Dialysis providers down premarket on potential new U.S. payment plan

• DaVita (NYSE:DVA) (-4%) and Fresenius Medical Care (NYSE:FMS) (-3%) are both in the red premarket in apparent response to the news that the Trump administration is working on a new payment approach for treating kidney disease patients that favors home care and transplants, a potential change that could significantly impact clinic-based dialysis services providers.
• The U.S. government is looking to cut the $114B it spends each year to treat chronic kidney disease and end-stage renal disease. The U.S. Centers for Medicare and Medicaid Services (CMS) is considering a trial payment design aimed at improved care in the early stages of kidney disease, better access to transplants and an emphasis on home dialysis.
• The initiative, if fully implemented, could be bullish for CVS Health (NYSE:CVS), which plans to offer home dialysis, and startups Cricket Health and Somatus.
• Fresenius' recent takeover of NxStage Medical appears prescient considering its focus on home dialysis.
• Related ticker: American Renal Associates (NYSE:ARA)