Breaking Down Pediatrix Medical Group, Inc. (MD) Financial Health: Key Insights for Investors

You're looking at Pediatrix Medical Group, Inc. (MD) and seeing a healthcare company in the middle of a major overhaul, so the key takeaway is this: the revenue number is misleading, but profitability is surging. The third quarter of 2025 saw net revenue dip to $493 million due to selling off non-core practices, but don't miss the real story: same-unit revenue-what matters for the core business-jumped a strong 8.0%, driven by better collections and higher patient acuity (sicker patients requiring more complex care). This operational focus is why they just raised their full-year 2025 Adjusted EBITDA guidance to a range of $270 million to $290 million, and why net income for Q3 hit a significant $72 million; that's a huge jump from the prior year. Honestly, the shift to a lean, profitable model is working, plus the balance sheet looks solid with net leverage now sitting at just under 1x; they even approved a $250 million share repurchase program. What this estimate hides, though, is the ongoing pressure on hospital fees, still a near-term risk you need to map against that impressive 15.7% projected Adjusted EBITDA margin.

Revenue Analysis

You're looking at Pediatrix Medical Group, Inc. (MD) and seeing a top-line revenue number that looks soft, but you need to look past the headline figure. The overall year-over-year revenue decline is a strategic choice, not an operational failure; the core business is actually performing well.

For the trailing twelve months (TTM) ending September 30, 2025, Pediatrix Medical Group, Inc.'s total revenue stood at approximately $1.92 billion. This figure reflects a year-over-year decrease of about 4.21%. That drop is defintely a head-turner, but it's crucial to understand the moving parts behind it.

Primary Revenue Sources and Business Segments

Pediatrix Medical Group, Inc. operates under a single, focused segment: specialized physician services. This means its revenue is almost entirely derived from professional fees for care provided to women, babies, and children. The business is concentrated in high-acuity, hospital-based care.

• Newborn Care: Neonatology services, often in Neonatal Intensive Care Units (NICUs).
• Maternal-Fetal Medicine: High-risk obstetrics and prenatal diagnostics.
• Pediatric Subspecialty Care: Cardiology, anesthesiology, and other specialized services.

The majority of the company's revenue comes from its neonatology and other pediatric subspecialty services. You can see the strategic focus on high-value care by reviewing their Mission Statement, Vision, & Core Values of Pediatrix Medical Group, Inc. (MD).

Decoding the Revenue Growth Rate

The reported revenue decline of 3.58% year-over-year for the third quarter of 2025 (Q3 2025 revenue: $492.9 million) is entirely due to a strategic portfolio shift. Management attributed the Q3 2025 decrease to approximately $54 million in non-same unit activity, primarily from practice dispositions-selling off affiliated office-based practices.

Here's the quick math: if you strip out the divested assets, the core business is actually growing. The key metric to watch is same-unit net revenue, which saw a strong increase of 8.0% in Q3 2025. This growth was driven by several positive factors:

• Pricing and Collections: A 7.6% increase from net reimbursement-related factors, reflecting improved collection activity.
• Patient Acuity: Higher patient acuity (sicker patients requiring more complex, higher-cost care), especially in neonatology.
• Volume: Patient service volumes increased by a modest 0.4%.

What this estimate hides is that while the overall revenue is expected to decline by about 5.2% for the full fiscal year 2025 due to the restructuring, the underlying organic growth, excluding the divestitures, is estimated to be approximately 5.3%. That's a healthy number for a mature healthcare provider.

Profitability Metrics

You're looking at Pediatrix Medical Group, Inc. (MD) because you see a turnaround story, and you're right-the numbers for the 2025 fiscal year show a significant swing to profitability. The key question is whether this margin expansion is sustainable, and the answer lies in their operational efficiency, not just top-line growth.

For the nine months ended September 30, 2025, Pediatrix Medical Group reported net income of $131.7 million on revenue of $1.42 billion, translating to a net profit margin of roughly 9.27%. [cite: 5 (from previous search)] That's a defintely welcome change from the prior year's net loss. The real story, though, is in the operating efficiency.

Here's the quick math on their core profitability for the year to date:

• Gross Margin (TTM): 23.38%
• Adjusted Operating Margin (9-Month): 12.4% [cite: 12 (from previous search)]
• Net Profit Margin (9-Month): 9.27% [cite: 5 (from previous search)]

Margin Trends and Operational Efficiency

The margin trend over the past year is a clear pivot from restructuring to execution. Pediatrix Medical Group has established consistent profitability after five years of lumpy, often negative, earnings growth. This shift isn't accidental; it's driven by tight cost management and a successful overhaul of their revenue cycle management (RCM) process-the system that ensures they get paid efficiently.

You see this operational strength in the same-unit revenue growth, which was a robust 8.0% in the third quarter of 2025. [cite: 4 (from previous search), 5 (from previous search)] This growth is mostly due to two factors: improved collection activity and higher patient acuity (sicker patients requiring more complex, higher-reimbursing care) in their hospital-based neonatology practices. [cite: 4 (from previous search), 5 (from previous search)] The company is simply better at collecting what it is owed now. S&P Global Ratings forecasts the S&P-adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin to expand to 15.7% in 2025, up from 12.3%, which is a strong signal of sustained efficiency.

Industry Comparison: A Nuanced View

When you stack Pediatrix Medical Group's margins against the broader healthcare sector, the picture gets nuanced. A typical small-to-mid-size medical office might report an average net profit margin as high as 45%; but for a large, publicly traded physician practice management (PPM) group like Pediatrix Medical Group, that comparison is misleading due to scale, overhead, and complexity. A better relative value check is the stock's valuation.

The company's Price-to-Earnings (P/E) ratio has been around 11.1x, which is less than half the US healthcare industry average P/E of 20.7x. This suggests that despite the recent success in margin expansion and the return to profitability, the market is still pricing the stock as a relative bargain compared to its peers, likely due to past revenue headwinds from portfolio restructuring. For a deeper understanding of the company's long-term strategy, you should review their Mission Statement, Vision, & Core Values of Pediatrix Medical Group, Inc. (MD).

Here is a snapshot of the key profitability ratios:

Debt vs. Equity Structure

You're looking at Pediatrix Medical Group, Inc. (MD) and trying to figure out if they're funding their growth with too much debt or if they're leaning on shareholder capital. The short answer is they've struck a healthy balance, especially when you look at the industry. Their financial structure is definitely manageable, showing a clear preference for long-term, fixed-rate debt.

As of the third quarter of 2025, Pediatrix Medical Group's total debt is approximately $640 million. The company has done a solid job of managing its leverage, with the majority of that capital sitting in long-term obligations. This is a good sign; it means less pressure from near-term debt maturities. Here's the quick math on their debt breakdown:

• Total Debt (June 2025): $640 million
• Long-term Debt and Finance Lease Liabilities (Q2 2025): Approximately $583.9 million
• Implied Short-term Debt: Roughly $56.1 million

What this breakdown hides is the composition. A core part of their long-term financing is the $400 million in 5.375% Senior Notes due 2030. That fixed rate and distant maturity date provide a great deal of stability, which is defintely a plus in a rising interest rate environment.

The key metric here is the Debt-to-Equity (D/E) ratio, which tells you how much debt the company uses to finance its assets relative to the value of shareholders' equity. As of Q3 2025, Pediatrix Medical Group's D/E ratio stands at about 0.78. To be fair, that's a very comfortable position.

The industry average for Health Care Services is roughly 0.8648. So, Pediatrix Medical Group is actually less leveraged than its peers. A ratio below 1.0 is generally considered conservative, indicating that equity holders fund more of the assets than creditors do. The company has also significantly reduced its D/E ratio from over 2.0 five years ago, showcasing a strong trend of de-leveraging.

Pediatrix Medical Group is balancing debt and equity funding with an eye on shareholder return. In August 2025, the Board authorized a $250 million share repurchase program. This is a clear signal that management believes the stock is undervalued and that they have strong enough cash flow-and low enough leverage-to return capital to shareholders instead of just paying down debt or pursuing acquisitions. It's a strategic shift from debt reduction to equity management.

For a deeper dive into the market's reaction to these financial moves, you should check out Exploring Pediatrix Medical Group, Inc. (MD) Investor Profile: Who's Buying and Why?

Here is a summary of the core financial health metrics:

The next step for you is to monitor their quarterly cash flow statements; strong operating cash flow is what makes their current debt load and the new share buyback sustainable.

Liquidity and Solvency

You're looking at Pediatrix Medical Group, Inc. (MD) to see if they can cover their near-term bills and manage their debt, which is the core of liquidity and solvency. The direct takeaway is that Pediatrix's liquidity position is defintely strong as of the end of the third quarter of 2025, driven by a substantial increase in working capital and robust operating cash flow.

When you look at the company's short-term financial strength-its ability to pay obligations due within a year-the liquidity ratios are excellent. The trailing twelve-month (TTM) Current Ratio stands at 1.83, which means Pediatrix has $1.83 in current assets for every dollar of current liabilities. Since physician services companies like Pediatrix carry minimal inventory, the Quick Ratio is essentially the same, also at 1.83. A ratio this high, well above the safe benchmark of 1.0, signals a very comfortable short-term position.

Here's the quick math on working capital (current assets minus current liabilities): Pediatrix reported working capital of $324.6 million as of September 30, 2025. This marks a significant improvement, an increase of $119.2 million from the $205.5 million reported at the end of 2024. This trend shows management's focus on better revenue cycle management and operational efficiencies, which is a key factor in their overall financial health. For more on the strategic direction driving these improvements, you can review their Mission Statement, Vision, & Core Values of Pediatrix Medical Group, Inc. (MD).

The cash flow statement for the 2025 fiscal year tells a story of operational strength and focused capital allocation. Operating Cash Flow (OCF) for the third quarter of 2025 was a strong $138.1 million, a notable jump from $95.7 million in the same period last year. This cash generation is the engine that fuels their liquidity.

The cash flow trends break down like this:

• Operating Cash Flow: Strong and increasing, driven by higher earnings and better accounts receivable (AR) collections. This is the primary liquidity strength.
• Investing Cash Flow: Used a modest $19.2 million for acquisition activity and $5.3 million for capital expenditures in Q3 2025. This shows targeted, rather than excessive, growth spending.
• Financing Cash Flow: Used $20.9 million for share repurchases in Q3 2025. This signals confidence in their cash position and a commitment to returning capital to shareholders.

The company's overall solvency is also very solid. They ended Q3 2025 with a cash and cash equivalents balance of $340.1 million. With total debt outstanding at $602 million, their net debt leverage is just under 1x their updated 2025 Adjusted EBITDA guidance midpoint. This low leverage ratio is a major strength, giving them significant financial flexibility to navigate industry turbulence or pursue strategic opportunities.

The table below summarizes the key liquidity metrics as of the end of the third quarter of 2025, demonstrating a clear path to meeting short-term obligations and managing debt effectively.

Next Step: Portfolio Manager: Model a stress test scenario against the Q3 2025 cash balance to determine the maximum sustainable debt service coverage ratio if operating cash flow declines by 15% in Q4.

Valuation Analysis

You are looking at Pediatrix Medical Group, Inc. (MD) right now and asking the core question: is it a buy, a hold, or a sell? Based on the latest metrics as of November 2025, the stock appears to be fairly valued, but with a strong upward price momentum that you need to watch closely.

The market has clearly rewarded Pediatrix Medical Group over the last year. The stock has climbed from its 52-week low of $11.84 to a recent closing price of $23.15 as of mid-November 2025, representing a significant 56.17% increase over the prior 12 months. This impressive run is defintely a factor in the current valuation, pushing the stock near the top of its range.

Here's the quick math on the key valuation multiples, using the most current trailing twelve months (TTM) data:

• Price-to-Earnings (P/E) Ratio (TTM): 11.89
• Price-to-Book (P/B) Ratio (Current): 2.14
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio (TTM): 8.11

A TTM P/E of 11.89 looks attractive, especially when you consider the forward P/E is even lower at approximately 10.50, suggesting the market expects earnings to grow. To be fair, the P/B ratio of 2.14 is a bit higher than the industry median, but the EV/EBITDA of 8.11 is reasonable for a healthcare provider, indicating the company is not overly expensive relative to its operating cash flow before non-cash charges.

What this estimate hides is the company's capital allocation strategy. Pediatrix Medical Group does not currently pay a dividend, so its dividend yield and payout ratio are both 0.00%. This isn't a stock for income investors, but it means the company is reinvesting all its free cash flow-which hit a robust $217.2 million recently-back into the business, plus authorizing a $250 million share repurchase program in August 2025. That buyback is a strong signal of management's confidence in the stock's value.

Analyst consensus is mixed but trending positive. The average one-year price target was recently revised to $23.12 per share, which is essentially flat against the current market price of $23.15. This close alignment suggests the stock is currently trading near its fair value. Still, the consensus rating from Wall Street analysts is generally a Hold, though some firms maintain an Outperform or Buy rating, with the average brokerage recommendation sitting at 2.4 on a 5-point scale. You can dig deeper into the company's long-term strategy by reviewing the Mission Statement, Vision, & Core Values of Pediatrix Medical Group, Inc. (MD).

To summarize the valuation metrics for your decision-making:

Next step: Look at the company's debt load and cash flow generation, because a low P/E can sometimes mask a high debt-to-equity ratio.

Risk Factors

You're seeing Pediatrix Medical Group, Inc. (MD) post strong bottom-line numbers, but it's crucial to look past the headline net income of $72 million for Q3 2025 and understand the persistent risks. The company's strategy of shedding lower-margin practices is working for profitability-Adjusted EBITDA is now guided to a range of $270 million to $290 million for the full year 2025-but this shift creates its own set of near-term challenges.

The biggest immediate risk is a shrinking top-line. The portfolio restructuring, which includes divesting nearly all affiliated office-based practices, is the main reason net revenue for Q3 2025 was down 3.6% year-over-year, coming in at $492.9 million. S&P Global Ratings projects this restructuring will cause a total revenue decline of 5.2% for the full year 2025. That's a significant headwind, even if same-unit revenue is growing at a healthy 8.0%.

Here's the quick math: you're trading short-term revenue contraction for long-term margin expansion. It's a calculated risk, but you need to monitor the pace of the revenue drop-off. Exploring Pediatrix Medical Group, Inc. (MD) Investor Profile: Who's Buying and Why?

External and Industry Headwinds

Pediatrix Medical Group, Inc. (MD) operates in a healthcare environment that is defintely turbulent. The external risks are centered on pricing and labor. Reimbursement policies and fee pressure from hospitals and commercial payers are a constant threat. Any significant pushback on hospital fee increases could directly impact the company's ability to sustain its improved margins.

Also, rising clinical compensation costs-labor pressures-remain a challenge for all healthcare providers. While the company's operational improvements have helped offset these costs, a sudden spike in salary expenses could quickly erode the forecasted S&P Global Ratings-adjusted EBITDA margin of 15.7% for 2025.

• Regulatory Risk: Changes to governmental reimbursement policies are always looming.
• Market Risk: Persistent pressure on hospital fee increases.
• Operational Risk: Sustaining margin growth against rising clinical labor costs.

Mitigation and Strategic Focus

The company is not just sitting still; they are actively mitigating these risks through a clear, focused strategy. The shift away from general pediatrics to high-margin, specialized services like neonatology, maternal-fetal medicine, and obstetric hospitalist operations is a strategic defense against broader industry pricing pressure.

The biggest operational win is the successful transition to a hybrid revenue cycle management (RCM) model, which is driving cash flow. For the first nine months of 2025, net cash from operations surged to $157 million, compared to $73.6 million in the prior-year period. This efficiency is why the company's net leverage is now just under 1x, using the midpoint of the updated 2025 Adjusted EBITDA outlook, a huge improvement from the prior expectation of 2.7x.

They are also leveraging technology, using a proprietary system called BabySteps to support clinicians in high-risk NICU (Neonatal Intensive Care Unit) settings, which helps with risk mitigation and clinical decision-making. That's a smart way to drive quality and efficiency.

Growth Opportunities

You're looking for clarity on Pediatrix Medical Group, Inc.'s (MD) future, especially as their recent financials show a revenue dip but a sharp profit rebound. The direct takeaway is this: the company's growth story has shifted from top-line expansion via acquisitions to a laser focus on margin expansion and operational efficiency, which is defintely a more sustainable path in the near term.

The biggest driver right now isn't new market entry, but a strategic portfolio restructuring. Pediatrix Medical Group, Inc. is actively divesting (selling off) non-core, office-based practices like primary and urgent care clinics to focus almost entirely on its core, higher-margin hospital-based services and Maternal-Fetal Medicine (MFM). This move is expected to streamline the business, with a goal for the hospital-based segment to account for 80% of total revenue.

Here's the quick math on the efficiency gains: the divestitures of these less profitable offices are projected to boost the company's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by about $30 million annually once completed. This focus on cost control and revenue cycle management is why the company's net income for the third quarter of 2025 surged to $71.71 million, up dramatically from $19.44 million a year earlier, even though sales fell to $492.88 million. Operational improvements are the short-term catalyst.

The near-term financial estimates reflect this operational pivot. While the revenue picture is mixed due to the practice sales, profitability is up. For the full fiscal year 2025, the company raised its Adjusted EBITDA outlook to a range of $245 million to $255 million, though some analyst models suggest a midpoint closer to $280 million, which is a significant beat over prior expectations. Still, analysts are cautious on 2026, projecting a slight earnings per share (EPS) decrease of -2.90%, from $1.38 to $1.34 per share.

Strategic Initiatives and Competitive Edge

Beyond the restructuring, Pediatrix Medical Group, Inc. is building its future on a few key pillars. They are leveraging their established competitive advantages in a consolidating healthcare sector. They have a massive clinical scale and a unique, broad network in specialized pediatric and neonatal services. This expertise is their moat (a sustainable competitive advantage), which is why they are doubling down on hospital partnerships.

Strategic initiatives driving future growth include:

• Acquisition Opportunities: Acquiring hospital-based practices from partners seeking operational expertise.
• Technology Investment: Expanding technological support for their clinicians.
• Capital Allocation: Launching a $250 million share repurchase program in August 2025, signaling management confidence in the stock's value.
• Clinical Excellence: A recommitment to the highest standards in clinical excellence, which you can see reflected in their Mission Statement, Vision, & Core Values of Pediatrix Medical Group, Inc. (MD)..

What this estimate hides, though, is the risk of ongoing fee pressures from hospitals and payers, which is a persistent headwind in the healthcare sector. But, the company's focus on high-acuity, specialized care-like neonatology-positions them well, as demand for these services is less elastic than general care.

The long-term outlook anticipates revenue hitting $2.1 billion and earnings reaching $145.1 million by 2028, based on a modest 2.5% annual revenue growth assumption. That's a slow-and-steady growth projection, but it's built on a much stronger, more profitable foundation than the company had before the restructuring. The next step is watching Q4 2025 results for confirmation that the operational improvements are sticking.