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DaVita (DVA) Tops Q2 Earnings & Revenues, Revises Outlook
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DaVita HealthCare Partners Inc. (DVA - Free Report) reported second-quarter 2016 adjusted operating earnings of $1.01 per share that surpassed the Zacks Consensus Estimate of 98 cents by 3.1%. Earnings also increased 4.1% year over year.
The outperformance was attributable to improved revenues.
Net income per share, including goodwill impairment charges related to certain HCP reporting units, gain on the partial sale of HCP's Tandigm Health ownership interest and loss on the sale of HCP Arizona business, amounted to 26 cents per share. Last year, net income including debt redemption charges, tax adjustment related to the settlement of a private civil suit and a goodwill impairment charge related to international operations was 78 cents per share.
Operational Update
Total revenue increased 8.8% year over year to approximately $3.72 billion and narrowly surpassed the Zacks Consensus Estimate by 1.2%. The year-over-year improvement was mainly attributable to rise in patient service revenues, capitated revenues and other revenues.
Total operating expenses and charges of DaVita Healthcare were $3.39 billion in the reported quarter, up 14.9% year over year. This rise in expenses are mainly attributable to a 9% increase in patient care and other costs, a 11% year-over-year increase in general and administrative expenses, a 14% year-over-year rise in depreciation and amortization expenses and a 65% year-over-year increase in provision for uncollectible accounts. Another major contributor was the goodwill impairment charge that came in $1.8 billion as against $4 million in the prior-year quarter.
Total U.S. dialysis treatments in the second quarter were approximately 6.7 million or 86,482 treatments per day. This represents a per day increase of 4.4% year over year. Normalized non-acquired treatment grew 4.3% in the reported quarter.
During the second quarter, DaVita opened 15 new dialysis centers alongside acquiring four and closing three in the United States. It has also acquired two and opened one dialysis center outside the United States.
Segment Update
Revenues from the Dialysis and Related Lab Services segment amounted to approximately $2.3 billion, up 9.5% year over year. The segment reported a 2.74% increase in adjusted operating income to $449 million from $437 million in the prior-year quarter.
HealthCare Partners (“HCP”) generated revenues of $1 billion in the quarter, up 9.7% year over year. The segment reported adjusted operating income of $44 million, up 22% from $36 million in the prior-year quarter.
Ancillary services and strategic initiatives generated revenues of $423 million, up 26.6% from $334 million in the year-ago quarter. Operating loss during the reported quarter was $13 million, 50% narrower than the year-ago loss of $26 million.
Financial Update
Total cash and cash equivalents of DaVita Healthcare dropped 13.3% to $1.3 billion as of Jun 30, 2016 from $1.5 billion as of Dec 31, 2015.
Cash from operations was $516 million in the reported quarter as against $31.4 million in the year-ago quarter. Free cash flow was $391 million in the reported quarter.
DaVita Healthcare’s long-term debt as of Jun 30, 2016 was $8.9 billion, down 1.1% from year-end 2015.
Share Repurchase Update
DaVita Healthcare spent $249 million to buy back 3.7 million shares in the first half of 2016. On Jul 13, 2016, the board of directors of DaVita approved an additional share repurchase authorization of $1.241 billion. Currently, the company has a total of $1.500 billion in outstanding authorizations available for share repurchases.
Revised Guidance for 2016
Management projected DaVita Healthcare’s consolidated operating income in the range of $1.785–$1.875 billion down from the earlier projection of $1.80–$1.95 billion.
The company also projected operating income for Kidney Care in the range of $1.675–$1.725 billion, revised from $1.625–$1.725 billion guided earlier. Operating income for HCP is now anticipated in the range of $110–$150 million against the earlier projected range of $175–$225 million.
Operating cash flow projection upped to the range of $1.600–$1.750 billion from $1.550–$1.750 billion projected earlier.
Zacks Rank and Performance of Other Healthcare Service Insurers
DaVita Healthcare carries a Zacks Rank #4 (Sell). Among other stocks in the health care space that have recently release their second-quarter results, the bottom line of Humana Inc. (HUM - Free Report) , Anthem, Inc. and Molina Healthcare, Inc.’s (MOH - Free Report) beat their respective Zacks Consensus Estimate.
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DaVita (DVA) Tops Q2 Earnings & Revenues, Revises Outlook
DaVita HealthCare Partners Inc. (DVA - Free Report) reported second-quarter 2016 adjusted operating earnings of $1.01 per share that surpassed the Zacks Consensus Estimate of 98 cents by 3.1%. Earnings also increased 4.1% year over year.
The outperformance was attributable to improved revenues.
Net income per share, including goodwill impairment charges related to certain HCP reporting units, gain on the partial sale of HCP's Tandigm Health ownership interest and loss on the sale of HCP Arizona business, amounted to 26 cents per share. Last year, net income including debt redemption charges, tax adjustment related to the settlement of a private civil suit and a goodwill impairment charge related to international operations was 78 cents per share.
Operational Update
Total revenue increased 8.8% year over year to approximately $3.72 billion and narrowly surpassed the Zacks Consensus Estimate by 1.2%. The year-over-year improvement was mainly attributable to rise in patient service revenues, capitated revenues and other revenues.
Total operating expenses and charges of DaVita Healthcare were $3.39 billion in the reported quarter, up 14.9% year over year. This rise in expenses are mainly attributable to a 9% increase in patient care and other costs, a 11% year-over-year increase in general and administrative expenses, a 14% year-over-year rise in depreciation and amortization expenses and a 65% year-over-year increase in provision for uncollectible accounts. Another major contributor was the goodwill impairment charge that came in $1.8 billion as against $4 million in the prior-year quarter.
Total U.S. dialysis treatments in the second quarter were approximately 6.7 million or 86,482 treatments per day. This represents a per day increase of 4.4% year over year. Normalized non-acquired treatment grew 4.3% in the reported quarter.
During the second quarter, DaVita opened 15 new dialysis centers alongside acquiring four and closing three in the United States. It has also acquired two and opened one dialysis center outside the United States.
Segment Update
Revenues from the Dialysis and Related Lab Services segment amounted to approximately $2.3 billion, up 9.5% year over year. The segment reported a 2.74% increase in adjusted operating income to $449 million from $437 million in the prior-year quarter.
HealthCare Partners (“HCP”) generated revenues of $1 billion in the quarter, up 9.7% year over year. The segment reported adjusted operating income of $44 million, up 22% from $36 million in the prior-year quarter.
Ancillary services and strategic initiatives generated revenues of $423 million, up 26.6% from $334 million in the year-ago quarter. Operating loss during the reported quarter was $13 million, 50% narrower than the year-ago loss of $26 million.
Financial Update
Total cash and cash equivalents of DaVita Healthcare dropped 13.3% to $1.3 billion as of Jun 30, 2016 from $1.5 billion as of Dec 31, 2015.
Cash from operations was $516 million in the reported quarter as against $31.4 million in the year-ago quarter. Free cash flow was $391 million in the reported quarter.
DaVita Healthcare’s long-term debt as of Jun 30, 2016 was $8.9 billion, down 1.1% from year-end 2015.
Share Repurchase Update
DaVita Healthcare spent $249 million to buy back 3.7 million shares in the first half of 2016. On Jul 13, 2016, the board of directors of DaVita approved an additional share repurchase authorization of $1.241 billion. Currently, the company has a total of $1.500 billion in outstanding authorizations available for share repurchases.
Revised Guidance for 2016
Management projected DaVita Healthcare’s consolidated operating income in the range of $1.785–$1.875 billion down from the earlier projection of $1.80–$1.95 billion.
The company also projected operating income for Kidney Care in the range of $1.675–$1.725 billion, revised from $1.625–$1.725 billion guided earlier. Operating income for HCP is now anticipated in the range of $110–$150 million against the earlier projected range of $175–$225 million.
Operating cash flow projection upped to the range of $1.600–$1.750 billion from $1.550–$1.750 billion projected earlier.
DAVITA HEALTHCR Price, Consensus and EPS Surprise
DAVITA HEALTHCR Price, Consensus and EPS Surprise | DAVITA HEALTHCR Quote
Zacks Rank and Performance of Other Healthcare Service Insurers
DaVita Healthcare carries a Zacks Rank #4 (Sell). Among other stocks in the health care space that have recently release their second-quarter results, the bottom line of Humana Inc. (HUM - Free Report) , Anthem, Inc. and Molina Healthcare, Inc.’s (MOH - Free Report) beat their respective Zacks Consensus Estimate.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>