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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-12111

Pediatrix Medical Group, Inc.

(Exact name of registrant as specified in its charter)


Florida		26-3667538
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

1301 Concord Terrace Sunrise, Florida		33323
(Address of principal executive offices)		(Zip Code)

(954) 384-0175

(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:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	MD	New York Stock Exchange

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. Yes ☑ No ☐

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). Yes ☑ No ☐

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.


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		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 ☐ No ☑

On October 30, 2025, the registrant had outstanding 85,877,386 shares of Common Stock, par value $.01 per share.

Pediatrix Medical Group, Inc.

INDEX


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (Unaudited)	3

	Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	4

	Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited)	5

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

SIGNATURES		24

Pediatrix Medical Group, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)


	September 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	340,059		$	229,940
Short-term investments		123,042			118,566
Accounts receivable, net		231,122			259,990
Prepaid expenses		8,942			13,410
Income taxes receivable		3,815			12,614
Other current assets		10,215			5,087
Total current assets		717,195			639,607
Property and equipment, net		38,636			39,172
Goodwill		1,255,423			1,242,606
Intangible assets, net		14,802			11,595
Operating and finance lease right-of-use assets		35,702			39,267
Deferred income tax assets		79,758			103,855
Other assets		57,889			76,598
Total assets	$	2,199,405		$	2,152,700
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	352,233		$	398,690
Current portion of debt and finance lease liabilities, net		25,339			20,545
Current portion of operating lease liabilities		12,226			12,704
Income taxes payable		2,749			2,171
Total current liabilities		392,547			434,110
Long-term debt and finance lease liabilities, net		577,169			597,119
Long-term operating lease liabilities		27,533			31,945
Long-term professional liabilities		239,679			257,455
Deferred income tax liabilities		38,285			34,246
Other liabilities		33,526			32,887
Total liabilities		1,308,739			1,387,762
Commitments and contingencies
Shareholders’ equity:
Preferred stock; $.01 par value; 1,000,000 shares authorized; none issued		—			—
Common stock; $.01 par value; 200,000,000 shares authorized; 85,832,837 and 85,866,000 shares issued and outstanding, respectively		858			859
Additional paid-in capital		1,006,197			1,013,690
Accumulated other comprehensive income (loss)		446			(1,071	)
Retained deficit		(116,835	)		(248,540	)
Total shareholders’ equity		890,666			764,938
Total liabilities and shareholders’ equity	$	2,199,405		$	2,152,700

The accompanying notes are an integral part of these Consolidated Financial Statements.

Pediatrix Medical Group, Inc.

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net revenue	$	492,875		$	511,158		$	1,420,078		$	1,510,555
Operating expenses:
Practice salaries and benefits		332,326			364,888			992,859			1,091,834
Practice supplies and other operating expenses		20,200			29,449			59,500			92,903
General and administrative expenses		60,793			58,121			175,111			174,884
Depreciation and amortization		5,551			6,254			16,196			25,353
Transformational and restructuring related expenses		5,954			18,560			16,393			40,619
Goodwill impairment		—			—			—			154,243
Long-lived asset impairments		—			—			—			27,791
Loss on disposal of businesses		—			59			—			10,932
Total operating expenses		424,824			477,331			1,260,059			1,618,559
Income (loss) from operations		68,051			33,827			160,019			(108,004	)
Investment and other income		5,883			1,089			14,347			2,941
Net gain on investments in divested businesses		20,906			—			20,906			—
Interest expense		(8,941	)		(10,126	)		(27,225	)		(31,033	)
Equity in earnings of unconsolidated affiliate		1,879			445			2,790			1,427
Total non-operating income (expenses)		19,727			(8,592	)		10,818			(26,665	)
Income (loss) before income taxes		87,778			25,235			170,837			(134,669	)
Income tax (provision) benefit		(16,070	)		(5,794	)		(39,132	)		5,120
Net income (loss)	$	71,708		$	19,441		$	131,705		$	(129,549	)
Other comprehensive income, net of tax
Unrealized holding gain on investments, net of tax of $101, $571, $496 and $657		309			1,745			1,517			2,005
Total comprehensive income (loss)	$	72,017		$	21,186		$	133,222		$	(127,544	)
Per common and common equivalent share data:
Net income (loss):
Basic	$	0.85		$	0.23		$	1.56		$	(1.56	)
Diluted	$	0.84		$	0.23		$	1.54		$	(1.56	)
Weighted average common shares:
Basic		84,609			83,891			84,649			83,223
Diluted		85,613			84,523			85,559			83,223

The accompanying notes are an integral part of these Consolidated Financial Statements.

Pediatrix Medical Group, Inc.

Consolidated Statements of Shareholders’ Equity

(in thousands)

(Unaudited)


	Common Stock
	Number of						Additional Paid-in			Accumulated Other Comprehensive			Retained			Total Shareholders’
	Shares			Amount			Capital			(Loss) Income			Deficit			Equity
2025
Balance at January 1, 2025		85,866		$	859		$	1,013,690		$	(1,071	)	$	(248,540	)	$	764,938
Net income		—			—			—			—			20,737			20,737
Unrealized holding gain on investments, net of tax		—			—			—			779			—			779
Common stock issued under employee stock purchase plan		60			—			662			—			—			662
Forfeitures of restricted stock		(7	)		—			—			—			—			—
Stock-based compensation expense		—			—			3,641			—			—			3,641
Repurchased common stock		(109	)		(1	)		(1,568	)		—			—			(1,569	)
Balance at March 31, 2025		85,810		$	858		$	1,016,425		$	(292	)	$	(227,803	)	$	789,188
Net income		—			—			—			—			39,260			39,260
Unrealized holding gain on investments, net of tax		—			—			—			429			—			429
Common stock issued under employee stock purchase plan		96			1			1,175			—			—			1,176
Issuance of restricted stock		963			10			(10	)		—			—			—
Stock-based compensation expense		—			—			3,909			—			—			3,909
Repurchased common stock		(15	)		—			(209	)		—			—			(209	)
Balance at June 30, 2025		86,854		$	869		$	1,021,290		$	137		$	(188,543	)	$	833,753
Net income		—			—			—			—			71,708			71,708
Unrealized holding gain on investments, net of tax		—			—			—			309			—			309
Common stock issued under employee stock purchase plan		58			—			700			—			—			700
Issuance of restricted stock		172			1			(1	)		—			—			—
Forfeitures of restricted stock		(20	)		—			—			—			—			—
Stock-based compensation expense		—			—			5,150			—			—			5,150
Repurchased common stock		(1,231	)		(12	)		(20,855	)		—			—			(20,867	)
Excise tax on share repurchases		—			—			(87	)		—			—			(87	)
Balance at September 30, 2025		85,833		$	858		$	1,006,197		$	446		$	(116,835	)	$	890,666
2024
Balance at January 1, 2024		84,018		$	840		$	999,906		$	(2,214	)	$	(149,471	)	$	849,061
Net income		—			—			—			—			4,035			4,035
Unrealized holding gain on investments, net of tax		—			—			—			60			—			60
Common stock issued under employee stock purchase plan		108			1			859			—			—			860
Forfeitures of restricted stock		(21	)		—			—			—			—			—
Stock-based compensation expense		—			—			3,067			—			—			3,067
Repurchased common stock		(97	)		(1	)		(886	)		—			—			(887	)
Balance at March 31, 2024		84,008		$	840		$	1,002,946		$	(2,154	)	$	(145,436	)	$	856,196
Net loss		—			—			—			—			(153,025	)		(153,025	)
Unrealized holding gain on investments, net of tax		—			—			—			200			—			200
Common stock issued under employee stock purchase plan		139			2			1,147			—			—			1,149
Issuance of restricted stock		1,630			16			(16	)		—			—			—
Forfeitures of restricted stock		(22	)		—			—			—			—			—
Stock-based compensation expense		—			—			1,952			—			—			1,952
Repurchased common stock		(2	)		—			(11	)		—			—			(11	)
Balance at June 30, 2024		85,753		$	858		$	1,006,018		$	(1,954	)	$	(298,461	)	$	706,461
Net income		—			—			—			—			19,441			19,441
Unrealized holding gain on investments, net of tax		—			—			—			1,745			—			1,745
Common stock issued under employee stock purchase plan		149			1			896			—			—			897
Forfeitures of restricted stock		(13	)		—			—			—			—			—
Stock-based compensation expense		—			—			4,110			—			—			4,110
Repurchased common stock		(23	)		—			(162	)		—			—			(162	)
Balance at September 30, 2024		85,866		$	859		$	1,010,862		$	(209	)	$	(279,020	)	$	732,492

The accompanying notes are an integral part of these Consolidated Financial Statements.

Pediatrix Medical Group, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	131,705		$	(129,549	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		16,196			25,353
Amortization of premiums, discounts and issuance costs		698			703
Impairment losses		—			182,034
Loss on disposal of businesses		—			10,932
Net gain on investments in divested businesses		(20,906	)		—
Stock-based compensation expense		12,700			9,129
Deferred income taxes		27,639			(15,880	)
Other		(3,386	)		(2,006	)
Changes in assets and liabilities:
Accounts receivable		29,101			635
Prepaid expenses and other current assets		(784	)		5,945
Other long-term assets		16,972			30,569
Accounts payable and accrued expenses		(38,833	)		(34,154	)
Payment of contingent consideration liability		(318	)		—
Income taxes payable		9,377			7,527
Long-term professional liabilities		(7,406	)		13,239
Other liabilities		(12,620	)		(22,032	)
Net cash provided by operating activities – continuing operations		160,135			82,445
Net cash used in operating activities - discontinued operations		(3,146	)		(8,882	)
Net cash provided by operating activities		156,989			73,563
Cash flows from investing activities:
Acquisition payments, net of cash acquired		(19,196	)		(8,167	)
Purchases of investments		(23,484	)		(54,402	)
Proceeds from maturities or sales of investments		21,424			45,324
Proceeds from investment in divested business		30,000			—
Purchases of property and equipment		(13,171	)		(18,582	)
Other		(3,587	)		2,359
Net cash used in investing activities		(8,014	)		(33,468	)
Cash flows from financing activities:
Borrowings on line of credit		—			235,500
Payments on line of credit		—			(235,500	)
Payments on term loan		(14,063	)		(9,375	)
Payments on finance lease obligations		(1,346	)		(2,045	)
Payment of contingent consideration liability		(3,182	)		—
Proceeds from issuance of common stock		2,538			2,906
Repurchases of common stock		(22,645	)		(1,060	)
Other		(158	)		52
Net cash used in financing activities		(38,856	)		(9,522	)
Net increase in cash and cash equivalents		110,119			30,573
Cash and cash equivalents at beginning of period		229,940			73,258
Cash and cash equivalents at end of period	$	340,059		$	103,831

The accompanying notes are an integral part of these Consolidated Financial Statements.

Pediatrix Medical Group, Inc.

Notes to Consolidated Financial Statements

September 30, 2025

(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 Pediatrix Medical Group, Inc. and its consolidated subsidiaries (collectively, “PMG”) together with the accounts of PMG’s affiliated business corporations or professional associations, professional corporations, limited liability companies and partnerships (the “affiliated professional contractors”). Certain subsidiaries of PMG have contractual management arrangements with its affiliated professional contractors, which are separate legal entities that provide physician services in certain states. The terms “Pediatrix” and the “Company” refer collectively to Pediatrix Medical Group, Inc., its subsidiaries and the affiliated professional contractors.

During 2024, the Company exited almost all of its affiliated office-based practices, including its primary and urgent care service line. The operating results of these practices did not meet the criteria to be reported as discontinued operations in the Company’s Consolidated Statements of Income and Comprehensive Income.

The Company is a party to a joint venture in which it owns a 37.5% economic interest. The Company accounts for this joint venture under the equity method of accounting because the Company exercises significant influence over, but does not control, this entity.

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”).

New Accounting Pronouncements

In December 2023, accounting guidance related to income tax disclosures was issued which will require additional disclosure in the Company's income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The accounting guidance will also require the Company to disaggregate its income taxes paid disclosure by federal and state jurisdictions, with further disaggregation required for significant state jurisdictions. The guidance is effective for annual periods beginning after December 15, 2024. We expect this standard to impact our disclosures with no impact to our results of operations, cash flows, or financial condition.

2. Cash Equivalents and Investments:

As of September 30, 2025 and December 31, 2024, the Company’s cash equivalents consisted entirely of money market funds totaling $6.8 million and $9.3 million, respectively.

Investments held are all classified as current and at September 30, 2025 and December 31, 2024 are summarized as follows (in thousands):


	September 30, 2025		December 31, 2024
Corporate securities	$	50,467	$	46,411
U.S. Treasury securities		42,506		40,590
Municipal debt securities		21,263		22,294
Federal home loan securities		6,792		6,640
Certificates of deposit		2,014		2,631
	$	123,042	$	118,566

3. 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 September 30, 2025 and December 31, 2024 (in thousands):


		Fair Value
	Fair Value Category	September 30, 2025		December 31, 2024
Assets:
Money market funds	Level 1	$	6,769	$	9,295
Short-term investments	Level 2		123,042		118,566
Mutual funds	Level 1		18,909		18,581

The following table presents information about the Company’s financial instruments that are not carried at fair value at September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025				December 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
2030 Notes	$	400,000	$	392,000	$	400,000	$	382,000

The carrying amounts of cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value due to the short maturities of the respective instruments. The carrying value of the Term A Loan facility approximates its fair value as it bears interest at rates that approximate current market rates for debt agreements with similar maturities and credit quality. If the Term A loan facility was measured at fair value, it would be categorized as Level 2 in the fair value hierarchy.

4. Accounts Receivable and Net Revenue:

Patient service revenue is recognized at the time services are provided by the Company’s affiliated physicians. The Company’s performance obligations related to the delivery of services to patients are satisfied at the time of service. Accordingly, there are no performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period with respect to patient service revenue. Almost all of the Company’s patient service revenue is reimbursed by government-sponsored healthcare programs (“GHC Programs”) and third-party insurance payors. Payments for services rendered to the Company’s patients are generally less than billed charges. The Company monitors its revenue and receivables from these sources and records an estimated contractual allowance to properly account for the anticipated differences between billed and reimbursed amounts.

Accordingly, patient service revenue is presented net of an estimated provision for contractual adjustments and uncollectibles. The Company estimates allowances for contractual adjustments and uncollectibles on accounts receivable based upon historical experience and other factors, including days sales outstanding (“DSO”) for accounts receivable, evaluation of expected adjustments and delinquency rates, past adjustments and collection experience in relation to amounts billed, an aging of accounts receivable, current contract and reimbursement terms, changes in payor mix and other relevant information. Contractual adjustments result from the difference between the physician rates for services performed and the reimbursements by GHC Programs and third-party insurance payors for such services.

Collection of patient service revenue the Company expects to receive is normally a function of providing complete and correct billing information to the GHC Programs and third-party insurance payors within the various filing deadlines and typically occurs within 30 to 60 days of billing.

Some of the Company’s hospital agreements require hospitals to pay the Company administrative fees. Some agreements provide for fees if the hospital does not generate sufficient patient volume in order to guarantee that the Company receives a specified minimum revenue level. The Company also receives fees from hospitals for administrative services performed by its affiliated physicians providing medical director or other services at the hospital.

The following table summarizes the Company’s net revenue by category (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net patient service revenue	$	422,179	$	438,675	$	1,208,967	$	1,293,353
Hospital contract administrative fees		67,728		72,413		201,137		215,129
Other revenue		2,968		70		9,974		2,073
	$	492,875	$	511,158	$	1,420,078	$	1,510,555

The approximate percentage of net patient service revenue by type of payor was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Contracted managed care		72	%		72	%		70	%		71	%
Government		23			23			25			24
Other third-parties		4			4			4			3
Private-pay patients		1			1			1			2
		100	%		100	%		100	%		100	%

5. Business Combinations:

On September 1, 2025, the Company completed the acquisition of several neonatology, maternal-fetal medicine and OB hospitalist practices in one transaction for a total consideration of $19.2 million, all of which was paid in cash at closing. The acquisition expanded the Company’s national network of physician practices across women’s and children’s services. In connection with this acquisition, the Company recorded tax deductible goodwill of $12.8 million, intangible assets consisting primarily of physician and hospital agreements of $6.1 million, operating lease right of use assets of $0.6 million, other assets of $0.3 million and operating lease liabilities of $0.6 million. In addition, during the three months ended September 30, 2025, the Company paid $3.5 million for contingent consideration related to a prior period acquisition.

6. Divestitures:

During the three months ended September 30, 2025, the Company recognized a gain of $28.8 million on an investment in a privately-held holding company of the buyer of its management services organization that was divested in 2019. The investment was measured under the measurement alternative for equity securities without readily determinable fair values. Under the measurement alternative, the investment was recorded at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. During the third quarter of 2025, the related company was acquired, and Pediatrix received a cash payment of $30 million in exchange for its investment.

During the three months ended September 30, 2025, the Company recognized a $7.9 million non-cash impairment charge related to an interest in its anesthesiology services medical group that was disposed in 2020. The non-cash impairment charge is recorded within the net gain on investments in divested businesses line item.

During the nine months ended September 30, 2024, the Company recognized a loss on disposal of businesses of $10.9 million associated with the exit of its primary and urgent care service line.

7. Goodwill and Long-Lived Asset Impairments:

During the second quarter of 2024, the Company experienced a triggering event, due to a sustained decline in its stock price and a market capitalization below the Company’s book equity value. As a result, the Company performed an interim goodwill impairment assessment. This assessment resulted in a non-cash goodwill impairment charge of $154.2 million.

During the nine months ended September 30, 2024, the Company recognized fixed asset impairments of $20.1 million, intangible asset impairments of $7.7 million and operating lease right-of-use asset impairments of $10.6 million associated with the exit of its affiliated office-based practices. The operating lease right-of-use impairments are recorded within the transformational and restructuring related expenses line item.

8. Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consist of the following (in thousands):


	September 30, 2025		December 31, 2024
Accounts payable	$	38,652	$	46,431
Accrued salaries and incentive compensation		183,312		215,357
Accrued payroll taxes and benefits		41,277		35,450
Accrued professional liabilities		29,516		30,430
Accrued interest		2,780		8,159
Other accrued expenses		56,696		62,863
	$	352,233	$	398,690

The net decrease in accrued salaries and incentive compensation of $32.0 million, from December 31, 2024 to September 30, 2025, is primarily due to the payment of performance-based incentive compensation, principally to the Company’s affiliated physicians, partially offset by performance-based incentive compensation accrued during the nine months ended September 30, 2025. A majority of the Company’s payments for performance-based incentive compensation is paid annually during the first quarter.

9. Line of Credit and Long-Term Debt:

On February 11, 2022, the Company issued $400.0 million of 5.375% unsecured senior notes due 2030 (the “2030 Notes”). Interest on the 2030 Notes accrues at the rate of 5.375% per annum, or $21.5 million, and is payable semi-annually in arrears on February 15 and August 15, beginning on August 15, 2022. The Company’s obligations under the 2030 Notes are guaranteed on an unsecured senior basis by the same subsidiaries and affiliated professional contractors that guarantee the Amended Credit Agreement (as defined below). The indenture under which the 2030 Notes are issued, among other things, limits the Company’s ability to (1) incur liens, (2) enter into sale and lease-back transactions and (3) merge or dispose of all or substantially all of its assets, in all cases, subject to a number of customary exceptions. Although the Company is not required to make mandatory redemption or sinking fund payments with respect to the 2030 Notes, upon the occurrence of a change in control, the Company may be required to repurchase the 2030 Notes at a purchase price equal to 101% of the aggregate principal amount of the 2030 Notes repurchased plus accrued and unpaid interest.

Concurrently with the issuance of the 2030 Notes, the Company amended its credit agreement (the “Credit Agreement”, and such amendment, the “Credit Agreement Amendment”). The Credit Agreement Amendment, among other things, (i) refinanced the prior unsecured revolving credit facility with a $450 million unsecured revolving credit facility, including a $37.5 million sub-facility for the issuance of letters of credit (the “Revolving Credit Line”), and a $250 million term A loan facility (“Term A Loan”) and (ii) removed JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement and appointed Bank of America, N.A. as the administrative agent for the lenders.

The Credit Agreement, as amended by the Credit Agreement Amendment (the “Amended Credit Agreement”) matures on February 11, 2027 and is guaranteed on an unsecured basis by substantially all of the Company’s subsidiaries and affiliated professional contractors. At the Company’s option, borrowings under the Amended Credit Agreement bear interest at (i) the Alternate Base Rate (defined as the highest of (a) the prime rate as announced by Bank of America, N.A., (b) the Federal Funds Rate plus 0.50% and (c) Term Secured Overnight Financing Rate (“SOFR”) for an interest period of one month plus 1.00% with a 1.00% floor) plus an applicable margin rate of 0.50% for the first two fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 0.125% to 0.750% based on the Company’s consolidated net leverage ratio or (ii) Term SOFR rate (calculated as the Secured Overnight Financing Rate published on the applicable Reuters screen page plus a spread adjustment of 0.10%, 0.15% or 0.25% depending on if the Company selects a one-month, three-month or six-month interest period, respectively, for the applicable loan with a 0% floor), plus an applicable margin rate of 1.50% for the first two full fiscal quarters after the date of the Credit Agreement Amendment, and thereafter at an applicable margin rate ranging from 1.125% to 1.750% based on the Company’s consolidated net leverage ratio. The Amended Credit Agreement also provides for other customary fees and charges, including an unused commitment fee with respect to the Revolving Credit Line ranging from 0.150% to 0.200% of the unused lending commitments under the Revolving Credit Line, based on the Company’s consolidated net leverage ratio.

The Amended Credit Agreement contains customary covenants and restrictions, including covenants that require the Company to maintain a minimum interest coverage ratio, a maximum consolidated net leverage ratio and to comply with laws, and restrictions on the ability to pay dividends, incur indebtedness or liens and make certain other distributions subject to baskets and exceptions, in each case, as specified therein. Failure to comply with these covenants would constitute an event of default under the Amended Credit Agreement, notwithstanding the ability of the Company to meet its debt service obligations. The Amended Credit Agreement includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the Amended Credit Agreement. In addition, the Company may increase the principal amount of the Revolving Credit Line or incur additional term loans under the Amended Credit Agreement in an aggregate principal amount such that on a pro forma basis after giving effect to such increase or additional term loans, the Company would be in compliance with the financial covenants, subject to the satisfaction of specified conditions and additional caps in the event that the Amended Credit Agreement is secured.

At September 30, 2025, the Company had an outstanding principal balance on the Amended Credit Agreement of $201.6 million, composed of the Term A Loan. There was no outstanding balance under the Revolving Credit Line at September 30, 2025. The Company had $450.0 million available on its Revolving Credit Line at September 30, 2025.

At September 30, 2025, the Company had an outstanding principal balance of $400.0 million on the 2030 Notes.

10. Common and Common Equivalent Shares:

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is calculated by dividing net income by the weighted average number of common and potential common shares outstanding during the period. Potential common shares consist of outstanding restricted stock and is calculated using the treasury stock method.

The calculation of shares used in the basic and diluted net income per common share calculation for the three and nine months ended September 30, 2025 and 2024 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Weighted average number of common shares outstanding		84,609		83,891		84,649		83,223
Weighted average number of dilutive common share equivalents(a)		1,004		632		910		—
Weighted average number of common and common equivalent shares outstanding		85,613		84,523		85,559		83,223
Antidilutive restricted stock not included in the diluted net income per common share calculation		60		2		132		389

(a) Due to a loss for the nine months ended September 30, 2024, 0.4 million incremental shares are not included because the effect would be antidilutive.

11. Stock Incentive Plans and Stock Purchase Plans:

The Company’s Amended and Restated 2008 Incentive Compensation Plan (the “Amended and Restated 2008 Incentive Plan”) provides for grants of stock options, stock appreciation rights, restricted stock, deferred stock, and other stock-related awards and performance awards that may be settled in cash, stock or other property.

Under the Amended and Restated 2008 Incentive Plan, options to purchase shares of common stock may be granted at a price not less than the fair market value of the shares on the date of grant. The options must be exercised within 10 years from the date of grant and generally become exercisable on a pro rata basis over a three-year period from the date of grant. The Company issues new shares of its common stock upon exercise of its stock options. Restricted stock awards generally vest over periods of three years upon the fulfillment of specified service-based conditions and in certain instances performance-based conditions. Deferred stock awards generally vest upon the satisfaction of specified market or performance-based conditions and service-based conditions. The Company recognizes compensation expense related to its restricted stock and deferred stock awards ratably over the corresponding vesting periods. During the nine months ended September 30, 2025, the Company granted 1.1 million shares of restricted stock and 1.0 million of market-based deferred stock awards to its employees and non-employee directors under the Amended and Restated 2008 Incentive Plan. At September 30, 2025, the Company had 1.5 million shares available for future grants and awards under the Amended and Restated 2008 Incentive Plan.

Under the Company’s Amended and Restated 1996 Non-Qualified Employee Stock Purchase Plan, as amended (the “ESPP”), employees are permitted to purchase the Company’s common stock at 85% of market value on January 1st, April 1st, July 1st and October 1st of each year. Under the Company’s 2015 Non-Qualified Stock Purchase Plan (the “SPP”), certain eligible non-employee service providers are permitted to purchase the Company’s common stock at 90% of market value on January 1st, April 1st, July 1st and October 1st of each year.

The Company recognizes stock-based compensation expense for the discount received by participating employees and non-employee service providers. During the nine months ended September 30, 2025, 0.2 million shares were issued under the ESPP. At September 30, 2025, the Company had approximately 1.4 million shares reserved for issuance under the ESPP. At September 30, 2025, the Company had approximately 61,000 shares in the aggregate reserved for issuance under the SPP. No shares have been issued under the SPP since 2020.

During the three and nine months ended September 30, 2025 and 2024, the Company recognized stock-based compensation expense of $3.4 million and $7.7 million, and $2.6 million and $7.5 million, respectively. In addition, during the three and nine months ended September 30, 2025 and 2024, the Company recognized an additional $1.7 million and $5.0 million, and $1.5 million and $1.6 million, respectively, of stock-based compensation related restructuring expense, which is included in transformational and restructuring related expenses in the Consolidated Statements of Income and Comprehensive Income.

12. Common Stock Repurchase Programs:

In July 2013, the Company’s Board of Directors authorized the repurchase of shares of the Company’s common stock up to an amount sufficient to offset the dilutive impact from the issuance of shares under the Company’s equity compensation programs.

The share repurchase program allows the Company to make open market purchases from time-to-time based on general economic and market conditions and trading restrictions. The repurchase program also allows for the repurchase of shares of the Company’s common stock to offset the dilutive impact from the issuance of shares, if any, related to the Company’s acquisition program. No shares were purchased under this program during the nine months ended September 30, 2025.

In August 2018, the Company announced that its Board of Directors had authorized the repurchase of up to $500.0 million of the Company’s common stock in addition to its existing share repurchase program, of which $2.9 million remained available for repurchase as of December 31, 2024. Under this share repurchase program, during the nine months ended September 30, 2025, the Company purchased 0.1 million of shares of its common stock for $1.8 million representing shares withheld to satisfy minimum statutory withholding obligations in connection with the vesting of restricted stock, resulting in $1.1 million remaining available for repurchase under this authorization as of September 30, 2025.

In August 2025, the Company announced that its Board of Directors had authorized the repurchase of up to $250.0 million of the Company's common stock in addition to its existing share repurchase programs. Under this share repurchase program, during the nine months ended September 30, 2025, the Company purchased 1.2 million shares of its common stock for $20.9 million, resulting in $229.1 million remaining available for repurchase under this authorization as of September 30, 2025.

The Company intends to utilize various methods to effect any future share repurchases, including, among others, open market purchases and accelerated share repurchase programs. The amount and timing of repurchases will depend upon several factors, including general economic and market conditions and trading restrictions.

13. Segment Reporting:

The Company has one reportable segment, which is also its single reporting unit, for purposes of presenting financial information in accordance with the accounting guidance for segment reporting. Financial results for all practices are managed on a consolidated basis. The chief operating decision maker assesses performance and decides how to allocate resources based on net income and total assets as reported in the Company’s Consolidated Financial Statements. Significant segment expenses are practice salaries and benefits and general and administrative expenses as reported on the Company’s Consolidated Statements of Income and Comprehensive Income. Refer to the Consolidated Financial Statements for the Company’s segment revenue, significant segment expenses, other segment expenses and net income.

14. Commitments and Contingencies:

The Company expects that audits, inquiries and investigations from government authorities and agencies will occur in the ordinary course of business. Such audits, inquiries and investigations and their ultimate resolutions, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows and the trading price of its securities. The Company has not included an accrual for these matters as of September 30, 2025 in its Consolidated Financial Statements, as the variables affecting any potential eventual liability depend on the currently unknown facts and circumstances that arise out of, and are specific to, any particular future audit, inquiry and investigation and cannot be reasonably estimated at this time.

In the ordinary course of business, the Company becomes involved in pending and threatened legal actions and proceedings, most of which involve claims of medical malpractice related to medical services provided by the Company’s affiliated physicians. The Company’s contracts with hospitals generally require the Company to indemnify them and their affiliates for losses resulting from the negligence of the Company’s affiliated physicians. The Company may also become subject to other lawsuits which could involve large claims and significant costs. The Company believes, based upon a review of pending actions and proceedings, that the outcome of such legal actions and proceedings will not have a material adverse effect on its business, financial condition, results of operations, cash flows and the trading price of its securities. The outcome of such actions and proceedings, however, cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows and the trading price of its securities.

Although the Company currently maintains liability insurance coverage intended to cover professional liability and certain other claims, the Company cannot assure that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against it in the future where the outcomes of such claims are unfavorable. With respect to professional liability risk, the Company generally self-insures a portion of this risk through its wholly owned captive insurance subsidiary. Liabilities in excess of the Company’s insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on the Company’s business, financial condition, results of operations, cash flows and the trading price of its securities.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion highlights the principal factors that have affected our financial condition and results of operations, as well as our liquidity and capital resources, for the periods described. This discussion should be read in conjunction with the unaudited Consolidated Financial Statements and the notes thereto included in this Quarterly Report. In addition, reference is made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on February 20, 2025 (the “2024 Form 10-K”). As used in this Quarterly Report, the terms “Pediatrix”, the “Company”, “we”, “us” and “our” refer to the parent company, Pediatrix Medical Group, Inc., a Florida corporation, and the consolidated subsidiaries through which its businesses are actually conducted (collectively, “PMG”), together with PMG’s affiliated business corporations or professional associations, professional corporations, limited liability companies and partnerships (“affiliated professional contractors”). Certain subsidiaries of PMG have contracts with our affiliated professional contractors, which are separate legal entities that provide physician services in certain states. The following discussion contains forward-looking statements. Please see the Company’s 2024 Form 10-K, including Item 1A., Risk Factors, for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. In addition, please see “Caution Concerning Forward-Looking Statements” below.

Overview

Pediatrix is a leading provider of physician services including newborn, maternal-fetal, and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 37 states. Our affiliated physicians provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications and maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies, primarily in areas where our affiliated neonatal physicians practice. We also provide services across multiple other pediatric subspecialties.

General Economic Conditions and Other Factors

Our operations and performance depend significantly on economic conditions. During the three months ended September 30, 2025, the percentage of our patient service revenue being reimbursed under government-sponsored healthcare programs (“GHC Programs”) decreased slightly as compared to the three months ended September 30, 2024. However, we could experience shifts toward GHC Programs if changes occur in economic behaviors or population demographics within geographic locations in which we provide services, including an increase in unemployment and underemployment as well as losses of commercial health insurance. Payments received from GHC Programs are substantially less for equivalent services than payments received from commercial insurance payors. In addition, costs of managed care premiums and patient responsibility amounts continue to rise, and accordingly, we may experience lower net revenue resulting from increased bad debt due to patients’ inability to pay for certain services.

Office-Based Practice Exits

During the second quarter of 2024, we formalized our physician practice optimization plans, resulting in a decision to exit almost all of our affiliated office-based practices, other than maternal-fetal medicine. Over the course of many years, we expanded our pediatric service lines and footprint to provide specialized care to more patients, including through our office-based portfolio of practices. This added complexity to our operations over time and, accordingly, increased costs that resulted in operating challenges primarily for our office-based portfolio of practices. Recognizing this and our need to adapt to the current healthcare climate, we made the decision to return to a hospital-based and maternal-fetal medicine-focused organization. As of December 31, 2024, the exits of our pediatric office-based practices were completed. Additionally, the Company exited its primary and urgent care service line during 2024 based on a review of the cost and time that would be required to build the platform to scale.

“Surprise” Billing Legislation

In late 2020, Congress enacted the No Surprises Act (“NSA”) legislation intended to protect patients from “surprise” medical bills when certain services are furnished by providers who are not in-network with the patient’s insurer. Effective January 1, 2022, if a patient’s insurance plan or coverage is subject to the NSA, providers are not permitted to send such patient an unexpected or “surprise” medical bill that arises from out-of-network emergency care provided at certain out-of-network facilities or at certain in-network facilities by out-of-network emergency providers, as well as nonemergency care provided at certain in-network facilities by out-of-network providers without the patient’s informed consent (as defined by the NSA). Many states have legislation on this topic and will continue to modify and review their laws pertaining to surprise billing.

For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received. The patient’s cost-sharing amount for out-of-network services covered by the NSA must be no more than the patient’s in-network cost-sharing amounts. Patient cost-sharing amounts for items and services subject to the NSA count toward the patient’s health plan deductible and out-of-pocket cost-sharing limits. For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount. An out-of-network provider is only permitted to bill a patient more than the cost-sharing amount allowed under the NSA for certain types of services if the provider satisfies all aspects of an informed consent process set forth in the NSA’s implementing regulations. Providers that violate these surprise billing prohibitions may be subject to enforcement actions by the Centers for Medicare and Medicaid Services or by states, one or both of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties enforcement action and federal civil monetary penalties.

For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution (“IDR”) process. The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment. Accordingly, we cannot predict how these IDR results will compare to the rates that our affiliated physicians customarily receive for their services. These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Healthcare Reform

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) has altered how health care is delivered and reimbursed in the U.S. and contains various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits. Other provisions of the ACA have expanded the scope and reach of the False Claims Act and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings. As a result, we could be affected by potential changes to various aspects of the ACA, including changes to subsidies, healthcare insurance marketplaces and Medicaid expansion. We cannot say for certain whether there will be additional future challenges to the ACA or what impact, if any, such challenges may have on our business. Changes resulting from various legal proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

In addition to the ACA, there could be changes to other government-sponsored or funded healthcare programs, such as a change to the Medicaid program design or Medicaid coverage and reimbursement rates set forth under federal or state law. These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll.

Medicaid Reform

The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which reforms the Medicaid program by eliminating certain financial incentives for states that have expanded their Medicaid programs under the ACA, imposing work requirements on certain adult beneficiaries, and requiring states to increase patient cost-sharing amounts for certain services. We cannot predict with any assurance the ultimate effect of these reforms on reimbursements for our services.

Non-GAAP Measures

In our analysis of our results of operations, we use various GAAP and certain non-GAAP financial measures. We have incurred certain expenses that we do not consider representative of our underlying operations, including transformational and restructuring related expenses. Accordingly, we report adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”), defined as net income before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses. Earnings per share has also been adjusted (“Adjusted EPS”) and consists of diluted net income per common and common equivalent share adjusted for amortization expense, stock-based compensation expense, transformational and restructuring related expenses and impacts from discrete tax events. For the three and nine months ended September 30, 2025 and 2024, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude net gain on investments in divested businesses, loss on disposal of businesses and impairment losses, as relevant.

We believe these measures, in addition to income from operations, net income and diluted net income per common and common equivalent share, provide investors with useful supplemental information to compare and understand our underlying business trends and performance across reporting periods on a consistent basis. These measures should be considered a supplement to, and not a substitute for, financial performance measures determined in accordance with GAAP. In addition, since these non-GAAP measures are not determined in accordance with GAAP, they are susceptible to varying calculations and may not be comparable to other similarly titled measures of other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

For a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three and nine months ended September 30, 2025 and 2024, refer to the tables below (in thousands, except per share data).


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025			2024
Net income (loss)	$	71,708		$	19,441	$	131,705		$	(129,549	)
Interest expense		8,941			10,126		27,225			31,033
Income tax provision (benefit)		16,070			5,794		39,132			(5,120	)
Depreciation and amortization expense		5,551			6,254		16,196			25,353
Transformational and restructuring related expenses		5,954			18,560		16,393			40,619
Net gain on investments in divested businesses		(20,906	)		—		(20,906	)		—
Impairment losses		—			—		—			182,034
Loss on disposal of businesses		—			59		—			10,932
Adjusted EBITDA	$	87,318		$	60,234	$	209,745		$	155,302


	Three Months Ended September 30,
	2025						2024
Weighted average diluted shares outstanding	85,613						84,523
Net income and diluted net income per share	$	71,708		$	0.84		$	19,441		$	0.23
Adjustments (1):
Amortization (net of tax of $482 and $446)		1,447			0.01			1,338			0.02
Stock-based compensation (net of tax of $851 and $656)		2,553			0.03			1,969			0.02
Transformational and restructuring expenses (net of tax of $1,489 and $4,640)		4,466			0.05			13,920			0.16
Net gain on investments in divested businesses (net of tax of $5,226)		(15,680	)		(0.18	)		—			—
Tax effects of goodwill impairment		—			—			(6,135	)		(0.07	)
Loss on disposal of businesses (net of tax of $15)		—			—			44			—
Net impact from discrete tax events		(7,003	)		(0.08	)		6,452			0.08
Adjusted income and diluted EPS	$	57,491		$	0.67		$	37,029		$	0.44

(1)

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the three months ended September 30, 2025 and 2024, other than for tax effects of goodwill impairment for the three months ended September 30, 2024. Tax effects of goodwill impairment relate to the goodwill impairment recognized in the second quarter of 2024.


	Nine Months Ended September 30,
	2025						2024
Weighted average diluted shares outstanding	85,559						83,223
Net income (loss) and diluted net income (loss) per share	$	131,705		$	1.54		$	(129,549	)	$	(1.56	)
Adjustments (1):
Amortization (net of tax of $1,334 and $1,842)		4,003			0.05			5,526			0.07
Stock-based compensation (net of tax of $1,927 and $1,872)		5,781			0.07			5,616			0.07
Transformational and restructuring expenses (net of tax of $4,099 and $10,155)		12,295			0.14			30,464			0.37
Net gain on investments in divested businesses (net of tax $5,226)		(15,680	)		(0.18	)		—			—
Impairment losses (net of tax of $28,573)		—			—			153,461			1.84
Loss on disposal of businesses (net of tax of $2,733)		—			—			8,199			0.10
Net impact from discrete tax events		(6,439	)		(0.08	)		8,456			0.10
Adjusted income and diluted EPS	$	131,665		$	1.54		$	82,173		$	0.99

(1)

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the nine months ended September 30, 2025 and 2024, other than for impairment losses, due to a portion of the expense being non-deductible.

Results of Operations

Three Months Ended September 30, 2025 as Compared to Three Months Ended September 30, 2024

Our net revenue was $492.9 million for the three months ended September 30, 2025, as compared to $511.2 million for the same period in 2024. The decrease in net revenue of $18.3 million, or 3.6%, was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in same-unit revenue. Same units are those units where we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $35.6 million, or 8.0%. The increase in same-unit revenue was comprised of an increase of $33.9 million, or 7.6%, from net reimbursement-related factors and $1.7 million, or 0.4%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting

from improved collection activity, increased patient acuity, primarily in neonatology, an increase in administrative fees from our hospital partners and a slightly favorable shift in payor mix. The net increase in revenue from patient service volumes was primarily related to increases in our neonatology services.

Practice salaries and benefits decreased $32.6 million, or 8.9%, to $332.3 million for the three months ended September 30, 2025, as compared to $364.9 million for the same period in 2024. The decrease of $32.6 million was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in clinical compensation expense, driven by benefits and incentive compensation based on practice results, at our existing units.

Practice supplies and other operating expenses decreased $9.2 million, or 31.4%, to $20.2 million for the three months ended September 30, 2025, as compared to $29.4 million for the same period in 2024. The decrease was primarily attributable to non-same unit activity, primarily from practice dispositions.

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically related to the day-to-day operations of our affiliated physician practices and services. General and administrative expenses were $60.8 million for the three months ended September 30, 2025, as compared to $58.1 million for the same period in 2024. The net increase of $2.7 million was primarily related to increases in incentive compensation expense based on financial results. General and administrative expenses as a percentage of net revenue was 12.3% for the three months ended September 30, 2025, as compared to 11.4% for the same period in 2024.

Depreciation and amortization expense was $5.6 million for the three months ended September 30, 2025, as compared to $6.3 million for the same period in 2024. The net decrease of $0.7 million was primarily related to lower capital expenditures at our existing units.

Transformational and restructuring related expenses were $6.0 million for the three months ended September 30, 2025 as compared to $18.6 million for the same period in 2024. The expenses during 2025 primarily related to position eliminations across various shared services departments and to a lesser extent revenue cycle management transition activities. The expenses during 2024 primarily related to revenue cycle management transition activities, position eliminations across various shared services and operations departments and impairment of various right-of-use lease assets resulting from practice dispositions.

Loss on disposal of businesses was $0.1 million for the three months ended September 30, 2024, resulting from the disposals of our primary and urgent care practices.

Income from operations increased $34.3 million, or 101.2%, to $68.1 million for the three months ended September 30, 2025, as compared to $33.8 million for the same period in 2024. Our operating margin was 13.8% for the three months ended September 30, 2025, as compared to 6.6% for the same period in 2024. The increase in our operating margin was primarily due to favorable same-unit results, primarily related to same-unit revenue growth, and the impact from practice disposition activity. Excluding transformation and restructuring related expenses and loss on disposal of businesses, our income from operations was $74.1 million and $52.4 million, and our operating margin was 15.0% and 10.3% for the three months ended September 30, 2025 and 2024, respectively. We believe excluding the impacts from transformational and restructuring related activity and loss on disposal of businesses provides a more comparable view of our operating income and operating margin.

Total non-operating income was $19.7 million for the three months ended September 30, 2025, as compared to total non-operating expenses of $8.6 million for the same period in 2024. The net increase in non-operating income was primarily related to a net gain on investments in divested businesses of $20.9 million, an increase in interest income due to higher cash balances and a decrease in interest expense from modestly lower interest rates and borrowings.

Our effective income tax rate (“tax rate”) was 18.3% for the three months ended September 30, 2025 as compared to 23.0% for the three months ended September 30, 2024. The tax rate for the three months ended September 30, 2025 and 2024 includes a net discrete tax benefit of $7.0 million and tax expense of $6.5 million, respectively. After excluding discrete tax impacts during the three months ended September 30, 2025 and 2024, our tax rate was 26.8% and (2.6)%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate. The tax rate for the three months ended September 30, 2024 reflects the tax effects of the non-cash goodwill impairment charge.

Net income was $71.7 million for the three months ended September 30, 2025, as compared to $19.4 million for the same period in 2024. Adjusted EBITDA was $87.3 million for the three months ended September 30, 2025, as compared to $60.2 million for the same period in 2024. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from our same-unit results and practice disposition activity.

Diluted net income per common and common equivalent share was $0.84 on weighted average shares outstanding of 85.6 million for the three months ended September 30, 2025, as compared to $0.23 on weighted average shares outstanding of 84.5 million for the same period in 2024. Adjusted EPS was $0.67 for the three months ended September 30, 2025, as compared to $0.44 for the same period in 2024.

Nine Months Ended September 30, 2025 as Compared to Nine Months Ended September 30, 2024

Our net revenue was $1.42 billion for the nine months ended September 30, 2025, as compared to $1.51 billion for the same period in 2024. The decrease in net revenue of $90.5 million, or 6.0%, was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in same-unit revenue. Same units are those units where we provided services for the entire current

period and the entire comparable period. Same unit net revenue increased by $88.4 million, or 6.9%. The increase in same-unit net revenue was comprised of an increase of $68.5 million, or 5.4%, from net reimbursement-related factors and an increase of $19.9 million, or 1.5%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from improved collection activity, increased patient acuity, primarily in neonatology, an increase in administrative fees from our hospital partners, a favorable shift in payor mix and modest improvements in managed care contracting. The increase in revenue from patient service volumes was primarily related to increases in our neonatology and maternal-fetal medicine services.

Practice salaries and benefits decreased $99.0 million, or 9.1%, to $992.9 million for the nine months ended September 30, 2025, as compared to $1.09 billion for the same period in 2024. The decrease of $99.0 million was primarily attributable to non-same unit activity, primarily from practice dispositions, partially offset by an increase in clinical compensation expense, driven by incentive compensation based on practice results and benefits, at our existing units.

Practice supplies and other operating expenses decreased $33.4 million, or 36.0%, to $59.5 million for the nine months ended September 30, 2025, as compared to $92.9 million for the same period in 2024. The decrease was primarily attributable to non-same unit activity, primarily from practice dispositions.

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services. General and administrative expenses were $175.1 million for the nine months ended September 30, 2025, as compared to $174.9 million for the same period in 2024. The net increase of $0.2 million was primarily related to higher incentive-based compensation based on financial results offset by net staffing reductions. General and administrative expenses as a percentage of net revenue were 12.3% for the nine months ended September 30, 2025, as compared to 11.6% for the same period in 2024.

Depreciation and amortization expense was $16.2 million for the nine months ended September 30, 2025, as compared to $25.4 million for the same period in 2024. The net decrease of $9.2 million was primarily related to non-same unit activity, primarily practice dispositions, and lower capital expenditures at existing units.

Transformational and restructuring related expenses were $16.4 million for the nine months ended September 30, 2025 as compared to $40.6 million for the same period in 2024. The expenses during 2025 primarily related to position eliminations across various shared services departments and revenue cycle management transition activities. The expenses during 2024 primarily related to the impairment of various right-of-use lease assets resulting from our practice portfolio management activities, position eliminations across various shared services and operations departments and revenue cycle management transition activities.

Goodwill impairment was $154.2 million for the nine months ended September 30, 2024, resulting from the triggering event during the second quarter based on a sustained stock price decline.

Long-lived asset impairments were $27.8 million for the nine months ended September 30, 2024, resulting from the practice portfolio management plan.

Loss on disposal of businesses was $10.9 million for the nine months ended September 30, 2024, resulting from the disposals of our primary and urgent care practices.

Income from operations increased $268.0 million, or 248.2%, to $160.0 million for the nine months ended September 30, 2025, as compared to loss from operations of $108.0 million for the same period in 2024. Our operating margin was 11.3% for the nine months ended September 30, 2025, as compared to (7.1)% for the same period in 2024. The increase in our operating margin was primarily due to the impact from practice disposition activity and favorable same-unit results, primarily related to same-unit revenue growth. Excluding impairment activity, transformation and restructuring related expenses and loss on disposal of businesses, our income from operations was $176.4 million and $125.5 million, and our operating margin was 12.4% and 8.3% for the nine months ended September 30, 2025 and 2024, respectively. We believe excluding the impacts from impairment activity, transformational and restructuring related activity and loss on disposal of businesses provides a more comparable view of our operating income and operating margin.

Total non-operating income was $10.8 million for the nine months ended September 30, 2025, as compared to net non-operating expenses of $26.7 million for the same period in 2024. The net increase in non-operating income was primarily related to a net gain on investments in divested businesses of $20.9 million, an increase in interest income due to higher cash balances and interest rates and a decrease in interest expense from modestly lower interest rates and borrowings.

Our tax rate was 22.9% for the nine months ended September 30, 2025 as compared to 3.8% for the nine months ended September 30, 2024. The tax rates for the nine months ended September 30, 2025 and 2024 include a net discrete tax benefit of $6.4 million and tax expense $8.5 million, respectively. After excluding discrete tax impacts during the nine months ended September 30, 2025 and 2024, our tax rate was 27.0% and 10.1%, respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate. The tax rate for the nine months ended September 30, 2024 reflects the tax effects of the non-cash goodwill impairment charge.

Net income was $131.7 million for the nine months ended September 30, 2025, as compared to net loss of $129.5 million for the same period in 2024. Adjusted EBITDA was $209.7 million for the nine months ended September 30, 2025, as compared to $155.3 million for the same period in 2024. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from our same-unit results and practice disposition activity.

Diluted net income per common and common equivalent share was $1.54 on weighted average shares outstanding of 85.6 million for the nine months ended September 30, 2025, as compared to diluted net loss per common and common equivalent share of $1.56 on weighted average shares outstanding of 83.2 million for the same period in 2024. Adjusted EPS was $1.54 for the nine months ended September 30, 2025, as compared to $0.99 for the same period in 2024.

Liquidity and Capital Resources

As of September 30, 2025, we had $340.1 million of cash and cash equivalents as compared to $229.9 million at December 31, 2024. Additionally, we had working capital of $324.6 million at September 30, 2025, an increase of $119.2 million from working capital of $205.5 million at December 31, 2024. The net increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily related to an increase in revenue.

Cash Flows

Cash provided by (used in) operating, investing and financing activities from continuing operations is summarized as follows (in thousands):

Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months

Quantitative and Qualitative Disclosures About Market Risk

Controls and Procedures

PART II - OTHER INFORMATION

Legal Proceedings

Risk Factors

SIGNATURES

Pediatrix Medical Group, Inc. 10-Q