Mednax Inc (MD) Q4 2020 Earnings Call Transcript

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Mednax Inc (MD -1.70%)
Q4 2020 Earnings Call
Feb 18, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the MEDNAX Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] And as a reminder, this call is being recorded. I'd now like to turn the conference over to our host, Mr. Charles Lynch. Please go ahead, sir.

Charles W. Lynch -- Senior VP of Finance, Strategy & IR

Thank you, and good morning, everyone. Thanks for joining our call. I'll quickly read through our forward-looking statements and then turn the call over to Mark. Certain statements and information during this conference 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 MEDNAX's 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 MEDNAX 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 most recent annual report on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form eight-K, 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 annual report on Form 10-K and in the Investors section of our website located at mednax.com. With that, I'll turn the call over to our CEO, Mark Ordan.

Mark S. Ordan -- Chief Executive Officer

Thanks, Charlie, and good morning, everyone. Also joining me on today's call are Marc Richards, our CFO; and Dr. Mack Hinson, President of our Pediatrix and Obstetrix Medical Group. When I spoke to you after Q3, I expressed confidence on our earnings power once we move past the impact of the COVID pandemic and that a run rate of $270 million in adjusted EBITDA is achievable. This remains my view, as I'll shortly discuss. In the fourth quarter, while our hospital birth rates were down 3.3%, our NICU volume was down just over 6%. In combination with a 200 basis point payer mix decline, this was more pronounced in November and December and this led to a decline in adjusted EBITDA in the fourth quarter compared to the third. And while we haven't provided specific guidance for the quarter, we did suggest on our last call that an appropriate baseline would be something similar to Q3. Our fourth quarter results, of course, were short of that based on that payer mix shift. It was a tough end to a very tough year. As a brief note, January results showed improvement in both volume and mix year-over-year versus the fourth quarter, and Marc will also give some details there. But at this point, we're certainly not extrapolating that one month of experience out further into '21. And since like many other companies affected by COVID, we can't possibly call the turn nor pinpoint where we might be with such a broad possible range of outcomes, we will not be providing guidance for 2021 at this time. But when we think about 2021, we first consider our 2019 EBITDA of $265 million, less the roughly $40 million to $50 million we estimate as the effect of COVID and last year's birth rate decline.

That gets us to a baseline. We also consider operational efficiencies, corporate efficiencies, organic and acquired growth and market-focused strategies, some of which we expect to contribute this year and some in '22 and beyond. Marc and I will be talking about all of these today and any of the factors that make me optimistic that our post COVID earnings power is actually greater than it was before. I fully believe our total focus on our women's and children services will pay off. We're positioning our organization to be efficient and successful and to be an even better partner to our patients, to our payers and to the health systems we work with. So where are we focused? Above all else, we are positioning MEDNAX as a leading provider of women's and children's healthcare in the markets we serve. To do that, and since we are already a leader in caring for babies, children and mothers most in need, we are doing all we can to drive enhancements in patient access. First, our practice analytics I spoke of during our last call have been rolled out, enabling much better understanding and oversight at the practice level. Our scheduling and patient volume management tools fit well with this enhanced understanding. We are also expanding our telehealth services to ensure that when you need MEDNAX, we will be there and that neither COVID, sleep nor snow will stop us. Second, we need to broaden the range of services we provide. In each of our markets, we are identifying and filling needs in all of our core pediatric subspecialties for the sake of our patients and our hospital partners, whether that's through acquisitions of new practices, sales driven growth or recruiting.

I'll also let you in on a MEDNAX secret that we won't keep secret. We proudly spend a great deal of money and time on independent clinical research, clinical training and seminars. This area, along with all of our clinical needs, is led by Dr. Curt Pickert, and its sole mission is to support our affiliated doctors and to enable the best possible care through better database knowledge. This is what our affiliate -- affiliated clinicians want in their practices. And third, in keeping with our commitment to lead in women's and children care, I'm excited to announce the addition of a blend of pediatric urgent and primary care to our core pediatric services. Given our great bench strength of pediatricians and clinicians in our markets, we think it's only natural to help families as the go-to group via babies, children's and maternal needs. So whether it's for cut or spray, immunizations or tests, a consultation for super convenient and expert primary care, we want families to turn to us because they trust us and know they can rely on us. And they should because they'll know we cannot only handle day-to-day needs, but we and our hospital partners can handle anything life throws their way. Wouldn't you want your loved ones to benefit from all we do at MEDNAX. Today, we are announcing that to begin this effort, we are acquiring NightLight Pediatric Urgent Care of Houston, Texas. NightLight is small but mighty. This minority, and women-owned and led eight-unit practice will be the foundation of our multi-market growth plans in this space. NightLight CEO, Zawadi Bryant and Medical Director, Anastasia Gentles will join MEDNAX as executives in charge of this area, reporting directly to me, Mack and Dr. Jim Swift, our Chief Development Officer. I'll be especially involved, particularly given my background in multi-site real estate in both healthcare and retail.

And since we view this as a new and enhanced service for our hospital partners, Mack, Jim and our other senior market leaders, will be working together to tailor what we do to best serve our patients and hospitals in our core markets. You'll of course note that we are jumping incidents without a big splashy acquisition. We believe our existing operations team in our major markets are sized to be able to oversee our growth in this area into the clear extension of our core. Beyond patient access, we are working to be as efficient as possible. I would also add that urgent care, primary care, telehealth and broader patient access is perfectly in a value-based approach to care. We have been determined for over 40 years to take great care of the patients in every way every day. The combination of the efforts I'm describing only further this. We're equally focused on efficiency from a corporate standpoint because the more efficiently we can run MEDNAX as a business, the better we'll be at supporting our practices and partners. So Marc will also give some details about where we think we can go in terms of our corporate expenses. So here at the onset of 2021, I'm inviting you to consider our post COVID company. When we combine our core practices, operational improvements with the strategies and growth additions I've just outlined, as well as the efficiencies that Marc will further detail. But also consider all of it linked to our very strong balance sheet, cash position and cash flow. It's this strong combination of factors that gives me increased confidence in our earnings power and the opportunity to move meaningfully beyond the $270 million in adjusted EBITDA that we've referenced while still being able to consider other shareholder-friendly uses of our capital. With that, I'll turn the call over to Marc Richards to provide more detail. Marc?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

Thanks, Mark, and good morning, everyone. I'll add some detail to our fourth quarter results and then speak to the notable headwinds and tailwinds we've contemplated as we look at 2021. Lastly, I'll touch on our financial position and the capital available to us for future allocation. Turning to the quarter. At the top line, our net revenue declined by $42 million or just over 9% year-over-year and by $44 million compared to the third quarter. I'll point out that we recorded only a very small amount of revenue from the provider relief fund established by the CARES Act during the quarter. Same unit volumes declined 6.6% year-over-year, which compares to a 4.3% year-over-year decline in the third quarter. We provided a brief table in our press release with some volume detail, but a lot a couple of points for color. First, during the fourth quarter, volume declines were more pronounced in November and December than they were in October, which for many of our service lines appears to coincide with the surge in COVID cases across the country and the likely negative impact that had on patient volumes and our office-based services as well as on selected pediatric services we provide in the hospital. Second, our NICU days were down by a greater amount in total works at the hospitals where we provide NICU coverage. This reflects modest year-over-year declines in both the rate of admission in the NICU and the average length of stay. And third, in our office-based practices, pediatric cardiology volumes were the most impacted during the quarter while MFM volumes were down only slightly compared to last year. On the pricing side, the most significant factor in the fourth quarter was payer mix, which shifted roughly 200 basis points toward government payers compared to last year and impacted our top line negatively by roughly $10 million. On the expense side, I want to share a few thoughts that can demonstrate both the variability in our cost structure and the active steps we've taken to enhance our efficiency.

First, our practice level, salary, wage and benefit expense was down by $15.3 million or just over 5% year-over-year. This reduction mostly reflects the variability in our practice-based compensation structures, primarily bonus expense. And second, our G&A expense was down $4.5 million year-over-year despite the fact that we incurred approximately $5 million in transitional service expense primarily related to the sale of American Anesthesiology earlier in 2020. The reimbursement for those expenses is reflected in our investment in other income line item, so there's a minimal impact to our adjusted EBITDA but they do inflate our reported G&A expense. I'll also make a similar point looking at our results on a sequential basis compared to the third quarter of 2020. Overall, our revenue declined by roughly $44 million, while adjusted EBITDA declined by about $14 million. Keep in mind that a significant component of these declines was the CARES Act funds we recorded in the third quarter, which contributed $14 million in revenue and $8 million in adjusted EBITDA and which did not recur in any meaningful way in the fourth quarter. Now turning to 2021. As Mark mentioned, we saw some improvement in trend in January versus the fourth quarter of 2020. Our same unit revenue declined by 5% year-over-year with same unit volumes down by roughly 6%, offset a bit by net pricing growth. Keep in mind that January 2021 had two less office days than in 2020, which reduced our same unit volume by just over 2% points. Additionally, our payer mix by volume was about 100 basis points unfavorable year-over-year versus 200 basis points in the fourth quarter. So overall, while same unit revenue continued to show a decline in January, it was less significant than what we reported for the fourth quarter of 2020. Lastly, our NICU days declined by 3.2% versus a 6.3% year-over-year decline in the fourth quarter. Looking at 2021 as a whole. I think that Mark gave a lot of detail on the tailwinds we're contemplating, including our organic growth plans, M&A expectations and patient access enhancements across our office-based practices and in telehealth. I want to add to that some color on our expectations for G&A.

As you'll see in our reported results, our G&A for the year was $249 million or 14.4% of revenue. This is a somewhat distorted figure since it includes roughly $18 million in PSA-related expenses we incurred. In 2021, we do anticipate the dollar decline in G&A as compared to 2020 even though we will still be incurring additional TSA expenses. And based on additional efficiencies, we believe are available to us. We view our future state G&A profile as moving below 13% of revenue. So the G&A reductions we expect to achieve in 2021 represent not only a potential tailwind for this year but an additional potential tailwind beyond 2021 as we move toward that future state, and possibly further, based on the pace of revenue growth over the coming several years. In terms of specific headwinds, our 2020 adjusted EBITDA includes a $14 million benefit from the CARES Act we received. While we may receive additional funds in 2021, we're conservatively not anticipating any material contributions to adjusted EBITDA this year. Secondly, we've contemplated a modest negative impact to pricing based on a number of fee schedule and coding updates finalized by CMS through late last year. And finally, as I've highlighted already, there will likely be some timing lag between the wind down of our TSA agreements and our ability to reduce the expenses we're incurring under those agreements within our G&A line item. As one last item for those of you keeping models, I do want to highlight seasonality of our operating results, particularly given the unusual nature of last year's pandemic impact but also with an emphasis on the quarterly results from continuing operations for 2020 that we provided last fall. First, as most of you know, MEDNAX normally has a relatively low contribution to full year adjusted EBITDA in the first quarter due to the restart of payroll taxes, 401k contributions and other factors. Additionally, since last year's first quarter reflects only a partial impact from COVID, we expect that adjusted EBITDA for the first quarter of 2021 will be lower than our adjusted EBITDA for the first quarter of 2020, which was $33.1 million. Lastly, I'll touch on our financial position and cash flow profile.

This should be far more straightforward now that all of the significant transaction activity of 2020 is behind us. On the balance sheet side, we completed the sale of MEDNAX Radiology Solutions in December for roughly $865 million in net proceeds. And in early January of this year, we redeemed our $750 million 5.25% senior notes for $764 million in cash. Based on our cash on hand at the end of December and that redemption, at the end of January, we had $1 billion in debt, representing our 2027 notes and approximately $370 million in cash, for net debt of just over $600 million. And our go-forward interest expense should be approximately $16 million per quarter, assuming no material borrowings on our revolver. In terms of cash flow, our historical experience has been that we convert somewhere in the range of 60% to 2/3 of our adjusted EBITDA to GAAP operating cash flow. And our annual recurring capital expenditures should be under $25 million this year. This expected free cash flow in 2021, combined with our existing cash on hand and borrowing capacity under revolver, provides us with significant available capital for both contemplated and uncontemplated acquisitions as well as any shareholder-friendly uses we may consider in the future. With that, I will now turn the call back over to Mark.

Mark S. Ordan -- Chief Executive Officer

Thanks, Marc. I think we are now ready to take any questions.

Questions and Answers:

Operator

[Operator Instructions] We'll go here to the line of A.J. Rice with Credit Suisse. Please go ahead.

Robert Don Moon -- Credit Suisse -- Analyst

Hey guys. Thanks for taking my question. This is Rob Moon on for A.J. Rice. I guess just to start, regarding birth rates and then, I guess, the disconnect with the lower NICU days. Are you seeing any impact in your mind from maybe a hesitation at the start of the pandemic for people to enlarge their families at that point? Or are you seeing some type of avoidance from hospitals, given the impact of the pandemic and kind of the concerns around safety in those areas? What are you seeing in terms of how you can explain some of these trends?

Mark S. Ordan -- Chief Executive Officer

Well, it's Mark. Rob, I'll start off and then Mack can fill in from his perspective. We try like every company that's been affected by COVID, to figure out how much of it is attributable to what. And so anecdotally, we all think about the factors that you considered and wonder how much of that at play and how much of people waiting for the vaccine before they'll continue to -- with their family plan. So it's hard to quantify. That's why we've been careful to say that there were a whole bunch of things that happened in 2021, including a decline in the birth rate, we can't forecast where that's going. It's certainly not the dire decline that many people in the last half of last year were expecting, that people were talking about double digit declines. And we don't have any evidence to show why the NICU days would be different than the -- with the birth rate because there are so many crosscurrents during the pandemic. Having said that, Mack is a neonatologist by background and stays in very close touch with our NICUs and our hospital partners. So Mack, if you have anything else you want to add?

Roger M. Hinson -- President, Pediatrix and Obstetrix Medical Groups

Yes, just a couple of things. One is certainly no change on our part. If you require a NICU admission, those standards haven't changed at all. And then secondly, on the question about the hospital partners and the hesitance with hospitals, a really minimal diversion of NICU beds in response to COVID in the fall. There was much more of that, that turned out not to be needed in the spring, the hospitals did not react similarly by diverting NICU beds to potential COVID adult beds in the second and third parts of the surge.

Robert Don Moon -- Credit Suisse -- Analyst

Great. Thanks guys. I guess just one more. The surprise billing legislation in late 2020 that was enacted, what's the risk there to the impact on your claims and then also on your future negotiations with payers? How should we think about that and kind of size that?

Mark S. Ordan -- Chief Executive Officer

Well, look, we're very aware of it. We operate overwhelmingly in network. We don't think that surprise billing is going to be a major factor for us. We support the effort to avoid surprise billing. We think it's better for everybody, so we don't consider that a major issue for us. And again, we're comfortable with our relationships with our carriers so we feel OK about it.

Robert Don Moon -- Credit Suisse -- Analyst

And then maybe if I could sneak in one last one. The commercial mix declined in the fourth quarter. Do you expect this was partially due to comps? Or is this more related to the high unemployment rate? Or do you think this has to do with working families maybe delaying births at the early onset of the pandemic, and that's why you're not getting as much commercial mix there? Because some of the work people had made those decisions?

Mark S. Ordan -- Chief Executive Officer

It's a good thinking question. I think it's probably the -- we think we guess -- anybody's guess is good, that it's more of the second choice that because of the high unemployment rate, people are not on health plans to the level that they were before, so they're turning to government or private pay. But we can't be certain. This was a fourth quarter phenomenon that we didn't see early in the fourth quarter. It started to worsen during the fourth quarter. And as both Marc and I mentioned, there was some relief in the -- in January. So we don't know that there's a trend here or not. But we would assume that it's because of fewer people being on the health plans.

Robert Don Moon -- Credit Suisse -- Analyst

Great. Thank you guys, really appreciate the time.

Operator

And next, we'll go to Ralph Giacobbe with Citi. Please go ahead.

Ralph Giacobbe -- Citigroup Inc. -- Analyst

Thanks, good morning. I understand the COVID uncertainty, but your commentary of the 1Q EBITDA being down year-over-year from that $33 million reported last year. And I guess bridging a $270 million normalized run rate, even granted in a normalized environment, I think it's still tough for me to bridge. I'm just hoping you can give more share, more details on how you bridge that and your conviction around that $270 million plus normalized?

Mark S. Ordan -- Chief Executive Officer

Sure. We spent about 1,100 hours on this subject preparing for today and running the business. So let me make a few observations. First, the first quarter of 2020 was a pre COVID quarter, and it was a relatively robust quarter. If you fast forward to the first quarter of 2021, and we are still in the midst of the pandemic. So it's hard to go from the first quarter of last year to the first quarter of this year, it's hard to make a comparison. We're not projecting -- we're guiding you where we think the first quarter is going to come out since we simply don't know. As far as the $270 million is concerned, I referred in my comments to what we did in 2019. So if we did $265 million of EBITDA in 2019 and you look at where we are today, it would take -- if you strip out the effects of COVID, that gets you to a baseline. Now at some point, we are optimistic and very hopeful that COVID will be in the rearview mirror. At that point, we see no reason that we shouldn't be at the 2019 level or beyond. We will be a fully focused company just on our women's and children's business. We will be a leaner company. All of our management time is spent on running our core business, which was not the case for the company in 2019. In addition, I talked about several of the initiatives that we have in place, many of which will have an effect on our operations and our results in 2021. So certainly, post COVID, we think that we should easily be at the -- shouldn't say easily because nothing in life is easy, but we should certainly be at that $270 million level, but we also say because of the things that we talked about on the call that we should be able to grow meaningfully beyond that.

I would say from my experience, I have never been in a situation where you take strong fundamentals and marry them with total dedicated focus, and you don't get better results. If I just highlight one, being -- operating the company without analytics, without understanding what's really going on in the practice level, month-by-month or week by week, it's awfully hard to manage a company. In your minds, I think of any really well-managed company, and they know what's going on day-to-day in the company. But we do now, but we didn't before. So just the ability to be able to manage the company more effectively, Mack has a terrific operations team that's now no longer flying blinds. And that's just -- but it's -- to me, as an operator, it's a very powerful example of what you can do that the company simply wasn't able to do before. Mack can comment on it, but the addition of telehealth is not just to sound good and to sound current. It's the idea of giving people greater access to MEDNAX. So when somebody calls for an appointment, we have another arrow in our quiver. And I'd ask Mack to talk about it because to us, that's a driver of efficiency, and it's a driver of results.

Roger M. Hinson -- President, Pediatrix and Obstetrix Medical Groups

Yes, I'm happy to comment on that. I think on a couple of fronts. So one, it's an efficiency aspect because our specialists are resource -- constrained resource. We have highly specialized physicians, there's a limited number of them. And our ability to get them in front of patients and vice versa patients in front of them is enhanced by being able to do that virtually. And certainly, we saw during the initial phases of COVID as we stood up telehealth, we markedly increased our telehealth visits over 2019. And that rate of telehealth visits has continued to be consistent even with the waxing and waning and ups and downs of COVID. So we've continued to do that. And I think part of the work in front of us is to continue to develop a scalable model to enhance that. Because it's important in two respects. One is patients are thinking differently about how they access care. And if we're not able to offer patients a virtual experience when that's appropriate and what they're looking for, they will go to providers who do that. But then secondly, and in the pediatric data, they're really -- compelling data to show that when you have a telehealth relationship, particularly in your outlying areas, you increase your referrals to your own physicians and to your own hospital partners. And this allows us -- the telehealth, this enhanced telehealth is not just reactive to the patients that we would normally see, but it allows us to expand our geographic boundaries far beyond what we've been able to do in the normal patients who would come and see you in our plan.

Ralph Giacobbe -- Citigroup Inc. -- Analyst

Okay. That's helpful. And I guess just my quick follow-up, though. You talked about sort of the $33 million sort of a robust number from 1Q 2020 but didn't have sort of the impacts of COVID in it. I guess when I look back historically, you generate somewhere around high teens to 20% of earnings typically in the first quarter. Is there something different going forward in terms of the seasonality of sort of just the business line you're in now as opposed to historically that we need to consider? Because again, bridging to that $270 million would suggest off that 33%, I mean, it would only represent about 12% of total annual earnings. Any help there in terms of considering that seasonality? Thanks.

Charles W. Lynch -- Senior VP of Finance, Strategy & IR

Yes. Ralph, it's Charlie. First, I don't think we're in a position today where we're trying to bridge from the first quarter of this year to what we see as underlying earnings power of that $270 million number. And that's why we try to, while we're not providing guidance, give you some baseline thoughts about how we're looking at underlying earnings power while still layering on some estimation of the impact to our business last year and today from the COVID pandemic. So there might be two bridges in there that you would think of. In terms of the seasonality, we will probably end up revisiting that somewhat, Ralph. It does continue to exist. just for the normal practical reasons of different cost restarts in the first quarter of the year for us. But against a revenue base that have the size than it was prior to the divestitures in anesthesia and radiology, we'll revisit that and see if that remains an appropriate view in a normalized environment of first quarter contribution for the full year. But we did want to make the point related to the first quarter of 2020, where we're looking and make sure that everyone is squared away appropriately looking at the first half of last year within their models related solely to continuing operations for our business and not including radiology and the like.

Mark S. Ordan -- Chief Executive Officer

But specifically, we don't have a different seasonal forecast than in the past. As Charlie said, we'll look at it. But right now, there'

Ralph Giacobbe -- Citigroup Inc. -- Analyst

All right. Thank you.s no reason for us to expect a different pattern.

Mark S. Ordan -- Chief Executive Officer

Thank you.

Operator

And next we'll go over to Kevin Fischbeck with Bank of America. Please go ahead.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Great. Thanks. I wanted to dig in a little bit more to this initial guidance that you were giving. So I guess you're saying kind of 265 minus 45 to kind of 220 as your kind of normalized base that you would go from there to think about -- you gave 2019 as the number, but obviously, you have been doing corporate initiatives to take out costs, etc, since 2019. I don't know if you were kind of saying that's done, and that's kind of in that analysis? Or take what you've already done and put it on that and then build from there with what you're going to do prospectively? It wasn't clear to me exactly how to think about what's in and out into that baseline.

Mark S. Ordan -- Chief Executive Officer

No, Ken, I fully understand. So let me just -- it's where I'm taking a little bit. 2020 was such a challenging year, so many different things happened in addition to the pandemic that it's hard for us to tie 2020 to 2021 and said it's a clear path. There were just too many large events, obviously, dominated by the pandemic, but other corporate events, obviously, transition events and expenses along with that, that we'd say it's hard to say how does 2020 lead to 2021?. So we're not giving guidance or even informal guidance. We're just trying to help you understand how we think about it. And so we look back at the last year when there wasn't all that tunnel, and that's 2019. And then we'd say, OK, what are the things that we changed in '20 and we're changing in '21 in how we operate to give us the conviction that beyond the pandemic, we should at least be at that $270 million level. So unless the birth -- birth rate comes tumbling down or something, or something else happens or the COVID sits over us like storm is sitting over the Midwest, we think that at some point, we should certainly be at that level. When we spoke about it in our third quarter call, we said just that. When COVID, when the effects of COVID lift and without a precipitous decline in the birth rate, we should be at that level. Our thinking hasn't changed. The only difference now is that COVID for all of us is sticking around longer than we hoped. So we're hopeful about the vaccine. We're hopeful that in July, everybody is vaccinated. We hope that people bounce back. But we can't call it any differently than you or anybody else can. So again, this is not guidance. It's just trying to give you a window into how we think and why we have so much conviction that the way we're managing the business today, on top of what was done in 2019 should yield the kind of results that we're describing.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Okay. That's it, it would have... Yes. So I guess you're saying that again, if COVID was normalized next year, $270 million would be a reasonable target for next year, all else equal, just it's really COVID that's kind of stopping you from reaching that thing. Or it wasn't clear to me, you kind of talked about $0.13 you pay is like a multiyear target, seems like. But getting back to the $270 million earnings power is not in your necessarily multiyear target unless COVID or some of the disruption fix you up...

Mark S. Ordan -- Chief Executive Officer

That's correct. What I was saying is that $270 million is not a multiyear target. It's a post COVID target. What I was saying is, in addition to that, we think we could be meaningfully above that as the fruits of a lot of what we're talking about really pan out. I mentioned our move into urgent care and primary care, that's not something that's going to affect us. Our bottom line results immediately. So we think that that's among the many things, telehealth and other things, which we took over time to propel us well past the $270 million number.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Okay. And then it's a little confusing with things like the TSA, etc. Will you give your 13% G&A kind of target a big -- it does sound like it might take a couple of years to get there. How does that compare to kind of an apples-for-apples 2019 G&A number?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

Hey Kevin, it's Marc Richards. If you look at the, call it, our P&L for 2019, we were at about $244 million in G&A. And looking at where we are now in 2020 at $248 million. But once again, that includes, call it, $18 million of transition services-related expenses that are sitting down on another line item, that's the accounting. So in terms of 2019, we expect, which was more in the 14-plus percent range. We expect moving into 2021 to be sub-13, knowing that the timing of when we transition our back office services on the anesthesiology, and two, on the radiology side, we're still performing services there that at the intersection of that wind down of costs related to those services, we should be below 13% G&A.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Okay. That's helpful. One last question. I just want to follow-up on that earlier. Yes, that's definitely helpful. I guess last question here. The question earlier about surprise billing. Sounds like you guys are not worried about that. I guess, NICU was specifically one of the categories that was spiked out in the bill. And therefore, it seems like an area that Congress thought that there was savings to be generated from. I mean, obviously, you guys have the biggest market share within NICU. So I guess just trying to square that, I don't know if there's any color you can provide about maybe where you think your rates are versus the market average so that is why you don't think that there's an issue? Or any other color you can provide there as to why there wouldn't be pressure on rates going forward?

Mark S. Ordan -- Chief Executive Officer

I can't say why it was worded the way it was in the legislation. I would certainly say that you could say that if there was a surprise bill in the NICU world, it could have a real effect on the patient. So I can understand, calling that out as an area where people would be sensitive. But I just reaffirm what I said before, since we are so overwhelmingly operate as a network, we don't see it as a major issue. We're not at all opposed to the legislation.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Okay. So you don't see your -- the average in network rate for someone providing?

Mark S. Ordan -- Chief Executive Officer

You cut out a little bit. Say it again.

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

But you don't see your in network rates as being dramatically higher than the average in network rates, and therefore, there's not a lot of risk?

Mark S. Ordan -- Chief Executive Officer

We have, I would say we have very good relationships with our payers and our rates are highly negotiated. So we'

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Okay. All right, thanks.re in network. So that limits exposure to surprise bill.

Operator

And next, we'll go to the line of Pito Chickering with Deutsche Bank. Please go ahead.

Philip Chickering -- Deutsche Bank -- Analyst

Sure. To follow-up on Rob's question about overall trends. In theory, if there is some sort of COVID baby bust, we wouldn't start to see any of those trends until realistically mid-December, sort of January and February. You did give us commentary in the script about volumes down 6% in January. Any chance you can give us specifically how NICU volumes did in December, January and how it looks in February? And because you referenced better systems you have in place now, as you look at your pipeline for birth trends, at least in the near term, how do you think these trends continue?

Charles W. Lynch -- Senior VP of Finance, Strategy & IR

Hi Pito, it's Charlie. I can give you a couple of points on the NICU volumes. I think Mark might have mentioned this on the call. For the month of January, our NICU days were down in the range of about 3% so that compares to the -- just over 6% for the December quarter. And within the December quarter, those trends were somewhat worse in the mid late part of the quarter. So in terms of the timing, the month of January showed some improvement in trend versus what we experienced late in 2020.

Philip Chickering -- Deutsche Bank -- Analyst

Okay. And then to follow-up on Ralph's question with a different angle. Can you just help us sort of quantify sort of some of these gives and takes as we bridge fourth quarter to first quarter? Again, I'm not asking you to bridge the first quarter to the whole year. But normally, you're looking at MEDNAX historically, order is about 80% of fourth quarter EBITDA. The implied impact is like 55%. So should we think about seasonality, 20% then COVID, the remaining sort of 25% impact?

Mark S. Ordan -- Chief Executive Officer

It's hard. The reason we didn't give, one of the reasons we didn't give guidance. And I said we roughly estimate the difference because of COVID and the birth rate is those are two things that we can't, we just can't predict right now. So I wasn't saying that the delta was because of COVID. I was saying the combination of COVID and the birth rate. So it's very hard this year to provide the bridge that you're looking for, and we would love to provide. We'd love to know it. It's just a difficult comparison. Our temptation, which we saw other companies do was to say really nothing about '21 and saying that we can't call it, that there's just too many variables. So we're focused on what we can do post COVID. Whenever post COVID is, so I can't provide additional detail, I wish we could.

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

The only thing I would add, though, is that if you look at the pace of EBITDA trend in 2020 for our continuing operations, that $33 million in the first quarter represented about 15% of full year adjusted EBITDA. And keep in mind, too, that the first quarter had fairly limited impacts to our business from the COVID pandemic, which really occurred in late March. So maybe that's a good reference point for you to think about as well. And I think getting back to the earlier question, too, relative to how you guys might have looked at the contribution from Q1 to the whole year in the past.

Philip Chickering -- Deutsche Bank -- Analyst

Okay. I'll ask sort of one more sort of as a quick follow-up question. How much CARES Act did you recognize in the fourth quarter?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

It was less than $2 million.

Philip Chickering -- Deutsche Bank -- Analyst

So if you assume it's just $2 million to make it easy, your fourth quarter EBITDA was sort of 13.5% or down 1% year-over-year, sort of CARES Act adjusted same-store revenues were down 9.5%. So that's really good cost control you guys did. Can you just refresh us as thinking about practice and salaries, what is variable versus fixed? Just as you help think about the macro environment in 2021, just so we know how to model if there's volatility within things you can't control in both trends, how much of that will flow through a variable versus fixed?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

I think we gave a couple of points that are useful. And keep in mind that Mark referenced to less than $2 million is at the top line so any contribution to EBITDA would be significantly less than that in the fourth quarter. But we did reference looking year-over-year, the total revenue declines in the range of $40 something million are practice level, SWB declines in the mid-teens our G&A declined in the mid single-digit millions, including the burden within G&A of our TSA expenses. So I think that gives some sense of both variability in the practice level comp structure as well as action items within our corporate and nonclinical expenses that were affected there. So we did think that there was a meaningful amount of cost flex to be appreciated in the quarter.

Philip Chickering -- Deutsche Bank -- Analyst

Great, thanks so much. And next we can go to the line of Ryan Daniels with Ryan. Please go ahead.

Nicholas Charles Spiekhout -- William Blair & Company -- Analyst

Hey guys. This is Nick Spiekhout in for Ryan. I guess to just start off, you talked about kind of your geographic diversification of the business. I was wondering how these volume declines kind of shook out in different areas. Was there large concentrations of clients in certain areas or particularly healthy areas? Or I guess if you can just provide some color on that front?

Mark S. Ordan -- Chief Executive Officer

Well, it was weak at different times during the year, we saw a different effect, which sort of like what happened in the country. We saw at different times when COVID was hard hitting in some areas or doing more restrictions in some areas than were harder hit. We couldn't pinpoint a correlation. So I'd say just like other businesses when people at local warnings that positivity rate was high, it affected behavior. We can't, unfortunately, tie it exactly. So, but no, it's not the case that 2020, one part of the country lagged and other part didn't. That moved around during the year.

Nicholas Charles Spiekhout -- William Blair & Company -- Analyst

Got you. So no real trend to kind of call out in Q4 in that front.

Mark S. Ordan -- Chief Executive Officer

Yes. It's a reason that nobody wants a pandemic, right? It has a massive effect and an uncharted effect.

Nicholas Charles Spiekhout -- William Blair & Company -- Analyst

So yes, absolutely. Yes, that's fair. Thanks. And then I guess, just kind of shift tracking a little bit. You talked about how our renewed focus on women's health could unlock some potential for maybe some accelerated growth in the future. Obviously, it's very messy right now due to COVID and just the changing of the business but wondering if there was any early successes on that front or stuff you've done that would lead you to believe that would take place in the future?

Mark S. Ordan -- Chief Executive Officer

Yes. I'm actually thrilled to talk about that. We have a very dedicated sales and growth team has reported directly to Dr. Jim Swift and to me. And we see a lot of interest in part of practices who would like to be part of MEDNAX, and we see a lot of interest in hospitals who would like us to be partners with them. And we think that when practices see and hospitals see that all of our energies is to being a better partner and being their support service for our affiliated practices. That it makes us more and more attractive. So at a time like this, we are not taking our foot off the gas at all because we and I think everybody knows that one of these days COVID will be behind us, so we want to be as strong as possible as we can when that happens. So we are very optimistic. We believe that post COVID, this will be a very strong company that we're focusing on all the right things. It wasn't for show that I talked about our research because we know that if somebody is thinking about joining MEDNAX or a hospital wants us or a payer wants to know that we are best-in-class we think that there are ingredients that are awfully important. So while we're bringing down our G&A and really being careful on expenses, we're not doing that in areas that really support our core. And we consider research and independent research a very important thing that we do. And the heads of our clinical operations play a very big role in how we run this business. So all of it gives us a lot of optimism. We hate the fact that we have to keep hurrying up and waiting because of the pandemic. But as far as we know, that's it.

Nicholas Charles Spiekhout -- William Blair & Company -- Analyst

Great. Thanks guys. Appreciate taking my question.

Operator

And next, we'll move to the line of Whit Mayo with UBS. Please go ahead Sir.

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Thanks. I wanted to just go back to the payer mix deterioration in the fourth quarter. Is this all explained by lower commercial volume? Or was there some rate change, some fee schedule change, any change in the collection rates? I'm just trying to make sure I fully understand what developed throughout the quarter?

Mark S. Ordan -- Chief Executive Officer

It's the former. It's just a greater percentage of government and private pay versus what we traditionally see. So there was no other factor. And again, as I answered the first question, we can only surmise that it's because people were no longer on health plans. And by the way, for it's worth, we assume that as the effects of COVID recede and people get back to normal, there'll be some lag and when they get back on health plans. So it's just not something we can project. It's just something we think is a logical assumption that if you run out, go to a store to spend money, it doesn't mean that you're back on your company's health plans at the same day. But no, there was no other rate change. There's nothing else that took place. It was simply a shift payer mix. And for what it's worth because we know a lot of people in the healthcare business, the payer mix decline that we felt was right to the basis point what other people experience too.

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Okay. It seems a little inconsistent with maybe what we hear from some of the providers we cover. But I was just going through the 10-K, and I'm looking at the balance sheet allowance disclosures. And in 2020, it was up to 78% of your gross AR. And in prior years, it tracked generally in kind of that 74%, 75% range. What's driving that balance sheet allowance higher? I mean it seems to imply higher reserves, but I'm not sure if this is an optics because of the divestiture. So can you maybe help us understand what's going on in there?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

The shift in payer mix is a direct impact on our allowance.

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

But you didn't see -- the payer mix didn't really impact your -- the prior three quarters. So it was all of -- just the fourth quarter impact is what increased the reserve for the balance sheet allowance?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

Mostly. Mostly, that's the case.

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Okay. What do you -- what is the reserve for commercial versus Medicaid?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

I don't have that handy. We tend to look at it in the aggregate but...

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Okay. All right. My other question, you guys filed an eight-K some time ago indicating that you don't plan on rebranding the organization back to pediatrics. And I presume that, that's just a timing issue, priorities have shifted. We're in the middle of a pandemic, probably not the greatest idea right now. It's expensive, blah, blah, blah. But Mark, just wanted to hear your thinking a little bit more on that decision? And do you plan on reevaluating that going forward? And how important is it over the next, call it, the intermediate term to rebrand back to that name, if at all?

Mark S. Ordan -- Chief Executive Officer

Well, one of the reasons you ticked off is on the money, and that's the money, we just said we'll spend several hundred thousand dollars to change a name. So we're cheap, and we try to manage our expenses. And while it sounds cool to change your name, we didn't see the reason. The names, Pediatrix and Obstetrix are owned by the company and are used widely by the company. And in many of our NICUs and ambulatory practices, those names are very prominent that we can use those names in our pediatric urgent care area as well. So we just didn't see a reason to spend several hundred thousand dollars to change a corporate name when we have these other names that are alive and well. So it was really driven by that as really, we're going to spend time and money redoing logos and things. It just seemed like a waste of money. It is in no way taking away from our -- the focus that we've described, not one bit. So that's the answer. But I would hope that you would take from that, that we're looking at every year expense that doesn't help our patients and eliminating it. I noticed the other day that a few of our lights were out in our conference room, and I hope that, that was somebody turning off light to cut down our consumption. But we're like I'll talk about that. And I hope that when COVID passes and things are better, we're feeling more flushed. We continue to be just as cheap as I just described.

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Okay. Thanks guys.

Operator

Next we'

Matthew Richard Borsch -- BMO Capital -- Analyst

Yes, good morning. Just wondering, are you expecting if COVID subsides, let's say, fairly rapidly here that you would get to that $270 million run rate going into 2022? And I guess just maybe my other question here is can you just help us think a little bit -- I know you've commented on this before, but on the -- how we should think about the growth rate as we look forward to 2022 and beyond? And how much sort of temporary things you'll still be doing? Or will you be just flat and moving forward at that point?ll go to Matt Borsch with BMO Capital Markets. Please go ahead.

Mark S. Ordan -- Chief Executive Officer

Well, look, we don't know when COVID is going to end and neither do you. Yes, we do hope. We walked with interest with the President said that people will be vaccinated by July. So we say, wow, people are vaccinated by July. And this pent-up demand from drawing back and people really want to get going planning their families, and they haven't gone younger during the pandemic. So we say, hey, that could really snap back very quickly. So we would love to think that by the end of the year, we're in a position to say, wow, it's behind us and the fourth quarter is fantastic because volumes come back. As I said earlier, we assume that when volume comes growing back, that the payer mix shift could led, but we don't have a trend to look at since this is all uncharted waters. So yes, we hope that we enter 2022 in a post COVID world that in the Q3 and Q4, we're seeing a lift and we have charts that have every possible curve, including the one I just described, we just can't tell you which one is going to be reality. It is no hedging based on our operations or based on our team or based on anything else. This is purely what's external that could affect us. We haven't cut anything where we think it could, in any way, deter us from growth. We're just waiting for the terrible cloud to lift so that, that happens. So yes, if I had a guess without providing guidance, I would say, well, we think by 2022, the year of 2022, it will be a whole new picture. And we pray that's true for MEDNAX and for our country and the world. But -- but I can't be more specific than that. We are optimistic and we're prepared.

Matthew Richard Borsch -- BMO Capital -- Analyst

Of course. Of course, I understand. I guess my other question was then just how to think about the growth rate, again, under the optimistic assumption, and I don't expect you know nor do I with this all-time right. But if we are going into 2022 as a sort of a clean year, how we think about the growth rate, not that year specifically necessarily, but sort of kind of multiyear from that point?

Mark S. Ordan -- Chief Executive Officer

Yes. I'm sorry, I answered your first part of your question for so long, and I forgot about the second part of the question. The second part of the question is, my view hasn't changed from over the last few quarters that I think we can achieve a mid- single-digits growth rate in our company. That may accelerate because of some of the things that we've talked about, but we think that, that's a reliable area for us to shoot for. We've been to talk about things like pediatric urgent care and other things, and I'm talking about in revenue, obviously. When we think about pediatric urgent care and the effect that, that could have a real positive effect on that, but it's too early to predict. But I would -- yes, I looked at the company as a company that is a specialist and leader in its field in an absolutely necessary field in medicine. And I think that we are an attractive company for hospitals and for practices. So we think that, that growth rate can continue and is at least sustainable. And third, I think we're a company that manages its finances very carefully and enjoys a strong balance sheet and strong cash flow. So when you put all that together, we have a lot of flexibility going forward. We have the strength, we have the growth and we have the core business.

Matthew Richard Borsch -- BMO Capital -- Analyst

Got it. Okay, thank you.

Operator

And next, we can go to the line of Brian Tanquilut with Jefferies. Please go ahead.

Brian Gil Tanquilut -- Jefferies -- Analyst

Hey, good morning. I guess on my first question, just on the acquisition in the pediatric urgent care space. Do you mind just walking us through what that model looks like. So when you buy these practices, do they own or operate a box? Is it a specialized pediatric urgent care unit? And should we expect more of these? And what kind of margins are we looking at in this space given that it's obviously a different line of business from what you're used to.

Mark S. Ordan -- Chief Executive Officer

Well it's only, first of all, we announced that we're acquiring NightLight. It's not our plan to go out and buy a lot of companies. We could buy a small tuck-in companies or we could just grow organically by leasing space and growing that way, which is very much part of what I've done in my past, and hopefully, a ring. Unlike Mack, I can't bring medical knowledge, so I have to bring something to the table. But we think that in each of our markets and in our top 20 markets, there's a tremendous need for something like this, and it's something that many most typical urgent care companies can't really provide because their services are inherently very limited. What attracted us to NightLight was not just to be able to acquire an eight-unit company in Houston, Texas, but to acquire their know-how and to very proudly welcome Zawadi Bryant and Dr. Gentles to MEDNAX to help us think through how we do this going forward. And while it's -- you could -- right to say it's different than what we've done in the past, we think it fits perfectly what we've done because we have an enormous concentration of pediatricians in each of these markets. We have an enormous relationship with our hospital partners in these markets. So we think it's only a natural extension to be able to do more for the kind of patients that we serve. And we're also unique because we handle the most difficult possible cases. And I think it's at least intuitive that you want to go to somebody who can help you with something minor, knowing that they can be there for you regardless of what it is. And other companies just don't have that backup. They can tell you to call 911, we're different. We have that bench in each of our markets. So we don't see it as a diversion or something different. What we have lacked in the past is the relationships with mothers and families. And we think that, that's a natural thing for MEDNAX to now develop. To say that if we can take care of you, shouldn't we have that relationship with you, for you, your children, not just a child who was just born in our NICU, your other children going forward. And since we have such a close working relationship with our hospitals, we think that it's a great fit and something that they'll appreciate, too.

Brian Gil Tanquilut -- Jefferies -- Analyst

Appreciate that. And then I guess my next question, looking at the disparity between the birth trend and the NICU same-store that you reported, I mean, is there anything you guys have seen that would explain why NICU is slightly worse? I mean, is this just lower NICU utilization rate? Or also, like do you think telemedicine B2B telemedicine going to smaller hospitals in smaller counties or smaller towns? Is that having an impact on NICU admissions in bigger cities?

Charles W. Lynch -- Senior VP of Finance, Strategy & IR

Hey Brian, it's Charlie. I mean, what I'll say is that and I'll turn it to Mack, too. But our observation through 2020 was that beginning in the second quarter of the year, the rate of admission into the NICU became a headwind factor. And as I think you know, the rate of admissions in NICU as a percent of total births it's been largely stable. And in fact, has had a very gradual rate of increase over literally in the past several decades. So that was a departure from trend. And we saw it in the second quarter, less so in the third. And again, in the fourth quarter, it's tough to point to specifically what that might reflect, but you almost default to it being some kind of practical outcome of the pandemic. And such, not something that we would expect to continue, but go back to trend. And Mack, if you have any other thoughts on that, too.

Roger M. Hinson -- President, Pediatrix and Obstetrix Medical Groups

I would agree with that completely. The two things you would look at would be the mix of gestational ages that you're seeing presenting to NICU, we're not seeing it but any meaningful change in that. And then secondly, if there's something within the pandemic that would adjust a baby in front of you that maybe require NICU admission. And those admission standards haven't changed either. And again, I think we've seen a negligible diversion of NICU beds and with your questions, telehealth, the telehealth in the NICU helps us manage and outline baby better and eyes on a baby to be able to make decisions to help the local care team but it does not meaningfully and certainly we don't have any evidence that's meaningfully changed transfers into our units.

Brian Gil Tanquilut -- Jefferies -- Analyst

Got it. And then last question for me. As you think about your maternal-fetal business, obviously, that gives you a little bit of a lens to future admissions into the NICU. What does that look like right now?

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

It's through both the third and the fourth quarters on a same-store basis. Our MFM volumes were not as far, but fairly close to it on a year-over-year basis. And within January, we're slightly positive. So that's been, it was something we brought up on the Q3 call that it's difficult to draw a straight line between our MFM patient volumes and either birth trends or NICU volumes because we don't have a perfect geographic overlap, there's a number of other complicating factors, but it appeared to eliminate one contraindicator at the time. So that volume base has been fairly stable. And like I said, for at least a point in time, looking at the month of January was positive year-over-year.

Brian Gil Tanquilut -- Jefferies -- Analyst

Awesome. Thank you guys.

Operator

Currently no further questions in queue.

Mark S. Ordan -- Chief Executive Officer

Great. Well, operator, thank you. Thank you, everybody. We look forward to talking to you in a post COVID world keeping you posted. [Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Charles W. Lynch -- Senior VP of Finance, Strategy & IR

Mark S. Ordan -- Chief Executive Officer

C. Marc Richards -- Executive Vice President , General Counsel and Secretary

Roger M. Hinson -- President, Pediatrix and Obstetrix Medical Groups

Robert Don Moon -- Credit Suisse -- Analyst

Ralph Giacobbe -- Citigroup Inc. -- Analyst

Kevin Mark Fischbeck -- Bank of America Securities -- Analyst

Philip Chickering -- Deutsche Bank -- Analyst

Nicholas Charles Spiekhout -- William Blair & Company -- Analyst

Benjamin Whitman Mayo -- UBS Investment Bank -- Analyst

Matthew Richard Borsch -- BMO Capital -- Analyst

Brian Gil Tanquilut -- Jefferies -- Analyst

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