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DaVita HealthCare (DVA) Down 4.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for DaVita HealthCare (DVA - Free Report) . Shares have lost about 4.3% 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 the most recent earnings report in order to get a better handle on the important catalysts.

DaVita  Q4 Earnings and Revenues Fall Shy of Estimates

DaVita Inc. reported fourth-quarter 2020 adjusted earnings per share of $1.67, missing the Zacks Consensus Estimate of $1.85 by 9.7%. The bottom line also fell10.2% from the year-ago quarter’s figure.

For 2020, adjusted  earnings per share came in at $7.26, missing the Zacks Consensus Estimate of $7.43 by 2.3%.The bottomline, however, rose 34.4% year over year.

Revenues

Total revenues in the quarter rose 0.7% year over year to $2.91 billionbut missed theZacks Consensus Estimate by 1%.

For 2020, revenues came in at $11.55 billion, also missing the Zacks Consensus Estimate by 0.3%.The topline, however, rose 1.4% year over year.

Segment Details

Net dialysis and related lab patient service revenues in the fourth quarter totaled $2.77 billion, up 0.3% on a year-over-year basis. Other revenues were $132.2 million, down 0.3% from the year-ago quarter’s figure.

Per management, total U.S. dialysis treatments for the fourth quarter were 7,574,217 or 95,876 treatments, on average per day. This represents a per-day decrease of 0.9% on a year-over-year basis.

Also,as of Dec 31, 2020, the company provided dialysis services to a total of approximately 240,400 patients at 3,137 outpatient dialysis centers, of which 2,816 centers were located in the United States and 321 in 10 other countries.

During the quarter, DaVita opened a total of 14 dialysis centers and closed seven in the United States. The company also acquired 30 dialysis centers outside the United States including foraying into a new country, which is the United Kingdom, during the fourth quarter of 2020.

Margin

Total operating expenses and charges amounted to $2.52 billion, up 3.3% year over year.

Adjusted operating income of $382 million fell 17.4% from the prior-year quarter. Adjusted operating margin came in at 13.1%, down 290 basis points (bps) from the year-ago quarter.

Financial Condition

DaVita exited the fourth quarter of 2020 with cash and cash equivalents of $324.9 million compared with $1.10 billion at the end of the year-ago period.

Cumulative net cash from operating activities of $1.97 billion compared unfavorably with $2.07 billion in the year-ago quarter.

2021 Guidance

Adjusted earnings per share is projected within $7.75 -$8.75,up from the previous guidance of $7.35-$7.60. The Zacks Consensus Estimate for the same stands at $8.14.

Adjusted operating income is anticipated between $1.68 billion and $1.83 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, DaVita HealthCare has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 A. 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 #3 (Hold). We expect an in-line return from the stock in the next few months.


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