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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2005
PEDIATRIX MEDICAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 001-12111 65-0271219
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1301 Concord Terrace 33323
Sunrise, FL
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 384-0175
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
================================================================================
Item 2.02. Results of Operations and Financial Condition.
- ---------------------------------------------------------
On November 2, 2005, Pediatrix Medical Group, Inc. (the "Company") issued a
press release ("Press Release") announcing its results of operations for the
three months and nine months ended September 30, 2005. A copy of the Press
Release is attached hereto as Exhibit 99.1 and is incorporated in this Current
Report by reference.
Item 7.01. Regulation FD Disclosure.
- ------------------------------------
The Company also announced in the Press Release that it has re-affirmed its
previously announced earnings per share guidance for the three months ended
December 31, 2005.
The information in Item 7.01 of this Current Report, and in the accompanying
exhibit hereto, shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section or Section 11 or 12(a)(2) of the Securities Act of
1933, as amended. The information contained in Item 7.01 of this Current Report
and in the accompanying exhibit shall not be incorporated by reference into any
registration statement or other document filed with the Securities and Exchange
Commission by the Company, whether made before or after the date hereof,
regardless of any general incorporation language in such filing, except as shall
be expressly set forth by specific reference in such filing.
Item 8.01. Voluntary Disclosure of Other Events.
- ------------------------------------------------
The Company also announced in the Press Release that its Board of Directors
authorized a new share repurchase program, pursuant to which the Company may
purchase up to $50 million of its common stock in open market purchases based
upon general economic and market conditions.
Item 9.01. Financial Statements and Exhibits.
- ---------------------------------------------
Item 9.01(a) Financial Statements of businesses acquired:
Not applicable.
Item 9.01(b) Pro Forma Financial Information:
Not applicable.
Item 9.01(c) Exhibits:
99.1 Press Release of Pediatrix Medical Group, Inc. dated
November 2, 2005.
SIGNATURES
Pursuant of the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PEDIATRIX MEDICAL GROUP, INC.
(Registrant)
Date: November 2, 2005 By: /s/ Karl B. Wagner
--------------------------
Karl B. Wagner
Chief Financial Officer
(c) Exhibits
99.1 Press Release of Pediatrix Medical Group, Inc., dated
November 2, 2005.
Exhibit 99.1
Pediatrix Reports Non-GAAP EPS of
$1.29 for 2005 Third Quarter, Board Authorizes $50 Million Share
Repurchase Program
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Nov. 2, 2005--Pediatrix
Medical Group, Inc., (NYSE: PDX), today reported that it earned $1.29
per share for the three months ended September 30, 2005, on a non-GAAP
basis that excludes the impact of equity-based compensation expense.
The nation's leading provider of newborn, maternal-fetal and
pediatric subspecialty physician services, Pediatrix reported results
for the 2005 third quarter that include the following quarterly
records:
-- Revenue of $178.1 million, up 13 percent from the comparable
prior-year period;
-- Income from operations, excluding equity-based compensation
expense, of $49.5 million, up 19 percent from the comparable
prior-year period;
-- Earnings per share of $1.29, excluding equity-based
compensation expense, an increase of 24 percent from the
comparable prior-year period, or $1.16 per share on a GAAP
basis; and
-- Cash flow from operations of $60.7 million.
"This was another quarter with very solid execution of our growth
strategy to expand our national group practice and manage our business
more efficiently," said Roger J. Medel, M.D., Chief Executive Officer
of Pediatrix Medical Group, Inc. "We accomplished these strong
financial results while responding to very specific challenges
presented during this busy hurricane season. I am particularly proud
of the way our physicians, nurse practitioners and administrative
managers, working with our hospital partners, were able to ensure
continuous care for babies who were relocated when the healthcare
delivery system along the U.S. Gulf Coast was severely impacted by
back-to-back storms. During this period, we demonstrated an important
dimension of our national group practice model, which is our ability
to quickly mobilize our physicians to provide critical care services
to patients."
For the three months ended September 30, 2005, Pediatrix reported
net patient service revenue of $178.1 million, up 13 percent from
$158.3 million for the comparable period of 2004, principally as a
result of the Company's ongoing acquisition program. Same-unit revenue
increased by 4.9 percent, which was primarily the result of neonatal
intensive care unit (NICU) patient volume growth of 4.0 percent and
volume growth of other services, including maternal fetal medicine and
pediatric cardiology.
Income from operations for the 2005 third quarter was $44.8
million on a GAAP basis, or $49.5 million when adjusted to exclude the
impact of equity-based compensation expense for restricted stock
granted during the period. Non-GAAP operating income for the 2005
third quarter increased by 19 percent from $41.5 million for the 2004
third quarter. The 2004 period was not affected by equity compensation
expense.
Pediatrix's non-GAAP income from operations as a percent of
revenue was 27.8 percent for the 2005 third quarter, up 158 basis
points from the prior year period. Pediatrix continues to see positive
trends in its ongoing general and administrative expense management.
Excluding equity-based compensation, general and administrative
expenses increased by approximately 6 percent in the 2005 third
quarter over the comparable prior year period. General and
administrative expenses on a non-GAAP basis were 11.9 percent of
revenue for the 2005 third quarter or 75 basis points lower than the
2004 third quarter.
Net income for the 2005 third quarter was $28.1 million. When
excluding the after-tax impact of equity-based compensation expense,
net income was $31.0 million for the 2005 third quarter, up 20 percent
from $25.9 million on a GAAP basis for the comparable period of 2004.
On a per-share basis, Pediatrix earned $1.16 based on a weighted
average 24.1 million shares outstanding for the three months ended
September 30, 2005. Non-GAAP earnings per share were $1.29, up 24
percent from $1.04 earned on a GAAP basis during the comparable 2004
period based on a weighted average 25 million shares outstanding.
During the 2005 third quarter, Pediatrix generated record cash
flow from operations of $60.7 million. During the period, Pediatrix
invested $19.9 million to complete three physician group practice
acquisitions. Pediatrix also used $45.2 million of its cash to
completely pay down amounts outstanding under its $225 million
revolving credit facility. At September 30, 2005, Pediatrix had total
debt of less than $2 million, consisting principally of capital lease
obligations.
For the nine months ended September 30, Pediatrix had net patient
service revenue of $516 million, compared with $458.6 million for the
same period of 2004. Pediatrix reported operating income of $118.0
million and net income of $73.2 million through nine months of 2005,
which compares with operating income of $116.0 million and net income
of $72.5 million for the comparable period of 2004. Earnings per share
for the nine months ended September 30, 2005, were $3.07, based on a
weighted average 23.8 million shares outstanding, as compared with
$2.88 per share based on a weighted average 25.2 million shares
outstanding for the comparable 2004 period. Pediatrix's results for
the nine months ended September 30, 2005, were impacted by a $6
million pre-tax charge to increase reserves related to an offer made
to settle its national Medicaid and TRICARE investigation as well as
equity compensation expense associated with the issuance of restricted
stock in July 2005.
Pediatrix continues to grow by acquiring and integrating physician
group practices into its national group practice structure. During the
2005 third quarter, Pediatrix completed the acquisition of neonatal
practices in Tampa, Florida, and Spokane, Washington, as well as a
pediatric cardiology practice based in Dallas, Texas. During the 2005
fourth quarter, Pediatrix has added a pediatric cardiology practice
serving patients in communities throughout northern Virginia and
Maryland. For all of 2005, Pediatrix has completed 13 physician group
practice acquisitions.
Separately, the Board of Directors has authorized the repurchase
of up to $50 million of the Company's common stock. The share
repurchase program allows for the Company to make open market
purchases from time to time based on general economic and market
conditions. Pediatrix has not included any possible impact of this
share repurchase program in its current earnings guidance. Pediatrix
has repurchased approximately $300 million of its common stock since
2002 under other share repurchase programs.
Outlook
Pediatrix reaffirms its previously issued earnings per share
guidance for the 2005 fourth quarter of $1.12 to $1.14 on a GAAP
basis, or $1.27 to $1.29 when excluding the after-tax impact of
equity-based compensation. Pediatrix's 2005 fourth quarter guidance
does not include any potential changes to reserves related to the
national Medicaid and TRICARE investigation settlement offer and it
does not include the impact of the newly authorized share repurchase
program.
Pediatrix is delaying the announcement of its 2006 earnings
guidance until completing the final steps in its forecasting process
that was disrupted when the Company's headquarters was closed for
several days following Hurricane Wilma.
Reconciliation of Non-GAAP Information
This press release contains non-GAAP information, including income
from operations, net income and earnings per share as adjusted to
exclude equity-based compensation expense. Pediatrix believes that the
presentation of non-GAAP guidance provides useful information to
management and investors regarding 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 for GAAP financial
information. The following table reconciles non-GAAP financial
information to income from operations, net income and net income per
common share which Pediatrix believes are the most comparable GAAP
measures:
Three Months Ended
September 30, 2005
GAAP Adjustments Adjusted
------------ ----------- ------------
(in thousands except per share data)
Net patient service revenue $ 178,099 $ -- $ 178,099
------------ ------------
Operating expenses:
Practice salaries and
benefits 99,062 (1,026) 98,036
Practice supplies and other
operating expenses 7,015 -- 7,015
General and administrative
expenses 24,870 (3,704) 21,166
Depreciation and amortization 2,339 -- 2,339
------------ ------------
Total operating expenses 133,286 -- 128,556
------------ ------------
Income from Operations 44,813 -- 49,543
Investment income 267 -- 267
Interest expense (367) -- (367)
------------ ------------
Income before income taxes 44,713 -- 49,443
Income tax provision (16,656) (1,762) (18,418)
------------ ------------
Net income $ 28,057 -- $ 31,025
============ ============
Per share data:
Net income per common and
common equivalent share
(diluted) $1.16 -- $1.29
Weighted average shares used in
computing net income per
common and common equivalent
share (diluted) 24,089 -- 24,089
This press release contains non-GAAP information for estimated
earnings per share for the three months ended December 31, 2005 that
is adjusted to exclude the after-tax impact of equity compensation
expense. The following table reconciles this non-GAAP guidance to
estimated earnings per common share in accordance with GAAP:
Three Months Ended
December 31, 2005
GAAP Adjustments Adjusted
--------------- ----------- --------------
Estimated Earnings
Per Share $1.12 to $1.14 $0.15 $1.27 to $1.29
- ----------------------------------------------------------------------
Investor Conference Call
At 10 a.m. Eastern Time today, Pediatrix Medical Group, Inc., will
host an investor conference call to discuss the quarterly results,
operations review and earnings guidance. The conference call Webcast
may be accessed from the Investors page on 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 EDT November 9,
2005 by dialing 800-475-6701, access code 798454. The replay will also
be available at www.pediatrix.com.
About Pediatrix
Pediatrix was founded in 1979. Pediatrix physicians and advanced
nurse practitioners are reshaping the delivery of maternal-fetal and
newborn care, identifying best demonstrated processes and
participating in clinical research to enhance patient outcomes and
provide high-quality, cost-effective care. Its neonatal physicians
provide services at more than 220 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 800 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."
Pediatrix Medical Group, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
-------- -------- -------- ---------
(in thousands, except
for per share data)
------------------------------------
Net patient service revenue $178,099 $158,333 $516,005 $458,636
-------- -------- -------- ---------
Operating expenses:
Practice salaries and benefits 99,062 88,592 295,022 258,947
Practice supplies and other
operating expenses 7,015 5,895 20,109 17,206
General and administrative
expenses 24,870 20,002 75,348 59,455
Depreciation and amortization 2,339 2,298 7,515 6,999
-------- -------- -------- ---------
Total operating expenses 133,286 116,787 397,994 342,607
-------- -------- -------- ---------
Income from operations 44,813 41,546 118,011 116,029
-------- -------- -------- ---------
Investment income 267 96 643 354
Interest expense (367) (298) (2,053) (854)
-------- -------- -------- ---------
Income before income taxes 44,713 41,344 116,601 115,529
Income tax provision (16,656) (15,401) (43,434) (43,035)
-------- -------- -------- ---------
Net income $28,057 $25,943 $73,167 $72,494
======== ======== ======== =========
Per share data:
Net income per common and common
equivalent share (diluted) $1.16 $1.04 $3.07 $2.88
Weighted average shares used in
computing net income per common
and common equivalent share
(diluted) 24,089 24,980 23,801 25,176
Balance Sheet Highlights
(Unaudited)
---------------
As of As of
Sept. 30, 2005 Dec. 31, 2004
------------------ ------------------
(in thousands)
Assets:
Cash and cash equivalents $4,778 $7,011
Short-term investments 11,895 9,961
Accounts receivable, net 109,874 107,860
Other current assets 29,790 27,402
Other assets 727,895 636,655
Total assets $884,232 $788,889
================== ==================
Liabilities and shareholders'
equity:
Accounts payable & accrued
expenses $135,213 $128,991
Total debt 1,577 55,312
Other liabilities 49,731 33,555
------------------ ------------------
Total liabilities 186,521 217,858
Shareholders' equity 697,711 571,031
Total liabilities and
shareholders' equity $884,232 $788,889
================== ==================
CONTACT: Pediatrix Medical Group, Inc.
Bob Kneeley, 954-384-0175, x-5300
bob_kneeley@pediatrix.com