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What changed in Pediatrix Medical Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Pediatrix Medical Group, Inc.'s 2023 and 2024 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 2024 report.

+427 added−423 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-20)

Top changes in Pediatrix Medical Group, Inc.'s 2024 10-K

427 paragraphs added · 423 removed · 343 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

111 edited+16 added−26 removed190 unchanged
Biggest changeThe CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. California recently amended and expanded CCPA through another ballot initiative, the California Privacy Rights Act (“CPRA”), passed on November 3, 2020 and made effective as of January 1, 2023.
Biggest changeCalifornia recently amended and expanded CCPA through another ballot initiative, the California Privacy Rights Act (“CPRA”), passed on November 3, 2020 and made effective as of January 1, 2023. The CPRA also created a new agency, the California Privacy Protection Agency (“CPPA”), which is authorized to issue substantive regulations and has resulted in increased privacy and information security enforcement.
We also maintain a database management system to assist our business development and recruiting departments to identify potential practice group acquisitions and physician candidates. PHYSICIAN PRACTICE GROUP ADMINISTRATION We provide multiple administrative services to support the practice of medicine by our affiliated physicians and strive to improve operating efficiencies of our affiliated practice groups. • Unit Management .
We also maintain a database management system to assist our business development and recruiting departments to identify potential practice group acquisitions and physician candidates. PHYSICIAN PRACTICE GROUP ADMINISTRATION We provide multiple administrative services to support the practice of medicine by our affiliated physicians and strive to improve operating efficiencies of our affiliated physician practice groups. • Unit Management .
A senior physician practicing medicine in each physician specialty or subspecialty practice that we manage acts as the medical director for that practice. Each medical director is responsible for the overall management of his or her practice, including staffing and scheduling, quality of care, professional discipline, utilization review, coordinating physician recruitment and monitoring of the financial success within the practice.
A senior physician practicing medicine in each physician specialty or subspecialty practice that we manage acts as the medical director for that practice. Each medical director is responsible for the overall management of his or her practice, including staffing and scheduling, quality of care, professional discipline, utilization review, coordinating physician recruitment and monitoring the financial success within the practice.
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.
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; 21 • 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 • 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 16 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 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.
Adverse 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 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.
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 physician practices must comply with stringent and often complex standards, including enrollment and reimbursement requirements.
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.
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. See also Item 1A. Risk Factors–“Information Systems, Cybersecurity and Data Privacy Risks” and Item 1C.
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.
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 service to the same extent and under the same terms and conditions” as the state Medicaid Program.
In addition, the federal Physician Self-Referral law, commonly known as the “Stark Law,” is a strict liability statute that prohibits a physician from making a referral to an entity for certain “designated health services” payable by Medicare if the physician, or an immediate family member of the physician, has a financial relationship with that entity, unless an exception applies.
In addition, the federal Physician Self-Referral law, commonly known as the “Stark Law,” 16 is a strict liability statute that prohibits a physician from making a referral to an entity for certain “designated health services” payable by Medicare if the physician, or an immediate family member of the physician, has a financial relationship with that entity, unless an exception applies.
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.
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.
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.
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.
Pediatric surgeons provide specialized care for patients ranging from newborns to adolescents, for all problems or conditions that require surgical intervention, and often have particular expertise in the areas of neonatal, prenatal, trauma, and pediatric oncology. Our affiliated physicians in this subspecialty include pediatric urologists, pediatric plastic and craniofacial surgeons and general and thoracic pediatric surgeons.
Pediatric surgeons provide specialized care for patients ranging from newborns to adolescents, for all problems or conditions that require surgical intervention, and often have particular expertise in the areas of neonatal, prenatal, trauma and pediatric oncology. Our affiliated physicians in this subspecialty include pediatric plastic and craniofacial surgeons and general and thoracic pediatric surgeons.
Our electronic charge capture system is used to code and bill for pediatric intensive care clinicians, hospitalists, other hospital providers, as well as all hospital services delivered by our ambulatory providers. We also use administrative data derived from this system to drive quality assurance and quality improvement programs. • Nextgen® .
Our electronic charge capture system is used to code and bill for pediatric intensive care clinicians, hospitalists, other hospital providers, as well as all hospital services delivered by our ambulatory providers. We also use administrative data derived from this system to drive quality assurance and quality improvement programs. 10 • Nextgen® .
We have implemented security policies, procedures and systems, including training programs, designed to comply with the requirements set forth in the Security Rule. In addition, Congress enacted the Health Information Technology for Economic and Clinical Health (“HITECH”) Act as part of the American Recovery and Reinvestment Act.
We have implemented security policies, procedures and systems, including training programs, designed to comply with the requirements set forth in the Security Rule. In addition, in 2009, Congress enacted the Health Information Technology for Economic and Clinical Health (“HITECH”) Act as part of the American Recovery and Reinvestment Act.
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.
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 19 and, depending on the number of affected individuals, the media for the affected market.
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.
BabySteps 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.
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 typically are responsible for billing patients and third-party payors for services rendered by our affiliated physicians separately 12 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.
In most of our affiliated practice groups, each physician has entered into an employment agreement with us or one of our affiliated professional contractors providing for a base salary and incentive bonus eligibility and typically having a term of three to five years.
In most of our affiliated practice groups, each physician has entered into an employment agreement with us or one of our affiliated professional contractors providing for a base salary and 14 incentive bonus eligibility and typically having a term of three to five years.
OCR released a bulletin in December 2022 titled “HIPAA Guidance on Use of Tracking Technologies” which expanded commonly understood interpretations of “individually identifiable health information” and placed limitations on covered entities and business associates’ use of online tracking technologies and related vendor engagements.
OCR released a bulletin in December 2022 titled “HIPAA Guidance on Use of Tracking Technologies” which expanded commonly understood interpretations of “individually identifiable health information” and placed limitations on covered entities 20 and business associates’ use of online tracking technologies and related vendor engagements.
For example, as part of our ongoing efforts to support and partner with hospitals and the local referring physician community, our affiliated neonatologists, pediatric hospitalists and advanced nurse practitioners provide in-hospital nursery care to newborns through our newborn nursery program.
For example, as part of our ongoing efforts to support and partner 5 with hospitals and the local referring physician community, our affiliated neonatologists, pediatric hospitalists and advanced nurse practitioners provide in-hospital nursery care to newborns through our newborn nursery program.
Maternal-Fetal Care We provide inpatient and office-based clinical care to expectant mothers and their unborn babies through our affiliated maternal-fetal medicine subspecialists as well as obstetricians and other clinicians, such as maternal-fetal medicine nurse practitioners, certified nurse mid-wives, sonographers and genetic counselors.
Maternal-Fetal Care We provide inpatient and office-based clinical care to expectant mothers and their unborn babies through our affiliated maternal-fetal medicine subspecialists, obstetricians and other clinicians, such as maternal-fetal medicine nurse practitioners, certified nurse mid-wives, sonographers and genetic counselors.
For example, the federal Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations (collectively, “HIPAA”) impose requirements to protect the privacy and security of protected health information (“PHI”) and to provide notification in the event of a breach of PHI.
For example, the Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations (collectively, “HIPAA”) impose requirements to protect the privacy and security of protected health information (“PHI”) and to provide notification in the event of a breach of PHI.
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.
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.
In all instances, however, we do not assume responsibility for charges relating to services provided by hospitals or other physicians with whom we collaborate. Such charges are separately billed and collected by the hospitals or other physicians.
In all instances, however, we do not assume responsibility for 11 charges relating to services provided by hospitals or other physicians with whom we collaborate. Such charges are separately billed and collected by the hospitals or other physicians.
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 .
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 .
Further healthcare reform continues to attract significant legislative and administrative interest, legal challenges, regulatory and compliance requirements, new approaches and public attention that create uncertainty and the potential for additional changes.
Further healthcare reform continues to attract significant legislative and administrative interest, legal challenges, regulatory and compliance 15 requirements, new approaches and public attention that create uncertainty and the potential for additional changes.
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.
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.
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.
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.
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.
As an accredited provider of continuing medical 9 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.
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.
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 2024.
The term “Business Associate” also includes “Subcontractors,” which means any entity to which a Business Associate delegates any function, activity or service, other than in the capacity of a member of that Business Associate’s workforce. PHI is broadly defined as any individually identifiable health information transmitted or maintained in any form, including electronic, paper or oral.
The term “Business Associate” also includes “Subcontractors,” which are any entity to which a Business Associate delegates any function, activity or service, other than in the capacity of a member of that Business Associate’s workforce. PHI is broadly defined as any individually identifiable health information transmitted or maintained in any form, including electronic, paper or oral.
Risk 15 Factors–“A significant number of our affiliated physicians or other clinicians could leave our affiliated practices or our affiliated practices may be unable to enforce the non-competition covenants of departed physicians.” Our hospital contracts also typically require that we and the physicians performing services maintain minimum levels of professional and general liability insurance.
Risk Factors–“A significant number of our affiliated physicians or other clinicians could leave our affiliated physician practices or our affiliated physician practices may be unable to enforce the non-competition covenants of departed physicians.” Our hospital contracts also typically require that we and the physicians performing services maintain minimum levels of professional and general liability insurance.
Tele- and mobile health, virtual reality, point-of-care diagnostics and advanced data analytics are currently shaping the future of medicine. Our team is actively engaged in integrating the latest innovations that can optimize clinical care delivery and augment our clinical research initiatives with the goal of further optimizing patient outcomes.
Telehealth and mobile health, virtual reality, point-of-care diagnostics and advanced data analytics are currently shaping the future of medicine. Our team is actively engaged in integrating the latest innovations that can optimize clinical care delivery and augment our clinical research initiatives with the goal of further optimizing patient outcomes.
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.
As of December 31, 2024, 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.
We are responsible for managing and coordinating the process for the salaries and benefits paid and provided to our affiliated physicians and practitioners. In addition, we employ, compensate and manage all non-medical personnel for our affiliated physician groups. • Recruiting and Credentialing . We have significant experience in locating, qualifying, recruiting, and retaining experienced physicians.
We are responsible for managing and coordinating the process for the salaries and benefits paid and provided to our affiliated physicians and practitioners. In addition, we employ, compensate and manage all non-medical personnel for our affiliated physician practices. • Recruiting and Credentialing . We have significant experience in locating, qualifying, recruiting, and retaining experienced physicians.
Our proxy statements and reports may also be obtained directly from the SEC's Internet website at www.sec.gov . Our internet website and the information contained therein or connected thereto are not incorporated into or deemed a part of this Form 10-K. 26
Our proxy statements and reports may also be obtained directly from the SEC's Internet website at www.sec.gov . Our internet website and the information contained therein or connected thereto are not incorporated into or deemed a part of this Form 10-K. 25
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.
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 60 hospitals. Pediatric Hospitalists . Pediatric hospitalists are hospital-based pediatricians specializing in inpatient care and management of acutely ill children.
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.
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 4 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 nurse practitioners and other pediatric clinicians, who staff and manage clinical activities at over 350 NICUs in 30 states.
Through its functional experts, our People Services team provides support, guidance and consultation in the areas of talent acquisition, employee wellness and safety programs, diversity, equity and inclusion, workplace policies and procedures, training and development and rewards strategies that include compensation, benefits and other rewards.
Through its functional experts, our People Services team provides support, guidance and consultation in the areas of talent acquisition, employee wellness and safety programs, workplace policies and procedures, training and development and rewards strategies that include compensation, benefits and other rewards.
Our training materials were enhanced with additional resources to support remote work environments required due to COVID-19 that have remained a valuable alternative for many of our employees. 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 leadership and our partners.
Our training materials were enhanced with additional resources to support remote work environments that have remained a valuable alternative for many of our employees. 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 leadership and our partners.
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. 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.
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.
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.
During 2024, 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.
A hospital not otherwise competing with us may begin to do so by opening a new NICU or operating facility, expanding the capacity of an existing NICU, adding operating room suites or, in the case of neonatal services, upgrading the level of its existing NICU.
A hospital not otherwise competing with us may begin to do so by opening a new NICU or operating facility, expanding the capacity of an existing NICU, or, in the case of neonatal services, upgrading the level of its existing NICU.
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.
We make available a catalog of over 11,000 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.
Different states also impose varying standards for their Medicaid programs.
Different states also impose 13 varying standards for their Medicaid programs.
The Privacy Rule applies to “Covered Entities,” which are health plans, health care clearinghouses, and health care providers that engage in standardized transactions under HIPAA, and, as discussed further below, “Business Associates,” which are entities that perform functions or services for or on behalf of Covered Entities that involve the use or disclosure of PHI.
The Privacy Rule applies to “Covered Entities,” which are health plans, health care clearinghouses, and health care providers that engage in standardized transactions under HIPAA, and “Business Associates,” which are entities that perform functions or services for or on behalf of Covered Entities that involve the use or disclosure of PHI.
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.
There are approximately 7,300 board-certified neonatologists in the United States. 6 Maternal-Fetal Medicine . Expectant mothers with pregnancy complications often seek or are referred by their obstetricians to maternal-fetal medicine subspecialists.
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.
Hospitals and Other Customers Our relationships with our hospital partners and other customers are critical to our operations. Hospitals control access to their units through the awarding of contracts and hospital privileges. We have been retained by approximately 395 hospitals to staff and manage clinical activities within specific hospital-based units and other departments.
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.
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 1,200 board-certified pediatric surgeons in the United States. Physician Practice Administration.
HHS has also adopted data security regulations (the “Security Rule”) that require Covered Entities (including health care providers) and Business Associates to implement administrative, physical and technical safeguards to protect the integrity, confidentiality and availability of PHI that is electronically created, received, maintained or transmitted (such as between us and our affiliated practices).
HHS has also adopted data security regulations (the “Security Rule”) that require Covered Entities and Business Associates to implement administrative, physical and technical safeguards to protect the integrity, confidentiality and availability of PHI that is electronically created, received, maintained or transmitted (such as between us and our affiliated physician practices).
These additional federal and state privacy and security-related laws may be more restrictive than HIPAA and could impose additional penalties. For example, the Federal Trade Commission uses its consumer protection authority under Section 5 of the Federal Trade Act to initiate enforcement actions in response to alleged privacy violations and data breaches.
These additional federal and state privacy and security-related laws may be more restrictive than HIPAA and could impose additional compliance obligations. For example, the Federal Trade Commission uses its consumer protection authority under Section 5 of the Federal Trade Act to initiate enforcement actions in response to alleged privacy and security violations as well as data breaches.
We plan to continue to find ways to supply real time data to our affiliated physician practices so that they can see, and more importantly manage, patient volumes. 8 • Promote Same-Unit and Organic Growth . We seek opportunities for increasing revenue from our hospital- and office-based operations.
We plan to continue to find ways to supply real 7 time data to our affiliated physician practices so that they can have visibility to, and more importantly, manage patient volumes. • Promote Same-Unit and Organic Growth . We seek opportunities for increasing revenue from our hospital-based and office-based operations.
We provide extensive continuing medical and nursing education to our affiliated clinicians in an effort to ensure that 6 they have access to current treatment methodologies, national best practices and evidence-based guidelines. We believe that referring and collaborating physicians, hospitals, third-party payors and patients all benefit from our clinical research, education, quality and safety initiatives.
We provide extensive continuing medical and nursing education to our affiliated clinicians in an effort to ensure that they have access to current treatment methodologies, national best practices and evidence-based guidelines. We 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.
For instance, the state of Washington passed the “My Health My Data Act” with respect to “consumer health data” which is defined as “personal information that is linked or reasonably linkable to a consumer and that identifies a consumer’s past, present, or future physical or mental health” and which will go into effect in 2024 with additional privacy rights and compliance obligations.
Additionally, the state of Washington passed the “My Health My Data Act” with respect to “consumer health data” which is defined as “personal information that is linked or reasonably linkable to a consumer and that identifies a consumer’s past, present, or future physical or mental health” and which went into effect in 2024 with additional privacy rights and compliance obligations.
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.
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.
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.
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, 24 healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, fertility benefits, and employee assistance programs, among many others. GEOGRAPHIC COVERAGE We provide physician services across 36 states.
We focus our efforts in this area using a market-based approach and in each geographic area where we operate, we consider how we can expand our existing hospital and health system relationships and form new ones.
We focus our efforts in this area using a market-based approach and in each geographic area where we operate, we consider how we can solidify and/or expand our existing hospital, health system and clinical practice relationships and form new ones.
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.
At December 31, 2024, our national network comprised approximately 2,335 affiliated physicians, including 1,335 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
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.
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 affiliated physician practices.
This product line provides additional benefits to our office-based practices, including clinical decision trees to assist physicians with the selection of compliant billing codes, medication management (including electronic prescription of controlled substance and prescription drug monitoring programs), promotion of consistent documentation, patient engagement tools, and data for research and education.
This product line provides additional benefits to our office-based practices, including clinical decision trees to assist physicians with the selection of compliant billing codes, medication management (including electronic prescription of controlled substance and prescription drug monitoring programs), promotion of consistent documentation, patient engagement tools, virtual visits and telemedicine tools, Artificial intelligence tools for streamlined clinician documentation, and data for research and education.
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.
Numerous state and certain other federal laws are designed to protect the privacy and security 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.
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.
Our affiliated physicians and clinicians provide critical medical care through several women’s and children’s healthcare services across 36 states, providing care to the most vulnerable patient population in the country: expecting mothers and their newborns and children.
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 .
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 3,000 board-certified maternal-fetal medicine subspecialists in the United States. Other Pediatric Subspecialty Medicine .
We have expanded our services to provide these remote programs to our hospital partners. We believe telehealth reduces overall healthcare spending, improves access to quality care and facilitates collaboration with specialists while improving patient engagement and satisfaction. • Acquire Physician Practice Groups.
We have expanded our services to provide these remote programs to our hospital partners and to our existing service lines to supplement current coverage needs. We believe telehealth reduces overall healthcare spending, improves access to quality care and facilitates collaboration with specialists while improving patient engagement and satisfaction. • Acquire Physician Practice Groups.
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.
This requires our clinicians to hone a skill set beyond just the practice of medicine. 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.
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 .
Our affiliated hospital-based physicians provide this inpatient pediatric and newborn care in PICUs, well-born nurseries and pediatric emergency rooms at over 50 hospitals. Pediatric Surgery .
This program is made available for babies during their hospital stay, which in the case of healthy babies typically consists of evaluation and observation, following which they are referred, and their hospital records are provided, to their pediatricians or family practitioners for follow-up care. Pediatric Primary and Urgent Care.
This program is made available for babies during their hospital stay, which in the case of healthy babies typically consists of evaluation and observation, following which they are referred, and their hospital records are provided, to their pediatricians or family practitioners for follow-up care. Newborn Hearing Screening Program . Our affiliated physicians also oversee our newborn hearing screening program.
Our hospital-based and office-based physicians continue to pursue an organic growth strategy that involves working with our hospital partners to develop integrated service programs for which we become a provider of solutions across the maternal-fetal, newborn, pediatric continuum of care.
Our affiliated hospital-based and office-based physicians continue to pursue an organic growth strategy that involves working with our hospital partners to develop integrated service programs for which we become a provider of solutions across our existing service lines.
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.
This includes the attraction, acquisition, development, engagement, compensation and retention of talent. Our People Services team reports to our Chief Executive 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.
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.
It could also adversely affect our or our affiliated professional contractors’ ability to contract with, or obtain payment from, non-governmental payors. 17 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.
Our office-based practices, such as maternal-fetal medicine and pediatric cardiology, compete for patients with office-based practices in those subspecialties. Hospitals control access to their NICUs and operating rooms by awarding contracts and hospital clinical privileges, and our relationships with our hospital partners are critical to our operations.
Our maternal-fetal medicine practices compete for patients with other office-based practices in this specialty. Hospitals control access to their NICUs by awarding contracts and hospital clinical privileges, and our relationships with our hospital partners are critical to our operations.
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.
As of December 31, 2024, we had approximately 2,335 practicing physicians affiliated with us, and we employed or contracted with approximately 1,970 other clinical professionals and approximately 2,150 other full-time and part-time employees.
This transition will involve significant time and resources, and our failure to execute this transition efficiently and effectively may have a material impact on our business, financial condition, results of operations, cash flows and the trading price of our securities.” • Risk Management .
Our failure to execute a hybrid revenue cycle management function efficiently and effectively may have a material impact on our business, financial condition, results of operations, cash flows and the trading price of our securities.” • Risk Management .
Risk Factors ─ “We are undertaking a transformation of our revenue cycle 12 management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as one or more third-party service providers.
Risk Factors ─ “During 2024, we undertook a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as third-party service providers.
Through its various training and educational programs, the training and development team supports the organization’s commitment to excellence and its mission to “Take great care of the patient, every day and in every way TM ”.
Our Training and Development team is committed to providing an environment that fosters both individual and organizational development. Through its various training and educational programs, the training and development team supports the organization’s commitment to excellence and its mission to “Take great care of the patient, every day and in every way TM ”.
Our affiliated physicians in this subspecialty specialize in retinopathy of prematurity screening and visual care consulting services. Other Newborn and Pediatric Care . Because our affiliated physicians and advanced nurse practitioners generally provide hospital-based coverage, they are situated to provide highly specialized care to address medical needs that may arise during a baby’s hospitalization.
Because our affiliated physicians and advanced nurse practitioners generally provide hospital-based coverage, they are situated to provide highly specialized care to address medical needs that may arise during a baby’s hospitalization.
We believe that the success of our mission to “Take great care of the patient, every day and in every way TM ” is realized by the engagement and empowerment of our affiliated physicians, other clinicians and administrative employees.
We believe that the success of our mission to “Take great care of the patient, every day and in every way TM ” is realized by the engagement and empowerment of our affiliated physicians, other clinicians and administrative employees. Our executive team, including our Senior Vice President of People Services, is responsible for developing and executing our human capital strategy.
With respect to professional liability risk, we self-insure a significant portion of this risk through our wholly owned captive insurance subsidiary. Liabilities in excess of our insurance coverage, including coverage for professional liability and certain other 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 professional liability and certain 22 other claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
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.
ITEM 1. BUSINESS OVERVIEW Pediatrix is a leading provider of physician services including newborn, maternal-fetal, and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 36 states.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor 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.
Biggest changeFor example, HIPAA limits how Covered Entities and Business Associates may use and disclose PHI, provides certain rights to individuals with respect to their PHI, imposes certain obligations for safeguarding the confidentiality, integrity, and availability of PHI that is electronically transmitted or electronically stored, and imposes 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 identifiable consumer health information.
If these initiatives are unsuccessful, it could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities. The erosion in the tax base caused by a general economic downturn can cause restrictions on the federal and state governments’ abilities to obtain financing and a decline in spending.
If these initiatives are unsuccessful, it could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities. An erosion in the tax base caused by a general economic downturn can cause restrictions on the federal and state governments’ abilities to obtain financing and a decline in spending.
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.
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.
For example, in some states, we are dependent on our relationship with affiliated physician 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.
Penalties 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.
Penalties 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 36 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.
Violations of the federal Anti-Kickback Statute can result in significant civil monetary penalties and criminal fines, as well as imprisonment and exclusion from participation in GHC Programs; • the federal civil False Claims Act, which may be enforced through civil whistleblower or qui tam actions and imposes significant civil penalties, treble damages and potential exclusion from GHC Programs against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or for making a false record or statement material to an obligation to pay the federal government or for knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
Violations of the federal Anti-Kickback Statute can result in significant civil monetary penalties and criminal fines, as well as imprisonment and exclusion from participation in GHC Programs; • the federal civil False Claims Act, which may be enforced through civil whistleblower or qui tam actions and imposes significant civil penalties, treble damages and potential exclusion from GHC Programs 35 against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or for making a false record or statement material to an obligation to pay the federal government or for knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government.
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.
Business—“Government Regulation—Fee Splitting; Corporate Practice of Medicine.” 37 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.
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.
For instance, on December 2, 2020, both CMS and 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 harbors, and exceptions.
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.
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.
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.
GHC Programs may also suspend our payments pending an audit or investigation, which 43 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.
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 downward 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.
Government authorities or other parties may assert that our business practices violate antitrust laws. The healthcare industry is subject to close antitrust scrutiny. The FTC, the Antitrust Division of the DOJ and state Attorneys General all actively review and, in some cases, take enforcement action against businesses, particularly in the healthcare industry, and can also bring antitrust suits.
Government authorities or other parties may assert that our business practices violate antitrust laws. The healthcare industry is subject to close antitrust scrutiny. The FTC, the Antitrust Division of the DOJ and state Attorneys General all actively review and, in some cases, take enforcement action against businesses, particularly in the healthcare industry. Private parties can also bring antitrust suits.
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.
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.
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.
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.
If a substantial number of our affiliated physicians or other clinicians leave our affiliated practices, we could incur significant legal fees to pursue enforcement of certain covenants within employment agreements or if our affiliated practices are unable to enforce the non-competition covenants in the employment agreements, our business, financial condition, results of operations and cash flows could be adversely affected.
If a substantial number of our affiliated physicians or other clinicians leave our affiliated physician practices, we could incur significant legal fees to pursue enforcement of certain covenants within employment agreements or if our affiliated physician practices are unable to enforce the non-competition covenants in the employment agreements, our business, financial condition, results of operations and cash flows could be adversely affected.
The term “designated health services” includes, 36 among other things, inpatient and outpatient hospital services, home health services, and clinical laboratory services; • similar state law provisions pertaining to anti-kickback, fee splitting, self-referral and false claims, and other fraud and abuse issues which typically are not limited to relationships involving government-funded programs.
The term “designated health services” includes, among other things, inpatient and outpatient hospital services, home health services, and clinical laboratory services; • similar state law provisions pertaining to anti-kickback, fee splitting, self-referral and false claims, and other fraud and abuse issues which typically are not limited to relationships involving government-funded programs.
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.
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.
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.
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.
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.
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.
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.
Government-funded programs, private insurers or state laws and regulations may limit, reduce or make retroactive adjustments to reimbursement amounts or rates. 33 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.
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.
Standards related to personal information, whether implemented pursuant to HIPAA, 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.
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.
See Item 1. Business—“Other Legal Proceedings” and— “Professional and General Liability Coverage.” 42 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.
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.
Our future results of operations could be adversely affected if we are unable to manage our growth 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.
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.
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.
Our affiliated physicians or other clinicians may leave our affiliated practices for a variety of reasons, including in order to provide services for other types of healthcare providers, such as teaching, research and government institutions, hospitals and health systems and other practice groups.
Our affiliated physicians or other clinicians may leave our affiliated physician practices for a variety of reasons, including in order to provide services for other types of healthcare providers, such as teaching, research and government institutions, hospitals and health systems and other practice groups.
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.
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.
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%.
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%.
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.
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.
Our contracts include management services agreements among other agreements with such affiliated practices, to which these practices reserve exclusive control and responsibility for all aspects of the practice of medicine and delivery of medical services.
Our contracts include management services agreements among other agreements with such affiliated physician practices, to which these practices reserve exclusive control and responsibility for all aspects of the practice of medicine and delivery of medical services.
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.
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.
Further, if a federal government shutdown were to occur for a prolonged period of time, federal government payment obligations, including its obligations under Medicare and Medicaid, may be delayed. Similarly, if state government shutdowns were to occur, state payment obligations may be delayed.
Further, if a federal government shutdown 34 were to occur for a prolonged period of time, federal government payment obligations, including its obligations under Medicare and Medicaid, may be delayed. Similarly, if state government shutdowns were to occur, state payment obligations may be delayed.
We are dependent upon our ability to recruit and retain a sufficient number of qualified physicians and other clinicians and other personnel to service existing units at hospitals and our affiliated practices and expand our business.
We are dependent upon our ability to recruit and retain a sufficient number of qualified physicians and other clinicians and other personnel to service existing units at hospitals and our affiliated physician practices and expand our business.
Business—“Government Investigations.” 35 The healthcare industry is highly regulated, and government authorities may determine that we have failed to comply with applicable laws, rules or regulations.
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.
Additionally, state corporate practice of medicine doctrines often impose penalties on physicians themselves for aiding the corporate practice of medicine, which could impact physicians participating with our affiliated practices. See Item 1.
Additionally, state corporate practice of medicine doctrines often impose penalties on physicians themselves for aiding the corporate practice of medicine, which could impact physicians participating with our affiliated physician practices. See Item 1.
Failure to maintain reliable information systems, disruptions in our existing information systems or the implementation of new systems could cause disruptions in our business operations, including errors and delays in billings and collections, difficulty satisfying requirements under hospital contracts, disputes with patients and payors, violations of patient privacy and confidentiality requirements and other regulatory requirements, increased administrative expenses and other adverse consequences.
Failure to maintain reliable information systems, disruptions in our existing information systems or the implementation of new systems could disrupt business operations or cause errors and delays in billings and collections, difficulty satisfying requirements under hospital contracts, disputes with patients and payors, violations of patient privacy, confidentiality, and other regulatory requirements, increased administrative expenses and other adverse consequences.
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.
On September 7, 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.
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.
These acquisitions could affect our overall payor mix or operating results in future periods. • Acquisitions of practices 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.
Moreover, these measures could affect our ability to contract with certain payors and under historically similar terms and may cause, and the prospect of these changes may have caused, payors to terminate their contracts with us and our affiliated practices, further affecting our business, financial condition, results of operations, cash flows and the trading price of our securities.
Moreover, these measures could affect our ability to contract with certain payors under historically similar terms and may cause (and the prospect of these changes may have caused) payors to terminate their contracts with us and our affiliated physician practices, further affecting our business, financial condition, operations, cash flows and the trading price of our securities.
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.
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 31 poverty level. As of December 31, 2024, 40 states, and the District of Columbia, adopted the expansion of Medicaid eligibility.
We are further obligated under the federal FCA to timely report and return any identified overpayments and to maintain reasonable internal audit mechanisms to identify overpayments. Failure to timely report and return overpayments to Medicare or Medicaid could subject us to liability under the federal FCA, and also equivalent false claims acts on the state level.
We are further obligated under the federal overpayment statute and FCA to timely report and return any identified overpayments and to maintain reasonable internal audit mechanisms to identify overpayments. Failure to timely report and return overpayments to Medicare or Medicaid could subject us to liability under the federal FCA, and also equivalent false claims acts on the state level.
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.
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. • 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 and 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.
In July of each year, CMS releases the annual Medicaid Managed Care Rate Development Guide which provides federal baseline rules for setting reimbursement rates in managed care plans. We could be affected by lower reimbursement rates in some or all of the Managed Medicaid Plans with which we participate.
Each year, CMS releases the annual Medicaid Managed Care Rate Development Guide which provides federal baseline rules for setting reimbursement rates in managed care plans. We could be affected by lower reimbursement 29 rates in some or all of the Managed Medicaid Plans with which we participate.
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.
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 law, and the enactment of additional consumer privacy laws or health privacy laws in various states.
They also have sought to reduce payments to certain hospitals in some of these states. Should any of these changes take effect, we cannot predict with any assurance the ultimate effect to reimbursements for our services. Congress and the Biden Administration may also seek substantial reforms to Medicaid law and the ability of states to design Medicaid programs.
They also have sought to reduce payments to certain hospitals in some of these states. Should any of these changes take effect, we cannot predict with any assurance the ultimate effect to reimbursements for our services. Congress and the second Trump Administration may also seek substantial reforms to Medicaid law and the ability of states to design Medicaid programs.
In connection with the transformation of our revenue cycle management function, we could experience a further reduction in revenue due to delays in collection efforts or the inability to collect from patients or third-party payors, claim denials, recoupments, or governmental and third-party audits, all of which may impact our profitability and cash flow.
In connection with this hybrid revenue cycle management function, we could experience a further reduction in revenue due to delays in collection efforts or the inability to collect from patients or third-party payors, claim denials, recoupments, or governmental and third-party audits, all of which may impact our profitability and cash flow.
In addition, as a result of ARPA, an additional Medicare payment reduction of up to 4% was requested to take effect in January 2022; however, Congress has delayed implementation of this reduction until 2025.
In addition, as a result of ARPA, an additional Medicare payment reduction of up to 4% was to take effect in January 2022; however, Congress delayed implementation of this reduction until 2025.
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.
A failure in or breach of our information systems as a result of cybersecurity attacks or other tactics could disrupt our business, has resulted and may result in the disclosure or misuse of PHI, personal information, or confidential or proprietary business information, and has caused 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, individuals, or classes of individuals.
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.
A majority of our net revenue in 2024 was generated by our operations in five states. In particular, Texas accounted for approximately 32% of our net revenue in 2024. See Item 1.
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.
For example, 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.
The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment.
The outcome of each IDR dispute is generally binding on both the provider/facility and plan with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment.
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.
First 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, if at any time the federal government is not able to meet its debt payments unless the federal debt ceiling is raised, and legislation increasing the debt ceiling is not enacted, the federal government may stop or delay making payments on its obligations, including funding for government programs in which we participate, such as Medicare and Medicaid.
In addition, if at any time the federal government is not able to meet its debt payments unless the federal debt ceiling is raised, and legislation increasing the debt ceiling is not enacted, the federal government may stop or delay making payments on its obligations, including funding for government programs in which we participate, primarily Medicaid.
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.
We currently anticipate that our affiliated physicians will continue to be eligible to receive bonus payments in 2025 through participation in the MIPS, although the amounts of such bonus payments are not expected to be material.
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.
Our remediation efforts may not be successful and could result in interruptions to our operations (including, without limitation, our billing processes), delays or cessation of service and loss of existing or potential customers.
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 include, for example and without limitation: • 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.
They also may be able to develop and deploy viruses, worms and other malicious software programs that disable our systems or otherwise exploit any security vulnerabilities. Outside parties may also attempt to fraudulently induce employees to take actions, including the release of confidential or sensitive information or to make fraudulent payments, through illegal electronic spamming, phishing or other tactics.
They also may be able to develop and deploy viruses, worms and other malicious software programs that disable our systems or otherwise exploit security vulnerabilities, or attempt to fraudulently induce employees to take actions, including to release confidential or sensitive information or make fraudulent payments, through illegal electronic spamming, phishing or other tactics.
If the economy were to contract into a recession (for example, as a result of the global COVID-19 pandemic, inflation, or as a result of a significant increase in prevailing interest rates), our government payors or other counterparties that owe us money could be delayed in obtaining, or may not be able to obtain, necessary funding and/or financing to meet their cash flow needs.
If the economy were to contract (for example, as a result of a future global pandemic, international or domestic conflict, inflation, or as a result of a significant increase in prevailing interest rates), our government payors or other counterparties that owe us money could be delayed in obtaining, or may not be able to obtain, necessary funding and/or financing to meet their cash flow needs.
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.
This bulletin outlined the HHS OCR’s 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 48 such vendors.
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.
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 2024, we recorded a non-cash impairment charge of $150.6 million.
We may not be able to successfully execute our same-unit and organic growth strategies. In addition to our acquisition growth strategy, we seek opportunities for increasing revenue from our existing operations through same-unit and organic growth strategies. We also seek opportunities to grow organically outside of our existing operations.
In addition to our acquisition growth strategy, we seek opportunities for increasing revenue from our existing operations through same-unit and organic growth strategies. We also seek opportunities to grow organically outside of our existing operations.
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.
Adverse economic developments in the United States could lead to a reduction in federal government expenditures, including GHC Programs in which we participate, primarily Medicaid.
In connection with the transition of our revenue cycle management function, we have and could experience a further reduction in revenue due to delays in collection efforts or the inability to collect from patients or third-party payors, claim denials, recoupments, or governmental and third-party audits, all of which have and may further impact our profitability and cash flow.
In connection with the previous transition of our revenue cycle management function, we experienced a reduction in revenue due to delays in collection efforts or the inability to collect from patients or third-party payors, claim denials, recoupments, or governmental and third-party audits, all of which impacted our profitability and cash flow.
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.
As of December 31, 2024 , our total indebtedness was $615.6 million, of which $400.0 million was at fixed interest rates and $215.6 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.
The federal government appealed this decision to the Fifth Circuit Court of Appeals, which subsequently issued an administrative stay of the district court’s ruling, thereby allowing the federal government to continue enforcing the preventive services requirement while the 5th Circuit considers the case. The case may ultimately be resolved by the United States Supreme Court.
The federal government appealed this decision to the Fifth Circuit Court of Appeals, which subsequently issued an administrative stay of the district court’s ruling, thereby allowing the federal government to continue enforcing the preventive services requirement while the 5th Circuit considers the case.
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.
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 an adverse 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. • The healthcare industry is highly regulated and government authorities may determine that we have failed to comply with applicable laws, rules or regulations. • We undertook a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as one or more third-party service providers.
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.
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.
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.
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 for alleged violations of HIPAA.
Risks Related to Our Business Strategy We are undertaking a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as one or more third-party service providers.
Risks Related to Our Business Strategy During 2024, we undertook a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as third-party service providers.
Further, we are also subject to a provision of the federal 21st Century Cures Act that is intended to facilitate the appropriate exchange of health information. In 2020, the U.S.
Further, we are also subject to a provision of the federal 21st Century Cures Act and related regulations that are intended to facilitate the appropriate exchange of electronic health information ("EHI"). Beginning in 2020, the U.S.
The Transparency in Coverage Final Rule, published November 12, 2020, aims to put health pricing information into the hands of consumers and allow them to select their providers based, in part, on cost. The final rule imposes two main requirements.
The Transparency in Coverage Final Rule, published November 12, 2020, aims to put health pricing information into the hands of consumers and allow them to select their providers based, in part, on cost. The final rule was phased in between July 2022 and January 2024 and imposed two main requirements.
The impact of the GFE requirements on the Company remains uncertain at this time, in part due to ongoing rulemaking around the NSA, as well as the delayed effective date of certain provisions of the GFE framework, uncertainty around operational timeframes, potential penalties and patient reaction, among other things.
The impact of the GFE requirements on the Company remains uncertain at this time, in part due to ongoing rulemaking around the NSA, as well as the delayed effective date of certain provisions of the GFE framework (as noted above related to co-providers and co-facilities and patients other than self-pay and uninsured), uncertainty around operational timeframes, potential penalties and patient reaction, among other things.
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.
Although we believe that we have reasonable and appropriate information security procedures and other safeguards in place, 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 information security vulnerabilities.
Diminished service quality from outsourcing, our inability to utilize offshore service providers or the failure to comply with restrictions on the use of third-party service providers could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. We may not find suitable acquisition candidates or successfully integrate our acquisitions.
Diminished service quality from outsourcing, our inability to utilize offshore service providers or the failure to comply with restrictions on the use of third-party service providers could 39 have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
For example, we typically experience negative cash flow from operations in the first quarter of each year, principally as a result of bonus payments to affiliated physicians as well as discretionary matching contributions for participants in our qualified contributory savings plans.
We have historically experienced and expect to continue to experience quarterly fluctuations in net revenue and net income. For example, we typically experience negative cash flow from operations in the first quarter of each year, principally as a result of bonus payments to affiliated physicians as well as discretionary matching contributions for participants in our qualified contributory savings plans.
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.
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.
Further, the costs associated with the transformation of our revenue cycle management function, as well as the additional costs and risks associated with any operational problems, delays in collections from payors, and errors and control issues during the termination and transition process, may impact our ability to realize the intended benefits from transforming our revenue cycle management function and may have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
Further, the costs associated with any operational problems, delays in collections from payors, and errors and control issues may impact our ability to realize the intended benefits from this transformation and may have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.
The birth rate in the United States has declined and may decline further. Preliminary birth data for 2022 indicate that total births in the United States remained effectively flat as compared to 2021. Provisional data for 2023 is not yet available.
The birth rate in the United States has declined and may decline further. 27 Birth data for 2023 indicate that total births in the United States decreased compared to 2022. Provisional data for 2024 is not yet available.
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.
Second certain health plans and issuers must report to their covered members, through a self-service pricing tool, certain pricing information (including the in-network rate and out-of-network allowed amounts) and cost-sharing obligations for all covered items and services.
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, and subsequently updated on March 18, 2024, and June 26, 2024, a bulletin on the requirements under HIPAA for online tracking technologies (e.g., cookies, pixels) to protect the privacy and security of PHI.
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.
The NSA balance billing prohibitions, coupled with the complexity and uncertainty of the IDR process, could limit the amount Pediatrix can charge and recover for items and 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Council includes our Chief Executive Officer, Executive Vice President and Chief Financial Officer, Executive Vice President, General Counsel and Secretary, Executive Vice President and Chief Operating Officer, Executive Vice President – National and Market Operations, Senior Vice President and Chief Information Officer, Vice President and Chief Information Security Officer, Vice President, Chief Compliance Officer, Vice President, People Services, and Associate Vice President, Internal Audit.
Biggest changeThe Council includes our Chief Executive Officer, Executive Vice President, Chief Financial Officer and Treasurer, Executive Vice President, General Counsel, Chief Administrative Officer and Secretary, Senior Vice President, Operations, Senior Vice President and Chief Information Officer, Senior Vice President, People Services, Vice President and Chief Information Security Officer, Vice President, Chief Compliance Officer, and Associate Vice President, Internal Audit.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy 49 We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information.
ITEM 1C. CYBERSECURITY 49 Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information.
Our Board of Directors receives reports at least twice per year from members of senior management, including our Chief Information Security Officer (“CISO”) and Chief Compliance Officer, regarding the Company’s information systems and technology and associated policies, processes, and practices for managing and mitigating cybersecurity and technology-related risks.
Our Board of Directors receives reports at least twice per year from members of senior management, including our Chief Information Security Officer (“CISO”) and Chief Compliance Officer , regarding the Company’s information systems 50 and technology and associated policies, processes, and practices for managing and mitigating cybersecurity and technology-related risks.
Our Board of Directors also meets with external advisors to discuss technology and cybersecurity risks applicable to the Company and obtains perspectives which inform senior management’s 50 discussions with our Board of Directors. Our Board of Directors has delegated oversight of the process for determining disclosure required with respect to cybersecurity incidents to its Audit Committee.
Our Board of Directors also meets with external advisors to discuss technology and cybersecurity risks applicable to the Company and obtains perspectives which inform senior management’s discussions with our Board of Directors. Our Board of Directors has delegated oversight of the process for determining disclosure required with respect to cybersecurity incidents to its Audit Committee.
While to date we have not identified any breaches from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, the sophistication of cybersecurity threats continues to increase, and the preventative actions we take to reduce the risk of cybersecurity incidents and protect our systems and information may be insufficient.
While to date we have not identified any breaches from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, the sophistication of cybersecurity threats continues to increase, and the preventive actions we take to reduce the risk of cybersecurity incidents and protect our systems and information may be insufficient.
The Council plans to meet quarterly beginning in 2024 and is responsible for management’s oversight of our IT security in a cohesive and holistic manner that is designed to enable optimal decision-making.
The Council meets quarterly and is responsible for management’s oversight of our IT security in a cohesive and holistic manner that is designed to enable optimal decision-making.
This does not mean that we meet any particular technical standards, specifications, or requirements, but only that we use these standards as a guide to help us design and assess our program.
Recently we have obtained HITRUST certification for one of our core clinical applications, however this does not mean that overall we meet any particular technical standards, specifications, or requirements, but only that we use these standards as a guide to help us design and assess our program.
For information on the Company’s cybersecurity-related risks, see “Information Systems, Cybersecurity and Data Privacy Risks” in “Risk Factors” on page 46 of this Annual Report on Form 10-K.
For information on the Company’s cybersecurity-related risks, see “Information Systems, Cybersecurity and Data Privacy Risks” in Item 1A. Risk Factors in this Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeBase 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.
Biggest changeBase Period Years Ended December 31, Company/Index 2019 2020 2021 2022 2023 2024 Pediatrix Medical Group, Inc. $ 100.00 $ 88.31 $ 97.91 $ 53.47 $ 33.47 $ 47.21 S&P 500 Index $ 100.00 $ 116.26 $ 147.29 $ 118.84 $ 147.64 $ 182.05 S&P 600 Health Care $ 100.00 $ 131.41 $ 138.98 $ 102.25 $ 99.53 $ 102.90 NYSE Composite Index $ 100.00 $ 104.40 $ 123.37 $ 109.14 $ 121.13 $ 137.26 Issuer Purchases of Equity Securities During the three months ended December 31, 2024, we withheld 57,056 shares of our common stock to satisfy minimum statutory withholding obligations in connection with the vesting of restricted stock.
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.
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, 2019 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.
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.
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 2024, 2023, or 2022.
Recent 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
Recent Sales of Unregistered Equity Securities During the three months ended December 31, 2024, 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. 54
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.
The returns are calculated assuming reinvestment of dividends. The graph covers the period from December 31, 2019 through December 31, 2024. 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 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.
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 14, 2025, we had 163 holders of record of our common stock, and the closing sales price on that date for our common stock was $14.05 per share.
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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, 2024 57,056 (b) $ 11.26 — (a) November 1 – November 30, 2024 — — — (a) December 1 – December 31, 2024 — — — (a) Total 57,056 $ 11.26 — (a) 53 a) We have two active repurchase programs.
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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.
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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 $497.1 million as of December 31, 2024. b) Shares withheld to satisfy nominal minimum statutory withholding obligations in connection with the vesting of restricted stock.

Item 6. [Reserved]

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

83 edited+16 added−31 removed63 unchanged
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.
Biggest changeFor 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, 2024, 2023 and 2022, refer to the tables below (in thousands, except per share data). 62 Years Ended December 31, 2024 2023 2022 (Loss) income from continuing operations attributable to Pediatrix Medical Group, Inc. $ (99,069 ) $ (60,408 ) $ 62,568 Interest expense 40,743 42,075 39,695 Income tax (benefit) provision (2,272 ) 12,049 18,806 Depreciation and amortization expense 32,226 36,171 35,636 Transformational and restructuring related expenses 64,260 2,219 27,312 Impairment losses 178,435 168,312 — Loss on disposal of businesses 9,699 — — Loss on early extinguishment of debt — — 57,016 Adjusted EBITDA from continuing operations attributable to Pediatrix Medical Group, Inc. $ 224,022 $ 200,418 $ 241,033 Years Ended December 31, 2024 2023 2022 Weighted average diluted shares outstanding 83,330 82,201 84,121 (Loss) income from continuing operations and diluted (loss) income from continuing operations per share attributable to Pediatrix Medical Group, Inc. $ (99,069 ) $ (1.19 ) $ (60,408 ) $ (0.73 ) $ 62,568 $ 0.74 Adjustments (1) : Amortization (net of tax of $2,373, $2,010 and $2,242) 7,120 0.09 6,032 0.07 6,727 0.08 Stock-based compensation (net of tax of $2,473, $3,081 and $3,596) 7,420 0.09 9,242 0.11 10,788 0.13 Transformational and restructuring related expenses (net of tax of $16,065, $555 and $6,828) 48,195 0.58 1,664 0.02 20,484 0.24 Impairment losses (net of tax of $31,633 and $42,078) 146,802 1.76 126,234 1.54 — — Loss on disposal of businesses (net of tax of $2,425) 7,274 0.09 — — — — Loss on early extinguishment of debt (net of tax of $14,254 ) — — — — 42,762 0.51 Net impact from discrete tax events 7,912 0.09 20,825 0.25 (3,370 ) (0.04 ) Adjusted income and diluted EPS from continuing operations attributable to Pediatrix Medical Group, Inc. $ 125,654 $ 1.51 $ 103,589 $ 1.26 $ 139,959 $ 1.66 (1) A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the years ended December 31, 2024, 2023 and 2022, respectively, other than for impairment losses for the year ended December 31, 2024, due to a portion of the expenses being non-deductible. 63 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, 2024 2023 Net revenue 100.0 % 100.0 % Operating expenses: Practice salaries and benefits 71.6 72.6 Practice supplies and other operating expenses 5.9 6.3 General and administrative expenses 11.8 11.4 Depreciation and amortization 1.6 1.8 Transformational and restructuring related expenses 3.2 0.1 Goodwill impairment 7.4 7.4 Long-lived asset impairments 1.4 — Loss on disposal of businesses 0.5 — Total operating expenses 103.4 99.6 (Loss) income from operations (3.4 ) 0.4 Non-operating expense, net (1.6 ) (2.8 ) Loss from continuing operations before income taxes (5.0 ) (2.4 ) Income tax benefit (provision) 0.1 (0.6 ) Loss from continuing operations (4.9 )% (3.0 )% Year Ended December 31, 2024 as Compared to Year Ended December 31, 2023 Our net revenue was $2.01 billion for the year ended December 31, 2024, as compared to $1.99 billion for 2023.
Other provisions have expanded the scope and reach of the FCA and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings.
Other provisions of the ACA have expanded the scope and reach of the FCA and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings.
Collection of patient service revenue we expect to receive is normally a function of providing complete and correct billing information to the GHC Programs and third-party insurance payors within the various filing deadlines and typically occurs within 30 to 60 days of billing.
Collection of patient service revenue we expect to receive is normally a function of providing complete and correct billing information to the GHC Programs and third-party insurance payors 60 within the various filing deadlines and typically occurs within 30 to 60 days of billing.
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.
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 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.
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
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.
Net revenue differs from gross fees due to (i) managed care payments at contracted rates, (ii) GHC Program reimbursements at government-established rates, (iii) various reimbursement plans and negotiated reimbursements from other third-parties, and (iv) discounted and uncollectible accounts of private-pay patients. Our payor mix is composed of contracted managed care, government, principally Medicare and Medicaid, other third-parties and private-pay patients.
Net revenue differs from gross fees due to (i) managed care payments at contracted rates, (ii) GHC Program reimbursements at government-established rates, (iii) various reimbursement plans and negotiated reimbursements from other third-parties, and (iv) discounted and uncollectible accounts of private-pay patients. Our payor mix is composed of contracted managed care, government, principally Medicaid, other third-parties and private-pay patients.
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 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.
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.
Changes resulting from various legal proceedings, 57 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.
Payor Mix 58 We bill payors for professional services provided by our affiliated physicians to our patients based upon rates for specific services provided. Our billed charges are substantially the same for all parties in a particular geographic area regardless of the party responsible for paying the bill for our services.
Payor Mix We bill payors for professional services provided by our affiliated physicians to our patients based upon rates for specific services provided. Our billed charges are substantially the same for all parties in a particular geographic area regardless of the party responsible for paying the bill for our services.
RCM Services Agreement On October 30, 2023, we provided notice to R1RCM that we were terminating that certain Services Agreement, dated May 12, 2021, as amended, by and between our wholly-owned subsidiary PMG Services, Inc. and R1RCM, effective as of December 15, 2023.
RCM Services Agreement On October 30, 2023, we provided notice to R1RCM that we were terminating that certain Services Agreement, dated May 12, 2021, as amended, by and between our wholly owned subsidiary PMG Services, Inc. and R1RCM, effective as of December 15, 2023 (the "Services Agreement").
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.
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. See Item 1.
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.
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.
Risk Factors ─“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.” Healthcare Reform The ACA has altered how health care is delivered and reimbursed in the U.S. and contain various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits.
Risk Factors ─“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.” Healthcare Reform The ACA has altered how health care is delivered and reimbursed in the U.S. and contains various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits.
Goodwill We record acquired assets, including identifiable intangible assets and liabilities at their respective fair values, recording to goodwill the excess of purchase price over the fair value of the net assets acquired.
Goodwill 61 We record acquired assets, including identifiable intangible assets and liabilities at their respective fair values, recording to goodwill the excess of purchase price over the fair value of the net assets acquired.
The indenture under which the 2030 Notes are issued, among other things, limits our ability to (1) incur liens and (2) enter into sale and lease-back transactions, and also limits our ability to merge or dispose of all or substantially all of our assets, in all cases, subject to a number of customary exceptions.
The indenture under which the 2030 Notes are issued, among other things, limits our ability to (1) incur liens, (2) enter into sale and lease-back transactions, and (3) merge or dispose of all or substantially all of our assets, in all cases, subject to a number of customary exceptions.
At December 31, 2023, we had no outstanding indebtedness under the Revolving Credit Line, which had an available borrowing capacity of $450.0 million. For additional information on our total indebtedness, see Note 13 to our Consolidated Financial Statements in this Form 10-K.
At December 31, 2024, we had no outstanding indebtedness under the Revolving Credit Line, which had an available borrowing capacity of $450.0 million. For additional information on our total indebtedness, see Note 13 to our Consolidated Financial Statements in this Form 10-K.
Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. The operating results for the periods presented were not significantly affected by inflation. This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. The operating results for the periods presented were not significantly affected by inflation. This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
ITEM 6. R ESERVED 54 ITE M 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described.
ITEM 6. R ESERVED 55 ITE M 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described.
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.
We have not recorded any material adjustments to prior period contractual adjustments and uncollectibles in the years ended December 31, 2024, 2023, or 2022. Some of our agreements require hospitals to pay us administrative fees.
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.
Because purchases under the ESPP 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 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.
At December 31, 2024, 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.
Financing Activities During the year ended December 31, 2023, our net cash used in financing activities for continuing operations of $25.7 million primarily consisted of payments of $12.5 million on our Term A Loan (as defined below), other activity of $8.8 million and net payments on our credit agreement of $4.0 million.
During the year ended December 31, 2023, our net cash used in financing activities for continuing operations of $25.7 million primarily consisted of payments of $12.5 million on our Term A Loan, other activity of $8.8 million and net payments on our Credit Agreement of $4.0 million.
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).
Effective January 1, 2022, if a patient’s insurance plan or coverage is subject to the NSA, providers are not permitted to send such patient 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).
Impairment Losses Goodwill is tested for impairment on at least an annual basis, in accordance with the subsequent measurement provisions of the accounting guidance for goodwill. Consistent with prior years, we performed our annual impairment analysis in the third quarter, specifically as of July 31, 2023.
Goodwill Impairment Goodwill is tested for impairment on at least an annual basis, in accordance with the subsequent measurement provisions of the accounting guidance for goodwill. Consistent with prior years, we performed our annual impairment analysis in the third quarter, specifically as of July 31, 2024.
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.
Based on our experience, we expect that we can improve the results of acquired physician practices in various ways, including improved collections, identification of growth initiatives and operating and cost savings based upon the significant infrastructure that we have developed.
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.
For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution ("IDR") process.
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.
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, 2024 2023 Contracted managed care 70% 67% Government 24% 26% Other third-parties 4% 5% 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.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K and can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 17, 2023 (the “2022 Annual Report”) and are incorporated herein by reference.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K and can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 20, 2024 (the “2023 Annual Report”) and are incorporated herein by reference.
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 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, 2024, 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 $3.5 million to $8.7 million.
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.
Geographic Coverage During 2024 and 2023, approximately 67% of our net revenue from continuing operations was generated by operations in our five largest states. During 2024 and 2023, our five largest states consisted of Texas, Florida, Georgia, California, and Washington. During both 2024 and 2023, our operations in Texas accounted for approximately 32% of our net revenue.
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 had approximately $1.34 billion in gross accounts receivable for continuing operations outstanding at December 31, 2024, 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 $6.4 million to $19.1 million.
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.
At December 31, 2024, our national network comprised approximately 2,335 affiliated physicians, including 1,335 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications.
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.
General Economic Conditions and Other Factors Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2024, the percentage of our patient service revenue being reimbursed under government-sponsored or funded healthcare programs (“GHC Programs”) decreased as compared to the year ended December 31, 2023.
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.
In addition, there is a corresponding insurance receivable of $28.5 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.
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.
After excluding discrete tax impacts and goodwill impairment-related effects for the years ended December 31, 2024 and 2023, our tax rates were 29.4% and 27.9%, 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.
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.
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, 2024, our DSO was 47.6 days.
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.
The purchase of common stock by participants in our 1996 Non-Qualified Employee Stock Purchase Plan, as amended (the “ESPP”), generated cash proceeds of $3.6 million, $4.9 million and $5.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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.
At December 31, 2024, the Company had long term capital requirements comprised primarily of $400.0 million in senior notes, $49.9 million of operating lease liabilities and $5.7 million of finance lease liabilities. At December 31, 2024, our total liability for uncertain tax positions was $2.9 million.
Excluding the effect of these items, our effective tax rate for the year ended December 31, 2023 was 35.8%. The tax rate for the year ended December 31, 2023 includes a net discrete tax expense of $7.9 million primarily related to the tax charge associated with the impairment of a cost-method investment as well as stock-based compensation shortfalls.
The tax rate for the year ended December 31, 2023 includes net discrete tax expense of $7.9 million, primarily related to the tax charge associated with the impairment of a cost-method investment as well as stock-based compensation shortfalls.
For the year ended December 31, 2023, both Adjusted EBITDA and Adjusted EPS are being further adjusted for impairment losses. For the years ended December 61 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 years ended December 31, 2024, 2023 and 2022, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude loss on disposal of businesses, impairment losses and the impacts from loss on the early extinguishment of debt, as relevant.
Transformation and Restructuring Related Initiatives Beginning in 2019, we developed a number of strategic initiatives across our organization, in both our shared services functions and our operational infrastructure, with a goal of generating improvements in our general and administrative expenses and our operational infrastructure.
Transformation and Restructuring Related Initiatives From time to time we develop strategic initiatives across our organization, in both our shared services functions and our operational infrastructure, with a goal of generating improvements in our general and administrative expenses and our operational infrastructure.
“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 total loss on disposal of these businesses was $11.0 million. “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.
Our termination of the Services Agreement was in connection with R1RCM’s performance, specifically R1RCM's failure to meet certain service levels set forth in the Services Agreement.
Our termination of the Services Agreement was in connection with R1RCM’s performance, specifically R1RCM's failure to meet certain service levels set forth in the Services Agreement. R1RCM was the primary provider of our enterprise revenue cycle management services.
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.
Our total liability related to professional liability risks at December 31, 2024 was $287.9 million, of which $30.4 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet.
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.
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, 2024 2023 Operating activities $ 217,250 $ 146,081 Investing activities (35,406 ) (48,176 ) Financing activities (14,485 ) (25,715 ) Operating Activities We generated cash flow from operating activities for continuing operations of $217.3 million and $146.1 million for the years ended December 31, 2024 and 2023, respectively.
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%.
The increase in revenue of $18.3 million, or 0.9%, was primarily attributable to an increase in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions. Same units are those units at which we provided services for the entire current period and the entire comparable period.
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.
We believe excluding the impacts from the impairment activity, transformational and restructuring related activity and loss on disposal of businesses provides a more comparable view of our operating income and operating margin. Total non-operating expenses were $32.6 million for the year ended December 31, 2024, as compared to $55.7 million for 2023.
Risk Factors ─ “We are undertaking a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as one or more third-party service providers.
Risk Factors ─ “During 2024, we undertook a transformation of our revenue cycle management function from an outsourced provider to a hybrid function that utilizes both our corporate personnel as well as third-party service providers.
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.
The net increase in cash flow of $71.2 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to increases in cash flow from accounts payable and accrued expenses, other long-term assets, income taxes and long-term professional liabilities.
A large majority of our affiliated physicians participate in our performance-based incentive compensation program and almost all of the payments due under the program are made annually in the first quarter.
Our cash flow from operating activities is significantly affected by the payment of physician incentive compensation. A large majority of our affiliated physicians participate in our performance-based incentive compensation program and almost all of the payments due under the program are made annually in the first quarter.
Many states have legislation on this topic and will continue to modify and review their laws pertaining to surprise billing. 55 For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received.
For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received.
In addition, during the first quarter of each year, we use cash to make any discretionary matching contributions for participants in our qualified contributory savings plans. 65 Investing Activities During the year ended December 31, 2023, our net cash used in investing activities for continuing operations of $48.2 million consisted primarily of capital expenditures of $33.3 million, net purchases from maturities or sale of investments of $9.0 million and acquisition payments of $6.7 million.
During the year ended December 31, 2023, our net cash used in 66 investing activities for continuing operations of $48.2 million consisted primarily of capital expenditures of $33.3 million, net purchases from maturities or sale of investments of $9.0 million and acquisition payments of $6.7 million.
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.
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.
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.
The Amended Credit Agreement also provides for other customary fees and charges, including an unused commitment fee with respect to the Revolving Credit Line ranging from 0.150% to 0.200% of the unused lending commitments under the Revolving Credit Line, based on our consolidated net leverage ratio. 67 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.
This transition will involve significant time and resources, and our failure to execute this transition efficiently and effectively may have a material impact on our business, financial condition, results of operations, cash flows and the trading price of our securities.” 2023 Acquisition Activity During 2023, we acquired one pediatric urology practice.
Our failure to execute a hybrid revenue cycle management function efficiently and effectively may have a material impact on our business, financial condition, results of operations, cash flows and the trading price of our securities.” 2024 Acquisition Activity During 2024, we acquired one maternal-fetal medicine practice.
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.
OVERVIEW Pediatrix is a leading provider of physician services including newborn, maternal-fetal and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 36 states.
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.
Excluding the impairment activity, transformational and restructuring related expenses and loss on disposal of businesses, our income from operations was $183.7 million and $157.9 million, and our operating margin was 9.1% and 7.9% for the years ended December 31, 2024 and 2023, respectively.
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.
Adjusted EPS was $1.51 for the year ended December 31, 2024, as compared to $1.26 for 2023. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2024, we had $229.9 million of cash and cash equivalents attributable to continuing operations as compared to $73.3 million at December 31, 2023.
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.
For example, the gross amount billed to patients covered under GHC Programs for the years ended December 31, 2024 and 2023 represented approximately 53% and 55%, respectively, of our total gross patient service revenue.
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.
Same-unit net revenue increased by $81.4 million, or 4.8%. The increase in same-unit net revenue was comprised of an increase of $47.8 million, or 2.8%, from net reimbursement-related factors, and $33.6 million, or 2.0%, related to patient service volumes.
General and administrative expenses as a percentage of net revenue was 11.4% for the year ended December 31, 2023, as compared to 11.7% for the same period in 2022. Transformational and restructuring related expenses attributable to continuing operations were $2.2 million for the year ended December 31, 2023, as compared to $27.3 million for 2022.
General and administrative expenses as a percentage of net revenue was 11.8% for the year ended December 31, 2024, as compared to 11.4% for the same period in 2023. Depreciation and amortization expense was $32.2 million for the year ended December 31, 2024, as compared to $36.2 million for 2023.
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.
We have 490 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. Our network also includes other pediatric subspecialists, including 240 physicians providing hospital-based pediatric care, over 230 physicians providing pediatric intensive care, and 20 physicians providing pediatric surgical care.
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.
Loss from continuing operations was $99.1 million for the year ended December 31, 2024, as compared to $60.4 million for 2023. Adjusted EBITDA from continuing operations was $224.0 million for the year ended December 31, 2024, as compared to $200.4 million for 2023.
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.
Additionally, we had working capital attributable to continuing operations of $205.5 million at December 31, 2024, an increase of $111.0 million from our working capital from continuing operations of $94.5 million at December 31, 2023. The increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily from an increase in revenue.
Practice salaries and benefits attributable to continuing operations increased by $65.0 million, or 4.7%, to $1.45 billion for the year ended December 31, 2023, as compared to $1.38 billion for 2022. Of the $65.0 million increase, $52.7 million was related to salaries and $12.3 million was related to benefits and incentive compensation.
Practice salaries and benefits decreased by $7.4 million, or 0.5%, to $1.44 billion for the year ended December 31, 2024, as compared to $1.45 billion for 2023.
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.
Investing Activities During the year ended December 31, 2024, our net cash used in investing activities of $35.4 million consisted primarily of capital expenditures of $22.0 million, net purchases from maturities or sale of investments of $12.1 million and acquisition payments of $8.2 million.
Recognition of this non-cash charge against goodwill resulted in a tax benefit which generated an additional deferred tax asset of $23.3 million that increased the book value of our equity. An incremental non-cash charge was required to reduce the book value of our equity to our previously determined fair value.
This assessment resulted in a non-cash impairment charge of $126.4 million for the year ended December 31, 2024. Recognition of this non-cash charge against goodwill resulted in a tax benefit which generated an additional deferred tax asset of $24.2 million that increased our book value.
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.
The net decrease in non-operating expenses was primarily related to an impairment loss of $20.0 million in the prior year related to a cost-method investment, an increase in investment income on higher cash balances and lower interest expense due to lower debt balances.
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 increase in our Adjusted EBITDA was primarily due to net favorable impacts in our same-unit results, primarily from higher revenue. 65 Diluted net loss per common and common equivalent share was $1.19 on weighted average shares outstanding of 83.3 million for the year ended December 31, 2024, as compared to $0.73 on weighted average shares outstanding of 82.2 million for 2023.
We had broadly classified these workstreams in four categories including practice operations, revenue cycle management, information technology and human resources. We have included the expenses, which in certain cases represent estimates, related to such activity on a separate line item in our consolidated statements.
We have included the expenses, which in certain cases represent estimates, related to such activity on a separate line item in our consolidated statements. During 2024, our transformation and restructuring related expenses relate specifically to our practice portfolio management activities, revenue cycle management transition activities and position eliminations across various shared services and operations departments.
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.
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 47.6 days at December 31, 2024 as compared to 50.5 days at December 31, 2023. The 2.9 days decrease in DSO was primarily due to improved cash collections at existing units.
At that date, our market capitalization exceeded the book value of our equity and we elected to perform a qualitative assessment. Based on the facts and circumstances at the time, we determined no impairment existed.
At that date, we elected to perform a quantitative assessment and determined no impairment existed. 58 During the second quarter of 2024, we experienced a triggering event, due to a sustained decline in our stock price and a market capitalization below our book equity value.
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.
During the year ended December 31, 2024, cash flow from accounts receivable for continuing operations was $10.3 million, as compared to $26.3 million for the same period in 2023. DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles.
Providers that violate these surprise billing prohibitions may be subject to state enforcement action or federal civil monetary penalties.
Providers that violate these surprise billing prohibitions may be subject to enforcement actions by CMS or by states, one or both of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties enforcement action and federal civil monetary penalties.
Our effective income tax rate (“tax rate”) attributable to continuing operations was (24.9)% for the year ended December 31, 2023, compared to 23.1% for the year ended December 31, 2022. The tax rate for the year ended December 31, 2023 is not meaningful as calculated due to the pre-tax income and related tax effects of the non-cash goodwill impairment charge.
Our effective income tax rate (“tax rate”) was 2.2% for the year ended December 31, 2024, compared to (24.9)% for the year ended December 31, 2023.
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.
General and administrative expenses 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. General and administrative expenses increased by $10.9 million, or 4.8%, to $238.4 million for the year ended December 31, 2024, as compared to $227.5 million for 2023.
Adjusted EBITDA from continuing operations attributable to Pediatrix Medical Group, Inc. was $200.4 million for the year ended December 31, 2023, as compared to $241.0 million for 2022. The decrease in our Adjusted EBITDA was primarily due to net unfavorable impacts in our same-unit results, primarily from higher operating expenses as well as a decrease in CARES Act relief.
Our operating margin was (3.4)% for the year ended December 31, 2024, as compared to 0.4% for the same period in 2023. The decrease in our operating margin was primarily due to impairment activity, transformational and restructuring expenses and loss on disposal of businesses, partially offset by net favorable impacts from same-unit results due to higher revenue.
The increase was primarily attributable to increases in practice supply, rent and other costs at our existing units, including increases in workers' compensation insurance and medical and office supplies expense, partially offset by a decrease in operating taxes.
The $7.4 million decrease was primarily related to non-same unit activity, primarily resulting from practice dispositions, partially offset by an increase in clinical compensation expense, including incentive compensation based on practice results and benefits, all at our existing units. The net increase in benefits primarily reflects increases in payroll taxes and group insurance costs.
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.
Financing Activities During the year ended December 31, 2024, our net cash used in financing activities of $14.5 million primarily consisted of payments of $12.5 million on our Term A Loan (as defined below).
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.
Practice supplies and other operating expenses decreased by $7.1 million, or 5.7%, to $117.7 million for the year ended December 31, 2024, as compared to $124.8 million for 2023. The decrease was primarily attributable to non-same unit activity, primarily resulting from practice dispositions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
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, 2024, we had an outstanding principal balance of $215.6 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 $2.3 million per year. 68
Considering the total outstanding balance, a 1% change in interest rates would result in an impact to income before income taxes of $2.2 million per year. 68

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