DaVita (DVA) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues reached $3.19 billion, with adjusted operating income of $506 million, adjusted EPS of $2.59, and free cash flow of $654 million, driven by strong U.S. dialysis and international growth, improved RPT, and cost controls.

• Net income attributable to DaVita Inc. was $223 million for Q2 2024, up from $179 million in Q2 2023, with diluted EPS of $2.50.

• RPT growth was fueled by improved collection capabilities and higher rates from health plan negotiations, with 2024 RPT growth now expected at 3.5%-4%.

• Center closure costs of $15 million in Q2 are now included in adjusted results, with $60 million expected for the full year, following SEC guidance.

• The Change Healthcare outage impacted cash collections and increased days sales outstanding, but claims processing has largely resumed.

Financial highlights

• U.S. dialysis revenues for Q2 2024 were $2.84 billion, up 3.1% sequentially and 4.8% year-over-year; international revenues grew 24.9% year-over-year for the first half of 2024.

• Adjusted net income was $230 million, with adjusted diluted EPS of $2.59.

• Free cash flow for Q2 2024 was $654 million; operating cash flow was $799 million.

• The company repurchased 4.77 million shares for $616 million in the first half of 2024, with $543 million remaining under the current repurchase authorization.

• Weighted average effective interest rate on all debt was 4.27% for Q2 2024, with $1.24 billion available on the revolving credit facility.

Outlook and guidance

• 2024 adjusted operating income guidance raised to $1.91–$2.01 billion, with adjusted EPS guidance of $9.25–$10.05 and free cash flow guidance of $950–$1,200 million.

• RPT growth for 2024 now expected at 3.5%-4%, with some annualization into 2025 but not expected to repeat at the same level.

• Center closure costs for 2025 are forecasted at $20–$30 million, with clinic closures expected to return to pre-COVID levels.

• The company plans to continue optimizing its U.S. dialysis center footprint, with elevated closure rates expected for the remainder of 2024.

• Management expects continued cost pressures from labor and supplies, but ongoing cost-saving initiatives are anticipated to help offset these impacts.