DaVita Inc. (DVA - Free Report) reported fourth-quarter 2016 adjusted operating earnings of 98 cents per share that surpassed the Zacks Consensus Estimate of 91 cents. However, earnings declined from $1.01 in the year-ago quarter.
Total revenue increased 5.2% year over year to approximately $3.72 billion but missed the Zacks Consensus Estimate of $3.74 billion. The year-over-year improvement was mainly attributable to a rise in patient service revenues, partially offset by a decrease in capitated revenues and other revenues from the year-ago quarter.
Stock Performance
The price performance of the stock has been unfavorable over the last three months. DaVita registered a return of 4.50%, underperforming the Zacks classified Medical - Outpatient and Home Healthcare sub-industry’s gain of almost 6.68%.
Segment UpdateDialysis and Related Lab Services
Total operating revenue during the fourth quarter was approximately $2.3 billion, up 4.8% year over year. However, operating income was down 6.0% year over year to $436 million.
Davita Medical Group (“DMG”)
Total operating revenue during the fourth quarter was $1 billion, up 10.1% year over year. However, the segment’s adjusted operating income plunged nearly 12% from $25 million in the prior-year quarter to of $22 million.
Financial Update
Total cash and cash equivalents of DaVita declined 13.3% to $913 million as of Dec 31, 2016 from $1.5 billion as of Dec 31, 2015.
Cash generated from operations in 2016 was $1.96 billion compared with $1.56 billion in 2015.
As of Dec 31, 2016, DaVita’s long-term debt was $8.9 billion, down 1.1% from year-end 2015.
Share Repurchase Update
DaVita bought back 6.7 million shares in the reported quarter for $416 million, or an average price of $61.96 per share. As of Dec 31, 2016 the company had a total of approximately $677 million in outstanding board repurchase authorizations.
Guidance
Management projected DaVita’s consolidated operating income for 2017 in the range of $1.635–$1.775 billion. The company expects operating income of $1.525–$1.625 billion for Kidney Care. Operating income for DMG is now anticipated in the range of $110–$150 million. Operating cash flow projection for 2017 is expected at $1.750–$1.950 billion.
Stocks to Consider
DaVita carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Glaukos sports a Zacks Rank #1 (Strong Buy) while Avinger and Fluidigm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock registered an impressive one-year return of 180.8%.
Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% last quarter.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 10.3% over the last one-year.
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DaVita Inc. (DVA - Free Report) reported fourth-quarter 2016 adjusted operating earnings of 98 cents per share that surpassed the Zacks Consensus Estimate of 91 cents. However, earnings declined from $1.01 in the year-ago quarter.
Total revenue increased 5.2% year over year to approximately $3.72 billion but missed the Zacks Consensus Estimate of $3.74 billion. The year-over-year improvement was mainly attributable to a rise in patient service revenues, partially offset by a decrease in capitated revenues and other revenues from the year-ago quarter.
Stock Performance
The price performance of the stock has been unfavorable over the last three months. DaVita registered a return of 4.50%, underperforming the Zacks classified Medical - Outpatient and Home Healthcare sub-industry’s gain of almost 6.68%.
Segment Update
Dialysis and Related Lab Services
Total operating revenue during the fourth quarter was approximately $2.3 billion, up 4.8% year over year. However, operating income was down 6.0% year over year to $436 million.
Davita Medical Group (“DMG”)
Total operating revenue during the fourth quarter was $1 billion, up 10.1% year over year. However, the segment’s adjusted operating income plunged nearly 12% from $25 million in the prior-year quarter to of $22 million.
Financial Update
Total cash and cash equivalents of DaVita declined 13.3% to $913 million as of Dec 31, 2016 from $1.5 billion as of Dec 31, 2015.
Cash generated from operations in 2016 was $1.96 billion compared with $1.56 billion in 2015.
As of Dec 31, 2016, DaVita’s long-term debt was $8.9 billion, down 1.1% from year-end 2015.
Share Repurchase Update
DaVita bought back 6.7 million shares in the reported quarter for $416 million, or an average price of $61.96 per share. As of Dec 31, 2016 the company had a total of approximately $677 million in outstanding board repurchase authorizations.
Guidance
Management projected DaVita’s consolidated operating income for 2017 in the range of $1.635–$1.775 billion. The company expects operating income of $1.525–$1.625 billion for Kidney Care. Operating income for DMG is now anticipated in the range of $110–$150 million. Operating cash flow projection for 2017 is expected at $1.750–$1.950 billion.
Stocks to Consider
DaVita carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Notably, Glaukos sports a Zacks Rank #1 (Strong Buy) while Avinger and Fluidigm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock registered an impressive one-year return of 180.8%.
Avinger projects sales growth of 30.7% for the current year. Additionally, the company posted a positive earnings surprise of 27% last quarter.
Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 10.3% over the last one-year.
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In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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