A month has gone by since the last earnings report for Pediatrix Medical Group (MD Quick QuoteMD - Free Report) . Shares have lost about 4.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pediatrix Medical Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pediatrix's Q1 Earnings & Revenue Beat Estimates

Pediatrix Medical reported first-quarter 2023 adjusted earnings of 23 cents per share, which beat the Zacks Consensus Estimate by a penny and our estimate of 20 cents. However, the bottom line declined from 33 cents per share a year ago.

MD’s net revenues of $491 million rose from $482.2 million a year ago. The top line beat the consensus mark of $487 million and our estimate of $479.3 million.

The quarterly results reflected strong patient volumes and lower G&A costs, investors are likely concerned about the company’s lower enrollment in commercial insurance programs, escalating practice salaries and benefits, and net borrowings.

Q1 Update

Overall same-unit revenues rose 2% year over year in the quarter under review thanks to increased patient volumes, partially offset by acquisition activity impact. Same-unit revenues attributable to patient volume inched up 1.6% year over year.

Total operating expenses increased 4% year over year to $461 million, higher than our estimate of $451.2 million, due to an escalation in practice salaries and benefits, and supplies and other operating expenses. General and administrative (G&A) expenses of $59.1 million dropped from $61.3 million, courtesy of cost savings resulting from net staffing reductions.

Interest expenses decreased to $10.4 million from $11.8 million a year ago, attributable to a declining debt level from the refinancing transactions of Pediatrix closed in the year-ago quarter.

Adjusted EBITDA of $40.1 million tumbled from $50.7 million a year ago, primarily due to funds received in the year-ago period from the provider relief fund.

At the first quarter-end, the company had $4.7 million remaining funds for share buybacks.

Financial Update (as of Mar 31, 2023)

Pediatrix exited the first quarter with cash and cash equivalents of $6.1 million, which declined from the 2022-end figure of $9.8 million.

Total assets of nearly $2,320.1 million decreased from $2,347.9 million at 2022-end.

Total debt, net, amounted to $757.7 million, up from $651.3 million at 2022-end.

Total equity of $909.8 million increased from $891.6 million at 2022-end.

In the first quarter, net cash used in operating activities increased to $100.9 million from $97.5 million a year ago.

2023 View

For 2023, management reiterated adjusted EBITDA guidance to $235-$245 million compared with $241 million in 2022. Also, it still expects depreciation and amortization expenses to be $38 million while interest expenses are projected in the range of $40-42.2 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Pediatrix Medical Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pediatrix Medical Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.