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DaVita (DVA) Beats Q4 Earnings Estimates, Misses Revenues

Zacks Equity Research
Updated

DaVita Inc. DVA reported fourth-quarter 2017 adjusted operating earnings of 92 cents per share, beating the Zacks Consensus Estimate of 91 cents. However, earnings declined 6.1% on a year-over-year basis.

Total revenues increased 3% year over year to $2.78 billion but missed the Zacks Consensus Estimate of $3.89 billion.

DaVita carries a Zacks Rank #3 (Hold).

DaVita HealthCare Partners Inc. Price and Consensus

 

DaVita HealthCare Partners Inc. Price and Consensus | DaVita HealthCare Partners Inc. Quote

 

Segmental Analysis

As an operating division of DaVita, DaVita Kidney Care focuses on setting worldwide standards for clinical, social and operational practices in kidney care. DaVita saw impressive results from the Kidney Care business. Net consolidated revenues in the segment were $2.78 billion, up 3% year over year. Adjusted operating income in the segment was $430 million, up 1.8% year over year.

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Revenues in the U.S. dialysis and lab business rose 3% year over year to $2.39 billion. The company’s patient care costs were down by approximately 11 cents per treatment compared with the last quarter. In the third quarter, DaVita’s patient care cost was favorably impacted by the hurricanes. Total U.S. dialysis treatments for the fourth quarter were 7,244,555, or 92,287 treatments per day, indicating a per day increase of 5.8% on a year-over-year basis.

In fourth-quarter 2017, DaVita acquired nine dialysis centers, opened 36 new centers and closed four in the United States. DaVita also acquired six dialysis centers, opened two centers and closed one center outside the United States.

For investors’ notice, the company’s major segment — Davita Medical Group (“DMG”) — has been on track for divestment to Optum, a subsidiary of UnitedHealth Group Inc. This transaction is subject to regulatory approvals and other customary closing conditions. The results of DMG business’ operations have been reported as discontinued in the quarter.

Financial Update

On Dec 31, 2017, free cash flow from continuing operations was $1.04 billion. For the three months ended Dec 31, 2017, DaVita had an operating cash flow of $343 million, of which $287 million was from continuing operations.

Share Repurchase Update

During the quarter ended Dec 31, 2017, DaVita repurchased a total of 7.4 million shares of its common stock for approximately $462 million at an average price of $62.37 per share.

DaVita bought back almost 13 million shares of its common stock for $811 million, at an average price of $62.54 per share in 2017.

Guidance

For 2018, the company projects Kidney Care consolidated operating income in the range of $1.5-$1.6 billion. Operating cash flow from continuing operations is estimated in the range of $1.4-$1.6 billion.

Effective tax rate is expected in the range of 26.5-27.5%.

Key Picks

A few better-ranked stocks that reported solid results this earnings season are PetMed Express PETS, PerkinElmer PKI and Becton, Dickinson and Company BDX. While PetMed sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported third-quarter fiscal 2018 adjusted earnings per share of 44 cents, up 88.3% from the prior-year quarter. Revenues rose 13.7% to $60.1 million.

PerkinElmer posted fourth-quarter 2017 adjusted earnings per share of 97 cents. Adjusted revenues were approximately $641.6 million, up from $567 million in the year-ago quarter.

Becton, Dickinson reported first-quarter 2018 adjusted earnings per share of $2.48, up 3.9% at constant currency. Revenues totaled $3.08 billion, up 3.7% at constant currency.

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