Davita Inc. (DVA) Stock Analysis and Metrics

Sector: Healthcare Industry: Medical Care Facilities CIK: 0000927066

Market Cap 8.90 Bn

P/B -15.57

P/E 11.53

P/S 0.67

ROIC (Qtr) 11.22

Div Yield % 0.00

Rev 1y % (Qtr) 4.80

Total Debt (Qtr) 12.78 Bn

Debt/Equity (Qtr) -22.34

About

DaVita Inc., known by its stock symbol DVA, is a prominent player in the healthcare industry, specializing in transforming care delivery to enhance the quality of life for patients globally. The company's primary business activities revolve around providing kidney care services, with a significant focus on the U.S. market. DaVita operates in 46 states and the District of Columbia, managing a network of 2,675 outpatient dialysis centers, which cater to approximately 200,800 patients. DaVita's revenue generation is primarily tied to its U.S. dialysis...

DaVita Inc., known by its stock symbol DVA, is a prominent player in the healthcare industry, specializing in transforming care delivery to enhance the quality of life for patients globally. The company's primary business activities revolve around providing kidney care services, with a significant focus on the U.S. market. DaVita operates in 46 states and the District of Columbia, managing a network of 2,675 outpatient dialysis centers, which cater to approximately 200,800 patients.

DaVita's revenue generation is primarily tied to its U.S. dialysis and related lab services business. This business provides dialysis, administrative, and related laboratory services to patients with chronic kidney failure, End-Stage Kidney Disease (ESKD), in the United States. The company's service portfolio includes outpatient hemodialysis services, hospital inpatient hemodialysis services, and home-based dialysis services, such as home hemodialysis and peritoneal dialysis. DaVita's laboratory services are also integral to its business, offering routine laboratory tests for dialysis and other physician-prescribed laboratory tests for ESKD patients.

The company's position within the industry is fortified by its strong reputation for clinical quality and innovation. DaVita's caregivers, including registered nurses, licensed practical or vocational nurses, patient care technicians, social workers, registered dietitians, and biomedical technicians, are committed to achieving superior clinical outcomes at its dialysis facilities. However, the company faces uncertainties related to future payment rates and potential changes in coverage determinations or rules by the Centers for Medicare and Medicaid Services (CMS) or Medicare Administrative Contractors, which could impact reimbursement.

DaVita's customers include patients with ESKD, nephrologists, payors, and transplant programs. The company's integrated kidney care business provides comprehensive care management for complex chronic kidney disease patients nationwide, with payment models that include a variety of structures to advance and encourage integrated and value-based care.

Notable brand names and trade names of DaVita's products and services include its U.S. dialysis and related lab services, outpatient hemodialysis services, hospital inpatient hemodialysis services, home-based dialysis services, and laboratory services. These services are designed to deliver flexible and comprehensive kidney care, maximizing patient choice in both models and modalities of care.

DaVita's key competitors in the kidney care services market include Fresenius Medical Care, Inc., and National Kidney Foundation. The company's competitive advantages lie in its strong reputation for clinical quality and innovation, its robust platform to deliver kidney care services, and its experienced and knowledgeable caregivers.

Price action

Investment thesis

Bull case

Operating cash flow of 1.89B provides strong 14.68x coverage of stock compensation 128.96M, indicating sustainable incentive practices.
Robust free cash flow of 1.29B exceeds capital expenditure of 601.09M by 2.15x, indicating strong organic growth funding capability.
Operating cash flow of 1.89B provides strong 13.61x coverage of inventory 139.09M, indicating efficient inventory management.
Operating cash flow of 1.89B fully covers other non-current liabilities 914.65M by 2.07x, showing strong long-term stability.
Cash reserves of 795.41M provide solid 0.87x coverage of other non-current liabilities 914.65M, indicating strong liquidity.

Bear case

Operating cash flow of 1.89B barely covers its investment activities of (739.80M), with a coverage ratio of -2.56, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Cash reserves of 795.41M provide limited coverage of acquisition spending of (162.93M), which is -4.88x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
High receivables of 2.86B relative to inventory of 139.09M (20.53 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
Operating earnings of 1.62B show weak coverage of depreciation charges of 702.75M, with a 2.31 ratio indicating high capital intensity and potential reinvestment needs.
Tax assets of 130.65M provide limited offset against tax liabilities of 768.86M, which is 0.17x, indicating potential future cash flow pressure from tax obligations.

Peer comparison

Companies in the Medical Care Facilities

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	HCA	HCA Healthcare, Inc.	114.88 Bn	18.11	1.54	46.35 Bn
2	THC	Tenet Healthcare Corp	18.07 Bn	13.34	0.87	13.19 Bn
3	UHS	Universal Health Services Inc	14.64 Bn	10.65	0.86	5.11 Bn
4	FMS	Fresenius Medical Care AG	14.10 Bn	16.69	0.61	14.98 Bn
5	EHC	Encompass Health Corp	12.55 Bn	19.95	2.17	2.66 Bn
6	ENSG	Ensign Group, Inc	10.08 Bn	30.72	2.09	2.16 Bn
7	DVA	Davita Inc.	8.90 Bn	11.53	0.67	12.78 Bn
8	CHE	Chemed Corp	6.38 Bn	22.87	2.52	0.14 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	1.19	1.26
EV to Cash from Ops. EV/CFO	11.06	12.78
EV to Debt EV to Debt	1.64	12.10
EV to EBIT EV/EBIT	12.90	10.74
EV to EBITDA EV/EBITDA	7.71	16.04
EV to Free Cash Flow [EV/FCF] EV/FCF	16.21	18.02
EV to Market Cap EV to Market Cap	2.35	432.64
EV to Revenue EV/Rev	1.57	2.77
Price to Book Value [P/B] P/B	-15.61	-1.92
Price to Earnings [P/E] P/E	11.56	5.13

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Dividend Coverage Ratio	0.00	0.10
Dividend Payout Ratio % Div Payout % (Qtr)	0.00	-13.44
Dividend per Basic Share Div per Share (Qtr)	0.00	0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	5.42
Interest Coverage Int. cover (Qtr)	2.85	-97.94

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	-10.54	-114.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	-31.35	65.22
Dividend Growth (1y) % Dividend Growth (1y) %	0.00	0.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	3.55	-46.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	2.97	75.97
EBIT Growth (1y) % EBIT 1y % (Qtr)	6.14	-61.19
EBT Growth (1y) % EBT 1y % (Qtr)	-4.41	-115.48
EPS Growth (1y) % EPS 1y % (Qtr)	4.20	-24.32
FCF Growth (1y) % FCF 1y % (Qtr)	-8.73	309.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	2.49	17.88

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.76	1.04
Cash Payout Ratio Cash Payout (Qtr)	0.00	0.04
Cash Ratio Cash Ratio (Qtr)	0.26	0.39
Current Ratio Curr Ratio (Qtr)	1.36	1.39
Debt to Equity Ratio Debt/Equity (Qtr)	-22.34	-13.19
Interest Cover Ratio Int Coverage (Qtr)	2.85	-97.94
Times Interest Earned Times Interest Earned (Qtr)	2.85	-97.94

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	17.50	-95.81
EBIT Margin % EBIT Margin % (Qtr)	12.19	-94.97
EBT Margin % EBT Margin % (Qtr)	7.90	-105.60
Gross Margin % Gross Margin % (Qtr)	32.00	23.31
Net Profit Margin % Net Margin % (Qtr)	5.80	-106.14

Davita Inc. (NYSE: DVA)

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