Warren Buffett’s Berkshire Hathaway Trims Stake in DaVita Amid Weak 2025 Outlook

Warren Buffett’s investment firm, Berkshire Hathaway, has trimmed its position in DaVita, a leading provider of dialysis services, prompting concerns among investors. Shares of DaVita fell 8% following the announcement as investors reacted not only to Berkshire’s sale but also to the company’s weaker financial outlook for 2025. Rising healthcare costs and operational challenges have put pressure on DaVita’s profitability, raising questions about the company’s long-term performance.

Berkshire Hathaway has been a major shareholder in DaVita since 2011, steadily increasing its stake over the years. On February 11, 2025, the firm sold 203,091 shares as part of a previously agreed-upon repurchase plan initiated in April 2024. This latest transaction reduced Berkshire’s ownership in DaVita to 45%, a stake now valued at approximately $6.4 billion. While any reduction in ownership by Berkshire Hathaway is closely monitored by investors, this particular sale was expected. DaVita had committed to a quarterly share repurchase program, gradually decreasing Buffett’s holding rather than signaling an abrupt exit.

The decline in DaVita’s stock price, however, wasn’t solely due to Berkshire Hathaway’s sale. The company’s 2025 outlook raised concerns about its ability to manage rising costs effectively. DaVita forecasted adjusted earnings per share for 2025 between $10.20 and $11.30, slightly missing Wall Street’s expectation of $11.24 per share according to LSEG analysts. Several factors contributed to these cautious projections, including increasing health benefit expenses for employees and costs related to the closure of multiple dialysis centers across the United States. Additionally, the company recorded a $24.2 million charge in the fourth quarter of 2024 from shutting down underperforming locations.

Despite these financial pressures, DaVita managed to exceed earnings expectations in the fourth quarter of 2024. The company reported earnings per share of $2.24, surpassing the predicted $2.13 per share. While this was a positive development, investors remained concerned about the impact of rising expenses on long-term margins.

Berkshire Hathaway’s relationship with DaVita spans more than a decade, highlighting its confidence in the company’s long-term potential. As of September 2024, DaVita was the tenth-largest equity holding in Berkshire’s portfolio, reinforcing its significance to Buffett’s investment strategy. Although Buffett himself has not commented on this recent reduction, the move aligns with his firm’s practice of adjusting holdings methodically rather than making abrupt exits.

DaVita now finds itself at a critical juncture. While the company has demonstrated resilience in meeting past earnings expectations, cost management remains a pressing concern. The planned closure of dialysis centers suggests a need for restructuring, and investors will closely watch how DaVita navigates these challenges moving forward. Management’s ability to control expenses, improve operational efficiency, and potentially explore new growth opportunities will determine the company’s financial stability in the coming years.

For investors, the situation presents both risks and opportunities. While the recent decline in DaVita’s stock reflects current market concerns, Berkshire Hathaway’s remaining 45% stake signals continued confidence in the company’s long-term viability. Going forward, monitoring DaVita’s strategic decisions and financial adjustments will be key to assessing its future trajectory in an increasingly complex healthcare environment.