Pediatrix Medical Group, Inc. (MD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report presents mixed signals. While the company shows operational strengths like improved cash collections and a share buyback program, it faces challenges with declining NICU volumes and increased G&A expenses. The Q&A section reveals uncertainties in M&A contributions and flat pricing assumptions, which could dampen growth expectations. Despite positive elements like technological advancements and operational strengthening, the overall sentiment remains neutral due to these offsetting factors.
Key Financial Performance
Adjusted EBITDA (Q4 2025) $66 million, in line with upwardly adjusted guidance. Reasons: Strong volume, acuity, payer mix, and financial control.
Full Year Adjusted EBITDA (2025) $276 million. Reasons: Investments in leadership, record practice bonuses, and steady metrics like volume, acuity, and payer mix.
Consolidated Revenue (Q4 2025) Decreased by $26 million year-over-year. Reasons: Net non-same-unit activity, portfolio restructuring, partially offset by acquisition and organic growth.
Same-Unit Growth (Q4 2025) 4% increase. Reasons: Same-unit pricing up just under 7%, offset by overall patient service volumes down just under 3%.
NICU Days (Q4 2025) Down about 2%. Reasons: Volume declines across all service lines and tough comparison to prior year.
Practice-Level SW&B Expenses (Q4 2025) Declined slightly year-over-year. Reasons: Portfolio restructuring activity, partially offset by same-unit increases in variable practice incentive compensation and salary and benefits.
Operating Cash Flow (Q4 2025) $115 million, down from $135 million in the prior year. Reasons: Decreases in cash flow from accounts payable and accrued and other liabilities.
Cash Balance (End of Q4 2025) $375 million. Reasons: Strong cash flow and operational performance.
Net Debt (End of Q4 2025) Just over $220 million. Reasons: Modest borrowings and strong cash flow.
AR DSO (December 31, 2025) 42.8 days, down almost 5 days year-over-year. Reasons: Improved cash collections at existing units.
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Operating Highlights
New physician alignment programs: Introduced two new programs to align physicians: a cash bonus with a stock price tracking element and Pediatrix Partners, which includes 46 physicians receiving stock price tracking grants.
Telemedicine expansion: Plans to leverage advanced telemedicine to provide care to currently out-of-reach populations and bridge to in-person care.
Growth in OB hospital medicine: Strong demand to increase presence in OB hospital medicine, leveraging existing hospital relations and physical presence.
NICU and maternal-fetal medicine growth: Exploring additional growth opportunities in NICUs and maternal-fetal medicine.
Revenue and EBITDA performance: 2025 adjusted EBITDA reached $276 million, with a 2026 projection of $280-$300 million. Revenue for 2026 is expected to remain at $1.9 billion.
Operational efficiencies: Improved cash collections reduced AR DSO by almost 5 days year-over-year. G&A expenses for 2026 are projected to decrease slightly as a percentage of revenue.
Portfolio restructuring: Revenue decrease due to portfolio restructuring, offset by acquisitions and organic growth.
Focus on pediatrics and obstetrics: Plans to maintain leadership in pediatrics and obstetrics while exploring non-dilutive opportunities outside these areas.
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Risk or Challenges
Payer Mix Benefit from ACA Subsidies: The company assumes that there was some payer mix benefit in 2025 from ACA subsidies. If these subsidies continue to lapse without an effective remedy, it could have an adverse effect on financial performance. The impact is difficult to quantify due to the many possible outcomes.
Revenue Decrease from Portfolio Restructuring: The company experienced a decrease in revenue due to portfolio restructuring, which was only partially offset by acquisitions and organic growth. This restructuring could pose challenges to maintaining revenue levels.
Volume Declines Across Service Lines: The company reported volume declines across all service lines during the quarter, including a 2% decrease in NICU days. This could impact overall revenue and operational efficiency.
Increased G&A Expenses: General and administrative expenses increased year-over-year, driven by higher salary and travel expenses. This could pressure operating margins if not managed effectively.
Uncertainty in M&A Contributions: The company has not factored any contributions from M&A activity into its 2026 outlook. This creates uncertainty in achieving growth targets if M&A opportunities do not materialize as expected.
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Guidance & Outlook
Adjusted EBITDA for 2026: Expected to be in the range of $280 million to $300 million, representing a midpoint increase of 5% compared to 2025. This projection assumes steady metrics, including volume, acuity, and payer mix.
Revenue for 2026: Projected to be approximately $1.9 billion, in line with 2025.
General and Administrative (G&A) Expense for 2026: Expected to range between $230 million and $240 million, slightly lower than 2025's $241 million. Achieving the midpoint would reduce G&A as a percentage of revenue by 20 basis points.
First Quarter 2026 Adjusted EBITDA: Anticipated to represent 17% to 19% of the annual expected range.
M&A Activity for 2026: No contributions from M&A activity have been factored into the 2026 outlook. Updates will be provided on timing and magnitude of potential additions.
Telemedicine Expansion: Plans to leverage advanced telemedicine to provide care to currently underserved areas, complementing the company's national in-person care presence.
Growth Opportunities in Core Areas: Focus on expanding NICUs, maternal-fetal medicine, and OB hospital medicine (OBH). Strong demand is anticipated for increased presence in OBH, leveraging existing hospital relations and physical presence.
Opportunities Outside Core Areas: Exploration of opportunities outside pediatrics and obstetrics, with a commitment to maintaining financial strength and avoiding dilution of core strengths.
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Shareholder Return Plan
Share Buyback Program: We deployed $64 million of capital during the quarter to buy 2.9 million shares of our stock, leaving us with just about 83 million shares outstanding.
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Key Q&A
Q:What are the drivers of the projected $1.9 billion revenue for 2026?
A:The revenue growth assumes flat volume and pricing overall, with some ups and downs within pricing components.
Q:What caused the negative patient volume year-over-year this quarter?
A:The decline in patient volume was attributed to a tough comparison with the strong fourth quarter of the previous year.
Q:Can you quantify the variable compensation expense and its impact on earnings?
A:Management did not provide specific quantification but mentioned that alignment with doctors is the key driver, not necessarily to achieve a smoothing effect.
Q:What is embedded in the guidance regarding exchange or subsidy impacts on overall volumes?
A:Management stated that they are not seeing changes yet but highlighted uncertainties such as government enrollment changes, commercial insurance shifts, and stop-gap measures. The guidance assumes metrics consistent with 2025.
Q:How is the flat-pricing assumption structured for 2026?
A:The flat-pricing assumption is based on trends from 2025, including incremental favorable payer mix and steady hospital contract admin fees, without ties to exchange issues.
Q:What is driving the $14 million EBITDA growth in 2026?
A:The growth is attributed to small-scale expense reductions and normal operational changes, with no specific factors called out.
Q:How much share repurchase is anticipated in the guidance?
A:A smaller amount of stock buyback is anticipated compared to 2025, with an opportunistic approach.
Q:What are the potential M&A opportunities being considered?
A:Opportunities include physical practices, telemedicine, OB hospitalist programs, and NICU-related relationships. Management is also considering private equity-owned companies but aims to balance these with core strengths.
Q:What is driving the strong pricing growth in the quarter, and how sustainable is it?
A:Pricing growth was driven by strong revenue cycle management collections, favorable payer mix, strong acuity, and increased contract administrative fees. Management expects these factors to stabilize in 2026, though comparisons will be tougher.
Q:Review of Unclear Management Responses
A:Management avoided providing specific quantification for variable compensation expenses and their impact on earnings. Additionally, they did not provide detailed insights into the potential changes in government enrollment or subsidy impacts, citing uncertainties and multiple variables.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ACA subsidy
AP liability
Administrative Officer
CFO decrease
Chief Administrative
Executive VP
GA expense
GA middle
General factor
Officer General
acquisition decrease
activity timing
acuity payer
area way
asset expense
benefit ACA
benefit Salary
bonus result
capital share
care quality
collection payer
comp Practice
compensation salary
contribution result
control rise
course essence
course volume
day comp
detail outlook
effect outcome
essence investment
event press
expectation contribution
expense GA
expense increase
expense interest
outlook line
volume acuity
MD Transcript
Pediatrix Medical Group, Inc. (MD) Q4 2025 Earnings Call Transcript
Unknown2-19
The earnings report presents mixed signals. While the company shows operational strengths like improved cash collections and a share buyback program, it faces challenges with declining NICU volumes and increased G&A expenses. The Q&A section reveals uncertainties in M&A contributions and flat pricing assumptions, which could dampen growth expectations. Despite positive elements like technological advancements and operational strengthening, the overall sentiment remains neutral due to these offsetting factors.
Pediatrix Medical Group, Inc. (MD) Q3 2025 Earnings Call Transcript
Positive11-3
The earnings call highlights strong adjusted EBITDA, effective cost management, and a positive cash flow. Despite a year-over-year revenue decline, same-unit growth and pricing improvements are strong. The company has also been actively repurchasing shares, which is generally positive for stock price. The Q&A revealed a focus on low debt and strategic acquisitions, though some responses lacked specificity. Overall, the financial health and strategic moves suggest a positive outlook for the stock price in the short term.
Pediatrix Medical Group, Inc. (MD) Q2 2025 Earnings Call Transcript
Positive8-5
The earnings call summary and Q&A reveal a generally positive outlook, with a raised EBITDA outlook, strong NICU growth, and improved cash flow. While revenue decreased, same-unit revenue grew, and expenses were managed effectively. The Q&A section highlighted successful arbitration and stable margins, though management's vague responses on Medicaid expansion introduce some uncertainty. Overall, the raised guidance, strong financial performance, and strategic focus on partnerships suggest a positive stock price movement, likely within the 2% to 8% range.
Earnings call transcript: Pediatrix Medical Q1 2025 beats forecasts, stock surges
Unknown5-6
The earnings call reveals a mixed performance with strong adjusted EBITDA and increased same unit pricing, yet a decline in consolidated revenue due to portfolio restructuring. The Q&A session highlights management's cautious outlook due to economic uncertainties, despite raising EBITDA guidance. The lack of a shareholder return plan and reliance on hospital partnerships add to the neutral sentiment. Overall, the company's financial health appears stable, but uncertainties and restructuring risks balance out the positive financial metrics, leading to a neutral stock price prediction.
MD Report
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