) reported first-quarter 2012 operating earnings of $1.46 per
share, beating the Zacks Consensus Estimate by a penny. Earnings
per share were also substantially higher than the prior-year
quarter earnings of 96 cents.
Net income was $140.1 million, up 48% from $94.5 million in the
year-ago quarter. The increase in net income was attributable to
better-than-expected revenues, partly offset by higher operating
and debt expenses.
Comprehensive net income came in at $165.6 million, up 47% from
$112.6 million in the prior-year quarter. Results include
unrealized losses on interest rate swap and cap agreements,
unrealized gains on investments and foreign currency translation
adjustments of $0.7 million in the reported quarter.
However, the year-ago quarter included unrealized losses on
interest rate swap and cap agreements, unrealized gains on
investments and foreign currency translation adjustments of $2.2
million. Additionally, comprehensive income attributable to the
non-controlling interest amounted to $24.8 million and $20.3
million, respectively in the comparable quarters.
Net operating revenue in the reported quarter surged 20% year
over year to $1.87 billion from $1.56 billion. Total operating
expenses and charges also climbed to $1.55 billion from $1.33
billion in the first quarter of 2011.
Segment wise, total revenue from the
Dialysis and related Lab Services
segment came in at $1.72 billion during the quarter, against $1.46
billion in the prior-year quarter.
Operating income for the segment increased 38% year over year to
$348 million in the reported quarter from $252 million in the
Ancillary services and strategic initiatives
generated revenues of $156 million, up from $106 million in the
year-ago quarter. However, the segment recorded operating loss of
$17 million in the reported quarter, much wider than $9 million in
the year-ago quarter.
Income from discontinued operations in the prior-year quarter
was $0.13 million. DaVita provided administrative services across
1,841 outpatient dialysis centers in the US, serving approximately
145,000 patients during the reported quarter. Additionally, the
company provided administrative services in 15 outpatient dialysis
centers in three non-U.S. countries.
During the reported quarter, DaVita acquired 28 centers and
opened 13 centers in the U.S., while 4 centers were opened outside
Total U.S. treatments for the reported quarter came in at
approximately 5.31 million or 68,132 treatments per day. This
represents a per day increase of 14.2% over the year-ago quarter.
The growth of non-acquired treatment in the quarter stood at
The company's effective tax rate was 36.7% in the reported
quarter. The third party owners' income attributable to non-tax
paying entities impacted the effective tax rate. The effective tax
rate attributable to DaVita in the reported quarter was 40.5%.
Operating cash flow amounted to $332 million during the quarter
under review, reflecting a marginal increase from $330 million in
the prior-year quarter.
Total assets at the end of March 2012 were $9.16 billion, up
from $8.89 billion as of December 31, 2011, while long-term debt
decreased to $4.40 billion from $4.42 billion as of December 31,
2010. Shareholders' equity as of March 31, 2012 amounted to $2.27
billion, up from $2.14 billion at 2011 end.
Concurrently, DaVita raised its operating income guidance for
2012 to $1.23-1.31 billion from the previous outlook of $1.20-1.30
billion. Additionally, the company affirmed its operating cash flow
guidance of $0.95-1.05 billion. The company expects the effective
tax rate attributable to DaVita in the range of 40-41% for fiscal
DaVita is experiencing revenue upsides in both its business
segments, which in turn is driving the top line. However, higher
expenses emerged as a spoiler during the quarter.
Nevertheless, the company has strong cash flows and a sturdy
balance sheet. We expect the cash flows to remain strong in the
upcoming quarters as well, based on higher-than-expected cash flow
during the last few quarters.
Moreover, the strong financial position of DaVita provides the
opportunity for meaningful mergers and acquisitions.Thus, we are
optimistic about the company's growth potential.
Lincare Holdings Inc.
), reported first quarter 2012 adjusted earnings per share of 54
cents, beating the Zacks Consensus Estimate by a penny and
surpassing the year-ago earnings per share of 49 cents. During the
reported quarter, profit remained flat year over year at $46.4
The shares of DaVita currently carry a Zacks #3 Rank, implying a
short-term 'Hold' rating. We also maintain a long-term 'Neutral'
recommendation on the shares.
DAVITA INC (DVA): Free Stock Analysis Report
LINCARE HLDGS (LNCR): Free Stock Analysis
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