DaVita Stock Declines After Q3 Earnings Miss Estimates, Margins Up

Core Viewpoint - DaVita Inc. reported a decline in adjusted earnings per share (EPS) for Q3 2024, missing consensus estimates, despite an increase in revenues driven by higher reimbursement rates and other fluctuations [1][2][9][10]. Financial Performance - Adjusted EPS for Q3 2024 was $2.59, down 9.1% year over year, and missed the Zacks Consensus Estimate by 6.2% [1] - GAAP EPS for the quarter was $2.50, reflecting a decline of 4.6% year over year [1] - Revenues reached $3.26 billion, an increase of 4.6% year over year, surpassing the Zacks Consensus Estimate by 1.3% [2] - Gross profit rose 5.5% year over year to $1.11 billion, with a gross margin of 34.1%, expanding by 30 basis points [6] Revenue Breakdown - Dialysis patient service revenues were $3.14 billion, up 6.3% year over year [3] - Other revenues were $125 million, down 26.2% from the previous year [3] Operational Metrics - Total U.S. dialysis treatments for Q3 were 7,350,784, averaging 93,048 per day, which is a sequential decrease of 0.1% [4] - DaVita served approximately 265,400 patients at 3,113 outpatient dialysis centers as of September 30, 2024 [4] Strategic Developments - During Q3 2024, DaVita opened three and closed 15 dialysis centers in the U.S., while also acquiring one and opening four centers outside the U.S. [5] - The company had around 69,500 patients in risk-based integrated care arrangements, representing $5.4 billion in annualized medical spend [5] Margin and Cost Analysis - Adjusted operating profit totaled $718.2 million, reflecting a 6.1% increase from the prior year [6] - General & administrative expenses increased by 4.4% year over year to $393.5 million [6] Financial Position - DaVita ended Q3 2024 with cash and cash equivalents of $1.09 billion, up from $437.2 million at the end of Q2 [7] - Total debt at the end of Q3 was $9.56 billion, compared to $8.99 billion at the end of Q2 [7] - Cumulative net cash provided by operating activities was $1.47 billion, down from $1.57 billion a year ago [7] Future Outlook - DaVita reiterated its adjusted EPS guidance for 2024, projecting a range of $9.25-$10.05, with the Zacks Consensus Estimate at $9.99 [8]