MEDNAX, Inc. Better than expected results inline with our propriety research; raising estimates

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1 MEDNAX, Inc. Feltl and Company Research Department 2100 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN Matt J. Weight Healthcare Services August 1, 2012 Company Description: MEDNAX, Inc., through its subsidiaries, Pediatrix Medical Group, Inc. and American Anesthesiology, Inc. provides neonatal, maternal-fetal, other pediatric subspecialty and anesthesia physician services in the United States Better than expected results inline with our propriety research; raising estimates (MD - $66.13) BUY Key Points Revenue of $449.3M beat Feltl/consensus estimates of $437.8M and $437.3M, respectively, with EPS of $1.22 that topped Feltl/consensus estimates of $1.20 and $1.19, respectively. Same unit revenue increased 3.9%, with same unit volumes increasing 1.5%, NICU patient days up 1.4%, and net reimbursement factors increased 2.4%. We highlight the Feltl Revenue Index accurately predicted same unit revenue would accelerate from 1Q12 s 2.4% growth rate. MD accelerates anesthesia acquisition pace and remains extremely bullish on pipeline with the expectation of exceeding its M&A guidance to spend $300M on deals Initiatives to reduce C-sections prior to week 39 has not had a noticeable impact on NICU volumes. Management guides 3Q12 EPS of $1.25-$1.30 compare to our $1.27 estimate. We are increasing our 2012 revenue and EPS estimates to $1,819M from $1,754M and to $4.76 from $4.72; and raising 2013 revenue and EPS estimates of to $2,024M from $1,878M and to $5.34 from $5.12 Maintaining BUY rating and $79 PT. Feltl 2Q12 perspective: MEDNAX reported better than expected top and bottom line results despite an EBITDA margin rate that was slightly lower than our estimate due to a greater mix of anesthesiology revenue. Given the recent concerns regarding slowing NICU volumes and a rather tepid pace in completing anesthesia transactions we believe the 2Q12 results and recent acquisition news should calm investor concerns. We are encouraged that same unit volumes were strong across all specialties, and reimbursement factors were better than expected despite a modest sequential deterioration in payer mix. We believe MD shares provide an attractive risk / reward profile, and with 2013 estimates increasing with the recent acquisitions and our expectation for additional deals combined with the likely benefit from higher Medicaid primary care rates we recommend investors initiate new or add to existing positions. 2Q12 results beat Feltl and consensus estimates: MD reported 2Q12 revenue of $449.3 million, beating the Feltl and consensus estimate of $437.8 million and $437.3 million, respectively. EPS of $1.22 also topped the Feltl and consensus estimate of $1.20 and $1.19, respectively. We note a lower tax rate and shareholder count contributed to $0.01 of the EPS beat relative to our estimates. Financial Summary. Rev(mil) 2011A 2012E 2013E Mar $382.3 $422.6A $484.5E Jun $393.4 $449.5A $515.3E Sep $407.7 $470.3E $512.1E Dec $404.9 $476.8E $512.1E FY $1,588 $1,819 $2,024E P/Sales 2.06x 1.80x 1.62x EPS 2011A 2012EA 2013E Mar $0.94 $0.98A $1.13E Jun $1.15 $1.22A $1.41E Sep $1.19 $1.27E $1.40E Dec $1.19 $1.29E $1.42E FY $4.47 $4.7E $5.34E P/E 14.8 x 14.0x 12.4x Price: $ Week Range: $ $58.48 Target: $79 Rating: BUY Shares Outstanding: 49.5 mil Mkt. Capitalization: $3,273 mil Ave. Volume: 353,088 Instit. Ownership: 96% BV / Share: $37.75 Debt / Tot. Cap.: 0.0% Est. LT EPS Growth: 15% Please see important disclosures on pages 5 to 7.

2 Our preliminary birth data analysis accurately predicted same unit revenue growth trends: We published a quarterly preview note on July 26, 2012 where we highlighted our analysis of state preliminary low weight birth data that we utilized to anticipate directional trends in MEDNAX s Pediatrix division. Our proprietary research suggested MD would experience an acceleration in its same unit revenue growth rate and volumes, and show improving mix trends. In line with our research, MD reported 3.9% same unit revenue growth for 2Q12, up from 1Q12 s 2.4% growth. This quarter s same unit revenue growth also exceeded management s guidance range of 1.5% - 3.5%. Same unit volume increased 1.5%, however, most encouraging was NICU patient days increasing 1.4%, up from 1Q12 1.2% and inline with our preliminary birth data analysis. Payer mix deteriorated 130 bps over prior year, yet management noted mix has been relatively stable since 3Q11. We expected a modest mix improvement, so we are slightly disappointed in the sequential increase, however we maintain our thesis that mix has stabilized and while quarterly volatility will continue, on an annual basis we do not expect significant movement in payer mix. We believe the 2.4% increase in reimbursement factors is impressive considering mix deteriorated 130 bps over prior year. At first glance this suggests greater success in managed care contracting, and while MD has been successful in negotiating higher rates, we do not believe there has been a material commercial price increase. Rather MD has been successful in generating greater administrative fees from its hospital partners for OB/GYN hospital programs, for example. Management would not quantify to what extent the administrative fees contributed to the growth this quarter, however we believe this metric is extremely interesting and suspect it can provide an additional growth avenue for the company. EBITDA margins below our expectations on higher anesthesiology mix: MD reported EBITDA margins of 23.9%, down 130 bps over prior year, and were 40 bps light of our estimates. The margin contraction was predominately driven by the higher mix of anesthesiology practices. As the company recently announced several anesthesiology acquisitions we expect margin rate will continue contracting. MD pays for acquisitions based on a multiple of proforma EBITDA, thus the company maintains it s indifferent regarding margin rate and focuses more on the absolute EBITDA growth. Acquisition pace accelerates, and with a full pipeline we expect more of the same: On the conference call management indicated it would likely exceed its original estimate of $300 million M&A spend in This is encouraging news, especially in light of investors frustration with the slow pace of completed transactions. During the second quarter, MD announced two anesthesia deals that brought on 22 anesthesiologists. MD accelerated this pace in July with three announced acquisitions that will bring on 81 additional physicians. The key acquisition was the Anesthesia Medical Alliance of East Tennessee that consists of 45 anesthesiologists and 158 anesthetists. We estimate this deal alone can eventually contribute approximately $80 million to $100 million in revenue and $0.20 of EPS. We do not include any unannounced anesthesia deals in our model, thus additional announced transactions represent upside to our estimates. Week 39 elective C-section controversy more bark than bite: Recently there has been significant investor concern regarding published studies looking at initiatives to reduce elective C-sections before week 39, and the implication for declining NICU utilization. Management believes this would have a minimal impact on its business and noted the published study was from 2008, and over the past four years MD has not reported any noticeable changed due to the initiatives to reduce C-sections prior to week 39. Higher Medicaid primary care rates in 2013 and 2014, and potentially longer: Recently, CMS clarified a proposed rule in the Patient Protection and Adorable Care Act to increase Medicaid payment for primary care services to be 100% of the Medicare rate in 2013 and CMS defined what is considered primary care which includes, among other specialties, neonatologist, pediatric hospitalists, and pediatric intensive and pediatric cardiology physicians. Management did not quantify the potential impact this would have on its business, however MD believes it s likely the higher Medicaid rates would not expire after 2014, as the law is currently written, as that would result in a significant decline in physicians who treat Medicaid patients. We estimate MD could experience a 4%-6% increase in EBITDA in 2013 with these higher rates. We have not included this in our model as CMS will issue the final rule likely during 4Q12. State budget deficits appear in better shape in 2012: Management noted there has not been much state budget activity regarding potential cuts to Medicaid. In fact MD does not expect any cuts to Medicaid physician reimbursement for FY2013 in any of their top five states. 3Q12 guidance brackets the street: MEDNAX is guiding 3Q12 same unit revenue growth of 1%-3%, with growth split evenly between patient volumes and net reimbursement growth. We note MD is up against a 5% revenue comp, thus the deceleration in same unit revenue growth from 2Q12 is not a reflection of weakening fundamentals. EPS is expected to be in a range of $1.25-$1.30 compared to our estimate of $1.27, compared to the consensus estimate of $1.26 (prior to 2Q12 results). Feltl and Company Research Department MEDNAX, Inc. (MD) Page 2

3 Raising 2012 and 2013 estimates: In light of the earnings beat and recent anesthesia acquisitions were are raising our 2012 revenue and EPS estimates to $1,819 million from $1,754 and to $4.76 from $4.72. We are also increasing our 2013 revenue and EPS estimates to $2,024 million from $1,878 million and to $5.34 from $5.13. We note our estimates incorporate a higher mix of anesthesia practices, and thus our EBITDA margin rate estimates are reduced 50 bps and 90 bps in 2012 and 2013 to 22.8%. Maintaining BUY rating and $79 price target: Given MEDNAX s ability to identify practices that historically are accretive in year one, its strong balance sheet, and ability to access capital, we anticipate M&A fueling low to mid double digit revenue growth over the long term. We believe the company can accelerate its earnings growth profile to the extent payer mix becomes a tailwind and the company completes more anesthesia acquisitions, which could ultimately push its earnings growth into the mid-teens level and the stock could then command a higher PE multiple. We maintain our BUY rating and $79 PT that reflects an 8.2x EV/EBITDA multiple on our 2013 estimate. Feltl and Company Research Department MEDNAX, Inc. (MD) Page 3

4 $ in 000's QA 2QA 3QA 4QA QA 2QA 3QE 4QE QE 2QE 3QE 4QE 2013 Net Patient Service Revenues $ 1,288,405 $ 1,401,559 $ 382,283 $ 393,402 $ 407,665 $ 404,898 $ 1,588,248 $ 422,616 $ 449,530 $ 470,258 $ 476,756 $ 1,819,159 $ 484,492 $ 515,299 $ 512,094 $ 512,073 $ 2,023,959 Practice Salaries and Benefits 783, , , , , , , , , , ,065 1,135, , , , ,510 1,266,899 Practice Supplies and Other Operating 52,232 57,511 15,090 16,253 16,718 18,754 66,815 16,985 17,956 18,810 21,549 75,301 19,380 20,612 20,484 22,531 83,007 General and Administrative 147, ,267 41,798 42,702 43,010 42, ,356 46,869 48,200 49,377 50, ,505 52,083 54,622 53,770 53, ,730 EBITDA 305, ,861 81,501 99, ,250 98, ,681 86, , , , ,987 99, , , , ,323 Depreciation & Amortization 16,448 21,950 5,781 6,032 6,213 7,266 25,292 7,113 7,687 7,712 8,105 30,617 8,091 8,502 8,296 8,552 33,441 EBIT 289, ,911 75,720 93,123 95,037 91, ,389 79,388 99, , , ,369 91, , , , ,882 Interest Expense (Net) 1,229 1, ,144 (126) (57) 679 (439) (436) (436) (436) (1,747) Pretax income 287, ,152 75,134 92,464 94,318 91, ,245 79,514 99, , , ,690 91, , , , ,629 Income Taxes 111, ,387 29,678 36,523 36,077 32, ,248 30,912 38,709 39,612 36, ,111 35,845 44,684 43,306 40, ,861 Net Income (Operating)^ $ 172,502 $ 192,145 $ 45,456 $ 55,941 $ 58,241 $ 58,359 $ 217,997 $ 48,602 $ 60,544 $ 63,277 $ 64,156 $ 236,579 $ 56,066 $ 69,891 $ 69,177 $ 69,635 $ 264,768 EPS Diluted (Operating)^ $ 3.71 $ 4.04 $ 0.94 $ 1.15 $ 1.19 $ 1.19 $ 4.47 $ 0.98 $ 1.22 $ 1.27 $ 1.29 $ 4.76 $ 1.13 $ 1.41 $ 1.40 $ 1.41 $ 5.34 Weighted Avg Diluted Shares 46,476 47,569 48,361 48,730 48,935 49,132 48,790 49,399 49,545 49,907 49,899 49,688 49,771 49,652 49,540 49,437 49,600 Margin Analysis Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Practice Salaries and Benefits 60.8% 61.0% 63.8% 59.8% 60.5% 60.4% 61.1% 64.4% 61.4% 61.9% 62.1% 62.4% 64.7% 61.6% 62.0% 62.2% 62.6% Practice Supplies and Other Operating 4.1% 4.1% 3.9% 4.1% 4.1% 4.6% 4.2% 4.0% 4.0% 4.0% 4.5% 4.1% 4.0% 4.0% 4.0% 4.4% 4.1% General and Administrative 11.4% 11.0% 10.9% 10.9% 10.6% 10.6% 10.7% 11.1% 10.7% 10.5% 10.5% 10.7% 10.8% 10.6% 10.5% 10.4% 10.6% EBITDA 23.7% 23.9% 21.3% 25.2% 24.8% 24.4% 24.0% 20.5% 23.9% 23.6% 22.9% 22.8% 20.6% 23.8% 23.5% 23.0% 22.7% Depreciation & Amortization 1.3% 1.6% 1.5% 1.5% 1.5% 1.8% 1.6% 1.7% 1.7% 1.6% 1.7% 1.7% 1.7% 1.7% 1.6% 1.7% 1.7% EBIT 22.4% 22.3% 19.8% 23.7% 23.3% 22.6% 22.4% 18.8% 22.2% 22.0% 21.2% 21.1% Income Taxes (% of EAT) 38.9% 38.4% 39.5% 39.5% 38.3% 36.1% 38.3% 38.9% 39.0% 38.5% 36.5% 38.2% 39.0% 39.0% 38.5% 36.5% 38.2% Net Margin 13.7% 13.7% 11.9% 14.2% 14.3% 14.4% 13.7% 11.5% 13.5% 13.5% 13.5% 13.0% 11.6% 13.6% 13.5% 13.6% 13.1% Y/Y Growth Revenue 20.6% 8.8% 14.8% 12.7% 16.1% 9.9% 13.3% 10.6% 14.3% 15.4% 17.7% 14.5% 14.6% 14.6% 8.9% 7.4% 11.3% Practice Salaries and Benefits 21.8% 9.1% 14.3% 12.7% 16.4% 10.7% 13.5% 11.6% 17.3% 18.0% 21.1% 17.0% 15.1% 15.0% 9.1% 7.6% 11.6% Practice Supplies and Other Operating 16.7% 10.1% 15.2% 15.6% 19.6% 14.5% 16.2% 12.6% 10.5% 12.5% 14.9% 12.7% 14.1% 14.8% 8.9% 4.6% 10.2% General and Administrative 17.8% 4.8% 9.7% 9.0% 14.7% 8.5% 10.4% 12.1% 12.9% 14.8% 16.8% 14.2% 11.1% 13.3% 8.9% 6.4% 9.9% EBITDA 19.8% 9.6% 19.3% 13.8% 15.5% 7.7% 13.7% 6.1% 8.3% 9.6% 10.4% 8.7% 15.1% 14.2% 8.4% 8.0% 11.2% EBIT 19.4% 8.2% 19.1% 13.4% 16.8% 6.5% 13.6% 4.8% 7.1% 8.7% 10.3% 7.9% 15.2% 14.4% 8.5% 8.2% 11.4% Net Income 4.0% 9.0% 18.8% 13.3% 15.7% 8.5% 13.7% 6.9% 8.2% 8.6% 9.9% 8.5% 15.4% 15.4% 9.3% 8.5% 11.9% EPS Diluted (Operating)^ 19.3% 8.8% 15.0% 10.5% 12.3% 6.0% 10.6% 4.7% 6.4% 6.5% 8.2% 6.6% 14.5% 15.2% 10.1% 9.6% 12.1% Feltl and Company Research Department MEDNAX, Inc. (MD) Page 4

5 Analyst Certification I, Matt Weight, certify that the views expressed in this research report accurately reflect my personal views about the subject company and its securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation related to the specific recommendations expressed in this report. Important Disclosures: The analyst or a member of his/her household does not hold a long or short position, options, warrants, rights or futures of this security in their personal account(s). As of the end of the month preceding the date of publication of this report, Feltl and Company did not beneficially own 1% or more of any class of common equity securities of the subject company. There is not any actual material conflict of interest that either the analyst or Feltl and Company is aware of. The analyst has not received any compensation for any investment banking business with this company in the past twelve months and does not expect to receive any in the next three months. Feltl and Company has not been engaged for investment banking services with the subject company during the past twelve months and does not anticipate receiving compensation for such services in the next three months. Feltl and Company has not served as a broker, either as agent or principal, buying back stock for the subject company s account as part of the company s authorized stock buy-back program in the last twelve months. No director, officer or employee of Feltl and Company serves as a director, officer or advisory board member to the subject company. Feltl and Company Rating System: Feltl and Company utilizes a four tier rating system for potential total returns over the next 12 months. Strong Buy: The stock is expected to have total return potential of at least 30%. Catalysts exist to generate higher valuations, and positions should be initiated at current levels. Buy: The stock is expected to have total return potential of at least 15%. Near term catalysts may not exist and the common stock needs further time to develop. Investors requiring time to build positions may consider current levels attractive. Hold: The stock is expected to have total return potential of less than 15%. Fundamental events are not present to make it either a Buy or a Sell. The stock is an acceptable longer-term holding. Sell: Expect a negative total return. Current positions may be used as a source of funds. 8/1/2012 Ratings Distribution for Feltl and Company Investment Banking Number of Percent Number of Percent of Rating Stocks of Total Stocks Rating category SB/Buy 35 57% 3 9% Hold 25 41% 0 0% Sell 1 2% 0 0% % 3 5% The above represents our ratings distribution on the stocks in the Feltl and Company research universe, together with the number in (and percentage of) each category for which Feltl and Company provided investment-banking services in the previous twelve months. Feltl and Company Research Department MEDNAX, Inc. (MD) Page 5

6 09/22/10 Strong Buy Target: $66 10/5/10 Strong Buy Target: $70 11/2/10 Strong Buy Target: $76 5/4/11 Buy Target: $81 10/25/11 Buy Target: $77 11/8/11 Buy Target: $79 Date Nature of Report Rating Price Target 09/22/10 STRONG BUY $66 10/4/10 Raising estimates on SAC acquisition STRONG BUY $70 11/1/10 Earnings preview STRONG BUY $70 11/2/10 Earnings review STRONG BUY $71 01/21/11 Feltl Neonatal Revenue Index STRONG BUY $71 02/03/11 Earnings review STRONG BUY $76 05/02/11 Feltl Neonatal Revenue Index STRONG BUY $71 05/04/11 1Q11 Earnings Review BUY $81 08/01/11 Feltl Neonatal Revenue Index BUY $81 08/03/11 2Q11 Earnings Review BUY $81 10/25/11 Feltl Neonatal Revenue Index BUY $77 11/2/11 3Q11 Earnings Review BUY $77 11/8/11 Raising estimates on AGA acquisition BUY $79 02/01/12 Feltl Neonatal Revenue Index BUY $79 02/03/02 4Q11 Earnings Review BUY $79 Feltl and Company does make a market in the subject security at the date of publication of this report. As a market maker, Feltl and Company could act as principal or agent with respect to the purchase or sale of those securities. Valuation and Price Target Methodology: Our price target is based on a combination of our 2012 EPS estimate and 2012 EBITDA estimate. Risks to Achievement of Estimates and Price Target: A material portion of MEDNAX s revenue is derived from Medicaid reimbursement, which has historically been subject to cuts when state sponsors face budget pressure. A growing portion of MEDNAX s revenue is derived from the Medicare physician fee schedule, which by law will be subject to large cuts without action by congress. Government reimbursement is significantly less than that derived from commercial payers who are seeing lower enrollment due to increased unemployment. MEDNAX derives over half of its revenue from five states and 24% of its revenue in the state of Texas. MEDNAX revenues are subject to variability based on the overall birthrate. Feltl and Company Research Department MEDNAX, Inc. (MD) Page 6

7 MEDNAX enters into agreements with hospital operators that grant its physicians the right to practice in their facilities and take on management of units. These contracts are subject to termination at short notice at the discretion of the hospitals. Other Disclosures: The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date, and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation or an offer to buy or sell any security. The securities described may not be qualified for purchase in all jurisdictions. Because of individual requirements, advice regarding securities mentioned in this report should not be construed as suitable for all accounts. This report does not take into account the investment objectives, financial situation and needs of any particular client of Feltl and Company. Some securities mentioned herein relate to small speculative companies that may not be suitable for some accounts. Feltl and Company suggests that prior to acting on any of the recommendations herein, the recipient should consider whether such a recommendation is appropriate given their investment objectives and current financial circumstances. Past performance does not guarantee future results. Additional information is available upon request. Feltl and Company Research Department MEDNAX, Inc. (MD) Page 7

8 EQUITY CAPITAL MARKETS DIRECTORY RESEARCH DEPARTMENT INSTITUTIONAL SALES: (866) Brent R. Rystrom Director of Equity Research (612) Mark E. Smith (612) Ty M. Lilja (612) Ben C. Haynor, CFA (612) Matt J. Weight (612) Shawn P. Bitzan (612) Shannon K. Richter (612) TRADING: (866) Thomas J. Walters Equity Trading (612) Christopher S. Modene Equity Trading (612) Elliott M. Randolph Institutional Sales Trading (612) Cory N. Carlson Institutional Sales Trading (612) Luke J. Weimerskirch (612) Mark A. Hagen (612) Ryan M. Quade (612) Brandt B. Wendland (612) Jeff R. Sonnek (612) Matt J. Rasmussen (612) Mike T. Larson (612) LASALLE PLAZA, 800 LASALLE AVENUE MINNEAPOLIS, MINNESOTA (612) (866) MEMBER SIPC & FINRA