Pediatrix Medical Group, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the MEDNAC's fourth quarter 2020 earnings conference call. At this time, all parties are in a listen-only mode. Later, we will conduct a question and answer session. The instructions will be given at that time. If you should require assistance during the call, please press star and then zero. And as a reminder, this call is being recorded. I'd now like to turn the conference over to our host, Mr. Charles Lynch. Please go ahead, sir.

Thank you, and good morning, everyone. Thanks for joining our call. I'll quickly read through our forward-looking statements and then turn the call over to Mark. Certain statements and information during this conference call may be deemed to be forward-looking statements within the meaning of the Federal Private Security's Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by MEDNAX's management in light of their experience and assessment of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and Mednax undertakes no duty to update or revise any such statements, whether as a result of new information, future events, or otherwise. Important factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in the company's most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K, including the sections entitled Risk Factors. In today's remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning's earnings press release, our annual report on Form 10-K, and in the investor section of our website located at MedNet.com. With that, I'll turn the call over to our CEO, Mark Borden.

Thanks, Charlie, and good morning, everyone. Also joining me on today's call are Mark Richards, our CFO, and Dr. Mack Hinson, President of our Pediatrics and Obstetrics Medical Group. When I spoke to you after Q3, I expressed confidence in our earnings power once we moved past the impact of the COVID pandemic, and that a run rate of $270 million in adjusted EBITDA is achievable. This remains my view, as I'll shortly discuss. In the fourth quarter, while our hospital birth rates were down 3.3%, our NICU volume was down just over 6 percent. In combination with the 200 basis point payer mix decline, this was more pronounced in November and December. And this led to a decline in the fourth quarter compared to the third. And while we hadn't provided specific guidance for the quarter, we did suggest on our last call that an appropriate baseline would be something similar to Q3. Our fourth quarter results, of course, were short of that based on that payer mix shift. It was a tough end, a very tough year. As a brief note, January results showed improvement in both volume and mix year-over-year versus the fourth quarter, and Mark will also give some details there. But at this point, we're certainly not extrapolating that one month of experience out further into 21. And since, like many other companies affected by COVID, we can't possibly call the turn nor pinpoint where we might be with such a broad possible range of outcomes, we will not be providing guidance for 2021 at this time. But when we think about 2021, we first consider our 2019 EBITDA of $265 million, left the roughly $40 to $50 million we estimate as the effect of COVID and last year's birth rate decline. That gets us to a baseline. We also consider operational efficiencies, corporate efficiencies, organic and acquired growth, and market-focused strategies, some of which we expect to contribute this year and some in 22 and beyond. Mark and I will be talking about all of these today, and they are the factors that make me optimistic that our post-COVID earning power is actually greater than I thought before. I fully believe our total focus on our women's and children's services will pay off. We're positioning our organization to be efficient and successful and to be an even better partner to our patients, to our payers, and to the health systems we work with. So where are we focused? Above all else, we are positioning Mednax as a leading provider of women's and children's healthcare in the markets we serve. To do that, and since we are already a leader in caring for babies, children, and mothers most in need, we are doing all we can to drive enhancements in patient access. First, our practice analytics I spoke of during our last call have been rolled out, enabling much better understanding and oversight at the practice level. Our scheduling and patient volume management tools fit well with this enhanced understanding. We are also expanding our telehealth services to ensure that when you need MedMax, we will be there, and that neither COVID, sleep, nor snow will stop us. Second, we need to broaden the range of services we provide. In each of our markets, we are identifying and filling needs in all of our core pediatric subspecialties for the sake of our patients and our hospital partners, whether that's through acquisitions of new practices sales-driven growth, or recruiting. I'll also let you in on a MedNAC secret that we won't keep secret. We proudly spend a great deal of money and time on independent clinical research, clinical training, and seminars. This area, along with all of our clinical needs, is led by Dr. Kurt Pickard, and its sole mission is to support our affiliated doctors and to enable the best possible care through better database knowledge. This is what our affiliated clinicians want in their practices. And third, in keeping with our commitment to lead in women's and children's care, I'm excited to announce the addition of a blend of pediatric urgent and primary care to our core pediatric services. Given our great bench strength of pediatricians and clinicians in our markets, we think it's only natural to help families as the go-to group for your babies, children's, and maternal needs. So whether it's for a cut or scrape, immunizations or tests, a consultation or super convenient and expert primary care, we want families to turn to us because they trust us and know they can rely on us. And they should because they'll know we can not only handle day-to-day needs, but we and our hospital partners can handle anything life throws their way. Wouldn't you want your loved ones to benefit from all we do at MedNet? Today, we are announcing that to begin this effort, we are acquiring Nightlight Pediatric Urgent Care of Houston, Texas. Nightlight is small but mighty. This minority women-owned and led eight-unit practice will be the foundation of our multi-market growth plans in this space. Nightlight's CEO, Zawadi Bryant, and medical director, Dr. Anastasia Jentles, will join MedNAS as executives in charge of this area, reporting directly to me, Mac, and Dr. Jim Swift, our Chief Development Officer. I'll be especially involved, particularly given my background in multi-site real estate in both healthcare and retail. And since we view this as a new and enhanced service for our hospital partners, Mac, Jim, and our other senior market leaders will be working together to tailor what we do to best serve our patients and hospitals in our core market. You'll of course note that we are jumping into this without a big splashy acquisition. We believe our existing operations team and our major markets are sized to be able to oversee our growth in this area since it's a clear extension of our core. Beyond patient access, we are working to be as efficient as possible. I would also add that urgent care, primary care, telehealth, and broader patient access fit perfectly in a value-based approach to care. We have been determined for over 40 years to take great care of the patient in every way, every day. The combination of the efforts I'm describing only further this. We're equally focused on efficiency from a corporate standpoint because the more efficiently we can run MedNet as a business, the better we'll be at supporting our practices and partners. So Mark will also give some details about where we think we can go in terms of our corporate expenses. So here at the onset of 2021, I'm inviting you to consider our post-COVID company when we combine our core practices, operational improvements with the strategies and growth additions I've just outlined, as well as the efficiencies that Mark will further detail. But also consider all of this linked to our very strong balance sheet, cash position, and cash flow. It's this strong combination of factors that gives me increased confidence in our earnings power and the opportunity to move meaningfully beyond the $270 million in adjusted EBITDA that we've referenced, while still being able to consider other shareholder-friendly uses of our capital. With that, I'll turn the call over to Mark Richards to provide more detail. Mark? Mark Richards Thanks, Mark, and good morning, everyone.