Mednax Inc. ( MD) Q4 2011 Earnings Call February 02, 2012 10:00 am ET Executives David Parker – Vice President of Investor Relations Roger J. Medel, M.D. – Chief Executive Officer Vivian Lopez-Blanco – Chief Financial Officer Analyst Kevin Fischbeck – Bank of America Merrill Lynch Kevin Ellich – Piper Jaffray Darren Lehrich – Deutsche Bank Securities Inc. Brooks O'Neil – Dougherty & Company Gary Taylor – Citigroup Ryan Daniels – William Blair & Co. LLC Robert M. Mains – Morgan Keegan & Co., Inc. Ralph Giacobbe – Credit Suisse Arthur Henderson – Jefferies & Company, Inc. Matt Weight – Feltl & Company Presentation Operator
In addition, during this call, we will discuss certain non-GAAP items. This morning’s press release contains a detailed GAAP reconciliation and that’s available on the Investors page on our website, www.mednax.com.With that, I would like to turn the call over to our CEO, Dr. Roger Medel. Roger J. Medel Thanks, David. Good morning, everyone, and thanks for joining our call this morning. We reported solid results from operations for MEDNAX during the 2011 fourth quarter and full year, results that continue to be driven largely by the successful execution of our long-term growth strategy. As our results demonstrate, MEDNAX is a company that continues to grow. We’re a company that has the financial strength and flexibility to fund future growth through internal cash generation on our recently expanded revolving credit facility, while at the same time building upon the solid foundation we’ve established to manage our existing operations. While our focus on over the next few minutes is the progress that we continue to make as we execute this proven long-term growth strategy. On the acquisition front, we had a solid year in 2011 with a total of 10 group practices deciding that they would place themselves in a better position by practicing as part of MEDNAX without complement of clinical and administrative infrastructure rather than continuing to try to manage a full-time clinical load and manage the business and administrative side of their practice. We invested more than a $160 million to acquire these practices, as well as to make contingent purchase price payments on previous acquisitions. Of the 10 groups, seven of them were on the pediatric side. We acquired three Maternal-Fetal Medicine groups, one neonatology group, one pediatric cardiology group, one other pediatric subspecialty group, and most recently in the fourth quarter, our first move into pediatric surgery, which we have previously discussed.
Focusing on recent additions and future growth prospects for American Anesthesiology, three of our 10 acquisitions were in anesthesia, with two coming in the fourth quarter. In November, we added Austin Anesthesiology Group, the first Texas-based group to join American Anesthesiology. This group practice employed 66 physicians and 71 cRNA, practicing as part of an anesthesia care team model with annual anesthesia volumes that the practice exceeding 85000 cases. In December, we also announced the acquisition of Burlington Anesthesia Associates in Mount Holly, New Jersey, the first New Jersey practice to join American Anesthesiology. This practice consists of 17 anesthesiologists who practice as part of an anesthesia care team model that employs 25 cRNAs.Both of these groups by joining MEDNAX are seeking the stability and resources that come with our national group model so that they can focus on doing what they do best taking care of their patients. With the addition of Texas and New Jersey anesthesia practices, we are expanding beyond the Southeast to our national model as planned. Both of these states are solid geographies for us in our historical pediatric business and now they represent an expanded footprint and the advancement of the American Anesthesiology national model. We plan to continue this path in 2012 as we expand into states in which we currently have pediatric business while at the same time moving into states which represent a new footprint for American Anesthesiology. Overall, we are not seeing anything that would suggest the level of acquisition activity we've experienced in the recent past will slowdown. We're managing a very full pipeline that includes practices within our historical neonatal, maternal fetal medicine and pediatric cardiology practices. Additionally, we are confident that now is the time to take our foot off the brake a bit and that we have the team in place to further grow our anesthesia operations. Read the rest of this transcript for free on seekingalpha.com