Executive Summary

Q4 2024 delivered solid execution: net revenue $502.4M (+1.2% YoY), GAAP EPS $0.36 vs $(1.50) YoY, Adjusted EPS $0.51, and Adjusted EBITDA $68.7M (+35% YoY), driven by +5.9% reimbursement/payer mix and +2.8% volume; portfolio restructuring completed and hybrid RCM stabilized .
Operating cash flow of $134.8M and cash of $229.9M strengthened liquidity; management cited net debt of ~$386M (~1.7x net leverage) exiting Q4, positioning MD with balance sheet flexibility .
2025 preliminary outlook: Adjusted EBITDA $215–$235M; revenue ~ $1.8B; G&A $220–$230M; Q1 ~17% of full‑year EBITDA (conservative stance given payer mix may normalize and SW&B still above historical) .
Potential stock catalysts: restructuring benefits flow-through in 2025, continued payer mix resiliency, and improved RCM/DSO; management’s credible, conservative guide sets a bar that could be raised if tailwinds persist .

What Went Well and What Went Wrong

What Went Well

Same‑unit growth accelerated: +8.7% same‑unit revenue in Q4 (5.9% reimbursement/payer mix, 2.8% volume), with commercial payor mix up ~200 bps YoY; NICU days +2.8% .
Cash generation and working capital improved: CFO $134.8M; DSO improved to 47.5 days from 51.5 in Q3 as RCM stabilized; year‑end cash $229.9M .
Strategic cleanup executed: completed exit of office‑based and primary/urgent care; management reiterates annualized ~$30M Adj. EBITDA lift (about one‑third realized in 2024) .

“Adjusted EBITDA of $69M was significantly above the expectations we provided in our updated guidance last year.” — CEO Mark Ordan .

What Went Wrong

Expense mix: G&A increased YoY on incentive compensation; transformational/restructuring costs $23.6M in Q4 weighed on GAAP earnings quality .
SW&B trend still elevated: same‑unit salary growth “just above 3%” in Q4—improving but not yet back to the pre‑2022 2–3% range .
Macro/provider headwinds persist; payer negotiations remain tough; 2025 outlook set conservatively given uncertainty and potential normalization of payer mix tailwinds .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$496.4	$504.3	$511.2	$502.4
GAAP Net Income ($M)	$(124.3)	$(153.0)	$19.4	$30.5
GAAP Diluted EPS ($)	$(1.50)	$(1.84)	$0.23	$0.36
Adjusted EPS ($)	$0.32	$0.34	$0.44	$0.51
Adjusted EBITDA ($M)	$50.8	$57.9	$60.2	$68.7
Operating Income ($M)	$(111.5)	$(157.7)	$33.8	$39.3
Cash from Operations ($M)	$73.0	$109.3	$95.7	$134.8
Cash & Equivalents ($M, period end)	$73.3	$19.4	$103.8	$229.9
Total Debt ($M, period end)	$633.3	$630.4	$626.7	$617.7
Operating Margin %	(22.5%) (calc from )	(31.3%) (calc from )	6.6% (calc from )	7.8% (calc from )
Adj. EBITDA Margin %	10.2% (calc from )	11.5% (calc from )	11.8% (calc from )	13.7% (calc from )

Note: Margins are our calculations from company‑reported revenue/operating income/Adj. EBITDA in cited documents.

Same‑Unit Volume KPIs (YoY)

KPI	Q2 2024	Q3 2024	Q4 2024
Hospital‑based patient services	+1.0%	+1.6%	+2.6%
Office‑based patient services	(1.2%)	+3.8%	+6.4%
NICU days	(0.8%)	+0.4%	+2.8%

Guidance Changes

Metric	Period	Previous Guidance	Current/Outcome	Change
Adjusted EBITDA	FY 2024	$205–$215M (Q3 update)	Actual $224.0M	Achieved above prior range
Adjusted EBITDA	FY 2024	Company expected high end or exceed (Jan 13)	Actual $224.0M	Exceeded “high end” commentary
Adjusted EBITDA	FY 2025	N/A	$215–$235M (preliminary)	New
Revenue	FY 2025	N/A	~ $1.8B (preliminary modeling)	New
G&A Expense	FY 2025	N/A	$220–$230M (preliminary)	New
Q1 Adj. EBITDA cadence	FY 2025	N/A	~17% of FY (preliminary)	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2, Q3)	Current Period (Q4)	Trend
Revenue Cycle Management (RCM)	Q2: Transition in progress; hybrid model build‑out . Q3: Transition completed .	Hybrid model stable; collections strong; focus on stability and incremental automation .	Improving/stabilizing
Payer Mix	Q2: +~230 bps commercial mix YoY . Q3: +~250 bps .	+~200 bps YoY; 5.9% reimbursement‑related same‑unit growth; management not assuming further tailwind in 2025 .	Tailwind moderating
Hospital contract admin fees	“Modest improvements” Q2/Q3 .	“Modest improvements”; ~<1/3 of pricing component in Q4 .	Stable to slight positive
Portfolio restructuring	Q2: Formalized exits (office‑based, primary/urgent care) . Q3: Primary/urgent care exited; ongoing practice exits .	Completed by YE’24; ~$30M annualized Adj. EBITDA benefit (about 1/3 realized in 2024) .	Completed; benefits continue in 2025
Clinician SW&B inflation	Q2: Elevated; impairments recorded . Q3: Decelerating but elevated .	Just above 3%; still above 2–3% historical; key focus in 2025 .	Gradual improvement
IVF tailwind (strategic)	Not discussed.	Potential multi‑year tailwind; not in outlook .	New potential positive
Macro/provider headwinds	Ongoing payer pressure noted Q2/Q3 .	Management cautious given uncertainty; conservative 2025 guide .	Persistent

Management Commentary

Strategic focus post‑restructuring: “supporting clinical excellence, strengthening our hospital and health system relationships, and optimizing our operating efficiency” .
On Q4 beat vs internal expectations and outlook posture: “Adjusted EBITDA of $69 million was significantly above the expectations…we provided a preliminary expectation of adjusted EBITDA of between $215 million and $235 million” .
On capital and flexibility: “We start with a sector‑leading balance sheet with net debt of about 1.7x…This affords us both flexibility and opportunities” .
On priorities: “Systematic work on our hospital relationships…[and] recruiting…are really key to our future success” .
On payer mix: tailwind meaningful but not assumed to continue: payer mix contributed roughly one‑third of pricing; cannot validate exchange migration with specificity .

Q&A Highlights

2025 model assumptions: flat volume and pricing (payer mix, managed care, admin fees) assumed; incremental RCM gains possible but focus on stability; SW&B trend flattening but still above historical .
Hospital subsidies/admin fees: ongoing discussions but none assumed in forecast .
Restructuring benefit phasing: ~$30M annualized EBITDA lift, ~1/3 realized in 2024; majority to flow in 2025 .
Guide conservatism: uncertainty in provider landscape and macro headwinds prompted prudent range; opportunity to outperform exists .
Capital allocation: maintain strong balance sheet; options include debt paydown or shareholder returns; no 2025 M&A contribution in model .

Estimates Context

Wall Street consensus (S&P Global) could not be retrieved at this time due to vendor request limits; therefore, we cannot quantify beats/misses vs consensus for revenue/EPS. Management characterized Q4 Adjusted EBITDA as “significantly above” its prior expectations, and provided a conservative 2025 outlook .
Consensus estimates unavailable from S&P Global for this report window.

Key Takeaways for Investors

Core engine re‑focused and performing: same‑unit growth robust (+5.9% reimbursement, +2.8% volume), with payer mix still favorable; restructuring complete and RCM stabilized, supporting mix and collections .
Quality of cash flows improved: strong Q4 CFO and DSO improvement de‑risk 2025 liquidity; net leverage ~1.7x provides optionality .
2025 guide is deliberately conservative: midpoint above leap‑year‑adjusted 2024, with upside if payer mix stays favorable, SW&B moderates further, or admin fee discussions yield benefits .
Watch for incremental operating leverage: as residual restructuring benefits annualize and G&A steps down to $220–$230M, Adj. EBITDA margins can expand if revenue holds .
Near‑term trading setup: conservative bar plus strong cash/low leverage can be supportive; any print showing continued payer mix tailwind or better‑than‑flat volume/pricing could drive positive revisions .
Medium‑term thesis: hospital relationship deepening and recruiting focus are central to durable growth; IVF potentially adds a multi‑year tailwind not in the 2025 model .
Risks: normalization of payer mix, persistent wage inflation, and payer immobility; transformation charges are largely behind but execution on SW&B and RCM automation remains key .

Appendix: Additional Data Points

Q4 operating expense detail: SW&B $349.0M; G&A $63.6M; transformation/restructuring $23.6M .
Balance sheet highlights: cash $229.9M; total debt $617.7M; no revolver borrowings at year‑end .
2025 EBITDA bridge considerations: ~$20M remaining restructuring benefit vs 2024 realization; 2024 leap year benefit of ~$4M not recurring; no M&A in guide .

Pediatrix Medical Group, Inc. (MD)·Q4 2024 Earnings Summary