pediatrix(US:MD)2021-08-06 18:23Financial Data and Key Metrics Changes - Revenue for the quarter was $473 million, exceeding internal expectations, with adjusted EBITDA of $66 million [10][48] - Adjusted EBITDA for 2021 is now expected to be above $240 million, an increase from the previous expectation of at least $220 million [10][49] - Operating cash flow for the second quarter was strong at $70 million, with cash at the end of the quarter at $338 million, up from $270 million at the end of the first quarter [48] Business Line Data and Key Metrics Changes - Total patient volumes increased by 1.3% compared to the second quarter of 2019, with hospital-based services up by 10 basis points and office-based services up by 5.2% [9][10] - Pediatric intensive care unit volumes were up 11.5% compared to the second quarter of 2019, while pediatric surgery volumes increased by 8% and maternal fetal medicine volumes rose by 9% [29][30] Market Data and Key Metrics Changes - The payer mix remained favorable year-over-year for the second consecutive quarter, with non-government volume up about 35 basis points [9][73] - Government reimbursement as a percentage of revenue decreased to 24% in Q2 2021 from 27% in 2020, indicating a shift in payer mix [78] Company Strategy and Development Direction - The company is focusing on building momentum in its core services and enhancing patient access, which has already added approximately $2 million to the top line in Q2 [12][13] - There is a strategic emphasis on expanding into children's primary and urgent care, with plans for new clinic openings and investments in this area [18] - The company is also making significant progress in improving operational efficiency through restructuring and technology upgrades, including transitioning revenue cycle management to R1 [42][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA above $270 million in 2022, driven by ongoing growth initiatives and efficiency improvements [21][49] - The rise in COVID-19 cases due to the Delta variant poses risks, but management remains optimistic about the recovery and growth trajectory [11][12] Other Important Information - The company completed several acquisitions, including child neurology consultants, to enhance its specialty services [16] - A significant data center consolidation and the implementation of an Oracle ERP solution were completed, which are expected to improve operational efficiency [45] Q&A Session Summary Question: NICU days increased more than birth numbers - Management explained that the NICU admission rate had reverted to trend after being below trend in 2020, leading to the observed differential [53][54] Question: Impact of vaccine approvals for under 12 population - Management indicated that while primary care pediatricians are involved in vaccinations, the overall impact on the company may not be significant [55] Question: Acquisition strategy and expansion into other specialties - Management confirmed a broad strategy to provide women's and children's health services, including subspecialties beyond traditional areas [56][57] Question: G&A efficiency opportunities - Management highlighted ongoing efforts to improve efficiency and reduce G&A costs through focused operations and restructuring [60][62] Question: Impact of managed care changes in Texas - Management acknowledged the challenges but expressed optimism about returning to network status with payers [68][69] Question: Sustainability of payer mix changes - Management noted that the current payer mix reflects a return to historical trends, but it is uncertain if this will stabilize at the new levels [78][79] Question: EBITDA margin expansion expectations - Management explained that recent investments in technology and infrastructure have impacted margins, but they expect improvements as these initiatives take effect [81][84] Question: Long-term EBITDA growth outlook - Management expressed optimism about future growth, indicating that they expect to exceed $270 million in adjusted EBITDA and continue to grow beyond that [99][100]