Should You Buy DaVita Stock At This Price?
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DaVita (DVA) stock returned 57.9% over the past twelve months, yet it still trades at 13.3 times earnings, against 21.8 for the median S&P 500 company. That multiple could reflect a sound dialysis business on sale, or a fair price for an operation with little growth left. For the stock to be a bargain, DaVita must generate enough cash to keep paying for buybacks while its clinics treat more patients. How solid is that cash?
DaVita’s Cash Is Holding Up, But Not Growing
DaVita is generating solid but flat cash. The company recorded $1.29 billion in free cash flow over the twelve months to September 2026, matching its total from a year earlier. That figure translates to a 10.6% yield on the company’s market value. U.S. dialysis accounts for most of DaVita’s revenue, bringing in $11.8 billion of its $13.6 billion total in fiscal 2025.
Over those same twelve months, DaVita spent $1.2 billion buying back its own shares, slightly below its free cash flow. Management expects full-year 2026 free cash flow of $1 billion to $1.25 billion on its own measure. That measure runs lower: it put third-quarter free cash flow at $276 million, against $359 million in the company’s filings. This cash matters all the more because DaVita carries $13.4 billion of debt. That debt equals 109.6% of its market value, against 19.4% for the S&P 500 taken as one company.
DaVita Earns Less Than It Did Five Years Ago
DaVita reported net income of $0.92 billion over the twelve months to September 2026, coming in below the $0.965 billion it earned in the twelve months to September 2021. However, the latest year does look a little better than the recent average on revenue growth and operating margin. Revenue grew 6.4% in the latest twelve months, against an average of 6.0% over the last three twelve-month periods. The company’s latest twelve-month operating margin of 15.2% also topped its three-period average operating margin of 14.9%.
Earnings per share still rose to $13.58 from $8.59 over those five years, and the gain came from fewer shares. DaVita cut its diluted share count to 65.5 million in the latest quarter, from 110 million five years earlier.
At the clinic level, DaVita is treating only slightly more patients. Overall treatment volume grew 1.2% in fiscal Q3 2026 from a year earlier. Management said this growth came from a larger patient census, mainly because of improving mortality.
Expanded HD Is DaVita’s Plan For Patient Growth
Management says a dialysis treatment called expanded HD means more patients living longer. The treatment relies on new dialyzers that work with DaVita’s existing dialysis machines. More than 90% of eligible patients in the pilot took it up. Speaking on DaVita’s October 29 call, management said the national rollout would start the following week and reach the vast majority of eligible patients in November.
Management expects no material net impact on adjusted operating income in 2026 or 2027, with the gains from lower mortality and higher volume starting in the second half of 2028. The company’s goal is volume growth of 2% or more by 2029. For 2027, management expects volume growth above 2026’s, along with a drag on revenue per treatment from a lower commercial mix.
What A Buyer At This Price Is Betting On
DaVita’s cash is holding up for now and covered the past twelve months of buybacks, but its clinics are not yet treating many more patients. A purchase at this price therefore looks more like a bet that DaVita fixes slow patient growth with expanded HD than a bet that the market has mispriced a sound business. Any buyer is also counting on the cash holding up, since DaVita’s debt is larger than its market value.
Treatment volume growth is the figure to watch when DaVita next reports, expected in February 2027.
Beyond DVA: A Systematic Way To Invest
Before you decide on DVA, consider a better choice. Since its September 2020 launch, the Trefis High Quality (HQ) Portfolio has returned 105%, ahead of a benchmark that combines the S&P 500, S&P MidCap and Russell 2000, without betting on one stock.
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