MEDNAX Inc. MD recently announced the acquisition of Columbia, MO-based Mid-Missouri Neonatology LLC. Although the transaction details were not disclosed, the acquisition was settled in cash and is expected to prove accretive to earnings immediately.
The private physician group practice provides delivery, neonatal, newborn nursery, pediatric and consultative services at Boone Hospital Center. The buyout is set to expand MEDNAX's service offerings across multiple specialties including maternal-fetal, neonatal, cardiac and hearing screen services.
We believe MEDNAX will continue to pursue acquisitions of expert private physician groups in different specialties like neonatology, anesthesiology, maternal-fetal medicine and pediatric cardiology specialties.
During full-year 2015, the company completed 12 acquisitions, of which 10 were physician group practices comprising 7 anesthesiology practices, 2 neonatology practices and 1 pediatric subspecialty practice. The company used approximately $850 million to fund its acquisition program.
MEDNAX reported revenues of $2.78 billion in the full year, highlighting an improvement of 14% from 2014 levels. Majority of the growth came from acquisitions that contributed $345.7 million in the year.
To date, in 2016, MEDNAX completed acquisitions of private physician groups like West End Anesthesia Group, Professional Anesthesia Associates and Lighthouse Anesthesia, based in Virginia, Tennessee and Georgia, respectively. The acquisitions will help MEDNAX to better serve hospital customers in the regions.
MEDNAX also bought Pediatric Ear, Nose and Throat Institute of South Texas (PENT) in San Antonio, TX. The acquisition expands MEDNAX's service offerings in the pediatric ear, nose and throat field as it provides every kind of ear, nose and throat medical, audiology and surgical services, including ear tubes, tonsillectomies and sinus surgery.
We believe that MEDNAX's nimble balance sheet will allow it to pursue acquisitions in the future as well. In Jun 2015, the company amended its credit facility, which increased the revolving loan commitments to $1.7 billion from $1.3 billion in addition to a $200 million term loan. As of Dec, 31, 2015, available borrowings under MEDNAX's credit facility were $1.4 billion.
Zacks Rank & Key Picks
MEDNAX has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include PRA Health Sciences PRAH , HCA Holdings HCA and VCA Inc WOOF . While PRA Health sports a Zacks Rank #1 (Strong Buy), both HCA and VCA carry a Zacks Rank #2 (Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.