DaVita Unit Acquires in Germany

Yesterday, DaVita Inc. (DVA - Analyst Report) announced the acquisition of ExtraCorp AG by its wholly-owned subsidiary DV Care GmbH. ExtraCorp is a German company that owns and operates two dialysis centers in Salzgitter and Seesen and manages two other dialysis centers in Dresden and Freital. All four centers provide a wide variety of dialysis services, of which hemodialysis is the most important one.

Acquisitions have been DaVita’s preferred growth strategy over the years and the company has slowly started moving into the international market. It already has dialysis centers in Singapore and India and has signed an agreement to build some in Malaysia.

Additionally, it is trying to expand its presence in Europe. DaVita has been looking for acquisition and partnership opportunities in all major European and Asian countries over the past year. At the same time, the company is also looking at domestic acquisitions. In September 2011, DaVita completed the acquisition of its competitor DSI Renal Inc.

Earnings Review

DaVita reported third-quarter income from continuing operations of $138.2 million, or $1.45 per share, which exceeded the Zacks Consensus Estimate by a penny.

Further, the Zacks Consensus Estimate for DaVita’s fourth-quarter earnings is currently at $1.48 per share, up about 31% year-over-year. Of the 13 firms covering the stock, 11 revised their estimates upward, while 1 downward revision was witnessed in the last 30 days.

For 2011, earnings are expected to be about $5.05 per share, climbing about 15% year-over-year. The company competes with Lincare Holdings Inc. (LNCR - Snapshot Report) and HealthSouth Corporation (HLS - Snapshot Report). Currently, DaVita caries a Zacks #2 Rank, implying a short term Buy rating.

On Wednesday, the shares of the company closed at $72.68, down 2.39%, on the New York Stock Exchange.

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