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Mednax Suffers From Low Patient Admissions, High Expenses
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Mednax, Inc. (MD - Free Report) is suffering from a subdued pace of birth across the country, which has slowed growth of one of its core businesses — neonatology. This has put significant stress on its revenue growth.
Moreover, a change in payor mix in its anesthesiology business has kept its commercial volumes under pressure. This segment also suffers from growth in compensation expense for nurse anesthetists.
Additionally, Mednax’s results have suffered due to huge investments made in diversification. These investments might create volatility in its quarter-over-quarter performance, before reaping long-term growth.
Markedly, an increase in expenses as a proportion of revenues owing to growth in compensation expense for supporting acquisition-related growth curbed margins further. Also, growth in existing units, including compensation for non-physician clinicians, increased at a faster pace than in the previous periods.
The company has been witnessing a dent in its bottom line led by a spike in its interest expenses for more than three years. It is also suffering from an increase in overall expenses, which has outpaced revenue growth compared with the last many years.
These factors led the company to trim its earnings guidance. Mednax expects earnings per share (EPS) for three months (ending Sep 30, 2017) in the range of 66 cents to 71 cents, down from $1.04 per share in the year-ago quarter. Adjusted EPS will likely be in the range of 83 cents to 88 cents, down from $1.09 per share in third quarter of 2016.
The range for its third-quarter guidance assumes anticipated same-unit revenue of negative 2% to flat year over year. For the third quarter of 2017, the company expects EBITDA to decline by 17% to 21% year over year, against growth of 7.7% in the prior-year period.
Per management, the challenges in its business are expected to continue in the near term. We thus expect shares of the company to remain under pressure in the coming quarters.
Other companies in the same space HCA Healthcare, Inc. (HCA - Free Report) , LifePoint Inc. and Universal Health Services Inc. (UHS - Free Report) are all suffering from low patient admissions. This is because patients are increasingly choosing to stay away from hospitals due to high out-of-pocket (which shift the initial costs to patients) costs.
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Mednax Suffers From Low Patient Admissions, High Expenses
Mednax, Inc. (MD - Free Report) is suffering from a subdued pace of birth across the country, which has slowed growth of one of its core businesses — neonatology. This has put significant stress on its revenue growth.
Moreover, a change in payor mix in its anesthesiology business has kept its commercial volumes under pressure. This segment also suffers from growth in compensation expense for nurse anesthetists.
Additionally, Mednax’s results have suffered due to huge investments made in diversification. These investments might create volatility in its quarter-over-quarter performance, before reaping long-term growth.
Markedly, an increase in expenses as a proportion of revenues owing to growth in compensation expense for supporting acquisition-related growth curbed margins further. Also, growth in existing units, including compensation for non-physician clinicians, increased at a faster pace than in the previous periods.
The company has been witnessing a dent in its bottom line led by a spike in its interest expenses for more than three years. It is also suffering from an increase in overall expenses, which has outpaced revenue growth compared with the last many years.
These factors led the company to trim its earnings guidance. Mednax expects earnings per share (EPS) for three months (ending Sep 30, 2017) in the range of 66 cents to 71 cents, down from $1.04 per share in the year-ago quarter. Adjusted EPS will likely be in the range of 83 cents to 88 cents, down from $1.09 per share in third quarter of 2016.
The range for its third-quarter guidance assumes anticipated same-unit revenue of negative 2% to flat year over year. For the third quarter of 2017, the company expects EBITDA to decline by 17% to 21% year over year, against growth of 7.7% in the prior-year period.
Per management, the challenges in its business are expected to continue in the near term. We thus expect shares of the company to remain under pressure in the coming quarters.
Other companies in the same space HCA Healthcare, Inc. (HCA - Free Report) , LifePoint Inc. and Universal Health Services Inc. (UHS - Free Report) are all suffering from low patient admissions. This is because patients are increasingly choosing to stay away from hospitals due to high out-of-pocket (which shift the initial costs to patients) costs.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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