Mednax, Inc. (NYSE: MD), the national medical group specializing
in prenatal, neonatal, and pediatric services, today reported
earnings from continuing operations of $0.05 per share for the
three months ended December 31, 2020. On a non-GAAP basis, Mednax
reported Adjusted EPS from continuing operations of $0.25.
For the 2020 fourth quarter, Mednax reported the following
results from continuing operations:
- Net revenue of $417 million;
- Income from continuing operations of $4 million;
- Net loss of $64 million; and
- Adjusted EBITDA of $58 million.
“The fourth quarter of 2020 completed a year of significant
change, following which we are entirely focused on our Pediatrix
and Obstetrix medical group,” said Mark S. Ordan, Chief Executive
Officer of Mednax. “While our results continued to be impacted by
the COVID-19 pandemic, they also show our enhanced efficiency and
financial strength, and we remain confident in the post-COVID
earnings power of our organization. We believe we are well
positioned to support our affiliated practices, to attract new
clinicians and physician groups to Mednax, to grow in other women’s
and children’s subspecialties, and to drive strong bottom line
results.”
Operating Results from Continuing Operations – Three Months
Ended December 31, 2020
As previously announced, Mednax completed the divestitures of
Mednax Radiology Solutions on December 15, 2020, and of American
Anesthesiology on May 6, 2020. The Company’s discussion of its
results from continuing operations for the quarter and the year
ended December 31, 2020 and the prior-year periods excludes the
operating results from these businesses.
During the 2020 fourth quarter, Mednax’s operations were
negatively impacted by reductions in patient volumes and revenue
from the COVID-19 pandemic more significantly than in the third
quarter of 2020.
Mednax’s net revenue for the three months ended December 31,
2020 was $416.6 million, compared to $458.6 million for the
prior-year period. Mednax’s overall same-unit revenue declined by
9.5 percent, slightly offset by growth attributable to recent net
acquisitions.
Same-unit revenue attributable to patient volume decreased by
6.6 percent for the 2020 fourth quarter as compared to the
prior-year period, and as compared to a decrease of approximately
4.3 percent for the 2020 third quarter. In each case, this decline
was primarily attributable to the impacts from the COVID-19
pandemic.
Shown below are year-over-year percentage changes in selected
same-unit volume statistics for the quarter ended December 31,
2020.
Quarter ended
December 31, 2020
Hospital-based patient services
(7.7)%
Office-based patient services
(6.1)%
Neonatology services (within
hospital-based
services):
Total births
(3.3)%
Neonatal intensive care unit (NICU)
days
(6.3)%
Same-unit revenue from net reimbursement-related factors
decreased by 2.9 percent for the 2020 fourth quarter as compared to
the prior-year period. The net decrease in revenue from net
reimbursement-related factors primarily reflects a decrease in the
percentage of services reimbursed by commercial and other
non-government payors, partially offset by increases in contract
and administrative fees and funds received under the CARES Act. The
percentage of patients reimbursed under commercial and other
non-government programs decreased by approximately 200 basis points
compared with the prior-year period.
For the 2020 fourth quarter, practice salaries and benefits
expense was $284.8 million, compared to $300.1 million for the
prior-year period, a decrease of $15.3 million. This decrease
primarily reflects reductions in variable incentive compensation,
based on practice-level revenue and other financial results during
the quarter.
For the 2020 fourth quarter, general and administrative expenses
were $54.7 million, as compared to $59.2 million for the prior-year
period. This decrease reflects salary and net staffing reductions,
partially offset by approximately $5 million in expenses incurred
as part of the Company’s transitional services being provided to
the buyers of American Anesthesiology and Mednax Radiology
Solutions. Mednax was reimbursed for these transition services
expenses and recorded such reimbursement as a component of
investment and other income within non-operating income.
As previously disclosed, Mednax has incurred certain expenses
related to transformational and restructuring related activities.
For the fourth quarter of 2020, these expenses totaled $13.0
million, compared to $28.9 million for the fourth quarter of 2019.
Of the expense recorded during the fourth quarter of 2020, $9.5
million related to executive management restructuring, contract
termination fees, and position eliminations, while the remainder
related to third-party consulting fees.
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 $58.3 million for the 2020
fourth quarter, compared to $77.5 million for the prior-year
period.
Depreciation and amortization expense was $7.7 million for the
fourth quarter of 2020 compared to $7.1 million for the fourth
quarter of 2019.
Investment and other income was $4.8 million for the fourth
quarter of 2020 compared to $0.9 million for the fourth quarter of
2019. This increase primarily represents the reimbursement related
to the transition services being provided to the buyers of American
Anesthesiology Mednax Radiology Solutions.
Interest expense was $27.3 million for the fourth quarter of
2020 compared to $27.7 million for the fourth quarter of 2019.
Mednax generated income from continuing operations of $4.4
million, or $0.05 per diluted share, for the 2020 fourth quarter,
based on a weighted average 85.1 million shares outstanding. This
compares with income from continuing operations of $9.9 million, or
$0.12 per diluted share, for the 2019 fourth quarter, based on a
weighted average 83.3 million shares outstanding.
For the fourth quarter of 2020, Mednax reported Adjusted EPS
from continuing operations of $0.25, compared to $0.45 for the
fourth quarter of 2019. 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 items.
Operating Results from Continuing Operations – Year Ended
December 31, 2020
For the year ended December 31, 2020, Mednax generated revenue
from continuing operations of $1.73 billion, compared to revenue of
$1.78 billion for the prior-year period. Adjusted EBITDA from
continuing operations for the year ended December 31, 2020 was
$219.9 million, compared to $264.5 million for the prior year.
Mednax reported loss from continuing operations of $9.6 million, or
$0.11 per share, for the year ended December 31, 2020, based on a
weighted average 83.4 million shares outstanding, which compares to
income from continuing operations of $42.2 million, or $0.50 per
share, based on a weighted average 84.0 million shares outstanding
for the year ended December 31, 2019. For the year ended December
31, 2020, Mednax reported Adjusted EPS from continuing operations
of $0.95, compared to $1.40 for the same period of 2019.
Financial Position and Cash Flow – Continuing Operations
Mednax had cash and cash equivalents of $1.12 billion at
December 31, 2020, compared to $107.9 million on December 31, 2019,
and net accounts receivable were $241.9 million.
During the fourth quarter of 2020, Mednax generated cash from
continuing operations of $82.2 million, compared to $37.9 million
during the fourth quarter of 2019, primarily reflecting an increase
in cash flow from deferred income taxes and income taxes payable,
partially offset by a decrease in cash from changes in other
assets.
Additionally, on December 15, 2020, Mednax completed the sale of
Mednax Radiology Solutions and received net proceeds, after related
transaction expenses and customary adjustments, of approximately
$865 million.
At December 31, 2020, Mednax had no outstanding borrowings under
its $1.2 billion revolving credit facility and had total debt
outstanding of $1.75 billion, consisting solely of its senior
notes, and net debt of $626 million.
Subsequent to the end of 2020, on January 7, 2021, Mednax
redeemed its $750 million in outstanding principal amount of 5.25%
senior notes due 2023. Following this redemption, the Company
anticipates that its net interest expense, related predominantly to
its $1.0 billion in 6.25% senior notes due 2027 and assuming no
material borrowings under its revolving credit facility, will be
approximately $16 million per quarter.
Seasonality of Operating Results
Consistent with prior years, Mednax’s results from operations in
the 2021 first quarter, when compared on a sequential basis to the
2020 fourth quarter, will be affected by annual seasonality. These
recurring items reduce Mednax’s net income, Adjusted EBITDA and
Adjusted EPS for the first quarter of each year, relative to other
quarters throughout the year.
These factors include the incurrence of a disproportionate share
of the annual expenses associated with Social Security payroll
taxes and 401(k) match. These seasonal factors also include impacts
on net revenue during the first quarter, on a sequential basis,
because there are fewer calendar days than in the fourth
quarter.
Discontinued Operations
The results for Mednax Radiology Solutions, American
Anesthesiology and MedData are presented as discontinued operations
for the quarter and year ended December 31, 2020 and all prior
periods as relevant.
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 twelve months ended
December 31, 2020 and 2019 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
1:30 p.m. EST today through midnight ET March 4, 2021 by dialing
866.207.1041, access Code 8270499. 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. Physicians and
advanced practitioners practicing as part of Mednax are reshaping
the delivery of care within their specialties and subspecialties,
using evidence-based tools, continuous quality initiatives,
clinical research and telehealth programs to enhance patient
outcomes and provide high-quality, cost-effective care. The Company
was founded in 1979, and today, through its affiliated professional
entities, Mednax provides services through a network of more than
2,300 physicians in 39 states and Puerto Rico. Additional
information is available at www.mednax.com.
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 Company’s ability to comply with the terms of its debt
financing arrangements; 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,
2020
2019
2020
2019
Net revenue
$
416,630
$
458,600
$
1,733,951
$
1,779,759
Operating expenses:
Practice salaries and benefits
284,772
300,073
1,193,940
1,180,759
Practice supplies and other operating
expenses
24,235
23,223
90,690
95,911
General and administrative expenses
54,671
59,194
248,947
244,512
Depreciation and amortization
7,692
7,101
28,441
25,931
Transformational and restructuring related
expenses
12,955
28,865
73,801
60,890
Total operating expenses
384,325
418,456
1,635,819
1,608,003
Income from operations
32,305
40,144
98,132
171,756
Investment and other income
4,849
909
17,913
3,686
Interest expense
(27,302)
(27,657)
(110,482)
(118,928)
Equity in earnings of unconsolidated
affiliates
504
517
1,585
2,270
Net non-operating expenses
(21,949)
(26,231)
(90,984)
(112,972)
Income from continuing operations before
income taxes
10,356
13,913
7,148
58,784
Income tax provision
(5,869)
(3,986)
(16,728)
(16,576)
Income (loss) from continuing
operations
4,487
9,927
(9,580)
42,208
Loss from discontinued operations, net of
tax
(68,783)
(596)
(786,908)
(1,539,910)
Net (loss) income
$
(64,296)
$
9,331
$
(796,488)
$
(1,497,702)
Per common and common equivalent share
data (diluted):
Income (loss) from continuing
operations
$
0.05
$
0.12
$
(0.11)
$
0.50
Loss from discontinued operations
$
(0.81)
$
(0.01)
$
(9.44)
$
(18.33)
Net (loss) income
$
(0.76)
$
0.11
$
(9.55)
$
(17.83)
Weighted average diluted shares
outstanding
85,082
83,288
83,395
84,011
Mednax, Inc.
Reconciliation of Income
(Loss) from Continuing Operations
to Adjusted EBITDA from
Continuing Operations
(in thousands)
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Income (Loss) from continuing
operations
$ 4,487
$ 9,927
$ (9,580)
$ 42,208
Interest expense
27,302
27,657
110,482
118,928
Income tax provision
5,869
3,986
16,728
16,576
Depreciation and amortization
7,692
7,101
28,441
25,931
Transformational and restructuring related
expenses
12,955
28,865
73,801
60,890
Adjusted EBITDA from continuing
operations
$ 58,305
$ 77,536
$ 219,872
$ 264,533
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,
2020
2019
Weighted average diluted shares
outstanding
85,082
83,288
Income from continuing operations and
diluted income from continuing
operations per share
$ 4,487
$ 0.05
$ 9,927
$ 0.12
Adjustments (1):
Amortization (net of tax of $662 and
$525)
1,986
0.02
1,575
0.02
Stock-based compensation (net of tax of
$731 and $1,461)
2,191
0.03
4,384
0.05
Transformational and restructuring related
expenses (net of tax
of $3,239 and $7,216)
9,716
0.12
21,649
0.27
Net impact from discrete tax events
2,661
0.03
(450)
(0.01)
Adjusted income and diluted EPS from
continuing operations
$ 21,041
$ 0.25
$ 37,085
$ 0.45
(1) Our blended statutory tax rate of 25% was used to calculate
the tax effects of the adjustments for the three months ended
December 31, 2020 and 2019.
Twelve Months Ended
December 31,
2020
2019
Weighted average diluted shares
outstanding
83,395
84,011
(Loss) income from continuing operations
and diluted (loss) income from
continuing operations per share
$ (9,580)
$ (0.11)
$ 42,208
$ 0.50
Adjustments (1):
Amortization (net of tax of $2,294 and
$1,814)
6,882
0.08
5,442
0.06
Stock-based compensation (net of tax of
$5,281 and $8,353)
15,843
0.19
25,057
0.30
Transformational and restructuring related
expenses (net
of tax of $18,450 and $15,222)
55,351
0.66
45,668
0.55
Net impact from discrete tax events
10,541
0.13
(455)
(0.01)
Adjusted income and diluted EPS from
continuing operations
$ 79,037
$ 0.95
$ 117,920
$ 1.40
(1) Our blended statutory tax rate of 25% was used to calculate
the tax effects of the adjustments for the twelve months ended
December 31, 2020 and 2019.
Mednax, Inc.
Balance Sheet
Highlights
(in thousands)
(Unaudited)
As of
As of
December 31, 2020
December 31, 2019
Assets:
Cash and cash equivalents
$ 1,123,843
$ 107,870
Investments
104,870
74,510
Accounts receivable, net
241,931
434,266
Other current assets
78,704
28,945
Intangible assets, net
26,642
28,587
Operating and finance lease right-of-use
assets
55,972
56,413
Goodwill, other assets, property and
equipment
1,715,986
1,687,814
Assets held for sale
─
1,727,496
Total assets
$ 3,347,948
$ 4,145,901
Liabilities and equity:
Accounts payable and accrued expenses
$ 423,157
$ 410,637
Total debt, net
1,744,805
1,730,238
Operating lease liabilities
59,903
62,897
Other liabilities
372,366
290,240
Liabilities held for sale
─
152,893
Total liabilities
2,600,231
2,646,905
Total equity
747,717
1,498,996
Total liabilities and equity
$ 3,347,948
$ 4,145,901
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210218005177/en/
Charles Lynch Senior Vice President, Finance and Strategy
954-384-0175, x 5692 charles_lynch@mednax.com
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