DaVita Inc. (DVA Quick QuoteDVA - Free Report) delivered adjusted earnings per share (EPS) of $2.59 in the second quarter of 2024, up 24.5% year over year. The figure topped the Zacks Consensus Estimate by 4.9%.

GAAP EPS for the quarter was $2.50, reflecting a surge of 30.9% year over year.

Revenues in Detail

Revenues of $3.19 billion in the second quarter increased 6.2% year over year. The figure surpassed the Zacks Consensus Estimate by 0.7%.

Per management, the revenue uptick primarily resulted from a seasonal improvement from patients meeting their co-insurance and deductibles and normal annual rate increases. However, this was partially offset by unfavorable changes in the payor mix.

Segment Details

DaVita generates revenues via two sources — Dialysis patient service revenues and Other revenues.

The dialysis patient service revenues were $3.06 billion, up 5.9% year over year.

Other revenues were $125.6 million, up 14.5% from the year-ago quarter’s figure.

Per management, the total U.S. dialysis treatments for the second quarter were 7,265,444 or 93,147 per day, on average. This represents a per-day increase of 1.1% on a sequential basis. Normalized non-acquired treatment growth in the second quarter of 2024 was 0.4% year over year.

As of Jun 30, 2024, DaVita provided dialysis services to around 265,100 patients at 3,124 outpatient dialysis centers, of which 2,672 were U.S. centers while 452 were located across 13 other countries.

During the second quarter of 2024, the company acquired and opened a total of 10 and closed three dialysis centers in the United States. It also acquired 24 dialysis centers, opened three and closed two dialysis centers outside the United States in the same period.

As of Jun 30, DaVita had approximately 71,300 patients in risk-based integrated care arrangements in its Integrated Kidney Care business, representing $5.4 billion in annualized medical spend. The company also had an additional 15,200 patients in other integrated care arrangements.

Margin Details

In the quarter under review, DaVita’s gross profit rose 10.6% to $1.04 billion. The gross margin expanded 129 basis points (bps) to 32.8%.

General & administrative expenses climbed 1.1% to $367.8 million.

Adjusted operating profit totaled $676.6 million, reflecting a 16.5% uptick from the prior-year quarter’s level. Adjusted operating margin in the second quarter expanded 188 bps to 21.2%.

Financial Position

DaVita exited second-quarter 2024 with cash and cash equivalents and short-term investments of $437.2 million compared with $355.7 million at the first-quarter end. Total debt (including the current portion) at the end of second-quarter 2024 was $8.99 billion compared with $9.13 billion at the first-quarter end.

Cumulative net cash provided by operating activities at the end of second-quarter 2024 was $664 million compared with $912.7 million a year ago.

2024 Guidance

DaVita has upped its adjusted EPS outlook for 2024.

Adjusted EPS for the full year is now projected to be in the range of $9.25-$10.05, upped from the previous expectations of $9.00-$9.80. The Zacks Consensus Estimate currently stands at $9.62.

Our Take

DaVita ended the second quarter of 2024 with better-than-expected results. The uptick in the company’s overall top-line and bottom-line performances was encouraging. Strength in both dialysis patient service and Other revenues during the period was impressive. The per-day increase in total U.S. dialysis treatments for the second quarter on a sequential basis and the opening of dialysis centers within the United States and acquiring centers overseas were promising. The expansion of both margins bodes well for the stock. 

However, the volume growth was lower than the company’s expectations due to elevated missed treatments related to spring storms and lower-than-expected census gain, which was disappointing. The current shortage of nursing staff raises our apprehension.

Zacks Rank and Key Picks

DaVita currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Blueprint Medicines Corporation (BPMC Quick QuoteBPMC - Free Report) , Quest Diagnostics Incorporated (DGX Quick QuoteDGX - Free Report) and Boston Scientific Corporation (BSX Quick QuoteBSX - Free Report) .

Blueprint Medicines, carrying a Zacks Rank of 2 (Buy), reported second-quarter 2024 loss per share of 80 cents, beating the Zacks Consensus Estimate by 37.5%. Revenues of $138.2 million outpaced the consensus mark by 32.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Blueprint Medicines has a long-term estimated growth rate of 34%. BPMC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.9%.

Quest Diagnostics reported second-quarter 2024 adjusted EPS of $2.35, beating the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.

Quest Diagnostics has a long-term estimated growth rate of 6.2%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.

Boston Scientific reported second-quarter 2024 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 6.9%. Revenues of $4.12 billion surpassed the Zacks Consensus Estimate by 2.5%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.