Here's Why You Should Retain DaVita Stock in Your Portfolio for Now

DaVita Inc. DVA has been gaining from its business model. The optimism, led by a solid fourth-quarter 2025 performance and the overseas growth, is expected to contribute further. However, concerns regarding its dependence on commercial payers persist.

So far this year, this Zacks Rank #3 (Hold) stock has gained 30.7% compared with the industry's 1.1% growth. The S&P 500 Index has declined 3.7% during the period.

The renowned global comprehensive kidney care provider has a market capitalization of $10 billion. The company projects 20.2% growth over the next five years and expects to maintain its strong performance going forward. DaVita’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 1.2%.

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Positive Drivers

Integrated Kidney Care Achieves Profitability Ahead of Schedule: DaVita’s Integrated Kidney Care (“IKC”) platform reached its first full-year profitability in 2025, ahead of its original 2026 target, marking a critical inflection point in its value-based care strategy. The model is demonstrating strong clinical and economic outcomes, including lower hospitalization rates, improved adherence and reduced costs during early dialysis periods.

Management expects an additional $20 million operating income contribution in 2026, reflecting continued scaling. This validates IKC as both a clinical differentiator and a viable long-term earnings driver, with potential to structurally shift DaVita’s revenue mix toward higher-margin, risk-based care models.

Strong EPS Growth Driven by Operating Leverage and Capital Allocation: DaVita expects 33% EPS growth in 2026, well above its long-term target, supported by modest operating income growth, share repurchases, and the removal of Mozarc-related headwinds. Nearly $1.8 billion in buybacks in 2025 reduced share count and lifted EPS, while lower interest expense and disciplined capital allocation further support earnings growth. This underscores the company’s ability to drive shareholder returns even with modest revenue growth.

Clinical Initiatives Positioned to Improve Volume: DaVita is actively deploying targeted clinical initiatives — including increased vaccination rates, GLP-1 adoption, advanced dialysis technologies and home care partnerships — to improve patient outcomes and reduce mortality.

These efforts are expected to support a return to treatment volume growth of 2% or more over time, which is a key long-term objective. Early data suggests a meaningful impact, including reduced hospitalization and mortality risks among vaccinated patients. While the benefits will materialize gradually, these initiatives reinforce DaVita’s integrated care model and provide a pathway to both clinical differentiation and sustainable volume recovery.

Downsides

Persistent Volume Pressure and Flat Treatment Growth: DaVita continues to face structural headwinds in treatment volumes, with U.S. treatments declining 1.1% in 2025 and expected to remain roughly flat in 2026. Elevated mortality rates and missed treatments are key drivers, with management acknowledging that meaningful improvement may take several years to materialize.

While clinical initiatives aim to reverse this trend, the lag between implementation and measurable impact creates near-term growth constraints. Sustained volume stagnation limits revenue expansion and increases reliance on pricing and cost control for earnings growth.

Reimbursement Headwinds From Policy Changes and Payer Dynamics: The expiration of enhanced premium tax credits is expected to create a $40 million revenue headwind in 2026, with additional impacts in subsequent years. While partially offset by cost discipline, an improving payer mix, and efficiency initiatives, this underscores DaVita’s exposure to policy-driven reimbursement changes.

Uncertainty around patient enrollment and payment behavior introduces variability in revenue per treatment. Given the company’s reliance on a complex mix of commercial and government payers, shifts in reimbursement frameworks remain a key risk to both top-line growth and margin stability.

Cost Pressures From Labor, Supplies and Patient Care Expenses: Patient care costs per treatment increased 5.9% year over year, caused by higher labor expenses, supply costs and health benefit costs. Although cost growth is expected to moderate in 2026, inflationary pressures remain a concern, particularly in a labor-intensive business like dialysis care.

The company must continuously offset these pressures through efficiency initiatives and pricing adjustments. Failure to manage cost inflation effectively could compress margins, especially in an environment of limited volume growth.

DaVita Inc. Price

DaVita Inc. price | DaVita Inc. Quote

Estimate Trend

DaVita is witnessing a stable estimate revision trend for 2026. Over the past 30 days, the Zacks Consensus Estimate for earnings per share has remained unchanged at $14.16.

The Zacks Consensus Estimate for the company’s first-quarter 2026 revenues is pegged at $3.3 billion, indicating a 2.4% uptick from the year-ago quarter’s reported number. The consensus mark for earnings is pegged at $2.41 per share, implying a 20.5% year-over-year decline.

Stocks to Consider

Some better-ranked stocks from the same medical industry are Pacific Biosciences of California PACB, Globus Medical GMED and Biodesix BDSX.

Pacific Biosciences of California, currently flaunting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2025 adjusted loss per share of 12 cents, which surpassed the Zacks Consensus Estimate by 36.8%. Revenues of $45 million beat the Zacks Consensus Estimate by 9.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

PACB has an estimated earnings decline rate of 1.9% against the industry’s 11.4% growth. The company beat earnings estimates in each of the trailing four quarters, with the average surprise being 27.7%.

Globus Medical, carrying a Zacks Rank of 1 at present, reported fourth-quarter 2025 adjusted EPS of $1.28, which outpaced the Zacks Consensus Estimate by 20.8%. Revenues of $826 million surpassed the Zacks Consensus Estimate by 4.9%.

GMED has an estimated long-term earnings growth rate of 9.6% compared with the industry’s 14% rise. The company beat earnings estimates in each of the trailing four quarters, with the average surprise being 13.2%.

Biodesix, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2025 adjusted loss per share of 49 cents, which beat the Zacks Consensus Estimate by 53.33%. Revenues of $29 million beat the Zacks Consensus Estimate by 14.1%.

BDSX has an estimated earnings growth rate of 22.5% for 2026 compared with the industry’s 12% rise. The company beat earnings estimates in two of the trailing four quarters, missed in one and met in the other, with the average surprise being 16.64%.

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DaVita Inc. (DVA): Free Stock Analysis Report

Globus Medical, Inc. (GMED): Free Stock Analysis Report

Pacific Biosciences of California, Inc. (PACB): Free Stock Analysis Report

Biodesix, Inc. (BDSX): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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