DaVita Jumps After Dialysis-Clinic Operator Boosts 2019 Forecast
DaVita Jumps After Dialysis-Clinic Operator Boosts 2019 Forecast
(Bloomberg) -- DaVita Inc. shares surged as much as 6.9% after the operator of kidney dialysis clinics boosted its 2019 profit outlook.
In an announcement Monday ahead of its second-quarter earnings report on Aug. 1, DaVita said full-year adjusted operating income would be $1.64 billion to $1.70 billion, up from a previous forecast of $1.54 billion to $1.64 billion.
The majority of the increase was due to a temporary boost from lower costs of calcimimetics, drugs used to decrease parathyroid hormones and calcium levels in the blood, the company said. Jason McGorman, a senior industry analyst for Bloomberg Intelligence, called that a “tailwind that may not be sustainable.”
DaVita shares were down over the past two weeks after President Donald Trump announced an overhaul of the U.S. approach to treating people with kidney disease in early July, hoping to move patients out of expensive dialysis centers and to increase transplants. The shares were also weighed down by news that drugstore giant CVS Health Corp. would begin human trials of a new home dialysis machine that could compete with DaVita and the other major dialysis player, Fresenius Medical Care AG.
On Monday, DaVita also released updated information for investors regarding its share buyback through a modified “Dutch auction.” The company said it would buy as much as $1.2 billion in shares at a price between $53.50 and $61.50 per share. The offer began Monday and will end on Aug. 16. That gives shareholders a greater certainty around price, said Jake Strole, analyst at Morningstar Investment Service.
The company’s shares traded at $59 at 11:26 a.m. Monday in New York. They are up almost 15% so far this year, boosted by the sale of DaVita’s physician-practice group to UnitedHealth Group Inc., which was approved June 19 by regulators in Colorado.
Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, is the lead independent director at DaVita.
To contact the reporter on this story: Myah Ward in New York at mward174@bloomberg.net
To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Mark Schoifet
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