Pediatrix Medical Group (NYSE:MD) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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Summary
Pediatrix Medical Group reported strong first quarter results with adjusted EBITDA of $58 million, driven by top-line growth despite a modest decline in same-unit volumes.
The company reaffirmed its full-year 2026 adjusted EBITDA outlook of $280 to $300 million, citing strong pricing from RCM cash collections, favorable payer mix, and increased patient acuity.
Strategic initiatives include the recruitment of top physician leaders to enhance care quality and expand hospital partnerships, as well as the rollout of a stock-based compensation program for clinician leaders.
Operational highlights include a 3% increase in same-unit growth and successful cash collections, with net salary growth consistent with previous ranges.
Management noted a potential decline in pricing strength in the latter half of the year but maintained a positive outlook based on current performance indicators.
Full Transcript
OPERATOR
Hello and thank you for standing by. At this time, I would like to welcome everyone to the Q1 2026 Pediatrix Medical Group earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, just press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Marianne Moore, General Counsel. You may begin.
Marianne Moore (General Counsel)
Thank you, operator and good morning. 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 Pediatrix 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 Pediatrics 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 filings with the SEC, including the 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 press release, our quarterly and annual report, and on our [email protected] . with that, I will turn the call over to Mark Gordan, our Chief Executive Officer.
Mark Gordan (Chief Executive Officer)
Thank you, Marianne and good morning, everyone. Also with me today is Cassandra Rossi, our Chief Financial Officer. We were pleased with our strong first quarter results driven by top line growth with adjusted EBITDA coming in at $58 million. We saw strong pricing that outpaced a modest decline in same unit volumes across our service lines. Although recent volume results don't show a trend, our parametric continues to be strong and we are comfortable with our decision to not have a headwind estimate for the potential effect of the tax subsidy lapse. We know that major hospital systems have seen a decline in patient volume and revenue and we may see that in the future. For now, this area is strong for us and we will continue to report on it as the year continues. Given the uncertainty of whether we will experience this headwind, and since it's still early in the year, we are reaffirming our full 2026 outlook of $280 to $300 million in adjusted EBITDA. Cassandra will now provide some additional details and I'll be back shortly.
Cassandra Rossi (Chief Financial Officer)
Thanks Mark and good morning everyone. Our consolidated revenue increase was driven by same unit growth of just under 3% and net non same unit activity of about $6 million, including growth from recent acquisitions and organic growth which was partially offset by decreases in revenue from our portfolio restructuring. Pricing growth of 4% was driven by solid RCM cash collections, increases in contract administrative fees, favorable payer mix and increased patient acuity in neonatology. While we saw volume declines across our service lines during the quarter, including NICU days that were down about 1%, practice level SWB expenses increased by $9 million year over year, primarily reflecting same unit increases in clinical salary expense. Net salary growth for the first quarter was in line with the ranges we have seen over the past 18 months that have averaged around 3%. Our G and A expense increased slightly year over year driven by a modest increase in salary and incentive compensation expense partially offset by decreases in professional services and IT expenses. DNA expense increased slightly year over year resulting from higher same unit amortization expense and DNA related to our recent acquisitions. Other non operating expense decreased year over year driven by a decrease in interest expense on modestly lower average borrowings at slower Moving on to Cash Flow As a reminder, we are a user of cash in the first quarter of each year as we pay out incentive compensation and other benefits, namely 401k matching contributions. We used $130 million in operating cash flow in the first quarter compared to 116 million in the prior year, with the differential related to decreases in cash flow from AP and accrued expenses primarily related to incentive compensation payments and decreases in cash flow from AR partially offset by higher earnings. We also deployed $21 million of capital during the quarter to buy a million shares of our stock, leaving us with 82 million shares outstanding. We ended the quarter with cash of just over 200 million and net debt of just over 385 million. This reflects net leverage of just over 1.3 times. Using the midpoint of our updated adjusted EBITDA outlook for 2026, our accounts receivable DSO at March 31st of 42.5 days were down slightly from December 31st but were down over 5 days year over year driven by improved cash collections at our existing units. We are maintaining our previously issued outlook range for the full year of 280 million to $300 million in adjusted EBITDA and while our first quarter results represented about 20% of that annual expected range, we do expect that adjusted EBITDA for the remaining 3/4 will be fairly ratable. I'll now turn the call back over to Mark.
Mark Gordan (Chief Executive Officer)
Thank you, Cassandra. I pounded the drum over the last few quarters that investments in care quality are always wise. Hospital systems want a partner who will outperform and our patients, of course, deserve nothing less. In ...