USPH 8-K
U S Physical Therapy Inc /Nv (USPH)
8-K
2023-02-23
For: 2023-02-22
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 22, 2023
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction
of incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's telephone number, including area code: (713 ) 297-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions ( see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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◻
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL RESULTS.
On February 22, 2023, U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention (“IIP”)
services, reported results for the three months and year ended December 31, 2022 (“2022 Fourth Quarter” and “2022 Year”, respectively).
The press release includes a discussion of Operating Results and Adjusted EBITDA non-GAAP (generally
accepted accounting principles) financial measures. See pages 13 and 14 of the press release, attached as Exhibit 99.1, for a definition of Operating Results and Adjusted EBITDA and for a reconciliation of those measures to the most
directly comparable financial measure calculated and presented in accordance with GAAP.
**The Company is still
completing its evaluation of the income tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a
result of this evaluation. Set forth in the attached press release are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form
8-K, including the exhibits, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be
incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
A copy of the press release is attached hereto as Exhibit 99.1
ITEM 8.01 Other Event.
See Item 2.02 above. The Board of Directors declared a quarterly dividend of $0.43 per share payable on April 7, 2023, to shareholders of record on March 10, 2023.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
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Exhibits
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Description of Exhibits
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Registrant's Press Release dated February 22, 2023 *
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* Filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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U.S. PHYSICAL THERAPY, INC.
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Dated: February 23, 2023
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By:
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/s/ CAREY HENDRICKSON
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Carey Hendrickson
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Chief Financial Officer
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(duly authorized officer and principal financial and accounting officer)
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CONTACT:
U.S. Physical Therapy, Inc.
Carey Hendrickson, Chief Financial Officer
Email: [email protected]
Chris Reading, Chief Executive Officer
(713) 297-7000
Three Part Advisors
Joe Noyons
(817) 778-8424
U.S. Physical Therapy Reports
Fourth Quarter and Full Year 2022 Results
Patient Volume Remains Strong
Company Provides 2023 Guidance and Raises Dividend
Houston, TX, February 22, 2023 – U.S. Physical Therapy, Inc. ("USPH"
or the “Company”) (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention (“IIP”) services, today reported results for the three months and year ended December 31, 2022 (“2022 Fourth
Quarter” and “2022 Year”, respectively).
FULL YEAR AND QUARTER HIGHLIGHTS
**The Company is still completing its evaluation of the income tax expense for the
2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below are the Company’s
current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
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•
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Adjusted EBITDA, a non-GAAP measure, was $17.9 million for the 2022 Fourth Quarter, an increase of $0.5 million, or 2.8%, from
$17.4 million, excluding Relief Funds, for the three months ended December 31, 2021 (“2021 Fourth Quarter”). See definition, explanation and calculation of Adjusted EBITDA, a non-GAAP measure, in the schedules on pages 13 and 14.
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Adjusted EBITDA was $73.7 million for the 2022 Year, a decrease of $0.1 million, or 0.2%, from $73.8 million, excluding Relief
Funds, for the year ended December 31, 2021 (“2021 Year").
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•
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For the 2022 Fourth Quarter, USPH’s net income attributable to its shareholders, a GAAP measure, was $2.6 million as compared to
$10.2 million for the 2021 Fourth Quarter. The 2022 Fourth Quarter included a goodwill impairment charge, further described below, of $4.8 million, net of taxes and allocation to non-controlling interest. For GAAP purposes, a charge
for the revaluation of redeemable non-controlling interest, net of taxes, is included in the computation of earnings or loss per diluted share. Loss per diluted share on a GAAP basis, net of taxes, was $0.01 for the 2022 Fourth
Quarter as compared to earnings per share of $0.73 for the 2021 Fourth Quarter.
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•
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For the 2022 Year, USPH’s net income attributable to its shareholders, a GAAP measure, was $32.2 million as compared to $40.8
million for the 2021 Year. Earnings per diluted share, which includes a charge for revaluation of redeemable non-controlling interest, was $2.25 for the 2022 Year, as compared to $2.41 for the 2021 Year.
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Operating Results, a non-GAAP measure, was $0.58 per diluted share for the 2022 Fourth Quarter compared to $0.72 per diluted
share, excluding Relief Funds (defined under “Impact of COVID-19/Relief Funds” below), for the 2021 Fourth Quarter. See definition, explanation and calculation of Operating Results, a non-GAAP measure, in the schedules on pages 13
and 14.
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Operating Results was $2.70 per diluted share for the 2022 Year. For the 2021 Year, Operating Results, excluding Relief Funds, was
$3.17 per diluted share.
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Average visits per clinic per day were 29.1 for the 2022 Fourth Quarter and 28.7 for the 2022 Year, the second highest average
visits per day for each period in the Company’s history, surpassed only by 29.8 average visits per day in the Fourth Quarter 2021 and 29.1 in the 2021 Year.
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•
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Net patient revenue from physical therapy operations was $120.1 million for the 2022 Fourth Quarter, an increase of 5.8% from
$113.5 million for the 2021 Fourth Quarter. Net patient revenue from physical therapy operations was $464.6 million for the 2022 Year, an increase of 6.0% from $438.3 million for the 2021 Year.
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For the 2022 Fourth Quarter, total patient visits were 1,152,139, an increase of 5.1% from 1,096,389 for the 2021 Fourth Quarter.
For the 2022 Year, total patient visits were 4,483,282, an increase of 6.2% from 4,219,576 for the 2021 Year.
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The net rate per patient visit was $104.28 in the 2022 Fourth Quarter, a $0.75 per visit increase from $103.53 in the 2021 Fourth
Quarter. For the 2022 Year, the net rate per patient visit was $103.63 as compared $103.88 in the 2021 Year. The net rate per patient visit increased throughout 2022, from $103.00 in the first quarter of 2022 to $103.18 in the second
quarter, $104.01 in the third quarter and $104.28 in the fourth quarter.
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Physical therapy total operating costs were $84.05 per visit in the 2022 Fourth Quarter, a decrease of 1.3% from $85.14 in the
third quarter of 2022, and an increase of 2.1% from $82.30 per visit in the Fourth Quarter 2021. Physical therapy salaries and related costs were $60.04 per visit in the Fourth Quarter 2022, a decrease of 1.6% from $60.99 in the third
quarter of 2022, and an increase of 1.4% from $59.20 in the Fourth Quarter 2021.
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For the 2022 Year, physical therapy total operating costs were $83.34 per visit, an increase of 4.6% from $79.71 for the 2021
Year. Total salaries and related costs were $59.52 per visit, an increase of 4.1% as compared to $57.20 for the 2021 Year.
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IIP services revenue increased 37.6% to $18.4 million in the 2022 Fourth Quarter as compared to $13.4 million in the 2021 Fourth
Quarter. For the full year, IIP services revenue increased 75.5% to $77.1 million in the 2022 Year as compared to $43.9 million for the 2021 Year. Excluding the Company’s IIP Acquisition in November 2021 (“IIP Acquisition”), IIP
services revenue increased 9.1% in the 2022 Fourth Quarter and 20.8% in the 2022 Full Year as compared to the same periods in 2021.
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The Company completed two acquisitions in the 2022 Fourth Quarter, resulting in five total acquisitions in the 2022 Year. On
October 31, 2022, the Company acquired 60% of the equity interest in a fourteen-clinic physical therapy practice with approximately $9.2 million in annual revenue and approximately 84,000 patient visits per year. On November 30, 2022,
the Company acquired 80% of the equity interest in a thirteen-clinic physical therapy practice with approximately $12.0 million in annual revenue and approximately 120,000 patient visits per year.
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The Company’s Board of Directors raised the Company’s quarterly dividend from $0.41 per share to $0.43 per share, an increase of
4.9%, effectively immediately, and declared a quarterly dividend for the first quarter of 2023 at the higher rate.
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Management currently expects the Company’s Adjusted EBITDA for 2023 to be in the range of $75.0 million to $80.0 million. The
guidance represents projected Adjusted EBITDA from existing operations and excludes future acquisitions. See “Management Provides 2023 Guidance” below for more information.
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U.S. Physical Therapy Press Release
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Page 2
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February 22, 2023
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Management’s Comments
Carey Hendrickson, Chief Financial Officer, said, “We are pleased to raise our quarterly dividend rate once again in the first quarter of 2023, which we have raised each year since the inception of our dividend in 2011. While we again have some Medicare rate headwinds as we enter 2023, we have tremendous confidence in our team to produce EBITDA growth this year through increased volumes, continued momentum in rate renegotiations and an ongoing focus on making our operations as efficient as possible.”
Fourth Quarter 2022 As Compared to Fourth Quarter 2021
**As noted above, the Company is still completing its evaluation of the income
tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below
are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
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Reported total revenue for the 2022 Fourth Quarter was $141.2 million, an increase of 8.7% as compared to $129.8 million for the
2021 Fourth Quarter. See table below for a detail of reported total revenue (in thousands):
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Three Months Ended
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December 31, 2022
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December 31, 2021
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Revenue related to Mature Clinics
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$
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105,655
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$
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106,955
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Revenue related to 2022 Clinic Additions
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7,759
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-
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Revenue related to 2021 Clinic Additions
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6,383
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5,304
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Revenue from clinics sold or closed in 2022
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349
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1,252
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Net patient revenue from physical therapy operations
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120,146
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113,511
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Other revenue
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883
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717
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Revenue from physical therapy operations
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121,029
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114,228
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Revenue from management contracts
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1,761
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2,242
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Revenue from industrial injury prevention services
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18,392
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13,363
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Total revenue
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$
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141,182
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$
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129,833
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Revenue from physical therapy operations increased $6.8 million, or 6.0%, to $121.0 million for the 2022 Fourth Quarter from
$114.2 million for the 2021 Fourth Quarter. The average net patient revenue per visit was $104.28 for the 2022 Fourth Quarter as compared to $103.53 for the 2021 Fourth Quarter. Total patient visits increased 5.1% to 1,152,139
for the 2022 Fourth Quarter from 1,096,389 for the 2021 Fourth Quarter.
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Net patient revenue related to clinics opened or acquired prior to 2021 and still in operation on December 31, 2022 (“Mature
Clinics”) decreased slightly. Visits for Mature Clinics (same store) for the 2022 Fourth Quarter decreased by 2.3% as compared to the 2021 Fourth Quarter while net patient revenue per visit increased by 1.1% over the comparable
period.
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IIP services revenue increased 37.6% to $18.4 million for the 2022 Fourth Quarter as compared to $13.4 million for the 2021
Fourth Quarter. The 2022 Fourth Quarter includes revenue of $6.2 million related to the IIP Acquisition compared to $2.2 million in the 2021 Fourth Quarter.
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Total operating cost was $113.4 million for the 2022 Fourth Quarter, or 80.3% of total revenue, as compared to $102.7 million,
or 79.1% of total revenue, for the 2021 Fourth Quarter. Operating cost related to Mature Clinics increased $0.3 million, or 0.4%, for the 2022 Fourth Quarter as compared to the 2021 Fourth Quarter. Operating cost related to the IIP
services business increased by $4.5 million for the 2022 Fourth Quarter as compared to the 2021 Fourth Quarter, of which $3.5 million related to the IIP Acquisition. See table below for a detail of operating cost (in thousands):
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Three Months Ended
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December 31, 2022
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December 31, 2021
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Operating cost related to Mature Clinics
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$
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84,846
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$
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84,539
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Operating cost related to 2022 Clinic Additions
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6,136
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59
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Operating cost related to 2021 Clinic Additions
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5,399
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4,437
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Operating cost related to clinics sold or closed in 2022
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455
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1,191
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Operating cost related to physical therapy operations
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96,836
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90,226
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Operating cost related to management contracts
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1,411
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1,814
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Operating cost related to industrial injury prevention services
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15,104
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10,610
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Total operating cost
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$
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113,351
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$
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102,650
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U.S. Physical Therapy Press Release
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Page 3
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February 22, 2023
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Total salaries and related costs, including all operations, were 58.3% of total revenue for the 2022 Fourth Quarter versus
58.0% for the 2021 Fourth Quarter. Rent, supplies, contract labor and other costs as a percentage of total revenue were 21.0% for the 2022 Fourth Quarter versus 20.0% for the 2021 Fourth Quarter. The provision for credit losses
as a percentage of total revenue was 1.0% for 2022 Fourth Quarter and 1.1% for 2021 Fourth Quarter.
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Gross profit for the 2022 Fourth Quarter was $27.8 million as compared to $27.2 million for the 2021 Fourth Quarter. The
gross profit percentage was 19.7% of total revenue for the 2022 Fourth Quarter as compared to 20.9% for the 2021 Fourth Quarter. The gross profit percentage for the Company’s physical therapy operations was 20.0% for the 2022
Fourth Quarter as compared to 21.0% for the 2021 Fourth Quarter. The gross profit percentage on management contracts was 19.9% for the 2022 Fourth Quarter as compared to 19.1% for the 2021 Fourth Quarter. The gross profit
percentage for industrial injury prevention services was 17.9% for the 2022 Fourth Quarter as compared to 20.6% for the 2021 Fourth Quarter. The table below details the gross profit (in thousands):
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Three Months Ended
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December 31, 2022
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December 31, 2021
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Physical therapy operations
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$
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24,193
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$
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24,002
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Management contracts
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350
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428
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Industrial injury prevention services
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3,288
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2,753
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Gross profit
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$
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27,831
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$
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27,183
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•
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During the 2022 Fourth Quarter, the Company recorded a charge for goodwill impairment of $9.1 million related to the IIP
Acquisition. The impairment is related to a change in the IIP Acquisition’s current and projected operating income as well as various inputs based on current market conditions, including the higher interest rate environment.
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Corporate office costs were $11.9 million for the 2022 Fourth Quarter as compared to $10.7 million for the 2021 Fourth
Quarter. Corporate office costs were 8.4% of total revenue for the 2022 Fourth Quarter as compared to 8.3% for the 2021 Fourth Quarter.
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•
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Operating income was $6.8 million for the 2022 Fourth Quarter and $16.5 million for 2021 Fourth Quarter.
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During the 2022 Fourth Quarter, the Company revalued the contingent earn-out consideration related to an acquisition
resulting in the elimination of a $0.5 million liability previously booked.
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For the 2022 Fourth Quarter, the Company recognized income of $0.2 million related to a joint venture company that provides
physical therapy services for patients at hospitals.
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•
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The change in revaluation of put-right liability was $0.8 million for the 2022 Fourth Quarter. The put right relates to the
potential future purchase of a company that provides physical therapy and rehabilitation services to hospitals and other ancillary providers in a distinct market area. The owners have the right to put this transaction to the
Company in approximately five years from November 2021. The value of this right will continue to be adjusted in future periods, as appropriate.
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Interest expense on debt and other, primarily from the Company’s $150 million term loan entered into in June 2022 and to a
lesser extent the funds drawn on the Company’s revolving credit facility, amounted to $2.2 million for the 2022 Fourth Quarter. The effective interest rate on the Company’s debt was 5.1% for the 2022 Fourth Quarter. See
discussion of Other Comprehensive Income below for information related to the Company’s interest rate swap agreement. For the 2021 Fourth Quarter, interest expense, primarily from the Company’s revolving line of credit, was $0.2
million.
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•
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The provision for income tax was $1.2 million for the 2022 Fourth Quarter and $3.9 million for the 2021 Fourth Quarter. The
provision for income tax, as a percentage of income before taxes less net income attributable to non-controlling interest (effective tax rate), was 31.7% for the 2022 Fourth Quarter and 27.2% for the 2021 Fourth Quarter.
Excluding the impact of the impairment charge discussed above, the effective tax in the Fourth Quarter 2022 was 27.9% See computation of 2022 Year tax rate in next section. See table below ($ in thousands):
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Three Months Ended
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December 31, 2022
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December 31, 2021
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Income before taxes
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$
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4,560
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$
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18,389
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Less: net loss (income) attributable to non-controlling interest:
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Redeemable non-controlling interest - temporary equity
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318
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(2,689
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)
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Non-controlling interest - permanent equity
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(1,059
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)
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(1,541
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)
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$
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(741
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)
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$
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(4,230
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)
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Income before taxes less net income attributable to non-controlling interest
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$
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3,819
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$
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14,159
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Provision for income taxes
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$
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1,212
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$
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3,946
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Percentage
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31.7
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%
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27.9
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%
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•
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The net loss attributable to redeemable non-controlling interest (temporary equity) was $0.3 million for the 2022 Fourth
Quarter as compared to net income attributable to redeemable non-controlling interest of $2.7 million for the 2021 Fourth Quarter. Net income attributable to non-controlling interest (permanent equity) was $1.1 million for the
2022 Fourth Quarter and $1.5 million for the 2021 Fourth Quarter. During the 2022 Fourth Quarter, $2.7 million of the goodwill impairment charge related to redeemable non-controlling interest (temporary equity).
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U.S. Physical Therapy Press Release
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Page 4
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February 22, 2023
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•
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For the 2022 Fourth Quarter, the Company’s net income attributable to its shareholders was $2.6 million as compared to $10.2
million for the 2021 Fourth Quarter. In accordance with GAAP, the revaluation of redeemable non-controlling interest, net of taxes, is not included in net income but charged directly to retained earnings; however, the charge for
this change is included in the earnings per basic and diluted share calculation. Inclusive of the charge for revaluation of noncontrolling interest, net of taxes, the amount is a loss of $0.1 million, or $0.01 per diluted share,
for the 2022 Fourth Quarter, and income of $9.4 million, or $0.73 per diluted share, for the 2021 Fourth Quarter.
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•
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For the 2022 Fourth Quarter, the Company’s Adjusted EBITDA, a non-GAAP measure, was $17.9 million as compared to $17.4 million
(excluding Relief Funds) in the 2021 Fourth Quarter. See definition, explanation and calculation of Adjusted EBITDA, a non-GAAP measure, in the schedules on pages 13 and 14.
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•
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For the 2022 Fourth Quarter, the Company’s Operating Results, a non-GAAP measure, was $7.5 million, or $0.58 per diluted share
as compared to $9.3 million (excluding Relief Funds), or $0.72 per diluted share, for the 2021 Fourth Quarter. See definition, explanation and calculation of Operating Results, a non-GAAP measure, in the schedules on pages 13 and
14.
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2022 Year As Compared to 2021 Year
**As noted above, the Company is still completing its evaluation of the income tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share,
operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the
completion of the evaluation.
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•
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Reported total revenue for the 2022 Year was $553.1 million, an increase of 11.7% as compared to $495.0 million for the 2021
Year. See table below for a detail of reported total revenue (in thousands):
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For the Year Ended
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December 31, 2022
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December 31, 2021
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|||||||
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Revenue related to Mature Clinics
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$
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421,806
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$
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420,093
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Revenue related to 2022 Clinic Additions
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14,779
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-
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Revenue related to 2021 Clinic Additions
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25,211
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12,638
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Revenue from clinics sold or closed in 2022
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2,794
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5,143
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Revenue from clinics sold or closed in 2021
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-
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456
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Net patient revenue from physical therapy operations
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464,590
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438,330
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Other revenue
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3,407
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2,939
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Revenue from physical therapy operations
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467,997
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441,269
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Revenue - Management contracts
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8,095
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9,853
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Revenue - Industrial injury prevention services
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77,052
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43,900
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Total revenue
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$
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553,144
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$
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495,022
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•
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Revenue from physical therapy operations increased $26.7 million, or 6.1%, to $468.0 million for the 2022 Year from $441.3
million in the 2021 Year. The average net patient revenue per visit was $103.63 for the 2022 Year as compared to $103.88 for the 2021 Year. Total patient visits were 4,483,282 for the 2022 Year and 4,219,576 for the 2021 Year, an
increase of 6.2%.
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•
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Net patient revenue related to Mature Clinics increased $1.7 million, or 0.4%, to $421.8 million for the 2022 Year, as
compared to $420.1 million for the 2021 Year. Visits for Mature Clinics (same store) for the 2022 Year increased 0.5% as compared to the 2021 Year. The increase in visits was partially offset by a 0.1% reduction in the net patient
revenue per visit.
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•
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IIP services revenue increased 75.5% to $77.1 million for the 2022 Year as compared to $43.9 million for the 2021 Year. The
2022 Year includes revenue of $26.7 million related to the IIP Acquisition compared to $2.2 million in the 2021 Year.
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•
|
Total operating cost was $441.1 million for the 2022 Year, or 79.7% of total revenue, as compared to $377.8 million, or 76.3%
of total revenue, for the 2021 Year. Operating cost related to Mature Clinics increased by $16.7 million for the 2022 Year as compared to the 2021 Year. Operating cost related to the IIP services business increased by $27.9
million for the 2022 Year as compared to the 2021 Year, of which $22.4 million related to the IIP Acquisition. See table below for a detail of operating cost (in thousands):
|
|
For the Year Ended
|
||||||||
|
December 31, 2022
|
December 31, 2021
|
|||||||
|
Operating cost related to Mature Clinics
|
$
|
337,606
|
$
|
320,882
|
||||
|
Operating cost related to 2022 Clinic Additions
|
12,425
|
74
|
||||||
|
Operating cost related to 2021 Clinic Additions
|
20,792
|
10,299
|
||||||
|
Operating cost related to clinics sold or closed in 2022
|
2,810
|
4,561
|
||||||
|
Operating cost related to clinics sold or closed in 2021
|
-
|
512
|
||||||
|
Operating cost - Physical therapy operations
|
373,633
|
336,328
|
||||||
|
Operating cost - Management contracts
|
6,402
|
8,306
|
||||||
|
Operating cost - Industrial injury prevention services
|
61,085
|
33,206
|
||||||
|
Total operating cost
|
$
|
441,120
|
$
|
377,840
|
||||
|
|
||||||||
|
U.S. Physical Therapy Press Release
|
Page 5
|
|
February 22, 2023
|
|
•
|
Total salaries and related costs, including all operations, were 57.7% of total revenue for the 2022 Year versus 56.3% for
the 2021 Year. Rent, supplies, contract labor and other costs as a percentage of total revenue were 21.0% for the 2022 Year versus 19.0% for the 2021 Year. The provision for credit losses as a percentage of total revenue was
1.0% for 2022 Year and 1.1% for 2021 Year. The Company experienced pressure on labor rates and other costs in 2022 due to the inflationary economic environment.
|
|
•
|
Gross profit for the 2022 Year was $112.0 million, a decrease of $5.2 million, or 4.4%, as compared to $117.2 million for
the 2021 Year. The gross profit percentage was 20.3% of total revenue for the 2022 Year as compared to 23.7% for the 2021 Year. The gross profit percentage for the Company’s physical therapy operations was 20.2% for the 2022
Year as compared to 23.8% for the 2021 Year. The gross profit percentage on management contracts was 20.9% for the 2022 Year as compared to 15.7% for the 2021 Year. The gross profit percentage for industrial injury prevention
services was 20.7% for the 2022 Year as compared to 24.4% for the 2021 Year. Gross profit in the 2022 Year was affected by pressure on labor rates and other costs due to the inflationary economic environment. The IIP margin in
2022 was impacted by the lower margin profile of the IIP Acquisition. The table below details the gross profit (in thousands):
|
|
For the Year Ended
|
||||||||
|
December 31, 2022
|
December 31, 2021
|
|||||||
|
|
||||||||
|
Physical therapy operations
|
$
|
94,364
|
$
|
104,941
|
||||
|
Management contracts
|
1,693
|
1,547
|
||||||
|
Industrial injury prevention services
|
15,967
|
10,694
|
||||||
|
Gross profit
|
$
|
112,024
|
$
|
117,182
|
||||
|
|
||||||||
|
•
|
See above discussion of the charge recorded for goodwill impairment.
|
|
•
|
Corporate office costs were $46.1 million for the 2022 Year as compared to $46.5 million for the 2021 Year. Corporate office
costs were 8.3% of total revenue for the 2022 Year as compared to 9.4% for the 2021 Year. The decrease was primarily due to lower estimated bonus expense in the 2022 Year than the 2021 Year.
|
|
•
|
Operating income was $56.8 million for the 2022 Year and $70.6 million for the 2021 Year.
|
|
•
|
The Company revalued contingent earn-out consideration related to some of its acquisitions resulting in the elimination of
$2.5 million of the of liabilities previously booked.
|
|
•
|
The Company recognized income of $1.2 million in the 2022 Full Year related to a joint venture company that provides physical
therapy services for patients at hospitals.
|
|
•
|
For the 2022 Year, the valuation of the put-right liability remained relatively the same. The put right relates to the
potential future purchase of a company that provides physical therapy and rehabilitation services to hospitals and other ancillary providers in a distinct market area. The owners have the right to put this transaction to the
Company in approximately five years from November 2021.
|
|
•
|
Other and interest income amounted to $0.9 million primarily derived from a gain of $0.6 million from the sales of various
clinics during the 2022 Year. Other and interest income was $0.2 million in 2021 Year.
|
|
•
|
Interest expense on debt and other, primarily from the $150 million term loan and revolving credit facility entered into in
June 2022, amounted to $5.8 million for the 2022 Year. The effective interest rate on the Company’s debt was 3.9% for the 2022 Year. See discussion of Other Comprehensive Income below for information related to the Company’s
interest rate swap agreement. For the 2021 Year, interest expense, primarily from the Company’s revolving line of credit, was $0.9 million.
|
|
•
|
The provision for income tax was $12.2 million for the 2022 Year and $15.3 million for the 2021 Year. The provision for income
tax as a percentage of income before taxes less net income attributable to non-controlling interest (effective tax rate) was 27.4% for the 2022 Year and 27.2% for the 2021 Year. See table below ($ in thousands):
|
|
For the Year Ended
|
||||||||
|
|
December 31, 2022
|
December 31, 2021
|
||||||
|
Income before taxes
|
$
|
55,571
|
$
|
73,196
|
||||
|
Less: net income attributable to non-controlling interest:
|
||||||||
|
Redeemable non-controlling interest - temporary equity
|
(6,902
|
)
|
(11,358
|
)
|
||||
|
Non-controlling interest - permanent equity
|
(4,347
|
)
|
(5,735
|
)
|
||||
|
$
|
(11,249
|
)
|
$
|
(17,093
|
)
|
|||
|
Income before taxes less net income attributable to non-controlling interest
|
$
|
44,322
|
$
|
56,103
|
||||
|
Provision for income taxes
|
$
|
12,164
|
$
|
15,272
|
||||
|
Percentage
|
27.4
|
%
|
27.2
|
%
|
||||
|
•
|
Net income attributable to redeemable non-controlling interest (temporary equity) was $6.9 million for the 2022 Year as
compared to net income attributable to redeemable non-controlling interest (temporary equity) of $11.4 million for the 2021 Year. Net income attributable to non-controlling interest (permanent equity) was $4.3 million for the
2022 Year and $5.7 million for the 2021 Year. During the 2022 Year, $2.7 million of the goodwill impairment charge related to redeemable non-controlling interest (temporary equity).
|
|
U.S. Physical Therapy Press Release
|
Page 6
|
|
February 22, 2023
|
|
•
|
The Company’s net income attributable to its shareholders was $32.2 million for the 2022 Year, and $40.8 million for the 2021 Year. Inclusive
of the charge for revaluation of non-controlling interest, net of taxes, the amount is $29.3 million, or $2.25 per diluted share, for the 2022 Year, and $31.1 million, or $2.41 per diluted share for the 2021 Year. See table on
page 14.
|
|
•
|
For the 2022 Year, the Company’s Operating Results, a non-GAAP measure, was $35.0 million, or $2.70 per diluted share, as compared to $40.8
million (excluding Relief Funds), or $3.17 per diluted share, for the 2021 Year. For the 2021 Year, the Company’s Operating Results including Relief Funds was $43.7 million, or $3.39 per diluted share. See table on page 14.
|
|
•
|
For the 2022 Year, the Company’s Adjusted EBITDA, a non-GAAP measure, was $73.7 million, as compared to $73.8 million,
excluding Relief Funds, for the 2021 Year. See definition, explanation and calculation of Adjusted EBITDA, a non-GAAP measure, in the schedule on pages 13 and 14.
|
Other Comprehensive Income
The Company entered into an interest rate swap agreement in May 2022, which became
effective on June 30, 2022. The maturity date of the swap agreement is June 30, 2027. It has a $150 million notional value adjusted concurrently with scheduled principal payments made on the term loan. Beginning in July 2022, the Company
pays a fixed one-month SOFR rate of interest of 2.815%. The total interest rate in any period also includes an applicable margin based on the Company’s consolidated leverage ratio. In the 2022 Fourth Quarter and 2022 Full Year, the
Company’s interest rate including the applicable margin was 4.665%. Unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other comprehensive income (loss), net of tax. The fair value
of the interest rate swap at December 31, 2022, was $5.4 million, which has been included within Other assets (current and long term) in the accompanying Consolidated Balance Sheet. The impact of the interest rate swap on the accompanying
Consolidated Statements of Comprehensive Income was an unrealized loss of $0.4 million, net of tax, for the 2022 Fourth Quarter, and an unrealized gain of $4.0 million, net of tax, for the 2022 Year.
Quarterly Dividend
The Company’s Board of Directors
increased the Company’s quarterly dividend on February 21, 2023, from $0.41 per share to $0.43 per share, an increase of 4.9%. The Board of Directors subsequently declared a quarterly dividend of $0.43 per share payable on April 7, 2023, to shareholders of record on March 10, 2023.
Impact of COVID-19
Relief Funds
In March 2020 in response to the COVID-19 pandemic, the federal government approved the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including $100.0 billion in
appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to the coronavirus, and for reimbursing eligible health care
providers for lost revenues and health care related expenses that are attributable to COVID-19. For the 2021 Year, the Company recorded income of approximately $4.6 million of payments under the CARES Act (“Relief Funds”). Under the
Company’s accounting policy, these payments were recorded as Other income – Relief Funds. These funds are not required to be repaid upon attestation and compliance with certain terms and conditions, which could change materially based on
evolving grant compliance provisions and guidance provided by the U.S. Department of Health and Human Services. Currently, the Company can attest and comply with the terms and conditions. The Company will continue to monitor the evolving
guidelines and may record adjustments as additional information is released.
Medicare Accelerated and Advance Payment Program (“MAAPP Funds”)
The CARES Act allowed for qualified healthcare providers to receive advanced payments under
the existing MAAPP funds during the COVID-19 pandemic. Under this program, healthcare providers could choose to receive advanced payments for future Medicare services provided. The Company applied for and received approval to receive MAAPP
Funds from Centers for Medicare & Medicaid Services in April 2020. The Company recorded the $14.1 million in advance payments received as a liability. During the quarter ended March 31, 2021, the Company repaid the MAAPP funds of $14.1
million rather than applying them to future services performed.
Management Provides 2023 Earnings Guidance
Please note that the earnings guidance represents projected Adjusted EBITDA from existing operations and excludes future acquisitions. The annual guidance figures will not be updated unless there is a material development that causes management to believe that Adjusted EBITDA will be significantly outside the given range.
Fourth Quarter and Year Ended 2022 Conference Call
U.S. Physical Therapy's management will host a conference call at 10:30 a.m. Eastern Time, 9:30 a.m. Central
Time, on February 23, 2023, to discuss results for the Company's 2022 Fourth Quarter and Year ended December 31, 2022. Interested parties may participate in the call by dialing (866) 952-8559 Primary or (785) 424-1743 Alternate and
entering reservation number USPHQ422 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via webcast, go to the Company's website at www.usph.com at least 15 minutes early to register, download and
install any necessary audio software. The conference call will be archived and can be accessed until May 23, 2023, at U.S. Physical Therapy’s website.
|
U.S. Physical Therapy Press Release
|
Page 7
|
|
February 22, 2023
|
Forward-Looking Statements
This press release contains statements that are considered to be forward-looking within the meaning under Section 21E
of the Securities Exchange Act of 1934, as amended. These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. These
statements (often using words such as “believes”, “expects”, “intends”, “plans”, “appear”, “should” and similar words) involve risks and uncertainties that could cause actual results to differ materially from those we expect. Included among
such statements may be those relating to new clinics, availability of personnel and the reimbursement environment. The forward-looking statements are based on our current views and assumptions and actual results could differ materially from those anticipated in such forward-looking statements as a result of certain risks, uncertainties, and factors, which include, but
are not limited to:
•
the multiple effects of the impact of public health crises and epidemics/pandemics, such as the novel strain of COVID-19 and its variants, for which the total financial magnitude cannot be currently estimated;
•
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
•
revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
•
changes in reimbursement rates or payment methods from third party payors including government agencies, and changes in the deductibles and co-pays owed by patients;
•
compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;
•
competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and
other intangible assets;
•
the impact of COVID-19 related vaccination and/or testing mandates at the federal, state and/or local level, which could have an adverse impact on staffing, revenue, costs and the results of operations;
•
changes as the result of government enacted national healthcare reform;
•
business and regulatory conditions including federal and state regulations;
•
governmental and other third party payor inspections, reviews, investigations and audits, which may result in sanctions or reputational harm and increased costs;
• revenue
and earnings expectations;
|
•
|
some of our acquisition agreements contain contingent consideration, the value of which may impact future
financial results;
|
|
•
|
one of our acquisition agreements includes a Put Right for a potential purchase of a company and we may
or may not have the capital necessary to satisfy this obligation;
|
•
legal actions, which could subject us to increased operating costs and uninsured liabilities;
• general economic conditions, including but not limited to inflationary and recessionary periods;
• availability and cost of qualified physical therapists;
• personnel productivity and hiring, training and retaining qualified personnel;
• competitive environment in the industrial injury prevention services business, which could result in the termination or nonrenewal of contractual service arrangements and other adverse financial consequences for that
service line;
• acquisitions, and the successful integration of the operations of the acquired businesses;
• impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interest (minority interests);
• maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;
• a security breach of our or our third party vendors’ information technology systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and
Accountability Act of 1996 of the Health Information Technology for Economic and Clinical Health Act;
• maintaining clients for which we perform management, industrial injury prevention related services, and other services, as a breach or termination of those contractual arrangements by such clients could cause operating
results to be less than expected;
• maintaining adequate internal controls;
• maintaining necessary insurance coverage;
• availability, terms, and use of capital; and
• weather and other seasonal factors.
In addition to the above, see Risk Factors in Item 1A of our Annual Report on Form 10-K for
the year ended December 31, 2021 and the additional risk factors below:
Our debt and financial obligations could adversely affect our financial
condition, our ability to obtain future financing, and our ability to operate our business.
We have outstanding debt obligations that could adversely affect our financial condition and
limit our ability to successfully implement our business strategy. Furthermore, from time to time, we may need additional financing to support our business and pursue our business strategy, including strategic acquisitions. Our ability
to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets, and other factors. We cannot assure that additional financing will be available to us
on favorable terms when required, or at all.
Our loan agreements contain certain
restrictions and requirements that among other things:
|
•
|
require us to maintain a quarterly fixed charge coverage ratio and minimum working capital ratio;
|
|
•
|
limit our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions,
to fund growth or for general corporate purposes;
|
|
•
|
limit our future ability to refinance our indebtedness on terms acceptable to us or at all;
|
|
•
|
limit our flexibility in planning for or reacting to changes in our business and market conditions or in funding our
strategic growth plan; and
|
|
•
|
impose on us financial and operational restrictions.
|
Our ability to meet our debt service obligations will depend on our future performance, which will be affected
by the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 1, 2022. If we do not generate enough cash flow to pay our debt service obligations, we may be required to
refinance all or part of our existing debt, sell our assets, borrow more money or raise equity. There is no guarantee that we will be able to take any of these actions on a timely basis, on terms satisfactory to us, or at all.
|
U.S. Physical Therapy Press Release
|
Page 8
|
|
February 22, 2023
|
If we fail to satisfy our debt service obligations or the other restrictions and requirements in our loan
agreements, we could be in default. Unless cured or waived, a default would permit lenders to accelerate the maturity of the debt under the credit agreement and to foreclose upon the collateral securing the debt.
Our outstanding loans bear interest at variable rates. We are exposed to certain market risks during the ordinary course of
business due to adverse changes in interest rates. The exposure to interest rate risk primarily results from our variable-rate borrowing. Fluctuations in interest rates can be volatile and the Company’s risk management activities do not
eliminate these risks. In May 2022, we entered into an interest rate swap agreement to manage these risks. While intended to reduce the effects of fluctuations in these prices and rates, these transactions may limit our potential
gains or expose us to losses. If our counterparties to such transactions or the sponsors fail to honor their obligations due to financial distress, we would be exposed to potential losses or the inability to recover anticipated gains
from these transactions. Some of our acquisition agreements contain contingent consideration, the value of which may impact future financial
results.
Some of our acquisition agreements include contingent earn-out consideration, the fair value of which is
estimated as of the acquisition date based on the present value of the expected contingent payments as determined using weighted probabilities of possible future payments. These fair value estimates contain unobservable inputs and
estimates that could materially differ from the actual future results. The fair value of the contingent earn out consideration could increase or decrease, as applicable. Changes in the fair value of contingent earn-outs will be
reflected in our results of operations in the period in which they are recognized, the amount of which may be material and cause volatility in our financial results.
Our business depends upon hiring, training and retaining qualified
employees.
Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while
controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. We compete with rehabilitation companies and other businesses for many of our
clinical and non-clinical employees, and turnover in these positions can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain
qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. If we are unable to hire, properly train and retain qualified
employees, we could experience higher employment costs and reduced revenues, which could adversely affect our earnings.
One
of our acquisition agreements contains a Put Right related to a potential future purchase of a majority interest in a separate company.
One of our acquisition agreements includes
a Put Right for the potential future purchase of a majority interest in a separate company at a purchase price which is derived based on a specified multiple of the separate company’s historical earnings. The exercise of the
Put Right is outside of our control. In the event the Put Right is triggered, we are required to purchase the aforementioned equity interest at the
calculated purchase price described above. The resulting purchase price may be greater than the fair value of such equity interests at the time, and we may or may not have the capital necessary to satisfy such contractual purchase
obligation, in which case we could be in breach.
Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our
forward-looking statements. Please see the other sections of this report and our other periodic reports filed with the Securities and Exchange Commission (the “SEC”) for more information on these factors. Our forward-looking statements
represent our estimates and assumptions only as of the date of this report. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement may no longer be accurate.
About U.S. Physical Therapy, Inc.
Founded in 1990, U.S. Physical Therapy, Inc. currently operates 640 outpatient physical therapy clinics in 40
states. The Company's clinics provide preventative and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, treatment for neurologically-related injuries and rehabilitation of injured workers.
In addition to owning and operating clinics, the Company manages 40 physical therapy facilities for unaffiliated third parties, including hospitals and physician groups. The Company also has an industrial injury prevention services
business which provides onsite services for clients’ employees including injury prevention and rehabilitation, performance optimization, post-offer employment testing, functional capacity evaluations, and ergonomic assessments.
More information about U.S. Physical Therapy, Inc. is available at www.usph.com. The information included on that website is not incorporated into this press release.
|
U.S. Physical Therapy Press Release
|
Page 9
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
Three Months Ended
|
For the Year Ended
|
|||||||||||||||
|
December 31, 2022
|
December 31, 2021
|
December 31, 2022
|
December 31, 2021
|
|||||||||||||
|
Net patient revenue
|
$
|
120,146
|
$
|
113,511
|
$
|
464,590
|
$
|
438,330
|
||||||||
|
Other revenue
|
21,036
|
16,322
|
88,554
|
56,692
|
||||||||||||
|
Net revenue
|
141,182
|
129,833
|
553,144
|
495,022
|
||||||||||||
|
Operating cost:
|
||||||||||||||||
|
Salaries and related costs
|
82,317
|
75,296
|
319,191
|
278,469
|
||||||||||||
|
Rent, supplies, contract labor and other
|
29,678
|
25,971
|
116,381
|
94,066
|
||||||||||||
|
Provision for credit losses
|
1,356
|
1,383
|
5,548
|
5,305
|
||||||||||||
|
Total operating cost
|
113,351
|
102,650
|
441,120
|
377,840
|
||||||||||||
|
Gross profit
|
27,831
|
27,183
|
112,024
|
117,182
|
||||||||||||
|
Goodwill Impairment
|
9,112
|
-
|
9,112
|
-
|
||||||||||||
|
Corporate office costs
|
11,925
|
10,718
|
46,111
|
46,533
|
||||||||||||
|
Operating income
|
6,794
|
16,465
|
56,801
|
70,649
|
||||||||||||
|
Other income and expense
|
||||||||||||||||
|
Relief Funds
|
-
|
4,597
|
-
|
4,597
|
||||||||||||
|
Resolution of a payor matter
|
-
|
-
|
-
|
1,216
|
||||||||||||
|
Settlement of a legal matter
|
-
|
(2,635
|
)
|
-
|
(2,635
|
)
|
||||||||||
|
Change in fair value of contingent earn-out consideration
|
520
|
-
|
2,520
|
-
|
||||||||||||
|
Equity in earnings of unconsolidated affiliate
|
192
|
112
|
1,175
|
112
|
||||||||||||
|
Other and interest income
|
69
|
41
|
859
|
199
|
||||||||||||
|
Change in revaluation of put-right liability
|
(776
|
)
|
-
|
(5
|
)
|
-
|
||||||||||
|
Interest expense - debt and other, net
|
(2,239
|
)
|
(191
|
)
|
(5,779
|
)
|
(942
|
)
|
||||||||
|
Total other income and expense
|
(2,234
|
)
|
1,924
|
(1,230
|
)
|
2,547
|
||||||||||
|
Income before taxes
|
4,560
|
18,389
|
55,571
|
73,196
|
||||||||||||
|
Provision for income taxes
|
1,212
|
3,946
|
12,164
|
15,272
|
||||||||||||
|
Net income
|
3,348
|
14,443
|
43,407
|
57,924
|
||||||||||||
|
Less: net loss (income) attributable to non-controlling interest:
|
||||||||||||||||
|
Redeemable non-controlling interest - temporary equity
|
318
|
(2,689
|
)
|
(6,902
|
)
|
(11,358
|
)
|
|||||||||
|
Non-controlling interest - permanent equity
|
(1,059
|
)
|
(1,541
|
)
|
(4,347
|
)
|
(5,735
|
)
|
||||||||
|
(741
|
)
|
(4,230
|
)
|
(11,249
|
)
|
(17,093
|
)
|
|||||||||
|
Net income attributable to USPH shareholders
|
$
|
2,607
|
$
|
10,213
|
$
|
32,158
|
$
|
40,831
|
||||||||
|
Basic and diluted earnings per share attributable to USPH shareholders
|
$
|
(0.01
|
)
|
$
|
0.73
|
$
|
2.25
|
$
|
2.41
|
|||||||
|
Shares used in computation - basic and diluted
|
13,002
|
12,912
|
12,985
|
12,898
|
||||||||||||
|
Dividends declared per common share
|
$
|
0.41
|
$
|
0.38
|
$
|
1.64
|
$
|
1.46
|
||||||||
|
U.S. Physical Therapy Press Release
|
Page 10
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
Three Months Ended
|
For the Year Ended
|
|||||||||||||||
|
December 31, 2022
|
December 31, 2021
|
December 31, 2022
|
December 31, 2021
|
|||||||||||||
|
Net income
|
$
|
3,348
|
$
|
14,443
|
$
|
43,407
|
$
|
57,924
|
||||||||
|
Other comprehensive loss
|
||||||||||||||||
|
Unrealized gain on cash flow hedge
|
(564
|
)
|
-
|
5,378
|
-
|
|||||||||||
|
Tax effect at statutory rate (federal and state) of 25.55%
|
144
|
-
|
(1,374
|
)
|
-
|
|||||||||||
|
Comprehensive income
|
$
|
2,928
|
$
|
14,443
|
$
|
47,411
|
$
|
57,924
|
||||||||
|
Comprehensive income attributable to non-controlling interest
|
(741
|
)
|
(4,230
|
)
|
(11,249
|
)
|
(17,093
|
)
|
||||||||
|
Comprehensive income attributable to USPH shareholders
|
$
|
2,187
|
$
|
10,213
|
$
|
36,162
|
$
|
40,831
|
||||||||
|
U.S. Physical Therapy Press Release
|
Page 11
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
December 31, 2022
|
December 31, 2021
|
||||||
|
ASSETS
|
(unaudited)
|
|||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
31,594
|
$
|
28,567
|
||||
|
Patient accounts receivable, less allowance for credit losses of $2,829 and $2,768, respectively
|
51,934
|
46,272
|
||||||
|
Accounts receivable - other
|
16,671
|
16,144
|
||||||
|
Other current assets
|
11,067
|
4,183
|
||||||
|
Total current assets
|
111,266
|
95,166
|
||||||
|
Fixed assets:
|
||||||||
|
Furniture and equipment
|
62,074
|
58,743
|
||||||
|
Leasehold improvements
|
42,877
|
39,194
|
||||||
|
Fixed assets, gross
|
104,951
|
97,937
|
||||||
|
Less accumulated depreciation and amortization
|
80,203
|
74,958
|
||||||
|
Fixed assets, net
|
24,748
|
22,979
|
||||||
|
Operating lease right-of-use assets
|
103,004
|
96,427
|
||||||
|
Investment in unconsolidated affiliate
|
12,131
|
12,215
|
||||||
|
Goodwill
|
494,101
|
434,679
|
||||||
|
Other identifiable intangible assets, net
|
108,755
|
86,382
|
||||||
|
Other assets
|
4,149
|
1,578
|
||||||
|
Total assets
|
$
|
858,154
|
$
|
749,426
|
||||
|
|
||||||||
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable - trade
|
$
|
3,300
|
$
|
3,268
|
||||
|
Accounts payable - due to seller of acquired business
|
3,204
|
3,203
|
||||||
|
Accrued expenses
|
37,413
|
45,705
|
||||||
|
Current portion of operating lease liabilities
|
33,709
|
30,475
|
||||||
|
Current portion of term loan and notes payable
|
7,863
|
830
|
||||||
|
Total current liabilities
|
85,489
|
83,481
|
||||||
|
Notes payable, net of current portion
|
1,913
|
3,587
|
||||||
|
Revolving line of credit
|
31,000
|
114,000
|
||||||
|
Term Loan, net of current portion and deferred financing costs
|
142,918
|
-
|
||||||
|
Deferred taxes
|
21,303
|
14,385
|
||||||
|
Operating lease liabilities, net of current portion
|
77,934
|
74,185
|
||||||
|
Other long-term liabilities
|
13,029
|
7,345
|
||||||
|
Total liabilities
|
373,586
|
296,983
|
||||||
|
|
||||||||
|
Redeemable non-controlling interest - temporary equity
|
167,515
|
155,262
|
||||||
|
|
||||||||
|
Commitments and Contingencies
|
||||||||
|
|
||||||||
|
U.S. Physical Therapy, Inc. ("USPH") shareholders’ equity:
|
||||||||
|
Preferred stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding
|
-
|
-
|
||||||
|
Common stock, $.01 par value, 20,000,000 shares authorized,
|
||||||||
|
15,216,326 and 15,126,160 shares issued, respectively
|
152
|
151
|
||||||
|
Additional paid-in capital
|
110,317
|
102,688
|
||||||
|
Accumulated other comprehensive gain
|
4,004
|
-
|
||||||
|
Retained earnings
|
232,948
|
224,395
|
||||||
|
Treasury stock at cost, 2,214,737 shares
|
(31,628
|
)
|
(31,628
|
)
|
||||
|
Total USPH shareholders’ equity
|
315,793
|
295,606
|
||||||
|
Non-controlling interest - permanent equity
|
1,260
|
1,575
|
||||||
|
Total USPH shareholders' equity and non-controlling interest - permanent equity
|
317,053
|
297,181
|
||||||
|
Total liabilities, redeemable non-controlling interest,
|
||||||||
|
USPH shareholders' equity and non-controlling interest - permanent equity
|
$
|
858,154
|
$
|
749,426
|
||||
|
|
||||||||
|
U.S. Physical Therapy Press Release
|
Page 12
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
|
Year Ended
|
|||||||
|
|
December 31, 2022
|
December 30, 2021
|
||||||
|
OPERATING ACTIVITIES
|
||||||||
|
Net income including non-controlling interest
|
$
|
43,407
|
$
|
57,924
|
||||
|
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating
activities:
|
||||||||
|
Depreciation and amortization
|
14,743
|
11,591
|
||||||
|
Provision for credit losses
|
5,548
|
5,305
|
||||||
|
Equity-based awards compensation expense
|
7,264
|
7,867
|
||||||
|
Deferred income taxes
|
4,309
|
5,688
|
||||||
|
Change in revaluation of put-right liability
|
5
|
-
|
||||||
|
Change in fair value of contingent earn-out consideration
|
(2,520
|
)
|
-
|
|||||
|
(Gain) loss on sale of clinics and fixed assets
|
(643
|
)
|
-
|
|||||
|
Impairment of Goodwill
|
9,112
|
-
|
||||||
|
Earnings in unconsolidated affiliate
|
(1,175
|
)
|
(112
|
)
|
||||
|
Other
|
(83
|
)
|
(134
|
)
|
||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Increase in patient accounts receivable
|
(10,279
|
)
|
(9,417
|
)
|
||||
|
(Increase) decrease in accounts receivable - other
|
(307
|
)
|
(1,538
|
)
|
||||
|
(Decrease) increase in other assets
|
(5,940
|
)
|
(633
|
)
|
||||
|
(Decrease) Increase in accounts payable and accrued expenses
|
(7,755
|
)
|
4,657
|
|||||
|
(Decrease) increase in other long-term liabilities
|
2,851
|
(4,792
|
)
|
|||||
|
Net cash provided by operating activities
|
58,537
|
76,406
|
||||||
|
|
||||||||
|
INVESTING ACTIVITIES
|
||||||||
|
Purchase of fixed assets
|
(8,248
|
)
|
(8,201
|
)
|
||||
|
Purchase of majority interest in businesses, net of cash acquired
|
(59,788
|
)
|
(86,823
|
)
|
||||
|
Purchase of redeemable non-controlling interest, temporary equity
|
(14,987
|
)
|
(28,465
|
)
|
||||
|
Purchase of non controlling interest-permanent
|
(280
|
)
|
(1,274
|
)
|
||||
|
Proceeds on sale of partnership interest - redeemable non-controlling interest
|
402
|
69
|
||||||
|
Distributions from unconsolidated affiliate
|
1,259
|
152
|
||||||
|
Sale of non-controlling interest - permanent
|
-
|
131
|
||||||
|
Proceeds on sales of partnership interest, clinics and fixed assets
|
373
|
275
|
||||||
|
Net cash used in investing activities
|
(81,269
|
)
|
(124,136
|
)
|
||||
|
|
||||||||
|
FINANCING ACTIVITIES
|
||||||||
|
Distributions to non-controlling interest, permanent and temporary equity
|
(15,348
|
)
|
(16,931
|
)
|
||||
|
Cash dividends paid to shareholders
|
(21,321
|
)
|
(18,765
|
)
|
||||
|
Proceeds from revolving line of credit
|
101,000
|
316,000
|
||||||
|
Proceeds from term loan
|
150,000
|
-
|
||||||
|
Payments on revolving line of credit
|
(184,000
|
)
|
(218,000
|
)
|
||||
|
Payments on Term Loan
|
(1,875
|
)
|
-
|
|||||
|
Principal payments on notes payable
|
(930
|
)
|
(4,899
|
)
|
||||
|
(Payment) receipt of Medicare Accelerated and Advance Funds
|
-
|
(14,054
|
)
|
|||||
|
Payment of loan costs
|
(1,779
|
)
|
-
|
|||||
|
Other
|
12
|
28
|
||||||
|
Net cash used in financing activities
|
25,759
|
43,379
|
||||||
|
|
||||||||
|
Net decrease in cash and cash equivalents
|
3,027
|
(4,351
|
)
|
|||||
|
Cash and cash equivalents - beginning of period
|
28,567
|
32,918
|
||||||
|
Cash and cash equivalents - end of period
|
$
|
31,594
|
$
|
28,567
|
||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Income taxes
|
$
|
7,615
|
$
|
12,214
|
||||
|
Interest paid
|
$
|
5,687
|
$
|
1,352
|
||||
|
Non-cash investing and financing transactions during the period:
|
||||||||
|
Purchase of businesses - seller financing portion
|
$
|
1,574
|
$
|
3,050
|
||||
|
Notes payable related to purchase of redeemable non-controlling interest, temporary equity
|
$
|
1,074
|
$
|
1,759
|
||||
|
Notes payable related to purchase of non-controlling interest, permanent equity
|
$
|
296
|
$
|
-
|
||||
|
Notes receivable related to sale of partnership interest - redeemable non-controlling interest
|
$
|
1,580
|
$
|
914
|
||||
|
U.S. Physical Therapy Press Release
|
Page 13
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED EBITDA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
The following tables provide detail of the diluted earnings per share computation and
reconcile net income attributable to USPH shareholders calculated in accordance with GAAP to Operating Results and Adjusted EBITDA. Management believes providing Operating Results and Adjusted EBITDA to investors is useful information for
comparing the Company's period-to-period results.
Operating Results, a non-GAAP measure, equals net income attributable to USPH shareholders per the consolidated
statements of income less the change in the revaluation of the put-right liability and the change in the fair value of a contingent earn-out payment. In accordance with GAAP, the revaluation of redeemable non-controlling interest, net of
tax, is included in the earnings per basic and diluted share calculation, although it is not included in net income but charged directly to retained earnings.
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest
income, interest expense, taxes, depreciation, amortization, gain on revaluation of put-right liability, equity-based awards compensation expense, change in the fair value of a contingent earn-out payment and related portion for
non-controlling interests. Management believes reporting Adjusted EBITDA is useful information for investors in comparing the Company’s period-to-period results as well as comparing with similar businesses which report adjusted EBITDA as
defined by their company.
Management uses Operating Results and Adjusted EBITDA, which eliminates certain items
described above that can be subject to volatility and unusual costs, as one the principal measures to evaluate and monitor financial performance period over period. Management believes that Operating Results and Adjusted EBITDA is useful
information for investors to use in comparing the Company's period-to-period results as well as for comparing with other similar businesses since most do not have redeemable instruments and therefore have different equity structures.
Operating Results and Adjusted EBITDA are not measures of financial performance under GAAP.
Adjusted EBITDA and Operating Results should not be considered in isolation or as an alternative to, or substitute for, net income attributable to USPH shareholders presented in the consolidated financial statements.
|
U.S. Physical Therapy Press Release
|
Page 14
|
|
February 22, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED EBITDA
2022 PERIODS COMPARED TO 2021 PERIODS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||||||||||||||
|
|
2022
|
2021
|
*
|
2022
|
2021
|
*
|
||||||||||
|
Computation of earnings per share - USPH shareholders:
|
||||||||||||||||
|
Net income attributable to USPH shareholders
|
$
|
2,607
|
$
|
10,213
|
$
|
32,158
|
$
|
40,831
|
||||||||
|
Charges to retained earnings:
|
||||||||||||||||
|
Revaluation of redeemable non-controlling interest
|
(3,697
|
)
|
(1,121
|
)
|
(3,890
|
)
|
(13,011
|
)
|
||||||||
|
Tax effect at statutory rate (federal and state) of 25.55%
|
945
|
286
|
994
|
3,324
|
||||||||||||
|
$
|
(145
|
)
|
$
|
9,378
|
$
|
29,262
|
$
|
31,144
|
||||||||
|
Earnings per share (basic and diluted)
|
$
|
(0.01
|
)
|
$
|
0.73
|
$
|
2.25
|
$
|
2.41
|
|||||||
|
|
||||||||||||||||
|
Adjustments:
|
||||||||||||||||
|
Goodwill impairment charge
|
9,112
|
-
|
9,112
|
-
|
||||||||||||
|
Change in fair value of contingent earn-out consideration
|
(520
|
)
|
-
|
(2,520
|
)
|
-
|
||||||||||
|
Change in revaluation of put-right liability
|
776
|
-
|
5
|
-
|
||||||||||||
|
Expenses related to executive officer transitions
|
-
|
-
|
-
|
1,301
|
||||||||||||
|
Relief Funds
|
-
|
(4,597
|
)
|
-
|
(4,597
|
)
|
||||||||||
|
Settlement of a legal matter
|
-
|
2,635
|
-
|
2,635
|
||||||||||||
|
Allocation to non-controlling interests
|
(2,734
|
)
|
676
|
(2,734
|
)
|
676
|
||||||||||
|
Revaluation of redeemable non-controlling interest
|
3,697
|
1,121
|
3,890
|
13,011
|
||||||||||||
|
Tax effect at statutory rate (federal and state)
|
(2,640
|
)
|
42
|
(1,981
|
)
|
(3,328
|
)
|
|||||||||
|
Operating Results (a non-GAAP measure)
|
$
|
7,546
|
$
|
9,255
|
$
|
35,034
|
$
|
40,842
|
||||||||
|
Relief Funds
|
-
|
4,597
|
-
|
4,597
|
||||||||||||
|
Allocation to non-controlling interests
|
-
|
(715
|
)
|
-
|
(715
|
)
|
||||||||||
|
Tax effect at statutory rate (federal and state) of 25.55%
|
-
|
(992
|
)
|
-
|
(992
|
)
|
||||||||||
|
Operating Results (including Relief Funds) (a non-GAAP measure)
|
$
|
7,546
|
$
|
12,145
|
$
|
35,034
|
$
|
43,732
|
||||||||
|
Basic and diluted Operating Results per share (a non-GAAP measure)
|
||||||||||||||||
|
Including Relief Funds
|
$
|
0.58
|
$
|
0.94
|
$
|
2.70
|
$
|
3.39
|
||||||||
|
Excluding Relief Funds
|
$
|
0.58
|
$
|
0.72
|
$
|
2.70
|
$
|
3.17
|
||||||||
|
Shares used in computation - basic and diluted
|
13,002
|
12,912
|
12,985
|
12,898
|
||||||||||||
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||||||||||||||
|
|
2022
|
2021
|
*
|
2022
|
2021
|
*
|
||||||||||
|
|
||||||||||||||||
|
Net income attributable to USPH shareholders
|
$
|
2,607
|
$
|
10,213
|
$
|
32,158
|
$
|
40,831
|
||||||||
|
|
||||||||||||||||
|
Adjustments:
|
||||||||||||||||
|
Depreciation and amortization
|
3,793
|
3,071
|
14,743
|
11,591
|
||||||||||||
|
Goodwill impairment
|
9,112
|
-
|
9,112
|
-
|
||||||||||||
|
Change in fair value of contingent earn-out consideration
|
(520
|
)
|
-
|
(2,520
|
)
|
-
|
||||||||||
|
Settlement of a legal matter
|
-
|
2,635
|
-
|
2,635
|
||||||||||||
|
Other and interest income
|
(69
|
)
|
(41
|
)
|
(859
|
)
|
(199
|
)
|
||||||||
|
Change in revaluation of put-right liability
|
776
|
-
|
5
|
-
|
||||||||||||
|
Interest expense - debt and other, net
|
2,239
|
191
|
5,779
|
942
|
||||||||||||
|
Provision for income taxes
|
1,212
|
3,946
|
12,164
|
15,272
|
||||||||||||
|
Equity-based awards compensation expense
|
1,802
|
1,587
|
7,264
|
7,867
|
||||||||||||
|
Allocation to non-controlling interests
|
(3,098
|
)
|
(358
|
)
|
(4,185
|
)
|
(1,277
|
)
|
||||||||
|
Adjusted EBITDA (including Relief Funds) (a non-GAAP measure)
|
17,854
|
21,244
|
73,661
|
77,662
|
||||||||||||
|
Relief Funds
|
$
|
-
|
$
|
(4,597
|
)
|
$
|
-
|
$
|
(4,597
|
)
|
||||||
|
Allocation to non-controlling interests
|
-
|
715
|
-
|
715
|
||||||||||||
|
Adjusted EBITDA (excluding Relief Funds) (a non-GAAP measure)
|
$
|
17,854
|
$
|
17,362
|
$
|
73,661
|
$
|
73,780
|
||||||||
|
* Revised to conform to current year presentation.
|
||||||||||||||||
|
U.S. Physical Therapy Press Release
|
Page 15
|
|
February 22, 2023
|
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF PHYSICAL THERAPY OPERATIONS
CLINIC COUNT
|
Date
|
Number of Clinics
|
|
March 31, 2021
|
564
|
|
June 30, 2021
|
575
|
|
September 30, 2021
|
579
|
|
December 31, 2021
|
591
|
|
March 31, 2022
|
601
|
|
June 30, 2022
|
608
|
|
September 30, 2022
|
614
|
|
December 31, 2022
|
640
|