Company Intends to Return to Original Name,
Pediatrix Medical Group; to Refocus as Dedicated Pediatrics &
Obstetrics Organization
Announces Intent to Sell MEDNAX Radiology
Solutions
Repays Revolving Line of Credit and Provides
Business Update
MEDNAX, Inc. (NYSE: MD), a leading health solutions partner
specializing in prenatal, neonatal, pediatric, and radiology
services, today announced a number of further steps it is taking as
part of its aggressive transformational activity to position the
Company for long-term, sustainable growth.
As previously announced, since 2018 MEDNAX has been conducting a
comprehensive review of its businesses. In that time, the MEDNAX
Board of Directors and management team have taken decisive
strategic and financial actions to position the Company for the
future, including implementing significant operational improvements
and efficiencies; leveraging the insights of leading consultants;
selling MedData; selling its American Anesthesiology medical group;
and enhancing its organizational and leadership structure to align
with a refocused business model.
The MEDNAX Board of Directors and management believe that
continuing to implement the Company’s strategic priorities and
reorienting the Company as a dedicated, streamlined pediatrics and
obstetrics business will provide the greatest near- and long-term
benefits for all of its stakeholders. Accordingly, MEDNAX intends
to return to its original company name, Pediatrix Medical Group,
Inc., pending approval by the Company’s shareholders at its 2020
annual meeting in August. The Company will continue trading under
its current ticker symbol (NYSE: MD).
“The initiatives we are outlining today signify our return to
our roots as a leading provider of women’s and children’s care, and
are a culmination of our efforts to concentrate on our core
practice areas and refine our strategy for growth and
profitability,” said Roger J. Medel, M.D., Chief Executive Officer
of MEDNAX. “As Pediatrix Medical Group, we will become an
organization wholly dedicated to women’s and children’s services,
and one that will continue to drive innovations to improve the
quality and experience of patient care for years to come.”
Return to Pediatrix Medical Group
Today, clinicians affiliated with the Company’s Pediatrix and
Obstetrix medical groups care for more than 1 million babies a
year. These medical groups represent the leading provider of
specialty women’s health services and pediatric care in the U.S.,
with a network of more than 2,200 physicians providing services
across 17 subspecialty lines. Pediatrix- and Obstetrix-affiliated
clinicians care for nearly 25% of the country’s NICU babies and
make 1,900 maternal fetal medicine visits per day in over 400
facilities across 40 states and Puerto Rico. In 2019, the Company’s
Pediatrix and Obstetrix medical groups generated approximately $1.8
billion in revenue.
MEDNAX has been implementing a number of key strategic
priorities to support its path forward and has developed a plan to
position Pediatrix Medical Group to drive sustained growth, which
is based on:
- Benefitting from proven leadership and a focused
organizational model. With unmatched experience over the past
40+ years, and the ongoing benefits of its refocused organizational
structure, the Company believes that the Pediatrix management team
is well positioned to re-energize the field and accelerate
growth.
- Retaining national and local reach. With its extensive
national footprint, the Pediatrix organization will focus on
leveraging its strong market position to build its organic growth
pipeline.
- Capitalizing on growth opportunities. Women’s and
children’s health services represent a large addressable market and
the Company believes Pediatrix is positioned to drive incremental
growth through robust sales initiatives and targeted tuck-in and
strategic acquisitions. Additionally, the Company believes it can
generate additional growth via expansion into adjacent clinical
services, as well as innovation in care delivery models supported
by digital health, data and analytics, and genomics.
“Our Pediatrix & Obstetrix medical groups have strengthened
and evolved over the past few decades, and we have been steadfast
in our unwavering commitment to providing patients with the highest
level of care,” said Mack Hinson, M.D., President of MEDNAX’s
Pediatrix & Obstetrix medical groups. “We have cultivated the
most talented group of pediatric and obstetric healthcare providers
in the country, and I am proud to see the Company turn its full
focus towards the continued development of these important practice
areas. We look forward to building on our strong foundation in
women’s and children’s health care, and we will continue to invest
our resources and strategies to deliver the best patient care and
experience possible.”
Intent to Sell MEDNAX Radiology Solutions
MEDNAX today confirmed that it has been reviewing strategic
alternatives for its radiology medical group, MEDNAX Radiology
Solutions. Prior to the onset of the COVID-19 pandemic, MEDNAX had
been in advanced discussions to divest this organization and plans
to move forward with a divestiture, when market conditions are
appropriate. MEDNAX intends to apply the proceeds from a sale of
MEDNAX Radiology Solutions towards debt reduction.
As part of the Company’s 2020 financial expectations that MEDNAX
provided prior to the impact of the COVID-19 pandemic, MEDNAX
Radiology Solutions was expected to contribute approximately $550
million and $90 million in revenue and Adjusted EBITDA,
respectively, to the Company’s operating results for the year. In
accordance with GAAP accounting, operating results for MEDNAX
Radiology Solutions will continue to be reported as part of
MEDNAX’s continuing operations at this time.
MEDNAX does not intend to provide further public comments on
this strategic alternatives process.
MEDNAX Business Update
As previously disclosed, during the 2020 second quarter to date,
MEDNAX’s operations have been significantly impacted by reductions
in patient volumes and revenue as a result of the COVID-19
pandemic. However, the Company’s operations began to normalize in
an accelerating fashion during the month of May.
In the Company’s radiology services medical group, during the
month of April, study volumes declined by approximately 50 percent
versus the prior year. On a preliminary basis, the Company
estimates that study volumes declined by approximately 30 to 35
percent during the month of May, with those declines lessening to
approximately 25 percent by the end of the month. In the Company’s
office-based women’s and children’s medical groups, during the
month of April, patient volumes declined by approximately 25
percent versus the prior year. On a preliminary basis, the Company
estimates that during the month of May, patient volumes declined by
approximately 10 to 15 percent versus the prior year, with those
declines lessening to approximately 10 percent by the end of the
month. Finally, the Company estimates that aggregate patient
volumes in its hospital-based pediatric medical groups, including
neonatology and neonatology-related services, pediatric intensive
care, and other pediatric services, experienced only minor,
single-digit percentage declines through the months of April and
May.
In total, the Company estimates that the reduction to
consolidated revenue as a result of these declines in patient
volume during the month of May, as compared to the prior year, was
in the range of approximately 10 to 15 percent. During the month of
April, the Company estimates that this impact was approximately 25
percent.
As previously announced, MEDNAX implemented a number of actions
to preserve its financial flexibility and partially mitigate the
significant impact of COVID-19 on the Company. MEDNAX and its
affiliated practices have also received, and expect to receive,
certain funds available to healthcare providers under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”).
Additionally, in recent weeks, following the divestiture of
American Anesthesiology on May 6, 2020, MEDNAX has taken action to
remove approximately $10 million in annualized expenses, and the
Company believes there are significant additional opportunities to
reshape the cost structure of its support services to affiliated
practices.
Finally, during the month of May, MEDNAX repaid all borrowings
on its revolving credit facility. As of May 31, the Company’s debt
consisted solely of $1.75 billion in senior notes, and MEDNAX had
total cash on hand of $90 million, resulting in net debt of $1.66
billion.
“Our highest priority during this challenging period has been to
ensure that MEDNAX is able to support its clinicians in their
mission to take great care of their patients,” said Stephen D.
Farber, Executive Vice President and Chief Financial Officer. “Our
ability to maintain financial flexibility is key to meeting this
priority. The steps we have taken, and will continue to take,
demonstrate our commitment to retain a strong balance sheet with
moderate leverage and meaningful liquidity. Moreover, we believe
these steps will help ensure that MEDNAX continues to meet its
commitments to its patients, its affiliated physicians, and its
hospital partners long into the future.”
Conference Call Today
MEDNAX, Inc., will host an investor conference call to discuss
today’s announcements at 9:00 a.m., ET today. The conference call
Webcast may be accessed from the Company’s Website, www.mednax.com.
A telephone replay of the conference call will be available from
1:30 p.m. ET today through midnight ET June 19, 2020 by dialing
866.207.1041, access Code 2325797. The replay will also be
available at www.mednax.com.
A slide presentation accompanying today’s conference call will
also be available on the Company’s website at approximately 8:45
a.m., ET today.
Important Additional Information and Where You Can Find
It
MEDNAX, Inc. (the “Company”), its directors and certain of its
executive officers may be deemed to be participants in a
solicitation of proxies from the Company’s shareholders at its 2020
Annual Meeting of Shareholders in connection with the matters to be
considered at the 2020 Annual Meeting of Shareholders . Information
regarding the Company’s directors and executive officers and their
respective interests in the Company, by security holdings or
otherwise, will be set forth in the Company’s Definitive Proxy
Statement for its 2020 Annual Meeting of Shareholders, to be filed
with the Securities and Exchange Commission (the “SEC”), and
reports filed by the Company and ownership forms filed by its
directors and executive officers with the SEC. The Company will
furnish its Definitive Proxy Statement for its 2020 Annual Meeting
of Shareholders to shareholders entitled to vote at the meeting and
will file a copy with the SEC. The Company urges its shareholders
to carefully read the Definitive Proxy Statement for its 2020
Annual Meeting of Shareholders, and any other relevant documents
filed by the Company with the SEC, when available because they will
contain important information. Shareholders will be able to receive
the proxy statement and other relevant documents free of charge at
the SEC’s website at www.sec.gov or at www.mednax.com.
ABOUT MEDNAX
MEDNAX, Inc. is a national health solutions partner comprised of
the nation's leading providers of physician services. Physicians
and advanced practitioners practicing as part of MEDNAX are
reshaping the delivery of care within their specialties and
subspecialties, using evidence-based tools, continuous quality
initiatives, consulting services, clinical research and
telemedicine to enhance patient outcomes and provide high-quality,
cost-effective care. The Company was founded in 1979, and today,
through its affiliated professional corporations, MEDNAX provides
services through a network of more than 3,000 physicians in all 50
states and Puerto Rico. Additional information is available at
www.mednax.com.
Certain statements and information in this press release may be
deemed to contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements may include, but are not limited to,
statements relating to the Company’s objectives, plans and
strategies, and all statements, other than statements of historical
facts, that address activities, events or developments that we
intend, expect, project, believe or anticipate will or may occur in
the future. These statements are often characterized by terminology
such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,”
“plan,” “will,” “expect,” “estimate,” “project,” “positioned,”
“strategy” and similar expressions, and are based on assumptions
and assessments made by the Company’s management in light of their
experience and their perception of historical trends, current
conditions, expected future developments and other factors they
believe to be appropriate. Any forward-looking statements in this
press release are made as of the date hereof, and the Company
undertakes no duty to update or revise any such statements, whether
as a result of new information, future events or otherwise.
Forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties. Important factors that
could cause actual results, developments, and business decisions to
differ materially from forward-looking statements are described in
the Company’s most recent Annual Report on Form 10-K and its
Quarterly Reports on Form 10-Q, including the sections entitled
“Risk Factors”, as well the Company’s current reports on Form 8-K,
filed with the Securities and Exchange Commission, and include the
impact of the COVID-19 outbreak on the Company and its financial
condition and results of operations; the effects of economic
conditions on the Company’s business; the effects of the Affordable
Care Act and potential changes thereto or a repeal thereof; the
Company’s relationships with government-sponsored or funded
healthcare programs, including Medicare and Medicaid, and with
managed care organizations and commercial health insurance payors;
the Company’s ability to comply with the terms of its debt
financing arrangements; the impact of the divestiture of the
Company’s anesthesiology medical group; whether the Company will be
able to complete the divestiture of its radiology medical group and
the terms of any such divestiture; the timing and contribution of
future acquisitions; the effects of share repurchases; and the
effects of the Company’s transformation initiatives, including its
reorientation on, and growth strategy for, its pediatrics and
obstetrics business.
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version on businesswire.com: https://www.businesswire.com/news/home/20200605005067/en/
Charles Lynch Vice President, Strategy and Investor Relations
954-384-0175 ext. 5692 charles_lynch@mednax.com
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