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DaVita HealthCare Partners Inc.

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DaVita ended fourth-quarter fiscal 2016 on a mixed note wherein adjusted earnings beat the Zacks Consensus Estimate while revenues missed the same. Over the past one year, the stock has underperformed the broader industry in terms of price performance. Davita’s revenues in the fourth quarter reflected significant year-over-year growth on the back of strong patient services. The company saw solid improvement in Kidney care in the quarter. DaVita also made efforts to control expenses in the fourth quarter. The company’s strength basically lies in its enhanced service offerings. A compelling inorganic growth story supported by its strong financial position is another positive. However, DaVita remains challenged by high debt levels, adverse effects of healthcare reforms, rise in Medicare costs, and an increase in Medicare Advantage (MA) beneficiaries. Also, MA rate cuts are likely to hurt the bottom line in the near future.


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