Pediatrix Medical Group Inc

Previous wording

During the second quarter of 2024, we formalized our physician practice optimization plans, resulting in a decision to exit almost all of our affiliated office-based practices, other than maternal-fetal medicine. Over the course of many years, we expanded our pediatric service lines and footprint to provide specialized care to more patients, including through our office-based portfolio of practices. This added complexity to our operations over time and, accordingly, increased costs that resulted in operating challenges primarily for our office-based portfolio of practices. Recognizing this and our need to adapt to the current healthcare climate, during the second quarter, we made the decision to return to a hospital-based and maternal-fetal medicine-focused organization. The exits of our pediatric office-based practices are expected to be completed by December 31, 2024. Accordingly, a recoverability assessment for each impacted individual physician practice was performed, and the estimated future cash flows related to the physician practices did not support the carrying value of the specifically identified individual long-lived assets. As a result, during the second quarter of 2024, we recorded fixed asset impairments of $20.1 million, intangible asset impairments of $7.7 million and operating lease right-of-use asset impairments of $8.1 million. The operating lease right-of-use impairments are recorded within the transformational and restructuring related expenses line item.

Current wording

During the second quarter of 2024, we formalized our physician practice optimization plans, resulting in a decision to exit almost all of our affiliated office-based practices, other than maternal-fetal medicine. Over the course of many years, we expanded our pediatric service lines and footprint to provide specialized care to more patients, including through our office-based portfolio of practices. This added complexity to our operations over time and, accordingly, increased costs that resulted in operating challenges primarily for our office-based portfolio of practices. Recognizing this and our need to adapt to the current healthcare climate, during the second quarter, we made the decision to return to a hospital-based and maternal-fetal medicine-focused organization. The exits of our pediatric office-based practices are expected to be completed by December 31, 2024. Accordingly, a recoverability assessment for each impacted individual physician practice was performed, and the estimated future cash flows related to the physician practices did not support the carrying value of the specifically identified individual long-lived assets. As a result, during the nine months ended September 30, 2024, we recorded fixed asset impairments of $20.1 million, intangible asset impairments of $7.7 million and operating lease right-of-use asset impairments of $10.6 million. The operating lease right-of-use impairments are recorded within the transformational and restructuring related expenses line item.

Previous wording

During the second quarter of 2024, we made the decision to exit our primary and urgent care service line based on a review of the cost and time that would be required to build the platform to scale. We divested one of our two previously acquired primary and urgent care practices during the second quarter and divested of the second of our two acquired primary and urgent care practices subsequent to the end of the second quarter. The total loss on disposal of these two businesses was $10.9 million, resulting from the loss on sale for one practice and marking the net assets to their fair value less costs to sell for the other practice.

Current wording

During the second quarter of 2024, we made the decision to exit our primary and urgent care service line based on a review of the cost and time that would be required to build the platform to scale. We divested one of our two previously acquired primary and urgent care practices during the second quarter and divested the second practice in the third quarter. The total loss on disposal of these two businesses was $10.6 million.

Previous wording

In our analysis of our results of operations, we use various GAAP and certain non-GAAP financial measures. We have incurred certain expenses that we do not consider representative of our underlying operations, including transformational and restructuring related expenses. Accordingly, we report adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”), defined as net income before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses. Earnings per share has also been adjusted (“Adjusted EPS”) and consists of diluted net income per common and common equivalent share adjusted for amortization expense, stock-based compensation expense, transformational and restructuring related expenses and impacts from discrete tax events. For the three and six months ended June 30, 2024, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude loss on disposal of businesses and impairment losses.

Current wording

In our analysis of our results of operations, we use various GAAP and certain non-GAAP financial measures. We have incurred certain expenses that we do not consider representative of our underlying operations, including transformational and restructuring related expenses. Accordingly, we report adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”), defined as net income (loss) before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses. Earnings per share has also been adjusted (“Adjusted EPS”) and consists of diluted net income (loss) per common and common equivalent share adjusted for amortization expense, stock-based compensation expense, transformational and restructuring related expenses and impacts from discrete tax events. For the three months ended September 30, 2024, Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude loss on disposal of businesses and tax effects of goodwill impairment. For the nine months ended September 30, 2024, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude loss on disposal of businesses and impairment losses.

Previous wording

For a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three and six months ended June 30, 2024 and 2023, refer to the tables below (in thousands, except per share data).

Current wording

For a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three and nine months ended September 30, 2024 and 2023, refer to the tables below (in thousands, except per share data).

Previous wording

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the six months ended June 30, 2024 and 2023, other than for goodwill impairment for the relevant period. Tax effects for the goodwill impairment approximate 10% due to a portion of the expense being non-deductible.

Current wording

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the three months ended September 30, 2024 and 2023, other than for tax effects of goodwill impairment for the relevant period. Tax effects of goodwill impairment relate to the goodwill impairment recognized in the second quarter of 2024.

Previous wording

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the three months ended June 30, 2024 and 2023, other than for goodwill impairment for the relevant period. Tax effects for the goodwill impairment approximate 10% due to a portion of the expense being non-deductible.

Current wording

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the nine months ended September 30, 2024 and 2023, other than for goodwill impairment for the relevant period. Tax effects for the goodwill impairment approximate 14% due to a portion of the expense being non-deductible.

Previous wording

Our net revenue was $504.3 million for the three months ended June 30, 2024, as compared to $500.6 million for the same period in 2023. The increase in net revenue of $3.7 million, or 0.7%, was primarily attributable to an increase in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $13.5 million, or 2.8%. The increase in same-unit revenue was comprised of an increase of $11.6 million, or 2.4%, from net reimbursement-related factors and $1.9 million, or 0.4%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from a favorable shift in payor mix and an increase in administrative fees from our hospital partners. The increase in revenue from patient service volumes was related to increases in maternal-fetal medicine and certain hospital-based pediatric subspecialty services, partially offset by modest declines in primary and urgent care and neonatology services.

Current wording

Our net revenue was $511.2 million for the three months ended September 30, 2024, as compared to $506.6 million for the same period in 2023. The increase in net revenue of $4.6 million, or 0.9%, was primarily attributable to an increase in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $24.6 million, or 5.2%. The increase in same-unit revenue was comprised of an increase of $15.9 million, or 3.4%, from net reimbursement-related factors and $8.7 million, or 1.8%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from a favorable shift in payor mix and an increase in administrative fees from our hospital partners. The increase in revenue from patient service volumes was related to increases across all of our service lines.

Previous wording

Practice salaries and benefits increased $3.8 million, or 1.1%, to $357.8 million for the three months ended June 30, 2024, as compared to $354.0 million for the same period in 2023. The $3.8 million increase was primarily attributable to an increase in clinical compensation expense, including benefits and incentive compensation, and modest increases in medical malpractice insurance expense, all at our existing units, partially offset by decreases in non-same unit activity.

Current wording

Practice salaries and benefits decreased $3.5 million, or 1.0%, to $364.9 million for the three months ended September 30, 2024, as compared to $368.4 million for the same period in 2023. The $3.5 million decrease was primarily attributable to non-same unit activity, primarily resulting from practice dispositions, partially offset by an increase in clinical compensation expense, including benefits and incentive compensation, all at our existing units.

Previous wording

Practice supplies and other operating expenses increased $1.3 million, or 4.1%, to $32.4 million for the three months ended June 30, 2024, as compared to $31.1 million for the same period in 2023. The increase was primarily attributable to practice supply, rent and other costs related to our existing units, primarily professional services and rent expense, partially offset by decreases in non-same unit activity.

Current wording

Practice supplies and other operating expenses decreased $1.9 million, or 6.0%, to $29.4 million for the three months ended September 30, 2024, as compared to $31.3 million for the same period in 2023. The decrease was primarily attributable to non-same unit activity, primarily resulting from practice dispositions, partially offset by a net increase in practice supply and other costs related to our existing units, with increases in professional services, travel and medical supply costs partially offset by a decrease in insurance expense.

Previous wording

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically related to the day-to-day operations of our affiliated physician practices and services. General and administrative expenses were $56.6 million for the three months ended June 30, 2024, as compared to $58.0 million for the same period in 2023. The net decrease of $1.4 million was primarily related to decreases in overall staffing levels and timing of certain incentive compensation expenses, partially offset by increases in salary expense for enhancement of front-end revenue cycle management staffing. General and administrative expenses as a percentage of net revenue was 11.2% for the three months ended June 30, 2024, as compared to 11.6% for the same period in 2023.

Current wording

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically related to the day-to-day operations of our affiliated physician practices and services. General and administrative expenses were $58.1 million for the three months ended September 30, 2024, as compared to $57.4 million for the same period in 2023. The net increase of $0.7 million was primarily related to increases in incentive compensation based on financial results and salary expense for enhancement of revenue cycle management staffing, partially offset by decreases in overall staffing levels. General and administrative expenses as a percentage of net revenue was 11.4% for the three months ended September 30, 2024, as compared to 11.3% for the same period in 2023.

Previous wording

Depreciation and amortization expense was $19.1 million for the six months ended June 30, 2024, as compared to $17.9 million for the same period in 2023. The increase of $1.2 million was primarily related to an increase in depreciation expense for non-same unit activity.

Current wording

Depreciation and amortization expense was $6.3 million for the three months ended September 30, 2024, as compared to $9.2 million for the same period in 2023. The decrease of $2.9 million was primarily related to a decrease in depreciation expense related to non-same unit activity, primarily practice dispositions.

Previous wording

Transformational and restructuring related expenses were $13.6 million for the three months ended June 30, 2024 and primarily related to impairment of various right-of-use lease assets resulting from our practice portfolio management activities, revenue cycle management transition activities and position eliminations across various shared services and operations departments.

Current wording

Transformational and restructuring related expenses were $18.6 million for the three months ended September 30, 2024 and primarily related to revenue cycle management transition activities, position eliminations across various shared services and operations departments and impairment of various right-of-use lease assets resulting from practice dispositions.

Previous wording

Loss from operations was $157.7 million for the three months ended June 30, 2024, as compared to income from operations of $48.5 million for the same period in 2023. Our operating margin was (31.3)% for the three months ended June 30, 2024, as compared to 9.7% for the same period in 2023. The decrease in our operating margin was primarily due to the impairment activity recorded during the second quarter and transformational and restructuring related activity, as well as net unfavorable impacts in our same-unit results driven by higher operating expenses, partially offset by same-unit revenue increases and decreases in general and administrative expenses. Excluding impairment activity and transformational and restructuring related expenses for the three months ended June 30, 2024, our income from operations was $48.8 million and our operating margin was 9.7% for such period. We believe excluding the impacts from the impairment and transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Current wording

Income from operations was $33.8 million for the three months ended September 30, 2024, as compared to $40.3 million for the same period in 2023. Our operating margin was 6.6% for the three months ended September 30, 2024, as compared to 7.9% for the same period in 2023. The decrease in our operating margin was primarily due to transformational and restructuring related activity, partially offset by net favorable impacts from our same-unit results driven by higher revenue and from non-same unit activity due to practice dispositions. Excluding transformational and restructuring related expenses for the three months ended September 30, 2024, our income from operations was $52.4 million and our operating margin was 10.3% for such period. We believe excluding the impacts from transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Previous wording

Total non-operating expenses were $10.0 million for the three months ended June 30, 2024, as compared to $9.6 million for the same period in 2023. The net increase in non-operating expenses was primarily related to an increase in other expense from the settlement of a litigation matter, partially offset by a decrease in interest expense.

Current wording

Total non-operating expenses were $8.6 million for the three months ended September 30, 2024, as compared to $9.4 million for the same period in 2023. The net decrease in non-operating expenses was primarily related to an increase in investment income on higher cash balances.

Previous wording

Net loss was $153.0 million for the three months ended June 30, 2024, as compared to net income of $28.3 million for the same period in 2023. Adjusted EBITDA was $57.9 million for the three months ended June 30, 2024, as compared to $59.1 million for the same period in 2023. The decrease in our Adjusted EBITDA was primarily due to net unfavorable impacts in our same-unit results, primarily from higher operating expenses.

Current wording

Net income was $19.4 million for the three months ended September 30, 2024, as compared to $21.4 million for the same period in 2023. Adjusted EBITDA was $60.2 million for the three months ended September 30, 2024, as compared to $50.4 million for the same period in 2023. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from our same-unit results and practice disposition activity.

Previous wording

Diluted net loss per common and common equivalent share was $1.79 on weighted average shares outstanding of 83.1 million for the six months ended June 30, 2024, as compared to diluted net income per common and common equivalent share of $0.52 on weighted average shares outstanding of 82.4 million for the same period in 2023. Adjusted EPS was $0.54 for the six months ended June 30, 2024, as compared to $0.62 for the same period in 2023.

Current wording

Diluted net income per common and common equivalent share was $0.23 on weighted average shares outstanding of 84.5 million for the three months ended September 30, 2024, as compared to $0.26 on weighted average shares outstanding of 83.0 million for the same period in 2023. Adjusted EPS was $0.44 for the three months ended September 30, 2024, as compared to $0.32 for the same period in 2023.

Previous wording

Our net revenue was $999.4 million for the six months ended June 30, 2024, as compared to $991.6 million for the same period in 2023. The increase in revenue of $7.8 million, or 0.8%, was primarily attributable to increases in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $27.9 million, or 2.9%. The increase in same-unit net revenue was comprised of an increase of $15.8 million, or 1.6%, from net reimbursement-related factors and an increase of $12.1 million, or 1.3%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from a favorable shift in payor mix and an increase in administrative fees from our hospital partners. The increase in revenue from patient service volumes was related to increases in our neonatology, newborn nursery, maternal-fetal medicine, and certaince hospital-based pediatric subspecialty services, partially offset by declines in primary and urgent care and pediatric cardiology services.

Current wording

Our net revenue was $1.51 billion for the nine months ended September 30, 2024, as compared to $1.50 billion for the same period in 2023. The increase in revenue of $12.4 million, or 0.8%, was primarily attributable to increases in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $51.5 million, or 3.7%. The increase in same-unit net revenue was comprised of an increase of $29.1 million, or 2.1%, from net reimbursement-related factors and an increase of $22.4 million, or 1.6%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from a favorable shift in payor mix and an increase in administrative fees from our hospital partners. The increase in revenue from patient service volumes was related to increases across all of our service lines.

Previous wording

Practice salaries and benefits increased $10.7 million, or 1.5%, to $726.9 million for the six months ended June 30, 2024, as compared to $716.3 million for the same period in 2023. The $10.7 million increase was primarily attributable to an increase in clinical compensation expense and a modest increase in medical malpractice expense at our existing units, partially offset by decreases in benefits and incentive compensation at our existing units as well as decreases in non-same unit activity.

Current wording

Practice salaries and benefits increased $7.2 million, or 0.7%, to $1.09 billion for the nine months ended September 30, 2024, as compared to $1.08 billion for the same period in 2023. The $7.2 million increase was primarily attributable to an increase in clinical compensation expense and benefits at our existing units, partially offset by decreases in non-same unit activity, primarily practice dispositions.

Previous wording

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services. General and administrative expenses were $116.8 million for the six months ended June 30, 2024, as compared to $117.1 million for the same period in 2023. The net decrease of $0.3 million is primarily related to lower information technology expenses, professional services fees, travel expenses, and decreases in expenses from net staffing reductions, partially offset by increases in salary expense for enhancement of revenue cycle management staffing. General and administrative expenses as a percentage of net revenue were 11.7% for the six months ended June 30, 2024, as compared to 11.8% for the same period in 2023.

Current wording

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services. General and administrative expenses were $174.9 million for the nine months ended September 30, 2024, as compared to $174.5 million for the same period in 2023. The net increase of $0.4 million is primarily related to increases in salary expense for enhancement of revenue cycle management staffing and incentive compensation based on financial results, partially offset by lower expenses from net staffing reductions, professional services fees, travel expenses, and information technology expenses. General and administrative expenses as a percentage of net revenue were 11.6% for the nine months ended September 30, 2024 and 2023.

Previous wording

Transformational and restructuring related expenses were $22.1 million for the six months ended June 30, 2024 and primarily related to the impairment of various right-of-use lease assets resulting from our practice portfolio management activities, position eliminations across various shared services and operations departments and revenue cycle management transition activities.

Current wording

Transformational and restructuring related expenses were $40.6 million for the nine months ended September 30, 2024 and primarily related to the impairment of various right-of-use lease assets resulting from our practice portfolio management activities, position eliminations across various shared services and operations departments and revenue cycle management transition activities.

Previous wording

Goodwill impairment was $154.2 million for the three months ended June 30, 2024, resulting from the triggering event during the second quarter based on a sustained stock price decline.

Current wording

Goodwill impairment was $154.2 million for the nine months ended September 30, 2024, resulting from the triggering event during the second quarter based on a sustained stock price decline.

Previous wording

Fixed assets impairments were $20.1 million for the three months ended June 30, 2024, resulting from the practice portfolio management plan.

Current wording

Fixed assets impairments were $20.1 million for the nine months ended September 30, 2024, resulting from the practice portfolio management activities.

Previous wording

Intangible assets impairments were $7.7 million for the three months ended June 30, 2024, resulting from the practice portfolio management plan.

Current wording

Intangible assets impairments were $7.7 million for the nine months ended September 30, 2024, resulting from the practice portfolio management activities.

Previous wording

Loss on disposal from businesses was $10.9 million for the six months ended June 30, 2024, resulting from the disposals of the primary and urgent care practices.

Current wording

Loss on disposal of businesses was $10.9 million for the nine months ended September 30, 2024, resulting from the disposals of the primary and urgent care practices.

Previous wording

Loss from operations was $141.8 million for the six months ended June 30, 2024, as compared to income from operations of $78.5 million for the same period in 2023. Our operating margin was (14.2)% for the six months ended June 30, 2024, as compared to 7.9% for the same period in 2023. The decrease in our operating margin was primarily due to the impairment activity recorded during the second quarter and transformational and restructuring related activity, as well as net unfavorable impacts in our same-unit results driven by higher operating expenses, partially offset by same-unit revenue increases and decreases in general and administrative expenses. Excluding impairment activity and transformational and restructuring related expenses for the six months ended June 30, 2024, our income from operations was $73.2 million and our operating margin was 7.3% for such period. We believe excluding the impacts from the impairment and transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Current wording

Loss from operations was $108.0 million for the nine months ended September 30, 2024, as compared to income from operations of $118.8 million for the same period in 2023. Our operating margin was (7.1)% for the nine months ended September 30, 2024, as compared to 7.9% for the same period in 2023. The decrease in our operating margin was primarily due to the impairment activity recorded during the second quarter and transformational and restructuring related activity, partially offset by net favorable impacts from non-same unit activity. Excluding impairment activity and transformational and restructuring related expenses for the nine months ended September 30, 2024, our income from operations was $125.5 million and our operating margin was 8.3% for such period. We believe excluding the impacts from the impairment and transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Previous wording

Our tax rate was 6.8% for the six months ended June 30, 2024 compared to 28.8% for the six months ended June 30, 2023. The tax rates for the six months ended June 30, 2024 and 2023 include net discrete tax benefits of $2.0 million and $0.9 million, respectively. After excluding discrete tax impacts, during the six months ended June 30, 2024 and 2023, our tax rate was 8.1% and 27.3%, respectively. We believe excluding discrete tax impacts on our tax rate provides a more comparable view of our effective income tax rate. The decrease in our tax rate from 27.3% to 8.1% for the six months ended June 30, 2024 primarily relates to the effects of the non-cash goodwill impairment charge and the pre-tax loss generated excluding the impairment charge.

Current wording

Our tax rate was 3.8% for the nine months ended September 30, 2024 compared to 29.4% for the nine months ended September 30, 2023. The tax rates for the nine months ended September 30, 2024 and 2023 include net discrete tax expense of $8.5 million and $2.0 million, respectively. After excluding discrete tax impacts, during the nine months ended September 30, 2024 and 2023, our tax rate was 10.1% and 27.2%, respectively. We believe excluding discrete tax impacts on our tax rate provides a more comparable view of our effective income tax rate. The decrease in our tax rate from 27.2% to 10.1% for the nine months ended September 30, 2024 as compared to the prior year period primarily relates to the effects of the non-cash goodwill impairment charge.

Previous wording

Net loss was $149.0 million for the six months ended June 30, 2024, as compared to net income of $42.5 million for the six months ended June 30, 2023. Adjusted EBITDA was $95.1 million for the six months ended June 30, 2024, as compared to $99.2 million for the same period in 2023. The decrease in our Adjusted EBITDA was primarily due to net unfavorable impacts in our same-unit results, primarily from higher operating expenses.

Current wording

Net loss was $129.5 million for the nine months ended September 30, 2024, as compared to net income of $63.9 million for the nine months ended September 30, 2023. Adjusted EBITDA was $155.3 million for the nine months ended September 30, 2024, as compared to $149.6 million for the same period in 2023. The increase in our Adjusted EBITDA was primarily due to net favorable impacts in our same-unit results, primarily from an increase in revenue.

Previous wording

Diluted net loss per common and common equivalent share was $1.84 on weighted average shares outstanding of 83.3 million for the three months ended June 30, 2024, as compared to diluted net income per common and common equivalent share of $0.34 on weighted average shares outstanding of 82.7 million for the same period in 2023. Adjusted EPS was $0.34 for the three months ended June 30, 2024, as compared to $0.39 for the same period in 2023.

Current wording

Diluted net loss per common and common equivalent share was $1.56 on weighted average shares outstanding of 83.2 million for the nine months ended September 30, 2024, as compared to diluted net income per common and common equivalent share of $0.77 on weighted average shares outstanding of 82.5 million for the same period in 2023. Adjusted EPS was $0.99 for the nine months ended September 30, 2024, as compared to $0.94 for the same period in 2023.

Previous wording

As of June 30, 2024, we had $19.4 million of cash and cash equivalents as compared to $73.3 million at December 31, 2023. Additionally, we had working capital of $119.1 million at June 30, 2024, an increase of $24.5 million from working capital of $94.5 million at December 31, 2023.

Current wording

As of September 30, 2024, we had $103.8 million of cash and cash equivalents as compared to $73.3 million at December 31, 2023. Additionally, we had working capital of $155.1 million at September 30, 2024, an increase of $60.6 million from working capital of $94.5 million at December 31, 2023. The increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily from an increase in revenue.

Previous wording

Cash (used in) provided from operating, investing and financing activities is summarized as follows (in thousands):

Current wording

Cash provided by (used in) operating, investing and financing activities is summarized as follows (in thousands):

Previous wording

During the six months ended June 30, 2024, our net cash used in operating activities for continuing operations was $13.3 million, compared to $8.0 million for the same period in 2023. The net increase in cash used of $5.3 million was primarily due to decreases in cash flow from accounts receivable, partially offset by increases in cash flow from income tax-related activity as well as accounts payable and accrued expenses.

Current wording

During the nine months ended September 30, 2024, our net cash provided by operating activities for continuing operations was $82.4 million, compared to $73.1 million for the same period in 2023. The net increase in cash provided of $9.3 million was primarily due to increases in cash flow from accounts payable and accrued expenses, partially offset by decreases in cash flow from accounts receivable.

Previous wording

During the six months ended June 30, 2024, cash outflow from accounts receivable was $0.9 million, as compared to a cash inflow of $28.9 million for the same period in 2023. The decrease in cash flow from accounts receivable for the six months ended June 30, 2024 as compared to the prior year period was primarily due to the prior year period reflecting a significant improvement in collections.

Current wording

During the nine months ended September 30, 2024, cash inflow from accounts receivable was $0.6 million, as compared to $22.1 million for the same period in 2023. The decrease in cash flow from accounts receivable for the nine months ended September 30, 2024 as compared to the prior year period was primarily due to the prior year period reflecting a significant improvement in cash collections.

Previous wording

DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles. DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Our DSO for continuing operations was 49.5 days at June 30, 2024 as compared to 50.5 days at December 31, 2023 and 49.2 days at June 30, 2023. The change in our DSO was primarily related to an increase in cash collections at our existing units.

Current wording

DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles. DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Our DSO for continuing operations was 51.6 days at September 30, 2024 as compared to 50.5 days at December 31, 2023 and 50.4 days at September 30, 2023. The change in our DSO was primarily related to revenue cycle management transition activity.

Previous wording

During the six months ended June 30, 2024, our net cash used in investing activities of $29.1 million consisted primarily of capital expenditures of $12.3 million, net purchases of investments of $8.7 million and acquisition payments of $8.2 million.

Current wording

During the nine months ended September 30, 2024, our net cash used in investing activities of $33.5 million consisted primarily of capital expenditures of $18.6 million, net purchases of investments of $9.1 million and acquisition payments of $8.2 million.

Previous wording

During the six months ended June 30, 2024, our net cash used in financing activities of $6.5 million primarily consisted of net payments on our Term A Loan (as defined below).

Current wording

During the nine months ended September 30, 2024, our net cash used in financing activities of $9.5 million primarily consisted of payments on our Term A Loan (as defined below).

Previous wording

The Amended Credit Agreement contains customary covenants and restrictions, including covenants that require us to maintain a minimum interest coverage ratio, a maximum consolidated total consolidated net leverage ratio and to comply with laws, and restrictions on the ability to pay dividends, incur indebtedness or liens and make certain other distributions subject to baskets and exceptions, in each case, as specified therein. Failure to comply with these covenants would constitute an event of default under the Amended Credit Agreement, notwithstanding the ability of the company to meet its debt service obligations. The Amended Credit Agreement includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the Amended Credit Agreement. In addition, we may increase the principal amount of the Revolving Credit Line or incur additional term loans under the Amended Credit Agreement in an aggregate principal amount such that on a pro forma basis after giving effect to such increase or additional term loans, we are in compliance with the financial covenants, subject to the satisfaction of specified conditions and additional caps in the event that the Amended Credit Agreement is secured.

Current wording

The Amended Credit Agreement contains customary covenants and restrictions, including covenants that require us to maintain a minimum interest coverage ratio, a maximum consolidated net leverage ratio and to comply with laws, and restrictions on the ability to pay dividends, incur indebtedness or liens and make certain other distributions subject to baskets and exceptions, in each case, as specified therein. Failure to comply with these covenants would constitute an event of default under the Amended Credit Agreement, notwithstanding the ability of the company to meet its debt service obligations. The Amended Credit Agreement includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the Amended Credit Agreement. In addition, we may increase the principal amount of the Revolving Credit Line or incur additional term loans under the Amended Credit Agreement in an aggregate principal amount such that on a pro forma basis after giving effect to such increase or additional term loans, we are in compliance with the financial covenants, subject to the satisfaction of specified conditions and additional caps in the event that the Amended Credit Agreement is secured.

Previous wording

At June 30, 2024, we had an outstanding principal balance on the Amended Credit Agreement of $221.9 million, composed of the Term A Loan. There was no balance outstanding under the Revolving Credit Line. We had $450.0 million available on our Amended Credit Agreement at June 30, 2024.

Current wording

At September 30, 2024, we had an outstanding principal balance on the Amended Credit Agreement of $218.8 million, composed of the Term A Loan. There was no balance outstanding under the Revolving Credit Line. We had $450.0 million available on our Amended Credit Agreement at September 30, 2024.

Previous wording

We maintain professional liability insurance policies with third-party insurers, subject to self-insured retention, exclusions and other restrictions. We self-insure our liabilities to pay self-insured retention amounts under our professional liability insurance coverage through a wholly owned captive insurance subsidiary. We record liabilities for self-insured amounts and claims incurred but not reported based on an actuarial valuation using historical loss information, claim emergence patterns and various actuarial assumptions. Our total liability related to professional liability risks at June 30, 2024 was $283.7 million, of which $29.0 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet. In addition, there is a corresponding insurance receivable of $29.4 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.

Current wording

We maintain professional liability insurance policies with third-party insurers, subject to self-insured retention, exclusions and other restrictions. We self-insure our liabilities to pay self-insured retention amounts under our professional liability insurance coverage through a wholly owned captive insurance subsidiary. We record liabilities for self-insured amounts and claims incurred but not reported based on an actuarial valuation using historical loss information, claim emergence patterns and various actuarial assumptions. Our total liability related to professional liability risks at September 30, 2024 was $284.2 million, of which $29.0 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet. In addition, there is a corresponding insurance receivable of $28.3 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.