Here's Why You Should Add Pediatrix Medical to Your Portfolio Now

Pediatrix Medical Group, Inc. MD is strategically positioned to grow on the back of delivering high-quality, evidence-based care in the healthcare space. The company has gained 5.6% in the year-to-date (YTD) period, outperforming the industry average of a 6.4% fall.

Pediatrix Medical — with a market cap of $1.2 billion — is a physician services provider company headquartered in Sunrise, FL. It provides newborn, maternal-fetal, radiology, pediatric cardiology and other pediatric subspecialties physician services in the United States and Puerto Rico. It also offers neonatal care services to babies born prematurely or with complications. Its forward P/E ratio of 8.72 is lower than the industry average of 13.87.

Due to its solid prospects, Pediatrix Medical currently carries a Zacks Rank #2 (Buy)

Where Do Estimates for MD Stand?

The Zacks Consensus Estimate for Pediatrix Medical’s 2025 earnings is pegged at $1.56 per share, indicating a 3.3% year-over-year rise. In the past month, it has witnessed two upward estimate revisions against none in the opposite direction. Furthermore, the consensus mark for revenues is pegged at $1.9 billion for 2025. It comfortably beat earnings estimates in each of the past four quarters, with an average surprise of 24.6%.

Pediatrix Medical Group, Inc. Price and EPS Surprise

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

MD’s Growth Drivers

Pediatrix Medical’s growth is being supported by strong same-unit revenue growth, improved payor mix and growth in hospital contract administrative fees.

Same-unit revenues improved 6.2% year over year in the first quarter of 2025, beating the Zacks Consensus Estimate by 0.7%. Solid performance in its hospital-based services, rise in NICU days, steady growth in maternal-fetal medicine and ongoing benefits from favorable reimbursement trends will support its performance.

MD has recently entered into agreements to take over operations of multiple NICU, MFM and OB hospitals, which will now be integrated into a broader hospital system portfolio.

MD increased its projection for adjusted EBITDA from the range of $215 million-$235 million to the $220 million-$240 million band in 2025. Pediatrix Medical’s total operating expenses declined 11% year over year to $426.3 million in the first quarter of 2025. Our model suggests this metric could decline by nearly 17.8% year over year in 2025, thanks to lower practice salaries and benefits, practice supplies and other operating expenses.

In the first quarter of 2025, the company bought back common shares worth $1.6 million. As of March 31, 2025, $1.3 million remained authorized for repurchase.

MD: Risks to Watch

However, there are some factors that investors should keep a careful eye on.

Pediatrix Medical has been grappling with a significant debt level over the past several years. As of March 31, 2025, it had a net debt of $612.6 million, significantly higher than the cash balance of $99 million. This is likely to put pressure on MD’s interest expenses. Its long-term debt to capital is 42.8%, higher than the industry’s average of 40.5%. Also, the company has faced challenges in its free cash flow generation over the past five years, experiencing a decline on three occasions. First-quarter 2025 free cash flow was in the negative zone.

Final Verdict: Buy MD Stock Now

Pediatrix Medical presents a compelling investment opportunity, backed by consistent earnings surprises, strategic acquisitions and a focus on high-quality, specialized care. With improving operating margins, upward earnings revisions and lower valuation, the company is well-positioned for continued success. For investors seeking value and stability in the healthcare sector, MD offers a solid case for inclusion.

Other Stocks to Consider

Some other top-ranked stocks in the Medical space are Clover Health Investments Corp CLOV, GeneDx Holdings Corp WGS and Integer Holdings Corporation ITGR, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clover Health Investments’ current-year earnings of 11 cents per share has witnessed one upward revision in the past 30 days against no movement in the opposite direction. Clover Health Investments beat earnings estimates in each of the trailing four quarters, with the average surprise being 114.6%. The consensus estimate for current-year revenues is pegged at $1.9 billion, suggesting 37.7% 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 30 days 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, suggesting 22.5% year-over-year growth.

The Zacks Consensus Estimate for Integer Holdings’ current-year earnings of $6.33 per share has witnessed two upward revisions in the past 30 days against no movement in the opposite direction. Integer Holdings beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 2.8%. The consensus estimate for current-year revenues is pegged at $1.9 billion, suggesting 7.7% year-over-year growth.

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

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