UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ______ to ______
Commission File Number:
(Exact name of registrant as specified in its charter)
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(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
On April 22, 2022, the registrant had outstanding
Mednax, Inc.
INDEX
2
Mednax, Inc.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
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March 31, 2022 |
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December 31, 2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable, net |
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Prepaid expenses |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Intangible assets, net |
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Operating and finance lease right-of-use assets |
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Deferred income tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Current portion of finance lease liabilities |
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Current portion of operating lease liabilities |
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Income taxes payable |
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Total current liabilities |
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Line of credit |
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Long-term debt and finance lease liabilities, net |
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Long-term operating lease liabilities |
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Long-term professional liabilities |
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Deferred income tax liabilities |
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Other liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Preferred stock; $ par value; |
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Common stock; $ par value; |
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Additional paid-in capital |
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Accumulated other comprehensive (loss) income |
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Retained deficit |
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Total Mednax, Inc. shareholders’ equity |
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Noncontrolling interest |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
3
Mednax, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
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Three Months Ended |
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2022 |
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2021 |
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Net revenue |
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$ |
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$ |
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Operating expenses: |
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Practice salaries and benefits |
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Practice supplies and other operating expenses |
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General and administrative expenses |
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Depreciation and amortization |
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Transformational and restructuring related expenses |
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Total operating expenses |
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Income from operations |
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Investment and other income |
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Interest expense |
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Loss on early extinguishment of debt |
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Equity in earnings of unconsolidated affiliate |
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Total non-operating expenses |
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(Loss) income from continuing operations before income taxes |
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Income tax benefit |
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(Loss) income from continuing operations |
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(Loss) income from discontinued operations, net of tax |
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Net (loss) income |
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Net loss attributable to noncontrolling interest |
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Net (loss) income attributable to Mednax, Inc. |
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$ |
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$ |
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Per common and common equivalent share data: |
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(Loss) income from continuing operations: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Income from discontinued operations: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Net (loss) income attributable to Mednax, Inc.: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average common shares: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
4
Mednax, Inc.
Consolidated Statements of Equity
(in thousands)
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Common Stock |
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Number of |
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Additional |
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Accumulated |
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Retained |
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Total |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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2022 |
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Balance at January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Dissolution of and net loss attributable to noncontrolling interest (1) |
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— |
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— |
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— |
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( |
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( |
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Unrealized holding loss on investments, net of tax |
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— |
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— |
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— |
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( |
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— |
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( |
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Common stock issued under employee stock option, |
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— |
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— |
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— |
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Issuance of restricted stock |
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( |
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— |
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— |
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— |
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Forfeitures of restricted stock |
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( |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Repurchased common stock |
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( |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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2021 |
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Balance at January 1, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Net loss attributable to noncontrolling interest (1) |
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— |
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— |
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— |
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— |
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( |
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( |
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Unrealized holding loss on investments, net of tax |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Common stock issued under employee stock option, |
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— |
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— |
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— |
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Issuance of restricted stock |
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( |
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— |
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— |
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— |
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Forfeitures of restricted stock |
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( |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Repurchased common stock |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
5
Mednax, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net (loss) income |
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$ |
( |
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$ |
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Loss (income) from discontinued operations |
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( |
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Adjustments to reconcile net income (loss) to net cash from operating activities: |
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Depreciation and amortization |
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Amortization of premiums, discounts and issuance costs |
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Loss on early extinguishment of debt |
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Stock-based compensation expense |
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Deferred income taxes |
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( |
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Other |
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( |
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( |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Prepaid expenses and other current assets |
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Other long-term assets |
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( |
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Accounts payable and accrued expenses |
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( |
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( |
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Income taxes receivable |
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( |
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Long-term professional liabilities |
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( |
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Other liabilities |
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( |
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Net cash used in operating activities – continuing operations |
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Net cash (used in) provided by operating activities - discontinued operations |
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( |
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Net cash used in operating activities |
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( |
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Cash flows from investing activities: |
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Acquisition payments, net of cash acquired |
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( |
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( |
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Purchases of investments |
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( |
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( |
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Proceeds from maturities or sales of investments |
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Purchases of property and equipment |
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( |
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Other |
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Net cash used in investing activities – continuing operations |
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( |
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( |
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Net cash provided by investing activities - discontinued operations |
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Net cash used in investing activities |
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( |
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Cash flows from financing activities: |
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Borrowings on credit agreement |
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Payments on credit agreement |
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( |
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Redemption of senior notes, including call premium |
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( |
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( |
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Proceeds from senior notes and term loan |
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Payments for financing costs |
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( |
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Payments on finance lease obligations |
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( |
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( |
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Proceeds from issuance of common stock |
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Repurchases of common stock |
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( |
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( |
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Other |
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( |
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Net cash used in financing activities – continuing operations |
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( |
) |
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( |
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Net cash used in financing activities |
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( |
) |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
6
Mednax, Inc.
Notes to Consolidated Financial Statements
March 31, 2022
(Unaudited)
1. Basis of Presentation and New Accounting Pronouncements:
The accompanying unaudited Consolidated Financial Statements of the Company and the notes thereto presented in this Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements, and do not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of interim periods. The financial statements include all the accounts of Mednax, Inc. and its consolidated subsidiaries (collectively, “MDX”) together with the accounts of MDX’s affiliated business corporations or professional associations, professional corporations, limited liability companies and partnerships (the “affiliated professional contractors”). Certain subsidiaries of MDX have contractual management arrangements with its affiliated professional contractors, which are separate legal entities that provide physician services in certain states and Puerto Rico. The terms “Mednax” and the “Company” refer collectively to Mednax Inc., its subsidiaries and the affiliated professional contractors.
The Company is a party to a joint venture in which it owns a
The consolidated results of operations for the interim periods presented are not necessarily indicative of the results to be experienced for the entire fiscal year. In addition, the accompanying unaudited Consolidated Financial Statements and the notes thereto should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company’s most recent Annual Report on Form 10-K (the “Form 10-K”).
2. Coronavirus Pandemic (“COVID-19”):
COVID-19 has had an impact on the demand for medical services provided by the Company's affiliated clinicians. Beginning in mid-March 2020 and through the second quarter of 2020, the Company’s affiliated office-based practices, which specialize in maternal-fetal medicine, pediatric cardiology, and numerous pediatric subspecialties, experienced a significant elevation of appointment cancellations compared to historical normal levels. The Company believes COVID-19, either directly or indirectly, also had an impact on its neonatology intensive care unit (“NICU”) patient volumes. Overall, the Company's operating results were significantly impacted by COVID-19 beginning in mid-March 2020, but volumes began to normalize in mid-2020 and substantially recovered throughout 2020 with no material impacts from COVID-19 or its variants in 2021 or thus far in 2022. However, due to the continued uncertainties surrounding the timeline of and impacts from COVID-19 and with multiple variant strains still circulating, the Company is unable to predict the ultimate impact on its business, financial condition, results of operations, cash flows and the trading price of its securities at this time.
CARES Act
In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing financial aid to the healthcare industry to reimburse healthcare providers for lost revenue and expenses attributable to COVID-19. The Department of Health and Human Services (“HHS”) is administering this program and began disbursing funds in April 2020, of which the Company’s affiliated physician practices within continuing operations received an aggregate of $
3. Cash Equivalents and Investments:
As of March 31, 2022 and December 31, 2021, the Company's cash equivalents consisted entirely of money market funds totaling $
Investments held are all classified as current and at March 31, 2022 and December 31, 2021 are summarized as follows (in thousands):
7
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March 31, 2022 |
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December 31, 2021 |
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Corporate securities |
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$ |
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$ |
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Municipal debt securities |
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U.S. Treasury securities |
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Certificates of deposit |
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Federal home loan securities |
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$ |
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$ |
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4. Fair Value Measurements:
The accounting guidance establishes a fair value hierarchy that prioritizes valuation inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The following table presents information about the Company’s financial instruments that are accounted for at fair value on a recurring basis at March 31, 2022 and December 31, 2021 (in thousands):
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Fair Value |
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|||||
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Fair Value |
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March 31, 2022 |
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December 31, 2021 |
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Assets: |
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Money market funds |
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Level 1 |
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$ |
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$ |
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Short-term investments |
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Level 2 |
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