DaVita (DVA) Earnings Miss Estimates, Revenues Beat In Q1

DaVita Inc. (NYSE:DVA) reported first-quarter 2017 adjusted operating earnings of 79 cents per share that missed the Zacks Consensus Estimate of 82 cents. Also, earnings declined from 92 cents in the year-ago quarter.

Total revenue increased from $3.58 billion year over year to approximately $3.70 billion and beat the Zacks Consensus Estimate of $3.69 billion.

Stock Performance

The price performance of the stock was favorable in the last three months. DaVita registered a return of 7.27%, outperforming the Zacks classified Medical - Outpatient and Home Healthcare sub-industry’s gain of almost 2.69%.

Segment Update

Dialysis and Related Lab Services

Total operating revenue during the first quarter was approximately $2.27 billion, up from $2.23 billion in the year-ago quarter. However, operating income was down from $440 million in the year-ago quarter to $415 million.

Davita Medical Group (DMG)

Total operating revenue during the first quarter was $1.09 billion, up from $989 million in the year-ago quarter. Also, the segment’s adjusted operating income came in at $12 million versus the prior-year’s quarter loss of $57 million.

Financial Update

Total cash and cash equivalents of DaVita declined to $1.47 billion as of Mar 31, 2017 from $913 million as of Dec 31, 2016. Cash generated from operations in the reported quarter was $865.2 million compared with $429.0 million in the year-ago quarter. As of Mar 31, 2017, DaVita’s long-term debt was $8.92 billion, down from $8.95 billion at year-end 2016.

Guidance

Management projected DaVita’s consolidated operating income for 2017 in the range of $1.635–$1.775 billion. The company expects operating income of $1.525–$1.625 billion for Kidney Care. Operating income for DMG is now anticipated in the range of $110–$150 million. Operating cash flow projection for 2017 is expected at $1.750–$1.950 billion.

Zacks Rank & Stocks to Consider

DaVita carries a Zacks Rank #3 (Hold).

Better-ranked medical stocks are Neovasc Inc. (NASDAQ:NVCN) , Hologic, Inc. (NASDAQ:HOLX) and Sunshine Heart Inc (NASDAQ:SSH) . Notably, all the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 32.8%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.

Neovasc saw a stellar gain of 14% over the last three months. The company projects sales growth of 102.88% for the current year.

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