MEDNAX second quarter net income increases 13.3% to $55.9 million

MEDNAX, Inc. (NYSE: MD), the national medical group specializing in neonatal, maternal-fetal, pediatric cardiology, other pediatric subspecialty and anesthesia physician services today reported earnings per share of $1.15 for the three months ended June 30, 2011.

MEDNAX's results from operations for the 2011 second quarter include revenue growth of 12.7 percent and operating income growth of 13.4 percent compared to the prior-year period.

"We continue to generate strong financial results that are the product of the deliberate management of our national medical group," said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX. "Our second quarter results also demonstrate the effectiveness of our model of successfully integrating acquired physician groups into our clinical and administrative infrastructure."

For the three months ended June 30, 2011, MEDNAX generated net patient service revenue of $393.4 million up 12.7 percent from $349.1 million for the comparable prior-year period.

MEDNAX's revenue growth attributable to contributions from recently acquired practices was 10 percent, while same-unit revenue grew by 2.7 percent for the 2011 second quarter when compared to the 2010 second quarter.

Same-unit revenue growth from reimbursement-related factors was 1.8 percent for the 2011 second quarter, and was due principally to increased payments received from third-party commercial payors as a result of the Company's ongoing contract renewal processes. The percentage of services reimbursed under government programs increased slightly, 20 basis points, during the 2011 second quarter when compared to the prior-year period.

Same-unit patient volume grew by 0.9 percent for the 2011 second quarter when compared to the prior-year period and includes volume growth from pediatric cardiology, anesthesia, neonatal and other pediatric physician services, offset by a slight decline in patient volume for the Company's maternal-fetal medicine services. For the 2011 second quarter, same-unit neonatal intensive care unit patient days increased by 0.4 percent when compared to the prior-year period.

Operating income for the 2011 second quarter was $93.1 million, up 13.4 percent from $82.1 million for the prior-year period while operating margin improved by 15 basis points, to 23.7 percent, on a year-over-year comparison. MEDNAX's operating income growth continues to exceed revenue growth as the Company successfully integrates newly acquired physician group practices into its established operations infrastructure. For the 2011 second quarter general and administrative expenses declined by 37 basis points as a percent of revenue, to 10.9 percent when compared to the prior-year period.

MEDNAX's net income grew by 13.3 percent for the 2011 second quarter, to $55.9 million from $49.4 million for the prior-year period. Earnings per share was $1.15 for the three months ended June 30, 2011, based on a weighted average 48.7 million shares outstanding, which compares with earnings per share of $1.04, based on a weighted average 47.5 million shares outstanding for the 2010 second quarter.

Through the first half of 2011, MEDNAX has generated revenue of $775.7 million, up 13.7 percent from $682.0 million for the prior-year period. Operating income for the six months ended June 30, 2011, grew by 15.9 percent to $168.8 million, up from $145.7 million for the first half of 2010. MEDNAX earned net income of $101.4 million, or $2.09 per share through June 30, 2011, based on a weighted average 48.5 million shares outstanding, which compares to net income of $87.6 million, or $1.85 per share based on a weighted average 47.4 million shares outstanding for the first half of 2010.

At June 30, 2011, MEDNAX had cash and cash equivalents of $24.0 million and net accounts receivable were $194.0 million. The Company had $66.0 million outstanding on its $350 million revolving credit facility at June 30, 2011.

During the 2011 second quarter, MEDNAX generated cash flow from operations of $95.3 million.

2011 Third Quarter Outlook

For the 2011 third quarter, MEDNAX expects that earnings will be in a range of $1.15 to $1.20 per share. This outlook assumes that total same-unit revenue for the three months ended September 30, 2011, will grow by 2 percent to 4 percent from the prior-year period. This same-unit growth forecast is expected to be evenly divided between patient volume growth across all MEDNAX physician specialties, and net reimbursement growth, including the mix of services reimbursed under commercial and government payor programs and improvements from commercial contract rates.

Source: MEDNAX