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In the last reported quarter, the company’s earnings per share (EPS) of $2.85 surpassed the Zacks Consensus Estimate by 48.4%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 36.6%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
On third-quarter 2023 earnings call in November 2023, DaVita’s management confirmed that it witnessed a sustained decline in mortality, which was in line with its expectations. Management assumed this trend to have continued and expected to return to positive volume growth in 2024. This looks promising for DaVita in the fourth quarter of 2023, as we expect this to have driven up its revenues.
On the same call, the company also confirmed witnessing a continued decrease in patient care costs during the quarter, driven primarily by the conversion of MIRCERA for anemia management. We expect the conversion to have continued in the fourth quarter, thereby leading to a further decline in patient care costs. This is likely to have positively impacted DaVita’s margin performance.
On the same earnings call, management also confirmed that revenue per treatment was strong in the quarter. This was driven by continued improvements in DaVita’s revenue cycle performance, normal contracted rate increases and an uptick in the private pay mix. We expect this trend to have continued in the fourth quarter, thus driving up the revenues.
DaVita’s management, on the third-quarter earnings call, had confirmed that revenues from its Integrated kidney care (IKC) will be lower in the fourth quarter primarily due to timing. Per management, the fourth quarter will also have typical seasonality, driven by several factors, including higher mistreatment rates around the holidays and increased general and administrative and other year-end costs in the fourth quarter, among others. Management expects the magnitude of this seasonality in the to-be-reported quarter to be higher than what it would normally witness. This raises our apprehension about IKC business’ performance in the quarter.
DaVita continued to navigate through a tight labor market and low unemployment situation during the third quarter of 2023, which has continued to put pressure on retention and training. Although this was partially offset by a slight easing in the wage environment, this is likely to have continued to weigh on its performance in the to-be-reported quarter.
The Estimate Picture
For fourth-quarter 2023, the Zacks Consensus Estimate of $3 billion for total revenues calls for an uptick of 2.9% from the prior-year reported figure.
The consensus estimate for EPS is pegged at $1.53, indicating an improvement of 37.8% from the prior-year reported number.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
GoodRx Holdings’ earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 18.3%.
Health Catalyst, Inc. (HCAT - Free Report) has an Earnings ESP of +300.00% and a Zacks Rank of 2. HCAT has an estimated growth rate of 69.2% for 2024.
Health Catalyst’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 185.4%.
Merit Medical Systems, Inc. (MMSI - Free Report) has an Earnings ESP of +1.30% and carries a Zacks Rank of 2 at present. MMSI has an estimated long-term growth rate of 11.5%.
Merit Medical’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 14.4%.
Image: Bigstock
DaVita (DVA) to Report Q4 Earnings: What's in the Offing?
DaVita Inc. (DVA - Free Report) is scheduled to release fourth-quarter 2023 results on Feb 13, after the closing bell.
In the last reported quarter, the company’s earnings per share (EPS) of $2.85 surpassed the Zacks Consensus Estimate by 48.4%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 36.6%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
On third-quarter 2023 earnings call in November 2023, DaVita’s management confirmed that it witnessed a sustained decline in mortality, which was in line with its expectations. Management assumed this trend to have continued and expected to return to positive volume growth in 2024. This looks promising for DaVita in the fourth quarter of 2023, as we expect this to have driven up its revenues.
On the same call, the company also confirmed witnessing a continued decrease in patient care costs during the quarter, driven primarily by the conversion of MIRCERA for anemia management. We expect the conversion to have continued in the fourth quarter, thereby leading to a further decline in patient care costs. This is likely to have positively impacted DaVita’s margin performance.
DaVita Inc. Price and EPS Surprise
DaVita Inc. price-eps-surprise | DaVita Inc. Quote
On the same earnings call, management also confirmed that revenue per treatment was strong in the quarter. This was driven by continued improvements in DaVita’s revenue cycle performance, normal contracted rate increases and an uptick in the private pay mix. We expect this trend to have continued in the fourth quarter, thus driving up the revenues.
DaVita’s management, on the third-quarter earnings call, had confirmed that revenues from its Integrated kidney care (IKC) will be lower in the fourth quarter primarily due to timing. Per management, the fourth quarter will also have typical seasonality, driven by several factors, including higher mistreatment rates around the holidays and increased general and administrative and other year-end costs in the fourth quarter, among others. Management expects the magnitude of this seasonality in the to-be-reported quarter to be higher than what it would normally witness. This raises our apprehension about IKC business’ performance in the quarter.
DaVita continued to navigate through a tight labor market and low unemployment situation during the third quarter of 2023, which has continued to put pressure on retention and training. Although this was partially offset by a slight easing in the wage environment, this is likely to have continued to weigh on its performance in the to-be-reported quarter.
The Estimate Picture
For fourth-quarter 2023, the Zacks Consensus Estimate of $3 billion for total revenues calls for an uptick of 2.9% from the prior-year reported figure.
The consensus estimate for EPS is pegged at $1.53, indicating an improvement of 37.8% from the prior-year reported number.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: DaVita has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks Worth a Look
Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
GoodRx Holdings, Inc. (GDRX - Free Report) has an Earnings ESP of +15.91% and a Zacks Rank of 2. GDRX has an estimated growth rate of 14.3% for 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
GoodRx Holdings’ earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 18.3%.
Health Catalyst, Inc. (HCAT - Free Report) has an Earnings ESP of +300.00% and a Zacks Rank of 2. HCAT has an estimated growth rate of 69.2% for 2024.
Health Catalyst’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 185.4%.
Merit Medical Systems, Inc. (MMSI - Free Report) has an Earnings ESP of +1.30% and carries a Zacks Rank of 2 at present. MMSI has an estimated long-term growth rate of 11.5%.
Merit Medical’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 14.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.