Shares of Pediatrix Medical Group, Inc. MD gained 7.4% since it reported second-quarter 2024 results on Aug 6. Positive investor sentiment might have been caused due to stable patient volumes and improved hospital contract administrative fees. However, the upside was partly offset by an increased expense level resulting from rising practice salaries and benefits, and transformational and restructuring-related costs.
MD reported second-quarter 2024 adjusted earnings per share (EPS) of 34 cents, which outpaced the Zacks Consensus Estimate by 9.7%. However, the bottom line declined 12.8% year over year.
Net revenues inched up 0.7% year over year to $504.3 million on the back of growth in same-unit revenues. The top line, however, missed the consensus mark of $506 million.
Pediatrix Medical Group, Inc. Price, Consensus and EPS Surprise
Pediatrix Medical Group, Inc. price-consensus-eps-surprise-chart | Pediatrix Medical Group, Inc. Quote
Q2 Update
Overall, same-unit revenues increased 2.8% year over year. Same-unit revenues, attributable to patient volume, grew 0.4% year over year.
Same-unit revenues from net reimbursement-related factors inched up 2.4%, attributable to decent growth in hospital contract administrative fees and improved payor mix.
MD’s total operating costs of $662 million increased 46.4% year over year, higher than our estimate of $470.1 million. The rise was due to higher practice salaries and benefits, practice supplies and other operating expenses, coupled with the incurrence of transformational and restructuring-related expenses and goodwill impairment, amongst others, in the second quarter.
Practice salaries and benefits increased 1.1% on a year-over-year basis. This is mainly due to rising same-unit clinical compensation costs, partially offset by the impact of practice dispositions. Meanwhile, practice supplies and other expenses witnessed an uptick of 4.1% year over year. Our estimate indicated the two expense components to increase 3.2% and 6.7%, respectively, on a year-over-year basis. General and administrative expenses declined 2.5% year over year in the second quarter against our estimate of a 0.6% rise.
Transformational and restructuring-related costs of $13.6 million stemmed from revenue cycle management transition activities and practice dispositions.
Interest expenses of $10.3 million declined 8% year over year and came higher than our estimate of $9.9 million.
Pediatrix incurred a net loss of $153 million against a net income of $28.3 million in the year-ago period.
Adjusted EBITDA fell 2.1% year over year to $57.9 million but beat our estimate of $51 million.
Financial Update (as of Jun 30, 2024)
Pediatrix exited the second quarter with cash and cash equivalents of $19.4 million compared with $73.3 million at 2023-end. There was no leftover capacity as part of its revolving credit facility at the quarter-end.
Total assets of $2 billion slipped 10% from the figure at 2023-end.
Total debt, including finance leases, net, amounted to $630.4 million, which declined 0.5% from the figure as of Dec 31, 2023.
Total shareholders’ equity of $706.5 million declined 16.8% from the 2023-end level.
Net cash used in operating activities was $18.3 million, while the cash usage totaled $11.9 million in the prior-year quarter.
Share Repurchase Update
Pediatrix bought back a nominal number of its common shares for $0.9 million in the first half of 2024. It had a leftover capacity of $3.7 million under its $500 million repurchase program (approved in August 2018) as of Jun 30, 2024.
2024 View Revised
Management continues to forecast adjusted EBITDA between $200 million and $220 million for 2024. The mid-point of the annual guidance indicates a 4.8% improvement from the 2023 reported figure.
Interest expense is estimated to be $40.02 million, indicating a 4.9% decline from the 2023 figure.
Depreciation and amortization expenses are estimated to be $37 million.
Transformational and restructuring-related expenses are expected at $40 million. Income tax expense is forecasted to be in the range of $2.58-$7.98 million.
Net loss is estimated to be between $112.51 million and $97.91 million.
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 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Elevance Health, Inc. ELV and HCA Healthcare, Inc. HCA beat the Zacks Consensus Estimate.
UnitedHealth Group reported a second-quarter 2024 adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year in the quarter under review on the back of strong performance in its UnitedHealthcare and Optum business lines. The top line outpaced the consensus mark of $98.7 billion.
Elevance Health reported second-quarter 2024 adjusted EPS of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%.
HCA Healthcare reported a second-quarter 2024 adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year in the quarter under review. The top line outpaced the consensus mark by 2.2%.
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