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DaVita Healthcare Partners' New Facility Now in Los Angeles

Zacks Equity Research
Updated

HealthCare Partners, an important division of DaVita Inc. DVA recently announced the opening of a new medical facility and urgent care clinic in Los Angeles at Washington Boulevard and Hoover Street. The development has been described as one of the largest health care projects in the city.

The facility has many patient care operations like On-site radiology and lab services, Pain management, Dermatology, Pulmonology, Podiatry, Opthalmology/Optometry, Rheumatology and many more. Further, apart from providing valuable medical services to the Pico Union/University Park communities, the facility is expected to create more employment and increase economic activity.

DaVita’s consistent efforts to upgrade services, global expansion initiatives and active acquisitions are impressive and supported by the company’s strong financial position. The development is likely to strengthen the company’s DaVita Medical Group (“DMG”) segment. For investors’ notice, DMG is on track for divestment to Optum, a subsidiary of UnitedHealth Group Inc.

A Sneak Peek at DMG Performance

DMG, the nation's largest operator of medical groups and physician networks, provides integrated care management.

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In the last reported quarter, DaVita announced the restructuring of the DMG segment that eliminated 350 non-clinical positions. Thus, management expects annualized savings of around $40 million per year, starting 2018.

Price Performance

Shares of DaVita have marginally underperformed the industry in a year's time. The stock has gained 27.5% compared with the industry's rally of 28.2%. The current return is also higher than S&P 500’s rise of 17.3%.

DaVita has a Zacks Rank #3 (Hold).

 

DaVita Grows Internationally as Well!

Apart from fortifying its foothold in the domestic space, DaVita is steadily expanding in the international markets.

In the past few years, the company has strengthened its position in the emerging and developing markets of Brazil, China, Colombia, Germany, India, Malaysia, Netherlands, Poland, Portugal and Saudi Arabia through strategic alliances as well as acquisitions of dialysis centers.

These are expected to help DaVita deliver more efficient patient care. Currently, DaVita is planning to expand in major European and Asian countries via acquisitions and partnerships.

By the end of the second quarter of 2018, DaVita’s adjusted operating income for International business was $3 million, which included a $5-million foreign exchange gain from the cash balance in Asia-Pacific joint venture. The company continues to expect breakeven adjusted operating income in late 2018 excluding any foreign exchange gains or losses.

Want More from the MedTech Space?

A few better-ranked stocks in the MedTech space are Inogen Inc INGN, Integer Holdings Corp. ITGR and Patterson Companies, Inc. PDCO. Inogen and Patterson Companies have a Zacks Rank #2 (Buy). Integer sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 22.5%, while the same for Integer Holdings and Patterson Companies is at 15% and 8.3%, respectively.

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