pediatrix(US:MD)2020-11-06 19:29Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of just under $73 million for Q3 2020, an increase from $69 million in the same quarter last year [27] - Same unit volumes declined by 4.3%, showing a partial recovery from a 9% decline in Q2 2020 [16][17] - The company received over $14 million in CARES funding during the quarter, contributing to a 3.9% same unit pricing growth [21] Business Line Data and Key Metrics Changes - In hospital-based practices, NICU days were down 3.9%, while volumes in related services were down more significantly [18] - Office-based practices, including Maternal Fetal Medicine and pediatric cardiology, saw volumes decline by approximately 5%, a recovery from a 17% decline in Q2 [20] - Pediatric cardiology remained one of the most impacted service lines, while MFM volumes rebounded sharply [20] Market Data and Key Metrics Changes - The overall volume trend in October appeared similar to Q3, with patient volumes down by mid-single digits compared to last year [17] - Births declined by just under 1% on a two-year stacked basis, consistent with historical trends [20] Company Strategy and Development Direction - The company is focusing on its core areas, particularly women's and children's health, and aims to grow organically and through new partnerships [41][42] - A recent partnership with Memorial Healthcare System to lead neonatology services across three hospitals was highlighted as a significant achievement [42] - The management emphasized the importance of operational efficiency and data analytics to improve financial control and decision-making [39][49][118] Management's Comments on Operating Environment and Future Outlook - Management does not foresee a major drop in birth rates and is actively managing operations to maximize efficiency [34][72] - The company aims to achieve a steady state EBITDA run rate of $270 million in 2021, assuming no major ongoing effects from COVID-19 [35][92] - Management expressed confidence in the ability to grow without straying from core areas, citing strong relationships with hospital systems [41][66] Other Important Information - The company incurred $34 million in transformational and restructuring expenses for the quarter, with expectations to reduce these costs in Q4 2020 [26] - Adjusted EBITDA for Q3 2020 included an $8 million contribution from CARES funds, with uncertainty regarding additional funding in Q4 [28][30] Q&A Session Summary Question: Insights on maternal fetal patient volume trends - Management indicated that current trends suggest a return to baseline volumes, but predicting beyond that is challenging [60] Question: Capital deployment strategy post-radiology sale - Management highlighted growth opportunities in core areas and expressed a shareholder-friendly approach to capital allocation, including potential buybacks [61][63] Question: Growth rate expectations and strategies - Management refrained from providing specific growth numbers but expressed confidence in achieving solid organic and new growth [65][66] Question: Clarification on NICU volume growth and same-store revenue - Management clarified that while NICU volumes are growing, overall same-store revenue remains slightly down due to pandemic impacts [72][73] Question: Adjustments needed for enterprise value calculations - Management confirmed no significant adjustments are needed outside of the radiology proceeds and CARES Act funds received [90][91] Question: Payer mix and its impact - Management reported no significant changes in payer mix, maintaining a stable trend over the past several years [124][125] Question: Cost-cutting measures and future realizations - Management indicated that significant non-payroll expense reductions are expected to be realized in the upcoming quarters [128]