NEW YORK (AP) -- Shares of DaVita Inc. rose to an all-time high Wednesday after a William Blair & Co. analyst praised the dialysis service company's $4.4-billion deal for doctor network operator HealthCare Partners.
THE SPARK: Analyst Ben Andrew said the purchase of HealthCare Partners sets DaVita up to benefit from the government's need to cut health care costs. He said HealthCare Partners could benefit as government health care programs look for new ways to move patients to private insurance plans. He added that its revenue growth, which is currently slower than the growth of DaVita's dialysis business, should improve over time.
Andrew said the purchase of HealthCare Partners "positions (DaVita) to be one of the largest beneficiaries of the move toward the next stage of healthcare delivery." He expects continued net income and revenue growth for the company and maintained an "Outperform" rating on DaVita shares.
THE BIG PICTURE: DaVita is one of the largest dialysis centers in the U.S., with close to 1,900 outpatient dialysis facilities.
In May the Denver company agreed to buy HealthCare Partners for about $4.42 billion in cash and stock. HealthCare Partners manages and runs medical groups and doctor networks that provide primary and specialist care in California, Nevada and Florida. It had $2.4 billion in revenue in 2011 and coordinates care for around 667,000 patients.
Warren Buffett's Berkshire Hathaway Inc. bought 2.7 million shares of DaVita in late 2011 and boosted its stake in the first quarter.
SHARE ACTION: DaVita rose $2.63, or 2.7 percent, to $100.27 in afternoon trading. Earlier the shares reached an all-time high of $103.97. DaVita shares fell 5.4 percent on May 22, the day after the HealthCare Partners deal was announced. The stock is up 21.7 percent since June 1.