MEDNAX, Inc. – Value Analysis (NYSE:MD) : October 6, 2017

Capitalcube gives MEDNAX, Inc. a score of 81.

Our analysis is based on comparing MEDNAX, Inc. with the following peers – Tenet Healthcare Corporation, Universal Health Services, Inc. Class B, Community Health Systems, Inc., athenahealth, Inc., LifePoint Health, Inc. and Birner Dental Management Services, Inc. (THC-US, UHS-US, CYH-US, ATHN-US, LPNT-US and BDMS-US).

Investment Outlook

MEDNAX, Inc. has a fundamental score of 81 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 1.44 is about median in its peer group.
  • MD-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • MD-US‘s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • MD-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • MD-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • MD-US has additional debt capacity.

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Leverage & Liquidity

MD-US has additional debt capacity.

  • With debt at a reasonable 24.08% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 27.63%), and a well-cushioned interest coverage level of 7.61x, MD-US has the capacity to borrow some more.
  • All 6 peers for the company have an outstanding debt balance.

MD-US has maintained its relatively high liquidity profile from the recent year-end.

  • MD-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 120.04x in 2012.
  • Though its interest coverage decreased to 7.61x from 9.30x (in 2016), its peer median remained relatively stable during this period at 2.70x.
  • Interest coverage fell 2.15 points relative to peers.
  • MD-US‘s debt-EV is its highest relative to the last five years and compares to a low of 0.51% in 2013.
  • While its debt-EV increased to 24.08% from 21.63% (in 2016), its peer median decreased during this period to 27.63% from 28.61%.
  • Relative to peers, debt-EV rose 3.42 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for MEDNAX, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Tenet Healthcare Corporation 79.38 1.24 1.21 17.88
Universal Health Services, Inc. Class B 26.05 1.33 9.23 30.56
Community Health Systems, Inc. 93.54 2.13 1.04 6.89
athenahealth, Inc. 4.81 1.62 5.61 81.05
LifePoint Health, Inc. 51.53 1.82 2.7 17.96
Birner Dental Management Services, Inc. 27.63 0.3 -9.98 21.02
MEDNAX, Inc. 24.08 1.59 7.61 24.3
Peer Median 27.63 1.59 2.7 21.02
Best In Class 4.81 2.13 9.23 81.05

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Company Profile

MEDNAX, Inc. provides physician services including newborn, anesthesia, maternal-fetal, teleradiology, pediatric cardiology and other pediatric subspecialty care. Its services include neonatal care, maternal-fetal care, anesthesia and anesthesia subspecialty care, pain management and other pediatric subspecialty care. The company was founded by Roger J. Medel in 1979 and is headquartered in Sunrise, FL.


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