Pediatrix Medical Group, Inc. Q2 FY2025 earnings call

• Mark Ordan noted Q2 adjusted EBITDA exceeded expectations, driven by same unit revenue growth >6%, NICU days up 6%, and favorable reimbursement. Ongoing cost management controls same-unit salaries partially offset by incentive comp. Full-year adjusted EBITDA range raised to $245M-$255M. Cash position strengthened, bolstering balance sheet.
• Kasandra Rossi discussed consolidated revenue decrease due to portfolio restructuring, but same-unit growth over 6%, same-unit pricing up 3.5%, practice-level expenses down Y/Y, strong cash flow, and improved accounts receivable DSO.
• Mark Ordan emphasized being a top partner to hospitals, focus on quality care, added Greg Neeb to bolster team, plans to manage through Big Beautiful Bill, and highlighted resilience via strong balance sheet.

Consolidated revenue decreased by over 7% due to non-same unit activity, but same-unit revenue grew over 6%. Hospital-based volume was strong with NICU days up 6%, and same-unit pricing increased 3.5% driven by higher acuity, strong RCM collections, and increased hospital administrative fees. Same-unit patient service volumes rose ~3%, primarily from hospital-based services (NICU) and modest growth in office-based maternal fetal medicine services. Adjusted EBITDA in Q2 exceeded $73 million, driven by same unit revenue growth over 6%, NICU days up 6%, and favorable reimbursement factors.

• Raised and narrowed full-year adjusted EBITDA range to $245M to $255M based on Q2 results and second half visibility.
• Expect adjusted EBITDA in second half to be fairly ratable in Q3 and Q4.

• Unclear details of the Big Beautiful Bill's impact, particularly on expansion states.
• Turbulent hospital-based healthcare environment poses a risk.

Q: Can you talk about the hospital admin fees? What percent of the pricing growth in the second quarter came from admin fees? How are negotiations going for 2026?

A: Kasandra said admin fees made up about 1/3 of pricing growth, operations targeting key programs. Mark added it's tied to bolstering hospital relationships.

Q: What drove the 6% NICU growth this quarter?

A: Mark said it's due to multiple factors including acuity, overall strong performance across various aspects.

Q: How will the Big Beautiful Bill impact expansion states?

A: Mark said details are unclear, but 60% of volume is in non-expansion states, and they hope it won't target their services.

Q: Any update on buybacks and IDR/arbitration?

A: Mark said they have flexibility, added Greg for opportunities, IDR/arbitration process gone well with mostly being in network.

Q: Thoughts on guidance and headwinds?

A: Kasandra said comps are tougher but margins expected to be stable.

Q: Contracting discussion with hospitals amid headwinds?

A: Mark said they're not seeing retreat, provide necessary service, and are partnering with growing hospital systems.