DAVITA INC. (DVA): what the price assumes

boothcheck covers DAVITA INC. (DVA) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/DVA

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5.8% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.5%); the inversion above states its own rate.

Per-Model Detail (n=3)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Roughly two-thirds of the revenue line comes from government programs and about 31% from commercial insurance, and the commercial third is where the profit is concentrated.
• Treatments are not growing: the company performed 28.73 million dialysis treatments in 2025 against 29.05 million in 2024, and revenue rose only because the rate per treatment did, from 391.32 dollars to 409.56 dollars.
• Share count is doing the work instead: weighted average basic shares fell to 67.4 million in the first quarter of 2026 from 79.4 million a year earlier, which turned a 21% rise in attributable profit into a 43% rise in earnings per share.

Bull Case

DaVita performed fewer dialysis treatments in 2025 than in 2024 and still reported earnings per share in the first quarter of 2026 that were more than 40% higher than a year before. That is not an accounting trick. It is what happens when a business with stable cash generation retires an enormous quantity of its own stock: weighted average basic shares fell from 79.4 million to 67.4 million over the year, and attributable profit rose from $162.9 million to $197.5 million. The per-share arithmetic does the rest.

Reading the price through the two available lenses gives opposite answers, and the difference is instructive rather than confusing. Measured against what comparable healthcare operators fetch on their earnings and cash flow, today's price sits below where those peer-multiple approaches land. Measured against a capitalization of current cash flow with no growth credited, the price stands more than four times what those earnings-power approaches reach. The gap is almost entirely debt. Those cash-flow capitalizations subtract about 10 billion dollars of net borrowings from the value before dividing by the shares, and they discount at a required return well above what the company actually pays on that borrowing. Whether that is conservatism or distortion depends entirely on whether you think the borrowing is safe.

The evidence says it largely is. Operating income covered the debt expense line more than three times over in 2025, and in the first quarter of 2026 income from operations of 482 million dollars carried a debt cost of 145 million dollars. This is a business with 3,262 outpatient centers serving about 296,300 patients, of which 2,666 are in the United States and 596 across 14 other countries. Demand is set by kidney failure, not by consumer preference, and the treatment is not optional. Payment comes from Medicare on a formula and from commercial insurers on a contract.

Pricing power is real even where volume is not. Revenue per treatment rose from $400.14 in the first quarter of 2025 to $417.59 in the first quarter of 2026, while patient care costs per treatment rose from $271.77 to $280.11. The spread widened by roughly nine dollars a treatment across close to 92,000 treatments a day. Operating income moved from 13.6% of revenue to 14.1% on that alone, and management raised its 2026 profit and earnings guidance ranges alongside the quarter.

There is also a second business quietly compounding. Integrated kidney care arrangements covered about 62,600 patients in risk-based contracts representing roughly $5.4 billion of annualized medical spend as of March 2026, with another 6,300 patients in other arrangements. Taking risk on the total cost of care for a population you already treat three times a week is a different business from billing per session, and it is the one place where the company's clinical data advantage converts into economics that dialysis reimbursement does not cap.

Bear Case

The defensible thing about this business was never the dialysis chair. It was the payer mix: a commercial minority paying multiples of the government rate, subsidizing the majority who do not. That subsidy is now under identifiable, dated pressure, and the company says so itself. Its own filing warns of the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates and of a reduction in the number or percentage of our patients under commercial plans. It then names the specific mechanism: the decision to let those enhanced premium tax credits expire at the end of 2025 may ultimately decrease the number of patients with access to health insurance. Patients who lose exchange coverage do not stop needing dialysis. They move onto government programs, at government rates.

Underneath the payer question the volume line has already turned. Dialysis treatments fell to 28,733,980 in 2025 from 29,046,346 in 2024, average treatments per day fell to 91,802 from 92,534, and normalized non-acquired treatment growth was negative 0.8% for the year. The company attributes the decline to higher mortality and missed treatments during a severe flu season, which is plausible for one year and unhelpful as a growth thesis. All of the 3.5% revenue increase in the U.S. dialysis business came from price, and part of that price increase came from phosphate binders being folded into the Medicare bundle, which brings the cost of the drugs along with the revenue.

So the growth in reported earnings per share is not operating growth. It is financial engineering of a defensible but finite kind. The company repurchased 3.0 million shares for $403 million during the first quarter of 2026 at an average of $133.70, and another 2.0 million for $302 million through May 5 at an average of $149.81. Meanwhile cash generation went the other way: operating cash flow for the twelve months to March 2026 was $2,027 million against $2,337 million a year earlier, and free cash flow $1,209 million against $1,444 million. Buying back stock at a falling cash-flow run rate with borrowed money works until the lenders reprice.

The balance sheet is the constraint that makes this matter. Net borrowings run near five times operating profit against a business whose volumes are flat and whose largest customer sets its own prices by regulation. Book equity has been consumed by the repurchases, which is why the asset-based valuation approaches produce nothing usable here at all: there is no meaningful equity base left to anchor them. When the only frames that value this company are ones built on current earnings and peer comparisons, a downgrade to either input moves the price directly.

Finally, the competitive picture is not static. The filing lists new entrants in the dialysis and pre-dialysis marketplace and innovative technologies, drugs, or other treatments among its named risks, alongside elevated labor costs and continued competition from other dialysis providers. Any therapy that slows progression to kidney failure removes patients from the top of this funnel years before they arrive. That is not a next-quarter risk. It is exactly the kind of slow erosion a business with negative volume growth and heavy leverage is least equipped to absorb.

Valuation

Only two families of method produce a usable reading for this company, and they point in opposite directions. Peer-multiple approaches, which compare what the market pays for comparable healthcare operators per dollar of earnings and cash flow, land above today's price. Earnings-power approaches, which capitalize current cash flow at a required return and credit no growth at all, land far below it, leaving the price standing more than four times where they settle. The asset-based approaches produce nothing at all, because years of buybacks have left too little book equity to anchor them. That absence is itself the most important fact in the section.

The reason those two readings diverge is leverage, and the arithmetic is worth spelling out. Net borrowings sit near five times operating profit. Capitalizing cash flow at a required return of roughly 9% and then subtracting about 10 billion dollars of net debt leaves very little for the equity, while the peer comparison implicitly accepts the debt as part of a normal capital structure for a business with contracted, regulated revenue. Both are defensible. The investor's question is which assumption about the borrowing they want to underwrite.

On the enterprise as a whole the price is undemanding. The market values the whole business at about 14 times trailing operating profit, which is low enough that the price already sits below what a modest annual decline in operating profit would justify at a cost of capital in the low sevens. Against its healthcare peer group the multiple is in the lower half of the range. Read on its own, the priced-in expectation is not a growth bet at all. It is closer to a value-supported one.

Peer comparison is where the operating picture gets its context. Operating margin ran 14.1% of revenue in the first quarter of 2026, which sits above UHS at 11.5%, ENSG at 8.5% and SEM at 5.8%, and below THC at 18.0%. Revenue growth is the weak column: consolidated revenue rose about 3.5% in the U.S. dialysis business last year against UHS at 10.4% and ENSG at 19.2%. This is a profitable operator with an unusually flat top line, and the multiple reflects the second fact more than the first.

Solvency is the closing consideration rather than a footnote. Operating income covered the debt expense line more than three times in 2025, and 482 million dollars of first-quarter operating income carried 145 million dollars of debt cost. Free cash flow over the twelve months to March 2026 was $1,209 million, down from $1,444 million, and management guides 2026 free cash flow to a range of $1.0 billion to $1.25 billion. That cash funds the repurchases that produce the per-share growth. The chain runs from reimbursement rates to cash flow to share count to earnings per share, and it is only as strong as its first link.

Catalysts

First-quarter results, released on May 5, 2026, were the strongest print in some time. Consolidated revenue was $3.416 billion, operating income $482 million against $439 million a year earlier, and diluted earnings per share from continuing operations $2.87 against $2.00. Operating cash flow of $321 million compared with $180 million, and free cash flow of $140 million reversed a negative figure in the prior-year quarter. Normalized non-acquired treatment growth came in at positive 0.1% against the first quarter of 2025, the first positive reading after a negative fourth quarter.

Management raised the low end of its full-year 2026 outlook alongside those results, lifting both its operating profit and its per-share earnings guidance ranges while holding free cash flow guidance at $1.0 billion to $1.25 billion. The buyback continued at pace after quarter end, with 2.0 million shares repurchased for $302 million between April 1 and May 5.

Two items sit further out. In February 2026 the company agreed to acquire a noncontrolling minority interest in Elara Caring, a home-based care provider, which extends the integrated-care strategy beyond the dialysis center. And the expiration of the enhanced ACA premium tax credits at the end of 2025 begins showing up in payer mix during 2026 rather than immediately, so the coverage effect is a 2026 and 2027 story rather than a first-quarter one. Second-quarter results are scheduled for August 4, 2026, announced on July 21.

Peer Cohorts (Per Segment, With Filing Citations)

U.S. dialysis (reported)

• FMS (FRESENIUS MEDICAL CARE AG)
• FY2025 20-F: …contribute to patient growth. In the U.S. and other markets in which dialysis is readily available, additional trends are: Trends in the developed markets: ● improvements in treatment quality, which prolong patient life; ● stronger demand for innovative products and therapies; ● advances in medical technology; ●…
• FY2025 20-F: …and a decrease in dialysis days, partially offset by Same Market Treatment Growth. During the year ended December 31, 2025, we acquired 6, opened 27, and combined, closed, or sold 107 dialysis clinics. U.S. In the U.S., revenue remained stable as an increase in organic growth was offset by a negative impact from…
• HCA (HCA Healthcare, Inc.)
• FY2025 10-K: …$28.33 per diluted share, for 2025, compared to $5.760 billion, or $22.00 per diluted share, for 2024. The 2025 and 2024 results include gains on sales of facilities of $37 million, or $0.12 per diluted share, and $14 million, or $0.04 per diluted share, respectively. The 2024 results also include additional expenses…
• FY2025 10-K: …Interest and penalties payable to taxing authorities are included as a component of our provision for income taxes. We have elected to treat taxes incurred on global intangible low-taxed income as a period expense. Although we believe we have properly reported taxable income and paid taxes in accordance with…
• THC (TENET HEALTHCARE CORP)
• FY2025 10-K: …31, 2025. In addition, our Hospital Operations segment provides revenue cycle management and value‑based care services to hospitals, health systems, physician practices, employers and other clients through Conifer Health Solutions, LLC. Our Ambulatory Care segment, through USPI Holding Company, Inc. (together with…
• FY2025 10-K: …Dallas, Texas. Our expansive, nationwide care delivery network consists of our Hospital Operations and Services ("Hospital Operations") and Ambulatory Care segments. As of December 31, 2025, our Hospital Operations segment was comprised of 50 acute care and specialty hospitals, a network of employed physicians and…
• UHS (UNIVERSAL HEALTH SERVICES, INC.)
• FY2025 10-K: …Inc.'s subsidiaries including UHS of Delaware, Inc. Further, the terms "we," "us," "our" or the "Company" in such context similarly refer to the operations of Universal Health Services Inc.'s subsidiaries including UHS of Delaware, Inc. Any reference to employees or employment contained herein refers to employment…
• FY2025 10-K: …renewal option. (17) We own a noncontrolling ownership interest of 30% in the entity that operates this facility that is managed by a third-party. (18) We hold a 51% ownership interest in this facility. The remaining 49% ownership interest is held by unaffiliated third parties. (19) We manage and hold a 51% ownership…
• SEM (SELECT MEDICAL HOLDINGS CORP)
• FY2025 10-K: …involving multiple organ systems. These conditions are often a result of complications related to heart failure, complex infectious disease, respiratory failure and pulmonary disease, complex surgery requiring prolonged recovery, renal disease, neurological events, and trauma. Given their complex medical needs, these…
• FY2025 10-K: …us-gaap:RevolvingCreditFacilityMember sem:SelectCreditAgreementMember srt:MaximumMember us-gaap:LineOfCreditMember 2025-01-01 2025-12-31 0001320414 us-gaap:RevolvingCreditFacilityMember sem:SelectCreditAgreementMember us-gaap:LineOfCreditMember 2025-01-01 2025-12-31 0001320414…
• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: , reviews segment income for each operating segment to evaluate performance and allocate capital resources. For more information about our operating segments, as well as financial information, see Part II., Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 7,…
• FY2025 10-K: MedicaidSkilledMember 2023-01-01 2023-12-31 0001125376 us-gaap:OperatingSegmentsMember ensg:MedicaidAndMedicareMember ensg:SkilledServicesSegmentMember 2023-01-01 2023-12-31 0001125376 ensg:EliminationsAndReconcilingItemsMember ensg:MedicaidAndMedicareMember 2023-01-01 2023-12-31 0001125376…

Other - Ancillary services (reported)

• ALHC (ALIGNMENT HEALTHCARE, INC.)
• FY2025 10-K: …expenses or intercompany loans. The ability of our subsidiaries to generate sufficient cash flow from future operations to allow us and them to make scheduled payments on our obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors,…
• FY2025 10-K: …operate our business depends on the performance of, and continued contracts with, these vendors. The functions performed by our major vendors include, but are not limited to, information technology support, claims processing, pharmaceutical benefit management, supplemental benefits (e.g., our "black card" benefit,…
• OSCR (Oscar Health, Inc.)
• FY2025 10-K: …fees for services performed via the +Oscar platform, revenue sharing from virtual credit card rebates, and sublease income. Medical Medical expense primarily consists of both paid and unpaid medical expenses incurred to provide medical services and products to our members. Medical claims include fee-for-service…
• FY2025 10-K: …with us. In the ordinary course of business, we provide our intellectual property to external third parties through licensing or restricted use agreements. For information on risks associated with our intellectual property rights, see Part I, Item 1A. "Risk Factors-Risks Related to our Business-Failure to secure,…
• CLOV (CLOVER HEALTH INVESTMENTS, CORP. /DE)
• FY2025 10-K: …and/or our inability to sell health insurance plans. These events could significantly increase our operating expenses, result in the loss of carrier relationships and our commission revenue, and otherwise harm our business, results of operations and financial condition. Moreover, an adverse regulatory action in one…
• FY2025 10-K: …proprietary technologies, greater ability to care for their members, greater marketing expertise, or greater financial resources and larger sales forces than we have, which could put us at a competitive disadvantage. Considering these factors, even if our MA plans and technology platform are more effective than those…
• PRVA (Privia Health Group, Inc.)
• FY2025 10-K: …increment of the series and is recognized as revenue in the month in which attributed members are entitled to receive care coordination services. Other Revenue The remainder of the Company's revenue is derived from leveraging the Company's existing base of providers and patients to deliver value-oriented services…
• FY2025 10-K: …we may face allegations that we, our partners or parties indemnified by us have infringed, misappropriated or otherwise violated the patents, trademarks, copyrights or other intellectual property rights of third parties. Such claims may be made by competitors seeking to obtain a competitive advantage or by other…

Patient care costs / U.S. dialysis segment expenses / Other - Ancillary services expenses (2) (reported)

• FMS (FRESENIUS MEDICAL CARE AG)
• FY2025 20-F: …​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment and corporate information in € K ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Care ​ ​ Care Total Inter-segment ​ ​ ​ ​ ​ ​ ​ ​ Delivery ​ ​ ​ Value-Based Care ​ ​ ​ Enablement ​ ​ ​ Segment ​ ​ ​ eliminations ​ ​ ​ Corporate ​ ​ ​ Total 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue from healthcare…
• FY2025 20-F: …31, 2024, Care Enablement recorded operating income as compared to an operating loss for the year ended December 31, 2023, primarily due to a favorable impact from business growth (driven by positive volume and pricing developments which were partially offset by volume-based procurement in China), a favorable impact…
• HCA (HCA Healthcare, Inc.)
• FY2025 10-K: …in licensure or other regulations and recognition of new provider types or payment models could also impact our competitive position. If our competitors are better able to attract patients, make capital expenditures and maintain modern and technologically upgraded facilities and equipment, recruit physicians, expand…
• FY2025 10-K: …receivable or period-to-period comparisons of our revenues. At December 31, 2025 and 2024 , estimated implicit price concessions of $ 7.674 billion and $ 7.773 billion, respectively, had been recorded to adjust our revenues and accounts receivable to the estimated amounts we expect to collect. To quantify the total…
• THC (TENET HEALTHCARE CORP)
• FY2025 10-K: …healthcare consumers are able to access performance data on quality measures and patient satisfaction, as well as pricing information for services, to compare competing providers. In addition, the No Surprises Act requires providers to send to health plans of insured patients and to uninsured patients good faith…
• FY2025 10-K: …in the number of patients using our facilities with either private or public program coverage and a decrease in uninsured and charity care admissions, along with reductions in Medicare and Medicaid reimbursement to healthcare providers, including us. However, we continue to provide uninsured discounts and charity…
• UHS (UNIVERSAL HEALTH SERVICES, INC.)
• FY2025 10-K: …care hospitals to gross charges for those hospitals by the above-mentioned total uncompensated care amounts. The percentage of cost to gross charges is calculated based on the total operating expenses for our acute care facilities divided by gross patient service revenue for those facilities. An increase in the level…
• FY2025 10-K: …care facilities, could result in an abnormally high demand for health care services which may require that resources be diverted from one part of operations to another, or disrupt the supply chain for equipment and supplies necessary for operations. In addition, unaffected individuals may decide to defer elective…
• SGRY (Surgery Partners, Inc.)
• FY2025 10-K: …to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which its obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to…
• FY2025 10-K: …have undertaken initiatives to revise payment methodologies and monitor health care costs. As part of their efforts to contain health care costs, payors increasingly are demanding discounted fee structures or the assumption by health care providers of all or a portion of the financial risk relating to paying for care…
• ARDT (Ardent Health, Inc.)
• FY2025 10-K: …from other providers as a result of reduced costs, lower regulatory barriers, reimbursement incentives, and individuals becoming more comfortable with receiving care in alternative settings, including remote care. We may not be able to timely innovate strategies and technologies to compete or meet changing patient…
• FY2025 10-K: …Private third party payors continue to demand discounted fee structures, and the ongoing trend toward consolidation among payors tends to increase their bargaining power over fee structures. Payors may utilize plan structures such as narrow networks and tiered networks that limit beneficiary provider choices, impose…
• SEM (SELECT MEDICAL HOLDINGS CORP)
• FY2025 10-K: …methods. These programs are monitored quarterly and estimates are revised as necessary to take into account additional information. The Company also records insurance proceeds receivable for liabilities which exceed the Company's deductibles and self-insured retention limits and are recoverable through its insurance…
• FY2025 10-K: …is variable in nature, as we are required to make judgments that impact the transaction price. We determine the transaction price for services provided to patients who are Medicare beneficiaries using Medicare's prospective payment systems and other payment methods. The expected payment is determined by the level of…
• OPCH (OPTION CARE HEALTH, INC.)
• FY2025 10-K: …professional fees. Depreciation and Amortization Expense. Depreciation within this caption relates to property and equipment and amortization relates to intangibles. Depreciation of revenue-generating assets, such as infusion pumps, is included in cost of revenue. Other Income (Expense) Interest Expense, Net .…
• FY2025 10-K: …when the services are rendered. Due to the nature of the healthcare industry and the reimbursement environment in which the Company operates, certain estimates are required to record revenue and accounts receivable at their net realizable values at the time goods or services are provided. Inherent in these estimates…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.