Pediatrix Medical Group, Inc.

Thank you for standing by. My name is Tammy and I will be your conference operator today. At this time, I would like to welcome everyone to the Pediatrics Medical Group Inc. 4th Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Charles Link. Please go ahead, sir.

Thank you, operator. Good morning, everyone. Welcome to our fourth quarter earnings call. I'll quickly read 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 Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by Pediatrics' 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 Pediatrics 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 filings with the SEC, 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 quarterly reports on Form 10-Q and our annual report on Form 10-K, and on our website at www.pediatrics.com. With that, I'll turn the call over to our CEO, Mark Hordan.

Thank you, Charlie, and good morning, everyone. Also with me today is Cassandra Rossi, our Chief Financial Officer. First, I want to thank Charlie, who will be departing at the end of this month. Charlie's contributions to our strategic goals and the communication of those goals to you will be missed. Please join me in wishing him well in his future endeavors. I want to begin by thanking our Board of Directors for reappointing me as Chief Executive Officer after serving as Executive Chair. I'm excited to return to this role, and particularly at this point in time for the company, following a period of such significant change. As I'll explain in a few minutes, I returned out of optimism about our prospects. I will begin with our fourth quarter results and then spend time on our strategic priorities for 2025 and beyond. We finished 2024 with very strong fourth quarter and therefore year-end results. Our same-unit revenue growth was strong, driven by continued favorable payer mix and positive volumes. Our same-unit cost trend continued down compared to the third quarter as well. As a result, adjusted EBITDA of $69 million was significantly above the expectations we provided in our updated guidance last year. From a strategic standpoint, we completed our portfolio restructuring on time Exiting practices that represented $200 million in annual revenue and a clear drag on earnings with their requisite overhead. I worked very closely with our operating teams who were incredibly focused on this goal. Their very hard work ensured that we were able to begin 2025 with a more focused portfolio and a more efficient operating team. successful transition of our revenue cycle management function to a hybrid model enables us to focus this year first on ensuring the stability of our now very improved RCM process and then on continued improvement in our performance. Next, I'll add my thoughts on our strategic priorities following our portfolio restructuring and RCM transition. First, we start with a sector-leading balance sheet with net debt of about 1.7 times. This affords us both flexibility and opportunities, which is most important in turbulent times. We now have a smaller footprint, resulting in a more focused and more efficient organization, and our priorities are quite clear. We will first and foremost prioritize patient-centric care by providing optimal support to our clinicians and our practices. We will seek to strengthen our hospital and health system relationships. and we will look to be good stewards of our improved financial position and our cash flow. I also fully believe that the net results of following these priorities can be consistent, visible, and strong operating results. With that in mind, and based on a robust budgeting process in which we focused on both the headwinds and opportunities we faced in 2025, This morning, we provided a preliminary expectation of adjusted EBITDA of between $215 and $235 million. Cassandra will shortly provide some additional thoughts, but we believe that this represents a rigorous yet realistic and achievable outlook for our business this year, which we will obviously revisit and update as appropriate in coming quarters. I'd anticipate that some of you are wondering, with the strength of our business and all that we accomplished, why not a guide to a higher number? Bear in mind that adjusted for the leap year at 2024, adjusted EBITDA was roughly $220 million. So at midpoint of 2025, guidance of $225 million is, of course, an increase. As I began my remarks, I returned to pediatrics as CEO because I see a real opportunity to further transform the company through better hospital relationships, better recruiting, which by the way will report to me, and growth and opportunities that both of these will afford. We are of course mindful that we are in a period of great uncertainty with headwinds in the healthcare provider space. These headwinds make us realistic about the year ahead, but in no way do they counter our optimism. With that, I'll turn the call over to Sandra.