1-Star Price
INVESTOR
5-Star Price
INVESTOR
Economic Moat
INVESTOR
Capital Allocation
INVESTOR
Narrow-moat DaVita turned in third-quarter results that were significantly lower than expected, and management pulled down key metrics of its 2022 and preliminary 2023 outlook. Considering these weak near-term prospects, we are reducing our fair value estimate by 7% to $108 per share. Despite this reduction, the shares appear moderately undervalued, especially after the big selloff after the earnings release.
DaVita is the largest provider of dialysis services in the United States, boasting market share that eclipses 35% when measured by both patients and clinics. The firm operates over 3,100 facilities worldwide, mostly in the U.S., and treats over 240,000 patients globally each year. Government payers dominate U.S. dialysis reimbursement. DaVita receives approximately 69% of U.S. sales at government (primarily Medicare) reimbursement rates, with the remaining 31% coming from commercial insurers. However, while commercial insurers represented only about 10% of the U.S. patients treated, they represent nearly all of the profits generated by DaVita in the U.S. dialysis business.
