Exhibit 99.2
Pediatrix Reports Non-GAAP EPS of 75 Cents for 2007 Second Quarter
Introduces 2007 Second Half EPS Guidance of $1.58 to $1.62
Announces $100 Million Share Repurchase Program
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Aug. 7, 2007--Pediatrix
Medical Group, Inc., (NYSE: PDX) today reported non-GAAP earnings per
share of 75 cents for the three months ended June 30, 2007.
During the 2007 second quarter, Pediatrix reported:
-- Revenue of $226.8 million, up 11 percent from the comparable
2006 period;
-- Non-GAAP operating income growth of 16 percent, to $60.0
million, coupled with continued margin expansion;
-- Cash flow from operations of $67.1 million.
"Our results for the 2007 second quarter mark continued progress
in advancing a national group practice model that allows physicians to
focus on patient care while managing the administrative functions of
our practice with increasing efficiency," said Roger J. Medel, M.D.,
Chief Executive Officer of Pediatrix. "We are confident that there are
ample opportunities for us to sustain our historical growth rates
through the continued execution of a proven strategy that adds value
to physicians practicing in a number of specialties."
In this press release, Pediatrix will compare its results based on
both generally accepted accounting principles (GAAP) and adjusted, or
non-GAAP, to exclude certain items. The Company believes that
excluding these items allows investors to have a more meaningful
understanding of the Company's operating results. These specific
non-GAAP, or adjusted, items include expenses of $1.8 million incurred
during the 2007 second quarter associated with the Company's recently
completed stock option review, and a gain of $1.6 million on the sale
of the Company's aircraft during the 2006 second quarter. Pediatrix
provides a detailed reconciliation of non-GAAP to GAAP items in the
tables accompanying this press release.
Pediatrix's net patient service revenue increased by 11 percent to
$226.8 million for the three months ended June 30, 2007, from $203.8
million for the comparable 2006 period. Revenue growth was driven by a
combination of higher patient volume for physician services, improved
reimbursement and acquisitions. Overall same-unit revenue for the 2007
second quarter increased by 8.7 percent, as compared with the same
period of 2006, which includes same-unit revenue growth attributable
to higher patient volume, of 5.3 percent. During the 2007 second
quarter, neonatal intensive care unit patient days increased by 4.2
percent on a same-unit basis.
For the 2007 second quarter, Pediatrix reported operating income
of $58.2 million, which compares with $53.6 million for the 2006
second quarter. Adjusted operating income grew by 16 percent, to $60.0
million for the 2007 period, from $51.9 million, adjusted, for the
comparable 2006 period.
Adjusted operating margin expanded by 99 basis points, to 26.5
percent for the 2007 second quarter from the prior-year period,
largely as a result of continued strong general and administrative
expense management. When adjusted, Pediatrix's general and
administrative expenses increased by 6 percent for the 2007 second
quarter, when compared with the 2006 second quarter, and general and
administrative expenses as a percent of revenue declined by 62 basis
points year over year.
Pediatrix's effective tax rate for the 2007 second quarter
increased to 39.25 percent, as compared to 37.25 percent for the
prior-year period. This increase reflects the Company's adoption of
Financial Accounting Standards Board's Interpretation No. 48, as well
as tax law changes in Texas.
Pediatrix's net income for the 2007 second quarter was $36.3
million, which compares with $33.5 million for the 2006 second
quarter. Adjusted net income of $37.4 million for the 2007 period
increased by 15 percent from $32.6 million for the comparable
prior-year period.
On a per share basis, Pediatrix earned 72 cents for the three
months ended June 30, 2007, based on a weighted average 50.1 million
shares outstanding, which compares with 68 cents, based on a weighted
average 49.5 million shares outstanding, for the comparable 2006
period.
Adjusted earnings per share of 75 cents for the 2007 second
quarter were up 13 percent from 66 cents, adjusted, for the 2006
second quarter.
For the three months ended June 30, 2007, Pediatrix had cash flow
from operations of $67.1 million.
At June 30, 2007, Pediatrix had cash and cash equivalents of
$136.6 million. Net accounts receivable were $132.8 million and
Pediatrix had no amounts outstanding under its $225 million revolving
credit facility at the end of the 2007 second quarter.
For the six months ended June 30, 2007, presented solely on a GAAP
basis, Pediatrix's net patient service revenue was $441.3 million, up
13 percent from the prior-year period. Operating income was $96.8
million for the first half of 2007, and was impacted by expenses of
$9.7 million associated with the Company's stock-option review and
accruals for payments related to Internal Revenue Code Section 409A.
Pediatrix's operating income was $91.1 million for the first half of
2006. Net income for the first half of 2007 was $61.9 million,
compared with $56.9 million for the first half of 2006. On a per share
basis, Pediatrix earned $1.24 for the first half of 2007, based on a
weighted average 50.0 million shares outstanding, which compares with
EPS of $1.16 based on a weighted average 49.2 million shares
outstanding for the first half of 2006.
Pediatrix has completed three physician group practice
acquisitions during 2007, including neonatal physician groups in San
Francisco, California, and Munster, Indiana, and a pediatric
cardiology group practice in San Antonio, Texas. Pediatrix has used
approximately $16 million of its cash thus far this year for physician
group practice acquisitions.
Guidance for the Remainder of 2007
Pediatrix also announced that it expects to earn $1.58 to $1.62
per share for the second half of 2007. Pediatrix's guidance reflects
the higher effective tax rate for all of 2007 and does not include the
impact from expenses associated with the Company's stock option review
beyond June 30, 2007.
The Company's guidance is based on the following key assumptions:
-- Projected same-unit patient volume growth of 3 to 5 percent at
neonatal intensive care units staffed by its physicians;
-- Improved reimbursement from third-party payors of 2 to 4
percent; and
-- Estimated contributions from cash investments of $50 million
to $55 million to acquire physician group practices within its
core neonatal, maternal-fetal and pediatric subspecialty care
throughout 2007, as well as contributions from acquisitions
completed during 2007.
Share Repurchase
Pediatrix's Board of Directors has authorized the Company to
repurchase up to $100 million of its common stock through open market
purchases, from time to time, based on price, general market and
economic conditions and trading restrictions. Pediatrix has not
included any possible impact of this share repurchase program in its
current earnings guidance.
Reconciliation of Non-GAAP Information
This press release contains non-GAAP information, including income
from operations, operating margin, net income and earnings per share
which is adjusted for certain items as set forth below. Pediatrix
believes that this non-GAAP information is useful to management and
investors reviewing financial and business trends related to its
results of operations and that when non-GAAP information is viewed
with GAAP information, investors are provided with a meaningful
understanding of Pediatrix's ongoing operating financial performance.
This information is not intended to be considered in isolation, or as
a substitute of GAAP financial information. The following tables
reconcile non-GAAP financial information to income from operations,
net income, and net income per common share, which Pediatrix believes
are the most comparable GAAP measures:
Non-GAAP Adjustments
Three Months Ended
June 30, June 30,
2007 2006
--------- ---------
(in thousands,
except for per
share data)
-------------------
Net patient service revenue $226,810 $203,807
GAAP general and administrative expenses 29,839 24,820
Gain on sale of aircraft 1,630
Stock option review expense (1,800)
--------- ---------
Non-GAAP general and administrative expenses 28,039 26,450
GAAP operating income 58,239 53,560
Net adjustments 1,800 (1,630)
--------- ---------
Non-GAAP operating income 60,039 51,930
GAAP income tax provision (23,463) (20,169)
Net adjustments (706) 800
--------- ---------
Non-GAAP income tax provision (24,169) (19,369)
GAAP net income 36,315 33,458
Net adjustments 1,094 (830)
--------- ---------
Non-GAAP net income 37,409 32,628
Net income per common and common equivalent share
(diluted):
GAAP EPS $ 0.72 $ 0.68
Adjustment 0.03 (0.02)
--------- ---------
Non-GAAP EPS $ 0.75 $ 0.66
Weighted average shares used in computing net
income per common and common equivalent share
(diluted) 50,125 49,461
Investor conference call
Pediatrix Medical Group, Inc. will host an investor conference
call to discuss the quarterly results at 11 a.m. Eastern Time today.
The conference call Webcast may be accessed from the Company's
website, www.pediatrix.com. A telephone replay of the conference call
will be available from 2:30 p.m. Eastern Time today through midnight
Eastern Time August 21, 2007 by dialing 800-475-6701, access code
883077. The replay will also be available at www.pediatrix.com.
About Pediatrix
Pediatrix Medical Group, Inc. is the nation's leading provider of
neonatal, maternal-fetal and pediatric physician subspecialty
services. Pediatrix physicians and advanced practitioners are
reshaping the delivery of care within the maternal-fetal, neonatal
intensive care and pediatric cardiology subspecialties, using
evidence-based tools, continuous quality initiatives and clinical
research to enhance patient outcomes and provide high-quality,
cost-effective care. Founded in 1979, its neonatal physicians provide
services at more than 240 neonatal intensive care units, and in many
markets they collaborate with affiliated maternal-fetal medicine,
pediatric cardiology physician subspecialists and pediatric
intensivists to provide a clinical care continuum. Combined, Pediatrix
and its affiliated professional corporations employ more than 950
physicians in 32 states and Puerto Rico. Pediatrix is also the
nation's largest provider of newborn hearing screens and newborn
metabolic screening. Additional information is available at
www.pediatrix.com.
Certain statements and information in this press release may be
deemed to be "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include, but are not limited to,
statements relating to our objectives, plans and strategies, and all
statements (other than statements of historical facts) that address
activities, events or developments that we intend, expect, project,
believe or anticipate will or may occur in the future are
forward-looking statements. These statements are often characterized
by terminology such as "believe", "hope", "may", "anticipate",
"should", "intend", "plan", "will", "expect", "estimate", "project",
"positioned", "strategy" and similar expressions, and are based on
assumptions and assessments made by Pediatrix's management in light of
their experience and their perception of historical trends, current
conditions, expected future developments and other factors they
believe to be appropriate. Any forward-looking statements in this
press release are made as of the date hereof, and Pediatrix undertakes
no duty to update or revise any such statements, whether as a result
of new information, future events or otherwise. Forward-looking
statements are not guarantees of future performance and are subject to
risks and uncertainties. Important factors that could cause actual
results, developments, and business decisions to differ materially
from forward-looking statements are described in Pediatrix's most
recent Annual Report on Form 10-K, including the section entitled
"Risk Factors". Additional factors include, but are not limited to,
uncertainties related to: the possible discovery of additional facts
beyond those reviewed by the Audit Committee in connection with its
stock option review; possible litigation related to the matters
investigated by the Pediatrix's Audit Committee or the restatements to
Pediatrix's financial statements and other historical disclosures; and
any regulatory actions of the SEC or the U.S. Attorney related to such
matters.
Pediatrix Medical Group, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended Six Months Ended
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
(in thousands, except for per share
data)
---------------------------------------
Net patient service revenue $226,810 $203,807 $441,266 $391,486
--------- --------- --------- ---------
Operating expenses:
Practice salaries and
benefits 126,662 114,419 257,607 226,988
Practice supplies and other
operating expenses 9,604 8,604 18,504 16,406
General and administrative
expenses 29,839 24,820 63,454 52,212
Depreciation and
amortization 2,466 2,404 4,939 4,752
-------- -------- -------- ---------
Total operating expenses 168,571 150,247 344,504 300,358
-------- -------- -------- ---------
Income from operations 58,239 53,560 96,762 91,128
Investment income 1,661 478 3,525 928
Interest expense (122) (411) (343) (820)
-------- -------- -------- ---------
Income before income taxes 59,778 53,627 99,944 91,236
Income tax provision (23,463) (20,169) (38,047) (34,351)
Net income $ 36,315 $ 33,458 $ 61,897 $ 56,885
========= ========= ========= =========
Per share data:
Net income per common and
common equivalent share
(diluted) $ 0.72 $ 0.68 $ 1.24 $ 1.16
Weighted average shares used
in computing net income per
common and common
equivalent share (diluted) 50,125 49,461 50,019 49,179
Balance Sheet Highlights
As of
June 30, Dec. 31,
2007 2006
----------- ----------
(Unaudited)
-----------
(in thousands)
Assets:
Cash & cash equivalents $ 136,606 $ 69,595
Short-term investments 14,535 65,660
Accounts receivable, net 132,836 125,573
Other current assets 47,888 40,771
Other assets, property and equipment 857,106 833,571
----------- ----------
Total assets $1,188,971 $1,135,170
=========== ==========
Liabilities and shareholders' equity:
Accounts payable & accrued expenses $ 170,293 $ 206,552
Total debt 527 860
Other liabilities 79,769 61,957
----------- ----------
Total liabilities 250,589 269,369
Shareholders' equity 938,382 865,801
Total liabilities and shareholders' equity $1,188,971 $1,135,170
=========== ==========
CONTACT: Pediatrix Medical Group, Inc.
Bob Kneeley, 954-384-0175, ext. 5300
Director, Investor Relation
bob_kneeley@pediatrix.com