DaVita income falls in Q1 on lower ACA enrollment, higher wages

DaVita Inc. reported that adjusted net income for the first quarter of 2017 fell 21% to $154 million, or $0.79 a share, compared to $190 million, or $0.92 per share in the first quarter of 2016.

“Q1 was in line with what we expected in Kidney Care,” Javier Rodriguez, CEO of DaVita Kidney Care, said during an investor call.

Rodriguez attributed the decline to several headwinds, including lower enrollment among dialysis patients in ACA plans, an increase in wages for clinical staff, and a decline in adjusted operating income for the pharmacy operations.

Rodriguez said that tailwinds benefiting the bottom line included decreased compensation accruals in 2017 due to a switch from profit share programs to a 401(k) match program, and lower EPO pricing from a renegotiated contract with Amgen.

He reaffirmed 2017 Kidney Care adjusted operating income guidance of $1.525 billion to $1.625 billion. He also expressed uncertainty about the impact the national efforts to repeal the Affordable Care Act will have on health care and DaVita’s business.

Total U.S. dialysis treatments for the first quarter of 2017 were 6,804,384, or 88,369 treatments per day, representing a per day increase of 3.7% over the first quarter of 2016. Normalized non-acquired treatment growth in the first quarter of 2017 as compared to the first quarter of 2016 was 3.8%.

As of March 31, 2017, DaVita provided dialysis services to approximately 205,900 patients at 2,544 outpatient dialysis centers, of which 2,382 centers were located in the United States and 162 centers were located in 11 countries outside of the United States.

During the first quarter of 2017, DaVita opened 24 new dialysis centers and acquired 12 dialysis centers in the United States. The company also opened five new dialysis centers and acquired three dialysis centers outside of the United States.

DaVita also finalized its acquisition of Renal Ventures Management May 1 for $415 million.