UASBIG Portfolio

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DaVita healthcare Partners released their 4Q earning that ended December 31, 2012 and reported on February 14, 2013.  In this quarter DaVita completed the acquisition of HealthCare partners.  They reported earnings of $173.3 million, or $1.68 per share—excluding the transaction expenses associated with the acquisition costs of HealthCare partners—compared to $1.57 in the year earlier quarter.  This beat the streets expectation by $.25. Revenue rose 33.05 percent to 2.48 billion rom the year earlier quarter. Net income was 155.8 million, or $1.51 per share.  Operating cash flow was 1,101 million and free cash flow was 715 million.

Management noted in their earning conference call that as part of the fiscal cliff negotiations congress mandated a rebasement of part of the bundle (payments by Medicare and Medicaid) for 2014. Which could lead to headwinds for kidney care providers, such as DaVita, in 2014. Currently, the kidney care providers are losing money on Medicare and many of the dialysis centers in America “ are in a fragile financial state”.  However, management is confident that they will be able to reduce total cost while at the same time improving quality of care. Some of those costs will be actualized by the further vertical integration of Healthcare partners and the resulting greater efficiency.  Management also touched on the increasing risk of the often-discussed government investigations and private lawsuits. 

In the near-term outlook, management maintained 2013 OI guidance of $1.75 billion to $1.9 billion, and this includes, on the kidney care side, $1.35 billion to $1.45 billion; and on the HeathCare Partners side, $400 million to $450 million.

DaVita has continued to post solid financial gains despite the uncertainty that exists in the healthcare sector.  The company proven the ability to diversify and integrate vertically, with its acquisition of HealthCare Partners.  DaVita's emphasis on quality of care and their vast network of dialysis centers has given the company a great competitive advantage in the Kidney care provider sector.

It is noteworthy to mention that Berkshire Hathaway bought an additional $3,728,844 worth of DaVita shares bringing their ownership to nearly 15 percent of the company.