pediatrix(MD) - 2024 Q3 - Quarterly Report

Financial Performance - Net income for the three months ended September 30, 2024, was $19.4 million, a decrease from$21.4 million in the same period of 2023[50]. - Adjusted EBITDA increased to $60.2 million for the three months ended September 30, 2024, compared to$50.4 million for the same period in 2023, reflecting a favorable impact from same-unit results and practice disposition activity[50]. - Net revenue for the three months ended September 30, 2024, was $511.2 million, up 0.9$506.6 million in the same period of 2023, driven by a 5.2% increase in same-unit net revenue[50]. - The operating margin decreased to 6.6% for the three months ended September 30, 2024, down from 7.9% in the same period of 2023, primarily due to transformational and restructuring related activities[50]. - General and administrative expenses were $58.1 million for the three months ended September 30, 2024, compared to$57.4 million in the same period of 2023, with expenses as a percentage of net revenue at 11.4%[50]. - Diluted net income per share was $0.23 for the three months ended September 30, 2024, down from$0.26 in the same period of 2023[51]. - Adjusted EPS rose to $0.44 for the three months ended September 30, 2024, compared to$0.32 for the same period in 2023[51]. - Net revenue for the nine months ended September 30, 2024, was $1.51 billion, a slight increase of$12.4 million or 0.8% compared to $1.50 billion in the same period of 2023[52]. - Same-unit net revenue increased by$51.5 million, or 3.7%, driven by a $29.1 million increase from net reimbursement-related factors and a$22.4 million increase related to patient service volumes[52]. - Loss from operations was $108.0 million for the nine months ended September 30, 2024, compared to income from operations of$118.8 million for the same period in 2023, resulting in an operating margin of (7.1)%[52]. - Adjusted EBITDA increased to $155.3 million for the nine months ended September 30, 2024, compared to$149.6 million for the same period in 2023[53]. - Cash provided by operating activities was $82.4 million for the nine months ended September 30, 2024, an increase of$9.3 million from $73.1 million in the same period of 2023[56]. Impairments and Losses - For the nine months ended September 30, 2024, the company recorded fixed asset impairments of$20.1 million, intangible asset impairments of $7.7 million, and operating lease right-of-use asset impairments of$10.6 million[40]. - A non-cash goodwill impairment charge of $130.0 million was recorded due to a decline in market capitalization, resulting in a total non-cash charge of$154.2 million[42]. - The total loss on disposal of two primary and urgent care practices was $10.6 million, with the first practice divested in Q2 2024 and the second in Q3 2024[41]. - Goodwill impairment was$154.2 million for the nine months ended September 30, 2024, primarily due to a sustained stock price decline[53]. - Transformational and restructuring related expenses amounted to $18.6 million for the three months ended September 30, 2024[50]. Regulatory and Compliance Risks - The expiration of the COVID-19 national emergency may impact Medicaid coverage and access to services, increasing regulatory and compliance risks[44]. - The company is subject to the No Surprises Act, which may limit the amounts charged for out-of-network services, potentially affecting financial performance[43]. Company Strategy and Operations - The company plans to exit almost all affiliated office-based practices, with completion expected by December 31, 2024, to focus on hospital-based and maternal-fetal medicine[40]. - The company operates a national network of affiliated physicians providing services in 37 states, focusing on neonatal and maternal-fetal care[38]. - The company has incurred transformational and restructuring related expenses, which are excluded from non-GAAP financial measures[46]. Tax and Interest Rates - The effective income tax rate was 23.0$10.1 million, slightly down from $10.4 million in the same period of 2023[50]. - A 1$2.2 million per year based on the outstanding balance of $218.8 million[64]. Cash and Liabilities - As of September 30, 2024, cash and cash equivalents were$103.8 million, up from $73.3 million at December 31, 2023[54]. - Working capital increased to$155.1 million at September 30, 2024, from $94.5 million at December 31, 2023[54]. - As of September 30, 2024, the outstanding principal balance on the Amended Credit Agreement was$218.8 million, with $450.0 million available[61]. - The company had an outstanding principal balance of$400.0 million on the 2030 Notes, accruing interest at a rate of 5.375% per annum, totaling $21.5 million payable semi-annually[61]. - Total liability related to professional liability risks was$284.2 million, with $29.0 million classified as current liability[61]. - The company anticipates that funds generated from operations, along with current cash and available funds, will be sufficient to meet working capital requirements and contractual obligations for at least the next 12 months[61].