Mednax's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Mednax, Inc. (MD)

Q2 2012 Earnings Call

July 31, 2012 10:00 a.m. ET

Executives

David Parker - Vice President, Investor Relations

Roger J. Medel - Chief Executive Officer

Vivian Lopez-Blanco - Chief Financial Officer

Analysts

Ryan Daniels - William Blair & Company

Kevin Ellich - Piper Jaffray Companies

Kevin Fischbeck – Bank of America Merrill Lynch

John Ransom - Raymond James

Gary Taylor – Citigroup

Ralph Giacobbe - Credit Suisse

Brooks O'Neil - Dougherty & Company

Kevin Campbell - Avondale Partners

Robert Mains - Stifel Nicolaus & Company, Inc.

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Mednax Second Quarter Earnings Conference Call. (Operator instructions) As a reminder, this teleconference is being recorded.

Now, at this time I will turn the conference call over to your hose, Vice President of Investor Relations, Mr. David Parker. Please go ahead, sir.

David Parker

Thank you, Tony, and, as he indicated, welcome to Mednax's 2012 second quarter earnings call.

Certain statements and information during this conference call may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by Mednax's management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today and Mednax undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise.

Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the company's most recent annual report on Form 10-K and its quarterly reports on Form 10-Q, including the sections entitled Risk Factors.

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

Dr. Roger Medel

Thank you, good morning and thanks for joining our call today. As we indicated in our release earlier this morning, we are especially pleased with our results for the second quarter, including the same-unit growth of nearly 4%. This same-unit was the contributing factor in our results, exceeding our guidance for the quarter. I also believe that this quarter's results show that we continue to make excellent progress in pursuing our clearly articulated strategy for sustainable long-term growth. We are drawing on the strength of a company that has over 30 years of operating experience and a reputation for durability in an uncertain healthcare environment.

Our revenue growth for the second quarter was 14.3% with growth attributable to contributions to some recently required practices of over 10% and the remainder coming from the same-unit results just mentioned.

In looking at the strength of our same-unit growth, we saw net reimbursement-related growth of 2.4% and volume growth of 1.5% for the quarter. While our strong same-unit growth was a positive story for the quarter, the larger part of our revenue growth was driven by contributions from acquisitions since last year.

What's not solely reflected in our second quarter results are the great strides we're making with our American Anesthesiology division as we continue to build our national group practice in that important specialty.

By now I'm sure that you're aware of the acquisitions of Anesthesia Medical Alliance of

East Tennessee and Loudoun Anesthesia Associates. Anesthesia Alliance of East Tennessee, the first Tennessee-based practice to join American Anesthesiology, is a 45-position group that practices the (inaudible) of an anesthesia carotene model that includes 158 nurse anesthetists working at the five hospitals, eight ambulatory surgery centers and three hospital-based pain management centers located primarily in the Knoxville, Tennessee metropolitan area.

The flagship facilities are Parkwest Medical Center and the Fort Sanders Regional Medical Center with whom the group has had long standing relationships. The practice provides anesthesia services across a wide spectrum of sub-specialty areas including cardiovascular, obstetrics, newer anesthesia, regional anesthesia and pain management.

Loudoun Anesthesia consists of 12 anesthesiologists and 17 anesthetists. This group founded in 1994 practices within the Inova Health Systems at Loudoun Hospitals. As many of you may recall, our first anesthesia acquisition in Virginia practices as part of the Inova Health System's Fairfax Hospital.

We also completed three additional anesthesiology group practice acquisitions during the 2012 second quarter. We acquired Burlington Anesthesia in Burlington, North Carolina, which I mentioned on our last earnings call, followed by the acquisition of Brazos Anesthesia Associates in Bryan, Texas.

The Brazos practice consists of 16 anesthesiologists who practice is part of an anesthesia fair team model that includes 29 anesthetists, as well as three pain care nurses. Serving the Brazos Valley community for 25 years. Brazos' company provides anesthesia services and three hospitals, as well as eight other office space locations. The pediatric division of Mednax is also an established provider of neonatal services in this community.

Florida Atlantic Anesthesia in Fort Lauderdale, Florida joins us near the end of the second quarter. The practice consists of 24 anesthesiologists and 5 full-time anesthetists and they provide anesthesia services at Holy Cross Hospital and Holy Cross HealthPlex in Fort Lauderdale. Founded in 1998, this group is one of the leading anesthesiology practices in the area and the second Florida-based practice to join American Anesthesiology.

The pediatrics division is also an established partner and provider of NICU services at Holy Cross Hospital, thereby, providing a continuum of care to our patients at our hospital partners inaudible) community.

East of these groups, under talented positions, joined American Anesthesiology because they believe the right choice in today's changing healthcare environment was to join a national medical group whose interest are 100% aligned with theirs. We're a quality established group that has developed relationships with their hospital and their practice in attractive metropolitan areas. We're fostering a collaborative environment in which the best clinical and administrator practices are shared across all the American Anesthesiology groups.

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