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Here's Why You Should Retain MEDNAX (MD) in Your Portfolio

MEDNAX Inc. MD has been in investors’ good books owing to its strategic acquisitions and an increasing top line on the back of operational efficiency along with solid segments. Its booming telehealth services are another positive.

Over the past 30 days, the stock has witnessed its 2021 and 2022 earnings estimates move 0.7% and 1.2% north, respectively.

The company has been gaining from its strong patient volume trends. On its last earnings call, management said that patient volumes across all services exceeded the pre-pandemic levels. MEDNAX is continuing to add various specialties to its portfolio, such as neurology, endocrinology, gastroenterology, hematology, etc.

It has a Value Score of A, reflecting its attractive stock value.

Now let’s see why this currently Zacks Rank #3 (Hold) player is an investor favorite now.

The company has an active inorganic growth profile. It acquires companies and forges alliances to enhance its capabilities. In 2019, it closed the buyouts of nine physician group practices including two neonatology physician practices, two maternal-fetal physician practices, one radiology practice and four other pediatric subspecialty practices. In 2020, it bought one paediatric subspecialty practice for $2.1 million. The company has a solid pipeline of activities coming up.

MEDNAX divested its MedData business to Frazier Healthcare Partners in 2019, which helped it focus on its core business. Following its MedData transaction, the company is now an organization dedicated to physician services and patient care. Moreover, it sold American Anesthesiology, which helped it mitigate cash losses induced by the coronavirus outbreak as well as lower its risk profile. MEDNAX also sold MEDNAX Radiology Solutions to focus on its core pediatrics and obstetrics business lines. All these enabled it to streamline its business.

The hospital company is expanding its telehealth services to ensure access to healthcare even from the confines of one’s residence. Given the current scenario, demand for virtual medical care services is here to stay, which will allow the company to bolster its telehealth service business line.

The company has been witnessing a healthy revenue stream on the back of its operational excellence, inorganic growth via strategic acquisitions and strong segmental performances for a while now. This is evident from its CAGR of 6% witnessed during the 2015-2019 period. In the first six months, revenues skyrocketed 213.2% year over year owing to robust volumes. We expect the company to continue witnessing top-line growth on the back of its strategic measures.

The company’s long-term growth rate stands at 19.5%, higher than the industry's average of 11.7%.

Shares of Mednax have surged 85.2% in a year compared with the  industry’s rally of 105.8%.


Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks in the same space are  Universal Health Services, Inc. UHSTenet Healthcare Corporation THC and  HCA Healthcare, Inc. HCA, each carrying a Zacks Rank #2 (Buy), currently.

Earnings of Universal Health, Tenet Healthcare and HCA Healthcare managed to deliver a trailing four-quarter surprise of 29.01%, 61.03% and 11.65%, respectively, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Universal Health Services, Inc. (UHS): Free Stock Analysis Report
 
Tenet Healthcare Corporation (THC): Free Stock Analysis Report
 
MEDNAX, Inc. (MD): Free Stock Analysis Report
 
HCA Healthcare, Inc. (HCA): Free Stock Analysis Report
 
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