DaVita

# DaVita **DaVita** is one of the largest providers of kidney dialysis services in the United States. Berkshire began investing in DaVita in 2012, and it has become a significant holding. ## The Investment Berkshire began accumulating DaVita shares in 2012. By 2024, we owned approximately 38% of the company. The investment reflects our confidence in the business and its management. > "DaVita operates in a growing market with a strong competitive position." The investment thesis for DaVita rests on demographic trends, the company's market position, and the quality of its management. ## The Competitive Advantage DaVita's advantages include: ### Market Position DaVita and Fresenius dominate the dialysis market, together serving the majority of patients. This duopoly structure creates pricing power and operating efficiencies. ### Demographic Tailwind Kidney disease is correlated with diabetes and hypertension, conditions that are becoming more prevalent as the population ages. Demand for dialysis services is growing steadily. ### Scale Economies DaVita operates over 2,800 dialysis centers. This scale provides purchasing power, operating efficiencies, and the ability to invest in technology and training. ### Management Quality DaVita's management team has a strong track record of operational excellence and capital allocation. The company culture emphasizes patient care and continuous improvement. ## The Business Model DaVita provides dialysis services to patients with end-stage renal disease: - The company operates dialysis centers where patients receive treatment - Most patients are covered by Medicare, which reimburses at fixed rates - The business generates recurring revenue from chronic patients - Operating margins are stable and predictable The business has attractive characteristics: - Recurring revenue from chronic patients - Government reimbursement provides payment certainty - Growing demand due to demographic trends - Scale advantages from large center network ## Why It Fits Buffett's Criteria 1. **Essential service** — Dialysis is life-sustaining treatment 2. **Growing demand** — Demographics favor the industry 3. **Strong market position** — Duopoly structure creates stability 4. **Good management** — Operational excellence and rational capital allocation ## Conclusion DaVita represents a significant investment in healthcare services. The business has strong competitive positions, growing demand, and excellent management. It fits Berkshire's criteria for a long-term holding.