Mednax, Inc. (NYSE: MD), and its affiliated practices operating
as Pediatrix® Medical Group, the nation’s leading provider of
highly specialized health care for women, children and babies,
today reported earnings from continuing operations of $0.47 per
share for the three months ended December 31, 2021. On a non-GAAP
basis, Mednax reported Adjusted EPS from continuing operations of
$0.52.
For the 2021 fourth quarter, Mednax reported the following
results from continuing operations:
- Net revenue of $499 million;
- Income from continuing operations of $68 million; and
- Adjusted EBITDA of $81 million.
“Our fourth quarter results mark the end of a solid year, thanks
to our focus on women’s, newborns’, and children’s health,” said
Mark S. Ordan, Chief Executive Officer of Mednax. “We strengthened
our support for our affiliated practices, enhanced our efficiency,
and made important investments to position ourselves for growth in
pediatric primary and urgent care. Thus far in 2022, we have
accelerated those investments, including our entry in Florida.
Finally, we believe our recently completed refinancing transactions
provide us with optimal financial flexibility and significantly
reduced ongoing interest expense.”
Operating Results from Continuing Operations – Three Months
Ended December 31, 2021
Mednax’s net revenue for the three months ended December 31,
2021 was $498.5 million, compared to $416.6 million for the
prior-year period. Mednax’s overall same-unit revenue increased by
17.6 percent, modestly complemented by net acquisition
activity.
Same-unit revenue from net reimbursement-related factors
increased by 11.3 percent for the 2021 fourth 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; an approximately 230 basis point increase in the
percentage of services reimbursed by commercial and other
non-government payors; increases in contract and administrative
fees; and modest improvements in managed care contracting. During
the 2021 fourth quarter, the Company recorded $18.4 million of
miscellaneous revenue from the provider relief fund established by
the CARES Act compared to $2.0 million in the prior year, which
increased the Company’s same-unit revenue from net
reimbursement-related factors by 4.1 percent.
Same-unit revenue attributable to patient volume increased by
6.3 percent for the 2021 fourth 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 months
and the year ended December 31, 2021. (Note: figures in the below
table reflect contributions only to net patient service revenue and
exclude other contributions to total same-unit revenue, including
contract and administrative fees.)
Three Months Ended December
31, 2021
Twelve Months Ended December
31, 2021
Hospital-based patient services
8.7%
5.2%
Office-based patient services
6.4%
9.8%
Neonatology services
(within hospital-based
services):
Total births
5.0%
2.5%
Neonatal intensive care unit (NICU)
days
5.6%
3.4%
For the 2021 fourth quarter, practice salaries and benefits
expense was $332.7 million, compared to $284.8 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, as well as
acquisitions completed over the past year.
For the 2021 fourth quarter, general and administrative expenses
were $59.0 million, as compared to $54.7 million for the prior-year
period.
For the fourth quarter of 2021, transformational and
restructuring related expenses totaled $3.1 million, compared to
$13.0 million for the fourth quarter of 2020. The expense recorded
during the fourth quarter of 2021 predominantly related to contract
termination fees, including as part of the Company’s transition to
a third-party revenue cycle management provider.
Adjusted EBITDA from continuing operations, which is defined as
earnings from continuing operations before interest, taxes,
depreciation and amortization, and transformational and
restructuring related expenses, was $81.0 million for the 2021
fourth quarter, compared to $58.3 million for the prior-year
period. Funds received from the provider relief fund established by
the CARES Act favorably impacted Adjusted EBITDA by approximately
$11.8 million for the fourth quarter of 2021.
Depreciation and amortization expense was $7.9 million for the
fourth quarter of 2021 compared to $7.7 million for the fourth
quarter of 2020.
Investment and other income was $1.8 million for the fourth
quarter of 2021 compared to $4.8 million for the fourth quarter of
2020. This decrease primarily reflects the reduced reimbursement
received related to the transition services being provided to the
buyer of the Company’s former anesthesiology medical group.
Interest expense was $16.6 million for the fourth quarter of
2021 compared to $27.3 million for the fourth 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 $40.3
million, or $0.47 per diluted share, for the 2021 fourth quarter,
based on a weighted average 86.2 million shares outstanding. This
compares with income from continuing operations of $4.5 million, or
$0.05 per diluted share, for the 2020 fourth quarter, based on a
weighted average 85.1 million shares outstanding.
For the fourth quarter of 2021, Mednax reported Adjusted EPS
from continuing operations of $0.52, compared to $0.25 for the
fourth 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,
and transformational and restructuring related expenses. Funds
received from the provider relief fund established by the CARES Act
favorably impacted Adjusted EPS by $0.10 for the 2021 fourth
quarter.
Operating Results from Continuing Operations – Year Ended
December 31, 2021
For the year ended December 31, 2021, Mednax generated revenue
from continuing operations of $1.91 billion, compared to $1.73
billion in the prior-year period. For 2021, the Company recorded
$26 million of miscellaneous revenue from the provider relief fund
established by the CARES Act compared to $22 million for the prior
year. Adjusted EBITDA from continuing operations for the year ended
December 31, 2021 was $265.5 million, compared to $219.9 million
for the prior year. Funds received from the provider relief fund
established by the CARES Act favorably impacted Adjusted EBITDA by
approximately $16.5 million for the year ended December 31, 2021,
compared to $14.3 million for the prior year. Mednax generated
income from continuing operations of $108.0 million, or $1.26 per
share, for the year ended December 31, 2021, based on a weighted
average 85.8 million shares outstanding, which compares to loss
from continuing operations of $9.6 million, or $0.11 per share,
based on a weighted average 83.4 million shares outstanding for the
prior year. For the year ended December 31, 2021, Mednax reported
Adjusted EPS from continuing operations of $1.63, compared to $0.95
in the same period of 2020. For the year ended December 31, 2021
Adjusted EPS also excludes the loss on early extinguishment of debt
and gain on sale of building.
Financial Position and Cash Flow – Continuing Operations
Mednax had cash and cash equivalents of $387 million at December
31, 2021, compared to $1.12 billion on December 31, 2020, and net
accounts receivable were $302 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.
For the fourth quarter of 2021, Mednax generated cash from
continuing operations of $75.0 million, compared to $82.2 million
fourth the fourth quarter of 2020, primarily reflecting decreases
in cash flow from changes in accounts payable and accrued expenses
and accounts receivable, partially offset by improved results.
During the fourth quarter of 2021, the Company used $10.4 million
to fund practice acquisitions and $3.2 million in capital
expenditures.
At December 31, 2021, Mednax had no outstanding borrowings under
its $600 million revolving credit facility and had total debt
outstanding of $1.0 billion, consisting solely of its 6.25% senior
notes due 2027 (the “2027 Notes”), and net debt of $613
million.
Subsequent Event – Refinancing Transactions
Subsequent to the fourth quarter of 2021, Mednax issued $400
million in 5.375% senior notes due 2030, the proceeds of which were
used, together with a new $450 million revolving credit facility, a
new $250 million term A loan and cash on hand, to redeem its $1.0
billion in outstanding principle amount of the 2027 Senior Notes
and pay related fees and expenses. After reflecting these
transactions, the Company’s total debt outstanding was $750
million.
Discontinued Operations
Discontinued operations for the three and 12 months ended
December 31, 2021 and 2020 include the operating results of the
Company’s former anesthesiology and radiology medical groups as
well as adjustments to the losses on sale 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 12 months ended December
31, 2021 and 2020 is provided in the financial tables of this press
release.
Preliminary 2022 Outlook
On a preliminary basis, Mednax anticipates that its 2022
Adjusted EBITDA, as defined above, will be at least $270 million.
This outlook does not reflect any additional funds from the
provider relief fund established by the CARES Act, which favorably
impacted Adjusted EBITDA by approximately $16.5 million for the
year ended December 31, 2021.
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
12:45 p.m. ET today through midnight ET March 3, 2022 by dialing
866.207.1041, access Code 1588129. 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 practicing under
the Pediatrix® brand. Pediatrix-affiliated clinicians are committed
to providing coordinated, compassionate and clinically excellent
services to women, babies and children across the continuum of
care, both in hospital settings and office-based practices.
Specialties include obstetrics, maternal-fetal medicine and
neonatology complemented by 18 pediatric subspecialties, as well as
a newly expanded area of primary and urgent care clinics. The
group’s high-quality, evidence-based care is bolstered by
investments in research, education, quality-improvement and safety
initiatives. The company was founded in 1979 as a single affiliated
neonatology practice and today provides its highly focused and
often critical care services through more than 4,700 affiliated
physicians and other clinicians in 38 states and Puerto Rico. To
learn more about Pediatrix, visit www.pediatrix.com or follow us on
Facebook, Instagram, LinkedIn, Twitter and the Pediatrix blog.
Mednax investment information can be found at
www.mednax.com/investors.
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 impact of surprise billing legislation; 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 December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Net revenue
$
498,530
$
416,630
$
1,911,191
$
1,733,951
Operating expenses:
Practice salaries and benefits
332,671
284,772
1,297,477
1,193,940
Practice supplies and other operating
expenses
27,956
24,235
100,472
90,690
General and administrative expenses
58,981
54,671
263,357
248,947
Gain on sale of building
—
—
(7,280
)
—
Depreciation and amortization
7,859
7,692
32,147
28,441
Transformational and restructuring related
expenses
3,058
12,955
22,100
73,801
Total operating expenses
430,525
384,325
1,708,273
1,635,819
Income from operations
68,005
32,305
202,918
98,132
Investment and other income
1,823
4,849
13,652
17,913
Interest expense
(16,603
)
(27,302
)
(68,722
)
(110,482
)
Loss on early extinguishment of debt
—
—
(14,532
)
—
Equity in earnings of unconsolidated
affiliate
290
504
1,912
1,585
Total non-operating expenses
(14,490
)
(21,949
)
(67,690
)
(90,984
)
Income (loss) from continuing operations
before income taxes
53,515
10,356
135,228
7,148
Income tax provision
(13,239
)
(5,869
)
(27,241
)
(16,728
)
Income (loss) from continuing
operations
40,276
4,487
107,987
(9,580
)
Income (loss) from discontinued
operations, net of tax
7,234
(68,783
)
22,950
(786,908
)
Net income (loss)
47,510
(64,296
)
130,937
(796,488
)
Net loss attributable to noncontrolling
interest
6
—
27
—
Net income (loss) attributable to Mednax,
Inc.
$
47,516
$
(64,296
)
$
130,964
$
(796,488
)
Per common and common equivalent share
data (diluted):
Income (loss) from continuing
operations
$
0.47
$
0.05
$
1.26
$
(0.11
)
Income (loss) from discontinued
operations
$
0.08
$
(0.81
)
$
0.27
$
(9.44
)
Net income (loss) attributable to Mednax,
Inc.
$
0.55
$
(0.76
)
$
1.53
$
(9.55
)
Weighted average common shares
86,245
85,082
85,828
83,395
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 December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Income (loss) from continuing operations
attributable to Mednax, Inc.
$
40,282
$
4,487
$
108,014
$
(9,580
)
Interest expense
16,603
27,302
68,722
110,482
Gain on sale of building
—
—
(7,280
)
—
Loss on early extinguishment of debt
—
—
14,532
—
Income tax provision
13,239
5,869
27,241
16,728
Depreciation and amortization expense
7,859
7,692
32,147
28,441
Transformational and restructuring related
expenses
3,058
12,955
22,100
73,801
Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.
$
81,041
$
58,305
$
265,476
$
219,872
Mednax, Inc.
Reconciliation of Diluted
Income (Loss) from Continuing Operations per Share
to Adjusted Income from
Continuing Operations per Diluted Share (“Adjusted EPS”)
(in thousands, except per
share data)
(Unaudited)
Three Months Ended December
31,
2021
2020
Weighted average diluted shares
outstanding
86,245
85,082
Income (loss) from continuing operations
and diluted income from continuing operations per share
attributable to Mednax, Inc.
$
40,282
$
0.47
$
4,487
$
0.05
Adjustments (1):
Amortization (net of tax of $593 and
$662)
1,780
0.02
1,986
0.02
Stock-based compensation (net of tax of
$1,005 and $731)
3,015
0.03
2,191
0.03
Transformational and restructuring
expenses (net of tax of $764 and $3,239)
2,294
0.03
9,716
0.12
Net impact from discrete tax events
(2,672
)
(0.03
)
2,661
0.03
Adjusted income and diluted EPS from
continuing operations attributable to Mednax, Inc.
$
44,699
$
0.52
$
21,041
$
0.25
(1)
A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the three months
ended December 31, 2021 and 2020.
Twelve Months Ended December
31,
2021
2020
Weighted average diluted shares
outstanding
85,828
83,395
Income (loss) from continuing operations
and diluted income from continuing operations per share
attributable to Mednax, Inc.
$
108,014
$
1.26
$
(9,580
)
$
(0.11
)
Adjustments (1):
Amortization (net of tax of $2,643 and
$2,294)
7,928
0.09
6,882
0.08
Stock-based compensation (net of tax of
$4,742 and $5,281)
14,226
0.16
15,843
0.19
Transformational and restructuring related
expenses (net of tax of $5,525 and $18,450)
16,575
0.19
55,351
0.66
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
(12,156
)
(0.14
)
10,541
0.13
Adjusted income and diluted EPS from
continuing operations attributable to Mednax, Inc.
$
140,026
$
1.63
$
79,037
$
0.95
(1)
A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the twelve months
ended December 31, 2021 and 2020.
Mednax, Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of December 31,
2021
As of December 31,
2020
Assets:
Cash and cash equivalents
$
387,391
$
1,123,843
Investments
99,715
104,870
Accounts receivable, net
301,775
241,931
Other current assets
51,683
78,704
Intangible assets, net
21,565
26,642
Operating and finance lease right-of-use
assets
65,461
55,972
Goodwill, other assets, property and
equipment
1,794,956
1,715,986
Total assets
$
2,722,546
$
3,347,948
Liabilites and equity:
Accounts payable and accrued expenses
$
394,118
$
423,183
Total debt, net
1,004,748
1,744,805
Operating lease liabilities
61,080
59,903
Other liabilities
365,908
372,340
Total liabilities
1,825,854
2,600,231
Total equity
896,692
747,717
Total liabilities and equity
$
2,722,546
$
3,347,948
Mednax, Inc.
Reconciliation of Income from
Continuing Operations
to Forward-Looking Adjusted
EBITDA from Continuing Operations Attributable to Mednax,
Inc.
(in thousands)
(Unaudited)
Year Ended December 31,
2022
Income from continuing operations
attributable to Mednax, Inc.
$
100,000
Interest expense
36,000
Loss on early extinguishment of debt
57,000
Income tax provision
43,000
Depreciation and amortization expense
34,000
Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.
$
270,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220217005220/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles_lynch@mednax.com
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