Financial Review: MEDNAX (MD) & Kindred Healthcare (KND)

MEDNAX (NYSE: MD) and Kindred Healthcare (NYSE:KND) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Profitability

This table compares MEDNAX and Kindred Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MEDNAX 9.26% 10.10% 5.23%
Kindred Healthcare -8.06% 2.29% 0.30%

Dividends

Kindred Healthcare pays an annual dividend of $0.12 per share and has a dividend yield of 1.3%. MEDNAX does not pay a dividend. Kindred Healthcare pays out -2.0% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MEDNAX and Kindred Healthcare, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MEDNAX 1 8 3 0 2.17
Kindred Healthcare 1 4 1 0 2.00

MEDNAX presently has a consensus target price of $54.45, suggesting a potential downside of 5.49%. Kindred Healthcare has a consensus target price of $8.83, suggesting a potential downside of 2.93%. Given Kindred Healthcare’s higher probable upside, analysts clearly believe Kindred Healthcare is more favorable than MEDNAX.

Insider and Institutional Ownership

95.1% of MEDNAX shares are owned by institutional investors. Comparatively, 83.9% of Kindred Healthcare shares are owned by institutional investors. 2.4% of MEDNAX shares are owned by company insiders. Comparatively, 3.0% of Kindred Healthcare shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

MEDNAX has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, Kindred Healthcare has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.

Earnings and Valuation

This table compares MEDNAX and Kindred Healthcare’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MEDNAX $3.46 billion 1.56 $320.37 million $3.45 16.70
Kindred Healthcare $7.22 billion 0.12 -$664.23 million ($6.02) -1.51

MEDNAX has higher earnings, but lower revenue than Kindred Healthcare. Kindred Healthcare is trading at a lower price-to-earnings ratio than MEDNAX, indicating that it is currently the more affordable of the two stocks.

Summary

MEDNAX beats Kindred Healthcare on 10 of the 16 factors compared between the two stocks.

About MEDNAX

MEDNAX, Inc. is a provider of physician services, including newborn, anesthesia, maternal-fetal, teleradiology, pediatric cardiology and other pediatric subspecialty care. As of December 31, 2016, the Company’s national network consisted of over 3,600 affiliated physicians, including over 1,130 physicians providing neonatal clinical care, in 35 states and Puerto Rico, primarily within hospital-based neonatal intensive care units (NICUs), to babies born prematurely or with medical complications. As of December 31, 2016, the Company had over 1,390 affiliated physicians providing anesthesia care to patients in connection with surgical and other procedures, as well as pain management. As of December 31, 2016, the Company had 270 affiliated physicians providing maternal-fetal and obstetrical medical care to expectant mothers experiencing complicated pregnancies primarily in areas where its affiliated neonatal physicians practice.

About Kindred Healthcare

Kindred Healthcare, Inc., incorporated on March 27, 1998, is a healthcare services company. The Company, through its subsidiaries, operates transitional care (TC) hospitals, a home health, hospice and community care business, inpatient rehabilitation hospitals (IRFs), a contract rehabilitation services business, nursing centers and assisted living facilities across the United States. The Company operates through divisions: the Kindred at Home division, the hospital division, the Kindred Rehabilitation Services division and the nursing center division. These divisions represent six segments: home health services, hospice services, hospitals, Kindred Hospital Rehabilitation Services, RehabCare and nursing centers. The home health services and hospice services operating segments are contained within the Kindred at Home division while the Kindred Hospital Rehabilitation Services and RehabCare operating segments are both contained within the Kindred Rehabilitation Services division.

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