Traders at the New York Stock Exchange witnessed a significant drop in shares of DaVita, a company specializing in dialysis services, on Friday. The stock plummeted over 12% after the company issued a disappointing outlook for the year ahead. DaVita projected its 2025 adjusted profit per share to be in the range of $10.20 to $11.30, falling short of analysts’ average expectation of $11.24 per share.
The weak guidance was attributed to rising patient care costs, including expenses related to center closures and health benefits. In the fourth quarter, DaVita incurred charges of $24.2 million for shutting down dialysis centers in the U.S. However, the company’s fourth-quarter earnings of $2.24 per share on an adjusted basis surpassed analysts’ estimates of $2.13 per share.
In a separate development, Berkshire Hathaway, a major investor in DaVita, sold 203,091 shares as part of a preplanned agreement to reduce its stake in the company to 45%. The transaction, disclosed in a regulatory filing, reduced Berkshire’s ownership position to nearly $6.4 billion. The share repurchase agreement, initiated in April, stipulated that DaVita would buy back shares to decrease Berkshire’s ownership stake to the agreed-upon level on a quarterly basis.
Warren Buffett’s conglomerate first invested in DaVita in 2011, and as of September, it was one of Berkshire’s top 10 equity holdings. The decision to reduce its stake in DaVita reflects Berkshire Hathaway’s strategic realignment of its investment portfolio.
Overall, the market reaction to DaVita’s subdued outlook and Berkshire Hathaway’s share sale underscores the challenges faced by companies in the healthcare sector. Investors will closely monitor how DaVita navigates the evolving landscape of patient care costs and regulatory dynamics in the coming months.
