Image Source: Mednax
Neonatology and anesthesiology remain key revenue contributors for Mednax, but its teleradiology opportunity may propel its future growth prospects.
By Alexander J. Poulos
The healthcare field remains one of the bright spots in the US economy, despite many uncertainties created by the politically-charged environment. Consumption of healthcare needs remains relatively impervious to the vagaries of the business cycle (the ups and downs of consumer demand); healthcare requirements tend to stay fairly uniform and constant (if not, growing along with the population and demographic trends).
The theory behind our enthusiasm for many enterprises in the healthcare arena is rather straightforward: most companies operating within it have predictive business models with consistent demand for their products/services, and stable margins are relatively easy to model within our valuation framework. With lots of talk about the repeal/replacement of the Affordable Care Act (“Obamacare”), healthcare cost containment is front and center in Washington yet again. We think it timely to highlight a unique company that is finding innovative ways to reduce the costs associated with providing quality healthcare in the United States.
Enter Mednax (MD), a consolidator in the healthcare field. The company purchases existing practices and integrates them under its corporate umbrella. In essence, an “acquired” physician goes from being a small practice operator with high overhead costs to an employee that enjoys the efficiencies of scale through the corporate entity. Mednax currently employs over 3,000 physicians in its network, an impressive number. Let’s examine the three primary revenue generators for Mednax, and what the future might hold for this compelling healthcare entity.