) reported second-quarter 2012 operating earnings of $1.49 per
share, beating the Zacks Consensus Estimate by 2 cents. Earnings
per share were substantially higher than $1.17 in the prior-year
Including legal proceeding contingency accrual and related
expenses of $78 million or 50 cents per share, the company reported
net income of $95.3 million or 99 cents, contracting from the
prior-year quarter net income of $100.0 million or $1.03 per
Total comprehensive income came in at $119.4 million, up 8% from
$110.6 million in the prior-year quarter.
Net operating revenue in the reported quarter surged 16.2% year
over year to $1.93 billion from $1.66 billion. Top line was in line
with the Zacks Consensus Estimate.
Total operating expenses and charges also climbed 18.9% to $1.68
billion from $1.41 billion in the second quarter of 2011.
DaVita provided administrative services across 1,884 outpatient
dialysis centers in the US, serving approximately 149,000 patients
during the reported quarter. Additionally, the company provided
administrative services in 19 outpatient dialysis centers in four
During the reported quarter, DaVita acquired 33 centers and
opened 14 centers in the U.S., while 4 centers were opened outside
Total U.S. treatments for the reported quarter came in at
approximately 5.45 million or 69,896 treatments per day. This
represents a per day increase of 14.3% over the year-ago quarter.
The growth of non-acquired treatment in the quarter stood at
The company's effective tax rate was 36.2% 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 41.5%.
Segment wise, total revenue from the
Dialysis and related Lab Services
segment came in at $1.76 billion during the quarter, against $1.54
billion in the prior-year quarter.
Operating income for the segment exhibited a slight decline of
0.7% year over year to $286 million in the reported quarter from
$288 million in the year-ago quarter.
Ancillary services and strategic initiatives
generated revenues of $175 million, up from $123 million in the
year-ago quarter. However, the segment recorded operating loss of
$19 million in the reported quarter, narrower than $30 million loss
incurred in the year-ago quarter.
Operating cash flow amounted to $202.1 million during the
quarter under review, reflecting a marginal decrease from $204.4
million in the prior-year quarter.
Free cash flow was $111.4 million reflecting a 15.7% decrease
from $132.1 million in the prior-year quarter.
Total assets at the end of June 2012 were $9.25 billion, up from
$8.89 billion as of December 31, 2011, while long-term debt
decreased to $4.39 billion from $4.42 billion as of December 31,
2011. Shareholders' equity as of June 30, 2012 amounted to $2.38
billion, up from $2.14 billion at 2011 end.
In May the company entered into an agreement to purchase
HealthCare Partners, for about $4.42 billion. The transaction
amount comprised of $3.66 billion in cash and about 9.38 million
shares of DaVita.
The purchase consideration is subject to post-close adjustments
and contingent consideration. Moreover, the shareholders of
HealthCare Partners will get an additional $275 million on
achieving certain performance targets by the company in 2012 and
2013. DaVita is expected to borrow funds to finance the
acquisition, apart from using its free cash balance and senior
secured credit facility.
Concurrently, DaVita raised its operating income guidance for
2012 to $1.28-1.33 billion from the previous outlook of $1.23-1.31
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 to be in the range of 40-41% for
Lincare Holdings Inc.
), reported its second quarter 2012 adjusted earnings per share of
56 cents, beating the Zacks Consensus Estimate by a penny and
surpassing the year-ago earnings per share of 45 cents (up 24.4%).
In the quarter, profit increased 11.9% to $47.9 million, led by
DaVita is experiencing revenue upsides in both its business
segments, which, in turn is driving the top line and cutting the
losses. However, higher expenses emerged as a dampener for the
Nevertheless, the company has strong cash flows and a sturdy
balance sheet. We expect cash flows to remain strong in the
upcoming quarters as well, based on higher-than-expected cash flow
during the last few quarters.
The shares of DaVita currently retain 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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