Why DaVita Stock Withered on Wednesday

Core Insights - DaVita's profitability has declined significantly, leading to a more than 10% drop in its stock value following the latest earnings release, contrasting sharply with the S&P 500's minor dip of 0.3% [1] Financial Performance - For Q3, DaVita reported total revenue of $3.26 billion, an increase from $3.12 billion in the same period of 2023, but its non-GAAP net income fell to $222 million ($2.59 per share) from $268 million year-over-year [2] - The revenue slightly exceeded the average analyst estimate of $3.25 billion, but adjusted profitability was below the consensus estimate of $2.72 [3] Management Commentary - Management attributed the revenue increase to higher average reimbursement rates and fluctuations, along with annual rate increases from the federal Medicare program and a rise in hospital inpatient dialysis treatments [3] Future Guidance - For 2024, DaVita projected adjusted per-share earnings between $9.25 and $10.05, with free cash flow expected to range from $950 million to $1.2 billion, compared to $8.47 and nearly $1.24 billion for full-year 2023 [4] Market Reaction - Investors reacted negatively to the earnings miss, reflecting concerns that a specialized healthcare company should demonstrate stronger growth, especially as the U.S. population ages [5]