MD Gains 11% Since Q4 Earnings Release, Unveils '25 View

Pediatrix Medical Group, Inc. MD shares rose 10.6% since it reported fourth-quarter 2024 results on Feb. 20, 2025. The quarterly results benefited on the back of strong same-unit revenue growth, improved payor mix and higher hospital contract administrative fees. A decline in the overall expense level also contributed to the upside. However, the upside was partly offset by higher same-unit clinical compensation costs.

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MD reported fourth-quarter 2024 adjusted earnings per share (EPS) of 51 cents, which surpassed the Zacks Consensus Estimate by 37.8%. The bottom line soared 59.4% year over year.

Net revenues were $502.4 million, which inched up 1.2% year over year. The top line beat the consensus mark by 3.4%.

Q4 Update for MD

Same-unit revenues improved 8.7% year over year, beating the Zacks Consensus Estimate and our estimate of 4.3%. Same-unit revenues, attributable to patient volume, grew 2.8% year over year. 

Same-unit revenues from net reimbursement-related factors advanced 5.9% year over year on the back of decent growth in hospital contract administrative fees and improved payor mix. It beat the Zacks Consensus Estimate and our estimate of 2.7%.

Pediatrix Medical’s total operating expenses declined 23.8% year over year to $463.1 million, higher than our estimate of $447.9 million. The decrease was attributable to lower practice salaries and benefits, and practice supplies and other operating expenses. 

Practice salaries and benefits fell 4% on a year-over-year basis on the back of the impact of practice dispositions. Interest expenses of $9.7 million slid 3.7% year over year but were higher than our estimate of $9.6 million.

MD’s net income totaled $30.5 million against the prior-year quarter’s loss of $124.3 million. 

Adjusted EBITDA climbed 35.2% year over year to $68.7 million, which beat our estimate of $53.8 million.

MD’s Financial Update (as of Dec. 31, 2024)

Pediatrix Medical exited the fourth quarter with cash and cash equivalents of $229.9 million, which increased more than three-fold from the 2023-end figure. There were no outstanding borrowings on its revolving credit facility at the quarter-end.

Total assets of $2.2 billion tumbled 3% from the level at 2023-end. 

Total debt, including finance leases, net, amounted to $617.7 million, down 2.5% from the figure as of Dec. 31, 2023. 

Total shareholders’ equity of $764.9 million decreased 9.9% from the 2023-end figure. 

Operating cash flow surged 50.4% from the 2023-end level to $206.6 million in 2024.

Share Repurchase Update for MD

Pediatrix Medical bought back common shares for $1.7 million in 2024. It had a leftover capacity of $2.9 million under its $500 million repurchase program (approved in August 2018) as of Dec. 31, 2024.

MD’s 2025 View Unveiled

Management projects adjusted EBITDA to be between $215 million and $235 million, the midpoint of which indicates a 0.4% increase from the 2024 reported figure of $224.1 million. Net income is estimated to be between $98.3 million and $112.9 million. A loss of $99.1 million was incurred in 2024.

Interest expense is forecasted at $37.9 million for 2025, which implies a 7.1% decline from the 2024 figure of $40.7 million. Income tax expense is expected to be in the range of $36.4-$41.8 million.

Depreciation and amortization expenses are estimated to be $27.5 million. Transformational and restructuring-related expenses are expected at $14.9 million.

MD’s Zacks Rank

Pediatrix Medical currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the Medical sector players that have reported fourth-quarter 2024 results so far, the bottom-line results of Centene Corporation CNC, Tenet Healthcare Corporation THC and Encompass Health Corporation EHC beat the respective Zacks Consensus Estimate.

Centene reported fourth-quarter 2024 adjusted EPS of 80 cents, which outpaced the Zacks Consensus Estimate by 63.3%. Moreover, the bottom line rose 77.8% year over year. Revenues were $40.8 billion, which increased 3.4% year over year. The top line surpassed the consensus mark by 4.8%. Revenues from Medicaid dipped 1% year over year to $20.8 billion, while Medicare revenues grew 4% year over year to $5.5 billion. Additionally, commercial revenues of $8.7 billion climbed 18% year over year.

Centene's premiums amounted to $35.5 billion, rising 3.8% year over year. Service revenues decreased 29.7% year over year to $777 million. Investment and other income of $344 million dipped 14.2% year over year. As of Dec. 31, 2024, total membership was 28.6 million, which grew 4.1% year over year. Centene’s HBR deteriorated 10 basis points year over year to 89.6%. Adjusted net earnings of $404 million rose 68.3% year over year. 

Tenet Healthcare’s fourth-quarter 2024 adjusted EPS of $3.44 surpassed the Zacks Consensus Estimate by 17.4%. The bottom line increased 28.4% year over year. Net operating revenues declined 5.7% year over year to $5.1 billion. The top line missed the consensus mark by 1.8%. Adjusted net income was $330 million, which increased 16.6% year over year. Adjusted EBITDA increased 3.6% year over year to $1.05 billion. Adjusted EBITDA margin of 20.7% improved 190 basis points year over year.

The Hospital Operations and Services segment recorded net operating revenues of $3.81 billion, which fell 11.4% year over year. On a same-hospital basis, net patient service revenues improved 0.6% year over year. Adjusted EBITDA declined 5.5% year over year to $518 million. The Ambulatory Care unit’s net operating revenues climbed 16.9% year over year to $1.3 billion. Adjusted EBITDA of $530 million rose 14.2% year over year. 

Encompass Health reported fourth-quarter adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 14.7%. The bottom line increased 23.2% year over year. Net operating revenues of $1.4 billion improved 12.8% year over year. The top line beat the consensus mark by 2.1%. EHC’s net patient revenue per discharge rose 4.2% year over year. Total discharges grew 7.8% year over year to 63,839. 

Net and comprehensive income climbed 37.9% year over year to $164.2 million in the fourth quarter.  Adjusted EBITDA of $289.6 million grew 13.6% year over year and surpassed our estimate of $261 million.   In the fourth quarter, Encompass Health added 22 beds to its existing hospitals and inaugurated one de novo hospital. The unit’s operating gain of $0.6 billion remained stable year over year. 

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