Why Pediatrix Medical Group Stock Tumbled on Thursday

Pediatrix Medical Group (NYSE: MD) wasn't one of the healthier stocks on the U.S. market on Thursday. The healthcare services provider's shares fell by more than 12% over the course of the day, due mostly to the earnings report it published early that morning.

Double dips

In its fourth quarter, Pediatrix's revenue came in at nearly $493.8 million, down almost 2% year over year. Net income not in accordance with generally accepted accounting principles (GAAP) also dipped slightly, falling to $42.5 million ($0.50 per share) from the year-ago profit of $43.5 million.

That meant a mixed quarter for the company, as analysts collectively modeled lower revenue ($486.2 million) but higher profitability. Their consensus for non-GAAP (adjusted) net income was $0.54 per share.

The company's bottom line was negatively affected by notably higher bonus payouts to its practitioners, which, in turn, stem from a tightening labor market for such professionals.

Insubstantial gains?

In its earnings release, Pediatrix proffered very selected guidance, stating that it expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $280 million to $300 million for full-year 2026. The previous year's figure was $275.6 million.

That issue with costs is certainly a concern, though over the years, Pediatrix has managed to deliver growth and decent bottom-line profits in adverse circumstances. At the same time, given the tepid growth figures analysts anticipate for the coming year, I don't feel it's a compelling buy, even at the beaten-down price following earnings.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.