MEDNAX, INC. – 10-K – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

OVERVIEW

Mednax is a leading provider of physician services including newborn,
maternal-fetal, pediatric cardiology and other pediatric subspecialty care. Our
national network is comprised of affiliated physicians who provide clinical care
in 38 states and Puerto Rico. At December 31, 2021, our national network
comprised over 2,400 affiliated physicians, including 1,330 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 490 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
245 physicians providing pediatric intensive care, 90 physicians providing
pediatric cardiology care, 200 physicians providing hospital-based pediatric
care, 50 physicians providing pediatric surgical care and urology services, 10
physicians providing pediatric ear, nose and throat services, 10 physicians
providing pediatric urgent care, and four physicians providing pediatric
ophthalmology services.

Coronavirus Pandemic (COVID-19)

COVID-19 has had an impact on the demand for medical services provided by our
affiliated clinicians. Beginning in mid-March 2020, our affiliated office-based
practices, which specialize in maternal-fetal medicine, pediatric cardiology,
and numerous pediatric subspecialties, experienced a significant elevation of
appointment cancellations compared to historical normal levels. We believe
COVID-19, either directly or indirectly, also had an impact on our NICU patient
volumes, and there is no assurance that impacts from COVID-19 will not further
adversely affect our NICU patient volumes or otherwise adversely affect our NICU
and related neonatology business. Further, in late 2020, we saw a shift in the
mix of patients reimbursed under government-sponsored healthcare programs, but
that shift materially reversed during the twelve months ended December 31, 2021.
Overall, our operating results were significantly impacted by COVID-19 beginning
in mid-March 2020, but volumes began to normalize in mid-2020 and substantially
recovered throughout 2020 and 2021 with no material impacts from any COVID-19
variants in 2021.

Due to the continued uncertainties surrounding the timeline of and impacts from
COVID-19 and with multiple variant strains still circulating, we are unable to
predict the ultimate impact on our business, financial condition, results of
operations, cash flows and the trading price of our securities at this time.

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act
("CARES Act") was signed into law. The CARES Act is a relief package intended to
assist many aspects of the American economy, including providing up to $100
billion in aid to the healthcare industry to reimburse healthcare providers for
lost revenue and expenses attributable to COVID-19. The remaining $70 billion in
aid is intended to focus on providers in areas particularly impacted by
COVID-19, rural providers, providers of services with lower shares of Medicare
reimbursement or who predominantly serve the Medicaid population, and providers
requesting reimbursement for the treatment of uninsured Americans. It is unknown
what, if any, portion of the remaining healthcare industry funding on the CARES
Act our affiliated physician practices will qualify for and receive. The
Department of Health and Human Services ("HHS") is administering this program,
and our affiliated physician practices within continuing operations received an
aggregate of $26.1 million and $22.0 million in relief payments during the year
ended December 31, 2021 and 2020, respectively. We have applications pending for
certain affiliated physician practices for incremental relief beyond what has
been received.

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In addition, the CARES Act also provides for deferred payment of the employer
portion of social security taxes through the end of 2020, and we utilized this
deferral option throughout 2020. We repaid almost all of these deferred social
security taxes during 2021 with an immaterial amount due on December 31, 2022.

Under current tax law, net operating losses can be carried forward indefinitely.
The CARES Act enacted rules allowing net operating losses arising in 2020 to be
carried back five taxable years. We generated a net operating loss for the 2020
tax year which has been carried back to the 2015 tax year under these provisions
to obtain a refund of income tax at the prior 35% corporate tax rate.

2021 Acquisition Activity

During 2021, we acquired nine physician practices, including one pediatric
orthopedic practice, one multi-location pediatric urgent care practice, one
pediatric cardiology practice, two pediatric neurology practices, one
maternal-fetal medicine practice, one obstetrics and gynecology practice, one
pediatric intensivist practice and one neonatology practice. Based on our
experience, we expect that we can improve the results of acquired physician
practices through improved managed care contracting, improved collections,
identification of growth initiatives and operating and cost savings based upon
the significant infrastructure that we have developed.

Transformation and Restructuring Initiatives

Beginning in 2019, we developed a number of 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 had broadly
classified these workstreams in four categories including practice operations,
revenue cycle management, information technology and human resources. We have
included the expenses, which in certain cases represent estimates, related to
such activity on a separate line item in our consolidated statements. A
significant amount of transformational and restructuring activities were related
to our divested anesthesiology services and radiology services medical groups,
and various expenses related to executive management and board restructuring
were incurred in 2020. In April 2020, we reduced the scope of our
transformational and restructuring related initiatives unless they were
initiatives that provided essential support for our response to COVID-19 or were
critical to our continuing operations. During 2021, our transformation and
restructuring expenses were primarily for contract termination and external
consulting costs.

Common Stock Repurchase Programs

In July 2013, our Board of Directors authorized the repurchase of shares of our
common stock up to an amount sufficient to offset the dilutive impact from the
issuance of shares under our equity compensation programs. The share repurchase
program allows us to make open market purchases from time-to-time based on
general economic and market conditions and trading restrictions. The repurchase
program also allows for the repurchase of shares of our common stock to offset
the dilutive impact from the issuance of shares, if any, related to the
Company's acquisition program. No shares were purchased under this program
during the twelve months ended December 31, 2021.

In August 2018, we announced that our Board of Directors had authorized the
repurchase of up to $500.0 million of our common stock in addition to our
existing share repurchase program, of which $98.7 million remained available for
repurchase as of January 1, 2021. Under this share repurchase program, during
the twelve months ended December 31, 2021, we withheld approximately 0.2 million
shares of our common stock to satisfy minimum statutory withholding obligations
of $4.7 million in connection with the vesting of restricted stock. As of
December 31, 2021, $94.0 million remained available under this share repurchase
program.

We intend to utilize various methods to effect any future share repurchases,
including, among others, open market purchases and accelerated share repurchase
programs. The amount and timing of repurchases will depend upon several factors,
including general economic and market conditions and trading restrictions.

General Economic Conditions and Other Factors

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Our operations and performance depend significantly on economic conditions.
Economic conditions in the United States ("U.S.") deteriorated as a result of
COVID-19, which impacted patient volumes, although patient volumes have
recovered to pre-COVID-19 levels as of December 31, 2021. During the year ended
December 31, 2021, the percentage of our patient service revenue being
reimbursed under government-sponsored healthcare programs ("GHC Programs")
decreased as compared to the year ended December 31, 2020. 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.

Healthcare Reform

The Patient Protection and Affordable Care Act (the "ACA") contains a number of
provisions that have affected us and, absent amendment or repeal, may continue
to affect us over the next several years. These provisions include 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 have expanded the scope and reach of the
Federal Civil False Claims Act and other healthcare fraud and abuse laws.
Moreover, we could be affected by potential changes to various aspects of the
ACA, including changes to subsidies, healthcare insurance marketplaces and
Medicaid expansion.

Despite the ACA going into effect over a decade ago, continuous legal and
Congressional challenges to the law's provisions and persisting uncertainty with
respect to the scope and effect of certain provisions have made compliance
costly. In 2017, Congress unsuccessfully sought to replace substantial parts of
the ACA with different mechanisms for facilitating insurance coverage in the
commercial and Medicaid markets. Congress may again attempt to enact substantial
or target changes to the ACA in the future. Additionally, Centers for Medicare &
Medicaid Services ("CMS") has administratively revised a number of provisions
and may seek to advance additional significant changes through regulation,
guidance and enforcement in the future.

At the end of 2017, Congress repealed the part of the ACA that required most
individuals to purchase and maintain health insurance or face a tax penalty,
known as the individual mandate. In light of these changes, in December 2018, a
federal district court in Texas declared that key portions of the ACA were
inconsistent with the U.S. Constitution and that the entire ACA is invalid as a
result. Several states appealed this decision, and in December 2019, a federal
court of appeals upheld the district court's conclusion that part of the ACA is
unconstitutional but remanded for further evaluation whether in light of this
defect the entire ACA must be invalidated. Democratic attorneys general and the
House appealed the Fifth Circuit's decision to the Supreme Court. On March 2,
2020, the Supreme Court agreed to hear the case, styled California v. Texas,
during the 2020-21 term. Oral arguments took place on November 2, 2020 and on
June 17, 2021, the Court held that the plaintiffs lacked standing to challenge
the ACA. Notwithstanding the Supreme Court's ruling, we cannot say for certain
whether there will be future challenges to the ACA or what impact, if any, such
challenges may have on our business. Changes resulting from these proceedings
could have a material impact on our business.

In late 2020 and early 2021, the results of the federal and state elections
changed which persons and parties occupy the Office of the President of the
United States and the U.S. Senate and many states' governors and legislatures.
The current Administration may propose sweeping changes to the U.S. healthcare
system, including expanding government-funded health insurance options,
additional Medicaid expansion or replacing current healthcare financing
mechanisms with systems that would be entirely administered by the federal
government. Any legislative or administrative change to the current healthcare
financing system could have a material adverse effect on our financial
condition, results of operations, cash flows and the trading price of our
securities.

In addition to the potential impacts to the ACA, there could be changes to other
GHC Programs, such as a change to the structure of Medicaid or Medicaid payment
rates set forth under state law. Historically, Congress and the Administration
have sought to convert Medicaid into a block grant or to institute per capita
spending caps, among

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other things. These changes, if implemented, could eliminate the guarantee that
everyone who is eligible and applies for benefits would receive them and could
potentially give states new authority to restrict eligibility, cut benefits and
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. Many states have recently
shifted a majority or all of their Medicaid program beneficiaries into Managed
Medicaid Plans. Managed Medicaid Plans have some flexibility to set rates for
providers, but many states require minimum provider rates in their contracts
with such plans. In July of each year, CMS releases the annual Medicaid Managed
Care Rate Development Guide which provides federal baseline rules for setting
reimbursement rates in managed care plans. We could be affected by lower
reimbursement rates in some of all of the Managed Medicaid Plans with which we
participate. We could also be materially impacted if we are dropped from the
provider network in one or more of the Managed Medicaid Plans with which we
currently participate.

We cannot predict with any assurance the ultimate effect of these laws and
resulting changes to payments under GHC Programs, nor can we provide any
assurance that they will not have a material adverse effect on our business,
financial condition, results of operations, cash flows and the trading price of
our securities. Further, any fiscal tightening impacting GHC Programs or changes
to the structure of any GHC Programs could have a material adverse effect on our
financial condition, results of operations, cash flows and the trading price of
our securities.

Medicaid Expansion

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. To date, 38 states and the District of Columbia have expanded
Medicaid eligibility to cover this additional low-income patient population, and
other states are considering expansion. 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, Democrats in Congress have sought to expand Medicaid or Medicaid-like
coverage in states that have not yet expanded Medicaid. They also have sought to
reduce payments to certain hospitals in some of these states. Additionally, as
noted above, Congress is currently considering altering the terms and state
remuneration for Medicaid expansion pursuant to the ACA. Should any of these
changes take effect, we cannot predict with any assurance the ultimate effect to
reimbursements for our services.

"Surprise" Billing Legislation

In late 2020, Congress enacted legislation intended to protect patients from
"surprise" medical bills when services are furnished by providers who are not
subject to contractual arrangements and payment limitations with the patient's
insurer. Effective January 1, 2022, patients will be protected from unexpected
or "surprise" medical bills that could arise from out-of-network emergency care
provided at an out-of-network facility or at in-network facilities by
out-of-network providers and out-of-network nonemergency care provided at
in-network facilities without the patient's informed consent. Many states have
passed similar legislation, but the federal government has been working to enact
a ban on surprise billing for quite some time that pertains to ERISA health
insurance plans that are not addressed under state legislation.

Under the "No Surprises Act," patients are only required to pay the in-network
cost-sharing amount, which has been determined through an established regulatory
formula and will count toward the patient's health plan deductible and
out-of-pocket cost-sharing limits. Providers will generally not be permitted to
balance bill patients beyond this cost-sharing amount. An out-of-network
provider will only be permitted to bill a patient more than the in-network
cost-sharing amount for care if the provider gives the patient notice of the
provider's network status and delivers to the patient or their health plan an
estimate of charges within certain specified timeframes, and obtains the
patient's written consent prior to the delivery of care. Providers that violate
these surprise billing prohibitions may be subject to state enforcement action
or federal civil monetary penalties. Out of network providers will undergo an
independent dispute resolution ("IDR") process to determine their payment
amounts for out of network services. These IDR results will bind both the
provider and payor for a 90-day period. We cannot predict how these IDR results
will compare to the rates that our affiliated physicians customarily receive for
their services.


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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.
Moreover, these measures could affect our ability to contract with certain
payors and under historically similar terms and may cause, and the prospect of
these changes may have caused, payors to terminate their contracts with us and
our affiliated practices, further affecting our business, financial condition,
results of operations, cash flows and the trading price of our securities.

Geographic Coverage

During 2021, 2020, and 2019, approximately 62%, 62% and 52%, respectively, of
our net revenue from continuing operations was generated by operations in our
five largest states. During 2021, 2020 and 2019, our five largest states
consisted of Texas, Florida, Georgia, California, and Washington. During 2021,
2020 and 2019, our operations in Texas accounted for approximately 30%, 29% and
28%, respectively, of our net revenue.

Payor Mix

We bill payors for professional services provided by our affiliated physicians
to our patients based upon rates for specific services provided. Our billed
charges are substantially the same for all parties in a particular geographic
area regardless of the party responsible for paying the bill for our services.
We determine our net revenue based upon the difference between our gross fees
for services and our estimated ultimate collections from payors. Net revenue
differs from gross fees due to (i) managed care payments at contracted rates,
(ii) GHC Program reimbursements at government-established rates, (iii) various
reimbursement plans and negotiated reimbursements from other third-parties, and
(iv) discounted and uncollectible accounts of private-pay patients.

Our payor mix is composed of contracted managed care, government, principally
Medicare and Medicaid, other third-parties and private-pay patients. We benefit
from the fact that most of the medical services provided in the NICU are
classified as emergency services, a category typically classified as a covered
service by managed care payors.

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

                            Years Ended December 31,
                           2021       2020       2019
Contracted managed care     68%        68%        68%
Government                  25%        27%        26%
Other third-parties         5%         4%         5%
Private-pay patients        2%         1%         1%
                           100%       100%       100%



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, 2021, 2020 and 2019 represented approximately 56% 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, 2021.

Quarterly Results

We have historically experienced and expect to continue to experience quarterly
fluctuations in net revenue and net income. These fluctuations are primarily due
to the following factors:

•

There are fewer calendar days in the first and second quarters of the year, as
compared to the third and fourth quarters of the year. Because we provide
services in NICUs on a 24-hours-a-day basis, 365 days a year, any reduction in
service days will have a corresponding reduction in net revenue.


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•

The majority of physician services provided by our office-based practices
consist of office visits and scheduled procedures that occur during business
hours. As a result, volumes at those practices fluctuate based on the number of
business days in each calendar quarter.

•

A significant number of our employees and our associated professional
contractors, primarily physicians, exceed the level of taxable wages for social
security during the first and second quarters of the year. As a result, we incur
a significantly higher payroll tax burden and our net income is lower during
those quarters.

We have significant fixed operating costs, including physician compensation,
and, as a result, are highly dependent on patient volume and capacity
utilization of our affiliated professional contractors to sustain profitability.
Additionally, quarterly results may be affected by the timing of acquisitions
and fluctuations in patient volume. As a result, the operating results for any
quarter are not necessarily indicative of results for any future period or for
the full year.

Application of Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States ("GAAP") requires estimates and
assumptions that affect the reporting of assets, liabilities, revenue and
expenses, and the disclosure of contingent assets and liabilities. Note 3 to our
Consolidated Financial Statements provides a summary of our significant
accounting policies, which are all in accordance with GAAP. Certain of our
accounting policies are critical to understanding our Consolidated Financial
Statements because their application requires management to make assumptions
about future results and depends to a large extent on management's judgment,
because past results have fluctuated and are expected to continue to do so in
the future.

We believe that the application of the accounting policies described in the
following paragraphs is highly dependent on critical estimates and assumptions
that are inherently uncertain and highly susceptible to change. For all of these
policies, we caution that future events rarely develop exactly as estimated, and
the best estimates routinely require adjustment. On an ongoing basis, we
evaluate our estimates and assumptions, including those discussed below.

Revenue Recognition

We recognize patient service revenue at the time services are provided by our
affiliated physicians. Our performance obligations relate to the delivery of
services to patients and are satisfied at the time of service. Accordingly,
there are no performance obligations that are unsatisfied or partially
unsatisfied at the end of the reporting period with respect to patient service
revenue. Almost all of our patient service revenue is reimbursed by GHC Programs
and third-party insurance payors. Payments for services rendered to our patients
are generally less than billed charges. We monitor our revenue and receivables
from these sources and record an estimated contractual allowance to properly
account for the anticipated differences between billed and reimbursed amounts.

Accordingly, patient service revenue is presented net of an estimated provision
for contractual adjustments and uncollectibles. Management estimates allowances
for contractual adjustments and uncollectibles on accounts receivable based upon
historical experience and other factors, including days sales outstanding
("DSO") for accounts receivable, evaluation of expected adjustments and
delinquency rates, past adjustments and collection experience in relation to
amounts billed, an aging of accounts receivable, current contract and
reimbursement terms, changes in payor mix and other relevant information.
Collection of patient service revenue we expect to receive is normally a
function of providing complete and correct billing information to the GHC
Programs and third-party insurance payors within the various filing deadlines
and typically occurs within 30 to 60 days of billing. Contractual adjustments
result from the difference between the physician rates for services performed
and the reimbursements by GHC Programs and third-party insurance payors for such
services. The evaluation of these historical and other factors involves complex,
subjective judgments. On a routine basis, we compare our cash collections to
recorded net patient service revenue and evaluate our historical allowance for
contractual adjustments and uncollectibles based upon the ultimate resolution of
the accounts receivable balance. These procedures are completed regularly in
order to monitor our process of establishing appropriate reserves for
contractual adjustments. We have not recorded any material adjustments to prior
period contractual adjustments and uncollectibles in the years ended December
31, 2021, 2020, or 2019.


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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 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, 2021, our DSO was 55.2
days. We had approximately $1.39 billion in gross accounts receivable for
continuing operations outstanding at December 31, 2021, 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 $6.6 million to $19.7 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
19 to our Consolidated Financial Statements in this Form 10-K.

Professional Liability Coverage

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, 2021, based on our historical experience
for continuing operations, a reasonably likely change of 2.0% to 7.0% in our
estimates would result in an increase or decrease to net income of $1.2 million
to $5.3 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.

Other Matters

Other significant accounting policies, not involving the same level of
measurement uncertainties as those discussed above, are nevertheless important
to an understanding of our Consolidated Financial Statements. For example, our
Consolidated Financial Statements are presented on a consolidated basis with our
affiliated professional contractors because we or one of our subsidiaries have
entered into management agreements with our affiliated professional contractors
meeting the "controlling financial interest" criteria set forth in accounting
guidance for consolidations. Our management agreements are further described in
Note 3 to our Consolidated Financial Statements in this Form 10-K. The policies
described in Note 3 often require difficult judgments on complex matters that
are often subject to multiple sources of authoritative guidance and are
frequently reexamined by accounting standards setters and regulators. See "New
Accounting Pronouncements" below for matters that may affect our accounting
policies in the future.


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Non-GAAP Measures

In our analysis of our results of operations, we use certain non-GAAP financial
measures. We have incurred certain expenses related to transformational and
restructuring related expenses that are expected to be project-based and
periodic in nature. Accordingly, beginning with the first quarter of 2019, we
began reporting Adjusted earnings before interest, taxes and depreciation and
amortization from continuing operations, defined as 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 beginning with the first quarter of 2019 consists of diluted
income (loss) from continuing operations per common and common equivalent share
adjusted for amortization expense, stock-based compensation expense and
transformational and restructuring related expenses. For the year ended December
31, 2021, both Adjusted EBITDA and Adjusted EPS are being further adjusted to
exclude the impacts from the gain on sale of building and loss on the early
extinguishment of debt. Adjusted EPS from continuing operations has been further
adjusted to reflect the impacts from discrete tax events.

We believe these measures, in addition to 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

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, 2021, 2020 and 2019, refer to the
tables below (in thousands, except per share data).

                                                          Years Ended 

December 31,

                                                      2021          2020    

2019

Income (loss) from continuing operations
attributable to Mednax, Inc.                        $ 108,014     $  (9,580 )   $  42,208
Interest expense                                       68,722       110,482       118,928
Gain on sale of building                               (7,280 )           -             -
Loss on early extinguishment of debt                   14,532             -             -
Income tax provision                                   27,241        16,728 

16,576

Depreciation and amortization expense                  32,147        28,441 

25,931

Transformational and restructuring related
expenses                                               22,100        73,801 

60,890

Adjusted EBITDA from continuing operations
attributable to Mednax, Inc.                        $ 265,476     $ 219,872     $ 264,533




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                                                       Years Ended December 31,
                                       2021                      2020                      2019
Weighted average diluted
shares outstanding               85,828                    83,395                     84,011
Income (loss) from
continuing operations and
diluted (loss) income from
continuing operations per
share attributable to
Mednax, Inc.                  $ 108,014     $   1.26     $ (9,580 )   $  (0.11 )   $  42,208     $  0.50
Adjustments (1):
Amortization (net of tax of
$2,643, $2,294, and $1,814)       7,928         0.09        6,882         0.08         5,442        0.06
Stock-based compensation
(net of tax of $4,742,
$5,281 and $8,353)               14,226         0.16       15,843         0.19        25,057        0.30
Transformational and
restructuring related
expenses (net of tax of
$5,525, $18,450 and
$15,222)                         16,575         0.19       55,351         0.66        45,668        0.55
Gain on sale of building
(net of tax of $1,820)           (5,460 )      (0.06 )          -            -             -           -
Loss on early
extinguishment of debt (net
of tax of $3,633)                10,899         0.13            -            -             -           -
Net impact from discrete
tax events                      (12,156 )      (0.14 )     10,541         0.13          (455 )     (0.01 )
Adjusted income and diluted
EPS from continuing
operations attributable to
Mednax, Inc.                  $ 140,026     $   1.63     $ 79,037     $   0.95     $ 117,920     $  1.40



(1)

A blended tax rate of 25% was used to calculate the tax effects of the
adjustments for the years ended December 31, 2021, 2020 and 2019, respectively.

RESULTS OF OPERATIONS

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

                                                            Years Ended December 31,
                                                          2021        2020         2019
Net revenue                                                100.0 %     100.0 %      100.0 %
Operating expenses:
Practice salaries and benefits                              67.9        68.9         66.3
Practice supplies and other operating expenses               5.2         5.2          5.4
General and administrative expenses                         13.8        14.4         13.7
Gain on sale of building                                    (0.4 )         -            -
Depreciation and amortization                                1.7         1.6          1.5
Transformational and restructuring related expenses          1.2         4.2          3.4
Total operating expenses                                    89.4        94.3         90.3
Income from operations                                      10.6         5.7          9.7
Non-operating expense, net                                  (3.5 )      (5.3 )       (6.4 )
Income from continuing operations before income taxes        7.1         0.4          3.3
Income tax provision                                        (1.4 )      (1.0 )       (0.9 )
Income (loss) from continuing operations                     5.7 %      

(0.6 )% 2.4 %

Year Ended December 31, 2021 as Compared to Year Ended December 31, 2020

Our net revenue attributable to continuing operations was $1.91 billion for the
year ended December 31, 2021, as compared to $1.73 billion for 2020. The
increase in revenue of $177.2 million, or 10.2%, was primarily attributable to
the recovery in patient volumes and reimbursement related factors related to
COVID-19 and the favorable impacts on 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 $163.3 million, or 9.8%.
The increase in

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same-unit net revenue was comprised of an increase of $85.8 million, or 5.2%,
related to patient service volumes and a net increase of $77.5 million, or 4.6%,
from net reimbursement-related factors. The increase in revenue from patient
service volumes was related to increases across all of our hospital-based and
office-based women's and children's services. Prior year volumes were
significantly unfavorably impacted by COVID-19. The net increase in revenue
related to net reimbursement-related factors was primarily due to an increase in
revenue resulting from a decrease in the percentage of our patients being
enrolled in GHC Programs, increases in administrative fees received from our
hospital partners and modest improvements in managed care contracting.

Practice salaries and benefits attributable to continuing operations increased
$103.5 million, or 8.7%, to $1.30 billion for the year ended December 31, 2021,
as compared to $1.19 billion for 2020. Of the $103.5 million increase, $55.9
million was related to salaries which primarily reflected increases in clinician
compensation expense driven by the comparison to reduced salaries expense during
2020 resulting from COVID-19 mitigation efforts. The remaining $47.6 million was
related to benefits and incentive compensation, with the increase to incentive
compensation driven by improved results as compared to 2020.

Practice supplies and other operating expenses attributable to continuing
operations increased $9.8 million, or 10.8%, to $100.5 million for the year
ended December 31, 2021, as compared to $90.7 million for 2020. The increase was
primarily attributable to practice supply, rent and other costs related to our
existing units for which the activity across many expense categories such as
travel, office and professional services expenses in 2020 had decreased as a
result of COVID-19, as well as increases in the current year for information
technology expenses from efforts directly supporting the physician practices.

General and administrative expenses attributable to continuing operations
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 were $263.4 million for the year ended December 31,
2021, as compared to $248.9 million for 2020. The net increase of $14.5 million
is primarily related to increases in various information technology related
expenses including systems fees, professional licenses, data center
enhancements, and security as well as a net increase in compensation expense
when comparing to the prior year that included decreases in compensation expense
from COVID-19 mitigation efforts such as temporary salary reductions, furloughs
and net staffing reductions. General and administrative expenses as a percentage
of net revenue was 13.8% for the year ended December 31, 2021, as compared to
14.4% for the same period in 2020.

Gain on sale of building was $7.3 million for the year ended December 31, 2021
and resulted from the sale of our secondary corporate office building during the
second quarter.

Transformational and restructuring related expenses attributable to continuing
operations were $22.1 million for the year ended December 31, 2021, as compared
to $73.8 million for 2020. The decrease of $51.7 million reflects the reduction
in the scope of transformational and restructuring related activities, which
limited such expenses them to initiatives critical to our business operations or
those that provided essential support for our response to COVID-19with the
expenses during the year ended December 31, 2021 primarily for contract
termination and external consulting costs.

Depreciation and amortization expense attributable to continuing operations was
$32.1 million for the year ended December 31, 2021, as compared to $28.4 million
for 2020. The increase is primarily related to depreciation of information
technology related equipment and amortization of intangible assets related to
acquisitions.

Income from operations attributable to continuing operations increased $104.8
million, or 106.8%, to $202.9 million for the year ended December 31, 2021, as
compared to $98.1 million for 2020. Our operating margin was 10.6% for the year
ended December 31, 2021, as compared to 5.7% for the same period in 2020. The
increase in our operating margin was primarily due to higher revenue growth,
partially offset by net increases in overall operating expenses as compared to
2020, some of which was driven by COVID-19 cost mitigation initiatives that took
place in 2020 as well as increases in incentive compensation expense in 2021
from improved results. Excluding the transformational and restructuring related
expenses and gain on sale of building, our income from operations attributable
to continuing operations was $225.0 million and $171.9 million, and our
operating margin was 11.4% and 9.9% for the year ended December 31, 2021 and
2020, respectively. We believe excluding the impacts from the

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transformational and restructuring related activity and gain on sale of building
provides a more comparable view of our operating income and operating margin
from continuing operations.

Total non-operating expenses attributable to continuing operations were $67.7
million for the year ended December 31, 2021, as compared to $91.0 million for
2020. The decrease in non-operating expenses was primarily related to a decrease
in interest expense resulting from the redemption of our 2023 Notes in January
2021, partially offset by the loss on the early redemption of our 2023 Notes.

Our effective income tax rate attributable to continuing operations was 20.1%
for the year ended December 31, 2021. Our effective income tax rate attributable
to continuing operations of 234.0% is not meaningful as calculated for the year
ended December 31, 2020 due to the decline in pre-tax income, primarily due to
the impacts from our transformational and restructuring related expenses and
COVID-19. The tax rate for the year ended December 31, 2021 includes a net
discrete tax benefit of $12.2 million, primarily related to a change in estimate
for the 2020 net operating loss carryback as allowed under the CARES Act for
refund at the 35% federal tax rate. After excluding discrete tax impacts, for
the year ended December 31, 2021, our tax rate was 29.1%. We believe excluding
discrete tax impacts on our tax rate provides a more comparable view of our
effective income tax rate.

Income from continuing operations was $108.0 million for the year ended December
31, 2021, as compared to loss from continuing operations of $9.6 million for
2020. Adjusted EBITDA from continuing operations was $265.5 million for the year
ended December 31, 2021, as compared to $219.9 million for 2020.

Diluted income from continuing operations per common and common equivalent share
was $1.26 on weighted average shares outstanding of 85.8 million for the year
ended December 31, 2021, as compared to diluted loss per common and common
equivalent share of $0.11 on weighted average shares outstanding of 83.4 million
for 2020. Adjusted EPS from continuing operations was $1.63 for the year ended
December 31, 2021, as compared to $0.95 for 2020.

Income from discontinued operations, net of tax, was $23.0 million for the year
ended December 31, 2021, as compared to loss from discontinued operations of
$786.9 million for 2020. Diluted income from discontinued operations per common
and common equivalent share was $0.27 for the year ended December 31, 2021, as
compared to a diluted loss from discontinued operations per common and common
equivalent share of $9.44 for 2020.

Net income was $131.0 million for the year ended December 31, 2021, as compared
to a net loss of $796.5 million for 2020. Diluted net income per common and
common equivalent share was $1.53 for the year ended December 31, 2021, as
compared to net loss per common and common equivalent share of $9.55 for 2020.

Year Ended December 31, 2020 as Compared to Year Ended December 31, 2019

Our net revenue attributable to continuing operations was $1.73 billion for the
year ended December 31, 2020, as compared to $1.78 billion for 2019. The
decrease in revenue of $45.8 million, or 2.6%, was primarily attributable to the
unfavorable impacts from COVID-19 on same-unit revenue, driven by declines in
volume, partially offset by an increase in revenue from net acquisitions. Same
units are those units at which we provided services for the entire current
period and the entire comparable period. Same-unit net revenue declined by $66.6
million, or 3.8%. The decline in same-unit net revenue was comprised of a
decrease of $89.0 million, or 5.1%, related to patient service volumes,
partially offset by a net increase of $22.4 million, or 1.3%, from net
reimbursement-related factors. The decrease in revenue from patient service
volumes was primarily related to a decline across all our services, primarily as
a result of COVID-19. The net increase in revenue related to net
reimbursement-related factors was primarily due to approximately $22.0 million
in CARES Act relief, an increase in administrative fees received from our
hospital partners and modest improvements in managed care contracting.

Practice salaries and benefits attributable to continuing operations increased
$13.2 million, or 1.1%, to $1.19 billion for the year ended December 31, 2020,
as compared to $1.18 billion for 2019. The increase was comprised of $13.2
million from salaries and a net nominal change in benefits and incentive
compensation, primarily reflecting increases in malpractice expense almost
entirely offset by decreases in incentive compensation expense. We anticipate
that we will experience a higher rate of growth in clinician compensation
expense at our existing units over historic

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averages, which could adversely affect our business, financial condition,
results of operations, cash flows and the trading price of our securities.

Practice supplies and other operating expenses attributable to continuing
operations decreased $5.2 million, or 5.4%, to $90.7 million for the year ended
December 31, 2020, as compared to $95.9 million for 2019. The decrease was
primarily attributable to decreases in other practice operating expenses as
compared to the prior year, primarily related to decreased activity across many
expense categories such as travel, office expenses and professional services
resulting from impacts of COVID-19, partially offset by increases in supplies
and other operating expenses related to acquisitions.

General and administrative expenses attributable to continuing operations
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 were $248.9 million for the year ended December 31,
2020, as compared to $244.5 million for 2019. The increase of $4.4 million is
primarily related to legal and professional services fees, partially offset by
decreases in compensation from net staffing reductions primarily resulting from
cost mitigation for COVID-19. General and administrative expenses as a
percentage of net revenue was 14.4% for the year ended December 31, 2020, as
compared to 13.7% for 2019. Certain general and administrative expenses related
to corporate overhead represent various support services provided across the
company, including approximately $18 million in costs related to support for the
anesthesiology services medical group divested in May 2020 through a transition
services agreement and to a much lesser extent the recently divested radiology
services medical group. Because a portion of such expenses were previously
allocated to but not specifically identifiable to the anesthesiology services
medical group, they are required to be presented as continuing operations.
Therefore, general and administrative expenses do not reflect potential general
and administrative cost savings that may be achieved in future periods.

Transformational and restructuring related expenses attributable to continuing
operations were $73.8 million for the year ended December 31, 2020, as compared
to $60.9 million for 2019. Approximately $33.6 million of the expenses incurred
during the year ended December 31, 2020 were for external consulting costs for
various process improvement and restructuring initiatives and approximately
$31.9 million were for compensation-related expenses resulting from the
restructuring changes in executive management and the board of directors, with
the remainder for position eliminations and contract termination and other fees.
Beginning in April 2020, we reduced the scope of our transformational and
restructuring related initiatives unless they were initiatives critical to our
business operations or those that provide essential support for our response to
COVID-19. Various activities related to executive management and board of
directors restructuring were recorded as transformational and restructuring
related expenses during the year ended December 31, 2020.

Depreciation and amortization expense attributable to continuing operations was
$28.4 million for the year ended December 31, 2020, as compared to $25.9 million
for 2019. The increase is primarily related to the amortization of intangible
assets related to acquisitions.

Income from operations attributable to continuing operations decreased $73.7
million, or 42.9%, to $98.1 million for the year ended December 31, 2020, as
compared to $171.8 million for 2019. Our operating margin was 5.7% for the year
ended December 31, 2020, as compared to 9.7% for the same period in 2019. The
decrease in our operating margin was primarily due to a decrease in revenue
related to COVID-19 and increases in transformation and restructuring related
expenses and practice salaries and benefits. Excluding transformational and
restructuring expenses, our income from operations attributable to continuing
operations for the years ended December 31, 2020 and 2019 was $171.9 million and
$232.7 million, respectively, and our operating margin was 9.9% and 13.1%,
respectively. We believe excluding the impacts from the transformational and
restructuring related activity provides a more comparable view of our operating
income and operating margin from continuing operations; however, this comparison
is affected by the unfavorable impacts from COVID-19 during 2020.

Total non-operating expenses attributable to continuing operations were $91.0
million for the year ended December 31, 2020, as compared to $113.0 million for
2019. The decrease in non-operating expenses was primarily related to an
increase in other income related to the transition services being provided to
the buyers of our divested medical groups and a decrease in interest expense,
primarily due to lower average borrowings under our Credit

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Agreement, partially offset by a decrease in equity earnings resulting from the
impacts to the underlying joint venture from COVID-19 and the settlement of a
litigation matter.

Our effective income tax rate attributable to continuing operations of 234.0% is
not meaningful as calculated for the year ended December 31, 2020 due to the
decline in pre-tax income, primarily due to the impacts from our
transformational and restructuring related expenses and COVID-19. Our effective
income tax rate attributable to continuing operations was 28.2% for the year
ended December 31, 2019.

Loss from continuing operations was $9.6 million for the year ended December 31,
2020, as compared to income from continuing operations of $42.2 million for
2019. Adjusted EBITDA from continuing operations was $219.9 million for the year
ended December 31, 2020, as compared to $264.5 million for 2019.

Diluted loss from continuing operations per common and common equivalent share
was $0.11 on weighted average shares outstanding of 83.4 million for the year
ended December 31, 2020, as compared to diluted income per common and common
equivalent share of $0.50 on weighted average shares outstanding of 84.0 million
for 2019. Adjusted EPS from continuing operations was $0.95 for the year ended
December 31, 2020, as compared to $1.40 for 2019.

Loss from discontinued operations, net of tax, was $786.9 million for the year
ended December 31, 2020, as compared to loss from discontinued operations of
$1.54 billion for 2019. Diluted loss from discontinued operations per common and
common equivalent share was $9.44 for the year ended December 31, 2020, as
compared to a diluted loss from discontinued operations per common and common
equivalent share of $18.33 for 2019.

Net loss was $796.5 million for the year ended December 31, 2020, as compared to
a net loss of $1.50 billion for 2019. Diluted net loss per common and common
equivalent share was $9.55 for the year ended December 31, 2020, as compared to
$17.83 for 2019.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2021, we had $387.4 million of cash and cash equivalents
attributable to continuing operations as compared to $1.12 billion at December
31, 2020. Additionally, we had working capital attributable to continuing
operations of $413.2 billion at December 31, 2021, a decrease of $691.8 million
from our working capital from continuing operations of $1.11 billion at December
31, 2020. The decrease in cash and working capital relates primarily to the use
of $764.0 million to redeem our 2023 Notes in January 2021.

Cash Flows

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

                              Years Ended December 31,
                          2021          2020           2019

Operating activities $ 113,760 $ 153,888 $ 74,091
Investing activities (55,423 ) (58,346 ) (50,240 )
Financing activities (760,116 ) (2,910 ) (384,110 )

Operating Activities

We generated cash flow from operating activities for continuing operations of
$113.8 million, $153.9 million and $74.1 million for the years ended December
31, 2021, 2020 and 2019, respectively. The net decrease in cash flow provided of
$40.1 million for the year ended December 31, 2021, as compared to the year
ended December 31, 2020, was primarily due to an decrease in cash flow from
accounts receivable, deferred income taxes and accounts payable and accrued
expenses, partially offset by an increase in cash from higher earnings and
changes in prepaid expenses and other assets.


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During the year ended December 31, 2021, cash outflow related to accounts
receivable for continuing operations was $72.7 million, as compared to cash
inflow $37.9 million for the same period in 2020. The decrease in cash flow from
accounts receivable for the year ended December 31, 2021 was primarily due to
increases in ending accounts receivable balances at existing units due to timing
of cash collections.

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
for continuing operations was 55.2 days at December 31, 2021 as compared to 52.3
days at December 31, 2020.

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.

We generated cash flow from operating activities for continuing operations of
$153.9 million and $74.1 million for the years ended December 31, 2020 and 2019,
respectively. The net increase in cash flow was primarily due to an increase in
cash flow from deferred income taxes and income taxes payable as well as
accounts receivable, partially offset by a decrease in cash from lower earnings
and changes in prepaid expenses and other assets. Cash flow from operating
activities in 2019 was also impacted by cash payments made for transformational
and restructuring related expenses.

Investing Activities

During the year ended December 31, 2021, our net cash used in investing
activities for continuing operations of $55.4 million consisted of capital
expenditures of $32.2 million, acquisitions payments of $29.9 million, the
payment associated with a strategic investment of $20.0 million, partially
offset by net proceeds from the sale of a building of $24.7 million and net
proceeds from maturities or sale of investments of $1.4 million.

Financing Activities

During the year ended December 31, 2021, our net cash used in financing
activities for continuing operations primarily consisted of $760.1 million
related to the redemption of the 2023 Notes, $4.7 million related to the
repurchase of our common stock and payments of $2.8 million for capital leases,
partially offset by proceeds from the issuance of common stock of $6.9 million.

Liquidity

On February 11, 2022, we issued $400 million of 5.375% unsecured senior notes
due 2030 (the "2030 Notes"). We used the net proceeds from the issuance of the
2030 Notes, together with $100 million drawn under our Revolving Credit Line (as
defined below), $250 million of Term A Loan (as defined below) and approximately
$305 million of cash on hand, to redeem (the "Redemption") our 6.25% senior
unsecured notes due 2027 (the "2027 Notes"), which had an outstanding principal
balance of $1.0 billion, and to pay costs, fees and expenses associated with the
Redemption and the Credit Agreement Amendment (as defined below).

Interest on the 2030 Notes accrues at the rate of 5.375% per annum, or annual
interest expense of $21.5 million, as compared to $62.5 million in annual
interest expense under the 2027 Notes, a savings of $41.0 million in annual
interest expense.

Interest under the 2030 Notes is payable semi-annually in arrears on February 15
and August 15, beginning on August 15, 2022. 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 and (2)

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enter into sale and lease-back transactions, and also limits our ability to
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.

Also in connection with the Redemption, we amended and restated the Credit
Agreement (the "Credit Agreement Amendment") concurrently with the issuance of
the 2030 Notes. The Credit Agreement, as amended by the Credit Agreement
Amendment (the "Amended Credit Agreement"), among other things, (i) refinanced
the prior unsecured revolving credit facility with a $450 million unsecured
revolving credit facility, including a $37.5 million sub-facility for the
issuance of letters of credit (the "Revolving Credit Line"), and a new $250
million term A loan facility ("Term A Loan") and (ii) removed JPMorgan Chase
Bank, N.A., as the administrative agent under the Credit Agreement and appointed
Bank of America, N.A. as the administrative agent for the lenders under the
Amended Credit Agreement.

The Amended Credit Agreement matures on February 11, 2027 and is guaranteed on
an unsecured basis by substantially all of our subsidiaries and affiliated
professional contractors. At our option, borrowings under the Amended Credit
Agreement bear interest at (i) the Alternate Base Rate (defined as the highest
of (a) the prime rate as announced by Bank of America, N.A., (b) the Federal
Funds Rate plus 0.50% and (c) Term SOFR for an interest period of one month plus
1.00% with a 1.00% floor) plus an applicable margin rate of 0.50% for the first
two fiscal quarters after the date of the Credit Agreement Amendment, and
thereafter at an applicable margin rate ranging from 0.125% to 0.750% based on
our consolidated net leverage ratio or (ii) Term SOFR rate (calculated as the
Secured Overnight Financing Rate published on the applicable Reuters screen page
plus a spread adjustment of 0.10%, 0.15% or 0.25% depending on if we select a
one-month, three-month or six-month interest period, respectively, for the
applicable loan with a 0% floor), plus an applicable margin rate of 1.50% for
the first two full fiscal quarters after the date of the Credit Agreement
Amendment, and thereafter at an applicable margin rate ranging from 1.125% to
1.750% based on our consolidated net leverage ratio. The Amended Credit
Agreement also provides for other customary fees and charges, including an
unused commitment fee with respect to the Revolving Credit Line ranging from
0.150% to 0.200% of the unused lending commitments under the Revolving Credit
Line, based on our consolidated net leverage ratio.

The Amended Credit Agreement contains customary covenants and restrictions,
including covenants that require us to maintain a minimum interest coverage
ratio, a maximum consolidated total consolidated net leverage ratio and to
comply with laws, and restrictions on the ability to pay dividends, incur
indebtedness or liens and make certain other distributions subject to baskets
and exceptions, in each case, as specified therein. Failure to comply with these
covenants would constitute an event of default under the Amended Credit
Agreement, notwithstanding the ability of the company to meet its debt service
obligations. The Credit Agreement includes various customary remedies for the
lenders following an event of default, including the acceleration of repayment
of outstanding amounts under the Credit Agreement. In addition, we may increase
the principal amount of the Revolving Credit Line or incur additional term loans
under the Amended Credit Agreement in an aggregate principal amount such that on
a pro forma basis after giving effect to such increase or additional term loans,
we are in compliance with the financial covenants, subject to the satisfaction
of specified conditions and additional caps in the event that the Credit
Agreement is secured.

The exercise of employee stock options and the purchase of common stock by
participants in our 1996 Non-Qualified Employee Stock Purchase Plan, as amended
(the "ESPP"), and our 2015 Non-Qualified Stock Purchase Plan (the "SPP")
generated cash proceeds of $6.9 million, $7.0 million and $11.3 million for the
years ended December 31, 2021, 2020 and 2019, respectively. Because stock option
exercises and purchases under the ESPP and SPP are dependent on several factors,
including the market price of our common stock, we cannot predict the timing and
amount of any future proceeds.

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 December 31, 2021 was
$308.8 million, of which $37.7 million is classified as a current liability

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within accounts payable and accrued expenses in the Consolidated Balance Sheet.
In addition, there is a corresponding insurance receivable of $58.1 million
recorded as a component of other assets for certain professional liability
claims that are covered by insurance policies.

At December 31, 2021, the Company has long term capital requirements comprised
primarily of $1.0 billion in senior notes, $73.7 million of operating lease
liabilities and $14.2 million of finance lease liabilities. At December 31,
2021, our total liability for uncertain tax positions was $5.7 million.

We anticipate that funds generated from operations, together with our current
cash on hand and funds available under our Credit Agreement, will be sufficient
to finance our working capital requirements, fund anticipated acquisitions and
capital expenditures, fund our share repurchase programs and meet our long term
capital requirements as described above for at least the next 12 months from the
date of issuance of this Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2019, accounting guidance related to income taxes was issued with
the goal of enhancing and simplifying various aspects of the income tax
accounting guidance, including requirements related to hybrid tax regimes,
deferred taxes on step-up in tax basis of goodwill obtained in a transaction
that is not a business combination, separate financial statements of entities
not subject to tax, the intraperiod tax allocation exception to the incremental
approach, deferred tax liabilities on outside basis differences, and
interim-period accounting for enacted changes in tax law and certain
year-to-date loss limitations. The guidance became effective for us on January
1, 2021. The adoption of this guidance did not have a material impact on our
consolidated financial statements and related disclosures.