Mednax, Inc.
MD
seems to be a good investment choice for investors, courtesy of rebounding patient volumes, the continuous addition of physician practices within its portfolio, sound financial position and favorable growth estimates.
Zacks Rank & Price Performance
Mednax currently sports a Zacks Rank #1 (Strong Buy). In a year, the stock has lost 15.7% against the
industry
’s rally of 27.3%. The
Medical
sector has declined 20%, while the Zacks S&P 500 composite has gained 5% in the same time frame.
Image Source: Zacks Investment Research
Favorable Style Score
MD carries an impressive
Value Score
of B. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.
Robust Growth Prospects
The Zacks Consensus Estimate for 2022 earnings is pegged at $1.84, indicating an increase of 12.9% on 4.2% higher revenues of $2 billion. The consensus mark for 2023 earnings stands at $2.00, suggesting growth of 8.5% on 5.2% higher revenues of $2.1 billion.
The expected long-term earnings growth rate is pegged at 9%, better than the industry’s average of 8.5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 has moved north by 7% and 5.3%, respectively, in the past 30 days, reflecting analyst optimism.
Impressive Earnings Surprise History
Mednax boasts a solid earnings surprise history, wherein the bottom line outpaced estimates in each of the trailing four quarters and missed once, the average surprise being 27.99%.
Business Tailwinds
Mednax has been entering into several fee-for-service contracts with hospitals and other healthcare facilities to deliver physician services, which in turn, contributes a substantial part to the healthcare provider’s revenues. After witnessing a dismal period in 2020, revenues of MD benefited from the recovery in patient volumes in 2021. Management anticipates revenues to lie in the $2 billion range for 2022, which indicates an increase of around 5.3% from the 2021 reported figure.
Mednax has a sound acquisition strategy in place, which has been bolstering capabilities, care network and the nationwide presence of MD. During 2021, the healthcare provider purchased nine physician practices comprising one pediatric orthopedic practice, one multi-location pediatric primary and urgent care practice, one pediatric cardiology practice, two pediatric neurology practices, one maternal-fetal medicine practice, one obstetrics and gynecology practice, one pediatric intensivist practice and one neonatology practice. At the end of 2021, the national network of Mednax included more than 2,400 affiliated physicians extending newborn, maternal-fetal, pediatric cardiology and other pediatric subspecialty care.
MD has been quite active on the acquisition front in 2022. Mednax and its affiliated practices Pediatrix Medical Group announced the acquisition of Florida-based Night Lite Pediatrics in February this year. The addition of Florida’s facility (backed by a solid team of practice providers and clinic support staff) into MD’s portfolio will aid it in delivering the best services to patients.
Mednax boasts a solid financial standing backed by a strong cash balance and adequate cash-generating abilities. MD generated cash from operations worth $76.7 million in 2021. Consequently, funds generated from operations and available under its Credit Agreement combined with a sound cash balance make management optimistic regarding the pursuit of acquisitions and share buybacks.
Mednax’s leverage ratio has been improving for a while. This uptrend is further substantiated by MD’s total debt to total capital of 52.8% at the fourth-quarter end, which not only improved 1,720 basis points from the level achieved at 2020 end but remained below the industry’s figure of 91.9%.
Stocks to Consider
Some better-ranked stocks in the medical space are
AMN Healthcare Services, Inc.
AMN
,
Corbus Pharmaceuticals Holdings, Inc.
CRBP
and
IDEXX Laboratories, Inc.
IDXX
. While AMN Healthcare sports a Zacks Rank #1, Corbus Pharmaceuticals and IDEXX Laboratories carry a Zacks Rank #2 (Buy) at present. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
AMN Healthcare’s earnings surpassed estimates in each of the last four quarters, the average surprise being 20.00%. The Zacks Consensus Estimate for AMN’s 2022 earnings suggests an improvement of 15.2% from the year-ago reported figure, while the same for revenues suggests growth of 18.8%. The consensus mark for 2022 earnings has moved north by 39.5% in the past 30 days. AMN Healthcare has a Value Score of B.
The bottom line of Corbus Pharmaceuticals outpaced earnings estimates in three of the last four quarters and missed once, the average surprise being 23.07%. The Zacks Consensus Estimate for CRBP’s 2022 earnings suggests an improvement of 21.6% from the year-ago reported figure.. The consensus mark for Corbus Pharmaceuticals’ 2022 earnings has moved north by 19.4% in the past seven days.
IDEXX Laboratories has a trailing four-quarter earnings surprise of 18.55%, on average. The Zacks Consensus Estimate for IDXX’s 2022 earnings indicates a rise of 9.9% year over year, while the same for revenues suggests an improvement of 10.3%. The consensus mark has moved north by 1.1% in the past 60 days. IDEXX Laboratories has a
Growth Score
of B.
Shares of AMN Healthcare and IDEXX Laboratories have gained 35% and 3.6%, respectively, in a year. Meanwhile, Corbus Pharmaceuticals stock has lost 82.6% in the same time frame.
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