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DaVita Inc DVA

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Morningstar’s Analysis

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Raising Our Fair Value Estimate After DaVita's Near- and Long-Term Outlooks Rise Again

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Narrow-moat dialysis firm DaVita turned in an exceptionally strong third quarter that allowed it to boost its 2020 bottom-line outlook for the second time this year despite pandemic-related challenges. We have raised our near-term assumptions, and combining those with recently generated cash flows and management's target of double-digit EPS for the long run, we have also raised our fair value estimate to $91 per share from $81 previously.

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Company Profile

Business Description

DaVita is the largest provider of dialysis services in the United States, boasting market share that eclipses 35% when measured by both patients and clinics. The firm operates about 3,000 facilities worldwide, mostly in the U.S., and treats over 235,000 patients globally each year. Government payers dominate U.S. dialysis reimbursement. DaVita receives approximately 69% of U.S. sales at government ( primarily Medicare) reimbursement rates, with the remaining 31% coming from commercial insurers. However, while commercial insurers represented only about 10% of the U.S. patients treated, they represent nearly all of the profits generated by DaVita in the U.S. dialysis business.

Contact
2000 16th Street
Denver, CO, 80202
T +1 720 631-2100
Sector Healthcare
Industry Medical Care Facilities
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 65,000

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