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MEDNAX's (MD) Strategic Initiatives to Streamline Operations
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MEDNAX Inc. (MD - Free Report) recently announced certain initiatives to transform its business, which bode well for the long haul.
The company has been conducting a comprehensive review since 2018 and taking several measures, such as improving operational efficiencies, divesting MedData and American Anesthesiology medical group, etc.
Management believes that implementing these measures and reorienting the business to a streamlined pediatrics and obstetrics operation will be advantageous to its shareholders. Subject to certain conditions, MEDNAX looks to get back its original company name, Pediatrix Medical Group, Inc. Notably, it will continue trading under its current ticker symbol, MD.
Rationale Behind the Move
Management made this strategic effort owing to the well-performing Pediatrix and Obstetrix medical groups, which are the primary provider of specialty women’s health solutions and pediatric care in the United States with a network of above 2,200 doctors delivering across 17 subspecialty lines. Last year, its Pediatrix and Obstetrix medical groups reported around $1.8 billion revenues.
Based on the company’s experience, top authorities believe that this business line is well-poised for growth. Also, teeming growth opportunities in women’s and children’s health services act as a catalyst. Pediatrix is expected to generate incremental growth via solid sales and targeted tuck-in and strategic buyouts. It can even witness growth through penetration into adjacent clinical services, innovation in care delivery models and so on.
Other Initiatives
MEDNAX also declared its intension to divest MEDNAX Radiology Solutions. The company has plans to use the proceeds for reducing its debt burden. However, it didn’t issue further information on the same.
As informed earlier, the company’s activities have been affected by the COVID-19 pandemic during the second quarter to date. It saw contraction in patient volume and revenues. However, the same bounced back to some extent in May. MEDNAX estimates that aggregate patient volumes in its hospital-based pediatric medical groups including neonatology and neonatology-related services, pediatric intensive care and other pediatric services suffered only minor, single-digit percentage declines in April and May.
MEDNAX projects that the decrease in patent volumes caused a drop of 10-15% in May’s consolidated revenues as compared with the prior-year figure. In April, the company anticipates, the impact was around 25%. The industry player resorted to a host of endeavors to improve its financial flexibility in recent times. Along with its affiliated practices, it already received and is expected to obtain more of certain funds under the Coronavirus Aid, Relief, and Economic Security Act.
After the sale of its American Anesthesiology on May 6, 2020, it also took measures to minimize around $10 million in annualized expenses.
Moreover last month, the company paid back its borrowings on revolving credit facility. As of May 31, 2020, its debt included $1.75 billion in senior notes and had cash in hand worth $90 million, resulting in net debt of $1.66 billion.
We believe, the company has potential for growth on the back of its strategic attempts and meaningful liquidity.
Zacks Rank
Shares of this Zacks Rank #4 (Sell) company have lost 28.1% in a year’s time, wider than its industry’s decline of 12.8%.
The performance looks pale in comparison to other companies in the same space, namely HCA Healthcare Inc (HCA - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Universal Health Services Inc. (UHS - Free Report) , which have lost 10.4%, 14.1% and 11.3%, respectively, in the same time frame.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>
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MEDNAX's (MD) Strategic Initiatives to Streamline Operations
MEDNAX Inc. (MD - Free Report) recently announced certain initiatives to transform its business, which bode well for the long haul.
The company has been conducting a comprehensive review since 2018 and taking several measures, such as improving operational efficiencies, divesting MedData and American Anesthesiology medical group, etc.
Management believes that implementing these measures and reorienting the business to a streamlined pediatrics and obstetrics operation will be advantageous to its shareholders. Subject to certain conditions, MEDNAX looks to get back its original company name, Pediatrix Medical Group, Inc. Notably, it will continue trading under its current ticker symbol, MD.
Rationale Behind the Move
Management made this strategic effort owing to the well-performing Pediatrix and Obstetrix medical groups, which are the primary provider of specialty women’s health solutions and pediatric care in the United States with a network of above 2,200 doctors delivering across 17 subspecialty lines. Last year, its Pediatrix and Obstetrix medical groups reported around $1.8 billion revenues.
Based on the company’s experience, top authorities believe that this business line is well-poised for growth. Also, teeming growth opportunities in women’s and children’s health services act as a catalyst. Pediatrix is expected to generate incremental growth via solid sales and targeted tuck-in and strategic buyouts. It can even witness growth through penetration into adjacent clinical services, innovation in care delivery models and so on.
Other Initiatives
MEDNAX also declared its intension to divest MEDNAX Radiology Solutions. The company has plans to use the proceeds for reducing its debt burden. However, it didn’t issue further information on the same.
As informed earlier, the company’s activities have been affected by the COVID-19 pandemic during the second quarter to date. It saw contraction in patient volume and revenues. However, the same bounced back to some extent in May. MEDNAX estimates that aggregate patient volumes in its hospital-based pediatric medical groups including neonatology and neonatology-related services, pediatric intensive care and other pediatric services suffered only minor, single-digit percentage declines in April and May.
MEDNAX projects that the decrease in patent volumes caused a drop of 10-15% in May’s consolidated revenues as compared with the prior-year figure. In April, the company anticipates, the impact was around 25%.
The industry player resorted to a host of endeavors to improve its financial flexibility in recent times. Along with its affiliated practices, it already received and is expected to obtain more of certain funds under the Coronavirus Aid, Relief, and Economic Security Act.
After the sale of its American Anesthesiology on May 6, 2020, it also took measures to minimize around $10 million in annualized expenses.
Moreover last month, the company paid back its borrowings on revolving credit facility. As of May 31, 2020, its debt included $1.75 billion in senior notes and had cash in hand worth $90 million, resulting in net debt of $1.66 billion.
We believe, the company has potential for growth on the back of its strategic attempts and meaningful liquidity.
Zacks Rank
Shares of this Zacks Rank #4 (Sell) company have lost 28.1% in a year’s time, wider than its industry’s decline of 12.8%.
The performance looks pale in comparison to other companies in the same space, namely HCA Healthcare Inc (HCA - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Universal Health Services Inc. (UHS - Free Report) , which have lost 10.4%, 14.1% and 11.3%, respectively, in the same time frame.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>