Board Authorizes Share Repurchase of Up To an
Additional $600 Million
Credit Facility Expanded to $1.5 Billion
MEDNAX, Inc. (NYSE: MD), the national medical group specializing
in neonatal, anesthesia, maternal-fetal, pediatric cardiology, and
other pediatric physician services, today reported earnings of
$0.86 per share for the three months ended September 30, 2014, an
increase of 13% over the prior-year period.
For the 2014 third quarter compared to the prior year period,
MEDNAX reported:
- Revenue growth of 12.9 percent to $627
million;
- Operating income growth of 12.0 percent
to $138 million; and
- Net income growth of 12.0 percent to
$86 million.
“Our strong operating results reflect continued success in our
active growth strategy,” said Roger J. Medel, M.D., Chief Executive
Officer of MEDNAX. “Our same-unit growth accelerated from the first
half of the year, including improvement in same-unit volumes. We
continue to see attractive opportunities in our acquisition
pipeline, and have announced nine practice additions in 2014,
including one in the third quarter and two so far in the fourth
quarter. In addition, we have completed two very complementary
non-practice acquisitions, one during the third quarter, which
enhance both our ability to deliver value to our physicians and
hospital partners and our ability to provide services to
non-affiliated physicians. As we continue to expand our national
group practice, we will also remain focused on improving our
operating efficiency and enhancing our capabilities to support our
physicians and hospital partners as they provide great care to our
patients.”
MEDNAX also announced today that its Board of Directors has
authorized the repurchase of up to an additional $600 million of
the Company’s common stock. This authorization is incremental to
the Company’s existing authorization to repurchase its common stock
up to an amount sufficient to offset the dilutive impact from the
issuance of shares under Company’s equity programs. MEDNAX intends
to utilize various methods to effect the share repurchases,
including, among others, open market purchases, which are expected
to commence in the near term, as well as an accelerated share
repurchase program. The amount and timing of purchases will depend
on several factors, including general economic and market
conditions and trading restrictions.
In order to fund future growth as well as the expanded share
repurchase program, MEDNAX has replaced its existing $800 million
credit facility with an expanded $1.5 billion credit facility,
composed of a $1.3 billion unsecured revolving line of credit and a
$200 million term loan.
“The authorization of this additional share repurchase program
reflects our confidence in the national group practice business
model and our ongoing commitment to enhance shareholder value,”
said Dr. Medel. “Our primary use of cash will remain focused on the
pursuit of acquisitions across all our physician specialties and in
support of those specialties, and we see many opportunities to use
our capital toward that end. At the same time, we believe that with
the combination of our ongoing cash flow from operations and our
expanded credit facility, we have sufficient access to capital to
continue our acquisition growth strategy while concurrently
undertaking shareholder-friendly uses of capital.”
Operating Results
MEDNAX’s net revenue for the three months ended September 30,
2014 increased by 12.9 percent, to $626.5 million, from $554.7
million for the comparable prior-year period, driven by a mix of
contributions from acquisitions and same-unit growth.
MEDNAX’s revenue growth attributable to contributions from
recently acquired practices was 7.9 percent, while overall
same-unit revenue grew by 5.0 percent when compared to the prior
year period.
During the three months ended September 30, 2014, MEDNAX
recorded parity revenue from payors within those states that are
now paying at the Medicare rate for Medicaid services as a result
of the Patient Protection and Affordable Care Act. MEDNAX’s third
quarter results include approximately $17.2 million in parity
revenue that contributed approximately $0.05 to its net income per
diluted share, reflecting the impacts of incentive compensation and
income taxes, compared to approximately $10.5 million in revenue,
or approximately $0.03 per diluted share on a comparable basis, in
the prior-year period.
Same-unit growth from net reimbursement-related factors was 2.9
percent. This was principally due to the favorable impact of the
parity revenue recorded during the three months ended September 30,
2014 and continued modest improvements in reimbursements received
from third-party commercial payors resulting from the Company’s
ongoing contract renewal process, partially offset by a slight
decrease in revenue from a shift in payor mix to government payors
from commercial payors, year-over-year.
On a same-unit basis, the percentage of services reimbursed
under government programs shifted by 30 basis points toward a
higher percentage of services reimbursed under government programs
for the 2014 third quarter when compared with the prior-year
period.
Same-unit growth attributable to patient volume increased by 2.1
percent for the 2014 third quarter when compared to the prior-year
period. Volume growth in our hospital-based anesthesia, neonatal
intensive care and other pediatric services was partially offset by
declines in pediatric cardiology and maternal-fetal medicine
services. For the 2014 third quarter, compared to the 2013 period,
same-unit neonatal intensive care unit (NICU) patient days were up
2.3 percent.
Operating income for the 2014 third quarter was $138.1 million,
up 12.0 percent from $123.3 million for the prior-year period.
Operating margin was 22.0 percent for the 2014 third quarter, as
compared to 22.2 percent for the prior-year period. The decrease of
18 basis points was primarily the result of the variability in
margins due to the mix of practices acquired since July 2013,
partially offset by slower growth in general and administrative
expenses as compared to revenue.
For the 2014 third quarter, general and administrative expenses
were $60.6 million, as compared to $54.7 million for the prior-year
period, a growth rate of 11.0 percent. General and administrative
expenses as a percentage of net patient service revenue was 9.7
percent for the three months ended September 30, 2014, slightly
lower than in the prior-year period.
MEDNAX generated net income of $86.2 million for the 2014 third
quarter, or $0.86 per share based on a weighted average 100.1
million shares outstanding. This compares with net income of $77.0
million, or $0.76 per share, for the 2013 third quarter, based on a
weighted average 101.2 million shares outstanding.
Through the nine months of 2014, MEDNAX has generated revenue of
$1.8 billion, up 12.7% from $1.6 billion for the prior-year period.
Operating income for the nine months ended September 30, 2014, grew
by 13.3% to $371.9 million, up from $328.2 million for the first
nine months of 2013. MEDNAX earned net income of $228.9 million, or
$2.28 per share, through September 30, 2014, based on a weighted
average 100.2 million shares outstanding, which compares to net
income of $201.5 million, or $2.00 per share, based on a weighted
average 101.0 million shares for the first nine months of 2013.
MEDNAX had cash and cash equivalents of $71.8 million at
September 30, 2014, and net accounts receivable were $345.2
million.
During the 2014 third quarter, MEDNAX generated cash flow from
operations of $159.4 million, as compared to $157.9 million for the
2013 third quarter.
MEDNAX used approximately $213.3 million of its cash during the
2014 third quarter to fund acquisitions and to make contingent
purchase price payments for previously completed acquisitions.
During the third quarter of 2014, one physician group practice was
acquired, becoming part of American Anesthesiology, and the Company
also acquired MedData, a rapidly-growing provider of revenue cycle
management services, including professional and facility coding,
billing and collections, as well as an industry leading early out /
patient pay solution, to emergency department, hospitalist, and
other physician specialty groups, as well as to hospitals. Through
the first nine months of 2014, MEDNAX acquired a total of seven
physician group practices, six joining American Anesthesiology and
one joining Pediatrix Medical Group, as well as acquiring MedData
and a small, complementary consulting services company, for a total
of nine acquisitions.
Since the end of the 2014 third quarter, MEDNAX has announced
the acquisitions of Houston Perinatal Associates, a private
physician group practice based in Houston, TX, and NEXus Medical
Group, LLC and its subsidiary, Meridian Anesthesia Consultants,
LLC, based in Macon, GA.
2014 Fourth Quarter Outlook
For the 2014 fourth quarter, MEDNAX expects earnings will be in
a range of $0.83 to $0.87 per share. This outlook assumes that
total same-unit revenue growth for the three months ended December
31, 2014 will grow by two percent to four percent from the
prior-year period. The forecast estimates that this growth will be
evenly divided between volume and net reimbursement-related
factors.
Included in the outlook for the 2014 fourth quarter is
approximately $0.06 per share from Medicaid parity, reflecting the
impacts from incentive compensation and income taxes, compared to
$0.05 per share in the 2013 fourth quarter.
Earnings conference call
MEDNAX, Inc., will host an investor conference call to discuss
the quarterly results at 10 a.m., E.D.T. today. 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
noon Eastern Time today through midnight E.D.T. November 13, 2014
by dialing 800.475.6701, access Code 338690. The replay will also
be available at www.mednax.com.
ABOUT MEDNAX
MEDNAX, Inc. is a national medical group that comprises the
nation's leading providers of neonatal, anesthesia, maternal-fetal
and pediatric medical and surgical subspecialty services. The
Company is reshaping the delivery of care within its specialties
and subspecialties using evidence-based tools, continuous quality
initiatives and clinical research to enhance patient outcomes and
provide high-quality, cost-effective care. Pediatrix Medical Group,
a division of MEDNAX, was founded in 1979 and includes neonatal
physicians who provide services at more than 360 neonatal intensive
care units, and collaborate with affiliated maternal-fetal
medicine, pediatric cardiology, pediatric critical care and
physician subspecialists to provide a clinical care continuum.
Pediatrix is also the nation's largest provider of newborn hearing
screens. American Anesthesiology, a division of MEDNAX, was
established in 2007 and includes more than 2,225 anesthesiologists
and advanced practitioners who provide anesthesia care to patients
in connection with surgical and other procedures as well as pain
management. MEDNAX, through its affiliated professional
corporations, employs approximately 2,575 physicians in 34 states
and Puerto Rico. 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 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. 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.
Condensed Consolidated Statements of
Income
(in thousands, except per share
data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2014 2013 2014 2013
Net revenue $ 626,506 $ 554,730 $ 1,788,389
$ 1,586,625 Operating expenses: Practice salaries and
benefits 394,794 346,879 1,139,050 1,008,002 Practice supplies and
other operating expenses 21,570 19,445 65,452 58,361 General and
administrative expenses 60,643 54,654 179,886 162,573 Depreciation
and amortization 11,356 10,461
32,088 29,475 Total operating expenses
488,363 431,439 1,416,476
1,258,411 Income from operations 138,143 123,291 371,913
328,214 Investment and other income 563 372 2,533 1,170 Interest
expense (2,019 ) (1,507 ) (5,578 ) (4,369 ) Equity in earnings of
unconsolidated affiliate 725 —
875 — Total non-operating expenses (731
) (1,135 ) (2,170 ) (3,199 ) Income before
income taxes 137,412 122,156 369,743 325,015 Income tax provision
51,174 45,198 140,820
123,472 Net income 86,238 76,958 228,923 201,543
Less: Net income attributable to
noncontrolling interests
(31
)
—
(40
)
—
Net income attributable to MEDNAX, Inc. $ 86,207 $
76,958 $ 228,883 $ 201,543
Net income attributable to MEDNAX, Inc.
common and common equivalent share (diluted)
$
0.86
$
0.76
$
2.28
$
2.00
Weighted average shares used in computing
net income attributable to MEDNAX, Inc. per common and common
equivalent share (diluted)
100,145
101,178
100,168
100,962
Balance Sheet Highlights
(in thousands)
(Unaudited) As of As of
September 30, 2014 December 31, 2013 Assets:
Cash and cash equivalents $ 71,822 $ 31,137 Short-term investments
7,281 6,457 Accounts receivable, net 345,169 285,397 Other current
assets 56,789 45,134 Goodwill, other assets, property and equipment
2,997,156 2,640,591 Total assets $ 3,478,217 $ 3,008,716
Liabilities and equity: Accounts payable and accrued
expenses $ 300,321 $ 308,754 Total debt 288,500 27,235 Other
liabilities 384,284 329,739 Total liabilities 973,105 665,728 Total
equity 2,505,112 2,342,988 Total liabilities and equity $ 3,478,217
$ 3,008,716
MEDNAX, Inc.Charles Lynch, 954-384-0175, x-5692Vice President,
Strategy and Investor Relationscharles_lynch@mednax.com
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