Pediatrix Medical Group, Inc. (MD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $26.02, Pediatrix Medical Group, Inc. (MD) is priced for +0.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-24.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.8pp.

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.9%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Bullet Takeaways

• This is a physician services company whose doctors staff hospital neonatal and maternal-fetal units under contract, so 85% of what it collects is billed per patient and the rest is an administrative fee the hospital pays for running the unit.

• Volumes are the structural problem: same-unit patient volume fell 1.6% in the first quarter while reimbursement and payer mix added 4.4%, which means every dollar of growth currently comes from rate rather than from more patients.

• Management reaffirmed full-year adjusted EBITDA of $280 million to $300 million in a mid-July update and said its payer composition had not shifted the way others in healthcare have reported; second-quarter results follow on August 4.

Bull Case

Shrinking a company on purpose is an unfashionable strategy, and it is working here. Over the past two years management has been exiting practices it could not make money on, and the first quarter shows the arithmetic of that decision landing. Revenue rose 3.9% to $476.2 million while adjusted EBITDA went from $49.2 million to $58.2 million. Profits grew roughly four times as fast as the top line. That gap is what portfolio pruning looks like when it is done to the right practices: revenue that never earned its keep leaves, and what remains converts better.

The reimbursement side is doing its part too. Same-unit revenue rose 2.8%, with pricing, collections and payer mix contributing 4.4% against a 1.6% decline in volume. Neonatal intensive care is not discretionary and it is not deferrable. A hospital that runs a NICU needs neonatologists on the unit at three in the morning, and there is no version of that service in which the hospital shops around quarterly. That is why rate has been able to carry the revenue line through a period of soft births.

Mid-July brought the most useful piece of information the company has offered this year. In an update on July 15, management said its second-quarter payer composition remained stable and unchanged against recent trends, and specifically that it had not seen the unfavorable payer mix shifts reported elsewhere in healthcare. Full-year adjusted EBITDA guidance of $280 million to $300 million was reaffirmed. Companies do not volunteer a mid-quarter update to say nothing has changed unless they think the market is assuming something has.

Capital allocation reinforces the same thesis. The company bought back $21.5 million of stock in the first quarter, retiring about a million shares, after spending $64 million on 2.9 million shares in the fourth quarter of 2025. Against roughly 83 million shares outstanding, that is a meaningful reduction in two quarters, and it is being funded out of the business rather than out of the revolver, which stood entirely undrawn against a $450 million facility at the end of March. Acquisitions took $7.0 million and capital spending $6.2 million in the same quarter, so this is not a business that needs much of its own cash to keep running.

What the bull case ultimately rests on is that every standard way of valuing this business already reaches or exceeds today's quote. Earnings power, peer comparison and discounted cash flow all land at or above where the shares trade, and only the asset-based lenses put the price modestly ahead, at about 1.16 times where those methods land. A company generating this much cash, with debt it can service several times over out of operating profit and a management team actively retiring stock, does not usually need a growth story to work out. It needs to not deteriorate.

Bear Case

The uncomfortable fact about a cheap-looking stock is that the market usually has a reason. Here the price asks for operating profit growth of about 1.4% a year, which is close to asking for nothing, and even that modest bar sits against a company whose patient volumes are falling. Same-unit volume declined 1.6% in the first quarter and NICU days were down about 1%. Births in the United States have been drifting lower for years, and a business whose core service is neonatal intensive care does not get to opt out of that trend. Growth is arriving entirely through rate and payer mix, and rate is the component a payer can renegotiate.

That concentration of dependence is the heart of the bear case. Roughly 85% of revenue is billed as net patient service revenue, which means it flows from commercial insurers, Medicaid and CHIP. Neonatal care is disproportionately Medicaid-funded, so a policy change to state reimbursement rates or eligibility does not affect this company at the margin, it affects it in the middle. The July update explicitly framed itself against unfavorable payer mix shifts other healthcare companies have reported. Management believes it has been spared. That is a statement about the last three months, not about the next three years.

The headline growth also flatters the underlying business. Revenue rose 3.9% in the quarter, but that figure is net of a portfolio that has been deliberately shrunk, with the company reporting a $26 million drag from net non-same-unit activity as recent acquisitions were partly offset by practice dispositions. Pruning improves what remains, but it also means the entity being valued today is smaller than the one that generated the historical record, and the pruning cannot repeat indefinitely. At some point the remaining portfolio has to grow on its own.

The balance sheet deserves a closer read than the summary suggests. At the end of March the company held $205.8 million on hand against $590.8 million of borrowings, made up of $400 million of senior notes due 2030 and $191 million drawn on a term loan. That is roughly $385 million net, comfortably serviceable against trailing operating profit but not trivial, and the first quarter consumed $129.5 million of operating cash, a seasonal outflow tied to early-year bonus payments. That swing is normal enough, yet it means the company runs a real intra-year dip in liquidity while buying back stock and funding tuck-in acquisitions from the same pot.

The fair concession is that none of this is a solvency question, and the valuation methods largely agree the shares are not expensive. But a stock can be cheap and still be a poor holding if the earnings base erodes faster than the multiple can compensate. The bear here is not that the price is too high against today's profits. It is that today's profits rest on a volume line that is shrinking, a rate line that a small number of payers control, and a cost base that has already given up most of its easy savings.

Valuation

Almost every way of valuing this business lands at or above where the shares change hands, which is an unusual place to start. Discounted cash flow, peer comparison and earnings power all reach the price or clear it; only the asset-based lenses put today's quote modestly ahead, at about 1.16 times where that family lands. That is not the signature of a stretched stock. It is the signature of a market that has decided something about the future which the trailing numbers do not yet show.

What the price actually embeds is close to stagnation. Operating profit needs to grow roughly 1.4% a year to support today's quote, and measured against this company's own record and against comparable healthcare operators, that assumption reads as ordinary rather than demanding. Read it the other way and the statement gets sharper: a buyer here is underwriting almost no improvement at all, and being compensated with a price below what most standard methods say the current earnings stream is worth.

The reason the market is unwilling to pay more sits in the composition of the growth. Same-unit revenue rose 2.8% in the first quarter, built from 4.4% of pricing, collections and payer mix set against a 1.6% decline in patient volume. A rate-driven revenue line in a Medicaid-heavy specialty is worth less per dollar than a volume-driven one, because rate is negotiated with a handful of counterparties on a schedule while volume is the accumulation of thousands of independent decisions. The valuation methods capitalize the dollars. The market is discounting where the dollars came from.

The balance sheet supports the downside rather than threatening it. At March 31 the company reported $205.8 million on hand against $590.8 million of total borrowings, consisting of $400 million of senior notes due 2030 and $191 million on a term loan, with a $450 million revolving facility entirely undrawn. Against full-year adjusted EBITDA the company guides to $280 million to $300 million, that borrowing load is modest, and the undrawn revolver is real optionality in a business with a heavy first-quarter working capital swing. Share count is falling as buybacks retire stock, which quietly improves every per-share figure the methods above are computed on.

What makes this one interesting is the mismatch between the two halves of the picture. The static methods are measuring a company that earns well, converts to cash, carries manageable debt and is buying itself back. The price is measuring a company whose patient volumes fall a little every year in a specialty defined by births. Both descriptions are accurate. The valuation question is which of them the next several years belong to.

Catalysts

Second-quarter results are due before the market opens on August 4, with the call at nine that morning. The July 15 update has already given away part of the answer: management said payer composition stayed stable through the quarter, said it had not experienced the unfavorable payer mix shifts reported elsewhere in the sector, and reaffirmed full-year adjusted EBITDA of $280 million to $300 million. That pre-announcement narrows what the print can surprise on, which pushes attention to the two lines it did not address: same-unit patient volume, and how much further the practice portfolio has been reshaped.

Volume is the number to watch. It fell 1.6% on a same-unit basis in the first quarter and NICU days were down about 1%, though management said it saw no continuation of a downward trend and left its volume assumptions alone. A second consecutive quarter of stabilization would matter more to this story than any single earnings beat, because the whole valuation debate turns on whether the volume line is cyclical or secular.

Capital allocation is the other live item. The company deployed $21.5 million on buybacks in the first quarter and $64 million in the fourth quarter of 2025, and the pace of that spending against a shrinking share count is the clearest signal available about how management reads its own valuation. Watch also for the cash position to rebuild from the seasonal first-quarter drawdown, since the second and third quarters are when this business normally generates the year's cash.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CON (CONCENTRA GROUP HOLDINGS PARENT, INC.)
• FY2025 10-K: …business is highly competitive, and we compete with other occupational health centers, onsite health clinics at employer worksites, and other healthcare providers for customers. If we are unable to compete effectively with other occupational health centers, onsite health clinics at employer worksites and healthcare…
• FY2025 10-K: …on occupational health include the following: • Independent occupational health practices are a significant source of competition and are mainly comprised of groups with between 1 and 3 locations dedicated to a single market. • A select number of occupational health groups have grown to become regional players. These…
• SGRY (Surgery Partners, Inc.)
• FY2025 10-K: …we compete with hospitals and operators of other surgical facilities to attract physicians and patients. We believe that the competitive factors that affect our surgical facilities' ability to compete for physicians are convenience of location of the surgical facilities, quality of care offered, convenience of…
• FY2025 10-K: …in multiple markets, each with a different competitive landscape, shifts within our payor mix or case mix may not be uniform across all of our affiliated facilities. Rather, these shifts may be concentrated within certain markets due to local competitive factors. In addition, we are unable to predict the results of…
• ARDT (Ardent Health, Inc.)
• FY2025 10-K: …subject to various federal, state and local statutes and ordinances regulating their operation. Management does not believe that compliance with such statutes and ordinances will materially adversely affect our financial position or results of operations. Competition The hospital industry is highly competitive, and…
• FY2025 10-K: …including its geographic coverage, and access to patients. A location convenient to a large population of potential patients or a wide geographic coverage area through a hospital network can significantly benefit an acute care hospital's competitive position. Another important factor is the scope and quality of…
• SEM (SELECT MEDICAL HOLDINGS CORP)
• FY2025 10-K: …Competition Critical Illness Recovery Hospitals and Rehabilitation Hospitals Our critical illness recovery hospitals and our rehabilitation hospitals both compete on the basis of the quality of the patient services we provide, the outcomes we achieve for our patients, and the prices we charge for our services. The…
• FY2025 10-K: …illness recovery hospital, rehabilitation hospital, and outpatient rehabilitation businesses, our ability to retain customers and physicians, or maintain or increase our revenue growth, price flexibility, control over medical cost trends, and marketing expenses may be compromised and our revenue and profitability may…
• OPCH (OPTION CARE HEALTH, INC.)
• FY2025 10-K: …of this bidding process, we may not be retained, and even if we are retained, the prices at which we are able to retain the business may be reduced. The loss of a payer relationship could significantly reduce the number of patients we serve and have a material adverse effect on our revenue and net income, and a…
• FY2025 10-K: …and deciding on how to allocate resources such as capital investments, share repurchases, and acquisitions. The CODM does not use or receive total assets by segment to make decisions regarding resources; therefore, the total asset disclosure by segment has not been included. The following table reflects results of…
• NHC (NATIONAL HEALTHCARE CORP)
• FY2025 10-K: …our competitors' facilities are located in newer buildings and may offer services not provided by us or are operated by entities having greater financial and other resources than us. Certain of our competitors are operated by not-for-profit, non-taxpaying or governmental agencies that can finance capital expenditures…
• FY2025 10-K: …non-operating income from equity in earnings of unconsolidated investments, dividends and realized gains and losses on marketable securities, interest income, and other miscellaneous non-operating income. 4 Quality of Patient Care The Centers for Medicare and Medicaid Services ("CMS") introduced the Five-Star Quality…
• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: …of each location. We believe that the primary competitive factors in the post-acute care industry are: • ability to attract and to retain qualified management and caregivers; • reputation and achievements of quality healthcare outcomes; • attractiveness and location of facilities; • the expertise and commitment of…
• FY2025 10-K: …services at lower prices than we offer. 9 Table of Contents Our other services, such as senior living facilities and other ancillary services, also compete with local, regional, and national companies. The primary competitive factors in these businesses are similar to those for our skilled nursing facilities and…
• PACS (PACS Group, Inc.)
• FY2025 10-K: …industry is highly competitive. Our skilled nursing facilities compete primarily on a local and regional basis with other skilled nursing facilities and with assisted/senior living facilities, from national and regional chains to smaller providers owning as few as a single facility. Competitors include other…
• FY2025 10-K: …industry in the markets in which we operate were to occur, it could reduce the occupancy rates of existing facilities and, in some cases, might reduce the private rates that we charge for our services. If we fail to attract patients and residents and to compete effectively with other healthcare providers, our revenue…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.