DVA's management did a good job of explaining away the GLP-1 doom and gloom scenario that sent the stock tumbling a few weeks ago. We share their view that the continuum from kidney disease to renal failure is so attenuated, narratives around weight loss drugs seem like a stretch.
However, problems remain. Management expects dialysis initiations to return to the ~2% growth in 2024. The difficulty we are having with that analysis is that YoY in-center hemodialysis stalled out in 2015 and has been downhill from there even before the excessive mortality during the Public Health Emergency. In 2019 the YoY change in in-center hemodialysis was 1.7%.
Today, ESRD services are covered by MA plans which are generally undercompensated, driving them to divert as many patients from hemodialysis as possible using proactive encounters, case management, etc. As MA+PDP enrollment grows that pressure will increase. The transplant system remains problem-plagued but progress is being made. Generally, there is an increasing awareness in the medical community that in-center dialysis is not a foregone conclusions. And yes, for the morbidly obese, GLP-1 drugs may make a difference at some point.
Let me know what you think.
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Emily Evans
Managing Director – Health Policy
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