Board Authorizes Share Repurchase Program
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Jul. 30, 2013--
MEDNAX, Inc. (NYSE: MD), the national medical group specializing in
neonatal, maternal-fetal, pediatric cardiology, other pediatric
subspecialties and anesthesia physician services, today reported
earnings of $1.37 per share for the three months ended June 30, 2013
that was the result of strong revenue growth, primarily from recent
acquisitions.
“Our consistently strong operating results reflect the solid progress we
are making in strategically building our national anesthesia group
practice platform while successfully and methodically executing on a
proven growth strategy that attracts physicians to our national group
practice and delivers ongoing value and efficiencies,” said Roger J.
Medel, M.D., Chief Executive Officer of MEDNAX. “We continue to manage a
very full and robust acquisition pipeline, and are confident in our
ability to continue growing through acquisitions across all of our
physician specialties.”
MEDNAX also announced today that its Board of Directors has authorized
the repurchase of shares of the Company’s common stock up to an amount
sufficient to offset the dilutive impact from the issuance of shares
under the Company’s equity programs. As a result of the share repurchase
program, earnings per share for the Company will be positively impacted
in future periods. The share repurchase program is effective immediately
and permits the Company to make open market purchases from time-to-time
based upon general economic and market conditions and trading
restrictions.
“The authorization of this share repurchase program reflects our
confidence in the national group practice business model and our ongoing
commitment to enhance shareholder value,” said Roger J. Medel, M.D.,
Chief Executive Officer of MEDNAX. “We continue to achieve solid
financial results, have a strong balance sheet, and remain very
optimistic about our prospects for continued growth. Our primary use of
cash will continue to be focused on the pursuit of acquisitions across
all of our physician specialties. At the same time, we believe that with
the combination of our ongoing cash flow from operations and our
available line of credit, we have sufficient access to capital to
continue our acquisition growth strategy while moving forward with this
share repurchase program.”
MEDNAX’s net patient service revenue for the three months ended June 30,
2013, increased by 17.7 percent, to $529.2 million, from $449.5 million
for the comparable prior-year period, largely driven by contributions
from acquisitions completed since April 2012.
During the three months ended June 30, 2013, MEDNAX started to receive
parity payments from a few of the states that are now paying at the
Medicare rate for Medicaid services as a result of the Patient
Protection and Affordable Care Act. MEDNAX’s second quarter results
include approximately $2.5 million in revenue from parity payments that
contributed approximately $0.02 to its net income per diluted share,
reflecting the impacts from incentive compensation and income taxes.
MEDNAX’s revenue growth attributable to contributions from recently
acquired practices was 16.0 percent, while overall same-unit revenue
grew by 1.7 percent when compared to the prior year period.
Same-unit growth from net reimbursement-related factors was 2.0 percent.
This was principally due to continued modest improvements in
reimbursements received from third-party commercial payors as a result
of the Company’s ongoing contract renewal processes.
For the first time in five quarters, on a sequential basis same-unit
payor mix showed a positive shift of 100 basis points toward a higher
percentage of services reimbursed from commercial payors as compared to
government programs.
Same-unit revenue attributable to patient volume decreased by 0.3
percent for the 2013 second quarter when compared to the prior-year
period, driven by declines in our hospital-based neonatal and anesthesia
practices, and our office-based pediatric cardiology services, partially
offset by increases in our maternal-fetal medicine and other pediatric
physician services, primarily newborn nursery and pediatric intensive
care services. For the 2013 second quarter, compared to the 2012 period,
same-unit neonatal intensive care unit (NICU) patient days were down by
1.3 percent.
Operating income for the 2013 second quarter was $113.4 million, up 13.7
percent from $99.7 million for the prior-year period. Operating margin
was 21.4 percent for the 2013 second quarter, as compared to 22.2
percent for the prior-year period. The decrease of 77 basis points was
primarily the result of the variability in margins due to the mix of
practices acquired since April 2012.
For the 2013 second quarter, general and administrative expenses were
$54.6 million, as compared to $48.2 million in the prior-year period, a
growth rate of 13.3 percent, which is considerably lower than the rate
of revenue growth. General and administrative expenses as a percentage
of net patient service revenue was 10.3 percent for the three months
ended June 30, 2013 as compared to 10.7 percent for the three months
ended June 30, 2012.
MEDNAX generated net income of $69.2 million for the 2013 second
quarter, or $1.37 per share based on a weighted average 50.5 million
shares outstanding. This compares with net income of $60.5 million, or
$1.22 cents per share for the 2012 second quarter, based on a weighted
average 49.5 million shares outstanding.
Through the first half of 2013, MEDNAX has generated revenue of $1.03
billion, up 18.3 percent from $872.1 million for the prior-year period.
Operating income for the six months ended June 30, 2013, grew by 14.4
percent to $204.9 million, up from $179.1 million for the first half of
2012. MEDNAX earned net income of $124.6 million, or $2.47 per share
through June 30, 2013, based on a weighted average 50.5 million shares
outstanding, which compares to net income of $108.9 million, or $2.20
per share based on a weighted average 49.5 million shares outstanding
for the first half of 2012.
At June 30, 2013, MEDNAX had cash and cash equivalents of $13.2 million
and net accounts receivable were $269.8 million. The Company had $153.8
million drawn on its $800 million revolving credit facility at June 30,
2013.
During the 2013 second quarter, MEDNAX generated cash flow from
operations of $127.2 million, as compared to $117.1 for the 2012 second
quarter.
MEDNAX also used $120.9 million of its cash during the 2013 second
quarter to fund practice acquisitions and to make contingent purchase
price payments for previously completed acquisitions.
A total of five physician group practices were acquired through June 30,
2013, with three physician group practices becoming part of American
Anesthesiology and two group practices becoming part of Pediatrix
Medical Group. The anesthesiology group practices that joined MEDNAX
during the second quarter are located in Georgia, Texas, and New York.
The neonatology group practice acquisitions were in Arizona and Texas.
Since the end of the 2013 second quarter, MEDNAX has announced the
acquisition of one neonatology physician group practice in Texas.
2013 Third Quarter Outlook
For the 2013 third quarter, MEDNAX expects earnings will be in a range
of $1.46 to $1.51 per share. This outlook assumes that same-unit revenue
growth for the three months ended September 30, 2013 will be 1.5 percent
higher to 3.5 percent higher, year-over-year. This same-unit revenue
growth will be driven primarily by net reimbursement growth, including
the impact from parity. The forecast estimates volume to be essentially
flat for the 2013 third quarter as compared to the prior year period.
Regarding the Medicaid parity rule, MEDNAX continues to expect this rule
to have a positive impact on its practices. MEDNAX started to receive
parity monies from a few states that are now paying at the Medicare rate
for Medicaid services. As a result, MEDNAX is including approximately
five cents from parity in its outlook for the 2013 third quarter based
on growth in net revenue from the enhanced payments expected from the
few states that are currently paying.
MEDNAX expects its share repurchase program to positively impact its
earnings per share in future periods. The impact on the 2013 third
quarter will depend on the timing of purchases based on market
conditions and trading restrictions.
Earnings conference call
MEDNAX, Inc., will host an investor conference call to discuss the
quarterly results at 10 a.m., E.D.T. 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 noon
Eastern Time today through midnight E.D.T. August 11, 2013 by dialing
800.475.6701, access Code 296008. 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 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 330 neonatal intensive care units, who collaborate
with affiliated maternal-fetal medicine, pediatric cardiology and
pediatric critical care physician subspecialists to provide a clinical
care continuum. Pediatrix is also the nation's largest provider of
newborn hearing screens. In 2007, MEDNAX expanded into anesthesia
services. Today, American Anesthesiology includes more than 1,650
anesthesiologists and advanced practitioners who provide anesthesia care
to patients in connection with surgical and other procedures as well as
pain management. MEDNAX, through its affiliated professional
corporations, employs more than 2,175 physicians in 34 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, 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 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. 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 MEDNAX’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 MEDNAX’s
current reports on Form 8-K, filed with the Securities and
Exchange Commission.
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MEDNAX, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2013
|
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2012
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2013
|
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2012
|
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|
|
|
|
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|
|
|
|
|
|
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Net patient service revenue
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$
|
529,180
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|
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$
|
449,530
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|
|
$
|
1,031,895
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|
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$
|
872,146
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Operating expenses:
|
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|
|
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|
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|
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Practice salaries and benefits
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|
|
331,922
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|
|
|
275,951
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|
|
|
661,123
|
|
|
|
548,212
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|
|
Practice supplies and other operating expenses
|
|
|
19,416
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|
|
|
17,956
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|
|
|
38,916
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|
|
|
34,941
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|
|
General and administrative expenses
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|
|
54,601
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|
|
|
48,200
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|
|
|
107,919
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|
|
|
95,069
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|
Depreciation and amortization
|
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|
9,870
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|
|
|
7,687
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|
|
19,014
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|
14,800
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Total operating expenses
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415,809
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|
|
349,794
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|
|
|
826,972
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|
|
|
693,022
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|
Income from operations
|
|
|
113,371
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|
|
|
99,736
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|
|
|
204,923
|
|
|
|
179,124
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|
|
Investment income
|
|
|
396
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|
|
|
365
|
|
|
|
798
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|
|
|
793
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Interest expense
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(1,673
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)
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|
|
(848
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)
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|
|
(2,862
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)
|
|
|
(1,402
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)
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|
Income before income taxes
|
|
|
112,094
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|
|
|
99,253
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|
|
|
202,859
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|
|
|
178,515
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|
|
Income tax provision
|
|
|
42,876
|
|
|
|
38,709
|
|
|
|
78,274
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|
|
|
69,621
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|
|
Net income
|
|
$
|
69,218
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|
|
$
|
60,544
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|
|
$
|
124,585
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|
|
$
|
108,894
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Net income per common and common
equivalent share (diluted)
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|
$
|
1.37
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|
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$
|
1.22
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|
|
$
|
2.47
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|
|
$
|
2.20
|
|
|
Weighted average shares used in
computing net income per
common and
common equivalent share (diluted)
|
|
|
50,549
|
|
|
|
49,545
|
|
|
|
50,471
|
|
|
|
49,474
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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Balance Sheet Highlights
(in thousands)
|
|
(Unaudited)
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As of
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As of
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|
June 30, 2013
|
|
December 31, 2012
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,163
|
|
$
|
21,280
|
|
Short-term investments
|
|
|
7,009
|
|
|
6,584
|
|
Accounts receivable, net
|
|
|
269,774
|
|
|
248,066
|
|
Other current assets
|
|
|
77,745
|
|
|
83,114
|
|
Goodwill, other assets, property and equipment
|
|
|
2,521,699
|
|
|
2,391,293
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|
Total assets
|
|
$
|
2,889,390
|
|
$
|
2,750,337
|
|
|
|
|
|
|
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Liabilities and shareholders’ equity:
|
|
|
|
|
|
Accounts payable & accrued expenses
|
|
$
|
204,154
|
|
$
|
255,661
|
|
Total debt
|
|
|
154,081
|
|
|
144,334
|
|
Other liabilities
|
|
|
338,010
|
|
|
314,974
|
|
Total liabilities
|
|
|
696,245
|
|
|
714,969
|
|
Shareholders' equity
|
|
|
2,193,145
|
|
|
2,035,368
|
|
Total liabilities and shareholders' equity
|
|
$
|
2,889,390
|
|
$
|
2,750,337
|
|
|
|
|
|
|
Source: MEDNAX, Inc.
MEDNAX, Inc.
David T. Parker, 954-384-0175, x-5300
Vice
President, Investor Relations & Corporate Communications
david_parker@mednax.com