What happened
Shares of DaVita (DVA 0.02%) were up 14.3% on Tuesday morning, after the healthcare company -- which specializes in dialysis treatment -- released first-quarter earnings and updated yearly guidance on Monday. The stock is up more than 35% this year.
So what
The company operates outpatient dialysis centers, including 2,724 in the U.S. and 350 in 11 other countries. It's a relatively stable business since dialysis patients need their treatments on a regular basis, regardless of how the economy is doing.
In the first quarter, the company reported revenue of $2.87 billion, up 2% year over year. The company also reported $1.25 in earnings per share (EPS). While that number was down from $1.61 in the same quarter a year ago, it was an improvement from the fourth quarter, when it posted $0.59 in EPS.
The results were an earnings surprise as analysts had predicted DaVita to show EPS of $1.08.
The big driver for investors was that the company increased its full-year guidance to between $6.20 and $7.30 in EPS, compared to earlier predictions of between $5.45 and $6.95.
Now what
In the company's first-quarter earnings call, CEO Javier Rodriguez said that despite higher labor costs, the company is benefiting from an improving business climate. Kidney disease affects one in seven U.S. adults, but nine out of 10 people with the disease are unaware they have it, according to American Kidney Fund data.
The company is hoping that its push for greater kidney disease awareness can increase its customer base. Diabetes is one cause of kidney disease, and the increase in diabetics across the world would also increase the need for DaVita's services.
