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In the last reported quarter, the company’s earnings per share (EPS) of $2.38 surpassed the Zacks Consensus Estimate by 21.4%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 29.4%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
On first-quarter 2024 earnings call in May, DaVita’s management confirmed that its adjusted patient care cost per treatment was down in the quarter sequentially compared with the seasonally elevated fourth quarter. This is likely to have continued in the second quarter as well, thereby aiding the company and boosting its operating income.
On the same earnings call, management confirmed that revenue per treatment (RPT) was slightly down in the first quarter of 2024 sequentially, primarily due to typical seasonality related to patient coinsurance and deductibles. However, management continued to see strength in RPT as a result of revenue cycle improvements. We expect this trend to have continued in the second quarter, thus driving up revenues.
In March, DaVita announced that it has agreed to terms on expanding its international operations in Brazil and Colombia, and its entry into Chile and Ecuador. The deal, involving four separate acquisitions from Fresenius Medical Care, is consistent with DaVita's disciplined investment strategy. On the call, management stated that the Chile acquisition had already closed. This is likely to have generated additional revenues for the company during the second quarter. However, management expects that their partial-year operating income in 2024 will largely be offset by expenses related to the acquisitions. This is likely to have weighed on DaVita’s second-quarter revenues.
Management also stated that the first quarter was DaVita’s fifth consecutive quarter of year-over-year new-to-dialysis admissions growth. However, due to seasonality in new dialysis admits, the realization of 1-2% growth is unlikely to be achieved in the second quarter. This raises our apprehension about the company’s performance in the to-be-reported quarter.
The Estimate Picture
For second-quarter 2024, the Zacks Consensus Estimate of $3.16 billion for total revenues calls for an uptick of 5.4% from the prior-year reported figure.
The consensus estimate for EPS is pegged at $2.47, indicating an improvement of 18.8% 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 #3.
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.
Image: Bigstock
Strength in Kidney Care Likely to Aid DaVita's (DVA) Q2 Earnings
DaVita Inc. (DVA - Free Report) is scheduled to release second-quarter 2024 results on Aug 6, after the closing bell.
In the last reported quarter, the company’s earnings per share (EPS) of $2.38 surpassed the Zacks Consensus Estimate by 21.4%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, delivering an earnings surprise of 29.4%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors at Play
On first-quarter 2024 earnings call in May, DaVita’s management confirmed that its adjusted patient care cost per treatment was down in the quarter sequentially compared with the seasonally elevated fourth quarter. This is likely to have continued in the second quarter as well, thereby aiding the company and boosting its operating income.
On the same earnings call, management confirmed that revenue per treatment (RPT) was slightly down in the first quarter of 2024 sequentially, primarily due to typical seasonality related to patient coinsurance and deductibles. However, management continued to see strength in RPT as a result of revenue cycle improvements. We expect this trend to have continued in the second quarter, thus driving up revenues.
DaVita Inc. Price and EPS Surprise
DaVita Inc. price-eps-surprise | DaVita Inc. Quote
In March, DaVita announced that it has agreed to terms on expanding its international operations in Brazil and Colombia, and its entry into Chile and Ecuador. The deal, involving four separate acquisitions from Fresenius Medical Care, is consistent with DaVita's disciplined investment strategy. On the call, management stated that the Chile acquisition had already closed. This is likely to have generated additional revenues for the company during the second quarter. However, management expects that their partial-year operating income in 2024 will largely be offset by expenses related to the acquisitions. This is likely to have weighed on DaVita’s second-quarter revenues.
Management also stated that the first quarter was DaVita’s fifth consecutive quarter of year-over-year new-to-dialysis admissions growth. However, due to seasonality in new dialysis admits, the realization of 1-2% growth is unlikely to be achieved in the second quarter. This raises our apprehension about the company’s performance in the to-be-reported quarter.
The Estimate Picture
For second-quarter 2024, the Zacks Consensus Estimate of $3.16 billion for total revenues calls for an uptick of 5.4% from the prior-year reported figure.
The consensus estimate for EPS is pegged at $2.47, indicating an improvement of 18.8% 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 #3.
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.
Esperion Therapeutics, Inc. (ESPR - Free Report) has an Earnings ESP of +15.91% and a Zacks Rank of 1. ESPR has an estimated long-term growth rate of 26.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Esperion’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 142.4%.
MediWound Ltd. (MDWD - Free Report) has an Earnings ESP of +4.76% and is a Zacks Rank #2 stock. MDWD has an estimated growth rate of 23.4% for 2025.
MediWound’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 47.7%.
CalciMedica, Inc. (CALC - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank of 2. CALC has an estimated growth rate of 80.2% for 2024.
CalciMedica’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 27.6%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.