Pediatrix Medical Group reported higher third-quarter revenue but slightly lower adjusted EBITDA, as growth in revenue was outpaced by rising costs at existing practices. Adjusted earnings per share increased from a year earlier, while reported net income and earnings per share fell, partly because the prior-year quarter included a gain from investments in businesses the company had divested.
Key details
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Revenue rose 1.7% to $501.4 million from $492.9 million a year earlier. Growth included a 1.1% contribution from activity outside the same-unit base, driven by acquisitions and partly offset by practice dispositions, and 0.6% growth at existing units.
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Same-unit revenue growth was evenly split between reimbursement-related factors and patient volume, each up 0.3%. Reimbursement benefited mainly from a more favorable payor mix, higher administrative fees from hospital partners and greater patient acuity, particularly in neonatology. The share of services reimbursed by commercial and other non-government payors rose 0.7 percentage points.
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Patient volumes were mixed. In the quarter, hospital-based patient services volume declined 0.3% year over year, while office-based volume increased 2.9%. Neonatal intensive care unit days were down 0.1%.
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Net income was $47.0 million, or $0.59 per diluted share, compared with $71.7 million, or $0.84 per share, in the prior-year quarter. The 2025 period included a $20.9 million gain on investments in divested businesses, which contributed to the year-over-year decline in reported earnings.
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Adjusted EPS increased to $0.72 from $0.67. The company’s adjusted measure excludes items including amortization, stock-based compensation, restructuring costs, gains on divested-business investments and certain tax effects.
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Adjusted EBITDA slipped to $85.5 million from $87.3 million. Pediatrix attributed the decrease mainly to expenses growing faster than revenue at existing units, partly offset by favorable contributions from acquisitions.
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Costs increased: Practice salaries and benefits were $341.5 million, up from $332.3 million, primarily because of higher clinical salaries, partly offset by lower benefits expense. General and administrative costs rose to $62.7 million from $60.8 million, mainly reflecting higher incentive compensation. Restructuring and transformation costs were broadly unchanged at $6.1 million.
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Interest expense declined to $8.1 million from $8.9 million, reflecting modestly lower interest rates and borrowings. Depreciation and amortization increased to $6.2 million from $5.6 million, partly due to capital spending and acquisitions.
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The diluted share count fell to 79.7 million from 85.6 million. Pediatrix said the reduction primarily reflected shares repurchased under its buyback program, partly offset by restricted-stock issuances.
Plain-English implications
The quarter showed modest revenue growth, supported by acquisitions and improved reimbursement factors, but cost pressure at existing practices weighed on adjusted EBITDA. The lower share count helped reduce the number of shares over which earnings are divided; reported earnings also faced a tough comparison with the prior-year gain from divested-business investments.