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MEDNAX (MD) Q3 Earnings Fall Short of Estimates, Rise Y/Y

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MEDNAX, Inc. (MD - Free Report) reported third-quarter 2018 adjusted earnings of 94 cents per share, missing the Zacks Consensus Estimate of 96 cents. However, the bottom line improved nearly 8% year over year, primarily backed by the company’s operational efficiency and its various growth initiatives.

Mednax, Inc Price, Consensus and EPS Surprise

Mednax, Inc Price, Consensus and EPS Surprise | Mednax, Inc Quote

Quarterly Details

The company generated revenues of $897 million, falling shy of the Zacks Consensus Estimate of $907 million by 1.1%, mainly due to lower neonatology patient volumes. However, the top line was up 3.2% from the year-ago period. Same unit revenues inched up 0.6% year over year, mainly driven by volume growth across all service lines. However, the upside was offset by a decline in patient volumes in neonatology services.

General and administrative expenses rose 1.5% to $102.9 million.

Interest expense of the company escalated 18.5% to $21.8 million for the third quarter, primarily due to higher effective interest rate on borrowings between two periods as well as higher outstanding borrowings.

In the quarter under review, EBITDA totaled $140.9 million, down by nearly 7% as a result of higher same-unit revenue growth, loss of contribution from non-renewal of a contract along with salaries and benefits costs.

The company closed three private physician practice acquisitions in the reported quarter.

Financial Update

As of Sep 30, 2018, the company had cash and cash equivalents of about $34 million, down 42.8% from year end 2017.

The company incurred total debt of $2 billion, up 8.3% from 2017-end level and total assets of $5.8 billion, down 0.5% from 2017-end level.

Cash flows from operating activities were $140.7 million, down 29.6% year over year.

Share Repurchase Update

MEDNAX deployed $250 million of cash to buy back common stock under its current $500 million share repurchase authorization.

Q418 Outlook

For the fourth quarter, the company expects its earnings per share in the range of 65-73 cents, down from the earlier projection of 72-77 cents and adjusted EPS within 87-95 cents. The guidance for adjusted EPS band excludes amortization costs and stock-based compensation expense.

EBITDA is now anticipated between $130 million and $140 million for the fourth quarter compared with the prior-year period’s tally of $154.6 million.

The company also assumes the effective tax rate for the ongoing quarter to be 27% and average outstanding shares to be 27 million.

Zacks Rank

MEDNAX, Inc. carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Releases From the Medical Sector

UnitedHealth Group Inc.’s (UNH - Free Report) third-quarter bottom line beat estimates on the back of higher revenues.

Centene Inc.’s (CNC - Free Report) third-quarter earnings surpassed estimates, majorly driven by the company’s growth strategy execution plus its solid operating metrics.

Community Health Systems, Inc.’s (CYH - Free Report) earnings miss is due to lower admissions in the reported quarter.

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