MD - Earnings call transcript Q1 2019 | Pediatrix Medical Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MEDNAX 2019 First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to the Vice President of Strategy and Investor Relations, Charles Lynch. Please go ahead.

Charles Lynch

operator. you, Thank and everyone, our quarter first Good welcome call. morning, to our I'll Stephen. then disclosure turn read the and and Roger statement quickly to call over statements Federal Private be Litigation call Reform statements this XXXX. information Securities the to of within the be forward-looking Certain may of meaning Act and during deemed conference other based to assumptions conditions, assessments their of appropriate. trends, current made and forward-looking experience MEDNAX' management These assessment believe on statements by future factors developments and expected are be of and they in light historical Any to call otherwise. today, or new forward-looking whether are made and MEDNAX of made during events statements this revise statements as undertakes update such result future of no any a duty as information, or materially recent Factors. from company's Form statements in that the Report reports its section described Annual entitled forward-looking cause Risk Important developments factors and differ could are most Form results, including the on quarterly actual XX-K on XX-Q, and business to decisions will today's metrics. we In non-GAAP by financial remarks management, be discussing non-GAAP the on Form A this Investors release, mednax.com. report annual of be located most our website morning's and earnings measures in in our can measures these section XX-K the found reconciliation at GAAP press comparable financial of to the call I'll our that, to With turn Dr. CEO, over Medel. Roger

Roger Medel

to morning, for and Thank quarter you, Charlie. Good results joining discuss our for XXXX. thanks call the of first the

the and in this to offset business. our trends, improvements million to for annualized stated volume of operations. a by high On meet trends. and target Our year revenue on by $XXX helped our guidance ranges was remain revenue in adjusted our results cost EPS management challenged cost track the to were discontinued of EBITDA after level, in EBITDA our focus offset line adjusting with headwinds these We growth end on our but

We been of buyers our also stock. own have

the bought million $XXX quarter. we $XX including million have of bought year-to-date, the worth shares, first we during For back

volumes trend the specialties. and unit neonatal admission Looking the most in rate of remained hospitals where of across and increased women our neonatology, Volumes lines. service the In our of births we of services underlying based car length our children stay. at but on intensive provide increased modestly into negative,

We for our expand services, of growth. to also a newborn ours area focus continue nursery

in the women the trends during also the we payer was half positive mix in children quarter, and services favorable Our second of XXXX. continuing saw

near quarter, we compared to Finally, favorable neonatology children first practice this multiples. acquisitions were and in Based And was at Georgia In we additional have but the women our the a that joined payer in remain all line. modestly, pipeline, I in effectively in acquisitive future service anesthesiology, year. on expect mix volumes unchanged MEDNAX. will in services great our last down

plans. continue to progress practice on We our optimization

quarter, which year. their we to labor control technology to through optimize continue efficiently, the enhance rollout this began use to the will robust resource schedule During will our premium clinical costs. management most rollout the practices, clinicians' across of of of ability time and This

provides by more these practices to I of larger groups. that our on have now a this their to them also the and first in moving efficiently To to incentive compensation the shifted engagement been model, practices, number We and equitable made physician a operate a practice the both. clinicians or model structure number have have create at with the date, either additional have changing progress to and or we grow risk-sharing encouraged that of a of received feedback dollar leadership

come renewal instances, practices to these up across organization We discussions renewal some as in anesthesia will even between either or, for dates. continue have our

we driven completed Lastly, during revenue organic growth growth in acquisitions radiology remained both by XXXX. solid and

a this geography. in to our either expand line acquisitions tuck-in service within on pursue our or to basis existing continue will We footprint

be of partnership doing scope announced are we will with meaningfully third-party we best-in-class our initiatives, that this also this the in expanding morning and We resources. transformational

now scheduling planning more powerful resources believe provide from months. been for projects level, resource are practices. operational the our our progression on practice and over we are the as of Most time, we the tool. them all projects, on to have level improvements identify our quarter, XX a Consequently, management benefits great which be as practice a our of strategic At technology investments, up our that patients. have At discussed and terms the data do. have these we since was natural details also to entail only take our work areas in practices functional information first our and efficiency these a the anesthesia rollout for process partners focused the business. actively improving past of but and We well measurable what clinical of done opportunities side environment working initiatives discussed that last improve to analytic provide across we streamline services undertaken we working and care investments the practices We we enhance continuing investments both and IT for to the not contemplate in believe our more additional to of can what improve we ability the our the also commitment we of financial on though, of we physicians will then, can do closely capabilities. their Based look will and Stephen and enhancements to with we of such of the are across ramping corporate

which approach opportunities. repurchases, to we to gives fund I view, the us In our and of balanced this direct will most highest-return approach free that capital our to balanced our capital to of be terms investments, flexibility acquisitions In internal cash expected flow. what expect the through anticipate internal would a pursue we allocation, we towards continue share toward view

Carlos and stand to nominated want and formal forward I with Spencer can of election directors, of point I to individuals, addition experience month. extensive Migoya health announce identifying care our we true a thorough Rucker Board this our out and Lastly, help assets new two to represent did to and of these Stuart, process after the has our our in nominees later believe the who leadership thoughtful conducted search Board that organization. to Michael been I we that Directors for with Board look

organization but quarters, complemented resources, take remains call Chief through over As coming goals on that the only our of Financial patients. Officer, of partnership great continue benefits our our our standpoint consistency our turn results. our environment working we can believe to focus optimizing operating focus, for I progress from enabling stability that, tremendous our from with primary Farber. and internal in yield I'll to clinicians, Stephen the a financial standpoint our not third-party by to to care of also the them Stephen? the our With

Stephen Farber

morning. spend of about the our Thanks results to like scope cash some call. good a on guidance; and I'd Roger, our within touch for the transformational flow time on and to couple then cash. lastly, of joining meaningful Thanks, first and quarter our uses of items changes talk and activities;

we've we're to course a bridge as both and QX for quarter except can ongoing revenue, discontinued tables, a further operations release first operations see and we have our progress MedData's MedData our our ranges our presenting adjusted to first adjusted this the our EBITDA you'll basis, adjusted And MedData to guidance say comment, process, sale the consolidated results To continuing and EPS. As that results continues it our line adjusted for based and models, in of on see progress provided reclassified in those process ordinary help on for you to and EBITDA on morning. continuing I'm an operations. much not to was both to now going and date your in guiding with comment results fashion. result in as EPS that

range. In effective general, out our slightly terms line was in midpoint Within at below forecast little cost second fairly what X.X that bit such thoughts and services, call our they of was activities on over to EBITDA good a of but the had children results our takes adjusted I first NICU top just puts ahead do want and were relate a how of our growth were the the day few and internally, our women we quarter. points. quarter to

admission is function versus total As the less at and than where Roger the we births a hospitals a year. mentioned, X% both length rate while cover stay, of of the in last upticks little NICU this were down

quarter-to-quarter we've the of about lot talked past, watch is key admit points As of opposed stay. and around the we what rate gyrations as in a that as birth most the our NICU trend underlying length driver closely

reflects comparison mix is positive and and in anesthesiology. paramedics women a modestly headwind also children favorable, to Our services which no in

budgeting our from variances paramedics, we So part the environment XXXX. those of between as outlook positive to volumes were NICU for had anesthesia and general formulate our anticipated the X process

we the volumes quarter. were On yielding to growth was quarter, same-unit the in flip-side, revenue the range for that guided anesthesia the lower modestly within

detail with our On headwind refresh the more adjusted target ongoing we've continue us we initiatives, million we year plans more goals last summer. set costs the paying late first and this still to the we highlight X were progress minute our I structure. scope on trend improvement during senior to broad of for a on yields proceeds. Cost a a deceleration on side, That quarter, of talk To complexity issuance completed billion challenging our end, shared we $XXX that itself through notes. against of for operational I'll some reflecting earnings the so of down senior can lend that we're and We In said, service next. our broader in debt expanded most to remains notes issued our levers Below significant in about $X EBITDA that and full and adding actions. line, revolver level just XXXX an revenue our activities in quarter the that own even organization the in we've our additional in first X.XX% to want and did the environment, how pull. to completed doesn't total, we of the of supplement see with that now the transformational the a

amended facility, to also from of revolving to the maturity it XXXX. We $X.X reducing $X pushing credit and out billion billion our

last X.X refinancing all XX% adjusted interest I'll $X.X So the write-off is between onetime costs. expense issuance our one to line XXXX, We've debt. quarter related that from EPS of wasn't $X.XX in and out to in as item that Related roughly point through our XXXX of impact interest our expense to flowed average mostly of the debt This are about deferred first to maturities in the guide. million out contemplated these had we today, of our activities and an essentially roughly that, roughly incurred borrowings fixed-rate extended years. of

I'll Turning to quarter. our guidance, start the second with

$XXX million not of we keeping to $XXX estimate For previous ops to you have $XX MedData that a roughly Carolina quarter, a in reminder, EBITDA Also, might in to year. been. models, the million the those from similar are contract in of million does to EBITDA what XXXX contribution for this adjusted outlook EBITDA to against our from comping the continuing order your bridge anesthesiology recur as won't North first include

roughly For we're last QX amount this where XXXX, be that million. was comping will the quarter $X at of This contract.

is our we fair want to our fundamental quarter components touch I not arrived we've that, I In to forecast. bottoms-up going time how major which at amount of process. revisit I'm in on last to EBITDA of any but detailed made full terms our through forecasting, very changes changes do any year walking adjusted of a of a the spent all outlook,

and It's quarter, by our anticipating about This For QX and mostly trends also thinking second range to into same-unit growth in revenue, of X%. experience. rate. relates external volumes X% our we're account informed mix and to the this takes

those volumes the the As on related but we market. based difficult our of variances to positive future paramedics, will I is had argue our noted, to that end immediate and view NICU anesthesiology in persist first quarter

result, first to a that's but we're payer and growth what to I giving is outlook yield mix what helpful of broader below the quarter. QX we behind As birth in and our of trends that anticipated, more views range, to weight might revenue hope a thinking same-unit of developing This to saw trends you our the some that's process you. of little maybe and have

that Finally, be But range adjusted we've EBITDA our arithmetic. MedData. clear, for purely revised is XXXX exclude year the of also to to adjustment full

and range and As initial reduce EBITDA over million. made million we the our to included in year, course last noted MedData revision by expected our we've from quarter, existing the that only range $XX $XX is of the

The other to activity. significant items about our morning I want talk transformational this is

a release, will like $XX activity. have resources management now expansion in a range now resource process well our aggregate service that this scope started anesthesia where clinical process our the of into intense These the we've process we this as information the practices Across functions, also and through out in can gone investments XXXX as the efforts, engaged of accelerate meant And of third-party in unfold. investments each human different our firms, this morning's of terms Consulting a of significant end, South, think they committing are a bit order implementation drive that as resources roughly range of technology-enabled we're tool Since and scheduling last as brings across technology to quarter focus. meaningful XXXX will a partners, We meaningfully through resources the areas the require and also supplement harness then, scope In standing in organization, with contemplated flow devoted they span each for underway. think that more, well million transformational we complement enterprise, within believe to terms technology which experience we way entire and significant where $XX an streams restructuring which in other to have quarter, three Accenture, change. administrative analytics. performance our revenue our the to sizing of will aggregate broader work the to capabilities item. behind data good scoping, these I opportunities which meaningful and be to, them we To deployment opportunities three time of meaningfully across consulting million shared and organization. over across of is you and improvements thinking shared analytics other with are in our somewhere of as We in noted the areas our transformational and there commitment anticipate external to $XXX also expanded operational at that to own of our and service good and million. tools robust I roll amount we and and and our targeted and cycle, now areas believe activities. and line we intend this resources we've we door about is for our the improvement for but include these go short, support FTI To through internal to with up and IT-enabled open directly these along change, and the tools systems to And sometimes our other practices. technology IT investments restructuring as focused

I really balance majority XX to since although towards most immediate. of for be activity XXXX. viewpoint say finite, probably intend say also would to returns through of the expect outlook, terms frame to over We a realistic activity be to yield and in X XXXX we this time won't is quarters with would is of the this process the XXXX our I the and our happening how that relates beyond of

capital, As yield. to we're also anticipated only about we go on the decision-making to safe where returns begin for I think assume they that you through but the the investments it's once recurring are significant not committing

achieve about affiliated some and flow optimize wrap you to continue ensure the for our Just intend up comments we're our that the thinking uses. with frame great will and about way of patients. mentioned, the sources we and to I improvements their the can systems take as working care want cash process they and to importantly, with up Roger ability and as to environment support physicians to enhance also to MEDNAX

you still working moving our When parts timing to side, EBITDA us terms expect in flow. of to the think to to like adjusted between and and convert for I On sources it's around are always realistic XX% it there to flow, ballpark I cash issues X/X cash talk since capital. comes operating

of MedData, expectation excluding XXXX, of a million ballpark $XXX morning $XX restructuring million cash of a $XXX you million that in range million. For operating in million to QX have transformational operations, to is in would I our was CapEx disclose under continuing think CapEx operations. of for $XX $XXX $XX million for our flow meaningfully just $X adjusted range annual our continuing to And good expectation spend. for a million to of spend XXXX This to our our did EBITDA, We range is needs prior forecast of total and million. the this $XXX suggest below against that

year roughly for So to from view flow is continuing again, us the and free all our restructuring prior told, cash for transformational spend. realistic a million, of $XXX operations

In a repurchases. acquisitions uses, expect we that I'll balanced and pursue approach terms of reiterate to investments, comment transformational share towards Roger's

towards year, more stock. value we've our the this repurchases views far heavily So given share been weighted about of our

won't on towards So $XXX side. much on that comment million but biased routine, remaining activity nonetheless we buyback in persistent are our authorization, we I more how utilize

expectations acquisition continue children to within the radiology. cash today. towards internal and Our and flow third, strategic pursue and about women transformational we are services activity talked And primarily at utilized we of length our relatively have we'll unchanged, investments acquisitions targeted, free

share Roger. I'll turn it MedData from proceeds repurchases similar acquisitions. from conference the that of with use call and intend to towards the Lastly, And combination, back sale any that, reiterate we a debt last to repayment, I'll

Roger Medel

please. Thank go the and Operator, you, ahead let's up open for questions, Stephen. call

Operator

of Rice [Operator question our Credit A.J. with Suisse. is And the first from line Instructions]

A.J. Rice

that Is the the, that opportunity other can is just discussion the compensation wondering. process Or it it and is? of anesthesia reworking on where comment as opportunity well? focused activity in the to relate a of specifically. specialties may you the the as was I bulk structure around well improving as change that the lot It seems the on as like is

Roger Medel

Well, with not for radiology anesthesia change beginning why was that's to package, the from model the physicians. we that are see the addressing other that. compensation our structured in we're compensation opportunities The the so model,

On point. the make this the neonatology at seeing really a side, need to change we're not

being anesthesia, So the but in made for compensation is bulk are anesthesia package radiology. both of changes the place and new in the

Stephen Farber

it's Stephen. A.J., Okay.

broad. specific of spoken some focus other think as them well But In in business are previously. organization I lines. about there are really, as activities, There more of elements the are on that those terms all other we've anesthesia, much transformational as the across opportunities in are

A.J. Rice

just on Maybe that. to up Okay. follow

But activity, renewed or seems me like issue around to really washing transformational anymore. have billing. program? the speak like interest you're know. your in I don't any there's that? view balance compensation that you haven't this On at on and guys feel Any whether whole to all you a have you way, of factor that in any while, of to you this in, heard either that in anything does exposure looking transformational I

Roger Medel

Yes. We bill, balance don't of course.

you are our mostly are what mean the billing But network hospital think physicians of strategy out yes, surprise is law. from network. people against I Balance I to the X the surprise not. always the but a is on Again, billing and when was is network, billing. be the think day

is little. very business out-of-network very, Our

X% And so or it's is, number than know I the but than it's don't X%, X% something. what probably less X% maybe. to less

Operator

line go to we of Citigroup. the Please go ahead. Ralph Giacobbe with Next,

Ralph Giacobbe

announced contract, contract, Is you that's that nothing just release, correct? First, previously in just The the the incremental. SAC want the clarify. mentioned to nonrenewable

Stephen Farber

Correct.

Ralph Giacobbe

go contribution is bit, and quarter. left? Okay. there want to put of MedData, core adjustments sort $X is what underlying $XX million what's the with Is initially that you in not assumed the million they the to seasonality I left that trying just what's the of And of first a after little assumption just as level then, MedData the to I'm understand up sort I well? same sort of thought of the guess get of if the do

Stephen Farber

about that million, always EBITDA the said Ralph. in Sure, the same the think, some guide. a million into QX as are in for QX something which a expectation played adjustment MedData a QX. my company bit of to comments, QX was lighter an we reasons I $X from It's our I in perspective. lighter what's in $XX for the And was little

think average you $XX that total, quarter suggest in million million if an X. would So QX, the of $X about $XX over of sort in with X, QX, million a

ramp year. of think I a into the would little it up sort bit

in go million and to million half. over $XX got the So $XX QX, you back then basically

Operator

Jason the Jefferies. go Next, to go Plagman we Please line with ahead. of

Jason Plagman

now. volumes that when just to soft do then driving on see we get Any might I guys. want the anesthesia might anything They've return you outpatient those for been volumes. movement Hey, when some to insight time to growth? else? on or or of thoughts inpatient, additional from And procedures start softness, we additional some think what's

Roger Medel

I don't soft. anesthesia Yes. I been mean think have in volumes particularly

past what participate, in and the about has to so think businesses more more is not half all I in been the center of we anesthesia. really do of centers, than pyramid talked the shift shift that probably is in-hospital We in our outpatient meaningful X for us. surgery from

So know, would on to Stephen, want I that? don't comment you

Stephen Farber

QX of yes, but had a terms in softer say expected, we they've just canceled than other had than we would each were mix little obviously they little out. a have better results, I expected, and I we mean,

it. modest directional any So just directional a with meant was It be it was really a statement. to magnitude not statement to

Jason Plagman

you're then wanted to then some That's just activity a seen I in on radiology seeing enough. marketplace your from the lot much practices. land bigger some of is And just radiology the activity those Okay. of evaluations of out how competitors. pipeline, that on Thoughts fair M&A and we've going

Stephen Farber

make are I'll there there some out done. is getting just that I activity mean Sure. deals general are there, and commentary.

to choose historically extremely with. we've that with to who we I to have think and been be continue partner selective intend we indicated

with we of perspective have and continue have to a expect in And are happy XX that the partners amount disciplined past also find affiliations I the of significant and relationships these completed terms right the – conducting not process in of think are dialogue, some manner a are the we matriculate. over active to but trying very, partners not cultural we to to time economics. in XX a very from But thoughtful the we months. very we right over we just the

Operator

go to we line Next, ahead. go Please Deutsche of Chickering Bank. Pito with the

Pito Chickering

Good morning questions. my taking guys. Thanks for

Just two questions here.

quarter impact selling at guidance, The for you're negative X% so the looking basis guiding but the low point basis first the first XQ XXX maintaining XXX guided growth. it revenue from revenue looks in first points same-store as it's days, was X% revenues EBITDA one guidance the to you're operationally same-store to you weaker than quarter, the with though year despite the

come where within So guidance? did this margin this new embedded from leverage

Charles Lynch

Pito, it's Charlie.

You're anticipated. QX experience right, QX. little bit kind that we've forward make you as we're year. into look lower And of have a range our quarter the than rolled in mentioned, into X the But might might Stephen

primary revenue kind focus basis, a is of expected EBITDA looked be I as said As it business range over my accretive one comments are way I steps take and a for EBITDA. just on last appropriate have couple Think EBITDA. to quarters, little it same-store or of negative we at have working the for perhaps, at we this through slight practice our would And focus our say, forecast think than on at sort may full even that about said add and suggest are adjusted thing we looked the by to our our that our that Hold year audience is overall the way, revenue the our top on on on flat we and impact the quick to would comes practice from. a on, adjusted appropriate more QX, thinking but our profitability in point. of that. of proactively line. where I would I'll And of this

I year, might to as suggest revenue just profitability efforts year the unfettered that line over line course trying line. in drive or to next movements relate an may opposed top of itself actually this So to the revenue our and

Pito Chickering

is XXXX beyond, XXXX more that about on as of enough. you Fair had sort give your revenue. of and how increase I percent guarantees then question, as physicians? the you leverage think you XQ the the versus And is looking how guess, details What XXX XQ as to rework increased from a Okay. points of in sort – increase can much about that And comp second sort XXXX basis some of structure, percent discretionary? at at can of a you change? growth And

Stephen Farber

XXXX. how suggest bit I and would I It's that premature little are to play there mean for of of pause a terms, XXXX. us unfolds And lot to we're about quarter sort very it. quarters. X I think probably factors into in a think over next we talk this into need broad I see the few

Operator

next comes SVB with question Ana Leerink. Gupte ahead. from line of And the go Please

Ana Gupte

Thanks. Hey. Good morning.

a on trying side realignment the their for risk on kind that and for renewals like it either for doing to is that able up down How percentage or a for to drive of or you've what Following up this – to of Is the revenue about? in leave lot? where practices. you that? commentary doing, the on do and same incentive share accelerate into been note the they And up made XXXX contracts ability then what XXXX the seems been anesthesia Is and cost again the efficiency? coming thing do you've that

Roger Medel

That's changing anesthesiologists guaranteed what our salary from the been compensation structure revenue. sharing of Yes. for the to we've talking a about,

we're a what about. like renegotiations of this that's number those so completed, We've And talking year. I said,

completed completed up year. that there probably I be been don't the We by was of now, it's coming year. more couple are that we percentage the know but have next expect before than to that will end our then the that a some what more And contracts XX% exactly now. complete have of

Ana Gupte

increased the and of save can expected of Okay. you have, remind the And year cadence to into next? cost be you this that again then guidance what on is just this me that

Stephen Farber

Sure.

plan, terms In be million of year. it'll XXXX-XXXX $XXX done of end cost this by the the

If you month after year than quarter. in get recall, with quarter to it's more month, a we acted after and $X.XX, little it continuing baked last about $X.XX,

time we the very exit So ramp comfortable by we that this are year. it will

Ana Gupte

pressures, something of is are will, Okay. side the And prepared with much around, we that you that if and cross-selling? potential talk being I I improved you you remarks think do on. more fully mean cross-sell, the realized is realized? of secular the so how to and you mostly about have said nursery in on the the there, kind you is? – care the Where Are neonate your And and baby well, early then potential but innings? go? Or in on what

Roger Medel

No, I at that Yes. wouldn't say been all. potential realized has

left the of a lot OB hospital of the well hearing side, a on both opportunities side. newborn opportunity number the on there, there's think I screen, on

a I total be is to and growth that, this So demonstrate in by think specialty. of the progress ours, of able focus that And we'll are year, there. some I making additional believe end we that

Operator

Next is Chad Stifel. with ahead. go Vanacore line of Please the

Chad Vanacore

Thanks.

call we the you're talk what cut year, end year? at target kind maybe rate revenue this At the improve end margin growth So a on the just actually given run EBITDA the the year, and mentioned Steve, fourth the of shooting of revenue target margin maybe some potential to about you but range What's EBITDA quarter, of margins. it by are could has string the lead revenues talking? that the you – for of

Stephen Farber

the Yes. the past in of I a Chad, you mentioned revenue margin just mentioned call. pretty because and movements that earlier quarters for not that really been the of addressing little we've couple in specifically very

that on then how as to adjusted it metric and the the tonnage, focused relates cash flow. total of net EBITDA EBITDA into free think we of dollars to any other opposed are I adjusted conversion

and is will focus. be that So our

Chad Vanacore

it? looking and imply improve. that way to that right. the at XQ would All you're seems from But to margins guidance XQ Is XQ

Stephen Farber

are we not contribution of course into not have efficiencies year, this course, underway. you of over to initiatives time on transformational back Again, the incremental expect, but from Math. guiding the We the we but in that significantly can margins, and

line may to And EBITDA and not lean revenue going opportunities lead have be from that so to I productive lot time, of relates away to we how time, over contribution. think, profitable. over But more terms towards will to are do that the revenue of with again, that's of additional course sort EBITDA to the course, identify, what in revenue lean that of a

Chad Vanacore

then, expect just next restructuring thinking couple bulk well, the What of million Where's you just Then, investment make? you have years. thinking target about the million of we got spending on the $XXX to that about? $XX over Or improvements the a Okay. that return expect costs be going? would it to to be do did you should company? And efficiencies to overall

Stephen Farber

lower, but transactions efficiency I are where they ROIs. the of aggregate, aggregate, some projects say significant or high some elements lead we process very better the opportunities efforts physician double-digit than are the are expect drive to double-digit ROIs ROIs satisfaction to further do. to company. There There that or that would ROIs. to where projects we are that comparable or clinical very ROIs are solid But in in

cost our the versus So more is ROI scale. the a at you're if expect you between cross detail making pursue in would us were long aware And the curves to we're to is long we more at, beginning for individual actually those see we unpacked that before of the of stream, the ROIs capital. go there encourage you these the of types investments a of, what to way think

Operator

Next, ahead. Please the Bank go line America. with of to Kevin we of Fischbeck go

Joanna Gajuk

Good is Gajuk, Kevin for in morning. This today. filling Joanna

follow-ups. So just couple of

so have the volumes commentary guess, nicely. anesthesia been had that you without much up on So should overall anesthesia decreasing, I volumes

about getting of some talking you've in one I terms decline the businesses of So magnitude margins? what's the seen the lower areas that exiting have And in is that of of business? the at, guess, what the you're anesthesia that I'm

Charles Lynch

just point mind, that, component have a did within Hey, fairly anesthesiology. Joanna, as I'll that for keep data we in look the part at of when outsized out, quarter, the Charlie. it's

or quarter. one that a just that impacted a have the that that mathematics count, component we some there. lot date lesser It's unit. weren't of that's impact in didn't was the same to talked of other some of in first about and of our to scale at volumes the down our all that volumes Adjusted slightly, more anything around had five see revenue so really businesses we didn't impact So days overall the that, were either outsized

Stephen Farber

– XX,XXX zoom our we're add little to pleased would you Joanna. of and out to were EBITDA the trying We we were EPS. our quarter quarter. to that, bit just both When we feet, adjusted a for with when made back I ahead midpoint

trying how of of We elevated color give happened level on any internal are there we little hydraulics And some businesses. that. came were out. it really what that happy with is So simply the a anything of to that to across the beyond transpired nothing

Joanna Gajuk

Right.

way line on seasonality. to this then, QX of the was as you're QX And flag are on, how so back-end essentially the anything so more year? mentioning of is guess, the rest be the talking quarter. think with versus expectations, it, roughly that guess, about Also, traction in the QX? loading guess, Obviously, saying here? I savings that's goes these right? guidance, of about year you that weakest gaining some tends you you for there's of can your a worthwhile QX So majority front, I else So the progression ramp-up So I cost

Stephen Farber

of That think correct. about are year. the how we balance You the is

Joanna Gajuk

I made on in the All last you mix right. comment, on commentary made And guess, anesthesia. follow-up you payer the a

So release some new not you of somewhat it I like But there's slightly guess, sounds call, where then to sort quarter-to-quarter. on you're the in I kind like press the it the call assume of flattish. guess, trend you unfavorable, it says moving that made and fluctuations

things So there. it's not are like stabilizing

that way will be that your in for QX. guidance still QX? the about Is worse the assume You much think mix to payer

Stephen Farber

surprised answer that bit the is we mean, in mix I of payer was sort flat Joanna, in a were QX. anesthesia

as single occur that it's terms apart quarter far mix. headwinds in the quarters, had as of tease when apart hard handful kind when of something to every actually in of For payer does. to And something tease last versus anesthesia; doesn't we've

this lack So two quarters call where quarter yes, occurrence expect to and a we for of has handful after of or that it say after persist. been of unwilling the headwind to kind QX a one

guidance. in generally conservative with approach to a suddenly along the middle down to So

couple just comfortable think is get more we before this something So with I of expectation. we need to any quarters for think new would a lot

Operator

to the James. Next, we’ll of line go Ransom Please John Raymond with go ahead.

John Ransom

here strategic for Is any morning. you on buyer? was because it'll color I'm happy color kind miss up. looking swing probably But so Do with interest great. just any to are the MedData of Hi. where the are? Are think you I you Good buttoned would guys and be on more Just buyer, process. financial you going that take longer?

Roger Medel

one. Strike

Stephen Farber

Those are all great questions.

Roger Medel

and swing is a again. There try miss

John Ransom

Really? Okay. Nothing? That's it?

Stephen Farber

believe about a operations. are level continuing throughout interest pretty we've company for well asset, with process. pleased, the is operation an think And unique defined is before, to pleased when said of rules been unique of – the discontinued from moved We as We've I the lot been attributes. we've look it positive with a we moving

that we the just know you we'll ordinary to So and would let I let know. you course, in say something guys when continue there's

John Ransom

thought human moving other slowly My we're is do long human have about radiology. you about headed? and curious going in Are of like AI? – any have beings term faster, being we where integration – you machine. right. and All question of always to we integration just thoughts about of updated integrating are kind I'm Roger, the terms man

Roger Medel

than all always and a and there hype IBM Yes. I and those of GE, expected. general lot would about things longer was stuff terms, take that in say,

I helping here the in radiologist but diagnosis. big think steps the in radiologist are replacing more reach the right the not

making sure don't making get that And diagnoses but example, not so diagnosis, the again, for so missed. much in

see gone going really have the again saying will through the through these those there's same let diagnosed machine is simply the future determined of that confirm make like we're going the foreseeable think that radiologist likely only I not to radiologists X to pneumonias. pneumonias, we're there XXX the any to Stuff what look machine at are diagnosis. and and the X just you process, a most films that in than once so have films. chest run And X-rays We're

John Ransom

That's then out you. And step before or you XQ remember, it some but surprising. this separately, of back not you issues at lastly, $XX if a EBITDA. about Got staffing so kind you couple I know running a vRad with ago. on of years was bought took break million And I I don't think

where of versus was that work do Just you've rate all you now with business you think big are kind integration run picture, gotten it? where the you there? bought you when behind the And

Roger Medel

made we've vRad I contributions that think of the radiology. made future said business. be all about we significant. terms, acquired. part the combination in general being the unique. to will we made be Having And practices of just love the progress. more The and to is are investments that, more being are that's of We topic hospital-based to with of it's always technology totally And were there's say talking of there and amount our done work

leave I'll it that. So at

John Ransom

And now. been Okay. you've Steve, a while there

that more I is now the of opinions drive hospital upstream payers from a five think that maybe from into company say, some the kind you or orientation where have where hospital-centric, three needs years XX at to bit do from now, that's land of to company are are have years any you volume the term now, will thoughts think and the MEDNAX outpatient people does kind – years orientation? will you Or future? or and setting." about awfully from Do a hospital looking now, trying is MEDNAX Gosh, long place away

Stephen Farber

the strength NICUs and around just of these the operate and of guess I on now I all we having subspecialties. I'd saying by eight pediatric be here franchise floored been the – my more way or wrapper months, and that by sort be with company, behalf that women's answer hospital of our start the roughly that then find the my partners mean, around to and children's XXX I our I continue seven to continue of

value think this I it's largest its when and that of mean, is I I type mean, So it four franchise, company, the about irreplaceable. of

very meaningful right, own. its and helping outpatient do are on growing the And is have and of I we whole without to that. in there is things including look or When future in There where do something other anesthesiology. continue presence I babies. going then rad such So hospital, your saving really when that there's think happen look, to which the addressing directly forward, simply answer question to kind it's hybrid – but field, as I hard are a

without of I the services is really And in of of industry lot that to you think also formats. every as both. And lot continuing in or ourselves hospital and you're them we can't a a itself of you other need answer have the expectation the think I a provide, So kind ASC when evolve frankly, run we guy's evolves.

So I probably think a is blended the perspective. future view our of

Operator

ahead. Please go to Matt we Next, with Capital Markets. BMO line the go of Borsch

Matt Borsch

do Yes. one you questions situation. two market, just One, quarters progressing? that or labor couple see A of labor question How wage got here. ago. you the on think the I

your curious Just here. thoughts

Roger Medel

there know labor And that market I related anesthesia. I've as we more said some down think think the I on and earlier, made progress side that, go we to continue are comments path. the to

I think the with. the just something, it's nurse are anesthesiologist, not is anesthetist well that we dealing and as

bulk So that's it's of the labor the really revolves we about I say issues, would when talk around that anesthesia.

Matt Borsch

an area you ask And guys point in different at think if a question, primary completely way? in future you I some do about longer-term strategy. could care might some your How target as the on that

Roger Medel

far to pediatrics. mixing from our it and The in care. importantly Well, – the And tends all about problem our our makes care we with high-volume, neonatal as kind and infant than business. to primary referrals pediatrics sense is general That is internal of neonatal most of the think get there us low-margin that, is as for logical pediatricians. more area

in of for practicing with us general of us sort competition puts to a pediatrics sudden pediatricians. so start And all our

patients thought but the outpatient the of But think subspecialties. where is day, going like could not probably pediatrics that about We pediatric to and have hospital. that we've long largest more pediatric time as at. we'd into and obstetrics, bringing business So an into the and to be pediatric surgery. we are some the group cardiology. that and about looking acceptable of something the pediatric neurology pediatric we'd We with neurology some do, for do be We're pediatric that some often, a end general cardiologists we're

looked we but at taken some in haven't that and steps the we've that future, decide foreseeable any to in direction. at point So that really do may

Matt Borsch

the you do would one, on last how that on somewhat that dependent Just birth see be rate developing?

Roger Medel

or us valued is patients to more the to be the to be hospital obstetrics actually patients us. very admit to hospital. that hospital, for that bringing more and we the ability whatever with would or valuable No, advantage The sticky the makes is

Operator

to go UBS. of with Mayo go line with the Please Next, ahead. Whit we

Whit Mayo

expenses I of compensation, wanted tell shifted maybe model? your many the back business way. the you strategy now percent to go us of ask today just the question have just can practices this comp around anesthesia different How to And a towards what new comp level, of practice And And to just today is another think guarantee way on billion guaranteed make versus versus where you much How this $X variable? is it maybe for there can variable? spending you're just a up asking target is a go? number.

Charles Lynch

Hey, Whit, it's Charlie.

shifted – handful size we to that a model. terms it of as groups a our larger and the of we've of progression Roger rev-share The got far, a it's mentioned, groups. so created In of handful over

the pretty portion anesthesia of decent is as a in compensation, in clinical Roger referenced. So of amount, overall terms

incentive competitive The that would what the and for output to output them activities In And is practices the at in and of incentive for on model tools a to of groups But creating is, direct revenues effectively to that's sharing. achieve direct use the wish taking to where to up first pursue same the talent the need your is provide, go around goal. have of pursue grow market, little around from a that helping conversation income their have ownership be and flex retain because the to That physicians care goes time, we and that greater to time, pockets. and first dollar we're productivity, And future basis, of question, of here be, to that. and kind structure a physicians to of actually and have for be patients. go-forward their wrap their need services down. right off-topic of we greater we to if where practices that a the kind some go more the ways and groups more that we those into risk to of their the their our say the around we of compensation, solving would dollar I recruit terms contractual ultimate the goal the the identify practices clinical model that

So of that And very it's structure, them model goal. think, moving well and this a ultimate comp kind more aligns of getting with way. engaged holistic of forward that we

Whit Mayo

metrics be you from now? to around like were year put for Okay. you'll like you And think then, and it any a where way in where

Charles Lynch

We I this physician particularly on want discussions. think of We're a of do be this group, the little cautious plenty groups, around about all leadership been other that. groups encouraging and collaboratively that and the what active done to of have over, it and why consult think achieve. transitioned the they they to with some their about has each have expect experience what and to have

So we around. renewals have some calendar have that discussions we

can we that others talk have mid-contracts. We about

with of groups want pretty don't I been enthusiastic fashion I'd about that to peers. some kind the some of this But So compensation in percent level, high would we've larger move the their get the think particularly lean to to a at thoughts too our of response and their groups, share and way. targeted willingness around of that so say clinician far

Whit Mayo

Okay. one No, that's question around And MedData. maybe helpful. just other

focused thinking Just more on down revolver bit were buybacks. paying Do but more you to towards may proceeds assuming think little thoughts. suggested you your the have I about that about updated I the And that you think you hear wrong, your wanted be sold here? refined previously the a business, Just proceeds? you reallocating

Stephen Farber

and repayment, at is some our mean proceeds, use there repurchases acquisitions. be. MedData-triggered non-MedData-triggered debt repurchase changed what's sure with – balances I'm I as share to for of really really and of -- proceeds. terms this in we it will we not the whatever mix then have share before, Sure. all and our the thoughts use repurchases how share that dynamic of probably about said other would

is also on it perspective, to don't that fall want – from things we an accretive a sale timing, So where the don't But want from it want diluted perspective. and be in we make of leverage the depends EPS to the business we cycle. sure

So middle ground. appropriate some finding

Operator

Matthew a Gillmor Please to ahead. with go we Next, question from go Baird. Robert

Matthew Gillmor

Just had X question here.

up following the stay. NICU So of on admit the length rate and

the better rate you're metrics cause down. just up Is generally, out may saying understand there would the guide. not us trend help that and taking this what move stay sustainable growth anything out like sounds is within the and length to call be to or it quarter? the of that drove conservative And So XQ admit maybe

Roger Medel

historical that's – ranges, Admit happened. right? just all admission fluctuate been historically or a but range. rates stay of just rates have been There of and quarter, and None ranges. the quarter. from length stay these But it's have do whatever, out higher, been higher or quarter data to calling that the it's lower are length within We're that this within where quarters of have not all

Operator

Blair. And It's of ahead. we one the Please with go question. line have final Daniels Ryan William

Nicholas Spiekhout

restatement quarterly MedData, be us for do just It's offering can guess Nick, I for guys you we to effectively? really more quick. Ryan. year-over-year for so in Are going assessment

Charles Lynch

as Certainly, quarters prior providing period. Yes. on the for that restated basis year a the unfold, we'll

Nicholas Spiekhout

do Anything the revenue for right like like that can now, year-over-year? of we so with especially kind MedData, though, like year quarterly last

Charles Lynch

we through it right have we can't will I do year. but it's commit something now, that unfold to as to the

Operator

have we questions. And no further

continue. may You

Roger Medel

All And right. no thank have and you forward further speaking look I thank operator, participating quarter. if with to questions, next quarter. all they for this Well, you, you

Operator

today gentlemen, Time May XX conference midnight. available is this Eastern XX through Ladies at P.M. and digitized replay after for

and the and Thank conference conclude any today. may by your You service enter you the code replay of using does access access time participation at TeleConference. your X-XXX-XXX-XXXX for calling for AT&T for XXXXXX. That

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Pediatrix Medical (MD) 3 May 192019 Q1 Earnings call transcript