Full Press Release Details
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Senior Vice President,
Finance and Strategy
Third Quarter Results
FORT LAUDERDALE, Fla., November 6, 2020 MEDNAX, Inc. (NYSE: MD), the national health solutions
partner specializing in prenatal, neonatal, and pediatric services, today reported a net loss of $41.0 million, or $0.49 per share for the three months ended September 30, 2020, primarily reflecting a
non-cash loss on the classification of the MEDNAX Radiology Solutions medical group to assets held for sale. On a non-GAAP basis, MEDNAX reported Adjusted EPS from
continuing operations of $0.37.
On September 9, MEDNAX entered into a definitive agreement to sell MEDNAX Radiology Solutions. The
results for MEDNAX Radiology Solutions have been classified as discontinued operations beginning with the third quarter of 2020, and prior period results have been conformed to the current period presentation for comparison purposes. For the third
quarter of 2020, MEDNAX Radiology Solutions generated net revenue and Adjusted EBITDA of $125.8 million and $21.1 million, respectively.
For the 2020 third quarter, MEDNAX reported the following results from continuing operations:
We believe the meaningful recovery in patient volumes experienced during the third quarter demonstrates the critical nature of services
our affiliated physicians and clinicians provide to their patients across the spectrum of women s and children s care, said Mark S. Ordan, Chief Executive Officer of MEDNAX. In addition, we achieved several important
milestones, in particular our announced definitive agreement to sell MEDNAX Radiology Solutions. This transaction will enable us to focus fully on our core services within our Pediatrix and Obstetrix Medical Groups, which we believe will enable us
to support our practices, grow efficiently and effectively, and drive strong bottom line results.
Operating Results from Continuing Operations Three Months Ended September 30, 2020
In addition to the announced agreement to sell MEDNAX Radiology Solutions, as previously disclosed, on May 6, 2020, MEDNAX completed the
sale of its anesthesiology medical group, American Anesthesiology. The Company s discussion of its results from continuing operations for the three and nine months ended September 30, 2020 and the prior-year periods excludes the operating
results from these businesses. Additionally, quarterly results from continuing operations, including non-GAAP metrics and a reconciliation to the most directly comparable GAAP measures, for 2019 and 2020 are
available on the Company s website.
During the 2020 third quarter, MEDNAX s operations continued to be impacted by reductions
in patient volumes and revenue as a result of the COVID-19 pandemic, although this impact was less significant than that experienced during the first half of 2020. The impact to net revenue was relatively
consistent throughout the quarter.
MEDNAX s net revenue for the three months ended September 30, 2020 was $460.6 million,
compared to $454.9 million for the prior-year period. MEDNAX s overall same-unit revenue declined by 0.4 percent, offset by growth attributable to recent acquisitions. During the 2020 third quarter, the Company received
$14.2 million from the provider relief fund established by the Coronavirus Aid, Relief, and Economic Security ( CARES ) Act, which was recorded as miscellaneous revenue and increased the Company s same-unit revenue from net
reimbursement-related factors by 3.1 percent.
Same-unit revenue attributable to patient volume decreased by 4.3 percent for the
2020 third quarter as compared to the prior-year period, and as compared to a decrease of approximately 9.0 percent for the 2020 second quarter. In each case this decline was primarily attributable to the impacts from the COVID-19 pandemic.
For the quarter, same-unit patient volumes within the Company s hospital-based
Pediatrix and Obstetrix services lines, which include neonatal intensive care unit (NICU) and other NICU related services, declined by approximately five percent.
Within hospital-based services, NICU patient days decreased by 3.9 percent for the third quarter compared to the prior-year period, which
reflects lower births at the hospitals where MEDNAX-affiliated practices provide neonatology services and a lower rate of admission into the NICU, partially offset by a modest increase in average length of stay. For the 2020 third quarter, total
births at the hospitals where MEDNAX-affiliated practices provide neonatology services declined year-over-year by 3.2 percent, as compared to an increase of 1.7 percent year-over-year for the 2019 third quarter.
For the quarter, same-unit patient volumes within the Company s office-based service lines, which include maternal-fetal medicine,
pediatric cardiology and other pediatric subspecialty services, declined by approximately five percent. This decline was driven by declines in pediatric cardiology and other patient volumes and only a slight decline in maternal-fetal medicine
Same-unit revenue from net reimbursement-related factors increased by 3.9 percent for
the 2020 third quarter as compared to the prior-year period. The net increase in revenue from net reimbursement-related factors reflects funds received under the CARES Act and modest improvements in managed care contracting, partially offset by a
reduction in revenue from a decrease in the percentage of services reimbursed by commercial and other non-government payors. The percentage of patients reimbursed under commercial and other non-government programs decreased by approximately 85 basis points compared with the prior-year period.
For the 2020 third quarter, practice salaries and benefits expense was $309.9 million, compared to $301.3 million for the prior-year
period, an increase of $8.6 million. This increase primarily reflects approximately $6 million related to the incentive compensation impact from provider relief funds received under the CARES Act during the third quarter of 2020.
For the 2020 third quarter, general and administrative expenses were $66.3 million, as compared to $63.3 million for the prior-year
period. General and administrative expenses for the 2020 third quarter include approximately $10 million in expenses incurred as part of the Company s transitional services being provided to the buyer of American Anesthesiology, partially
offset by salary and net staffing reductions. MEDNAX was reimbursed for these transition services expenses and recorded such reimbursement as a component of investment and other income within non-operating
As previously disclosed, MEDNAX has incurred certain expenses related to transformational and restructuring activities. For the
third quarter of 2020, these expenses totaled $34.3 million, compared to $12.8 million for the third quarter of 2019. Of the expense recorded during the third quarter of 2020, $26.7 million related to executive management and board of
directors restructuring, while the remainder related to third-party consulting fees, contract termination fees, and position eliminations.
Adjusted EBITDA from continuing operations, which is defined as earnings from continuing operations before interest, taxes, depreciation and
amortization, and transformational and restructuring related expenses, was $72.7 million for the 2020 third quarter, compared to $69.3 million for the prior-year period. Funds received from the provider relief fund established by the CARES
Act impacted Adjusted EBITDA positively by approximately $8 million for the 2020 third quarter.
Depreciation and amortization
expense was $7.2 million for the third quarter of 2020 compared to $6.4 million for the third quarter of 2019.
other income was $10.5 million for the third quarter of 2020 compared to $0.8 million for the third quarter of 2019. This increase primarily represents the reimbursement related to the transition services being provided to American
Interest expense was $27.3 million for the third quarter of 2020 compared to $29.9 million for the third
quarter of 2019. This decline primarily reflects lower average borrowings compared to the prior-year period.
MEDNAX generated a loss from continuing operations of $2.7 million, or $0.03 per
diluted share, for the 2020 third quarter, based on a weighted average 83.9 million shares outstanding. This compares with income from continuing operations of $12.9 million, or $0.16 per diluted share, for the 2019 third quarter, based on
a weighted average 82.9 million shares outstanding.
For the third quarter of 2020, MEDNAX reported Adjusted EPS from continuing
operations of $0.37, compared to $0.38 for the third quarter of 2019. For these periods, Adjusted EPS from continuing operations is defined as diluted (loss) income from continuing operations per common and common equivalent share excluding non-cash amortization expense, stock-based compensation expense, transformational and restructuring related expenses and discrete tax items.
Operating Results from Continuing Operations Nine Months Ended September 30, 2020
For the nine months ended September 30, 2020, MEDNAX generated revenue from continuing operations of $1.32 billion, effectively
unchanged from the prior-year period. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2020 was $161.6 million, compared to $187.0 million for the prior year. MEDNAX reported a loss from continuing
operations of $14.1 million, or $0.17 per share, for the nine months ended September 30, 2020, based on a weighted average 83.3 million shares outstanding, which compares to income from continuing operations of $32.3 million, or
$0.38 per share, based on a weighted average 84.3 million shares outstanding for the first nine months of 2019. For the nine months ended September 30, 2020, MEDNAX reported Adjusted EPS from continuing operations of $0.70, compared to
$0.96 for the same period of 2019.
Financial Position and Cash Flow Continuing Operations
MEDNAX had cash and cash equivalents of $294.5 million at September 30, 2020, compared to $132.2 million on June 30, 2020,
and net accounts receivable were $267.1 million.
During the third quarter of 2020, MEDNAX generated cash from continuing operations
of $127.1 million, compared to $56.7 million during the third quarter of 2019, primarily reflecting lower income tax payments in 2020.
At September 30, 2020, MEDNAX had no outstanding borrowings under its $1.2 billion revolving credit facility and had total debt
outstanding of $1.75 billion, consisting solely of its senior notes, and net debt of $1.46 billion.
Our cash inflows and
reduced net debt demonstrate MEDNAX s strong financial profile, especially given the challenges presented to the Company and all healthcare providers thus far in 2020, said Marc Richards, Executive Vice President and Chief Financial
Officer. Including the anticipated proceeds from the sale of MEDNAX Radiology Solutions, we expect to be well positioned to reduce our total borrowings, support our practices internally, and fund our strategic growth in the future.
Discontinued Operations
The results for MEDNAX Radiology Solutions, American Anesthesiology and MedData, the
Company s former management services organization, are presented as discontinued operations for the three and nine months ended September 30, 2020 and all prior periods as relevant.
During the third quarter of 2020, the Company reported a loss from discontinued operations of $38.4 million, which predominantly reflects
a loss on the classification of MEDNAX Radiology Solutions as assets held for sale as of September 30, 2020.
A reconciliation of Adjusted EBITDA from continuing operations and Adjusted EPS from continuing operations to the most directly comparable GAAP
measures for the three and nine months ended September 30, 2020 and 2019 and Adjusted EBITDA for MEDNAX Radiology Solutions to the most directly comparable GAAP measure for the three months ended September 30, 2020 is provided in the
financial tables of this press release.
Earnings Conference Call
MEDNAX, Inc. will host an investor conference call to discuss the quarterly results at 9 a.m., ET today. The conference call Webcast may be
accessed from the Company s Website, www.mednax.com. A telephone replay of the conference call will be available from 1:00 p.m. ET today through midnight ET November 19, 2020 by dialing 866.207.1041, access Code 6818509. The replay
will also be available at www.mednax.com.
MEDNAX, Inc. is a national health solutions partner comprised of the nation s leading providers of physician services. Physicians and advanced
practitioners practicing as part of MEDNAX are reshaping the delivery of care within their specialties and subspecialties, using evidence-based tools, continuous quality initiatives, consulting services, clinical research and telemedicine
to enhance patient outcomes and provide high-quality, cost-effective care. The Company was founded in 1979, and today, through its affiliated professional corporations, MEDNAX provides services through a network of more than 3,000
physicians in all 50 states and Puerto Rico. Additional information is available at www.mednax.com.
Certain statements and
information in this press release may be deemed to contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the Securities
Act ), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may include, but are not limited to, statements relating to the Company s objectives, plans and strategies, and all statements,
other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as
believe, hope, may, anticipate, should, intend, plan, will, expect, estimate, project, positioned,
strategy and similar expressions, and are based on assumptions and assessments made by the Company s management in light of their experience and their perception of historical trends, current conditions, expected future developments