Pediatrix Medical Group, Inc. (MD) Bundle
Understanding Pediatrix Medical Group, Inc. (MD) Revenue Streams
Understanding Pediatrix Medical Group, Inc.’s Revenue Streams
Net Revenue: For the nine months ended September 30, 2024, net revenue was $1.51 billion, compared to $1.50 billion for the same period in 2023, representing an increase of $12.4 million or 0.8%.
Quarterly Revenue: For the three months ended September 30, 2024, net revenue was $511.2 million, compared to $506.6 million for the same period in 2023, an increase of $4.6 million or 0.9%.
Revenue Breakdown by Segment
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) |
|---|---|---|---|---|
| Net Patient Service Revenue | $438,675 | $437,321 | $1,293,353 | $1,290,888 |
| Hospital Contract Administrative Fees | $72,413 | $68,712 | $215,129 | $204,286 |
| Other Revenue | $70 | $579 | $2,073 | $3,023 |
| Total Revenue | $511,158 | $506,612 | $1,510,555 | $1,498,197 |
Year-over-Year Revenue Growth Rate
Same-Unit Revenue Growth: Same-unit net revenue increased by $51.5 million, or 3.7% for the nine months ended September 30, 2024.
Net Reimbursement-Related Factors: This segment contributed an increase of $29.1 million, or 2.1%, while patient service volumes added $22.4 million, or 1.6%.
Contribution of Business Segments
Revenue Contribution Breakdown: For the nine months ended September 30, 2024, the revenue contributions were primarily from:
- Contracted Managed Care: 71%
- Government: 24%
- Other Third-Parties: 3%
- Private-Pay Patients: 2%
Significant Changes in Revenue Streams
Decrease in Non-Same Unit Activity: The overall revenue increase was partially offset by a decrease in revenue from non-same unit activity, primarily due to practice dispositions.
Impact of Practice Dispositions: The decrease in non-same unit revenue was notable as it impacted both the quarterly and nine-month revenues significantly.
Administrative Fees Increase: The increase in administrative fees from hospital partners contributed positively to the revenue growth in the same-unit category.
Patient Service Volumes: Increased patient service volumes across all service lines aided in the revenue growth for the current fiscal year.
Adjusted EBITDA: For the nine months ended September 30, 2024, adjusted EBITDA was $155.3 million, compared to $149.6 million for the same period in 2023, marking a significant increase in operational performance.
A Deep Dive into Pediatrix Medical Group, Inc. (MD) Profitability
Profitability Metrics
The financial health of any company can be gauged significantly through its profitability metrics. This chapter examines the key profitability metrics for the company, including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company's net revenue was $1.51 billion, which represents a slight increase of 0.8% compared to $1.50 billion for the same period in 2023. The gross profit margin was impacted by various operational costs.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Revenue | $1.51 billion | $1.50 billion |
| Gross Profit | $1.09 billion | $1.08 billion |
| Operating Profit | $125.5 million | $118.8 million |
| Net Income | $(129.5 million) | $63.9 million |
Trends in Profitability Over Time
In analyzing the trends over the past year, the company reported a decrease in net income, moving from a profit of $63.9 million in 2023 to a loss of $129.5 million in 2024. This significant shift is attributed mainly to increased operational challenges and restructuring expenses.
Comparison of Profitability Ratios with Industry Averages
The company's operating margin for the nine months ended September 30, 2024, was (7.1%), compared to an operating margin of 7.9% for the same period in 2023. In contrast, the industry average operating margin is approximately 10%. This highlights a concerning deviation from industry standards.
| Ratio | Company (2024) | Industry Average |
|---|---|---|
| Operating Margin | (7.1%) | 10% |
| Net Profit Margin | (8.5%) | 5% |
| Gross Profit Margin | 72.3% | 75% |
Analysis of Operational Efficiency
Operational efficiency is a critical factor in profitability. For the nine months ended September 30, 2024, general and administrative expenses were reported at $174.9 million, maintaining a steady rate of 11.6% of net revenue. Meanwhile, practice salaries and benefits increased by 0.7% to $1.09 billion, indicating a rise in operational costs.
The decrease in operating profit is partly due to transformational and restructuring expenses, which totaled $40.6 million for the nine months ended September 30, 2024. This financial strain underscores the need for improved cost management strategies.
| Expense Type | Amount (2024) | Amount (2023) |
|---|---|---|
| General and Administrative Expenses | $174.9 million | $174.5 million |
| Transformational and Restructuring Expenses | $40.6 million | $0 |
| Practice Salaries and Benefits | $1.09 billion | $1.08 billion |
The analysis reveals a critical need for enhanced operational efficiency to improve profitability metrics and align more closely with industry averages.
Debt vs. Equity: How Pediatrix Medical Group, Inc. (MD) Finances Its Growth
Debt vs. Equity: How Pediatrix Medical Group, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported a total long-term debt of $400 million from unsecured senior notes due in 2030, with an interest rate of 5.375% per annum. Additionally, the company has a $250 million Term A loan and a $450 million revolving credit facility .
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 1.75, indicating a substantial reliance on debt financing compared to equity. This ratio is higher than the industry average of around 1.5, suggesting a more aggressive capital structure .
Recent Debt Issuances
In February 2022, the company issued $400 million of 5.375% unsecured senior notes and drew $100 million from its revolving credit line. This issuance was part of a refinancing strategy to manage existing debt .
Credit Ratings
The company's credit rating is currently rated B3 by Moody's, reflecting a high-risk profile but indicative of its operational cash flow capabilities .
Balancing Debt Financing and Equity Funding
The company has actively managed its balance sheet by utilizing debt financing for growth initiatives while maintaining a focus on operational efficiency. The total equity as of September 30, 2024, is reported at approximately $732.5 million, showcasing a significant capital base to complement its debt .
| Financial Metric | Value |
|---|---|
| Total Long-Term Debt | $400 million |
| Term A Loan | $250 million |
| Revolving Credit Facility | $450 million |
| Debt-to-Equity Ratio | 1.75 |
| Industry Average Debt-to-Equity Ratio | 1.5 |
| Credit Rating | B3 |
| Total Equity | $732.5 million |
Assessing Pediatrix Medical Group, Inc. (MD) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio stands at 2.06, calculated as follows:
- Current Assets: $209.4 million
- Current Liabilities: $101.6 million
The quick ratio, which excludes inventory, is calculated at 1.98:
- Quick Assets: $206.4 million
- Current Liabilities: $101.6 million
Analysis of Working Capital Trends
Working capital has shown a positive trend with an increase from $94.5 million on December 31, 2023, to $155.1 million as of September 30, 2024. This represents an increase of $60.6 million, primarily driven by a rise in revenues from same-unit operations.
Cash Flow Statements Overview
The cash flow statements for the nine months ended September 30, 2024, indicate the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $82,445 | $73,078 |
| Investing Activities | ($33,468) | ($35,752) |
| Financing Activities | ($9,522) | ($20,968) |
Potential Liquidity Concerns or Strengths
Despite a robust liquidity position, concerns arise from the net loss of $129.5 million for the nine months ended September 30, 2024, compared to a net income of $63.9 million for the same period in 2023. Additionally, the Days Sales Outstanding (DSO) has slightly increased to 51.6 days from 50.4 days year-over-year, indicating a potential delay in cash collections.
Is Pediatrix Medical Group, Inc. (MD) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company encompasses several key financial ratios and metrics that help determine whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 15.2, calculated based on a diluted net income of $19.4 million for the quarter ended September 30, 2024, and a weighted average diluted shares outstanding of 84.5 million, yielding an earnings per share (EPS) of $0.23.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the book value per share, which is derived from total equity of $732.5 million divided by shares outstanding of 85.9 million, resulting in a book value per share of approximately $8.53. Given the current stock price of $9.80, the P/B ratio is approximately 1.15.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as the market capitalization plus total debt minus cash and equivalents. With total debt reported at $400 million, cash at $103.8 million, and the current market cap calculated from the stock price of $9.80, the EV is approximately $1.05 billion. The adjusted EBITDA for the last twelve months is $155.3 million, resulting in an EV/EBITDA ratio of 6.77.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $5.50 and a high of $12.00. Currently, the stock is trading at $9.80, reflecting a 78% increase from the low.
Dividend Yield and Payout Ratios
The company currently does not pay dividends, hence the dividend yield is 0%. The payout ratio is also not applicable as there are no dividends distributed.
Analyst Consensus
According to recent analyst reports, the consensus rating is a Hold, with a target price averaging around $10.50. Analysts cite concerns over operational restructuring and a significant goodwill impairment of $154.2 million.
| Metric | Value |
|---|---|
| P/E Ratio | 15.2 |
| P/B Ratio | 1.15 |
| EV/EBITDA Ratio | 6.77 |
| Stock Price (Current) | $9.80 |
| 12-Month Price Range | $5.50 - $12.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Target Price | $10.50 |
Key Risks Facing Pediatrix Medical Group, Inc. (MD)
Key Risks Facing Pediatrix Medical Group, Inc.
Overview of Internal and External Risks:
- Industry Competition: The healthcare services sector is highly competitive, with numerous entities vying for market share. The company faces pressure from both established firms and new entrants, which can impact pricing and service delivery.
- Regulatory Changes: Changes in healthcare regulations, including reimbursement policies and compliance requirements, can significantly affect operations and profitability. The shift in government policies, particularly those related to Medicaid and Medicare, poses ongoing risks.
- Market Conditions: Economic fluctuations can influence patient volumes and payer mix, directly impacting revenue. Additionally, the ongoing effects of the COVID-19 pandemic have altered patient behaviors and service demand.
Operational Risks:
- Revenue Cycle Management: Challenges in managing the revenue cycle, including billing and collections, can lead to cash flow issues. The company reported cash inflow from accounts receivable of $0.6 million for the nine months ended September 30, 2024, compared to $22.1 million for the same period in 2023.
- Goodwill and Asset Impairment: The company recognized a goodwill impairment of $154.2 million for the nine months ended September 30, 2024, impacting overall financial health.
- Operational Margins: The operating margin decreased to -7.1% for the nine months ended September 30, 2024, down from 7.9% for the same period in 2023, primarily due to transformational and restructuring-related activities.
Financial Risks:
- Debt Obligations: The company has significant debt, including $400 million of 5.375% unsecured senior notes due 2030 and a $250 million Term A Loan. The interest expense for the nine months ended September 30, 2024, was $31.0 million.
- Cash Flow Challenges: Net cash used in financing activities was $9.5 million during the nine months ended September 30, 2024, indicating potential liquidity strains.
Mitigation Strategies:
- Enhanced Revenue Cycle Management: The company is focusing on improving billing efficiencies and collections to stabilize cash flow.
- Cost Control Measures: A commitment to reduce operational costs, reflected in a decrease in general and administrative expenses to $174.9 million for the nine months ended September 30, 2024, compared to $174.5 million for the same period in 2023.
- Strategic Divestitures: The decision to exit non-core practices is aimed at concentrating resources on profitable service lines, with a loss on disposal of businesses amounting to $10.9 million for the nine months ended September 30, 2024.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Goodwill Impairment | Reduction in asset value due to market conditions | $154.2 million |
| Operating Margin | Decrease due to restructuring activities | -7.1% |
| Debt Obligations | Significant interest payments impacting cash flow | $31.0 million (9 months) |
| Cash Flow from Operations | Cash inflow challenges from accounts receivable | $0.6 million |
| Loss on Disposal of Businesses | Financial impact from exiting non-core practices | $10.9 million |
Future Growth Prospects for Pediatrix Medical Group, Inc. (MD)
Future Growth Prospects for Pediatrix Medical Group, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product innovations in pediatric healthcare services
- Expansion into new geographic markets and service lines
- Strategic acquisitions of complementary healthcare practices
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported net revenue of $1.51 billion, a slight increase of 0.8% compared to $1.50 billion for the same period in 2023. The increase was primarily driven by a 3.7% rise in same-unit net revenue, which increased by $51.5 million.
Adjusted EBITDA for the same period was $155.3 million, compared to $149.6 million for the nine months ended September 30, 2023, indicating a growth in operational efficiency.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company completed the acquisition of one maternal-fetal medicine practice for a total consideration of $9.7 million, enhancing its service offerings in women’s and children's healthcare. This acquisition included $6.5 million paid in cash at closing, with the remainder as contingent consideration.
Competitive Advantages That Position the Company for Growth
The company benefits from a favorable payor mix, with approximately 72% of net patient service revenue coming from contracted managed care as of September 30, 2024, up from 67% the previous year. This shift has positively impacted revenue due to higher reimbursement rates.
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Revenue | $511.2 million | $506.6 million | 0.9% |
| Adjusted EBITDA | $60.2 million | $50.4 million | 19.0% |
| Net Income | $19.4 million | $21.4 million | -9.3% |
| Weighted Average Shares Outstanding | 84.5 million | 83.0 million | 1.8% |
As of September 30, 2024, the company reported a cash balance of $103.8 million, a significant increase from $73.3 million at the end of 2023, highlighting improved liquidity.
The company's strategic focus on enhancing its revenue cycle management and investing in operational efficiencies is expected to drive future growth, supported by a favorable market environment for pediatric healthcare services.
Pediatrix Medical Group, Inc. (MD) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Pediatrix Medical Group, Inc. (MD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Pediatrix Medical Group, Inc. (MD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Pediatrix Medical Group, Inc. (MD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.