Pediatrix Medical (MD) 2 Nov 232023 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Pediatrix Medical Group, Inc.

Third Quarter 2023 Earnings Conference Call.

[Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Charles Lynch. ahead. go Please

factors deem future good forward-looking and call. Federal I quickly Litigation call and will statements statements, or to section made statements in management as Risk the expected statements other as information, new from Thank of of of meaning and whether differ or morning, no to then appropriate. factors company's our may are filings made conference current light this their statements, SEC, Important and information today, the business experience cause with Reform Any the be we'll described the update that of read forward-looking and within Pediatrix materially you, during undertakes everyone. to a and get XXXX. result are historical and developments actual statements conditions, forward-looking Certain and forward-looking in entitled Private they by assumptions on otherwise. Pediatrix believe the of future Securities duty Factors. assessment the trends, call such based and events results, during Act decisions These any developments assessments forward-looking are statements this made could including of to be revise into

by and press www.pediatrics.com. earnings Form on Form the comparable morning's report GAAP most quarterly website discussing In on non-GAAP be these to measures in and our at financial our management, this XX-Q be remarks we will annual report of measures today's financial metrics. XX-K A our non-GAAP reconciliation release, found on can

our to call With that, turn the CEO, Dr. I'll Jim Swift. over

today everyone. Richards, morning, good Officer. Chief Marc and is our Charlie, Also with Financial you, me Thank

we this as the of inflation. operating further, clinicians maternal organization. Pediatrix persistent the the believe of that largest in full service in of potential the results current relatively a believe our in represent earnings shortfall both as steps company. so We address the results great reflected step to level largest women's cost U.S. reflect do Our pace We volumes unique since call well firmly is to manifesting a take newborns this meaningful we sector. plan health disappointing go To field group and a for soft practice provider not

practices services Our critical network women, often affiliated the and their provides greatest babies finds children, to in need.

for set. rate have been differentiator debt a relationship interest as cash our in-network borrowings, challenging do maintaining floating have a environment, allowed has rising the in predominantly more navigated no-surprise us of a key important, profile and We just And successful rate we prepayment implementation of structure, to that. our against is structure the enabled flow

we in significant our this bolster we footprint. make to as trends steps stable core intend and to gross support continue a margin of mind, all profile business to cost designed address and necessary any to line changes generate service to With take our

our Let list areas of me focus.

organization, whether First, in we are geography, intend earnings practices or performance any within other the the subspecialty number viewed structural the priority or enhance There by ambulatory financial across to our practices of organization. broader in make of wide our to perspectives. potential individual variances specialty of changes

places have to management are resources portfolio we careful dedicating We proactive taken variances. that the to the approach a always ensure and right right narrow to to these

these we as practice take these actions take term in steps expand quickly as can. the can we improve identify and performance where further possible will We near efforts to

the remaining competitive cost the costs, in while facing to clinician Second, to challenge on we intend head confront environment. also that we're mitigate labor

but quality models the that, patient each support first practice. needs work in highest current to We our ensure will continue overall are to of foremost, the aligned affiliated practices order also to care, to needs with review staffing and optimal

to build core priorities liquidity, and strength previously. as Third, have financial communicated we given our on capital will our allocation we our focus

Given are national the the of the that peer clinicians. positioned past over years, several to which organization the as service we platform we that in with believe need has practices dislocation favorably a in collaborate occurred physician choice industry across for high-quality

we we and as the made to decision vendor a not did disclosed services. cycle into overall have function Lastly, management this revenue our operating to this make importance morning, the decision new our transition this given lightly performance. We for practices of to

team our focused conviction the structure optimal over for that performance functions hybrid is incorporating an experience our past year a underscores appropriate to on the However, generate true model front-end Pediatrix. internal

to hybrid men. Our with more quickly decision believe our reflects we can that migrate to make be this our need model and accomplished existing to change completely our

observed we DSOs AR, that during RCM in we have a to regression performance and seen challenges QX in Additionally, metrics. other past

focused XXXX. chapter of own transition we to RCM to are simply areas our the where sense. now on turning expect rely prior where We it this where makes efficiencies, to and And a partner begin we end their the we team on outside for commas on

discussed we've believe As this year, been potential we new while transition help any internal we which a to vendor. our we third-party team, have building disruptions, where at minimize length will

Our through current a to make vendor switch will new a continue as we the transition to period vendor. provide services

help period potential this transition in While we costs, some believe result transition likely this will duplicative mitigate will too risks.

as of performance management compared activities. cycle cost our in as transparent expenses terms underlying of are and as to revenue go-forward and ongoing be will temporary We what possible

enhance to All best-in-class to support the continue operating whole, margins, these effectiveness, ensuring can to us gross we steps services while believe sustainable, on practices. our improved provide Pediatrix path put a can affiliated our meaningfully

Richards. I'll that, over to With turn the Marc call

additional everyone. I'll Jim, quarter. you, details for Thank morning, provide the some good and

driven quarter collection pricing against volumes. practice our and impacted by primarily for million below and also forecast, quarter roughly $XX Our in Within soft year-over-year adjusted in payer level the recovery by both a line internal very top reflected XXXX. patient expenses growth revenue results, operating rates our primarily mix was our challenging EBITDA same-unit

between other. underlying on growth salary saw divided growth deceleration. evenly roughly salaries by practice some to the points accelerated the as of compared this on we year one compensation XXX quarter benefits level, incentive when At and was the This the expense second basis hand our and year-over-year

full adjusted expense Finally, cost level a reported for fourth the for third $XXX contribution range we declined outlook on slightly to forecast quarter. quarter EBITDA fourth updating updated a in our to G&A somewhat results year mitigating million to third of which of our quarter, year-over-year, what our the pockets million, $XXX similar growth. the contemplates we and Based for the quarter our total are

million borrowings Finally, quarter. during as million we with the to a and cash. repaid us, third reduce the in during cash operating referenced, our over $XX million to $XX in revolver million the continue of full revolver $XXX We the period quarter. with Jim just generated borrowings $XX in flow. capacity we ended We available remaining

With over that, Jim. call back turn the to I'll

you, Operator, Thank the let's now call Marc. questions. open for

[Operator with Instructions] We'll go Brian to the Jefferies. Tanquilut line of

you're question, I that that, you and level rates practice the adjusting or clinician work to whether how looking first as should there my about are we you hospitals levers can that ask subsidies for? wage expenses looking in think guess I address can pull, it's be that

have revenue startups the is when available Brian, look the of the standpoint, and looking do to at new sure things make it when to we subsidy we're do bring I'll us we the with that From especially start clinicians we OGI that. at, one on.

annual at taking on look something forward. certainly we'll look We basis. at going always an that's So that

far the of As framework. as cost

variable seen think on but we've the practices and of comp look has gone mix comp through to need have up, do of year, is right going to structure both seen which have areas the a we variable all And as but we're variable it We what things a and comp, of together. in fixed trying cost variable comp at just look those at the lens the look I RCM we some base the as we're to that at we've through the recovered structure.

Got it.

cycle about side, third-party transition as the bring make maybe and learnings you were this a a as back then for smoother what go from think you years in And third-party RCM look I will vendor, your vendor Okay. think rev hybrid? that transition the

guess my I've of to is, Yes. I clinician now and know to can right. cycle entire about speak learned I more I than ever wanted what I'll all on rev career. start it, us

probably understand our services much unique. I it's We think we believe what are in that we described. rooted So very

out insurance of the service Our for patients terms finding the of and things in parent. bedside as simple like baby at the the unique which is the of name the

make invested so resources to a just Pediatrix And we we're we have this who the bedside end current fashion. And people why adding here are of our front significant start that for vendor alongside undertaking That's as need believe while those tasks. people the in are to employed that process transition. we've we more complete the closer having in on

know our team, in going entire transition. tightly team we're if anything. this eyes in I think Marc, our I open you really wide leadership entire don't have is involved operations So

certainly from to we that think No, XX that's so. in months I we will and plan transition learned age say well, or a I Jim. doing a applied on lot lessons the what next be those learned over last would

be broken you've can seem external working Jim, wasn't quick there it just on I an follow-up. if while. to transition before okay, for And things throw rev side. a vendor, been cycle the mean, I a you this

much it ran RCM how just bring to prior back bringing pretty back in? So like is things to it you

component We help by decision an to was we what cost we The of of transition. a we're is previous turnover then and on cost look there at out transition were there and of vendor that be bringing vendor have and I never that issue. the in -- current solution with in the hence us the for big there believe on cost technology Brian, of was we going have That think expected there to the to was much that us because going that happened. a of to we who when labor available the through No. a end. our vendor, setting technology technology efficiencies the labor vendors And an can that invest workforce an change. the for it made will a identified are always dollars that to outside the reason knew are there outside that. we and made millions going in maintaining But issue, we back do obviously, problem

to be what we Finally hybrid stand said, will what a model. it we strongly that has believe by learned is and and we

end and who to on efficiencies own patient care vendor and then level the end. has and back we physician practice of have at do at what the front have the the We a more level

go [Operator Instructions] We'll Fischbeck to of Kevin with Bank of America. the line

for This Fischbeck. Kevin Neil on is

question So first is just non-same-store the regarding revenue.

like a growth. non-same-store sounded to it headwind revenue was So

So that? what drove

It's Charlie.

to our that see footprint. portfolio that's like of something it's I this but Jim fashion. that's course around fashion, and the non-same portfolio, had through there's footprint material very some a reviewed practice have our comparability and the and largely exits notice in And some put at year And this that course where year as our you we a of of the not the what been You'll in the negative side. net case, of mentioned review our in the through we think

one Okay. I guess I have follow-up. just

companies get margin subsidies to So an Do from the we've have been professional go lot hospital ability offset increased the fees. you and a to pressure? hearing about back

reliant fees. Well, somebody to that We're to those great our very we contract on need those of relationship them. when not a fees those not well And those the place understand relates to so fees. continue and to fees had extent We've have we're you we and as large partners. a hospital with need to structure it done

services smaller at have higher that. volumes do we intensity, look that but for However, those

on what And go pressures so we back current will whether those in or be will, see fees and we opportunities our new result whether health increased can systems. it on do costs, and we OGI with

Thank the we've this you. at And Please queue continue. that, with exhausted time.

for right, thank you, everyone, being and call. the All you, operator, thank on

-- the I the you and team available have with if out additional am rest please throughout of are We today, questions. reach

and does using that gentlemen, Thank conference our Event AT&T participation your for Conferencing. and for conclude you Ladies for today.

disconnect. now may You