Author Topic: DVA – DaVita HealthCare Partners  (Read 175695 times)

ValueMaven

  • Sr. Member
  • ****
  • Posts: 278
Re: DVA – DaVita HealthCare Partners
« Reply #580 on: December 17, 2018, 02:42:15 PM »
Yes - on the margin its a negative... even still the story doesnt change all that much.  Good for UNH for reworking the deal honestly...the valuation was always high...get it done, turn back into a pure-play and start buying back a ton of stock...


walkie518

  • Sr. Member
  • ****
  • Posts: 385
Re: DVA – DaVita HealthCare Partners
« Reply #581 on: February 11, 2019, 09:36:45 AM »
I suppose what we're all waiting for now is a closing date

after the price decline, market seems to think they're not going to close?  so what if they didn't, not sure the stock should trade here anyway?

I imagine mgmt is taking advantage of the lower pricing to buy back with cash on hand?  anyone have any add'l thoughts to consider as we approach earnings?

cubsfan

  • Hero Member
  • *****
  • Posts: 1128
Re: DVA – DaVita HealthCare Partners
« Reply #582 on: February 11, 2019, 11:57:50 AM »
I suppose what we're all waiting for now is a closing date

after the price decline, market seems to think they're not going to close?  so what if they didn't, not sure the stock should trade here anyway?

I imagine mgmt is taking advantage of the lower pricing to buy back with cash on hand?  anyone have any add'l thoughts to consider as we approach earnings?

That is what I am waiting for - this DMG deal has to close - but with the FTC shutdown, it could not happen.
Management is NOT buying back stock, as they are at their leverage limits - that has plenty to do with the low price.
On the last call (January) - they clearly indicated their priorities - with the DMG proceeds - first reduce debt significantly and then buy back lots of stock over time.

This DMG deal needs to happen.

MrB

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1061
Re: DVA – DaVita HealthCare Partners
« Reply #583 on: February 12, 2019, 07:06:49 AM »
Found this 21 Dec 18 article in the meantime. Isolated source, so not sure how much you can trust it and the Davita filing referred to in the article does not make any reference to the Nevada clinics specifically, so not sure what the connection with Nevada is based on.

https://www.pressreader.com/usa/las-vegas-review-journal/20181221/282179357192793

"Unitedhealth Group’s Optum is dropping plans to purchase the Davita Medical Group physician clinics in Nevada after the Federal Trade Commission investigated the deal’s compliance with antitrust regulations.

Davita, in a U.S. Securities and Exchange Commission filing last week, indicated that while Optum will continue with its planned purchase of Davita, it will carve out the Nevada clinics. That, with 2018 business performance and projections for 2019 performance, will reduce the price it will pay for Davita by $560 million to $4.34 billion."

Anyhow what one could potentially deduce is that a) the significant reduction in the deal value is partly for some assets being excluded, so not just reduced performance, which is what I originally thought and I did not like that. Also b) I would assume that the FTC process would work more or less as follows, review, conditional approval, conditions fulfilled and then approval.

So it tells me that the deal was at that point (21 Dec) probably close to final review and hopefully approval, which would put it on management's Q1 timeline, but then government shutdown happened. I think in some total looks positive to me and probably indicates shutdown being the main holdup.

dwy000

  • Hero Member
  • *****
  • Posts: 545
Re: DVA – DaVita HealthCare Partners
« Reply #584 on: February 12, 2019, 09:21:03 AM »
Found this 21 Dec 18 article in the meantime. Isolated source, so not sure how much you can trust it and the Davita filing referred to in the article does not make any reference to the Nevada clinics specifically, so not sure what the connection with Nevada is based on.

https://www.pressreader.com/usa/las-vegas-review-journal/20181221/282179357192793

"Unitedhealth Group’s Optum is dropping plans to purchase the Davita Medical Group physician clinics in Nevada after the Federal Trade Commission investigated the deal’s compliance with antitrust regulations.

Davita, in a U.S. Securities and Exchange Commission filing last week, indicated that while Optum will continue with its planned purchase of Davita, it will carve out the Nevada clinics. That, with 2018 business performance and projections for 2019 performance, will reduce the price it will pay for Davita by $560 million to $4.34 billion."

Anyhow what one could potentially deduce is that a) the significant reduction in the deal value is partly for some assets being excluded, so not just reduced performance, which is what I originally thought and I did not like that. Also b) I would assume that the FTC process would work more or less as follows, review, conditional approval, conditions fulfilled and then approval.

So it tells me that the deal was at that point (21 Dec) probably close to final review and hopefully approval, which would put it on management's Q1 timeline, but then government shutdown happened. I think in some total looks positive to me and probably indicates shutdown being the main holdup.

Nice find MrB.    So what happens with the Nevada clinics?  Sold to someone else?  I can't imagine it makes economic sense to continue operating this small subset on its own.   If sold to someone else there might be additional proceeds down the road to offset some of the Optum decline.

walkie518

  • Sr. Member
  • ****
  • Posts: 385
Re: DVA – DaVita HealthCare Partners
« Reply #585 on: February 12, 2019, 10:28:44 AM »
Found this 21 Dec 18 article in the meantime. Isolated source, so not sure how much you can trust it and the Davita filing referred to in the article does not make any reference to the Nevada clinics specifically, so not sure what the connection with Nevada is based on.

https://www.pressreader.com/usa/las-vegas-review-journal/20181221/282179357192793

"Unitedhealth Group’s Optum is dropping plans to purchase the Davita Medical Group physician clinics in Nevada after the Federal Trade Commission investigated the deal’s compliance with antitrust regulations.

Davita, in a U.S. Securities and Exchange Commission filing last week, indicated that while Optum will continue with its planned purchase of Davita, it will carve out the Nevada clinics. That, with 2018 business performance and projections for 2019 performance, will reduce the price it will pay for Davita by $560 million to $4.34 billion."

Anyhow what one could potentially deduce is that a) the significant reduction in the deal value is partly for some assets being excluded, so not just reduced performance, which is what I originally thought and I did not like that. Also b) I would assume that the FTC process would work more or less as follows, review, conditional approval, conditions fulfilled and then approval.

So it tells me that the deal was at that point (21 Dec) probably close to final review and hopefully approval, which would put it on management's Q1 timeline, but then government shutdown happened. I think in some total looks positive to me and probably indicates shutdown being the main holdup.

Nice find MrB.    So what happens with the Nevada clinics?  Sold to someone else?  I can't imagine it makes economic sense to continue operating this small subset on its own.   If sold to someone else there might be additional proceeds down the road to offset some of the Optum decline.
I suppose urgency to sell the Nevada clinics is dictated by profitability?

cubsfan

  • Hero Member
  • *****
  • Posts: 1128
Re: DVA – DaVita HealthCare Partners
« Reply #586 on: February 12, 2019, 11:04:17 AM »
I'd say they are just non-core assets. DaVita proved they are NOT very good at running the DMG business, so get out of all of it as quick as you can.
« Last Edit: February 16, 2019, 01:05:35 PM by cubsfan »

walkie518

  • Sr. Member
  • ****
  • Posts: 385
Re: DVA – DaVita HealthCare Partners
« Reply #587 on: February 15, 2019, 03:43:57 PM »
didn't find anything so interesting regarding the quarter except the MA rates are likely to improve

diluted share count, however, has been reduced from 184m to 166m

sure, perhaps they overpaid a little...but if DVA hits the lower end of cash flow from ops guidance ($1.375B) for 2019 without buybacks, the stock trades at 8x 2019 op cash flow

my feeling is that op cash flow will improve after deal closes, and of course, share count will continue to shrink, likely at a faster clip

I suppose the Chanos et al overhang still exists? 

5xEBITDA

  • Newbie
  • *
  • Posts: 27
Re: DVA – DaVita HealthCare Partners
« Reply #588 on: February 16, 2019, 12:59:16 PM »
They are really downplaying the AKF legislation issue...it is a legitimate loophole in reimbursement laws they have built the last ~10 years of their business on

cubsfan

  • Hero Member
  • *****
  • Posts: 1128
Re: DVA – DaVita HealthCare Partners
« Reply #589 on: February 16, 2019, 01:08:00 PM »
There is always someone taking potshots at DaVita - unions, insurance payers, etc - that's not going away anytime soon.