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DaVita (DVA) Q3 Earnings Lag Estimates, 2022 EPS View Cut
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DaVita Inc. (DVA - Free Report) delivered adjusted earnings per share (EPS) of $1.45 in the third quarter of 2022, which declined 38.3% on a sequential basis. The figure lagged the Zacks Consensus Estimate by 12.1%.
Our projection of adjusted EPS was $1.64.
GAAP EPS for the quarter was $1.13, reflecting a plunge of 52.1% year over year.
Revenues in Detail
Revenues of $2.95 billion in the third quarter were up by 0.4% year over year. The figure missed the Zacks Consensus Estimate by 1.1%.
The third-quarter revenues compare to our estimate of $2.97 billion.
Management noted that the top line was primarily driven by increased hospital inpatient dialysis revenues and continued migration to Medicare Advantage plans. However, the quarterly revenues were negatively impacted by unfavorable changes in government rates due to the reinstatement of 2% Medicare sequestration as of Jul 1 and a decrease in the commercial mix.
Segment Details
The company’s dialysis patient service revenues were $2.85 billion, up by 0.3% year over year. Other revenues were $102.2 million, up 1.8% from the year-ago quarter’s figure.
Our projected figures for dialysis patient service revenues and Other revenues were $2.87 billion and $107.2 million, respectively.
Per management, total U.S. dialysis treatments for the third quarter were 7,335,825 or 92,859 per day, on average. This represents a per-day decrease of 0.4% on a sequential basis.
As of Sep 30, 2022, DaVita provided dialysis services to around 243,800 patients at 3,128 outpatient dialysis centers, of which 2,776 were U.S. centers while 352 were located across 11 other countries.
During the third quarter of 2022, the company acquired five dialysis centers, opened a total of six new dialysis centers and closed 44 dialysis centers in the United States. It also acquired three dialysis centers, opened three dialysis centers and closed three dialysis centers outside the United States in the same period.
In the quarter under review, DaVita’s gross profit fell 7.2% to $863.1 million. Gross margin contracted 237 basis points (bps) to 29.3%.
We had projected 29.2% of gross margin for Q3.
General & administrative expenses climbed 24.7% to $365.4 million.
Adjusted operating profit totaled $497.7 million, reflecting 21.8% plunge from the prior-year quarter’s level. Adjusted operating margin in the third quarter contracted 479 bps to 16.9%.
The adjusted operating margin according to our model was 12.8% for Q3.
Financial Position
DaVita exited third-quarter 2022 with cash and cash equivalents, and short-term investments of $441.8 million compared with $363.1 million at the end of the second quarter. Total debt (including the current portion) at the end of third-quarter 2022 was $9.08 billion, compared with $9.26 billion at the end of the second quarter.
The cumulative net cash flow from operating activities at the end of third-quarter 2022 was $1.22 billion.
DaVita repurchased 2.1 million shares of its common stock for $185 million during the reported quarter. Management also informed that subsequent to Sep 30, 2022, through Oct 27, 2022, DaVita did not repurchase any shares.
2022 Guidance
DaVita lowered its financial outlook for the full-year 2022.
Adjusted EPS for the full year is now projected in the range of $6.20-$6.70, lowered from the previously-provided outlook of $7.50-$8.50. The Zacks Consensus Estimate for the same currently stands at $7.64.
Our Take
DaVita ended the third quarter of 2021 with lower-than-expected results. The dismal overall bottom-line result is disappointing. A fall in the company’s total U.S. dialysis treatments during the third quarter is concerning. The contraction of both margins also does not bode well for the company. DaVita lowered its full-year adjusted EPS outlook, which further raises apprehension. The company faced negative volume trends due to COVID and continued labor pressure during the reported quarter, which is further concerning.
However, uptick in the company’s overall top line and both its segments’ revenue during the period is impressive. The acquisition of several dialysis centers and the opening of others, both within the United States and overseas, are also encouraging. The increased hospital inpatient dialysis revenues registered during the third quarter are also promising.
Zacks Rank and Key Picks
DaVita currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 37.6% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 10.5%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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DaVita (DVA) Q3 Earnings Lag Estimates, 2022 EPS View Cut
DaVita Inc. (DVA - Free Report) delivered adjusted earnings per share (EPS) of $1.45 in the third quarter of 2022, which declined 38.3% on a sequential basis. The figure lagged the Zacks Consensus Estimate by 12.1%.
Our projection of adjusted EPS was $1.64.
GAAP EPS for the quarter was $1.13, reflecting a plunge of 52.1% year over year.
Revenues in Detail
Revenues of $2.95 billion in the third quarter were up by 0.4% year over year. The figure missed the Zacks Consensus Estimate by 1.1%.
The third-quarter revenues compare to our estimate of $2.97 billion.
Management noted that the top line was primarily driven by increased hospital inpatient dialysis revenues and continued migration to Medicare Advantage plans. However, the quarterly revenues were negatively impacted by unfavorable changes in government rates due to the reinstatement of 2% Medicare sequestration as of Jul 1 and a decrease in the commercial mix.
Segment Details
The company’s dialysis patient service revenues were $2.85 billion, up by 0.3% year over year. Other revenues were $102.2 million, up 1.8% from the year-ago quarter’s figure.
Our projected figures for dialysis patient service revenues and Other revenues were $2.87 billion and $107.2 million, respectively.
Per management, total U.S. dialysis treatments for the third quarter were 7,335,825 or 92,859 per day, on average. This represents a per-day decrease of 0.4% on a sequential basis.
As of Sep 30, 2022, DaVita provided dialysis services to around 243,800 patients at 3,128 outpatient dialysis centers, of which 2,776 were U.S. centers while 352 were located across 11 other countries.
During the third quarter of 2022, the company acquired five dialysis centers, opened a total of six new dialysis centers and closed 44 dialysis centers in the United States. It also acquired three dialysis centers, opened three dialysis centers and closed three dialysis centers outside the United States in the same period.
DaVita Inc. Price, Consensus and EPS Surprise
DaVita Inc. price-consensus-eps-surprise-chart | DaVita Inc. Quote
Margin Details
In the quarter under review, DaVita’s gross profit fell 7.2% to $863.1 million. Gross margin contracted 237 basis points (bps) to 29.3%.
We had projected 29.2% of gross margin for Q3.
General & administrative expenses climbed 24.7% to $365.4 million.
Adjusted operating profit totaled $497.7 million, reflecting 21.8% plunge from the prior-year quarter’s level. Adjusted operating margin in the third quarter contracted 479 bps to 16.9%.
The adjusted operating margin according to our model was 12.8% for Q3.
Financial Position
DaVita exited third-quarter 2022 with cash and cash equivalents, and short-term investments of $441.8 million compared with $363.1 million at the end of the second quarter. Total debt (including the current portion) at the end of third-quarter 2022 was $9.08 billion, compared with $9.26 billion at the end of the second quarter.
The cumulative net cash flow from operating activities at the end of third-quarter 2022 was $1.22 billion.
DaVita repurchased 2.1 million shares of its common stock for $185 million during the reported quarter. Management also informed that subsequent to Sep 30, 2022, through Oct 27, 2022, DaVita did not repurchase any shares.
2022 Guidance
DaVita lowered its financial outlook for the full-year 2022.
Adjusted EPS for the full year is now projected in the range of $6.20-$6.70, lowered from the previously-provided outlook of $7.50-$8.50. The Zacks Consensus Estimate for the same currently stands at $7.64.
Our Take
DaVita ended the third quarter of 2021 with lower-than-expected results. The dismal overall bottom-line result is disappointing. A fall in the company’s total U.S. dialysis treatments during the third quarter is concerning. The contraction of both margins also does not bode well for the company. DaVita lowered its full-year adjusted EPS outlook, which further raises apprehension. The company faced negative volume trends due to COVID and continued labor pressure during the reported quarter, which is further concerning.
However, uptick in the company’s overall top line and both its segments’ revenue during the period is impressive. The acquisition of several dialysis centers and the opening of others, both within the United States and overseas, are also encouraging. The increased hospital inpatient dialysis revenues registered during the third quarter are also promising.
Zacks Rank and Key Picks
DaVita currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 37.6% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.
Merit Medical, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 10.5%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.