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Pediatrix Reports Fourth Quarter EPS of 73 Cents
FORT LAUDERDALE, Fla., Feb 6, 2003 (BUSINESS WIRE) -- Pediatrix Medical Group, Inc., (NYSE:PDX) today reported 2002 fourth quarter and year-end results that include strong same-unit revenue growth and continued margin expansion.

For the 2002 fourth quarter, net patient service revenue was $119.5 million, up 14.1 percent from $104.8 million for the 2001 fourth quarter. These results include same-unit revenue growth of 10.7 percent, driven principally by same-unit patient volume growth of 7.6 percent.

Earnings before interest, investment income, taxes, depreciation and amortization (EBITDA) increased by 26.4 percent to $32.4 million for the three months ended December 31, 2002, versus EBITDA of $25.6 million for the same period of 2001. EBITDA margin increased by 260 basis points, to 27.1 percent, for the 2002 fourth quarter, up from 24.5 percent for the comparable period of 2001. Results for the 2001 fourth quarter included a charge of approximately $900,000 for costs related to the settlement of shareholder litigation.

For the three months ended December 31, 2002, net income was $19.0 million, or 73 cents per share based on 26.1 million fully-diluted shares outstanding. This compares with net income of $10.1 million, or 39 cents per share based on 26.0 million fully-diluted shares outstanding for the three months ended December 31, 2001.

Pediatrix generated a significant reduction in general and administrative expenses as a percent of revenue. That improvement is attributable to a number of factors, including the successful integration of a large physician group practice completed in mid-2001 and reduced legal expenses.

Cash flow from operations exceeded $30 million for the 2002 fourth quarter.

For the 12 months ended December 31, 2002, Pediatrix reported net patient service revenue of $465.5 million, an increase of 31.3 percent from $354.6 million for 2001. Net income increased to $68.8 million for the 12 months ended December 31, 2002, or $2.58 per share based on 26.6 million shares fully-diluted shares outstanding, from $30.4 million, or $1.36 per share based on a weighted average 22.5 million fully-diluted shares outstanding for the comparable period of 2001. Cash flow from operations for the 12 months ended December 31, 2002, was approximately $98 million.

Pediatrix's results for 2002 include the positive impact from the change in accounting for goodwill amortization. Had the new accounting treatment been in effect during 2001, net income and earnings per share would have been $14.6 million and 56 cents, respectively, for the 2001 fourth quarter, and $44.4 million and $1.98, respectively, for the 12 months ended December 31, 2001.

At December 31, 2002, Pediatrix had cash and cash equivalents of approximately $73.2 million. During the third quarter of 2002, Pediatrix announced and completed a $50 million share repurchase program. In November 2002, Pediatrix's Board authorized an additional $50 million share repurchase, and the Company began buying back shares during the 2003 first quarter.

Pediatrix also continues to use its cash for acquisitions. During 2002, Pediatrix acquired six physician group practices and was awarded two contracts to manage neonatal intensive care units (NICUs).

As previously disclosed, in June 2002 Pediatrix received an information request from the Federal Trade Commission in connection with an investigation of the Company. The investigation remains active, and late yesterday, the Company received a subpoena requesting additional information. Pediatrix intends to continue to cooperate fully with the FTC, but at this time cannot predict whether the investigation will have a material adverse effect on its business, financial condition or results of operations.

Investor conference call

Pediatrix Medical Group, Inc., will host an investor conference call to discuss the quarterly results at 11 a.m. (EST) today. During that call, members of Pediatrix's management team are expected to also provide more specific earnings guidance for 2003. The conference call Webcast may be accessed from the Company's website,, or from A telephone replay of the conference call will be available from 2 p.m. Eastern Time today through midnight Eastern Time February 13, 2003 by dialing 800-475-6701, access code 669644. The replay will also be available at and at

About Pediatrix

Pediatrix was founded in 1979. Its neonatal physicians provide services at more than 190 NICUs and through Obstetrix its perinatal physicians provide services in many markets where Pediatrix's neonatal physicians practice. Combined, Pediatrix and its affiliated professional corporations employ more than 600 physicians in 30 states and Puerto Rico. Additional information is available on the Internet:

Matters discussed in this release may include forward-looking statements within the meaning of the securities laws. All statements, other than statements of historical facts, that address activities, events or developments that Pediatrix intends, expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements 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 relevant. Any forward-looking statement is not a guarantee of future performance and is subject to various risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statement. Such risks and uncertainties include, among others: pending and future billing and other investigations by government authorities; Pediatrix's ability to comply with laws and regulations applicable to the healthcare industry; limitations of, reductions in or retroactive adjustments to reimbursement amounts or rates by government-sponsored healthcare programs; whether physicians appropriately record the services they provide; Pediatrix's ability to find suitable acquisition candidates and to successfully integrate future or recent acquisitions; laws protecting the privacy of patient healthcare information; federal and state healthcare reform or changes in government-sponsored healthcare programs; Pediatrix's ability to successfully recruit and retain qualified physicians; malpractice and other lawsuits; the value of Pediatrix's intangible assets, such as goodwill; Pediatrix's ability to manage growth; fluctuations in quarterly results; and competition in the healthcare industry.

Pediatrix more fully describes these and other risk factors in its Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission. Any forward-looking statements in this press release are made as of the date hereof based on management's current beliefs and expectations and Pediatrix has no obligation to update and revise any such statements, whether as a result of new developments, information or otherwise.

                    Pediatrix Medical Group, Inc.
                  Consolidated Statements of Income
                                  Three months ended  12 months ended
                                     December 31,      December  31,
                                      2002     2001     2002     2001
                                  (in thousands, except for per share
Net patient service revenue       $119,473 $104,754 $465,481 $354,595
Operating expenses:
Practice salaries and benefits      67,215   57,010  263,165  197,581
Practice supplies and other
 operating expenses                  4,351    3,937   15,791   14,297
General and administrative
 expenses(1)                        15,519   18,177   68,315   62,841
Depreciation and amortization        1,688    6,412    6,135   21,437
Total operating expenses            88,773   85,536  353,406  296,156
Income from operations              30,700   19,218  112,075   58,439
Investment income                      223       63      818      309
Interest expense                      (299)    (430)  (1,156)  (2,538)
Income before income taxes          30,624   18,851  111,737   56,210
Income tax provision               (11,637)  (8,703) (42,961) (25,782)
Net income                          18,987   10,148   68,776   30,428
Per share data:
Net income per common and common
 equivalent share (diluted)           0.73     0.39     2.58     1.36
Weighted average shares used in
 computing net income per common
 and common equivalent share
 (diluted)                          26,119   25,989   26,629   22,478
(1) General and administrative expenses for the 12 months ended
    December 31, 2002, include approximately $1.3 million in
    settlement expenses related to the Colorado Medicaid
                       Balance Sheet Highlights
                                                   As of      As of
                                                 Dec. 31,   Dec. 31,
                                                    2002       2001
                                                    (in thousands)
Cash & cash equivalents                            $73,195    $27,557
Accounts receivable, net                            75,356     63,851
Other current assets                                12,804     21,550
Other assets, property and equipment
                                                   487,324    460,141
Total assets                                      $648,679   $573,099
Liabilities and shareholders' equity:
Accounts payable & accrued expenses
                                                  $ 76,400   $ 73,203
Total debt                                           2,489      3,206
Other liabilities                                   21,792     17,838
Total liabilities                                  100,681     94,247
Shareholders' equity                               547,998    478,852
Total liabilities and shareholders' equity
                                                 $ 648,679  $ 573,099
                         Other Operating Data
                                                      12 months ended
                                                        December 31,
                                                         2002    2001
Number of:
Births                                                501,832 450,205
NICU Admissions                                        55,121  48,186
NICU Patient days                                     983,733 804,293

Pediatrix Medical Group, Inc., Fort Lauderdale
Bob Kneeley, 954/384-0175, Ext.5300