DVA · DaVita Inc.

Management Discussion and Analysis

DaVita’s Q1 2026 financial performance reflects continued operational execution, with profitability and cash flow growth outpacing top-line expansion. Revenue increased 6.0% year-over-year to $3.4 billion, but this growth occurred despite a decline in average dialysis treatments per day — a dynamic management attributes to the mix of treatment days. Since dialysis operating revenues and expenses are directly driven by treatment volume, this implies that pricing, payer mix, or service-level adjustments contributed meaningfully to the revenue increase.

Operating income grew 9.8% to $481.9 million, and operating margin expanded to 14.1%. This leverage stems from disciplined cost management: management notes that increases in certain expenses were partially offset by decreases in health benefits expense and pharmaceutical costs. Additionally, productivity improvements have yielded lower-than-expected labor-related costs, and management expects these efficiencies to continue throughout the year.

Net income rose 21.2% to $197.5 million, and diluted EPS increased 43.5% to $2.87. This outsized earnings growth relative to operating income reflects both the operating margin expansion and favorable changes in working capital, as well as an increase in operating results — consistent with management’s observation that the increase in operating cash flow was principally due to changes in working capital and stronger operating performance.

Regarding liquidity, management notes that the increase in days sales outstanding is attributable solely to timing of collections — not deterioration in credit quality or billing practices. This contextualizes the working capital dynamics underlying the cash flow improvement. While future developments related to staffing, labor, supply costs, and broader macroeconomic conditions remain uncertain, management emphasizes that productivity gains have meaningfully moderated cost pressures to date and are expected to persist.