2Q 2022 mortality of DVA's major source of new patients, those with diabetes, is looking better than 1Q 2022 but remains elevated and with each report revision, climbs. We will wait to see what June employment print looks like next week but if the labor picture has not improved we may continue to see the same number of average treatments per week which was down almost 5% in 1Q.
Unless things improve quickly - which seems impossible given the havoc elevated mortality brings - DVA will be flirting with 4.00% leverage ratio. After 1Q it took a leap from 3.30% to 3.50%. Assuming patients and treatments per patient per week erode by 0.30% another 25bp jump seems possible. Given corporate credit's challenges these days, DVA's decision to single-mindedly buy back stock to the exclusion of investments in innovation is not looking too smart.
Have a great day.
Emily Evans
Managing Director – Health Policy
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