U.S. dialysis treatments decreased by 3.3% sequentially to 7,040,519 in Q1 2025 from 7,278,605 in Q4 2024, and by 1.6% year-over-year from 7,151,512 in Q1 2024. This decline was primarily driven by a decrease in treatment days, increased missed treatments due to storms and seasonal flu, and elevated patient mortality rates.

International revenues increased by 17.1% sequentially to $302 million in Q1 2025 from $258 million in Q4 2024, and by 37.9% year-over-year from $219 million in Q1 2024. This growth was primarily due to acquired and non-acquired treatment growth, as well as average reimbursement rate increases in certain countries.

U.S. IKC operating income shifted to a loss of $29 million in Q1 2025 from an income of $30 million in Q4 2024, and an increased loss from $21 million in Q1 2024. This decline was primarily due to a net decrease in shared savings, despite an increase in revenues from special needs plans.

The significant increase in cash flow from operating activities in Q1 2025 (to $180.0 million from a cash use of $134.8 million in Q1 2024) was largely due to increased collections, which were adversely impacted in Q1 2024 by the Change Healthcare cybersecurity breach. Management's efforts to restore functions and prioritize dialysis care appear effective in this regard.

U.S. dialysis patient care costs per treatment increased by 6.5% year-over-year to $271.77 in Q1 2025 from $255.13 in Q1 2024. This rise is attributed to increased pharmaceutical costs (including phosphate binders) and higher compensation expenses, indicating ongoing cost pressures.

Corporate administrative support expenses increased by 17.2% sequentially to $34 million in Q1 2025 from $29 million in Q4 2024, and by 13.3% year-over-year from $30 million in Q1 2024. This increase was primarily driven by higher long-term incentive compensation expense and professional fees.

The Company experienced a ransomware incident on April 12, 2025, leading to network disruption and data exfiltration, including PII/PHI. While management believes there has been no material adverse impact to date, the investigation is ongoing, the full financial impact is unknown, and insurance coverage is uncertain, creating continued risk.

DaVita remains subject to ongoing investigations from the U.S. Attorney's Office (NJ), California Department of Insurance, DC Office of Attorney General (antitrust), and the Federal Trade Commission (FTC) regarding various aspects of its business, including joint ventures, physician agreements, and restrictive covenants. The Company disputes allegations but acknowledges potential material adverse effects.

The filing highlights continued elevated mortality rates in the patient population due to severe flu season and infectious diseases, negatively impacting treatment volumes. Additionally, inflationary conditions and a challenging healthcare labor market continue to drive increased staffing and labor costs, posing ongoing operational and financial challenges.

U.S. dialysis average patient service revenue per treatment increased by 1.1% sequentially to $400.14 in Q1 2025 from $395.87 in Q4 2024, and by 4.1% year-over-year from $384.54 in Q1 2024. This was driven by the incorporation of phosphate binders into the ESRD PPS bundle, Medicare base rate increases, and favorable changes in mix.

The Company acknowledges the concentration of profits from higher-paying commercial payor plans, which face 'continued downward pressure on average realized payment rates.' This indicates a structural challenge to pricing power in a key revenue segment.

Management's forward-looking statements identify the 'potential impact of new or potential entrants in the dialysis and pre-dialysis marketplace' and the 'potential impact of innovative technologies, drugs, or other treatments' as ongoing competitive threats to the industry.

U.S. dialysis patient care costs per treatment increased by 6.5% year-over-year to $271.77 in Q1 2025 from $255.13 in Q1 2024. This was primarily due to increases in pharmaceutical costs (including phosphate binders), compensation expenses (wage rates), and medical supplies.

Total U.S. dialysis treatments decreased by 1.6% year-over-year and 3.3% sequentially, impacting the fixed cost leverage. The decline was attributed to fewer treatment days, increased missed treatments due to flu and storms, and higher patient mortality, which directly affects operational throughput.

U.S. dialysis general and administrative expenses decreased by 10.4% sequentially to $283 million in Q1 2025 from $316 million in Q4 2024. This was primarily due to decreases in professional fees, contract salaries, and advocacy costs, partially offsetting increased compensation expenses.

U.S. dialysis general and administrative expenses increased year-over-year due to 'increased IT-related expenses,' indicating continued investment in technology. Depreciation related to corporate IT projects also decreased, suggesting a shift in investment focus or lifecycle.

The ransomware incident on April 12, 2025, which led to the proactive disconnection of network parts and data exfiltration, underscores the critical importance and inherent risks associated with the Company's technological infrastructure and digital transformation efforts.

The Company continues to implement strategies related to Integrated Kidney Care (IKC) and Value-Based Care (VBC) initiatives, which inherently rely on technological capabilities for data management, patient outcomes tracking, and risk-based arrangements. This indicates ongoing strategic investment in healthcare technology.

DaVita repurchased 3,660 thousand shares for $550.2 million in Q1 2025, a significant increase from 2,119 thousand shares for $240.1 million in Q1 2024. As of May 12, 2025, $1.133 billion remained available under the $2.0 billion authorization, indicating a strong commitment to returning capital to shareholders.

Total debt principal outstanding increased to $9.80 billion in Q1 2025 from $9.51 billion in Q4 2024. Debt expense rose by 36.4% year-over-year to $135.1 million in Q1 2025, driven by an increase in the weighted average effective interest rate (5.60% in Q1 2025 vs. 4.51% in Q1 2024) due to the expiration of lower-rate interest rate caps and new senior notes.

Development capital expenditures, aimed at expanding productive capacity, increased by 33.3% year-over-year to $48 million in Q1 2025 from $36 million in Q1 2024. This indicates continued investment in new U.S. and international dialysis centers, expansions, and hospital operations.

The filing mentions that increases in 'contributions to charitable organizations' were a driver for the increase in U.S. dialysis patient care costs in Q1 2025 compared to Q4 2024 and Q1 2024. This indicates a commitment to social responsibility.

The Company's forward-looking statements explicitly list 'our goals and disclosures related to environmental, social and governance (ESG) matters, including, among other things, evolving regulatory requirements affecting ESG standards, measurements and reporting requirements' as a risk factor. This highlights the ongoing focus and potential challenges in this area.

The Company noted 'increased union organizing activities' with petitions filed in 9 clinics in California, some subject to legal challenges. This indicates potential social and labor relations challenges that could impact operational stability and costs.

The Company states that 'global economic conditions and political and regulatory developments, including, among other things, inflationary pressures and new U.S. administration policies have increased, and may continue to increase, our expenses, including, among others, staffing, labor, and supply costs.' This indicates a challenging cost environment.

Revenue recognition for the Integrated Kidney Care (IKC) business, particularly from government Comprehensive Kidney Care Contracting (CKCC) programs, has 'certain constraints for plan years 2024 and 2025,' leading to delays in recognition. This highlights the impact of the regulatory environment on IKC revenue.

Effective January 1, 2025, phosphate binders were incorporated into the ESRD PPS bundled payment, leading to an increase in U.S. dialysis average patient service revenue per treatment. This regulatory change provides a favorable reimbursement adjustment for a key drug class.