Pediatrix may take $28M loss on backdated options

Sunrise, FL-based Pediatrix Medical Group has become the latest in a long series of medical and other companies facing major public embarrassment over questionable stock option practices. Pediatrix, which provides of newborn, maternal-fetal and pediatric physician sub-specialty services, employs 890 physicians in 32 states. Following an internal review, the company has concluded that it could end up recording additional compensation expenses of as much as $28 million in charges to counterbalance "deficiencies" in its procedures. This announcement follows closely on the heels of similar news from UnitedHealth Group, for its part, which recently said it would cut $286 million from earnings reported between 2003 and 2005 due to stock option-related issues. Because of the internal investigation, Pediatrix is late in filing its second- and third-quarter financial reports.

The Pediatrix committee's review concluded that there were problems with the way options were granted, including backdating of options that favored grantees. Former CFO and audit committee member Lawrence Mullen resigned from the Pediatrix board on the heels of the report.

For more background on the backdating controversy:
- read this Associated Press article
- see the Pediatrix release on the subject