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Here's Why You Should Steer Clear of MEDNAX (MD) at Present
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MEDNAX, Inc. (MD - Free Report) has been suffering a setback due to coronavirus-induced business loss.
Over the past 60 days, the company has witnessed its 2020 and 2021 earnings estimates move 41.5% and 22.5% south, respectively, reflecting pessimism around the stock.
Its return on equity stands at 13.9%, significantly below its industry's average of 374.8%.
The company’s first-quarter 2020 results were negatively impacted by the coronavirus. In fact, the outbreak dented patient volumes as well as revenues.
Given the current pandemic-led uncertainty, the company scrapped its previously-announced quarterly and 2020 outlook. Within its Radiology Solutions, orders for radiological studies also witnessed a downfall. Further, its office-based practises, such as maternal-fetal medicine, pediatric cardiology and numerous paediatric subspecialties saw appointment cancellations from historical normal levels.
The company is grappling with issues like steep expenses for the past many years. More concerning is the rate of increase in expenses surpassing the revenue improvement in the past four years. In the first quarter of 2020, general and administrative expenses inched up 3.3% to $105.2 million. Though the company undertook cost-curbing initiatives, high labor costs should persistently weigh on salaries and the benefit component of total expenses.
MEDNAX’s debt level including long-term loans has been rising over the past several years. Its times interest earned now stands at -10.24X against its industry’s average of 2.74X. As of Mar 31, 2020, the company had cash and cash equivalents of about $312 million, significantly lower than its long-term debt of $2.1 billion. Although the company announced an amendment to its credit facility and a concurrent drawdown of $300 million, its lack of financial flexibility bothers.
Its earnings estimate for the current year is pegged at $1.38, indicating a downside of 59.2% from the year-ago reported figure.
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Here's Why You Should Steer Clear of MEDNAX (MD) at Present
MEDNAX, Inc. (MD - Free Report) has been suffering a setback due to coronavirus-induced business loss.
Over the past 60 days, the company has witnessed its 2020 and 2021 earnings estimates move 41.5% and 22.5% south, respectively, reflecting pessimism around the stock.
Its return on equity stands at 13.9%, significantly below its industry's average of 374.8%.
The company’s first-quarter 2020 results were negatively impacted by the coronavirus. In fact, the outbreak dented patient volumes as well as revenues.
Given the current pandemic-led uncertainty, the company scrapped its previously-announced quarterly and 2020 outlook. Within its Radiology Solutions, orders for radiological studies also witnessed a downfall. Further, its office-based practises, such as maternal-fetal medicine, pediatric cardiology and numerous paediatric subspecialties saw appointment cancellations from historical normal levels.
The company is grappling with issues like steep expenses for the past many years. More concerning is the rate of increase in expenses surpassing the revenue improvement in the past four years. In the first quarter of 2020, general and administrative expenses inched up 3.3% to $105.2 million. Though the company undertook cost-curbing initiatives, high labor costs should persistently weigh on salaries and the benefit component of total expenses.
MEDNAX’s debt level including long-term loans has been rising over the past several years. Its times interest earned now stands at -10.24X against its industry’s average of 2.74X. As of Mar 31, 2020, the company had cash and cash equivalents of about $312 million, significantly lower than its long-term debt of $2.1 billion. Although the company announced an amendment to its credit facility and a concurrent drawdown of $300 million, its lack of financial flexibility bothers.
Its earnings estimate for the current year is pegged at $1.38, indicating a downside of 59.2% from the year-ago reported figure.
Shares of this presently Zacks Rank #5 (Strong Sell) company have lost 36.5% year to date, wider than its industry’s decline of 35.8%. Other companies in the same space, such as HCA Healthcare, Inc. (HCA - Free Report) , Tenet Healthcare Corp. (THC - Free Report) and Universal Health Services, Inc. (UHS - Free Report) have also decreased 34.3%, 76.4% and 55.1% in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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