DaVita (DVA) to Report Q2 Earnings: What's in the Offing?
DaVita Inc. DVA is scheduled to release second-quarter 2023 results on Aug 3, after the closing bell.
In the last reported quarter, the company’s earnings per share (EPS) of $1.58 surpassed the Zacks Consensus Estimate by 46.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on three occasions and lagged once, delivering an earnings surprise of 17.3%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
On first-quarter 2023 earnings call in May, DaVita’s management confirmed that it witnessed an uptick in treatments per day in the quarter, driven by net census gains due to both higher admissions and lower mortality. However, management also anticipates a reduction in overall treatment volume on a year-over-year basis due to the annualization of access mortality from 2022. Management also continues to assume excess mortality in the remainder of 2023. These are likely to have weighed on DaVita’s second-quarter performance.
On the same call, management confirmed that recent data continued to show an encouraging differentiation in hospitalization rates from patients in DaVita’s Integrated Kidney Care (IKC) program versus its overall patient population. This trend is likely to have continued in the second quarter, thus leading to wider enrolment in the IKC program.
Management also stated that as DaVita continues to scale its IKC business, it will continue to focus on driving its net saving rate while pursuing a cost-efficient model of care. This raises optimism about the stock.
DaVita Inc. Price and EPS Surprise
DaVita Inc. price-eps-surprise | DaVita Inc. Quote
DaVita’s continued pharmaceutical cost-saving initiatives from its anemia management transition to MIRCERA, reductions in contract labor spend and positive variability in health benefits and insurance costs also look promising for its second-quarter performance.
In the first quarter, DaVita witnessed sequential improvement in U.S. dialysis treatments per day despite missed treatment rates remaining high compared to pre-COVID levels. We anticipate the improvement in U.S. dialysis treatments per day to have continued in the to-be-reported quarter as well, thereby boosting DaVita’s revenues.
On Apr 1, 2023, DaVita and Medtronic announced the launch of Mozarc Medical, a new independent device company focused exclusively on innovative kidney health technologies. Mozarc's current products and its research and development pipeline, from kidney access technologies to advanced home dialysis and acute therapies, are intended to improve the overall patient experience and increase access to home-based care. This raises our optimism about DaVita.
The Estimate Picture
For second-quarter 2023, the Zacks Consensus Estimate of $2.94 billion for total revenues calls for an uptick of 0.6% from the prior-year reported figure.
The consensus estimate for EPS is pegged at $1.66, indicating a decline of 27.8% from the prior-year reported number.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: DaVita has an Earnings ESP of -5.56%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
AmerisourceBergen Corporation ABC has an Earnings ESP of +0.59% and a Zacks Rank of 2. ABC has an estimated long-term growth rate of 8.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
AmerisourceBergen’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.1%.
McKesson Corporation MCK has an Earnings ESP of +3.47% and is a Zacks #2 Rank stock. MCK has an estimated long-term growth rate of 10.9%.
McKesson’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.5%.
Becton, Dickinson and Company BDX, popularly known as BD, has an Earnings ESP of +0.48% and a Zacks Rank of 2. BDX has an estimated long-term growth rate of 10.1%.
BD’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 5.8%.
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