Pediatric healthcare provider Pediatrix Medical Group (NYSE: MD) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.6% year on year to $492.9 million. Its non-GAAP profit of $0.67 per share was 43.9% above analysts’ consensus estimates.

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“Our operating results for the third quarter exceeded our expectations and were driven by a combination of reimbursement-related factors, including strong collection activity, higher patient acuity and slightly favorable payor mix, as well as operational consistency,” said Mark S. Ordan, Chief Executive Officer of Pediatrix Medical Group.

Company Overview

With a network of approximately 2,620 affiliated physicians caring for some of the most vulnerable patients, Pediatrix Medical Group (NYSE: MD) provides specialized physician services focused on neonatal, maternal-fetal, pediatric cardiology and other pediatric subspecialty care across 37 states.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Pediatrix Medical Group grew its sales at a tepid 1.6% compounded annual growth rate. This was below our standards and is a tough starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Pediatrix Medical Group’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.3% annually.

Pediatrix Medical Group also reports same-store sales, which show how much revenue its established locations generate. Over the last two years, Pediatrix Medical Group’s same-store sales averaged 4.8% year-on-year growth. Because this number is better than its revenue growth, we can see its sales from existing locations are performing better than its sales from new locations.

This quarter, Pediatrix Medical Group’s revenue fell by 3.6% year on year to $492.9 million but beat Wall Street’s estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

Pediatrix Medical Group was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.2% was weak for a healthcare business.

On the plus side, Pediatrix Medical Group’s operating margin rose by 1.2 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 2.7 percentage points on a two-year basis.

In Q3, Pediatrix Medical Group generated an operating margin profit margin of 13.8%, up 7.2 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Pediatrix Medical Group’s EPS grew at a spectacular 12.5% compounded annual growth rate over the last five years, higher than its 1.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Pediatrix Medical Group’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Pediatrix Medical Group’s operating margin expanded by 1.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Pediatrix Medical Group reported adjusted EPS of $0.67, up from $0.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Pediatrix Medical Group’s full-year EPS of $2.05 to shrink by 11.2%.

Key Takeaways from Pediatrix Medical Group’s Q3 Results

We were impressed by how significantly Pediatrix Medical Group blew past analysts’ same-store sales expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates on better proftability. Zooming out, we think this was a very solid print. The stock traded up 11.9% to $19 immediately after reporting.

Pediatrix Medical Group had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.