Pediatrix Reports Record EPS, Cash Flow for 2002 Third Quarter; $50 Million Share Repurchase Program Completed During Period
Pediatrix also announced that it expects to earn from $3.10 to $3.20 per share for calendar year 2003.
For the 2002 third quarter, net patient service revenue was $122.5 million, up 19.2 percent from $102.8 million for the 2001 third quarter. Revenue increases are attributed to several factors, including same unit revenue growth of 14.7 percent, which consisted of patient volume growth of 5.8 percent, and improved reimbursement. In addition, revenue increased as a result of contributions from physician group practices acquired during the past 12 months.
Earnings before interest, investment income, taxes, depreciation and amortization (EBITDA) increased by 25.7 percent, to $32.8 million for the three months ended September 30, 2002, versus $26.1 million for the same period of 2001. EBITDA margin expanded to 26.8 percent for the 2002 third quarter, up from 25.4 percent for the comparable period of 2001. Operating income was $31.3 million for the 2002 third quarter, an increase of 58.4 percent from the 2001 third quarter. General and administrative expenses as a percent of revenue declined to 14.3 percent for the 2002 third quarter, from 16.4 percent for the comparable period of 2001.
For the three months ended September 30, 2002, net income was $19.3 million, or 73 cents per share based on 26.4 million fully-diluted shares outstanding. This compares with net income of $10.3 million, or 40 cents per share based on 25.7 million fully-diluted shares outstanding for the three months ended September 30, 2001.
Cash flow from operations of $35.7 million for the 2002 third quarter was up from $30.0 million for the comparable period of 2001.
During the quarter, Pediatrix's board of directors authorized a share repurchase program, and Pediatrix used $50 million of its cash to purchase approximately 1.7 million shares of its common stock. This share repurchase is now complete.
Pediatrix also continues to use its cash for acquisitions. During the 2002 third quarter, Pediatrix completed the acquisition of a neonatal physician group practice based in Florence, SC. In addition, Pediatrix was awarded a contract to provide neonatal intensive care services at a hospital in Rockford, IL. Year-to-date, Pediatrix has acquired six physician groups and was awarded two contracts to manage neonatal intensive care units (NICUs).
For the nine months ended September 30, 2002, Pediatrix reported net patient service revenue of $346.0 million, an increase of 38.5 percent from $249.8 million for the first nine months of 2001. Net income increased to $49.8 million for the nine months ended September 30, 2002, from $20.3 million for the comparable period of 2001.
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 57 cents, respectively, for the 2001 third quarter, and $29.8 million and $1.40, respectively, for the nine months ended September 30, 2001.
Investor Conference Call
At 11 a.m. Eastern Time today, Pediatrix Medical Group, Inc., will host an investor conference call to discuss the quarterly results, operations review and specific earnings guidance for 2003. The conference call Webcast may be accessed from the company's website, http://www.pediatrix.com, or from http://www.companyboardroom.com. A telephone replay of the conference call will be available from 2 p.m. Eastern Time today through midnight Eastern Time November 7, 2002 by dialing 800-475-6701, access code new code 655852. The replay will also be available at http://www.pediatrix.com and at http://www.companyboardroom.com.
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: http://www.pediatrix.com.
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
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
--------- --------- --------- ---------
(in thousands, except for per share data)
---------------------------------------
Net patient service revenue $122,502 $102,784 $346,008 $249,841
--------- --------- --------- ---------
Operating expenses:
Practice salaries and benefits 68,232 55,899 195,950 140,571
Practice supplies and other
operating expenses 3,997 3,898 11,440 10,360
General and administrative
expenses(1) 17,483 16,896 52,796 44,664
Depreciation and amortization 1,520 6,344 4,447 15,025
--------- --------- --------- ---------
Total operating expenses 91,232 83,037 264,633 210,620
--------- --------- --------- ---------
Income from operations 31,270 19,747 81,375 39,221
--------- --------- --------- ---------
Investment income 221 100 595 246
Interest expense (288) (795) (857) (2,108)
--------- --------- --------- ---------
Income before income taxes 31,203 19,052 81,113 37,359
Income tax provision (11,857) (8,733) (31,324) (17,079)
--------- --------- --------- ---------
Net income $19,346 $10,319 $49,789 $20,280
========= ========= ========= =========
Per share data:
Net income per common and
common equivalent share
(diluted) $0.73 $0.40 $1.86 $0.96
Weighted average shares used
in computing net income per
common and common equivalent
share (diluted) 26,363 25,745 26,794 21,268
(1) General and administrative expenses for the nine months ended
September 30, 2002, include approximately $1.3 million in settlement
expenses related to the Colorado Medicaid investigation.
Balance Sheet Highlights
------------------------
As of As of
Sept. 30, Dec. 31,
2002 2001
----------- -----------
(unaudited)
(in thousands)
Assets:
Cash and cash equivalents $41,395 $27,557
Accounts receivable, net 75,644 63,851
Other current assets 6,712 21,550
Other assets 485,381 460,141
----------- -----------
Total assets $609,132 $573,099
=========== ===========
Liabilities and shareholders' equity:
Accounts payable & accrued expenses $ 68,072 $ 73,203
Total debt 2,479 3,206
Other liabilities 15,314 17,838
----------- -----------
Total liabilities 85,865 94,247
Shareholders' equity 523,267 478,852
----------- -----------
Total liabilities and shareholders' equity
$ 609,132 $ 573,099
=========== ===========
CONTACT: Pediatrix Medical Group, Inc., Fort Lauderdale
Bob Kneeley, 954/384-0175 x-5300
bob_kneeley@pediatrix.com