Recently,
DaVita Inc.
(
DVA
) announced the purchase of a majority stake in NephroLife, an
India-based kidney care company, in which the former already held a
minority stake. However, the financial terms of the deal were not
divulged.
NephroLife currently operates nine centers in Bangalore, India,
offering dialysis service and vascular surgery, among other kidney
care services. Subsequent to the acquisition, the company will be
called DaVita NephroLife.
DaVita has always been focused on expanding domestically via
acquisitions. Rapid inorganic growth aids DaVita by providing
competitive advantage against arch rivals such as
Gentiva Health Services Inc.
(
GTIV
) and
Quest Diagnostics Inc.
(
DGX
).
However, recently the company seems inclined toward
international expansion as well. As part of its international
expansion strategy, DaVita aims to penetrate the rapidly developing
Indian economy since it also provides ample opportunities for
investment in the health care sector.
Previously, in November 2011, DaVita announced the acquisition
of ExtraCorp AG by its wholly-owned subsidiary DV Care GmbH.
ExtraCorp is a German company that owns and operates two dialysis
centers in Salzgitter and Seesen and manages two other dialysis
centers in Dresden and Freital.
DaVita also operates a dialysis center in Singapore besides
signing an agreement to develop and operate various clinics in
Malaysia. The company even owns a non-profit organization: Bridge
of Life - DaVita Medical Missions, which has been involved in the
trainings of kidney care professionals and opening of dialysis
centers in the rural areas of India for several years.
Overall, we believe that the NephroLife acquisition is an
important step in DaVita's international expansion plans. It is not
only expected to be accretive to the company's earnings in the long
term, but is also likely to pave way for further acquisitions and
alliances in India.
Currently, the Zacks Consensus Estimate for DaVita's
fourth-quarter 2011 earnings is $1.48 per share, up about 31% from
the year-ago quarter. None of the 12 analysts covering the stock
revised their estimates in the last 30 days. For 2011 and 2012, the
Zacks Consensus Estimate stands at $5.05 and $6.23 per share,
respectively, up 15% and 23% year-over-year.
Currently, DaVita carries a Zacks #2 Rank (short-term Buy
rating) along with a long-term Outperform recommendation.
QUEST DIAGNOSTC (
DGX
): Free Stock Analysis Report
DAVITA INC (
DVA
): Free Stock Analysis Report
GENTIVA HEALTH (
GTIV
): Free Stock Analysis Report
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