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Yesterday, DaVita Inc.’s (DVA - Analyst Report) subsidiary – Paladina Health LLC – announced the acquisition of ModernMed, which operates business-based clinics and physician practices in 12 states across the US. However, the terms of the transaction remained undisclosed.

ModernMed’s extraordinary network of providers coupled with a history of excellent care are expected to blend well with Paladina and DaVita’s long-term strategy of growth through meaningful acquisitions. Moreover, now that the uncertainties related to the bundling rule and the capital markets have eased, more acquisitions were probable.

Based on this view, in November last year, DaVita’s wholly-owned subsidiary DV Care GmbH acquired ExtraCorp in Germany, in order to expand its dialysis services. DaVita is also seeking international pastures to expand its healthcare service portfolio. The company has been looking for acquisition and partnership opportunities in all major European and Asian countries over the past year.

Simultaneously, DaVita is also looking at domestic acquisitions. In September 2011, the company completed the acquisition of its competitor DSI Renal Inc. Additionally, such strong inorganic growth also aids DaVita by providing competitive advantage to the company against arch-rivals such as Gentiva Health Services Inc. (GTIV - Analyst Report) and Quest Diagnostics Inc. (DGX - Analyst Report).

Estimate Trend Revision

DaVita reported third-quarter 2011 operating earnings of $1.45 per share, beating the Zacks Consensus Estimate by a penny and also modestly surpassing $1.15 per share recorded in the year-ago quarter. Net operating income increased 15.6% year over year to $138.2 million. Higher top line was partially offset by higher expenses.

Currently, the Zacks Consensus Estimate for the fourth quarter is operating earnings of $1.48 per share, which would be up by about 31% from the year-ago quarter. Over the last 30 days, none of the 12 analysts covering the stock have revised their estimates for the fourth quarter, which further indicates no directional pressure on the performance of the stock in the near term.

With respect to earnings surprises, the stock has been almost steady over the last four quarters, with all three positive surprises. The average remained positive at 0.97%. Additionally, DaVita carries a Zacks Rank #2, which translates into a short-term Buy rating and long-term Neutral stance.

On Thursday, the shares of DaVita closed at $78.88, up 0.4%, on the New York Stock Exchange.

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