Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DaVita Inc (DVA, Financial) successfully managed operational challenges during recent hurricanes, ensuring minimal disruption to patient care.
- The company reported adjusted operating income of $535 million and adjusted earnings per share of $2.59 for the third quarter, in line with expectations.
- DaVita Inc (DVA) continues to demonstrate resilience by mitigating volume headwinds with margin expansion and strong cash flow.
- The company is on track to meet its 2024 adjusted operating income guidance of $1.91 billion to $2.01 billion, despite supply chain disruptions.
- DaVita Inc (DVA) is prepared for the inclusion of oral-only drugs into the Medicare bundle, which is expected to improve patient access to important therapies.
Negative Points
- Hurricane-related supply chain disruptions are expected to impact fourth-quarter financial results by approximately $10 million to $20 million.
- Elevated mortality rates continue to challenge treatment volume growth, with expectations of this trend persisting into 2025.
- Interest expenses have increased due to the expiration of previous interest rate caps, impacting earnings per share.
- The company faces ongoing labor cost pressures and higher medical benefits expenses, contributing to increased patient care costs.
- Uncertainty remains regarding the financial impact of the inclusion of phosphate binders in the Medicare bundle, with potential variability in reimbursement and pricing.
Q & A Highlights
Q: How much impact did the hurricanes have on Q3 treatment volumes, and how should we think about Q4 given the greater impact from hurricanes?
A: Joel Ackerman, CFO, mentioned that the hurricanes had about a 10 basis point impact on Q3 treatment volumes, primarily affecting the mistreatment rate. For Q4, the impact is expected to be less significant than in Q3, with less than a 10 basis point effect anticipated.
Q: Can you provide more details on the potential financial impact of the inclusion of phosphate binders in next year's results?
A: Javier Rodriguez, CEO, explained that it's challenging to provide a useful range due to uncertainties in reimbursement rates, product mix, and volume. The transition of oral drugs into the bundle could provide more patient access, but the financial impact will depend on several factors, including government reimbursement and product pricing.
Q: What are the expectations for volume growth for the year and into 2025?
A: Joel Ackerman, CFO, stated that they expect 2024 volume growth to be between 0.5% to 1%. For 2025, the main factor will be mortality rates. The base for next year starts with this year's growth minus a slight headwind from treatment days, with additional considerations for clinic closures and the Baxter PD issue.
Q: How did the true-up with payers go for 2023 during the third quarter, given the volatility in the payer market?
A: Joel Ackerman, CFO, confirmed that they are on track for the year and reaffirmed their negative $50 million guidance for Integrated Kidney Care (IKC). The volatility in the payer market has not significantly impacted them.
Q: What are the drivers behind the increase in G&A expenses in the quarter?
A: Javier Rodriguez, CEO, attributed the increase to investments in IT, reimbursement operations, and efforts to enhance the continuum of care. These investments are aimed at improving revenue per treatment and overall operational efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
