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What changed in Pediatrix Medical Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Pediatrix Medical Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+432 added−489 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-17)

Top changes in Pediatrix Medical Group, Inc.'s 2023 10-K

432 paragraphs added · 489 removed · 333 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

108 edited+16 added−20 removed203 unchanged
Biggest changeWe believe that referring and collaborating physicians, hospitals, third-party payors and patients all benefit from our clinical research, education, quality and safety initiatives. DEMAND FOR OUR SERVICES Hospital-Based Care. Hospitals generally must provide cost-effective, quality care in order to enhance their reputations within their communities and desirability to patients, referring and collaborating physicians and third-party payors.
Biggest changeDEMAND FOR OUR SERVICES Hospital-Based Care. Hospitals generally must provide cost-effective, quality care in order to enhance their reputations within their communities and desirability to patients, referring and collaborating physicians and third-party payors. In an effort to improve outcomes and manage costs, hospitals typically employ or contract with physician specialists to provide specialized care in many hospital-based units or settings.
We are pursuing an enhanced m odel comprising urgent/acute care, primary care and telehealth where patient services offered in the traditional pediatric urgent care clinic are expanded to include the full pediatric continuum of care, 7 including subspecialty services and primary care services with an integrative approach to pediatric health, general and developmental pediatrics for high-risk newborns, complementary prenatal services with a focus on patient education and wellness, behavioral health and chronic pediatric diseases.
We are pursuing an enhanced m odel comprising urgent/acute care, primary care and telehealth where patient services offered in the traditional pediatric urgent care clinic are expanded to include the full pediatric continuum of care, including subspecialty services and primary care services with an integrative approach to pediatric health, general and 7 developmental pediatrics for high-risk newborns, complementary prenatal services with a focus on patient education and wellness, behavioral health and chronic pediatric diseases.
As healthcare organizations are expected to increasingly be held accountable for the quality and cost of the care they provide, we believe that our ability to capture this data within our clinical data warehouses adds value to our patients and our hospital and physician partners. • Utilize Enhanced Technology Solutions.
As healthcare organizations are expected to increasingly be held accountable for the quality and cost of the care that they provide, we believe that our ability to capture this data within our clinical data warehouses adds value to our patients and our hospital and physician partners. • Utilize Enhanced Technology Solutions.
Physicians spend years of their lives learning and training the science of medicine in order to bring their knowledge and skill to the bedside of a patient. It is an art, honed through repeated patient interactions, that allows any clinician to translate science into compassionate care for our patients.
Physicians spend years of their lives learning and training in the science of medicine in order to bring their knowledge and skill to the bedside of a patient. It is an art, honed through repeated patient interactions, that allows any clinician to translate science into compassionate care for our patients.
In addition to base salaries, these offerings may include a combination of annual bonuses, stock-based compensation awards, an Employee Stock Purchase Plan, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, adoption assistance, employee assistance programs, continuing education, among many others. GEOGRAPHIC COVERAGE We provide physician services across 37 states.
In addition to base salaries, these offerings may include a combination of annual bonuses, stock-based compensation awards, an Employee Stock Purchase Plan, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, adoption assistance, employee assistance programs and continuing education, among many others. GEOGRAPHIC COVERAGE We provide physician services across 37 states.
We believe our Compliance Program provides a solid framework to meet this commitment and our obligations as a provider of healthcare services, including: • a Chief Compliance Officer who reports to the Board of Directors on a regular basis; • a Compliance Committee consisting of our senior executives; • a formal internal audit function, including an Associate Vice President of Internal Audit who reports to the Audit Committee on a regular basis; • our Code of Conduct , which is applicable to our employees, independent contractors, officers and directors; • our Code of Professional Conduct – Finance , which is applicable to our finance personnel, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer; • a disclosure program that includes a mechanism to enable individuals to disclose on a confidential or anonymous basis to the Chief Compliance Officer or any person who is not in the disclosing individual’s chain of command, issues or questions believed by the individual to be a potential violation of criminal, civil, or administrative laws or of company policies or procedures; • an organizational structure designed to integrate our compliance objectives into our corporate offices, regions and practices; and 22 • education, monitoring and corrective action programs designed to establish methods to promote the understanding of our Compliance Program and adherence to its requirements.
We believe our Compliance Program provides a solid framework to meet this commitment and our obligations as a provider of healthcare services, including: • a Chief Compliance Officer who reports to our Board of Directors on a regular basis; • a Compliance Committee consisting of our senior executives; • a formal internal audit function, including an Associate Vice President of Internal Audit who reports to the Audit Committee on a regular basis; • our Code of Conduct , which is applicable to our employees, independent contractors, officers and directors; • our Code of Professional Conduct – Finance , which is applicable to our finance personnel, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Chief Operating Officer; • a disclosure program that includes a mechanism to enable individuals to disclose on a confidential or anonymous basis to the Chief Compliance Officer or any person who is not in the disclosing individual’s chain of command, issues or questions believed by the individual to be a potential violation of criminal, civil, or administrative laws or of company policies or procedures; • an organizational structure designed to integrate our compliance objectives into our corporate offices, regions and practices; and • education, monitoring and corrective action programs designed to establish methods to promote the understanding of our Compliance Program and adherence to its requirements.
Risk Factors ─ “Potential healthcare reform efforts may have a significant effect on our business.” Additional changes at the state level, including changes in Medicaid Program administration, eligibility and coverage, as well as changes in the regulatory framework governing the provision of telemedicine services, and other legal developments, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Risk Factors ─ “Potential healthcare reform efforts may have a significant effect on our business.” Additional changes at the state level, including changes in Medicaid Program administration, eligibility and coverage, as well as changes in the regulatory framework governing the provision of telemedicine services, and other legal developments, could have a 16 material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
See “Government Regulation—Government Regulatory Requirements.” 14 We also receive compensation pursuant to contracts with commercial payors that offer a wide variety of health insurance products, such as health maintenance organizations, preferred provider organizations and exclusive provider organizations that are subject to various state laws and regulations, as well as employer-sponsored coverage subject to federal Employee Retirement Income Security Act (“ERISA”) requirements.
See “Government Regulation—Government Regulatory Requirements.” We also receive compensation pursuant to contracts with commercial payors that offer a wide variety of health insurance products, such as health maintenance organizations, preferred provider organizations and exclusive provider organizations that are subject to various state laws and regulations, as well as employer-sponsored coverage subject to federal Employee Retirement Income Security Act (“ERISA”) requirements.
Further, the Stark Law, through the 17 addition of section 1903(s) to the Social Security Act, prohibits the federal government from making federal financial participation payments to state Medicaid programs for designated health services furnished as a result of a referral that would violate the Stark Law if Medicare “covered the service to the same extent and under the same conditions” as the state Medicaid Program.
Further, the Stark Law, through the addition of section 1903(s) to the Social Security Act, prohibits the federal government from making federal financial participation payments to state Medicaid programs for designated health services furnished as a result of a referral that would violate the Stark Law if Medicare “covered the 17 service to the same extent and under the same terms and conditions” as the state Medicaid Program.
Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may affect our reimbursement, restrict our existing operations, limit the expansion of our business or impose additional compliance requirements and costs, any of which could have a material adverse effect on our business, 16 financial condition, results of operations, cash flows and the trading price of our securities.
Healthcare reform implementation, additional legislation or regulations, and other changes in government policy or regulation may affect our reimbursement, restrict our existing operations, limit the expansion of our business or impose additional compliance requirements and costs, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
We maintain an extensive nationwide database of neonatologists, maternal-fetal medicine physicians, and other pediatric subspecialty physicians. Our medical directors and physician leaders play a central role in the recruiting and interviewing process before candidates are introduced to other practice group physicians and hospital administrators. We verify the credentials, licenses and references of 12 all prospective affiliated physician candidates.
We maintain an extensive nationwide database of neonatologists, maternal-fetal medicine physicians, and other pediatric subspecialty physicians. Our medical directors and physician leaders play a central role in the recruiting and interviewing process before candidates are introduced to other practice group physicians and hospital administrators. We verify the credentials, licenses and references of all prospective affiliated physician candidates.
As an accredited provider of continuing medical and nursing education, we offer a variety of live and online educational credit opportunities that can be accessed on demand by our providers and are in synergy with latest research publications and healthcare industry standards. We are continually expanding our learning materials to new subspecialties.
As an accredited provider of continuing medical and nursing education, we offer a variety of live and online educational credit opportunities that can be accessed on demand by our providers and are in synergy with latest research publications and healthcare 10 industry standards. We are continually expanding our learning materials to new subspecialties.
Subject to applicable laws, rules and regulations, the terms, conditions and compensation rates of our contracts with commercial third-party payors are negotiated and often vary across markets and among payors. In some cases, we contract with organizations that establish and maintain provider networks and then rent or lease such networks to the actual payor.
Subject to applicable laws, rules and regulations, the terms, conditions and compensation rates of our 14 contracts with commercial third-party payors are negotiated and often vary across markets and among payors. In some cases, we contract with organizations that establish and maintain provider networks and then rent or lease such networks to the actual payor.
If the self-insured retention amounts and other amounts that we are actually required to pay materially exceed the estimates that have been reserved, our financial condition, results of operations and cash flows could be materially, adversely affected. HUMAN CAPITAL MANAGEMENT We believe our affiliated physicians, other clinical professionals and administrative employees are key to our success.
If the self-insured retention amounts and other amounts that we are actually required to pay materially exceed the estimates that have been reserved, our financial condition, results of operations and cash flows could be materially, adversely affected. HUMAN CAPITAL MANAGEMENT 23 We believe our affiliated physicians, other clinical professionals and administrative employees are key to our success.
Changes reflected in OIG and CMS’s final rules could affect our operations and may cause us to modify certain arrangements, transactions, or other financial relationships. In addition, CMS and OIG issue advisory opinions in response to requests from industry stakeholders regarding proposed arrangements and whether such arrangements comply with applicable fraud and abuse laws.
Changes reflected in OIG and CMS’s Final Rules could affect our operations and may cause us to modify certain arrangements, transactions, or other financial relationships. In addition, CMS and OIG periodically issue Advisory Opinions in response to requests from industry stakeholders regarding proposed arrangements and whether such arrangements comply with applicable fraud and abuse laws.
These laws include the federal civil FCA, which prohibits knowingly presenting, or causing to be presented, false claims to GHC Programs, including Medicare, Medicaid, TRICARE (the program for military dependents and retirees), the Federal Employees Health Benefits Program, and insurance plans purchased through the ACA insurance exchanges where payments include federal funds.
These laws include the FCA, which prohibits knowingly presenting, or causing to be presented, false claims to GHC Programs, including Medicare, Medicaid, TRICARE (the program for military dependents and retirees), the Federal Employees Health Benefits Program, and insurance plans purchased through the ACA insurance exchanges where payments include federal funds.
Our internet website and the information contained therein or connected thereto are not incorporated into or deemed a part of this Form 10-K. Any amendments or waivers to our Code of Professional Conduct – Finance will be promptly disclosed on our website following the date of any such amendment or waiver.
Our website and the information contained therein or connected thereto are not incorporated into or deemed a part of this Form 10-K. Any amendments or waivers to our Code of Professional Conduct – Finance will be promptly disclosed on our website following the date of any such amendment or waiver.
We also believe one of the greatest predictors of success in our partnerships at the hospital and health system level is a high degree of strategic alignment between our clinical leaders and our partners. This requires our clinicians to hone a skill set beyond just the practice of medicine.
We also believe one of the greatest predictors of success in our partnerships at the hospital and health system level is a high degree of strategic alignment between our clinical leaders and our partners. This 9 requires our clinicians to hone a skill set beyond just the practice of medicine.
The growth team partners with the operational leadership across each of our medical groups to execute our overall growth strategy. • Adaptation and Expansion of Telehealth. Our telehealth programs offer the latest in telemedicine, which is the use of telecommunication and information technology in order to provide clinical healthcare at a distance.
The growth team partners with the operational leadership across each of our medical groups to execute our overall growth strategy. • Adaptation of Telehealth. Our telehealth programs offer the latest in telemedicine, which is the use of telecommunication and information technology in order to provide clinical healthcare at a distance.
Under HIPAA, as amended by regulations promulgated pursuant to HITECH, Covered Entities are required to report any unauthorized use or disclosure of PHI that meets the definition of a breach to affected individuals, HHS 20 and, depending on the number of affected individuals, the media for the affected market.
Under HIPAA, as amended by regulations promulgated pursuant to HITECH, Covered Entities are required to report any unauthorized use or disclosure of PHI that meets the definition of a breach to affected individuals, HHS and, depending on the number of affected individuals, the media for the affected market.
Our business entails an inherent risk of claims of medical malpractice against our affiliated physicians, clinicians and us. We contract and pay premiums for professional liability insurance that indemnifies us and our affiliated healthcare professionals generally on a claims-made basis for losses incurred related to medical malpractice 23 litigation.
Our business entails an inherent risk of claims of medical malpractice against our affiliated physicians, clinicians and us. We contract and pay premiums for professional liability insurance that indemnifies us and our affiliated healthcare professionals generally on a claims-made basis for losses incurred related to medical malpractice litigation.
This includes robust compensation and benefits programs to help meet the needs of our affiliated physicians, other clinical professionals and administrative employees. 25 We take great care to ensure that our cash-based compensation packages are reflective of the market value for the work that our colleagues perform.
This includes robust compensation and benefits programs to help meet the needs of our affiliated physicians, other clinical professionals and administrative employees. We take great care to ensure that our cash-based compensation packages are reflective of the market value for the work that our colleagues perform.
We typically are 13 responsible for billing patients and third-party payors for services rendered by our affiliated physicians separately from other related charges billed by the hospital or other physicians to the same payors. Some of our hospital contracts require hospitals to pay us administrative fees.
We typically are responsible for billing patients and third-party payors for services rendered by our affiliated physicians separately from other related charges billed by the hospital or other physicians to the same payors. Some of our hospital contracts require hospitals to pay us administrative fees.
We are typically responsible for billing patients and third-party payors on behalf of our affiliated professional contractors for services rendered by our affiliated physicians and, with respect to services provided in a hospital, separately from other charges billed by 15 hospitals to the same payors.
We are typically responsible for billing patients and third-party payors on behalf of our affiliated professional contractors for services rendered by our affiliated physicians and, with respect to services provided in a hospital, separately from other charges billed by hospitals to the same payors.
It is the goal of the People Services department to support the needs of our organization and our workforce while serving as a trusted strategic partner to our management team. We work together to make sound decisions for all of our operations teams and medical groups.
It is the goal of the People Services team to support the needs of our organization and our workforce while serving as a trusted strategic partner to our management team. We work together to make sound decisions for all of our operations teams and medical groups.
This requires that our clinicians have a skill set beyond just the practice of medicine. 24 Compliance Program and Training Fundamental to our core values are people and a culture of integrity. Our Compliance Department is led by our Chief Compliance Officer.
This requires that our clinicians have a skill set beyond just the practice of medicine. Compliance Program and Training Fundamental to our core values are people and a culture of integrity. Our Compliance Department is led by our Chief Compliance Officer.
Our hospital contracts typically have terms of one to three years which can be terminated without cause by either party upon prior written notice, and renew automatically for additional terms of one to three years unless terminated early by any party.
Our hospital contracts typically have terms of one to three years which can be terminated without cause by either party upon prior written notice, and renew automatically for additional terms of one to three 13 years unless terminated early by any party.
Numerous state and certain other federal laws protect the confidentiality of health information and other personal information, including but not limited to state medical privacy laws, state laws protecting personal information, state data breach notification laws, state genetic privacy laws, human subjects research laws and federal and state consumer protection laws.
Numerous state and certain other federal laws protect the confidentiality of health information and other personal information, including but not limited to state medical privacy laws, state laws protecting personal information, state data breach notification laws, state genetic privacy laws, human subjects research laws and federal 20 and state consumer protection laws.
The Federal government has responded by instructing federal agencies, such as the OCR and FTC, to use their existing authority to provide greater protections for consumers with respect to the use of their data, and more specifically, their health data.
The Federal government has also responded by instructing federal agencies, such as the OCR and FTC, to use their existing authority to provide greater protections for consumers with respect to the use of their data, and more specifically, their health data.
Our Compliance Program, including our Code of Conduct , is administered by our Chief Compliance Officer with oversight by our Chief Executive Officer, Compliance Committee and Board of Directors. Copies of our Code of Conduct and our Code of Professional Conduct – Finance are available on our website, www.Pediatrix.com .
Our Compliance Program, including our Code of Conduct , is administered by our Chief Compliance Officer with oversight by our Chief Executive Officer, Compliance Committee and Board of Directors. Copies of our Code of Conduct and our Code of Professional Conduct – Finance are available 22 on our website, www.Pediatrix.com .
See “Government Investigations.” Additionally, federal and state fraud and abuse laws, rules and regulations are not static and amendments, clarifications, revisions, or other modifications to these laws may occur from time to time.
See “Government Investigations.” Additionally, federal and state fraud and abuse laws, rules and 18 regulations are not static and amendments, clarifications, revisions, or other modifications to these laws may occur from time to time.
We believe that our community presence, through our hospital coverage and outpatient clinics, assists referring obstetricians, office-based pediatricians and family physicians with their practices. Our affiliated physicians are able to provide comprehensive maternal-fetal, newborn and pediatric subspecialty care to patients using the latest advances in methodologies, supporting the local referring physician community with 24-hours-a-day, seven-days-a-week on-site or on-call coverage.
We believe that our community presence, through our hospital coverage and outpatient clinics, assists referring obstetricians, office-based pediatricians and family physicians with their practices. Our affiliated physicians provide comprehensive maternal-fetal, newborn and pediatric subspecialty care to patients using the latest advances in methodologies, supporting the local referring physician community with 24-hours-a-day, seven-days-a-week on-site or on-call coverage.
OUR PHYSICIAN SPECIALTIES AND SERVICES The following discussion describes our physician specialties and the care that we provide, either directly or through our affiliated professional contractors: Neonatal Care We provide clinical care to babies born prematurely or with complications within specific units at hospitals, primarily NICUs, through our network of affiliated neonatal physician subspecialists (“neonatologists”), neonatal 4 nurse practitioners and other pediatric clinicians who staff and manage clinical activities at over 375 NICUs in 33 states.
OUR PHYSICIAN SPECIALTIES AND SERVICES The following discussion describes our physician specialties and the care that we provide, either directly or through our affiliated professional contractors: Neonatal Care We provide clinical care to babies born prematurely or with complications within specific units at hospitals, primarily NICUs, through our network of affiliated neonatal physician subspecialists (“neonatologists”), neonatal 4 nurse practitioners and other pediatric clinicians who staff and manage clinical activities at over 365 NICUs in 33 states.
Adverse changes or conditions affecting states in which our operations are concentrated, such as healthcare reforms, changes in laws, rules and regulations, reduced Medicare or Medicaid reimbursements, an increase in the income level required to qualify for government healthcare programs or government investigations, may have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Adverse 25 changes or conditions affecting states in which our operations are concentrated, such as healthcare reforms, changes in laws, rules and regulations, reduced Medicaid reimbursements, an increase in the income level required to qualify for government healthcare programs or government investigations, may have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Risk Factors ─ “State budgetary constraints and the uncertainty over the future Medicaid expansion could have an adverse effect on our reimbursement from Medicaid programs” and “Potential healthcare reform efforts may have a significant effect on our business.” In order to participate in GHC Programs, we and our affiliated practices must comply with stringent and often complex standards, including enrollment and reimbursement requirements.
Risk Factors ─ “State budgetary constraints and the uncertainty over the future of Medicaid could have an adverse effect on our reimbursement from Medicaid programs” and “Potential healthcare reform efforts may have a significant effect on our business.” In order to participate in GHC Programs, we and our affiliated practices must comply with stringent and often complex standards, including enrollment and reimbursement requirements.
Health and Well-Being We care about the health and well-being of our affiliated clinicians, other clinical professionals and our administrative employees and their families and are committed to their health, safety and wellness.
Health and Well-Being 24 We care about the health and well-being of our affiliated clinicians, other clinical professionals and our administrative employees and their families and are committed to their health, safety and wellness.
With advancements in care, there are approximately 1.4 million adults in the United States today living with congenital heart disease. There are approximately 3,300 board-certified pediatric cardiologists in the United States. Pediatric Primary and Urgent Care. Pediatric urgent care practices provide screening, diagnosis and treatment for a variety of minor non-emergent health issues, working in partnership with community pediatricians.
With advancements in care, there are approximately 1.4 million adults in the United States today living with congenital heart disease. There are approximately 3,600 board-certified pediatric cardiologists in the United States. Pediatric Primary and Urgent Care. Pediatric urgent care practices provide screening, diagnosis and treatment for a variety of minor non-emergent health issues, working in partnership with community pediatricians.
If the hospital chooses to do so, it may award the contract to operate the relevant facility to a competing group or company from within or outside the surrounding community. Our contracts with hospitals generally provide that they may be terminated without cause upon prior written notice. The healthcare industry is highly competitive.
If the hospital chooses to do so, it may award the contract to operate the relevant facility to a competing group or company from within or outside the surrounding community. Our contracts with hospitals generally provide that they may be terminated without cause upon prior written notice. The broader healthcare industry is also highly competitive.
In addition, pediatric surgeons provide specialized care for patients ranging from newborns to adolescents, for all problems or conditions affecting children that require surgical intervention, and often have particular expertise in the areas of neonatal, prenatal, trauma, and pediatric oncology. There are approximately 1,070 board-certified pediatric surgeons in the United States.
In addition, pediatric surgeons provide specialized care for patients ranging from newborns to adolescents, for all problems or conditions affecting children that require surgical intervention, and often have particular expertise in the areas of neonatal, prenatal, trauma, and pediatric oncology. There are approximately 1,180 board-certified pediatric surgeons in the United States.
Data on neonatal outcomes demonstrates that, in general, the likelihood of mortality or an adverse condition or outcome (referred to as “morbidity”) is reduced the longer a baby remains in the womb. There are approximately 2,650 board-certified maternal-fetal medicine subspecialists in the United States. Pediatric Cardiology Medicine .
Data on neonatal outcomes demonstrates that, in general, the likelihood of mortality or an adverse condition or outcome (referred to as “morbidity”) is reduced the longer a baby remains in the womb. There are approximately 2,880 board-certified maternal-fetal medicine subspecialists in the United States. Pediatric Cardiology Medicine .
Hospitals and Other Customers Our relationships with our hospital partners and other customers are critical to our operations. Hospitals control access to their units and operating rooms through the awarding of contracts and hospital privileges. We have been retained by approximately 420 hospitals to staff and manage clinical activities within specific hospital-based units and other departments.
Hospitals and Other Customers Our relationships with our hospital partners and other customers are critical to our operations. Hospitals control access to their units and operating rooms through the awarding of contracts and hospital privileges. We have been retained by approximately 410 hospitals to staff and manage clinical activities within specific hospital-based units and other departments.
Fee Splitting; Corporate Practice of Medicine Many states have laws that prohibit business corporations, such as Pediatrix, from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians, or engaging in certain arrangements, such as fee splitting, with physicians.
Fee Splitting; Corporate Practice of Medicine Many states have laws that limit business corporations, such as Pediatrix, from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians, or engaging in certain arrangements, such as fee splitting, with physicians.
If there is a determination by government authorities that we have not complied with any of these laws, rules and regulations, our business, financial condition and results of operations could be materially, adversely affected.
If there is a determination by a government authority that we have not complied with any of these laws, rules and regulations, our business, financial condition and results of operations could be materially, adversely affected.
While advisory opinions are only directly applicable to the requestor of the opinion, these advisory opinions provide notice to healthcare industry participants of the types of conduct that government agencies find to be permissible or impermissible under the applicable laws.
While Advisory Opinions are only directly applicable to the requestor of the opinion, they provide notice to healthcare industry participants of the types of conduct that government agencies find to be permissible or impermissible under the applicable laws.
There are approximately 6,350 board-certified neonatologists in the United States. Maternal-Fetal Medicine . Expectant mothers with pregnancy complications often seek or are referred by their obstetricians to maternal-fetal medicine subspecialists.
There are approximately 6,820 board-certified neonatologists in the United States. Maternal-Fetal Medicine . Expectant mothers with pregnancy complications often seek or are referred by their obstetricians to maternal-fetal medicine subspecialists.
We have over 570 affiliated physicians who provide maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where our affiliated neonatal physicians practice.
We have over 580 affiliated physicians who provide maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where our affiliated neonatal physicians practice.
Although we believe that the non-competition covenants of our affiliated physicians are reasonable in scope and duration and therefore generally enforceable under applicable state laws, we cannot predict whether a court or arbitration panel would enforce these covenants in any particular case.
Although we believe that the non-competition covenants of our affiliated physicians are reasonable in scope and duration and therefore generally enforceable under applicable state laws, we cannot predict whether a court or arbitration panel would enforce these covenants in any particular case. See Item 1A.
Pediatric urologists are specialized pediatric surgeons who diagnose, treat and manage children’s urinary and genital problems. There are approximately 400 board-certified pediatric urologists in the United States. Physician Practice Administration.
Pediatric urologists are specialized pediatric surgeons who diagnose, treat and manage children’s urinary and genital problems. There are approximately 450 board-certified pediatric urologists in the United States. Physician Practice Administration.
Pediatric intensivists are hospital-based pediatricians with additional education and training in caring for critically ill or injured children and adolescents. Our affiliated physicians who provide this clinical care staff and manage pediatric intensive care units (“PICUs”) at approximately 70 hospitals. 5 Pediatric Hospitalists . Pediatric hospitalists are hospital-based pediatricians specializing in inpatient care and management of acutely ill children.
Pediatric intensivists are hospital-based pediatricians with additional education and training in caring for critically ill or injured children and adolescents. Our affiliated physicians who provide this clinical care staff and manage pediatric intensive care units (“PICUs”) at over 65 hospitals. 5 Pediatric Hospitalists . Pediatric hospitalists are hospital-based pediatricians specializing in inpatient care and management of acutely ill children.
Our affiliated hospital-based physicians provide this inpatient pediatric and newborn care in PICUs, NICUs and pediatric emergency rooms at over 60 hospitals. Pediatric Surgery .
Our affiliated hospital-based physicians provide this inpatient pediatric and newborn care in PICUs, NICUs and pediatric emergency rooms at over 55 hospitals. Pediatric Surgery .
We have licensed the Nextgen Electronic Health Record (“EHR”) and Electronic Patient Management (“EPM”), an integrated product line for our affiliated office-based physicians and other clinicians to record patient clinical documentation and manage the full revenue cycle.
We have licensed the Nextgen Electronic Health Record (“EHR”) and Practice Management (“PM”), an integrated product line for our affiliated office-based physicians and other clinicians to record patient clinical documentation and manage the full revenue cycle.
In addition, the health care industry is increasing the use of value-based reimbursement methodologies and accordingly, our reimbursement may be dependent upon our ability to achieve quality targets that change year over year. See Item 1A.
In addition, the healthcare industry is increasing the use of value-based reimbursement methodologies and accordingly, our reimbursement may be dependent upon our ability to achieve quality targets that change year over year. See Item 1A.
We make available a catalog of over 7,000 courses to all audiences across subjects including business skills, leadership and management, office productivity, health and wellness and personal development, among others. The courses are designed to develop great people who become great leaders that will ultimately shape a great company.
We make available a catalog of over 9,500 courses to all audiences across subjects including business skills, leadership and management, office productivity, health and wellness and personal development, among others. The courses are designed to develop great people who become great leaders that will ultimately shape a great company.
As of December 31, 2022, 39 states and the District of Columbia have expanded Medicaid eligibility to cover this additional low-income patient population (including states that have adopted but not yet implemented expansion and those that are using an alternative approach to eligibility expansion) and other states are considering such expansion.
As of December 31, 2023, 40 states and the District of Columbia have expanded Medicaid eligibility to cover this additional low-income patient population (including states that have adopted but not yet implemented expansion and those that are using an alternative approach to eligibility expansion) and other states are considering such expansion.
For example, pediatric intensivists are subspecialists who care for critically ill or injured children and adolescents in PICUs. There are approximately 2,800 board-certified pediatric intensivists in the United States. As another example, pediatric hospitalists are pediatricians who provide care in many hospital areas, including labor and delivery and the newborn nursery.
For example, pediatric intensivists are subspecialists who care for critically ill or injured children and adolescents in PICUs. There are approximately 3,075 board-certified pediatric intensivists in the United States. As another example, pediatric hospitalists are pediatricians who provide care in many hospital areas, including labor and delivery and the newborn nursery.
BabySteps Cloud is a clinical electronic documentation system used by our affiliated neonatal physicians and other clinicians to record clinical progress notes and certain laboratory reports and provides a decision tree to assist them in certain situations with the selection of appropriate billing codes. • Clinical Data Warehouse.
BabySteps Cloud is a clinical electronic documentation system used by our affiliated neonatal physicians and other clinicians to record clinical progress notes and certain laboratory reports and to provide them with a decision tree to assist them in certain situations with the selection of appropriate billing codes.
With comprehensive reporting tools, our physicians can use this information to benchmark outcomes, enhance 11 clinical decision-making and advance best practices at the bedside. Using a variety of clinical performance markers, our de-identified data warehouse also helps us track medication and procedure interactions, link treatments to outcomes and identify opportunities to enhance patient outcomes. • Nextgen® .
With comprehensive reporting tools, our physicians can use this information to benchmark outcomes, enhance clinical decision-making and advance best practices at the bedside. Using a variety of clinical performance markers, our de-identified data warehouse also helps us track medication and procedure interactions, link treatments to outcomes and identify opportunities to enhance patient outcomes. • pMD Charge Capture.
To this end, we have relaunched our Clinical Leadership Development Program where our affiliated clinicians from across the organization will participate virtually and in person in a variety of leadership workshops to provide them with the best tools to foster positive productive relationships with our valued partners.
To this end, we maintain a Clinical Leadership Development Program where our affiliated clinicians from across the organization participate virtually and in person in a variety of leadership workshops to provide them with the best tools to foster positive productive relationships with our valued partners.
In order to accept payments from payment cards, merchants must use payment card processing applications that have been validated under the Payment Application Data Security Standard (“PA-DSS”), and complete a self-assessment questionnaire that complies with the Payment Card Industry Data Security Standard (“PCI-DSS”).
In order to accept payments from payment cards through a third-party vendor, merchants must use payment card processing applications that have been validated under the Payment Application Data Security Standard (“PA-DSS”), and complete a self-assessment questionnaire that complies with the Payment Card Industry Data Security Standard (“PCI-DSS”).
Our People Services team reports up to our Chief Executive Officer and regularly engages with our board of directors and its compensation and talent committee. Our People Services department is a core administrative support function of Pediatrix.
Our People Services team reports to our Chief Operating Officer and regularly engages with our Chief Executive Officer and board of directors and its compensation and talent committee. Our People Services team is a core administrative support function of Pediatrix.
Some contracts provide for fees if the hospital does not generate sufficient patient volume in order to guarantee that we receive a specified minimum revenue level. We also receive fees from hospitals for administrative services performed by our affiliated physicians providing medical director services at the hospital. Administrative fees accounted for approximately 13% of our net revenue during 2022.
Some contracts provide for fees if the hospital does not generate sufficient patient volume in order to guarantee that we receive a specified minimum revenue level. We also receive fees from hospitals for administrative services performed by our affiliated physicians providing medical director services at the hospital. Administrative fees accounted for approximately 14% of our net revenue for 2023.
ITEM 1. BUSINESS OVERVIEW Pediatrix is a leading provider of physician services including newborn, maternal-fetal, pediatric cardiology and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 37 states. We ceased providing services in Puerto Rico on December 31, 2022.
ITEM 1. BUSINESS OVERVIEW Pediatrix (formerly known as Mednax, Inc.) is a leading provider of physician services including newborn, maternal-fetal, pediatric cardiology and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 37 states. We ceased providing services in Puerto Rico on December 31, 2022.
At December 31, 2022, our national network comprised approximately 2,600 affiliated physicians, including 1,330 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
At December 31, 2023, our national network comprised approximately 2,620 affiliated physicians, including 1,330 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
HIPAA Transaction Requirements In addition to privacy, security, and breach notifications requirements, HIPAA establishes uniform electronic data transmission standards that all healthcare providers must use for electronic healthcare transactions.
Cybersecurity for additional information. HIPAA Transaction Requirements In addition to privacy, security, and breach notifications requirements, HIPAA establishes uniform electronic data transmission standards that all healthcare providers must use for electronic healthcare transactions.
Antitrust The healthcare industry is subject to close antitrust scrutiny. The Federal Trade Commission (“FTC”), the Antitrust Division of the DOJ and state Attorneys General all actively review and, in some cases, take enforcement action against business conduct and acquisitions in the healthcare industry. Private parties harmed by alleged anticompetitive conduct can also bring antitrust suits.
The Federal Trade Commission (“FTC”), the Antitrust Division of the DOJ and state Attorneys General all actively review and, in some cases, take enforcement action against business conduct and acquisitions in the healthcare industry. Private parties harmed by alleged anticompetitive conduct can also bring antitrust suits.
Diverse representation at all levels of our organization is of the utmost importance to our culture and our business. As of February 1, 2023, approximately 80% of our total headcount was female and over 40% of our total headcount identified as a person of color.
Diverse representation at all levels of our organization is of the utmost importance to our culture and our business. As of December 31, 2023, approximately 80% of our total headcount was female and over 40% of our total headcount identified as a person of color.
BabySteps Cloud enables our affiliated practices to capture a consistent set of clinical information about the patients we treat. We de-identify and transfer data from the clinical documentation that resides in BabySteps to our “clinical data warehouse” that since inception has accumulated clinical information on more than 1.8 million patients and over 32 million patient days.
BabySteps Cloud enables our affiliated practices to capture a consistent set of clinical information about the patients we treat. We de-identify and transfer data from the clinical documentation that resides in BabySteps to our “clinical data warehouse” that since inception has accumulated clinical information on more than 1.9 million patients and approximately 34 million patient days.
We endorse High Reliability Organization ("HRO") concepts to provide “Just Culture” training to our clinicians.
We endorse High Reliability Organization (“HRO”) concepts to provide “Just Culture” training to our clinicians.
Compliance Program We maintain a compliance program that includes the OIG’s seven established elements of an effective program and which reflects our commitment to complying with all laws, rules and regulations applicable to our business and that meets our ethical obligations in conducting our business (the “Compliance Program”).
Compliance Program We maintain a compliance program that is designed to include the OIG’s seven fundamental elements of an effective compliance program and which reflects our commitment to complying with all laws, rules and regulations applicable to our business and that meets our ethical obligations in conducting our business (the “Compliance Program”).
During 2022, approximately 65% of our net revenue was generated by operations in our five largest states. Our operations in Texas accounted for approximately 32% of our net revenue for the same period.
During 2023, approximately 67% of our net revenue was generated by operations in our five largest states. Our operations in Texas accounted for approximately 32% of our net revenue for the same period.
Complex initiatives are derived and based on our long-standing CQI efforts, such as our 100,000 Babies Campaign, our 10 value-based care initiatives, and various clinical quality collaboratives. Our quality metrics include standard clinical outcome reporting, trend analysis and threshold performance, which are provided to our affiliated clinicians. • Patient Safety Organization (“PSO”).
Complex initiatives are derived and based on our long-standing CQI efforts, our value-based care initiatives, and various clinical quality collaboratives. Our quality metrics include standard clinical outcome reporting, trend analysis and threshold performance, which are provided to our affiliated clinicians. • Patient Safety Organization (“PSO”).
If payment is less than billed charges, we bill the balance to the patient, subject to federal and state laws regulating such billing, which Congress or states may continue to enact. See Item 1A.
If payment is less than billed charges, we bill the balance to the patient, subject to the requirements of the No Surprises Act (“NSA”) and other federal and state laws regulating such billing, which Congress or states may continue to enact. See Item 1A.
Our affiliated physicians and clinicians provide critical medical care through over 20 women’s and children’s healthcare services across 37 states, providing care to the most vulnerable patient population in the country: expecting mothers and their newborns and children. We ceased providing services in Puerto Rico on December 31, 2022.
Our affiliated physicians and clinicians provide critical medical care through over 20 women’s and children’s healthcare services across 37 states, providing care to the most vulnerable patient population in the country: expecting mothers and their newborns and children.
The Affordable Care Act (“ACA”) allows states to expand their Medicaid programs to enroll more individuals through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historical eligibility levels to 133% of the federal poverty level.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) allows states to expand their Medicaid programs to enroll more individuals through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historical eligibility levels to 133% of the federal poverty level.
As of December 31, 2022, we had approximately 2,600 practicing physicians affiliated with us, and we employed or contracted with approximately 2,450 other clinical professionals and approximately 2,800 other full-time and part-time employees.
As of December 31, 2023, we had approximately 2,620 practicing physicians affiliated with us, and we employed or contracted with approximately 2,550 other clinical professionals and approximately 2,900 other full-time and part-time employees.
Government Regulatory Requirements In order to participate in the Medicare program and the various state Medicaid programs, we and our affiliated physician practices must comply with stringent and often complex regulatory requirements. Moreover, different states impose varying standards for their Medicaid programs.
Government Regulatory Requirements In order to participate in the Medicare program and the various state specific Medicaid programs, we and our affiliated physician practices must comply with stringent and often complex regulatory requirements.
It could also adversely affect our or our affiliated professional contractors’ ability to contract with, or obtain payment from, non-governmental payors. 18 Although we intend to conduct our business in compliance with all applicable federal and state fraud and abuse laws, many of the laws, rules and regulations applicable to us, including those relating to billing and those relating to financial relationships with physicians and hospitals, are broadly worded and may be interpreted or applied by prosecutorial, regulatory or judicial authorities in ways that we cannot predict.
Although we intend to conduct our business in compliance with all applicable federal and state fraud and abuse laws, many of the laws, rules and regulations applicable to us, including those relating to billing and those relating to financial relationships with physicians and hospitals, are broadly worded and may be interpreted or applied by prosecutorial, regulatory or judicial authorities in ways that we cannot predict.
Liabilities in excess of our insurance coverage, including coverage for cyber liability and certain other privacy and security breach-related claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Liabilities in excess of our insurance coverage, including coverage for cyber liability and certain other privacy and security breach-related claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. 21 See also Item 1A. Risk Factors–“Information Systems, Cybersecurity and Data Privacy Risks” and Item 1C.
Our network also includes other pediatric subspecialists, including over 240 physicians providing pediatric intensive care, 100 physicians providing pediatric cardiology care, 235 physicians providing hospital-based pediatric care, 55 physicians providing pediatric surgical care and urology services, 45 physicians providing pediatric urgent care, 10 physicians providing pediatric ear, nose and throat services, and four physicians providing pediatric ophthalmology care.
Our network also includes other pediatric subspecialists, including over 230 physicians providing pediatric intensive care, 90 physicians providing pediatric cardiology care, 255 physicians providing hospital-based pediatric care, 65 physicians providing pediatric surgical care and urology services, 55 physicians providing pediatric urgent care, 10 physicians providing pediatric ear, nose and throat services, and three physicians providing pediatric ophthalmology care.
We envision a new model comprising urgent/acute care, primary care and telehealth. We made our entry into the pediatric urgent care service line in early 2021 with the affiliation with an eight-clinic pediatric urgent care practice that provides screening, diagnosis and treatment for a variety of minor non-emergent health issues, working in partnership with community pediatricians.
We entered into the pediatric urgent care service line in early 2021 through the affiliation with an eight-clinic pediatric urgent care practice that provides screening, diagnosis and treatment for a variety of minor non-emergent health issues, working in partnership with community pediatricians. We expanded our presence in 2022 through the affiliation with a 13-clinic pediatric urgent care practice.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • federal and state regulations that broadly define provider and supplier affiliation and require providers to disclose to GHC Programs certain disclosable events including, without limitation, current or previous direct or indirect affiliations with providers or suppliers having uncollected debt to GHC Programs, being subject to payment suspension, being excluded from participation in GHC Programs or had such billing privileges denied or revoked, and that permit GHC Programs to deny or revoke provider or supplier enrollment based upon such affiliations upon determining that the affiliations pose an undue risk of fraud, waste, or abuse; • state laws that prohibit general business corporations from practicing medicine, exercising control over physicians’ medical decisions or engaging in certain practices or financial arrangements, such as splitting fees with physicians.
Biggest changePenalties for violating these laws can range from physician licensure sanctions, fines and criminal sanctions; • statutes created by HIPAA, which impose criminal liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, including private insurance plans, or, in any matter involving a healthcare benefit program, for knowingly and willfully making materially false, fictitious or fraudulent statements in connection with the delivery of or payment for health care benefits; • federal and state regulations that broadly define provider and supplier affiliation and require providers to disclose to GHC Programs certain disclosable events including, without limitation, current or previous direct or indirect affiliations with providers or suppliers having uncollected debt to GHC Programs, being subject to payment suspension, being excluded from participation in GHC Programs or had such billing privileges denied or revoked, and that permit GHC Programs to deny or revoke provider or supplier enrollment based upon such affiliations upon determining that the affiliations pose an undue risk of fraud, waste, or abuse; • state laws that prohibit or limit general business corporations from practicing medicine, exercising control over physicians’ medical decisions or engaging in certain practices or financial arrangements, such as splitting fees with physicians.
While numerous federal agencies have released waivers to ease regulatory obstacles to the adoption of telehealth, many of these waivers do not override applicable state laws. States have adopted waivers as well but differ in the scope and application of such waivers and also on the time period the waiver is available.
While numerous federal agencies released waivers to ease regulatory obstacles to the adoption of telehealth, many of these waivers do not override applicable state laws. States have adopted waivers as well but differ in the scope and application of such waivers and also on the time period the waiver is available.
Further, any fiscal tightening impacting GHC Programs or changes to the structure of any GHC Programs could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.
Further, any fiscal tightening impacting GHC Programs or changes to the structure of any GHC Programs could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.
Also, any adjustment in Medicare reimbursement rates may have a detrimental impact on our reimbursement rates not only for Medicare patients, but also for patients covered under Medicaid and other third-party payors, because a state’s Medicaid payments cannot exceed the payments it would have made had those patients been enrolled in traditional Medicare, and other third-party payors often base their reimbursement rates on a percentage of Medicare rates.
Any adjustment in Medicare reimbursement rates may have a detrimental impact on our reimbursement rates not only for Medicare patients, but also for patients covered under Medicaid and other third-party payors, because a state’s Medicaid payments cannot exceed the payments it would have made had those patients been enrolled in traditional Medicare, and other third-party payors often base their reimbursement rates on a percentage of Medicare rates.
These laws include: • Federal and state laws related to confidentiality, privacy and security of personal information, including PHI, that limit the manner in which we may use and disclose that information, impose obligations to safeguard that information and require that we notify third parties in the event of a breach.
These laws include: • Federal and state laws related to the confidentiality, privacy and security of personal information, including PHI, that limit the manner in which we may use and disclose that information, impose obligations to safeguard that information and require that we notify third parties in the event of a breach.
These laws and their interpretations vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion, and are subject to change and to evolving interpretations by state boards of medicine and state attorneys general, among others; • federal and state laws governing participation in GHC Programs could result in denial of our application to become a participating provider or revocation of our participation or billing privileges, which in turn, could cause us to not be able to treat patients covered by the applicable program or prohibit us from billing for the treatment services provided to such patients; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; • federal and state laws and policies that require healthcare providers to maintain licensure, certification, or accreditation to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs; 38 • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • laws that regulate debt collection practices, as applied to our debt collection practices; • federal and state laws pertaining to the provision and coverage of services by non-physician practitioners, such as advanced nurse practitioners, physician assistants and other clinical professionals, physician supervision of such services and reimbursement requirements that may be dependent on the manner in which the services are provided and documented; and • federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federal healthcare programs, inappropriately reducing hospital inpatient lengths of stay for such patients or employing individuals who are excluded from participation in federally funded healthcare programs.
These laws and their interpretations vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion, and are subject to change and to evolving interpretations by state boards of medicine and state attorneys general, among others; • federal and state laws governing participation in GHC Programs could result in denial of our application to become a participating provider or revocation of our participation or billing privileges, which in turn, could cause us to not be able to treat patients covered by the applicable program or prohibit us from billing for the treatment services provided to such patients; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; • federal and state laws and policies that require healthcare providers to maintain licensure, certification, or accreditation to enroll and participate in the Medicare and Medicaid programs, to report certain changes in their operations to the agencies that administer these programs; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • laws that regulate debt collection practices, as applied to our debt collection practices; • federal and state laws pertaining to the provision and coverage of services by non-physician practitioners, such as advanced nurse practitioners, physician assistants and other clinical professionals, physician supervision of such services and reimbursement requirements that may be dependent on the manner in which the services are provided and documented; and • federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federal healthcare programs, inappropriately reducing hospital inpatient lengths of stay for such patients or employing individuals who are excluded from participation in federally funded healthcare programs.
We may not be able to successfully execute our same-unit and organic growth strategies for reasons including the following: • We may not be able to expand the services that our affiliated physicians provide to our hospital partners or the services provided by our services companies to their customers. • We may not be able to attract referrals to our office-based practices or neonatology transports to our hospital-based units. • We may not be able to execute new contractual arrangements with hospitals, including through joint ventures, where we either currently provide or do not currently provide physician services. • We may not be able to work with our hospital partners to develop integrated services programs for which we become a multi-specialty provider of solutions within the maternal-fetal, newborn, pediatric continuum of care. • We may not accurately project same-unit and organic growth performance, including projections of revenue and operating expenses, or we may experience a shift in the mix of services that certain of our customers request from us, potentially resulting in lower margins.
We may not be able to successfully execute our same-unit and organic growth strategies for reasons including the following: c • We may not be able to expand the services that our affiliated physicians provide to our hospital partners or the services provided by our services companies to their customers. • We may not be able to attract referrals to our office-based practices or neonatology transports to our hospital-based units. • We may not be able to execute new contractual arrangements with hospitals, including through joint ventures, where we either currently provide or do not currently provide physician services. • We may not be able to work with our hospital partners to develop integrated services programs for which we become a multi-specialty provider of solutions within the maternal-fetal, newborn, pediatric continuum of care. • We may not accurately project same-unit and organic growth performance, including projections of revenue and operating expenses, or we may experience a shift in the mix of services that certain of our customers request from us, potentially resulting in lower margins.
Business—“Government Regulation—Fee Splitting; Corporate Practice of Medicine.” Further, regulatory authorities or other parties also could assert that our relationships, including fee arrangements, among our affiliated professional contractors, hospital clients or referring physicians violate the anti-kickback, fee splitting or self-referral laws and regulations or that we have submitted false claims or otherwise failed to comply with government program reimbursement requirements.
Business—“Government Regulation—Fee Splitting; Corporate Practice of Medicine.” Further, regulatory authorities or other parties also could assert that our relationships, including fee arrangements, among our affiliated professional contractors, hospital clients or referring physicians violate the anti-kickback, fee splitting, EKRA, or self-referral laws and regulations or that we have submitted false claims or otherwise failed to comply with government program reimbursement requirements.
Our affiliated physicians and other individual providers are responsible for maintaining all required professional licensures or certifications in good standing, which is generally a condition of reimbursement in GHC Programs and in private insurance, and for appropriately recording and documenting the services that they provide. We use this information to seek reimbursement for their services from third-party payors.
Our affiliated physicians and other individual providers are responsible for maintaining all required professional licensures or certifications in good standing, which is generally a condition of reimbursement in GHC 38 Programs and in private insurance, and for appropriately recording and documenting the services that they provide. We use this information to seek reimbursement for their services from third-party payors.
GHC Programs may also suspend our payments pending an audit or investigation, which could last for an extended period of time. If we are not reimbursed fully or in a timely manner 44 for such services or there is a finding that we were incorrectly reimbursed, our revenue, cash flows and financial condition could be materially, adversely affected.
GHC Programs may also suspend our payments pending an audit or investigation, which could last for an extended period of time. If we are not reimbursed fully or in a timely manner for such services or there is a finding that we were incorrectly reimbursed, our revenue, cash flows and financial condition could be materially, adversely affected.
Additionally, under certain circumstances, we could be excluded temporarily or permanently from certain commercial or GHC Programs. Any of these disruptions or breaches of security could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. 47 We may experience difficulties implementing or enhancing technology, software and processes.
Additionally, under certain circumstances, we could be excluded temporarily or permanently from certain commercial or GHC Programs. Any of these disruptions or breaches of security could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. We may experience difficulties implementing or enhancing technology, software and processes.
In addition, our reliance on a workforce in other countries exposes us to disruptions in the business, political and economic environment in those regions. Further, any changes to existing laws or the enactment of new legislation restricting offshore outsourcing in the United States may adversely affect our ability to outsource 40 functions to third-party offshore service providers.
In addition, our reliance on a workforce in other countries exposes us to disruptions in the business, political and economic environment in those regions. Further, any changes to existing laws or the enactment of new legislation restricting offshore outsourcing in the United States may adversely affect our ability to outsource functions to third-party offshore service providers.
It is possible that we may seek to enforce indemnification provisions in the future against sellers who may no longer have the financial wherewithal to satisfy their obligations to us. Accordingly, we may incur material liabilities for past activities of acquired businesses. • We could incur or assume indebtedness and issue equity in connection with acquisitions.
It is possible that we may seek to enforce indemnification provisions in the future against sellers who may no longer have the financial wherewithal to satisfy their obligations to us. Accordingly, we may incur material liabilities for past activities of acquired businesses. 40 • We could incur or assume indebtedness and issue equity in connection with acquisitions.
These acquisitions could affect our overall payor mix or operating results in future periods. • Acquisitions of practices and services companies could entail financial and operating risks not fully anticipated. Such acquisitions could divert management's attention and our resources. 41 • An acquisition could be subject to challenge under the antitrust laws either before or after it is consummated.
These acquisitions could affect our overall payor mix or operating results in future periods. • Acquisitions of practices and services companies could entail financial and operating risks not fully anticipated. Such acquisitions could divert management's attention and our resources. • An acquisition could be subject to challenge under the antitrust laws either before or after it is consummated.
We may be required to repay these agencies or private payors if a finding is made that we were incorrectly reimbursed within a certain time period, or we may become involved in disputes with payors and could be subjected to pre-payment and post-payment reviews, which can be time-consuming and result in non-payment or delayed payment for the services we provide.
We may be required to repay these agencies or private payors if a 43 finding is made that we were incorrectly reimbursed within a certain time period, or we may become involved in disputes with payors and could be subjected to pre-payment and post-payment reviews, which can be time-consuming and result in non-payment or delayed payment for the services we provide.
Similarly, individual and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth could limit market acceptance of our healthcare services when delivered remotely. If any of these events occur, it could have an adverse effect on our business, financial condition, results of operations and the trading price of our securities.
Individual and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth could limit market acceptance of our healthcare services when delivered remotely. If any of these events occur, it could have an adverse effect on our business, financial condition, results of operations and the trading price of our securities.
The following is a summary of the principal risk factors described in this section: • Our financial condition and results of operations have been and may continue to be materially adversely affected by the ongoing COVID-19 pandemic. • Economic conditions could have an adverse effect on our business. • The birth rate in the United States has declined in past years and may decline further. • Unfavorable changes or conditions could occur in the states where our operations are concentrated. • Potential healthcare reform efforts may have a significant effect on our business. • COVID-19 necessitated the delivery of certain healthcare services remotely via telehealth, which is subject to extensive federal and state regulation, as well as temporary waivers tied to the COVID-19 public health emergency, and certain flexibilities afforded to the provision and reimbursement of telehealth may be rolled back. • The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) and potential changes to it may have a significant effect on our business. • The Transparency in Coverage Final Rule, which requires certain health plans and issuers to publish pricing information on in-network and out-of-network providers and make price comparison and cost-sharing information available to insureds, could have a material impact on our business. • State budgetary constraints and the uncertainty over the future of Medicaid could have an adverse effect on our reimbursement from Medicaid programs. • Congress or states have, and may continue to, enact surprise billing or other laws restricting the amount out-of-network providers of services can charge and recover for such services. • Expanding eligibility of GHC Programs could adversely affect our reimbursement. • Government-funded programs, private insurers, or state laws and regulations may limit, reduce, or make retroactive adjustments to reimbursement amounts or rates. • We may become subject to billing investigations by federal and state government authorities and private insurers, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations. • Outsourcing internal business functions has significant risks, and our failure to manage these risks successfully could materially adversely affect our business, results of operations and financial condition. • We may not find suitable acquisition candidates or successfully integrate our acquisitions.
The following is a summary of the principal risk factors described in this section: • Economic conditions could have an adverse effect on our business. • The birth rate in the United States has declined in past years and may decline further. • Unfavorable changes or conditions could occur in the states where our operations are concentrated. • Potential healthcare reform efforts may have a significant effect on our business. • COVID-19 necessitated the delivery of certain healthcare services remotely via telehealth, which is subject to extensive federal and state regulation, as well as temporary waivers tied to the COVID-19 public health emergency, and certain flexibilities afforded to the provision and reimbursement of telehealth may be rolled back. • The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) and potential changes to it may have a significant effect on our business. • The Transparency in Coverage Final Rule, which requires certain health plans and issuers to publish pricing information on in-network and out-of-network providers and make price comparison and cost-sharing information available to insureds, could have a material impact on our business. • State budgetary constraints and the uncertainty over the future of Medicaid could have an adverse effect on our reimbursement from Medicaid programs. • Congress or states have, and may continue to, enact surprise billing or other laws restricting the amount out-of-network providers of services can charge and recover for such services. • Expanding eligibility of GHC Programs could adversely affect our reimbursement. • Government-funded programs, private insurers, or state laws and regulations may limit, reduce, or make retroactive adjustments to reimbursement amounts or rates. • We may become subject to billing investigations by federal and state government authorities and private insurers, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations. • Outsourcing internal business functions has significant risks, and our failure to manage these risks successfully could materially adversely affect our business, results of operations and financial condition. • We may not find suitable acquisition candidates or successfully integrate our acquisitions.
Business—“Government Regulation.” We may in the future become the subject of regulatory or other investigations, audits or proceedings, and our interpretations of applicable laws, rules and regulations may be challenged, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Business—“Government Regulation.” 37 We may in the future become the subject of regulatory or other investigations, audits or proceedings, and our interpretations of applicable laws, rules and regulations may be challenged, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
If we record additional impairment losses related to our goodwill in the future, it could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. We are subject to medical malpractice and other lawsuits that may not covered by insurance.
If we record additional impairment losses related to our goodwill in the future, it could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. 42 We are subject to medical malpractice and other lawsuits that may not covered by insurance.
We cannot predict with any assurance the ultimate effect of these laws and resulting changes to payments under GHC Programs, nor can we provide any assurance that they will not have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
We cannot predict with any assurance the ultimate effect of these laws and resulting changes to payments under GHC Programs, nor can we provide any assurance that they will not have a material adverse effect on our 30 business, financial condition, results of operations, cash flows and the trading price of our securities.
See Item 1. Business—“Other Legal Proceedings” and— “Professional and General Liability Coverage.” 43 The reserves that we have established related to our professional liability losses are subject to inherent uncertainties and if actual costs exceed our estimates this may lead to a reduction in our net earnings.
See Item 1. Business—“Other Legal Proceedings” and— “Professional and General Liability Coverage.” The reserves that we have established related to our professional liability losses are subject to inherent uncertainties and if actual costs exceed our estimates this may lead to a reduction in our net earnings.
Any retroactive adjustments to our 34 reimbursement amounts could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. In addition, our agreements with certain third-party payors are terminable for various reasons.
Any retroactive adjustments to our reimbursement amounts could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. In addition, our agreements with certain third-party payors are terminable for various reasons.
In addition, substantially all of our affiliated physicians have agreed not to compete within a specified 46 geographic area for a certain period after termination of employment. The law governing non-compete agreements and other forms of restrictive covenants varies from state to state.
In addition, substantially all of our affiliated physicians have agreed not to compete within a specified geographic area for a certain period after termination of employment. The law governing non-compete agreements and other forms of restrictive covenants varies from state to state.
To the extent our costs increase, we may not be able to recover our increased costs from these programs, and cost containment measures and market changes in non-government-funded insurance plans have generally restricted our ability to recover, or shift to non-governmental payors, these increased costs.
To the extent our costs increase, we may not be able to recover our increased costs from these programs, and cost containment measures and market changes in non-government-funded insurance plans have generally restricted 34 our ability to recover, or shift to non-governmental payors, these increased costs.
Risks Related to Governmental Changes and the Healthcare Regulatory Environment Potential healthcare reform efforts may have a significant effect on our business. We could be affected by potential changes to healthcare laws, rules and regulations, including changes to subsidies, healthcare insurance marketplaces and Medicaid expansion.
Risks Related to Governmental Changes and the Healthcare Regulatory Environment Potential healthcare reform efforts may have a significant effect on our business. We could be affected by potential changes to healthcare laws, rules and regulations, including changes to subsidies, healthcare insurance marketplaces and Medicaid expansion and contraction.
We currently, and from time to time in the future, may outsource portions of internal business functions, including our revenue cycle management functions, to third-party service providers. These functions are performed both domestically and in offshore locations, with our oversight.
We currently, and from time to time in the future may, outsource portions of internal business functions, including our revenue cycle management functions, to third-party service providers. These functions are performed 39 both domestically and in offshore locations, with our oversight.
The American Rescue Plan Act ("ARPA") enacted in March 2021, temporarily extended these tax credits to individuals with incomes above 400% of the federal poverty level and made the subsidy more generous for those below 400%.
The American Rescue Plan Act ("ARPA") enacted 29 in March 2021, temporarily extended these tax credits to individuals with incomes above 400% of the federal poverty level and made the subsidy more generous for those below 400%.
Changes to CHIP or the ACA’s expansion of Medicaid coverage could cause patients who otherwise would have participated in private healthcare insurance programs to participate in GHC Programs, or vice versa, or cause patients who otherwise would have been covered by CHIP or Medicaid to lose insurance coverage altogether.
Changes to CHIP or the ACA’s expansion of Medicaid coverage could cause patients who otherwise would have 33 participated in private healthcare insurance programs to participate in GHC Programs, or vice versa, or cause patients who otherwise would have been covered by CHIP or Medicaid to lose insurance coverage altogether.
Additionally, on December 1, 2022, the HHS Office for Civil Rights issued a bulletin on the requirements under HIPAA for online tracking technologies (e.g., cookies, pixels) to protect the privacy and security of health information.
On December 1, 2022, the HHS Office for Civil Rights issued a bulletin on the requirements under HIPAA for online tracking technologies (e.g., cookies, pixels) to protect the privacy and security of health information.
In addition, if we experience a higher rate of growth in compensation expense, our business, financial condition, results of operations, cash flows and the trading price of our securities could be adversely affected.
In 45 addition, if we experience a higher rate of growth in compensation expense, our business, financial condition, results of operations, cash flows and the trading price of our securities could be adversely affected.
Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers and disruption of our operations, including, without limitation, our billing processes.
Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers and disruption 46 of our operations, including, without limitation, our billing processes.
For example, in some states, we are dependent on our relationship with affiliated practices, which we do not own, to provide physician and other clinical services, and our business would be adversely affected if those relationships were disrupted or if our arrangements with our providers are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, or if our contractual relationships with such entities ceases to continue.
For example, in some states, we are dependent on our relationship with affiliated practices, which we do not own, to provide physician and other clinical services, and our business would be adversely affected if those relationships were disrupted or if our arrangements with our providers are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, or if our contractual relationships with such entities cease to continue.
Adverse developments in the United States could lead to a reduction in federal government expenditures, including GHC Programs in which we participate, such as Medicare and Medicaid.
Adverse economic developments in the United States could lead to a reduction in federal government expenditures, including GHC Programs in which we participate, such as Medicare and Medicaid.
In addition, we may experience reputational harms and a negative market perception when it comes to protecting patient data and other personal information that could influence our future operations. HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
In addition, we may experience reputational harm and a negative market perception when it comes to protecting patient data and other personal information that could influence our future operations. HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
Congress or states have, and may continue to, enact laws restricting the amount out-of-network providers of services can charge and recover for such services. In late 2020, Congress enacted legislation intended to protect patients from “surprise” medical bills when services are furnished by providers who are not in network with the patient’s insurer (the “No Surprises Act" or the "NSA").
Congress or states have, and may continue to, enact laws restricting the amount out-of-network providers of services can charge and recover for such services. In late 2020, Congress enacted legislation intended to protect patients from “surprise” medical bills when services are furnished by providers who are not in network with the patient’s insurer (the “No Surprises Act” or the NSA).
In addition, hospitals may from time to time 42 cancel or delay certain elective procedures in order to address increasing demand for beds by other patients.
In addition, hospitals may from time to time cancel or delay certain elective procedures in order to address increasing demand for beds by other patients.
A failure in or breach of our information systems as a result of cyber-attacks or other tactics could disrupt our business, has and may result in the disclosure or misuse of PHI, confidential or proprietary business information, and has or may cause financial loss, damage our reputation, increase our administrative expenses, and expose us to additional risk of liability to federal or state governments or individuals.
A failure in or breach of our information systems as a result of cybersecurity attacks or other tactics could disrupt our business, has and may result in the disclosure or misuse of PHI, confidential or proprietary business information, and has or may cause financial loss, damage our reputation, increase our administrative expenses, and expose us to additional risk of liability to federal or state governments or individuals.
Although we believe that we have reasonable and appropriate information security procedures and other safeguards in place, which are monitored and routinely tested internally and by external parties, as cyber threats continue to evolve, we have been and may be required to expend additional resources to continue to enhance our information security measures or to investigate and remediate any information security vulnerabilities.
Although we believe that we have reasonable and appropriate information security procedures and other safeguards in place, which are monitored and routinely tested internally and by external parties, as cybersecurity threats continue to evolve, we have been and may be required to expend additional resources to continue to enhance our information security measures or to investigate and remediate any information security vulnerabilities.
Risks Related to Macroeconomic Conditions 27 Economic conditions could have an adverse effect on our business. Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2022, the percentage of our patient service revenue being reimbursed under GHC Programs remained relatively stable as compared to the year ended December 31, 2021.
Risks Related to Macroeconomic Conditions Economic conditions could have an adverse effect on our business. 27 Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2023, the percentage of our patient service revenue being reimbursed under GHC Programs remained relatively stable as compared to the year ended December 31, 2022.
Government-funded programs, private insurers or state laws and regulations may limit, reduce or make retroactive adjustments to reimbursement amounts or rates. A significant portion of our net revenue is derived from payments made by GHC Programs, principally Medicare and Medicaid, including the managed care plans under the Medicare and Medicaid programs.
Government-funded programs, private insurers or state laws and regulations may limit, reduce or make retroactive adjustments to reimbursement amounts or rates. A significant portion of our net revenue is derived from payments made by GHC Programs, principally Medicaid, including the managed care plans under the Medicaid program.
Risks Related to Our Business Strategy We currently outsource, and from time to time in the future may outsource, a portion of our internal business functions to third-party providers. Outsourcing these functions has significant risks, and our failure to successfully manage these risks could materially adversely affect our business, results of operations and financial condition.
We currently outsource, and from time to time in the future may outsource, a portion of our internal business functions to third-party providers. Outsourcing these functions has significant risks, and our failure to successfully manage these risks could materially adversely affect our business, results of operations and financial condition.
HIPAA has ranges of increasing minimum penalty amounts tiered according to the entity’s degree of culpability. Breaches of unsecured PHI may also result in unexpected costs in the millions of dollars to us through third party litigation, contractual breaches, and breach notification and remediation.
HIPAA has ranges of increasing minimum penalty amounts tiered according to the entity’s degree of culpability. Breaches of unsecured PHI may also result in unexpected costs to us, upwards of millions of dollars, through third party litigation, contractual breach resolution, breach notification and remediation.
In addition, if the demand exceeds the supply for physicians and other clinicians and personnel either in general or in specific markets, we could experience an increase in compensation expense, including premium pay and agency labor costs.
Further, if the demand exceeds the supply for physicians and other clinicians and personnel either in general or in specific markets, we could experience an increase in compensation expense, including premium pay and agency labor costs.
We currently anticipate that our affiliated physicians will continue to be eligible to receive bonus payments in 2023 through participation in the MIPS, although the amounts of 31 such bonus payments are not expected to be material.
We currently anticipate that our affiliated physicians will continue to be eligible to receive bonus payments in 2024 through participation in the MIPS, although the amounts of such bonus payments are not expected 31 to be material.
Standards related to personal information, whether implemented pursuant to HIPAA, HITECH, state laws, federal or state action or otherwise, could have a significant effect on the manner in which we handle and our ability to collect, generate, and maintain personal information, including PHI, and how we communicate with payors, providers, patients and others.
Standards related to personal information, whether implemented pursuant to HIPAA, HITECH, state laws, federal or state agency actions or otherwise, could have a significant effect on the manner in which we handle and our ability to collect, generate, and maintain personal information, including PHI, and how we communicate with payors, providers, patients and others.
This bulletin outlined the HHS Office for Civil Rights’ position on the use of online tracking technology vendors, when certain information received by such vendors constitutes protected health information under HIPAA, and accordingly, when business associate agreements must be executed between covered entities, like the Company, and such vendors.
This bulletin outlined the HHS Office for Civil Rights’ position on the use of online tracking technology vendors, when certain information received by such vendors constitutes PHI under HIPAA, and accordingly, when business associate agreements must be executed between covered entities, like the Company, and such vendors.
In an effort to address shelter-in-place, quarantine, executive order or related measures to combat the spread of COVID-19, as well as the perceived need by individuals to continue such practices to avoid infection and to provide safe access to care for our patients, we have converted certain in-person visits to telehealth visits.
In an effort to address shelter-in-place, quarantine, executive order or related measures to combat the spread of COVID-19, as well as the perceived need by individuals to continue such practices to avoid infection and to provide safe access to care for our patients, we converted certain in-person visits to telehealth visits and have continued to provide services in this manner.
A majority of our net revenue in 2022 was generated by our operations in five states. In particular, Texas accounted for approximately 32% of our net revenue in 2022. See Item 1.
A majority of our net revenue in 2023 was generated by our operations in five states. In particular, Texas accounted for approximately 32% of our net revenue in 2023. See Item 1.
The outbreak of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, “COVID-19”) evolved into a global pandemic that spread to most regions of the world, including virtually all of the United States.
In early 2020, the outbreak of the SARS-Cov-2 virus and the COVID-19 disease that it causes (collectively, “COVID-19”) evolved into a global pandemic that spread to most regions of the world, including virtually all of the United States.
The ACA allowed states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. As of December 31, 2022, 39 states and the District of Columbia adopted the expansion of Medicaid eligibility.
The ACA allowed states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. As of December 31, 2023, 40 states, and the District of Columbia, adopted the expansion of Medicaid eligibility.
To the extent the COVID-19 pandemic materially adversely affects our business and financial results, it may also have the effect of significantly heightening many of the other risks associated with our business and indebtedness, including those described in this Form 10-K.
To the extent the COVID-19 pandemic or any future pandemic or outbreak materially adversely affects our business and financial results, it may also have the effect of significantly heightening many of the other risks associated with our business and indebtedness, including those described in this Form 10-K.
Effective January 1, 2022, if the patient’s insurance plan is subject to the NSA, providers are not permitted to send patients an unexpected or “surprise” medical bill that arises from out-of-network emergency care provided at an out-of-network facility or at in-network facilities by out-of-network providers and out-of-network nonemergency care provided at in-network facilities without the patient’s informed consent.
Effective January 1, 2022, if the patient’s insurance plan is subject to the NSA, providers are not permitted to send patients an unexpected or “surprise” medical bill that arises from out-of-network emergency care provided at certain out-of-network facilities or at certain in-network facilities by out-of-network emergency providers, as well as out-of-network nonemergency care provided at certain in-network facilities without the patient’s informed consent.
While we are taking steps to manage our growth, our future results of operations could be adversely affected if we are unable to do so effectively. Hospitals or other customers may terminate their agreements with us, our physicians may lose the ability to provide services in hospitals or administrative fees paid to us by hospitals may be reduced.
Our future results of operations could be adversely affected if we are unable to manage our growth effectively. 41 Hospitals or other customers may terminate their agreements with us, our physicians may lose the ability to provide services in hospitals or administrative fees paid to us by hospitals may be reduced.
Beginning in 2020, the Merit-based Incentive Payment System (“MIPS”) allowed eligible physicians to receive incentive payments based on the achievement of certain quality and cost metrics, among other measures, and be reduced for those who are underperforming against those same metrics and measures.
The Merit-based Incentive Payment System (“MIPS”) allows eligible physicians to receive incentive payments based on the achievement of certain quality and cost metrics, among other measures, and be reduced for those who are underperforming against those same metrics and measures.
Our compliance with these changing and increasingly burdensome and sometimes conflicting regulations and requirements may cause us to incur substantial costs or require us to change our business practices, which may impact our financial condition.
Our compliance with frequently changing and increasingly burdensome regulations and requirements may cause us to incur substantial costs or require us to change our business practices, which may impact our financial condition.
First, certain health plans and insurers will be required to publish on a public website machine-readable files containing information on their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.
First, as of July 1, 2022, certain health plans and insurers are required to publish on a public website machine-readable files containing information on their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.
In addition, we have and may incur significant legal fees to pursue enforcement of such agreements and restrictive covenants. Further, the Federal Trade Commission issued a proposed rule on January 5, 2023 that would prohibit employers from using non-compete clauses with workers.
In addition, we have and may incur significant legal fees to pursue enforcement of such agreements and restrictive covenants. Further, the Federal Trade Commission issued a proposed rule on January 5, 2023 that would prohibit employers from using non-compete clauses with workers and certain states have enacted or proposed prohibitions on using non-compete clauses with workers, including healthcare providers.
In addition, violations of these laws are punishable by monetary fines, civil and criminal penalties, exclusion from participation in GHC Programs, and forfeiture of amounts collected in violation of such laws and regulations, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Business—“Government Regulation—Fraud and Abuse Provisions” and “—Government Regulatory Requirements.” In addition, violations of these laws are punishable by monetary fines, civil and criminal penalties, exclusion from participation in GHC Programs, and forfeiture of amounts collected in violation of such laws and regulations, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
These measures could limit the amount we can charge and recover for services we furnish where we provide care within healthcare facilities that participate with a patient’s insurer, but we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
For instance, on December 2, 2020, both CMS and the Department of Health and Human Services Office of Inspector General (“OIG”) issued Final Rules revising the federal anti-kickback statute, the CMPL, and the Stark Law regulations to foster arrangements that would promote care coordination, advance the delivery of value-based care, and protect consumers from harms caused by fraud and abuse through additional new statutory definitions, safe 39 harbors, and exceptions.
For instance, on December 2, 2020, both CMS and OIG issued Final Rules revising the federal anti-kickback statute, the CMPL, EKRA, and the Stark Law regulations to foster arrangements that would promote care coordination, advance the delivery of value-based care, and protect consumers from harms caused by fraud and abuse through additional new statutory definitions, safe harbors, and exceptions.
Overall, our operating results were significantly impacted by the COVID-19 pandemic beginning in mid-March 2020, but volumes began to normalize in May 2020 and substantially recovered during the months of June 2020 through December 2020. During 2021 and 2022, volumes across our services returned to pre-COVID-19 levels.
Overall, our operating results were significantly impacted by the COVID-19 pandemic beginning in mid-March 2020, but volumes began to normalize in May 2020 and substantially recovered during the months of June 2020 through December 2020.
Future declines in births are possible, particularly if there is an economic recession, and could have an adverse effect on our patient volumes, net revenue, results of operations, cash flows, financial condition and the trading price of our securities.
Future declines in births are possible, particularly if there is an economic recession, and could have an adverse effect on our patient volumes, net revenue, results of operations, cash flows, financial condition and the trading price of our securities. Unfavorable changes or conditions could occur in the states where our operations are concentrated.
In addition, information security risks have generally increased in recent years, and in particular during COVID-19, because of new technologies and the increased activities of perpetrators of cyber-attacks resulting in the theft of protected health, business or financial information.
In addition, information security risks have generally increased in recent years because of new technologies and the increased activities of perpetrators of cybersecurity attacks resulting in the theft of protected health, business or financial information.
In addition to the laws above, we may see more stringent state and federal privacy legislation in 2023 and beyond, including potential changes to HIPAA, the enactment of a broad federal consumer privacy law, and the enactment of broad consumer privacy laws in various states.
In addition to the laws above, we may see more stringent state and federal privacy legislation in future years, including potential changes to HIPAA, the enactment of a broad federal consumer privacy laws, and the enactment of broad consumer privacy laws or health privacy laws in various states.
The value of our common stock may fluctuate. There has been significant volatility in the market price of securities of healthcare companies generally that we believe in many cases has been unrelated to operating performance.
There has been significant volatility in the market price of securities of healthcare companies generally that we believe in many cases has been unrelated to operating performance.
We compete with many types of healthcare providers, including teaching, research and government institutions, hospitals and health systems and other practice and services groups, for the services of qualified clinicians. The U.S. is currently experiencing and is expected to continue to experience a nationwide healthcare professional shortage, particularly as healthcare providers burn out from their work during the COVID-19 pandemic.
We compete with many types of healthcare providers, including teaching, research and government institutions, hospitals and health systems and other practice and services groups, for the services of qualified clinicians. The U.S. is currently experiencing and is expected to continue to experience a nationwide healthcare professional shortage.
Any legislative or administrative change to the current healthcare delivery or financing systems could have a material adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.
Changes resulting from these proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Second, certain health plans and issuers must begin reporting to their covered members certain pricing information (including the in-network rate and out-of-network allowed amounts) and cost-sharing obligations for covered items and services. This information must be reported for 500 items and services as of January 1, 2023 and for all items and services by January 1, 2024.
Second, as of January 1, 2023, certain health plans and issuers must report to their covered members certain pricing information (including the in-network rate and out-of-network allowed amounts) and cost-sharing obligations for covered items and services.
As of December 31, 2022 , our total indebtedness was $644.6 million, of which $400.0 million was at fixed interest rates and $244.6 million was at variable rates. We also had $446.0 million of additional borrowing capacity under our revolving line of credit which was subject to a variable interest rate.
As of December 31, 2023 , our total indebtedness was $628.1 million, of which $400.0 million was at fixed interest rates and $228.1 million was at variable rates. We also had $450.0 million of additional borrowing capacity under our revolving line of credit which was subject to a variable interest rate.
Business—“Geographic Coverage.” Adverse changes or conditions affecting these particular states, such as healthcare reforms, changes in laws and regulations, increases in unreimbursed services arising from services furnished to undocumented noncitizens, reduced Medicaid eligibility or reimbursements and government investigations, economic conditions, weather conditions, and natural disasters may have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Business—“Geographic Coverage.” Adverse changes or conditions affecting these particular states, such as healthcare reforms, changes in laws and regulations, increases in unreimbursed services arising from services furnished to undocumented noncitizens, reduced Medicaid eligibility or reimbursements and government investigations, economic conditions, weather conditions, and natural disasters may have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. 28 Our financial condition and results of operations have been and may continue to be materially adversely affected by the coronavirus pandemic (COVID-19) and its variants, and any future pandemics or outbreaks.
Becerra , the plaintiffs argue that the law’s requirement that insurance cover certain preventive services is unconstitutional. In September 2022, a federal district court in Texas ruled in favor of the plaintiffs, finding, among other things, that the requirement that self-funded plans and insurers cover certain preventive services violates the plaintiffs' rights under the Religious Freedom Restoration Act.
In September 2022, a federal district court in Texas ruled partly in favor of the plaintiffs and partly in favor of the Department of Health and Human Services, which is defending the ACA, finding, among other things, that the requirement that self-funded plans and insurers cover certain preventive services violates the plaintiffs' rights under the Religious Freedom Restoration Act.
Some states may seek to maintain expanded eligibility and to do so could offset the cost by further reducing payments to providers of services. In some states, we could experience delayed or reduced Medicaid payment for services furnished to program enrollees.
Some states may seek to maintain expanded eligibility and could offset the cost by further reducing payments to providers of services. In some states, we could experience delayed or reduced Medicaid payment for services furnished to program enrollees. Moreover, Democrats in Congress have sought to expand Medicaid or Medicaid-like coverage in states that have not yet expanded Medicaid.
The foregoing and other continued disruptions to our business as a result of COVID-19 or any future pandemic could result in a material adverse effect on our business, results of operations, financial condition, prospects and the trading prices of our securities. Unfavorable changes or conditions could occur in the states where our operations are concentrated.
The foregoing and other continued disruptions to our business as a result of COVID-19 or any future pandemic or outbreak could result in a material adverse effect on our business, results of operations, financial condition, prospects and the trading prices of our securities. The value of our common stock may fluctuate.
For example, HIPAA limits how covered entities and business associates may use and disclose PHI, provides certain rights to individuals with respect to their PHI, and imposes certain security requirements with respect to PHI and information systems containing PHI; • HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of PHI, including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI.
For example, HIPAA and the HITECH limit how covered entities and business associates may use and disclose PHI, provides certain rights to individuals with respect to their PHI, and imposes certain security requirements with respect to PHI and information systems containing PHI, among other things; • HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of PHI, including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI; • Other federal and state laws establish additional requirements for protecting the privacy and security of personal information, including health information, and in many cases are not preempted by HIPAA.
These requirements remain subject to change, and we cannot predict how the availability of this health pricing information may impact our business operations and patient volumes.
These requirements remain subject to change, and we cannot predict how the availability of this health pricing information may impact our business operations and patient volumes. Moreover, Congress is considering legislation that imposes additional transparency requirements on providers.
Also under the NSA, out of network providers will be paid an amount determined by the patient’s insurer for services rendered in the emergency care setting; if a provider is not satisfied with the amount paid for the services, the provider can pursue recourse through an independent dispute resolution ("IDR") process.
For claims subject to the NSA, including many emergency care services, out of network providers are paid an amount determined by the patient’s insurer; if a provider is not satisfied with the amount paid for the services, the provider can pursue recourse through an independent dispute resolution (“IDR”) process.
Under current accounting standards, goodwill is tested for impairment on at least an annual basis and more frequently if impairment indicators exist, and we have been subject to impairment losses as circumstances have changed after acquisition.
Under current accounting standards, goodwill is tested for impairment on at least an annual basis and more frequently if impairment indicators exist, and we have been subject to impairment losses as circumstances have changed after acquisition. For example, during the fourth quarter of 2023, we recorded a non-cash impairment charge of $148.3 million.
Business—“Government Investigations.” The healthcare industry is highly regulated, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations. 35 The healthcare industry and physicians’ medical practices, including the healthcare and other services that we and our affiliated physicians provide, are subject to extensive and complex federal, state and local laws, rules and regulations, compliance with which imposes substantial costs on us.
The healthcare industry and physicians’ medical practices, including the healthcare and other services that we and our affiliated physicians provide, are subject to extensive and complex federal, state and local laws, rules and regulations, compliance with which imposes substantial costs on us.
Business— “Government Regulation—Fraud and Abuse Provisions.” Further, identified overpayments from Medicare or Medicaid must be refunded to the government within 60 days of identification or the entity could be held liable under the federal FCA, including for treble damages and substantial civil penalties.
Business— “Government Regulation—Fraud and Abuse Provisions.” Further, identified overpayments from Medicare or Medicaid must be refunded to the government within 60 days of identification or the entity could be held liable under the federal False Claims Act (“FCA”), including for treble damages and substantial civil penalties, currently set at $13,946 up to $27,894 per false claim or statement for penalties assessed after January 15, 2024.
This inability to use our information management systems at hospital locations may have an adverse effect on our business, financial condition, results of operations and cash flows.
This inability to use our information management systems at hospital locations may have an adverse effect on our business, financial condition, results of operations and cash flows. Federal and state laws concerning the privacy and security of personal information may increase our costs and limit our ability to collect and use that information.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item is included in and incorporated herein by reference to Item 1. Business of this Form 10-K under “Government Investigations” and “Other Legal Proceedings.” ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 50 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item is included in and incorporated herein by reference to Item 1. Business of this Form 10-K under “Government Investigations” and “Other Legal Proceedings.” ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEquity Compensation Plans Information regarding equity compensation plans is set forth in Item 12 of this Form 10-K and is incorporated herein by reference. 53
Biggest changeRecent Sales of Unregistered Equity Securities During the three months ended December 31, 2023, we did not sell any unregistered shares of our equity securities. Equity Compensation Plans Information regarding equity compensation plans is set forth in Item 12 of this Form 10-K and is incorporated herein by reference. 53
We believe that the number of beneficial owners of our common stock is greater than the number of record holders because a significant number of shares of our common stock is held through brokerage firms in “street name.” Dividend Policy We did not declare or pay any cash dividends on our common stock in 2022, 2021, or 2020.
We believe that the number of beneficial owners of our common stock is greater than the number of record holders because a significant number of shares of our common stock is held through brokerage firms in “street name.” Dividend Policy We did not declare or pay any cash dividends on our common stock in 2023, 2022, or 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Liquidity and Capital Resources.” 51 Performance Graph The following graph compares the cumulative total shareholder return on $100 invested on December 31, 2017 in our common stock against the cumulative total return of the S&P 500 Index, S&P 600 Health Care Index, and the NYSE Composite Index.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Liquidity and Capital Resources.” 52 Performance Graph The following graph compares the cumulative total shareholder return on $100 invested on December 31, 2018 in our common stock against the cumulative total return of the S&P 500 Index, S&P 600 Health Care Index, and the NYSE Composite Index.
The returns are calculated assuming reinvestment of dividends. The graph covers the period from December 31, 2017 through December 31, 2022. The stock price performance included in the graph is not necessarily indicative of future stock price performance.
The returns are calculated assuming reinvestment of dividends. The graph covers the period from December 31, 2018 through December 31, 2023. The stock price performance included in the graph is not necessarily indicative of future stock price performance.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “MD.” As of February 10, 2023, we had 190 holders of record of our common stock, and the closing sales price on that date for our common stock was $14.95 per share.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “MD.” As of February 15, 2024, we had 193 holders of record of our common stock, and the closing sales price on that date for our common stock was $9.36 per share.
Removed
Base Period Years Ended December 31, Company/Index 2017 2018 2019 2020 2021 2022 Pediatrix Medical Group, Inc. $ 100.00 $ 61.75 $ 52.00 $ 45.92 $ 50.92 $ 27.81 S&P 500 Index $ 100.00 $ 93.76 $ 120.84 $ 140.49 $ 177.98 $ 143.61 S&P 600 Health Care $ 100.00 $ 109.77 $ 131.87 $ 173.30 $ 183.28 $ 134.84 NYSE Composite Index $ 100.00 $ 88.80 $ 108.62 $ 113.40 $ 134.00 $ 118.55 Issuer Purchases of Equity Securities During the three months ended December 31, 2022, we withheld 98,932 shares of our common stock to satisfy minimum statutory withholding obligations in connection with the vesting of restricted stock. 52 Period Total Number of Shares Repurchased (a) 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) October 1 – October 31, 2022 — $ — — (a) November 1 – November 30, 2022 — — — (a) December 1 – December 31, 2022 98,932 (b) 14.86 — (a) Total 98,932 $ 14.86 — (a) a) We have two active repurchase programs.
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Base Period Years Ended December 31, Company/Index 2018 2019 2020 2021 2022 2023 Pediatrix Medical Group, Inc. $ 100.00 $ 84.21 $ 74.36 $ 82.45 $ 45.03 $ 28.18 S&P 500 Index $ 100.00 $ 128.88 $ 149.83 $ 189.82 $ 153.16 $ 190.27 S&P 600 Health Care $ 100.00 $ 120.14 $ 157.88 $ 166.97 $ 122.84 $ 119.57 NYSE Composite Index $ 100.00 $ 122.32 $ 127.70 $ 150.90 $ 133.50 $ 148.17 Issuer Purchases of Equity Securities During the three months ended December 31, 2023, we did not repurchase any shares of our equity securities.
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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 programs, which is estimated to be approximately 1.1 million shares for 2023.
Removed
Our August 2018 repurchase program allows us to repurchase up to an additional $500.0 million of shares of our common stock, of which we repurchased $494.5 million as of December 31, 2022. b) Shares withheld to satisfy minimum statutory withholding obligations of $1.5 million in connection with the vesting of restricted stock.
Removed
The amount and timing of any future repurchases will depend upon several factors, including general economic and market conditions and trading restrictions. Recent Sales of Unregistered Equity Securities During the three months ended December 31, 2022, we did not sell any unregistered shares of our equity securities.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeYears Ended December 31, 2022 2021 2020 Income (loss) from continuing operations attributable to Pediatrix Medical Group, Inc. $ 62,568 $ 108,014 $ (9,580 ) Interest expense 39,695 68,722 110,482 Gain on sale of building — (7,280 ) — Loss on early extinguishment of debt 57,016 14,532 — Income tax provision 18,806 27,241 16,728 Depreciation and amortization expense 35,636 32,147 28,441 Transformational and restructuring related expenses 27,312 22,100 73,801 Adjusted EBITDA from continuing operations attributable to Pediatrix Medical Group, Inc. $ 241,033 $ 265,476 $ 219,872 62 Years Ended December 31, 2022 2021 2020 Weighted average diluted shares outstanding 84,121 85,828 83,395 Income (loss) from continuing operations and diluted (loss) income from continuing operations per share attributable to Pediatrix Medical Group, Inc. $ 62,568 $ 0.74 $ 108,014 $ 1.26 $ (9,580 ) $ (0.11 ) Adjustments (1) : Amortization (net of tax of $2,242, $2,643, and $2,294) 6,727 0.08 7,928 0.09 6,882 0.08 Stock-based compensation (net of tax of $3,596, $4,742, and $5,281) 10,788 0.13 14,226 0.16 15,843 0.19 Transformational and restructuring related expenses (net of tax of $6,828, $5,525, and $18,450) 20,484 0.24 16,575 0.19 55,351 0.66 Gain on sale of building (net of tax of $1,820) — — (5,460 ) (0.06 ) — — Loss on early extinguishment of debt (net of tax of $14,254 and $3,633) 42,762 0.51 10,899 0.13 — — Net impact from discrete tax events (3,370 ) (0.04 ) (12,156 ) (0.14 ) 10,541 0.13 Adjusted income and diluted EPS from continuing operations attributable to Pediatrix Medical Group, Inc. $ 139,959 $ 1.66 $ 140,026 $ 1.63 $ 79,037 $ 0.95 (1) A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the years ended December 31, 2022, 2021 and 2020, respectively.
Biggest changeYears Ended December 31, 2023 2022 2021 (Loss) income from continuing operations attributable to Pediatrix Medical Group, Inc. $ (60,408 ) $ 62,568 $ 108,014 Interest expense 42,075 39,695 68,722 Gain on sale of building — — (7,280 ) Loss on early extinguishment of debt — 57,016 14,532 Income tax provision 12,049 18,806 27,241 Depreciation and amortization expense 36,171 35,636 32,147 Transformational and restructuring related expenses 2,219 27,312 22,100 Impairment losses 168,312 — — Adjusted EBITDA from continuing operations attributable to Pediatrix Medical Group, Inc. $ 200,418 $ 241,033 $ 265,476 Years Ended December 31, 2023 2022 2021 Weighted average diluted shares outstanding 82,201 84,121 85,828 (Loss) income from continuing operations and diluted income from continuing operations per share attributable to Pediatrix Medical Group, Inc. $ (60,408 ) $ (0.73 ) $ 62,568 $ 0.74 $ 108,014 $ 1.26 Adjustments (1) : Amortization (net of tax of $2,010, $2,242, and $2,643) 6,032 0.07 6,727 0.08 7,928 0.09 Stock-based compensation (net of tax of $3,081, $3,596, and $4,742) 9,242 0.11 10,788 0.13 14,226 0.16 Transformational and restructuring related expenses (net of tax of $555, $6,828, and $5,525) 1,664 0.02 20,484 0.24 16,575 0.19 Impairment losses (net of tax of $42,078) 126,234 1.54 — — — — Gain on sale of building (net of tax of $1,820) — — — — (5,460 ) (0.06 ) Loss on early extinguishment of debt (net of tax of $14,254 and $3,633) — — 42,762 0.51 10,899 0.13 Net impact from discrete tax events 20,825 0.25 (3,370 ) (0.04 ) (12,156 ) (0.14 ) Adjusted income and diluted EPS from continuing operations attributable to Pediatrix Medical Group, Inc. $ 103,589 $ 1.26 $ 139,959 $ 1.66 $ 140,026 $ 1.63 (1) A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the years ended December 31, 2023, 2022 and 2021, respectively. 62 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain information related to our continuing operations expressed as a percentage of our net revenue: Years Ended December 31, 2023 2022 Net revenue 100.0 % 100.0 % Operating expenses: Practice salaries and benefits 72.6 70.1 Practice supplies and other operating expenses 6.3 6.2 General and administrative expenses 11.4 11.7 Gain on sale of building — — Depreciation and amortization 1.8 1.8 Transformational and restructuring related expenses 0.1 1.4 Goodwill impairment 7.4 — Total operating expenses 99.6 91.2 Income from operations 0.4 8.8 Non-operating expense, net (2.8 ) (4.6 ) (Loss) income from continuing operations before income taxes (2.4 ) 4.2 Income tax provision (0.6 ) (1.0 ) (Loss) income from continuing operations (3.0 )% 3.2 % Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022 Our net revenue attributable to continuing operations was $1.99 billion for the year ended December 31, 2023, as compared to $1.97 billion for 2022.
Financing Activities During the year ended December 31, 2022, our net cash used in financing activities for continuing operations of $487.6 million primarily consisted of $1.0 billion related to the redemption of the 2027 Notes, including the call premium, the repurchase of $88.5 million of our common stock, payments of $9.4 million on our Term A Loan (as defined below), and payments for financing costs of $8.6 million, partially offset by $400.0 million in proceeds from the issuance of the 2030 Notes and $250.0 million from our Term A Loan.
During the year ended December 31, 2022, our net cash used in financing activities for continuing operations of $487.6 million primarily consisted of $1.0 billion related to the redemption of the 2027 Notes, including the call premium, the repurchase of $88.5 million of our common stock, payments of $9.4 million on our Term A Loan (as defined below), and payments for financing costs of $8.6 million, partially offset by $400.0 million in proceeds from the issuance of the 2030 Notes and $250.0 million from our Term A Loan.
We used the net proceeds from the issuance of the 2030 Notes, together with $100 million drawn under our Revolving Credit Line (as defined below), $250 million of Term A Loan (as defined below) and approximately $308 million of cash on hand, to redeem (the “Redemption”) our 2027 Notes, which had an outstanding principal balance of $1.0 billion, and to pay costs, fees and expenses associated with the Redemption and the Credit Agreement Amendment (as defined below).
We used the net proceeds from the issuance of the 2030 Notes, together with $100.0 million drawn under our Revolving Credit Line (as defined below), $250.0 million of Term A Loan and approximately $308.0 million of cash on hand, to redeem (the “Redemption”) the 2027 Notes, which had an outstanding principal balance of $1.0 billion, and to pay costs, fees and expenses associated with the Redemption and the Credit Agreement Amendment (as defined below).
We anticipate that funds generated from operations, together with our current cash on hand and funds available under our Amended Credit Agreement, will be sufficient to finance our working capital requirements, fund anticipated acquisitions and capital expenditures, fund expenses related to our transformational and restructuring activities, fund our share repurchase programs and meet our contractual obligations as described above for at least the next 12 months from the date of issuance of this Form 10-K.
We anticipate that funds generated from operations, together with our current cash on hand and funds available under our Amended Credit Agreement, will be sufficient to finance our working capital requirements, fund anticipated acquisitions and capital expenditures, fund expenses related to our transformational and restructuring activities, fund our share repurchase programs and meet our contractual obligations as described above for at least the next 12 months from the date of issuance of this Form 10-K. 67
The Credit Agreement, as amended by the Credit Agreement Amendment (the “Amended Credit Agreement”), among other things, (i) refinanced the prior unsecured revolving credit facility with a $450 million unsecured revolving credit facility, including a $37.5 million sub-facility for the issuance of letters of credit (the “Revolving Credit Line”), and a new $250 million term A loan facility (“Term A Loan”) and (ii) removed JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement and appointed Bank of America, N.A. as the administrative agent for the lenders.
The Credit Agreement, as amended by the Credit Agreement Amendment (the “Amended Credit Agreement”), among other things, (i) refinanced the prior unsecured revolving credit facility with a $450.0 million unsecured revolving credit facility, including a $37.5 million sub-facility for the issuance of letters of credit (the “Revolving Credit Line”), and a new $250.0 million term A loan facility (“Term A Loan”) and (ii) removed JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement and appointed Bank of America, N.A. as the administrative agent for the lenders under the Amended Credit Agreement.
The Amended Credit Agreement contains customary covenants and restrictions, including covenants that require us to maintain a minimum interest coverage ratio, a maximum consolidated total consolidated net leverage ratio and to comply with laws, and restrictions on the ability to pay dividends, incur indebtedness or liens and make certain other distributions subject to baskets and exceptions, in each case, as specified therein.
The Amended Credit Agreement contains customary covenants and restrictions, including covenants that require us to maintain a minimum interest coverage ratio, a maximum consolidated net leverage ratio and to comply with laws, and restrictions on the ability to pay dividends, incur indebtedness or liens and make certain other distributions subject to baskets and exceptions, in each case, as specified therein.
Because stock option exercises and purchases under the ESPP and SPP are dependent on several factors, including the market price of our common stock, we cannot predict the timing and amount of any future proceeds. 69 We maintain professional liability insurance policies with third-party insurers, subject to self-insured retention, exclusions and other restrictions.
Because stock option exercises and purchases under the ESPP and SPP are dependent on several factors, including the market price of our common stock, we cannot predict the timing and amount of any future proceeds. We maintain professional liability insurance policies with third-party insurers, subject to self-insured retention, exclusions and other restrictions.
At our option, borrowings under the Amended Credit Agreement bear interest at (i) the Alternate Base Rate (defined as the highest of (a) the prime rate as announced by Bank of America, N.A., (b) the Federal Funds Rate plus 0.50% and (c) Term SOFR for an interest period of one month plus 1.00% with a 1.00% floor) plus an applicable margin rate of 0.50% for the first two fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 0.125% to 0.750% based on our consolidated net leverage ratio or (ii) Term SOFR rate (calculated as the Secured Overnight Financing Rate published on the applicable Reuters screen page plus a spread adjustment of 0.10%, 0.15% or 0.25% depending on if we select a one-month, three-month or six-month interest period, respectively, for the applicable loan with a 0% floor), plus an applicable margin rate of 1.50% for the first two full fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 1.125% to 1.750% based on our consolidated net leverage ratio.
At our option, borrowings under the Amended Credit Agreement bear interest at (i) the Alternate Base Rate (defined as the highest of (a) the prime rate as announced by Bank of America, N.A., (b) the Federal Funds Rate plus 0.50% and (c) Term Secured Overnight Financing Rate (“SOFR”) for an interest period of one month plus 1.00% with a 1.00% floor) plus an applicable margin rate of 0.50% for the first two fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 0.125% to 0.750% based on our consolidated net leverage ratio or (ii) Term SOFR rate (calculated as the Secured Overnight Financing Rate published on the applicable Reuters screen page plus 66 a spread adjustment of 0.10%, 0.15% or 0.25% depending on if we select a one-month, three-month or six-month interest period, respectively, for the applicable loan with a 0% floor), plus an applicable margin rate of 1.50% for the first two full fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 1.125% to 1.750% based on our consolidated net leverage ratio.
The impact of this change does not include adjustments that may be required as a result of audits, inquiries and investigations from government authorities and agencies and other third-party payors that may occur in the ordinary course of business. See Note 19 to our Consolidated Financial Statements in this Form 10-K.
The impact of this change 60 does not include adjustments that may be required as a result of audits, inquiries and investigations from government authorities and agencies and other third-party payors that may occur in the ordinary course of business. See Note 19 to our Consolidated Financial Statements in this Form 10-K.
The share repurchase program allows us to make open market purchases from time-to-time based on general economic and market conditions and trading restrictions. The repurchase program also allows for the repurchase of shares of our common stock to offset the dilutive impact from the issuance of shares, if any, related to the Company’s acquisition program.
The share repurchase program allows us to make open market purchases from time-to-time based on general economic and market conditions and trading restrictions. The repurchase program also allows for the repurchase of shares of our 57 common stock to offset the dilutive impact from the issuance of shares, if any, related to the Company’s acquisition program.
Quarterly Results 59 We have historically experienced and expect to continue to experience quarterly fluctuations in net revenue and net income. These fluctuations are primarily due to the following factors: • There are fewer calendar days in the first and second quarters of the year, as compared to the third and fourth quarters of the year.
Quarterly Results We have historically experienced and expect to continue to experience quarterly fluctuations in net revenue and net income. These fluctuations are primarily due to the following factors: • There are fewer calendar days in the first and second quarters of the year, as compared to the third and fourth quarters of the year.
Contractual adjustments result from the difference between the physician rates for services performed and the reimbursements by GHC Programs and third-party insurance payors for such services. The evaluation of these historical and other factors involves 60 complex, subjective judgments.
Contractual adjustments result from the difference between the physician rates for services performed and the reimbursements by GHC Programs and third-party insurance payors for such services. The evaluation of these historical and other factors involves complex, subjective judgments.
Application of Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires estimates and assumptions that affect the reporting of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities.
Application of Critical Accounting Policies and Estimates 59 The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires estimates and assumptions that affect the reporting of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities.
D ue to the continued uncertainties surrounding the timeline of and impacts from COVID-19 and with multiple variant strains still circulating, we are unable to predict the ultimate impact on our business, financial condition, results of operations, cash flows and the trading price of our securities at this time.
However, d ue to the continued uncertainties surrounding the timeline of and impacts from COVID-19 and with variant strains still circulating, we are unable to predict the ultimate impact on our business, financial condition, results of operations, cash flows and the trading price of our securities at this time.
We evaluate the need for professional liability insurance reserves in excess of amounts estimated in our actuarial valuations on a routine basis, and as of December 31, 2022, based on our historical experience for continuing operations, a reasonably likely change of 4.0% to 10.0% in our estimates would result in an increase or decrease to net income of $3.1 million to $8.1 million.
We evaluate the need for professional liability insurance reserves in excess of amounts estimated in our actuarial valuations on a routine basis, and as of December 31, 2023, based on our historical experience for continuing operations, a reasonably likely change of 4.0% to 10.0% in our estimates would result in an increase or decrease to net income of $3.2 million to $8.1 million.
We have not recorded any material adjustments to prior period contractual adjustments and uncollectibles in the years ended December 31, 2022, 2021, or 2020. Some of our agreements require hospitals to pay us administrative fees.
We have not recorded any material adjustments to prior period contractual adjustments and uncollectibles in the years ended December 31, 2023, 2022, or 2021. Some of our agreements require hospitals to pay us administrative fees.
Investing Activities During the year ended December 31, 2022, our net cash used in investing activities for continuing operations of $57.0 million consisted primarily of capital expenditures of $29.7 million and acquisitions payments of $28.2 million.
During the year ended December 31, 2022, our net cash used in investing activities for continuing operations of $57.0 million consisted primarily of capital expenditures of $29.7 million and acquisition payments of $28.2 million.
At December 31, 2022, we believe we were in compliance, in all material respects, with the financial covenants and other restrictions applicable to us under the Amended Credit Agreement and the 2030 Notes.
At December 31, 2023, we believe we were in compliance, in all material respects, with the financial covenants and other restrictions applicable to us under the Amended Credit Agreement and the 2030 Notes.
These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1A.
We have 570 affiliated physicians who provide maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where our affiliated neonatal physicians practice.
We have 580 affiliated physicians who provide maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where our affiliated neonatal physicians practice.
The Credit Agreement, as amended by the Credit Agreement Amendment (the "Amended Credit Agreement"), matures on February 11, 2027 and is guaranteed on an unsecured basis by substantially all of our subsidiaries and affiliated professional contractors.
The Amended Credit Agreement matures on February 11, 2027 and is guaranteed on an unsecured basis by substantially all of our subsidiaries and affiliated professional contractors.
The exercise of employee stock options and the purchase of common stock by participants in our 1996 Non-Qualified Employee Stock Purchase Plan, as amended (the “ESPP”), and our 2015 Non-Qualified Stock Purchase Plan (the “SPP”) generated cash proceeds of $5.4 million, $6.9 million and $7.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.
The exercise of employee stock options and the purchase of common stock by participants in our 1996 Non-Qualified Employee Stock Purchase Plan, as amended (the “ESPP”), and our 2015 Non-Qualified Stock Purchase Plan (the “SPP”) generated cash proceeds of $4.9 million, $5.4 million and $6.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2022, our national network comprised approximately 2,600 affiliated physicians, including 1,330 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
At December 31, 2023, our national network comprised approximately 2,620 affiliated physicians, including 1,330 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
In August 2018, the Company announced that its Board of Directors had authorized the repurchase of up to $500.0 million of the Company’s common stock in addition to its existing share repurchase program, of which $94.0 million remained available for repurchase as of December 31, 2021.
In August 2018, the Company announced that its Board of Directors had authorized the repurchase of up to $500.0 million of the Company’s common stock in addition to its existing share repurchase program, of which $5.5 million remained available for repurchase as of December 31, 2022.
For example, the gross amount billed to patients covered under GHC Programs for the years ended December 31, 2022, 2021 and 2020 represented approximately 56% of our total gross patient service revenue. These percentages of gross revenue and the percentages of net revenue provided in the table above include the payor mix impact of acquisitions completed through December 31, 2022.
For example, the gross amount billed to patients covered under GHC Programs for the years ended December 31, 2023 and 2022 represented approximately 55% of our total gross patient service revenue. These percentages of gross revenue and the percentages of net revenue provided in the table above include the payor mix impact of acquisitions completed through December 31, 2023.
Medicaid Expansion The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level.
Medicaid Expansion The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the 56 federal poverty level. See Item 1.
No shares were purchased under this program during the twelve months ended December 31, 2022.
No shares were purchased under this program during the twelve months ended December 31, 2023.
The following is a summary of our payor mix, expressed as a percentage of net revenue from continuing operations, exclusive of administrative fees and miscellaneous revenue, for the periods indicated: Years Ended December 31, 2022 2021 2020 Contracted managed care 66% 68% 68% Government 26% 25% 27% Other third-parties 6% 5% 4% Private-pay patients 2% 2% 1% 100% 100% 100% The payor mix shown in the table above is not necessarily representative of the amount of services provided to patients covered under these plans.
The following is a summary of our payor mix, expressed as a percentage of net revenue from continuing operations, exclusive of administrative fees and miscellaneous revenue, for the periods indicated: Years Ended December 31, 2023 2022 Contracted managed care 67% 66% Government 26% 26% Other third-parties 5% 6% Private-pay patients 2% 2% 100% 100% The payor mix shown in the table above is not necessarily representative of the amount of services provided to patients covered under these plans.
In addition, there is a corresponding insurance receivable of $54.7 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.
In addition, there is a corresponding insurance receivable of $33.2 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.
Effective January 1, 2022, if the patient’s insurance plan is subject to the NSA, providers are not permitted to send patients an unexpected or “surprise” medical bill that arises from out-of-network emergency care provided at an out-of-network facility or at in-network facilities by out-of-network providers and out-of-network nonemergency care provided at in-network facilities without the patient’s informed consent.
Effective January 1, 2022, if the patient’s insurance plan or coverage is subject to the NSA, providers are not permitted to send patients an unexpected or “surprise” medical bill that arises from out-of-network emergency care provided at certain out-of-network facilities or at certain in-network facilities by out-of-network emergency providers, as well as nonemergency care provided at certain in-network facilities by out-of-network providers without the patient’s informed consent (as defined by the NSA).
CARES Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing up to $100 billion in aid to the healthcare industry to reimburse healthcare providers for lost revenue and expenses attributable to COVID-19.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including by providing aid to the healthcare industry to reimburse healthcare providers for lost revenue and expenses attributable to COVID-19.
Our net revenue, net income and operating cash flows may be materially and adversely affected if actual adjustments and uncollectibles exceed management’s estimated provisions as a result of changes in these factors. As of December 31, 2022, our DSO was 53.1 days.
Our net revenue, net income and operating cash flows may be materially and adversely affected if actual adjustments and uncollectibles exceed management’s estimated provisions as a result of changes in these factors. As of December 31, 2023, our DSO was 50.5 days.
Overall, our operating results were significantly impacted by COVID-19 beginning in mid-March 2020, but volumes began to normalize in mid-2020 and substantially recovered since that time with no material impacts from any COVID-19 variants in 2021 and 2022.
Overall, our operating results were significantly impacted by COVID-19 beginning in mid-March 2020, but volumes began to normalize in mid-2020 and substantially recovered throughout 2020 with no material impacts from COVID-19 or its variants since that time.
“Surprise” Billing Legislation In late 2020, Congress enacted legislation intended to protect patients from “surprise” medical bills when services are furnished by providers who are not in network with the patient’s insurer (the “No Surprises Act" or the "NSA").
“Surprise” Billing Legislation In late 2020, Congress enacted the No Surprises Act (“NSA”) legislation intended to protect patients from “surprise” medical bills when certain services are furnished by providers who are not in-network with the patient’s insurer.
The decrease in same-unit net revenue was comprised of a decrease of $50.2 million, or 2.7%, from net reimbursement-related factors, partially offset by an increase of $29.6 million, or 1.6%, related to patient service volumes.
The increase in same-unit net revenue was comprised of an increase of $37.5 million, or 2.0%, from net reimbursement-related factors, partially offset by a decrease of $2.7 million, or 0.1%, related to patient service volumes.
Also in connection with the Redemption, we amended and restated the Credit Agreement (the “Credit Agreement Amendment”) concurrently with the issuance of the 2030 Notes.
Also in connection with the Redemption, we amended and restated the Credit Agreement (the “Credit Agreement”), and such amendment and restatement (the “Credit Agreement Amendment”), concurrently with the issuance of the 2030 Notes.
We had approximately $1.55 billion in gross accounts receivable for continuing operations outstanding at December 31, 2022, and considering this outstanding balance, based on our historical experience, a reasonably likely change of 0.5% to 1.50% in our estimated collection rate would result in an impact to net revenue of $7.5 million to $22.4 million.
We had approximately $1.38 billion in gross accounts receivable for continuing operations outstanding at December 31, 2023, and considering this outstanding balance, based on our historical experience, a reasonably likely change of 0.5% to 1.50% in our estimated collection rate would result in an impact to net revenue of $6.6 million to $19.9 million.
We believe excluding the impacts from the transformational and restructuring related activity and gain on sale of building provides a more comparable view of our operating income and operating margin from continuing operations. Total non-operating expenses attributable to continuing operations were $91.3 million for the year ended December 31, 2022, as compared to $67.7 million for 2021.
We believe excluding the impacts from the goodwill impairment and transformational and restructuring related activity provides a more comparable view of our operating income and operating margin from continuing operations. Total non-operating expenses attributable to continuing operations were $55.7 million for the year ended December 31, 2023, as compared to $91.3 million for 2022.
For the year ended December 31, 2021, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude the impacts from the gain on sale of building and for the years ended December 31, 2022 and 2021, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude the impacts from loss on the early extinguishment of debt.
For the year ended December 31, 2021, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude the impacts from the gain on sale of building .
Our total liability related to professional liability risks at December 31, 2022 was $307.9 million, of which $32.2 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet.
Our total liability related to professional liability risks at December 31, 2023 was $283.3 million, of which $32.0 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet.
LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2022, we had $9.8 million of cash and cash equivalents attributable to continuing operations as compared to $387.4 million at December 31, 2021.
LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2023, we had $73.3 million of cash and cash equivalents attributable to continuing operations as compared to $9.8 million at December 31, 2022.
Under this share repurchase program, during the year ended December 31, 2022, the Company purchased 4.5 million shares of its common stock for $88.5 million, including $2.9 million to satisfy minimum statutory withholding obligations in connection with the vesting of restricted stock. As of December 31, 2022, $5.5 million remained available under this share repurchase program.
Under this share repurchase program, during the year ended December 31, 2023, the Company purchased 61,000 shares of its common stock for $0.9 million to satisfy minimum statutory withholding obligations in connection with the vesting of restricted stock. As of December 31, 2023, $4.6 million remained available under this share repurchase program.
Depreciation and amortization expense attributable to continuing operations was $35.6 million for the year ended December 31, 2022, as compared to $32.1 million for 2021.
Depreciation and amortization expense attributable to continuing operations was $36.2 million for the year ended December 31, 2023, as compared to $35.6 million for 2022.
At December 31, 2022, the Company had long term capital requirements comprised primarily of $400.0 million in senior notes, $70.7 million of operating lease liabilities and $12.9 million of finance lease liabilities. At December 31, 2022, our total liability for uncertain tax positions was $3.0 million.
At December 31, 2023, the Company had long term capital requirements comprised primarily of $400 million in senior notes, $76.5 million of operating lease liabilities and $11.3 million of finance lease liabilities. At December 31, 2023, our total liability for uncertain tax positions was $2.7 million.
Geographic Coverage During 2022, 2021 and 2020, approximately 65%, 62% and 62%, respectively, of our net revenue from continuing operations was generated by operations in our five largest states. During 2022, 2021 and 2020, our five largest states consisted of Texas, Florida, Georgia, California, and Washington.
Geographic Coverage During 2023 and 2022, approximately 67% and 65%, respectively, of our net revenue from continuing operations was generated by operations in our five largest states. During 2023 and 2022, our five largest states consisted of Texas, Florida, Georgia, California, and Washington. During both 2023 and 2022, our operations in Texas accounted for approximately 32% of our net revenue.
After excluding discrete tax impacts, for the years ended December 31, 2022 and 2021, our tax rates were 27.3% and 29.1%, respectively. We believe excluding discrete tax impacts on our tax rate provides a more comparable view of our effective income tax rate.
After excluding discrete tax impacts and goodwill impairment-related effects (for December 31, 2023 only), for the years ended December 31, 2023 and 2022, our tax rates were 27.9% and 27.3%, respectively. We believe excluding discrete tax impacts and goodwill impairment-related impacts on our tax rate provides a more comparable view of our effective income tax rate.
Any legislative or administrative change to the current healthcare financing system could have a material adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.
Changes resulting from various legal proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1A.
Adjusted earnings per share (“Adjusted EPS”) from continuing operations has also been further adjusted for these items and beginning with the first quarter of 2019 consists of diluted income (loss) from continuing operations per common and common equivalent share adjusted for amortization expense, stock-based compensation expense and transformational and restructuring related expenses.
Adjusted earnings per share (“Adjusted EPS”) from continuing operations has also been further adjusted for these items and consists of diluted income (loss) from continuing operations per common and common equivalent share adjusted for amortization expense, stock-based compensation expense, transformational and restructuring related expenses and any impacts from discrete tax events.
Adjusted EPS from continuing operations has been further adjusted to reflect the impacts from discrete tax events. We have included Adjusted EBITDA and Adjusted EPS in this Form 10-K because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions.
We have included Adjusted EBITDA and Adjusted EPS in this Form 10-K because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions.
Also under the NSA, out of network providers will be paid an amount determined by the patient’s insurer for services rendered in the emergency care setting; if a provider is not satisfied with the amount paid for the services, the provider can pursue recourse through an independent dispute resolution ("IDR") process.
For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an amount determined by the patient’s insurer; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution process.
The increase was primarily related to an increase in depreciation expense at our existing units for information technology and other equipment as well as for acquisitions, partially offset by lower amortization expenses related to intangible assets at our existing units.
The increase was primarily related to an increase in depreciation expense related to information technology equipment, partially offset by lower amortization expenses related to intangible assets, both at our existing units as well as a decrease in depreciation and amortization related to non-same unit activity.
However, because many factors can affect historical and future loss patterns, the determination of an appropriate professional liability reserve involves complex, subjective judgment, and actual results may vary significantly from estimates. Non-GAAP Measures In our analysis of our results of operations, we use certain non-GAAP financial measures.
However, because many factors can affect historical and future loss patterns, the determination of an appropriate professional liability reserve involves complex, subjective judgment, and actual results may vary significantly from estimates.
The increase in revenue of $60.8 million, or 3.2%, was primarily attributable to increases in revenue from net acquisitions, partially offset by a decrease in same-unit revenue. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue decreased by $20.6 million, or 1.1%.
The increase in revenue of $22.6 million, or 1.1%, was primarily attributable to an increase in same-unit revenue, partially offset by a decrease in revenue from net non-same unit activity. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $34.8 million, or 1.9%.
Our network also includes other pediatric subspecialists, including 240 physicians providing pediatric intensive care, 100 physicians providing pediatric cardiology care, 235 physicians providing hospital-based pediatric care, 55 physicians providing pediatric surgical care and urology services, 45 physicians providing pediatric urgent care, 10 physicians providing pediatric ear, nose and throat services, and four physicians providing pediatric ophthalmology services.
Our network also includes other pediatric subspecialists, including 230 physicians providing pediatric intensive care, 90 physicians providing pediatric cardiology care, 255 physicians providing hospital-based pediatric care, 65 physicians providing pediatric surgical care and urology services, 55 physicians providing pediatric urgent care, 10 physicians providing pediatric ear, nose and throat services, and three physicians providing pediatric ophthalmology services.
The Department of Health and Human Services (“HHS”) is administering this program, and our affiliated physician practices within continuing operations received an aggregate of $13.3 million, $26.1 million and $22.0 million in relief payments during the years ended December 31, 2022, 2021 and 2020, respectively.
The Department of Health and Human Services (“HHS”) administers this program, and our affiliated physician practices within continuing operations received an aggregate of $13.3 million in relief payments during the year ended December 31, 2022.
These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and make it more difficult for people to enroll.
These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll. See Item 1. Business – “Relationship With Our Partners – Government Regulatory Requirements” and see also Item 1A.
In addition, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, and we utilized this deferral option throughout 2020. We repaid all of these deferred social security taxes as of December 31, 2022. Under current tax law, net operating losses can be carried forward indefinitely.
In addition, the CARES Act also provided for deferred payment of the employer portion of social security taxes through the end of 2020, and we utilized this deferral option throughout 2020. We repaid all of these deferred social security taxes as of December 31, 2022.
Adjusted EPS from continuing operations was $1.66 for the year ended December 31, 2022, as compared to $1.63 for 2021. The decrease in weighted average shares outstanding resulted from the share repurchases completed during 2022. Income from discontinued operations, net of tax, was $3.8 million for the year ended December 31, 2022, as compared to $23.0 million for 2021.
Adjusted EPS from continuing operations was $1.26 for the year ended December 31, 2023, as compared to $1.66 for 2022. The decrease in weighted average shares outstanding resulted primarily from the share repurchases completed during 2022.
During the year ended December 31, 2022, the percentage of our patient service revenue being reimbursed under government-sponsored healthcare programs (“GHC Programs”) remained relatively stable as compared to the year ended December 31, 2021.
General Economic Conditions and Other Factors Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2023, the percentage of our patient service revenue being reimbursed under government-sponsored or funded healthcare programs (“GHC Programs”) remained relatively stable as compared to the year ended December 31, 2022.
Income from operations attributable to continuing operations decreased $30.2 million, or 14.9%, to $172.7 million for the year ended December 31, 2022, as compared to $202.9 million for 2021. Our operating margin was 8.8% for the year ended December 31, 2022, as compared to 10.6% for the same period in 2021.
Income from operations attributable to continuing operations decreased by $165.4 million, or 95.8%, to $7.3 million for the year ended December 31, 2023, as compared to $172.7 million for 2022. Our operating margin was 0.4% for the year ended December 31, 2023, as compared to 8.8% for the same period in 2022.
Excluding the transformational and restructuring related expenses and gain on sale of building our income from operations attributable to continuing operations was $200.0 million and $217.7 million, and our operating margin was 10.1% and 11.4% for the year ended December 31, 2022 and 2021, respectively.
Excluding the goodwill impairment and transformational and restructuring related expenses our income from operations attributable to continuing operations was $157.9 million and $200.0 million, and our operating margin was 7.9% and 10.1% for the years ended December 31, 2023 and 2022, respectively.
Cash Flows Cash provided by (used in) operating, investing and financing activities from continuing operations is summarized as follows (in thousands): Years Ended December 31, 2022 2021 2020 Operating activities $ 182,312 $ 113,760 $ 153,888 Investing activities (56,954 ) (55,423 ) (58,346 ) Financing activities (487,554 ) (760,116 ) (2,910 ) Operating Activities We generated cash flow from operating activities for continuing operations of $182.3 million, $113.8 million and $153.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash Flows Cash provided by (used in) operating, investing and financing activities from continuing operations is summarized as follows (in thousands): Years Ended December 31, 2023 2022 Operating activities $ 146,081 $ 182,312 Investing activities (48,176 ) (56,954 ) Financing activities (25,715 ) (487,554 ) Operating Activities We generated cash flow from operating activities for continuing operations of $146.1 million and $182.3 million for the years ended December 31, 2023 and 2022, respectively.
Providers will generally not be permitted to balance bill patients beyond this cost-sharing amount.
For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount.
The net increase in non-operating expenses was primarily related to an increase of $42.5 million in loss on early extinguishment of debt from the redemption of our 6.25% senior unsecured notes due 2027 (the “2027 Notes”) in February 2022 as compared to the loss associated with the redemption of our 5.25% senior unsecured notes due 2023 (the “2023 Notes”) in January 2021, partially offset by lower interest expense on lower debt balances in 2022.
The net decrease in non-operating expenses was primarily related to a decrease of $57.0 million in loss on early extinguishment of debt from the redemption of our 6.25% senior unsecured notes due 2027 (the “2027 Notes”) in February 2022, partially offset by an impairment loss related to a cost-method investment and an increase in interest expense from higher interest rates on lower average borrowings.
In addition, since these non-GAAP measures are not determined in accordance with GAAP, they are susceptible to varying calculations and may not be comparable to other similarly titled measures of other companies For a reconciliation of each of Adjusted EBITDA from continuing operations and Adjusted EPS from continuing operations to the most directly comparable GAAP measures for the years ended December 31, 2022, 2021 and 2020, refer to the tables below (in thousands, except per share data).
For a reconciliation of each of Adjusted EBITDA from continuing operations and Adjusted EPS from continuing operations to the most directly comparable GAAP measures for the years ended December 31, 2023, 2022 and 2021, refer to the tables below (in thousands, except per share data).
General and administrative expenses attributable to continuing operations primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services.
The increases in our same-unit activity were partially offset by modest decreases in practice supply, rent and other costs related to non-same unit activity. 63 General and administrative expenses attributable to continuing operations primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services.
The decrease in our operating margin was primarily due to lower same-unit revenue, including CARES Act relief and net increases in overall operating expenses, partially offset by favorable impacts from net acquisitions.
The decrease in our operating margin was primarily due to goodwill impairment as well as net increases in overall operating expenses and a decrease in CARES Act relief, partially offset by higher same-unit revenue and decreases in general and administrative expenses.
Additionally, we had working capital attributable to continuing operations of $1.0 million at December 31, 2022, a decrease of $412.2 million from our working capital from continuing operations of $413.2 million at December 31, 2021.
Additionally, we had working capital attributable to continuing operations of $94.5 million at December 31, 2023, an increase of $93.5 million from our working capital from continuing operations of $1.0 million at December 31, 2022.
Diluted income from continuing operations per common and common equivalent share was $0.74 on weighted average shares outstanding of 84.1 million for the year ended December 31, 2022, as compared to $1.26 on weighted average shares outstanding of 85.8 million for 2021.
Diluted net loss per common and common equivalent share attributable to Pediatrix Medical Group, Inc. was $0.73 on weighted average shares outstanding of 82.2 million for the year ended December 31, 2023, as compared to diluted net income per common and common equivalent share of $0.79 for 2022 on weighted average shares outstanding of 84.1 million for 2022.
The net increase in cash flow provided of $68.5 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to an increase in cash flow from accounts receivable and income taxes, partially offset by a decrease in cash flow from lower earnings, changes in accounts payable and accrued expenses and prepaid expenses and other assets.
The net decrease in cash flow of $36.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to decreases in cash flow from income taxes, accounts payable and accrued expenses and other liabilities.
DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Our DSO for continuing operations was 53.1 days at December 31, 2022 as compared to 55.2 days at December 31, 2021. Our cash flow from operating activities is significantly affected by the payment of physician incentive compensation.
Our DSO for continuing operations was 50.5 days at December 31, 2023 as compared to 53.1 days at December 31, 2022. The 2.6 days decrease in DSO was primarily due to improved cash collections at existing units. Our cash flow from operating activities is significantly affected by the payment of physician incentive compensation.
Liquidity On February 11, 2022, we issued $400 million of 2030 Notes.
Liquidity On February 11, 2022, we issued $400.0 million of 5.375% unsecured senior notes due 2030 (the “2030 Notes”).
Our obligations under the 2030 Notes are guaranteed on an unsecured senior basis by the same subsidiaries and affiliated professional contractors that guarantee the Amended Credit Agreement (as defined below).
Interest on the 2030 Notes accrues at the rate of 5.375% per annum, or $21.5 million, and is payable semi-annually in arrears on February 15 and August 15. Our obligations under the 2030 Notes are guaranteed on an unsecured senior basis by the same subsidiaries and affiliated professional contractors that guarantee the Amended Credit Agreement (as defined below).
All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. Recently, Democrats in Congress have sought to expand Medicaid or Medicaid-like coverage in states that have not yet expanded Medicaid.
Business – “Relationship With Our Partners – Third-Party Payors.” All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level.
During the year ended December 31, 2022, cash outflow related to accounts receivable for continuing operations was $5.5 million, as compared to $72.7 million for the same period in 2021.
During the year ended December 31, 2023, cash flow from accounts receivable for continuing operations was $26.3 million, as compared to cash outflow of $5.5 million for the same period in 2022. The increase in cash flow from accounts receivable for the year ended December 31, 2023 was primarily due to improved cash collections at existing units.
These measures should be considered a supplement to, and not a substitute for, financial performance measures determined in accordance with GAAP.
These measures should be considered a supplement to, and not a substitute for, financial performance measures determined in accordance with GAAP. In addition, since these non-GAAP measures are not determined in accordance with GAAP, they are susceptible to varying calculations and may not be comparable to other similarly titled measures of other companies.
Our national network is comprised of affiliated physicians who provide clinical care in 37 states. We ceased providing services in Puerto Rico on December 31, 2022.
OVERVIEW Pediatrix (formerly known as Mednax, Inc.) is a leading provider of physician services including newborn, maternal-fetal, pediatric cardiology and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 37 states. We ceased providing services in Puerto Rico on December 31, 2022.
Income from continuing operations was $108.0 million for the year ended December 31, 2021, as compared to loss from continuing operations of $9.6 million for 2020. Adjusted EBITDA from continuing operations was $265.5 million for the year ended December 31, 2021, as compared to $219.9 million for 2020.
Loss from continuing operations was $60.4 million for the year ended December 31, 2023, as compared to income from continuing operations of $62.6 million for 2022.
Based on our experience, we expect that we can improve the results of acquired physician practices through improved managed care contracting, improved collections, identification of growth initiatives and operating and cost savings based upon the significant infrastructure that we have developed. 57 Common Stock Repurchase Programs In July 2013, our Board of Directors authorized the repurchase of shares of our common stock up to an amount sufficient to offset the dilutive impact from the issuance of shares under our equity compensation programs.
Based on our experience, we expect that we can improve the results of acquired physician practices in various ways, including improved managed care contracting, improved collections, identification of growth initiatives and operating and cost savings based upon the significant infrastructure that we have developed.
Accordingly, beginning with the first quarter of 2019, we began reporting adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”) from continuing operations, 61 defined as income (loss) from continuing operations before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses.
We have incurred certain expenses that we do not consider representative of our underlying operations, including transformational and restructuring related expenses. Accordingly, we report adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”) from continuing operations, defined as income (loss) from continuing operations before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−1 removed1 unchanged
Biggest changeWe borrow under our Amended Credit Agreement at various interest rate options based on the Alternate Base Rate or Term SOFR rate depending on certain financial ratios.
Biggest changeWe borrow under our Amended Credit Agreement at various interest rate options based on the Alternate Base Rate or Term SOFR rate depending on certain financial ratios. At December 31, 2023, we had an outstanding principal balance of $228.1 million on our Amended Credit Agreement under our Term A Loan.
Considering the total outstanding balance, a 1% change in interest rates would result in an impact to income before income taxes of $2.4 million per year. 70
Considering the total outstanding balance, a 1% change in interest rates would result in an impact to income before income taxes of $2.3 million per year. 68
Removed
At December 31, 2022, we had an outstanding principal balance of $244.6 million on our Amended Credit Agreement, composed of $240.6 million under our Term A Loan and $4.0 million under our Revolving Credit Line.

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