DaVita sees possible $30M-$40M hit to 2025 operating income from CA bill

Asked during a UBS conference presentation about the proposed California minimum wage bill, executives from DaVita stated in part, according to a transcript of the event: “Yeah, so as you pointed out, it is still making its way through the legislature. So so it’s not yet a guarantee that this will happen. That said, we’re pretty happy with the outcome here. It is, it is no secret that we have had our challenges with the unions for many years now. And I don’t think anyone should view this as our challenges with the unions are now over, but they will change. And and we’re happy because ultimately we believe the unions were were abusing the very unique ballot system that exists in California, as well as the legislature to ultimately scare voters and put our patients and to some extent, our teammates at risk. And it was a very, very uncomfortable position. They were looking to put forth ideas that ultimately were not good for clinical care and not good for our teammates. So this outcome basically allows us to redirect the money that we were spending battling those ballot initiatives to protect our patients and funnel that to our teammates. We have quantified the impact in, we think we’ll see basically the full impact in calendar 2025. And we think that will be somewhere between $30 million and $40 million of operating income. So a hit relative to what we otherwise would have forecasted. And in 2024, we won’t see the full hit, but it’ll be a number somewhere in the probably $20 million to $25 million in 2024. And just to be clear, we will benefit from the offset because we were quite certain we were gearing up for another ballot fight in 2024. As a reminder, those have cost us somewhere in the neighborhood of $50 million to $60 million every other year. So we’ve got protection against ballot initiatives and legislation targeting the dialysis industry through 2026. So if you do the math, it’s roughly a breakeven trade off, maybe a little bit negative. But we’re we’re super comfortable with this outcome in this decision, given the amount of risk we’ve taken off the table and the benefits to our teammates and the protection from for our patients.”