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DaVita (DVA) Earnings Beat Estimates, Revenues Lag in Q4

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DaVita Inc.DVA reported fourth-quarter 2016 adjusted operating earnings of 98 cents per share that surpassed the Zacks Consensus Estimate of 91 cents. However, earnings declined from $1.01 in the year-ago quarter.

Total revenue increased 5.2% year over year to approximately $3.72 billion but missed the Zacks Consensus Estimate of $3.74 billion. The year-over-year improvement was mainly attributable to a rise in patient service revenues, partially offset by a decrease in capitated revenues and other revenues from the year-ago quarter.

Stock Performance

The price performance of the stock has been unfavorable over the last three months. DaVita registered a return of 4.50%, underperforming the Zacks classified Medical - Outpatient and Home Healthcare sub-industry's gain of almost 6.68%.

Segment Update

Dialysis and Related Lab Services

Total operating revenue during the fourth quarter was approximately $2.3 billion, up 4.8% year over year. However, operating income was down 6.0% year over year to $436 million.

Davita Medical Group ("DMG")

Total operating revenue during the fourth quarter was $1 billion, up 10.1% year over year. However, the segment's adjusted operating income plunged nearly 12% from $25 million in the prior-year quarter to of $22 million.

Financial Update

Total cash and cash equivalents of DaVita declined 13.3% to $913 million as of Dec 31, 2016 from $1.5 billion as of Dec 31, 2015.

Cash generated from operations in 2016 was $1.96 billion compared with $1.56 billion in 2015.

As of Dec 31, 2016, DaVita's long-term debt was $8.9 billion, down 1.1% from year-end 2015.

Share Repurchase Update

DaVita bought back 6.7 million shares in the reported quarter for $416 million, or an average price of $61.96 per share. As of Dec 31, 2016 the company had a total of approximately $677 million in outstanding board repurchase authorizations.

Guidance

Management projected DaVita's consolidated operating income for 2017 in the range of $1.635-$1.775 billion. The company expects operating income of $1.525-$1.625 billion for Kidney Care. Operating income for DMG is now anticipated in the range of $110-$150 million. Operating cash flow projection for 2017 is expected at $1.750-$1.950 billion.

DaVita HealthCare Partners Inc. Price, Consensus and EPS Surprise

DaVita HealthCare Partners Inc. Price, Consensus and EPS Surprise | DaVita HealthCare Partners Inc. Quote

Stocks to Consider

DaVita carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader medical sector include Glaukos Corporation GKOS , Avinger, Inc. AVGR and Fluidigm Corporation FLDM . Notably, Glaukos sports a Zacks Rank #1 (Strong Buy) while Avinger and Fluidigm carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock registered an impressive one-year return of 180.8%.

Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% last quarter.

Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 10.3% over the last one-year.

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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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