DaVita (DVA) Sees Q3 EPS Above Views; Boosts FY11 Operating Income Outlook

DaVita Inc. (NYSE: DVA) reports estimates for certain third quarter 2011 operating results in advance of the announcement of its actual third quarter operating results, which is expected to occur after market close on November 3, 2011. Our estimate of operating results for the third quarter of 2011 includes:

• Operating income in the range of $314 million to $322 million.
  
  
• Diluted earnings per share from continuing operations in the range of $1.43 to $1.48. The Street sees EPS of $1.29.
  
  
• Normalized non-acquired treatment growth of approximately 4.6%.
  
  
• Continued deterioration in our mix of treatments reimbursed by non-government payors as a percentage of total treatments.
  
  
• Operating results of DSI beginning September 1, 2011

We are also raising our operating income guidance for 2011 to now be in the range of $1,125 million to $1,155 million. This guidance excludes the non-cash goodwill impairment charge recorded in the second quarter of 2011. Our previous operating income guidance for 2011 was in the range of $1,080 million to $1,120 million. This 2011 full-year guidance reflects anticipated declines in rates from the Veterans Administration and higher general and administrative spending in the fourth quarter. The above expectations regarding our results for the third quarter and guidance for 2011 are solely management estimates and projections based on currently available information. The quarter ended September 30, 2011 has recently completed, and as a result, the Company’s final results for the third quarter of 2011 are not yet available.

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