Adjusted EPS of $0.89
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Apr. 30, 2018--
MEDNAX, Inc. (NYSE: MD), the national health solutions partner
specializing in neonatology, anesthesiology, radiology, maternal-fetal
medicine, other pediatric services, and management services, today
reported earnings of $0.68 per diluted share for the three months ended
March 31, 2018. On a non-GAAP basis, MEDNAX reported Adjusted EPS of
$0.89.
For the 2018 first quarter, MEDNAX reported the following results:
-
Net revenue of $902 million;
-
Net income of $63 million; and
-
EBITDA of $134 million.
“Our operating results for the first quarter were at the high end of our
expectations and reflect further execution of our corporate
initiatives,” said Roger J. Medel, M.D., Chief Executive Officer of
MEDNAX. “We have begun 2018 with progress in all aspects of the focus
areas we identified through 2017, including cost and service excellence,
practice-level operating plans, and continuing our strategic growth.
Notably, we have expanded the scope of our internal initiatives while
also supporting the growth of our organization, which thus far this year
has included additions to the radiology groups who joined MEDNAX during
2017. Looking forward, we will continue to focus on execution of our
plans, which we believe will position us well to deliver a
differentiated value proposition and to remain committed to taking great
care of our patients.”
Operating Results
MEDNAX’s net revenue for the three months ended March 31, 2018 increased
by 7.9 percent, to $901.9 million, from $835.6 million for the
prior-year period. MEDNAX’s revenue growth attributable to recent
acquisitions was 4.4 percent, while overall same-unit revenue increased
by 3.5 percent when compared to the prior-year period.
Same-unit revenue from net reimbursement-related factors increased by
2.1 percent for the 2018 first quarter as compared to the prior-year
period. The net increase in revenue was primarily due to modest
improvements in managed care contracting and an increase in the
administrative fees received from MEDNAX’s hospital partners.
The percentage of services reimbursed under government programs was
unfavorable by roughly 70 basis points for the first quarter compared
with the prior-year period, reflecting modestly unfavorable comparisons
for anesthesiology and neonatology and other pediatric services. This
unfavorable payor mix comparison impacted same-unit revenue growth from
net reimbursement-related factors negatively by roughly 80 basis points.
Same-unit revenue attributable to patient volume increased by 1.4
percent for the 2018 first quarter as compared to the prior-year period.
Volumes increased across almost all of the Company’s service lines. For
the 2018 first quarter, same-unit neonatal intensive care unit (NICU)
patient days increased by 1.2 percent compared to the prior-year period.
For the 2018 first quarter, practice salaries and benefits expense was
$631.8 million, compared to $572.4 million for the prior-year period.
Practice salaries and benefits expense as a percentage of net revenue
was 70.1 percent for the first quarter of 2018, compared to 68.5 percent
for the prior-year period. This increase in expense as a percentage of
revenue was primarily attributable to growth in clinician compensation
expense at existing practices, support for organic-growth initiatives as
well as to support acquisition-related growth.
For the 2018 first quarter, general and administrative expenses were
$108.8 million, as compared to $103.8 million for the prior-year period.
Included within general and administrative expenses was an increase of
approximately $2.2 million of stock-based compensation expense primarily
resulting from the change in timing of the Company’s annual equity grant
from June to March in order to align the timing with other compensation
related activities. General and administrative expenses as a percentage
of net revenue was 12.1 percent for the first quarter of 2018, compared
to 12.4 percent for the prior-year period.
Earnings before interest, taxes, depreciation and amortization expense
(EBITDA) for the 2018 first quarter was $133.6 million, compared to
$133.0 million for the prior-year period. EBITDA as a percentage of net
revenue was 14.8 percent for the first quarter of 2018, compared to 15.9
percent in the prior-year period, with this decline primarily reflecting
higher operating expense growth as compared to revenue growth.
Depreciation and amortization expense was $26.2 million for the first
quarter of 2018 compared to $25.6 million for the first quarter of 2017,
an increase of $0.6 million that primarily related to the amortization
of intangible assets from recent acquisitions.
Interest expense was $19.9 million for the first quarter of 2018
compared to $17.8 million for the first quarter of 2017, due primarily
to a higher effective interest rate on borrowings between the two
periods and slightly higher outstanding borrowings.
MEDNAX generated net income of $63.4 million for the 2018 first quarter,
or $0.68 per diluted share based on a weighted average 93.5 million
shares outstanding. This compares with net income of $54.7 million, or
$0.59 per diluted share, for the 2017 first quarter, based on a weighted
average 93.1 million shares outstanding.
The Company’s effective tax rate for the first quarter of 2018 was 27.5
percent, compared to 39.0 percent for the first quarter of 2017, related
to the reduction in the corporate tax rate enacted under the Tax Cuts
and Jobs Act of 2017.
For the first quarter of 2018, MEDNAX reported Adjusted EPS of $0.89,
compared to $0.75 for the first quarter of 2017. Adjusted EPS is defined
as diluted net income per common and common equivalent share excluding
non-cash amortization expense and stock-based compensation expense.
MEDNAX had cash and cash equivalents of $40.9 million at March 31, 2018,
and net accounts receivable were $542.6 million.
During the first quarter of 2018, MEDNAX used $113.6 million to fund
operations, which compares to $21.8 million used to fund operations
during the 2017 first quarter. MEDNAX typically uses cash during the
first quarter of each year as it pays incentive compensation,
principally to its physicians, and employee benefit plan matching
contributions that were accrued during the prior year. The use of cash
during the first quarter of 2018 also reflects the payment of taxes
related to 2017 that were deferred for companies impacted by the 2017
hurricanes.
MEDNAX used $22.4 million during the 2018 first quarter to fund
acquisitions and to make contingent purchase price and other payments
for previously completed acquisitions. During the quarter, four
physician groups were acquired across neonatology, radiology and
pediatric subspecialty services.
At March 31, 2018, MEDNAX had total net debt outstanding of $2.0
billion, consisting primarily of its borrowings under its revolving
credit facility and senior notes. At March 31, 2018, the amount of
additional borrowing capacity available under the Company’s revolving
credit facility was approximately $780 million.
Since the end of the first quarter, MEDNAX has announced the acquisition
of Women’s Radiology Associates LLP, a radiology practice based in
Houston, Texas. This marked the fifth physician group practice group to
become part of MEDNAX in 2018 and the sixth radiology services practice
acquisition the Company has completed as part of its radiology growth
strategy.
2018 Second Quarter Outlook
For the 2018 second quarter, MEDNAX expects earnings per share will be
in a range of $0.81 to $0.86 per diluted share and Adjusted EPS will be
in a range of $1.04 to $1.09. The Adjusted EPS range excludes $0.14 per
diluted share of estimated amortization expense and $0.09 per diluted
share of estimated stock-based compensation expense.
This outlook assumes that total same-unit revenue growth for the three
months ended June 30, 2018 will be in a range of two to four percent,
compared to the prior-year period.
Additionally, for the 2018 second quarter, MEDNAX expects that EBITDA
growth will be between one percent and six percent, compared to the
prior-year period EBITDA of $148.7 million. Related to expected EBITDA
growth, included within expected general and administrative expense for
the second quarter of 2018 is approximately $4.0 million primarily
related to the previously mentioned change in the timing of the
Company’s annual equity grant from June to March in order to align the
timing with other compensation related activities.
This outlook also assumes an effective tax rate for the second quarter
of 2018 of 27 percent.
Non-GAAP Measures
A reconciliation of EBITDA and Adjusted EPS to the most directly
comparable GAAP measures for the three months ended March 31, 2018 and
2017 is provided in the financial tables of this press release.
Additionally, historical reconciliations of EBITDA and Adjusted EPS to
the most directly comparable GAAP measures as well as the reconciliation
of forward-looking EBITDA to the most directly comparable GAAP measure
are available on the Company’s website at www.mednax.com/investors.
Earnings Conference Call
MEDNAX, Inc., will host an investor conference call to discuss the
quarterly results on Tuesday, May 1st, at 9:00 a.m., ET. 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 12:00
p.m. ET today through midnight ET May 22, 2018 by dialing 800.475.6701,
access Code 447904. The replay will also be available at www.mednax.com.
ABOUT MEDNAX
MEDNAX, Inc. is a national health solutions partner comprised of the
nation's leading providers of physician 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, clinical research
and telemedicine to enhance patient outcomes and provide high-quality,
cost-effective care. The Company was founded in 1979, and today, through
its affiliated professional corporations, MEDNAX provides services
through a network of approximately 4,100 physicians in all 50 states and
Puerto Rico. In addition to its national physician network, MEDNAX
provides services to healthcare facilities and physicians in over 40
states through two complementary businesses, consisting of a management
services company and a consulting services company. 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 MEDNAX’s
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.
|
MEDNAX, INC.
|
|
Consolidated Statements of Income
|
|
(in thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
901,857
|
|
|
$
|
835,597
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Practice salaries and benefits
|
|
|
631,830
|
|
|
|
572,385
|
|
|
Practice supplies and other operating expenses
|
|
|
30,655
|
|
|
|
27,796
|
|
|
General and administrative expenses
|
|
|
108,776
|
|
|
|
103,765
|
|
|
Depreciation and amortization
|
|
|
26,163
|
|
|
|
25,614
|
|
|
Total operating expenses
|
|
|
797,424
|
|
|
|
729,560
|
|
|
Income from operations
|
|
|
104,433
|
|
|
|
106,037
|
|
|
Investment and other income
|
|
|
1,464
|
|
|
|
576
|
|
|
Interest expense
|
|
|
(19,935
|
)
|
|
|
(17,752
|
)
|
|
Equity in earnings of unconsolidated affiliates
|
|
|
1,525
|
|
|
|
797
|
|
|
Total non-operating expenses
|
|
|
(16,946
|
)
|
|
|
(16,379
|
)
|
|
Income before income taxes
|
|
|
87,487
|
|
|
|
89,658
|
|
|
Income tax provision
|
|
|
(24,059
|
)
|
|
|
(34,967
|
)
|
|
Net income
|
|
$
|
63,428
|
|
|
$
|
54,691
|
|
|
|
|
|
|
|
|
|
|
Net income per common and
common equivalent share (diluted)
|
|
$
|
0.68
|
|
|
$
|
0.59
|
|
|
Weighted average diluted shares outstanding
|
|
|
93,505
|
|
|
|
93,143
|
|
|
|
|
|
|
|
|
|
|
MEDNAX, INC.
|
|
Reconciliation of Net Income to EBITDA
|
|
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
2017
|
|
Net income
|
|
$
|
63,428
|
|
$
|
54,691
|
|
Interest expense
|
|
|
19,935
|
|
|
17,752
|
|
Income tax provision
|
|
|
24,059
|
|
|
34,967
|
|
Depreciation and amortization
|
|
|
26,163
|
|
|
25,614
|
|
EBITDA
|
|
$
|
133,585
|
|
$
|
133,024
|
|
|
|
|
|
|
|
MEDNAX, INC.
|
|
Reconciliation of Diluted Net Income per Share
|
|
to Adjusted Diluted Net Income per Share (“Adjusted EPS”)
|
|
(in thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
2017
|
|
Weighted average dilutive shares outstanding
|
|
93,505
|
|
93,143
|
|
Net income and diluted net income per share
|
|
$
|
63,428
|
|
$
|
0.68
|
|
$
|
54,691
|
|
$
|
0.59
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization (net of tax of $4,764 and $6,843)
|
|
|
12,560
|
|
|
0.13
|
|
|
10,704
|
|
|
0.11
|
|
Stock-based compensation (net of tax of $2,715 and $2,939)
|
|
|
7,160
|
|
|
0.08
|
|
|
4,597
|
|
|
0.05
|
|
Adjusted net income and diluted EPS
|
|
$
|
83,148
|
|
$
|
0.89
|
|
$
|
69,992
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDNAX, INC.
Balance Sheet Highlights
(in thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
40,939
|
|
$
|
60,200
|
|
Short-term investments
|
|
|
10,844
|
|
|
10,292
|
|
Accounts receivable, net
|
|
|
542,609
|
|
|
503,999
|
|
Other current assets
|
|
|
28,283
|
|
|
52,744
|
|
Intangible assets, net
|
|
|
629,308
|
|
|
639,928
|
|
Goodwill, other assets, property and equipment
|
|
|
4,631,091
|
|
|
4,600,115
|
|
Total assets
|
|
$
|
5,883,074
|
|
$
|
5,867,278
|
|
|
|
|
|
|
|
Liabilities and shareholders’ equity:
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
302,565
|
|
$
|
438,017
|
|
Total debt
|
|
|
1,966,399
|
|
|
1,852,824
|
|
Other liabilities
|
|
|
470,622
|
|
|
509,983
|
|
Total liabilities
|
|
|
2,739,586
|
|
|
2,800,824
|
|
Total shareholders’ equity
|
|
|
3,143,488
|
|
|
3,066,454
|
|
Total liabilities and shareholders’ equity
|
|
$
|
5,883,074
|
|
$
|
5,867,278
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180430006554/en/
Source: MEDNAX, Inc.
MEDNAX, Inc.
Charles Lynch, 954-384-0175, x 5692
Vice
President, Strategy and Investor Relations
charles_lynch@mednax.com