Reports Fourth-Quarter EPS of $0.89 and
Full-Year EPS of $3.18
Expects First Quarter 2015 EPS of $0.68 to
$0.72
MEDNAX, Inc. (NYSE:MD), the national medical group specializing
in neonatal, anesthesia, maternal-fetal, pediatric cardiology and
other pediatric physician services, today reported earnings of
$0.89 per diluted share for the three months ended December 31,
2014, an increase of 14% over the prior-year period.
For the 2014 fourth quarter compared to the prior year period,
MEDNAX reported:
- Revenue growth of 14.7 percent to $651
million;
- Operating income growth of 13.9 percent
to $141 million; and
- Net income growth of 11.9 percent to
$88 million.
“Our strong fourth-quarter operating results concluded a very
successful year for us, with double-digit growth in revenue,
operating income and earnings per share,” said Roger J. Medel,
M.D., Chief Executive Officer of MEDNAX. “Our same-unit revenue
growth showed continued strength in volumes. We completed an
additional four practice acquisitions during the quarter, bringing
our total to 11 for the year, and including two non-practice
acquisitions, we made 2014 the most active acquisition year in our
company’s history. We also repurchased more than $360 million of
our stock during the fourth quarter, complementing our acquisition
activity to increase shareholder value through the use of our
capital. As we look forward to 2015, we continue to see attractive
opportunities in our acquisition pipeline, and we believe we enter
the year very favorably positioned to add further value to our
physicians and our hospital partners through our complementary and
increasingly diverse service offerings and the ability to enhance
both the outcomes and cost-effectiveness of our patient care.”
Operating Results
MEDNAX’s net revenue for the three months ended December 31,
2014 increased by 14.7 percent, to $650.5 million, from $567.4
million for the comparable prior-year period, driven by a mix of
contributions from acquisitions completed since October 2013 and
same-unit growth.
MEDNAX’s revenue growth attributable to contributions from
recently acquired practices was 10.1 percent, while overall
same-unit revenue grew by 4.6 percent when compared to the prior
year period.
During the three months ended December 31, 2014, MEDNAX recorded
parity revenue from payors within those states that were then
paying at Medicare rates for Medicaid services as a result of the
Patient Protection and Affordable Care Act. MEDNAX’s fourth quarter
results for both the 2014 and 2013 periods include approximately
$17 million in parity revenue that contributed approximately $0.05
to its net income per diluted share, reflecting the impacts of
incentive compensation expense and income taxes.
Same-unit growth attributable to patient volume was 3.2 percent
for the 2014 fourth quarter as compared to the prior-year period.
Volume growth in our anesthesia, neonatology, other pediatric
services and maternal-fetal medicine was partially offset by a
decline in pediatric cardiology services. For the 2014 fourth
quarter, compared to the 2013 period, same-unit neonatal intensive
care unit (NICU) patient days were up 3.0 percent.
Same-unit growth from net reimbursement-related factors was 1.4
percent. This was principally due to continued modest improvements
in reimbursements received from third-party commercial payors
resulting from the Company’s ongoing contract renewal process.
On a same-unit basis, the percentage of services reimbursed
under government programs decreased by 30 basis points for the 2014
fourth quarter compared with the prior-year period.
For the 2014 fourth quarter, general and administrative expenses
were $67.6 million, as compared to $55.6 million for the prior-year
period, a growth rate of 21.6 percent. General and administrative
expenses as a percentage of net patient service revenue was 10.4
percent for the fourth quarter of 2014, compared to 9.8 percent in
the prior-year period, due to the mix of acquisitions completed
over the past year.
Operating income for the 2014 fourth quarter was $141.1 million,
up 13.9 percent from $123.9 million for the prior-year period.
Operating margin was 21.7 percent for the 2014 fourth quarter, as
compared to 21.8 percent for the prior-year period.
MEDNAX generated net income of $88.4 million for the 2014 fourth
quarter, or $0.89 per diluted share based on a weighted average
99.1 million shares outstanding. This compares with net income of
$79.0 million, or $0.78 per diluted share, for the 2013 fourth
quarter, based on a weighted average 101.1 million shares
outstanding.
For the year ended December 31, 2014, MEDNAX generated revenue
of $2.4 billion, up 13.2% from the prior year. Operating income for
the year grew by 13.5% to $513.0 million, up from $452.1 million
for the prior year. MEDNAX earned net income of $317.3 million, or
$3.18 per diluted share, for the year ended December 31, 2014,
based on a weighted average 99.9 million shares outstanding, which
compares to net income of $280.5 million, or $2.78 per diluted
share, based on a weighted average 101.0 million shares, for the
year ended December 31, 2013.
MEDNAX had cash and cash equivalents of $47.9 million at
December 31, 2014, and net accounts receivable were $352.2
million.
During the fourth quarter of 2014, MEDNAX generated cash flow
from operations of $178.8 million, as compared to $139.2 million in
the prior year period.
MEDNAX used approximately $135.7 million of its cash during the
2014 fourth quarter and $495.2 million during the full year to fund
acquisitions and to make contingent purchase price payments for
previously completed acquisitions. During the fourth quarter of
2014, four physician group practices were acquired. For the full
year 2014, MEDNAX acquired a total of 11 physician group practices,
including eight anesthesiology practices, one neonatology practice,
one maternal-fetal medicine practice and one pediatric cardiology
practice, as well as completing two complementary, non-practice
acquisitions.
Also during the fourth quarter of 2014, MEDNAX used $360.7
million to fund repurchases of its common stock as part of an
authorization by the Company’s Board of Directors to repurchase up
to $600 million of the Company’s common stock, announced on October
30, 2014. These repurchases were effected through open market
purchases and an accelerated share repurchase program, announced on
December 15, 2014. Including repurchases completed earlier in the
year, MEDNAX repurchased a total of $488 million of its common
stock during 2014.
2015 First Quarter Outlook
For the 2015 first quarter, MEDNAX expects earnings will be in a
range of $0.68 to $0.72 per diluted share. This outlook assumes
that total same-unit revenue for the three months ended March 31,
2015 will grow by one percent to three percent from the prior-year
period, including an approximately one percent unfavorable impact
on pricing from the decrease in parity revenue from the 2014 first
quarter.
Included in the outlook for the 2015 first quarter is
approximately $0.02 per diluted share from Medicaid parity,
reflecting the impacts from incentive compensation expense and
income taxes, compared to $0.04 per share in the 2014 first
quarter.
MEDNAX’s results from operations for the 2015 first quarter,
when compared on a sequential basis to the 2014 fourth quarter,
will be affected by annual seasonality. These factors include
impacts on net patient service revenue during the first quarter, on
a sequential basis, because there are fewer calendar days than in
the fourth quarter, as well as a significant increase in expenses
associated with Social Security payroll taxes that are higher at
the beginning of every year, as compared to the fourth quarter of
each year. These recurring items reduce MEDNAX’s operating income,
net income, and earnings per share for the first quarter of each
year, relative to other quarters throughout the year.
Earnings conference call
MEDNAX, Inc., will host an investor conference call to discuss
the quarterly results at 10 a.m., E.S.T. 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
noon Eastern Time today through midnight E.S.T. February 12, 2015
by dialing 800.475.6701, access Code 351624. The replay will also
be available at www.mednax.com.
ABOUT MEDNAX
MEDNAX, Inc. is a national medical group comprised of the
nation's leading providers of neonatal, anesthesia, maternal-fetal
and pediatric physician subspecialty 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 and
clinical research to enhance patient outcomes and provide
high-quality, cost-effective care. Pediatrix Medical Group, a
division of MEDNAX, was founded in 1979 and includes neonatal
physicians who provide services at more than 360 neonatal intensive
care units, and collaborate with affiliated maternal-fetal
medicine, pediatric cardiology, pediatric critical care and other
physician subspecialists to provide a clinical care continuum.
Pediatrix is also the nation's largest provider of newborn hearing
screens. American Anesthesiology, a division of MEDNAX, was
established in 2007 and includes more than 2,350 anesthesiologists
and advanced practitioners who provide anesthesia care to patients
in connection with surgical and other procedures as well as pain
management. MEDNAX, through its affiliated professional
corporations, employs more than 2,625 physicians in 34 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, 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.
MEDNAX, INC. Consolidated Statements of Income (in
thousands, except per share data) (Unaudited)
Three Months Ended
December 31,
12 Months Ended
December 31,
2014 2013 2014 2013
Net revenue $ 650,525 $ 567,387 $ 2,438,913 $ 2,154,012
Operating expenses: Practice salaries and benefits 404,345 353,316
1,543,395 1,361,318 Practice supplies and other operating expenses
23,549 24,027 89,002 82,388 General and administrative expenses
67,641 55,636 247,527 218,209 Depreciation and amortization
13,903 10,491 45,990 39,966 Total operating
expenses 509,438 443,470 1,925,914
1,701,881 Income from operations 141,087 123,917 512,999 452,131
Investment income 195 526 2,728 1,696 Interest expense (3,313)
(1,046) (8,891) (5,415) Equity in earnings of unconsolidated
affiliate 905 — 1,780 — Total
non-operating expenses (2,213) (520) (4,383)
(3,719) Income before income taxes 138,874 123,397 508,616
448,412 Income tax provision 50,594 44,423
191,413 167,895 Net income 88,280 78,974 317,203 280,517 Net
loss attributable to
noncontrolling interests
118
—
78
—
Net income attributable to MEDNAX, Inc. $ 88,398 $ 78,974 $ 317,281
$ 280,517 Net income attributable to MEDNAX, Inc.
common and common equivalent share
(diluted)
$
0.89
$
0.78
$
3.18
$
2.78
Weighted average shares used in computing
net income attributable to MEDNAX,
Inc.
per common and common equivalent share
(diluted)
99,129
101,080
99,887
100,969
Balance Sheet Highlights
(in thousands)
(Unaudited) As of As of
December 31, 2014 December 31, 2013 Assets:
Cash and cash equivalents $ 47,928 $ 31,137 Short-term investments
6,035 6,457 Accounts receivable, net 352,191 285,397 Other current
assets 60,898 45,134 Goodwill, other assets, property and equipment
3,141,743 2,640,591 Total assets $ 3,608,795 $
3,008,716
Liabilities and equity: Accounts payable
and accrued expenses $ 380,658 $ 308,754 Total debt 569,320 27,235
Other liabilities 393,251 329,739 Total liabilities
1,343,229 665,728 Total equity 2,265,566 2,342,988
Total liabilities and equity $ 3,608,795 $ 3,008,716
MEDNAX, Inc.Charles Lynch, 954-384-0175, Ext. 5692Vice
President, Strategy and Investor
Relationscharles_lynch@mednax.com
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