DaVita Beats on Q4 Earnings, Down Y/Y; Retains '15 View - Analyst Blog
DaVita HealthCare Partners Inc. (DVA) reported fourth-quarter 2014 adjusted operating earnings of $1.09 per share that surpassed the Zacks Consensus Estimate of 88 cents. However, earnings declined slightly from the year-ago quarter figure of $1.10 per share owing to a rise in expenses.
Including extraordinary items, the company’s net income came in at 96 cents per share, down from 99 cents in the year-ago quarter.
Operational Update
Total net revenue increased 8.6% to approximately $3.3 billion. The top line matched the Zacks Consensus Estimate. The year-over-year increase was mainly attributable to a rise in patient service revenues, capitated revenues and other revenues.
Total operating expenses and charges of DaVita Healthcare were $2.9 billion in the reported quarter, up 11.5% year over year. This was primarily due to rise in patient care costs and other costs, general and administrative charges, provision for uncollectible accounts as well as depreciation and amortization expenses.
Total U.S. dialysis treatments in the reported quarter came in at approximately 6.5 million or 81,434 treatments per day. This represents a per day increase of 6.2% year-over-year. Growth of non-acquired treatment in the reported quarter was 5.2% while normalized non-acquired treatment growth was 4.6%.
In fourth-quarter 2014, DaVita Healthcare opened 30 dialysis centers in the U.S. The company also took over 2 dialysis centers and closed 5 dialysis centers in the U.S. Moreover, DaVita Healthcare bought 3 dialysis centers and opened 1 dialysis center outside the U.S.
Segment Update
Revenues from the Dialysis and Related Lab Services segment amounted to approximately $2.2 billion, up 7.2% year over year. Operating income at the segment also increased 8.9% year over year to $443 million in the reported quarter.
HealthCare Partners (HCP) generated revenues of $882 million in the quarter, surging 6.4% year over year. However, operating income in the segment decreased to $33 million from $98 million a year ago.
Ancillary services and strategic initiatives recorded revenues of $309 million, higher than $242 million in the fourth quarter of 2013. Operating loss during the reported quarter was $19 million, wider than a loss of $9 million in the comparable quarter a year ago.
Full-Year Highlights
DaVita reported 2014 adjusted operating earnings of $4.13 per share that declined from $4.26 per share earned in 2013.
Including extra-ordinary items, DaVita Healthcare’s net income came in at $3.64 per share, down from $3.81 in 2013.
Financial Update
Total cash and cash equivalents of DaVita Healthcare increased to $965.2 million as of Dec 31, 2014, from $946.2 million at the end of 2013.
Net cash flow from operating activities in 2014 came in at $1.5 billion, down 17.7% year over year. Cash flows were also below the company guided level of $1.7–$1.8 billion.
DaVita Healthcare’s long-term debt as of Dec 31, 2014 was $8.4 billion, up from $8.1 billion as of Dec 31, 2013.
Guidance for 2015
DaVita reiterated its 2015 outlook.
Operating income guidance for 2015 is reaffirmed in the range of $1.75–$1.90 billion. For Kidney Care, operating income is expected in the $1.525–$1.625 billion range while for HCP, it is projected to be between $225 million and $275 million, in line with the previous guidance.
Operating cash flow guidance was reiterated in the band of $1.5–$1.7 billion.
Performance of Other Healthcare Service Stocks
Anthem Inc. (ANTM) reported fourth-quarter 2014 adjusted income of $1.73 per share, beating the Zacks Consensus Estimate of $1.72.
Molina Healthcare Inc. (MOH) reported fourth-quarter 2014 net income from continuing operations of 69 cents per share, handily beating the Zacks Consensus Estimate of 60 cents per share.
Humana Inc.’s (HUM) fourth-quarter 2014 operating earnings came in at $1.09 per share, lower than the Zacks Consensus Estimate of $1.16.
Zacks Rank
DaVita Healthcare presently carries a Zacks Rank #3 (Hold).
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