DaVita Beats Q1 Earnings Estimates, Updates 2015 Guidance - Analyst Blog

DaVita HealthCare Partners Inc.DVA reported first-quarter 2015 adjusted operating earnings of 86 cents per share that surpassed the Zacks Consensus Estimate as well as the year-ago earnings by a penny.

Davita Healthcare Partners Inc. - Earnings Surprise | FindTheCompany

Including accrual of an after-tax estimated loss contingency, the company's net loss was 52 cents per share, which compared unfavorably with a net income of 85 cents in the year-ago quarter.

Operational Update

Total net revenue increased 8.1% to approximately $3.3 billion. The top line met the Zacks Consensus Estimate. The year-over-year increase was mainly attributable to a rise in patient service revenues, capitated revenues and other revenues.

Total operating expenses and charges of DaVita Healthcare were $3.4 billion in the reported quarter, up 28.9% year over year. This was primarily due to a rise in patient care costs and other costs, general and administrative charges, depreciation and amortization expenses and loss contingency accrual in the quarter.

Total U.S. dialysis treatments in the reported quarter came in at approximately 6.3 million or 81,758 treatments per day. This represents a per day increase of 4.5% year over year. Growth of non-acquired treatment in the reported quarter was 3.9%, while normalized non-acquired treatment growth was 4.5%.

In first quarter, DaVita Healthcare opened 18 dialysis centers in the U.S. The company also took over one and closed two dialysis centers in the U.S. Moreover, DaVita Healthcare opened two dialysis centers outside the U.S.

Segment Update

Revenues from the Dialysis and Related Lab Services segment amounted to approximately $2.1 billion, up 5.8% year over year. Operating loss at the segment was $104 million comparing unfavorably with an income of $387 million in the year-ago quarter.

HealthCare Partners (HCP) g enerated revenues of $928 million in the quarter, up 10.3% year over year. Operating income in the segment increased to $60 million from $54 million a year ago.

Ancillary services and strategic initiatives recorded revenues of $305 million, higher than $257 million in the first quarter of 2014. Operating loss during the reported quarter was $14 million, which compared unfavorably with the year-ago income of $2 million.

Financial Update

Total cash and cash equivalents of DaVita Healthcare increased to $1 billion as of Mar 31, 2015, from $965.2 million as of Dec 31, 2014.

Net cash flow from operating activities in the first quarter was $410 million, down from $419 million in the year-ago quarter.

DaVita Healthcare's long-term debt as of Mar 31, 2015 was $8.4 billion, unchanged from that at year-end 2014.

Share Repurchase Update

DaVita repurchased 0.9 million shares for $70 million during the quarter. Additionally, in the month of April, the company deployed $14 million to repurchase 0.2 million shares.

On Apr 14, 2015, DaVita's board of directors approved a $726 million share repurchase program. This authorization is in addition to the $274 million left under the previous authorization. Thus, the company is now left with $1 billion for repurchases.

Guidance for 2015

DaVita updated its 2015 outlook.

Operating income guidance for 2015 was raised to $1.8-$1.925 billion from the range of $1.75-$1.90 billion guided earlier. For Kidney Care, operating income is expected in the $1.575-$1.650 billion range, up from the previous outlook of $1.525-$1.625 billion. On the other hand, for HCP, operating income is projected to be between $225 million and $275 million, in line with the previous guidance.

Operating cash flow guidance was reiterated in the band of $1.5-$1.7 billion.

Performance of Other Healthcare Service Stocks

Aetna Inc. AET reported first-quarter earnings of $2.39 per share surpassing the Zacks Consensus Estimate of $1.96.

Anthem Inc. ANTM reported first-quarter adjusted income of $3.14 per share beating the Zacks Consensus Estimate of $2.69.

Humana Inc.'s HUM first-quarter operating earnings came in at $2.47 per share missing the Zacks Consensus Estimate of $2.54.

Zacks Rank

DaVita Healthcare presently carries a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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