DaVita Inc. DVA delivered adjusted earnings per share (EPS) of $2.59 in the third quarter of 2024, down 9.1% year over year. The figure also missed the Zacks Consensus Estimate by 6.2%.

GAAP EPS for the quarter was $2.50, reflecting a decline of 4.6% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

DaVita’s Revenues in Detail

Revenues of $3.26 billion in the third quarter increased 4.6% year over year. The figure surpassed the Zacks Consensus Estimate by 1.3%.

Per management, the revenue uptick primarily resulted from increases in average reimbursement rates and other normal fluctuations.

Shares of this company plunged 6% in pre-market trading.

DVA’s Segment Details

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

The dialysis patient service revenues were $3.14 billion, up 6.3% year over year.

Other revenues were $125 million, down 26.2% from the year-ago quarter’s figure.

Per management, the total U.S. dialysis treatments for the third quarter were 7,350,784 or 93,048 per day, on average. This represents a per-day decrease of 0.1% on a sequential basis. Normalized non-acquired treatment declined 0.2% year over year in the third quarter of 2024.

As of Sept. 30, 2024, DaVita provided dialysis services to around 265,400 patients at 3,113 outpatient dialysis centers, of which 2,660 were U.S. centers while 453 were located across 13 other countries.

During the third quarter of 2024, the company opened three and closed 15 dialysis centers in the United States. It also acquired one, opened four and closed four dialysis centers outside the United States in the same period.

As of Sept. 30, DaVita had approximately 69,500 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 13,900 patients in other integrated care arrangements.

DaVita’s Margin Details

In the quarter under review, DaVita’s gross profit rose 5.5% year over year to $1.11 billion. The gross margin expanded 30 basis points (bps) to 34.1%.

General & administrative expenses climbed 4.4% year over year to $393.5 million.

Adjusted operating profit totaled $718.2 million, reflecting a 6.1% uptick from the prior-year quarter’s level. Adjusted operating margin in the third quarter expanded 31 bps to 22%.

DVA’s Financial Position

DaVita exited third-quarter 2024 with cash and cash equivalents and short-term investments of $1.09 billion compared with $437.2 million at the second-quarter end. Total debt (including the current portion) at the end of third-quarter 2024 was $9.56 billion compared with $8.99 billion at the second-quarter end.

Cumulative net cash provided by operating activities at the end of third-quarter 2024 was $1.47 billion compared with $1.57 billion a year ago.

DaVita’s 2024 Guidance

DaVita has reiterated its adjusted EPS outlook for 2024.

Adjusted EPS for the full year is continued to be projected in the range of $9.25-$10.05. The Zacks Consensus Estimate currently stands at $9.99.

Our Take

DaVita ended the third quarter of 2024 with better-than-expected revenues. The uptick in the company’s overall top-line and dialysis patient service revenues was encouraging. The opening of dialysis centers within the United States and opening and acquiring centers overseas were promising. The expansion of both margins bodes well for the stock. 

However, lower-than-expected earnings and the dismal bottom-line performance was disappointing. The plunge in Other revenues during the period was also discouraging. The per-day decrease in total U.S. dialysis treatments for the third quarter on a sequential basis and the year-over-year decline in normalized non-acquired treatment does not look promising. DVA continued to face volume and labor pressures during the third quarter, raising our apprehension.

DVA’s 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 Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted EPS of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.4%.

ResMed reported the first quarter of fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.4%.

Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.3%.

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

Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report

DaVita Inc. (DVA) : Free Stock Analysis Report

ResMed Inc. (RMD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research