NEW YORK (TheStreet) -- Shares of DaVita (DVA - Get Report) were climbing 5.84% to $58.38 on heavy trading volume mid-afternoon Monday after the company announced a change for Medicaid patients seeking Affordable Care Act (ACA) plan coverage.
DaVita will suspend support for applications to the American Kidney Fund for charitable premium assistance by Medicaid patients who are seeking additional coverage on an ACA plan, the Denver-based kidney care services provider said in a statement.
The change will affect 2,000 patients, or about 1% of DaVita's total patient population.
Because Medicaid reimburses for dialysis at a lower rate than ACA plans, DaVita estimates it could result in a reduction in annualized operating income of up to $230 million.
Baird analysts view the change as a "de-risking event," adding that the "worst-case operating income hit" is in the range of what was expected.
The firm lowered its price target to $68 from $85 but kept its "outperform" rating on DaVita stock, according to TheFly.
Additionally, DaVita will report its 2016 third quarter results after Wednesday's market close.
Analysts surveyed by FactSet are looking for adjusted earnings of 93 cents per share on revenue of $3.72 billion.
For the year-ago period, DaVita posted adjusted earnings of $1.00 per share and $3.53 billion in revenue.
More than 4.54 million of the company's shares changed hands so far today vs. its average 30-day volume of 2.07 million shares per day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates DaVita as a Hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, the team also finds weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
You can view the full analysis from the report here: DVA