Davita Healthcare ((DVA)) has held its Q4 earnings call. Read on for the main highlights of the call.
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DaVita Inc. recently released its earnings call report, reflecting a mixed sentiment of strong financial achievements and ongoing challenges. The company reported robust financial performance, driven by strategic initiatives, but faced headwinds with volume growth and external disruptions.
Strong Financial Performance
DaVita Inc. concluded the year 2024 with impressive financial metrics, recording an adjusted operating income of $1.98 billion and an adjusted earnings per share (EPS) of $9.68. This marks a significant year-over-year growth of 21% and 26% respectively, alongside a free cash flow of $1.16 billion.
Expansion in Latin America
The company made strides in its strategic expansion into Latin America, successfully closing three of its four planned acquisitions in the region. The final acquisition in Brazil is anticipated to close by mid-2025, underscoring DaVita’s commitment to growth in this market.
Oral Drugs Transition
A key operational shift for DaVita is the transition of oral drugs to the dialysis benefit, effective January 1, 2025. This move could contribute an additional $0 to $50 million in operating income, representing a potential new revenue stream.
Share Repurchase Program
In line with its capital allocation strategy, DaVita remains committed to returning value to shareholders through an ongoing share repurchase program, signaling confidence in its financial health and future prospects.
Volume Growth Challenges
Despite experiencing positive volume growth for the first time since the pandemic, DaVita faced challenges as the growth did not meet expectations for the full year. Factors such as elevated mortality rates, mistreatment, and supply constraints negatively impacted new patient starts.
Impact of Hurricane Helene
The operations were notably affected by Hurricane Helene, which caused a disruption in peritoneal dialysis (PD) supply, leading to a loss of approximately 350 admissions and a $6 million impact on fourth-quarter operating income.
International Operating Income Decline
DaVita’s international operations saw a decline in adjusted operating income by $17 million, largely attributed to a $19 million reserve against aged accounts receivable in Brazil, highlighting the challenges in international markets.
Flat Volume Growth Outlook for 2025
The guidance for 2025 suggests flat treatment volume growth, with anticipated headwinds from the number of treatment days and PD admissions. This cautious outlook reflects the ongoing operational challenges.
Integrated Kidney Care Loss
DaVita’s Integrated Kidney Care (IKC) segment reported a full-year adjusted operating loss of $35 million. However, this was $15 million ahead of expectations, indicating some progress in managing losses.
Forward-Looking Guidance
DaVita’s 2025 guidance projects adjusted operating income growth of 5.2% and EPS growth of 11%, with revenue per treatment expected to rise by 4.5% to 5.5%. Despite these positive forecasts, the company anticipates a 6% to 7% increase in patient care costs, driven by inflationary pressures and the addition of oral medications. The company remains focused on operational excellence and growth in integrated kidney care, with plans to manage costs effectively and maintain its capital allocation strategy.
Overall, DaVita Inc.’s earnings call reflects a balanced sentiment of achievements and ongoing challenges. The company has demonstrated solid financial performance and strategic growth initiatives, yet it faces hurdles such as volume growth issues and external disruptions. Looking forward, DaVita remains committed to operational excellence and shareholder value, navigating challenges with a strategic focus on its core operations.
