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DaVita HealthCare (DVA) Down 4.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for DaVita HealthCare (DVA - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DaVita HealthCare due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

DaVita Earnings Beat Estimates in Q2, Revenues Miss

DaVita Inc. reported second-quarter 2020 adjusted earnings per share of $1.95, beating the Zacks Consensus Estimate of $1.29 by 51%. The bottom line also reflects a significant 59.8%improvement from the year-ago quarter figure.

Total revenues in the quarter rose 1.4% year over year to $2.88 billion, missing the Zacks Consensus Estimate by 1.1%.

Segment Details

Net dialysis and related lab patient service revenues in the second quarter totaled $2.76 billion, up 1.1% on a year-over-year basis. Other revenues were $121.8 million, up 2.4% from the year-ago quarter’s figure.

Per management, total U.S. dialysis treatments for the second quarter were 7,570,908, or an average 97,063treatments per day. This represents a per-day increase of 0.7% on a year-over-year basis.

Also, as of Jun 30, 2020 the company provided dialysis services to a total of approximately 236,800patients at 3,082 outpatient dialysis centers, of which 2,795 centers were located in the United States and 287centers in 10 other countries.

During the quarter, DaVita opened a total of 28new dialysis centers and acquired one in the country.It also took over three dialysis centers and opened two outside of the United States . However, during the second quarter, the company also closed six dialysis centers in the United States.

Margin

Total operating expenses and charges amounted to $2.47 billion, compared with $2.38 billion in the year -ago period.

Adjusted operating income of $461.2 million fell 0.9% from the prior-year quarter. Adjusted operating margin came in at 16%, down 20 basis points (bps) from the year-ago quarter.

Financial Condition

DaVita exited the second quarter with cumulative net cash from operating activities of $1.01 billion compared with $751.1 million in the year-ago quarter.

Guidance

DaVita has reaffirmed the 2020 revenue range between $11.50 billion and $11.70 billion. The Zacks Consensus Estimate for the same is pegged at $11.68 billion.

Adjusted EPS projection has been updated to the range of $6.25-$6.75 compared with the previously-issued $5.75-6.25. The Zacks Consensus Estimate for the same stands at $6.13.

Adjusted operating income margin is estimated in the band of 14-14.75% (up from the prior-guided range of 13-14%).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, DaVita HealthCare has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, DaVita HealthCare has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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