Pediatrix Medical's Q1 Earnings Beat Estimates on Declining Costs

Shares of Pediatrix Medical Group, Inc. MD have risen 11.5% since it reported first-quarter 2025 results on May 6. The quarterly results benefited from strong same-unit revenue growth, improved payor mix and growth in hospital contract administrative fees. A decline in the overall expense level also contributed to the upside. However, the upside was partly offset by higher same-unit clinical compensation costs.

Pediatrix Medical reported first-quarter 2025 adjusted earnings per share (EPS) of 33 cents, which surpassed the Zacks Consensus Estimate by 32%. The bottom line soared 65% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Net revenues were $458.4 million, which declined 7.4% year over year. However, the top line beat the consensus mark by 0.9%.

Pediatrix Medical Group, Inc. Price, Consensus and EPS Surprise

Pediatrix Medical Group, Inc. price-consensus-eps-surprise-chart | Pediatrix Medical Group, Inc. Quote

MD’s Q1 Update

Same-unit revenues improved 6.2% year over year, beating the Zacks Consensus Estimate and our estimate of 0.7% and 0.8% respectively. Same-unit revenues, attributable to patient volume, grew 1.6% year over year. 

Same-unit revenues from net reimbursement-related factors advanced 4.6% year over year due to decent growth in hospital contract administrative fees and improved payor mix, beating the Zacks Consensus Estimate and our estimate of 0.3% and 0.8%, respectively.

Pediatrix Medical’s total operating expenses declined 11% year over year to $426.3 million, less than our estimate of $429.8 million. The decrease was attributable to lower practice salaries and benefits, and practice supplies and other operating expenses. Practice salaries and benefits fell 8.7% on a year-over-year basis to $337 million on the back of the impact of practice dispositions. Interest expenses of $9.2 million declined 13.2% year over year but were higher than our estimate of $8 million.

MD’s net income totaled $20.7 million compared with the prior-year quarter’s income of $4. million. Adjusted EBITDA climbed 32.3% year over year to $49.2 million, which beat our estimate of $38.8 million.

MD’s Financial Update (as of March 31, 2025)

Pediatrix Medical exited the first quarter with cash and cash equivalents of $99 million, which decreased from $229.9 million as of 2024-end. There were no outstanding borrowings on its revolving credit facility at the quarter-end.

Total assets of $2 billion declined from $2.2 billion at 2024-end. 

Total debt, including finance leases, net, amounted to $612.6 million, down from $617.7 million as of Dec. 31, 2024. 

Total shareholders’ equity of $789.2 million increased from the 2024-end figure of $764.9 million. 

Operating cash outflow was $116.1 million in the first quarter of 2025 improved from $122.6 million in the year-ago quarter.

Share Repurchase Update for MD

Pediatrix Medical bought back common shares for $1.6 million in the first quarter of 2025. It had a leftover capacity of $1.3 million under its $500 million repurchase program (approved in August 2018) as of March 31, 2025.

MD’s 2025 View Revised

Management now projects adjusted EBITDA to be between $220 million and $240 million, higher than the previous expected range of $215 million-$235 million. Net income is estimated to be between $106.21 million and $120.81 million.

Interest expenses are forecasted at $36.87 million for 2025. Income tax expenses are expected to be in the range of $39.28-$44.68 million.

Depreciation and amortization expenses are now estimated to be $26.06 million. Transformational and restructuring-related expenses are expected at $11.58 million at present.

MD’s Zacks Rank & Other Key Picks

MD currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space are Aveanna Healthcare Holdings Inc. AVAH, BrightSpring Health Services, Inc. BTSG and GeneDx Holdings Corp WGS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Aveanna Healthcare’s current-year earnings of 12 cents per share has witnessed five upward revisions in the past 60 days against none in the opposite direction. The consensus estimate for current-year revenues is pegged at $2.1 billion, implying 4.6% year-over-year growth.

The Zacks Consensus Estimate for BrightSpring Health Services’ current-year earnings is pegged at 98 cents per share. BrightSpring Health Services has witnessed four upward revisions in the past seven days against none in the opposite direction. The consensus estimate for current-year revenues is pegged at $12.2 billion, implying 7.9% year-over-year growth.

The Zacks Consensus Estimate for GeneDx Holdings’ current-year earnings of $1.09 per share has witnessed one upward revision in the past month against no movement in the opposite direction. GeneDx Holdings beat earnings estimates in each of the trailing four quarters, with the average surprise being 145.8%. The consensus estimate for current-year revenues is pegged at $374.1 billion, calling for 22.5% year-over-year growth.

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This article originally published on Zacks Investment Research (zacks.com).

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