DaVita Expects Fewer Dialysis Treatments in Q4, but Higher Revenue per Visit Could Help Offset the Drop

Key Points

• DaVita expects fourth-quarter dialysis treatments to fall sequentially, with calendar effects creating an almost 100-basis-point year-over-year headwind; seasonal missed treatments are also expected to rise.
• Higher revenue per treatment should partly offset lower volume, though a weaker commercial insurance mix and declining binder contributions will weigh on revenue per visit. Lower binder-related costs are expected to help fourth-quarter year-over-year performance.
• DaVita sees a 1.5%–2% Medicare rate increase as a reasonable estimate, while a roughly $70 million exchange-related headwind is expected next year. Its IKC business has been a growth contributor, though results may vary with shared savings and contract timing.

DaVita NYSE: DVA expects a meaningful sequential decline in dialysis treatments in the fourth quarter because of calendar effects, but higher revenue per treatment should help offset the impact, Chief Financial Officer Joel Ackerman said at the Wolfe Healthcare Conference.

Ackerman said third-quarter volume was about 20 basis points below the company’s expectations because patients missed more treatments, primarily as a result of hospitalizations. Patient census, which he described as the more important driver of future volume, came in slightly better than expected.

The missed treatment rate was about 20 basis points worse than both DaVita’s expectations and the year-earlier quarter. Ackerman said the increase reflected a broader rise in U.S. hospitalizations rather than an issue specific to DaVita’s patients.

For the fourth quarter, DaVita assumes missed treatments will rise from the third quarter, as they typically do during flu season, but return to a normal year-over-year pattern.

Fourth-quarter outlook

Calendar effects benefited third-quarter volume by about 65 basis points year over year, while the fourth quarter faces a headwind of almost 100 basis points, Ackerman said. The number of treatment days and the distribution of weekdays matter because DaVita performs more treatments on Mondays, Wednesdays and Fridays than on other treatment days.

Ackerman recommended that investors use treatments per normalized day when modeling volume, saying that measure removes calendar effects and tends to be smoother.

He said revenue per treatment should rise from the third quarter and help offset the lower treatment volume. However, he expects it to be below the fourth quarter of 2025, when the sequential increase was unusually large.

Lower commercial insurance mix and a declining contribution from binders will weigh on revenue per treatment, Ackerman said. He added that the binder trend should also reduce cost per treatment and that lower costs per treatment should contribute to fourth-quarter strength year over year.

DaVita also expects a significant sequential increase in its IKC business. International results benefited in the third quarter from nonrecurring divestitures in Brazil, which offset nonrecurring negatives from Brazilian divestitures in the second quarter; Ackerman said investors should not expect a similar international uptick in the fourth quarter.

Medicare rates and insurance mix

Ackerman reaffirmed that a 1.5% to 2% range is a reasonable way to think about the Medicare rate increase. He said the outcome will depend in part on transitional drug add-on payments, utilization and average sales prices, with more information becoming available each quarter.

He noted that a 1% change in the Medicare fee-for-service rate is worth about $30 million in operating income to DaVita, less than it would have been historically because of the growth of Medicare Advantage. Medicare Advantage rates are negotiated with payers rather than directly tied to the fee-for-service rate, he said.

Discussing the roughly $70 million exchange-related headwind for next year, Ackerman said it reflects new patients entering with a lower commercial insurance mix and the annualization of this year’s trend. He said the situation appeared to have settled after uncertainty about coverage in the first half of the year, with the third quarter playing out as expected.

For exchange membership assumptions, Ackerman said DaVita has generally relied on Congressional Budget Office estimates.

Growth opportunities

DaVita has not provided 2027 guidance, and Ackerman said it was too early to offer a full view of the year’s headwinds and opportunities. He pointed to the company’s record over the past several years of often finding ways to offset pressures despite volume growth below the more than 2% level it would like to reach.

In IKC, Ackerman said the business has contributed roughly 2% a year to enterprise operating-income growth in recent years, exceeding its earlier expectation of about 1%. He still views approximately 1% annual contribution as a reasonable forward-looking expectation, though results could be uneven because of changes in shared savings and the timing of new contracts.

DaVita is also rolling out new dialyzers intended to improve the removal of so-called middle-molecule toxins. Ackerman said the company expects them to be available to the vast majority of eligible patients in November and believes they could improve mortality over the next several years.

Internationally, Ackerman said DaVita sees continued opportunity to deploy capital and deliver roughly 1% of operating-income growth contribution. He cautioned against generalizing about margins across a portfolio spanning 15 countries, saying returns depend partly on the mix of markets.

About DaVita (NYSE:DVA)

DaVita Inc. is a healthcare provider focused on kidney care. Its core business is operating outpatient dialysis centers that provide treatment and related services to people with chronic kidney failure. The company also offers home dialysis programs, provides dialysis services to patients in hospitals, and supports kidney care through services such as care coordination and education. DaVita primarily serves patients in the United States and also operates in international markets. Founded in 1994 as Total Renal Care, the company adopted the name DaVita in 2000.

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