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DaVita (DVA) to Report Q4 Earnings: What's in the Offing?

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DaVita Inc. (DVA - Free Report)  is scheduled to release fourth-quarter 2020 results on Feb 11, after market close.

In the last reported quarter, the company delivered an earnings surprise of 20.8%. Its bottom line surpassed estimates in all the trailing four quarters, the average being 27.3%.

Let’s take a look at how things are shaping up prior to this announcement.

Q4 Estimates

For the fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $2.94 billion, indicating a rise of 1.3% from the year-ago quarter’s reported number. The same for earnings per share (EPS) stands at $1.92, suggesting 3.2% growth from the year-ago period’s reported figure.

Factors at Play

Robust performance by net dialysis and its related lab patient service segment is likely to have contributed to DaVita’s top line in the soon-to-be-reported quarter.

Of late, the company is working with predictive analytics to identify chronic kidney diseases patients with maximum risk of transition to End Stage Renal Disease (ESRD). Through the third quarter of 2020, DaVita Kidney Care segment continued delivering a strong performance with respect to the treatment of Chronic Kidney Disease (CKD) and ESRD, a trend that most likely continued in the fourth quarter as well.

The company is also steadily making progress with its nephrology care line, which is a new physician-led entity with around 1,100 nephrologists. This, in turn, is expected to have facilitated DaVita’s connection with the nephrologist practice in the fourth quarter.

DaVita Kidney Care also provided support to nephrologist-led organizations like Nephrology Care Alliance (NCA) in their endeavor to treat patients of chronic kidney diseases. During the third quarter, the company customized the care for patients across the kidney care continuum using proprietary systems that it has been developing for years in partnership with the industry leaders. Benefits of these developments are expected to get reflected in fourth-quarter results.

Moreover, as a result of the pandemic, the company has been witnessing an uptick in in-center dialysis services, a trend that most likely continued in the fourth quarter.

 

DaVita Inc. Price and EPS Surprise

DaVita Inc. Price and EPS Surprise

 

DaVita Inc. price-eps-surprise | DaVita Inc. Quote

 

During the third quarter, DaVita opened a total of 17 dialysis centers apart from acquiring five and closing eight in the United States. It also bought 11 dialysis centers, besides opening one and selling or closing eight outside the United States during the September quarter. This momentum is further expected to have continued through the December quarter. Significantly, DaVita earns a significant portion of its revenues from overseas operations and the acquisition of dialysis centers abroad.

However, revenues from calcimimetics were on a declining trajectory through the third quarter, a trend that most likely persisted in the fourth quarter too. Additionally, unfavorable currency movements are likely to have weighed on the company’s international sales in the fourth quarter.

What Our Quantitative Model Suggests

Our proven model does not predict an earnings beat for DaVita this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat but that is not the case here as you will see below.

Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: DaVita carries a Zacks Rank #3, currently.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Option Care Health, Inc. (OPCH - Free Report) has an Earnings ESP of +34.69% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Radius Health, Inc. (RDUS - Free Report) has an Earnings ESP of +10.54% and a Zacks Rank #2, at present.

DENTSPLY SIRONA Inc. (XRAY - Free Report) has an Earnings ESP of +04.45% and a Zacks Rank of 2, presently.

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