DaVita Reports Q4 2024 Earnings with Mixed Guidance for 2025

DaVita Reports Q4 2024 Earnings. The company showed strong adjusted EPS growth, but guidance for 2025 indicates flat treatment volume, which could affect investor sentiment and stock prices.

Date: 14-02-2025

AI Rating: 6

Overview of Financial Performance
DaVita has showcased a strong performance in its fourth-quarter earnings call for 2024. Key points include producing full-year adjusted operating income and adjusted EPS in the top half of their guidance range, with year-over-year growth of 21% and 26%, respectively. Adjusted EPS for Q4 stood at $2.24, contributing to a full-year adjusted EPS of $9.68.

Earnings Per Share (EPS)
The adjusted EPS growth of 26% indicates a positive trajectory for DaVita’s profitability, aligning well with targeted financial performance. The adjusted EPS guidance for 2025 is projected between $10.20 to $11.30, implying an 11% growth year-over-year. This demonstrates solid earnings potential which can positively influence stock prices.

Revenue Performance
Revenue per treatment increased by approximately $1 sequentially, reflecting the typical seasonality and contributing to a 3.7% growth for the full year in 2024. The company anticipates revenue per treatment growth to be between 4.5% to 5.5% in the upcoming year, primarily driven by the inclusion of new oral phosphate binders into the reimbursement bundle.

Challenges Ahead
Despite the strong historical performance, DaVita's management highlighted pressing challenges, particularly a flat volume growth outlook for 2025 compared to growth in 2024. The lost patient admissions due to supply constraints from hurricanes will cause a significant impact in new patient starts and is expected to be a headwind in achieving prior growth targets.

Future Outlook and Cash Flow
Free cash flow for 2025 is projected to be $1 billion to $1.25 billion, slightly lower than prior years. This reduction is attributed to working capital changes. The overall guidance suggests that while the company remains strong in its fundamentals, uncertainties about volume growth may cause concern among investors, potentially influencing stock prices negatively in the short term. In sum, while EPS growth is a positive highlight, the flat treatment volume forecast raises cautious sentiments which could temper overall investor enthusiasm.

Stocks: DVA