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DaVita (DVA) Continues to Underperform: Time to Offload it?
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On Aug 17, 2016, we issued an updated research report on DaVita HealthCare Partners Inc. (DVA - Free Report) .
In the recently reported quarter, the company’s earnings per share of $1.01 surpassed the Zacks Consensus Estimate by 3.1% and improved 4.1% year over year on higher revenues.
With respect to the surprise trend, this Zacks Rank #5 (Strong Sell) Healthcare organization delivered an average positive surprise of 4.28% in the last four quarters. However, the Zacks Consensus Estimate has been revised downward over the last seven days. In spite of DaVita Healthcare better-than-expected earnings, we note that it incurred 14.9% higher total operating expense and charges in the quarter. The company expects the expenditures in its dialysis and related lab services general and administrative expenses to rise further in the subsequent quarters of 2016. These high expenses might drain the company’s bottom line.
The company also lowered its full-year 2016 guidance to a range of $110–$150 million. The company’s expectation of lesser fee-for-service revenue growth, lower membership growth in Medicare Advantage and charges related to rebranding from HealthCare Partners to the DaVita Medical Group led to the revision in guidance.
A significant portion of DaVita’s dialysis and related lab service revenues are generated from patients who have commercial payors as the primary payor. However, the company’s top line might be dented if people shift from commercial insurance schemes to government schemes due to the wide disparity in payment rates in case of a rise in unemployment. In fact, the mix of treatments reimbursed by non-government payors, as a percentage of total treatments, has been falling consistently over the years.
However, continuous acquisition of dialysis centers that helped in bolstering the company’s client base, expansion of operations across the globe through joint ventures, mergers and other alliances, strong balance sheet backed by significant cash inflow and reduced long-term debt as well as efficient capital deployment to increase shareholders’ value remain strong positives for DaVita.
Stocks that Warrant a Look
Investors can also look at better-ranked stocks from the same industry like Almost Family Inc , RadNet Inc (RDNT - Free Report) and UD Physical Therapy Inc. (USPH - Free Report) . Each of these stocks holds a Zacks Rank #2 (Buy)
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 >>
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DaVita (DVA) Continues to Underperform: Time to Offload it?
On Aug 17, 2016, we issued an updated research report on DaVita HealthCare Partners Inc. (DVA - Free Report) .
In the recently reported quarter, the company’s earnings per share of $1.01 surpassed the Zacks Consensus Estimate by 3.1% and improved 4.1% year over year on higher revenues.
With respect to the surprise trend, this Zacks Rank #5 (Strong Sell) Healthcare organization delivered an average positive surprise of 4.28% in the last four quarters. However, the Zacks Consensus Estimate has been revised downward over the last seven days.
In spite of DaVita Healthcare better-than-expected earnings, we note that it incurred 14.9% higher total operating expense and charges in the quarter. The company expects the expenditures in its dialysis and related lab services general and administrative expenses to rise further in the subsequent quarters of 2016. These high expenses might drain the company’s bottom line.
The company also lowered its full-year 2016 guidance to a range of $110–$150 million. The company’s expectation of lesser fee-for-service revenue growth, lower membership growth in Medicare Advantage and charges related to rebranding from HealthCare Partners to the DaVita Medical Group led to the revision in guidance.
A significant portion of DaVita’s dialysis and related lab service revenues are generated from patients who have commercial payors as the primary payor. However, the company’s top line might be dented if people shift from commercial insurance schemes to government schemes due to the wide disparity in payment rates in case of a rise in unemployment. In fact, the mix of treatments reimbursed by non-government payors, as a percentage of total treatments, has been falling consistently over the years.
However, continuous acquisition of dialysis centers that helped in bolstering the company’s client base, expansion of operations across the globe through joint ventures, mergers and other alliances, strong balance sheet backed by significant cash inflow and reduced long-term debt as well as efficient capital deployment to increase shareholders’ value remain strong positives for DaVita.
Stocks that Warrant a Look
Investors can also look at better-ranked stocks from the same industry like Almost Family Inc , RadNet Inc (RDNT - Free Report) and UD Physical Therapy Inc. (USPH - Free Report) . Each of these stocks holds a Zacks Rank #2 (Buy)
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 >>