DaVita (DVA) Q3 2026 earnings review
DaVita raises its profit outlook, but debt slows share buybacks
DaVita, the kidney dialysis clinic operator, grew US patient treatments again while slowing its share buybacks as debt rose. Third-quarter operating profit excluding a China write-down rose 9% to $561 million, above what the company's own plan pointed to on lower overhead costs. Management lifted the bottom of its full-year profit outlook, but by our math the plan leaves fourth-quarter operating profit up less than 1% from a year ago.
| US underlying treatment growth | +0.4% from a year ago (+0.3% last quarter) |
|---|---|
| Operating profit, excluding one-offs | $561M +8.5% from a year ago |
| Profit per share, excluding one-offs | $3.82 +52% from a year ago |
| Full-year operating profit outlook | Raised $12.5M at the middle of the range, to $2,175–2,250M |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because small gains in clinic volume and third-quarter overhead were offset by slower share buybacks and rising medical supply costs. Value-based care enrollment jumped by 15,900 patients to 80,800, yet quarterly profit in that unit dropped from $40 million to $4 million, and beating the third-quarter plan mainly reflects cautious phasing.
The question now is whether DaVita can keep growing per-share profit rapidly now that debt sits near the top of its target band and clinic supply costs are rising. Either fourth-quarter value-based care collections and free cash flow rebound to fund buybacks, or per-share growth slows toward single-digit operating profit growth. Fourth-quarter cash flow and the 2027 outlook will settle it.
🐂 Bull Case
US Clinic Treatments Grew for a Third Quarter
DaVita runs outpatient kidney dialysis clinics, where patient volume is the core growth driver. Sales from treatments at US clinics open at least a year, adjusted for the calendar, grew 0.4% from a year ago, up from 0.1% in the first quarter and 0.3% in the second. Total US treatments per calendar-adjusted day rose 0.7% to 92,546, while the release gave no update on the rollout of its new dialysis filters.
This matters because the clinic network is growing again after shrinking through 2025. Part of the jump comes from comparing against a weak third quarter last year, when flu, hurricanes and a cyber incident hurt clinic visits. Even so, daily treatments edged up 0.1% from the second quarter, and the company cited "an increase in average reimbursement rates and improvements in payor mix" during the quarter.
What to watch: underlying US treatment growth in the fourth quarter. A fourth positive reading without last year's easy comparison would show that patient survival is genuinely lifting clinic volume.
Third-Quarter Profit Beat the Implied Plan
Three months ago, management kept its full-year profit forecast unchanged and indicated that third-quarter profit would sit well below the fourth quarter. By our math, that plan pointed to $520 million to $545 million of operating profit excluding one-offs for the third quarter. DaVita delivered $561 million instead, up 8.5% from a year ago, and lifted the bottom of its full-year profit range by $25 million.
Overhead costs did the work. General and administrative expenses (corporate and clinic overhead) fell to 11.4% of revenue from 12.1% a year ago, a drop of 0.7 percentage points. In US dialysis, overhead fell $15 million from the second quarter to $316 million because of "decreased professional fees", after rising earlier in the year on technology spending.
What to watch: fourth-quarter operating profit excluding one-offs against the $591 million implied by the middle of the new full-year outlook. Beating that mark would show the third-quarter result was not just profit pulled forward.
Value-Based Care Added 15,900 Patients, but Profit Dropped
In Integrated Kidney Care (IKC), DaVita manages total medical costs for kidney patients under risk-based contracts and keeps a share of the savings. The unit serves as both a growth driver and an earnings swing factor because accounting rules delay revenue until savings are certain. This quarter, patients in risk-based contracts jumped by 15,900 to 80,800, up 24.5% from both last quarter and a year ago.
- Risk-based IKC patients: 80,800, up from 64,900 in the second quarter
- Annualized medical spend under management: $6.4 billion, up from $5.8 billion in the second quarter
- IKC quarterly operating profit: $4 million, down from $40 million in the second quarter
The patient jump breaks a two-year pattern where enrollment stayed near 65,000, enlarging the medical pool DaVita can earn savings on. However, DaVita noted that these contracts remain "subject to complex or novel patient attribution mechanics and benchmark adjustments", which caused segment profit to drop back to $4 million.
What to watch: fourth-quarter IKC operating profit. With $24 million earned through nine months, the unit needs about $18 million in the fourth quarter to reach its full-year profit goal.
🐻 Bear Case
Buybacks Slowed as Debt Reached $10.3 Billion
DaVita turns modest operating profit growth into fast per-share profit growth by buying back its own stock. In the third quarter, profit per share excluding one-offs rose 52.2% from a year ago to $3.82, even though operating profit excluding one-offs grew 8.5%, because the diluted share count was 11.2% lower than a year ago. Management raised the middle of its full-year per-share profit outlook by $0.10 to $14.75.
However, the buyback pace dropped sharply in the third quarter. DaVita spent $111 million to retire 0.6 million shares at $186.21 each, down from $348 million in the second quarter and $403 million in the first. In the same period, the company spent $222 million on equity method investments, and net debt climbed to $10.34 billion.
- Third-quarter share buybacks: $111 million, down from $348 million in the second quarter
- Nine-month buybacks vs free cash flow: $863 million spent against $672 million of free cash flow
- Interest rate on senior credit facilities: 6.02%, up from 5.76% in the second quarter
This matters because nine-month buybacks and investments exceeded free cash flow, pushing net debt to 3.38 times trailing cash profit, near the top of management's 3.0 to 3.5 target band. With borrowing costs rising and less room to add debt, buybacks must now track cash generation.
What to watch: fourth-quarter share repurchases beyond the $87 million already spent in October. Another light quarter would mean per-share profit growth will move closer to operating profit growth in 2027.
Medical Supplies Pushed Clinic Care Costs Higher
In US dialysis clinics, profit per treatment depends on keeping care costs below the payment rate per treatment. In the third quarter, patient care costs (nurses, clinic staff and medical supplies) rose to $280.22 per treatment, up $2.82 from the second quarter and up 2.4% from a year ago. DaVita attributed the quarterly jump to "increased medical supplies expenses", while nine-month costs also reflected higher wages and health benefits.
Across the whole company, patient care costs rose to 68.5% of revenue from 68.2% a year ago, a 0.3 percentage point increase. Because US revenue per treatment grew only 1.1% from a year ago to $415.25, clinic care costs outpaced pricing, and only lower corporate overhead kept total US dialysis expenses per treatment to a 1.1% increase.
What to watch: patient care cost per treatment in the fourth quarter. Another sequential rise would squeeze US clinic margins going into 2027, when Medicare payment updates remain modest.
Risks this quarter didn't answer
Four standing concerns around government reimbursement, commercial insurance mix and clinic utilization received no new figures in the third-quarter earnings release.
- Commercial insurance mix for 2027: expired health-exchange subsidies are set to increase the profit drag in 2027; fourth-quarter guidance commentary will update the estimate.
- Medicare 2027 payment rate and tariffs: the final government rate rule for 2027 and any tariff impact on imported medical supplies will be addressed on the call or in the annual filing.
- Patient mortality and clinic utilization: management does not publish quarterly mortality rates or clinic capacity usage in the release; commentary on the call is the only check.
- Legal and regulatory inquiries: updates on subpoenas regarding charitable premium assistance and federal billing lawsuits await the quarterly filing's legal footnote.
👓 Other Themes
China Write-Down Cut Reported Operating Profit
DaVita recorded $62 million of "non-cash goodwill and other asset impairment charges related to our business in China" during the third quarter. Because local partners own part of the venture, $34 million of the charge went to noncontrolling interests, leaving a $27 million hit to DaVita's reported net income. Excluding the write-down, international operating profit was $46 million, up from $27 million a year ago.
💲 Other KPIs
Free cash flow (operating cash flow after clinic upkeep, new clinic builds and payments to clinic partners) fell 54.3% from $604 million a year ago, when collections rebounded after the 2025 cyber incident. Over the past 12 months, free cash flow totaled $980 million, down from $1,308 million in the second quarter.
Average payment per US dialysis treatment dipped $0.62 from the second quarter's $415.87 and rose 1.1% from $410.59 a year ago. That is slower than the 3.4% year-over-year gain in the second quarter, as the benefit from adding oral phosphate drugs to the Medicare bundle levels off.
Uncollected patient and insurer bills rose 7.5% from a year ago and 1.7% from the second quarter, growing faster than third-quarter revenue at 4.6%. However, collection speed in US dialysis improved by one day from the second quarter to 51 days of sales outstanding, while contract assets held steady at $565 million.
🔮 Guidance
Raised. The kidney care provider lifted the bottom of its range by $25 million, moving the middle of the range up $12.5 million to $2,212.5 million, or 5.7% growth for the year. By our math, that leaves $590.5 million for the fourth quarter, up 0.8% from a year ago against a tough fourth-quarter comparison. Across four quarters, the middle of the range moved +$40M, $0M, and +$12.5M.
Raised. Management lifted the low end by $0.20, putting the middle of the range at $14.75, or 36.8% growth from last year. By our math, that leaves $4.08 per share for the fourth quarter, up 20.0% from $3.40 a year ago as share count reductions continue to lift per-share growth above operating profit growth. Across four quarters, the middle of the range moved +$0.35, $0.00, and +$0.10.
Unchanged. The full-year plan still calls for $1,125 million at the middle of the range, up 9.9% from 2025. With $672 million generated in the first nine months, the plan requires $453 million in the fourth quarter by our math, up 46.6% from $309 million in the fourth quarter of last year.
Unchanged. The clinic schedule has 78.8 calendar-adjusted treatment days in the fourth quarter, down 0.4 days from the third quarter and down 0.7 days from the fourth quarter of 2025. That calendar difference will reduce fourth-quarter treatment volume by nearly 1% compared with a year ago.
❓ Key Questions
What drove the 15,900 patient jump in value-based care?
Risk-based Integrated Kidney Care patients rose 24.5% in a single quarter to 80,800 after sitting near 65,000 for two years. Investors need to know whether new health-plan contracts or mid-year attribution adjustments caused the jump, and when those patients will generate profit.
Will leverage near 3.4x cap share buybacks in 2027?
Third-quarter buybacks dropped to $111 million after a $222 million equity investment, and net debt reached 3.38 times cash profit, near the 3.5x ceiling. How much cash will go to buybacks versus debt reduction over the next year?
How is the new dialysis filter rollout progressing?
Management previously planned to roll out middle-molecule clearance dialyzers across US clinics in the coming quarters to help lift treatment growth toward 2% by 2029. The release gave no rollout numbers, clinic counts or supply updates.
What caused the $62 million write-down in China?
DaVita wrote down goodwill and assets in China by $62 million while international operating profit excluding the charge jumped to $46 million. Management did not say whether reimbursement cuts or clinic closures triggered the charge, or what lifted international profit.