DaVita (DVA) Earnings Beat Estimates in Q3, Revenues Miss

Zacks Equity Research
·4-min read

DaVita Inc. DVA reported third-quarter 2020 adjusted earnings per share (EPS) of $1.80, beating the Zacks Consensus Estimate of $1.49 by 20.8%. The bottom line also reflects a 17.6% improvement from the year-ago quarter figure.

Total revenues in the quarter rose 0.7% year over year to $2.92 billion but missed the Zacks Consensus Estimate by 0.6%.

Segment Details

Net dialysis and related lab patient service revenues in the third quarter totaled $2.78 billion, up 0.4% on a year-over-year basis. Other revenues were $142.4 million, up 12.2% from the year-ago quarter’s figure.

Per management, total U.S. dialysis treatments for the third quarter were 7,656,173, or an average 96,914 treatments per day. This represents a per-day decrease of 0.2% on a year-over-year basis.

Also,as of Sep 30, 2020, the company provided dialysis services to a total of approximately 238,200 patients at 3,100 outpatient dialysis centers, of which 2,809 centers were located in the United States and 291 in nine other countries.

During the quarter, DaVita opened a total of 17 new dialysis centers, acquired five dialysis centers and closed eight dialysis centers in the United States. It also acquired 11 dialysis centers, opened one new dialysis center and sold or closed eight dialysis centers outside the United States during the third quarter of 2020.

Margin

Total operating expenses and charges amounted to $2.49 billion, down 1.2% year over year.

Adjusted operating income of $438 million fell 5.2% from the prior-year quarter. Adjusted operating margin came in at 15%, down 90 basis points (bps) from the year-ago quarter.

DaVita Inc. Price, Consensus and EPS Surprise

 

DaVita Inc. Price, Consensus and EPS Surprise
DaVita Inc. Price, Consensus and EPS Surprise

 

DaVita Inc. price-consensus-eps-surprise-chart | DaVita Inc. Quote

 

Financial Condition

DaVita exited the third quarter with cash and cash equivalents of $710.5 million compared with $2.93 billion at the end of the second quarter.

Cumulative net cash from operating activities of $1.49 billion compared with $1.39 billion in the year-ago quarter.

Guidance

DaVita now projects 2020 revenues in the range of $11.50-$11.60 billion compared with the previously-issued band of $11.50-$11.70 billion. The Zacks Consensus Estimate for the same is pegged at $11.59 billion.

Adjusted EPS projection has been updated to the range of $7.35-$7.60 from the previously-guided $6.25-$6.75. The Zacks Consensus Estimate for the same stands at $6.90.

Adjusted operating income margin is estimated in the band of 15.3-15.6% (up from the prior-guided range of 14-14.75%).

Our Take

DaVita ended the third quarter on a mixed note. The significant improvement in the bottom line is encouraging. Dialysis services in the United States showcased solid results during the quarter anda ramp-up overseas. The acquisition of several dialysis centers overseas is encouraging as well. A solid guidance for 2020 is another positive.

However, foreign exchange headwinds and stiff competition continue to weigh on the company. Contraction of adjusted operating margin is another concern.

Zacks Rank and Other Key Picks

DaVita currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and AngioDynamics, Inc. ANGO. While Align Technology sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

AngioDynamics reported first-quarter fiscal 2021 adjusted EPS of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%.

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