MD Pediatrix Medical Group Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 01, 2024

 

 

 

 

 

 

 

Pediatrix Medical Group, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Florida			001-12111	26-3667538
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1301 Concord Terrace
Sunrise, Florida				33323
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 954 384-0175

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $.01 per share		MD		The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On November 1, 2024, Pediatrix Medical Group, Inc., a Florida corporation (the “Company”), issued a press release announcing the results of its operations for the three months and nine months ended September 30, 2024 (the “Third Quarter Release”). A copy of the Third Quarter Release is attached hereto as Exhibit 99.1 and is hereby incorporated in this Current Report by reference. The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement or other document filed by the Company under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

Exhibit Index

99.1— Press Release of Pediatrix Medical Group, Inc. dated November 1, 2024.

104 — Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			Pediatrix Medical Group, Inc.
Date:	November 1, 2024	By:	/s/ Kasandra H. Rossi
			Kasandra H. Rossi Chief Financial Officer

 

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FOR MORE INFORMATION:

Charles Lynch

Senior Vice President, Finance and Strategy

954-384-0175, x 5692

charles.lynch@pediatrix.com

 

FOR IMMEDIATE RELEASE

 

Pediatrix Medical Group Reports Third Quarter Results

 

FORT LAUDERDALE, Fla., November 1, 2024 - Pediatrix Medical Group, Inc. (NYSE: MD), a leading provider of physician services, today reported earnings of $0.23 per share for the three months ended September 30, 2024. On a non-GAAP basis, Pediatrix reported Adjusted EPS of $0.44.

 

For the 2024 third quarter, Pediatrix reported the following results:

 

“Our third quarter operating results modestly exceeded our expectations, driven primarily by strength in same-unit revenue,” said James D. Swift, M.D., Chief Executive Officer of Pediatrix Medical Group. “During the quarter, we successfully completed our previously announced transition to a hybrid revenue cycle management structure, and we remain on track to complete our portfolio management plans by the end of 2024. We believe that a more focused portfolio, with enhanced support for our affiliated practices, will enable stronger financial performance and benefit all of our stakeholders.”

 

Operating Results– Three Months Ended September 30, 2024

 

Pediatrix’s net revenue for the three months ended September 30, 2024 was $511.2 million, compared to $506.6 million for the prior-year period. This increase reflected growth in

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same-unit revenue of 5.2 percent, partially offset by the impact of non-same unit activity, primarily practice dispositions.

 

Same-unit revenue from net reimbursement-related factors increased by 3.4 percent for the 2024 third quarter as compared to the prior-year period. This increase primarily reflects improved payor mix and modest improvements in hospital contract administrative fees. The percentage of services reimbursed by commercial and other non-government payors increased by approximately 250 basis points compared to the prior year period.

 

Same-unit revenue attributable to patient volume increased by 1.8 percent for the 2024 third 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 nine months ended September 30, 2024. (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 September 30, 2024		Nine Months Ended September 30, 2024
Hospital-based patient services		1.6%		1.7%
Office-based patient services		3.8%		2.5%
Neonatology services (within hospital-based services):
Neonatal intensive care unit (NICU) days		0.4%		0.8%

 

For the 2024 third quarter, practice salaries and benefits expense was $364.9 million, compared to $368.4 million for the prior-year period. This comparison primarily reflects the impact of practice disposition activity and a decrease in same-unit medical malpractice expense, partially offset by increases in same-unit clinical compensation costs, including incentive compensation based on practice results.

For the 2024 third quarter, general and administrative expenses were $58.1 million, as compared to $57.4 million for the prior-year period. This comparison primarily reflects higher incentive compensation based on financial results and increased internal staffing as part of the Company’s development of its hybrid revenue cycle management structure, largely offset by net staffing reductions.

For 2024 third quarter, transformational and restructuring related expenses totaled $18.6 million. These expenses related primarily to revenue cycle management transition activities and practice dispositions.

 

Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization, transformational and restructuring related expenses, and loss on disposal of businesses, was $60.2 million for the 2024 third quarter, compared to $50.4 million for the prior-year period.

Depreciation and amortization expense was $6.3 million for the third quarter of 2024, compared to $9.2 million for the prior-year period. This comparison was primarily related to a decrease in depreciation expense related to non-same unit activity, primarily practice dispositions.

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Interest expense was $10.1 million for the third quarter of 2024, compared to $10.4 million for the third quarter of 2023.

 

Pediatrix generated net income of $19.4 million, or $0.23 per diluted share, for the 2024 third quarter, based on a weighted average 84.5 million shares outstanding. This compares with net income of $21.4 million, or $0.26 per diluted share, for the 2023 third quarter, based on a weighted average 83.0 million shares outstanding.

 

For the third quarter of 2024, Pediatrix reported Adjusted EPS of $0.44, compared to $0.32 for the third quarter of 2023. For these periods, Adjusted EPS is defined as diluted income per common and common equivalent share excluding non-cash amortization expense, stock-based compensation expense, transformational and restructuring related expenses, loss on disposal of businesses, tax effects of goodwill impairment and discrete tax events.

Operating Results – Nine Months Ended September 30, 2024

For the nine months ended September 30, 2024, Pediatrix generated revenue of $1.51 billion, compared to $1.50 billion for the prior-year period. Pediatrix generated a net loss of $129.5 million, or $1.56 per share, for the nine months ended September 30, 2024, based on a weighted average 83.2 million shares outstanding, which compares to income of $63.9 million, or $0.77 per share, based on a weighted average 82.5 million shares outstanding for the first nine months of 2023. Adjusted EBITDA for the nine months ended September 30, 2024 was $155.3 million, compared to $149.6 million for the prior year. For the nine months ended September 30, 2024, Pediatrix reported Adjusted EPS of $0.99, compared to $0.94 in the same period of 2023.

Financial Position and Cash Flow – Continuing Operations

 

Pediatrix had cash and cash equivalents of $103.8 million at September 30, 2024, compared to $73.3 million at December 31, 2023, and net accounts receivable at September 30, 2024 were $286.9 million.

 

For the third quarter of 2024, Pediatrix generated cash from continuing operations of $95.7 million, compared to $81.1 million during the third quarter of 2023. During the third quarter of 2024, the Company used $6.3 million to fund capital expenditures.

 

At September 30, 2024, Pediatrix had total debt outstanding of $619 million, consisting of its $400 million in 5.375% Senior Notes due 2030 and $219 million in borrowings under its Term A Loan. At September 30, 2024, the Company had no outstanding borrowings under its $450 million revolving line of credit.

 

Portfolio Management Update

 

As previously disclosed, during the second quarter of 2024, Pediatrix formalized its practice portfolio management plans, resulting in a decision to exit almost all of its affiliated office-based practices, other than maternal-fetal medicine, and during and subsequent to the end of the 2024 second quarter, the Company completed the exit of its primary and urgent care service line through two separate transactions. In aggregate, the office-based practices that the Company intends to exit and the primary and urgent care clinics that have been divested contributed net revenue of approximately $200 million in 2023. As previously disclosed, Pediatrix expects that

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the annualized favorable impact to Adjusted EBITDA resulting from its portfolio management plans to be approximately $30 million, based on 2023 financial information.

 

The Company continues to expect to complete these exits prior to the end of 2024.

 

2024 Outlook

Pediatrix anticipates that its 2024 Adjusted EBITDA, as defined above, will be in a range of $205 million to $215 million. This outlook reflects Adjusted EBITDA for the first nine months of 2024 of $155.3 million.

 

Non-GAAP Measures

 

A reconciliation of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three and nine months ended September 30, 2024 and 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 November 15, 2024 by dialing 1-866-207-1041, access code 6573245. The replay will also be available at www.pediatrix.com.

 

ABOUT PEDIATRIX MEDICAL GROUP

Pediatrix® Medical Group, Inc. (NYSE:MD) is a 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 multiple pediatric subspecialties. 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 approximately 4,800 affiliated physicians and other clinicians. To learn more about Pediatrix, visit www.pediatrix.com or follow us on Facebook, Instagram, LinkedIn 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,”

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“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 practice portfolio management plans and whether the Company is able to achieve the expected favorable impact to Adjusted EBITDA therefrom; the impact of the Company’s termination of its then 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.

 

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Pediatrix Medical Group, Inc.

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net revenue		$	511,158			$	506,612			$	1,510,555			$	1,498,197
Operating expenses:
Practice salaries and benefits			364,888				368,404				1,091,834				1,084,671
Practice supplies and other operating expenses			29,449				31,319				92,903				93,128
General and administrative expenses			58,121				57,406				174,884				174,478
Depreciation and amortization			6,254				9,211				25,353				27,109
Transformational and restructuring related expenses			18,560				—				40,619				—
Goodwill impairment			—				—				154,243				—
Fixed assets impairments			—				—				20,112				—
Intangible assets impairments			—				—				7,679				—
Loss on disposal of businesses			59				—				10,932				—
Total operating expenses			477,331				466,340				1,618,559				1,379,386
Income (loss) from operations			33,827				40,272				(108,004	)			118,811
Investment and other income			1,089				273				2,941				2,096
Interest expense			(10,126	)			(10,374	)			(31,033	)			(31,994	)
Equity in earnings of unconsolidated affiliate			445				661				1,427				1,578
Total non-operating expenses			(8,592	)			(9,440	)			(26,665	)			(28,320	)
Income (loss) before income taxes			25,235				30,832				(134,669	)			90,491
Income tax (provision) benefit			(5,794	)			(9,441	)			5,120				(26,612	)
Net income (loss)		$	19,441			$	21,391			$	(129,549	)		$	63,879
Other comprehensive income (loss), net of tax
Unrealized holding gain on investments, net of tax of $571, $-, $657 and $100			1,745				1				2,005				218
Total comprehensive income (loss)		$	21,186			$	21,392			$	(127,544	)		$	64,097
Per common and common equivalent share data (diluted):
Net income (loss):		$	0.23			$	0.26			$	(1.56	)		$	0.77
Weighted average common shares			84,523				82,950				83,223				82,492

 

 

 

 

 

 

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Pediatrix Medical Group, Inc.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net income (loss)		$	19,441			$	21,391			$	(129,549	)		$	63,879
Interest expense			10,126				10,374				31,033				31,994
Income tax provision (benefit)			5,794				9,441				(5,120	)			26,612
Depreciation and amortization expense			6,254				9,211				25,353				27,109
Transformational and restructuring related expenses			18,560				—				40,619				—
Goodwill impairment			—				—				154,243				—
Fixed assets impairments			—				—				20,112				—
Intangible assets impairments			—				—				7,679				—
Loss on disposal of businesses			59				—				10,932				—
Adjusted EBITDA		$	60,234			$	50,417			$	155,302			$	149,594

 

 

 

 

 

 

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Pediatrix Medical Group, Inc.

Reconciliation of Diluted Net Income (Loss) per Share

to Adjusted Income per Diluted Share (“Adjusted EPS”)

(in thousands, except per share data)

(Unaudited)

 

		Three Months Ended September 30,
		2024								2023
Weighted average diluted shares outstanding		84,523								82,950
Net income and diluted net income per share		$	19,441			$	0.23			$	21,391			$	0.26
Adjustments (1):
Amortization (net of tax of $446 and $498)			1,338				0.02				1,493				0.02
Stock-based compensation (net of tax of $656 and $791)			1,969				0.02				2,373				0.03
Transformational and restructuring expenses (net of tax of $4,640)			13,920				0.16				—				—
Tax effects of goodwill impairment			(6,135	)			(0.07	)			—				—
Loss on disposal of businesses (net of tax of $15)			44				—				—				—
Net impact from discrete tax events			6,452				0.08				1,114				0.01
Adjusted income and diluted EPS		$	37,029			$	0.44			$	26,371			$	0.32

 

 

 

		Nine Months Ended September 30,
		2024								2023
Weighted average diluted shares outstanding		83,223								82,492
Net (loss) income and diluted net (loss) income per share		$	(129,549	)		$	(1.56	)		$	63,879			$	0.77
Adjustments (1):
Amortization (net of tax of $1,842 and $1,508)			5,526				0.07				4,522				0.06
Stock-based compensation (net of tax of $1,872 and $2,325)			5,616				0.07				6,974				0.09
Transformational and restructuring expenses (net of tax of $10,155)			30,464				0.37				—				—
Goodwill impairment (net of tax of $21,625)			132,618				1.59				—				—
Fixed assets impairments (net of tax of $5,028)			15,084				0.18				—				—
Intangible assets impairments (net of tax of $1,920)			5,759				0.07				—				—
Loss on disposal of businesses (net of tax of $2,733)			8,199				0.10				—				—
Net impact from discrete tax events			8,456				0.10				1,984				0.02
Adjusted income and diluted EPS		$	82,173			$	0.99			$	77,359			$	0.94

 

 

 

 

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Pediatrix Medical Group, Inc.

Balance Sheet Highlights

(in thousands)

(Unaudited)

 

		As of September 30, 2024				As of December 31, 2023
Assets:
Cash and cash equivalents		$	103,831			$	73,258
Investments			116,621				104,485
Accounts receivable, net			286,897				272,313
Other current assets			20,866				33,398
Intangible assets, net			13,183				21,240
Operating and finance lease right-of-use assets			56,566				70,294
Goodwill, other assets, property and equipment			1,478,909				1,644,822
Total assets		$	2,076,873			$	2,219,810
Liabilities and shareholders' equity:
Accounts payable and accrued expenses		$	333,493			$	350,798
Total debt, including finance leases, net			626,721				633,334
Operating lease liabilities			56,932				68,314
Other liabilities			327,235				318,303
Total liabilities			1,344,381				1,370,749
Total shareholders' equity			732,492				849,061
Total liabilities and shareholders' equity		$	2,076,873			$	2,219,810

 

 

 

 

 

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Pediatrix Medical Group, Inc.

Reconciliation of Net Loss to Forward-Looking Adjusted EBITDA

(in thousands)

(Unaudited)

 

		Year Ended December 31, 2024
Net loss		$	(110,315	)		$	(103,015	)
Interest expense			40,559				40,559
Income tax provision			1,990				4,690
Depreciation and amortization expense			31,800				31,800
Transformational and restructuring related expenses			48,000				48,000
Goodwill and long-lived asset impairments			182,034				182,034
Loss on disposal of businesses			10,932				10,932
Adjusted EBITDA		$	205,000			$	215,000

 

 

 

 

 

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v3.24.3

Document And Entity Information	Nov. 01, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 01, 2024
Entity Registrant Name	Pediatrix Medical Group, Inc.
Entity Central Index Key	0000893949
Entity Emerging Growth Company	false
Entity File Number	001-12111
Entity Incorporation, State or Country Code	FL
Entity Tax Identification Number	26-3667538
Entity Address, Address Line One	1301 Concord Terrace
Entity Address, City or Town	Sunrise
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33323
City Area Code	954
Local Phone Number	384-0175
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	MD
Security Exchange Name	NYSE

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