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MEDNAX, INC. Reports Operating Results (10-Q)

November 03, 2010 | About:

10qk

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MEDNAX, INC. (MD) filed Quarterly Report for the period ended 2010-09-30.

Mednax, Inc. has a market cap of $2.82 billion; its shares were traded at around $59.6 with a P/E ratio of 15.2 and P/S ratio of 2.1. Mednax, Inc. had an annual average earning growth of 18.6% over the past 10 years. GuruFocus rated Mednax, Inc. the business predictability rank of 5-star.MD is in the portfolios of Andreas Halvorsen of Viking Global Investors LP, David Dreman of Dreman Value Management, Columbia Wanger of Columbia Wanger Asset Management, Richard Pzena of Pzena Investment Management LLC, Chuck Royce of Royce& Associates, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Our net patient service revenue increased $19.8 million, or 6.0%, to $351.1 million for the three months ended September 30, 2010, as compared to $331.3 million for the same period in 2009. Of this $19.8 million increase, $17.2 million, or 86.9%, was attributable to revenue generated from acquisitions completed after June 30, 2009. Same-unit net patient service revenue increased $2.6 million, or 0.8%, for the three months ended September 30, 2010. The change in same-unit net patient service revenue was the result of a net increase in revenue of approximately $2.4 million, or 0.7%, related to pricing and reimbursement factors and a net increase of $0.2 million, or 0.1%, from higher overall patient service volumes across our specialties. The net increase in revenue of $2.4 million related to pricing and reimbursement factors was primarily due to improved managed care contracting and the flow through of revenue from modest price increases, partially offset by a decrease in revenue caused by an increase in the percentage of our patients being enrolled in government-sponsored programs. Payments received from government-sponsored programs are substantially less than payments received from commercial insurance payors for equivalent services. The net increase in revenue of $0.2 million from higher patient service volumes includes a decrease of $1.1 million from a 0.6% decline in neonatal intensive care unit patient days and a net increase of $1.3 million primarily from volume growth in our anesthesiology and pediatric cardiology services, partially offset by volume declines in our maternal-fetal medicine subspecialty. Same units are those units at which we provided services for the entire current period and the entire comparable period.

Practice supplies and other operating expenses increased $0.9 million, or 6.7%, to $14.0 million for the three months ended September 30, 2010, as compared to $13.1 million for the same period in 2009. The increase was attributable to practice supply and other costs of $0.7 million related to hospital-based and hearing screen program acquisitions and rent, medical supply and other costs of $0.4 million related to our office-based acquisitions, partially offset by a decrease of $0.2 million in practice supply and other costs at our existing units.

Our net patient service revenue increased $78.1 million, or 8.2%, to $1.03 billion for the nine months ended September 30, 2010, as compared to $955.0 million for the same period in 2009. Of this $78.1 million increase, $61.6 million, or 78.9%, was attributable to revenue generated from acquisitions completed after December 31, 2008. Same-unit net patient service revenue increased $16.6 million, or 1.8%, for the nine months ended September 30, 2010. The change in same-unit net patient service revenue was the net result of increased revenue of approximately $18.4 million, or 2.0%, related to pricing and reimbursement factors, partially offset by a net decrease of $1.8 million, or 0.2%, from lower overall patient service volumes across our specialties. The net increase in revenue of $18.4 million related to pricing and reimbursement factors was primarily due to improved managed care contracting and the flow through of revenue from modest price increases partially offset by a decrease in revenue caused by an increase in the percentage of our patients being enrolled in government-sponsored programs. Payments received from government-sponsored programs are substantially less than payments received from commercial insurance payors for equivalent services. The net decrease in revenue of $1.8 million from lower patient service volumes includes a decrease of $2.1 million from a 0.4% decline in neonatal intensive care unit patient days and a decrease of $2.5 million from volume declines in our maternal-fetal medicine subspecialty and other services, partially offset by an increase of $2.8 million from volume growth in our pediatric cardiology and anesthesiology services. Same units are those units at which we provided services for the entire current period and the entire comparable period.

Practice supplies and other operating expenses increased $2.6 million, or 6.7%, to $41.1 million for the nine months ended September 30, 2010, as compared to $38.5 million for the same period in 2009. The increase was attributable to practice supply and other costs of $1.7 million related to hospital-based and hearing screen program acquisitions and rent, medical supply and other costs of $1.0 million related to our office-based acquisitions, partially offset by a decrease of $0.1 million in practice supply and other costs at our existing units.

As of September 30, 2010, we had $61.4 million of cash and cash equivalents on hand as compared to $26.5 million at December 31, 2009. In addition, we had working capital of $22.7 million at September 30, 2010, an increase of $76.7 million from a working capital deficit of $54.0 million at December 31, 2009. This net increase in working capital is primarily due to year-to-date earnings and proceeds from the issuance of common stock under our stock incentive and stock purchase plans, partially offset by the use of funds for practice acquisition payments and payments on our Line of Credit.

During the nine months ended September 30, 2010, our net cash used in financing activities of $36.6 million consisted primarily of net payments on our Line of Credit of $50.0 million and a $1.6 million payment of a contingent consideration liability, partially offset by $9.6 million of proceeds from the exercise of employee stock options and the issuance of common stock under our stock purchase plans, $3.4 million of excess tax benefits related to the resolution of income tax matters and $2.3 million of excess tax benefits related to the exercise of employee stock options and vesting of restricted stock. Under the current accounting guidance for business combinations, payments of contingent consideration liabilities related to acquisitions completed after January 1, 2009 are presented as cash flows from financing activities. Payments of contingent consideration liabilities related to acquisitions completed prior to January 1, 2009 are presented as cash flows from investing activities.

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