Pediatrix Earns 81 Cents per Share, Non-GAAP, for 2007 Third Quarter
Introduces 2008 EPS Guidance of $3.35 to $3.45
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Nov. 2, 2007--Pediatrix Medical Group, Inc. (NYSE:PDX) today reported earnings for the three months ended September 30, 2007 of 79 cents per share based on generally accepted accounting principles (GAAP), or 81 cents per share on a non-GAAP basis that excludes expenses related to the Company's stock option review that was completed in late July.
Pediatrix's results continue to reflect the Company's ability to manage its operations more efficiently. For the 2007 third quarter, compared to the same period of 2006, Pediatrix reported GAAP results that include:
-- Revenue growth of 10 percent, which includes same-unit growth
of 6.1 percent;
-- Operating income growth of 12 percent;
-- Operating margin expansion of 45 basis points to 26.7 percent;
and
-- Net income growth of 13 percent.
"At the same time that we have launched our important new growth initiative to build a national group practice of anesthesiologists, our results for this quarter highlight our continued focus on our core operations," said Roger J. Medel, M.D., Pediatrix's Chief Executive Officer. "While we are in the early stages of our efforts, we are encouraged by the opportunity to transfer our administrative core competencies to anesthesia practices. We continue to attract physician group practices from all subspecialties, and remain confident in our ability to continue to grow our existing national group of neonatal, maternal-fetal, pediatric cardiology and related subspecialty care."
For the three months ended September 30, 2007, net patient service revenue was $236.9 million, up 10 percent from $215.8 million for the comparable 2006 period. Revenue growth consisted of 6.1 percent same-unit growth, as well as contributions from physician group practice acquisitions. Same-unit revenue growth was principally the result of volume growth of 5.2 percent, as well as improved reimbursement. Same-unit neonatal intensive care unit (NICU) patient volume growth was 4.9 percent for the 2007 third quarter. Income from operations increased by 12 percent, to $63.1 million for the three months ended September 30, 2007, when compared with $56.5 million for the comparable 2006 period. Results for both periods include costs associated with the stock option review that was announced in August 2006 and completed in July 2007.
Operating margin increased by 45 basis points, largely as a result of ongoing general and administrative expense management efforts.
Pediatrix reported net income of $39.6 million for the 2007 third quarter, up 13 percent from $35.2 million for the comparable 2006 period.
The Company earned 79 cents per share, on a GAAP basis, based on a weighted average 50.3 million shares outstanding, which is up from 71 cents per share based on a weighted average 49.5 million shares outstanding for the 2006 third quarter.
On a non-GAAP basis earnings per share increased by 11 percent, to 81 cents, for the three months ended September 30, 2007, from 73 cents on a non-GAAP basis for the 2006 third quarter. This non-GAAP comparison excludes pre-tax expenses of $1.9 million for the 2007 third quarter and $1.7 million for the 2006 third quarter that were associated with the stock option review.
At September 30, 2007, Pediatrix had cash and cash equivalents of $50.5 million, and no amounts outstanding under its revolving credit facility. The Company generated cash flow from operations of $62.8 million during the 2007 third quarter.
Pediatrix used its cash to complete five physician group practice acquisitions during the three months ended September 30, 2007, including its first anesthesia group practice, Fairfax Anesthesiology Associates, based in northern Virginia. Pediatrix also completed the acquisition of a San Antonio, TX, pediatric cardiology practice; a Seattle, WA, ultrasound radiology practice; a Nashville, TN, neonatal group practice; and a Central California maternal-fetal medicine group practice during the 2007 third quarter. For the period, the Company invested a total of $89.4 million in acquisitions. The Nashville and Central California acquisitions closed at the end of September and were funded October 1, resulting in an additional $7.2 million in acquisition spending.
The Company also used $67.4 million of its cash to complete open market purchases of its common stock during the period, as part of a $100 million share repurchase program that was authorized by its Board of Directors in August. The Company's share repurchase program is now complete.
For the nine months ended September 30, 2007, presented on a GAAP basis, Pediatrix had net patient service revenue of $678.1 million, compared with $607.2 million for the same period of 2006. Pediatrix reported operating income of $159.9 million and net income of $101.5 million through nine months of 2007, which compares with operating income of $147.7 million and net income of $92.1 million for the comparable period of 2006. Earnings per share for the nine months ended September 30, 2007, were $2.02, based on a weighted average 50.1 million shares outstanding, as compared with $1.87 per share based on a weighted average 49.3 million shares outstanding for the comparable 2006 period.
Earnings Guidance
Pediatrix expects 2008 earnings per share to be in a range of $3.35 to $3.45, with expected same-unit patient volume growth of 3 to 5 percent, 2 to 4 percent same-unit reimbursement growth that includes increased reimbursement from the Texas Medicaid program, and estimated contributions from $80 to $85 million of capital invested to complete base-business acquisitions during the remainder of 2007 and all of 2008.
Reconciliation of Non-GAAP Information
This press release contains non-GAAP information, for earnings per share, which is adjusted for certain items as set forth below. Pediatrix 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 Pediatrix's ongoing operating 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 Pediatrix believes are the most comparable GAAP measures:
Three Months Ended
September 30, 2007
GAAP Adjustments Adjusted
--------- ----------- ---------
(in thousands except per share
data)
Net patient service revenue $236,876 $236,876
--------- ---------
Operating expenses:
Practice salaries and benefits 131,925 131,925
Practice supplies and other
operating expenses 9,395 9,395
General and administrative expenses 29,837 (1,900) 27,937
Depreciation and amortization 2,577 2,577
--------- ---------
Total operating expenses 173,734 171,834
--------- ---------
Income from operations 63,142 65,042
--------- ---------
Investment income 2,121 2,121
Interest expense (147) (147)
--------- ---------
Income before income taxes 65,116 67,016
Income tax provision (25,558) (746) (26,304)
--------- ---------
Net income $ 39,558 $ 40,712
--------- ---------
Net income per common and common
equivalent share (diluted) $ 0.79 $ 0.02 $ 0.81
Weighted average shares used in
computing net income per common and
common equivalent share (diluted) 50,264 50,264
Three Months Ended
September 30, 2006
GAAP Adjustments Adjusted
--------- ----------- ---------
(in thousands except per share
data)
Net patient service revenue $215,755 $215,755
--------- ---------
Operating expenses:
Practice salaries and benefits 120,836 120,836
Practice supplies and other
operating expenses 8,092 8,092
General and administrative expenses 27,971 (1,675) 26,296
Depreciation and amortization 2,308 2,308
--------- ---------
Total operating expenses 159,207 157,532
--------- ---------
Income from operations 56,548 58,223
--------- ---------
Investment income 1,173 1,173
Interest expense (122) (122)
--------- ---------
Income before income taxes 57,599 59,274
Income tax provision (a) (22,434) (632) (23,066)
--------- ---------
Net income $ 35,165 $ 36,208
--------- ---------
Net income per common and common
equivalent share (diluted) $ 0.71 $ 0.02 $ 0.73
Weighted average shares used in
computing net income per common and
common equivalent share (diluted) 49,515 49,515
(a) The income tax provision for the three months ended September 30,
2006, includes the cumulative impact of an increase in the Company's
effective tax rate for 2006.
Earnings conference call
Pediatrix Medical Group, Inc. will host an investor conference call to discuss the quarterly results at 10 a.m. (EDT) 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 1:30 p.m. (EDT) today through midnight (EST) November 16, 2007, by dialing 800-475-6701, access code 891276. The replay will also be available at www.pediatrix.com.
About Pediatrix
Pediatrix Medical Group, Inc. is the nation's leading provider of neonatal, maternal-fetal and pediatric physician subspecialty services and recently expanded to include anesthesiology services. Pediatrix physicians and advanced practitioners are reshaping the delivery of care within the maternal-fetal, neonatal intensive care and pediatric cardiology subspecialties, using evidence-based tools, continuous quality initiatives and clinical research to enhance patient outcomes and provide high-quality, cost-effective care. Founded in 1979, its neonatal physicians provide services at more than 240 neonatal intensive care units, and in many markets they collaborate with affiliated maternal-fetal medicine, pediatric cardiology physician subspecialists and pediatric intensivists to provide a clinical care continuum. Combined, Pediatrix and its affiliated professional corporations employ more than 1,000 physicians in 32 states and Puerto Rico. Pediatrix is also the nation's largest provider of newborn hearing screens and newborn metabolic screening. Additional information is available at www.pediatrix.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 Pediatrix'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 Pediatrix 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 Pediatrix's most recent Annual Report on Form 10-K, including the section entitled "Risk Factors". Additional factors include, but are not limited to: the possible discovery of additional facts beyond those reviewed by the Audit Committee; additional litigation related to the matters investigated by the Pediatrix's Audit Committee or the restatements to Pediatrix's financial statements and other historical disclosures; and any regulatory actions of the SEC or the U.S. Attorney related to such matters.
Pediatrix Medical Group, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
--------- --------- --------- ---------
(in thousands, except for per share
data)
---------------------------------------
Net patient service revenue $236,876 $215,755 $678,142 $607,241
--------- --------- --------- ---------
Operating expenses:
Practice salaries and
benefits 131,925 120,836 389,532 347,824
Practice supplies and other
operating expenses 9,395 8,092 27,899 24,498
General and administrative
expenses 29,837 27,971 93,291 80,183
Depreciation and
amortization 2,577 2,308 7,516 7,060
--------- --------- --------- ---------
Total operating expenses 173,734 159,207 518,238 459,565
--------- --------- --------- ---------
Income from operations 63,142 56,548 159,904 147,676
--------- --------- --------- ---------
Investment income 2,121 1,173 5,646 2,101
Interest expense (147) (122) (490) (942)
--------- --------- --------- ---------
Income before income taxes 65,116 57,599 165,060 148,835
Income tax provision (25,558) (22,434) (63,605) (56,785)
--------- --------- --------- ---------
Net income $ 39,558 $ 35,165 $101,455 $ 92,050
========= ========= ========= =========
Per share data:
Net income per common and
common equivalent share
(diluted) $ 0.79 $ 0.71 $ 2.02 $ 1.87
Weighted average shares used
in computing net income per
common and common
equivalent share (diluted) 50,264 49,515 50,102 49,283
Balance Sheet Highlights
(Unaudited)
As of As of
Sept. 30, Dec. 31,
2007 2006
---------- ----------
(in thousands)
Assets:
Cash and cash equivalents $ 50,507 $ 69,595
Short-term investments 29,083 65,660
Accounts receivable, net 142,815 125,573
Other current assets 57,945 40,771
Other assets, property and equipment 957,601 833,571
---------- ----------
Total assets $1,237,951 $1,135,170
========== ==========
Liabilities and shareholders' equity:
Accounts payable & accrued expenses $ 210,624 $ 206,552
Total debt 899 860
Other liabilities 84,451 61,957
---------- ----------
Total liabilities 295,974 269,369
Shareholders' equity 941,977 865,801
---------- ----------
Total liabilities and shareholders' equity $1,237,951 $1,135,170
========== ==========
CONTACT: Pediatrix Medical Group, Inc., Fort Lauderdale
Bob Kneeley, Director, Investor Relations,
954-384-0175, x-5300
bob_kneeley@pediatrix.com
SOURCE: Pediatrix Medical Group, Inc.