DaVita (NYSE:DVA) expects stronger dialysis treatment growth and pharmaceutical cost savings to help offset reimbursement pressures in 2027, though Chief Financial Officer Joel Ackerman said changes in patients’ insurance coverage will remain a significant headwind.
Speaking at an investor conference, Ackerman said the company continues to anticipate roughly $70 million in pressure next year from a decline in commercial insurance mix tied to the expiration of enhanced premium tax credits. The conference operator said that would come on top of approximately $40 million absorbed this year.
Ackerman said DaVita’s existing dialysis patients have generally done a better job of maintaining exchange coverage than the company had expected, even after losing enhanced tax credits. The larger effect comes as new patients enter dialysis with a lower commercial insurance mix, delaying the impact on DaVita relative to some other providers, he said.
Most patients who leave the exchanges move to Medicare or Medicare Advantage, although some find other commercial coverage, Ackerman said. The company is watching how many retain exchange coverage or obtain employer-sponsored insurance.
Medicare Payments and Cost Savings
Ackerman said DaVita estimates that the 2027 Medicare dialysis payment increase for large dialysis organizations will be 1.5% to 2% for the full year, rather than the headline 3.5% increase cited for the first quarter. The difference largely reflects uncertainty about how payments associated with drugs leaving the transitional drug add-on payment adjustment, or TDAPA, will evolve.
He said the company expects changes in average sales price and potentially utilization of DefenCath to affect rates after the first quarter. Because DaVita does not have exposure to that product, a decline in the associated reimbursement would be a revenue issue without a corresponding reduction in its costs, Ackerman said.
To help mitigate reimbursement pressure, DaVita sees opportunities to reduce pharmaceutical costs, including through contracting, generic conversion, changes in drug mix and dosing modifications. Ackerman said prescribing decisions remain entirely physician-driven.
“We think the cost savings opportunities on pharma are bigger than normal in 2027,” he said.
Volume Outlook and Dialyzer Rollout
DaVita expects treatment volume growth to be positive this year and improve in 2027, Ackerman said. He cautioned that it was too early to draw conclusions about fourth-quarter trends from October results.
Calendar effects are expected to provide approximately a 50-basis-point improvement in the volume growth comparison next year. After accounting for an estimated 25-basis-point nonrecurring benefit this year from Fresenius clinic closures, DaVita expects a net tailwind of about 25 basis points before other factors, he said.
The company is also accelerating a nationwide rollout of expanded hemodialysis dialyzers after a pilot involving about 10,000 patients. Ackerman said physician enthusiasm, operational readiness and available supply supported the decision.
DaVita does not expect a financial impact from the rollout until the second half of 2028. Ackerman cited the timing of mortality differences observed in the CONVINCE study, while cautioning that results in real-world practice may differ from clinical trials. DaVita has a target of returning to at least 2% volume growth by 2029.
Technology Spending and Other Businesses
Technology spending has grown by more than 20% annually for roughly four years and has been a significant cost headwind, Ackerman said. He expects spending to keep rising next year, but at a slower rate. DaVita has increased investment in artificial intelligence this year, although it has not yet seen returns from that spending, he said.
Ackerman said DaVita’s international business is performing as expected, while its IKC business is having a strong year and is expected to contribute about 2% to operating income growth, compared with the usual 1% the company cites.
A new relationship with Humana covering chronic kidney disease patients will create an economic headwind in the second half of this year and first half of next year, he said, because DaVita generally incurs costs before generating revenue.
On capital allocation, Ackerman said DaVita intends to invest in growth and innovation, maintain leverage within its 3 to 3.5 times target range and preserve liquidity. When suitable investment opportunities are not available, he said, the company generally plans to use free cash flow for share repurchases.
About DaVita (NYSE:DVA)
DaVita Inc is a healthcare provider focused on kidney care. Its core business is operating outpatient dialysis centers that provide treatment and related services to people with chronic kidney failure.
The company also offers home dialysis programs, provides dialysis services to patients in hospitals, and supports kidney care through services such as care coordination and education. DaVita primarily serves patients in the United States and also operates in international markets.
Founded in 1994 as Total Renal Care, the company adopted the name DaVita in 2000.
