Presents Financial Outlook for 2009 First Quarter

FORT LAUDERDALE, Fla.--(BUSINESS WIRE)-- MEDNAX, Inc. (NYSE:MD), the national medical group providing newborn, maternal-fetal, pediatric subspecialty and anesthesia physician services, today reported earnings per share of 85 cents for the 2008 fourth quarter, or 81 cents on a non-GAAP basis when excluding a reduction in amounts accrued for malpractice expense based on favorable historical claims experience. In addition, the Company provided a financial outlook for the 2009 first quarter.

“During this quarter we saw some stabilization in neonatal patient volume, which was essentially flat for the quarter and while the percentage of our patient services reimbursed under government programs during the quarter was higher year-over-year, it was consistent with levels at the end of the 2008 third quarter,” said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX, Inc. “As a result, our 2008 fourth quarter results were at the high end of our previously guided range. While we are managing through these recent challenges, we continued to expand our national medical group across all of our physician specialties during 2008, attracting physicians who are looking for a partner that will allow them to concentrate on patient care. We are optimistic that we will continue to expand our national medical group during 2009.”

For the three months ended December 31, 2008, MEDNAX’s net patient service revenue was $297.8 million, up 19 percent from $250.4 million for the comparable 2007 period. Revenue growth was primarily from acquisitions completed during the prior 12 months.

For the 2008 fourth quarter, same-unit revenue was essentially unchanged from the comparable prior-year period. Same-unit patient volume for MEDNAX’s combined patient services grew by 1.7 percent as a result of volume growth at office-based and anesthesia practices. Neonatal intensive care unit (NICU) patient volume declined by 0.4 percent for the quarter. Overall same-unit reimbursement declined by 1.7 percent, largely as a result of an increase in the percentage of patient services reimbursed by government payors during the 2008 fourth quarter when compared to the prior-year period. Throughout the 2008 fourth quarter, MEDNAX’s payor mix was essentially at the same level as the latter part of the 2008 third quarter, when the Company experienced more government, and less commercial, reimbursement for patient services.

For the three months ended December 31, 2008, and 2007, MEDNAX’s results from operations, when presented on a GAAP basis, include items that make comparisons difficult. MEDNAX believes that comparisons should be made on a non-GAAP basis after adjusting the following items:

• Increasing practice salaries and benefits expense by $2.8 million, resulting in a decrease in income from continuing operations of $1.7 million for the three months ended December 31, 2008, to exclude a reduction in amounts accrued for malpractice expenses; and
• Increasing the Company’s tax provision by $800,000 for the three months ended December 31, 2007, to exclude a reduction in the Company’s accrued liability for uncertain tax positions.

For the three months ended December 31, 2008, non-GAAP operating income was $62.6 million, or 21 percent of revenue, which compares with $64.4 million, or 25.7 percent of revenue, for the comparable 2007 period.

MEDNAX’s operating margin was impacted by lower revenue from neonatal services, caused primarily by increased government payor mix on a year-over-year basis and lower neonatal patient volume. The Company’s operating margin was also impacted by a change in the composition of acquired practices, which included more office-based maternal-fetal medicine and pediatric cardiology practices, as well as the expansion into hospital-based anesthesia physician services during 2008. In general, office-based practices have higher practice supplies and other expenses than hospital-based practices. In addition, anesthesia practices have lower margins than neonatal practices, although MEDNAX expects that it will be able to achieve operating improvements at its anesthesia practices that will lead to incremental margin expansion at those practices in the future.

MEDNAX continues to achieve efficiency in managing its national group practice. Despite the revenue impact from lower NICU patient volume and higher government payor mix, general and administrative expenses as a percent of revenue were unchanged, at 11.2 percent, when compared to the 2007 fourth quarter.

For the 2008 fourth quarter, MEDNAX had income from continuing operations of $37.3 million, or 81 cents per share, both non-GAAP, based on a weighted average 45.9 million shares outstanding during the period. This compares with income from continuing operations of $39.7 million, or 80 cents per share, both non-GAAP, based on a weighted average 49.3 million shares outstanding for the 2007 fourth quarter. On a GAAP basis, income from continuing operations and net income for the 2008 fourth quarter were $39.0 million, or 85 cents per share, compared to $40.5 million of income from continuing operations, or 82 cents per share, in the 2007 period. In the 2007 fourth quarter, net income was $41.3 million, or 84 cents per share.

MEDNAX had cash flow from operations of $68.3 million for the 2008 fourth quarter, and the Company used $37.7 million of its cash for practice acquisitions, including neonatal practices in Akron, Ohio, and Hammond, Louisiana, as well as a maternal-fetal medicine group practice based in Tampa, Florida.

At December 31, 2008, MEDNAX had cash and cash equivalents of $14.3 million and accounts receivable were $162.4 million. Total debt outstanding was $140.1 million which consisted primarily of amounts outstanding on the Company’s revolving credit facility.

MEDNAX reported net patient service revenue of $1.1 billion for the 12 months ended December 31, 2008, on a GAAP basis, up 16 percent from $917.6 million for 2007. Same-unit revenue increased by 3.2 percent during 2008 when compared with 2007 as a result of volume growth at its office-based practices, as well as improved reimbursement from commercial payors. Same-unit NICU volume declined by 1.0 percent for the year, or 1.2 percent when excluding the extra day in the leap year, and the Company’s revenue was impacted from a higher percentage of patient services reimbursed from government payors during the second half of 2008.

Operating income was $242.0 million for 2008, up 10 percent from $220.9 for 2007. MEDNAX generated income from continuing operations of $146.7 million, or $3.11 per share, and net income of $169.2 million, or $3.59 per share, for 2008 based on a weighted average 47.2 million shares outstanding. This compares with income from continuing operations of $140.0 million, or $2.81 per share, and net income of $142.7 million, or $2.86 per share, based on a weighted average 49.9 million shares outstanding, for 2007.

For the year, MEDNAX had cash flow from operations of $181.4 million, and the Company used $274.0 million to complete 13 acquisitions, including four neonatal, four maternal-fetal, three pediatric cardiology and two anesthesia physician groups.

2009 First Quarter Outlook

MEDNAX expects to earn 63 to 67 cents per share for the 2009 first quarter. This outlook incorporates estimated same-unit NICU patient volume that ranges from growth of 1 percent to a decline of up to 2 percent, as well as an assumption that payor mix for the 2009 first quarter will be consistent with the 2008 fourth quarter.

MEDNAX’s outlook anticipates contributions from practice acquisitions within its neonatal, maternal-fetal and pediatric cardiology physician services to contribute to 2009 first quarter earnings. MEDNAX previously announced that it expects to invest $70 to $75 million in practice acquisitions within those specialties during 2009, and the Company has completed one acquisition during the 2009 first quarter to date.

There are several seasonal issues that will affect MEDNAX’s operating results for the 2009 first quarter relative to the 2008 fourth quarter. In the first quarter, there are fewer calendar days, which reduces the Company’s neonatal revenue on a sequential basis. In addition, MEDNAX’s FICA, or Social Security, payroll tax expenses are higher at the beginning of every year as compared to the fourth quarter of the year.

Reconciliation of Non-GAAP Information

This press release contains non-GAAP information for the three months ended December 31, 2008, and December 31, 2007, related to operating income, operating margin, income from continuing operations, net income and earnings per share which is adjusted as set forth below. MEDNAX believes that this non-GAAP information is useful to management and investors reviewing financial and business trends related to its results of operations and that when non-GAAP information is viewed with GAAP information investors are provided with a meaningful understanding of MEDNAX’s ongoing operating and financial performance. This information is not intended to be considered in isolation, or as a substitute of GAAP financial information. The following tables reconcile non-GAAP financial information to net income per common share, which MEDNAX believes are the most comparable GAAP measures:

		Three Months Ended December 31, 2008
		GAAP				Adjustments			Non-GAAP
		(in thousands, except for per share data)
Net patient service revenue		$	297,815						$	297,815
Operating expenses:
Practice salaries and benefits			181,590			2,800				184,390
Practice supplies and operating expenses			13,379							13,379
General and administrative expenses			33,444							33,444
Depreciation and amortization			4,020							4,020
Total operating expenses			232,433							235,233
Income from operations			65,382							62,582
Operating margin			22.0	%						21.0	%
Investment income			537							537
Interest expense			(1,747	)						(1,747	)
Income from continuing operations before income taxes			64,172							61,372
Income tax provision			(25,187	)		1,099				(24,088	)
Income from continuing operations			38,985			(1,701	)			37,284
Income from discontinued operations, net of income taxes			-							-
Net income		$	38,985			(1,701	)		$	37,284
Per common and common equivalent share data (diluted):
Net income from continuing operations		$	0.85			(0.04	)		$	0.81
Net income from discontinued operations		$	-			-			$	-
Net income		$	0.85			(0.04	)		$	0.81
Weighted average shares used in computing net income per common and common equivalent share (diluted)			45,897							45,897

Non-GAAP Adjustments
(Unaudited)
		Three Months Ended December 31, 2007
		GAAP				Adjustments			Non-GAAP
		(in thousands, except for per share data)
Net patient service revenue		$	250,356						$	250,356
Operating expenses:
Practice salaries and benefits			145,565							145,565
Practice supplies and operating expenses			9,461							9,461
General and administrative expenses			28,119							28,119
Depreciation and amortization			2,831							2,831
Total operating expenses			185,976							185,976
Income from operations			64,380							64,380
Operating margin			25.7	%						25.7	%
Investment income			1,209							1,209
Interest expense			(259	)						(259	)
Income from continuing operations before income taxes			65,330							65,330
Income tax provision			(24,806	)		(800	)			(25,606	)
Income from continuing operations			40,524			(800	)			39,724
Income from discontinued operations, net of income taxes			743							743
Net income		$	41,267			(800	)		$	40,467
Per common and common equivalent share data (diluted):
Net income from continuing operations		$	0.82			(0.02	)		$	0.80
Net income from discontinued operations		$	0.02			--			$	0.02
Net income		$	0.84			(0.02	)		$	0.82
Weighted average shares used in computing net income per common and common equivalent share (diluted)			49,311							49,311

Earnings Conference Call

MEDNAX, Inc., will host an investor conference call at 10 a.m. (EST) today to discuss the quarterly results and outlook for the 2009 first quarter. 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 noon (EST) today through midnight (EST) February 19, 2009, by dialing 800-475-6701, access code 981964. The replay will also be available at www.mednax.com.

About MEDNAX

MEDNAX, Inc., is a national medical group that comprises the nation’s leading provider of neonatal, maternal-fetal and pediatric physician subspecialty services as well as anesthesia 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 and clinical research to enhance patient outcomes and provide high-quality, cost-effective care. Pediatrix Medical Group, a unit of MEDNAX, was founded in 1979 and now includes neonatal physicians who provide services at more than 250 neonatal intensive care units, who collaborate with affiliated maternal-fetal medicine, pediatric cardiology and pediatric intensivist physician subspecialists to provide a clinical care continuum. Pediatrix is also the nation’s largest provider of newborn hearing screens. In 2007, the Company expanded into anesthesia services. Today, American Anesthesiology includes more than 450 anesthesiologists and advanced practitioners. MEDNAX, through its affiliated professional corporations, employs more than 1,200 physicians in 32 states and Puerto Rico. Additional information is available at www.mednax.com.

Certain statements and information in this press release may be deemed to be “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our 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 are forward-looking statements. 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 MEDNAX’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 MEDNAX 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, including the section entitled “Risk Factors”.

MEDNAX, Inc.
Consolidated Statements of Income
(Unaudited)
	Three Months Ended								Years Ended
	December 31,								December 31,
	2008				2007				2008				2007
	(in thousands, except for per share data)
Net patient service revenue	$	297,815			$	250,356			$	1,068,277			$	917,644
Operating expenses:
Practice salaries and benefits		181,590				145,565				643,445				533,306
Practice supplies and operating expenses		13,379				9,461				44,767				34,078
General and administrative expenses		33,444				28,119				124,965				119,766
Depreciation and amortization		4,020				2,831				13,071				9,594
Total operating expenses		232,433				185,976				826,248				696,744
Income from operations		65,382				64,380				242,029				220,900
Investment income		537				1,209				2,982				6,855
Interest expense		(1,747	)			(259	)			(3,593	)			(749	)
Income from continuing operations before income taxes		64,172				65,330				241,418				227,006
Income tax provision		(25,187	)			(24,806	)			(94,736	)			(86,987	)
Income from continuing operations		38,985				40,524				146,682				140,019
Income from discontinued operations, net of income taxes		-				743				22,519				2,703
Net income	$	38,985			$	41,267			$	169,201			$	142,722
Per common and common equivalent share data (diluted):
Net income from continuing operations	$	0.85			$	0.82			$	3.11			$	2.81
Net income from discontinued operations	$	-			$	0.02			$	0.48			$	0.05
Net income	$	0.85			$	0.84			$	3.59			$	2.86
Weighted average shares used in computing net income per common and common equivalent share (diluted)		45,897				49,311				47,161				49,904

Balance Sheet Highlights
(Unaudited)
		As of			As of
		Dec. 31, 2008			Dec. 31, 2007
		(in thousands)
Assets:
Cash and cash equivalents		$	14,346		$	102,843
Short-term investments			20,764			18,042
Accounts receivable, net			162,395			145,504
Other current assets			87,396			97,737
Other assets, property and equipment			1,211,973			938,676
Total assets		$	1,496,874		$	1,302,802
Liabilities and shareholder's equity:
Accounts payable & accrued expenses		$	302,584		$	243,120
Total debt			140,114			924
Other liabilities			89,038			99,706
Total liabilities			531,736			343,750
Shareholders' equity			965,138			959,052
Total liabilities and shareholders' equity		$	1,496,874		$	1,302,802
Other Operating Data
	12 Months Ended December 31,
	2008				2007
Number of:
Births	730,049					707,274
NICU Admissions	86,865					85,059
NICU Patient days	1,566,485					1,556,093

Source: MEDNAX, Inc.

MEDNAX, Inc., Fort Lauderdale
Bob Kneeley, Director, Investor Relations, 954-384-0175, x-5300
bob_kneeley@mednax.com