No. of Recommendations: 1
It’s taken a while but DVA seems to be basically running the play- very steady to slightly growing cash flow and plowing all cash into repurchases. Berkshire will be capped out at 45%, at 43% now. New to dialysis patients back to pre-covid levels, mortality still elevated which has impacted them, but seems they are operating very well.
From the conference call:
“Okay. And then you made a comment in the prepared remarks about leverage. And I think you said that you were looking to add debt to ensure capacity would be in this range. Are you saying that you would look to potentially lever up deploying more capital, I guess, on share repurchase? Or were you just talking about something else? .”
Joel Ackerman DaVita Inc. – CFO & Treasurer
Yes. So I wouldn't use the phrase lever up because what we're really targeting here is maintaining the leverage range of 3x to 3.5x. And if our goal was to get our leverage range or our leverage multiple above that, that's what I would characterize as levering up. I think the reality is as our EBITDA grows in order to maintain that leverage range of 3 to 3.5x, recognizing we're at the low end of that range right now. We need more debt capacity. And it's just using the middle of the number as EBITDA goes up, you multiply it by 3.25%, and that's the capacity you need. So we're thinking about how much debt capacity do we need to make sure we can stay in that range as EBITDA grows. .
Kevin Mark Fischbeck BofA Securities, Research Division – Managing Director in Equity Research
Okay. In theory, that capacity would be used on share repurchase. Is that -- or is there anything else .
Joel Ackerman DaVita Inc. – CFO & Treasurer
I mean it would be used using our capital allocation philosophy. So the first thing we would love to do would be to invest it in growth, recognizing it needs to be capital-efficient growth and hit our return thresholds. Barring that, share repurchases would certainly be on the -- at the top of the list of how we would use excess capacity to maintain our leverage level. .
