We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, the company’s earnings of $1.45 per share lagged the Zacks Consensus Estimate by 12.1%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions and lagged the same in the other two, delivering a negative earnings surprise of 0.9%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
During third-quarter 2022 call in October, DaVita confirmed that it continued to witness treatment volume and labor-related headwinds in the reported quarter. Management confirmed that the headwinds in volumes had persisted longer than was assumed, and contract labor costs and productivity did not begin to improve in the quarter as had been expected by DaVita. Management also confirmed that it expects these pressures to continue longer than anticipated. Moreover, the continued uncertainty from COVID-19 and the labor market led DaVita to lower its guidance for the year. This does not look encouraging for the stock as this is likely to have significantly impacted the fourth-quarter revenues.
During the same call, DaVita confirmed that its net treatment rates, which had a meaningful impact on the change in its treatment volume due to an increase in mid-treatment rates resulting from the Ominicon search, were anticipated to return to seasonal norms after the win in search. However, that was not the case and hence, management believes these will remain elevated through the end of 2022. This is also likely to have weighed on the to-be-reported quarter’s treatment volume, thereby impacting the overall top line.
Management also confirmed during the last earnings call that although COVID-19 mortality rates in 2022 have been down compared with prior years, excess mortality remains a challenge for DaVita. The company expects this to persist in the fourth quarter, although the magnitude of the impact will depend on the size and the severity of COVID-19 surges during the winter.
Moreover, labor costs have continued to remain a challenge over the past few months, with higher contracted labor utilization and base wage increases. Despite management’s efforts to offset the impact of wage and other inflationary increases, these are likely to have weighed on the company’s fourth-quarter 2022 top line.
On a positive note, management had stated that although U.S. dialysis treatments per day were down on a sequential basis, revenue per treatment grew sequentially. This primarily resulted from favorable adjustments, increased acute treatment and the continued shift to Medicare Advantage plans, partially offset by the reinstatement of Medicare sequestration. This trend is likely to have continued into the fourth quarter, thereby driving up the quarter’s revenues. However, the reinstatement of Medicare sequestration is likely to continue to have a negative impact on fourth-quarter revenues.
DaVita is likely to have continued to benefit from its acquisition of MedSleuth, which was completed in January 2022. MedSleuth’s software enables closer partnerships and better coordination between transplant centers, nephrologists and kidney care providers, with all three working together to support the company’s patient transplant journey.
During the third-quarter 2022 earnings call DaVita confirmed that its Integrated Kidney Care is a business that management has generally assumed will have a better fourth-quarter performance than other quarters because of how revenue recognition works. This is also likely to have driven up the quarterly revenues.
The Estimate Picture
For fourth-quarter 2022, the Zacks Consensus Estimate of $2.94 billion for total revenues calls for a decline of 0.2% from the prior-year reported figure.
We estimate fourth-quarter total revenues to be $2.93 billion, reflecting a decline of 0.3% year over year.
The consensus estimate for earnings per share is pegged at 88 cents, indicating a decline of 56.4% from the prior-year reported number.
We estimate fourth-quarter earnings to be 86 cents, reflecting a decline of 57.5% year over year.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: DaVita has an Earnings ESP of -1.71%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +13.21% and a Zacks Rank of 2. EXAS has an estimated growth rate of 29.4% for 2023.
Inozyme Pharma, Inc. (INZY - Free Report) has an Earnings ESP of +7.35% and is a Zacks #2 Rank stock. INZY has an estimated long-term growth rate of 16.6%.
Inozyme Pharma’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, with the average surprise being 9.2%.
Penumbra, Inc. (PEN - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank of 2 at present. PEN’s earnings yield of 0.4% compares favorably with the industry’s negative yield.
Penumbra’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 37.6%.
Image: Bigstock
DaVita (DVA) to Report Q4 Earnings: What's in the Offing?
DaVita Inc. (DVA - Free Report) is scheduled to release fourth-quarter 2022 results on Feb 22, after the closing bell.
In the last reported quarter, the company’s earnings of $1.45 per share lagged the Zacks Consensus Estimate by 12.1%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions and lagged the same in the other two, delivering a negative earnings surprise of 0.9%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
During third-quarter 2022 call in October, DaVita confirmed that it continued to witness treatment volume and labor-related headwinds in the reported quarter. Management confirmed that the headwinds in volumes had persisted longer than was assumed, and contract labor costs and productivity did not begin to improve in the quarter as had been expected by DaVita. Management also confirmed that it expects these pressures to continue longer than anticipated. Moreover, the continued uncertainty from COVID-19 and the labor market led DaVita to lower its guidance for the year. This does not look encouraging for the stock as this is likely to have significantly impacted the fourth-quarter revenues.
During the same call, DaVita confirmed that its net treatment rates, which had a meaningful impact on the change in its treatment volume due to an increase in mid-treatment rates resulting from the Ominicon search, were anticipated to return to seasonal norms after the win in search. However, that was not the case and hence, management believes these will remain elevated through the end of 2022. This is also likely to have weighed on the to-be-reported quarter’s treatment volume, thereby impacting the overall top line.
DaVita Inc. Price and EPS Surprise
DaVita Inc. price-eps-surprise | DaVita Inc. Quote
Management also confirmed during the last earnings call that although COVID-19 mortality rates in 2022 have been down compared with prior years, excess mortality remains a challenge for DaVita. The company expects this to persist in the fourth quarter, although the magnitude of the impact will depend on the size and the severity of COVID-19 surges during the winter.
Moreover, labor costs have continued to remain a challenge over the past few months, with higher contracted labor utilization and base wage increases. Despite management’s efforts to offset the impact of wage and other inflationary increases, these are likely to have weighed on the company’s fourth-quarter 2022 top line.
On a positive note, management had stated that although U.S. dialysis treatments per day were down on a sequential basis, revenue per treatment grew sequentially. This primarily resulted from favorable adjustments, increased acute treatment and the continued shift to Medicare Advantage plans, partially offset by the reinstatement of Medicare sequestration. This trend is likely to have continued into the fourth quarter, thereby driving up the quarter’s revenues. However, the reinstatement of Medicare sequestration is likely to continue to have a negative impact on fourth-quarter revenues.
DaVita is likely to have continued to benefit from its acquisition of MedSleuth, which was completed in January 2022. MedSleuth’s software enables closer partnerships and better coordination between transplant centers, nephrologists and kidney care providers, with all three working together to support the company’s patient transplant journey.
During the third-quarter 2022 earnings call DaVita confirmed that its Integrated Kidney Care is a business that management has generally assumed will have a better fourth-quarter performance than other quarters because of how revenue recognition works. This is also likely to have driven up the quarterly revenues.
The Estimate Picture
For fourth-quarter 2022, the Zacks Consensus Estimate of $2.94 billion for total revenues calls for a decline of 0.2% from the prior-year reported figure.
We estimate fourth-quarter total revenues to be $2.93 billion, reflecting a decline of 0.3% year over year.
The consensus estimate for earnings per share is pegged at 88 cents, indicating a decline of 56.4% from the prior-year reported number.
We estimate fourth-quarter earnings to be 86 cents, reflecting a decline of 57.5% year over year.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: DaVita has an Earnings ESP of -1.71%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +13.21% and a Zacks Rank of 2. EXAS has an estimated growth rate of 29.4% for 2023.
Exact Sciences’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, with the average surprise being 0.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inozyme Pharma, Inc. (INZY - Free Report) has an Earnings ESP of +7.35% and is a Zacks #2 Rank stock. INZY has an estimated long-term growth rate of 16.6%.
Inozyme Pharma’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, with the average surprise being 9.2%.
Penumbra, Inc. (PEN - Free Report) has an Earnings ESP of +11.11% and carries a Zacks Rank of 2 at present. PEN’s earnings yield of 0.4% compares favorably with the industry’s negative yield.
Penumbra’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, with the average surprise being 37.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.