Mednax, Inc. (NYSE: MD), the national medical group specializing
in prenatal, neonatal, and pediatric services, today reported
earnings from continuing operations of $0.06 per share for the
three months ended March 31, 2021. On a non-GAAP basis, Mednax
reported Adjusted EPS from continuing operations of $0.24.
For the 2021 first quarter, Mednax reported the following
results from continuing operations:
- Net revenue of $447 million;
- Income from continuing operations of $5 million; and
- Adjusted EBITDA of $45 million.
“Our operating results for the first quarter of 2021 reflected a
meaningful positive trend through the quarter of patient volumes
and payor mix,” said Mark S. Ordan, Chief Executive Officer of
Mednax. “We believe that along with this trend, our singular focus
on supporting our affiliated clinicians and the incredible care
they provide to women and children and our efforts to reshape our
operating efficiency will enable us to grow and to drive strong
results for all stakeholders.”
Operating Results from Continuing Operations – Three Months
Ended March 31, 2021
During the 2021 first quarter, Mednax’s operations were
negatively impacted by reductions in patient volumes and revenue
from the COVID-19 pandemic. However, this impact was less
significant than during the fourth quarter of 2020.
Mednax’s net revenue for the three months ended March 31, 2021
was $446.8 million, compared to $441.2 million for the prior-year
period. Mednax’s overall same-unit revenue increased by 2.5
percent, slightly offset by net acquisition activity. After
adjusting to exclude the leap-year impact of an extra day in the
2020 first quarter results, overall same-unit revenue increased 3.6
percent.
Same-unit revenue from net reimbursement-related factors
increased by 5.0 percent for the 2021 first quarter as compared to
the prior-year period. The net increase primarily reflects funds
received under the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act; modest improvements in managed care contracting;
increases in contract and administrative fees; and an approximately
110 basis point increase in the percentage of services reimbursed
by commercial and other non-government payors. During the 2021
first quarter, the Company recorded $7.7 million of miscellaneous
revenue from the provider relief fund established by the CARES Act,
which increased the Company’s same-unit revenue from net
reimbursement-related factors by 1.8 percent.
Same-unit revenue attributable to patient volume decreased by
2.5 percent for the 2021 first quarter as compared to the
prior-year period, and as compared to a decrease of approximately
6.6 percent for the 2020 fourth quarter. In each case, this decline
was primarily attributable to the impacts from the COVID-19
pandemic. After adjusting to exclude the leap-year impact of an
extra day in the 2020 first quarter results, overall same-unit
revenue attributable to patient volume decreased by 1.4
percent.
Shown below are year-over-year percentage changes in selected
same-unit volume statistics for the quarter ended March 31,
2021.
Actual
Leap-year Adjusted
Hospital-based patient services
(4.4
)%
(3.3
)%
Office-based patient services
3.4
%
5.0
%
Neonatology services (within
hospital-based services):
Total births
(1.2
)%
(0.1
)%
Neonatal intensive care unit (NICU)
days
(2.2
)%
(1.1
)%
For the 2021 first quarter, practice salaries and benefits
expense was $319.0 million, compared to $316.3 million for the
prior-year period. This increase primarily reflects increases in
variable incentive compensation, based on practice-level revenue
and other financial results during the quarter, partially offset by
favorable malpractice expense year over year.
For the 2021 first quarter, general and administrative expenses
were $66.5 million, as compared to $67.4 million for the prior-year
period. This decrease reflects stock-based compensation and salary
decreases from net staffing reductions, partially offset by
approximately $5 million in expenses incurred as part of the
Company’s transitional services being provided to the buyers of the
Company’s former anesthesiology and radiology medical groups.
Mednax was reimbursed for these transition services expenses and
recorded such reimbursement within investment and other income, a
component of net non-operating expenses.
For the first quarter of 2021, transformational and
restructuring related expenses totaled $4.9 million, compared to
$16.1 million for the first quarter of 2020. Of the expense
recorded during the first quarter of 2021, $3.7 million related to
third-party consulting fees, while the remainder related primarily
to contract termination fees and position eliminations.
Adjusted EBITDA from continuing operations, which is defined as
earnings from continuing operations before interest, loss on early
extinguishment of debt, taxes, depreciation and amortization, and
transformational and restructuring related expenses, was $45.5
million for the 2021 first quarter, compared to $33.1 million for
the prior-year period. Funds received from the provider relief fund
established by the CARES Act impacted Adjusted EBITDA positively by
approximately $4 million for the 2021 first quarter.
Depreciation and amortization expense was $8.0 million for the
first quarter of 2021 compared to $6.8 million for the first
quarter of 2020.
Investment and other income was $6.0 million for the first
quarter of 2021 compared to a loss of $1.0 million for the first
quarter of 2020. This increase primarily represents the
reimbursement related to the transition services being provided to
the buyers of the Company’s former anesthesiology and radiology
medical groups.
Interest expense was $17.6 million for the first quarter of 2021
compared to $27.7 million for the first quarter of 2020. This
decline primarily reflects the Company’s January 7, 2021 redemption
of its $750 million in outstanding principle amount of 5.25% senior
notes due 2023 (the “2023 Notes”).
Loss on early extinguishment of debt, related to the redemption
of the 2023 Notes, was $14.5 million for the first quarter of 2021,
which included cash premiums and accelerated amortization of
deferred financing costs.
Mednax generated income from continuing operations of $5.4
million, or $0.06 per diluted share, for the 2021 first quarter,
based on a weighted average 85.5 million shares outstanding. This
compares with a loss from continuing operations of $18.5 million,
or $0.22 per diluted share, for the 2020 first quarter, based on a
weighted average 82.8 million shares outstanding.
For the first quarter of 2021, Mednax reported Adjusted EPS from
continuing operations of $0.24, compared to $0.06 for the first
quarter of 2020. For these periods, Adjusted EPS from continuing
operations is defined as diluted income from continuing operations
per common and common equivalent share excluding non-cash
amortization expense, stock-based compensation expense,
transformational and restructuring related expenses, loss on early
extinguishment of debt and discrete tax items.
Financial Position and Cash Flow – Continuing Operations
Mednax had cash and cash equivalents of $270 million at March
31, 2021, compared to $1.12 billion on December 31, 2020, and net
accounts receivable were $246 million. Mednax used $764 million in
cash in January 2021 to redeem its $750 million 2023 Notes,
including cash premiums and accrued interest.
During the first quarter of 2021, Mednax used cash of $98.9
million to fund continuing operations, compared to a use of $153.0
million during the first quarter of 2020. Mednax typically uses
cash during the first quarter of each year as it pays incentive
compensation, principally to its affiliated physicians, and
employee benefit plan matching contributions that were accrued
during the prior year. Additionally, during the first quarter of
2021, the Company used $9.1 million to fund capital expenditures
and $6.0 million to fund the acquisition of two physician
groups.
At March 31, 2021, Mednax had no outstanding borrowings under
its $1.2 billion revolving credit facility and had total debt
outstanding of $1.0 billion, consisting solely of its senior notes
due 2027, and net debt of $730 million.
Discontinued Operations
Discontinued operations for the three months ended March 31,
2021 reflects adjustments to the loss on sale related to the
divestiture of the anesthesiology medical group. Discontinued
operations for the three months ended March 31, 2020 includes the
operating results of the Company’s former anesthesiology and
radiology medical groups.
Non-GAAP Measures
A reconciliation of Adjusted EBITDA from continuing operations
and Adjusted EPS from continuing operations to the most directly
comparable GAAP measures for the three months ended March 31, 2021
and 2020 is provided in the financial tables of this press
release.
Earnings Conference Call
Mednax, Inc. will host an investor conference call to discuss
the quarterly results at 9 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 May 22, 2021 by dialing
866.207.1041, access Code 7654508. The replay will also be
available at www.mednax.com.
ABOUT MEDNAX
Mednax, Inc. is a national medical group 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,
clinical research and telehealth programs to enhance patient
outcomes and provide high-quality, cost-effective care. The Company
was founded in 1979, and today, through its affiliated professional
entities, Mednax provides services through a network of more than
2,300 physicians in 39 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 pandemic 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 and radiology medical groups; the impact
of management transitions; 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.
Mednax, Inc.
Consolidated Statements of
Income
(in thousands, except per
share data)
(Unaudited)
Three Months Ended
March 31,
2021
2020
Net revenue
$
446,753
$
441,245
Operating expenses:
Practice salaries and benefits
319,012
316,279
Practice supplies and other operating
expenses
22,212
23,842
General and administrative expenses
66,516
67,442
Depreciation and amortization
8,031
6,803
Transformational and restructuring related
expenses
4,878
16,076
Total operating expenses
420,649
430,442
Income from operations
26,104
10,803
Investment and other income (expense)
5,967
(1,046)
Interest expense
(17,645)
(27,665)
Loss on early extinguishment of debt
(14,532)
─
Equity in earnings of unconsolidated
affiliate
495
494
Total non-operating expenses
(25,715)
(28,217)
Income (loss) from continuing operations
before income taxes
389
(17,414)
Income tax benefit (provision)
4,955
(1,085)
Income (loss) from continuing
operations
5,344
(18,499)
Income (loss) from discontinued
operations, net of tax
12,290
(213)
Net income (loss)
17,634
(18,712)
Net loss attributable to noncontrolling
interest
8
─
Net income (loss) attributable to Mednax,
Inc.
$
17,642
$
(18,712)
Per common and common equivalent share
data (diluted):
Income (loss) from continuing
operations
$
0.06
$
(0.22)
Income from discontinued operations
$
0.15
$
─
Net income (loss) attributable to Mednax,
Inc
$
0.21
$
(0.22)
Weighted average common shares
85,491
82,799
Mednax, Inc.
Reconciliation of Income
(Loss) from Continuing Operations
to Adjusted EBITDA from
Continuing Operations Attributable to Mednax, Inc.
(in thousands)
(Unaudited)
Three Months Ended March
31,
2021
2020
Income (loss) from continuing operations
attributable to Mednax, Inc.
$
5,352
$
(18,499)
Interest expense
17,645
27,665
Loss on early extinguishment of debt
14,532
—
Income tax (benefit) provision
(4,955)
1,085
Depreciation and amortization expense
8,031
6,803
Transformational and restructuring related
expenses
4,878
16,076
Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.
$
45,483
$
33,130
Mednax, Inc.
Reconciliation of Diluted
Income (Loss) from Continuing Operations per Share
to Adjusted Income from
Continuing Operations Attributable to Mednax, Inc. per Diluted
Share (“Adjusted EPS”)
(in thousands, except per
share data)
(Unaudited)
Three Months Ended March
31,
2021
2020
Weighted average diluted shares
outstanding
85,491
82,799
Income (loss) from continuing operations
and diluted income from continuing operations per share
attributable to Mednax, Inc.
$
5,352
$
0.06
$
(18,499)
$
(0.22)
Adjustments (1):
Amortization (net of tax of $890 and
$512)
2,672
0.03
1,535
0.02
Stock-based compensation (net of tax of
$929 and $1,813)
2,788
0.03
5,442
0.07
Transformational and restructuring
expenses (net of tax of $1,219 and $4,019)
3,659
0.04
12,057
0.15
Loss on early extinguishment of debt (net
of tax of $3,633)
10,899
0.13
—
—
Net impact from discrete tax events
(5,067)
(0.05)
4,834
0.04
Adjusted income and diluted EPS from
continuing operations attributable to
Mednax, Inc.
$
20,303
$
0.24
5,369
$
0.06
(1)
A blended statutory rate of 25.0% was used
to calculate the tax effects of the adjustments for the three
months ended March 31, 2021 and 2020.
Mednax, Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of
As of
March 31, 2021
December 31, 2020
Assets:
Cash and cash equivalents
$
269,630
$
1,123,843
Investments
100,811
104,870
Accounts receivable, net
245,736
241,931
Other current assets
49,222
78,704
Intangible assets, net
21,483
26,642
Operating and finance lease right-of-use
assets
52,634
55,972
Goodwill, other assets, property and
equipment
1,744,228
1,715,986
Total assets
$
2,483,744
$
3,347,948
Liabilities and equity:
Accounts payable and accrued expenses
$
306,410
$
423,183
Total debt, net
999,231
1,744,805
Operating lease liabilities
56,036
59,903
Other liabilities
355,084
372,340
Total liabilities
1,716,761
2,600,231
Total equity
766,983
747,717
Total liabilities and equity
$
2,483,744
$
3,347,948
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210507005108/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles_lynch@mednax.com
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