1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
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.
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.
