Warren Buffett Sells $168M in Davita Shares One Day Before Dialysis Provider Hit by Lawsuit
Berkshire Hathaway chair Warren Buffett proved once again his foresight for businesses when he sold over a million shares of DaVita a day before the dialysis service provider was sued.
Buffett sold 1,145,938 shares of DaVita worth £126.23 million ($168.57 million) on 8th May, according to a Form 4 filing with the US Securities and Exchange Commission. He still owns 33,996,541 shares of the company worth billions of dollars.
Buffett, who recently announced his plans to retire as chairman, made the stock trade a day before the company was hit by a lawsuit filed by the Pennsylvania-based United Food and Commercial Workers Local 1776 on 9th May. The benefits fund pays for dialysis services for its members.
The stock faced further selling pressure after DaVita reported on 12th May that Q1 earnings per diluted share fell to £1.50 ($2) from £1.98 ($2.65) a year earlier as net income dropped to £173.89 million ($232.21 million) from £229.14 million ($305.98 million) despite a marginal rise in total revenue. Shares are down 7.4% in the past month, and Buffett was able to sell at the high end of the stock price range at £110.16 ($147.10) apiece.
Buffett has a strong track record of winning during market crashes, including the recent economic turmoil fueled by US tariffs under the Trump Administration. His simple yet effective investment philosophy of acquiring ownership in solid businesses at reasonable costs and holding onto those investments for the long term has helped him amass a massive fortune of £119.44 ($159.5 billion).
DaVita Accused of Inflating Treatment Costs
The union health benefits fund, which offers benefits for thousands of members across the US, sued DaVita in the federal court of Florida, accusing it of artificially inflating treatment costs by billions of dollars.
According to the lawsuit, DaVita illegally ‘carved up’ regions in the US to avoid competition. The plaintiffs also accused the company of engaging in parallel price hikes that were higher relative to rivals since 2021 and ‘not adequately explained by market forces.’
The lawsuit highlighted that DaVita earns a big chunk of the dialysis industry revenue in the country, which it allegedly achieved through a ‘decades-long strategy of acquiring small, independent clinics in uncontested mergers.’ Plaintiffs also believe DaVita have had the scope to collude on pricing through their partnerships.
The lawsuit proposed a nationwide class action status for all purchasers of outpatient dialysis services from DaVita or its affiliates.
DaVita Already Facing Antitrust Claims
The company is also one of the outpatient medical centre operators dealing with antitrust claims in a Chicago federal court regarding employee mobility and compensation.
In the 2021 lawsuit, plaintiffs alleged a conspiracy related to recruitment practices for senior workers at ambulatory surgery centres. Experts believe the plaintiffs’ estimated class-wide damages close to £651.52 million ($870 million) in that case.
DaVita has denied any wrongdoing in both lawsuits, highlighting that the allegations in the most recent one are ‘baseless.’
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