MD - Earnings call transcript Q1 2022 | Pediatrix Medical Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MEDNAX First Quarter 2022 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. Charles Lynch. Please go ahead.

Charles Lynch

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

Mark Ordan

everybody. call joining CFO; Officer. today's our Thanks, our Charlie, and good morning, Marc are Swift, Development Also Chief Richards, me on and Jim Dr.

for results the quarter. with the pleased are We

X%, office-based growth. resilience in our basis, Total anticipated health line bottom challenging and than with rise. higher continue up results X% our NICU growth Our a on hospitals Volumes were the a births just to same-unit were with up bit demonstrate over volumes in patient environment and challenges addressed. and provide under expectations where care we at just aggregate and operating we line services were hospital-based a

we to during $X recorded COVID first adjusted which pandemic. our CARES were when the relates by million related in periods that about EBITDA from to related million, in the favorably submitted quarter to XXXX revenue We applications Act operations funds the during also $XX impacted disrupted the

modestly we discuss done revenue primarily in this below past, despite the particularly least surrounding billing that pleased and for XXXX. remain cost comparison for pricing, This our results a pressures at like million provided we've models. EBITDA headwinds of primarily of performance that rulings, in adjusted expectations. variance and CARES with revenue revenue our EBITDA anticipated the I'll functions, to make transition our excuse funds. although to was you also out this timing. largely had it me, contribution was proper of detail, this the point more for expectations Offsetting to internal the labor for our industry, health physician as was believe in during the good in groups we details revenue, comfortable addition but financial uncertainties -- Marc surprise care cost EBITDA adjusted in our our quarter, we to cycle Within modest As across adjusted yielding will in release. order I'm we've outlook appears with to of relates detailed was contemplating quarter, primarily $XXX of the their we your related line before in this our and ours,

in many be manner successfully and know amazing around all to our a our team On organization ensuring renewed want schedule. we've states shortly country, and pediatrics relationships, continue to fair commitment that part equally the on amazing support We to we contracts team. the payer discussions to in of. the that On challenging have environment, labor this has we'll clinical focused our constructive really I'll including to on where labor share people front, be only the continues and how deepened be

start I'll priorities. organizational our on you people. with our update me Let

of To many me that Dr. of end, As on is President will affiliated understanding great in to issues patients. is to This executive to physician organization and the and of leader, to will directly leadership physician opportunities on to our advance constantly likewise X, care. a our and Clinical the establishing we priority, group company. XXXX. sake ensure which judgment, physician as specialties decision advising this the council, is that company's work Mack our to are has physicians far group. patient his of the priority our an enable invaluable to understanding and be ensuring is reason a our for confident have represented council an goals clinicians. serve our and talked of and and of of of to our to role Chair ensuring Across of mission, President dedication adviser joined across in we've executive minds Mack for his addition affiliated their and highest transitioning physician of be affiliated of for Pickert, clinicians equally team I he I'm our an of note, personally organization, in that our areas a have knowledge the always of that And an pleased of providing our ardent focused that will rest all processes. Hinson that away since Curt as for a teams. our keep Services our dedication place and Children's as the This continue market. our to the is them us of of and meet my On from skill our this our to a organization by thank will June truly with Dr. he of in devoted today's choice A Vice on people our work Women's I'm adviser senior true awe pediatrics within organization want our to all I'm given entire practices, also here. the I physician better our pediatrics a first-hand opportunity Executive me council, an it's equitable experience remain organization. him in fully support for true for of are taken, to group practice to behalf in our absolutely steps all earnings been that on we has can the That's leader he about Mack practices done entire is amazing number professionals nonclinical February and our ESG of including affiliated patients On to will key call, support all operations. an commitment

to amazing of we throughout a brand XXXX, women's pediatric's choice, recall now not the company for core that, efforts shareholders commitment This of couple behalf on now that and this being core are approval personal you'll let growth. a entity our deep public employer can our find to babies our logo, integral caring and marketing in across brand. asked we of name practices. excited our shareholders. to for website we pediatrics which is out company up introduced name and position signify Further about rolled meet will return I'm to of and inclusion as a Here truly well-known in importance ensure formally March, commitment do The to the our again, also pediatrics to buzzwords. new are our And formally that to which the of I nationwide, not return a also full I which great trusted believe and and of and and for and Group, team, across the and we'll the of thanks strong well. the children. that my in to Medical year, be of our respected the signifying focus return teams to our complete Pediatrics highly our X country name clinicians is standards hospitals our view in our corporate you'll and talked in diversity the involvement and high strides a in just our the and is affiliated the as partner rename our that pediatrics,

Following year pediatrics and of clinics de care brand care of to of several opening a begun urgent our us the We've XX in this of care our of centers. Orlando, new second platform, bringing before primary of clinics acquisition novo key the markets end development urgent of process NightLight earlier goal their this the to clinical urgent with year.

role added as to a component reinforce team our development the also has estate, de of existing Building us new market key area As that We've care a of also is who our additional Since in primary real company clinic I've a said play opportunistic carry within expanding. Jim location, senior it. role exactly for the opportunities the the Dr. and size to us and also since our give directly contemplate tailor name. opportunities acquisitions, the past, to real in business of still a urgent locations to a also and pediatrics clinics report to believe we'll in key presence chance markets to novo key I will estate this our but our is brand Swift, gives will clinics development these and head whose layout footprint. these leadership pediatric's

make and are. people. the pediatrics teams their call the special turn caring I our that operators clinicians we to thank the Marc, support The want I for Before that organization to the patients, myriad

to can It's gives our stakeholders serve our well. continue despite priority, and changing to that that, every a that dedication that highest the as continue has to operate succeed, But never and that patience we dedication in of grow see environment. We and me motivates challenging all confidence day our me I wavered.

call additional the for details. financial turn I'll Now Marc to

Marc Richards

primarily they Mark's our and Thanks, transition add revenue on process details some and everyone. morning, our comments relate X results, I'll transition position. that results and Mark, to then financial were to quarterly would I provide as first factors as quarter management cycle, that our cycle there on outlook good to within Related our revenue to impacted timing financial which related. classify modestly revenue process

our previously you sequentially QX days directionally at was been our surprised reserving since XX that but AR were Based this. for slightly there in in this receivables, versus RX would which our there at was accounts on receivable extension unbilled our beyond to XX see not aging manual end. roughly nature, that March balance as to sheet, of by practices affected As an as it of XX. RX. quarter functions XX We in had be increase by our was our modestly automated million, This an December $XX transition the revenue expectations delay various increased some normal expectation will reflects to brought the DSOs related by

However, a this timing we view matter. AR predominantly as aging

of collection over by to this to amounts. RCM also our RX a which normal are return activity, our DSOs of self-pay normal Separately, by And expect but other We correspondingly, in also historically to our expect also year. managed uptick but slight not transition third-party saw levels these related the we we historically vendors. receivables, course a

For point to for that context, I'll which total our self-pay, us is typically true out X% of only X% revenue. represents self-pay,

these the we our RX. is professional decline and in Net-net, separate amount. vendors to true primary RCM the the in a QX, pricing normal yielded from is said, fairly our you EBITDA at believe we the CARES second, with expectations That underlying the collectibility adjusted to and might again, vendors net this MEDNAX our carry accounts. RX. impact from in transition closely revenue levels All manage quarter. items ongoing we transition modest are which, RCM the of variances balances, our to whether cost This level, reflecting timing So trends nominal prior line told, had our the these several remain to G&A modest we of utilizes a these temporary we received. related lower to a on saw accounts in that to expectations largely for these within and the determine savings as these rate. in funds were or lower at practices. self-pay pieces contribution salaries combination optimize At of our primarily third-party from with practice same-unit items, are expenses increase the ensure QX, the following RX, in internal to collection primarily shift, modest these our it's X which, in favorable historically working first our a revenue first these modest fees also a existing Offsetting imagine,

the year. the for that first Within million. $XXX adjusted expectations quarter quarter, comparable our of of second our As EBITDA as to in second than our least close the outlook sheet XX, in March a on for only growth and maintaining total quarter expect I'll year's completed our with net relate of slightly modest to range reflects at the Xx million, of gross both our cash year, structure a outlook, Mark trailing prior for reaccelerating EBITDA of results with of balance adjusted EBITDA for amount of million noted, borrowings of EBITDA. position. we $XX of billion or revenue during to the we that refinancing financial adjusted we're the approximately EBITDA roughly and the XXXX with of the half On in adjusted $X $XXX underlying our leverage adjusted quick be overview CapEx higher and

we loan ongoing all refinancing fairly are our is our Our debt debt our March $XX in fixed the debt interest reduced credit million term on rate this XX This service borrowings, prepayable. facility revolving our million and $XX of borrowings be floating expense XXXX. compared of Based first and to of between under in quarter structure year to million costs. significantly the quarterly $X fourth expect our evenly and quarter split and approximately

believe efficient structure an flexibility with capital Mark. back also our turn I'll the the provides and to foreseeable future. call debt optimal for offers liquidity over us We structure current that

Mark Ordan

Thanks, any Marc. questions. We're ready for

Charles Lynch

Cynthia, questions, for open you we'd it. can the appreciate line if up

Operator

the we And go will line to Stifel. Tao Qiu Instructions]. with [Operator of

Tao Qiu

has kind your much before any active And You maybe you give cost your relative of expectations? have market the on opportunity acquisition taken if update refinance the I'm you how pipeline an year-to-date rates seen now of in also the of us capital wondering increased? the novo to acquisition debt that could moved or changes de your to have higher. is

Mark Ordan

in change acquisition seen the we've some Well, pricing pipeline. in

this Jim, if dislocation provide team anything think our that bit uncertainties to there things now. we've billing a bit. that us want relative to -- the opportunities want little that add take to this that? stab all surprise of a we those know, more been out see We to to on a the and working cautious do Given are legislation, for don't on that will level still out is there's because pricing little I how and you

James Swift

the I different think primary just continues to there market. specialties among and be subspecialties acquisition the interest in care

Tao Qiu

been capital? transaction about by that Has What volume? affected the of cost

Mark Ordan

Only slightly.

on our on side. primary our care call, has last As focus we urgent been said

to continuing which to it's to also where flow helpful, we've a So that's what at is fuller working better we're been of And key properly. be I'd and even now. of also major system that and to can with seen But right growth. And big that's, our would hospital us, very them, areas of to a we want we the trust and transactions. and in I foresee say, partners where we digest are point areas interest which doing look fill

Tao Qiu

of increases. but know I you labor labor that of Got they're seen expect on and levels, kind for of your kind year. historical with what relatively that that side, the on cost labor where Would salary we've the Do on you. seeing to stable? at here? hospital remain accelerate the rest benefits in outlook stands the that front, wondering to see some costs what's you growth And that physician you accelerating be mentioned the contrast I'm

Mark Ordan

retain and it mean working to of didn't difference. some material just any forecasting not as would we're I recruit certainly people. made. the than I ever harder -- wasn't comments think I fluff I say that We're And it

organization. that Pickert work feel the does clinicians the join alignment others really mentioned that organization they double have people that think own executives so on so and sure and key double is I such there's our the time and recruiting to executive physician a close we down, making just Dr. and this here. between for to them, the this personally our our that team to home organization people counsel down the want to to our has attract efforts the us whole is I when as that

as we the resources saw heart we're that, of well. quite we have something that terrific what In part since doing shifting, I think that's of wind the team. that department, team recruiting our do. And that's really a to really added we we human

forecasting So harder make sure that materially to -- anything working except things keep not that materially don't we're different, we on we're we track.

Operator

go Next, A.J. line to Credit Rice of we the with will Suisse.

A.J. Rice

Thanks, everyone.

terms surprised part the out going maybe First, your arrangements discussions changes? and pricing payers? move also ask billing. thoughts any care, on just to to any Obviously, there focused about impact any you're with updated people of from versus seeing network are managed whether on of be that will of on Any --

Mark Ordan

about of is haven't one that good the reasons shift. a A.J., Well, we material feel number, seen XXX that we our

had, our line with as mentioned, our all with I renewals major and have dialogue schedule expectations. We payers. We've very good on in of had

in cross had people there's of but current certainly So been a wave that a things direction not feared. a negative

hoped Now I about back that Medical say after April by going be can the there'll Texas Association they'll they're I And by that ruling summer. was had many that what think and the they've think and that would we there from of early to where clarity year. government be, to and speculate get this is, people reaction the the clarity latest that, said expected, be

being modestly I would to feel we'll but is and be have wait the least that And we what do very about to at and what right Having say comfortable, the a said there's there I everybody Really, people read. can would I little bit clarity, read out is everything during -- I've until think would that, time, I thoughtful think I more way done of So in realize government they've things. this limbo. think see.

things be So along until okay. we to learn moving seem further,

A.J. Rice

question. a maybe follow-up And Okay.

of like there. see the of it it's much to quo? deal, changes subsiding now toward been try a NICU the what Do pandemic that slowed a discuss you bit, since to systems is making mentioned And that management big of Or Is announced being I do significance a you are that hospitals potential picking status pretty your was to can think health willing part know that push discussions the has while up? You what those seems pandemic you sort about? deal. is making you're to or whatever. a Memorial be push

James Swift

their seeing that's inpatient perceive looking from What think the A.J., on both needs, standpoint side, Actually, more and what fill. I we're the see health we're Jim. is not as them trying opportunities. is and activity this to it's systems we with they of a what at different accelerating

I they're is really do side subspecialties what on think of how that the inpatient support at patients with being able the arena. these looking really lead to we on manage some to ambulatory them

to a national been health local the very we're relationship at strong large services, trying at engagement on And would systems. a a both and inpatient level, to that our So I it with build level good as ambulatory. the all look characterize on has

Operator

line Next, with will Ryan of we go William to the Daniels Blair.

Nicholas Spiekhout

now? Can you hear me Sorry.

Operator

Yes, go ahead. Please we can.

Nicholas Spiekhout

Okay.

on any just there's Nick to Ryan. I inflationary the up, about areas other start guess, wondering of Spiekhout typical those if of that. front, just outside pressures is guess likely Sorry are the to kind for likely kind inflation? of on I wage where that -- show

Charles Lynch

Charlie. it's Nick,

virtually that what front, the you real just you be. think possibility you may whatever and see been quarter, I answer seen labor our can supply I think that case in can pretty is based have all time, going first As has on we In experience, front, to imagine that, as chain our can always anywhere, be favorable. itself a the on the the there's that about show P&L, throughout

regardless all is have functions, us underlying at at historically far As so have, at savings a we year, a over we've practice in seeing as the I'll which some -- least trends, nonclinical add the of turnover Marc activity. we afforded look this our the the and at Richards also that In which and -- looking benefit G&A, salary normal environment. underlying we're of changes timely level, year, has opportunity that fashion, made past our corporate good trends, for to-date mentioned inflationary the on

to So think there. doesn't of We've good that against lot pretty that's a them. work us those insulate from it helped I some forces. But opportunities us they're not mean just outside had

Nicholas Spiekhout

front-end then last transition last Got of the kind functions. mentioned savings, And you. the I component RCM quarter you that of that was think RX the on on ambulatory

of you kind late I target? to to the are Is of on still targeted benefits think that the And we front? that for XXXX that. mid- how see

Marc Richards

that Nick, ambulatory plan. for slated of it's Marc the our The end still this piece and is you. Richards. I year, within can towards still that's project tail to Yes. speak

Nicholas Spiekhout

pretty I guess just then quarter, couple And a one Is the think one, completed you. by take it last last now? integration, Got months. that more should mentioned Brave quick fully you I much

Marc Richards

that Brave we're investment our front a we digital the EHR a with now with Well, technical have relationship integration, we and on for them through that's company an door. working and made, technology their platform

So with we're we of with status the concert that feel rollout good in about where that. we are pediatric them working we're primary care and urgent obviously, ambulatory doing. some And the of

that So working well. is relationship

Charles Lynch

Yes. to Brave the an Nick, have that that, we is And investment in clarify on organization. with that relationship just

So it not an was acquisition. outright

advanced us is. up. in IT to So made that's pretty brought the that that It's and opportunities they a Jim support what and for the and care where clinics, platform primary are focus operating our of availability access us, the just have investments brings urgent

Mark Ordan

been they most partnership us. beneficial that has terrific I would have also relationships, team real for and and I very a investor/investment think find there's which don't add, culture in a you'd

Nicholas Spiekhout

Right. Yes.

just from of that So the of kind on mostly those you of partnership. you efficiencies that? that of Are you're the expect of the -- kind gaining with efficiencies majority kind kind experiencing like that

Mark Ordan

that's as speak. No, I think we increasing still

and clinics, the when of it. think that's we'll new effect to open I full clinics feel locations As we both transition new

Operator

Securities. Mayo from question Whit comes next with Our the of line SVB

Whit Mayo

I hear something me? you funny. just Can heard

Mark Ordan

do. We

Whit Mayo

Okay.

XXX the they days, think reserves added guys days. methodology, reserving until didn't really higher I maybe On XX age out you than more

XXX, in more was? the something further -- is trying understand me this out? to I'm receivables quarter? to So just this related age even this maybe receivable XX, timing help the which that's category this out. of what Just Or Was wonder

Marc Richards

of It's see those you receivables that from the view as It's DSO. And they and I a but perspective. age of into bit want every more through or get accounting both. Certainly, out cumulative matters is to the don't Marc go our less And it in the policies, Richards. intricacies pipeline. day little a the age

Whit Mayo

So go just like be given reserving some but like methodology. XX, seems it, you to the receivable. that every if to this I to clear, XX, would the it trying into we might bucket I'm said so didn't automatically it think was XX against that go time make be from I I policy that you next whatever time, so manual apply XX there's a there automation reserve would exceptions about is, it helpful. XXX% of here the you understand to I sure to that want be timing you and talk know guess higher --

Marc Richards

history. absent of we function. reserving history our built is we point. onetime contrary, compelling mean, event our transitioning fair that's and And change our do no. seeing kind the yes, And of I wouldn't that here are at MEDNAX we the methodology absolutely that despite that methodology a a fact off Well, RCM to information

would the efficacy I out all to prove coming of say So months. this need we the in

Whit Mayo

Marc? that gross think does would X% allowance, impact, at it used to think balance million XX%. mean should imply just if way revenue this the And -- the it simplistically, working XX%, sorry, itself? right XX% the sheet I $XX I against look I'm think Okay. was to mean, I that I of the AR we Is impact actually been level. it's a -- be

Marc Richards

a about that's number directionally, say little but That's a probably directionally why I'd -- think way is good to high, certainly it. that

Whit Mayo

a a was say, first as play So out, quarter, just next up like, guide good get quarters? all a few do million that the if you make minus things let's argument, the number $XX $XX in million, this for the in there of if to sake back

Marc Richards

normal beyond policy, receivables fully as the that have the despite I the the future, are our premise here. that the collected Yes. It's aged receivables fact aging kind efficacy those mean of that's reserved. timing are process. those of there's And in

that's the component. timing So yes,

Whit Mayo

claim just additional last maybe scheme one just into on on root may mean, and cause I things. turning And I edits. fairly this guess, you payers more detail is? And back the I the mean about be a one things, appreciate in hearing automated -- are just what Can to to of we're issue? it versus visualize Okay. also, topic. are I go trying here little if understand manual this it. trying bit I'm small, just exactly exactly I'm grand understand some I but that any of the this. numbers think in you

Marc Richards

we we simple. have. It's I technology They are. course, part their they kind reason And of with of investments Yes. mean that was didn't to RX of are. and they've course, of automated the due the went made into that, business intelligence

Mark Ordan

is in payer behavior. a change not about This

Marc Richards

Right.

Operator

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

Kevin Fischbeck

that. core and to the just ex follow you the CARES on up sense Maybe of your money pricing was what Can ex issues? Great. give RCM

Charles Lynch

years didn't I've the and there past see that experienced to comments around made some from that. several any we Yes, variances Kevin, what past over the we've typically repeat in meaningful in

distortions the has pricing. and managed Our normal the meaning just change, underlying items without of typically care escalators kind Driven of rate payer generally to on by range. like, experience offset Medicaid by mix, like X% pricing X% been somewhat the this, in normal

correct admin same those but base. another the unit of is this which, the unit calculation you for quarter And within very not So were on core pricing up as way in somewhat, are know, component same meaning fees, again, our in then there. a drivers in

these historically distortions absent are of quarter, about I'd the Some some normal. pieces variances say this that was and

Kevin Fischbeck

like the sounds How Okay. of you X. Or And should about the is X/X, that? then RCM -- Is the Is of about the X? should issue, it we we X/X? think RX when bigger the magnitude about it a mentioned think X. think how we

Marc Richards

I'd probably think half. and a more half it of of

Kevin Fischbeck

like to sounded at it's you still Okay. But doing working you point self-pay with the makes that work? like vendors you're on issue, your if sounds temporary guess, And it. temporary believe then it's side, what drove also this that you I still that understand what you're a of it kind think but

Marc Richards

was front a transition on that. with dig us on really first a that it pause Well, leads just RX quarter in deeper the our and blip to in

Kevin Fischbeck

I last guess maybe then. And Okay. question then

As see, this with that are normally as care kind you bit rates. little I I'm of time. think like happening things quarter, waiting that I quarter, you're discussions last sounds saying it contracts had said to far mix a think, some higher you your going like on were sounds at price, it managed

So Are to kind is and still Or still of that a companies more forward? half? looking are that renewing wait-and-see taking the some approach back just move they in number of the kind of change? maybe

Mark Ordan

Overwhelmingly, wanting things we and not off. putting are to renew seeing companies

providers continue enjoyed be have in our continue networked we want being network. the We to. and overwhelmingly And clearly to to

So wantable than today might fear we we are be. we

Operator

I'm [Operator no Instructions] questions in a And moments, continue. few showing Please allowing queue.

Charles Lynch

If there be with support reach understanding and are to all morning. further assistance. think Thank can no this have other and a are we great you of if out for and optimistic us day. your questions, set I we And

Operator

participation today. your your using Executive ladies gentlemen, And for much. Teleconference Thank and AT&T you that and for Thank does for conference very Service. conclude call you

disconnect. may now You

Pediatrix Medical (MD) 1 May 222022 Q1 Earnings call transcript