DaVita Amends Credit Agreement, Secures $250M Loan

DaVita Inc. has amended its credit agreement, securing a $250M loan to repay a portion of its outstanding senior secured term loans. The company's financial performance has been strong, with revenue growth and good cash flow management. However, high leverage and negative equity pose financial risks. Analysts rate the stock a Sell with a $145 price target.

DaVita Inc. (NYSE: DVA) has amended its credit agreement, securing a $250M loan to repay a portion of its outstanding senior secured term loans. The company executed a Seventh Amendment to its Credit Agreement on July 17, 2025, which involved a repricing of its senior secured term loan facility and an incremental borrowing of $250 million [1].

The proceeds from this borrowing were used to repay a portion of DaVita’s outstanding senior secured term loans, potentially impacting the company’s financial flexibility and stakeholder interests. The interest margin on the new Tranche B-2 Term Facility is now 175 bps (Term SOFR) or 75 bps (Base Rate), down from 200 bps and 100 bps, respectively, on the prior Tranche B-1. The maturity of the facility has been extended to May 2031, which extends DaVita’s debt maturity profile [1].

The quantitative impact on DaVita’s capital structure indicates that the company’s long-term debt and lease obligations amount to $9.56 billion, with a current portion of long-term debt at $179 million. Total liabilities stand at $15.46 billion, while cash and equivalents are $439 million. Stockholders’ equity is negative at $267 million, indicating a deficit. The updated liquidity and leverage ratios show that net debt is $9.3 billion, debt-to-equity is not meaningful due to negative equity, and net debt/ total assets is approximately 54% [1].

Interest savings from the 25 bps reduction in margin on $9.56 billion of term debt could save DaVita ~$24 million annually in interest expense. The $250M refinancing does not increase net debt but extends maturities and reduces near-term refinancing risk. However, the company’s high leverage and negative equity remain material risks for investors and creditors [1].

Analysts have rated the stock a Sell with a $145 price target. Spark’s Take on DVA Stock indicates that while the company has strong financial performance in terms of revenue growth and cash flow management, high leverage and negative equity pose financial risks. The technical analysis shows mixed signals, and while the P/E ratio suggests fair valuation, the lack of dividend yield may deter income-focused investors [2].

DaVita Inc. operates in the healthcare industry, primarily providing kidney care services, including dialysis treatments. The company focuses on delivering high-quality care to patients with chronic kidney disease and end-stage renal disease. Despite the recent refinancing, analysts' consensus view on DVA is cautious, with a "Hold" rating overall. Among eight analysts covering the stock, one suggests a "Strong Buy," six recommend a "Hold,” and one gives a “Moderate Sell” rating [3].

DaVita is expected to release its Q2 2025 earnings on Tuesday, Aug. 5. Analysts expect DaVita to post adjusted earnings of $2.70 per share, up 4.3% from $2.59 per share reported in the same quarter last year. The company has surpassed Wall Street's bottom-line estimates in three of the past four quarters but has missed the projections on one other occasion [3].

In conclusion, DaVita’s July 2025 debt repricing and $250M incremental term loan reflect proactive capital management, reducing interest costs and extending maturities. However, the company’s high leverage and negative equity remain material risks for investors and creditors. Ongoing monitoring of liquidity, leverage, and interest rate trends is warranted.

References:
[1] https://www.reddit.com/r/PocketQuantResearch/comments/1m2hspq/dva_8k_debt_refinancing_lowers_interest_costs/
[2] https://www.tipranks.com/news/company-announcements/davita-amends-credit-agreement-with-250m-loan
[3] https://www.barchart.com/story/news/33429006/davitas-quarterly-earnings-preview-what-you-need-to-know