PDX: Pediatrix lowers guidance on slow NICU business

Pediatrix Medical Group (PDX) lowered its earnings and revenue guidance for the three months ending June 30 and for all of 2008 in anticipation of continued slow downs in neonatal intensive care unit patient volume. The company also announced that it will buy back $100 million worth of its stock, which doesn’t seem too smart.

Meanwhile, Natus Medical (BABY) is among the market leaders. Given the news from PDX, one has to wonder about what that means for BABY. Natus makes neurodiagnostic and newborn care products. So we have a stock pickers’ dilemma.

This announcement follows the company’s warning during its recent conference call that it was seeing lower volume. I blogged on that call here.

In a news release, Pediatrix said, “Through the first six weeks of the 2008 second quarter Pediatrix’s same-unit NICU volume declined by approximately 2 percent when compared to the same period of 2007.”

As a result, PDX said, it “now expects to earn 77 cents to 80 cents for the 2008 second quarter if NICU patient volume remains at current levels for the rest of the period. In addition, at this time Pediatrix does not expect to meet its previously issued earnings guidance for the 12 months ended December 31, 2008, as a result of lower NICU patient volume during 2008 to date.”

PDX describes itself as “. . .the nation’s leading provider of neonatal, maternal-fetal and pediatric physician subspecialty services and recently expanded to include anesthesiology services.”

Daily charts for PDX and BABY are here. Click on a chart for weekly and hourly charts. PDX is down $5.73 to $49.70 and has a bearish point and figure chart price objective of $37. BABY is trading at $21.11 and has a bullish price objective of $30.50.

Full disclosure: I have no interest in PDX or BABY.

For educational purposes only. Investigate before you speculate.

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