DaVita Pricing Spineometer: 4 of 5 Vertebrae

DaVita, a kidney care provider primarily serving the United States, had a positive FY 2024. Revenue rose 5.6% to $12.8 billion, and operating profits rose 30% to $2.1 billion over last year.

A review of DaVita’s 13 February 2025 earnings call and associated financial reports provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

Javier Rodriguez, CEO of DaVita, sent mixed signals about revenue drivers. Is DaVita focused on raising service volumes or raising prices to improve earnings?

His opening statements emphasized volume, noting, “A priority for 2025 will, of course, continue to be an intense focus on volume as we believe in an eventual return to a 2% growth trend, recognizing timing is difficult to predict.”

His response to analysts’ questions, however, points to a focus on revenue quality, that is, pricing. He stated, “I would say for ’25, we remain focused on driving margin. I think there are contracts out there that we just see as unattractive, and we are not going to pursue just for the sake of volume growth and revenue growth. So, I would say ’25 is likely to look like a much slower growth year from a membership standpoint.”

The optimal price for volume growth is different from that for earnings growth. Which price optimization is he after?

Joel Ackerman, CFO of DaVita, hinted at potential price increases in his opening remarks, yet they appear to be slightly below anticipated input-cost inflation.

He stated, “We anticipate 4.5% to 5.5% revenue per treatment growth year over year. Around 40% of this expected growth is the result of new oral phosphate binder reimbursement. The remaining 60% is driven by rate increases, collections improvements, and changes in mix.

On patient care cost per treatment, we anticipate growth of 6% to 7% year over year. Again, oral phosphate binders are a key driver, accounting for approximately 40% of the expected growth year over year.”

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 76,000 employees at DaVita, industry benchmarks would suggest 25 to 125 professionals would manage pricing decisions daily. DaVita has pricing requirements similar to those of many other healthcare businesses. Given the factors below, we recommend the pricing team be positioned at the lower end of this industry benchmark, in the range of 25 to 50.

1. DaVita reports that commercial payors have significantly higher rates than Medicare, Medicaid, and other government-based programs. With commercial payors, DaVita would negotiate the rates for services. Standard price management techniques for providing price guidance to salespeople to guide their negotiations and set price expectations can be used with these customers.
2. DaVita further reports that the more profitable segment of payors, commercial insurers, is in secular decline. Pricing professionals should work with DaVita business strategists to identify a long-term response.
3. DaVita provides a wide array of services and continues to expand its service offerings. Pricing professionals working on new offerings are likely to improve DaVita’s ability to capture prices aligned with their fair share of the value delivered to customers.
4. DaVita reports intense competition from large and medium-sized providers, and specifically names Fresenius Medical Care as its largest competitor. DaVita may benefit from having pricing professionals calibrate price responses to competitive dynamics.
5. DaVita primarily serves patients in the United States but has outlets in other countries, of which Brazil has the highest number of clinics. DaVita may benefit from pricing professionals focused on individual countries, as commercial practices, regulations, and competitive dynamics will vary by geography.
6. The benefits of price management engaged with managing macroeconomic shocks are likely to be minimal.

OBSERVED PRICING CAPABILITY

Research into DaVita’s investment in pricing yielded encouraging results.

1. The size of the price management team, identified as the “Value-Based Care” team at DaVita, was well within industry benchmarks.
2. Within this team, we identified analysts, managers, directors, and vice presidents.
3. The geographical dispersion of this team was well correlated with the customer base of DaVita.
4. Data analysis, including analytics used in negotiating with payers, was managed by the Value-Based Care team.

Given the importance and capability of pricing at DaVita, as indicated by financial reports, management statements, and our pricing team research, we have reached the following conclusion as of January 2026.

DaVita Pricing Spineometer: 4 out of 5 Vertebrae. Gaps in DaVita’s price management capability are suspected to exist but are not observable from public data alone. DaVita’s score reflects conflicting price-management goals and a lag in raising prices relative to input-cost inflation.

DVA (DaVita Inc.) fell from 172 the day prior to their earnings call to 142 one week later. FY 2024 revenue of $12.8 billion with a 16% operating margin and a P/E ratio near 11.

For FY 2024, a 1% improvement in price would yield a 6.1% increase in operating profit, or an estimated $1.4 billion increase in market capitalization, holding all else constant at DaVita.