DaVita Faces Stock Drop Amid Rising Costs and Weaker Outlook

DaVita, a prominent dialysis service provider, saw a sharp decline in its stock price last Friday, with shares falling over 12%. This significant drop came after the company issued a weaker-than-expected financial forecast and revealed rising costs related to patient care.

The Colorado-based company projected that its adjusted earnings per share for 2025 would range from $10.20 to $11.30, below the analyst consensus estimate of $11.24 per share. The disappointing forecast is attributed to increasing operational expenses, including the closure of several dialysis centers and higher health benefit costs. In the fourth quarter, DaVita also recorded $24.2 million in charges tied to the closure of U.S.-based centers.

Despite this gloomy outlook, DaVita exceeded analysts’ earnings expectations for the fourth quarter, posting adjusted earnings of $2.24 per share, surpassing the anticipated $2.13 per share.

In a separate development, Berkshire Hathaway, DaVita’s largest institutional shareholder, reduced its stake in the company. A regulatory filing revealed that Berkshire sold 203,091 shares on Tuesday, lowering its ownership stake to 45%, which is valued at approximately $6.4 billion. This sale was part of a prearranged share repurchase agreement between the two companies, which started in April and involves DaVita repurchasing shares from Berkshire on a quarterly basis to gradually reduce its stake.

Berkshire Hathaway, led by Warren Buffett, initially invested in DaVita in 2011, and as of September, DaVita was one of the conglomerate’s top ten largest equity holdings. Although the sale reduces Berkshire’s stake, the ongoing relationship between the two companies remains a key element of DaVita’s corporate strategy.

With rising operational costs and a challenging healthcare environment, DaVita will need to navigate these hurdles while staying competitive in the dialysis service market.

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