Pediatrix Medical Group, Inc. Q3 FY2025 earnings call

• Third quarter adjusted EBITDA was $87 million, exceeding expectations, driven by pricing, collections, and expense controls. 2025 year-to-date results are strong with no expected shift from normal seasonality in Q4. Full-year adjusted EBITDA outlook is $270 million to $290 million due to practice bonus variability. • Consolidated revenue affected by portfolio restructuring but offset by same-unit growth, pricing, and volume. • Strong clinical scale with over 1,300 physicians and 1,170 advanced practice providers across 322 locations in 33 states, maintaining a detailed clinical data warehouse. • Extensive research activity with 1,395 peer-reviewed publications, 39 sites conducting 72 clinical studies, diversified funding sources. • Proprietary BabySteps system for NICU patients, supporting clinical decision-making, efficiency, and risk mitigation. • Focus on 4 areas of concentration, including pediatric surgery, neurology, etc., and successful portfolio restructuring to strengthen efforts. • Strong recruiting team and focus on areas of need for hospital partners and clinicians.

Consolidated revenue decreased by just under $54 million due to portfolio restructuring. However, same-unit growth was 8%, same unit pricing was up about 7.5%, and patient service volumes were up just under 40 basis points. Pricing was driven by solid RCM cash collections, increased patient acuity and neonatology, an increase in contract administrative fees, and favorable payer mix. Practice-level SW&B expenses declined year-over-year, but salary expense, incentive compensation, and benefits expense increased on a same-unit basis. Revenue contribution details weren't explicitly broken down by segments beyond the overall consolidated view.

• Full-year adjusted EBITDA outlook is a wider-than-usual range of $270 million to $290 million due to practice bonus variability. • In the quarter, bought back 1.2 million shares, with total to date 1.7 million shares. • No expected shift from normal seasonality in Q4.

• Factors could cause actual results to differ materially from forward-looking statements, as described in SEC filings. • Potential changes in payer mix, hospital headwinds affecting practice bonus variability and deal dynamics. • Uncertainty around exchange credits and their impact on the business.

Q: Albert Rice from UBS asked about capital deployment, share repurchases, and acquisition opportunities.

A: Mark Ordan said they've been aggressively buying back shares, looking at various opportunities, and Greg Neeb is working on expanding efforts.

Q: Kieran Ryan from Deutsche Bank asked about breaking out strong pricing factors in Q3.

A: Kasandra Rossi said over 1/3 of pricing was from strong RCM collections, ~20% from acuity, ~10% from contract administrative fees, and ~10% from payer mix favorability.

Q: Jack Slevin from Jefferies asked about exchange credits, capital allocation, and deal impact.

A: Mark Ordan said they hope exchange credits continue, capital allocation is focused on laser-focused on hospital system needs, and the acquired deal's details weren't broken out but supports growth, and no clear change in hospitals monetizing practices.