Yahoo Finance DaVita (DVA) Tops Q1 Earnings Estimates, Ups FY23 EPS View
DaVita Inc. DVA delivered adjusted earnings per share (EPS) of $1.58 in the first quarter of 2023, which declined 4.2% year over year. The figure topped the Zacks Consensus Estimate by 46.3%.
Our projection of adjusted EPS was $1.02.
GAAP EPS for the quarter was $1.25, reflecting a year-over-year plunge of 22.4%.
Revenues in Detail
Revenues of $2.87 billion in the first quarter were up 1.9% year over year. The figure surpassed the Zacks Consensus Estimate by 1.6%.
First-quarter revenues compared to our estimate of $2.83 billion.
The top line was driven by solid performances by DaVita’s dialysis patient service revenues and Other revenues.
Segmental Details
The company’s dialysis patient service revenues were $2.76 billion, up 1.6% year over year. This figure compared to our dialysis patient service revenues’ first-quarter projection of $2.72 billion.
Other revenues were $112.7 million, up 11.2% from the year-ago quarter. This figure compares to our first-quarter projection of $105.5 million.
Per management, the total U.S. dialysis treatments for the first quarter were 7,117,427 or 92,434 per day, on average. This represents a per-day increase of 0.9% on a sequential basis.
As of Mar 31, 2023, DaVita provided dialysis services to around 246,000 patients at 3,058 outpatient dialysis centers, of which 2,707 were U.S. centers, while 351 were located across 11 other countries.
In the first quarter of 2023, the company opened three dialysis centers and closed 20 in the United States. It also opened three dialysis centers and closed two outside the United States in the same period.
DaVita Inc. Price, Consensus and EPS Surprise
DaVita Inc. price-consensus-eps-surprise-chart | DaVita Inc. Quote
Margin Details
In the quarter under review, DaVita’s gross profit rose 1.9% to $814.5 million. However, the gross margin contracted 1 basis point (bps) to 28.4%.
We had projected 25.6% of gross margin for the first quarter.
General and administrative expenses climbed 12.5% to $331.6 million.
Adjusted operating profit totaled $482.9 million, reflecting a 4.2% plunge from the prior-year quarter. The adjusted operating margin in the first quarter contracted 109 bps to 16.8%.
Financial Position
DaVita exited first-quarter 2023 with cash and cash equivalents, and short-term investments of $367.1 million compared with $321.8 million at 2022-end. Total debt (including the current portion) at the end of first-quarter 2023 was $8.66 billion compared with $8.92 billion at the end of 2022.
Net cash flow from operating activities at the end of first-quarter 2023 was $462.6 million compared with $322.2 million a year ago.
2023 Guidance
DaVita has raised its adjusted EPS outlook for 2023.
Adjusted EPS from continuing operations for the year is projected to be $6.20-$7.30, up from the prior stated $5.45-$6.95. The Zacks Consensus Estimate for the same stands at $5.93.
Our Take
DaVita ended the first quarter of 2023 with better-than-expected results. The uptick in the company’s overall top line and both segments during the period was impressive. The increase in total U.S. dialysis treatments in the quarter was also encouraging. The opening of several dialysis centers within the United States and overseas was promising.
However, the dismal overall bottom-line results were disappointing. The contraction of both margins does not bode well for DaVita. The company faced continued labor pressure in the reported quarter, which was further concerning.
Zacks Rank and Key Picks
DaVita currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are AmerisourceBergen Corporation ABC, Merit Medical Systems, Inc. MMSI and Cardinal Health, Inc. CAH.
AmerisourceBergen, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted earnings per share of $3.50, beating the Zacks Consensus Estimate by 6.4%. Revenues of $ $63.46 billion outpaced the consensus mark by 4.4%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AmerisourceBergen has a long-term estimated growth rate of 8.7%. ABC’s earnings surpassed estimates in all the trailing four quarters, the average being 3.1%.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Cardinal Health reported third-quarter fiscal 2023 adjusted EPS of $1.74, beating the Zacks Consensus Estimate by 17.6%. Revenues of $50.49 billion surpassed the Zacks Consensus Estimate by 1.7%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 12.4%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.
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