Mednax, Inc. (NYSE: MD), whose affiliated practices operate as
Pediatrix® Medical Group, the nation’s leading provider of highly
specialized health care for women, children and babies, today
reported a loss from continuing operations of $0.25 per share for
the three months ended March 31, 2022. Results from continuing
operations include a pretax loss on early extinguishment of debt of
$57 million. On a non-GAAP basis, Mednax reported Adjusted EPS from
continuing operations of $0.33.
For the 2022 first quarter, Mednax reported the following
results from continuing operations:
- Net revenue of $482 million;
- Loss from continuing operations of $21 million; and
- Adjusted EBITDA of $51 million.
“Our bottom line results were in line with our expectations and
reflect continued patient volume growth,” said Mark S. Ordan, Chief
Executive Officer of Mednax. “Our financial focus remains on
increasing the efficiency of our support services and on growth in
and around our core. Most important for the benefit of all our
stakeholders is that we do all we prudently can to show support and
care for our world-class affiliated clinicians. They are the heart
and soul of Pediatrix.”
Operating Results from Continuing Operations – Three Months
Ended March 31, 2022
Mednax’s net revenue for the three months ended March 31, 2022
was $482.2 million, compared to $446.8 million for the prior-year
period. Mednax’s revenue growth was driven by net acquisition
activity, complemented by an overall same-unit revenue increase of
1.3 percent.
Same-unit revenue attributable to patient volume increased by
3.2 percent for the 2022 first quarter as compared to the
prior-year period with growth across all our service lines. Shown
below are year-over-year percentage changes in certain same-unit
volume statistics for the three months ended March 31, 2022. (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
March 31, 2022
Hospital-based patient services
3.3
%
Office-based patient services
4.8
%
Neonatology services
(within hospital-based
services):
Total births
3.9
%
Neonatal intensive care unit (NICU)
days
2.3
%
Same-unit revenue from net reimbursement-related factors
declined by 1.9 percent for the 2022 first quarter as compared to
the prior-year period. This net decrease primarily reflects timing
of certain revenue cycle management transition activities,
partially offset by funds received under the Coronavirus Aid,
Relief, and Economic Security (“CARES”) Act and increases in
contract and administrative fees. The percentage of services
reimbursed by commercial and other non-government payors was
relatively unchanged for the year over year period. During the 2022
first quarter, the Company recorded $10.4 million of miscellaneous
revenue from funds received under the CARES Act compared to $7.7
million in the prior year, which increased the Company’s same-unit
revenue from net reimbursement-related factors by 0.6 percent
during the three months ended March 31, 2022.
For the 2022 first quarter, practice salaries and benefits
expense was $343.2 million, compared to $319.0 million for the
prior-year period. This increase primarily reflects acquisitions
completed over the past year.
For the 2022 first quarter, general and administrative expenses
were $61.3 million, as compared to $66.5 million for the prior-year
period. The net decrease of $5.2 million is primarily related to
lower professional fees, including legal fees, as well as a net
savings in revenue cycle management expenses.
For the first quarter of 2022, transformational and
restructuring related expenses totaled $1.4 million, compared to
$4.9 million for the fourth quarter of 2021. This decline primarily
reflects lower expenses related to third-party consulting services
compared to the prior year.
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 and also excludes loss on the early
extinguishment of debt, was $50.7 million for the 2022 first
quarter, compared to $45.5 million for the prior-year period. Funds
received from the provider relief fund established by the CARES Act
favorably impacted Adjusted EBITDA by approximately $6.2 million
for the first quarter of 2022, compared to a favorable impact of
$4.6 million in the prior year period.
Depreciation and amortization expense was $8.8 million for the
first quarter of 2022 compared to $8.0 million for the first
quarter of 2021.
Investment and other income was $0.9 million for the first
quarter of 2022, compared to $6.0 million for the first quarter of
2021. This decrease primarily reflects the reimbursement received
in the prior year period related to the transition services being
provided to the buyers of the Company’s former anesthesiology and
radiology medical groups.
During the first quarter of 2022, 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 6.25% Senior Notes due
2027 and pay related fees and expenses. For the 2022 first quarter,
loss on early extinguishment of debt of $57.0 million related
primarily to the call premium on the Senior Notes due 2027 as well
as the write off of deferred debt costs. Loss on early
extinguishment of debt was $14.5 million for the 2021 first quarter
and was related to the redemption of the Company’s $750.0 million
in Senior Notes due 2023.
Interest expense was $11.8 million for the first quarter of 2022
compared to $17.6 million for the first quarter of 2021. This
decrease of $5.8 million primarily reflects the net decrease in
interest expense on the Company’s senior notes.
Mednax generated a loss from continuing operations of $20.9
million, or $0.25 per diluted share, for the 2022 first quarter,
based on a weighted average 85.4 million shares outstanding. This
compares with 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.
For the first quarter of 2022, Mednax reported Adjusted EPS from
continuing operations of $0.33, compared to $0.24 for the first
quarter of 2021. 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, and discrete
tax events, and for both periods also excludes the impact from the
loss on early extinguishment of debt. Funds received from the
provider relief fund established by the CARES Act favorably
impacted Adjusted EPS by $0.07 for the 2022 first quarter, compared
to a favorable impact of $0.05 for the first quarter of 2021.
Financial Position and Cash Flow – Continuing Operations
Mednax had cash and cash equivalents of $7 million at March 31,
2022, compared to $387 million on December 31, 2021, and net
accounts receivable were $318 million. As previously disclosed,
during the first quarter of 2022 the Company used cash on hand,
together with proceeds from the new issuance of debt, to redeem its
$1.0 billion in outstanding principal amount of 6.25% Senior Notes
due 2027 and pay related fees and expenses.
During the first quarter of 2022, Mednax used cash of $89.9
million to fund continuing operations, compared to a use of $98.9
million during the first quarter of 2021. 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
2022, the Company used $25.7 million to fund acquisitions and $7.1
million to fund capital expenditures.
At March 31, 2022, Mednax had total debt outstanding of $799
million, consisting of its $400 million in 5.375% Senior Notes due
2030; $250 million in borrowings under its Term A Loan; and $149
million in borrowings under its revolving line of credit.
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, 2022
and 2021 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
12:45 p.m. ET today through midnight ET May 12, 2022 by dialing
866.207.1041, access Code 7323641. 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 March
31,
2022
2021
Net revenue
$
482,229
$
446,753
Operating expenses:
Practice salaries and benefits
343,155
319,012
Practice supplies and other operating
expenses
28,489
22,212
General and administrative expenses
61,287
66,516
Depreciation and amortization
8,769
8,031
Transformational and restructuring related
expenses
1,421
4,878
Total operating expenses
443,121
420,649
Income from operations
39,108
26,104
Investment and other income
875
5,967
Interest expense
(11,818
)
(17,645
)
Loss on early extinguishment of debt
(57,016
)
(14,532
)
Equity in earnings of unconsolidated
affiliate
505
495
Total non-operating expenses
(67,454
)
(25,715
)
(Loss) income from continuing operations
before income taxes
(28,346
)
389
Income tax benefit
7,401
4,955
(Loss) income from continuing
operations
(20,945
)
5,344
(Loss) income from discontinued
operations, net of tax
(247
)
12,290
Net (loss) income
(21,192
)
17,634
Net loss attributable to noncontrolling
interest
4
8
Net (loss) income attributable to Mednax,
Inc.
$
(21,188
)
$
17,642
Per common and common equivalent share
data (diluted):
(Loss) income from continuing
operations
$
(0.25
)
$
0.06
Income from discontinued operations
$
—
$
0.15
Net (loss) income attributable to Mednax,
Inc.
$
(0.25
)
$
0.21
Weighted average common shares
85,405
85,491
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,
2022
2021
(Loss) income from continuing operations
attributable to Mednax, Inc.
$
(20,941
)
$
5,352
Interest expense
11,818
17,645
Loss on early extinguishment of debt
57,016
14,532
Income tax benefit
(7,401
)
(4,955
)
Depreciation and amortization expense
8,769
8,031
Transformational and restructuring related
expenses
1,421
4,878
Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.
$
50,682
$
45,483
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 March
31,
2022
2021
Weighted average diluted shares
outstanding
85,405
85,491
(Loss) income from continuing operations
and diluted income from continuing operations per share
attributable to Mednax, Inc.
$
(20,941
)
$
(0.25
)
$
5,352
$
0.06
Adjustments (1):
Amortization (net of tax of $541 and
$890)
1,621
0.02
2,672
0.03
Stock-based compensation (net of tax of
$1,109 and $929)
3,326
0.04
2,788
0.03
Transformational and restructuring
expenses (net of tax of $355 and $1,219)
1,066
0.01
3,659
0.04
Loss on early extinguishment of debt (net
of tax of $14,254 and $3,633)
42,762
0.50
10,899
0.13
Net impact from discrete tax events
492
0.01
(5,067
)
(0.05
)
Adjusted income and diluted EPS from
continuing operations attributable to Mednax, Inc.
$
28,326
$
0.33
$
20,303
$
0.24
(1) A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the three months
ended March 31, 2022 and 2021.
Mednax, Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of March 31, 2022
As of December 31,
2021
Assets:
Cash and cash equivalents
$
7,179
$
387,391
Investments
89,576
99,715
Accounts receivable, net
317,619
301,775
Other current assets
25,403
51,683
Intangible assets, net
21,050
21,565
Operating and finance lease right-of-use
assets
66,055
65,461
Goodwill, other assets, property and
equipment
1,814,094
1,794,956
Total assets
$
2,340,976
$
2,722,546
Liabilities and equity:
Accounts payable and accrued expenses
$
232,089
$
394,118
Total debt, net
807,334
1,004,748
Operating lease liabilities
61,874
61,080
Other liabilities
362,603
365,908
Total liabilities
1,463,900
1,825,854
Total equity
877,076
896,692
Total liabilities and equity
$
2,340,976
$
2,722,546
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428005318/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles_lynch@mednax.com
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