Pediatrix Medical Group, Inc.

Previous wording

Our operations and performance depend significantly on economic conditions. During the three months ended March 31, 2025, the percentage of our patient service revenue being reimbursed under government-sponsored healthcare programs (“GHC Programs”) decreased as compared to the three months ended March 31, 2024. However, we could experience shifts toward GHC Programs if changes occur in economic behaviors or population demographics within geographic locations in which we provide services, including an increase in unemployment and underemployment as well as losses of commercial health insurance. Payments received from GHC Programs are substantially less for equivalent services than payments received from commercial insurance payors. In addition, costs of managed care premiums and patient responsibility amounts continue to rise, and accordingly, we may experience lower net revenue resulting from increased bad debt due to patients’ inability to pay for certain services.

Current wording

Our operations and performance depend significantly on economic conditions. During the three months ended June 30, 2025, the percentage of our patient service revenue being reimbursed under government-sponsored healthcare programs (“GHC Programs”) remained stable as compared to the three months ended June 30, 2024. However, we could experience shifts toward GHC Programs if changes occur in economic behaviors or population demographics within geographic locations in which we provide services, including an increase in unemployment and underemployment as well as losses of commercial health insurance. Payments received from GHC Programs are substantially less for equivalent services than payments received from commercial insurance payors. In addition, costs of managed care premiums and patient responsibility amounts continue to rise, and accordingly, we may experience lower net revenue resulting from increased bad debt due to patients’ inability to pay for certain services.

Previous wording

In addition to the ACA, there could be changes to other government-sponsored or funded healthcare programs, such as a change to the Medicaid program design or Medicaid coverage and reimbursement rates set forth under federal or state law. These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll. Moreover, the expiration of the COVID-19 national emergency and public health emergency declarations in May 2023 may impact the coverage for and access to certain services for Medicaid patients. Expiration of the national emergency and public health emergency declarations will also end waivers for the provision of certain services, and returning our services to a pre-pandemic regulatory state similarly may increase our exposure to legal, regulatory, compliance and clinical risks.

Current wording

In addition to the ACA, there could be changes to other government-sponsored or funded healthcare programs, such as a change to the Medicaid program design or Medicaid coverage and reimbursement rates set forth under federal or state law. These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll.

Previous wording

The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. Recently, Democrats in Congress have sought to expand Medicaid or Medicaid-like coverage in states that have not yet expanded Medicaid. They also have sought to reduce payments to certain hospitals in some of these states. Should any of these changes take effect, we cannot predict with any assurance the ultimate effect on reimbursements for our services.

Current wording

The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which reforms the Medicaid program by eliminating certain financial incentives for states that have expanded their Medicaid programs under the ACA, imposing work requirements on certain adult beneficiaries, and requiring states to increase patient cost-sharing amounts for certain services. We cannot predict with any assurance the ultimate effect of these reforms on reimbursements for our services.

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.

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 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.

Previous wording

For a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three months ended March 31, 2025 and 2024, 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 six months ended June 30, 2025 and 2024, 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 three months ended March 31, 2025 and 2024.

Current wording

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the three months ended June 30, 2025 and 2024, other than for impairment losses, due to a portion of the expense being non-deductible.

Previous wording

Practice salaries and benefits decreased $32.1 million, or 8.7%, to $337.0 million for the three months ended March 31, 2025, as compared to $369.1 million for the same period in 2024. The decrease of $32.1 million was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in clinical compensation, including incentive compensation based on practice results, at our existing units.

Current wording

Practice salaries and benefits decreased $34.3 million, or 9.6%, to $323.5 million for the three months ended June 30, 2025, as compared to $357.8 million for the same period in 2024. The decrease of $34.3 million was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in clinical compensation expense, including incentive compensation based on practice results, at our existing units.

Previous wording

Practice supplies and other operating expenses decreased $12.4 million, or 39.9%, to $18.7 million for the three months ended March 31, 2025, as compared to $31.1 million for the same period in 2024. The decrease was primarily attributable to non-same unit activity, primarily from practice dispositions.

Current wording

Practice supplies and other operating expenses decreased $11.8 million, or 36.3%, to $20.6 million for the three months ended June 30, 2025, as compared to $32.4 million for the same period in 2024. The decrease was primarily attributable to non-same unit activity, primarily from practice dispositions.

Previous wording

Depreciation and amortization expense was $5.3 million for the three months ended March 31, 2025, as compared to $10.3 million for the same period in 2024. The net decrease of $5.0 million was primarily related to non-same unit activity, primarily practice dispositions.

Current wording

Depreciation and amortization expense was $5.3 million for the three months ended June 30, 2025, as compared to $8.8 million for the same period in 2024. The net decrease of $3.5 million was primarily related to non-same unit activity, primarily practice dispositions.

Previous wording

Transformational and restructuring related expenses were $6.6 million for the three months ended March 31, 2025 as compared to $8.5 million for the same period in 2024. The expenses during 2025 and 2024 primarily related to position eliminations across various shared services departments and revenue cycle management transition activities.

Current wording

Transformational and restructuring related expenses were $3.8 million for the three months ended June 30, 2025 as compared to $13.6 million for the same period in 2024. The expenses during 2025 and 2024 primarily related to position eliminations across various shared services departments and revenue cycle management transition activities.

Previous wording

Income from operations increased $16.2 million, or 102.0%, to $32.1 million for the three months ended March 31, 2025, as compared to $15.9 million for the same period in 2024. Our operating margin was 7.0% for the three months ended March 31, 2025, as compared to 3.2% for the same period in 2024. The increase in our operating margin was primarily due to the impact from practice disposition activity and favorable same-unit results, primarily due to same-unit revenue growth. Excluding transformation and restructuring related expenses, our income from operations was $38.7 million and $24.4 million, and our operating margin was 8.4% and 4.9% for the three months ended March 31, 2025 and 2024, respectively. We believe excluding the impacts from the transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Current wording

Income from operations increased $217.6 million, or 138.0%, to $59.9 million for the three months ended June 30, 2025, as compared to loss from operations of $157.7 million for the same period in 2024. Our operating margin was 12.8% for the three months ended June 30, 2025, as compared to (31.3)% for the same period in 2024. The increase in our operating margin was primarily due to favorable same-unit results, primarily related to same-unit revenue growth, and the impact from practice disposition activity. Excluding impairment activity, transformation and restructuring related expenses and loss on disposal of businesses, our income from operations was $63.7 million and $48.8 million, and our operating margin was 13.6% and 9.7% for the three months ended June 30, 2025 and 2024, respectively. We believe excluding the impacts from impairment activity, transformational and restructuring related activity and loss on disposal of businesses provides a more comparable view of our operating income and operating margin.

Previous wording

Total non-operating expenses were $4.0 million for the three months ended March 31, 2025, as compared to $8.1 million for the same period in 2024. The net decrease in non-operating expenses was primarily related to an increase in interest income due to higher cash balances and a decrease in interest expense from lower borrowings.

Current wording

Total non-operating expenses were $4.9 million for the three months ended June 30, 2025, as compared to $10.0 million for the same period in 2024. The net decrease in non-operating expenses was primarily related to an increase in interest income due to higher cash balances and a decrease in interest expense from modestly lower interest rates and borrowings.

Previous wording

Our effective income tax rate (“tax rate”) was 26.2% for the three months ended March 31, 2025 as compared to 48.4% for the three months ended March 31, 2024. The tax rates for the three months ended March 31, 2025 and 2024 include net discrete tax benefits of $0.2 million and expense of $1.7 million, respectively. After excluding discrete tax impacts during the three months ended March 31, 2025 and 2024, our tax rate was 26.8% and 27.0%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate.

Current wording

Our effective income tax rate (“tax rate”) was 28.6% for the three months ended June 30, 2025 as compared to 8.8% for the three months ended June 30, 2024. The tax rate for the three months ended June 30, 2025 and 2024 includes net discrete tax expense of $0.7 million and $0.3 million, respectively. After excluding discrete tax impacts during the three months ended June 30, 2025 and 2024, our tax rate was 27.2% and 9.0%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate. The tax rate for the three months ended June 30, 2024 reflects the effects of the non-cash goodwill impairment charge and the pre-tax loss generated excluding the impairment charge.

Previous wording

Net income was $20.7 million for the three months ended March 31, 2025, as compared to $4.0 million for the same period in 2024. Adjusted EBITDA was $49.2 million for the three months ended March 31, 2025, as compared to $37.2 million for the same period in 2024. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from our same-unit results and practice disposition activity.

Current wording

Net income was $39.3 million for the three months ended June 30, 2025, as compared to net loss of $153.0 million for the same period in 2024. Adjusted EBITDA was $73.2 million for the three months ended June 30, 2025, as compared to $57.9 million for the same period in 2024. 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 income per common and common equivalent share was $0.24 on weighted average shares outstanding of 85.4 million for the three months ended March 31, 2025, as compared to $0.05 per common and common equivalent share on weighted average shares outstanding of 83.3 million for the same period in 2024. Adjusted EPS was $0.33 for the three months ended March 31, 2025, as compared to $0.20 for the same period in 2024.

Current wording

Diluted net income per common and common equivalent share was $0.46 on weighted average shares outstanding of 85.5 million for the three months ended June 30, 2025, as compared to diluted net loss per common and common equivalent share of $1.84 on weighted average shares outstanding of 83.3 million for the same period in 2024. Adjusted EPS was $0.53 for the three months ended June 30, 2025, as compared to $0.34 for the same period in 2024.

Previous wording

Our net revenue was $458.4 million for the three months ended March 31, 2025, as compared to $495.1 million for the same period in 2024. The decrease in net revenue of $36.7 million, or 7.4%, was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in same-unit revenue. 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 $26.1 million, or 6.2%. The increase in same-unit revenue was comprised of an increase of $19.4 million, or 4.6%, from net reimbursement-related factors and $6.7 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.

Current wording

Our net revenue was $927.2 million for the six months ended June 30, 2025, as compared to $999.4 million for the same period in 2024. The decrease in net revenue of $72.2 million, or 7.2%, was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in same-unit revenue. 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 $52.9 million, or 6.2%. The increase in same-unit net revenue was comprised of an increase of $34.9 million, or 4.1%, from net reimbursement-related factors and an increase of $18.0 million, or 2.1%, 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 increased patient acuity, primarily in neonatology, an increase in administrative fees from our hospital partners, a favorable shift in payor mix and modest improvements in managed care contracting. The increase in revenue from patient service volumes was primarily related to increases in our neonatology and maternal-fetal medicine services.

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 $58.6 million for the three months ended March 31, 2025, as compared to $60.2 million for the same period in 2024. The net decrease of $1.6 million was primarily related to net staffing reductions partially offset by increases in other expenses, including billing and collection fees, certain professional services and information technology. General and administrative expenses as a percentage of net revenue was 12.8% for the three months ended March 31, 2025, as compared to 12.2% for the same period in 2024.

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 $114.3 million for the six months ended June 30, 2025, as compared to $116.8 million for the same period in 2024. The net decrease of $2.5 million was primarily related to net staffing reductions, partially offset by increases in other expenses, including billing and collection fees and information technology. General and administrative expenses as a percentage of net revenue were 12.3% for the six months ended June 30, 2025, as compared to 11.7% for the same period in 2024.

Previous wording

As of March 31, 2025, we had $99.0 million of cash and cash equivalents as compared to $229.9 million at December 31, 2024. Additionally, we had working capital of $220.6 million at March 31, 2025, an increase of $15.1 million from working capital of $205.5 million at December 31, 2024. The net increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily from an increase in revenue.

Current wording

As of June 30, 2025, we had $224.7 million of cash and cash equivalents as compared to $229.9 million at December 31, 2024. Additionally, we had working capital of $272.0 million at June 30, 2025, an increase of $66.5 million from working capital of $205.5 million at December 31, 2024. The net increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily related to an increase in revenue.

Previous wording

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

Current wording

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

Previous wording

During the three months ended March 31, 2025, our net cash used in operating activities from continuing operations was $116.1 million, compared to $122.6 million for the same period in 2024. The net decrease in cash used of $6.5 million was primarily due to higher earnings and increases in cash flow from accounts receivable, partially offset by decreases in cash flow from accounts payable and accrued expenses, primarily related to incentive compensation payments.

Current wording

During the six months ended June 30, 2025, our net cash provided by operating activities from continuing operations was $22.0 million, compared to net cash used in operating activities from continuing operations of $13.3 million for the same period in 2024. The net increase in cash provided of $35.3 million was primarily due to higher earnings and increases in cash flow from accounts receivable.

Previous wording

During the three months ended March 31, 2025, cash inflow from accounts receivable was $17.5 million, as compared to a cash outflow of $9.9 million for the same period in 2024. The increase in cash flow from accounts receivable for the three months ended March 31, 2025 as compared to the prior year period was primarily due to a decrease in days sales outstanding (“DSO”).

Current wording

During the six months ended June 30, 2025, cash inflow from accounts receivable was $21.2 million, as compared to a cash outflow of $0.9 million for the same period in 2024. The increase in cash flow from accounts receivable for the six months ended June 30, 2025 as compared to the prior year period was primarily due to a decrease in days sales outstanding (“DSO”).

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 from continuing operations was 47.6 days at March 31, 2025 and December 31, 2024 as compared to 52.2 days at March 31, 2024. The decrease in our DSO from March 31, 2024 was primarily related to improved 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 was 46.4 days at June 30, 2025 as compared to 47.6 days at December 31, 2024 and 49.5 days at June 30, 2024. The decrease in our DSO from December 31, 2024 and June 30, 2024 was primarily related to improved cash collections at our existing units.

Previous wording

During the three months ended March 31, 2025, our net cash used in investing activities of $7.5 million consisted of $3.7 million of other activity, primarily related to practice dispositions, and capital expenditures of $3.3 million.

Current wording

During the six months ended June 30, 2025, our net cash used in investing activities of $14.6 million consisted of capital expenditures of $7.8 million, $3.6 million of other activity, primarily related to practice dispositions, and net purchases of investments of $3.1 million.

Previous wording

During the three months ended March 31, 2025, our net cash used in financing activities of $6.0 million primarily consisted of payments on our Term A Loan (as defined below).

Current wording

During the six months ended June 30, 2025, our net cash used in financing activities of $10.3 million consisted primarily of payments on our Term A Loan (as defined below).

Previous wording

At March 31, 2025, we had an outstanding principal balance on the Amended Credit Agreement of $210.9 million, composed of the Term A Loan. There was no balance outstanding under the Revolving Credit Line. We had $450.0 million available on the Revolving Credit Line at March 31, 2025.

Current wording

At June 30, 2025, we had an outstanding principal balance on the Amended Credit Agreement of $206.3 million, composed of the Term A Loan. There was no balance outstanding under the Revolving Credit Line. We had $450.0 million available on the Revolving Credit Line at June 30, 2025.

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 March 31, 2025 was $276.9 million, of which $30.0 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 $25.0 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 June 30, 2025 was $274.8 million, of which $30.6 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 $23.8 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.

Previous wording

Certain information included or incorporated by reference in this Quarterly Report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, and all statements, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements in this Quarterly Report are made as of the date hereof, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the 2024 Form 10-K, including the section entitled “Risk Factors.”

Current wording

Certain information included or incorporated by reference in this Quarterly Report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, future impacts of legal, regulatory, political and macroeconomic developments and all statements, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements in this Quarterly Report are made as of the date hereof, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the 2024 Form 10-K, including the section entitled “Risk Factors.”