pediatrix(US:MD)2023-08-03 11:01Company Operations - Pediatrix provides physician services across 37 states, focusing on neonatal and maternal-fetal care, and ceased operations in Puerto Rico as of December 31, 2022[60]. Financial Performance - Net revenue attributable to continuing operations was $500.6 million for the three months ended June 30, 2023, an increase of $14.6 million, or 3.0%, compared to $486.0 million for the same period in 2022[83]. - Same-unit net revenue increased by $15.3 million, or 3.2%, driven by a $12.5 million increase from net reimbursement-related factors and a $2.8 million increase related to patient service volumes[83]. - Net revenue for the six months ended June 30, 2023, was $991.6 million, an increase of $23.3 million, or 2.4%, compared to $968.3 million for the same period in 2022[95]. - Income from continuing operations was $28.3 million for the three months ended June 30, 2023, compared to $30.7 million for the same period in 2022[92]. - Income from operations attributable to continuing operations decreased by $10.8 million, or 12.0%, to $78.5 million for the six months ended June 30, 2023, compared to $89.3 million for the same period in 2022[101]. Expenses and Costs - Practice salaries and benefits increased by $23.2 million, or 7.0%, to $354.0 million for the three months ended June 30, 2023, compared to $330.8 million for the same period in 2022[84]. - Practice salaries and benefits for the six months ended June 30, 2023, increased by $42.4 million, or 6.3%, to $716.3 million compared to $673.9 million for the same period in 2022[96]. - General and administrative expenses decreased by $3.2 million to $58.0 million for the three months ended June 30, 2023, representing 11.6% of net revenue, down from 12.6% in the same period in 2022[86][87]. - General and administrative expenses for the six months ended June 30, 2023, were $117.1 million, a decrease of $5.4 million from $122.5 million for the same period in 2022[98]. - Adjusted EBITDA from continuing operations was $59.1 million for the three months ended June 30, 2023, down from $65.6 million for the same period in 2022[92]. - Adjusted EBITDA from continuing operations was $99.2 million for the six months ended June 30, 2023, down from $116.2 million for the same period in 2022, primarily due to decreased CARES Act relief and higher operating expenses[104]. Cash Flow and Liquidity - Cash flow from accounts receivable increased by $28.9 million for the six months ended June 30, 2023, compared to a decrease of $16.0 million for the same period in 2022, indicating improved cash collections[110]. - Days sales outstanding (DSO) improved to 49.2 days at June 30, 2023, down from 58.2 days at June 30, 2022, reflecting better cash collection efficiency[111]. - As of June 30, 2023, the company had $5.8 million in cash and cash equivalents, down from $9.8 million at December 31, 2022, while working capital increased to $77.4 million from $1.0 million[106]. - Net cash provided by financing activities was $29.6 million for the six months ended June 30, 2023, primarily from net borrowings on the Revolving Credit Line[113]. - The outstanding principal balance on the Amended Credit Agreement was $275.4 million as of June 30, 2023, with $409.0 million available under the agreement[118]. - 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[123]. Regulatory and Economic Factors - During Q2 2023, the percentage of patient service revenue reimbursed under government-sponsored healthcare programs remained stable compared to Q2 2022, but potential shifts could occur due to economic changes[61]. - 39 states and the District of Columbia have expanded Medicaid eligibility under the ACA, which could affect reimbursements for services provided by Pediatrix[73]. - The No Surprises Act limits out-of-network billing, potentially impacting revenue recovery for services not contracted with insurers[62]. - Changes to Medicaid programs and payment structures could materially affect Pediatrix's financial condition and results of operations[71]. - Future legislative changes to the ACA and GHC Programs could have a material adverse effect on Pediatrix's financial condition and trading price of securities[70]. - The company faces uncertainties regarding the impact of COVID-19 on demand for medical services, although volumes have normalized since mid-2020[75]. Taxation - The tax rate decreased from 28.2% in the first half of 2022 to 27.3% in the first half of 2023, attributed to an increase in income from continuing operations before income taxes[103]. Interest Rate Sensitivity - A 1% change in interest rates would impact income before taxes by approximately $2.8 million per year based on the outstanding balance of $275.4 million on the Amended Credit Agreement[125].