☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Florida | 26-3667538 | ||
(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) | ||
1301 Concord Terrace Sunrise, Florida | 33323 | ||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Common Stock, par value $.01 per share | MD | New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
☐ | ||||||
Page | ||||||||||
PART I - FINANCIAL INFORMATION | ||||||||||
Item 1. | Financial Statements | 3 | ||||||||
3 | ||||||||||
4 | ||||||||||
5 | ||||||||||
7 | ||||||||||
8 | ||||||||||
Item 2. | 16 | |||||||||
Item 3. | 26 | |||||||||
Item 4. | 26 | |||||||||
Item | 27 | |||||||||
Item 1A. | 27 | |||||||||
Item 2. | ||||||||||
Item 6. | 29 | |||||||||
30 |
March 31, 2020 | December 31, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 312,155 | $ | 112,767 | ||||
Short-term investments | 85,041 | 74,510 | ||||||
Accounts receivable, net | 476,991 | 498,869 | ||||||
Prepaid expenses | 19,409 | 21,919 | ||||||
Income taxes receivable | 26,449 | — | ||||||
Other current assets | 20,851 | 23,442 | ||||||
Total current assets | 940,896 | 731,507 | ||||||
Property and equipment, net | 100,227 | 94,492 | ||||||
Goodwill | 2,710,292 | 2,710,292 | ||||||
Intangible assets, net | 263,308 | 274,407 | ||||||
Operating lease right-of-use assets | 79,810 | 82,824 | ||||||
Deferred income tax assets | 132,783 | 162,385 | ||||||
Other assets | 92,346 | 89,994 | ||||||
Total assets | $ | 4,319,662 | $ | 4,145,901 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 323,363 | $ | 511,866 | ||||
Current portion of finance lease liabilities | 697 | 130 | ||||||
Current portion of operating lease liabilities | 22,340 | 23,317 | ||||||
Income taxes payable | — | 6,505 | ||||||
Total current liabilities | 346,400 | 541,818 | ||||||
Line of credit | 368,500 | — | ||||||
Long-term debt and finance lease liabilities, net | 1,733,469 | 1,730,295 | ||||||
Long-term operating lease liabilities | 62,238 | 67,005 | ||||||
Long-term professional liabilities | 238,347 | 226,892 | ||||||
Deferred income tax liabilities | 61,975 | 57,995 | ||||||
Other liabilities | 21,337 | 22,900 | ||||||
Total liabilities | 2,832,266 | 2,646,905 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock; $.01 par value; 1,000 shares authorized; NaN issued | — | — | ||||||
Common stock; $.01 par value; 200,000 shares authorized; 85,150 and 84,248 shares issued and outstanding, respectively | 852 | 842 | ||||||
Additional paid-in capital | 995,257 | 987,942 | ||||||
Retained earnings | 491,287 | 510,212 | ||||||
Total shareholders’ equity | 1,487,396 | 1,498,996 | ||||||
Total liabilities and shareholders’ equity | $ | 4,319,662 | $ | 4,145,901 | ||||
September 30, 2020 | December 31, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 294,512 | $ | 107,870 | ||||
Short-term investments | 81,574 | 74,510 | ||||||
Accounts receivable, net | 267,125 | 434,266 | ||||||
Prepaid expenses | 13,317 | 17,108 | ||||||
Income taxes receivable | 22,797 | 0 | ||||||
Other current assets | 20,287 | 11,837 | ||||||
Assets held for sale | 951,548 | 85,916 | ||||||
Total current assets | 1,651,160 | 731,507 | ||||||
Property and equipment, net | 78,570 | 72,677 | ||||||
Goodwill | 1,480,668 | 1,479,850 | ||||||
Intangible assets, net | 27,665 | 28,587 | ||||||
Operating lease right-of-use | 58,993 | 56,413 | ||||||
Deferred income tax assets | 62,950 | 86,644 | ||||||
Other assets | 64,820 | 48,643 | ||||||
Assets held for sale | 0 | 1,641,580 | ||||||
Total assets | $ | 3,424,826 | $ | 4,145,901 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 388,517 | $ | 410,637 | ||||
Current portion of finance lease liabilities | 2,440 | 0 | ||||||
Current portion of operating lease liabilities | 18,695 | 18,254 | ||||||
Income taxes payable | 0 | 6,039 | ||||||
Liabilities held for sale | 78,712 | 106,888 | ||||||
Total current liabilities | 488,364 | 541,818 | ||||||
Long-term debt and finance lease liabilities, net | 1,742,263 | 1,730,238 | ||||||
Long-term operating lease liabilities | 40,220 | 44,643 | ||||||
Long-term professional liabilities | 242,366 | 204,914 | ||||||
Deferred income tax liabilities | 63,630 | 56,468 | ||||||
Other liabilities | 42,977 | 22,819 | ||||||
Liabilities held for sale | 0 | 46,005 | ||||||
Total liabilities | 2,619,820 | 2,646,905 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred stock; $.01 par value; 1,000 shares authorized; NaN issued | 0 | 0 | ||||||
Common stock; $.01 par value; 200,000 shares authorized; 85,504 and 84,248 shares issued and outstanding, respectively | 855 | 842 | ||||||
Additional paid-in capital | 1,023,974 | 987,942 | ||||||
Accumulated other comprehensive income | 1,990 | 78 | ||||||
Retained (deficit) earnings | (222,058 | ) | 510,134 | |||||
Total MEDNAX, Inc. shareholders’ equity | 804,761 | 1,498,996 | ||||||
Noncontrolling i nterest | 245 | 0 | ||||||
Total equity | 805,006 | 1,498,996 | ||||||
Total liabilities and equity | $ | 3,424,826 | $ | 4,145,901 | ||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net revenue | $ | 845,918 | $ | 851,183 | ||||
Operating expenses: | ||||||||
Practice salaries and benefits | 652,721 | 621,539 | ||||||
Practice supplies and other operating expenses | 25,264 | 25,791 | ||||||
General and administrative expenses | 105,235 | 101,821 | ||||||
Depreciation and amortization | 18,673 | 20,033 | ||||||
Transformational and restructuring related expenses | 30,907 | 3,544 | ||||||
Total operating expenses | 832,800 | 772,728 | ||||||
Income from operations | 13,118 | 78,455 | ||||||
Investment and other (expense) income | (679 | ) | 1,647 | |||||
Interest expense | (27,608 | ) | (30,723 | ) | ||||
Equity in earnings of unconsolidated affiliates | 1,345 | 1,236 | ||||||
Total non-operating expenses | (26,942 | ) | (27,840 | ) | ||||
(Loss) income from continuing operations before income taxes | (13,824 | ) | 50,615 | |||||
Income tax provision | (2,286 | ) | (8,962 | ) | ||||
(Loss) income from continuing operations | (16,110 | ) | 41,653 | |||||
Loss from discontinued operations, net of tax | (2,602 | ) | (284,525 | ) | ||||
Net loss | $ | (18,712 | ) | $ | (242,872 | ) | ||
Per common and common equivalent share data: | ||||||||
(Loss) income from continuing operations: | ||||||||
Basic | $ | (0.20 | ) | $ | 0.48 | |||
Diluted | $ | (0.20 | ) | $ | 0.48 | |||
Loss from discontinued operations: | ||||||||
Basic | $ | (0.03 | ) | $ | (3.31 | ) | ||
Diluted | $ | (0.03 | ) | $ | (3.29 | ) | ||
Net loss: | ||||||||
Basic | $ | (0.23 | ) | $ | (2.82 | ) | ||
Diluted | $ | (0.23 | ) | $ | (2.81 | ) | ||
Weighted average common shares: | ||||||||
Basic | 82,799 | 86,073 | ||||||
Diluted | 82,799 | 86,545 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net revenue | $ | 460,635 | $ | 454,913 | $ | 1,317,321 | $ | 1,321,159 | ||||||||
Operating expenses: | ||||||||||||||||
Practice salaries and benefits | 309,904 | 301,306 | 909,168 | 880,686 | ||||||||||||
Practice supplies and other operating expenses | 22,440 | 22,581 | 66,455 | 72,688 | ||||||||||||
General and administrative expenses | 66,346 | 63,284 | 194,276 | 185,318 | ||||||||||||
Depreciation and amortization | 7,195 | 6,408 | 20,749 | 18,830 | ||||||||||||
Transformational and restructuring related expenses | 34,291 | 12,766 | 60,846 | 32,025 | ||||||||||||
Total operating expenses | 440,176 | 406,345 | 1,251,494 | 1,189,547 | ||||||||||||
Income from operations | 20,459 | 48,568 | 65,827 | 131,612 | ||||||||||||
Investment and other income | 10,534 | 802 | 13,064 | 2,777 | ||||||||||||
Interest expense | (27,250 | ) | (29,909 | ) | (83,180 | ) | (91,271 | ) | ||||||||
Equity in earnings of unconsolidated affiliates | 282 | 786 | 1,081 | 1,753 | ||||||||||||
Total non-operating expenses | (16,434 | ) | (28,321 | ) | (69,035 | ) | (86,741 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 4,025 | 20,247 | (3,208 | ) | 44,871 | |||||||||||
Income tax provision | (6,677 | ) | (7,360 | ) | (10,859 | ) | (12,590 | ) | ||||||||
(Loss) income from continuing operations | (2,652 | ) | 12,887 | (14,067 | ) | 32,281 | ||||||||||
Loss from discontinued operations, net of tax | (38,392 | ) | (1,268,803 | ) | (718,125 | ) | (1,539,314 | ) | ||||||||
Net loss | $ | (41,044 | ) | $ | (1,255,916 | ) | $ | (732,192 | ) | $ | (1,507,033 | ) | ||||
Per common and common equivalent share data: | ||||||||||||||||
(Loss) income from continuing operations: | ||||||||||||||||
Basic | $ | (0.03 | ) | $ | 0.16 | $ | (0.17 | ) | $ | 0.39 | ||||||
Diluted | $ | (0.03 | ) | $ | 0.16 | $ | (0.17 | ) | $ | 0.38 | ||||||
Loss from discontinued operations: | ||||||||||||||||
Basic | $ | (0.46 | ) | $ | (15.39 | ) | $ | (8.62 | ) | $ | (18.36 | ) | ||||
Diluted | $ | (0.46 | ) | $ | (15.31 | ) | $ | (8.62 | ) | $ | (18.26 | ) | ||||
Net loss: | ||||||||||||||||
Basic | $ | (0.49 | ) | $ | (15.23 | ) | $ | (8.79 | ) | $ | (17.97 | ) | ||||
Diluted | $ | (0.49 | ) | $ | (15.15 | ) | $ | (8.79 | ) | $ | (17.88 | ) | ||||
Weighted average common shares: | ||||||||||||||||
Basic | 83,862 | 82,441 | 83,260 | 83,846 | ||||||||||||
Diluted | 83,862 | 82,883 | 83,260 | 84,302 |
Common Stock | ||||||||||||||||||||
Number of Shares | Amount | Additional Paid-in Capital | Retained Earnings | Total Equity | ||||||||||||||||
2020 | ||||||||||||||||||||
Balance at January 1, 2020 | 84,248 | $ | 842 | $ | 987,942 | $ | 510,212 | $ | 1,498,996 | |||||||||||
Net loss | — | — | — | (18,712 | ) | (18,712 | ) | |||||||||||||
Unrealized holding loss on investments, net of tax (1) | — | — | — | (213 | ) | (213 | ) | |||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 78 | 1 | 1,831 | — | 1,832 | |||||||||||||||
Issuance of restricted stock | 968 | 10 | (10 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (19 | ) | — | — | — | — | ||||||||||||||
Stock-based compensation expense | — | — | 8,035 | — | 8,035 | |||||||||||||||
Repurchased common stock | (125 | ) | (1 | ) | (2,541 | ) | — | (2,542 | ) | |||||||||||
Balance at March 31, 2020 | 85,150 | $ | 852 | $ | 995,257 | $ | 491,287 | $ | 1,487,396 | |||||||||||
2019 | ||||||||||||||||||||
Balance at January 1, 2019 | 87,820 | $ | 878 | $ | 992,647 | $ | 2,094,359 | $ | 3,087,884 | |||||||||||
Net loss | — | — | — | (242,872 | ) | (242,872 | ) | |||||||||||||
Unrealized holding loss on investments, net of tax (1) | — | — | — | (194 | ) | (194 | ) | |||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 140 | 1 | 3,541 | — | 3,542 | |||||||||||||||
Issuance of restricted stock | 978 | 10 | (10 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (6 | ) | — | — | — | — | ||||||||||||||
Stock swaps | (20 | ) | — | (666 | ) | — | (666 | ) | ||||||||||||
Stock-based compensation expense | — | — | 11,100 | — | 11,100 | |||||||||||||||
Repurchased common stock | (2,525 | ) | (25 | ) | (28,740 | ) | (50,217 | ) | (78,982 | ) | ||||||||||
Balance at March 31, 2019 | 86,387 | $ | 864 | $ | 977,872 | $ | 1,801,076 | $ | 2,779,812 | |||||||||||
Common Stock | ||||||||||||||||||||
Number of | Additional Paid-in | Retained (Deficit) | Total | |||||||||||||||||
Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
2020 | ||||||||||||||||||||
Balance at January 1, 2020 | 84,248 | $ | 842 | $ | 987,942 | $ | 510,212 | $ | 1,498,996 | |||||||||||
Net loss | — | — | — | (18,712 | ) | (18,712 | ) | |||||||||||||
Unrealized holding loss on investments, net of tax (1) | — | — | — | (213 | ) | (213 | ) | |||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 78 | 1 | 1,831 | — | 1,832 | |||||||||||||||
Issuance of restricted stock and conversion of deferred stock to common stock | 968 | 10 | (10 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (19 | ) | — | — | — | — | ||||||||||||||
Stock-based compensation expense | — | — | 8,035 | — | 8,035 | |||||||||||||||
Repurchased common stock | (125 | ) | (1 | ) | (2,541 | ) | — | (2,542 | ) | |||||||||||
Balance at March 31, 2020 | 85,150 | $ | 852 | $ | 995,257 | $ | 491,287 | $ | 1,487,396 | |||||||||||
Net loss | — | — | — | (672,436 | ) | (672,436 | ) | |||||||||||||
Unrealized holding gain on investments, net of tax (1) | — | — | — | 2,078 | 2,078 | |||||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 277 | 3 | 2,541 | — | 2,544 | |||||||||||||||
Issuance of restricted stock | 200 | 2 | (2 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (57 | ) | (1 | ) | 1 | — | — | |||||||||||||
Stock-based compensation expense | — | — | 7,489 | — | 7,489 | |||||||||||||||
Repurchased common stock | (34 | ) | (1 | ) | (500 | ) | — | (501 | ) | |||||||||||
Balance at June 30, 2020 | 85,536 | $ | 855 | $ | 1,004,786 | $ | (179,071 | ) | $ | 826,570 | ||||||||||
Net loss | — | — | — | (41,044 | ) | (41,044 | ) | |||||||||||||
Contribution from noncontrolling Interests (1) | 245 | 245 | ||||||||||||||||||
Unrealized holding gain on investments, net of tax (1) | — | — | — | 47 | 47 | |||||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 89 | 1 | 1,323 | — | 1,324 | |||||||||||||||
Issuance of restricted stock and conversion of deferred stock to common stock | 282 | 3 | (3 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (92 | ) | (1 | ) | 1 | — | — | |||||||||||||
Stock-based compensation expense | — | — | 23,316 | — | 23,316 | |||||||||||||||
Repurchased common stock | (311 | ) | (3 | ) | (5,449 | ) | — | (5,452 | ) | |||||||||||
Balance at September 30, 2020 | 85,504 | $ | 855 | $ | 1,023,974 | $ | (219,823 | ) | $ | 805,006 | ||||||||||
(1) | Presented within retained (deficit) earnings |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (18,712 | ) | $ | (242,872 | ) | ||
Loss from discontinued operations | 2,602 | 284,525 | ||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 18,673 | 20,033 | ||||||
Amortization of premiums, discounts and issuance costs | 1,458 | 1,520 | ||||||
Stock-based compensation expense | 8,035 | 10,989 | ||||||
Deferred income taxes | 33,582 | (5,108 | ) | |||||
Other | (1,883 | ) | 2,767 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 25,904 | (15,915 | ) | |||||
Prepaid expenses and other current assets | 5,101 | 4,790 | ||||||
Other long-term assets | 11,189 | 9,580 | ||||||
Accounts payable and accrued expenses | (198,452 | ) | (132,559 | ) | ||||
Income taxes payable | (32,883 | ) | 14,373 | |||||
Payments of contingent consideration liabilities | (102 | ) | (42 | ) | ||||
Long-term professional liabilities | 6,969 | (496 | ) | |||||
Other liabilities | (7,912 | ) | (11,993 | ) | ||||
Net cash used in operating activities – continuing operations | (146,431 | ) | (60,408 | ) | ||||
Net cash provided by operating activities - discontinued operations | — | 3,591 | ||||||
Net cash used in operating activities | (146,431 | ) | (56,817 | ) | ||||
Cash flows from investing activities: | ||||||||
Acquisition payments, net of cash acquired | (75 | ) | (4,250 | ) | ||||
Purchases of investments | (21,042 | ) | — | |||||
Proceeds from maturities or sales of investments | 9,860 | 4,800 | ||||||
Purchases of property and equipment | (13,713 | ) | (5,821 | ) | ||||
Proceeds from sale of business | 4,750 | — | ||||||
Net cash used in investing activities – continuing operations | (20,220 | ) | (5,271 | ) | ||||
Net cash used in investing activities - discontinued operations | — | (3,420 | ) | |||||
Net cash used in investing activities | (20,220 | ) | (8,691 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on credit agreement | 515,000 | 518,500 | ||||||
Payments on credit agreement | (146,500 | ) | (866,000 | ) | ||||
Proceeds from issuance of senior notes | — | 500,000 | ||||||
Payments for credit facility amendment and financing costs | (500 | ) | (8,380 | ) | ||||
Payments of contingent consideration liabilities | (1,248 | ) | (1,308 | ) | ||||
Payments on finance lease obligations | (3 | ) | (42 | ) | ||||
Proceeds from issuance of common stock | 1,832 | 2,876 | ||||||
Repurchases of common stock | (2,542 | ) | (78,982 | ) | ||||
Net cash provided from financing activities – continuing operations | 366,039 | 66,664 | ||||||
Net cash provided from financing activities - discontinued operations | — | — | ||||||
Net cash provided from financing activities | 366,039 | 66,664 | ||||||
Net increase in cash and cash equivalents | 199,388 | 1,156 | ||||||
Cash and cash equivalents at beginning of period | 112,767 | 56,745 | ||||||
Less cash and cash equivalents of discontinued operations at end of period | — | (11,425 | ) | |||||
Cash and cash equivalents of continuing operations at end of period | $ | 312,155 | $ | 46,476 | ||||
Common Stock | ||||||||||||||||||||
Number of | Additional Paid-in | Retained (Deficit) | Total | |||||||||||||||||
Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
2019 | ||||||||||||||||||||
Balance at January 1, 2019 | 87,820 | $ | 878 | $ | 992,647 | $ | 2,094,359 | $ | 3,087,884 | |||||||||||
Net loss | — | — | — | (242,872 | ) | (242,872 | ) | |||||||||||||
Unrealized holding loss on investments, net of tax (1) | — | — | — | (194 | ) | (194 | ) | |||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 140 | 1 | 3,541 | — | 3,542 | |||||||||||||||
Issuance of restricted stock | 978 | 10 | (10 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (6 | ) | — | — | — | — | ||||||||||||||
Stock swaps | (20 | ) | — | (666 | ) | — | (666 | ) | ||||||||||||
Stock-based compensation expense | — | — | 11,100 | — | 11,100 | |||||||||||||||
Repurchased common stock | (2,525 | ) | (25 | ) | (28,740 | ) | (50,217 | ) | (78,982 | ) | ||||||||||
Balance at March 31, 2019 | 86,387 | $ | 864 | $ | 977,872 | $ | 1,801,076 | $ | 2,779,812 | |||||||||||
Net loss | — | — | — | (8,245 | ) | (8,245 | ) | |||||||||||||
Unrealized holding gain on investments, net of tax (1) | — | — | — | 232 | 232 | |||||||||||||||
Common stock issued under employee stock option, employee stock purchase plan | 155 | 2 | 3,673 | — | 3,675 | |||||||||||||||
Issuance of restricted stock | 123 | 1 | (1 | ) | — | — | ||||||||||||||
Forfeitures of restricted stock | (61 | ) | (1 | ) | 1 | — | — | |||||||||||||
Stock-based compensation expense | — | — | 15,080 | — | 15,080 | |||||||||||||||
Repurchased common stock | (2,508 | ) | (25 | ) | (29,196 | ) | (36,306 | ) | (65,527 | ) | ||||||||||
Balance at June 30, 2019 | 84,096 | $ | 841 | $ | 967,429 | $ | 1,756,757 | $ | 2,725,027 | |||||||||||
Net loss | — | — | — | (1,255,916 | ) | (1,255,916 | ) | |||||||||||||
Unrealized holding gain on investments, net of tax (1) | — | — | — | (32 | ) | (32 | ) | |||||||||||||
Common stock issued under employee stock option, employee stock purchase plan and stock purchase plan | 124 | 1 | 2,605 | — | 2,606 | |||||||||||||||
Issuance of restricted stock | 12 | — | — | — | — | |||||||||||||||
Forfeitures of restricted stock | (27 | ) | — | — | — | — | ||||||||||||||
Stock-based compensation expense | — | — | 8,090 | — | 8,090 | |||||||||||||||
Repurchased common stock | (20 | ) | — | (415 | ) | — | (415 | ) | ||||||||||||
Balance at September 30, 2019 | 84,185 | $ | 842 | $ | 977,709 | $ | 500,809 | $ | 1,479,360 | |||||||||||
(2) | Presented within retained (deficit) earnings as the balance is immaterial. |
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (732,192 | ) | $ | (1,507,033 | ) | ||
Loss from discontinued operations | 718,125 | 1,539,314 | ||||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 20,749 | 18,830 | ||||||
Amortization of premiums, discounts and issuance costs | 4,076 | 4,293 | ||||||
Stock-based compensation expense | 36,120 | 27,512 | ||||||
Deferred income taxes | 30,214 | (13,484 | ) | |||||
Other | (30 | ) | 3,370 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 30,006 | 7,491 | ||||||
Prepaid expenses and other current assets | (1,716 | ) | (22,545 | ) | ||||
Other long-term assets | 7,703 | 21,825 | ||||||
Accounts payable and accrued expenses | (36,433 | ) | (2,238 | ) | ||||
Income taxes payable / receivable | (28,837 | ) | (25,838 | ) | ||||
Long-term professional liabilities | 15,703 | 4,508 | ||||||
Other liabilities | 8,157 | (19,768 | ) | |||||
Net cash provided by operating activities – continuing operations | 71,645 | 36,237 | ||||||
Net cash provided by operating activities—discontinued operations | 144,841 | 186,177 | ||||||
Net cash provided by operating activities | 216,486 | 222,414 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition payments, net of cash acquired | (2,225 | ) | (31,200 | ) | ||||
Purchases of investments | (36,090 | ) | (13,907 | ) | ||||
Proceeds from maturities or sales of investments | 30,865 | 26,240 | ||||||
Purchases of property and equipment | (21,809 | ) | (14,862 | ) | ||||
Proceeds from sale of business, net of cash sold | 1,080 | 0 | ||||||
Net cash used in investing activities – continuing operations | (28,179 | ) | (33,729 | ) | ||||
Net cash provided by (used in) investing activities—discontinued operations | 3,079 | (20,793 | ) | |||||
Net cash used in investing activities | (25,100 | ) | (54,522 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on credit agreement | 527,500 | 1,225,800 | ||||||
Payments on credit agreement | (527,500 | ) | (1,755,500 | ) | ||||
Proceeds from issuance of senior notes | 0 | 500,000 | ||||||
Payments for credit facility amendment and financing costs | (510 | ) | (9,194 | ) | ||||
Payments on finance lease obligations | (433 | ) | 0 | |||||
Proceeds from issuance of common stock | 5,697 | 9,157 | ||||||
Contribution from noncontrolling interests | 245 | 0 | ||||||
Repurchases of common stock | (8,495 | ) | (144,925 | ) | ||||
Net cash used in financing activities – continuing operations | (3,496 | ) | (174,662 | ) | ||||
Net cash used in financing activities—discontinued operations | (1,248 | ) | (8,909 | ) | ||||
Net cash used in financing activities | (4,744 | ) | (183,571 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 186,642 | (15,679 | ) | |||||
Cash and cash equivalents at beginning of period | 107,870 | 40,774 | ||||||
Cash and cash equivalents at end of period | $ | 294,512 | $ | 25,095 | ||||
1. | Basis of Presentation and New Accounting Pronouncements: |
2. | Coronavirus Pandemic (“COVID-19”): |
3. | Cash Equivalents and Investments: |
March 31, 2020 | December 31, 2019 | |||||||
Corporate securities | $ | 46,883 | $ | 32,962 | ||||
Municipal debt securities | 23,327 | 29,066 | ||||||
Federal home loan securities | 8,052 | 8,013 | ||||||
Certificates of deposit | 6,779 | 4,469 | ||||||
$ | 85,041 | $ | 74,510 | |||||
September 30, 2020 | December 31, 2019 | |||||||
Corporate securities | $ | 56,680 | $ | 32,962 | ||||
Municipal debt securities | 13,523 | 29,066 | ||||||
Federal home loan securities | 6,529 | 8,013 | ||||||
Certificates of deposit | 4,842 | 4,469 | ||||||
$ | 81,574 | $ | 74,510 | |||||
4. | Fair Value Measurements: |
Fair Value | ||||||||||||
Fair Value Category | March 31, 2020 | December 31, 2019 | ||||||||||
Assets: | ||||||||||||
Money market funds | Level 1 | $ | 6,357 | $ | 16,775 | |||||||
Short-term investments | Level 2 | 85,041 | 74,510 | |||||||||
Mutual Funds | Level 1 | 11,640 | 14,264 | |||||||||
Liabilities: | ||||||||||||
Contingent consideration | Level 3 | 1,288 | 2,696 |
Fair Value | ||||||||||||
Fair Value Category | September 30, 2020 | December 31, 2019 | ||||||||||
Assets: | ||||||||||||
Money market funds | Level 1 | $ | 2,411 | $ | 16,775 | |||||||
Short-term investments | Level 2 | 81,574 | 74,510 | |||||||||
Mutual Funds | Level 1 | 14,446 | 14,264 |
March 31, 2020 | December 31, 2019 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Liabilities: | ||||||||||||||||
2023 Notes | 750,000 | 611,250 | 750,000 | 766,875 | ||||||||||||
2027 Notes | 1,000,000 | 801,200 | 1,000,000 | 1,025,600 |
September 30, 2020 | December 31, 2019 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Liabilities: | ||||||||||||||||
2023 Notes | 750,000 | 759,375 | 750,000 | 766,875 | ||||||||||||
2027 Notes | 1,000,000 | 1,035,000 | 1,000,000 | 1,025,600 |
Accounts Receivable and Net Revenue: |
March 31, 2020 | December 31, 2019 | |||||||
Gross accounts receivable | $ | 1,840,118 | $ | 1,943,664 | ||||
Allowance for contractual adjustments and uncollectibles | (1,363,127 | ) | (1,444,795 | ) | ||||
$ | 476,991 | $ | 498,869 | |||||
September 30, 2020 | December 31, 2019 | |||||||
Gross accounts receivable | $ | 1,119,171 | $ | 1,750,264 | ||||
Allowance for contractual adjustments and uncollectibles | (852,046 | ) | (1,315,998 | ) | ||||
$ | 267,125 | $ | 434,266 | |||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net patient service revenue | $ | 734,387 | $ | 749,585 | ||||
Hospital contract administrative fees | 104,595 | 94,721 | ||||||
Other revenue | 6,936 | 6,877 | ||||||
$ | 845,918 | $ | 851,183 | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net patient service revenue | $ | 382,936 | $ | 400,330 | $ | 1,133,313 | $ | 1,159,363 | ||||||||
Hospital contract administrative fees | 61,186 | 51,149 | 154,840 | 149,407 | ||||||||||||
Other revenue | 16,513 | 3,434 | 29,168 | 12,389 | ||||||||||||
$ | 460,635 | $ | 454,913 | $ | 1,317,321 | $ | 1,321,159 | |||||||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Contracted managed care | 68 | % | 69 | % | ||||
Government | 25 | 24 | ||||||
Other third-parties | 5 | 5 | ||||||
Private-pay patients | 2 | 2 | ||||||
100 | % | 100 | % | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Contracted managed care | 69 | % | 68 | % | 69 | % | 68 | % | ||||||||
Government | 26 | 26 | 26 | 26 | ||||||||||||
Other third-parties | 4 | 5 | 4 | 5 | ||||||||||||
Private-pay patients | 1 | 1 | 1 | 1 | ||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Business Combinations, Assets Held for Sale and Discontinued Operations: |
September 30, 2020 | December 31, 2019 | |||||||
Assets | ||||||||
Accounts receivable, net | $ | 54,284 | $ | 64,603 | ||||
Prepaid expenses and other current assets | 9,819 | 9,744 | ||||||
Property and equipment, net | 20,078 | 19,204 | ||||||
Operating leases right-of-use | 14,165 | 15,008 | ||||||
Goodwill | 640,818 | 685,170 | ||||||
Intangible assets, net | 170,059 | 180,978 | ||||||
Deferred income tax assets | 6,020 | 18,183 | ||||||
Other assets | 36,305 | 40,724 | ||||||
$ | 951,548 | $ | 1,033,614 | |||||
Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 39,505 | $ | 42,474 | ||||
Operating and finance leases | 13,619 | 14,355 | ||||||
Long-term professional liabilities | 23,744 | 21,978 | ||||||
Other liabilities | 1,844 | 81 | ||||||
$ | 78,712 | $ | 78,888 | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net revenue | $ | 125,765 | $ | 125,650 | $ | 340,133 | $ | 366,678 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of service salaries and benefits | 84,718 | 80,336 | 234,169 | 238,402 | ||||||||||||
Cost of service supplies and other operating expenses | 1,449 | 1,532 | 4,273 | (1,468 | ) | |||||||||||
General and administrative expenses | 19,876 | 20,734 | 57,178 | 64,490 | ||||||||||||
Depreciation and amortization | 5,090 | 7,595 | 20,328 | 22,757 | ||||||||||||
Transformational and restructuring related expenses | 2,491 | 441 | 6,517 | 1,487 | ||||||||||||
Goodwill impairment | 46,963 | 117,924 | 46,963 | 117,924 | ||||||||||||
Total operating expenses | 160,587 | 228,562 | 369,428 | 443,592 | ||||||||||||
Loss from operations | (34,822 | ) | (102,912 | ) | (29,295 | ) | (76,914 | ) | ||||||||
Non-operating income, net | 1,369 | 2,059 | 3,035 | 4,768 | ||||||||||||
Loss before income taxes | (33,453 | ) | (100,853 | ) | (26,260 | ) | (72,146 | ) | ||||||||
Income tax (provision) benefit | (62 | ) | 3,907 | (1,988 | ) | (3,687 | ) | |||||||||
Net loss | $ | (33,515 | ) | $ | (96,946 | ) | $ | (28,248 | ) | $ | (75,833 | ) | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net revenue | $ | 2,700 | $ | 309,602 | $ | 377,661 | $ | 924,845 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of service salaries and benefits | 2,746 | 250,157 | 351,408 | 746,237 | ||||||||||||
Cost of service supplies and other operating expenses | 38 | 2,837 | 5,254 | 9,537 | ||||||||||||
General and administrative expenses | 215 | 18,338 | 31,179 | 57,909 | ||||||||||||
Depreciation and amortization | — | 5,605 | 6,308 | 17,863 | ||||||||||||
Transformational and restructuring related expenses | — | 6,785 | 28,634 | 17,506 | ||||||||||||
Goodwill impairment | — | 1,331,291 | — | 1,331,291 | ||||||||||||
Loss on sale, net | 4,499 | — | 644,653 | — | ||||||||||||
Total operating expenses | 7,498 | 1,615,013 | 1,067,436 | 2,180,343 | ||||||||||||
Loss from operations | (4,798 | ) | (1,305,411 | ) | (689,775 | ) | (1,255,498 | ) | ||||||||
Non-operating (expense) income, net | — | (17 | ) | 51 | (14 | ) | ||||||||||
Loss before income taxes | (4,798 | ) | (1,305,428 | ) | (689,724 | ) | (1,255,512 | ) | ||||||||
Income tax benefit | 100 | 129,241 | 5,661 | 115,987 | ||||||||||||
Net loss | $ | (4,698 | ) | $ | (1,176,187 | ) | $ | (684,063 | ) | $ | (1,139,525 | ) | ||||
7. | Accounts Payable and Accrued Expenses: |
March 31, 2020 | December 31, 2019 | |||||||
Accounts payable | $ | 47,519 | $ | 39,610 | ||||
Accrued salaries and bonuses | 108,079 | 268,619 | ||||||
Accrued payroll taxes and benefits | 47,791 | 67,268 | ||||||
Accrued professional liabilities | 48,149 | 44,869 | ||||||
Accrued contingent consideration | 1,288 | 2,696 | ||||||
Accrued interest | 27,422 | 32,910 | ||||||
Other accrued expenses | 43,115 | 55,894 | ||||||
$ | 323,363 | $ | 511,866 | |||||
September 30, 2020 | December 31, 2019 | |||||||
Accounts payable | $ | 60,956 | $ | 35,410 | ||||
Accrued salaries and bonuses | 158,579 | 193,631 | ||||||
Accrued payroll taxes and benefits | 48,474 | 54,768 | ||||||
Accrued professional liabilities | 55,469 | 44,699 | ||||||
Accrued interest | 26,940 | 32,910 | ||||||
Other accrued expenses | 38,099 | 49,219 | ||||||
$ | 388,517 | $ | 410,637 | |||||
Common and Common Equivalent Shares: |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Weighted average number of common shares outstanding | 82,799 | 86,073 | ||||||
Weighted average number of dilutive common share equivalents | — | 472 | ||||||
Weighted average number of common and common (a) | 82,799 | 86,545 | ||||||
Antidilutive securities not included in the diluted calculation | 849 | 504 | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Weighted average number of common shares outstanding | 83,862 | 82,441 | 83,260 | 83,846 | ||||||||||||
Weighted average number of dilutive common share equivalents | — | 442 | — | 456 | ||||||||||||
Weighted average number of common and common equivalent shares outstanding (a) | 83,862 | 82,883 | 83,260 | 84,302 | ||||||||||||
Antidilutive securities not included in the diluted net income per common share calculation | 829 | 962 | 1,004 | 796 | ||||||||||||
(a) | Due to a loss from continuing operations for the three months and nine months ended l d be antidilutive. |
Stock Incentive Plans and Stock Purchase Plans: |
Common Stock Repurchase Programs: |
Commitments and Contingencies: |
March 31, 2020 | ||||
Assets | ||||
Cash and cash equivalents | $ | 19 | ||
Accounts receivable, net | 147,717 | |||
Prepaid expenses and other assets | 14,519 | |||
Property and equipment, net | 900 | |||
Goodwill | 545,272 | |||
Intangible assets, net | 60,034 | |||
$768,461 | ||||
Liabilities | ||||
Accounts payable and accrued expenses | $ | 54,311 | ||
Accrued professional liabilities | 20,627 | |||
Other liabilities | 5,174 | |||
$80,112 | ||||
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
(Loss) income from continuing operations | $ | (16,110 | ) | $ | 41,653 | |||
Interest expense | 27,608 | 30,723 | ||||||
Income tax provision | 2,286 | 8,962 | ||||||
Depreciation and amortization | 18,673 | 20,033 | ||||||
Transformational and restructuring related expenses | 30,907 | 3,544 | ||||||
Adjusted EBITDA from continuing operations | $ | 63,364 | $ | 104,915 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Loss) income from continuing operations | $ | (2,652 | ) | $ | 12,887 | $ | (14,067 | ) | $ | 32,281 | ||||||
Interest expense | 27,250 | 29,909 | 83,180 | 91,271 | ||||||||||||
Income tax provision | 6,677 | 7,360 | 10,859 | 12,590 | ||||||||||||
Depreciation and amortization | 7,195 | 6,408 | 20,749 | 18,830 | ||||||||||||
Transformational and restructuring related expenses | 34,291 | 12,766 | 60,846 | 32,025 | ||||||||||||
Adjusted EBITDA from continuing operations | $ | 72,761 | $ | 69,330 | $ | 161,567 | $ | 186,997 | ||||||||
Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Weighted average diluted shares outstanding | 82,799 | 86,545 | ||||||||||||||
(Loss) income from continuing operations and diluted income from continuing operations per share | ||||||||||||||||
Adjustments (1) : | $ | (16,110 | ) | $ | (0.20 | ) | $ | 41,653 | $ | 0.48 | ||||||
Amortization (net of tax of $2,740 and $3,449) | 8,220 | 0.10 | 9,325 | 0.11 | ||||||||||||
Stock-based compensation (net of tax of $1,962 and $2,967) | 5,885 | 0.07 | 8,022 | 0.09 | ||||||||||||
Transformational and restructuring expenses (net of tax of $7,727 and $957) | 23,180 | 0.28 | 2,587 | 0.03 | ||||||||||||
Net impact from discrete tax events | 5,077 | 0.07 | (4,791 | ) | (0.06 | ) | ||||||||||
Adjusted income and diluted EPS from continuing operations | $ | 26,252 | $ | 0.32 | $ | 56,796 | $ | 0.65 | ||||||||
Three Months Ended September 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Weighted average diluted shares outstanding | 83,862 | 82,883 | ||||||||||||||
(Loss) income from continuing operations and diluted (loss) income from continuing operations per share | $ | (2,652 | ) | $ | (0.03 | ) | $ | 12,887 | $ | 0.16 | ||||||
Adjustments (1) : | ||||||||||||||||
Amortization (net of tax of $601 and $444) | 1,802 | 0.02 | 1,333 | 0.02 | ||||||||||||
Stock-based compensation (net of tax of $1,132 and $1,902) | 3,398 | 0.04 | 5,706 | 0.07 | ||||||||||||
Transformational and restructuring related expenses (net of tax of $8,573 and $3,191) | 25,718 | 0.31 | 9,575 | 0.12 | ||||||||||||
Net impact from discrete tax events | 2,905 | 0.03 | 1,784 | 0.01 | ||||||||||||
Adjusted income and diluted EPS from continuing operations | $ | 31,171 | $ | 0.37 | $ | 31,285 | $ | 0.38 | ||||||||
(1) | Our blended statutory tax |
Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Weighted average diluted shares outstanding | 83,260 | 84,302 | ||||||||||||||
(Loss) income from continuing operations and diluted (loss) income from continuing operations per share | $ | (14,067 | ) | $ | (0.17 | ) | $ | 32,281 | $ | 0.38 | ||||||
Adjustments (1) : | ||||||||||||||||
Amortization (net of tax of $1,632 and $1,289) | 4,896 | 0.06 | 3,867 | 0.05 | ||||||||||||
Stock-based compensation (net of tax of $4,550 and $6,893) | 13,652 | 0.16 | 20,672 | 0.25 | ||||||||||||
Transformational and restructuring related expenses (net of tax of $15,211 and $8,006) | 45,635 | 0.55 | 24,019 | 0.28 | ||||||||||||
Net impact from discrete tax events | 7,849 | 0.10 | (5 | ) | — | |||||||||||
Adjusted income and diluted EPS from continuing operations | $ | 57,965 | $ | 0.70 | $ | 80,834 | $ | 0.96 | ||||||||
(2) | Our blended statutory tax rate of 25% was used to calculate the tax effects of the adjustments for the nine months ended September 30, 2020 and 2019. |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Operating activities | $ | (146,431 | ) | $ | (60,408 | ) | ||
Investing activities | (20,220 | ) | (5,271 | ) | ||||
Financing activities | 366,039 | 66,664 |
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Operating activities | $ | 71,645 | $ | 36,237 | ||||
Investing activities | (28,179 | ) | (33,729 | ) | ||||
Financing activities | (3,496 | ) | (174,662 | ) |
Period | Total Number of Shares Repurchased | Average Price Paid per Share | Total Number of Shares Purchased as part of the Repurchase Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Programs (a) | ||||||||||||
January 1 – January 31, 2020 | 40,150 | (b) | $ | 27.17 | — | (a | ) | |||||||||
February 1 – February 29, 2020 | — | — | — | (a | ) | |||||||||||
March 1 – March 31, 2020 | 84,950 | (b) | 17.09 | — | (a | ) | ||||||||||
Total | 125,100 | $ | 20.33 | — | (a | ) |
Period | Total Number of Shares Repurchased (a) | Average Price Paid per Share | Total Number of Shares Purchased as part of the Repurchase Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Programs (a) | ||||||||||||
July 1 – July 31, 2020 | 290,716 | (b) | $ | 17.65 | — | (a | ) | |||||||||
August 1 – August 31, 2020 | — | — | — | (a | ) | |||||||||||
September 1 – September 30, 2020 | 19,873 | (b) | 16.14 | — | (a | ) | ||||||||||
Total | 310,589 | $ | 17.55 | — | (a | ) |
(a) | We have two active repurchase programs. Our July 2013 program allows us to repurchase shares of our common stock up to an amount sufficient to offset the dilutive impact from the issuance of shares under our equity compensation |
(b) | Represents shares withheld to satisfy minimum statutory withholding obligations of an aggregate of |
+ | Filed herewith. |
* | Furnished herewith. |
Date: November 6, 2020 | By: | /s/ Mark S. Ordan | ||||||
Mark S. Ordan | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
Date: November 6, 2020 | By: | /s/ C. Marc Richards | ||||||
Chief Financial Officer | ||||||||
(Principal Financial | ||||||||
Date: November 6, 2020 | ||||||||
By: | /s/ John C. Pepia | |||||||
John C. Pepia | ||||||||
Chief Accounting Officer | ||||||||
(Principal Accounting Officer) |