Nov 2 2009
MEDNAX, Inc. (NYSE:MD) today reported record results from operations for the three months and nine months ended September 30, 2009, that reflect contributions from acquisitions, same-unit revenue growth and operating efficiencies.
For the 2009 third quarter, MEDNAX reported quarterly record results for:
- Revenue, which was $331.3 million, an increase of 24 percent over the prior-year;
- Operating income of $78.3 million, which grew by 26 percent as operating margin increased to 23.7 percent;
- Net income from continuing operations of $48.1 million, an increase of 29 percent;
- Net income per share from continuing operations of $1.03, which grew by 27 percent; and
- Record quarterly cash flow from operations of $106.7 million.
“We continue to see the benefits of our business model, which successfully balances the growth opportunities that come from our ability to attract physicians to our national medical group practice model and achieve efficiencies under our management programs,” said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX. “We remain excited about the long-term growth prospects for our organization, both within our historical subspecialties and our emerging anesthesia specialty. At the same time, we are making better use of our administrative infrastructure to improve operating results across all of our physician services.”
For the three months ended September 30, 2009, MEDNAX’s net patient service revenue of $331.3 million increased by 24 percent from $267.2 million reported for the 2008 third quarter.
Revenue increased largely due to acquisitions completed during the past 12 months, including an anesthesiology group practice acquired at the end of the 2008 third quarter.
Same-unit revenue increased by 7.4 percent, and consisted of patient volume growth across all of the Company’s physician specialties and subspecialties of 4.8 percent and growth of 2.6 percent related to reimbursement factors.
At neonatal intensive care units staffed by MEDNAX’s Pediatrix Medical Group, patient volume increased by 4.0 percent, on a same-unit basis, for the 2009 third quarter when compared with the prior-year period.
MEDNAX’s same-unit revenue growth related to reimbursement factors for the 2009 third quarter continues to benefit from improved reimbursement for services covered under third-party commercial payor programs. This was offset by an increase in the percentage of its services reimbursed under government programs during the 2009 third quarter, compared with the prior-year period. On a sequential basis, the percentage of MEDNAX’s services reimbursed under government programs for the 2009 third quarter was approximately 2 percentage points higher than for the 2009 second quarter.
Income from operations for the 2009 third quarter grew by 26 percent, to $78.3 million, from $62.2 million for the comparable 2008 period. Operating margin of 23.7 percent for the 2009 third quarter improved by 37 basis points from the prior-year period, due largely to revenue growth leading to operating efficiencies in both practice and administrative services. As a percent of revenue, general and administrative expenses declined by 15 basis points, to 11.36 percent for the 2009 third quarter when compared with the prior-year period.
MEDNAX’s tax rate was 38.45 percent for the 2009 third quarter, down from 39.25 for the 2008 third quarter as a result of lower reserve requirements related to the expiration of the statute of limitations on certain items.
MEDNAX’s net income from continuing operations for the 2009 third quarter of $48.1 million increased by 29 percent from $37.4 million for the 2008 third quarter, principally as a result of revenue growth, operating efficiencies, reduced interest expense and a lower tax rate. MEDNAX earned $1.03 per share based on a weighted average 46.7 million shares outstanding for the 2009 third quarter, up 27 percent from 81 cents per share, based on a weighted average 46.2 million shares outstanding for the 2008 third quarter.
For the nine months ended September 30, 2009, MEDNAX’s net patient service revenue was $955.0 million, up 24 percent from $770.5 million for the first nine months of 2008. Operating income grew by 19 percent to $209.7 million for the nine months ended September 30, 2009, from $176.7 million for the comparable 2008 period. Both income from continuing operations and net income were $125.4 million through nine months of 2009, or $2.71 per share based on a weighted average 46.3 million shares outstanding. This compares with income from continuing operations of $107.7 million, or $2.26 per share based on a weighted average 47.6 million shares outstanding, through nine months of 2008. Net income through nine months of 2008 was $130.2 million, or $2.74 per share, which includes income from discontinued operations, net of income taxes, of $22.5 million related to the sale of the Company’s metabolic screening laboratory.
At September 30, 2009, MEDNAX had cash and cash equivalents of $20.9 million. The Company had an outstanding balance of $85.5 million on its $350 million revolving credit facility.
MEDNAX’s cash flow from operations for the 2009 third quarter was $106.7 million and the Company continued to use its cash to reduce debt levels and complete acquisitions. During the 2009 third quarter, MEDNAX reduced amounts outstanding on its revolving credit facility by $66.5 million. In addition, the Company invested $41.1 million of its cash to fund its acquisitions, including two group practices, a neonatal group in Nashville, Tennessee and a multi-state pediatric subspecialty group based in Las Vegas, Nevada, and to make contingent purchase price payments for previous acquisitions.
Through nine months of 2009, MEDNAX has generated $168.5 million in cash flow from operations. The Company has invested $103.4 million this year to fund acquisitions, including eight physician group practices, as well as to make contingent purchase price payments for previous acquisitions.
Source MEDNAX, Inc.,