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 $0.36
per share for the three months ended June 30, 2022. On a non-GAAP
basis, Pediatrix reported Adjusted EPS from continuing operations
of $0.47.
For the 2022 second quarter, Pediatrix reported the following
results from continuing operations:
- Net revenue of $486 million;
- Income from continuing operations of $31 million; and
- Adjusted EBITDA of $66 million.
“Our bottom line results reflected modest volume growth and
continued operating efficiency,” said Mark S. Ordan, Chief
Executive Officer of Pediatrix Medical Group. “Our formal return to
the Pediatrix name and brand reflects our commitment to the highest
quality care possible for women, babies and children, and that is
where 100 percent of our efforts are focused.”
Operating Results from Continuing Operations – Three Months
Ended June 30, 2022
Pediatrix’s net revenue for the three months ended June 30, 2022
was $486.0 million, compared to $473.0 million for the prior-year
period. Pediatrix’s revenue growth was driven by net acquisition
activity, modestly offset by an overall same-unit revenue decrease
of 1.3 percent.
Same-unit revenue attributable to patient volume increased by
0.6 percent for the 2022 second quarter as compared to the
prior-year period, with growth in neonatology and other pediatric
services partially offset by slight declines in maternal-fetal
medicine and pediatric cardiology services. Shown below are
year-over-year percentage changes in certain same-unit volume
statistics for the three and six months ended June 30, 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 June 30,
2022
Six Months Ended June 30,
2022
Hospital-based patient services
0.7%
2.0%
Office-based patient services
0.7%
3.1%
Neonatology services (within
hospital-based services):
Total births
0.0%
1.9%
Neonatal intensive care unit (NICU)
days
0.4%
1.3%
Same-unit revenue from net reimbursement-related factors
declined by 1.9 percent for the 2022 second quarter as compared to
the prior-year period. This net decrease primarily reflects a
modest decline in the percentage of services reimbursed by
commercial and other non-government payors compared to the
prior-year period and the timing of certain revenue cycle
management transition activities, partially offset by increases in
contract and administrative fees and funds received under the
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The
percentage of services reimbursed by commercial and other
non-government payors declined by approximately 120 basis points
compared to the prior-year period. For the 2022 second quarter, the
Company recorded $0.7 million of miscellaneous revenue from funds
received under the CARES Act, which increased the Company’s
same-unit revenue from net reimbursement-related factors by 0.2
percent for the three months ended June 30, 2022.
For the 2022 second quarter, practice salaries and benefits
expense was $330.8 million, compared to $317.0 million for the
prior-year period. This increase primarily reflects acquisitions
completed over the past year.
For the 2022 second quarter, general and administrative expenses
were $61.2 million, as compared to $71.0 million for the prior-year
period. The net decrease of $9.8 million is primarily related to
lower professional fees, including legal fees, as well as a net
savings in revenue cycle management expenses.
For the second quarter of 2022, transformational and
restructuring related expenses totaled $5.3 million, compared to
$9.9 million for the second quarter of 2021. The expense recorded
during the second quarter of 2022 related predominantly to position
eliminations.
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 $65.6 million for the 2022
second quarter, compared to $65.5 million for the prior-year
period. Funds received from the provider relief fund established by
the CARES Act favorably impacted Adjusted EBITDA by approximately
$0.5 million for the second quarter of 2022.
Depreciation and amortization expense was $8.8 million for the
second quarter of 2022 compared to $8.1 million for the second
quarter of 2021.
Investment and other income was $0.8 million for the second
quarter of 2022, compared to $4.2 million for the second quarter of
2021. This decrease primarily reflects the reimbursement received
in the prior year period related to the transition services
provided to the buyers of the Company’s divested medical
groups.
Interest expense was $8.4 million for the second quarter of 2022
compared to $16.9 million for the second quarter of 2021. This
decrease reflects lower total debt and lower interest rates from
the Company’s previously-disclosed refinancing transactions
completed during the first quarter of 2022.
Pediatrix generated 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. This
compares with 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.
For the second quarter of 2022, Pediatrix reported Adjusted EPS
from continuing operations of $0.47, compared to $0.41 for the
second 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 the prior year period also excludes the gain on
sale of building.
Operating Results from Continuing Operations – Six Months Ended
June 30, 2022
For the six months ended June 30, 2022, Pediatrix generated
revenue from continuing operations of $968.3 million, compared to
$919.7 million for the prior-year period. Adjusted EBITDA from
continuing operations for the six months ended June 30, 2022 was
$116.2 million, compared to $111.0 million for the prior year.
Pediatrix generated income from continuing operations of $9.8
million, or $0.11 per share, for the six months ended June 30,
2022, based on a weighted average 85.9 million shares outstanding,
which compares to income from continuing operations of $35.9
million, or $0.42 per share, based on a weighted average 85.7
million shares outstanding for the first six months of 2021. For
the six months ended June 30, 2022, Pediatrix reported Adjusted EPS
from continuing operations of $0.79, compared to $0.65 in the same
period of 2021.
Financial Position and Cash Flow – Continuing Operations
Pediatrix had cash and cash equivalents of $14.1 million at June
30, 2022, compared to $387.4 million on December 31, 2021, and net
accounts receivable were $307.2 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.
For the second quarter of 2022, Pediatrix generated cash from
continuing operations of $81.6 million, compared to $70.4 million
for the second quarter of 2021. During the second quarter of 2022,
the Company used $64.4 million to fund the repurchase of 3.3
million shares under the Company’s previously announced repurchase
program, $6.6 million to fund capital expenditures and $3 million
to fund one practice acquisition.
At June 30, 2022, Pediatrix had total debt outstanding of $800
million, consisting of its $400 million in 5.375% Senior Notes due
2030; $247 million in borrowings under its Term A Loan; and $153
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 and six months ended June
30, 2022 and 2021 is provided in the financial tables of this press
release.
2022 Outlook
Pediatrix anticipates that its 2022 Adjusted EBITDA, as defined
above, will be in a range of $260 million to $270 million. This
outlook reflects Adjusted EBITDA for the first six months of 2022
of $116.2 million.
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 18, 2022 by dialing
866.207.1041, access Code 9245025. 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 a newly expanded area of 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 4,800 affiliated
physicians and other clinicians in 37 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.
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 name change; 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 and its implementation; 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.
Pediatrix Medical Group,
Inc.
Consolidated Statements of
Income
(in thousands, except per
share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Net revenue
$
486,033
$
472,959
$
968,262
$
919,712
Operating expenses:
Practice salaries and benefits
330,757
317,035
673,912
636,047
Practice supplies and other operating
expenses
29,843
24,182
58,332
46,394
General and administrative expenses
61,165
70,968
122,452
137,484
Gain on sale of building
—
(7,280
)
—
(7,280
)
Depreciation and amortization
8,775
8,106
17,544
16,137
Transformational and restructuring related
expenses
5,338
9,932
6,759
14,810
Total operating expenses
435,878
422,943
878,999
843,592
Income from operations
50,155
50,016
89,263
76,120
Investment and other income
844
4,176
1,719
10,143
Interest expense
(8,409
)
(16,879
)
(20,227
)
(34,524
)
Loss on early extinguishment of debt
—
—
(57,016
)
(14,532
)
Equity in earnings of unconsolidated
affiliate
443
577
948
1,072
Total non-operating expenses
(7,122
)
(12,126
)
(74,576
)
(37,841
)
Income from continuing operations before
income taxes
43,033
37,890
14,687
38,279
Income tax provision
(12,332
)
(7,363
)
(4,931
)
(2,408
)
Income from continuing operations
30,701
30,527
9,756
35,871
(Loss) income from discontinued
operations, net of tax
(3,565
)
4,478
(3,812
)
16,768
Net income
27,136
35,005
5,944
52,639
Net loss attributable to noncontrolling
interest
—
6
4
14
Net income attributable to Pediatrix
Medical Group, Inc.
$
27,136
$
35,011
$
5,948
$
52,653
Per common and common equivalent share
data (diluted):
Income from continuing operations
$
0.36
$
0.36
$
0.11
$
0.42
(Loss) income from discontinued
operations
$
(0.04
)
$
0.05
$
(0.04
)
$
0.19
Net income attributable to Pediatrix
Medical Group, Inc.
$
0.32
$
0.41
$
0.07
$
0.61
Weighted average common shares
85,619
85,933
85,914
85,653
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,
2022
2021
2022
2021
Income from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
30,701
$
30,533
$
9,760
$
35,885
Interest expense
8,409
16,879
20,227
34,524
Gain on sale of building
—
(7,280
)
—
(7,280
)
Loss on early extinguishment of debt
—
—
57,016
14,532
Income tax provision
12,332
7,363
4,931
2,408
Depreciation and amortization expense
8,775
8,106
17,544
16,137
Transformational and restructuring related
expenses
5,338
9,932
6,759
14,810
Adjusted EBITDA from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
65,555
$
65,533
$
116,237
$
111,016
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,
2022
2021
Weighted average diluted shares
outstanding
85,619
85,933
Income from continuing operations and
diluted income from continuing operations per share attributable to
Pediatrix Medical Group, Inc.
$
30,701
$
0.36
$
30,533
$
0.36
Adjustments (1):
Amortization (net of tax of $541 and
$576)
1,624
0.02
1,728
0.02
Stock-based compensation (net of tax of
$1,084 and $1,434)
3,252
0.04
4,301
0.04
Transformational and restructuring
expenses (net of tax of $1,335 and $2,483)
4,003
0.05
7,449
0.09
Gain on sale of building (net of tax of
$1,820)
—
—
(5,460
)
(0.06
)
Net impact from discrete tax events
294
—
(3,516
)
(0.04
)
Adjusted income and diluted EPS from
continuing operations attributable to Pediatrix Medical Group,
Inc.
$
39,874
$
0.47
$
35,035
$
0.41
(1) A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the three months
ended June 30, 2022 and 2021.
Six Months Ended June
30,
2022
2021
Weighted average diluted shares
outstanding
85,914
85,653
Income from continuing operations and
diluted income from continuing operations per share attributable to
Pediatrix Medical Group, Inc.
$
9,760
$
0.11
$
35,885
$
0.42
Adjustments (1):
Amortization (net of tax of $1,082 and
$1,466)
3,245
0.04
4,400
0.05
Stock-based compensation (net of tax of
$2,193 and $2,363)
6,578
0.07
7,089
0.08
Transformational and restructuring
expenses (net of tax of $1,690 and $3,702)
5,069
0.06
11,108
0.13
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 $14,254 and $3,633)
42,762
0.50
10,899
0.13
Net impact from discrete tax events
786
0.01
(8,583
)
(0.10
)
Adjusted income and diluted EPS from
continuing operations attributable to Pediatrix Medical Group,
Inc.
$
68,200
$
0.79
$
55,338
$
0.65
(1) A blended tax rate of 25% was used to
calculate the tax effects of the adjustments for the six months
ended June 30, 2022 and 2021.
Pediatrix Medical Group,
Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of June 30, 2022
As of December 31,
2021
Assets:
Cash and cash equivalents
$
14,088
$
387,391
Investments
93,386
99,715
Accounts receivable, net
307,201
301,775
Income taxes receivable
21,529
14,249
Other current assets
23,097
37,434
Intangible assets, net
20,965
21,565
Operating and finance lease right-of-use
assets
67,504
65,461
Goodwill, other assets, property and
equipment
1,821,846
1,794,956
Total assets
$
2,369,616
$
2,722,546
Liabilities and equity:
Accounts payable and accrued expenses
$
287,463
$
394,118
Total debt, including finance leases,
net
808,176
1,004,748
Operating lease liabilities
62,667
61,080
Other liabilities
365,880
365,908
Total liabilities
1,524,186
1,825,854
Total equity
845,430
896,692
Total liabilities and equity
$
2,369,616
$
2,722,546
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,
2022
Income from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
86,000
$
95,000
Interest expense
38,000
36,000
Loss on early extinguishment of debt
57,000
57,000
Income tax provision
35,700
38,700
Depreciation and amortization expense
34,000
34,000
Transformational and restructuring related
expenses
9,300
9,300
Adjusted EBITDA from continuing operations
attributable to Pediatrix Medical Group, Inc.
$
260,000
$
270,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005290/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles.lynch@pediatrix.com
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