DVA · Q3 2025 Earnings

Cautious

DaVita

Reported October 29, 2025

30-second summary

Revenue grew 4.8% YoY to $3.42B with adjusted EPS of $2.51, and management called the quarter "in line with expectations" — yet the FY2025 adjusted EPS range was narrowed to $10.35–$11.15 from $10.20–$11.30 (midpoint down $0.05) and adjusted OI midpoint cut $25M to $2,035–$2,135M. Underlying volumes deteriorated further (normalized NAG -0.6%, mistreatment rates still elevated vs Q3 2024), and Q3 OI ran ~$50M below sell-side expectations on day-mix and lingering cyber-related mistreatments. Q4 needs a ~60bps day-mix tailwind (~$15M) plus continued cost discipline to clear even the lowered midpoint.

Headline numbers

EPS

Q3 FY2025

$2.51

Revenue

Q3 FY2025

$3.42B

+4.8% YoY

Free cash flow

Q3 FY2025

$0.60B

Operating margin

Q3 FY2025

14.8%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$3.42B	+4.8%	$3.38B	+1.2%
EPS	$2.51	—	$2.95	-14.9%
Operating margin	14.8%	—	15.9%	-110bps
Free cash flow	$0.60B	—	$0.16B	+284.7%

Guidance

DaVita narrowed FY2025 EPS and operating income guidance while reaffirming free cash flow, reflecting a modest downward adjustment to profitability despite Q3 tracking in-line with expectations.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted Diluted EPS (non-GAAP)	FY2025	$10.20 to $11.30	$10.35 to $11.15	Low-end +$0.15, high-end -$0.15; midpoint -$0.05	Lowered
Adjusted Operating Income	FY2025	$2,010 million to $2,160 million	$2,035 million to $2,135 million	Low-end +$25M, high-end -$25M; midpoint -$25M	Lowered

Reaffirmed unchanged this quarter: Free Cash Flow ($1,000 million to $1,250 million)

Segment KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
U.S. Dialysis	$2.98B	+2.3%
International	$0.352B	+8.3%
Integrated Kidney Care (IKC)	$0.094B	-38.2%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025
Average Treatments per Day	91,680
Normalized Non-Acquired Treatment Growth YoY	-0.6%
Revenue per Treatment	$410.59
Patient Care Cost per Treatment	$273.54
Risk-Based Integrated Care Patients	64,900
Annualized Risk-Based Medical Spend	$5.5 billion
Operating Margin	14.8%
Leverage Ratio	3.37x

Management tone

Q1 cyber shock → Q2 defensive recalibration → Q3 quiet downward narrowing.

Three quarters ago the cyber incident was framed as a discrete one-time event; last quarter the framing shifted to "mistreatments persisted longer than expected and we're assuming flat vs 2024 in H2"; this quarter management quantified the cumulative discrete-event drag at 75–100bps of 2025 volume and effectively conceded the original FY EPS high end was unreachable. The verbatim posture remained confident — "our third quarter performance was in line with our expectations and keeps us on track to achieve our full-year guidance" — but the guide midpoint moved down $0.05 anyway. The mismatch between "on track" rhetoric and a midpoint cut is the tone shift: management is no longer willing to defend the upper bound but doesn't want to characterize the quarter as a miss.

The 2026 framing was new and more candid than prior quarters. In Q2 management said volume initiatives would take "years not quarters"; in Q3 they gave Barclays a concrete starting-point math — a 50–75bps structural improvement from 2025 normalization, offset by a ~10bps day-mix headwind, implying a 2026 NAG starting point of -25 to -50bps. That is a notable departure: management rarely pre-frames forward-year volumes this explicitly, and the implied 2026 NAG remains negative.

The revenue-cycle and technology lever was reframed downward. In Q2 the narrative was "new wave of clinical innovation"; this quarter management told TD Cowen to expect 10–20bps of annual ROPS improvement going forward (vs. larger historical gains), explicitly acknowledging diminishing returns. The $120M-per-1%-collections framing is useful sizing but the message is that the easier wins have been harvested.

Q&A highlights

Kevin Fishbeck · Bank of America

What would volume growth look like in 2025 excluding the three discrete headwinds (hurricane, cyber incident, flu)? What color can you provide on mortality improvement efforts?

Management estimated the three items created a 75-100 basis point headwind on 2025 volumes from both census and mistreatment rate. Mortality improvement is a long-term study involving protocol reviews on time on therapy, fluid management, GLP-1s, and other medications. Mid-molecule clearance efforts will take time to show results.

75-100 basis point volume headwind from discrete 2025 itemsHeadwind comprised of census and mistreatment rate impactsMortality improvement is multi-year initiative involving clinical protocols

Andrew Mock · Barclays

How should we model 2026 volume growth starting point, considering the 75-100 bps discrete items? Will technology and infrastructure investments impact treatment growth?

Management indicated that adjusting for discrete items would suggest a 50-75 basis point structural improvement in 2026 growth relative to 2025, implying a starting point for 2026 of negative 25-50 bps when accounting for day mix headwinds. Technology investments are not expected to directly impact volume but could indirectly through hospitalization risk stratification and revenue operations improvements.

50-75 basis point structural improvement expected in 2026 vs 2025 growthImplied 2026 starting point of negative 25-50 bps volume growthDay mix creates additional 10 basis point headwind in 2026 vs 2025Technology investments focused on cost and collection improvements, not direct volume impact

AJ Rice · UBS

Why is Q3 operating income $50M below consensus? What was the specific earnings impact from the cyber incident in Q3?

Management explained the Q3 miss through day mix headwinds and detailed Q4 expectations. The cyber incident's Q3 impact was primarily volume-related (mistreatment rate), with cost impacts being non-GAAP adjustments in prior quarter. Mozart charge was non-operating, eliminating future P&L drag.

Q3 had 60 basis point day mix headwind year-over-yearQ4 expected to have 60 basis point day mix tailwind worth ~$15MCyber incident Q3 impact primarily on mistreatment rate/volumeMozart charge eliminates significant future P&L drag, recognized in other income not operating income

Peter Chickering · Deutsche Bank

What are new patient starts and mortality trends in Q3? Any impact from IOTA bundled transplant system? What drives the wide implied Q4 guidance range?

No material new trends in admissions or mortality; mistreatment rate running higher than Q3 2024 despite coming down from Q2 peaks. IOTA has had no impact. Q4 guidance range widest driven by RPT and IKC timing variability, with expected volume growth of 20-30 bps from day mix tailwind.

Mistreatment rate elevated vs Q3 2024 despite improvement from Q2 peaksAdmissions within normal post-COVID bandsMortality down from Q1 but primarily flu-driven, no concerning trendQ4 expected volume growth: 20-30 basis points year-over-year

Ryan Langston · TD Cowen

What is commercial treatment mix percentage and sequential change? Where are revenue cycle improvements in their lifecycle?

Commercial mix is just below 11%, down 15 basis points sequentially from Q2 to Q3. Revenue cycle improvements are continuous rather than discrete projects; management expects ongoing modest gains of 10-20 basis points annually worth approximately $120M in operating income per 1% improvement. Cyber incident slowed momentum but investments in AI and automation continue.

Commercial treatment mix: just below 11% in Q3Sequential decline: 15 basis points from Q2 to Q31% improvement in ROPS collections = ~$120M operating incomeExpected ongoing revenue cycle improvements: 10-20 basis points annually

Answers to last quarter's watch list

Mistreatment rate trajectory in Q3 — Elevated vs Q3 2024 despite coming down from Q2 peaks. The H1 ~50bps YoY increase did not fully narrow, which is part of why the FY OI midpoint was cut $25M. Cyber-related drag persists longer than the Q2 "behind us on admits" framing suggested.

Resolved negatively

RPT ex-binders progression — Q3 RPT printed $410.59, a clean $6 step-up from Q2's $404.58 and above the ~$408 trigger that would have signaled further pressure. RPT is the bright spot in the print.

Resolved positively

IKC underlying trend ex-pull-forward — Q3 IKC revenue collapsed to $94M (-38.2% YoY) as the $40M Q2 timing benefit unwound. The run-rate is well below where it tracked pre-pull-forward; management did not explicitly retable the FY ~-$20M OI guide for IKC, so directional read is negative but unresolved on the specific OI number.

Continue monitoring

Cost-per-treatment durability — Patient care costs/treatment rose to $273.54 from $268.36 in Q2, a meaningful step-up. The cost cushion that funded Q2's maintained OI guide has narrowed, contributing to the $25M FY OI midpoint cut.

Resolved negatively

GLP-1 admit impact — Management told Bank of America that GLP-1s remain part of the multi-year mortality-improvement program with no near-term volume impact called out.

Continue monitoring

What to watch into next quarter

Does Q4 deliver the ~$15M day-mix tailwind and clear the lowered $10.35–$11.15 EPS range — management explicitly sized the Q4 60bps day-mix tailwind; missing on this becomes a second straight quiet cut.

2026 NAG starting point in the formal FY2026 guide — management telegraphed -25 to -50bps; an initial 2026 guide below that range would confirm the structural volume problem is worse than discrete-event math suggests.

Patient care cost per treatment trajectory — $273.54 in Q3 vs $268.36 in Q2 is a $5+ jump. A continued climb above $275 in Q4 would erode the cost lever that has propped up FY OI for two consecutive quarters.

IKC Q4 revenue run-rate and FY OI outcome — Q3 at $94M is the new clean base; watch whether FY IKC OI lands near the ~-$20M guide or worse, given the Q3 reset.

Commercial mix in Q4 — already just below 11% and down 15bps QoQ; further mix deterioration into year-end open-enrollment would frame 2026 RPT headwinds well before the formal guide.

Sources

DaVita Inc. Q3 2025 Earnings Press Release (SEC Form 8-K Exhibit 99.1), filed 2025-10-29.
DaVita Inc. Q3 2025 Earnings Call Q&A transcript.

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