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MEDNAX (MD) Q4 Earnings Surpass Estimates, Increase Y/Y

Zacks Equity Research

MEDNAX, Inc. MD delivered fourth-quarter 2018 adjusted earnings of 92 cents per share, beating the Zacks Consensus Estimate by 10.8%. Moreover, the bottom line improved nearly 12.2% year over year, led by revenue increase partly offset by rise in expenses.

In spite of the earnings beat, the stock declined 0.9% on disappointing guidance for first quarter of 2019. Management guided EPS in the range of 67 to 75 cents, which is below the current Zacks Consensus Estimate of 87 cents.

Quarterly Details

The company generated revenues of $932.7 million, surpassing the Zacks Consensus Estimate  by 2.7%. Also, the top line was up 2.4% from the year-ago period, mainly supported by a significant improvement in managed care contracting. Same unit revenues inched up 2.8% year over year, mainly driven by recent buyouts and higher patient volume. However, this upside was offset by the non-renewal of a few contracts.

General and administrative expenses rose 3.6% to $112.8 million.

Interest expense of the company escalated 28.3% to $25.4 million , primarily due to higher effective interest rate on borrowings between two periods.

In the quarter under review, EBITDA totaled $136.7 million, down by nearly 11.6%.

The company paid a total of $89.3 million in the reported quarter to purchase three radiology and one neonatology practices and also to make contingent purchase price payments for prior buyouts.

Mednax, Inc Price, Consensus and EPS Surprise

Mednax, Inc Price, Consensus and EPS Surprise | Mednax, Inc Quote

Financial Update

As of Dec 31, 2018, the company had cash and cash equivalents of about $36 million, down 40% from year end 2017.

The company incurred total debt of $1.9 billion, up 6.6% from 2017-end level and total assets of $5.9 billion, up 1.5% from the level at 2017 end.

Cash flows from operating activities were $127.6 million, down 34.7% year over year.

First-Quarter Outlook

For the first quarter of 2019, the company expects adjusted EPS to be in the band of 67-75 cents. Mednax projects adjusted EBITDA in the range of $108-$118 million.

This guidance assumes that total same-unit revenue growth for the three months ended Mar 31, 2019 will be in a range of flat to 2 % from the prior-year period.

Shares outstanding are predicted to be around 87.3 million.

Preliminary 2019 Guidance

On a preliminary basis, the company estimates adjusted EBITDA to be in the band of $550-$580 million.

The company intends to utilize part of the remaining $250 million share repurchase authorization through open market purchases in the first quarter of 2019.

Zacks Rank

MEDNAX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases From Medical Sector

Some stocks worth considering from the medical sector are as follows:

Constellation Pharmaceuticals, Inc. CNST is set to report fourth-quarter 2018 earnings performance on Feb 14. The stock has an Earnings ESP of +9.72% and a Zacks Rank of 2.

Tenet Healthcare Corporation THC is slated to announce fourth-quarter earnings on Feb 25. The company is a Zacks #3 Ranked player and has an Earnings ESP of +5.63%.

Alder BioPharmaceuticals, Inc. ALDR has an Earnings ESP of +13.52% and a Zacks Rank #2 (Buy). The company is scheduled to release fourth-quarter earnings on Feb 25.

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