Buffett's Berkshire Hathaway Reduces Stake in DaVita Amid Earnings Report

Warren Buffett’s Berkshire Hathaway Inc. has reduced its stake in the dialysis provider DaVita Inc. according to a recent filing with the U.S. Securities and Exchange Commission.

What Took Place: On February 11, Berkshire sold 203,091 shares of DaVita, a transaction valued at approximately $35.96 million, based on the stock's closing price at that time. Following this sale, Berkshire now holds around 35.892 million shares in DaVita, which constitutes a 45% ownership stake. This change aligns with their previously established share repurchase agreement.

Berkshire Hathaway has maintained an investment in DaVita since the fourth quarter of 2011.

DaVita's Financial Performance

DaVita recently announced its full-year and fourth-quarter earnings after the market closed on Thursday. For the fiscal year ending December 31, 2024, the company reported consolidated revenues of $12.8 billion, with its fourth-quarter revenue reaching $3.3 billion, surpassing estimates from Benzinga Pro, which predicted $3.27 billion.

The diluted earnings per share for DaVita stood at $3.09 for the quarter and $10.73 for the entire year. Additionally, its adjusted diluted earnings per share were reported at $2.24, exceeding the quarterly estimates of $2.14.

During the fourth quarter, DaVita repurchased 2.3 million shares at an average price of $156.46 each, and for the entire year, it repurchased a total of 9.8 million shares at an average price of $140.06.

Significance of the Share Repurchase Agreement

This share repurchase agreement is vital because it helps maintain Berkshire’s stake at 45%. A prior filing indicated that if Berkshire's ownership exceeds 49.5%, DaVita is obligated to buy back shares immediately. Furthermore, Berkshire has agreed to vote any shares it holds above 40% according to the recommendations of DaVita's board.

The company took action to repurchase its shares so that Berkshire's holdings could return to a 45% stake as of February 11, in anticipation of upcoming events.

Stock Market Reactions

On Thursday, DaVita’s shares increased by 2.94%, reaching a price of $177.06 each. However, in after-hours trading, the shares fell by 6.87% following DaVita’s report of a weaker outlook for 2025. The company projected a full-year earnings per share (EPS) of between $10.20 to $11.30, which was lower than the market expectations set at $11.44.

In contrast, the SPDR S&P 500 ETF Trust saw an increase of 1.06% on the same day. Year-to-date, DaVita’s stock has risen by 18.18%, and it has recorded an increase of 43.47% over the past year.

Market analysts have an average price target for DaVita shares set at $138.33, indicating a ‘sell’ rating, with estimates ranging between $90 and $175. Recent ratings from firms such as Barclays and Truist Securities have suggested a target of $168 per share, which indicates a possible upside of about 1.89% from its current price.

Image via Shutterstock

Berkshire, DaVita, Shares