Berkshire Hathaway sells $27.8 million in DaVita shares

Berkshire Hathaway, led by Warren Buffett, disclosed the sale of approximately $27.8 million worth of DaVita Inc. (DVA) shares in a series of transactions between May 22 and May 27, with prices ranging from $137.28 to $140.18 per share; Berkshire's remaining holdings in DaVita are now 33,796,541 shares. This follows DaVita's recent Q1 2025 earnings beat with an adjusted EPS of $2.00 on revenue of $3.22 billion, though TD Cowen maintained a Hold rating while reducing the price target to $157, citing increased flu cases and weather-related impacts.

Analysis

Berkshire Hathaway Inc. has disclosed the sale of DaVita Inc. shares amounting to approximately $27.8 million, executed across multiple transactions between May 22 and May 27, with prices ranging from $137.28 to $140.18 per share. Following these sales, Berkshire Hathaway's holdings in the healthcare provider, which has a market capitalization of $10.5 billion and trades at a P/E ratio of 13.5, now stand at 33,796,541 shares. This portfolio adjustment by Berkshire Hathaway occurred as DaVita reported first-quarter 2025 earnings that surpassed analyst expectations, with an adjusted EPS of $2.00 against a forecast of $1.96, and revenue of $3.22 billion, slightly above the projected $3.20 billion. Despite these positive results, TD Cowen maintained a Hold rating on DaVita shares and reduced its price target from $165 to $157, citing increased flu cases and weather-related impacts as factors contributing to underperformance. DaVita also announced an upsized private offering of senior notes due 2033, increasing the aggregate principal from $750 million to $1 billion, with proceeds intended to repay existing revolving credit facility borrowings. Operationally, DaVita faced challenges including a cyber incident and a severe flu season, leading to a downward revision of its full-year volume expectations by 50 basis points, although the company reaffirmed its full-year guidance for EBIT, EPS, and free cash flow.

Key Decisions for Investors

• Investors should monitor Berkshire Hathaway's subsequent filings for any further sales of DaVita stock, as the recent $27.8 million divestment, though a small portion of its overall stake, could signal an evolving perspective from a significant long-term investor.
• Carefully weigh DaVita's better-than-expected Q1 earnings and reaffirmed full-year guidance against the backdrop of lowered volume growth expectations, operational challenges including a cyber incident and flu impacts, and TD Cowen's reduced price target to $157, suggesting a cautious investment stance may be prudent.
• Assess the impact of DaVita's $1 billion upsized senior note offering on its balance sheet leverage and future financing costs, especially considering the company is navigating operational headwinds while maintaining its P/E ratio of 13.5.