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Pediatrix (MD) Up 8% Since Q2 Earnings Release, Revenues Up Y/Y

·5 min read

Pediatrix Medical Group, Inc.’s MD shares have gained 7.5% since reporting strong second-quarter 2022 earnings on Aug 4. The quarterly results were driven by improved patient volumes and better net acquisition activity. However, an elevated expense level partly offset the upside.

Q2 Update

Pediatrix reported second-quarter 2022 adjusted earnings of 47 cents per share, which matched the Zacks Consensus Estimate but came above our estimate of 45 cents. The bottom line grew 14.6% year over year.

Net revenues of MD rose 2.8% year over year to $486 million. However, the top line missed the consensus mark by 1.3% and was lower than our estimate of $490.5 million.

Pediatrix Medical Group Inc. Price, Consensus and EPS Surprise

Pediatrix Medical Group Inc. Price, Consensus and EPS Surprise
Pediatrix Medical Group Inc. Price, Consensus and EPS Surprise

Pediatrix Medical Group Inc. price-consensus-eps-surprise-chart | Pediatrix Medical Group Inc. Quote

Overall same-unit revenues dipped 1.3% year over year in the quarter under review.  Same-unit revenues attributable to patient volume inched up 0.6% year over year, courtesy of strength exhibited by neonatology and other pediatric services.

Total operating expenses of $435.9 million increased 3.1% year over year due to a 23.4% escalation in practice supplies and other operating expenses, a 4.3% rise in practice salaries and benefits and a 8.3% uptick in depreciation and amortization expenses. The figure was higher than our estimate of $428.3 million.

General and administrative expenses decreased 13.8% year over year to $61.2 million in the second quarter. Interest expense of $8.4 million slumped 50.2% year over year, attributable to reduced total debt and a decline in interest rates from the refinancing transactions of Pediatrix reported in the first quarter of 2022.

Adjusted EBITDA inched up marginally year over year to $65.6 million in the quarter under review. The figure was lower than our estimate of $67.5 million.

Financial Update (as of Jun 30, 2022)

Pediatrix exited the second quarter with cash and cash equivalents of $14.1 million, which declined to more than 27-fold from the 2021-end figure.

Total assets of $2,369.6 million fell 13% from the figure at 2021 end.

Net debt, including finance leases, decreased 19.6% from the 2021-end level to $808.2 million.

Total equity of $845.4 million declined 5.7% from the figure as of Dec 31, 2021.

Cash used in operations totaled $81.6 million for the second quarter, which climbed 15.9% from the prior-year comparable period’s level.

Pediatrix had $153 million as borrowings as part of its revolving credit facility at the end of the second quarter.

Q3 EBITDA View

For the third quarter, MD projects adjusted EBITDA to grow in the mid-single-digit percent range. The year-ago quarter witnessed the metric register 0.8% year-over-year growth.

2022 View

Management currently projects adjusted EBITDA within $260-$270 million, while the earlier guidance estimated the metric at a minimum of $270 million. The midpoint of the revised guidance suggests 0.2% dip from the 2021 figure.

Annual interest expense is forecast within $36-$38 million. Depreciation and amortization expense is expected at $34 million this year. Transformational and restructuring-related expenses are projected at $9.3 million.

Earlier, MD anticipated revenues of $2 billion this year, which indicates a 4.7% increase from the 2021 reported figure.

Zacks Rank

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

Other Medical Sector Releases

Of the Medical sector players that have reported second-quarter results so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Elevance Health Inc. ELV and HCA Healthcare, Inc. HCA beat the respective Zacks Consensus Estimate.

UnitedHealth Group reported second-quarter 2022 adjusted earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 6.3%. The bottom line improved 19% year over year. Revenues of UNH were $80.3 billion, which climbed 13% year over year in the second quarter. The top line outpaced the consensus mark by 0.9%. The medical care ratio of UnitedHealth Group improved 130 basis points (bps) year over year to 81.5% during the quarter under review.

Elevance Health’s second-quarter 2022 earnings of $8.04 per share outpaced the Zacks Consensus Estimate of $7.72. The bottom line improved 14.4% year over year. Operating revenues of ELV in the second quarter totaled $38,482 million, which rose 15.6% year over year. The top line beat the consensus mark of $38,120 million. As of Jun 30, 2022, medical enrollment of ELV amounted to 47.1 million, which grew 6.1% year over year.

HCA Healthcare reported second-quarter 2022 adjusted earnings of $4.21 per share, which outpaced the Zacks Consensus Estimate by 14.7%. However, the bottom line declined 3.7% year over year. Revenues of HCA Healthcare amounted to $14.8 billion, which increased 2.7% year over year in the second quarter. Yet, the top line missed the consensus mark by a whisker. HCA’s same-facility equivalent admissions inched up 0.5% year over year, while same-facility admissions dipped 1.2% year over year.


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