DaVita Inc Stock Plummets as Guidance Misses Expectations and Berkshire Hathaway Reduces Stake

DaVita Inc.'s (DVA) stock price plummeted on Friday, February 14, 2025, as the company reported fourth-quarter and year-end numbers that, though mostly positive, fell short of expectations in a key area. The healthcare company's Q4 earnings per share (EPS) of $2.24 beat analyst estimates of $2.13, and sales of $3.3 billion also surpassed Wall Street's targets. However, the success of the last quarter was overshadowed by relatively weak guidance for 2025. DaVita expects EPS to fall between $10.20 and $11.30, which is below the consensus estimate of $11.24.

The news of Berkshire Hathaway trimming its stake in DaVita also contributed to the stock's decline. The legendary company still owns 45% of DaVita but sold more than 200,000 shares. Although this isn't a massive sale, its timing with a somewhat disappointing earnings report didn't instill confidence in investors. DaVita's stock tumbled 13.5% to lead S&P 500 decliners, as Warren Buffett's Berkshire Hathaway pared its stake in the provider of kidney dialysis.

DaVita's soft guidance for 2025 has raised several key concerns among investors and analysts. The company faces supply constraints and rising patient care costs, which are expected to impact new patient growth and profitability. The company's mortality and mistreatment rates remain elevated, which will continue to impact new patient growth. Additionally, DaVita's guidance for 2025 is below its historical performance, with EPS growth averaging around 26.83% over the past five years. The current guidance suggests a significant slowdown in growth compared to historical trends. The kidney dialysis industry is facing increased competition and regulatory pressures, and DaVita's soft guidance may indicate that the company is not well-positioned to navigate these industry-wide challenges effectively.



Investors should closely monitor DaVita's progress and assess the validity of these concerns as more information becomes available. While the company has faced unique hurdles in recent years, such as the COVID-19 pandemic, it has a strong track record of adapting to changing market conditions and delivering solid financial performance over the long term. As such, investors should remain cautious but not overly pessimistic about DaVita's future prospects.