Operator: Hello, and thank you for standing by. At this time, I would like to welcome everyone to the Q4 2025 Pediatrix Medical Group, Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mary Ann Moore, Chief Administrative Officer and General Counsel. You may begin.

Mary Ann Moore: Thank you, operator, and good morning. Certain statements and information during this call may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by Pediatrix management in light of their experience and assessment of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and Pediatrix undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in the company's filings with the SEC, including the sections entitled Risk Factors. In today's remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning's earnings press release, our quarterly and annual report and on our website at www.pediatrix.com. With that, I will turn the call over to Mark Ordan, our Chief Executive Officer.

Mark Ordan: Thanks, Mary Ann and good morning, everyone. Also with me today is Kasandra Rossi, our Chief Financial Officer. Our fourth quarter results were quite strong and capped an equally strong 2025. Our adjusted EBITDA of $66 million was in line with our upwardly adjusted guidance. Throughout 2025, including the fourth quarter, strong volume, acuity and payer mix, combined with strong financial control, gave rise to these results. During this time, we welcomed new leaders in key areas of the company, all of whom are dedicated in some way to focusing on care quality, which, of course, is the very essence of Pediatrix. With these investments and record practice bonuses, our full year adjusted EBITDA was a very strong $276 million. We expect our results in 2026 to be in the range of $280 million to $300 million, which at its midpoint, of course, is 5% above 2025. This projection assumes steady metrics, including volume, acuity and payer mix and recent though early results support this outlook. Despite these steady metrics on our top line, we have several operational initiatives, which we believe will flow favorably to our adjusted EBITDA. We have said that we assumed that there was some payer mix benefit in 2025 from ACA subsidies. If those continue to lapse with no effective remedy, we would expect some effect. And as we have said before, this is very difficult to quantify such an effect because there are many possible outcomes. Kasandra will now provide some additional details on the quarter and preliminary outlook for 2026.

Kasandra Rossi: Thanks, Mark, and good morning, everyone. Our consolidated revenue decrease was driven by net non-same-unit activity of $26 million, including a decrease in revenue from our portfolio restructuring, partially offset by an increase in revenue from acquisition and organic growth. This decrease was partially offset by same-unit growth of 4%, with same-unit pricing up just under 7% and overall patient service volumes down just under 3%. Pricing was driven by solid RCM cash collections, favorable payer mix, increased patient acuity in neonatology and an increase in contract administrative fees. And while we saw volume declines across all our service lines during the quarter, including NICU days down about 2%, we were up against a tough comp. Practice-level SW&B expenses declined slightly year-over-year, reflecting our portfolio restructuring activity, partially offset by same-unit increases. On a same-unit basis, we saw increases in variable practice incentive compensation and salary and benefits. Salary growth for the fourth quarter was modestly below the ranges that we have seen for the prior 6 quarters, those averaged around 3%. Our G&A expense increased year-over-year, driven by a modest increase in salary expense as well as some travel expenses. D&A expense decreased year-over-year, resulting from lower overall CapEx and an increase in fully depreciated assets. Other non-operating expense decreased year-over-year, driven by higher interest income on cash balances and a decrease in interest expense on modestly lower average borrowings at slightly lower rates. Moving on to cash flow. We generated $115 million in operating cash flow in the fourth quarter compared to $135 million in the prior year, primarily related to decreases in cash flow from AP and accrued and other liabilities. We also deployed $64 million of capital during the quarter to buy 2.9 million shares of our stock, leaving us with just about 83 million shares outstanding. We ended the quarter with cash of $375 million and net debt of just over $220 million. This reflects net leverage of just under 1x. Our AR DSO at December 31 of 42.8 days were down slightly from September 30, but were down almost 5 days year-over-year, driven by improved cash collections at our existing units. Moving on to our preliminary 2026 outlook that Mark noted earlier. This outlook contemplates full-year revenue of approximately $1.9 billion, in line with 2025. It also contemplates full-year G&A expense in the range of $230 million to $240 million compared to our 2025 G&A of $241 million. Achieving the middle of the range would put it down about 20 basis points as a percent of revenue. I'll also note the normal seasonality of our quarterly results. With our expectations of full year adjusted EBITDA, we anticipate that our first quarter 2026 adjusted EBITDA will represent about 17% to 19% of that annual expected range. Historically, the first quarter adjusted EBITDA has ranged from 17% to 21% of the full year. We have also not factored any contribution to our results from M&A activity in 2026 and would plan to update you on the timing and magnitude of any potential additions. I'll now turn the call back over to Mark.

Mark Ordan: Thanks, Kasandra. Our very strong balance sheet and cash flow enable us to invest in quality and clinical support and to attract and retain the finest clinicians in each of our areas of concentration. In the fourth quarter, we introduced 2 new programs to further align our physicians at Pediatrix. The first program provides a portion of the physician's cash bonus and a stock price tracking element that is paid out over multiple years. This program is a first step for us toward creating greater alignment across the entire organization, and we hope to expand it in the future. More than 500 physicians are participating in this program in its first year, and we expect this to create greater awareness of and responsibility for our collaborative role in delivering best-in-class care. We are also excited to announce Pediatrix Partners. This is a group of 46 physicians from across our specialties who have received a stock price tracking grant to recognize their leadership role along with future efforts to help guide our decisions in quality, hospital relations, recruiting and retention and growth. We anticipate annually adding physicians to this inaugural class. Looking into 2026 and beyond, we see many areas of potential opportunity. With our great physical footprint, we have the ability to leverage advanced telemedicine. This can provide vital assistance and care to people who are currently out of reach and can be a bridge to our national in-person care presence. As we speak, we are looking at additional growth opportunities in our physical core, both in NICUs and maternal-fetal medicine along with OBH. On OBH, we have a very strong presence in OB hospital medicine, and we see very strong demand for us to really increase our presence here. Remember, our long-established hospital relations, thanks to our NICU, PICU and MFM practices provide an obvious entrée here. And given our existing physical presence and dedicated overhead already, we believe we could provide a cost advantage to our hospital partners. We love the space we are in, and we enjoy our leadership position. We're also very aware of opportunities outside of our pediatrics and obstetrics space. We assure you that we will guard our balance sheet strength carefully and only consider other opportunities that do not dilute our great strength in pediatrics and obstetrics. And in our core areas in pediatrics and obstetrics, we see many viable growth avenues. We are uniquely positioned, have the financial strength and discipline to accomplish this, and we are determined to do all we can to achieve smart growth. Operator, I'd like to now turn the call over to questions.

Operator: [Operator Instructions] Your first question comes from the line of Ryan Daniels with William Blair.

Matthew Mardula: This is Matthew Mardula on for Ryan Daniels. And I know in your prepared remarks, you said full-year revenue of $1.9 billion for 2026. Could you kind of give us the drivers of that revenue growth? Any color into the expectations for facility volume growth or pricing expectations for the 2026 year would be great to hear about.

Kasandra Rossi: Matthew, so really, this overall assumes that we are going to be flat both in volume and in pricing. While there will be some kind of ups and downs within the components that are part of pricing, overall, we do expect those to be pretty flat.

Matthew Mardula: And then with the negative patient volume year-over-year this quarter, is there anything you could call out regarding kind of what happened there? And I know you previously mentioned it's difficult to call out one exact factor or one reason why. But kind of with the strong volume we have seen in the past couple of quarters, is there any color we can hear about with what happened this quarter?

Kasandra Rossi: No, it really -- that's about the comp. And so we tried to mention that the volume being down this quarter was really -- it's because that the comp was fairly tough from the fourth quarter of last year.

Operator: Your next question comes from the line of Jack Slevin with Jefferies.

Jack Slevin: I want to drill in a little bit on probably the quarter and the guidance as well. Maybe slightly different start on the quarter. The variable comp expense, I think we saw this in 2021, where you had a really strong year and then variable comp sort of spiked higher. I know you sort of gave a little bit of a hint at it with the wide guidance range heading into the quarter. Is there any way to quantify or talk about sort of what that was in the quarter and how that drove earnings? And then the second piece, Mark, hearing your commentary on some of the changes to some of the physician or stock-based comp structures, should we think about that as something that might have a smoothing effect for the same sort of dynamic in future years?

Mark Ordan: Well, so two things. One is there were a variety of factors that led to our fourth quarter operations and going into 2026. So there's really no better parsing that I could provide. In terms of alignment, I would say that's really the key driver of this. It's not to achieve a smoothing effect. It's really just to make sure that over time, our doctors who have an enormous role in our hospital relations, quality recruiting, and retention really feel a strong tie to the company and that we have a mutual bond to each other. So that's the driver of this.

Jack Slevin: I appreciate that. And then just thinking about the guidance, hearing your commentary, and it's been consistent over a decent period about how it's hard to quantify for you all to parse out exchange impact or subsidy impact on your overall volumes. But I guess trying to think about the guidance, like is there any way to understand what could possibly be embedded in the guidance for that factor. And then hearing a little bit of your commentary, it sounds like you might have said early in the year, you have indications that sort of things are consistent. Should I take that as like payer mix, other sort of early indicators on this specific issue would tell you that you're not really seeing a change yet...

Mark Ordan: That's exactly right. But we're not seeing a change yet, but the government hasn't yet figured out what the changes are in enrollment. We don't know yet whether people who said they're going to enroll are going to pay. We don't know yet what the government might do in terms of a stop gap. And then the question is what do people do? Are people going on to commercial insurance? There are so many variables that make this up. So we are -- obviously, our antenna is up and I probably look twice a day and see what the government is up to. So it's just very hard to quantify. But in our guidance, we assume that we have the same metrics that we had during 2025.

Jack Slevin: And maybe just one follow-up, Mark or Kasandra on that. Just like to think about pricing really strong. There really wasn't that much payer mix movement in '25. So if I think about that flat-pricing assumption, is it fair to say that like in the way you've built that some of the trends on hospital contract admin fees or core pricing or acuity might be balancing against some sort of implicit downside protection for an issue on exchanges. Is that a fair way to think about how you've structured that pricing assumption?

Kasandra Rossi: No. So it's not really tied to anything with the exchanges. But we did actually see some incremental favorable payer mix in '25, although, of course, the start of the shift was in '24. So we did see that. So really, we're just saying that we expect everything to remain pretty steady in 2026, really an average of what we saw in 2025. So that's where the guidance is based on.

Jack Slevin: Okay...

Mark Ordan: As you know, there are many components of it from volume, acuity, basic payer mix. So we're assuming all of the factors that were in -- we have no reason to think that any of those will change for 2026. So that's why our forecast is as it is.

Operator: [Operator Instructions] Your next question comes from the line of A.J. Rice with UBS.

Albert Rice: So your EBITDA at the midpoint is supposed to grow about $14 million year-to-year in '26. I mean it looks like you've got some assumptions about G&A cost reduction in there, maybe other cost reduction. Can you just flesh out a little bit more what is embedded in guidance with respect to the cost or expense side of the equation?

Mark Ordan: It's really just that. We did call out, I think Kasandra called out likely expense reduction at a small scale. And that's really it. We're overall forecasting pretty much the same kind of results that we had in '25 carrying into '26. And just because of normal operations changes quarter-to-quarter, that's where we fall out. As I said in my comments, there are many things that we're working on that could affect us going forward, but nothing that we could call out specifically at this time.

Albert Rice: Yes. I was just saying unusually, people would assume you get some kind of inflationary update in G&A, and you're actually forecasting about a $6 million decline year-to-year, which I don't know, I thought there might be something specific behind that. On the comments about capital deployment, you said no M&A is embedded in the guidance. Obviously, you've got -- you're doing share repurchase. Can you just give us a little flavor for how much share repurchase is anticipated in the current guidance? And then on -- if you did M&A, I know you said you got the opportunity to grow in NICU. You got the opportunity with maternal-fetal medicine. Is it that type of thing? Or those are just potentially bid on contracts to recruit individual doctors. Is there any place where you're looking for M&A that might be a little bigger and chunkier that you would potentially consider?

Mark Ordan: Well, on the first part of your question, we assume in our guidance a small -- a much smaller amount of stock buyback depending on -- we'll be opportunistic about that. But probably, we don't anticipate at the same scale as we did in 2025. In terms of growth opportunities, there are really many. They range from physical practices to telemedicine within our space. I mentioned OB hospitalist, which is a very important program nationwide in many hospitals, and we have a real strength in that. And as I said earlier, because of our NICU relationships, maternal-fetal medicine relationships, PICU relationships across the nation, we're uniquely positioned to do that and do it in a cost-efficient way. And then A.J., yes, there are lots of companies out there, many that are private equity owned that are looking for a new home. And I think there are a lot of people out there that are aware of our balance sheet. And my team and I have certainly done deals like that over time. So we get a lot of inbound interest. We want to balance that inbound interest with the strength of our core and make sure that we don't do anything that can take away from our core. But this is a time when it's good to have strong cash flow, strong balance sheet, great relationship with hospitals and be opportunistic if there's something out there that we can do.

Operator: Next question comes from the line of Ann Hynes with Mizuho.

Ann Hynes: Can we just talk about pricing? I mean it seemed very strong in the quarter, up around over 9%, and this is versus the 7% in Q3. And I know you talked about acuity and other drivers, but it still seems very high. Can you tell us what's happening with the acuity shift in payer mix? Just more detail on just that strength over the past couple of quarters and how sustainable you think it is, that would be great.

Kasandra Rossi: Yes. So for the quarter, it was actually up just under 7%. And it's really the same things we've seen for the past couple of quarters. We really have strong RCM collections coming through, which was related to all the stabilization efforts that we undertook in '25 with our revenue cycle management transition. And then we did have some favorable impact from payer mix that we've talked a little bit about. Acuity was also strong again. And we did have contract administrative fees that were up a bit. So it's really the same things we've seen. And then what we anticipate is that is going to stay -- kind of get steady as we move into '26. And of course, in '26, the comps are going to be tougher.

Mark Ordan: On acuity, with advances, our hospitals are known because of our NICUs to be able to handle patients that in the past, you could never have handled. So I think there is certainly something that favors us because we are the leader in Level 3 and Level 4 NICUs around the country. And as Kasandra said, there's just been a real strengthening in that part of the business.

Operator: There are no further questions at this time. I will turn the call back over to Mark Ordan, CEO, for closing remarks.

Mark Ordan: Great. Thank you all very much, and have a great day.

Operator: That concludes today's call. Thank you all for joining, and you may now disconnect.