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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 5, 2003
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PEDIATRIX MEDICAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-26762 65-0271219
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1301 Concord Terrace
Sunrise, Florida 33323-2825
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (954) 384-0175
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(Former Name or Former Address, if Changed Since Last Report)
Item 12. Information Furnished Under Item 12 (Results of Operations and
Financial Condition)
On November 5, 2003, Pediatrix Medical Group, Inc. issued a press release
announcing its results of operations for the quarter ended September 30, 2003
and introducing 2004 earnings guidance. The press release is attached as an
exhibit hereto and is incorporated herein by reference.
(c). Exhibits
99.1 Press Release of Pediatrix Medical Group, Inc., dated November 5,
2003.
SIGNATURES
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Pursuant to 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.
Date: November 5, 2003 By: /s/ Karl B. Wagner
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Karl B. Wagner
Chief Financial Officer
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 Press Release dated November 5, 2003.
Exhibit 99.1
Pediatrix Reports Record Third Quarter Results;
Introduces 2004 EPS Guidance of $4.00 to $4.10
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Nov. 5, 2003--Pediatrix
Medical Group, Inc. (NYSE:PDX) today reported record earnings per
share of 97 cents for the three months ended September 30, 2003, up 33
percent from the prior year as a result of strong revenue growth,
continued operating efficiencies and the beneficial impact of the
Company's share repurchase program.
Highlights for the three months ended September 30, 2003 include:
-- Record quarterly net income of $23.5 million, up 21 percent;
-- Record operating income of $38.2 million with expanded
operating margins;
-- Record quarterly revenue of $145.5 million, up 19 percent; and
-- Record cash flow from operations of $46.3 million, up 30
percent.
"This was another very solid quarter in which we continued to run
our business more efficiently while at the same time successfully
executing our strategy as a growth company," said Roger J. Medel,
M.D., President and Chief Executive Officer of Pediatrix, the nation's
largest provider of newborn and maternal-fetal medicine physician
services. "We continue to build our national group practice through
acquisitions, the addition of neonatal units through internal
contracting efforts and excellent same-unit growth. Our results
reflect the very strong performance of our core business and the
attractiveness that our model presents to physicians, hospital
administrators and payors across the country."
For the three months ended September 30, 2003, Pediatrix reported
net patient service revenue of $145.5 million, up 19 percent from
$122.5 million for the comparable period of 2002. Revenue for the 2003
third quarter included same-unit revenue growth of 12.5 percent, as
well as contributions from acquisitions completed during the past 12
months.
Income from operations increased by 22 percent to $38.2 million
for the 2003 third quarter from $31.3 million for the comparable
period of 2002 as a result of the combination of revenue growth and
continued operating efficiencies. For the 2003 third quarter,
operating margin improved over the same period in the prior year by
approximately 72 basis points to 26.3 percent. This improvement is
due, in part, to a decline in general and administrative expenses as a
percent of revenue by more than 60 basis points to 13.6 percent for
the 2003 third quarter when compared to the same period of 2002.
Net income was $23.5 million for the three months ended September
30, 2003, up 21 percent from $19.3 million for the same period of
2002. On a per share basis, Pediatrix earned 97 cents for the three
months ended September 30, 2003 based on weighted average shares
outstanding of 24.2 million, compared with earnings per share of 73
cents based on weighted average shares outstanding of 26.4 million for
the comparable 2002 period.
For the nine months ended September 30, 2003, Pediatrix reported
net patient service revenue of $405.4 million, an increase of 17
percent from $346.0 million for the first nine months of 2002. Net
income increased to $60.4 million for the nine months ended September
30, 2003 from $49.8 million for the comparable period of 2002.
Cash flow from operations for the 2003 third quarter was a record
$46.3 million. For the comparable period of 2002, cash flow from
operations was $35.7 million. For the nine months ended September 30,
2003, Pediatrix has generated cash flow from operations of $79.8
million, up from $67.2 million for the same period of 2002.
During the 2003 third quarter, Pediatrix used cash to acquire
physician practices, complete a previously-authorized share repurchase
program, make capital expenditures and reduce amounts outstanding
under its revolving credit facility. At September 30, 2003, total debt
was $17.1 million, which includes $14.5 million outstanding under the
Company's credit facility.
Pediatrix invested a total of $17.1 million in cash during the
2003 third quarter to acquire neonatal physician group practices based
in Cleveland, OH, and Tampa, FL, as well as a pediatric intensive care
physician group practice based in Chicago, IL. Since October 1, 2003,
Pediatrix has entered into contracts to provide neonatal physician
services at two Kansas City-area hospitals and at a hospital in
southern California.
Pediatrix expects that earnings per share for 2004 will be in a
range of $4.00 to $4.10. The Company re-affirms its previous guidance
for the 2003 fourth quarter of 95 to 97 cents per share. These
estimates assume continued same-unit revenue growth of 6 to 10
percent, additional operating improvements and continued acquisitions.
Separately, Pediatrix continues to work with government officials
on two ongoing matters. In June 2002, Pediatrix announced that the
Federal Trade Commission was conducting an investigation of
competitive issues related to an acquisition completed in May 2001.
The Company is cooperating fully with the FTC. As part of the
investigational process, the Company continues to meet with the FTC
staff and provide extensive information and testimony. While the
investigation continues to move forward, the Company is not able to
predict either the timing or the possible outcome of this
investigation.
The Company is also cooperating with a U.S. Attorney's office
investigation into Pediatrix's Medicaid billing practices that was
announced in June 2003. The Company continues to meet with and provide
information to federal investigators and Medicaid representatives in
connection with the investigation. The Company is not able to predict
either the timing or the possible outcome of this investigation.
There can be no assurance that the outcome of these investigations
will not have a material adverse effect on the Company's business,
financial condition, results of operations or trading price of the
Company's shares.
Investor Conference Call
At 11 a.m. Eastern Time today, Pediatrix Medical Group, Inc., will
host an investor conference call to discuss 2003 third quarter
results, operations review and specific earnings guidance for the 2003
fourth quarter and for calendar year 2004. The conference call Webcast
may be accessed from the Company's website, http://www.pediatrix.com.
A telephone replay of the conference call will be available from 2
p.m. Eastern Time today through midnight Eastern Time November 12,
2003 by dialing 800-475-6701, access code 702153. The replay will also
be available at http://www.pediatrix.com.
About Pediatrix
Pediatrix was founded in 1979. Pediatrix physicians 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 200 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 675 physicians in 30 states and Puerto Rico. Additional
information is available at http://www.pediatrix.com.
Matters discussed in this release may include forward-looking
statements within the meaning of the Federal securities laws. Such
forward-looking statements may include, but are not limited to,
statements relating to Pediatrix's objectives, plans and strategies,
and all statements (other than statements of historical facts) that
address activities, events or developments that Pediatrix intends,
expects, projects, believes or anticipates will or may occur in the
future are forward-looking statements. Such statements are often
characterized by terminology such as "believe", "hope", "may",
"anticipate", "should", "intend", "plan", "will", "expect",
"estimate", "project", "positioned", "strategy" and similar
expressions.
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 believed to be appropriate. Any
forward-looking statement is made as of the date hereof. We disclaim
any duty to update or revise any such statement, 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 that could cause actual results, developments
and business decisions to differ materially from those contemplated by
such forward-looking statements.
Some of the factors that may cause actual results, developments
and business decisions to differ materially from those projected or
anticipated by such forward-looking statements, as more fully
discussed under the section entitled "Risk Factors" in Pediatrix's
most recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission, include, pending and future investigations by
federal and state government authorities of Pediatrix's billing or
other practices (including the previously disclosed investigations
regarding Pediatrix's Medicaid billing practices and an investigation
by the Federal Trade Commission); unfavorable regulatory or other
changes or conditions in geographic areas where Pediatrix's operations
are concentrated; determinations that Pediatrix failed to comply with
applicable health care laws and regulations, limitations, reductions
or retroactive adjustments reimbursement amounts or rates by
government-sponsored health care programs; audits by third party
payors with respect to Pediatrix's billings for services; failure of
physicians affiliated with us to appropriately record and document the
services that they provide; Pediatrix's failure to find suitable
acquisition candidates or successfully integrate any future or recent
acquisitions; Pediatrix's failure to successfully implement
Pediatrix's strategy of diversifying its operations; impairment of
long-lived assets, such as goodwill; federal and state health care
reform, including changes in the interpretation of
government-sponsored health care programs; Pediatrix's failure to
successfully recruit additional and retain existing qualified
physicians; pending and future malpractice and other lawsuits;
(including the previously disclosed shareholder class action
lawsuits); Pediatrix's failure to manage growth effectively and to
maintain effective and efficient information systems; Pediatrix's
failure to collect reimbursements from third party payors in a timely
manner; cancellation or non-renewal of Pediatrix's arrangements with
hospitals, or renewal of such arrangements on less favorable terms;
loss of Pediatrix's affiliated physicians' privileges or ability to
provide services in hospitals, or hospitals entering into arrangements
with physicians not affiliated with Pediatrix; and increased
competition in the health care industry.
Pediatrix Medical Group, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2003 2002 2003 2002
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(in thousands, except for per share
data)
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Net patient service revenue $145,514 $122,502 $405,415 $346,008
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Operating expenses:
Practice salaries and benefits 80,196 68,232 230,460 195,950
Practice supplies and other
operating expenses 4,778 3,997 13,561 11,440
General and administrative
expenses 19,843 17,483 57,150 52,796
Depreciation and amortization 2,495 1,520 6,048 4,447
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Total operating expenses 107,312 91,232 307,219 264,633
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Income from operations 38,202 31,270 98,196 81,375
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Investment income 76 221 296 595
Interest expense (417) (288) (1,142) (857)
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Income before income taxes 37,861 31,203 97,350 81,113
Income tax provision (14,388) (11,857) (36,993) (31,324)
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Net income $23,473 $19,346 $60,357 $49,789
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Per share data:
Net income per common and common
equivalent share (diluted) $0.97 $0.73 $2.46 $1.86
Weighted average shares used in
computing net income per common
and common equivalent share
(diluted) 24,196 26,363 24,521 26,794
Balance Sheet Highlights
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As of As of
Sept. 30, Dec. 31,
2003 2002
(unaudited)
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(in thousands)
Assets:
Cash and cash equivalents $10,410 $73,195
Accounts receivable, net 89,869 75,356
Other current assets 18,459 12,804
Other assets 559,537 487,324
Total assets $678,275 $648,679
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Liabilities and shareholders' equity:
Accounts payable & accrued expenses
$ 96,976 $ 76,400
Total debt 17,137 2,489
Other liabilities 27,652 21,792
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Total liabilities 141,765 100,681
Shareholders' equity 536,510 547,998
Total liabilities and shareholders' equity
$ 678,275 $ 648,679
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CONTACT: Pediatrix Medical Group, Inc., Fort Lauderdale
Bob Kneeley, 954-384-0175, ext. 5300
bob_kneeley@pediatrix.com