MEDNAX, Inc. (NYSE:MD) Q4 2014 Earnings Conference Call Transcript

Jan 29, 2015 • 10:00 am ET

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MEDNAX, Inc. (NYSE:MD) Q4 2014 Earnings Conference Call Transcript

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Presentation
Operator
operator

Ladies and gentlemen, thank you for standing by. Welcome to the MEDNAX 2014 Fourth Quarter Earnings Conference Call. (Operator Instructions) And as a reminder, this conference is being recorded.

I would now like to turn the conference over to our host, Mr. Charles Lynch. Please go ahead.

Executive
Charles Lynch

Thanks, and good morning. I want to quickly turn over the call to Roger and Vivian but first read our forward-looking statements. (Forward-looking cautionary statements)

And with that, I'd like to turn the call over to our CEO, Dr. Roger Medel.

Executive
Roger Medel

Thank you, Charlie. Good morning, and thanks for joining the call today to discuss our results for the fourth quarter and full year 2014. We had a great quarter to end the year. Our revenue was up by almost 15%, bringing our full year growth to 13%, and our total revenue to just over $2.4 billion. For the fourth quarter, our top line operating income and EPS all grew by double digits, in line with our long-term expectations.

I think it's important to note that we achieved this growth in Q4 without any year-over-year increase in parity payments, which we will talk about later in some more detail. Our same unit revenue growth continued to accelerate in the quarter to just under 5%, with strength in same unit volumes across anesthesiology, neonatology and other pediatric services. We also wrapped up our most active acquisition year ever. During the fourth quarter, we completed 4 practice acquisitions.

I discussed 2 of these on our last earnings call, but we also completed a small pediatric cardiology acquisition in December, and then we finished the year with the purchase of Metropolitan Anesthesia Alliance, which is based in Memphis, Tennessee. Including these deals, we were able to put close to $0.5 billion to work for 13 acquisitions last year, 11 of which were practices, and two of which were strategic nonpractice businesses. We complemented these acquisitions

Executive
Roger Medel

with an additional $490 million in share buybacks, including over $360 million completed during the fourth quarter under our new $600 million authorization that we announced at the end of October. So overall, we were able to utilize nearly $1 billion of our capital in 2014. We also positioned ourselves very favorably for the future. Despite our level of capital used during 2014, we start this year with very modest leverage and ample financial flexibility. And in intermediate terms, while the subset of Medicaid parity payments would have resulted in a modest headwind to EPS growth in 2015, we are filling this gap with share repurchases and the contributions from acquisitions that we completed in 2014.

So I hope this provides you with a good visibility into how we're looking at the coming year from a financial perspective. More fundamentally though, we entered 2015 better positioned to address the needs of our hospital partners. It's becoming clear that the challenges of health care reform are getting more and more real, whether it's through the implementation of the Affordable Care Act the focus