What Pediatrix Medical Group (MD) Said on Its Q3 Earnings Call

Key Points

• Pediatrix exceeded expectations in Q3 2026, reporting $85 million in adjusted EBITDA and narrowing its full-year outlook to $290 million–$300 million. Same-unit revenue grew as volume and pricing each contributed 30 basis points.
• Revenue rose just under 2% year over year, driven by acquisitions and same-unit gains, while operating cash flow declined to $118 million from $138 million. The company ended the quarter with $312 million in cash and leverage below one times EBITDA.
• Pediatrix repurchased more than 3 million shares during the quarter and has bought back 10 million shares since August 2025. Management plans to remain opportunistic on repurchases while evaluating acquisitions in women’s and children’s healthcare and expanding telehealth.

Pediatrix Medical Group NYSE: MD reported third-quarter 2026 adjusted EBITDA of $85 million, with management saying results exceeded its expectations despite rising costs across healthcare delivery. The company narrowed its full-year adjusted EBITDA outlook to a range of $290 million to $300 million.

Chief Executive Officer Mark Ordan said same-unit revenue was positive during the quarter, with volume and pricing contributing equally. The company continued to see no clear negative impact from the lapse of Affordable Care Act subsidies, an issue that management said it has monitored for several quarters.

“Our overall results for the quarter exceeded our expectations in spite of increasing costs in virtually all areas of providing great healthcare,” Ordan said.

Revenue Growth Driven by Acquisitions and Same-Unit Gains

Chief Financial Officer Kasandra Rossi said consolidated revenue increased by just under 2% from a year earlier. Growth was driven by non-same-unit activity, primarily recent acquisitions, as well as 60 basis points of same-unit growth.

Same-unit patient service volumes increased about 30 basis points, led by maternal-fetal medicine services. That growth was partly offset by declines in other neonatology services, primarily newborn nursery activity. NICU days were stable from the prior-year period.

Same-unit pricing increased 30 basis points. Rossi attributed the improvement to favorable payer mix, higher hospital administrative fees and increased patient acuity, primarily in neonatology. She said payer mix accounted for roughly 40% of the positive pricing factors, while hospital administrative fees contributed about 25% and acuity represented about 15%.

The company began to lap favorable collection activity from prior quarters, which reduced pricing by a little more than 100 basis points during the third quarter, Rossi said. She described revenue-cycle-management trends as being in a “very steady state,” while noting the company continues to seek further automation opportunities.

Expenses, Cash Flow and Balance Sheet

Practice-level salaries, wages and benefits expenses increased from a year earlier. On a same-unit basis, higher salary expense was partly offset by lower benefits expense. Rossi said clinical salary growth has remained in the approximately 3% to 3.5% range over the past several years, compared with mid- to high-single-digit growth seen several years ago.

Depreciation and amortization expense rose about $700,000 year over year, reflecting capital expenditures at existing units and capital expenditures and intangible amortization from recent acquisitions. Higher incentive-based compensation tied to financial results was partly offset by lower technology-related expenses, including certain software-as-a-service costs rolling out of the profit-and-loss statement.

Operating cash flow totaled $118 million in the third quarter, compared with $138 million in the prior-year period. Rossi said the decline reflected changes in cash flow from accounts payable and accrued expenses and accounts receivable.

As of Sept. 30, Pediatrix had $312 million in cash and net debt of just over $266 million. Leverage stood at just under one times, based on the midpoint of the company’s updated 2026 adjusted EBITDA guidance. Accounts receivable days sales outstanding were 42.5 days, unchanged from June 30 and March 31 and down by more than half a day from a year earlier.

Share Repurchases and Capital Allocation

Pediatrix repurchased just over 3 million shares during the quarter. Since August 2025, the company has repurchased 10 million shares at an average price of $23 per share, reducing shares outstanding to 78 million from 87 million at the end of the second quarter of 2025, according to Ordan.

Ordan said the company has sought to be opportunistic with its buyback program and will continue to consider the pace of repurchases with its board. He also emphasized that Pediatrix’s balance sheet leaves it positioned to pursue potentially larger acquisitions.

Management said it would consider acquisition opportunities adjacent to its existing operations and within women’s and children’s healthcare. Pediatrix is also expanding telehealth services and evaluating select opportunities in the OB hospitalist market. Ordan said coding changes scheduled to take effect in 2027 could affect that area, though the rules have not been finalized and OB hospitalist services are not currently a material part of the company’s business.

Insurance Mix and Regulatory Issues

Management said it has not experienced a discernible business impact from the expiration of ACA subsidies. Ordan said the company continues to examine anecdotal developments and assess whether they are affecting Pediatrix, but has not seen evidence of a negative effect to date.

Rossi said payer mix improved by more than 70 basis points from the third quarter of 2025 and remained stable sequentially. Management expects payer mix to remain stable, while continuing to pursue administrative-fee increases with hospital partners where warranted.

On the No Surprises Act independent dispute resolution process, Ordan said Pediatrix has historically been out of network for less than 5% of its business. He said the company does not expect proposed changes to the process to become a headwind, citing its view that the company follows the rules and is overwhelmingly in network.

Ordan also said hospital subsidy arrangements for NICU practices are “considerably less than half” of the company’s practices and have not changed substantially year over year. He said Pediatrix works to demonstrate the value it provides to hospital partners by operating NICUs efficiently and maintaining high-quality care.

About Pediatrix Medical Group (NYSE:MD)

Pediatrix Medical Group, Inc provides specialized physician-led healthcare services for women, infants and children. The company's clinical offerings include neonatal and perinatal care, maternal-fetal medicine, pediatric medical subspecialties, pediatric hospitalist services and related services delivered in partnership with hospitals and healthcare systems.

Pediatrix-affiliated physicians and advanced practice providers generally work in hospital-based settings, including neonatal intensive care units, delivery rooms, pediatric units and outpatient practices.

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