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.