DaVita (DVA) Q3 Earnings call transcript Oct 29, 2024
2min read In the third quarter earnings call, DaVita Inc., a leading provider of kidney care services, showcased their operational resilience and strategic navigation through the challenges of Hurricane Helene and Milton. With a focus on maintaining uninterrupted patient care, DaVita demonstrated a remarkable response to the storms, ensuring that care for dialysis patients was not disrupted despite the impact on their supply chain.
Community Impact and Operational Efficiency
Javier Rodriguez, DaVita's CEO, highlighted the company's commitment to patient care and community support during the hurricanes. Despite the disruptions, the company's frontline caregivers ensured that most of their centers were operational within days of the storms, providing care to patients in affected communities. Rodriguez emphasized the importance of DaVita's scaled resources and operating discipline in overcoming these challenges.
Supply Chain Challenges and Future Outlook
The call also addressed the disruption to DaVita's supply chain, specifically the closure of Baxter's North Cove facility, which impacted their access to peritoneal dialysis solutions and saline for in-center hemodialysis. Although the company has been able to secure alternative supplies, they anticipate an impact of approximately $10 million to $20 million in the fourth quarter due to high supply costs and lower productivity from home caregivers. However, they expect to resume new patient starts for peritoneal dialysis in the upcoming months.
Financial Performance and Future Expectations
The call provided insights into DaVita's financial performance, with adjusted operating income at $535 million and adjusted earnings per share at $2.59 for the quarter. The company reaffirmed their adjusted operating income guidance for 2024 and maintained their expectations for full-year treatment volume growth. Looking ahead to 2025, they anticipate a return to adjusted operating income growth more consistent with their historic pre-pandemic guidance, with potential headwinds from mortality, supply chain challenges, and the expiration of interest rate caps.
Analyst Questions and Insights
During the Q&A session, analysts delved into the details of DaVita's performance and future expectations. Andrew Mok of Barclays asked about the impact of hurricanes on treatment volumes and the potential for a significant acceleration in Q4. Rodriguez and Ackerman clarified that the impact on treatment volumes was minimal, with only a 10 basis point increase in mistreatment rate, and that Q4 volumes are expected to be less affected. Mok also sought clarification on the potential financial impact of phosphate binders transitioning into the bundle for 2025, to which Rodriguez and Ackerman provided an overview of the uncertainties surrounding the rule's reimbursement, product mix, and volume impact.
Conclusion
DaVita's third quarter earnings call underscored the company's operational resilience and strategic response to hurricanes and supply chain disruptions. With a focus on patient care and community support, DaVita demonstrated their ability to navigate challenges while maintaining their commitment to quality care. As they look ahead to 2025, the company is poised to address the uncertainties and headwinds, with a focus on returning to pre-pandemic adjusted operating income growth.
