DaVita Bears Retreat as Stock Rallies Into Q3 Print

DVA reports third-quarter results today with the stock up 5% yesterday and short sellers having trimmed positions meaningfully over the past week, a notably different setup from the preview published four days ago.

Since that earlier note, two things have shifted. Short interest has dropped 4.1% over the past week to 6.9% of the free float, reversing the slow build that had been running through most of October. The borrow market remains relaxed: availability is wide at 406%, meaning roughly four shares are available to borrow for every one already lent out, and borrowing costs are a modest 0.50%. Options positioning is almost entirely neutral. The put/call ratio of 0.51 is barely above its 20-day average of 0.51, a z-score of just 0.39, and well below the 52-week peak of 1.54. There is no sign of defensive hedging ahead of the print. The ORTEX short score has also eased over the past two weeks, sliding from around 63.8 to 62.7, suggesting the short thesis has lost a little conviction.

The debate between bulls and bears remains anchored in the same structural tension. Bears worry about Medicare reimbursement pressure, which accounts for roughly two-thirds of US revenue, slowing organic volume trends, and a payer mix where the 10% of patients covered by commercial insurers drive a disproportionate share of profits. Bulls counter with DaVita's scale, approximately 35% of US dialysis clinic capacity serving around 280,000 patients annually, and the continued presence of Berkshire Hathaway as a 45% shareholder under a Schedule 13D filing. Analyst opinion is cautious rather than enthusiastic: the consensus sits at hold, with UBS maintaining a buy and a target of $270, while Barclays and Truist have held equal-weight and hold ratings respectively after adjusting targets following the August print. Those post-August target moves are the most recent substantive analyst actions, making the consensus around $220 to $250 now trading well above the current price of $193.

The August quarter is the unavoidable backdrop. DVA fell nearly 20% the day after Q2 results and extended that to almost 24% over the following five days, the kind of reaction that leaves institutional holders on edge regardless of how calm the short-lending market looks now. The stock has recovered substantially since then, gaining 8.6% over the past month and 5.1% yesterday alone. Retail attention is elevated too: ORTEX's Wikipedia views signal shows a z-score of 2.95 against the prior 90 days, indicating sharply above-average interest in the name heading into the print.

The Q3 report is therefore less a test of DaVita's structural position in kidney care, which the market broadly accepts, and more a referendum on whether the factors that drove August's collapse, volume trends, payer mix and margin guidance, have stabilised enough to justify the recovery in the share price.