DaVita (DVA) Announces Preliminary Q2 Results, View Upbeat

DaVita Inc. (NYSE:DVA) recently announced preliminary results for second-quarter 2019, with operating income projected within $460-$465 million.

The company is scheduled to release full financial results on Aug 1, after market close.

Investors Cheer

Following the announcement, shares of this Zacks Rank #3 (Hold) company jumped 4.9% to $58.80 at close.

Notably, DaVita’s impressive guidance for 2019 has boosted investors’ optimism in the stock. The company now expects adjusted operating income between $1.64 billion and $1.70 billion. This reflects a significant increase from the earlier projected range of $1.54 billion to $1.64 billion.

Per management, the substantially raised view is a result of the company's higher profit expectation from calcimimetics.

Quarter Highlights

DaVita expects calcimimetics to have contributed nearly $40 million to its operating income in the second quarter.

Additionally, the company’s U.S. dialysis and related lab services segment is anticipated to have significantly driven the top line.

Hence, the company now expects non-acquired treatment growth of 2.1%, with 7,520,587 treatments in the second quarter. Revenue per treatment is expected at $350, an increase of approximately $1.60 year over year.

For the second quarter, DaVita projects reduced per treatment costs of $9 from the year-ago figure. Per management, this is likely to be driven by reduced calcimimetics expenses and reduced labor and benefit expenses due to strong productivity.

Notably, the recent divestment of the DaVita Medical Group unit to Optum has helped the company focus more on its core Kidney Care business, thereby fortifying its foothold in the global renal care market.

Price Performance

We believe positive performances such as these will boost DaVita’s shares which have slipped 17% in a year, compared with the industry’s 19.4% decline.

Key Picks

Some better-ranked stocks in the broader medical space are DENTSPLY SIRONA (NASDAQ:XRAY) , AmerisourceBergen Corporation (NYSE:ABC) and Stryker Corporation (NYSE:SYK) . While DENTSPLY SIRONA sports a Zacks Rank #1 (Strong Buy), AmerisourceBergen and Stryker carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DENTSPLY SIRONA’s second-quarter 2019 revenues is pegged at $1.03 billion. The same for adjusted earnings per share stands at 62 cents, indicating an increase of 3.3% from the year-ago reported figure.

The Zacks Consensus Estimate for AmerisourceBergen’s third-quarter fiscal 2019 revenues is pegged at $45.2 billion, suggesting 4.8% growth from the prior-year reported figure. The same for adjusted earnings per share stands at $1.63, implying a 5.8% improvement from the year-ago reported number.

The Zacks Consensus Estimate for Stryker’s second-quarter 2019 revenues is pegged at $3.6 billion, indicating an 8.5% rise from the year-ago reported figure. The same for adjusted earnings per share stands at $1.94, suggesting 10.2% growth from the year-earlier quarter's reported figure.

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