DaVita narrows 2025 guidance ranges while advancing technology and clinical innovation

Earnings Call Insights: DaVita Inc. (DVA) Q3 2025

MANAGEMENT VIEW

* CEO Javier Rodriguez highlighted that "our third quarter performance was in line with our expectations and keeps us on track to achieve our full year guidance," emphasizing a continued focus on patient care amid a dynamic policy environment, referencing the ongoing government shutdown and healthcare policy uncertainty.
* Rodriguez spotlighted DaVita Clinical Research (DCR), noting its operation of "more than 250 research sites in the United States" and over "500 clinical trials... instrumental in advancing kidney care research." He stated, "DCR maintains more than 250 research sites... has helped achieve FDA approval for dozens of ESKD drugs and... fueled more than 700 clinical publications."
* The CEO discussed ongoing investments in technology infrastructure, including enhancements to the clinical platform, upgrades to scheduling and revenue operations systems, and adoption of AI solutions, acknowledging that "these projects result in higher G&A growth" but are seen as "critical to advancing clinical care, improving the experience of our patients and teammates and driving long-term cost efficiencies."
* Rodriguez announced a reaffirmation and narrowing of full-year guidance ranges: "We now anticipate full year adjusted operating income between $2.035 billion and $2.135 billion and adjusted earnings per share of $10.35 to $11.15."
* CFO Joel Ackerman reported, "Third quarter adjusted operating income was $517 million, adjusted earnings per share was $2.51 and free cash flow was $604 million," attributing performance to effective management of patient care costs and noting U.S. treatment volume was down 1.5% year-over-year.

OUTLOOK

* Management reaffirmed the midpoint of guidance for adjusted operating income and adjusted earnings per share while narrowing each range. Rodriguez stated, "We now anticipate full year adjusted operating income between $2.035 billion and $2.135 billion and adjusted earnings per share of $10.35 to $11.15."
* Looking ahead to 2026, Rodriguez identified key variables: "We faced several headwinds in 2025 that we don't expect to recur, including Hurricane Helene, the severe flu season and the cyber incident... We'll also be assessing the ongoing recalibration of Medicare Advantage landscape."
* No formal 2026 guidance was provided, but management cited a "range of potential outcomes" and will provide updates at the next earnings call.

FINANCIAL RESULTS

* Ackerman detailed U.S. treatments per day declined 1.5% versus Q3 2024, primarily due to day mix and impacts from "higher mortality from a severe flu season and lost admissions opportunities as the result of Hurricane Helene and the cyber incident."
* Revenue per treatment increased approximately $6 versus Q2, driven by "rate increases, higher revenue from phosphate binders and the negative impact of the cyber incident on Q2 RPT."
* Patient care costs per treatment rose by approximately $5 sequentially, mainly due to "typical increases in wages and higher pharmaceutical expense due to higher dispensing volumes of phosphate binders."
* International adjusted operating income was $27 million, down $9 million sequentially due to the absence of a prior onetime benefit.
* Integrated Kidney Care (IKC) reported a Q3 adjusted operating loss of $21 million, with Ackerman reiterating expectations for flat or better IKC results compared to 2024.
* DaVita repurchased 3.3 million shares in Q3, with an additional 400,000 shares repurchased post-quarter, totaling approximately 10 million shares year-to-date.
* Quarter-end leverage was reported at 3.37x consolidated EBITDA.

Q&A

* Kevin Fischbeck, BofA Securities, asked about the volume headwind from discrete events and future mortality improvements. Ackerman replied that "the number is probably about a 75 to 100 basis point headwind on '25 volume from those 3 things combined." Rodriguez described efforts to improve mortality as "steady over time... looking at all our clinical protocols, looking at time on therapy, fluid, other protocols, GLP-1s and other medications."
* Fischbeck probed the significance of Medicare Advantage (MA) enrollment as a swing factor. Rodriguez responded, "there's enough dynamics and enough membership in there that you could see a scenario where it could swing in one direction or another."
* Andrew Mok, Barclays, inquired about the volume outlook for 2026 and impact from technology investments. Ackerman projected a 50 to 75 basis point structural improvement in '26 growth relative to '25 growth, while Rodriguez said, "we are investing in a lot of things... optimistic, and we're working hard," but specific volume impacts remain uncertain.
* Mok also asked about premium tax credits. Rodriguez confirmed the prior estimate of a $120 million headwind over three years if credits expire, with the impact "not evenly spread out."
* Albert Rice, UBS, pressed on Q3 operating income being below consensus and on impacts from the cyber-attack and Mozarc charge. Ackerman explained, "the charge will largely eliminate the Mozarc drag on the P&L next year... In terms of cyber, the big impact was last quarter... impact goes way down" in Q3 and Q4.
* Pito Chickering, Deutsche Bank, asked about new patient starts, mortality, and IKC timing. Ackerman noted volume "came in largely as expected with a little bit more pressure on missed treatments" and mortality "down versus Q1, but that's largely a flu phenomenon."

SENTIMENT ANALYSIS

* Analysts raised persistent concerns about treatment volume, mortality trends, payer mix, and the sustainability of financial improvements, with a tone that was neutral to slightly negative, seeking clarification on guidance and risks from policy changes and discrete events.
* Management maintained a confident yet measured tone, emphasizing consistency with expectations and long-term investments, while acknowledging uncertainties. Rodriguez stated, "we remain confident in our ability to navigate them effectively."
* Compared to the previous quarter, analyst sentiment remained skeptical regarding volume and mortality, and management's tone continued to stress resilience and operational discipline, though with more explicit caution around 2026 swing factors.

QUARTER-OVER-QUARTER COMPARISON

* The company continues to navigate headwinds from external events (cyber incident, flu season, hurricane), with management now narrowing guidance ranges and discussing more specific 2026 variables than in Q2.
* The volume decline worsened from -1.1% in Q2 to -1.5% in Q3 year-over-year, attributed to similar causes as last quarter.
* Analysts persistently focused on volume growth, mortality, payer mix, and the impact of policy changes, while management's responses have shifted to more granular discussions of discrete headwinds and swing factors for the coming year.
* Management's confidence in cost controls and technology investment continued, but there was greater emphasis on external unpredictables for 2026.

RISKS AND CONCERNS

* Management cited several risks: "government shutdown," "policy debate" around enhanced premium tax credits and Medicare Advantage, and uncertainty in "timing of IKC revenue."
* Ongoing volume and mortality headwinds from severe flu, hurricane disruption, and the cyber incident were acknowledged, though management does not expect these to recur in 2026.
* The expiration of premium tax credits could result in a "$120 million" headwind over three years if not renewed.
* Analyst questions repeatedly highlighted uncertainty in payer mix, revenue cycle timing, and the durability of cost and tech initiatives.

FINAL TAKEAWAY

DaVita's third quarter results aligned with expectations, supporting a reaffirmation and narrowing of full-year guidance for both adjusted operating income and earnings per share. Management emphasized ongoing investments in technology and clinical research as foundational to long-term value, while highlighting discrete external headwinds that impacted 2025 but are not anticipated to recur in 2026. Risks related to policy changes, payer mix volatility, and the timing of value-based care revenues remain under active management, with formal 2026 guidance to be provided next quarter.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/dva/earnings/transcripts]

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