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Why Is Mednax (MD) Up 46.5% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Mednax (MD). Shares have added about 46.5% 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 Earnings Miss Estimates in Q1, Tumble Y/Y

MEDNAX reported first-quarter 2020 adjusted earnings of 32 cents per share, missing the Zacks Consensus Estimate by 23.8%. Moreover, the bottom line plunged 50.8% year over year.

The company’s results were negatively impacted by the COVID-19 pandemic. In fact, the coronavirus outbreak dented patient volumes as well as revenue.

Quarterly Details

The company generated revenues of $846 million, which missed the Zacks Consensus Estimate by 0.6%. Also, the top line slid 0.6% from the year-ago period.

Same unit revenues dipped 1% year over year.

General and administrative expenses inched 3.3% to $105.2 million.
Interest expense of the company declined 10.1% to $27.6 million on the back of lower borrowings.

In the quarter under review, EBITDA totaled $63.4 million, down 39.6% year over year.

The company invested $13.7 million in capital expenditures.
Withdrawal of Preliminary Outlook

Given the current pandemic-led uncertainty, the company scrapped its previously-announced quarterly and 2020 outlook.

Financial Update

As of Mar 31, 2020, the company had cash and cash equivalents of $312 million, up 177% from the level at 2019 end.

The company’s total debt of $2.1 billion was up 21.5% from the level at 2019 end while total assets worth $4.3 billion rose 4.2% from the level at 2019 end.

Cash flow used in operating activities was $146.4 million in the quarter under review, jumping 142.4% year over year.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted -25.34% due to these changes.

VGM Scores

At this time, Mednax has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Mednax has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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