MEDNAX, inc (NYSE:MD)
Q3 2021 Earnings Call
Oct 28, 2021, 9:00 a.m. ET
- Prepared Remarks
- Questions and Answers
- Call Participants
Ladies and gentlemen, thank you for standing by, and welcome to the MEDNAX, Inc. Third Quarter 2021 Earnings Conference. [Operator Instructions] Later, we will conduct a question-and-answer session. Instructions will be given to you at that time. [Operator Instructions]
I would now like to turn the conference over to Mr. Charles Lynch, Senior Vice President, Finance and Strategy. Please go ahead.
Charles Lynch — Vice President, Strategy and Investor Relations
Thank you, Cynthia, and good morning, everyone. I’ll quickly read our forward-looking statements, and then we’ll get into the call. Certain statements and information during this conference call may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by MEDNAX’s management, in light of their experience and assessment of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Any forward-looking statements made during this call are made as of today, and MEDNAX undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the company’s most recent annual report on Form 10-K, it’s quarterly reports on Form 10-Q and it’s current reports on Form 8-K, including in sections entitled Risk Factors.
In today’s remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning’s earnings press release, our quarterly report on Form 10-Q and our annual report on Form 10-K, and on our website at www.mednax.com.
With that, I’ll turn the call over to our CEO, Mark Ordan.
Mark S. Ordan — Chief Executive Officer
Thanks, Charlie, and good morning, everyone. Also joining me on today’s call are Mark Richards, our CFO; Dr. Mack Hinson, Neonatologists and Head of our Pediatrics and Obstetrix Medical Groups; and Dr. Jim Swift, Pediatric Intensivist and our Chief Development Officer. You’ll see our strong third quarter results in this morning’s filing. Total births at the hospitals where we provided NICU services were up 2.8% on a same-unit basis, and our NICU days were up 5.6%. Key metrics such as payer mix and rate of admissions continue to be favorable compared to last year.
In fact, for MEDNAX as a whole, our patient volumes, revenue and adjusted EBITDA were all ahead of the same period in 2019, which suggests that at this time, our business has more than recovered from the significant negative impact to the COVID-19 pandemic that we experienced in 2020 and earlier this year. Mark will give some details of our comparisons to pre-pandemic levels. As a result of volumes exceeding pre-COVID levels, as well as stable cost trends at the practice level and improvements in our G&A infrastructure that we’ll detail this morning.
Our revenue for the quarter of $493 million was above our internal expectations as was our adjusted EBITDA of $73 million. Based on our results, we now expect that our 2021 adjusted EBITDA will exceed our prior internal expectation of being above $240 million, and we now expect 2021 adjusted EBITDA of at least $250 million. We also fully expect adjusted EBITDA next year to exceed $270 million, absent any major external events. This is still a preliminary view into 2022, and we’ll be in a better position to provide a more specific outlook after we finish our budgeting process, but I believe we’re building momentum in our business.
Demand for the critical services that our affiliated clinicians provide not only recovered from last year’s disruptions, but continues to grow. We also estimate that the broader growth efforts we have in place have supplemented this demand so far in 2021. I’ll give some detail here as we see our growth concentrated in several areas. First, we target opportunities to expand practices or add practices and enhance our hospital relationships and also directly improve care through the coordination of different subspecialties that many patients need to access.
Second, in our daily operations, we strive to provide the best 24/7 support possible to our practices, which combines our patient service access initiatives, improving technology support, improving revenue cycle management efficiency, recruiting the best talent and old-fashioned focused managerial actions. And third, we look for acquisition opportunities where we see a clear combination of bolstering hospital relationships, adding to our patient care and support and a demonstrable growth path within that acquisition.
Acquisitions haven’t been a major part of our activity so far this year, but they could play just as important role as organic growth when we do see them strategically. The sum of these efforts is continuing to ramp up post-COVID. And importantly, after all of our reorganization activities, pre-COVID. For the 2021 year-to-date, we estimate that we have added approximately three percentage points to our adjusted EBITDA growth versus 2020, over and above the pure same-store growth that our affiliated practices have experienced. In addition to all this activity, we recently announced our investment in Brave Care, and I want to explain why this is actually a very key piece of our growth plan.
We again believe that we are totally uniquely positioned to grow in the combined pediatric and primary emergent care space. In our major markets, MEDNAX, under our pediatrics brand alone has the concentration of pediatrician population density, hospital relationships and partnerships and an enormous and growing base of vital patient relationships and our market managerial support that’s already in place in our major markets. With our NightLight acquisition in place and in fact, thriving, we have a nucleus from which recent growth. But for this to grow, we needed the engine and the talent to enable building something really meaningful.
Brave Care brings scalable internal controls and patient-facing technology, systems and protocols that will otherwise take us years to create. The proprietary technology systems and operating platform that Brave’s team has built over a two-plus-year period gives patients and their parents a truly seamless experience when they visit. It also gives great remote connectivity to clinicians through an extremely user-friendly remote mobile app, so parents always have a resource at their fingertips. Brave Care systems are integrated with all…
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