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DaVita(DVA) - 2025 Q1 - Earnings Call Transcript
DaVitaDaVita(US:DVA)2025-05-12 22:00

Financial Data and Key Metrics Changes - First quarter adjusted operating income was $439 million and adjusted EPS was $2, with free cash flow at negative $45 million, indicating strong expense management and profitability from orals in the bundle [16][24] - Revenue per treatment increased by $4, with approximately $10 of this increase attributable to new reimbursement for phosphate binders [20][38] - Patient care cost per treatment increased by $7 sequentially, driven by approximately $8 per treatment of new costs associated with phosphate binders [20][38] Business Line Data and Key Metrics Changes - Adjusted international operating income increased by $29 million compared to the fourth quarter, with strong performance noted in various markets [21] - Integrated Kidney Care (IKC) reported operating losses of $29 million, consistent with expectations, and is anticipated to have stronger performance in the second half of the year [21][60] Market Data and Key Metrics Changes - Treatments per day declined by 40 basis points compared to the first quarter of 2024, primarily due to a higher missed treatment rate caused by a severe flu season [17][19] - The company expects an approximately 50 basis point decline in treatments for the year, influenced by the flu season and a cyber incident [19][28] Company Strategy and Development Direction - The company remains committed to investing available capital in innovation and high-return growth opportunities, including a recent acquisition in Latin America [12] - The capital allocation strategy includes returning capital to shareholders through share repurchases, with approximately $680 million of stock repurchased since the last earnings call [12] Management's Comments on Operating Environment and Future Outlook - Management highlighted the impact of a cybersecurity incident that disrupted operations but emphasized the commitment to patient care and the restoration of major systems [7][9] - Despite challenges from the flu season and the cyber incident, the company maintains its 2025 guidance range for adjusted operating income and adjusted EPS [15][24] Other Important Information - The company launched a community-based collaboration with the YMCA to support chronic kidney disease education and prevention, with early results showing 30% of participants screened had previously undiagnosed CKD [5][6] - The company is advocating for patients at state and federal levels regarding policy changes, with no material financial impact expected from recent tariff or Medicaid reforms [13][14] Q&A Session Summary Question: Impact of flu and cyber attack on treatment growth - The flu had a more significant impact on the full year, with over half of the 50 basis point revision attributed to census decline in the first quarter, while the cyber incident accounted for roughly equal contributions from mistreatment rates and lost admissions [26][27] Question: Costs related to the cyber attack - Majority of costs from the cyber attack will be one-time items recognized in the second quarter, with some direct costs likely covered by insurance and not included in adjusted operating income forecasts [29] Question: Phosphate binders uptake and drug mix - The mix leaned towards iron-based binders, leading to an increase in guidance for operating income contribution from phosphate binders to the upper end of the previous range [31] Question: Revenue per treatment expectations - Revenue per treatment is expected to remain within the previously guided range of 4.5% to 5.5%, with half of the increase coming from core business and half from orals [41][42] Question: International market performance - International markets had a strong quarter, with a noted $50 million year-over-year increase and an additional $10 million in Q1 [54]