DaVita Inc. (DVA) Earnings & Analysis

Latest quarter

DaVita reported third-quarter revenue of $3.6 billion, above the $3.5 billion consensus and up from $3.4 billion a year earlier. Adjusted earnings per share were $3.82, above the $3.78 consensus. Diluted earnings per share were $4.11, compared with $2.04 a year earlier.

The company’s filing said patient census growth increased treatments per day from a year earlier, partly offset by more missed treatments. On the earnings call, CFO Joel Ackerman said higher reimbursement rates supported revenue per treatment, although a lower commercial insurance mix and lower phosphate binder reimbursement offset part of the increase.

DaVita’s gross margin was 31.5%, compared with 31.8% a year earlier, while operating margin was 14.0%, down from 14.8%. Free cash flow was $371.2 million, compared with $685.4 million a year earlier. Ackerman said patient care costs per treatment rose year over year, with higher medical supply and professional liability expenses than the company had anticipated.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Joel Ackerman said treatment growth came from a larger patient census, primarily as mortality improved, although missed treatments offset some of the gain. Asked about the quarter ahead, he said DaVita expected missed-treatment rates to return to a normal year-over-year pattern and the census growth recorded during the third quarter to support treatments per normalized day in the fourth. He also anticipated a treatment-volume headwind from the year-over-year mix of treatment days.

Ackerman said normal rate increases lifted revenue per treatment from a year earlier, but a lower commercial insurance mix and reduced phosphate binder reimbursement offset some of that benefit. He said the effect of expiring enhanced premium tax credits on exchange-plan census was developing as expected. Asked about the outlook for U.S. dialysis margins, Ackerman identified revenue-per-treatment pressure and cost relief as opposing forces and said the company would know more in February.

CEO Javier Rodriguez said U.S. dialysis technology investment was higher than DaVita had forecast entering the year and was weighing on full-year performance. Ackerman said technology spending growth should slow next year, though spending would continue to rise.

Rodriguez said integrated kidney care was ahead of plan. Ackerman attributed the business’s performance largely to higher shared savings rates in its Medicare demonstration project and contracts with Medicare Advantage insurers, partly offset by higher physician payouts and the launch of a chronic kidney disease program with Humana.

On expanded hemodialysis, Rodriguez said pilots had produced positive patient and physician feedback and that clinical staff had been trained for a national rollout. He expected the therapy to reach the vast majority of eligible patients in November and said DaVita did not expect a material net impact on adjusted operating income in 2026 or 2027.

Asked about the government’s kidney care plan and competition, Rodriguez said DaVita shared its goals for earlier intervention and patient choice, but argued that attracting capital would require attention to the sector’s payment structure. Ackerman said it was too early to determine the insurance mix of additional treatments resulting from improved mortality.

Guidance

DaVita said it narrowed its full-year 2026 adjusted operating income range and its adjusted earnings-per-share range, with adjusted EPS now expected at $14.30 to $15.20. Rodriguez said the outlook reflected higher expected integrated kidney care income offset by higher U.S. dialysis costs, particularly technology investment. DaVita now expects integrated kidney care adjusted operating income of at least $65.0 million, an increase from its prior guidance.