Core Insights - DaVita Inc. (DVA) is set to report its second-quarter 2025 results on August 5, with previous earnings per share (EPS) of $2.00 exceeding estimates by 14.3% [1] - The company has shown a mixed performance over the last four quarters, beating estimates three times and missing once, with an average earnings surprise of 3.6% [1] Factors Influencing Performance - DaVita's performance in the first quarter of 2025 was bolstered by strong sales of phosphate binders, which are essential for dialysis patients [2] - The transition of phosphate binders from Medicare Part D to the dialysis benefit by the Centers for Medicare & Medicaid Services (CMS) is expected to continue benefiting DaVita's revenues [2] - However, the company is facing challenges with new patient starts due to supply constraints in peritoneal dialysis solutions, which may negatively impact volume growth in 2025 [3][16] Financial Estimates - The Zacks Consensus Estimate for DaVita's second-quarter 2025 revenues is $3.30 billion, reflecting a 3.5% increase from the previous year [4] - The consensus estimate for EPS is $2.70, indicating a 4.3% rise from the prior-year period [4] Earnings Prediction - DaVita is predicted to beat earnings estimates, supported by a positive Earnings ESP of +6.67% and a Zacks Rank of 3 (Hold) [5][6] Share Price Performance - Over the past three months, DaVita's shares have increased by 1.1%, outperforming the Medical - Outpatient and Home Healthcare sector's decline of 2.8% [7] - The company's shares have also outperformed the Zacks Medical sector's decrease of 1.6%, but lagged behind the S&P 500's growth of 13.9% [7] Valuation Metrics - DaVita's forward 12-month price-to-sales (P/S) ratio is 0.8X, significantly lower than the industry average of 2.6X [11] - The company is trading at a discount compared to peers like Encompass Health and Elanco Animal Health, which have P/S ratios of 1.8X and 1.5X, respectively [12] Long-Term Investment Outlook - Management anticipates variability in drug mix, particularly with iron-based binders, which could impact operating income from phosphate binders, projected to be at the upper end of $0 to $50 million for the year [15] - Despite challenges, DaVita's core business strength and financial stability present a favorable long-term investment opportunity [17][18]

Core Insights - DaVita Inc. reported adjusted earnings per share (EPS) of $2.00 for Q1 2025, a decrease of 11.5% year over year, but exceeded the Zacks Consensus Estimate by 14.3% [1] - The company's revenues reached $3.22 billion, marking a 4.9% increase year over year and surpassing the Zacks Consensus Estimate by 0.4% [2] Revenue Analysis - Revenue per treatment was $400.1 million, up 4.1% year over year, driven by the inclusion of phosphate binders in the payment system and other rate increases [3] - Dialysis patient service revenues were $3.10 billion, reflecting a 5.5% year-over-year increase, while other revenues decreased by 6.6% to $120.5 million [5] Treatment and Patient Metrics - Total U.S. dialysis treatments for Q1 2025 were 7,040,519, averaging 91,793 treatments per day, a slight sequential increase of 0.01% [6] - As of March 31, 2025, DaVita served approximately 282,000 patients across 3,173 outpatient dialysis centers [6] Operational Changes - During Q1 2025, DaVita acquired one, opened six, and closed four dialysis centers in the U.S., and also acquired one and closed two centers internationally [7] Financial Performance - Gross profit declined by 0.8% year over year to $983.9 million, with a gross margin contraction of 177 basis points to 30.5% [8] - General & administrative expenses rose by 3.2% year over year to $374.1 million, while adjusted operating profit fell by 3.1% to $609.8 million [9] Cash Flow and Debt - DaVita ended Q1 2025 with cash and cash equivalents of $511.9 million, down from $845.9 million at the end of 2024, and total debt increased to $9.74 billion [10] - Net cash provided by operating activities was $180 million, compared to a net cash used of $134.8 million in the previous year [11] Guidance and Outlook - The company reiterated its adjusted EPS outlook for 2025, projecting a range of $10.20 to $11.30, with the Zacks Consensus Estimate at $10.76 [12] - Management expressed optimism regarding the revenue contribution from phosphate binders to the full-year operating income [14] Market Reaction - DaVita's shares fell nearly 0.4% in after-hours trading following the earnings report [4]