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DaVita (DVA) Earnings and Revenues Beat Estimates in Q3

Zacks Equity Research

DaVita Inc. DVA reported third-quarter 2019 adjusted earnings per share (EPS) of $1.53, beating the Zacks Consensus Estimate of $1.23. The bottom line increased from the year-ago quarter’s figure of 56 cents.


Total revenues in the quarter moved up 2% year over year to $2.90 billion, beating the Zacks Consensus Estimate of $2.85 billion.


Third-quarter adjusted operating income totaled $462 million, up 47.1% year over year.


Segment Details


This Zacks Rank #3 (Hold) company reports through two main segments —  Net dialysis and related lab patient service revenues and Other revenues.


Net dialysis and related lab patient service revenues in the third quarter totaled $2.78 billion, up 4.5% on a year-over-year basis. Other revenues were $126 million, down 32.7% from the year-ago quarter’s figure.


Per management, total U.S. dialysis treatments for the third quarter were 7,673,191 or an average of 97,129 treatments per day. The figure represents a per day increase of 2.7% on a year-over-year basis.

DaVita Inc. Price, Consensus and EPS Surprise


DaVita Inc. Price, Consensus and EPS Surprise

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


Moreover, the company provided dialysis services to 233,300 patients at 2,985 outpatient dialysis centers. Of the total, 2,736 centers were located in the United States and 249 centers were located in nine other countries.


For investors’ notice, the company has completed the divestment of the DaVita Medical Group (“DMG”) division to Optum — a subsidiary of UnitedHealth Group UNH. The deal is valued at $4.34 billion.


Financial Condition


DaVita exited the third quarter with operating cash flow of $641 million.




DaVita raised its guidance for 2019.


Notably, the company now expects adjusted operating income between $1.74 billion and $1.77 billion compared with the previous guidance of $1.64-$1.70 billion.


Adjusted EPS is expected in the range of $5.25-$5.75, higher than the previous expectation of $5-$5.50. The Zacks Consensus Estimate is pegged at $4.78, much below the guidance.


Our Take


DaVita ended the third quarter on a tepid note. Dialysis services in the United States showcased solid results during the quarter. Also, dialysis activities ramped up overseas. Further, the company is on track to acquire more dialysis centers in the United States. Moreover, a win against the union-backed ballot in California indicates bright prospects. The recent divestment of the DMG unit to Optum is likely to enable the company to clear its debts. A raised guidance for 2019 is an added positive.


On the flip side, the company’s Other business unit has been seeing softness for a couple of quarters now.


Earnings of Other MedTech Majors at a Glance


Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences EW and Thermo Fisher Scientific Inc TMO, each carrying a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.


Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the consensus estimate by 2.1%. Revenues of $6.27 billion outpaced the consensus mark by 1.3%.


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