DaVita Stock Down Despite Q2 Earnings Beat, Gross Margin Expands

DaVita Inc. DVA delivered adjusted earnings per share (EPS) of $2.95 in the second quarter of 2025, up 13.9% year over year. The figure surpassed the Zacks Consensus Estimate by 9.3%.

GAAP EPS for the quarter was $2.58, reflecting an uptick of 3.2% year over year.

DaVita’s Revenues in Detail

Revenues of $3.38 billion in the second quarter increased 6.1% year over year. The figure topped the Zacks Consensus Estimate by 1.3%.

Revenue per treatment in the second quarter of 2025 was $404.6 million, up 3.7% year over year and 1.1% sequentially. Per management, this was primarily driven by normal seasonal improvements, including patients meeting their co-insurance and deductibles. This was partially offset by decreased volume of phosphate binders.

Shares of this company plunged nearly 10.1% till last trading.

DVA’s Segment Details

DaVita generates revenues via two sources — Dialysis patient service revenues and Other revenues.

The dialysis patient service revenues were $3.21 billion, up 4.8% year over year.

Other revenues were $172.7 million, up 37.4% from the year-ago quarter’s figure.

Per management, the total U.S. dialysis treatments for the second quarter were 7,186,217 or 92,131 per day, on average. This represents a per-day increase of 0.4% on a sequential basis. Normalized non-acquired treatment declined 0.8% year over year in the second quarter of 2025.

As of June 30, 2025, DaVita provided dialysis services to around 283,100 patients at 3,175 outpatient dialysis centers, of which 2,662 were U.S. centers while 513 were located across 13 other countries.

During the second quarter of 2025, the company acquired one, opened three and closed two dialysis centers in the United States. It also opened six and closed five dialysis centers outside the United States in the same period.

As of June 30, 2025, DaVita had approximately 64,400 patients in risk-based integrated care arrangements in its Integrated Kidney Care business, representing $5.3 billion in annualized medical spend. The company also had an additional 9,300 patients in other integrated care arrangements.

DaVita Inc. Price, Consensus and EPS Surprise

DaVita Inc. price-consensus-eps-surprise-chart | DaVita Inc. Quote

DaVita’s Margin Details

In the quarter under review, DaVita’s gross profit increased 7% year over year to $1.12 billion. The gross margin expanded 31 basis points (bps) to 33.1%.

General & administrative expenses climbed 12.2% year over year to $412.8 million.

Adjusted operating profit totaled $705.2 million, reflecting a 4.2% increase from the prior-year quarter’s level. Adjusted operating margin in the second quarter contracted 36 bps to 20.9%.

DVA’s Financial Position

DaVita exited second-quarter 2025 with cash and cash equivalents and short-term investments of $739.4 million compared with $511.9 million at the first-quarter end. Total debt (including the current portion) at the end of second-quarter 2025 was $10.26 billion compared with $9.74 billion at the first-quarter end.

Cumulative net cash provided by operating activities at the end of second-quarter 2025 was $504.2 million compared with $664 million a year ago.
During the three months ended June 30, 2025, DVA repurchased 3.1 million shares for $446 million.

DaVita’s Guidance

DaVita has reiterated its adjusted EPS outlook for 2025.

Adjusted EPS for the full year is continued to be projected in the range of $10.20-$11.30. The Zacks Consensus Estimate currently stands at $10.76.

Our Take on DVA

DaVita ended the second quarter of 2025 with better-than-expected results. The uptick in the company’s top and bottom lines and revenue per treatment was encouraging. The per-day increase in total U.S. dialysis treatments for the second quarter on a sequential basis and solid revenues from both sources were encouraging. The opening and acquiring of dialysis centers within the United States and acquiring centers overseas were promising. The gross margin expansion bodes well for the stock.

However, the year-over-year decline in normalized non-acquired treatment was disappointing. The contraction of the adjusted operating margin does not bode well for the stock.

DaVita’s Zacks Rank and Key Picks

DVA currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are GE HealthCare Technologies Inc. GEHC, West Pharmaceutical Services, Inc. WST and Boston Scientific Corporation BSX.

GE HealthCare, sporting a Zacks Rank #1 (Strong Buy), reported second-quarter 2025 adjusted EPS of $1.06, beating the Zacks Consensus Estimate by 16.5%. Revenues of $5.01 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

GE HealthCare has a long-term estimated growth rate of 5.8%. GEHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.5%.

West Pharmaceutical reported second-quarter 2025 adjusted EPS of $1.84, beating the Zacks Consensus Estimate by 21.9%. Revenues of $766.5 million surpassed the Zacks Consensus Estimate by 5.4%. It currently flaunts a Zacks Rank #1.

West Pharmaceutical has a long-term estimated growth rate of 8.4%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.

Boston Scientific reported second-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $5.06 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2 (Buy).

Boston Scientific has a long-term estimated growth rate of 14%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.1%.

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

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