Pediatrix Medical Group, Inc.

Previous wording

For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received. The patient’s cost-sharing amount for out-of-network services covered by the NSA must be no more than the patient’s in-network cost-sharing amounts. Patient cost-sharing amounts for items and services subject to the NSA count toward the patient’s health plan deductible and out-of-pocket cost-sharing limits. For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount. An out-of-network provider is only permitted to bill a patient more than the cost-sharing amount allowed under the NSA for certain types of services if the provider satisfies all aspects of an informed consent process set forth in the NSA’s implementing regulations. Providers that violate these surprise billing prohibitions may be subject to enforcement actions by the Centers for Medicare and Medicaid Services ("CMS"), the U.S. Department of Labor, or by states, one or multiple of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties enforcement action and federal civil monetary penalties.

Current wording

For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received. The patient’s cost-sharing amount for out-of-network services covered by the NSA must be no more than the patient’s in-network cost-sharing amounts. Patient cost-sharing amounts for items and services subject to the NSA count toward the patient’s health plan deductible and out-of-pocket cost-sharing limits. For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount. An out-of-network provider is only permitted to bill a patient more than the cost-sharing amount allowed under the NSA for certain types of services if the provider satisfies all aspects of an informed consent process set forth in the NSA’s implementing regulations. Providers that violate these surprise billing prohibitions may be subject to enforcement actions by the Centers for Medicare and Medicaid Services ("CMS"), the U.S. Department of Labor, or by states, one or multiple of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties and enforcement actions and federal civil monetary penalties.

Previous wording

For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution (“IDR”) process. The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment. Providers have had difficulty enforcing IDR awards against insurers, as certain federal courts have held that the NSA does not provide a private right of action to compel payment, leaving enforcement primarily to the U.S. Department of Health and Human Services. Accordingly, we cannot predict how these IDR results will compare to the rates that our affiliated physicians customarily receive for their services. In addition, in May 2026, CMS finalized the most comprehensive revisions to the IDR process since its implementation. These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Current wording

For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution (“IDR”) process. The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment. Providers have had difficulty enforcing IDR awards against insurers, as certain federal courts have held that the NSA does not provide a private right of action to compel payment, leaving enforcement primarily to the U.S. Department of Health and Human Services. Accordingly, we cannot predict how these IDR results will compare to the rates that our affiliated physicians customarily receive for their services. In addition, in May 2026, CMS finalized the most comprehensive revisions to the IDR process since its implementation. The rule became effective in August 2026, and certain of its requirements will be implemented on a rolling basis through subsequent guidance and system changes. Changes to the IDR process or to the calculation of qualifying payment amounts, as well as other regulatory, judicial or legislative developments, could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Previous wording

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) has altered how health care is delivered and reimbursed in the U.S. and contains various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits. Other provisions of the ACA have expanded the scope and reach of the False Claims Act and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings. As a result, we could be affected by potential changes to various aspects of the ACA, including the loss of enhanced subsidies, changes to tax credits, monthly premiums, healthcare insurance marketplaces and Medicaid expansion. We cannot predict with any assurance the ultimate effect that the loss of enhanced subsidies will have on reimbursement for our services. We cannot say for certain whether there will be additional future challenges to the ACA or what impact, if any, such challenges may have on our business. Changes resulting from various legal proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Current wording

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) has altered how health care is delivered and reimbursed in the U.S. and contains various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits. Other provisions of the ACA have expanded the scope and reach of the False Claims Act and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings. As a result, we could be affected by potential changes to various aspects of the ACA, including the loss of enhanced subsidies, changes to tax credits, monthly premiums, healthcare insurance marketplaces and Medicaid expansion. Many individuals who purchase coverage through ACA marketplaces face higher out-of-pocket premiums and may reduce or discontinue coverage, and insurers have proposed a median premium increase of approximately 15% for 2027. We cannot predict with any assurance the ultimate effect that the loss of enhanced subsidies or increases to premiums will have on reimbursement for our services. We cannot say for certain whether there will be additional future challenges to the ACA or what impact, if any, such challenges may have on our business. Changes resulting from various legal proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

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 any 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 any impacts from discrete tax events. For the three and nine months ended September 30, 2025, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude net gain on investments in divested businesses.

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, 2026 and 2025, 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, 2026 and 2025, 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, 2026 and 2025.

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, 2026 and 2025.

Previous wording

Our net revenue was $487.8 million for the three months ended June 30, 2026, as compared to $468.8 million for the same period in 2025. The increase in net revenue of $19.0 million, or 4.0%, was primarily attributable to an increase in non-same unit activity, primarily from the impact of recent acquisitions, net of dispositions, and from 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 $8.5 million, or 1.9%. The increase in same-unit net revenue was comprised of an increase of $18.1 million, or 4.0%, from net reimbursement-related factors, partially offset by a decrease of $9.6 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 improved collection activity, a favorable shift in payor mix and increased patient acuity, primarily in neonatology. The decrease in revenue from patient service volumes was primarily related to our neonatology services.

Current wording

Our net revenue was $501.4 million for the three months ended September 30, 2026, as compared to $492.9 million for the same period in 2025. The increase in net revenue of $8.5 million, or 1.7%, was primarily attributable to an increase in non-same unit activity, primarily from the impact of recent acquisitions, net of dispositions, and from 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 $2.7 million, or 0.6%. The increase in same-unit net revenue was comprised of an increase of $1.4 million, or 0.3%, from net reimbursement-related factors, and $1.3 million, or 0.3%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to a favorable shift in payor mix, an increase in administrative fees from our hospital partners and increased patient acuity, primarily in neonatology, partially offset by the benefit of improved collection activity in the prior year. The increase in revenue from patient service volumes was primarily related to our maternal-fetal medicine services, partially offset by a decline in newborn nursery services.

Previous wording

Practice salaries and benefits increased $21.3 million, or 3.2%, to $681.9 million for the six months ended June 30, 2026, as compared to $660.5 million for the same period in 2025. The increase of $21.3 million was primarily attributable to increases in clinical salaries and malpractice expense at our existing units.

Current wording

Practice salaries and benefits increased $9.2 million, or 2.8%, to $341.5 million for the three months ended September 30, 2026, as compared to $332.3 million for the same period in 2025. The increase of $9.2 million was primarily attributable to increases in clinical salaries expense, partially offset by lower benefits expense, at our existing units.

Previous wording

Practice supplies and other operating expenses decreased $1.4 million, or 6.9%, to $19.2 million for the three months ended June 30, 2026, as compared to $20.6 million for the same period in 2025. The decrease was primarily attributable to lower practice supply, professional fees and other expenses at our existing units.

Current wording

Practice supplies and other operating expenses decreased $0.6 million, or 3.2%, to $19.6 million for the three months ended September 30, 2026, as compared to $20.2 million for the same period in 2025. The decrease was primarily attributable to non-same unit activity from 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 related to the day-to-day operations of our affiliated physician practices and services. General and administrative expenses were $61.3 million for the three months ended June 30, 2026, as compared to $55.7 million for the same period in 2025. The net increase of $5.6 million was primarily related to increases in compensation expense, primarily from executive transition related costs. General and administrative expenses as a percentage of net revenue were 12.6% for the three months ended June 30, 2026, as compared to 11.9% for the same period in 2025.

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 $62.7 million for the three months ended September 30, 2026, as compared to $60.8 million for the same period in 2025. The net increase of $1.9 million was primarily related to higher incentive-based compensation based on financial results, partially offset by a decrease in information technology-related expenses. General and administrative expenses as a percentage of net revenue were 12.5% for the three months ended September 30, 2026, as compared to 12.3% for the same period in 2025.

Previous wording

Depreciation and amortization expense was $11.9 million for the six months ended June 30, 2026, as compared to $10.6 million for the same period in 2025. The net increase of $1.3 million was primarily related to capital expenditures at our existing units and from capital expenditures and amortization of intangible assets from recent acquisitions.

Current wording

Depreciation and amortization expense was $6.2 million for the three months ended September 30, 2026, as compared to $5.6 million for the same period in 2025. The net increase of $0.7 million was primarily related to capital expenditures at our existing units and from capital expenditures and amortization of intangible assets from recent acquisitions.

Previous wording

Transformational and restructuring related expenses were $13.4 million for the six months ended June 30, 2026 as compared to $10.4 million for the same period in 2025. The expenses during 2026 primarily related to revenue cycle management transition activities. The expenses during 2025 primarily related to position eliminations across various shared services departments and revenue cycle management activities.

Current wording

Transformational and restructuring related expenses were $6.1 million for the three months ended September 30, 2026 as compared to $6.0 million for the same period in 2025. The expenses during 2026 and 2025 primarily related to position eliminations and revenue cycle management transition activities.

Previous wording

Income from operations decreased $3.0 million, or 4.9%, to $56.9 million for the three months ended June 30, 2026, as compared to $59.9 million for the same period in 2025. Our operating margin was 11.7% for the three months ended June 30, 2026, as compared to 12.8% for the same period in 2025. The decrease in our operating margin was primarily due to unfavorable impacts in our same-unit results, primarily from higher operating expenses, partially offset by favorable impacts from recent acquisitions. Excluding transformational and restructuring related expenses, our income from operations was $65.4 million and $63.7 million, and our operating margin was 13.4% and 13.6% for the three months ended June 30, 2026 and 2025, respectively. We believe excluding the impacts from transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Current wording

Income from operations decreased $2.8 million, or 4.2%, to $65.2 million for the three months ended September 30, 2026, as compared to $68.1 million for the same period in 2025. Our operating margin was 13.0% for the three months ended September 30, 2026, as compared to 13.8% for the same period in 2025. The decrease in our operating margin was primarily due to unfavorable impacts in our same-unit results, primarily from higher operating expenses, partially offset by favorable impacts from recent acquisitions. Excluding transformational and restructuring related expenses, our income from operations was $71.3 million and $74.1 million, and our operating margin was 14.2% and 15.0% for the three months ended September 30, 2026 and 2025, respectively. 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 $5.7 million for the six months ended June 30, 2026, as compared to $8.9 million for the same period in 2025. The net decrease in non-operating expenses was primarily related to a decrease in interest expense from modestly lower interest rates and borrowings and an increase in interest income due to higher cash balances.

Current wording

Total non-operating expenses were $0.2 million for the three months ended September 30, 2026, as compared to net non-operating income of $19.7 million for the same period in 2025. The net decrease in non-operating income was primarily related to a net gain on investments in divested businesses of $20.9 million recognized in 2025, partially offset by 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 June 30, 2026, as compared to 28.6% for the three months ended June 30, 2025. The tax rate for the three months ended June 30, 2026 and 2025 includes a net discrete tax benefit of $0.6 million and tax expense of $0.7 million, respectively. After excluding discrete tax impacts during the three months ended June 30, 2026 and 2025, our tax rate was 27.3% and 27.2%, 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 27.7% for the three months ended September 30, 2026, as compared to 18.3% for the three months ended September 30, 2025. The tax rate for the three months ended September 30, 2026 and 2025 includes net discrete tax expense of $0.3 million and a net discrete tax benefit of $7.0 million, respectively. After excluding discrete tax impacts during the three months ended September 30, 2026 and 2025, our tax rate was 27.2% and 26.8%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate.

Previous wording

Net income was $39.8 million for the three months ended June 30, 2026, as compared to $39.3 million for the same period in 2025. Adjusted EBITDA was $76.4 million for the three months ended June 30, 2026, as compared to $73.2 million for the same period in 2025. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from recent acquisitions, partially offset by a decrease in same-unit results due to higher expenses as compared to revenue growth.

Current wording

Net income was $47.0 million for the three months ended September 30, 2026, as compared to $71.7 million for the same period in 2025. Adjusted EBITDA was $85.5 million for the three months ended September 30, 2026, as compared to $87.3 million for the same period in 2025. The decrease in our Adjusted EBITDA was primarily due to lower same unit results due to higher expenses as compared to revenue growth partially offset by net favorable impacts from recent acquisitions.

Previous wording

Diluted net income per common and common equivalent share was $0.49 on weighted average shares outstanding of 81.4 million for the three months ended June 30, 2026, as compared to $0.46 on weighted average shares outstanding of 85.5 million for the same period in 2025. The decrease in our weighted average shares outstanding is primarily due to the impact of shares repurchased under our repurchase program, partially offset by issuances of restricted stock. Adjusted EPS was $0.63 for the three months ended June 30, 2026, as compared to $0.53 for the same period in 2025.

Current wording

Diluted net income per common and common equivalent share was $0.59 on weighted average shares outstanding of 79.7 million for the three months ended September 30, 2026, as compared to $0.84 on weighted average shares outstanding of 85.6 million for the same period in 2025. The decrease in our weighted average shares outstanding is primarily due to the impact of shares repurchased under our repurchase program, partially offset by issuances of restricted stock. Adjusted EPS was $0.72 for the three months ended September 30, 2026, as compared to $0.67 for the same period in 2025.

Previous wording

Our net revenue was $964.0 million for the six months ended June 30, 2026, as compared to $927.2 million for the same period in 2025. The increase in net revenue of $36.8 million, or 4.0%, was primarily attributable to an increase in same-unit revenue and non-same unit activity, primarily from the impact of recent acquisitions, net of 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 $20.1 million, or 2.3%. The increase in same-unit net revenue was comprised of an increase of $37.0 million, or 4.2%, from net reimbursement-related factors partially offset by a decrease of $16.9 million, or 1.9%, 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 improved collection activity, a favorable shift in payor mix, increased patient acuity, primarily in neonatology, and an increase in administrative fees from our hospital partners. The decrease in revenue from patient service volumes was related to decreases across all our service lines.

Current wording

Our net revenue was $1.47 billion for the nine months ended September 30, 2026, as compared to $1.42 billion for the same period in 2025. The increase in net revenue of $45.3 million, or 3.2%, was primarily attributable to an increase in same-unit revenue and non-same unit activity, primarily from the impact of recent acquisitions, net of 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 $27.1 million, or 2.0%. The increase in same-unit net revenue was comprised of an increase of $39.3 million, or 2.9%, from net reimbursement-related factors partially offset by a decrease of $12.2 million, or 0.9%, 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 improved collection activity, a favorable shift in payor mix, an increase in administrative fees from our hospital partners, and increased patient acuity, primarily in neonatology. The decrease in revenue from patient service volumes was related to decreases across all our service lines.

Previous wording

Practice salaries and benefits increased $12.6 million, or 3.9%, to $336.1 million for the three months ended June 30, 2026, as compared to $323.5 million for the same period in 2025. The increase of $12.6 million was primarily attributable to increases in clinical salaries and malpractice expense at our existing units.

Current wording

Practice salaries and benefits increased $30.5 million, or 3.1%, to $1.02 billion for the nine months ended September 30, 2026, as compared to $992.9 million for the same period in 2025. The increase of $30.5 million was primarily attributable to increases in clinical salaries and malpractice expense at our existing units.

Previous wording

Practice supplies and other operating expenses decreased $2.6 million, or 6.6%, to $36.7 million for the six months ended June 30, 2026, as compared to $39.3 million for the same period in 2025. The decrease was primarily attributable to non-same unit activity, primarily resulting from practice dispositions and lower supply and other expenses at our existing units.

Current wording

Practice supplies and other operating expenses decreased $3.3 million, or 5.5%, to $56.2 million for the nine months ended September 30, 2026, as compared to $59.5 million for the same period in 2025. The decrease was primarily attributable to non-same unit activity, primarily resulting from practice dispositions and lower supply and other expenses at our existing units.

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 affiliated physician practices and services. General and administrative expenses were $121.6 million for the six months ended June 30, 2026, as compared to $114.3 million for the same period in 2025. The net increase of $7.3 million was primarily related to increases in compensation expense, primarily from executive transition related costs. General and administrative expenses as a percentage of net revenue were 12.6% for the six months ended June 30, 2026, as compared to 12.3% for the same period in 2025.

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 affiliated physician practices and services. General and administrative expenses were $184.3 million for the nine months ended September 30, 2026, as compared to $175.1 million for the same period in 2025. The net increase of $9.2 million was primarily related to increases in compensation expense, primarily from executive transition related costs, and higher incentive-based compensation expense based on financial results. General and administrative expenses as a percentage of net revenue were 12.6% for the nine months ended September 30, 2026, as compared to 12.3% for the same period in 2025.

Previous wording

Depreciation and amortization expense was $5.8 million for the three months ended June 30, 2026, as compared to $5.3 million for the same period in 2025. The net increase of $0.5 million was primarily related to capital expenditures and amortization of intangible assets from recent acquisitions.

Current wording

Depreciation and amortization expense was $18.1 million for the nine months ended September 30, 2026, as compared to $16.2 million for the same period in 2025. The net increase of $1.9 million was primarily related to capital expenditures at our existing units and from capital expenditures and amortization of intangible assets from recent acquisitions.

Previous wording

Transformational and restructuring related expenses were $8.5 million for the three months ended June 30, 2026 as compared to $3.8 million for the same period in 2025. The expenses during 2026 primarily related to revenue cycle management transition activities. The expenses in 2025 were primarily related to position eliminations and revenue cycle management transition activities.

Current wording

Transformational and restructuring related expenses were $19.5 million for the nine months ended September 30, 2026 as compared to $16.4 million for the same period in 2025. The expenses during 2026 primarily related to revenue cycle management transition activities and position eliminations. The expenses during 2025 primarily related to position eliminations and revenue cycle management activities.

Previous wording

Income from operations increased $6.6 million, or 7.2%, to $98.6 million for the six months ended June 30, 2026, as compared to $92.0 million for the same period in 2025. Our operating margin was 10.2% for the six months ended June 30, 2026, as compared to 9.9% for the same period in 2025. The increase in our operating margin was primarily due to recent acquisitions. Excluding transformational and restructuring related expenses, our income from operations was $112.0 million and $102.4 million, and our operating margin was 11.6% and 11.0% for the six months ended June 30, 2026 and 2025, respectively. We believe excluding the impacts from transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Current wording

Income from operations increased $3.8 million, or 2.4%, to $163.8 million for the nine months ended September 30, 2026, as compared to $160.0 million for the same period in 2025. Our operating margin was 11.2% for the nine months ended September 30, 2026, as compared to 11.3% for the same period in 2025. The decrease in our operating margin was primarily due to unfavorable impacts in our same-unit results, primarily from higher operating expenses, partially offset by favorable impacts from recent acquisitions. Excluding transformational and restructuring related expenses, our income from operations was $183.3 million and $176.4 million, and our operating margin was 12.5% and 12.4% for the nine months ended September 30, 2026 and 2025, respectively. 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 $2.9 million for the three months ended June 30, 2026, as compared to $4.9 million for the same period in 2025. The net decrease in non-operating expenses was primarily related to a decrease in interest expense from modestly lower interest rates and borrowings and an increase in interest income due to higher cash balances.

Current wording

Total non-operating expenses were $6.0 million for the nine months ended September 30, 2026, as compared to net non-operating income of $10.8 million for the same period in 2025. The net decrease in non-operating income was primarily related to a net gain on investments in divested businesses of $20.9 million recognized in 2025, partially offset by a decrease in interest expense from lower interest rates and borrowings and an increase in interest income due to higher cash balances.

Previous wording

Our effective income tax rate (“tax rate”) was 25.2% for the six months ended June 30, 2026 as compared to 27.8% for the six months ended June 30, 2025. The tax rate for the six months ended June 30, 2026 and 2025 includes a net discrete tax benefit of $1.7 million and tax expense of $0.6 million, respectively. After excluding discrete tax impacts during the six months ended June 30, 2026 and 2025, our tax rate was 27.1% for each period. 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 26.2% for the nine months ended September 30, 2026 as compared to 22.9% for the nine months ended September 30, 2025. The tax rates for the nine months ended September 30, 2026 and 2025 include a net discrete tax benefit of $1.4 million and $6.4 million, respectively. After excluding discrete tax impacts during the nine months ended September 30, 2026 and 2025, our tax rate was 27.1% and 27.0%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate.

Previous wording

Net income was $69.4 million for the six months ended June 30, 2026, as compared to $60.0 million for the same period in 2025. Adjusted EBITDA was $134.6 million for the six months ended June 30, 2026, as compared to $122.4 million for the same period in 2025. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from recent acquisitions and from our same-unit results.

Current wording

Net income was $116.4 million for the nine months ended September 30, 2026, as compared to $131.7 million for the same period in 2025. Adjusted EBITDA was $220.1 million for the nine months ended September 30, 2026, as compared to $209.7 million for the same period in 2025. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from recent acquisitions and from our same-unit results.

Previous wording

Diluted net income per common and common equivalent share was $0.85 on weighted average shares outstanding of 82.0 million for the six months ended June 30, 2026, as compared to $0.70 on weighted average shares outstanding of 85.5 million for the same period in 2025. The decrease in our weighted average shares outstanding is primarily due to the impact of shares repurchased under our repurchase program, partially offset by issuances of restricted stock. Adjusted EPS was $1.07 for the six months ended June 30, 2026, as compared to $0.87 for the same period in 2025.

Current wording

Diluted net income per common and common equivalent share was $1.43 on weighted average shares outstanding of 81.3 million for the nine months ended September 30, 2026, as compared to $1.54 on weighted average shares outstanding of 85.6 million for the same period in 2025. The decrease in our weighted average shares outstanding is primarily due to the impact of shares repurchased under our repurchase program, partially offset by issuances of restricted stock. Adjusted EPS was $1.78 for the nine months ended September 30, 2026, as compared to $1.54 for the same period in 2025.

Previous wording

As of June 30, 2026, we had $288.9 million of cash and cash equivalents as compared to $375.2 million at December 31, 2025. Additionally, we had working capital of $158.6 million at June 30, 2026, a decrease of $146.0 million from working capital of $304.6 million at December 31, 2025. The net decrease in working capital is primarily due to an increase in the current portion of debt from the reclassification of the Term A Loan (as defined below), which matures in February 2027.

Current wording

As of September 30, 2026, we had $311.9 million of cash and cash equivalents as compared to $375.2 million at December 31, 2025. Additionally, we had working capital of $148.3 million at September 30, 2026, a decrease of $156.3 million from working capital of $304.6 million at December 31, 2025. The net decrease in working capital is primarily due to an increase in the current portion of debt from the reclassification of the Term A Loan (as defined below), which matures in February 2027.

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 six months ended June 30, 2026, our net cash used in operating activities from continuing operations was $3.2 million, compared to cash provided of $22.0 million for the same period in 2025. The net increase in cash used of $25.2 million was primarily due to an increase in cash used to fund working capital, primarily incentive compensation payments.

Current wording

During the nine months ended September 30, 2026, our net cash provided by operating activities from continuing operations was $114.5 million, compared to $160.1 million for the same period in 2025. The net decrease in cash provided of $45.6 million was primarily due to increased cash used to fund working capital, primarily incentive compensation payments, and lower cash collections from accounts receivable.

Previous wording

During the six months ended June 30, 2026, cash inflow from accounts receivable was $2.1 million, as compared to $21.2 million for the same period in 2025. The decrease in cash flow from accounts receivable for the six months ended June 30, 2026 as compared to the prior year period was primarily due to growth in revenue at existing units and the impact of acquisitions, partially offset by a decrease in days sales outstanding (“DSO”).

Current wording

During the nine months ended September 30, 2026, cash outflow from accounts receivable was $2.2 million, as compared to cash inflow of $29.1 million for the same period in 2025. The decrease in cash flow from accounts receivable for the nine months ended September 30, 2026 as compared to the prior year period was primarily due to growth in revenue at existing units and the impact of acquisitions, partially offset by 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 was 42.5 days at June 30, 2026 as compared to 42.8 days at December 31, 2025 and 46.4 days at June 30, 2025. The decrease in our DSO for both periods 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 42.5 days at September 30, 2026 as compared to 42.8 days at December 31, 2025 and 43.1 days at September 30, 2025. The decrease in our DSO for both periods was primarily related to improved cash collections at our existing units.

Previous wording

During the six months ended June 30, 2026, our net cash used in investing activities of $6.0 million consisted of capital expenditures of $7.6 million and acquisition payments of $7.0 million, partially offset by net proceeds from maturities of investments of $8.1 million.

Current wording

During the nine months ended September 30, 2026, our net cash used in investing activities of $10.6 million consisted of capital expenditures of $12.0 million and acquisition payments of $7.0 million, partially offset by net proceeds from maturities of investments of $7.9 million.

Previous wording

During the six months ended June 30, 2026, our net cash used in financing activities of $75.9 million consisted primarily of stock repurchases of $64.2 million and payments on our Term A Loan of $12.5 million.

Current wording

During the nine months ended September 30, 2026, our net cash used in financing activities of $165.5 million consisted primarily of stock repurchases of $147.2 million and payments on our Term A Loan of $18.8 million.

Previous wording

At June 30, 2026, we had an outstanding principal balance on the Amended Credit Agreement of $184.4 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, 2026.

Current wording

At September 30, 2026, we had an outstanding principal balance on the Amended Credit Agreement of $178.1 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 September 30, 2026.

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, 2026 was $271.1 million, of which $35.9 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 $18.9 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, 2026 was $269.4 million, of which $33.9 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 $22.6 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.