pediatrix(MD) - 2020 Q4 - Annual Report

Financial Position - Total indebtedness as of December 31, 2020, was $1.75 billion, with $0.75 billion repaid in January 2021[221] - The company has $900 million of additional borrowing capacity under its revolving line of credit, which is subject to a variable interest rate[221] - The company has no outstanding borrowings on its Credit Agreement as of December 31, 2020, indicating a strong liquidity position[375] - The company is subject to market risk from interest rate changes, managing this risk through a combination of fixed and variable rate debt[375] - The carrying value of the Company's long-term debt was $1.7 billion as of December 31, 2020, with senior notes totaling $1.75 billion and a total carrying value of $1.731 billion after issuance costs[498] - The estimated fair value of the Company's 2023 Notes was $756.2 million and the 2027 Notes was $1.07 billion as of December 31, 2020[499] Revenue and Expenses - Total revenue for 2020 was $1,733,951, a decrease of 2.6% from $1,779,759 in 2019[398] - Operating expenses increased to $1,635,819 in 2020, up from $1,608,003 in 2019, reflecting a rise of 1.3%[398] - The company reported a net loss of $796,488 for 2020, compared to a net loss of $1,497,702 in 2019, indicating an improvement[398] - Cash and cash equivalents significantly increased to $1,123,843 in 2020 from $107,870 in 2019, representing a growth of 940%[398] - Total assets decreased to $3,347,948 in 2020, down from $4,145,901 in 2019, a decline of 19.2%[398] - Total liabilities slightly decreased to $2,600,231 in 2020 from $2,646,905 in 2019, a reduction of 1.8%[398] - Shareholders' equity dropped to $747,717 in 2020, down from $1,498,996 in 2019, a decrease of 50%[398] - The company incurred transformational and restructuring related expenses of $73,801 in 2020, compared to $60,890 in 2019, an increase of 21.5%[398] Cash Flow - Net cash provided by operating activities for continuing operations was $153,888, an increase from $74,091 in 2019[404] - Total net cash provided by operating activities decreased to $204,620 from $357,711 in 2019[404] - The company reported a net cash used in financing activities of $4,158, a decrease from $393,070 in 2019[404] Operational Challenges - A significant portion of cash flow from operations will be required to service interest and principal payments on debt, limiting availability for operations and expansion[224] - The company faces risks related to litigation, including potential claims for breach of contract and negligence, which could adversely affect financial condition and results of operations[217] - The company is dependent on third-party payors for a significant portion of net revenue, with risks of uncollectible and delayed reimbursements impacting cash flows[218] - Recruitment and retention of qualified physicians and clinicians are critical, with potential increases in compensation expenses due to market demand[228] - Information systems are essential for operations, and disruptions could lead to billing errors and increased administrative expenses[232] - Cybersecurity risks have increased, with potential breaches leading to financial loss and damage to reputation[235] - The company may face challenges in collecting reimbursements due to administrative issues and disputes with payors, affecting revenue and cash flows[219] - Legal fees associated with litigation could adversely impact financial condition and results of operations[217] Compliance and Regulatory Risks - The company faces risks related to compliance with federal and state privacy laws, which could increase costs and limit service offerings[240] - The company may face litigation and sanctions if alleged non-compliance with laws related to personal health information occurs[242] - The company anticipates potential changes to privacy legislation that could impact operations and compliance costs[241] Acquisitions and Divestitures - The company completed the acquisition of a pediatric subspecialty practice for $2.1 million in 2020, expanding its national network of physician practices[464] - The company divested its anesthesiology services medical group in May 2020, impacting its operating results significantly[421] - The Company divested its radiology services medical group in December 2020, with results reported as discontinued operations for the years ended December 31, 2020, 2019, and 2018[422] - The divestiture of the radiology services medical group resulted in a cash payment of $885 million, with a loss from discontinued operations of $63.8 million in 2020[471][475] - The anesthesiology services medical group was sold for $50 million, with an estimated total loss on sale of $663.7 million recorded in 2020[476][477] Stock and Compensation - The Company grants stock-based awards under its Amended and Restated 2008 Incentive Compensation Plan, measuring the cost based on grant-date fair value[450] - The Company recognized $21.1 million in stock-based compensation expense for the year ended December 31, 2020, down from $33.4 million in 2019[518] - The total stock-based compensation cost related to non-vested restricted and deferred stock remaining to be recognized as compensation expense over a weighted-average period of 1.8 years was $11.6 million as of December 31, 2020[519] - The total stock-based compensation related to non-vested stock options remaining to be recognized as compensation expense over a weighted average period of approximately 2.6 years was $4.3 million[523] Taxation - The Company reported a total income tax provision of $16.7 million for the year ended December 31, 2020, compared to $16.6 million in 2019[501] - The effective tax rate for continuing operations increased to 234.0% for the year ended December 31, 2020, primarily due to a significant reduction in pre-tax income[502] - The Company's net deferred tax liabilities were $7.3 million as of December 31, 2020, compared to net deferred tax assets of $30.2 million at the end of 2019[505] - The liability for uncertain tax positions decreased to $6.2 million as of December 31, 2020, from $7.4 million in 2019[508] Market Conditions - The healthcare industry is highly competitive, with potential consolidation strengthening competitors, which may adversely affect the company's financial condition and operations[243] - The company's payor mix for 2020 included 68% from contracted managed care, 27% from government, and 4% from other third parties[458] - Net patient service revenue for 2020 was $1,481,331,000, a decline from $1,567,624,000 in 2019, contributing to total net revenue of $1,733,951,000, down from $1,779,759,000[458]