DaVita Stock Down Despite Q1 Earnings Beat, Margins Contract

DaVita Inc. DVA delivered adjusted earnings per share (EPS) of $2.00 in the first quarter of 2025, down 11.5% year over year. However, the figure surpassed the Zacks Consensus Estimate by 14.3%.GAAP EPS for the quarter was $2.00, reflecting a plunge of 24.5% year over year.DaVita’s Revenues in DetailRevenues of $3.22 billion in the first quarter increased 4.9% year over year. The figure topped the Zacks Consensus Estimate by 0.4%.Revenue per treatment in the first quarter of 2025 was $400.1 million, up 4.1% year over year. Per management, this was primarily driven by the incorporation of phosphate binders (oral drugs prescribed to help dialysis patients avoid mineral bone disease) into the end-stage renal disease Prospective Payment System bundle, Medicare base rate and other annual rate increases, as well as an increase in hospital inpatient dialysis rates and favorable changes in mix. This was partially offset by other normal fluctuations.Shares of this company plunged nearly 0.4% in yesterday’s after-hours trading.DVA’s Segment DetailsDaVita generates revenues via two sources — Dialysis patient service revenues and Other revenues.The dialysis patient service revenues were $3.10 billion, up 5.5% year over year.Other revenues were $120.5 million, down 6.6% from the year-ago quarter’s figure.Per management, the total U.S. dialysis treatments for the first quarter were 7,040,519 or 91,793 per day, on average. This represents a per-day increase of 0.01% on a sequential basis. Normalized non-acquired treatment declined 0.6% year over year in the first quarter of 2025.As of March 31, 2025, DaVita provided dialysis services to around 282,000 patients at 3,173 outpatient dialysis centers, of which 2,661 were U.S. centers while 512 were located across 13 other countries.During the first quarter of 2025, the company acquired one, opened six and closed four dialysis centers in the United States. It also acquired one and closed two dialysis centers outside the United States in the same period.As of March 31, 2025, DaVita had approximately 62,100 patients in risk-based integrated care arrangements in its Integrated Kidney Care business, representing $5.2 billion in annualized medical spend. The company also had an additional 9,300 patients in other integrated care arrangements. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)DaVita Inc. Price, Consensus and EPS Surprise DaVita Inc. price-consensus-eps-surprise-chart | DaVita Inc. QuoteDaVita’s Margin DetailsIn the quarter under review, DaVita’s gross profit declined 0.8% year over year to $983.9 million. The gross margin contracted 177 basis points (bps) to 30.5%.General & administrative expenses climbed 3.2% year over year to $374.1 million.Adjusted operating profit totaled $609.8 million, reflecting a 3.1% decline from the prior-year quarter’s level. Adjusted operating margin in the first quarter contracted 157 bps to 18.9%.DVA’s Financial PositionDaVita exited first-quarter 2025 with cash and cash equivalents and short-term investments of $511.9 million compared with $845.9 million at 2024-end. Total debt (including the current portion) at the end of first-quarter 2025 was $9.74 billion compared with $9.45 billion at 2024-end.Net cash provided by operating activities at the end of first-quarter 2025 was $180 million against net cash used in operating activities of $134.8 million a year ago.During the three months ended March 31, 2025, DVA repurchased 3.7 million shares for $550 million.DaVita’s GuidanceDaVita has reiterated its adjusted EPS outlook for 2025.Adjusted EPS for the full year is continued to be projected in the range of $10.20-$11.30. The Zacks Consensus Estimate currently stands at $10.76.Our Take on DVADaVita ended the first quarter of 2025 with better-than-expected results. The uptick in the company’s top line and revenue per treatment was encouraging. Solid dialysis patient service revenues and the per-day increase in total U.S. dialysis treatments for the first quarter on a sequential basis were encouraging. The opening and acquiring of dialysis centers within the United States and acquiring centers overseas were promising.On the earnings call, management confirmed that DaVita is dispensing phosphate binders for physician orders and receiving reimbursement from CMS and Medicare Advantage plans on a per script basis during the initial TDAPA period. Management sounded optimistic about the revenue contribution of these drugs to DVA’s full-year operating income. This looks promising for the stock.However, the dismal bottom-line performance and lower Other revenues during the quarter were disappointing. The year-over-year decline in normalized non-acquired treatment was also discouraging. The contraction of both margins does not bode well for the stock.DaVita’s Zacks Rank and Key PicksDVA currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader medical space that have announced quarterly results are CVS Health Corporation CVS, Integer Holdings Corporation ITGR and Boston Scientific Corporation BSX.CVS Health, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2025 adjusted EPS of $2.25, beating the Zacks Consensus Estimate by 31.6%. Revenues of $94.59 billion outpaced the consensus mark by 1.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.CVS Health has a long-term estimated growth rate of 11.4%. CVS’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.1%.Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.Boston Scientific reported first-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 11.9%. Revenues of $4.66 billion surpassed the Zacks Consensus Estimate by 2.3%. It currently carries a Zacks Rank #2.Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boston Scientific Corporation (BSX): Free Stock Analysis Report DaVita Inc. (DVA): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report Integer Holdings Corporation (ITGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks