Mednax, Inc. (NYSE: MD), the national medical group specializing
in prenatal, neonatal, and pediatric services, today reported
earnings from continuing operations of $0.36 per share for the
three months ended June 30, 2021. On a non-GAAP basis, Mednax
reported Adjusted EPS from continuing operations of $0.41.
For the 2021 second quarter, Mednax reported the following
results from continuing operations:
- Net revenue of $473 million;
- Income from continuing operations of $31 million; and
- Adjusted EBITDA of $66 million.
“Strong patient volume trends across the spectrum of our service
lines provided the foundation for strong second quarter results,”
said Mark S. Ordan, Chief Executive Officer of Mednax. “We believe
these trends, combined with our focus on women’s and children’s
care, operating efficiency and growth in many areas of pediatric
subspecialty services, together put us on a very positive forward
path.”
Operating Results from Continuing Operations – Three Months
Ended June 30, 2021
Mednax’s net revenue for the three months ended June 30, 2021
was $473.0 million, compared to $415.4 million for the prior-year
period. Mednax’s overall same-unit revenue increased by 13.4
percent, slightly complemented by net acquisition activity.
Same-unit revenue attributable to patient volume increased by
9.5 percent for the 2021 second quarter as compared to the
prior-year period. Shown below are year-over-year percentage
changes in certain same-unit volume statistics for the three and
six months ended June 30, 2021.
Three Months Ended June 30,
2021
Six Months Ended June 30,
2021
Hospital-based patient services
6.5%
1.2%
Office-based patient services
23.2%
12.9%
Neonatology services (within
hospital-based services):
Total births
2.9%
1.2%
Neonatal intensive care unit (NICU)
days
4.4%
1.1%
Same-unit revenue from net reimbursement-related factors
increased by 3.9 percent for the 2021 second quarter as compared to
the prior-year period. The net increase primarily reflects
increases in contract administrative fees; modest improvements in
managed care contracting; and an approximately 35 basis point
increase in the percentage of services reimbursed by commercial and
other non-government payors. Partially offsetting these increases,
during the 2021 second quarter, the Company did not record any
funds under the Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act, as compared to $5.8 million recorded during the 2020
second quarter. This decreased the Company’s same-unit revenue from
net reimbursement-related factors by 1.4 percent.
For the 2021 second quarter, practice salaries and benefits
expense was $317.0 million, compared to $283.0 million for the
prior-year period. This increase reflects comparisons with the
temporary reductions in salary expense related to COVID-19 cost
mitigation initiatives during the 2020 second quarter, as well as
current year increases in variable incentive compensation, based on
practice-level revenue and other financial results during the
quarter.
For the 2021 second quarter, general and administrative expenses
were $71.0 million, as compared to $60.5 million for the prior-year
period. This increase primarily reflects higher expenditures
related to information-technology initiatives, as well as
comparisons with the temporary reductions in salary expense related
to COVID-19 mitigation initiatives during the 2020 second quarter.
During the second quarters of both 2021 and 2020, the Company
incurred approximately $3 million in expenses as part of the
Company’s transitional services being provided primarily to the
buyer of the Company’s former anesthesiology medical group. Mednax
was reimbursed for these transition services expenses and recorded
such reimbursement within investment and other income, a component
of net non-operating expenses.
During the second quarter of 2021, Mednax completed the sale of
a secondary corporate office building, resulting in a gain on sale
of $7.3 million. This gain is being excluded from Adjusted EBITDA
and Adjusted EPS.
For the second quarter of 2021, transformational and
restructuring related expenses totaled $9.9 million, compared to
$10.5 million for the second quarter of 2020. Of the expense
recorded during the second quarter of 2021, $6.2 million related to
contract termination fees as part of the Company’s transition to a
third-party revenue cycle management provider, while the remainder
related primarily to third-party consulting fees.
Adjusted EBITDA from continuing operations, which is defined as
earnings from continuing operations before interest, taxes,
depreciation and amortization, transformational and restructuring
related expenses, and gain on sale of building was $65.5 million
for the 2021 second quarter, compared to $55.7 million for the
prior-year period. Funds received from the provider relief fund
established by the CARES Act impacted Adjusted EBITDA positively by
approximately $3 million for the prior-year second quarter.
Depreciation and amortization expense was $8.1 million for the
second quarter of 2021 compared to $6.8 million for the second
quarter of 2020.
Investment and other income was $4.2 million for the second
quarter of 2021 compared to $3.6 million for the second quarter of
2020.
Interest expense was $16.9 million for the second quarter of
2021 compared to $28.3 million for the second quarter of 2020. This
decrease primarily reflects the Company’s January 2021 redemption
of its $750 million in outstanding principle amount of 5.25% senior
notes due 2023 (the “2023 Notes”).
Mednax generated income from continuing operations of $30.5
million, or $0.36 per diluted share, for the 2021 second quarter,
based on a weighted average 85.9 million shares outstanding. This
compares with income from continuing operations of $7.1 million, or
$0.08 per diluted share, for the 2020 second quarter, based on a
weighted average 83.7 million shares outstanding.
For the second quarter of 2021, Mednax reported Adjusted EPS
from continuing operations of $0.41, compared to $0.26 for the
second 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, gain on sale
of building and discrete tax items as relevant to each period. For
the six months ended June 30, 2021 Adjusted EPS also excludes the
loss on early extinghuisment of debt.
Operating Results from Continuing Operations – Six Months Ended
June 30, 2021
For the six months ended June 30, 2021, Mednax generated revenue
from continuing operations of $919.7 million, compared to $856.7
million in the prior-year period. Adjusted EBITDA from continuing
operations for the six months ended June 30, 2021 was $111.0
million, compared to $88.8 million for the prior year. Mednax
generated income from continuing operations of $35.9 million, or
$0.42 per share, for the six months ended June 30, 2021, based on a
weighted average 85.7 million shares outstanding, which compares to
a loss from continuing operations of $11.4 million, or $0.14 per
share, based on a weighted average 83.1 million shares outstanding
for the first six months of 2020. For the six months ended June 30,
2021, Mednax reported Adjusted EPS from continuing operations of
$0.65, compared to $0.32 in the same period of 2020.
Financial Position and Cash Flow – Continuing Operations
Mednax had cash and cash equivalents of $338.2 million at June
30, 2021, compared to $1.12 billion on December 31, 2020, and net
accounts receivable were $248.1 million. As previously disclosed,
Mednax used $764 million in cash in January 2021 to redeem its $750
million 2023 Notes, including cash premiums and accrued
interest.
During the second quarter of 2021, Mednax generated cash from
continuing operations of $70.4 million, compared to $97.5 million
during the second quarter of 2020. During the second quarter of
2021, the Company used $9.5 million to fund capital expenditures
and $1.2 million to fund one practice acquisition.
At June 30, 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 $662 million.
Discontinued Operations
Discontinued operations for the three and six months ended June
30, 2021 and 2020 includes the operating results of the Company’s
former anesthesiology and radiology medical groups for relevant
periods.
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 and six months ended June
30, 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 August 20, 2021 by dialing
866.207.1041, access Code 6548348. 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 Company’s transition to a third-party
revenue cycle management provider; 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 June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net revenue
$
472,959
$
415,441
$
919,712
$
856,686
Operating expenses:
Practice salaries and benefits
317,035
282,985
636,047
599,264
Practice supplies and other operating
expenses
24,182
20,173
46,394
44,015
General and administrative expenses
70,968
60,488
137,484
127,930
Gain on sale of building
(7,280
)
—
(7,280
)
—
Depreciation and amortization
8,106
6,751
16,137
13,554
Transformational and restructuring related
expenses
9,932
10,479
14,810
26,555
Total operating expenses
422,943
380,876
843,592
811,318
Income from operations
50,016
34,565
76,120
45,368
Investment and other income
4,176
3,576
10,143
2,530
Interest expense
(16,879
)
(28,265
)
(34,524
)
(55,930
)
Loss on early extinguishment of debt
—
—
(14,532
)
—
Equity in earnings of unconsolidated
affiliate
577
305
1,072
799
Total non-operating expenses
(12,126
)
(24,384
)
(37,841
)
(52,601
)
Income (loss) from continuing operations
before income taxes
37,890
10,181
38,279
(7,233
)
Income tax provision
(7,363
)
(3,097
)
(2,408
)
(4,182
)
Income (loss) from continuing
operations
30,527
7,084
35,871
(11,415
)
Income (loss) from discontinued
operations, net of tax
4,478
(679,520
)
16,768
(679,733
)
Net income (loss)
35,005
(672,436
)
52,639
(691,148
)
Net loss attributable to noncontrolling
interest
6
—
14
—
Net income (loss) attributable to Mednax,
Inc.
$
35,011
$
(672,436
)
$
52,653
$
(691,148
)
Per common and common equivalent share
data (diluted):
Income (loss) from continuing
operations
$
0.36
$
0.08
$
0.42
$
(0.14
)
Income (loss) from discontinued
operations
$
0.05
$
(8.11
)
$
0.19
$
(8.18
)
Net income (loss) attributable to Mednax,
Inc
$
0.41
$
(8.03
)
$
0.61
$
(8.32
)
Weighted average common shares
85,933
83,744
85,653
83,061
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 June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Income (loss) from continuing operations
attributable to Mednax, Inc.
$
30,533
$
7,084
$
35,885
$
(11,415
)
Interest expense
16,879
28,265
34,524
55,930
Gain on sale of building
(7,280
)
─
(7,280
)
─
Loss on early extinguishment of debt
─
─
14,532
─
Income tax provision
7,363
3,097
2,408
4,182
Depreciation and amortization expense
8,106
6,751
16,137
13,554
Transformational and restructuring related
expenses
9,932
10,479
14,810
26,555
Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.
$
65,533
$
55,676
$
111,016
$
88,806
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
June 30,
2021
2020
Weighted average diluted shares
outstanding
85,933
83,744
Income from continuing operations and
diluted income from continuing operations per share attributable to
Mednax, Inc.
$
30,533
$
0.36
$
7,084
$
0.08
Adjustments (1):
Amortization (net of tax of $576 and
$520)
1,728
0.02
1,559
0.02
Stock-based compensation (net of tax of
$1,434 and $1,605)
4,301
0.04
4,812
0.07
Transformational and restructuring
expenses (net of tax of $2,483 and $2,620)
7,449
0.09
7,859
0.09
Gain on sale of building (net of tax of
$1,820)
(5,460
)
(0.06
)
—
—
Net impact from discrete tax events
(3,516
)
(0.04
)
110
—
Adjusted income and diluted EPS from
continuing operations attributable to Mednax, Inc.
$
35,035
$
0.41
$
21,424
$
0.26
(1) A blended statutory rate of
25.0% was used to calculate the tax effects of the adjustments for
the three months ended June 30, 2021 and 2020.
Six Months Ended
June 30,
2021
2020
Weighted average diluted shares
outstanding
85,653
83,061
Income (loss) from continuing operations
and diluted income from continuing operations per share
attributable to Mednax, Inc.
$
35,885
$
0.42
$
(11,415
)
$
(0.14
)
Adjustments (1):
Amortization (net of tax of $1,466 and
$1,032)
4,400
0.05
3,094
0.04
Stock-based compensation (net of tax of
$2,363 and $3,418)
7,089
0.08
10,254
0.12
Transformational and restructuring
expenses (net of tax of $3,702 and $6,639)
11,108
0.13
19,916
0.24
Gain on sale of building (net of tax of
$1,820)
(5,460
)
(0.06
)
—
—
Loss on early extinguishment of debt (net
of tax of $3,633)
10,899
0.13
—
—
Net impact from discrete tax events
(8,583
)
(0.10
)
4,944
0.06
Adjusted income and diluted EPS from
continuing operations attributable to
Mednax, Inc.
$
55,338
$
0.65
$
26,793
$
0.32
(1) A blended statutory rate of
25.0% was used to calculate the tax effects of the adjustments for
the six months ended June 30, 2021 and 2020.
Mednax, Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of
As of
June 30, 2021
December 31, 2020
Assets:
Cash and cash equivalents
$
338,157
$
1,123,843
Investments
100,763
104,870
Accounts receivable, net
248,055
241,931
Other current assets
65,338
78,704
Intangible assets, net
19,989
26,642
Operating and finance lease right-of-use
assets
56,508
55,972
Goodwill, other assets, property and
equipment
1,726,320
1,715,986
Total assets
$
2,555,130
$
3,347,948
Liabilities and equity:
Accounts payable and accrued expenses
$
329,918
$
423,183
Total debt, net
998,982
1,744,805
Operating lease liabilities
58,825
59,903
Other liabilities
358,281
372,340
Total liabilities
1,746,006
2,600,231
Total equity
809,124
747,717
Total liabilities and equity
$
2,555,130
$
3,347,948
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210806005035/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles_lynch@mednax.com
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