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Mednax (MD) Pursues $1.1B Transactions to Reduce Debt Burden
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Mednax, Inc. (MD - Free Report) recently completed financing transactions worth $1.1 billion, included within which is the issuance of senior unsecured notes with an aggregate principal amount of $400 million. The notes will fetch an interest rate of 5.375% and are set to mature in 2030.
Shares of Mednax gained 4.4% on Feb 15.
Concurrent with the completion of the notes issuance, Mednax replaced its previous unsecured Revolving Credit Facility of $600 million with a new $450 million unsecured Revolving Credit Facility and a Term A Loan of $250 million.
Utilizing cash on hand and the proceeds derived from the abovementioned transactions, Mednax plans to redeem its 6.25% senior notes with an aggregate principal amount of $1 billion, set to mature in 2027.
By issuing senior notes amid a continued low-interest-rate environment, MD can procure funds at a lower cost and enhance financial flexibility. Also, the interest expenses of MD are likely to come down through the recent move as the high-interest carrying notes will be redeemed by low-interest bearing ones.
Lower interest expenses remain crucial for a company, which can otherwise exert pressure on the margins. It is worth mentioning that Mednax’s interest expenses plunged 37.3% in the first nine months of 2021 from the year-ago comparable period’s level.
The recent move highlights Mednax’s sincere efforts to bring down the debt burden. MD seems to have succeeded in its endeavor as the transactions yielded results and reduced its outstanding debt to roughly $750 million from $1 billion reported as of Sep 30, 2021.
Time and again, Mednax has resorted to moves similar to the latest one of repaying debts. During the nine months ended Sep 30, 2021, MD redeemed the 2023 Notes carrying an outstanding principal balance of $750 million.
Sufficient cash reserves and adequate cash-generation abilities are indicative of a strong financial position, which positions Mednax well to uninterruptedly service its debt obligations. The recent move also has a new revolving credit facility and term loan for complementing the borrowing purposes of the company.
On regular servicing of debts, Mednax has witnessed an improvement in its leverage ratio. MD’s total debt to total capital of 54.3% at the third-quarter end improved 1,570 basis points (bps) from the 2020-end level and remained below the industry’s figure of 90.9%.
Zacks Rank & Price Performance
Shares of Mednax have lost 8.1% in a year against the industry’s rally of 22.7%. MD currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the medical space include The Joint Corp. (JYNT - Free Report) , Community Health Systems, Inc. (CYH - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) . While Community Health sports a Zacks Rank #1 (Strong Buy), The Joint Corp. and Molina Healthcare carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Joint Corp. has a trailing four-quarter surprise of 224.58%, on average. The consensus estimate for JYNT’s 2022 earnings has moved north by 6.1% in the past 30 days. The Joint Corp. has a Growth Score of B.
Community Health has a trailing four-quarter surprise of 675.03%, on average. The consensus estimate for CYH’s 2022 earnings has moved north by 11.9% in the past 30 days. Community Health has a VGM Score of B.
Molina Healthcare has a trailing four-quarter surprise of 5.03%, on average. The Zacks Consensus Estimate for MOH’s 2022 earnings indicates an improvement of 26.4% from the prior-year reported figure, while the same for revenues suggests a 7.8% rise from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 18.8%, better than the industry’s average of 14.5%. Molina Healthcare boasts of a VGM Score of A.
Shares of The Joint Corp., Community Health and Molina Healthcare have gained 48.2%, 48% and 47.5%, respectively, in a year.
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Mednax (MD) Pursues $1.1B Transactions to Reduce Debt Burden
Mednax, Inc. (MD - Free Report) recently completed financing transactions worth $1.1 billion, included within which is the issuance of senior unsecured notes with an aggregate principal amount of $400 million. The notes will fetch an interest rate of 5.375% and are set to mature in 2030.
Shares of Mednax gained 4.4% on Feb 15.
Concurrent with the completion of the notes issuance, Mednax replaced its previous unsecured Revolving Credit Facility of $600 million with a new $450 million unsecured Revolving Credit Facility and a Term A Loan of $250 million.
Utilizing cash on hand and the proceeds derived from the abovementioned transactions, Mednax plans to redeem its 6.25% senior notes with an aggregate principal amount of $1 billion, set to mature in 2027.
By issuing senior notes amid a continued low-interest-rate environment, MD can procure funds at a lower cost and enhance financial flexibility. Also, the interest expenses of MD are likely to come down through the recent move as the high-interest carrying notes will be redeemed by low-interest bearing ones.
Lower interest expenses remain crucial for a company, which can otherwise exert pressure on the margins. It is worth mentioning that Mednax’s interest expenses plunged 37.3% in the first nine months of 2021 from the year-ago comparable period’s level.
The recent move highlights Mednax’s sincere efforts to bring down the debt burden. MD seems to have succeeded in its endeavor as the transactions yielded results and reduced its outstanding debt to roughly $750 million from $1 billion reported as of Sep 30, 2021.
Time and again, Mednax has resorted to moves similar to the latest one of repaying debts. During the nine months ended Sep 30, 2021, MD redeemed the 2023 Notes carrying an outstanding principal balance of $750 million.
Sufficient cash reserves and adequate cash-generation abilities are indicative of a strong financial position, which positions Mednax well to uninterruptedly service its debt obligations. The recent move also has a new revolving credit facility and term loan for complementing the borrowing purposes of the company.
On regular servicing of debts, Mednax has witnessed an improvement in its leverage ratio. MD’s total debt to total capital of 54.3% at the third-quarter end improved 1,570 basis points (bps) from the 2020-end level and remained below the industry’s figure of 90.9%.
Zacks Rank & Price Performance
Shares of Mednax have lost 8.1% in a year against the industry’s rally of 22.7%. MD currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the medical space include The Joint Corp. (JYNT - Free Report) , Community Health Systems, Inc. (CYH - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) . While Community Health sports a Zacks Rank #1 (Strong Buy), The Joint Corp. and Molina Healthcare carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Joint Corp. has a trailing four-quarter surprise of 224.58%, on average. The consensus estimate for JYNT’s 2022 earnings has moved north by 6.1% in the past 30 days. The Joint Corp. has a Growth Score of B.
Community Health has a trailing four-quarter surprise of 675.03%, on average. The consensus estimate for CYH’s 2022 earnings has moved north by 11.9% in the past 30 days. Community Health has a VGM Score of B.
Molina Healthcare has a trailing four-quarter surprise of 5.03%, on average. The Zacks Consensus Estimate for MOH’s 2022 earnings indicates an improvement of 26.4% from the prior-year reported figure, while the same for revenues suggests a 7.8% rise from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 18.8%, better than the industry’s average of 14.5%. Molina Healthcare boasts of a VGM Score of A.
Shares of The Joint Corp., Community Health and Molina Healthcare have gained 48.2%, 48% and 47.5%, respectively, in a year.