DaVita Shares Rise on Positive Earnings

DaVita (DVA) riding an uptick in demand for dialysis and kidney care, reported a fall in fourth quarter profit to 98 cents per share year- over-year, but finished ahead of analyst consensus estimates of 91 cents.

At the same time, the company's revenues for the quarter, $3.72 billion, finished slightly off from a $3.74 billion analyst consensus.

The company's shares were up in after-hours trading at $66.30 after closing on the New York Stock Exchange at $64.66.

The Denver company bounced from a $6 million loss in fourth quarter 2015 to net income of $157.7 million for the same period of 2016. For all of 2016 the company posted net income of $879.8 million, compared with a profit of $269.7 million in 2015.

On a non-financial basis the company saw a per-day increase of 3.7% in patient treatment volume in the fourth quarter year-over-year.

The company released its guidance for 2017, predicted its consolidated operating income to land between $1.63 billion to $1.77 billion. Adjusted operating cash flow for the year is likely to end up between $1.75 billion and $1.95 billion and those figures include net benefit of the anticipated Veterans Administration payment.

For the last quarter of 2016, the company repurchased 6.7 million common shares at a cost of $416 million or an average share price of $61.96. For the whole year, DaVita repurchased 16.6 million shares at a cost of $1.1 billion at an average share price of $64.41. The board still has $677 million of share repurchase authorization.

The company also reached a settlement with the U.S. federal government in the first quarter of this year so that the company will receive payment of $538 million for dialysis patients via the Veterans' Administration.

While the VA settlement is a plus to the bottom line, the dialysis sector has been rife with controversy over the last year as federal investigations tied to the Centers for Medicare and Medicaid Services announced probes into the steering of patients away from the government based services into private or commercial plans which companies like DaVita could benefit from.

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