pediatrix(US:MD)2024-05-07 15:11Financial Data and Key Metrics Changes - The company reaffirmed its full-year 2024 outlook for adjusted EBITDA between $200 million and $220 million, indicating a focus on stabilizing margins compared to 2023 [3] - In Q1 2024, the company reported a cash flow usage of $123 million, compared to $101 million in Q1 2023, largely due to accounts receivable [62] Business Line Data and Key Metrics Changes - Maternal-fetal medicine volumes increased by approximately 3% in Q1 2024, while primary and urgent care volumes declined [16][57] - NICU days were up about 2.5% in Q1 2024, indicating stable demand in hospital-based services [26][57] Market Data and Key Metrics Changes - The company experienced a decline in non-same unit revenue for the quarter, down about $6.8 million, primarily due to ongoing disposition activities [28] - The accounts receivable DSO rose roughly a day and a half from the end of 2023, reflecting slight impacts from a healthcare incident and the RCM transition process [40] Company Strategy and Development Direction - The company has made a strategic decision to exit its primary and urgent care clinic platform, which includes about two dozen clinics in Florida, Texas, and Colorado, to focus on margin stabilization [6][39] - The company is undergoing an accelerated portfolio restructuring plan to exit underperforming office-based practices, aiming to improve profitability [39][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the restructuring activities will enhance operational efficiency and support for practices, with significant impacts expected in the second half of the year [60][65] - The company anticipates that the financial impact of restructuring will be felt more in the second half of 2024, with Q2 expected to contribute 24% to 25% of the full-year adjusted EBITDA outlook [65][68] Other Important Information - The transition to a hybrid RCM model is progressing well, with a contract finalized with Guidehouse, and about one-third of affiliated practices transitioned as of now [13][64] - The company is focused on maintaining G&A expenses at levels comparable to or lower than 2023 as a percentage of revenue, despite internal additions to the RCM team [59] Q&A Session Summary Question: Outlook on volume and rate side of the business - Management indicated that the financial impacts from restructuring will affect results in the second half of the year, but it is premature to comment on 2025 growth [14][39] Question: Size of revenue impact from practice dispositions - Management confirmed that the practices being exited have negative EBITDA contributions, and the revenue impact will be tracked as the year progresses [52][23] Question: Growth algorithm for pediatrics post-restructuring - The focus will be on core services, with recent acquisitions in maternal-fetal medicine indicating a strategy for both organic and inorganic growth [32][39]