DaVita HealthCare Partners Inc. DVA reported second-quarter 2015 adjusted operating earnings of 95 cents per share that surpassed the Zacks Consensus Estimate by 1.06%. The reported figure was in line with the year-ago earnings.
Including debt redemption as well as refinancing charges and payments related to the settlement of the Vainer suit, the company’s net income was 78 cents per share compared with 68 cents earned in the year-ago quarter.
Operational Update
Total net revenue increased 8.3% to approximately $3.4 billion. Revenues were almost in line with the Zacks Consensus Estimate. The year-over-year increase was mainly attributable to rise in patient service revenues, capitated revenues and other revenues.
Total operating expenses and charges of DaVita Healthcare were $2.9 billion in the reported quarter, up 9.9% year over year. This was primarily due to a rise in patient care costs and other costs, general and administrative charges, and depreciation and amortization expenses in the quarter.
Total U.S. dialysis treatments in the reported quarter came in at approximately 6.5 million or 82,860 treatments per day. This represents a per day increase of 4.3% year over year. Growth of both non-acquired treatment and normalized non-acquired treatment was 3.7% in the reported quarter.
In second quarter, DaVita Healthcare opened 13 dialysis centers in the U.S. The company also purchased one and opened two dialysis centers outside the U.S.
Segment Update
Revenues from the Dialysis and Related Lab Services segment amounted to approximately $2.2 billion, up 6.4% year over year. Operating income at the segment was $438 million compared with an income of $408 million in the year-ago quarter.
HealthCare Partners (HCP) generated revenues of $966 million in the quarter, up 8.9% year over year. Operating income in the segment decreased to $72 million from $82 million a year ago.
Ancillary services and strategic initiatives recorded revenues of $334 million, higher than $274 million in the second quarter of 2014. Operating loss during the reported quarter was $26 million, wider than the year-ago loss of $2 million.
Financial Update
Total cash and cash equivalents of DaVita Healthcare decreased to $933.7 million as of Jun 30, 2015 from $965.2 million as of Dec 31, 2014.
Net cash flow from operating activities in the second quarter was $31 million, significantly down from $410 million in the year-ago quarter. Cash flow was affected by post-tax payments associated with the settlement of the Vainer suit during the reported quarter.
DaVita Healthcare’s long-term debt as of Jun 30, 2015 was $9.1 billion, up from $8.4 billion at year-end 2014.
Share Repurchase Update
On Apr 14, 2015, DaVita’s board of directors approved a $726 million share repurchase program. This authorization is in addition to the $274 million left under the previous authorization.
DaVita repurchased 0.2 million shares for $14 million during the quarter, thereby taking the tally to 1.1 million shares repurchased for $84 million in the first six months of 2015.
Guidance for 2015
DaVita updated its 2015 outlook.
Management increased the lower end of the consolidated operating income guidance to $1.825 billion from $1.8 billion. As a result, the operating income guidance for 2015 is now $1.825–$1.925 compared with the earlier guidance of $1.8–$1.925 billion.
The company also increased the lower end of the operating income guidance for Kidney Care to $1.6 billion from $1.575 billion. As a result, Kidney Care operating income is now expected in the $1.6–$1.650 billion range compared with the previous outlook of $1.575–$1.650 billion. On the other hand, for HCP, operating income is projected to be between $225 million and $275 million, in line with the previous guidance.
Operating cash flow guidance was upped to $1.6–$1.75 billion from $1.5–$1.7 billion.
Performance of Other Healthcare Service Stocks
Aetna Inc. AET reported second-quarter 2015 earnings of $2.05 per share, way ahead of the Zacks Consensus Estimate of $1.84 per share.
Anthem Inc. ANTM reported second-quarter 2015 adjusted income of $3.10 per share that surpassed the Zacks Consensus Estimate of $2.74.
Molina Healthcare, Inc. MOH reported second-quarter 2015 adjusted net income from continuing operations of 86 cents per share that handily beat the Zacks Consensus Estimate of 66 cents per share.
Zacks Rank
DaVita Healthcare holds a Zacks Rank #2 (Buy).
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