DAVITA INC.

DaVita Inc. is a leading healthcare provider focused on transforming care delivery to improve quality of life for patients globally, operating as a comprehensive kidney care provider with a history of more than 25 years ¹ as a leader in clinical quality and innovation. The company cares for patients at every stage and setting along their kidney health journey, from slowing the progression of kidney disease to helping support transplantation, including in home settings, dialysis centers, hospitals, and skilled nursing facilities. The underlying ESKD dialysis patient population grew at an approximate compound annual rate of 1.8% from 2013 to 2023 and 0.2% from 2018 to 2023 as compared to an increase in annual growth of 0.5% from 2022 to 2023 ². Based on the most recent 2025 annual data report from the United States Renal Data System (USRDS), there were over 557,000 ESKD dialysis patients in the U.S. in 2023 ³.

DaVita estimates it has approximately a 36% share of the U.S. dialysis market based upon the number of patients it serves ⁴. The U.S. dialysis industry remains highly competitive and is continuously evolving, with competition from large and medium-sized providers, including its largest competitor Fresenius Medical Care, as well as new entrants, private equity-backed kidney care providers, individual nephrologists, and former medical directors who have opened their own dialysis units or facilities. The company's competitive advantages include its patient-centric care model, its leadership in the Centers for Medicare & Medicaid Services' (CMS) Quality Incentive Program (QIP) for the eleven most recently reported years ⁵, and its leadership under CMS' Five-Star Quality Rating System for the ten most recently reported years ⁶.

DaVita generates revenue primarily through providing dialysis and related lab services to patients suffering from chronic kidney failure, also known as end stage renal disease (ESKD), in the United States, which is its largest line of business. The company's U.S. dialysis revenues represent approximately 86% of its consolidated revenues for the year ended December 31, 2025 ⁷. Revenue is derived from a mix of government-based programs, including Medicare and Medicare Advantage plans, Medicaid and managed Medicaid plans, other government-based programs, and commercial insurance plans, with the payments from commercial payors generating nearly all of its profits and all of its non-hospital dialysis profits coming from commercial payors. The company also generates revenue from its U.S. integrated kidney care (IKC) business, international operations, and other ancillary services, with its IKC business utilizing value-based payment methodologies including two-sided shared savings/shared losses and outcomes-based pay-for-performance compensation arrangements.

DaVita's U.S. dialysis business is a leading provider of kidney dialysis services for patients suffering from ESKD, and as of December 31, 2025, provided dialysis, administrative and related laboratory services to a total of approximately 200,500 patients ⁸ through a network of 2,657 outpatient dialysis centers in 46 states and the District of Columbia ⁹. The company also has contracts to provide hospital inpatient dialysis services to patients in approximately 740 hospitals throughout the U.S. ¹⁰ and operates a separately licensed and highly automated clinical laboratory that specializes in ESKD patient testing. For the year ended December 31, 2025, approximately 89% of total U.S. dialysis patients were covered under some form of government-based program, with approximately 73% covered under Medicare and Medicare Advantage plans ¹¹, and approximately 26% of U.S. dialysis patient service revenues and approximately 11% of U.S. dialysis patients were associated with non-hospital commercial payors ¹². The company's U.S. dialysis revenues by payor source for patient service revenues for the year ended December 31, 2025 were: Medicare and Medicare Advantage plans 57%, Medicaid and managed Medicaid plans 7%, other government-based programs 3%, total government-based programs 68%, and commercial (including hospital dialysis services) 32% ¹³.

DaVita's ancillary services include its U.S. integrated kidney care (IKC) business, which as of December 31, 2025 provided integrated care and disease management services to 66,000 patients in risk-based integrated care arrangements and to an additional 9,400 patients in other integrated care arrangements across the United States ¹⁴. The company's international operations as of December 31, 2025 provided dialysis and administrative services to a total of 585 outpatient dialysis centers located in 14 countries outside of the U.S., serving approximately 94,500 patients ¹⁵. Other ancillary services include DaVita Clinical Research (DCR), a provider-based specialty clinical research organization; MedSleuth, a transplant software business working with transplant centers across the U.S.; and DaVita Venture Group (DVG), which focuses on innovative products, solutions and businesses that improve care for patients with kidney disease and related conditions.

During 2025, DaVita repurchased 12,678,623 shares of its common stock for aggregate consideration of $1,788 million ¹⁶, and had a 14.9% net reduction in its outstanding share count year-over-year ¹⁷. The company entered into a new Term Loan A-2 facility in the aggregate principal amount of $2,000 million ¹⁸ and a revolving line of credit in an aggregate principal amount up to $1,500 million ¹⁹, and entered into a new Term Loan B-2 facility in the aggregate principal amount of $1,878 million ²⁰, with a portion of the proceeds used to pay-off the principal balances outstanding on its Term Loan A-1 and Term Loan B-1. The company also issued an aggregate principal amount of $1,000 million of 6.75% senior notes due 2033 ²¹ and purchased an additional $4,750 million notional amount of forward interest rate caps to shield exposure to significant interest rate increases through 2029 ²². Additionally, the company experienced a cybersecurity incident in April 2025 that impacted its network, resulting in the exfiltration of certain data, including PII and PHI, and disruption to its operations, for which it incurred patient care charges of approximately $1.0 million and general and administrative expenses of approximately $24.2 million during the year ended December 31, 2025 ²³.

For the year ended December 31, 2025, DaVita reported total consolidated revenues of $13,643,069 thousand ²⁴, compared to $12,815,550 thousand ²⁵ in 2024, representing an increase of 6.5% ²⁶. Operating income was $2,043,615 thousand ²⁷ compared to $2,090,483 thousand ²⁸ in 2024, a decrease of 2.2% ²⁹. Net income attributable to DaVita Inc. was $746,803 thousand ³⁰ compared to $936,342 thousand ³¹ in 2024. Diluted net income per share from continuing operations was $9.51 ³² compared to $10.73 ³³ in the prior year. Net cash provided by operating activities was $1,886,500 thousand ³⁴ compared to $2,022,038 thousand ³⁵ in 2024, and free cash flow was $1,024 million ³⁶ compared to $1,162 million ³⁷ in 2024.

DaVita provided specific forward-looking expectations for 2026 in its U.S. dialysis business, including approximately flat treatment volumes due to the net impact of a number of factors, such as mortality levels that remain elevated relative to pre-pandemic periods but assuming a slight improvement in flu impact compared to 2025, and admissions levels consistent with 2025 excluding the impact of the recent cyber incident. The company expects operating income growth resulting from revenue per treatment improvements, primarily driven by rate increases and improvements in collections efforts impacted by the cyber incident, partially offset by the expiration of enhanced premium tax credits for exchange plans. An increase in costs per treatment is expected due to inflationary increases in labor and other costs, partially offset by a continued decline in depreciation and amortization costs as well as a decline in costs associated with the cyber incident. The impact of phosphate binders on operating income is expected to be approximately flat year-over-year. Operating income growth is also expected in the international business and the integrated kidney care business. A decrease in debt expense is expected in 2026 due in part to the financing transactions announced in 2025, and positive other income is expected in 2026 as the result of decreased losses from the investment of Mozarc Medical Holding LLC (Mozarc).

DaVita's growth strategy includes continued expansion of its U.S. integrated kidney care (IKC) business, which provides advanced integrated care management services to health plans and government programs for members/beneficiaries diagnosed with ESKD and CKD. The company has invested substantial resources and expects to continue to invest substantial resources in the Comprehensive Kidney Care Contracting (CKCC) model as part of its overall plan to grow its integrated kidney care business and value-based care initiatives, with CMS having announced it will extend the CKCC program by one year to end on December 31, 2027 ³⁸. The company's IKC business is developing various forms of technology-based, administrative, financial and other collaboration and incentive arrangements with physician partners and other providers in support of its innovative care model.

DaVita's international dialysis operations have continued to grow steadily and expand as a result of acquiring and developing outpatient dialysis centers in various strategic markets. As of December 31, 2025, the company operated 585 outpatient dialysis centers located in 14 countries outside of the U.S. serving approximately 94,500 patients ³⁹, representing a net increase of 76 international dialysis centers primarily from acquisitions ⁴⁰. The company's international operations generated total revenues of approximately 10% of consolidated revenues for 2025 ⁴¹, and the company expects operating income growth in its international business in 2026.

DaVita expects an increase in costs per treatment in its U.S. dialysis business due to inflationary increases in labor and other costs, partially offset by a continued decline in depreciation and amortization costs as well as a decline in costs associated with the cyber incident. The company anticipates that it will continue to experience increases in its operating costs in 2026 that may outpace any net Medicare, commercial or other rate increases that it may receive, which could significantly impact its operating results. In particular, the company expects to continue experiencing increases in operating costs that are subject to inflation, such as labor and supply costs, including increases in maintenance costs, regardless of whether there is a compensating inflation-based increase in Medicare, commercial or other payor payment rates. The company expects to continue to incur capital expenditures and associated depreciation and amortization costs to improve, renovate and maintain its facilities, equipment and information technology.

DaVita expects its 2026 capital expenditures to increase compared to its 2025 capital expenditures driven by continued investment in its international markets and reinvestment in its existing domestic centers ⁴². The company expects to continue to implement certain cost control initiatives to help manage its overall operating costs, including labor productivity, and expects to continue these initiatives in 2026. The company expects that levels of general and administrative expenses will be impacted by continued investment in developing its capabilities and executing on its strategic priorities.

DaVita's capital allocation strategy includes a share repurchase program, with the Board having authorized a share repurchase plan of $2.0 billion as of September 5, 2024 ⁴³, and effective August 21, 2025, the Board increased the authorization under the existing share repurchase plan by $2.0 billion in additional repurchasing authority ⁴⁴. As of February 6, 2026, the company had a total of $1.9 billion, excluding excise taxes, available under the current repurchase authorization for additional share repurchases ⁴⁵. The company has no current plans to pay cash dividends and there are certain limitations on its ability to pay dividends under the terms of its senior secured credit facilities.

DaVita faces structural headwinds including elevated mortality levels in its patient population relative to pre-pandemic periods, which have negatively impacted treatment volume, and the expectation that mortality levels will remain elevated but with a slight improvement in flu impact compared to 2025. The company also faces headwinds from the expiration of enhanced premium tax credits for exchange plans, which is expected to have an adverse impact on the affordability of commercial insurance plans, leading to a smaller percentage of patients covered by such plans and potentially resulting in more patients shifting to Medicare or becoming uninsured. Additionally, the company faces risks from the potential impact of innovative technologies, drugs, or other treatments, such as GLP-1 receptor agonists or SGLT2 inhibitors, which may slow the progression of CKD and reduce demand for dialysis treatments over time.

DaVita faces execution risks including the potential for continued increases in operating costs that may outpace any net Medicare, commercial or other rate increases, particularly labor and supply costs subject to inflation. The company also faces risks related to its ability to successfully implement strategic and operational initiatives in a complex, evolving and highly regulated environment, including with respect to IKC and VBC initiatives and home-based dialysis. The company's business is subject to a complex set of governmental laws, regulations and other requirements, and any failure to adhere to those requirements, or any changes in those requirements or in federal or state legislation or regulations, could have a material adverse effect on its business. The company also faces risks from the cybersecurity incident experienced in April 2025, which adversely impacted its billing and revenue collection cycles, its ability to accept new patients, and its ability to perform certain business functions, and the company continues to incur expenses and experience lost revenue as a result of the incident.

DaVita's business is highly sensitive to the percentage of patients with higher-paying commercial insurance, as the payments received from commercial payors generate nearly all of its profit and all of its non-hospital dialysis profits come from commercial payors ⁴⁶. A substantial portion of U.S. dialysis patient service revenues are generated from patients on commercial plans, and a reduction in the number or percentage of such patients could have a material adverse effect. The company faces significant risks from its participation in government healthcare programs, with approximately 68% of total U.S. dialysis patient service revenues generated from government-based programs for services to approximately 89% of total U.S. patients ⁴⁷, and changes in government payment rates under the Medicare ESRD Prospective Payment System or state Medicaid programs could materially impact results. The company is subject to a complex set of governmental laws, regulations and other requirements, and any failure to adhere to those requirements, or any changes in those requirements, could have a material adverse effect. The company faces risks from its substantial indebtedness, with long-term debt of $10,163,988 thousand ⁴⁸ as of December 31, 2025, and is subject to interest rate risk on its variable rate indebtedness, with an estimated $5.3 million reduction in net income from a hypothetical 100 basis point increase in interest rates ⁴⁹. The company also faces risks from the cybersecurity incident experienced in April 2025, which resulted in the exfiltration of certain data, including PII and PHI, and disruption to its operations, and the company continues to incur expenses and experience lost revenue as a result of the incident ⁵⁰.

Management's message in the 10-K filing emphasizes the company's mission to be the provider, partner and employer of choice, and its focus on transforming care delivery to improve quality of life for patients globally. Key themes include the company's leadership in clinical quality and innovation for more than 25 years ⁵¹, its patient-centric care model that leverages its platform of kidney care services to maximize patient choice, and its commitment to reimagining high quality care as more preventative, better integrated, improved outcomes at the lowest total cost, and personalized at scale. Management highlights the company's continued leadership in CMS' Quality Incentive Program for the eleven most recently reported years ⁵² and under CMS' Five-Star Quality Rating System for the ten most recently reported years ⁵³. Strategic priorities emphasized for the period ahead include growing the integrated kidney care business and value-based care initiatives, expanding international operations, and continuing to invest in home-based dialysis modalities. Management also notes the expectation for approximately flat treatment volumes in the U.S. dialysis business in 2026, operating income growth resulting from revenue per treatment improvements, and a decrease in debt expense due to the financing transactions announced in 2025.