DaVita (DVA) Q4 2025 earnings review
Record EPS Driven by Buybacks and Pricing, Not Patients
DaVita closed 2025 with a financial beat, delivering 16.2% Adjusted Operating Margins (up 130bps YoY) and a massive 51% surge in Q4 Adjusted EPS to $3.40. However, the quality of growth is lopsided. Treatment volumes remain in contraction (-0.6% YoY), meaning the company is deriving profit growth entirely from higher reimbursement rates (Revenue Per Treatment +$12 QoQ) and aggressive share repurchases (12.7M shares retired in FY25). While 2026 EPS guidance implies stunning ~33% growth, Adjusted Operating Income is guided for only ~3% growth, highlighting that financial engineering—not organic growth—is the primary engine.
🐂 Bull Case
The spread between Revenue Per Treatment (RPT) and Patient Care Costs (PCC) widened significantly. RPT jumped to $422.60 (+3% QoQ) while costs were controlled, driving Adjusted Operating Margin to 16.2%, the highest level in five quarters.
DaVita repurchased 12.7 million shares in 2025 (approx. 15% of float), driving the share count down to 69.6M. With leverage at 3.26x (inside target range) and strong FCF, this EPS compounding lever remains active.
🐻 Bear Case
Despite lapping easier comps, U.S. dialysis treatment volume declined 0.6% YoY (normalized/non-acquired). The inability to return to volume growth remains a structural concern for long-term health.
2026 Guidance for Adjusted Operating Income ($2.085-$2.235B) implies only ~3% growth at the midpoint vs FY25, suggesting limited operational leverage despite the pricing gains.
⚖️ Verdict: ⚪
Neutral. The EPS generation is elite due to capital allocation, but an essential healthcare provider shrinking its patient volumes for consecutive years presents a fundamental valuation ceiling. Investment thesis relies entirely on reimbursement stability and buybacks.
Key Themes
Volume Recession Continues
U.S. normalized non-acquired treatment growth remains stuck in negative territory, coming in at -0.6% for Q4 2025. This metric has been negative for four consecutive quarters (-0.6% in Q3, -0.8% in Q2, -0.6% in Q1). Management previously cited temporary headwinds (flu, cyber), but the persistence suggests structural issues in patient census or mortality.
Pricing Power (RPT) Breakout
Revenue Per Treatment (RPT) surged to $422.60 in Q4, up $12.01 sequentially and significantly outpacing the $6.06 sequential increase in Patient Care Costs (PCC). This spread expansion is the sole driver of the margin beat. Drivers include higher reimbursement rates and mix improvements, plus the seasonal impact of flu vaccines.
Integrated Kidney Care (IKC) Swing to Profit
The IKC segment, often a drag on earnings, contributed $46 million in operating income in Q4 2025, a sharp reversal from the $21 million loss in Q3 2025. However, IKC results are notoriously lumpy due to the timing of shared savings recognition, so this may not be a new run-rate.
Mozarc Investment Drag
DaVita incurred a $20.5 million impairment and restructuring charge related to its Mozarc Medical joint venture in Q4. This equity investment loss continues to create noise in GAAP numbers and excluded from Adjusted metrics, raising questions about the JV's performance trajectory.
Other KPIs
Accelerating. Up 13% sequentially from $517M in Q3 and up 19% YoY from $491M in 24Q4. Margin expanded to 16.2%, demonstrating strong operating leverage despite negative volume growth.
Decelerating. Down from $1.162B in FY24. Q4 FCF was $309M, weaker than the $604M generated in Q3. The decline reflects working capital timing and higher interest payments ($580M expense in FY25 vs $470M in FY24).
Stable. Improved slightly from 3.37x in Q3 2025. Remains comfortably within the management target band of 3.0x-3.5x, preserving capacity for further buybacks.
Guidance
Accelerating significantly. The midpoint ($14.30) implies ~33% growth vs 2025 Actual ($10.78). This is driven primarily by the full-year impact of the massive 2025 share repurchases.
Stable/Slow Growth. Midpoint ($2.16B) implies only ~3% growth over 2025 Actual ($2.094B). This confirms that operational growth is muted, and the EPS story is financial engineering.
Stable/Accelerating. Midpoint ($1.125B) implies ~10% growth over FY25 Actual ($1.024B), though range overlaps significantly with prior year performance.
Key Questions
Volume Inflection Visibility
With normalized volume growth negative for all of 2025 (-0.6% in Q4), and prior headwinds (cyber, flu) largely passed, do you see a path to positive volume growth in H1 2026, or is negative census a new structural normal?
Operating Income Leverage
2026 Adjusted OI guidance implies only ~3% growth at the midpoint. Given the strong exit velocity in Q4 RPT ($422/treatment), why isn't there more operating leverage flowing through to the 2026 outlook?
Accounts Receivable Spike
Accounts Receivable jumped to $2.41 billion in Q4 from $2.14 billion a year ago (+12%), outpacing revenue growth. Is this related to payment delays from the cyber incident aftermath, or a change in payer behavior?
Mozarc Trajectory
After the $20.5M impairment/restructuring charge in Q4, how should we think about the drag from Mozarc in 2026? Is the JV underperforming initial expectations?