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DaVita Third Quarter Results Top Estimates, Boosts 2013 Outlook

Kidney dialysis centers operator DaVita, Inc. (DVA) reported Tuesday a profit for the third quarter that declined from last year, despite revenue growth, reflecting lower operating margins amid higher expenses. However, both adjusted earnings per shared and quarterly revenues topped analysts' expectations. The company also raised its operating income guidance for the full-year 2013.

The Denver, Colorado-based company reported net income of $136.63 million or $0.64 per share for the third quarter, lower than $144.72 million or $0.75 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $235.75 million or $1.10 per share, compared to $151.52 million or $0.78 per share last year.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.96 per share for the quarter. Analysts' estimates typically exclude special items.

Total net revenues for the quarter surged to $3.0 billion from $1.95 billion in the same quarter last year, and topped twelve Wall Street analysts' consensus estimate of $2.93 billion.

Net patient service revenues grew to $2.05 million from $1.78 million from last year.

Operating margin for the quarter contracted 490 basis points to 12.6 percent, and adjusted operating margin declined only 160 basis points to 16.1 percent from last year.

Operating expenses and charges for the quarter surged to $2.62 billion from $1.61 billion in the year-ago quarter.

Total U.S. treatments for the quarter were 6.03 million or 76,388 treatments per day, representing a per day increase of 7.3 percent over last year.

During the third quarter, the company acquired ten dialysis centers and opened a total of 25 dialysis centers located in the U.S. as well as acquired 18 dialysis additional centers outside of the U.S.

DaVita operated or provided administrative services at 2,108 outpatient dialysis, with 66 of them located in ten countries outside of the U.S. at the end of the third quarter, serving about 166,000 patients.

Looking ahead to fiscal 2013, the company narrowed its consolidated operating income guidance to a range of $1.88 billion to $1.92 billion from the prior forecast between $1.83 billion and $1.93 billion. The company also now expects operating cash flows for the year in a range of $1.60 billion to $1.70 billion, up from the prior forecast of $1.40 billion to $1.50 billion.

In the third quarter, the company's board also approved a two-for-one stock split of common stock in the form of a stock dividend payable on September 6 to stockholders of record on August 23, 2013. The common stock began trading on a post-split basis on September 9, 2013.

DVA closed Tuesday's regular trading session at $56.53, down $0.22 or 0.39% on a volume of 1.87 million shares. The stock lost a further $2.48 or 4.39% in after-hours trading.

by RTTNews Staff Writer

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