DaVita Inc. (DVA) Earnings

Management highlights

- Clinical highlight: Continued momentum of Integrated Kidney Care (IKC), delivered year - over - year improvements in CMS' Comprehensive Kidney Care Contracting program measurements. - First quarter financial results: Delivered strong financial results ahead of expectations with outperformance from U.S. dialysis trilogy elements. - Technology strategy: Modernized data infrastructure by standardizing and integrating data through proprietary EMR platform, and actively deploying AI solutions across clinical, operational and business use cases. - ACA Plans: ACA open enrollment trending slightly favorable relative to prior expectations, but will gain greater clarity as year progresses. - Financial outlook: Raising and narrowing adjusted operating income guidance to $2.15 billion - $2.25 billion range and adjusted EPS guidance to $14.10 - $15.20 per share due to higher volume forecast and lower patient care costs.

Guidance

- Raising and narrowing adjusted operating income guidance to a range of $2.15 billion to $2.25 billion. - Raising adjusted EPS guidance to a range of $14.10 to $15.20 per share. - Increased guidance primarily due to higher volume forecast for the year and lower patient care costs. - Expect adjusted operating income to be about evenly split across remaining 3 quarters, assuming Q4 weighted IKC operating income.

Segment performance

U.S. dialysis segment: Treatments declined ~20 basis points vs Q1 2025, treatments per normalized day increased 40 basis points vs Q1 2025, ~20 basis points ahead of expectations. Revenue per treatment declined ~$5 sequentially, year - over - year RPT growth ~4% in Q1, still expect full year RPT growth 1% - 2%. Patient care cost per treatment about flat to 4th quarter, lower than expected due to better - than - expected productivity improvements. U.S. dialysis G&A costs declined $16 million from 4th quarter but grew ~$37 million or 13% vs Q1 2025 due to continued technology investment. International adjusted operating income was $30 million in Q1, IKC had an adjusted operating loss of $19 million.

Analyst Q&A

• Q: I wanted to dig in a little bit to the volume commentary. I guess, is there any way that you can kind of break out whether weather had an impact, how much that was? And then the improved mortality? Is there a way to kind of break that into what was maybe just a light flu season year - over - year versus underlying trends you're trying to think about how durable the better mortality for the rest of this year?

  A: On weather, weather came in exactly as expected, about 10 bps better than last year. In terms of flu, came in line with forecast, focusing on cumulative hospitalizations which is in line with 2 years ago. In terms of mortality, changes are rather small, not ready to call out significant underlying trend

• Q: Can you just give a little more color on the rate update? Why was the rate so strong in Q1 relative to your guidance for the year?

  A: RPT was up a little more than 4%, 2/3 of that was normal stuff in terms of rate increases and mix shifts, about $6 attributed to timing, still sticking with 1% - 2% guide for full year

• Q: Can you talk a little bit more about the ACA impact and how you're thinking about it? It sounds like you're saying it was coming in better, but it sounds like the guidance hasn't changed yet for the year to get that right. And then how are you thinking about the timing? Is it that Q1 came in better? Now you're assuming it's going to ramp? Or did you always assume Q1 was going to be a little bit lighter relative to the year, thoughts there?

  A: It's very early, Q1 was pretty flattish to Q4, has performed better than expected, but too early to change numbers, holding to $40 million number but trending a little better than that

• Q: Just a follow - up on the treatment commentary. Can you just talk about the new starts to dialysis in first quarter? And as you think about Fresenius scaling in from their closures, is this an immediate ramp in sort of 1Q, 2Q and then normalize in the back half of the year? Just want to make sure that as you're increasing your treatment growth guidance here that we're also modeling where you guys go from 2Q and then where you guys finished the year in fourth quarter?

  A: On the admit side, not a lot of color to go in, talking about basis points of change, guess about half the new starts from Fresenius in Q1, other half in Q2, normalized treatment per day count expected to grow over the course of the year, ending somewhere higher than current 40 bps

• Q: If you pull out the $6 you're talking about from a timing perspective, gets us to $4.11 to $4.12, typically, 2Q ramps, $4 or $5 as you burn through the deductibles and then we see continued ramp in the third quarter and then obviously, fourth quarter, we get the update with the new Medicare rates. I guess, I'm trying to figure out how we're still getting to 1% to 2% revenue per treatment guidance growth, even pulling out at $6 in the fourth quarter - from the first quarter because of normal seasonality you guys see in the interim treatment?

  A: There are 2 dynamics, normal variability and mix and enhanced premium tax credits, commercial mix expected to decline over the year, which will put pressure on RPT to bridge from higher number in Q1 to 1% - 2% for the year

• Q: Your G&A per treatment, you talked about was up 13% due to tech investments. Where does it end the year? And kind of - should we think about this declining linear throughout the year as those investments were made or just any color around how we should be modeling G&A treatments for - G&A cost per treatment throughout the year as the tech investments begin to decline?

  A: Look at G&A as a piece of total cost, not trying to optimize G&A in isolation, look at total cost CAGR of 2.6% over last 5 years, guide will stand on total cost

• Q: Nice to see the operating income guide up, EPS guide up as well. I noticed the free cash flow guide did not change. I think this was a similar dynamic last year. Just wanted to confirm that's normal course and nothing specific to read into?

  A: There's just more variability in a wider range with free cash flow, so didn't move the number despite increase in OI

• Q: This administration is really focused on fraud, waste and abuse. It seems to me dialysis might be a little better insulated versus other types of providers. Just any general thoughts on this administration's focus on that FWA and what this could mean potentially for DaVita or maybe not mean for DaVita or even just more broadly for dialysis in general?

  A: Tough to comment on broader environment, take compliance incredibly seriously, dialysis not a controversial diagnosis, simplifies some compliance issues, internally focused on doing right by government