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MEDNAX Reports First Quarter Adjusted EPS of $0.87; GAAP EPS of $0.73

the national medical group specializing in neonatal and other pediatric services, anesthesia, maternal-fetal, radiology, pediatric cardiology and other physician and management services, today reported earnings of $0.73 per diluted share for the three months ended March 31, 2016. On a non-GAAP basis, MEDNAX reported Adjusted EPS of $0.87, an increase of five percent over the prior-year period.

For the 2016 first quarter compared to the prior year period, MEDNAX reported:

  • Revenue growth of 17.7 percent to $753 million;
  • EBITDA growth of 12.0 percent to $144 million;
  • Adjusted EPS growth of 4.8 percent to $0.87 and EPS growth of 1.4 percent to $0.73.

“Our first-quarter results marked a strong start to the year and a continuation of our growth and operating strategy,” said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX. “We generated double-digit growth in revenue and EBITDA, which reflected the increasingly diversified ways in which we can add value to our hospital partners. During the quarter, we acquired four new physician practices, and notably, the results of our 100,000 Babies campaign were published in Pediatrics, the official journal of the American Academy of Pediatrics. Looking toward the remainder of 2016, we believe we are well positioned to be a true health solutions partner to our customers, through great patient care, value-added service lines and our continued investments in clinical research, education and quality.”

Operating Results

MEDNAX’s net revenue for the three months ended March 31, 2016 increased by 17.7 percent, to $752.6 million, from $639.4 million for the prior-year period, driven primarily by contributions from acquisitions completed since January 2015.

MEDNAX’s revenue growth attributable to recent acquisitions was 15.1 percent, while overall same-unit revenue increased by 2.6 percent when compared to the prior year period.

Same-unit growth attributable to patient volume was 1.5 percent for the 2016 first quarter as compared to the prior-year period, driven by strong growth in anesthesia as well as growth in neonatology and other pediatric services, primarily newborn nursery and pediatric cardiology services. For the 2016 first quarter, compared to the 2015 period, same-unit neonatal intensive care unit (NICU) patient days were up 0.5 percent.

Same-unit revenue growth from net reimbursement-related factors was 1.1 percent for the 2016 first quarter as compared to the prior-year period. Same-unit growth was reduced by 1.0 percent due to the decrease in Medicaid parity revenue compared to the prior-year period. MEDNAX’s first quarter 2015 results included approximately $6 million in parity revenue, which contributed approximately $0.02 to its net income per diluted share, that did not recur in the first quarter of 2016.

Excluding the unfavorable impact of the $6.0 million decrease in parity revenue, a non-GAAP measure, net same-unit growth from reimbursement-related factors was 2.1 percent in the first quarter of 2016, and total same-unit revenue growth was 3.6 percent.

On a same-unit basis, the percentage of services reimbursed under government programs increased by approximately 50 basis points in the 2016 first quarter compared with the prior-year period. However, when compared to the 2015 fourth quarter, this payor mix shift was favorable by approximately 40 basis points.

For the 2016 first quarter, general and administrative expenses were $90.0 million, as compared to $67.9 million for the prior-year period. General and administrative expenses as a percentage of net revenue was 12.0 percent for the first quarter of 2016, compared to 10.6 percent in the prior-year period, reflecting the mix of acquisitions completed over the past year, primarily the Company’s non-practice physician services.

Earnings before interest, taxes, depreciation and amortization expense (EBITDA), a non-GAAP measure, for the 2016 first quarter was $143.9 million, up 12.0 percent from $128.6 million for the prior-year period.

Depreciation and amortization expense was $19.6 million in the first quarter of 2016 compared to $13.6 million in the first quarter of 2015, an increase of $6.0 million that primarily related to the amortization of intangible assets from recent acquisitions.

Interest expense was $14.5 million in the first quarter of 2016 compared to $3.3 million in the first quarter of 2015, due primarily to an increase in the average amount of total borrowings between the two periods, most of which related to the $750 million 5.25% senior notes issued in December 2015. The difference in interest cost associated with the senior notes, as compared to MEDNAX’s revolving credit facility, impacted the Company’s GAAP EPS and Adjusted EPS in the first quarter of 2016 negatively...


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