DaVita shares in free fall: Investors unimpressed by slight revenue growth

DaVita investors experienced a Wednesday that might quickly be forgotten. The reason for the sell-off: the current quarterly figures of the dialysis specialist. An unexpectedly weak earnings performance caused the company's shares to plummet by over 10 percent—a significant loss considering the slight 0.3 percent dip in the S&P 500 Index on the same day. DaVita reported total revenues of $3.26 billion for the third quarter, slightly surpassing the $3.25 billion average expected by analysts. Revenue had increased by $140 million compared to the previous year. However, the company's adjusted net income for the same period fell to $222 million ($2.59 per share), significantly trailing the $268 million from the prior year quarter. The management attributed the revenue increase mainly to higher average reimbursement rates and normal fluctuations. Furthermore, annual tariff increases—including those from the government Medicare program—and a rise in in-patient dialysis treatments in hospitals contributed to the revenue growth. For the entire year 2024, the company forecasts an adjusted earnings per share of $9.25 to $10.05 and free cash flow between $950 million and $1.2 billion. In the previous year, these metrics stood at $8.47 per share and just under $1.24 billion. However, a sales forecast was not provided. The significant earnings decline met with little enthusiasm from investors. Observers speculate that market participants expect stronger growth impulses from such a specialized healthcare company, especially in an environment where the U.S. population is increasingly aging.