DAVITA INC. (DVA): what the price requires

The current priced-in claim for DAVITA INC. (DVA) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/DVA

Headline

FieldValue
TickerDVA
CompanyDAVITA INC.
Current price$235.12/sh
CompositionPatient service revenues - Medicare and Medicare Advantage 49% / Patient service revenues - Medicaid and Managed Medicaid 6% / Patient service revenues - Other government 9% / Patient service revenues - Commercial 31% / Other revenues - Medicare and Medicare Advantage 4% / Other revenues - Medicaid and Managed Medicaid 0% / Other revenues - Commercial 0% / Other 1% / Eliminations of intersegment revenues -1%

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed8.3%
Operating margin today14.6%
Margin compression implied-6.3pp
Multiple paid14x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration 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 6.1% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~5.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.73σ
cohort percentile (of 112 peers)19
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; earnings-power land below the price.

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.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings4.41x3expensive
Relative0.83x2justifies
Growth—0—

Families that justify the price: Relative Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.9%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$827.510.28xnoFCF base $1.5B, growth 7% (input: historical growth), terminal g 4.0%, WACC 6.9%, 5yr projection
DCF Exit MultipleGrowth$385.040.61xnoExit EV/EBITDA: 8.2x / 10.2x / 12.2x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$262.630.90xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.1x / 18.0x / 20.9x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$243.840.96xnoRev $13.8B, growth 7% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.2x / 1.4x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$128.521.83xnoEPS $10.71, growth 8% (input: historical EPS growth), PEG=2.52 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$155.991.51xnoNormalized EBIT (5y avg op income, one-time charges added back) $1.78B × (1−19%) / WACC 6.9% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$307.450.76xyesEBITDA $2.80B × sector EV/EBITDA 12.0x
FCF YieldEarnings$53.334.41xyesFCF $1492.7M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$31.627.44xyesSBC-adj FCF $1.35B (FCF $1.49B − SBC $0.14B) capitalized at Kₑ
Ben Graham FormulaEarnings$223.711.05xyesEPS $10.71 × (8.5 + 2×8.2%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$502.180.47xnoRevenue $13.84B × sector P/S 2.5x
PEG Fair ValueRelative$131.921.78xnoEPS $10.71 × (PEG 1.5 × growth 8.2% (input: historical EPS growth)) → PE 12.3x
Earnings YieldEarnings$115.782.03xnoEPS $10.71 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$10.0b
Net debt / NOPAT (after-tax)6.29x
Net debt / operating income (pre-tax)5.07x
Share count CAGR (buyback)-9.0%
Burning cashno

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

Bullet Takeaways

DaVita's value engine is buybacks, not growth: revenue rose just 6% to $3.42 billion in Q1 2026, but the share count shrinking about 5% a year drove non-GAAP EPS of $2.87 (23.2% above consensus) and raised full-year adjusted EPS guidance to $13.60 to $15.00.

The valuation methods disagree: the relative-multiple method calls the price fair at about 13 times operating income while the earnings-power method calls it expensive (nearly 4 times no-growth value), and negative book equity from the leveraged-buyback model knocks out the asset-based methods entirely.

The core risk is concentrated and structural: profits depend heavily on higher-paying commercial payors under continued rate pressure, layered on roughly $12.6 billion of net debt against negative equity, so any reimbursement squeeze hits a thin, highly-levered equity hard.

Bull Case

What a standard valuation model misses about DaVita is that the engine of shareholder value is not revenue growth; it is the buyback machine running on top of a sticky, recurring annuity. Dialysis is a non-discretionary, life-sustaining service with a captive patient base, and DaVita is one of two operators that dominate the U.S. market. Revenue grows in the low single digits (Q1 2026 sales rose 6% to $3.42 billion), but the company converts that steady cash into outsized per-share growth by retiring its own stock aggressively, shrinking the share count at roughly 5% a year. That is why the book-value methods simply refuse to run: years of debt-funded repurchases have driven equity negative, and a screen needing positive book value throws the company out even as the per-share economics compound.

The Q1 2026 results show how powerful that combination is. Non-GAAP EPS of $2.87 came in 23.2% above consensus, and management raised full-year guidance, lifting adjusted operating income to a $2.085 to $2.235 billion range and adjusted EPS to $13.60 to $15.00, an increase of roughly a third at the midpoint over the prior year, driven far more by the shrinking share count and operational discipline than by volume. Treatments per normalized day actually rose 40 basis points, and management nudged up its annual volume growth forecast.

The third leg is the durability of the underlying demand. The patient base is renewed by the steady incidence of kidney disease, and the revenue is anchored by a mix of Medicare and Medicare Advantage (about 49% of patient service revenue) and higher-paying commercial plans (about 31%), with reimbursement tied to documented base payment rates [DVA FY2025 10-K, accession 0000927066-26-000012]. The cyberattack that disrupted operations in April 2025 is behind the company, with care having continued uninterrupted and the financial impact largely one-time. At $207.82 (June 27, 2026) the price sits below what even a 5% annual decline in operating profit would warrant, which for a stable, cash-generative, share-shrinking annuity is a low bar to clear.

Bear Case

The most honest way to read DaVita is to weigh which valuation methods say what, because they disagree sharply, and the conservative ones are usually the more reliable read. The relative-multiple method says the price is fair; the earnings-power method says it is expensive, implying the price is nearly four times the value of the business if it never grows again. When a price depends on a sector multiple holding rather than on the company's own cash-generation supporting it, the earnings-power view deserves the heavier weight, and here it warns that the price already leans on a full multiple plus continued buyback-driven EPS growth, not on cheap underlying cash flow.

The structural risk is the payor mix, and it is the single most important sentence in the filing. DaVita explicitly flags the concentration of profits generated by higher-paying commercial plans, for which there is continued downward pressure on average realized payment rates, and ties its profitability to its ability to negotiate and maintain those contracts [DVA FY2025 10-K, accession 0000927066-26-000012]. Commercial patients are a minority of volume but the majority of profit; Medicare reimburses well below commercial rates. Any policy shift that moves patients off commercial plans, or any squeeze on commercial reimbursement, hits the profit pool disproportionately. The revenue recognition itself carries significant estimating risk tied to capturing Medicare's base rate and other factors [DVA FY2025 10-K, accession 0000927066-26-000012].

The leverage compounds it. Net debt of roughly $12.6 billion sits against negative book equity, so the equity is a thin, highly-levered slice on top of a large borrowed base. That structure magnifies every operating wobble: the buyback model that turns 6% revenue growth into 30%-plus EPS growth on the way up works in reverse if commercial reimbursement compresses, volumes soften, or rates raise refinancing costs. The bear case is not that dialysis stops being essential. It is that a low-growth, heavily-levered annuity, with its profit concentrated in a commercial-payor pool under persistent rate pressure, is priced where the more honest, conservative methods say it is already expensive, leaving the EPS growth dependent on buybacks that the balance sheet can only sustain for so long.

Valuation

DaVita is a case of model disagreement, and the disagreement is the analysis. At $207.82 the relative-multiple method says the price is fair (roughly 13 times operating income, in the lower half of the range), while the earnings-power method says it is expensive, implying the price is nearly four times the no-growth value of the business. These are not contradictions so much as different lenses: the price is cheap on current cash multiples and expensive on no-growth earnings power.

The method set is thin because the capital structure breaks most frames. Negative book equity from the leveraged-buyback model knocks out the asset and residual-income methods entirely, and the heavy dilution (the share count shrinking about 5% a year) is itself the value mechanism. What remains is the tension between the multiple view and the earnings-power view, and the conservative earnings-power read is the one to lean on: it says the price already embeds a full multiple and continued buyback-driven EPS growth, not a cash-flow bargain.

The practical synthesis: DaVita is a stable, dominant, recurring-revenue dialysis annuity whose equity value is engineered through leverage and repurchases. The cash generation is real and the demand is durable, which is why the price is supported on a multiple basis. But the profit concentration in commercial payors and the negative-equity, high-leverage structure mean the price has little cushion if reimbursement compresses. The valuation is reasonable if the buyback engine and commercial mix hold, and expensive on the more conservative frame if either gives way.

Catalysts

The most recent catalyst was a Q1 2026 report that beat expectations and lifted guidance. Sales rose 6% to $3.42 billion, and non-GAAP EPS of $2.87 came in 23.2% above consensus, driven by operational discipline and the continued share-count reduction. U.S. dialysis treatment volume declined about 20 basis points versus the prior period, but treatments per normalized day rose 40 basis points, and management raised its annual volume growth forecast to a 25- to 50-basis-point range. DaVita increased its adjusted operating income guidance by about $40 million at the midpoint, to $2.085 to $2.235 billion, with adjusted EPS guidance of $13.60 to $15.00.

The payor and policy environment is the central ongoing catalyst. Because profits are concentrated in higher-paying commercial plans, any change to commercial reimbursement, Medicare Advantage dynamics, or rules affecting how patients are covered moves the profit pool more than volume does. Reimbursement negotiations, base-rate updates, and regulatory developments around dialysis coverage are the items to track, since they bear directly on the spread between commercial and government payment.

The cyberattack from April 2025 is now a resolved item rather than a forward catalyst: dialysis care continued without interruption, major systems were restored quickly, and the financial impact was largely one-time. The forward watch items are the pace of buybacks against the leveraged balance sheet, commercial-payor mix trends, and treatment-volume growth, the three levers that determine whether the engineered EPS growth continues. The next quarterly updates on volume and any reimbursement news are the near-term markers.

Sources: https://www.aol.com/articles/davita-dva-q1-2026-earnings-154442716.html , https://stockstory.org/us/stocks/nyse/dva/news/earnings-call/dva-q1-deep-dive-operational-discipline-and-technology-investments-drive-outperformance , https://www.fool.com/earnings/call-transcripts/2026/05/06/davita-dva-q1-2026-earnings-transcript/ , https://www.tipranks.com/stocks/dva/earnings

Peer Cohorts (Per Segment, With Filing Citations)

U.S. dialysis (reported)

Other - Ancillary services (reported)

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

Methodology Note

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.

View the full interactive DVA report on boothcheck