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What's in the Cards for DaVita (DVA) This Earnings Season?

Zacks Equity Research

DaVita Inc. DVA is scheduled to release third-quarter 2019 results on Nov 5, after the closing bell.

In the last reported quarter, the company delivered a positive earnings surprise of 10.91%. It has an average negative surprise of 7.3% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

What do the Q3 Estimates Say?

For the third quarter, the Zacks Consensus Estimate for the top line is pegged at $2.85 billion, indicating a rise of 0.2% from the year-ago quarter. The same for the bottom line is pinned at $1.23, suggesting growth of 119.6% from the year-ago reported figure.

DaVita Inc. Price and EPS Surprise

 

DaVita Inc. Price and EPS Surprise

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

Factors at Play

As an operating division of DaVita, DaVita Kidney Care focuses on setting global standards for clinical, social and operational practices in kidney care. A possible increase in net dialysis and related lab patient service revenues are likely to have contributed to the company’s top line in the soon-to-be-reported quarter.

For investors’ notice, the company has divested the DaVita Medical Group unit to Optum for $4.3 billion. This is expected to enhance DaVita’s focus on its core Kidney Care business. Notably, the Kidney Care wing is a significant contributor to the company’s top line.

DaVita is the largest provider of home dialysis with its full integrated technology dialysis platform. Moreover, the company has a offering more than 12,000 education classes to chronic kidney disease patients. Strong partnerships with over 900 hospitals across the United States are also expected to have boosted performance in the quarter to be reported.

For 2019, the company expects to benefit from calcimimetics, which contributed in the last reported quarter as well. Notably, for the second half of 2019, net operating income benefit from calcimimetics is expected between $125 million and $150 million. These trends are expected to reflect in third-quarter results.

It is encouraging to note that for 2019, DaVita expects adjusted operating income between $1.64 billion and $1.70 billion. This suggests an increase over the earlier range of $1.54-$1.64 billion.

However, anticipated dismal non-acquired growth owing to the slowdown in industry patient growth along with stiff competition are likely to have affected DaVita’s performance in the third quarter.

What Our Quantitative Model Suggests

Per our proven model, a combination of — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the chances of an earnings beat. This is not the case here as you will see.

Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: DaVita carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this time around.

Aurora Cannabis ACB has an Earnings ESP of +25.76% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.55% and a Zacks Rank #3.

Cardinal Health, Inc. CAH has an Earnings ESP of +0.69% and a Zacks Rank #3.

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DaVita Inc. (DVA) : Free Stock Analysis Report
 
AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
Aurora Cannabis Inc. (ACB) : Free Stock Analysis Report
 
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