DaVita (DVA) to Report Q3 Earnings: What's in the Offing?

DaVita, Inc. DVA is scheduled to release third-quarter 2020 results on Oct 29, after market close.

In the last-reported quarter, the company delivered an earnings surprise of 51.2%. Its earnings surpassed estimates in the trailing four quarters, the average beat being 28.2%. Let’s take a look at how things are shaping up prior to this announcement.

What do the Q3 Estimates Say?

For the third quarter, the Zacks Consensus Estimate for revenues is pegged at $2.94 billion, indicating a rise of 1.3% from the year-ago quarter. The same for earnings per share (EPS) is pinned at $1.49, suggesting a 2.6% decline over the year-ago figure.

Factors at Play

Robust performance by the net dialysis and related lab patient service segment is likely to have contributed to DaVita’s top line in the soon-to-be-reported quarter.

Lately, the company has been working with predictive analytics to identify chronic kidney diseases patients with the highest risk of transition to End Stage Renal Disease (ESRD). Through the second quarter, DaVita Kidney Care segment continued delivering strong performance with respect to treatment of Chronic Kidney Disease (CKD) and ESRD. We expect this trend to get reflected in the third quarter as well.

The company has also been making progress with its nephrology care line, which is a new physician-led entity with around 1,100 nephrologists. This is expected to have facilitated the connection of DaVita to the nephrologist practice in the third quarter.

DaVita Kidney Care also provided support to nephrologist-led organizations like Nephrology Care Alliance (NCA) in their endeavor to treat patients of chronic kidney diseases. In May 2020, DaVita launched the DaVita Venture Group (“DVG”), through which it plans to accelerate efforts to develop and deploy solutions aimed at improving the health care and quality of life for patients of kidney disease and related chronic conditions.

Moreover, as a result of the pandemic, the company has been witnessing an uptick in in-center dialysis services.

These developments are expected to get reflected on third-quarter results.

DaVita Inc. Price and EPS Surprise

DaVita Inc. Price and EPS Surprise

DaVita Inc. price-eps-surprise | DaVita Inc. Quote

During the second quarter, DaVita opened a total of 28 new dialysis centers and acquired one in the country. It also took over three dialysis centers and opened two outside the United States. This trend is expected to have continued through the to-be-reported quarter as well.

However, revenues from calcimimetics were on a declining trajectory through the last-reported quarter. This trend is expected to have persisted through the third quarter.

DaVita earns a significant part of its revenues from overseas operations and acquisition of dialysis centers abroad. Unfavorable currency movements are likely to have impacted the company’s international sales in the third quarter of 2020.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see.

Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #1.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Masimo Corporation MASI has an Earnings ESP of +10.71% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardinal Health, Inc. CAH has an Earnings ESP of +1.70% and a Zacks Rank of 2 at present.

IDEXX Laboratories, Inc. IDXX has an Earnings ESP of +0.35% and is a Zacks #2 Ranked stock.

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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.

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