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Mednax (MD) Up 31.6% Since Last Earnings Report: Can It Continue?

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  • MD

A month has gone by since the last earnings report for Mednax (MD). Shares have added about 31.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Mednax due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

MEDNAX's Q4 Earnings Fall Shy of Estimates, Tumble Y/Y

MEDNAX reported fourth-quarter 2020 adjusted earnings of 25 cents per share, which missed the Zacks Consensus Estimate of 31 cents by 19.4%. Moreover, the bottom line plunged 72.5% year over year due to soft revenues.

The COVID-19 pandemic continued to adversely impact the company’s patient volumes and revenues, which in turn, dragged its fourth-quarter results.

Quarterly Details

The company generated revenues of $417 million, which missed the Zacks Consensus Estimate by 8.6%. The top line also slumped 54% from the year-ago period. This was due to dented patient volumes stemming from the pandemic.

Same unit revenues were down 9.5% year over year. Nevertheless, this decline was partially offset by growth from the company’s recent buyouts.
General and administrative expenses decreased 7.6% year over year to $54.7 million due to rise in salary and net staffing reductions.

Total operating expenses decreased 8.2% year over year to $384.3 million on the back of lower practise salaries and benefits, transformational and restructuring expense and general and administrative expenses.

Interest expense of the company dipped 1.3% to $27.3 million due to lower borrowings.

In the quarter under review, adjusted EBITDA totaled $58.3 million, down 24.8% year over year.

Financial Update

As of Dec 31, 2020, the company had cash and cash equivalents of $1.1 billion, which increased more than ten-fold from the level as of Dec 31, 2019.

The company’s total debt, net of $1.7 billion, inched up 0.8% from the level at 2019 end while total assets worth $3.3 billion were down 19.2% from the last-year end.

Cash flow generated from operating activities was $82.2 million in the quarter under review, which increased 116.9% year over year.

Business Update

The company completed its pending sale of MEDNAX Radiology Solutions to intensify its focus on Pediatrix and Obstetrix medical groups. It received proceeds of approximately $865 million after related transaction expenses and customary adjustments from this transaction.

Full-Year Update

For the year ended Dec 31, 2020, the company’s operating revenues came in at $1.73 billion, down 2.8% year over year.

Adjusted EBITDA for 2020 was down 16.9%. Adjusted EPS from continuing operations for 2020 stood at 95 cents, down 32.1% from the 2019 reported figure.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -46.08% due to these changes.

VGM Scores

Currently, Mednax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Mednax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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