Pediatrix Medical Group Reports Fourth Quarter Results
- None.
- Decline in same-unit revenue and patient volume for Q4 2023 compared to the prior-year period.
- Significant non-cash impairment loss of $168.3 million related to goodwill and other assets recorded during Q4 2023.
- Decrease in Adjusted EBITDA from continuing operations to $50.8 million for Q4 2023 compared to $66.5 million for the prior-year period.
- Loss from continuing operations of $124.3 million, or $1.50 per diluted share, for Q4 2023, indicating a decline from income in the previous year.
- Adjusted EPS from continuing operations dropped to $0.32 for Q4 2023, down from $0.47 for Q4 2022.
Insights
The reported loss from continuing operations of $1.50 per share by Pediatrix Medical Group for Q4 2023, compared to the prior year's income of $0.29 per diluted share, represents a significant downturn. The shift from a net income to a net loss is a critical indicator of the company's financial health and could influence investor sentiment. The non-cash impairment loss of $168.3 million related to goodwill and other assets is a substantial figure and suggests a reevaluation of the company's assets, potentially due to underperformance or a challenging market environment. This impairment could affect the company's balance sheet and future earnings potential.
Furthermore, the decline in same-unit revenue and net revenue year-over-year, despite a modest increase in hospital contract administrative fees and payer mix, indicates underlying challenges in operations and market conditions. The decrease in funds received under the CARES Act also impacted revenue and Adjusted EBITDA, highlighting the company's reliance on these funds during the previous year and the impact of their absence in the current fiscal period. The slight increase in practice salaries and benefits expense, despite declines in incentive compensation and malpractice expenses, reflects rising costs in clinical compensation and group health insurance, potentially squeezing profit margins.
The decrease in same-unit revenue, particularly in hospital-based patient services and neonatal intensive care unit (NICU) days, may reflect broader trends in healthcare service utilization. The 1.0 percent decline in patient volume could be associated with factors such as demographic shifts, changes in healthcare policies, or increased competition. It's important to consider how these trends may continue to affect Pediatrix's service demand and revenue generation, especially in the context of its specialized focus on women's, children's and babies' healthcare.
Pediatrix's anticipation of reliable cash flow for 2024 based on their operating plans, including progress in their hybrid revenue-cycle management structure and increased in-network status, suggests strategic initiatives aimed at improving financial stability. However, the effectiveness of these initiatives will need to be monitored closely, as the healthcare industry faces ongoing challenges such as reimbursement rate pressures and evolving regulatory environments.
The preliminary 2024 Adjusted EBITDA outlook range of $200 million to $220 million provided by Pediatrix offers insight into the company's expectations for the coming year. This projection, when compared to the Adjusted EBITDA of $200.4 million for the year ended December 31, 2023, indicates that the company does not foresee a significant improvement in its earnings before interest, taxes, depreciation and amortization. This conservative outlook may be factored into market expectations and could impact the stock's performance if investors were anticipating a stronger recovery post-pandemic.
The company's improved cash position at the end of 2023, with cash and cash equivalents of $73.3 million compared to $9.8 million at the end of 2022, provides a more robust liquidity profile that could support operational needs and strategic investments. Nevertheless, the overall financial performance and the reported loss from continuing operations will likely be focal points for investors assessing the company's profitability trajectory and long-term value.
For the 2023 fourth quarter, Pediatrix reported the following results from continuing operations:
-
Net revenue of
$496 million -
Loss from continuing operations of
$124 million -
Adjusted EBITDA of
$51 million
“Our fourth quarter operating results were consistent with our expectations,” said James D. Swift, M.D., Chief Executive Officer of Pediatrix Medical Group. “We believe our operating plans for 2024, which build on progress in both our hybrid revenue-cycle management structure and increased in-network status, position us for very reliable cash flow, a foundation for future growth.”
Operating Results from Continuing Operations – Three Months Ended December 31, 2023
Pediatrix’s net revenue for the three months ended December 31, 2023 was
Same-unit revenue attributable to patient volume declined by 1.0 percent for the 2023 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 year ended December 31, 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
|
|
Year Ended
|
|
|
|
|
|
|
Hospital-based patient services |
|
(3.0)% |
|
(0.9)% |
Office-based patient services |
|
|
|
|
|
|
|
|
|
Neonatology services (within hospital-based services): |
|
|
|
|
Neonatal intensive care unit (NICU) days |
|
(2.0)% |
|
(0.7)% |
|
|
|
|
|
Same-unit revenue from net reimbursement-related factors declined by 0.5 percent for the 2023 fourth quarter as compared to the prior-year period. This decline primarily reflects the impact in the 2022 fourth quarter of financial support provided by the Company’s revenue cycle management vendor, as well as a decrease in funds received under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. During the fourth quarter of 2023, the Company received no funds under the CARES Act compared to
For the 2023 fourth quarter, practice salaries and benefits expense was
For the 2023 fourth quarter, general and administrative expenses were
For the fourth quarter of 2023, transformational and restructuring related expenses totaled
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 impairment losses was
Depreciation and amortization expense of
Investment and other income was
Interest expense was
During the fourth quarter of 2023, Pediatrix recorded an aggregate non-cash impairment loss of
Pediatrix generated a loss from continuing operations of
For the fourth quarter of 2023, Pediatrix reported Adjusted EPS from continuing operations of
Operating Results from Continuing Operations – Year Ended December 31, 2023
For the year ended December 31, 2023, Pediatrix generated revenue from continuing operations of
Financial Position and Cash Flow – Continuing Operations
Pediatrix had cash and cash equivalents of
For the fourth quarter of 2023, Pediatrix generated cash from continuing operations of
At December 31, 2023, Pediatrix had total debt outstanding of
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 and years ended December 31, 2023 and 2022 is provided in the financial tables of this press release.
Preliminary 2024 Outlook
On a preliminary basis, Pediatrix anticipates that its 2024 Adjusted EBITDA, as defined above, will be in a range of
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 March 5, 2024 by dialing 1-866-207-1041, access code 2056898. 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 termination of its current third-party revenue cycle management provider and transition to a hybrid revenue cycle management model with one or more new third-party service providers, including any transition costs associated therewith; 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
|
|
|
Twelve Months Ended
|
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net revenue |
|
$ |
496,443 |
|
|
$ |
513,844 |
|
|
$ |
1,994,640 |
|
|
$ |
1,972,021 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Practice salaries and benefits |
|
|
363,604 |
|
|
|
366,557 |
|
|
|
1,448,275 |
|
|
|
1,383,319 |
|
Practice supplies and other operating expenses |
|
|
31,672 |
|
|
|
31,480 |
|
|
|
124,800 |
|
|
|
121,669 |
|
General and administrative expenses |
|
|
53,064 |
|
|
|
51,057 |
|
|
|
227,542 |
|
|
|
231,397 |
|
Depreciation and amortization |
|
|
9,062 |
|
|
|
9,136 |
|
|
|
36,171 |
|
|
|
35,636 |
|
Transformational and restructuring related expenses |
|
|
2,219 |
|
|
|
19,576 |
|
|
|
2,219 |
|
|
|
27,312 |
|
Goodwill impairment |
|
|
148,312 |
|
|
|
— |
|
|
|
148,312 |
|
|
|
— |
|
Total operating expenses |
|
|
607,933 |
|
|
|
477,806 |
|
|
|
1,987,319 |
|
|
|
1,799,333 |
|
(Loss) income from operations |
|
|
(111,490 |
) |
|
|
36,038 |
|
|
|
7,321 |
|
|
|
172,688 |
|
Investment and other income |
|
|
2,242 |
|
|
|
1,335 |
|
|
|
4,338 |
|
|
|
3,671 |
|
Interest expense |
|
|
(10,081 |
) |
|
|
(9,952 |
) |
|
|
(42,075 |
) |
|
|
(39,695 |
) |
Impairment loss |
|
|
(20,000 |
) |
|
|
— |
|
|
|
(20,000 |
) |
|
|
— |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57,016 |
) |
Equity in earnings of unconsolidated affiliates |
|
|
479 |
|
|
|
403 |
|
|
|
2,057 |
|
|
|
1,722 |
|
Total non-operating expenses |
|
|
(27,360 |
) |
|
|
(8,214 |
) |
|
|
(55,680 |
) |
|
|
(91,318 |
) |
(Loss) income from continuing operations before income taxes |
|
|
(138,850 |
) |
|
|
27,824 |
|
|
|
(48,359 |
) |
|
|
81,370 |
|
Income tax benefit (provision) |
|
|
14,563 |
|
|
|
(3,824 |
) |
|
|
(12,049 |
) |
|
|
(18,806 |
) |
(Loss) income from continuing operations |
|
|
(124,287 |
) |
|
|
24,000 |
|
|
|
(60,408 |
) |
|
|
62,564 |
|
Income from discontinued operations, net of tax |
|
|
— |
|
|
|
5,659 |
|
|
|
— |
|
|
|
3,767 |
|
Net (loss) income |
|
|
(124,287 |
) |
|
|
29,659 |
|
|
|
(60,408 |
) |
|
|
66,331 |
|
Net loss attributable to noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Net (loss) income attributable to Pediatrix Medical Group, Inc. |
|
$ |
(124,287 |
) |
|
$ |
29,659 |
|
|
$ |
(60,408 |
) |
|
$ |
66,335 |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized holding gain (loss) on investments, net of
|
|
|
1,303 |
|
|
|
366 |
|
|
|
1,521 |
|
|
|
(5,051 |
) |
Total comprehensive (loss) income attributable to
|
|
$ |
(122,984 |
) |
$ |
30,025 |
|
|
$ |
(58,887 |
) |
|
$ |
61,284 |
|
|
Per common and common equivalent share data (diluted): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income from continuing operations |
|
$ |
(1.50 |
) |
|
$ |
0.29 |
|
|
$ |
(0.73 |
) |
|
$ |
0.74 |
|
Income from discontinued operations |
|
$ |
— |
|
|
$ |
0.07 |
|
|
$ |
— |
|
|
$ |
0.05 |
|
Net (loss) income attributable to Pediatrix Medical Group, Inc. |
|
$ |
(1.50 |
) |
|
$ |
0.36 |
|
|
$ |
(0.73 |
) |
|
$ |
0.79 |
|
Weighted average common shares |
|
|
82,660 |
|
|
|
82,158 |
|
|
|
82,201 |
|
|
|
84,121 |
|
Pediatrix Medical Group, Inc. Reconciliation of (Loss) Income from Continuing Operations to Adjusted EBITDA from Continuing Operations Attributable to Pediatrix Medical Group, Inc. (in thousands) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(Loss) income from continuing operations attributable to Pediatrix
|
|
$ |
(124,287 |
) |
|
$ |
24,000 |
|
|
$ |
(60,408 |
) |
|
$ |
62,568 |
|
Interest expense |
|
|
10,081 |
|
|
|
9,952 |
|
|
|
42,075 |
|
|
|
39,695 |
|
Loss on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
57,016 |
|
Income tax (benefit) provision |
|
|
(14,563 |
) |
|
|
3,824 |
|
|
|
12,049 |
|
|
|
18,806 |
|
Depreciation and amortization expense |
|
|
9,062 |
|
|
|
9,136 |
|
|
|
36,171 |
|
|
|
35,636 |
|
Transformational and restructuring related expenses |
|
|
2,219 |
|
|
|
19,576 |
|
|
|
2,219 |
|
|
|
27,312 |
|
Impairment losses |
|
|
168,312 |
|
|
|
— |
|
|
|
168,312 |
|
|
|
— |
|
Adjusted EBITDA from continuing operations attributable to
|
|
$ |
50,824 |
|
|
$ |
66,488 |
|
|
$ |
200,418 |
|
|
$ |
241,033 |
|
Pediatrix Medical Group, Inc. Reconciliation of Diluted (Loss) 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
|
|
|||||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||
Weighted average diluted shares outstanding |
|
|
82,660 |
|
|
|
|
|
|
82,158 |
|
|
|
|
||
(Loss) income from continuing operations and diluted income from
|
|
$ |
(124,287 |
) |
|
$ |
(1.50 |
) |
|
$ |
24,000 |
|
$ |
0.29 |
|
|
Adjustments (1): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization (net of tax of |
|
|
1,510 |
|
|
|
0.02 |
|
|
|
1,820 |
|
|
|
0.02 |
|
Stock-based compensation (net of tax of |
|
|
2,268 |
|
|
|
0.03 |
|
|
|
1,120 |
|
|
|
0.01 |
|
Transformational and restructuring expenses (net of tax of |
|
|
1,664 |
|
|
|
0.02 |
|
|
|
14,682 |
|
|
|
0.18 |
|
Impairment losses (net of tax of |
|
|
126,234 |
|
|
|
1.53 |
|
|
— |
|
|
— |
|
||
Net impact from discrete tax events |
|
|
18,841 |
|
|
|
0.22 |
|
|
|
(3,073 |
) |
|
|
(0.03 |
) |
Adjusted income and diluted EPS from continuing operations
|
|
$ |
26,230 |
|
|
$ |
0.32 |
|
|
$ |
38,549 |
|
|
$ |
0.47 |
|
(1) A blended tax rate of |
|
Twelve Months Ended
|
|
||||||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||
Weighted average diluted shares outstanding |
|
|
82,201 |
|
|
|
|
|
|
84,121 |
|
|
|
|
||
(Loss) income from continuing operations and diluted income from
|
|
$ |
(60,408 |
) |
|
$ |
(0.73 |
) |
|
$ |
62,568 |
|
|
$ |
0.74 |
|
Adjustments (1): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization (net of tax of |
|
|
6,032 |
|
|
|
0.07 |
|
|
|
6,727 |
|
|
|
0.08 |
|
Stock-based compensation (net of tax of |
|
|
9,242 |
|
|
|
0.11 |
|
|
|
10,788 |
|
|
|
0.13 |
|
Transformational and restructuring related expenses (net of tax of |
|
|
1,664 |
|
|
|
0.02 |
|
|
|
20,484 |
|
|
|
0.24 |
|
Impairment losses (net of tax of |
|
|
126,234 |
|
|
|
1.54 |
|
|
|
— |
|
|
|
— |
|
Loss on early extinguishment of debt (net of tax of |
|
|
— |
|
|
|
— |
|
|
|
42,762 |
|
|
|
0.51 |
|
Net impact from discrete tax events |
|
|
20,825 |
|
|
|
0.25 |
|
|
|
(3,370 |
) |
|
|
(0.04 |
) |
Adjusted income and diluted EPS from continuing operations
|
|
$ |
103,589 |
|
|
$ |
1.26 |
|
|
$ |
139,959 |
|
|
$ |
1.66 |
|
(1) A blended tax rate of |
Pediatrix Medical Group, Inc. Balance Sheet Highlights (in thousands) (Unaudited) |
||||||||
|
|
As of
|
|
|
As of
|
|
||
Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
73,258 |
|
|
$ |
9,824 |
|
Investments |
|
|
104,485 |
|
|
|
93,239 |
|
Accounts receivable, net |
|
|
272,313 |
|
|
|
296,787 |
|
Other current assets |
|
|
33,398 |
|
|
|
28,139 |
|
Intangible assets, net |
|
|
21,240 |
|
|
|
18,491 |
|
Operating and finance lease right-of-use assets |
|
|
70,294 |
|
|
|
66,924 |
|
Goodwill, other assets, property and equipment |
|
|
1,644,822 |
|
|
|
1,834,483 |
|
Total assets |
|
$ |
2,219,810 |
|
|
$ |
2,347,887 |
|
Liabilities and shareholders' equity: |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
$ |
350,798 |
|
|
$ |
374,225 |
|
Total debt, net |
|
|
633,334 |
|
|
|
651,279 |
|
Operating lease liabilities |
|
|
68,314 |
|
|
|
65,802 |
|
Other liabilities |
|
|
318,303 |
|
|
|
364,949 |
|
Total liabilities |
|
|
1,370,749 |
|
|
|
1,456,255 |
|
Total shareholders' equity |
|
|
849,061 |
|
|
|
891,632 |
|
Total liabilities and shareholders' equity |
|
$ |
2,219,810 |
|
|
$ |
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
|
|
|||||
|
|
|
|
|
|
|
||
Income from continuing operations attributable to Pediatrix Medical Group, Inc. |
|
$ |
68,750 |
|
|
$ |
83,700 |
|
Interest expense |
|
|
40,600 |
|
|
|
39,900 |
|
Income tax provision |
|
|
26,650 |
|
|
|
32,400 |
|
Depreciation and amortization expense |
|
|
39,000 |
|
|
|
39,000 |
|
Transformational and restructuring related expenses |
|
|
25,000 |
|
|
|
25,000 |
|
Adjusted EBITDA from continuing operations attributable to Pediatrix Medical Group, Inc. |
|
$ |
200,000 |
|
|
$ |
220,000 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240220939114/en/
Charles Lynch
Senior Vice President, Finance and Strategy
954-384-0175, x 5692
charles.lynch@pediatrix.com
Source: Pediatrix Medical Group, Inc.
FAQ
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