Full Press Release Details
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On December 15, 2020,
Mednax, Inc., a Florida corporation ( the Company ), pursuant to the previously disclosed Securities Purchase Agreement, dated as of September 9, 2020, by and between Mednax Services, Inc., a Florida corporation ( Mednax
Services ), and Radiology Partners, Inc., a Delaware corporation ( Buyer ), the Company completed the divestiture of Redwood Radiology, LLC, a Delaware limited liability company and wholly owned subsidiary of Mednax Services, which
owns the Company s radiology and teleradiology services medical group, Mednax Radiology Solutions ( Mednax Radiology ), (the Divestiture ). The purchase consideration was comprised of a cash payment of $885 million
paid at closing, subject to certain cash, minimum net working capital, indebtedness and other adjustments. The Company received approximately $865 million at closing and intends to use the proceeds of the transaction to redeem its
$750 million in outstanding principal amount of 5.25% senior notes due in 2023 (the 2023 Notes ) with a redemption date of January 7, 2021.
The Divestiture is considered a significant disposition for the Company. As a result, the Company prepared the accompanying unaudited pro
forma condensed consolidated financial information in accordance with Article 11 of Regulation S-X.
The Company presented its operations for Mednax Radiology as discontinued operations in its condensed consolidated financial statements
included in the Company s Form 10-Q for the three and nine months ended September 30, 2020. The accompanying unaudited pro forma condensed consolidated balance sheet gives effect to the Divestiture
as if it occurred on September 30, 2020, the end of the most recent period for which a balance sheet is required. The accompanying unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2020
and for the years ended December 31, 2019, 2018, and 2017 gives effect to the Divestiture as if it occurred on January 1, 2017. In addition, the unaudited pro forma condensed consolidated statements of income for the years ended
December 31, 2019, 2018, and 2017 give effect to the divestiture of the Company s anesthesiology medical group that was divested in May 2020 (collectively referred to as the Divestitures ) as if it occurred on January 1,
2017, for which the unaudited pro forma results were previously disclosed on a Current Report on Form 8-K filed on May 12, 2020.
The accompanying unaudited pro forma condensed consolidated financial information includes pro forma adjustments that are directly
attributable to the Divestitures and are factually supportable. Pro forma adjustments are presented for informational purposes only and are described in the accompanying notes based on information and assumptions currently available at the time of
the filing of the Current Report on Form 8-K. The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the Company s results of operations or financial
condition would have been had the Divestiture been completed on the date indicated above. In addition, it is not necessarily indicative of the Company s future results of operations or financial condition.
The accompanying unaudited pro forma condensed consolidated financial information should be read in conjunction with (i) the audited
consolidated financial statements and accompanying notes and Management s Discussion and Analysis of Financial Condition and Results of Operations included in the Company s Annual Report on Form
10-K for the year ended December 31, 2019, and (ii) the unaudited condensed consolidated financial statements and accompanying notes and Management s Discussion and Analysis of Financial
Conditions and Results of Operations included in the Company s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2020
| Mednax, Inc. Historical Financial Statements as Reported | Pro Forma Adjustments Related to Mednax Radiology Divestiture Activity | Adjustments Related to the Redemption of the 2023 Notes and Excess Cash | Pro Forma | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 294,512 | $ | 92,027 | A | $ | 386,539 | |||||||||
| Short-term investments | 81,574 | 81,574 | ||||||||||||||
| Accounts receivable, net | 267,125 | 267,125 | ||||||||||||||
| Prepaid expenses | 13,317 | 13,317 | ||||||||||||||
| Income taxes receivable | 22,797 | 22,797 | ||||||||||||||
| Other current assets | 20,287 | 20,287 | ||||||||||||||
| Assets held for sale | 951,548 | (951,548 | ) B | |||||||||||||
| Total current assets | 1,651,160 | (951,548 | ) | 92,027 | 791,639 | |||||||||||
| Property and equipment, net | 78,570 | 78,570 | ||||||||||||||
| Goodwill | 1,480,668 | 1,480,668 | ||||||||||||||
| Intangible assets, net | 27,665 | 27,665 | ||||||||||||||
| Operating lease right-of-use assets | 58,993 | 58,993 | ||||||||||||||
| Deferred income taxes | 62,950 | 62,950 | ||||||||||||||
| Other assets | 64,820 | 64,820 | ||||||||||||||
| Total assets | $ | 3,424,826 | $ | (951,548 | ) | $ | 92,027 | $ | 2,565,305 | |||||||
| LIABILITIES AND EQUITY | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 388,517 | $ | (13,125 | ) A | $ | 375,392 | |||||||||
| Current portion of finance leases | 2,440 | 2,440 | ||||||||||||||
| Current portion of operating leases | 18,695 | 18,695 | ||||||||||||||
| Liabilities held for sale | 78,712 | (78,712 | ) B | |||||||||||||
| Total current liabilities | 488,364 | (78,712 | ) | (13,125 | ) | 396,527 | ||||||||||
| Long-term debt, net | 1,732,805 | (744,923 | ) A | 987,882 | ||||||||||||
| Long-term finance leases | 9,458 | 9,458 | ||||||||||||||
| Long-term operating leases | 40,220 | 40,220 | ||||||||||||||
| Long-term professional liabilities | 242,366 | 242,366 | ||||||||||||||
| Deferred income taxes | 63,630 | 63,630 | ||||||||||||||
| Other liabilities | 42,977 | 42,977 | ||||||||||||||
| Total liabilities | 2,619,820 | (78,712 | ) | (758,048 | ) | 1,783,060 | ||||||||||
| Commitments and contingencies | ||||||||||||||||
| Total equity | 805,006 | (872,836 | ) | 850,075 | C | 782,245 | ||||||||||
| Total liabilities and equity | $ | 3,424,826 | $ | (951,548 | ) | $ | 92,027 | $ | 2,565,305 |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial
Unaudited Pro Forma Condensed Consolidated Statement of Income
Nine Months Ended September 30, 2020
(in thousands, except per share data)
| Mednax, Inc. Historical Financial Statements as Reported | Pro Forma Adjustments | Pro Forma | ||||||||||
| Net revenue | $ | 1,317,321 | $ | 1,317,321 | ||||||||
| Practice salaries and benefits | 909,168 | 909,168 | ||||||||||
| Practice supplies and other operating expense | 66,455 | 66,455 | ||||||||||
| General and administrative expense | 194,276 | 194,276 | ||||||||||
| Depreciation and amortization | 20,749 | 20,749 | ||||||||||
| Transformation and restructuring related expenses | 60,846 | 60,846 | ||||||||||
| Total operating expenses | 1,251,494 | 1,251,494 | ||||||||||
| Income from operations | 65,827 | 65,827 | ||||||||||
| Investment and other income | 13,064 | 920 | D | 13,984 | ||||||||
| Interest expense | (83,180 | ) | 30,736 | E | (52,444 | ) | ||||||
| Equity in earnings of unconsolidated affiliate | 1,081 | 1,081 | ||||||||||
| Total non-operating expenses | (69,035 | ) | 31,656 | (37,379 | ) | |||||||
| (Loss) income from continuing operations before income taxes | (3,208 | ) | 31,656 | 28,448 | ||||||||
| Income tax provision | (10,859 | ) | (7,914 | ) F | (18,773 | ) | ||||||
| (Loss) income from continuing operations | (14,067 | ) | 23,742 | 9,675 | ||||||||
| Loss from discontinued operations | (718,125 | ) | 718,125 | G | ||||||||
| Net (loss) income | $ | (732,192 | ) | $ | 741,867 | $ | 9,675 | |||||
| (Loss) income from continuing operations: | ||||||||||||
| Basic | $ | (0.17 | ) | $ | 0.29 | $ | 0.12 | |||||
| Diluted | $ | (0.17 | ) | $ | 0.29 | $ | 0.12 | |||||
| (Loss) income from discontinued operations: | ||||||||||||
| Basic | $ | (8.62 | ) | $ | 8.62 | $ | ||||||
| Diluted | $ | (8.62 | ) | $ | 8.62 | $ | ||||||
| Net (loss) income | ||||||||||||
| Basic | $ | (8.79 | ) | $ | 8.91 | $ | 0.12 | |||||
| Diluted | $ | (8.79 | ) | $ | 8.91 | $ | 0.12 | |||||
| Weighted average common shares | ||||||||||||
| Basic | 83,260 | 83,260 | ||||||||||
| Diluted | 83,260 | 83,777 | H |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2019
(in thousands, except per share data)
| I | ||||||||||||||||||||||||
| Mednax, Inc. Historical Financial Statements as Reported | Pro Forma Adjustments Related to Prior Divestiture Activity | Pro Forma Results (Adjusted for Prior Divestiture Activity) | Pro Forma Adjustments Related to Mednax Radiology Divestiture Activity | Adjustments Related to the Redemption of the 2023 Notes and Excess Cash | Pro Forma Results (Combined) | |||||||||||||||||||
| Net revenue | $ | 3,513,542 | $ | (1,250,359 | ) | $ | 2,263,183 | $ | (483,424 | ) | $ | 1,779,759 | ||||||||||||
| Practice salaries and benefits | 2,508,778 | (1,008,515 | ) | 1,500,263 | (319,504 | ) | 1,180,759 | |||||||||||||||||
| Practice supplies and other operating expense | 112,766 | (12,392 | ) | 100,374 | (4,463 | ) | 95,911 | |||||||||||||||||
| General and administrative expense | 404,643 | (76,258 | ) | 328,385 | (83,873 | ) | 244,512 | |||||||||||||||||
| Depreciation and amortization | 78,860 | (22,652 | ) | 56,208 | (30,277 | ) | 25,931 | |||||||||||||||||
| Transformation and restructuring related expenses | 95,329 | (31,719 | ) | 63,610 | (2,720 | ) | 60,890 | |||||||||||||||||
| Goodwill impairment | 1,449,215 | (1,331,291 | ) | 117,924 | (117,924 | ) | ||||||||||||||||||
| Total operating expenses | 4,649,591 | (2,482,827 | ) | 2,166,764 | (558,761 | ) | 1,608,003 | |||||||||||||||||
| Income from operations | (1,136,049 | ) | 1,232,468 | 96,419 | 75,337 | 171,756 | ||||||||||||||||||
| Investment and other income | 5,671 | (3 | ) | 5,668 | (1,982 | ) | 1,841 | D | 5,527 | |||||||||||||||
| Interest expense | (119,381 | ) | 73 | (119,308 | ) | 380 | 39,375 | E | (79,553 | ) | ||||||||||||||
| Equity in earnings of unconsolidated affiliate | 7,779 | (39 | ) | 7,740 | (5,470 | ) | 2,270 | |||||||||||||||||
| Total non-operating expenses | (105,931 | ) | 31 | (105,900 | ) | (7,072 | ) | 41,216 | (71,756 | ) | ||||||||||||||
| (Loss) income from continuing operations before income taxes | (1,241,980 | ) | 1,232,499 | (9,481 | ) | 68,265 | 41,216 | 100,000 | ||||||||||||||||
| Income tax benefit (provision) | 91,886 | (113,021 | ) | (21,135 | ) | 4,559 | (10,304 | ) F | (26,880 | ) | ||||||||||||||
| (Loss) income from continuing operations | (1,150,094 | ) | 1,119,478 | (30,616 | ) | 72,824 | 30,912 | 73,120 | ||||||||||||||||
| Loss from discontinued operations | (347,608 | ) | 347,608 | J | ||||||||||||||||||||
| Net (loss) income | $ | (1,497,702 | ) | $ | 1,467,086 | $ | (30,616 | ) | $ | 72,824 | $ | 30,912 | $ | 73,120 | ||||||||||
| (Loss) income from continuing operations: | ||||||||||||||||||||||||
| Basic | $ | (13.78 | ) | $ | 0.88 | |||||||||||||||||||
| Diluted | $ | (13.78 | ) | $ | 0.87 | |||||||||||||||||||
| (Loss) income from discontinued operations: | ||||||||||||||||||||||||
| Basic | $ | (4.16 | ) | $ | ||||||||||||||||||||
| Diluted | $ | (4.16 | ) | $ | ||||||||||||||||||||
| Net (loss) income | ||||||||||||||||||||||||
| Basic | $ | (17.94 | ) | $ | 0.88 | |||||||||||||||||||
| Diluted | $ | (17.94 | ) | $ | 0.87 | |||||||||||||||||||
| Weighted average common shares | ||||||||||||||||||||||||
| Basic | 83,495 | 83,495 | ||||||||||||||||||||||
| Diluted | 83,495 | 84,057 | H |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2018
(in thousands, except per share data)
| I | ||||||||||||||||||||||||
| Mednax, Inc. Historical Financial Statements as Reported | Pro Forma Adjustments Related to Prior Divestiture Activity | Pro Forma Results (Adjusted for Prior Divestiture Activity) | Pro Forma Adjustments Related to Mednax Radiology Divestiture Activity | Adjustments Related to the Redemption of the 2023 Notes and Excess Cash | Pro Forma Results (Combined) | |||||||||||||||||||
| Net revenue | $ | 3,454,810 | $ | (1,287,662 | ) | $ | 2,167,148 | $ | (444,041 | ) | $ | 1,723,107 | ||||||||||||
| Practice salaries and benefits | 2,426,376 | (1,024,600 | ) | 1,401,776 | (276,105 | ) | 1,125,671 | |||||||||||||||||
| Practice supplies and other operating expense | 108,851 | (14,664 | ) | 94,187 | (1,712 | ) | 92,475 | |||||||||||||||||
| General and administrative expense | 403,934 | (83,269 | ) | 320,665 | (88,447 | ) | 232,218 | |||||||||||||||||
| Depreciation and amortization | 83,832 | (30,128 | ) | 53,704 | (29,349 | ) | 24,355 | |||||||||||||||||
| Total operating expenses | 3,022,993 | (1,152,661 | ) | 1,870,332 | (395,613 | ) | 1,474,719 | |||||||||||||||||
| Income from operations | 431,817 | (135,001 | ) | 296,816 | (48,428 | ) | 248,388 | |||||||||||||||||
| Investment and other income | 5,211 | 3 | 5,214 | (2,163 | ) | 2,761 | D | 5,812 | ||||||||||||||||
| Interest expense | (88,789 | ) | 557 | (88,232 | ) | (4,713 | ) | 39,375 | E | (53,570 | ) | |||||||||||||
| Equity in earnings of unconsolidated affiliate | 6,825 | 6,825 | 889 | 7,714 | ||||||||||||||||||||
| Total non-operating expenses | (76,753 | ) | 560 | (76,193 | ) | (5,987 | ) | 42,136 | (40,044 | ) | ||||||||||||||
| Income from continuing operations before income taxes | 355,064 | (134,441 | ) | 220,623 | (54,415 | ) | 42,136 | 208,344 | ||||||||||||||||
| Income tax provision | (96,453 | ) | 34,761 | (61,692 | ) | 16,998 | (10,534 | ) F | (55,228 | ) | ||||||||||||||
| Income from continuing operations | 258,611 | (99,680 | ) | 158,931 | (37,417 | ) | 31,602 | 153,116 | ||||||||||||||||
| Income from discontinued operations | 10,018 | (10,018 | ) J | |||||||||||||||||||||
| Net income | $ | 268,629 | $ | (109,698 | ) | $ | 158,931 | $ | (37,417 | ) | $ | 31,602 | $ | 153,116 | ||||||||||
| Income from continuing operations: | ||||||||||||||||||||||||
| Basic | $ | 2.84 | $ | 1.68 | ||||||||||||||||||||
| Diluted | $ | 2.82 | $ | 1.67 | ||||||||||||||||||||
| Income from discontinued operations: | ||||||||||||||||||||||||
| Basic | $ | 0.11 | $ | |||||||||||||||||||||
| Diluted | $ | 0.11 | $ | |||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Basic | $ | 2.95 | $ | 1.68 | ||||||||||||||||||||
| Diluted | $ | 2.93 | $ | 1.67 | ||||||||||||||||||||
| Weighted average common shares | ||||||||||||||||||||||||
| Basic | 91,104 | 91,104 | ||||||||||||||||||||||
| Diluted | 91,606 | 91,606 |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2018
(in thousands, except per share data)
| I | ||||||||||||||||||||||||
| Mednax, Inc. Historical Financial Statements as Reported | Pro Forma Adjustments Related to Prior Divestiture Activity | Pro Forma Results (Adjusted for Prior Divestiture Activity) | Pro Forma Adjustments Related to Mednax Radiology Divestiture Activity | Adjustments Related to the Redemption of the 2023 Notes and Excess Cash | Pro Forma Results (Combined) | |||||||||||||||||||
| Net revenue | $ | 3,253,391 | $ | (1,327,634 | ) | $ | 1,925,757 | $ | (277,301 | ) | $ | 1,648,456 | ||||||||||||
| Practice salaries and benefits | 2,227,335 | (1,000,067 | ) | 1,227,268 | (178,716 | ) | 1,048,552 | |||||||||||||||||
| Practice supplies and other operating expense | 106,444 | (14,798 | ) | 91,646 | (5,879 | ) | 85,767 | |||||||||||||||||
| General and administrative expense | 385,864 | (86,888 | ) | 298,976 | (62,771 | ) | 236,205 | |||||||||||||||||
| Depreciation and amortization | 78,856 | (33,487 | ) | 45,369 | (22,789 | ) | 22,580 | |||||||||||||||||
| Total operating expenses | 2,798,499 | (1,135,240 | ) | 1,663,259 | (270,155 | ) | 1,393,104 | |||||||||||||||||
| Income from operations | 454,892 | (192,394 | ) | 262,498 | (7,146 | ) | 255,352 | |||||||||||||||||
| Investment and other income | 4,385 | 4,385 | (2,758 | ) | 3,681 | D | 5,308 | |||||||||||||||||
| Interest expense | (74,556 | ) | 604 | (73,952 | ) | 299 | 39,375 | E | (34,278 | ) | ||||||||||||||
| Equity in earnings of unconsolidated affiliate | 952 | 952 | (256 | ) | 696 | |||||||||||||||||||
| Total non-operating expenses | (69,219 | ) | 604 | (68,615 | ) | (2,715 | ) | 43,056 | (28,274 | ) | ||||||||||||||
| Income from continuing operations before income taxes | 385,673 | (191,790 | ) | 193,883 | (9,861 | ) | 43,056 | 227,078 | ||||||||||||||||
| Income tax provision | (80,231 | ) | 74,253 | (5,978 | ) | 4,312 | (16,361 | ) F | (18,027 | ) | ||||||||||||||
| Income from continuing operations | 305,442 | (117,537 | ) | 187,905 | (5,549 | ) | 26,695 | 209,051 | ||||||||||||||||
| Income from discontinued operations | 14,930 | (14,930 | ) J | |||||||||||||||||||||
| Net income | $ | 320,372 | $ | (132,467 | ) | $ | 187,905 | $ | (5,549 | ) | $ | 26,695 | $ | 209,051 | ||||||||||
| Income from continuing operations: | ||||||||||||||||||||||||
| Basic | $ | 3.31 | $ | 2.26 | ||||||||||||||||||||
| Diluted | $ | 3.29 | $ | 2.25 | ||||||||||||||||||||
| Income from discontinued operations: | ||||||||||||||||||||||||
| Basic | $ | 0.16 | $ | |||||||||||||||||||||
| Diluted | $ | 0.16 | $ | |||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Basic | $ | 3.47 | $ | 2.26 | ||||||||||||||||||||
| Diluted | $ | 3.45 | $ | 2.25 | ||||||||||||||||||||
| Weighted average common shares | ||||||||||||||||||||||||
| Basic | 92,431 | 92,431 | ||||||||||||||||||||||
| Diluted | 92,958 | 92,958 |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements included herein were prepared in accordance with Article 11 of Regulation S-X and are based on historical financial information of the Company. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed consolidated financial
statements to give effect to pro forma events that are (1) directly attributable to the Divestitures and (2) factually supportable. Certain information and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States have been condensed or omitted from this report, as is permitted by such rules and regulations. The Divestiture meets the definition of discontinued operations, as defined
by Accounting Standards Codification 205-20 Discontinued Operations (ASC 250-20).
The accompanying unaudited pro forma condensed consolidated financial statements are based on the Company s Annual Report on Form 10-K for the year ended December 31, 2019, and the Company s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2020. The
unaudited pro forma condensed consolidated balance sheet as of September 30, 2020 gives effect to the Divestiture as if it had occurred on September 30, 2020. The unaudited pro forma condensed consolidated statement of income for the nine
months ended September 30, 2020 gives effect to the Divestiture and for the years ended December 31, 2019, 2018 and 2017 gives effect to the Divestitures as if they had occurred on January 1, 2017, the beginning of the earliest period