Pediatrix Medical Group (NYSE: MD), the physician services provider reports net income of $165.4 million for 2025 as it completes its transition away from office-based primary and urgent care. Management focuses on core hospital-based neonatology and maternal-fetal medicine to drive same-unit revenue growth and improve operational margins.
The company reports a shift to profitability for the fiscal year ended December 31, 2025, following a significant restructuring of its medical practice portfolio. The company records net income of $165.4 million, rebounding from a net loss of $99.1 million in the previous year. This financial recovery occurs as the group completes the disposal of nearly all office-based practices to concentrate on hospital-based services.
Financial Performance
For the fourth quarter of 2025, net revenue reaches $493.8 million, down from $502.4 million year-over-year. Net income for the quarter stands at $33.7 million, or $0.40 per diluted share. Adjusted EBITDA for the quarter is $65.8 million, compared to $68.7 million in the prior-year period.
On a full-year basis, total 2025 revenue is $1.91 billion. Net income of $165.4 million results in diluted earnings of $1.94 per share. Adjusted EBITDA grows to $275.6 million from $224.0 in2024.The company ends the year with $375.2 million in cash and cash equivalents. Total debt is $597 million, including $400 million in senior notes due 2030 and $197 million in Term A loan borrowings. Days sales outstanding (DSO) improves to 42.8 days from 47.6 days.
Strategic Refocus
The company’s 2025 results reflect the culmination of a strategy to exit office-based and urgent care service lines. As of December 31, 2024, Pediatrix finalized plans to return to a hospital-based and maternal-fetal medicine-focused organizational structure. While total revenue for the year declines 4.9% to $1.91 billion due to these practice dispositions, same-unit net revenue increases by 6.2%.
Product Highlights
Pediatrix maintains a national network of approximately 2,295 affiliated physicians, including 1,350 neonatologists staffing over 360 NICUs across 32 states. The company utilizes its proprietary BabySteps cloud-based clinical electronic documentation system to benchmark outcomes and improve bedside care. Additionally, the group expands its telehealth programs to provide remote clinical healthcare to metropolitan and rural communities. In 2025, the company’s newborn hearing screening program screens over 793,000 babies at 340 hospitals.
Investment Thesis
Bull Case: The company demonstrates strong same-unit revenue growth driven by improved collections and higher patient acuity. The specialized nature of neonatology provides a defensive market position, as hospitals rely on these services for reputation and admissions.
Bear Case: Labor costs remain a significant burden, with practice salaries and benefits accounting for 70.1% of net revenue in 2025. Furthermore, continued declines in the U.S. birth rate could negatively impact future patient volumes.
Growth Strategy
Pediatrix Medical Group expects full-year 2026 Adjusted EBITDA in the range of $280 million to $300 million, reflecting continued execution of its strategy centered on organic growth in hospital-based units and maternal-fetal medicine. Management is also pursuing selective acquisitions of physician practice groups within core specialties to support scale and strengthen its presence in key service lines.
Capital allocation priorities remain focused on returning cash to shareholders alongside disciplined investment. In 2025, the company repurchased $83.8 million of stock under a newly authorized $250 million buyback program, signaling continued emphasis on share repurchases while maintaining flexibility for targeted acquisitions and operational expansion.
Reimbursement Pressure
No Surprises Act has materially altered reimbursement dynamics for neonatology by prohibiting balance billing for these services, eliminating the ability of providers to obtain patient consent for out-of-network charges. As a result, patients receiving neonatology care from out-of-network clinicians at covered facilities are limited to in-network cost-sharing amounts, typically determined using the qualifying payment amount (QPA), or the median contracted rate for the service in a given geographic market. Health plans make an initial payment to out-of-network providers, with any disputes over reimbursement subject to the law’s Independent Dispute Resolution (IDR) arbitration process.
These provisions may constrain recovery levels on out-of-network services and introduce broader contractual and operating risks for providers such as Pediatrix Medical Group. The framework could affect negotiations with payors by increasing pressure on contracted rates or encouraging insurers to reassess network participation. In addition, non-compliance with the NSA’s surprise billing restrictions can expose providers to federal civil monetary penalties and enforcement actions from regulators including CMS, the U.S. Department of Labor, and relevant state authorities.
Sector and Macro Context
Pediatrix operates in a fragmented physician services market where hospital-based units face variable admission rates and complex reimbursement systems. The company faces headwinds from a generally declining U.S. birth rate and the potential impact of the No Surprises Act on out-of-network reimbursement. Approximately 24% of net revenue comes from government-funded healthcare programs like Medicaid, exposing the company to state budgetary constraints and reimbursement rate cuts.
Technical Analysis
Short-Term: The stock shows positive momentum, rising from a closing price of $14.35 on June 30, 2025 to $21.52 on February 13, 2026.
Long-Term: Over a five-year period, the stock has underperformed major indices. An investment of $100 in December 2020 would be valued at $87.16 by the end of 2025, compared to $182.25 for the S&P 500 Index.
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