Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Charles Lynch. ahead. go Please

Charles Lynch

be and and Litigation forward-looking Greg, appropriate. assessment Pediatrix's of and call. everyone. future this or of result quickly experience statements, forward-looking the based call historical statements I'll statements in trends, within are forward-looking Thank meaning factors duty expected statements future their management information, made today, Act the and new good made light during of conditions, of developments then no assessments our of may such conference undertakes whether this statements, information Private they to the current assumptions to of we'll read as as by made be Pediatrix are and otherwise. events call statements believe Any update a Securities you, Federal other and any during and morning, deemed Reform or get on Certain These to be forward-looking into XXXX. revise

Important the and factors from Form described on its XX-Q developments reports are and reports forward-looking current sections annual statements could differ in results, decisions quarterly to X-K, business most on Form including materially recent Form report XX-K, Risk cause on the entitled its company's that actual Factors.

by and press www.pediatrix.com. earnings Form on Form the comparable morning's report GAAP most quarterly website discussing In on non-GAAP be these to measures in and our at financial our management, this XX-Q be remarks we will annual reports of measures today's financial metrics. XX-K A our non-GAAP reconciliation release, found on can

our to call With that, turn the CEO, Dr. I'll Jim Swift. over

Jim Swift

today everyone. Richards, morning, good Officer. Chief Marc and is our Charlie, Also with Financial you, me Thank

as and that year expectations, of line maintaining see between million quarter full were $XXX we're our $XXX you'll this Marc And in outlook results morning. some variances EBITDA for Our in with release our morning, million. I will discuss this and first our largely with adjusted

office-based same-unit patient against comparables. nearly trends, against grew the where services, positive relatively volumes were stable our business X% strong comp. terms year-ago X% particularly volume was for This In of year to prior a case

and were Within year-over-year, a comp. metrics on was NICU basis. two-year days our year-ago also same-unit And compounded services, a against this up both difficult hospital-based but births declined

As this you'll see in in activities, in mind our same-unit management detail pricing our we in roughly year's which was $XX I'll strong, modest in reflects keeping funds. growth million first minute. CARES morning, pricing cycle last in release recorded also a that partially quarter, This revenue just improvements

we've to normalize similar to side, course above practice-level cost hover last this expect trends, of XXXX. the the expense through to our But historical the continued few growth growth On expense what discussed quarters. we in

year-over-year continues we net area Lastly, efficiencies continue seek to And our further in G&A to and expense staffing. we reflect primarily services. of the created, our in corporate have declined efficiencies will

staffing our Turning focus to in nature the beginning particularly we activities by subject expertise gaps encouraging, highly but hospital-based date, on the necessary front-end matches no the identified to bring made address to targeted means clinical been had the internal revenue our has matter experienced care. to of the cycle, in that I'll classify and in services, Throughout this as year, the of additions, progress complete. both we've

the benchmarks, closely that have metrics, quickly very Our internal to that improvements any we the ensuring right team we identifying ensure has vendor and are implemented the make worked to had to tracking with our that to variances we upon that bridge we we're be front-end to the have go with we date can pleased identified built and past. that gaps in have forward. the spoken Overall, steps about as

still it's believe has our moving hybrid, is Marc an tandem reduce that our extensive nonetheless care. through detail, unbilled our point us or effective, AR; internally emphasize on our effective only the And improvements we to ongoing but enabled not will I business, and accounts be our we and the in get most early, our that receive proving receivable is hybrid the the front We at found vendor of also also an solution from believe necessary we ultimately while as with this vendor, a in is with staffed in end a working DSOs, near that, basis. our claims services revenue. supplementing What generate that higher-touch process; will function

to over Marc With turn that, I'll Richards. the call

Marc Richards

Thanks, Jim. Good morning, everyone.

details results. RCM our activities of our through how flowed with start financial I'll

declined XX, year. March and in As gross a we above the see days our release that the this last AR end were year-end earnings have still since of our high year down days DSOs our net ago, eight Overall, and morning, both of you'll XX-Q filed would and historically from range but to from consider down be normal. two XXs as days XX

funds issue net pricing represented 'XX, our despite a pricing on side, first the pay CARES P&L points increased by was half burdened surrounding also roughly activities, a the highlighted RCM not only collections, of by we pricing our same-unit In 'XX. QX we quarter in headwind the year's private quarter temporary same-unit the recorded on our latter but based last call. discussed core by On of first of the which XX that X.X% headwind of we basis year-over-year

year improvements for P&L. same-store burden And sustained our Accordingly, outlook. continue discussion to that pricing, and full despite EBITDA, our improvement are adjusted core last a component in our RCM additional of year to of a notable similar activities outlook

employee net compensation were leverage ended We $XXX of Xx. of just finally our million, and as payments balance the with net over sheet. borrower We and quarter, we Turning QX, quarter net the debt, matching. the in during plans typically timing are to on benefit a incentive based

call back to over With turn I'll the that, Jim.

Jim Swift

call you, Operator, Thank Marc. now the open let's for questions.

Operator

comes go Your from Fischbeck first [Operator of America. Bank Instructions] Please the Kevin question of ahead. line from

Kevin Fischbeck

start just things. of side Thanks. cost on Maybe Great. the to

do be kind see to you I what's the tell You said to Can year issue. just cost you will you comp a the when us guess, as start just that of -- growth going the expected And that? it's on. that moderate goes driving

think So when better are we cost start how once that then about you growth And see things should to getting normalized. year-over-year.

Marc Richards

Kevin, Marc jump I flip then over it I'll to here. don't Richards in, Jim. Why and

You are correct.

Looking in item for discrete outsized did see same-store normalized in increase I compensation. progresses, quarter. comp And think sequentially we the also that's the with the both that quarter-over-quarter, an a note. and That P&L growth the as to projection to clinical year comp, important and expect back at consistent our more we to revert is

the saw in we first So quarter. that coming

I year We expect it to Jim, continues. don't if you want slowly normal as - the know to revert to

Jim Swift

quarter, growth talked growth the organic of lot a practices and as up. activity And we this does this years. out then with last on, the last de quarter, first smooth quarter generally, and that cost the we in some growth have we some occurs Yes. will in And ramp Kevin, our over add and into as about see come this novo of that

we So to think, again, this return will normal.

Kevin Fischbeck

then on no just still, some. Okay. that's concern side, pricing that, I for a Great. surprises obviously, guess, the And

of have seeing, Just hear working want the the to whether on what DSOs skewing any that greatest are are or that from input and backlogs the you kind Thanks. metrics. of any happening how latest is process and guys

Jim Swift

I'll start. Well,

able with gives backlog. pause. push claims the out the IDR on payers We CMS we're nonetheless, winning been what's from with of payers, of process IDR about And these basis, But that the the and successfully and this we've XX% of in process, XX% to IDR XX%. going winning on we're the the individual some many through to further But still these. reporting, -- process activity have us recently with not been seen came

think QX line XX%. on in providers, there that came I a And the average, report CMS out was trend just that winning about were for

built be fair process infrastructure and payers want able on to that's piece that that and balanced we So an manage the succeed, IDR to message level. this we that a to we've think important sends the the

hopefully, that will and think of bring those conversations of with out who So payers we some are network them. table, the this -- substantive had to we've this

Kevin Fischbeck

Thanks. Great.

Operator

from comes Brian next the line from of Please go Your question ahead. Tanquilut Jefferies.

Taji Phillips

morning. good Hi,

taking my question. You've got for Thank you Brian. Taji on for

to also just we at pricing comp will that year? right? trend considering how from I the on thinking throughout -- be circle should on How back XXXX. first, commentary that Now your looking that want with about negative persistent but So pressures, we reconciled growth, same-store RCM

Marc Richards

Hi, Richards here. Marc good morning.

in I efforts. was first basis of RCM quarter think that's year. first CARES a quarter about seen a pieces to by points burdened of are last pricing the our quarter relative marginal the That pricing for about great up as we've of XXX question. XX lot And points. to there in relative Same basis improvement the unit

first points issues the quarter is we basis for with taking points of XXX private of same-store side in last that. pay so that the offset there's basis account, which accretion partially year, XXX in or saw by accounts into of there, which So

point XXX probably quarter, So the through picking basis going expectations area, the looking it pricing first is consistent at forward. with in

I component, also analysis, probably that prior a catch-up in would note smaller there's some that component, activity. some year pricing from

in progresses, So a say basis point the we as that's creeping still to lot. I'd I our are with that XXX that the consistent extent year range that's expectation. know

Taji Phillips

I I see as balance $X hand. the the QX on million And sheet, of cash I color. No, you to shift ended appreciate then with

improving Just hand. curious balance your on about outlook cash on your

Marc Richards

That's year, in of quarter borrower. net the a first question. the -- We a good we're

revolver of and the payments year. practices that. funded our with arrangements our Accordingly, in we compensation Our incentive on require drew March annual

we will expect, our to quarter the the quarter will do year and continue decline will However, two. build cash over as and goes position on, borrowings or the up change, that net next

Taji Phillips

you. Thank

Operator

William Your next from ahead. question Blair. comes Ryan go from of Daniels Please line the

Jack Senft

quarter. great. and for service with good some care? like guys would Any this office-based on and medicine some of other area the This fetal urgent maternal color you Any strong Hi, morning. or additional comment from service a here contribution patient added year-over-year on nice being as is primary pediatric Jack be Looks growth such areas, growth the Ryan.

Charles Lynch

work Lynch. a it patient growth The in small our remains piece Sure. you a line. I'll care. will I couple revenue. strong It's give fairly see of in of backwards that net We've pieces, primary on and relatively that, is to volume service total in urgent volumes caveat and continued Charlie aggregate,

to So growth, of impact in our terms much. same-store volume move doesn't overall too

fetal also at was total we that office-based of medicine, our just and saw Within the in for service our cardiology under service quarter, office-based was strength which and first largest we saw that looking services. the lines, primarily are quoted the But growth office-based lines, the maternal peds subspecialties. within we X% some

Jack Senft

you. Thank all. That's Okay.

Operator

next of Your comes question go Please Rice A.J. the Suisse. ahead. from line from Credit

A.J. Rice

around Hi, the cycle revenue Maybe on comments management. the first everybody.

opportunity making time you're to respect sure with you're support sort So on this to to you just XXs. with and everything rate, you to expenses you that this cycle days that will of of reduce to a costs maybe there, get going Any back run right. management normalized frame Or you've then track, a it incurring see high fashion. go issue, on ultimately, DSOs the things an think, more staff to also Is side beyond a associated the as getting at And hoping the in forward? some on getting get XX and you're that's that? there added revenue

Jim Swift

the to for speak can Jim. This thanks question. A.J., is I'll well. it Marc and as start

automated what we really little on challenging to the fashion. a at at think amount an we the in is where fair found the times in Especially be I I of of need can information, that point bit what hospital-based touch there's side, and get commented care. high a

and activities. some So But you we've doing bedside, them folks folks get of actually, of almost at back, forward-facing information. to forward-facing used -- have if will, the some the put we other organization this within some be at these

that the focused people side smoothed has that but terms a It's RCM. the of we're amount front-end of of out on, in the small business

the going the We what because those we are. challenges line of that's solution part right in are people keep now think to to

for keep right We back with the we're some for But then on to also Marc, in we're the and vendor what the end on the beyond it's folks going not these you? cost end. now, working But do providing. significant future are areas a line. of think the front we

Marc Richards

your note Yes. guidance would DSO anticipate I just 'XX for on our continued question. improvement expectation the quick does in DSO. real A.J., that

as XXs So this we year. high approach would that year-end expect to be in we

A.J. Rice

All right. Okay.

Marc Richards

RCM. need with We'll triangulate to surrounding continued to relative improvements efforts our

A.J. Rice

that the already direction? arena, to the -- areas Okay. in opportunities potential are NICU, you in And you're growth with then pipeline Can women's talk about development on there services? respect where business NICU, just maybe manage you for adjacent to add health you other that and more seeing opportunities a bit you little out the see where the what

Jim Swift

thank organic you. evenly I the and it organic probably have A.J., specialties of across the specialties. inpatient Yes, a Listen, robust growth. think we standpoint, ambulatory breaks still very an from pipeline

care, those service do have Some we be there. opportunities may tilted and towards newborn the critical of lines NICU but pediatric more in some

On inclusive of we pretty a the X feel side, that some is in time we we're good that Level working NICU. at have actively nonorganic pipeline this opportunities

So approach, we and more that, a but to on inorganic. it's balanced feel come organic on both pretty

A.J. Rice

And finally, -- you hear hear fees hospitals hospital-based They then services calling reporting. when the increasing. I some people out associated are with

reason? Now Is on doing that changing with like to any there have anesthesia that terms the emergency what maybe hospitals it's a in would mostly bit. sounds you're any pay going room, year-to-year dynamic for of little you fees

Jim Swift

do A.J. Or stipend OB know in to require hospitals. approach think But that, arena, hospice we to our haven't flat. again, one services the big in change that in our requires smaller volume. has some that's are the There with pretty that sometimes a contract especially support, seen I approach. fees been I some

know, -- largely you do As have have we're stipends it. with not practices our

been So forefront again, at discussion. of we that haven't the

A.J. Rice

Okay. a lot. Thanks

Operator

Your from Bank. Chickering Deutsche Pito next the line ahead. of go from question comes Please

Kieran Ryan

there. Hi,

on question. the Thanks bps got down saw that I taking You've was for Ryan mix commercial and for Kieran year-over-year. Pito. about nongovernment XX

a the any had wondering up you talk this impact puts just year? X% was the do but range if just to see could I So not you on about within that takes still pricing, given and there. pricing in huge that X% broader And move,

Charles Lynch

Lynch. Charlie it's Kieran,

good picture think a you that. Marc reference quarter. gave mid-Xs Essentially trend that range the in pieces around a for when this core I

you're think I So there. relatively on point

year-over-year for is a did a It of side. basis, a mix, bit though a On a trend here headwind gross the very mix volume quarter, for side, the payer yes, pricing line see the this impact up net say looking I back at looking by government we on on and had bps still that on would XX quarter. multiyear to modest our slightly improving. a we're increase little that, our at stable

So smoothing out quarter-to-quarter, And in out. But meaningful stability mix. amount to overall given got a very a little has variances bit, call trajectory. a that fact, there some in that like we've slightly we favorable of those are our it payer

Kieran Ryan

a impact see, on to check at Got million RCM Just quick it. you. wanted Obviously, Thank the just that just improvement sizing And to front. follow-up. can then about still I I get you wanted weighted this the $XX to see towards are if half? that... in year, the first

Marc Richards

with correct. consistent still expectations this That's That right. year. That's our is

Kieran Ryan

Thanks so much.

Operator

the next comes Securities. ahead. Please Mayo Your SVB question from go line Whit from of

Whit Mayo

Thanks. morning. Good

the Marc, Just reserved fully AR guys clarification first few a quarter quarters? here. did any had you you recover in prior in questions that

Marc Richards

that the through on contain extent efforts really related That's may it's last Well, of any flowing My was, with it. to positive, rate the the -- that of component There's are that recovery additional face, flows of to through. rate analysis. comment really -- a not the significant is, quarter year its extent component first that. that some

Whit Mayo

Okay.

you guys year. a also that prepared comments some more little on of in Can think you see corporate efficiencies your expect some maybe I elaborate in those just to efforts? this you referenced bit

Marc Richards

In terms overhead? our of

Whit Mayo

Yes.

being as think should number this sure you're efficiencies wasn't a seeking yes. that's just that we our year. effort, if that's sizable circle in I I ongoing some if an expenses you corporate said or

Marc Richards

past would we there I relative or No, to say -- changes. over what been done have significant have was that year two, the

to the a right the But now, as to we that don't in the remainder We or material have of significant throughout expectation year. program seek cuts we place efficiencies. indicated, of continue

Whit. take overall that, on I think that's our

Whit Mayo

Okay. since make but by quarter. And in indicates No, overreading I offset release, it's press that be It that's in I it. this I just the in want the comp may incentive at to a helpful. sure was decrease get SW&B

comp. the Just year prior That might not more about just I'm that sure reading comment incentive be a that.

Charles Lynch

Whit, little level, we will this practice largely the there, of received first comp specific, flow-through related year-over-year and to that the down it the Yes, CARES and didn't to and and That's bit it's accrues incentive variable Charlie. comp which recur it impact 'XX, dollars in the references a quarter year.

Whit Mayo

your guys I sorry. for providing you Marc anything, but sort specific know I want that to Last or if Okay. of guidance every was out you'd the be internal habit wasn't it don't just there Charlie, that one, call quarter, in to sure of to or share expectations. care relates as

Marc Richards

the address. to we not in notice that QX. want that, extent noticed would that anything quarter the in consensus ahead, did to that related say expectations We would we to I

Whit Mayo

guys. you, Thank Perfect.

Operator

are there Instructions] And at this time, further no [Operator questions.

Jim Swift

the We'll Thank you, end operator. now. call

Operator

Ladies that your does conclude and Teleconferencing. for Thank conference for today. you your and participation AT&T gentlemen, for using

now may You disconnect.

Pediatrix Medical (MD) 2 May 232023 Q1 Earnings call transcript