Pediatrix Medical Group, Inc. (NYSE: MD), the nation’s leading
provider of highly specialized health care for women, children and
babies, today reported earnings from continuing operations of $0.34
per share for the three months ended June 30, 2023. On a non-GAAP
basis, Pediatrix reported Adjusted EPS from continuing operations
of $0.39.
For the 2023 second quarter, Pediatrix reported the following
results from continuing operations:
- Net revenue of $501 million;
- Income from continuing operations of $28 million; and
- Adjusted EBITDA of $59 million.
“Our second quarter operating results were in line with our
expectations and reflect stable patient volumes and strong cash
generation,” said James D. Swift, M.D., Chief Executive Officer of
Pediatrix Medical Group. “As we focus on improvements in our
revenue cycle management operations, our priorities also include
strengthening and growing our organization through new sales, the
expansion of our primary and urgent care clinic footprint, and
contemplated allocation of our capital toward acquisitions.”
Operating Results from Continuing Operations – Three Months
Ended June 30, 2023
Pediatrix’s net revenue for the three months ended June 30, 2023
was $500.6 million, compared to $486.0 million for the prior-year
period. Pediatrix’s overall same-unit revenue increased by 3.2
percent, slightly offset by the impact of net non-same unit
activity.
Same-unit revenue from net reimbursement-related factors
increased by 2.6 percent for the 2023 second quarter as compared to
the prior-year period. This primarily reflects improved collections
related to revenue cycle management activities and increases in
contract and administrative fees, partially offset by a decrease in
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act funds
recorded.
During the second quarter of 2023, the Company did not record
any miscellaneous revenue for CARES Act funds, compared to $0.7
million in the prior year period, which decreased the Company’s
same-unit revenue from net reimbursement-related factors by 0.2
percent for the three months ended June 30, 2023. The percentage of
services reimbursed by commercial and other non-government payors
was unchanged compared to the prior-year period.
Same-unit revenue attributable to patient volume increased by
0.6 percent for the 2023 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, 2023. (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 June 30,
2023
Six Months Ended June 30,
2023
Hospital-based patient services
0.0%
0.5%
Office-based patient services
2.4%
1.9%
Neonatology services (within
hospital-based services):
Total births
(2.0)%
(2.0)%
Neonatal intensive care unit (NICU)
days
0.7%
0.1%
For the 2023 second quarter, practice salaries and benefits
expense was $354.0 million, compared to $330.8 million for the
prior-year period. This increase primarily reflects same-unit
clinical compensation increases as well as increases in incentive
compensation, based on practice results.
For the 2023 second quarter, general and administrative expenses
were $58.0 million, as compared to $61.2 million for the prior-year
period. This net decrease is primarily related to cost reductions
from professional services and other non-staffing expenses.
For the second quarter of 2023, the Company did not incur any
transformational and restructuring related expenses, compared to
$5.3 million for the second quarter of 2022.
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 $59.1 million for the 2023
second quarter, compared to $65.6 million for the prior-year
period. Funds recorded from the provider relief fund established by
the CARES Act favorably impacted Adjusted EBITDA by approximately
$0.5 million for the second quarter of 2022.
Depreciation and amortization expense was $8.9 million for the
second quarter of 2023, compared to $8.8 million for the second
quarter of 2022.
Investment and other income was $1.2 million for the second
quarter of 2023, compared to $0.8 million for the second quarter of
2022.
Interest expense was $11.2 million for the second quarter of
2023, compared to $8.4 million for the second quarter of 2022. This
increase primarily reflects higher interest rates on the Company’s
adjustable-rate borrowings, partially offset by lower total
borrowings.
Pediatrix generated income from continuing operations of $28.3
million, or $0.34 per diluted share, for the 2023 second quarter,
based on a weighted average 82.7 million shares outstanding. This
compares with income from continuing operations of $30.7 million,
or $0.36 per diluted share, for the 2022 second quarter, based on a
weighted average 85.6 million shares outstanding. The decrease in
weighted average shares outstanding is related to share repurchases
completed during 2022.
For the second quarter of 2023, Pediatrix reported Adjusted EPS
from continuing operations of $0.39, compared to $0.47 for the
second quarter of 2022. 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.
Operating Results from Continuing Operations – Six Months Ended
June 30, 2023
For the six months ended June 30, 2023, Pediatrix generated
revenue from continuing operations of $991.6 million, compared to
$968.3 million for the prior-year period. Adjusted EBITDA from
continuing operations for the six months ended June 30, 2023 was
$99.2 million, compared to $116.2 million for the prior year.
Pediatrix generated income from continuing operations of $42.5
million, or $0.52 per share, for the six months ended June 30,
2023, based on a weighted average 82.4 million shares outstanding,
which compares to income from continuing operations of $9.8
million, or $0.11 per share, based on a weighted average 85.9
million shares outstanding for the first six months of 2022. For
the six months ended June 30, 2023, Pediatrix reported Adjusted EPS
from continuing operations of $0.62, compared to $0.79 in the same
period of 2022.
Financial Position and Cash Flow – Continuing Operations
Pediatrix had cash and cash equivalents of $5.8 million at June
30, 2023, compared to $9.8 million at December 31, 2022, and net
accounts receivable was $270.9 million.
For the second quarter of 2023, Pediatrix generated cash from
continuing operations of $92.6 million, compared to $81.6 million
during the second quarter of 2022. During the second quarter of
2023, the Company used $8.1 million to fund capital
expenditures.
At June 30, 2023, Pediatrix had total debt outstanding of $675
million, consisting of its $400 million in 5.375% Senior Notes due
2030; $234 million in borrowings under its Term A Loan; and $41
million in borrowings under its revolving line of credit.
2023 Outlook
As previously disclosed, Pediatrix anticipates that its 2023
Adjusted EBITDA, as defined below, will be in a range of $235
million to $245 million.
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, 2023 and 2022 and of forward looking Adjusted EBITDA from
continuing operations to the most directly comparable GAAP measure
for the year ending December 31, 2023 is provided in the financial
tables of this press release.
Earnings Conference Call
Pediatrix 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.pediatrix.com. A
telephone replay of the conference call will be available from
12:45 p.m. ET today through midnight ET August 17, 2023 by dialing
1-866-207-1041, access Code 6377399. The replay will also be
available at www.pediatrix.com.
ABOUT PEDIATRIX MEDICAL GROUP
Pediatrix® Medical Group, Inc. (NYSE:MD) is the nation’s leading
provider of physician services. 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 more than 20 pediatric
subspecialties, as well as pediatric primary and urgent care
clinics. The group’s high-quality, evidence-based care is bolstered
by significant investments in research, education,
quality-improvement and safety initiatives. The physician-led
company was founded in 1979 as a single neonatology practice and
today provides its highly specialized and often critical care
services through more than 5,000 affiliated physicians and other
clinicians in 37 states. To learn more about Pediatrix, visit
www.pediatrix.com or follow us on Facebook, Instagram, LinkedIn,
Twitter and the Pediatrix blog. Investment information can be found
at www.pediatrix.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 Company’s transition to a third-party revenue cycle
management provider; the impact of surprise billing legislation;
the effects of economic conditions on the Company’s business; the
effects of the Affordable Care Act and potential healthcare reform;
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 COVID-19 pandemic on the
Company and its financial condition and results of operations; 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 or organic growth
initiatives; 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.
Pediatrix Medical Group,
Inc.
Consolidated Statements of
Income and Comprehensive Income
(in thousands, except per
share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net revenue
$
500,577
$
486,033
$
991,585
$
968,262
Operating expenses:
Practice salaries and benefits
354,032
330,757
716,267
673,912
Practice supplies and other operating
expenses
31,089
29,843
61,809
58,332
General and administrative expenses
58,013
61,165
117,072
122,452
Depreciation and amortization
8,945
8,775
17,898
17,544
Transformational and restructuring related
expenses
—
5,338
—
6,759
Total operating expenses
452,079
435,878
913,046
878,999
Income from operations
48,498
50,155
78,539
89,263
Investment and other income
1,189
844
1,823
1,719
Interest expense
(11,230
)
(8,409
)
(21,620
)
(20,227
)
Loss on early extinguishment of debt
—
—
—
(57,016
)
Equity in earnings of unconsolidated
affiliates
490
443
917
948
Total non-operating expenses
(9,551
)
(7,122
)
(18,880
)
(74,576
)
Income from continuing operations before
income taxes
38,947
43,033
59,659
14,687
Income tax provision
(10,665
)
(12,332
)
(17,171
)
(4,931
)
Income from continuing operations
28,282
30,701
42,488
9,756
Loss from discontinued operations, net of
tax
—
(3,565
)
—
(3,812
)
Net income
28,282
27,136
42,488
5,944
Net loss attributable to noncontrolling
interest
—
—
—
4
Net income attributable to Pediatrix
Medical Group, Inc.
$
28,282
$
27,136
$
42,488
$
5,948
Other comprehensive (loss) income, net of
tax
Unrealized holding (loss) gain on
investments,
net of tax of $126, $414, $353 and
$1,308
(387
)
(1,234
)
217
(3,902
)
Total comprehensive income attributable to
Pediatrix
Medical Group, Inc.
$
27,895
$
25,902
$
42,705
$
2,046
Per common and common equivalent share
data (diluted):
Net income attributable to Pediatrix
Medical Group, Inc.:
$
0.34
$
0.32
$
0.52
$
0.07
Weighted average common shares
82,664
85,619
82,377
85,914
Pediatrix Medical Group,
Inc.
Reconciliation of Income from
Continuing Operations
to Adjusted EBITDA from
Continuing Operations Attributable to
Pediatrix Medical Group,
Inc.
(in thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Income from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
28,282
$
30,701
$
42,488
$
9,760
Interest expense
11,230
8,409
21,620
20,227
Loss on early extinguishment of debt
—
—
—
57,016
Income tax provision
10,665
12,332
17,171
4,931
Depreciation and amortization expense
8,945
8,775
17,898
17,544
Transformational and restructuring related
expenses
—
5,338
—
6,759
Adjusted EBITDA from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
59,122
$
65,555
$
99,177
$
116,237
Pediatrix Medical Group,
Inc.
Reconciliation of Diluted
Income 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 June
30,
2023
2022
Weighted average diluted shares
outstanding
82,664
85,619
Income from continuing operations and
diluted income from continuing operations per share attributable to
Pediatrix Medical Group, Inc.
$
28,282
$
0.34
$
30,701
$
0.36
Adjustments (1):
Amortization (net of tax of $512 and
$541)
1,533
0.02
1,624
0.02
Stock-based compensation (net of tax of
$782 and $1,084)
2,344
0.03
3,252
0.04
Transformational and restructuring
expenses (net of tax of $1,335)
—
—
4,003
0.05
Net impact from discrete tax events
150
—
294
—
Adjusted income and diluted EPS from
continuing operations attributable to Pediatrix Medical Group,
Inc.
$
32,309
$
0.39
$
39,874
$
0.47
(1) A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the three months
ended June 30, 2023 and 2022.
Six Months Ended June
30,
2023
2022
Weighted average diluted shares
outstanding
82,377
85,914
Income from continuing operations and
diluted income from continuing operations per share attributable to
Pediatrix Medical Group, Inc.
$
42,488
$
0.52
$
9,760
$
0.11
Adjustments (1):
Amortization (net of tax of $1,010 and
$1,082)
3,029
0.04
3,245
0.04
Stock-based compensation (net of tax of
$1,534 and $2,193)
4,601
0.06
6,578
0.07
Transformational and restructuring
expenses (net of tax of $1,690)
—
—
5,069
0.06
Loss on early extinguishment of debt (net
of tax of $14,254)
—
—
42,762
0.50
Net impact from discrete tax events
870
—
786
0.01
Adjusted income and diluted EPS from
continuing operations attributable to Pediatrix Medical Group,
Inc.
$
50,988
$
0.62
$
68,200
$
0.79
(1) A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the six months
ended June 30, 2023 and 2022.
Pediatrix Medical Group,
Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of June 30, 2023
As of December 31,
2022
Assets:
Cash and cash equivalents
$
5,849
$
9,824
Investments
98,490
93,239
Accounts receivable, net
270,852
296,787
Other current assets
22,576
28,139
Intangible assets, net
16,800
18,491
Operating and finance lease right-of-use
assets
67,088
66,924
Goodwill, other assets, property and
equipment
1,823,855
1,834,483
Total assets
$
2,305,510
$
2,347,887
Liabilities and shareholders'
equity:
Accounts payable and accrued expenses
$
277,680
$
374,225
Total debt, including finance leases,
net
681,192
651,279
Operating lease liabilities
64,633
65,802
Other liabilities
339,630
364,949
Total liabilities
1,363,135
1,456,255
Total shareholders' equity
942,375
891,632
Total liabilities and shareholders'
equity
$
2,305,510
$
2,347,887
Pediatrix Medical Group,
Inc.
Reconciliation of Income from
Continuing Operations
to Forward-Looking Adjusted
EBITDA from Continuing Operations Attributable to
Pediatrix Medical Group,
Inc.
(in thousands)
(Unaudited)
Year Ended December 31,
2023
Income from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
110,000
$
120,000
Interest expense
42,200
40,000
Income tax provision
44,800
47,000
Depreciation and amortization expense
38,000
38,000
Adjusted EBITDA from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
235,000
$
245,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803407566/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles.lynch@pediatrix.com
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