DaVita Q2 Earnings Call Highlights

Key Points

• DaVita reaffirmed its 2026 outlook after reporting second-quarter adjusted operating income of $579 million, adjusted EPS of $4.02 and free cash flow of $256 million. Treatment growth exceeded expectations, helped by lower patient mortality, and full-year nominal volume growth is expected near the top of the company’s 25–50 basis-point range.
• Revenue per treatment fell sequentially by about $2 due to timing effects, lower phosphate-binder revenue and reduced commercial insurance mix. DaVita still expects full-year revenue-per-treatment growth of 1%–2%, while patient-care costs per treatment declined by about $3.
• DaVita plans to broadly deploy expanded hemodialysis using existing machines after securing dialyzer supplies, with management citing clinical results showing non-inferiority to HDF. The company also repurchased shares, completed a $200 million investment in Elara Caring and maintained its guidance midpoint of $2.2 billion in adjusted operating income and $14.65 in adjusted EPS.

DaVita NYSE: DVA reported second-quarter results that management said were broadly in line with expectations, supported by accelerating treatment-volume growth and lower mortality among patients. The kidney-care company reaffirmed its full-year 2026 guidance, while outlining plans to expand access to newer dialysis technology designed to improve clearance of so-called middle molecules.

Second-quarter adjusted operating income was $579 million, adjusted earnings per share were $4.02, and free cash flow totaled $256 million, Chief Financial Officer Joel Ackerman said on the company’s earnings call.

U.S. dialysis treatments increased 56 basis points from the second quarter of 2025, with treatments per normalized day rising by the same amount. Ackerman said volume growth came in slightly above expectations, primarily because mortality was lower than anticipated. That benefit was partly offset by fewer patient admissions from closed Fresenius clinics and a higher-than-expected level of missed treatments.

DaVita now expects full-year nominal treatment growth near the upper end of its prior range of 25 to 50 basis points. On a calendar-normalized basis, that would translate to growth of roughly 50 to 75 basis points, according to Ackerman.

Revenue Per Treatment Declines Sequentially

Revenue per treatment declined by about $2 from the first quarter. Ackerman attributed the sequential decrease to favorable revenue timing in the first quarter, lower revenue from phosphate binders and a decline in commercial insurance mix related to expired Affordable Care Act subsidies.

Although revenue per treatment was up 3.6% in the first half compared with the first half of 2025, the company continues to expect full-year growth of 1% to 2%. The midpoint of that outlook implies slightly negative revenue-per-treatment growth in the second half versus the same period a year earlier, driven by lower commercial mix, lower phosphate-binder revenue and a favorable fourth-quarter 2025 comparison related to aged-claim resolutions.

Patient care costs per treatment fell about $3 sequentially, reflecting labor and fixed-cost leverage from higher treatment volume and lower phosphate-binder costs. Higher benefit costs partly offset those improvements. DaVita expects total cost per treatment to grow between 1.25% and 2.25% for the full year.

During the question-and-answer session, Ackerman said U.S. dialysis general and administrative expenses increased 10% in the quarter, while enterprise adjusted operating income increased about 5%.

Phosphate Binders and Medicare Policy

Chief Executive Officer Javier Rodriguez highlighted the transition of phosphate binders into the Medicare dialysis bundle. He said the policy change, which began more than two years ago after advance notice from the Centers for Medicare & Medicaid Services, has expanded access to clinically preferred therapies.

Rodriguez said the number of patients relying on over-the-counter options such as TUMS has declined by more than 50%, allowing more patients to use treatments intended to better manage phosphate levels and reduce risks associated with cardiovascular complications and bone fractures.

CMS in late June issued its proposed rule for the 2027 ESRD prospective payment system. Rodriguez said the proposal includes a Medicare base-rate update and the addition of phosphate binders to the bundled dialysis payment beginning next year.

He said the proposed payment update remains below the industry’s cost trends because of methodology changes and TDAPA-related dynamics. DaVita is providing feedback during the rulemaking process and hopes the final rule better reflects the cost of providing care.

Rodriguez added that CMS has reduced its projected phosphate-binder spending estimate by nearly $500 million since the medications’ initial transition. DaVita supports ending the TDAPA period after two years, though the company said its ultimate 2027 financial effect will depend on the final dialysis-bundle update.

Expanded HD Deployment Planned

DaVita plans to begin broadly deploying expanded hemodialysis, or expanded HD, across its network in coming quarters after securing supplies of compatible dialyzers. The technology is intended to clear a broader group of toxins known as middle molecules.

Rodriguez cited results from the MOTheR clinical trial, which compared expanded HD using medium cut-off dialyzers with hemodiafiltration, or HDF. He said expanded HD was shown to be non-inferior to HDF on a composite endpoint including all-cause mortality and major cardiovascular events.

Unlike HDF, expanded HD can be delivered using DaVita’s existing dialysis machines, which Rodriguez said should allow for faster implementation without significant capital investment. He said a recent Food and Drug Administration approval of a new expanded-HD dialyzer from NIPRO improved supply availability and economics.

Management said the near-term financial impact of deployment is included in 2026 guidance and is not expected to be significant. Ackerman said a positive economic impact would depend on a mortality benefit and is not expected to begin until 2028.

Capital Allocation and Outlook

DaVita closed its $200 million minority investment in Elara Caring in July. Ackerman said the home-health provider is expected to generate a small other-income benefit in 2026, likely in the mid-single-digit millions.

The company repurchased 2.2 million shares in the second quarter and another 183,000 shares after quarter-end. Its leverage ratio was 3.37 times consolidated EBITDA, within its stated 3.0 to 3.5 times target range. DaVita also issued $500 million of incremental debt during the quarter, primarily to repay revolver borrowings.

International adjusted operating income was $25 million, in line with expectations. Integrated Kidney Care, or IKC, generated $40 million of adjusted operating income, above expectations because revenue was recognized earlier than anticipated. Management still expects International and IKC each to contribute about $20 million to full-year enterprise adjusted operating income growth.

DaVita reaffirmed full-year guidance with a midpoint of $2.2 billion for adjusted operating income and $14.65 for adjusted earnings per share. Ackerman said the company expects adjusted operating income in the fourth quarter to be $50 million to $100 million higher than in the third quarter, with IKC revenue timing the largest driver.

About DaVita (NYSE:DVA)

DaVita Inc NYSE: DVA is a leading provider of kidney care services, specializing in the management and operation of outpatient dialysis centers for patients with chronic kidney failure and end-stage renal disease. Headquartered in Denver, Colorado, the company offers a comprehensive suite of treatment modalities, including in-center hemodialysis, peritoneal dialysis, and home dialysis therapies. In addition to its core dialysis services, DaVita provides patient education, nutritional counseling, vascular access management and related laboratory services to support kidney health and overall patient well-being.

Since its formation in the mid-1990s through a clinical management services spin-off, DaVita has expanded both organically and through strategic partnerships and acquisitions.

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