Pediatrix Medical Group, Inc. Q4 FY2024 earnings call

Key Points - Mark Gordon: - Strong Q4 and year-end results with same unit revenue growth driven by payer mix and volume. - Completed portfolio restructuring exiting $200M revenue practices. - Transitioned RCM to hybrid model. - Strategic priorities include patient-centric care, strengthening hospital relationships, and financial stewardship. - 2025 preliminary adjusted EBITDA guidance $215M to $235M. - ### Kasandra Rossi: - Q4 consolidated revenue growth over 1% with same unit growth 8.7% offset by restructuring. - Cash flow strong in Q4 with operating cash flow $135M, accounts receivable DSO at 47.5 days. - 2025 outlook includes full year revenue ~$1.8B, G&A expense $220M-$230M, factors like RCM stability, payer mix flat, and cost trend monitoring.

Consolidated revenue growth was just over 1% with strong same unit growth of 8.7%, offset by portfolio restructuring impact of over $35 million. Adjusted EBITDA in Q4 was $69 million. Operating cash flow in Q4 was $135 million, with accounts receivable DSO ending the year at 47.5 days. Net debt reduced to $386 million from $515 million at September 30th, reflecting net leverage of just over 1.7 times based on 2024 adjusted EBITDA.

- Preliminary adjusted EBITDA for 2025 expected to be between $215 million and $235 million. - Consideration of leap year adjustment, portfolio restructuring benefit of $30M annualized (third realized in 2024), and cautious outlook due to industry uncertainty. - Midpoint of 2025 guidance ($225M) is an increase from 2024 adjusted EBITDA ($220M adjusting for leap year).

- Industry uncertainty and headwinds in the healthcare provider space. - Payer mix variability which is not controllable. - Wage inflation potentially outstripping cost trends. - Economic conditions creating uncertainty in the provider space.

Q: Drill down on 2025 outlook, specifically volume, pricing, and RCM metrics A: Volume assumed flat, pricing payer mix expected to level off, RCM focused on stabilization with process improvement.

Q: NICU management relationships and improved economics A: Strong conversations with hospital partners but no increase baked into forecast.

Q: Backing out leap year and restructuring, thoughts on wage inflation and guidance A: Cautious guidance due to uncertainty in provider space environment.

Q: IVF opportunity and its impact A: Potential tailwind but not incorporated in numbers yet.

Q: Payer mix tailwind in 2024 and 2025 outlook A: Payer mix was tailwind in 2024, expected to level off in 2025.

Q: Exiting primary and urgent care clinics impact on EBITDA tailwind A: Part of $30M EBITDA lift, ~third realized in 2024, rest in 2025.

Q: Capital allocation and leverage targets A: Strong balance sheet provides opportunities, will work with board to decide best course including returning cash to shareholders.