DaVita at UBS Global Healthcare Conference: sees 2027 pressure, long-term lift

On November 9, 2026, DaVita (DVA) addressed the UBS Global Healthcare Conference to present a mixed outlook. The company reported better-than-anticipated dialysis volume and revenue per treatment in 2024, but expressed concerns about future reimbursement challenges. Management highlighted ongoing cost pressures, particularly in technology and pharmaceuticals, while anticipating operational improvements and a significant clinical rollout to spur growth later in the decade.

DaVita reported that 2024 volume growth exceeded expectations, and revenue per treatment remained robust. The company forecasted a full-year effective Medicare ESRD rate increase of 1.5% to 2.0% for 2027, which is below its cost trend. Additional commercial mix pressure of around $70 million is anticipated in 2027 due to exchange-related patient shifts.

Integrated Kidney Care (IKC) contributed about 2% to operating income growth this year, surpassing its usual 1% baseline, while international operations remained stable. DaVita sees expanded hemodialysis with middle molecule clearance as a major long-term opportunity, though it is not expected to impact earnings in the near term.

Chief Financial Officer Joel Ackerman stated that DaVita entered 2024 with a difficult forecast but has performed better than expected in several areas. International operations are on track, contributing about 1% annually to operating income growth. The company's U.S. dialysis volume growth surpassed early expectations, surpassing the pre-COVID growth rate of about 2%.

Revenue per treatment also outperformed predictions. However, the main cost challenge has been in general and administrative spending and information technology, with IT spending growing by more than 20% annually for four straight years due to core systems modernization and AI investments.

The company reiterated its free cash flow guidance of $1.0 billion to $1.25 billion, maintaining leverage around 3.4x, within its target range of 3.0x to 3.5x. With a trailing twelve-month free cash flow of approximately $1.3 billion, against a market capitalization of $11.75 billion, DaVita provides a free cash flow yield of around 11%. InvestingPro analysts consider this valuation strong, suggesting the stock is slightly undervalued and included in their most undervalued stocks watchlist.