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What's in the Offing for DaVita (DVA) This Earnings Season?
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DaVita Inc.’s (DVA - Free Report) fourth-quarter 2018 results are scheduled to release on Feb 14, after market close. While the company’s Kidney Care business is expected to mar the top line, the dialysis business’ overseas performance might partially boost quarterly results.
Q3 Results at a Glance
In the last reported quarter, DaVita reported adjusted operating earnings per share of 56 cents, which missed the Zacks Consensus Estimate by 37.1%. The figure also declined 34.1% on a year-over-year basis.
Total revenues improved 3% year over year to $2.85 billion, also missing the Zacks Consensus Estimate of $2.92 billion.
Which Way Are Q4 Estimates Treading?
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 89 cents, reflecting a year-over-year decline of 3.3%. The same for revenues stands at $2.99 billion, showing year-over-year growth of 7.6%.
Let’s delve into factors that are likely to impact DaVita’s fourth-quarter 2018 results.
As an operating division of DaVita, DaVita Kidney Care is currently the sole contributor to the company’s net revenues. With a focus on clinical, social and operational practices in kidney care, the segment is likely to disappoint in the fourth quarter of 2018.
In the last reported quarter, the Kidney Care business put up a lackluster show, declining 1.4% year over year to $2.85 billion.
In fact, it is disheartening to note that for 2018, management at DaVita expects Kidney Care adjusted consolidated operating income in the range of $1.5-$1.53 billion, lower than the earlier band of $1.5-$1.6 billion.
Issues in DaVita Rx
DaVita Rx is a full-service pharmacy specializing in kidney care and dedicated to ensure safety for patients.
In 2018, management at DaVita announced that certain unfavorable changes in the oral pharmacy space, including reimbursement reductions, have hurt the economics of DaVita Rx. In fact, for the second half of 2018, the company expects to incur an adjusted loss on DaVita Rx operations of $20 million to $35 million.
Other Factors to Consider
Overseas Prospects Bright
DaVita has steadily expanded its base in the international markets. Currently, the company is seeking to expand in major European and Asian countries via acquisitions and partnerships.
In the last reported quarter, international dialysis patient service and other revenues totaled $113 million, up 5.6% year over year. Moreover, the company continues to expect breakeven adjusted operating income in late 2018, excluding any foreign exchange gains or losses.
Additionally, DaVita’s Proposition 8 victory in California in the last reported quarter has established the company’s foothold as a major dialysis provider in the United States. Although it led to significant costs for DaVita, the company will continue providing free-flowing and life-saving dialysis services to customers.
What Does Our Model Say?
Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. However, this is not the case here.
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: DaVita carries a Zacks Rank #4 (Sell).
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks Worth a Look
Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat in their upcoming quarterly results.
Medidata Solutions, Inc. has an Earnings ESP of +0.54% and a Zacks Rank #2.
Wright Medical Group N.V. has an Earnings ESP of +58.24% and a Zacks Rank #2.
Zacks' Best Stock-Picking Strategy
It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.
How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.
Image: Bigstock
What's in the Offing for DaVita (DVA) This Earnings Season?
DaVita Inc.’s (DVA - Free Report) fourth-quarter 2018 results are scheduled to release on Feb 14, after market close. While the company’s Kidney Care business is expected to mar the top line, the dialysis business’ overseas performance might partially boost quarterly results.
Q3 Results at a Glance
In the last reported quarter, DaVita reported adjusted operating earnings per share of 56 cents, which missed the Zacks Consensus Estimate by 37.1%. The figure also declined 34.1% on a year-over-year basis.
Total revenues improved 3% year over year to $2.85 billion, also missing the Zacks Consensus Estimate of $2.92 billion.
Which Way Are Q4 Estimates Treading?
For the quarter to be reported, the Zacks Consensus Estimate for earnings is pegged at 89 cents, reflecting a year-over-year decline of 3.3%. The same for revenues stands at $2.99 billion, showing year-over-year growth of 7.6%.
Let’s delve into factors that are likely to impact DaVita’s fourth-quarter 2018 results.
DaVita Inc. Price and EPS Surprise
DaVita Inc. Price and EPS Surprise | DaVita Inc. Quote
Possible Deterrents
Kidney Care Likely to be Down
As an operating division of DaVita, DaVita Kidney Care is currently the sole contributor to the company’s net revenues. With a focus on clinical, social and operational practices in kidney care, the segment is likely to disappoint in the fourth quarter of 2018.
In the last reported quarter, the Kidney Care business put up a lackluster show, declining 1.4% year over year to $2.85 billion.
In fact, it is disheartening to note that for 2018, management at DaVita expects Kidney Care adjusted consolidated operating income in the range of $1.5-$1.53 billion, lower than the earlier band of $1.5-$1.6 billion.
Issues in DaVita Rx
DaVita Rx is a full-service pharmacy specializing in kidney care and dedicated to ensure safety for patients.
In 2018, management at DaVita announced that certain unfavorable changes in the oral pharmacy space, including reimbursement reductions, have hurt the economics of DaVita Rx. In fact, for the second half of 2018, the company expects to incur an adjusted loss on DaVita Rx operations of $20 million to $35 million.
Other Factors to Consider
Overseas Prospects Bright
DaVita has steadily expanded its base in the international markets. Currently, the company is seeking to expand in major European and Asian countries via acquisitions and partnerships.
In the last reported quarter, international dialysis patient service and other revenues totaled $113 million, up 5.6% year over year. Moreover, the company continues to expect breakeven adjusted operating income in late 2018, excluding any foreign exchange gains or losses.
Additionally, DaVita’s Proposition 8 victory in California in the last reported quarter has established the company’s foothold as a major dialysis provider in the United States. Although it led to significant costs for DaVita, the company will continue providing free-flowing and life-saving dialysis services to customers.
What Does Our Model Say?
Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. However, this is not the case here.
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: DaVita carries a Zacks Rank #4 (Sell).
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks Worth a Look
Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat in their upcoming quarterly results.
Masimo Corporation (MASI - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medidata Solutions, Inc. has an Earnings ESP of +0.54% and a Zacks Rank #2.
Wright Medical Group N.V. has an Earnings ESP of +58.24% and a Zacks Rank #2.
Zacks' Best Stock-Picking Strategy
It's hard to believe, even for us at Zacks. But from 2000-2018, while the market gained +4.8% per year, our top stock-picking strategy averaged +54.3% per year.
How has that screen done lately? From 2017-2018, it sextupled the market's +15.8% gain with a soaring +98.3% return.
Free – See the Stocks It Turned Up for Today >>