Expects Third Quarter EPS of $0.82 to $0.86
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Jul. 31, 2014--
MEDNAX, Inc. (NYSE:MD), the national medical group specializing in
neonatal, anesthesia, maternal-fetal, pediatric cardiology, and other
pediatric physician services, today reported earnings of $0.79 per share
for the three months ended June 30, 2014, an increase of 16% over the
prior-year period.
For the 2014 second quarter compared to the prior year period, MEDNAX
reported:
-
Revenue growth of 12.5 percent to $596 million;
-
Operating income growth of 14.4 percent to $130 million; and
-
Net income growth of 14.2 percent to $79 million.
“Our strong operating results reflect continued success in our active
growth strategy,” said Roger J. Medel, M.D., Chief Executive Officer of
MEDNAX. “We continue to see attractive opportunities in our acquisition
pipeline, and have now completed eight additions in 2014, including one
so far in the third quarter. As we continue to expand our national group
practice, we will also remain focused on improving our operating
efficiency and enhancing our capabilities to support our physicians as
they provide great care to our patients.”
MEDNAX’s net patient service revenue for the three months ended June 30,
2014 increased by 12.5 percent, to $595.5 million, from $529.2 million
for the comparable prior-year period, largely driven by contributions
from acquisitions completed since April 2013.
MEDNAX’s revenue growth attributable to contributions from recently
acquired practices was 9.2 percent, while overall same-unit revenue grew
by 3.3 percent when compared to the prior year period.
During the three months ended June 30, 2014, MEDNAX recorded parity
revenue from payors within those 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 $16.0 million in parity revenue that contributed
approximately $0.05 to its net income per diluted share, reflecting the
impacts of incentive compensation and income taxes, compared to
approximately $2.5 million in revenue, or less than $0.01 per diluted
share on a comparable basis, in the prior-year period.
Same-unit growth from net reimbursement-related factors was 2.6 percent.
This was principally due to the favorable impact of the parity revenue
recorded during the three months ended June 30, 2014, continued modest
improvements in reimbursements received from third-party commercial
payors resulting from the Company’s ongoing contract renewal process,
and a slight increase in revenue from a shift in payor mix to commercial
payors from government payors, year-over-year.
On a same-unit basis, the percentage of services reimbursed under
government programs shifted by 30 basis points toward a lower percentage
of services reimbursed under government programs for the 2014 second
quarter when compared with the prior-year period.
Same-unit growth attributable to patient volume increased by 70 basis
points for the 2014 second quarter when compared to the prior-year
period. Volume growth in our anesthesia, neonatal intensive care, and
other pediatric services was somewhat offset by declines in
maternal-fetal medicine and pediatric cardiology services. For the 2014
second quarter, compared to the 2013 period, same-unit neonatal
intensive care unit (NICU) patient days were up 0.7 percent.
Operating income for the 2014 second quarter was $129.7 million, up 14.4
percent from $113.4 million for the prior-year period. Operating margin
was 21.8 percent for the 2014 second quarter, as compared to 21.4
percent for the prior-year period. The increase of 35 basis points was
primarily the result of slower growth in practice salaries and benefits
and general and administrative expenses as compared to revenue.
For the 2014 second quarter, general and administrative expenses were
$60.8 million, as compared to $54.6 million for the prior-year period, a
growth rate of 11.4 percent, somewhat lower than the rate of revenue
growth. General and administrative expenses as a percentage of net
patient service revenue was 10.2 percent for the three months ended June
30, 2014, slightly lower than in the prior-year period.
MEDNAX generated net income of $79.0 million for the 2014 second
quarter, or $0.79 per share based on a weighted average 99.9 million
shares outstanding. This compares with net income of $69.2 million, or
$0.68 per share, for the 2013 second quarter, based on a weighted
average 101.1 million shares outstanding.
Through the first half of 2014, MEDNAX has generated revenue of $1.16
billion, up 12.6% from $1.03 billion for the prior-year period.
Operating income for the six months ended June 30, 2014, grew by 14.1%
to $233.8 million, up from $204.9 million for the first half of 2013.
MEDNAX earned net income of $142.7 million, or $1.42 per share, through
June 30, 2014, based on a weighted average 100.2 million shares
outstanding, which compares to net income of $124.6 million, or $1.23
per share, based on a weighted average 100.9 million shares for the
first half of 2013.
MEDNAX had cash and cash equivalents of $17.7 million at June 30, 2014,
and net accounts receivable were $327.4 million.
During the 2014 second quarter, MEDNAX generated cash flow from
operations of $134.2 million, as compared to $126.6 million for the 2013
second quarter.
MEDNAX used approximately $73.4 million of its cash during the 2014
second quarter to fund acquisitions and to make contingent purchase
price payments for previously completed acquisitions. During the second
quarter of 2014, three physician group practices were acquired, becoming
part of American Anesthesiology, and the Company also acquired a small,
complementary consulting services company. Through the first half of
2014, MEDNAX acquired a total of six physician group practices, five
becoming part of American Anesthesiology and one becoming part of
Pediatrix Medical Group.
Since the end of the 2014 second quarter, MEDNAX has announced the
acquisition of Associated Anesthesiologists of Joliet, S.C., a private
physician group practice based in Joliet, IL, and its related entities,
which on a combined basis provide anesthesia and pain-management
services in southern Illinois and northern Indiana through 85 full-time
anesthesia providers (37 anesthesiologists and 48 anesthetists) and 12
other clinical and administrative staff.
2014 Third Quarter Outlook
For the 2014 third quarter, MEDNAX expects earnings will be in a range
of $0.82 to $0.86 per share. This outlook assumes that total same-unit
revenue growth for the three months ended September 30, 2014 will grow
by 2.0 percent to 4.0 percent from the prior-year period. This same-unit
revenue growth will be driven primarily by net reimbursement growth,
including the positive impact from parity. The forecast estimates volume
to be 0.5 percent higher to 1.5 percent higher for the 2014 third
quarter, as compared to the 2013 third quarter.
Included in the outlook for the 2014 third quarter is approximately
$0.05 per share from Medicaid parity, reflecting the impacts from
incentive compensation and income taxes.
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 14, 2014 by dialing
800.475.6701, access Code 330897. 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 providers of neonatal, anesthesia, maternal-fetal and pediatric
medical and surgical subspecialty services. The Company is reshaping the
delivery of care within its 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 division of MEDNAX, was
founded in 1979 and includes neonatal physicians who provide services at
more than 360 neonatal intensive care units, and collaborate with
affiliated maternal-fetal medicine, pediatric cardiology, pediatric
critical care and physician subspecialists to provide a clinical care
continuum. Pediatrix is also the nation's largest provider of newborn
hearing screens. American Anesthesiology, a division of MEDNAX, was
established in 2007 and includes more than 2,150 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 approximately 2,500 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)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net patient service revenue
|
|
$
|
595,544
|
|
$
|
529,180
|
|
$
|
1,161,883
|
|
$
|
1,031,895
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Practice salaries and benefits
|
|
|
372,216
|
|
|
331,922
|
|
|
744,256
|
|
|
661,123
|
|
Practice supplies and other operating expenses
|
|
|
22,466
|
|
|
19,416
|
|
|
43,882
|
|
|
38,916
|
|
General and administrative expenses
|
|
|
60,829
|
|
|
54,601
|
|
|
119,243
|
|
|
107,919
|
|
Depreciation and amortization
|
|
|
10,361
|
|
|
9,870
|
|
|
20,732
|
|
|
19,014
|
|
Total operating expenses
|
|
|
465,872
|
|
|
415,809
|
|
|
928,113
|
|
|
826,972
|
|
Income from operations
|
|
|
129,672
|
|
|
113,371
|
|
|
233,770
|
|
|
204,923
|
|
Investment and other income
|
|
|
335
|
|
|
396
|
|
|
1,970
|
|
|
798
|
|
Interest expense
|
|
|
(2,188)
|
|
|
(1,673)
|
|
|
(3,559)
|
|
|
(2,862)
|
|
Equity in earnings of unconsolidated affiliate
|
|
|
150
|
|
|
—
|
|
|
150
|
|
|
—
|
|
Total non-operating expenses
|
|
|
(1,703)
|
|
|
(1,277)
|
|
|
(1,439)
|
|
|
(2,064)
|
|
Income before income taxes
|
|
|
127,969
|
|
|
112,094
|
|
|
232,331
|
|
|
202,859
|
|
Income tax provision
|
|
|
48,944
|
|
|
42,876
|
|
|
89,646
|
|
|
78,274
|
|
Net income
|
|
|
79,025
|
|
|
69,218
|
|
|
142,685
|
|
|
124,585
|
|
Less: Net income attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
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noncontrolling interests
|
|
|
(9)
|
|
|
—
|
|
|
(9)
|
|
|
—
|
|
Net income attributable to MEDNAX, Inc.
|
|
$
|
79,016
|
|
$
|
69,218
|
|
$
|
142,676
|
|
$
|
124,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income attributable to MEDNAX, Inc.
common and common equivalent share (diluted)
|
|
$
|
0.79
|
|
$
|
0.68
|
|
$
|
1.42
|
|
$
|
1.23
|
|
Weighted average shares used in computing
net income attributable to MEDNAX, Inc.
per common and common equivalent share
(diluted)
|
|
|
99,866
|
|
|
101,098
|
|
|
100,226
|
|
|
100,942
|
|
|
|
Balance Sheet Highlights
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
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As of
|
|
As of
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
17,713
|
|
$
|
31,137
|
|
Short-term investments
|
|
|
7,568
|
|
|
6,457
|
|
Accounts receivable, net
|
|
|
327,410
|
|
|
285,397
|
|
Other current assets
|
|
|
55,007
|
|
|
45,134
|
|
Goodwill, other assets, property and equipment
|
|
|
2,766,802
|
|
|
2,640,591
|
|
Total assets
|
|
$
|
3,174,500
|
|
$
|
3,008,716
|
|
|
|
|
|
|
|
Liabilities and equity:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
241,766
|
|
$
|
308,754
|
|
Total debt
|
|
|
178,693
|
|
|
27,235
|
|
Other liabilities
|
|
|
349,264
|
|
|
329,739
|
|
Total liabilities
|
|
|
769,723
|
|
|
665,728
|
|
Total equity
|
|
|
2,404,777
|
|
|
2,342,988
|
|
Total liabilities and equity
|
|
$
|
3,174,500
|
|
$
|
3,008,716
|
|
|
Source: MEDNAX, Inc.
MEDNAX, Inc.
Charles Lynch, 954-384-0175, Ext. 5692
Vice
President, Strategy and Investor Relations
charles_lynch@mednax.com