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DaVita (DVA) Q4 Earnings and Revenues Fall Shy of Estimates

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DaVita Inc. DVA reported fourth-quarter 2020 adjusted earnings per share (EPS) of $1.67, missing the Zacks Consensus Estimate of $1.85 by 9.7%. The bottom line also fell 10.2% from the year-ago quarter’s figure.

For 2020, adjusted EPS came in at $7.26, missing the Zacks Consensus Estimate of $7.43 by 2.3%.The bottomline, however, rose 34.4% year over year.

Revenues

Total revenues in the quarter rose 0.7% year over year to $2.91 billion but missed the Zacks Consensus Estimate by 1%.

For 2020, revenues came in at $11.55 billion, also missing the Zacks Consensus Estimate by 0.3%.The topline, however, rose 1.4% year over year.

Segment Details

Net dialysis and related lab patient service revenues in the fourth quarter totaled $2.77 billion, up 0.3% on a year-over-year basis. Other revenues were $132.2 million, down 0.3% from the year-ago quarter’s figure.

Per management, total U.S. dialysis treatments for the fourth quarter were 7,574,217 or 95,876 treatments, on average per day. This represents a per-day decrease of 0.9% on a year-over-year basis.

Also, as of Dec 31, 2020, the company provided dialysis services to a total of approximately 240,400 patients at 3,137 outpatient dialysis centers, of which 2,816 centers were located in the United States and 321 in 10 other countries.

During the quarter, DaVita opened a total of 14 dialysis centers and closed seven in the United States. The company also acquired 30 dialysis centers outside the United States including foraying into a new country, which is the United Kingdom, during the fourth quarter of 2020.

Margin

Total operating expenses and charges amounted to $2.52 billion, up 3.3% year over year.

Adjusted operating income of $382 million fell 17.4% from the prior-year quarter. Adjusted operating margin came in at 13.1%, down 290 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 fourth quarter of 2020 with cash and cash equivalents of $324.9 million compared with $1.10 billion at the end of the year-ago period.

Cumulative net cash from operating activities of $1.97 billion compared unfavorably with $2.07 billion in the year-ago quarter.

2021 Guidance

Adjusted EPS is projected within $7.75 -$8.75, up from the previous guidance of $7.35-$7.60. The Zacks Consensus Estimate for the same stands at $8.14.

Adjusted operating income is anticipated between $1.68 billion and $1.83 billion.

Our Take

DaVita ended the fourth quarter on a weak note. Nonetheless, net dialysis and related lab patient service revenues increased during the quarter. The acquisition of several dialysis centers overseas is encouraging as well. A solid guidance for 2021 is another positive.

Notably, the company repurchased shares worth $417 million in the quarter under review.

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

Zacks Rank and Key Picks

DaVita currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space that already announced quarterly results are Hologic, Inc. HOLX, Abbott Laboratories ABT and AngioDynamics, Inc. ANGO. While Hologic sports a Zacks Rank #1 (Strong Buy), the other two presently carry a Zacks Rank#2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Further, fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny. The Zacks Consensus Estimate was of a loss per share of a couple ofcents. Additionally, revenues of $72.8 million beat the consensus mark by 8%.

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