MD 10-K & 10-Q changes, risk factors and insider trading

COVID-19 necessitated the delivery of certain healthcare services remotely via telehealth, which is subject to extensive federal and state regulation, as well as temporary waivers tied to the COVID-19 public health emergency, and certain flexibilities afforded to the provision and reimbursement of telehealth have been and may continue to be rolled back.

Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2024,2025, the percentage of our patient service revenue being reimbursed under GHC Programs decreasedremained stable as compared to the year ended December 31, 2023.2024. If, however, economic conditions in the United States deteriorate, we could experience shifts toward GHC Programs, and patient volumes and reimbursement for services we provide could decline. Further, we could experience and have experienced shifts toward GHC Programs if changes occur in population demographics within geographic locations in which we provide services. Adverse economic conditions could also lead to additional increases in the number of unemployed and under-employed workers and a decline in the number of private employers that offer healthcare insurance coverage to their employees. Employers that do offer healthcare coverage may increase the required contributions from employees to pay for their coverage and increase patient responsibility amounts. In addition, certain private payors’ poor experience with the healthcare insurance exchanges and any uncertainty around the future of the ACA, and healthcare insurance exchanges may result in those payors exiting the healthcare insurance exchange marketplaces or the cessation of the healthcare insurance exchanges. As a consequence, the number of patients who participate in GHC Programs or who are uninsured or underinsured could increase. Payments received from GHC Programs are substantially less than payments received from private healthcare insurance programs (managed care and other third-party payors). Payments under policies issued through the healthcare insurance exchanges may be less than payments from private healthcare insurance programs and in some cases, patients’ responsibility for costs related to healthcare plans obtained through the healthcare insurance exchanges may be high and could increase in the future, and we may experience increased bad debt due to patients’ inability to pay for certain services. A payor mix shift from private healthcare insurance programs to GHC Programs or to healthcare insurance exchanges has in the past resulted andand, if it were to occur again in the future may continue to result in an increase in our estimated provision for contractual adjustments and uncollectibles and a corresponding decrease in our net revenue, as well as a significant reduction in our average reimbursement rates. While weWe have developed a number of strategic initiatives across our organization, in both our shared services functions and our operational infrastructure, to address some of the effects of changes in economic conditions,conditions; there is no assurance thathowever, these initiatives willmight not be successful in generating improvements in our general and administrative expenses and our operational infrastructure. If these initiatives are unsuccessful, it could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.

Birth data for 20232024 indicate that total births in the United States decreasedincreased by 1% compared to 2022.2023. Provisional data for 20242025 is not yet available. FutureDespite the slight increase in the number of total births in 2024, the birth rate has generally declined and future declines in births are possible, particularly if there is an economic recession, and could have an adverse effect on our patient volumes, net revenue, results of operations, cash flows, financial condition and the trading price of our securities.

All federal and state government health care programs, including for example Medicare, Medicaid and the ACA, may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings. The resultscurrent of the 2024 federal election, including the election of President Trumpadministration and RepublicanRepublican-controlled control of both houses of Congress,Congress may result in significant changes in, and have resulted in uncertainty with respect to, legislation, regulation, implementation or repeal of laws and rules related to government health programs, including Medicare and Medicaid. Further, efforts by the second Trump Administration to limit federal agency budgets or personnel may result in program cuts and reductions to agency budgets, employees, and operations, which could result in increased costs or other negative impacts on our business that are difficult to predict. In addition, the staff of the Department of Government Efficiency (the "DOGE"), an executive administrative agency created by the second Trump Administration,Administration have beenwas provided access to key payment and contracting systems at CMS to look for opportunities for improving efficiency and to identify fraud and ineffective use of resources. State governments, including Florida, have implemented similar initiatives focused on improving efficiency and identifying fraud in state healthcare programs. While we cannot predict the actions of the DOGE,current administration or state governments, there is a possibility that changes willmay be made to CMS and/or state-level spending, which could ultimately affect our financial condition and results of operation.

TheWhile secondthere Trumphave Administrationbeen maymultiple seekattempts to advancerepeal changesor amend the ACA through legislative action and legal challenges, legislative attempts to completely repeal the ACA have been unsuccessful to date. Most recently, on June 27, 2025, the United States Supreme Court issued its decision in Braidwood Management v. Becerra, upholding the ACA’s requirement that private health plans cover certain preventive services recommended by the U.S. healthcarePreventive system,Services includingTask changesForce towithout cost sharing and rejecting the ACAplaintiffs' claims that wouldthe eliminaterequirements oris reduce certain subsidies, modify certain benefitsunconstitutional and allowviolated competitionthe fromplaintiffs' short-termrights limitedunder durationthe insuranceReligious products,Freedom allRestoration ofAct. whichThere could result in fewer people with insurance, or fewer people with ACA compliant insurance, and these changes could have a material impact on our business. We cannot say for certain whether there willmay be additional future challenges to the ACA orand whatthe impact,impact of such challenges, if any, such challenges may have on our business.business are uncertain. Changes resulting from these proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

In addition to the ACA, there could be changes to other GHC Programs, such as a change to the Medicaid program design or Medicaid coverage and reimbursement rates set forth under federal or state law. Historically, Congress and the Trump Administration sought to convert Medicaid into a block grant or to institute per capita spending caps, among other things. These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll. Additionally, several states are considering and pursuing changes to their Medicaid programs, such as requiring recipients to engage in employment or education activities as a condition of eligibility for most adults, disenrolling recipients for failure to pay a premium, or adjusting premium amounts based on income.

Moreover, certain potentially material changes seem likely with respect to government reimbursement and the healthcare industry in general. For instance, the 2024 Medicare Physician Fee Schedule Final Rule decreased the 2024 conversion factor (i.e., the amount Medicare pays per relative value unit (wRVU)) by nearly 3.4% from the 2023 amount. Congress enacted legislation to moderate some of these cuts, but Medicare payments to physicians still decreased in 2024. For 2025, the conversion factor was decreased by 2.93%, further reducing reimbursement amounts for physician services. The 2026 Medicare Physician Fee Schedule Final Rule increased the conversion factor for qualifying alternative payment model participants (“QPs”) by approximately 3.77% and increased the conversion factor for physicians and other practitioners who are not QPs by 3.26% compared with 2025 levels. However, if the conversion factor is reduced again in the future, Medicare payments to physicians may again decrease. These reductions adversely affect reimbursement for physician services and could also negatively impact other GHC Program reimbursement and commercial payor reimbursement. These changes could materially impact our business.

COVID-19 necessitated the delivery of certain healthcare services remotely via telehealth, which is subject to extensive federal and state regulation, as well as temporary waivers tied to the COVID-19 public health emergency, and certain flexibilities afforded to the provision and reimbursement of telehealth have been and may continue to be rolled back.

In an effort to address shelter-in-place, quarantine, executive order or related measures to combat the spread of COVID-19, as well as the perceived need by individuals to continue such practices to avoid infection and to provide safe access to care for our patients, we converted certain in-person visits to telehealth visits and have continued to provide services in this manner. There is significant variation in demand, consumer acceptance, and market adoption of telehealth services. The provision of telehealth is largely regulated at the state level and can include, among other things, variations in the definition of telehealth, physician/patient relationship requirements, informed consent for telehealth services, licensure, scope of practice, covered modalities, electronic prescribing, coverage and reimbursement, and privacy and security requirements. Our ability to conduct telehealth services and provide medical services in a particular jurisdiction is directly dependent upon the applicable laws governing remote healthcare, the practice of medicine and healthcare delivery in general in such location, which are subject to changing political, regulatory and other influences. While numerous federal agencies released waivers to ease regulatory obstacles to the adoption of telehealth, many of these waivers do not override applicable state laws. States have adopted waivers as well but differ in the scope and application of such waivers and also on the time period the waiver is available. Many state waivers in relation to COVID-19 have already expired. On a federal level, CMS created flexibilities for the provision and reimbursement of telehealth for Medicare beneficiaries during the COVID-19 PHE. While some of these flexibilities have been permanently extended, others arehave stillbeen permittedtemporarily subject to temporally limited authorizations. For example, in the calendar year 2025 Physician Fee Schedule Final Rule, CMS authorized Medicare coverage of certain telehealth services on a provisional basisextended through 2025.December 31, 2027. If Congress or a federal agency does not act to again extend these flexibilities, they could expire, and these changes could materially impact our business.

The Transparency in Coverage Final Rule, published November 12, 2020, aims to put health pricing information into the hands of consumers and allow them to select their providers based, in part, on cost. The final rule was phased in between July 2022 and January 2024 and imposed two main requirements. First certain health plans and insurers are required to publish on a public website machine-readable files containing information on their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs. Second certain health plans and issuers must report to their covered members, through a self-service pricing tool, certain pricing information (including the in-network rate and out-of-network allowed amounts) and cost-sharing obligations for all covered items and services. These requirements remain subject to change, and we cannot predict how the availability of this health pricing information may impact our business operations and patient volumes. Moreover, Congress is considering legislation that imposes additional transparency requirements on providers. For example, in January 2026, the White House released information on the “Great Healthcare Plan.” This plan would increase transparency requirements for health insurers, cut payments to pharmacy benefit managers, and expand the use of health savings accounts. If patients choose to use services of less costly providers, we could see a reduction in patient volumes or decide to reduce the prices of our services to compensate, either of which could have an adverse effect on our financial condition, results of operations, cash flows and the trading price of our securities.

Congress and the second Trump Administration may also seek substantial reforms to Medicaid law and the ability of states to design Medicaid programs. In recent years, members of Congress have introduced a number of proposals intended to reform the Medicaid program by cutting or expanding coverage and available benefits, and the program is in a state of flux. Further, the One Big Beautiful Bill Act reformed the Medicaid program by imposing work requirements on certain adult beneficiaries, and requiring states to increase patient cost-sharing amounts for certain services, among other reforms. Any additional changes, if enacted, could reduce or eliminate eligibility for certain individuals or reduce payments to providers of services. As a result, we could experience an increase in the number of uninsured patients and delayed or reduced Medicaid payment for services furnished to program enrollees.

In late 2020, Congress enacted legislation intended to protect patients from “surprise” medical bills when services are furnished by providers who are not in network with the patient’s insurer (the “No Surprises Act” or the "“NSA"”). Effective January 1, 2022, if a patient’s insurance plan is subject to the NSA, the patient generally may not be balance billed in excess of their plan’s in-network cost-sharing amount for the provision of emergency care rendered by an out-of-network provider at certain in-network or out-of-network facilities. The NSA also prohibits an out-of-network provider from balance billing a patient for the provision of non-emergency services rendered in connection with a patient’s visit at certain in-network facilities, unless, for certain services, the patient is notified in advance and provides consent to being balance billed in accordance with technical requirements set forth in the NSA. Notably, however, there are certain services for which a balance billing is always prohibited and consent to do so may never be obtained, including emergency,emergency medicine, anesthesia, pathology, radiology, laboratory, and neonatology services. Providers that violate these surprise billing prohibitions may be subject to enforcement action by the Centers for Medicare and Medicaid Services (“CMS”), the U.S. Department of Labor, or by states, one or both of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as federal civil monetary penalties and any state-specific penalties. To that end, many states have similar legislation on this topic that continue to evolve.

For claims subject to the NSA, including many emergency care services, out-of-network providers (and facilities, in the emergency care context) are paid an initial payment by the plan. If a provider (or facility, in the emergency care context) receives a payment denial or is unsatisfied with the out-of-network rate paid by the plan and the parties are unable to resolve the dispute, either party can initiate an Independent Dispute Resolution (“IDR”) process, which is essentially an arbitration process whereby a certified IDR entity evaluates proposed offers from both the provider/facility and the plan and makes a determination based on several factors, including, but not limited to, the QPA. The outcome of each IDR dispute is generally binding on both the provider/facility and plan with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment.payment, though providers have had difficulty enforcing IDR awards against insurers. The NSA interim final rules establishing the IDR process have been subject to a series of legal challenges that resulted in the Eastern District of Texas vacating certain provisions of such rules and related guidance documents in 2023, with the Fifth Circuit Court of Appeals affirming several of these holdings. In October 2023, CMS issued a proposed rule that included new provisions governing the IDR process. That and other rulemaking remains ongoing, and litigation related to the QPA also remains ongoing.

In general, payments received from GHC Programs are substantially less than payments received from private healthcare insurance programs (managed care and other third-party payors). A shift in the mix of our payors from private healthcare insurance programs to government payors may result in an increase in our estimated provision for contractual adjustments and uncollectibles and a corresponding decrease in our net revenue, as well as a significant reduction in our average reimbursement rates. Additionally,Further, ifthe Congressional Budget Office has estimated that the One Big Beautiful Bill Act will cut federal spending on Medicaid and CHIP benefits by $1 trillion, due in part to eliminating at least 10.5 million people from the programs by 2034. If Congress does not act to extend CHIP beyond 2027, or if Congress extends CHIP but substantially alters the current program, we could be adversely affected if children in states where we do business lose Medicaid coverage or payments for services furnished to these children are delayed or reduced.

In recent years, legislative and regulatory changes have resulted in limitations and reductions in payments to healthcare providers for certain services under the Medicare program. For example, Congress established automatic spending reductions under the Budget Control Act of 2011 (the “BCA”), resulting in a 2% reduction in Medicare payments that began in 2013 and extend through the first sixeleven months of the FY 2032 sequestration order. As a result of the COVID-19 pandemic, this reduction was temporarily suspended from May 1, 2020 through March 31, 2022, with subsequent reductions to 1% from April 1, 2022 until June 30, 2022. The 2% reduction was then reinstated and has been in effect since June 30, 2022. In addition, as a result of ARPA, an additional Medicare payment reduction of up to 4% was to take effect in January 2022; however, Congress has repeatedly delayed implementation of this reduction until 2025.2026. Further, the projected budget deficit associated with the One Big Beautiful Bill Act may trigger additional payment reductions, reducing Medicare spending by an estimated $45 billion, if Congress does not take action. Any downward adjustment in Medicare reimbursement rates may have a detrimental impact on our reimbursement rates not only for Medicare patients, but also for patients covered under Medicaid and other third-party payors, because a state’s Medicaid payments cannot exceed the payments it would have made had those patients been enrolled in traditional Medicare, and other third-party payors often base their reimbursement rates on a percentage of Medicare rates. It is difficult to predict whether, when or what other deficit reduction initiatives may be proposed by Congress. We anticipate that the federal deficit will continue to place pressures on GHC Programs.

In addition, our agreements with certain third-party payors are terminable for various reasons. If an agreement with a third-party payor is terminated, we are generally required to seek reimbursement as an out-of-network provider. In the event we attempt to balance-bill patients, we may be limited in our ability to do so by certain state and federal laws and regulations, as discussed above. As these laws and regulations continue to develop, it could incentivize certain third-party payors to cut rates and/or terminate agreements as a business strategy which could lower overall reimbursement to providers. Any reductions in reimbursement amounts could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Federal laws, along with a growing number of state laws, allow a private person to bring a civil action in the name of the government for false billing violations. See Item 1. Business— “Government Regulation—Fraud and Abuse Provisions.” Further, identified overpayments from Medicare or Medicaid must be refunded to the government within 60 days of identification or the entity could be held liable under the federal False Claims Act (“FCA”), including for treble damages and substantial civil penalties, currently set at $13,946$14,308 up to $27,894$28,619 per false claim or statement for penalties assessed after JanuaryJuly 15,3, 2024.2025. In addition, our contracts with private insurers often provide such insurers with audit rights over payments made to us and the ability to seek recoupment for overpayments. We believe that audits, inquiries and investigations from government agencies, government contractors and private insurers will occur from time to time in the ordinary course of our business, which could result in substantial costs to us, legal actions by or against us, and a diversion of management’s time and attention. New regulations and heightened enforcement activity also could materially affect our cost of doing business and our risk of becoming the subject of an audit or investigation. We cannot predict whether any future audits, inquiries or investigations, or the public disclosure of such matters, likely would have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1. Business—“Government Investigations.”

We may in the future become the subject of regulatory or other investigations, audits or proceedings, and our interpretations of applicable laws, rules and regulations may be challenged, which could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. For example, in some states, we are dependent on our relationship with affiliated physician practices, which we do not own, to provide physician and other clinical services, and our business would be adversely affected if those relationships were disrupted or if our arrangements with our providers are found to violate state laws prohibiting the corporate practice of medicine or fee splitting, or if our contractual relationships with such entities cease to continue. Our contracts include management services agreements among other agreements with such affiliated physician practices, to which these practices reserve exclusive control and responsibility for all aspects of the practice of medicine and delivery of medical services. Recent state legislative activity has reflected growing scrutiny of the corporate practice of medicine, with a number of states proposing or enacting laws to expand existing prohibitions, enhance disclosure and reporting obligations, and broaden enforcement authority over management and ownership arrangements between healthcare providers and non-clinical entities. While we seek to substantially comply with the applicable state prohibitions on the corporate practice of medicine and fee splitting, these laws could impact our business operations, and state officials who administer these laws or other third parties may successfully challenge our contractual arrangements, which could subject us to civil and criminal penalties and require us to restructure our relationships with providers to comply with these statutes, which could have a material adverse effect on our business, financial condition, and operations. Additionally, state corporate practice of medicine doctrines often impose penalties on physicians themselves for aiding the corporate practice of medicine, which could impact physicians participating with our affiliated physician practices. See Item 1. Business—“Government Regulation—Fee Splitting; Corporate Practice of Medicine.”

Our business entails an inherent risk of claims of medical malpractice against our affiliated physicians and us. We may also be subject to other lawsuits which may involve large claims and significant defense costs. Although weWe currently maintain liability insurance coverage intended to cover professional liability and other claims, there can be no assurance thatbut our insurance coverage willmight not be adequate to cover liabilities arising out of claims asserted against us where the outcomes of such claims are unfavorable to us. Generally, we self-insure our liabilities to pay retention amounts for professional liability matters through a wholly owned captive insurance subsidiary. Liabilities in excess of our insurance coverage, including coverage for professional liability and other claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1. Business—“Other Legal Proceedings” and— “Professional and General Liability Coverage.”

We have established reserves for losses and related expenses that represent estimates involving actuarial projections. These actuarial projections are developed at a given point in time and represent our expectations of the ultimate resolution and administration of costs of losses incurred with respect to professional liability risks for the amount of risk retained by us. Insurance reserves are inherently subject to uncertainty. Our reserve estimates are based on actuarial valuations using historical claims, demographic factors, industry trends, severity and exposure factors and other actuarial assumptions. The estimates of projected ultimate losses are developed at least annually. Our reserves have been, and could further be, significantly affected should current and future occurrences differ from historical claim trends and expectations. While claims are monitored closely when estimating reserves,Moreover, the complexity of the claims and wide range of potential outcomes often hamper timely adjustments to the assumptions used in theseour reserve estimates. Actual losses and related expenses may deviate, perhaps substantially, from the reserve estimates reflected in our financial statements. If our estimated reserves are determined to be inadequate, we have been and could further be required to increase reserves at the time the deficiency is determined. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—“Application of Critical Accounting Policies and Estimates—Professional Liability Coverage.”

If our cash flows and capital resources are insufficient to fund our debt service requirements, we may be forced to reduce or delay acquisitions or other investments, or to seek additional capital, or restructure or refinance our indebtedness. If our cash flows and capital resources are sufficient to fund our debt services requirements, but insufficient to permit us to refinance our debt upon maturity, or if we are otherwise unable to refinance our debt upon maturity, using our cash flows and capital resources to fund our debt service would significantly reduce our available cash and liquidity. In such situations, we would have less flexibility to fund working capital, capital expenditures, strategic initiatives or other general corporate purposes, and we may be more dependent on continued cash generation or other sources of financing. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. We cannot assure you that we will be able to refinance any of our debt, including our revolving line of credit and senior notes, on commercially reasonable terms or at all.

Our Amended and Restated Articles of Incorporation, as amended, authorize our Board of Directors to issue up to 1,000,000 shares of undesignated preferred stock and to determine the powers, preferences and rights of these shares without shareholder approval. This preferred stock could be issued with voting, liquidation, dividend and other rights superior to those of the holders of common stock. The issuance of preferred stock under some circumstances could have the effect of delaying, deferring or preventing a change in control. In addition, provisions in our Amended and Restated Articles of Incorporation, as amended, and Bylaws, including those relating to calling shareholder meetings, taking action by written consent and other matters, could render it more difficult or discourage an attempt to obtain control of Pediatrix through a proxy contest or consent solicitation, however, there is no assurance that these provisions wouldmight not have such an effect. These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock. Notwithstanding these provisions, we could, and have, become the target of activist shareholders who acquire ownership positions in our common stock and seek to influence our company. Responding to actions by activist shareholders can be costly and time-consuming, disrupt our business and divert the attention of our Board of Directors, management and employees. Additionally, perceived uncertainties as to our future direction, including the composition of our Board of Directors, as a result of shareholder activism may lead to the perception of a change in the direction of our business or other instability, which may be exploited by our competitors, cause concern to our current or potential customers and acquisition candidates, and make it more difficult for us to attract and retain qualified personnel, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows and the trading prices of our securities. In addition, the trading prices of our securities may experience periods of increased volatility as a result of shareholder activism.

Our affiliated professional contractors usually enter into employment agreements with our affiliated physicians. Certain of our employment agreements can be terminated without cause by any party upon prior written notice. In addition, substantially all of our affiliated physicians have agreed not to compete within a specified geographic area for a certain period after termination of employment. The law governing non-compete agreements and other forms of restrictive covenants varies from state to state. Although we believe that the non-competitionstate and othersome restrictivestates covenantshave applicablebeen toimplementing ourtheir affiliatedown physiciansnon-compete arerestrictions. reasonableAs ina scope and duration and therefore enforceable under applicable state law,result, courts and arbitrators in some states may be reluctant to enforce non-compete agreements and restrictive covenants against physicians. In addition, we have and may incur significant legal fees to pursue enforcement of such agreements and restrictive covenants. Further, the Federal Trade Commission issued a final rule that would prohibit employers from using non-compete clauses with workers. The rule would have been effective September 4, 2024, but iswas currentlyenjoined. enjoinedThe pendingFederal legalTrade challenges.Commission had challenged the injunction, but voluntarily dismissed its appeal in September 2025 and acceded to the vacatur of the final rule. To the extent the composition of the Federal Trade Commission changes in the future, it could again attempt to regulate employers’ use of non-compete clauses with workers. Certain states also have enacted or proposed prohibitions on using non-compete clauses with workers, including healthcare providers. Our affiliated physicians or other clinicians may leave our affiliated physician practices for a variety of reasons, including in order to provide services for other types of healthcare providers, such as teaching, research and government institutions, hospitals and health systems and other practice groups. If a substantial number of our affiliated physicians or other clinicians leave our affiliated physician practices, we could incur significant legal fees to pursue enforcement of certain covenants within employment agreements or if our affiliated physician practices are unable to enforce the non-competition covenants in the employment agreements, our business, financial condition, results of operations and cash flows could be adversely affected.

Information security risks have generally increased in recent years because of new technologies and tactics of cyber criminals. Despite our layered security controls and our continuous monitoring and testing (by both internal and external parties) of such controls, experienced cyber criminals have been and may be able to penetrate our information systems, misappropriate or compromise sensitive patient or personnel information or proprietary or confidential information, create system disruptions or cause shutdowns. They also may be able to develop and deploy viruses, worms and other malicious software programs that disable our systems or otherwise exploit security vulnerabilities, or attempt to fraudulently induce employees to take actions, including to release confidential or sensitive information or make fraudulent payments, through illegal electronic spamming, phishing or other tactics. For example, in February 2024, Change Healthcare, a subsidiary of UnitedHealth Group and a major processor of U.S. medical claims, was the subject of a well-publicized cyberattack. This event caused significant delays and disruptions in payments to hospitals, physicians, pharmacists, and other health care providers across the country, including us. While thisThis cyberattack did not have a material impact on us or our operations, but future cyber attacks on us or our third-party providers could have a material impact on our business.

A failure in or breach of our information systems as a result of cybersecurity attacks or other tactics could disrupt our business, has resulted and may result in the disclosure or misuse of PHI, personal information, or confidential or proprietary business information, and has caused or may cause financial loss, damage our reputation, increase our administrative expenses, and expose us to additional risk of liability to federal or state governments, individuals, or classes of individuals. Although we believe that we have reasonable and appropriate information security procedures and other safeguards in place, asAs cybersecurity threats continue to evolve, we have been and may be required to expend additional resources to continue to enhance our information security measures or to investigate and remediate information security vulnerabilities. Our remediation efforts may not be successful and could result in interruptions to our operations (including, without limitation, our billing processes), delays or cessation of service and loss of existing or potential customers. In addition, breaches of our security measures and the unauthorized dissemination of patient healthcare and other sensitive information, personal information, or proprietary or confidential information about us, our patients, clients or customers, or other third-parties, could expose such persons to the risk of financial or medical identity theft. It could also expose us or such persons to a risk of loss or misuse of this information, result in litigation, or potential liability, cause damage to our brand and reputation or otherwise harm our business. Under certain circumstances, we could also be excluded temporarily or permanently from certain commercial or GHC Programs. Any of these disruptions or breaches of security could have an adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

We are engaged in various implementation and enhancement efforts for new technology, software and processes. These solutions are designed to provide greater efficiency and flexibility across our enterprise. In implementing and enhancing various solutions and processes, we may experience significant delays, increased costs and other difficulties. Any significant disruption or deficiency in the design and implementation of these solutions and processes could adversely affect our ability to operate our business. While we have invested significant resources in planning and project management, unforeseenUnforeseen implementation or enhancement issues may arise.arise with respect to our investments in planning and project management resources. In addition, our efforts to centralize various business processes and functions within our organization in connection with our system implementations may disrupt our operations. Any implementation or enhancement issues or business operation disruptions could have a material effect on our business, financial condition, results of operations, cash flows, internal control over financial reporting and the trading price of our securities.

Other federal and state laws establish additional requirements for protecting the privacy and security of identifiable consumer health information. For instance, the state of Washington enacted the “My Health My Data Act” which regulates “consumer health data” which is defined as “personal information that is linked or reasonably linkable to a consumer and that identifies a consumer’s past, present, or future physical or mental health.” The “My Health My Data Act” provides exemptions for PHI and similar information maintained by a covered entity or business associate in compliance with HIPAA, personal data collected in the context of certain research activities, including data subject to 45 C.F.R. Parts 46, 50, and 56, and personal information that has been de-identified. NevadaIn alsoaddition, enactedcertain aother similarstates Consumerhave Healthenacted, Dataor Privacymay Law, and Connecticut amended its consumer privacy law to include provisions specific toenact, consumer health information.data Additional states have contemplated enacting similarprotection laws that could impose additional compliance obligations;

Further, we are also subject to a provision of the federal 21st Century Cures Act and related regulations that are intended to facilitate the appropriate exchange of electronic health information ("“EHI"”). Beginning in 2020, the U.S. Department of Health and Human Services’ ("“HHS"”) Office of the National Coordinator for Health Information Technology (“ONC”) promulgated final rules to support access, exchange, and use of EHI. Specifically, the information blocking regulations were implemented as part of the 21st Century Cures Act, and are primarily designed to facilitate technology interoperability and enable the free flow of EHI. The original information blocking regulations compliance date was April 5, 2021 and the U.S. Department of Health and Human Services (“HHS”) subsequently issued a final rule called the HTI-1 Rule that, among other things, revised the information blocking regulations, effective March 11, 2024.On2024. On August 5, 2024, ONC published in the Federal Register a proposed rule called the HTI-2 Proposed Rule that, among other things, will further revise the information blocking regulations, if finalized. Under the 21st Century Cures Act, health care providers that violate the information blocking prohibition will be subject to appropriate disincentives. On July 1, 2024, the HHS published in the Federal Register a final rule to establish such disincentives, effective July 31, 2024. Developers of certified information technology and health information networks/health information exchanges, however, may be subject to civil monetary penalties of up to $1 million per violation (adjusted for inflation). The HHS Office of Inspector General (“OIG”) has the authority to impose such penalties and on July 3, 2023, published a final rule in the Federal Register codifying new authority in regulation, which became effective September 1, 2023. On July 29, 2024, HHS published a statement in the Federal Register that, among other things, announced a reorganization of certain roles and functions and renamed ONC the Assistant Secretary for Technology Policy and Office of the National Coordinator for Health Information Technology, or ASTP/ONC. The impact on the information blocking rules to our business is currently unclear.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion should be read in conjunction with our Consolidated Financial Statements and the related notes included in Item 8 of this Form 10-K. This discussion contains forward-looking statements. Please see the explanatory note concerning “Forward-Looking Statements” preceding Part I of this Form 10-K and Item 1A. Risk Factors for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements. The operating results for the periods presented were not significantly affected by inflation.

Pediatrix is a leading provider of physician services including newborn, maternal-fetal and other pediatric subspecialty care. Our national network is comprised of affiliated physicians who provide clinical care in 3637 states. At December 31, 2024,2025, our national network comprised approximately 2,3352,295 affiliated physicians, including 1,3351,350 physicians who provide neonatal clinical care, primarily within hospital-based neonatal intensive care units (“NICUs”), to babies born prematurely or with medical complications. We have 490475 affiliated physicians who provide maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where our affiliated neonatal physicians practice. Our network also includes other pediatric subspecialists, including 240 physicians providing hospital-based pediatric care, over 230 physicians providing pediatric intensive care, 220 physicians providing hospital-based pediatric care and 20 physicians providing pediatric surgical care.

Our operations and performance depend significantly on economic conditions. During the year ended December 31, 2024,2025, the percentage of our patient service revenue being reimbursed under government-sponsored or fundedgovernment-funded healthcare programs (“GHC Programs”) decreasedremained stable as compared to the year ended December 31, 2023.2024. We could, however, experience shifts toward GHC Programs if changes occur in economic behaviors or population demographics within geographic locations in which we provide services, including an increase in unemployment and underemployment as well as losses of commercial health insurance. Payments received from GHC Programs are substantially less for equivalent services than payments received from commercial insurance payors. In addition, costs of managed care premiums and patient responsibility amounts continue to rise, and accordingly, we may experience lower net revenue resulting from increased bad debt due to patients’ inability to pay for certain services. See Item 1A. Risk Factors, in this Form 10-K for additional discussion on the general economic conditions in the United States and recent developments in the healthcare industry that could affect our business.

During the second quarter of 2024, we formalized our physician practice optimization plans, resulting in a decision to exit almost all of our affiliated office-based practices, other than maternal-fetal medicine. Over the course of many years, we expanded our pediatric service lines and footprint to provide specialized care to more patients, including through our office-based portfolio of practices. This added complexity to our operations over time and, accordingly, increased costs that resulted in operating challenges primarily for our office-based portfolio of practices. Recognizing this and our need to adapt to the current healthcare climate, during the second quarter, we made the decision to return to a hospital-based and maternal-fetal medicine-focused organization. Accordingly, a recoverability assessment for each impacted individual physician practice was performed, and the estimated future cash flows related to the physician practices did not support the carrying value of the specifically identified individual long-lived assets. As a result, we recorded fixed asset impairments of $20.1 million, operating lease right-of-use asset impairments of $12.5 million and intangible asset impairments of $7.7 million during the year ended December 31, 2024. The operating lease right-of-use impairments are recorded within the transformational and restructuring related expenses line item. As of December 31, 2024, the planned exits of our pediatric office-based practices were completed. Additionally, we exited our primary and urgent care service line during 2024 based on a review of the cost and time that would be required to build the platform to scale.

For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received. The patient’s cost-sharing amount for out-of-network services covered by the NSA must be no more than the patient’s in-network cost-sharing amounts. Patient cost-sharing amounts for items and services subject to the NSA count toward the patient’s health plan deductible and out-of-pocket cost-sharing limits. For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount. An out-of-network provider is only permitted to bill a patient more than the cost-sharing amount allowed under the NSA for certain types of services if the provider satisfies all aspects of an informed consent process set forth in the NSA’s implementing regulations. Providers that violate these surprise billing prohibitions may be subject to enforcement actions by CMSCMS, the U.S. Department of Labor, or by states, one or bothmultiple of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties enforcement action and federal civil monetary penalties.

For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution ("“IDR"”) process. The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment.payment, though providers have had difficulty enforcing IDR awards against insurers. Accordingly, we cannot predict how these IDR results will compare to the rates that our affiliated physicians customarily receive for their services. These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1A. Risk Factors ─ “Congress or states have, and may continue to, enact laws restricting the amount out-of-network providers of services can charge and recover for such services.”

The ACA has altered how health care is delivered and reimbursed in the U.S. and contains various provisions, including the establishment of health insurance exchanges to facilitate the purchase of qualified health plans, expanded Medicaid eligibility, subsidized insurance premiums and additional requirements and incentives for businesses to provide healthcare benefits. Other provisions of the ACA have expanded the scope and reach of the FCA and other healthcare fraud and abuse laws. The status of the ACA may be subject to change as a result of political, legislative, regulatory, and administrative developments, as well as judicial proceedings. As a result, we could be affected by potential changes to various aspects of the ACA, including changes to subsidies, tax credits, monthly premiums, healthcare insurance marketplaces and Medicaid expansion. We cannot say for certain whether there will be additional future challenges to the ACA or what impact, if any, such challenges may have on our business. Changes resulting from various legal proceedings, and any legislative or administrative change to the current healthcare financing system, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities. See Item 1A. Risk Factors ─ “Potential healthcare reform efforts may have a significant effect on our business.”

In addition to the ACA, there could be changes to other GHC Programs, such as a change to the Medicaid program design or Medicaid coverage and reimbursement rates set forth under federal or state law. These changes, if implemented, could eliminate the guarantee that everyone who is eligible and applies for Medicaid benefits would receive them and could potentially give states new authority to restrict eligibility, cut benefits and/or make it more difficult for people to enroll. See Item 1. Business – “Relationship With Our Partners” – “Government Regulatory Requirements” and see also Item 1A. Risk Factors ─ “Potential healthcare reform efforts may have a significant effect on our business.” Moreover, the expiration of the COVID-19 national emergency and public health emergency declarations in May 2023 may impact the coverage for and access to certain services for Medicaid patients. Expiration of the national emergency and public health emergency declarations will also end waivers for the provision of certain services, and returning our services to a pre-pandemic regulatory state similarly may increase our exposure to legal, regulatory, compliance and clinical risks.

Medicaid ExpansionReform

The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. See Item 1. Business – “Relationship With Our Partners – Third-Party Payors.” All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. Recently,In Democratsrecent inyears, members of Congress have soughtintroduced a number of proposals intended to expandreform the Medicaid program by cutting or Medicaid-likeexpanding coverage and available benefits, and the program is in a state of flux. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which reforms the Medicaid program by eliminating certain financial incentives for states that have not yet expanded Medicaid.their TheyMedicaid alsoprograms haveunder soughtthe ACA, imposing work requirements on certain adult beneficiaries, and requiring states to reduceincrease paymentspatient tocost-sharing amounts for certain hospitals in some of these states.services. See Item 1A. Risk Factors – “State budgetary constraints and the uncertainty over the future of Medicaid could have an adverse effect on our reimbursement from Medicaid programs.” ShouldThe anyCongressional ofBudget theseOffice changeshas takeestimated effect,that wethe One Big Beautiful Bill Act will cut federal spending on Medicaid and Children’s Health Insurance Program benefits by $1 trillion, due in part to eliminating at least 10.5 million people from the programs by 2034. We cannot predict with any assurance the ultimate effect of these reforms on reimbursements for our services.

During 2024,2025, we acquired one maternal-fetal medicine practice.practice and acquired several neonatology, maternal-fetal medicine and OB hospitalist practices in one transaction. Based on our experience, we expect that we can improve the results of acquired physician practices in various ways, including improved collections, identification of growth initiatives and operating and cost savings based upon the significant infrastructure that we have developed.

From time to time we develop strategic initiatives across our organization, in both our shared services functions and our operational infrastructure, with a goal of generating improvements in our general and administrative expenses and our operational infrastructure. We have included the expenses, which in certain cases represent estimates, related to such activity on a separate line item in our consolidated statements. During 2024,2025, our transformation and restructuring related expenses relate specifically to our practice portfolio management activities, revenue cycle management transition activities and position eliminations across various shared services departments and operationsrevenue departments.cycle management transition activities.

During 20242025 and 2023,2024, approximately 67%64% and 67%, respectively, of our net revenue from continuing operations was generated by operations in our five largest states. During 20242025 and 2023,2024, our five largest states consisted of Texas, Florida, Georgia, California, and Washington. During both 20242025 and 2023,2024, our operations in Texas accounted for approximately 32% of our net revenue.

The following is a summary of our payor mix, expressed as a percentage of net revenue from continuing operations,revenue, exclusive of hospital contract administrative fees and miscellaneousother revenue, for the periods indicated:

The payor mix shown in the table above is not necessarily representative of the amount of services provided to patients covered under these plans. For example, the gross amount billed to patients covered under GHC Programs for the years ended December 31, 20242025 and 20232024 represented approximately 53% and 55%, respectively, of our total gross patient service revenue. These percentages of gross revenue and the percentages of net revenue provided in the table above include the payor mix impact of acquisitions completed through December 31, 2024.2025.

Some of our agreements require hospitals to pay us administrative fees. Some agreements provide for fees if the hospital does not generate sufficient patient volume in order to guarantee that we receive a specified minimum revenue level. We also receive fees from hospitals for administrative services performed by our affiliated physicians providing medical director or other administrative services at the hospital.

DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles. DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Any significant change in our DSO results in additional analyses of outstanding accounts receivable and the associated reserves. We calculate our DSO using a three-month rolling average of net revenue. Our net revenue, net income and operating cash flows may be materially and adversely affected if actual adjustments and uncollectibles exceed management’s estimated provisions as a result of changes in these factors. As of December 31, 2024,2025, our DSO was 47.642.8 days. We had approximately $1.34$1.15 billion in gross accounts receivable for continuing operations outstanding at December 31, 2024,2025, and considering this outstanding balance, based on our historical experience, a reasonably likely change of 0.5% to 1.50% in our estimated collection rate would result in an impact to net revenue of $6.4$5.5 million to $19.1$16.5 million. The impact of this change does not include adjustments that may be required as a result of audits, inquiries and investigations from government authorities and agencies and other third-party payors that may occur in the ordinary course of business. See Note 1918 to our Consolidated Financial Statements in this Form 10-K.

We maintain professional liability insurance policies with third-party insurers generally on a claims-made basis, subject to self-insured retention, exclusions and other restrictions. Our self-insured retention under our professional liability insurance program is maintained primarily through a wholly owned captive insurance subsidiary. We record liabilities for self-insured amounts and claims incurred but not reported based on an actuarial valuation using historical loss information, claim emergence patterns and various actuarial assumptions. Liabilities for claims incurred but not reported are not discounted. The average lag period from the date a claim is reported to the date it reaches final settlement is approximately four years, although the facts and circumstances of individual claims could result in lag periods that vary from this average. Our actuarial assumptions incorporate multiple complex methodologies to determine the best liability estimate for claims incurred but not reported and the future development of known claims, including methodologies that focus on industry trends, paid loss development, reported loss development and industry-based expected pure premiums. The most significant assumptions used in the estimation process include the use of loss development factors to determine the future emergence of claim liabilities, the use of frequency and trend factors to estimate the impact of economic, judicial and social changes affecting claim costs, and assumptions regarding legal and other costs associated with the ultimate settlement of claims. The key assumptions used in our actuarial valuations are subject to constant adjustments as a result of changes in our actual loss history and the movement of projected emergence patterns as claims develop. We evaluate the need for professional liability insurance reserves in excess of amounts estimated in our actuarial valuations on a routine basis, and as of December 31, 2024,2025, based on our historical experience for continuing operations,experience, a reasonably likely change of 4.0% to 10.0% in our estimates would result in an increase or decrease to net income of $3.5$3.4 million to $8.7$8.5 million. However, because many factors can affect historical and future loss patterns, the determination of an appropriate professional liability reserve involves complex, subjective judgment, and actual results may vary significantly from estimates.

WeGoodwill record acquired assets, including identifiable intangible assets and liabilities at their respective fair values, recording to goodwillrepresents the excess of purchase price over the fair value of the net assets acquired. Goodwill is tested for impairment at a reporting unit level on at least an annual basis in accordance with the subsequent measurement provisions of the accounting guidance for goodwill. When testing goodwill for impairment, we may assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying amount, including goodwill. Alternatively, we may bypass this qualitative assessment and perform the quantitative goodwill impairment test. We may use income and market-based valuation approaches to determine the fair value of our reporting units. These approaches focus on various significant assumptions, including the weighted average cost of capital discount factor, revenue growth rates and market multiples for revenue and earnings before interest, taxes and depreciation and amortization (“EBITDA”). We also consider the economic outlook for the healthcare services industry and various other factors during the testing process, including hospital and physician contract changes, local market developments, changes in third-party payor payments and other publicly available information.

In our analysis of our results of operations, we use various GAAP and certain non-GAAP financial measures. We have incurred certain expenses that we do not consider representative of our underlying operations, including transformational and restructuring related expenses. Accordingly, we report adjusted earnings before interest, taxes and depreciation and amortization (“Adjusted EBITDA”) from continuing operations,, defined as net income (loss) from continuing operations before interest, taxes, depreciation and amortization, and transformational and restructuring related expenses. Adjusted earnings per share (“Adjusted EPS”) from continuing operations has also been further adjusted for these items and consists of diluted net income (loss) from continuing operations per common and common equivalent share adjusted for amortization expense, stock-based compensation expense, transformational and restructuring related expenses and any impacts from discrete tax events. For the years ended December 31, 2024,2025, 20232024 and 2022,2023, both Adjusted EBITDA and Adjusted EPS are being further adjusted to exclude net gain on investments in divested businesses, impairment losses and loss on disposal of businesses, impairment losses and the impacts from loss on the early extinguishment of debt, as relevant. We have included Adjusted EBITDA and Adjusted EPS in this Form 10-K because each is a key measure used by our management and boardBoard of directorsDirectors to evaluate our operating performance, generate future operating plans and make strategic decisions.

We believe these measures, in addition to net income (loss) from continuing operations,, net income (loss) and diluted net income (loss) from continuing operations per common and common equivalent share, provide investors with useful supplemental information to compare and understand our underlying business trends and performance across reporting periods on a consistent basis. These measures should be considered a supplement to, and not a substitute for, financial performance measures determined in accordance with GAAP. In addition, since these non-GAAP measures are not determined in accordance with GAAP, they are susceptible to varying calculations and may not be comparable to other similarly titled measures of other companies. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

For a reconciliation of each of Adjusted EBITDA from continuing operations and Adjusted EPS from continuing operations to the most directly comparable GAAP measures for the years ended December 31, 2024,2025, 20232024 and 2022,2023, refer to the tables below (in thousands, except per share data).

The following table sets forth, for the periods indicated, certain information related to our continuing operations expressed as a percentage of our net revenue:

Our net revenue was $2.01$1.91 billion for the year ended December 31, 2024,2025, as compared to $1.99$2.01 billion for 2023.2024. The increasedecrease in revenue of $18.3$99.1 million, or 0.9%,4.9%, was primarily attributable to non-same unit revenue, primarily from practice dispositions, partially offset by an increase in same-unit revenue, partially offset by a decrease in revenue from non-same unit activity, primarily resulting from practice dispositions.revenue. Same units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $81.4$106.8 million, or 4.8%.6.2%. The increase in same-unit net revenue was comprised of an increase of $47.8$97.5 million, or 2.8%,5.7%, from net reimbursement-related factors, and $33.6$9.3 million, or 2.0%,0.5%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from improved collection activity, increased patient acuity, primarily in neonatology, a favorable shift in payor mix andmix, an increase in administrative fees from our hospital partners.partners and modest improvements in managed care contracting. The increase in revenue from patient service volumes was primarily related to increases across all ofin our serviceneonatology lines.and maternal-fetal medicine services.

Practice salaries and benefits decreased by $7.4$100.0 million, or 0.5%,6.9%, to $1.44$1.34 billion for the year ended December 31, 2024,2025, as compared to $1.45$1.44 billion for 2023.2024. The $7.4$100.0 million decrease was primarily related to non-same unit activity, primarily resulting from practice dispositions, partially offset by an increase in clinical compensation expense, including incentive compensation based on practice results and benefits, all at our existing units. The net increase in benefits primarily reflects increases in payroll taxes and group insurance costs.

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically identifiable to the day-to-day operations of our physician practices and services. General and administrative expenses increased by $10.9$2.4 million, or 4.8%,1.0%, to $238.4$240.8 million for the year ended December 31, 2024,2025, as compared to $227.5$238.4 million for 2023.2024. The net increase of $10.9$2.4 million is primarily related to increases in incentivecollection fees and higher incentive-based compensation based on financial results and salaries expense for enhancement of revenue cycle management staffing, partially offset by lower expenses from net staffing reductions, travel, information technology and insurance expenses.results. General and administrative expenses as a percentage of net revenue was 11.8%12.6% for the year ended December 31, 2024,2025, as compared to 11.4%11.8% for the same period in 2023.2024.

Depreciation and amortization expense was $32.2$21.8 million for the year ended December 31, 2024,2025, as compared to $36.2$32.2 million for 2023.2024. The decrease was primarily related to lowernon-same depreciationunit activity, primarily resulting from fixedpractice assetdispositions, impairmentsand recognizedlower duringcapital 2024.expenditures at existing units.

Transformational and restructuring related expenses were $64.3$22.3 million for the year ended December 31, 2024,2025, as compared to $2.2$64.3 million for 2023.2024. The expenses during 2025 primarily related to position eliminations across various shared services departments and revenue cycle management transition activities. The expenses during 2024 reflectprimarily related to the impairment of various right-of-use lease impairment and severance expensesassets resulting from our practice portfolio management activities, revenue cycle management transition activities, and position eliminations across various shared services and operations departments.departments The expenses during 2023 are directly related to the termination of our prior contract forand revenue cycle management services.transition activities.

Goodwill impairment was $150.6 million and $148.3 million for the yearsyear ended December 31, 20242024, andresulting 2023,from respectively.the triggering event during the second quarter based on a sustained stock price decline.

LossIncome from operations was $68.7$208.8 million for the year ended December 31, 2024,2025, as compared to incomeloss from operations of $7.3$68.7 million for 2023.2024. Our operating margin was (3.4)%10.9% for the year ended December 31, 2024,2025, as compared to 0.4%(3.4)% for the same period in 2023.2024. The decreaseincrease in our operating margin was primarily due to impairmentthe activity,impact transformationalfrom practice disposition activity and restructuring expenses and loss on disposal of businesses, partially offset by net favorable impacts from same-unit resultsresults, dueprimarily related to highersame-unit revenue.revenue growth. Excluding the impairment activity, transformational and restructuring related expenses and loss on disposal of businesses, our income from operations was $183.7$231.1 million and $157.9$183.7 million, and our operating margin was 9.1%12.1% and 7.9%9.1% for the years ended December 31, 20242025 and 2023,2024, respectively. We believe excluding the impacts from the impairment activity, transformational and restructuring related activityexpenses and loss on disposal of businesses provides a more comparable view of our operating income and operating margin.

Total non-operating expensesincome werewas $32.6$7.6 million for the year ended December 31, 2024,2025, as compared to $55.7total non-operating expenses of $32.6 million for 2023.2024. The net decreaseincrease in total non-operating expensesincome was primarily related to ana impairmentnet lossgain on investments in divested businesses of $20.0$20.9 million in the prior year related to a cost-method investment,million, an increase in investmentinterest income ondue to higher cash balances and lowerinterest rates and a decrease in interest expense duefrom tomodestly lower debtinterest balances.rates and borrowings.

Our effective income tax rate (“tax rate”) was 23.6% for the year ended December 31, 2025, compared to 2.2% for the year ended December 31, 2024,2024. comparedThe totax (24.9)%rate for the year ended December 31, 2023. The tax rates for the years ended December 31, 2024 and 2023 areis not meaningful as calculated due to the pre-tax loss and related tax effects of the non-cash goodwill impairment charges in each period.charge. Excluding the effect of these items, our effective tax rate was 45.5% and 35.8% for the yearsyear ended December 31, 20242024. The tax rate for the year ended December 31, 2025 reflects a net discrete tax benefit of $6.6 million, primarily related to divested operations and 2023,a respectively.decrease in the liability for uncertain tax positions. The tax rate for the year ended December 31, 2024 reflects net discrete tax expense of $7.9 million, primarily related to a reduction in the carrying value of deferred tax assets due to practice management portfolio activities as well as stock-based compensation shortfalls. The tax rate for the year ended December 31, 2023 includes net discrete tax expense of $7.9 million, primarily related to the tax charge associated with the impairment of a cost-method investment as well as stock-based compensation shortfalls. After excluding discrete tax impacts and goodwill impairment-related effectseffects, as relevant, for the years ended December 31, 20242025 and 2023,2024, our tax rates were 29.4%26.6% and 27.9%,29.4%, respectively. We believe excluding discrete tax impacts and goodwill impairment-related impacts onfrom our tax rate provides a more comparable view of our effective income tax rate.

LossNet from continuing operationsincome was $99.1$165.4 million for the year ended December 31, 2024,2025, as compared to $60.4a net loss of $99.1 million for 2023.2024. Adjusted EBITDA from continuing operations was $224.0$275.6 million for the year ended December 31, 2024,2025, as compared to $200.4$224.0 million for 2023.2024. The increase in our Adjusted EBITDA was primarily due to net favorable impacts in our same-unit results, primarily from higher revenue.

Diluted net income per common and common equivalent share was $1.94 on weighted average shares outstanding of 85.3 million for the year ended December 31, 2025, as compared to diluted net loss per common and common equivalent share wasof $1.19 on weighted average shares outstanding of 83.3 million for the year ended December 31, 2024, as compared to $0.73 on weighted average shares outstanding of 82.2 million for 2023.2024. Adjusted EPS was $1.51$2.04 for the year ended December 31, 2024,2025, as compared to $1.26$1.51 for 2023.2024.

As of December 31, 2024,2025, we had $229.9$375.2 million of cash and cash equivalents attributable to continuing operations as compared to $73.3$229.9 million at December 31, 2023.2024. Additionally, we had working capital attributableof to$304.6 continuingmillion operationsat December 31, 2025, an increase of $99.1 million from our working capital of $205.5 million at December 31, 2024, an increase of $111.0 million from our working capital from continuing operations of $94.5 million at December 31, 2023.2024. The increase in working capital is primarily due to net favorable impacts in our same-unit results, primarily from an increase in revenue.

We generated cash flow from operating activities for continuing operations of $217.3$274.7 million and $146.1$217.3 million for the years ended December 31, 20242025 and 2023,2024, respectively. The net increase in cash flow of $71.2$57.4 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to higher earnings and increases in cash flow from accounts payable and accrued expenses, other long-term assets, income taxes and long-term professional liabilities.receivable.

During the year ended December 31, 2024,2025, cash flow from accounts receivable for continuing operations was $10.3$30.6 million, as compared to $26.3$10.3 million for the same period in 2023.2024.

DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles. DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Our DSO forwas continuing42.8 operationsdays wasat December 31, 2025 as compared to 47.6 days at December 31, 2024 as compared to 50.5 days at December 31, 2023.2024. The 2.94.8 days decrease in DSO was primarily due to improved cash collections at existing units.

Our cash flow from operating activities is significantly affected by the payment of physician incentive compensation. A large majority of our affiliated physicians participate in our performance-based incentive compensation program and almost all of the payments due under the program are made annually in the first quarter. As a result, we typically experience negative cash flow from operations in the first quarter of each year and fund our operations during this period with cash on hand or funds borrowed under our Credit Agreement. In addition, during the first quarter of each year, we use cash to make any discretionary matching contributions for participants in our qualified contributory savings plans.plan.

On February 11, 2022, we issued $400.0 million of 5.375% unsecured senior notes due 2030 (the “2030 Notes”). Interest on the 2030 Notes accrues at the rate of 5.375% per annum, or $21.5 million, and is payable semi-annually in arrears on February 15 and August 15. Our obligations under the 2030 Notes are guaranteed on an unsecured senior basis by the same subsidiaries and affiliated professional contractors that guarantee the Amended Credit Agreement (as defined below). The indenture under which the 2030 Notes are issued, among other things, limits our ability to (1) incur liens, (2) enter into sale and lease-back transactions, and (3) merge or dispose of all or substantially all of our assets, in all cases, subject to a number of customary exceptions. Although we are not required to make mandatory redemption or sinking fund payments with respect to the 2030 Notes, upon the occurrence of a change in control, we may be required to repurchase the 2030 Notes at a purchase price equal to 101% of the aggregate principal amount of the 2030 Notes repurchased plus accrued and unpaid interest.

Our operations and performance depend significantly on economic conditions. During the three months ended MarchJune 31,30, 2026, the percentage of our patient service revenue being reimbursed under government-sponsored or government-funded healthcare programs (“GHC Programs”) decreased slightly as compared to the three months ended MarchJune 31,30, 2025. However, we could experience shifts toward GHC Programs if changes occur in economic behaviors or population demographics within geographic locations in which we provide services, including an increase in unemployment and underemployment as well as losses of commercial health insurance. Payments received from GHC Programs are substantially less for equivalent services than payments received from commercial insurance payors. In addition, costs of managed care premiums and patient responsibility amounts continue to rise, and accordingly, we may experience lower net revenue resulting from increased bad debt due to patients’ inability to pay for certain services.

For claims subject to the NSA, insurers are required to calculate the patient’s total cost-sharing amount pursuant to rules set forth in the NSA and its implementing regulations which, in some cases, can be calculated by reference to the applicable qualifying payment amount for the items or services received. The patient’s cost-sharing amount for out-of-network services covered by the NSA must be no more than the patient’s in-network cost-sharing amounts. Patient cost-sharing amounts for items and services subject to the NSA count toward the patient’s health plan deductible and out-of-pocket cost-sharing limits. For claims subject to the NSA, providers are generally not permitted to balance bill patients beyond this cost-sharing amount. An out-of-network provider is only permitted to bill a patient more than the cost-sharing amount allowed under the NSA for certain types of services if the provider satisfies all aspects of an informed consent process set forth in the NSA’s implementing regulations. Providers that violate these surprise billing prohibitions may be subject to enforcement actions by the Centers for Medicare and Medicaid Services,Services ("CMS"), the U.S. Department of Labor, or by states, one or multiple of which may be tasked with investigating potential non-compliance as a result of patient complaints, as well as any state-specific penalties enforcement action and federal civil monetary penalties.

For claims subject to the NSA, including many emergency care services, out-of-network providers will be paid an initial amount determined by the plan; if a provider is not satisfied with the initial amount paid for the services, the provider can pursue recourse through an independent dispute resolution (“IDR”) process. The outcome of each IDR dispute is generally binding on both the provider and payor with respect to the particular claims at issue in that dispute but may not affect an insurer’s future offers of payment,payment. though providersProviders have had difficulty enforcing IDR awards against insurers.insurers, as certain federal courts have held that the NSA does not provide a private right of action to compel payment, leaving enforcement primarily to the U.S. Department of Health and Human Services. Accordingly, we cannot predict how these IDR results will compare to the rates that our affiliated physicians customarily receive for their services. In addition, in May 2026, CMS finalized the most comprehensive revisions to the IDR process since its implementation. These measures could limit the amount we can charge and recover for services we furnish where we have not contracted with the patient’s insurer, and therefore could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

Medicare and Medicaid Reform

The ACA also allows states to expand their Medicaid programs through federal payments that fund most of the cost of increasing the Medicaid eligibility income limit from a state’s historic eligibility levels to 133% of the federal poverty level. All of the states in which we operate, however, already cover children in the first year of life and pregnant women if their household income is at or below 133% of the federal poverty level. In recent years, members of Congress have introduced a number of proposals intended to reform the Medicaid program by cutting or expanding coverage and available benefits, and the program is in a state of flux. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which reforms the Medicaid program by eliminating certain financial incentives for states that have expanded their Medicaid programs under the ACA, imposing work requirements on certain adult beneficiaries, and requiring states to increase patient cost-sharing amounts for certain services. The Congressional Budget Office has estimated that the One Big Beautiful Bill Act will cut federal spending on Medicaid and Children’s Health Insurance Program benefits by $1$900 trillion,billion, due in part to eliminating atmillions least 10.5 millionof people from the programs by 2034. Additionally, several states are considering and pursuing changes to their Medicaid programs, such as requiring recipients to engage in employment or education activities as a condition of eligibility for most adults, disenrolling recipients for failure to pay a premium, or adjusting premium amounts based on income. We cannot predict with any assurance the ultimate effect of these reforms on reimbursements for our services.

For a reconciliation of each of Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures for the three and six months ended MarchJune 31,30, 2026 and 2025, refer to the tables below (in thousands, except per share data).

A blended tax rate of 25% was used to calculate the tax effects of the adjustments for the three months ended MarchJune 31,30, 2026 and 2025.

Three Months Ended MarchJune 31,30, 2026 as Compared to Three Months Ended MarchJune 31,30, 2025

Our net revenue was $476.2$487.8 million for the three months ended MarchJune 31,30, 2026, as compared to $458.4$468.8 million for the same period in 2025. The increase in net revenue of $17.8$19.0 million, or 3.9%,4.0%, was primarily attributable to an increase in same-unit revenue and to a lesser extent, non-same unit activity, primarily from the impact of recent acquisitions, net of dispositions.dispositions, and from same-unit revenue. Same-units are those units at which we provided services for the entire current period and the entire comparable period. Same-unit net revenue increased by $12.1$8.5 million, or 2.8%.1.9%. The increase in same-unit net revenue was comprised of an increase of $19.1$18.1 million, or 4.4%,4.0%, from net reimbursement-related factorsfactors, partially offset by $7.0a decrease of $9.6 million, or 1.6%,2.1%, related to patient service volumes. The net increase in revenue related to net reimbursement-related factors was primarily due to an increase in revenue resulting from improved collection activity, ana increasefavorable shift in administrativepayor feesmix from our hospital partners,and increased patient acuity, primarily in neonatology, and a slightly favorable shift in payor mix.neonatology. The decrease in revenue from patient service volumes was primarily related to our maternal-fetal medicine and neonatology services.

Practice salaries and benefits increased $8.7$12.6 million, or 2.6%,3.9%, to $345.7$336.1 million for the three months ended MarchJune 31,30, 2026, as compared to $337.0$323.5 million for the same period in 2025. The increase of $8.7$12.6 million was primarily attributable to an increaseincreases in clinical compensationsalaries and malpractice expense at our existing units.

Practice supplies and other operating expenses decreased $1.2$1.4 million, or 6.4%,6.9%, to $17.5$19.2 million for the three months ended MarchJune 31,30, 2026, as compared to $18.7$20.6 million for the same period in 2025. The decrease was primarily attributable to non-same unit activity, primarily resulting fromlower practice dispositions.supply, professional fees and other expenses at our existing units.

General and administrative expenses primarily include all billing and collection functions and all other salaries, benefits, supplies and operating expenses not specifically related to the day-to-day operations of our affiliated physician practices and services. General and administrative expenses were $60.3$61.3 million for the three months ended MarchJune 31,30, 2026, as compared to $58.6$55.7 million for the same period in 2025. The net increase of $1.7$5.6 million was primarily related to increases in incentive compensation expenseexpense, basedprimarily onfrom financialexecutive results,transition partiallyrelated offset by lower professional services and other expenses.costs. General and administrative expenses as a percentage of net revenue waswere 12.7%12.6% for the three months ended MarchJune 31,30, 2026, as compared to 12.8%11.9% for the same period in 2025.

Depreciation and amortization expense was $6.1$5.8 million for the three months ended MarchJune 31,30, 2026, as compared to $5.3 million for the same period in 2025. The net increase of $0.8$0.5 million was primarily related to capital expenditures at our existing units and from amortization of intangible assets and capital expenditures from recent acquisitions.

Transformational and restructuring related expenses were $4.9$8.5 million for the three months ended MarchJune 31,30, 2026 as compared to $6.6$3.8 million for the same period in 2025. The expenses during 2026 primarily related to revenue cycle management transition activities. The expenses in 2025 were primarily related to position eliminations and revenue cycle management transition activities.

Income from operations increaseddecreased $9.6$3.0 million, or 29.8%,4.9%, to $41.7$56.9 million for the three months ended MarchJune 31,30, 2026, as compared to $32.1$59.9 million for the same period in 2025. Our operating margin was 8.7%11.7% for the three months ended MarchJune 31,30, 2026, as compared to 7.0%12.8% for the same period in 2025. The increasedecrease in our operating margin was primarily due to acquisitionsunfavorable andimpacts favorablein our same-unit results, primarily relatedfrom tohigher revenueoperating growth.expenses, partially offset by favorable impacts from recent acquisitions. Excluding transformational and restructuring related expenses, our income from operations was $46.6$65.4 million and $38.7$63.7 million, and our operating margin was 9.8%13.4% and 8.4%13.6% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. We believe excluding the impacts from transformational and restructuring related activity provides a more comparable view of our operating income and operating margin.

Total non-operating expenses were $2.8$2.9 million for the three months ended MarchJune 31,30, 2026, as compared to $4.0$4.9 million for the same period in 2025. The net decrease in non-operating expenses was primarily related to a decrease in interest expense from modestly lower interest rates and borrowings.borrowings and an increase in interest income due to higher cash balances.

Our effective income tax rate (“tax rate”) was 23.9% for the three months ended March 31, 2026, as compared to 26.2% for the three months ended MarchJune 31,30, 2026, as compared to 28.6% for the three months ended June 30, 2025. The tax rate for the three months ended MarchJune 31,30, 2026 and 2025 includes a net discrete tax benefit of $1.1$0.6 million and $0.2tax expense of $0.7 million, respectively. After excluding discrete tax impacts during the three months ended MarchJune 31,30, 2026 and 2025, our tax rate was 26.8%27.3% forand each27.2%, period.respectively. We believe excluding discrete tax impacts provides a more comparable view of our tax rate.

Net income was $29.6$39.8 million for the three months ended MarchJune 31,30, 2026, as compared to $20.7$39.3 million for the same period in 2025. Adjusted EBITDA was $58.2$76.4 million for the three months ended MarchJune 31,30, 2026, as compared to $49.2$73.2 million for the same period in 2025. The increase in our Adjusted EBITDA was primarily due to net favorable impacts from ourrecent acquisitions, partially offset by a decrease in same-unit results anddue recentto acquisitions.higher expenses as compared to revenue growth.

Diluted net income per common and common equivalent share was $0.36$0.49 on weighted average shares outstanding of 83.181.4 million for the three months ended MarchJune 31,30, 2026, as compared to $0.24$0.46 on weighted average shares outstanding of 85.485.5 million for the same period in 2025. The decrease in our weighted average shares outstanding is primarily due to the impact of shares repurchased under our repurchase program, partially offset by issuances of restricted stock. Adjusted EPS was $0.44$0.63 for the three months ended MarchJune 31,30, 2026, as compared to $0.33$0.53 for the same period in 2025.

As of MarchJune 31,30, 2026, we had $205.8$288.9 million of cash and cash equivalents as compared to $375.2 million at December 31, 2025. Additionally, we had working capital of $144.4$158.6 million at MarchJune 31,30, 2026, a decrease of $160.2$146.0 million from working capital of $304.6 million at December 31, 2025. The net decrease in working capital is primarily due to an increase in the current portion of debt andfrom financethe leasereclassification liabilities fromof the Term A Loan (as defined below), which matures in February 2027.

Cash (used in) provided by operating, investing and financing activities from continuing operations is summarized as follows (in thousands):

During the threesix months ended MarchJune 31,30, 2026, our net cash used in operating activities from continuing operations was $129.5$3.2 million, compared to $116.1cash provided of $22.0 million for the same period in 2025. The net increase in cash used of $13.4$25.2 million was primarily due to an increase in cash used to fund working capital, primarily incentive compensation payments.

During the threesix months ended MarchJune 31,30, 2026, cash inflow from accounts receivable was $4.9$2.1 million, as compared to $17.5$21.2 million for the same period in 2025. The decrease in cash flow from accounts receivable for the threesix months ended MarchJune 31,30, 2026 as compared to the prior year period was primarily due to growth in revenue at existing units and the impact of acquisitions, partially offset by a decrease in days sales outstanding (“DSO”).

DSO is one of the key factors that we use to evaluate the condition of our accounts receivable and the related allowances for contractual adjustments and uncollectibles. DSO reflects the timeliness of cash collections on billed revenue and the level of reserves on outstanding accounts receivable. Our DSO was 42.5 days at MarchJune 31,30, 2026 as compared to 42.8 days at December 31, 2025 and 47.646.4 days at MarchJune 31,30, 2025. The decrease in our DSO for both periods was primarily related to improved cash collections at our existing units.

During the threesix months ended MarchJune 31,30, 2026, our net cash used in investing activities of $12.0$6.0 million consisted of capital expenditures of $7.6 million and acquisition payments of $7.0 million and capital expenditures of $6.2 million, partially offset by net proceeds from maturities of investments of $0.7$8.1 million.

During the threesix months ended MarchJune 31,30, 2026, our net cash used in financing activities of $27.6$75.9 million consisted primarily of stock repurchases of $21.5$64.2 million and payments on our Term A Loan of $6.3$12.5 million.

At MarchJune 31,30, 2026, we had an outstanding principal balance on the Amended Credit Agreement of $190.6$184.4 million, composed of the Term A Loan. There was no balance outstanding under the Revolving Credit Line. We had $450.0 million available on the Revolving Credit Line at MarchJune 31,30, 2026.

At MarchJune 31,30, 2026, we had an outstanding principal balance of $400.0 million on the 2030 Notes. Our obligations under the 2030 Notes are guaranteed on an unsecured senior basis by the same subsidiaries and affiliated professional contractors that guarantee our Amended Credit Agreement. Interest on the 2030 Notes accrues at the rate of 5.375% per annum, or $21.5 million, and is payable semi-annually in arrears on February 15 and August 15, beginning on August 15, 2022.

At MarchJune 31,30, 2026, we believe we were in compliance, in all material respects, with the financial covenants and other restrictions applicable to us under the Amended Credit Agreement and the 2030 Notes. We believe we will be in compliance with these covenants throughout 2026.

We maintain professional liability insurance policies with third-party insurers, subject to self-insured retention, exclusions and other restrictions. We self-insure our liabilities to pay self-insured retention amounts under our professional liability insurance coverage through a wholly owned captive insurance subsidiary. We record liabilities for self-insured amounts and claims incurred but not reported based on an actuarial valuation using historical loss information, claim emergence patterns and various actuarial assumptions. Our total liability related to professional liability risks at MarchJune 31,30, 2026 was $270.9$271.1 million, of which $34.0$35.9 million is classified as a current liability within accounts payable and accrued expenses in the Consolidated Balance Sheet. In addition, there is a corresponding insurance receivable of $19.2$18.9 million recorded as a component of other assets for certain professional liability claims that are covered by insurance policies.

Certain information included or incorporated by reference in this Quarterly Report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, future impacts of legal, regulatory, political and macroeconomic developments and all statements, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements in this Quarterly Report are made as of the date hereof, and we undertake no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements include the following: the impact of the Company’s practice portfolio management plans and whether the Company is able to achieve the expected favorable impact to Adjusted EBITDA therefrom, the effects of economic conditions on our businessbusiness, including a slowdown of economic growth, economic downturns, inflationary pressures, elevated unemployment levels and sluggish or uneven economic recovery; the effects of the Medicare Access and CHIP Reauthorization Act of 2015, the ACA, the One Big Beautiful Bill Act and potential additional healthcare reform; our relationships with government-sponsored or funded healthcare programs and with managed care organizations and commercial health insurance payors and any shifts in the Company’s payor mix; the impact of state budgetary constraints and uncertainty over the future of Medicaid; the impact of surprise billing legislation; our transition to a hybrid revenue cycle management model; the timing and contribution of future acquisitions or organic growth initiatives; our ability to comply with the terms of our debt financing arrangements and our ability to replace, refinance or extend our current debt financing arrangements; the effects of our transformation initiatives, including our renewed focus, and growth strategy for, our hospital basedhospital-based and maternal fetalmaternal-fetal businesses; and other risks and uncertainties set forth under Part I, Item 1A. Risk Factors, of the 2025 Form 10-K as well as other risks and uncertainties set forth from time to time in the reports we file with the SEC.