Full Press Release Details
FOR MORE INFORMATION:
Vice President, Strategy and Investor Relations
954-384-0175, x 5692
Second Quarter GAAP EPS of $0.69;
Adjusted EPS of $0.85
FORT LAUDERDALE, Fla., July 28, 2017 MEDNAX, Inc. (NYSE: MD), the national health solutions partner specializing in neonatology,
anesthesiology, maternal-fetal medicine, other pediatric services, radiology, and management services, today reported earnings of $0.69 per diluted share for the three months ended June 30, 2017. On a non-GAAP basis, MEDNAX reported Adjusted
For the 2017 second quarter, MEDNAX reported the following results:
Our operating results for the second quarter were largely in
line with our expectations, said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX. The trends we experienced earlier in the year, in both payor mix for anesthesia services and volume trends in neonatal services, remained a
challenge during the quarter, impacting our same-unit revenue compared to the prior year. At the same time, we remain committed to growth in all of our specialties and to executing on the pipeline of opportunities we have developed. We also remain
committed to being the provider of choice to our partners, based on our investments in great patient care, clinical research, education, quality and safety.
MEDNAX s net revenue for the three months ended June 30, 2017 increased by 9.2 percent, to $842.9 million, from $771.8 million for
the prior-year period, driven by contributions from acquisitions completed since April 2016.
MEDNAX s revenue growth attributable to
recent acquisitions was 10.1 percent, while overall same-unit revenue decreased by 0.9 percent when compared to the prior year period.
Same-unit revenue from net reimbursement-related factors declined by 0.6 percent for the 2017 second quarter as compared to the prior-year
period. The net decrease in revenue was primarily due to an increase in the percentage of services reimbursed under government programs, partially offset by modest improvements in managed care contracting.
The percentage of services reimbursed under government programs increased by 90 basis points for the second quarter compared with the
prior-year period, driven by a 160 basis point shift to government payors for anesthesiology services.
Same-unit revenue attributable to
patient volume declined by 0.3 percent for the 2017 second quarter as compared to the prior-year period. Volume growth in anesthesiology was offset by declines in neonatalogy and other pediatric services. For the 2017 second quarter, same-unit
neonatal intensive care unit (NICU) patient days decreased by 0.4 percent compared to the prior-year period.
For the 2017 second quarter,
practice salaries and benefits expense was $561.4 million, compared to $484.6 million in the prior-year period. Practice salaries and benefits expense as a percentage of net revenue was 66.6 percent for the second quarter of 2017, compared to 62.8
percent in the prior-year period. This increase in expense as a percentage of revenue was primarily attributable to growth in compensation expense to support acquisition-related growth and growth at existing units, including compensation for
non-physician clinicians that increased at a faster pace than in previous periods.
For the 2017 second quarter, general and
administrative expenses were $103.0 million, as compared to $92.1 million for the prior-year period. General and administrative expenses as a percentage of net revenue was 12.2 percent for the second quarter of 2017, compared to 12.0 percent in the
Earnings before interest, taxes, depreciation and amortization expense (EBITDA) for the 2017 second quarter was $147.6
million, compared to $168.1 million for the prior-year period, or a decline of 12.2 percent. EBITDA as a percentage of net revenue was 17.5 percent for the second quarter of 2017, compared to 21.8 percent in the prior-year period, with this decline
primarily reflecting a decrease in same-unit revenue and higher operating expenses as well as impacts from the volume and mix of acquisitions completed since April 2016.
Depreciation and amortization expense was $25.7 million in the second quarter of 2017 compared to $20.2 million in the second quarter of 2016,
an increase of $5.5 million that primarily related to the amortization of intangible assets from recent acquisitions.
was $18.5 million in the second quarter of 2017 compared to $15.1 million in the second quarter of 2016, due primarily to an increase in the average amount of total borrowings between the two periods.
MEDNAX generated net income of $63.7 million for the 2017 second quarter, or $0.69 per diluted
share based on a weighted average 92.8 million shares outstanding. This compares with net income of $82.4 million, or $0.89 per diluted share, for the 2016 second quarter, based on a weighted average 92.9 million shares outstanding.
For the second quarter of 2017, MEDNAX reported Adjusted EPS of $0.85, compared to $1.03 for the second quarter of 2016. Adjusted EPS is
defined as diluted net income attributable to MEDNAX, Inc. per common and common equivalent share excluding non-cash amortization expense and stock-based compensation expense.
For the six months ended June 30, 2017, MEDNAX generated revenue of $1.68 billion, up 10.1 percent from $1.52 billion for the prior-year
period. EBITDA for the six months ended June 30, 2017 was $279.3 million, compared to $312.1 million for the prior year. MEDNAX earned net income of $118.4 million, or $1.27 per share, through June 30, 2017, based on a weighted average
93.0 million shares outstanding, which compares to net income of $150.3 million, or $1.62 per share, based on a weighted average 93.0 million shares outstanding for the first half of 2016. For the six months ended June 30, 2017,
MEDNAX reported Adjusted EPS of $1.60, compared to $1.90 in the same period of 2016.
MEDNAX had cash and cash equivalents of $40.4
million at June 30, 2017, and net accounts receivable were $480.4 million.
During the second quarter of 2017, MEDNAX generated cash
flow from operations of $137.6 million, which compares to $149.7 million during the 2016 second quarter.
MEDNAX used approximately $4.6
million during the 2017 second quarter to fund acquisitions and to make contingent purchase price payments for previously completed acquisitions. During the quarter, one physician group was acquired.
At June 30, 2017, MEDNAX had total net debt outstanding of $1.8 billion, consisting primarily of its borrowings under its revolving
credit facility, senior notes and term loan. At June 30, 2017, the amount of additional borrowing capacity available under the Company s revolving credit facility was approximately $840 million.
2017 Third Quarter Outlook
quarter, MEDNAX expects earnings per share will be in a range of $0.66 to $0.71 per diluted share and Adjusted EPS will be in a range of $0.83 to $0.88. The Adjusted EPS range excludes approximately $0.11 per diluted share of estimated amortization
expense and $0.06 per diluted share of estimated stock-based compensation expense.
Additionally, for the 2017 third quarter, MEDNAX
expects that EBITDA will decline by 17 percent to 21 percent, compared to the prior-year period. As compared to the 12.2 percent decline in EBITDA in the second quarter of 2017, this expectation incorporates the impact of the anniversary of
contributions from certain acquisitions completed during the third quarter of 2016.
This outlook assumes that total same-unit revenue
growth for the three months ended September 30, 2017 will be in a range of flat to negative two percent, compared to the prior-year period.
This outlook also assumes an effective tax rate for the third quarter of 2017 of approximately 39
percent. Our effective income tax rate of 31.4 percent for the third quarter of 2016 included the favorable impact from the settlement of a tax matter. Excluding this favorable settlement, the effective income tax rate was 39 percent.
A reconciliation of EBITDA
and Adjusted EPS to the most directly comparable GAAP measures for the three and six months ended June 30, 2017 and 2016 is provided in the financial tables of this press release. Additionally, historical reconciliations of EBITDA and Adjusted
EPS to the most directly comparable GAAP measures as well as the reconciliation of forward-looking EBITDA to the most directly comparable GAAP measure are available on the Company s website at www.mednax.com/investors.
Earnings Conference Call
host an investor conference call to discuss the quarterly results at 10 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 12:00 p.m. ET today through midnight ET August 18, 2017 by dialing 800.475.6701, access Code 427369. 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, 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 3,725 physicians in all 50 states and Puerto Rico. In addition to its national physician network, MEDNAX provides services to healthcare facilities and physicians in over 40 states through two
complementary businesses, consisting of a management services company and a consulting services company. 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, 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 our 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 MEDNAX s management in light of their experience and their
perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements in this press release are made as of the date hereof, and MEDNAX undertakes no duty to
update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could
cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in MEDNAX s most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q, including the sections
entitled Risk Factors , as well MEDNAX s current reports on Form 8-K, filed with the Securities and Exchange Commission.
Consolidated Statements of Income
(in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net revenue | $ | 842,944 | $ | 771,759 | $ | 1,678,541 | $ | 1,524,383 | ||||||||
| Operating expenses: | ||||||||||||||||
| Practice salaries and benefits | 561,418 | 484,625 | 1,133,803 | 976,436 | ||||||||||||
| Practice supplies and other operating expenses | 30,872 | 26,992 | 58,668 | 54,038 | ||||||||||||
| General and administrative expenses | 103,015 | 92,116 | 206,780 | 182,066 | ||||||||||||
| Depreciation and amortization | 25,735 | 20,241 | 51,349 | 39,825 | ||||||||||||
| Total operating expenses | 721,040 | 623,974 | 1,450,600 | 1,252,365 | ||||||||||||
| Income from operations | 121,904 | 147,785 | 227,941 | 272,018 | ||||||||||||
| Investment and other income | 365 | 410 | 941 | 1,028 | ||||||||||||
| Interest expense | (18,535 | ) | (15,058 | ) | (36,287 | ) | (29,521 | ) | ||||||||
| Equity in earnings of unconsolidated affiliate | 689 | 789 | 1,486 | 1,583 | ||||||||||||
| Total non-operating expenses | (17,481 | ) | (13,859 | ) | (33,860 | ) | (26,910 | ) | ||||||||
| Income before income taxes | 104,423 | 133,926 | 194,081 | 245,108 | ||||||||||||
| Income tax provision | 40,725 | 51,601 | 75,692 | 95,012 | ||||||||||||
| Net income | 63,698 | 82,325 | 118,389 | 150,096 | ||||||||||||
| Net loss attributable to noncontrolling interests | 102 | 230 | ||||||||||||||
| Net income attributable to MEDNAX, Inc. | $ | 63,698 | $ | 82,427 | $ | 118,389 | $ | 150,326 | ||||||||
| Net income attributable to MEDNAX, Inc. per common and common equivalent share (diluted) | $ | 0.69 | $ | 0.89 | $ | 1.27 | $ | 1.62 | ||||||||
| Weighted average diluted shares outstanding | 92,812 | 92,945 | 92,977 | 93,018 |
Reconciliation of Net Income Attributable to MEDNAX, Inc. to EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net income attributable to MEDNAX, Inc. | $ | 63,698 | $ | 82,427 | $ | 118,389 | $ | 150,326 | ||||||||
| Interest expense, net (1) | 17,481 | 13,859 | 33,860 | 26,910 | ||||||||||||
| Income tax provision | 40,725 | 51,601 | 75,692 | 95,012 | ||||||||||||
| Depreciation and amortization | 25,735 | 20,241 | 51,349 | 39,825 | ||||||||||||
| EBITDA | $ | 147,639 | $ | 168,128 | $ | 279,290 | $ | 312,073 |
Reconciliation of Diluted Net Income per Share Attributable to MEDNAX, Inc.
to Adjusted Diluted Net Income per Share Attributable to MEDNAX, Inc. ( Adjusted EPS )
(in thousands, except per share data)
| Three Months Ended June 30, | ||||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Weighted average dilutive shares outstanding | 92,812 | 92,945 | ||||||||||||||
| Net income and diluted net income per share attributable to MEDNAX, Inc. | $ | 63,698 | $ | 0.69 | $ | 82,427 | $ | 0.89 | ||||||||
| Adjustments: | ||||||||||||||||
| Amortization (net of tax of $6,800 and $5,175) | 10,636 | 0.11 | 8,266 | 0.09 | ||||||||||||
| Stock-based compensation (net of tax of $2,826 and $3,206) | 4,420 | 0.05 | 5,121 | 0.05 | ||||||||||||
| Adjusted net income and diluted EPS | $ | 78,754 | $ | 0.85 | $ | 95,814 | $ | 1.03 | ||||||||
| Six Months Ended June 30, | ||||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Weighted average dilutive shares outstanding | 92,977 | 93,018 | ||||||||||||||
| Net income and diluted net income per share attributable to MEDNAX, Inc. | $ | 118,389 | $ | 1.27 | $ | 150,326 | $ | 1.62 | ||||||||
| Adjustments: | ||||||||||||||||
| Amortization (net of tax of $13,644 and $10,288) | 21,340 | 0.23 | 16,276 | 0.17 | ||||||||||||
| Stock-based compensation (net of tax of $5,764 and $6,677) | 9,017 | 0.10 | 10,563 | 0.11 | ||||||||||||
| Adjusted net income and diluted EPS | $ | 148,746 | $ | 1.60 | $ | 177,165 | $ | 1.90 |
Balance Sheet Highlights
| As of | As of | |||||||
| June 30, 2017 | December 31, 2016 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 40,423 | $ | 55,698 | ||||
| Short-term investments | 11,161 | 11,286 | ||||||
| Accounts receivable, net | 480,402 | 495,276 | ||||||
| Other current assets | 25,584 | 24,868 | ||||||
| Intangible assets, net | 643,002 | 668,529 | ||||||
| Goodwill, other assets, property and equipment | 4,206,824 | 4,083,743 | ||||||
| Total assets | $ | 5,407,396 | $ | 5,339,400 | ||||
| Liabilities and shareholders equity: | ||||||||
| Accounts payable and accrued expenses | $ | 320,051 | $ | 407,938 | ||||
| Total debt | 1,773,171 | 1,705,682 | ||||||
| Other liabilities | 475,926 | 465,013 | ||||||
| Total liabilities | 2,569,148 | 2,578,633 | ||||||
| Total shareholders equity | 2,838,248 | 2,760,767 | ||||||
| Total liabilities and shareholders equity | $ | 5,407,396 | $ | 5,339,400 |