pediatrix(US:MD)2025-11-03 12:00Financial Performance - Net revenue for the three months ended September 30, 2025, was $492.9 million, a decrease of $18.3 million, or 3.6%, compared to $511.2 million in the same period in 2024[77]. - Same-unit net revenue increased by $35.6 million, or 8.0%, driven by a $33.9 million increase from net reimbursement-related factors and a $1.7 million increase from patient service volumes[77]. - Income from operations increased by $34.3 million, or 101.2%, to $68.1 million for the three months ended September 30, 2025, with an operating margin of 13.8% compared to 6.6% in 2024[85]. - Adjusted EBITDA for the three months ended September 30, 2025, was $87.3 million, compared to $60.2 million for the same period in 2024[88]. - Net income for the three months ended September 30, 2025, was $71.7 million, compared to $19.4 million in 2024[88]. - For the nine months ended September 30, 2025, net revenue was $1.42 billion, a decrease of $90.5 million, or 6.0%, compared to $1.51 billion in 2024[90]. - Adjusted EPS for the three months ended September 30, 2025, was $0.67, compared to $0.44 for the same period in 2024[89]. - Total non-operating income was $19.7 million for the three months ended September 30, 2025, compared to total non-operating expenses of $8.6 million in 2024[86]. - Income from operations increased by $268.0 million, or 248.2%, to $160.0 million for the nine months ended September 30, 2025, compared to a loss of $108.0 million in 2024[98]. - Net income was $131.7 million for the nine months ended September 30, 2025, compared to a net loss of $129.5 million for the same period in 2024[101]. - Adjusted EBITDA rose to $209.7 million for the nine months ended September 30, 2025, from $155.3 million in 2024[101]. - Cash provided by operating activities was $160.1 million for the nine months ended September 30, 2025, compared to $82.4 million for the same period in 2024[106]. - Days sales outstanding (DSO) improved to 43.1 days at September 30, 2025, down from 51.6 days at September 30, 2024[108]. - Total non-operating income was $10.8 million for the nine months ended September 30, 2025, compared to net non-operating expenses of $26.7 million in 2024[99]. Operational Changes - As of December 31, 2024, the exits of pediatric office-based practices were completed, with a focus returning to hospital-based and maternal-fetal medicine services[66]. - The company exited its primary and urgent care service line during 2024 due to the high costs and time required to scale[66]. - The company operates a national network of affiliated physicians providing services in 37 states, focusing on neonatal and maternal-fetal care[64]. - The company is transitioning to a hybrid revenue cycle management model, which is part of its transformation initiatives[124]. - The company is focusing on growth strategies for its hospital-based and maternal-fetal businesses[124]. - The company is assessing the timing and contribution of future acquisitions or organic growth initiatives[124]. Regulatory and Market Risks - The No Surprises Act, effective January 1, 2022, limits out-of-network providers from sending surprise medical bills, which could materially affect the company's financial condition and results of operations[67][69]. - The Patient Protection and Affordable Care Act has altered healthcare delivery and reimbursement, with potential changes that could adversely impact the company's business[70]. - The One Big Beautiful Bill Act, signed into law on July 4, 2025, reforms the Medicaid program, which may affect reimbursements for services provided by the company[72]. - The effects of economic conditions and healthcare reforms, including the Medicare Access and CHIP Reauthorization Act, are being monitored for their impact on the business[124]. - Relationships with government-sponsored healthcare programs and managed care organizations are critical to the company's operations[124]. - The company is facing risks related to state budgetary constraints and uncertainty over the future of Medicaid[124]. - The company is subject to market risk primarily from exposure to changes in interest rates due to its financing and investing activities[125]. - A 1% change in interest rates would result in an impact to income before taxes of approximately $2.0 million per year[125]. - The company intends to manage interest rate risk through a combination of fixed rate and variable rate debt[125]. Cost Management - The company has experienced rising costs of managed care premiums and patient responsibility amounts, leading to increased bad debt[65]. - General and administrative expenses were $60.8 million for the three months ended September 30, 2025, an increase of $2.7 million from $58.1 million in 2024, with expenses as a percentage of net revenue rising to 12.3% from 11.4%[81]. - Practice salaries and benefits decreased by $32.6 million, or 8.9%, to $332.3 million for the three months ended September 30, 2025[79]. - Transformational and restructuring related expenses were $16.4 million for the nine months ended September 30, 2025, down from $40.6 million for the same period in 2024[96]. Cash and Debt Management - As of September 30, 2025, cash and cash equivalents were $340.1 million, up from $229.9 million at December 31, 2024[104]. - The company had an outstanding principal balance of $201.6 million on the Amended Credit Agreement as of September 30, 2025[116]. - The company anticipates that funds generated from operations will be sufficient to finance working capital requirements and fund anticipated acquisitions for at least the next 12 months[121]. - The company had an outstanding principal balance of $201.6 million on its Amended Credit Agreement under the Term A Loan as of September 30, 2025[125].