DaVita Inc.
Health Care · Health Care Providers & Services
Structural: duopoly with $FMS in US outpatient dialysis (~70% combined share of ~550k US ESRD patients); aging demographics + rising diabetes/hypertension prevalence drive steady ~1-2% annual treatment growth. Commercial-payor mix arbitrage is the entire economic engine - ~10-12% of treatments produce ~100%+ of segment operating income; Medicare reimbursement (~$280/treatment) is roughly breakeven.
Berkshire owns ~45% of shares outstanding, continues buying back through DVA's tender participation. Integrated Kidney Care (IKC) pivot toward value-based / capitated contracts is the long-duration optionality.
(1) duopoly pricing power + structural patient growth; (2) Berkshire backstop + aggressive buybacks shrinking float ~5-7%/yr; (3) IKC scaling toward profitability could re-rate multiple; (4) GLP-1 long-term tail risk for diabetes/CKD progression appears overstated near-term - pipeline of ESRD patients already locked in for 5-10 yrs; (5) international expansion (LatAm, Europe, Asia) adds non-US growth leg.
(1) GLP-1 adoption ($LLY $NVO) compresses incidence growth on a 5-10yr horizon; (2) commercial-payor erosion risk from MA plan steerage + payor consolidation; (3) ESRD treatment-choice legislation (state-level) periodically threatens commercial subsidy; (4) staffing inflation + nurse shortage pressure clinic-level margins; (5) Medicare Advantage shift dilutes the lucrative employer-commercial mix; (6) AKI / cyberattack operational risk (2024 outage reminder).
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