USPH 8-K
U S Physical Therapy Inc /Nv (USPH)
8-K
2023-11-08
For: 2023-11-07
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): November 7, 2023
(Exact name of registrant as specified in its charter)
|
|
|
|
||
|
(State or other jurisdiction
of incorporation or organization)
|
(Commission
File Number)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
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):
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)
|
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
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).
|
Emerging growth company
|
|
|
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.
|
◻
|
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL RESULTS.
On November 7, 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 services,
reported results for the three and nine months ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
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.
ITEM 8.01 OTHER EVENTS
On November 6, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.43 per share payable on December 8, 2023, to shareholders of record on November 16,
2023.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
|
Exhibits
|
Description of Exhibits
|
|
|
Registrant's Press Release dated November 7, 2023
|
||
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.
|
U.S. PHYSICAL THERAPY, INC.
|
|||||||
|
Dated: November 7, 2023
|
By:
|
/s/ CAREY HENDRICKSON
|
|||||
|
Carey Hendrickson
|
|||||||
|
Chief Financial Officer
|
|||||||
|
(duly authorized officer and principal financial and accounting officer)
|
|||||||
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
Third Quarter 2023 Results
Reports Record-High Third Quarter Patient Volume
Houston, TX, November 7,
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 services, today reported results for the three and nine months ended September 30, 2023.
THIRD QUARTER FINANCIAL HIGHLIGHTS
|
•
|
Adjusted EBITDA, a non-Generally Accepted Accounting Principles (“GAAP”) measure, was $18.6 million for the three months ended September 30, 2023 (“2023 Third Quarter”), an increase
of $1.6 million from $17.0 million for the three months ended September 30, 2022 (“2022 Third Quarter”). See pages 15 and 16 of this release for the definition and reconciliation of Adjusted EBITDA to the most directly comparable GAAP
measure.
|
|
•
|
Net income attributable to USPH’s shareholders, a GAAP measure, was $9.3 million for the 2023 Third Quarter compared to $9.6 million for the 2022 Third Quarter. In accordance with
GAAP, the revaluation of non-controlling interest, net of taxes, is not included in net income but is charged directly to retained earnings; however, this change is included in the computation of earnings per share. Earnings per share
were $0.51 for the 2023 Third Quarter as compared to $0.72 for the 2022 Third Quarter.
|
|
•
|
Operating Results per share, a non-GAAP measure, were $0.62 per share for the 2023 Third Quarter as compared to $0.58 for the 2022 Third Quarter. See pages 15 and 16 of this release
for the definition and reconciliation of Operating Results per share to the most directly comparable GAAP measure.
|
|
•
|
Net patient revenue from physical therapy operations increased 9.0% to $127.2 million for the 2023 Third Quarter from $116.7 million for the 2022 Third Quarter due primarily to
increased volume from the 58 net new clinics added since the comparable prior year period as well as higher visits at the mature clinics, partially offset by lower net rate per patient visit.
|
|
•
|
Average visits per clinic per day was 29.7 in the 2023 Third Quarter, a record-high for a third quarter in the Company’s history, compared to 28.8 average visits per clinic per day in
the 2022 Third Quarter. Total patient visits increased 10.8% in the 2023 Third Quarter as compared to the 2022 Third Quarter, with patient visits at mature clinics up 1.3%.
|
|
•
|
Net rate per patient visit was $102.37 in the 2023 Third Quarter compared to $104.01 in the 2022 Third Quarter. The decrease in net rate was due to the combined Medicare rate
reductions in 2022 and 2023. All other payor categories, including commercial and workers compensation, increased as compared to the prior year. Net rate per patient visit increased sequentially in the 2023 Third Quarter from the net
rate of $102.03 in the second quarter of 2023.
|
|
•
|
Physical therapy total operating costs per patient visit were $84.49 in the 2023 Third Quarter, a decrease of 0.8% from $85.14 in the 2022 Third Quarter. Physical therapy salaries and
related costs per visit were $60.35 in the 2023 Third Quarter, a decrease of 1.0% from $60.99 in the 2022 Third Quarter.
|
|
•
|
The Company’s physical therapy gross profit increased 5.4% in the 2023 Third Quarter as compared to the 2022 Third Quarter and has increased 10.9% for the nine months ended September
30, 2023, versus the nine months ended September 30, 2022.
|
|
U.S. Physical Therapy Press Release
|
Page 2
|
|
November 7, 2023
|
|
|
•
|
Industrial injury prevention (“IIP”) services revenue was $19.5 million for the 2023 Third Quarter compared to $20.2 million in the 2022 Third Quarter. IIP services operating margin
increased to 22.7% in the 2023 Third Quarter from 21.9% in the 2022 Third Quarter.
|
|
•
|
During the 2023 Third Quarter, the Company added 19 clinics, including the acquisitions described below, and closed three clinics, bringing its total clinic count to 672 as of
September 30, 2023, as compared to 614 clinics as of September 30, 2022.
|
|
•
|
On July 31, 2023, the Company acquired a 70% equity interest in a five-clinic practice for a purchase price of $2.1 million, with the current practice owners retaining a 30% equity
interest. The business currently generates approximately $2.4 million in annual revenues.
|
|
•
|
On September 29, 2023, the Company acquired 70% equity interests in two physical therapy practices with the current practice owners retaining 30% equity interests for a combined
purchase price of $13.9 million. The businesses currently generate approximately $7.2 million in combined annual revenues and approximately 48,000 visits on an annualized basis across five total clinics.
|
|
•
|
On October 31, 2023, the Company, through one of its IIP subsidiaries, acquired an IIP services and ergonomics software business for approximately $4.0 million. The Company’s IIP
subsidiary purchased all of the IIP services business and 55% of the ergonomics software business. The combined businesses currently generate approximately $2.6 million in annual revenue.
|
|
•
|
On November 6, 2023, the Company’s Board of Directors declared a quarterly dividend of $0.43 per share payable on December 8, 2023, to shareholders of record on November 16, 2023.
|
|
•
|
Management currently expects the Company’s Adjusted EBITDA for 2023 to be within its provided guidance range of $75.0 million to $80.0 million, most likely at the low-to-mid area of
such range. The earnings guidance represents projected Adjusted EBITDA from existing operations and excludes future acquisitions. See “2023 Earnings Guidance” below for more information.
|
MANAGEMENT’S COMMENTS
Chris
Reading, Chief Executive Officer, said, “Our team continues to produce excellent results despite the pressure from Medicare
rate reductions, inflationary impacts, and an improving but still challenging hiring environment. Our clinic volumes were once again at record levels in the third quarter and our total operating costs per visit continued to trend below
last year. We also added 19 clinics from acquisitions and de novos during the quarter, and purchased an IIP services and ergonomics software business subsequent to quarter-end that provides us an opportunity to expand the reach of our
ergonomics program. We achieved rate increases in all payor categories other than Medicare in the third quarter and will continue to focus on this initiative to drive greater progress in our net rate as we go forward.”
Carey Hendrickson, Chief Financial Officer, said, “Our balance sheet is in an outstanding position with $149
million of debt fixed at a below-market rate and approximately $120 million of excess cash, mostly from our secondary offering in May, ready for deployment into growth initiatives.”
2023 THIRD QUARTER VERSUS 2022 THIRD QUARTER
Total net revenue
for the 2023 Third Quarter was $150.0 million, an increase of 7.5%, compared to $139.6 million for the 2022 Third Quarter. The following table provides a breakdown of total net revenue.
|
Three Months Ended September 30,
|
Variance
|
|||||||||||||||||||
|
2023
|
2022
|
$
|
%
|
|||||||||||||||||
|
Revenue related to:
|
(in thousands, except percentages)
|
|||||||||||||||||||
|
Mature Clinics (1)
|
$
|
111,943
|
$
|
111,598
|
$
|
345
|
0.3
|
%
|
||||||||||||
|
2023 clinic additions
|
3,598
|
-
|
3,598
|
*
|
(2) |
|
||||||||||||||
|
2022 clinic additions
|
11,674
|
3,899
|
7,775
|
*
|
(2) |
|
||||||||||||||
|
Clinics sold or closed (3)
|
28
|
1,213
|
(1,185
|
)
|
*
|
(2) |
|
|||||||||||||
|
Net patient revenue from physical therapy operations
|
127,243
|
116,710
|
10,533
|
9.0
|
%
|
|||||||||||||||
|
Other revenue
|
889
|
753
|
136
|
18.1
|
%
|
|||||||||||||||
|
Physical therapy operations
|
128,132
|
117,463
|
10,669
|
9.1
|
%
|
|||||||||||||||
|
Industrial injury prevention services
|
19,486
|
20,155
|
(669
|
)
|
(3.3
|
)%
|
||||||||||||||
|
Management contracts
|
2,389
|
1,984
|
405
|
20.4
|
%
|
|||||||||||||||
|
$
|
150,007
|
$
|
139,602
|
$
|
10,405
|
7.5
|
%
|
|||||||||||||
|
(1)
|
See Glossary of Terms –
Revenue Metrics for the definition.
|
|
(2)
|
Not meaningful.
|
|
(3)
|
Revenue from closed clinics includes revenue from the eight and 16 clinics closed during the nine months ended
September 30, 2023 and the year ended December 31, 2022, respectively.
|
|
U.S. Physical Therapy Press Release
|
Page 3
|
|
November 7, 2023
|
|
•
|
Revenue from physical therapy operations increased $10.7 million, or 9.1%, to $128.1 million for the 2023 Third Quarter from $117.5 million for the 2022 Third Quarter primarily
due to a record-high average visits for a third quarter in the Company’s history, and an increase in volume from the 58 net new clinics added since the comparable prior year period, partially offset by a decrease in net rate per
patient visit. The number of patient visits increased 10.8% to 1,242,954 for the 2023 Third Quarter from 1,122,070 in the 2022 Third Quarter, with visits at mature clinics up 1.3% over the same periods.
|
Net rate per patient visit was $102.37 in the 2023 Third
Quarter as compared to $104.01 in the 2022 Third Quarter. The decrease in net rate was due to the combined Medicare rate reductions in 2022 and 2023. All other payor categories, including commercial and workers compensation, increased as
compared to the prior year. Net rate per patient visit increased sequentially in the 2023 Third Quarter from the net rate of $102.03 in the second quarter of 2023.
|
•
|
IIP services revenue decreased $0.7 million, or 3.3%, to $19.5 million for the 2023 Third Quarter as compared to $20.2 million for the 2022 Third Quarter.
|
Operating costs were $122.1 million for the 2023 Third Quarter, or 81.4% of
net revenue, compared to $112.8 million, or 80.8% of net revenue, for the 2022 Third Quarter. Total physical therapy costs per visit were $84.49 in the 2023 Third Quarter, a decrease of 0.8% from $85.14 in the 2022 Third Quarter. Salaries
and related costs were 59.9% of net revenue for the 2023 Third Quarter versus 58.6% for the 2022 Third Quarter. On a cost per patient visit basis, physical therapy salaries and related costs per visit were $60.35 in the 2023 Third Quarter,
a decrease of 1.0% from $60.99 in the 2022 Third Quarter. Rent, supplies, contract labor and other costs as a percentage of total revenue were 20.5% for the 2023 Third Quarter versus 21.3% for the 2022 Third Quarter. The provision for
credit losses, as a percentage of total revenue, was 1.0% for both the 2023 Third Quarter and the 2022 Third Quarter. The following table provides a breakdown of operating costs.
|
Three Months Ended September 30,
|
Variance
|
|||||||||||||||||||
|
2023
|
2022
|
$ |
|
%
|
||||||||||||||||
|
Operating costs related to:
|
(In thousands, except percentages)
|
|||||||||||||||||||
|
Mature Clinics (1)
|
$
|
91,822
|
$
|
90,811
|
$
|
1,011
|
1.1
|
%
|
||||||||||||
|
2023 Clinic additions
|
3,395
|
-
|
3,395
|
*
|
(2) |
|
||||||||||||||
|
2022 Clinic additions
|
9,665
|
3,482
|
6,183
|
*
|
(2) |
|
||||||||||||||
|
Clinics sold or closed (3)
|
137
|
1,238
|
(1,101
|
)
|
*
|
(2) |
|
|||||||||||||
|
Physical therapy operations
|
105,019
|
95,531
|
9,488
|
9.9
|
%
|
|||||||||||||||
|
Industrial injury prevention services
|
15,062
|
15,750
|
(688
|
)
|
(4.4
|
)%
|
||||||||||||||
|
Management contracts
|
1,997
|
1,537
|
460
|
29.9
|
%
|
|||||||||||||||
|
|
$
|
122,078
|
$
|
112,818
|
$
|
9,260
|
8.2
|
%
|
||||||||||||
|
(1)
|
See Glossary of
Terms – Revenue Metrics for the definition.
|
|
(2)
|
Not meaningful.
|
|
(3)
|
Operating costs from closed clinics include costs from the eight and 16 clinics closed or sold during the
nine months ended September 30, 2023 and the year ended December 31, 2022, respectively.
|
|
•
|
Operating costs from physical therapy operations increased $9.5 million, or 9.9%, to $105.0 million in the 2023 Third Quarter from $95.5 million in the 2022 Third Quarter
primarily driven by costs associated with the 58 net new clinics since the comparable prior year period as well as increased patient visits at mature clinics.
|
|
•
|
Operating costs from IIP services were down $0.7 million, or 4.4%, versus the comparable prior year period.
|
|
U.S. Physical Therapy Press Release
|
Page 4
|
|
November 7, 2023
|
Gross profit for the 2023 Third Quarter increased $1.1 million, or 4.3%, to
$27.9 million from $26.8 million for the 2022 Third Quarter. Gross profit margin decreased to 18.6% in the 2023 Third Quarter from 19.2% in the 2022 Third Quarter. The following table provides a detailed breakdown of gross profit and
related gross profit margins.
|
Three Months Ended September 30,
|
||||||||||||||||||||||||
|
2023
|
2022
|
Variance
|
||||||||||||||||||||||
|
|
|
$ |
Margin %
|
$ |
Margin %
|
$ |
|
%
|
||||||||||||||||
|
|
(In thousands, except percentages)
|
|||||||||||||||||||||||
|
Physical therapy operations
|
$
|
23,113
|
18.0
|
%
|
$
|
21,932
|
18.7
|
%
|
$
|
1,181
|
5.4
|
%
|
||||||||||||
|
Industrial injury prevention services
|
4,424
|
22.7
|
%
|
4,405
|
21.9
|
%
|
19
|
0.4
|
%
|
|||||||||||||||
|
Management contracts
|
392
|
16.4
|
%
|
447
|
22.5
|
%
|
(55
|
)
|
(12.3
|
)%
|
||||||||||||||
|
Gross profit
|
$
|
27,929
|
18.6
|
%
|
$
|
26,784
|
19.2
|
%
|
$
|
1,145
|
4.3
|
%
|
||||||||||||
Corporate office costs were $12.0 million, or 8.0% of net revenue, for the
2023 Third Quarter compared to $11.9 million, or 8.5% of net revenue, for the 2022 Third Quarter.
Operating income for the 2023 Third Quarter was $15.9 million, or 10.6% of net revenue, and $14.9
million, or 10.7% of net revenue, for the 2022 Third Quarter.
Total other (expense) income, net, was ($0.1) million in the 2023 Third Quarter compared to $1.1
million in the 2022 Third Quarter.
|
•
|
Interest expense, net of $0.9 million savings from the interest rate swap arrangement discussed in the “Balance Sheet and Cash Flow” section
below, was $2.1 million for the 2023 Third Quarter compared to $2.0 million in the 2022 Third Quarter. The interest rate on the Company’s credit facilities, net of the savings from the interest rate swap, was 4.9% for the 2023
Third Quarter, with an all-in effective interest rate, including all associated costs, of 5.6%.
|
|
•
|
Interest income from investing excess cash (proceeds from the secondary offering sale of the Company’s stock completed in May 2023) in a high-yield savings account was $1.7
million during the 2023 Third Quarter.
|
|
•
|
The Company revalued the contingent earn-out consideration related to acquisitions and recognized $0.2 million as income (a reduction in the related liability) in the 2023 Third
Quarter compared to $2.0 million in the 2022 Third Quarter.
|
|
•
|
The revaluation of a put-right liability resulted in $0.1 million of expense (an increase in the related liability) for the 2023 Third Quarter compared to $0.8 million of income
for the 2022 Third Quarter. The put-right, which expires in November 2026, 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 provision for income taxes was $3.6 million in the 2023 Third Quarter
compared to $3.2 million during the 2022 Third Quarter. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest (effective tax rate) was 27.8% for the 2023 Third Quarter
and 25.2% for the 2022 Third Quarter. A computation of our effective income tax rate is as follows:
|
Three Months Ended September 30,
|
||||||||
|
2023
|
2022
|
|||||||
|
(In thousands, except percentages)
|
||||||||
|
Income before taxes
|
$
|
15,779
|
$
|
16,036
|
||||
|
Less: Net income attributable to non-controlling interest:
|
||||||||
|
Redeemable non-controlling interest - temporary equity
|
(1,976
|
)
|
(2,037
|
)
|
||||
|
Non-controlling interest - permanent equity
|
(992
|
)
|
(1,227
|
)
|
||||
|
(2,968
|
)
|
(3,264
|
)
|
|||||
|
Income before taxes less net income attributable to non-controlling interest
|
12,811
|
12,772
|
||||||
|
Provision for income taxes
|
$
|
3,557
|
$
|
3,215
|
||||
|
Effective income tax rate
|
27.8
|
%
|
25.2
|
%
|
||||
Net income attributable to non-controlling interest (temporary and permanent) was $3.0 million in the 2023 Third Quarter compared to $3.3 million in the 2022 Third
Quarter.
|
U.S. Physical Therapy Press Release
|
Page 5
|
|
November 7, 2023
|
Adjusted EBITDA, a non-GAAP measure, increased $1.6 million to $18.6
million for the 2023 Third Quarter from $17.0 million in the 2022 Third Quarter while Operating Results, also a non-GAAP measure, increased $1.7 million to $9.2 million, or $0.62 per share, in the 2023 Third Quarter from $7.5 million,
or $0.58 per share, in the 2022 Third Quarter. The increase in both Adjusted EBITDA and Operating Results was primarily associated with clinic additions since the comparable prior year period. See pages 15 and 16 of this release for
the definition and reconciliation of Adjusted EBITDA and Operating Results to the most directly comparable GAAP measure.
NINE MONTHS ENDED SEPTEMBER 30, 2023 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2022
Total net revenue for nine months ended September 30, 2023 (“2023 Nine Months”) was $450.0 million, an increase
of 9.2%, compared to $412.0 million for the nine months ended September 30, 2022 (“2022 Nine Months”). The table below provides a breakdown of total net revenue.
|
Nine Months Ended September 30,
|
Variance
|
|||||||||||||||||||
|
2023
|
2022
|
$ |
|
%
|
||||||||||||||||
|
Revenue related to:
|
(in thousands, except percentages)
|
|||||||||||||||||||
|
Mature Clinics (1)
|
$
|
340,830
|
$
|
332,629
|
$
|
8,201
|
2.5
|
%
|
||||||||||||
|
2023 clinic additions
|
5,888
|
-
|
5,888
|
*
|
(2) | |||||||||||||||
|
2022 clinic additions
|
35,965
|
7,294
|
28,671
|
*
|
(2) |
|
||||||||||||||
|
Clinics sold or closed (3)
|
421
|
4,521
|
(4,100
|
)
|
*
|
(2) |
|
|||||||||||||
|
Net patient revenue from physical therapy operations
|
383,104
|
344,444
|
38,660
|
11.2
|
%
|
|||||||||||||||
|
Other revenue
|
2,479
|
2,523
|
(44
|
)
|
(1.7
|
)%
|
||||||||||||||
|
Physical therapy operations
|
385,583
|
346,967
|
38,616
|
11.1
|
%
|
|||||||||||||||
|
Industrial injury prevention services
|
58,082
|
58,660
|
(578
|
)
|
(1.0
|
)%
|
||||||||||||||
|
Management contracts
|
6,336
|
6,335
|
1
|
0.0
|
%
|
|||||||||||||||
|
$
|
450,001
|
$
|
411,962
|
$
|
38,039
|
9.2
|
%
|
|||||||||||||
|
(1)
|
See Glossary of
Terms - Revenue Metrics for the definition.
|
|
(2)
|
Not meaningful.
|
|
(3)
|
Revenue from closed clinics includes revenue from the eight and 16 clinics closed or sold during the nine
months ended September 30, 2023 and the year ended December 31, 2022, respectively.
|
|
•
|
Revenue from physical therapy
operations increased $38.6 million, or 11.1%, to $385.6 million for the 2023 Nine Months from $347.0 million for the 2022 Nine Months primarily due to higher average visits per clinic per day (30.0 for the 2023 Nine Months
versus 28.7 for the 2022 Nine Months) and an increase in volume from the 58 net new clinics added since the comparable prior year period, partially offset by a decrease in net rate per visit. The number of patient visits
increased 12.2% to 3,737,584 for the 2023 Nine Months from 3,331,143 for the 2022 Nine Months, with patient visits at our mature clinics up 3.2% over the same periods.
|
Net rate per patient visit decreased to $102.50 in
the 2023 Nine Months from $103.40 in the 2022 Nine Months due to the combined Medicare rate reductions in 2022 and 2023, including the discontinuation of sequestration relief on Medicare visits effective in July 2022.
|
•
|
Revenue from IIP services decreased slightly to $58.1 million for the 2023 Nine Months as compared to $58.7 million for the 2022 Nine Months.
|
|
U.S. Physical Therapy Press Release
|
Page 6
|
|
November 7, 2023
|
Operating costs
were $359.0 million for the 2023 Nine Months, or 79.8% of net revenue, compared to $327.8 million, or 79.6% of net revenue, for the 2022 Nine Months. Salaries and related costs were 58.4% of net revenue for the 2023 Nine Months
versus 57.5% for the 2022 Nine Months. Rent, supplies, contract labor and other costs as a percentage of total revenue were 20.4% for the 2023 Nine Months versus 21.0% for the 2022 Nine Months. The provision for credit losses as a
percentage of total revenue was 1.0% in both the 2023 Nine Months and the 2022 Nine Months. On a cost per patient visit basis, physical therapy salaries and related costs per visit were $59.01 for the 2023 Nine Months, a decrease
of 0.6% from $59.34 for the 2022 Nine Months. Total physical therapy costs per visit were $82.35 for the 2023 Nine Months, a decrease of 0.9% from $83.09 for the 2022 Nine Months. The following table provides a breakdown of
operating costs.
|
Nine Months Ended September 30,
|
Variance
|
|||||||||||||||||||
|
2023
|
2022
|
$ |
%
|
|||||||||||||||||
|
Operating costs related to:
|
(In thousands, except percentages)
|
|||||||||||||||||||
|
Mature Clinics (1)
|
$
|
273,031
|
$
|
266,324
|
$
|
6,707
|
2.5
|
%
|
||||||||||||
|
2023 Clinic additions
|
5,701
|
-
|
5,701
|
*
|
(2) |
|
|
|||||||||||||
|
2022 Clinic additions
|
28,175
|
6,597
|
21,578
|
*
|
(2) |
|
|
|||||||||||||
|
Clinics sold or closed (3)
|
880
|
3,877
|
(2,997
|
)
|
*
|
(2) |
|
|
||||||||||||
|
Physical therapy operations
|
307,787
|
276,798
|
30,989
|
11.2
|
%
|
|||||||||||||||
|
Industrial injury prevention services
|
45,904
|
45,980
|
(76
|
)
|
(0.2
|
)%
|
||||||||||||||
|
Management contracts
|
5,317
|
4,991
|
326
|
6.5
|
%
|
|||||||||||||||
|
|
$
|
359,008
|
$
|
327,769
|
$
|
31,239
|
9.5
|
%
|
||||||||||||
|
(1)
|
See Glossary
of Terms - Revenue Metrics for the definition.
|
|
(2)
|
Not meaningful.
|
|
(3)
|
Operating costs from closed clinics include costs from the eight and 16 clinics closed or sold during
the nine months ended September 30, 2023, and the year ended December 31, 2022, respectively.
|
|
•
|
Physical therapy operating costs increased $31.0 million, or 11.2%, to $307.8 million in the 2023 Nine Months from $276.8 million in the 2022 Nine Months primarily driven
by costs associated with the 58 net new clinics added since the comparable prior year period as well as the 3.2% increase in patient visits at mature clinics.
|
|
•
|
Operating costs from IIP services decreased slightly to $45.9 million during the 2023 Nine Months from $46.0 million during the 2022 Nine Months.
|
Gross profit increased $6.8 million, or 8.1%, to $91.0 million for the 2023 Nine Months from $84.2 million for the 2022 Nine Months. Gross profit margin
decreased slightly to 20.2% in the 2023 Nine Months from 20.4% in the 2022 Nine Months. The following table provides a detailed breakdown of gross profit and related gross profit margins.
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2023
|
2022
|
Variance
|
||||||||||||||||||||||
|
|
$ |
Margin %
|
|
$ |
Margin %
|
$ |
|
%
|
||||||||||||||||
|
|
(In thousands, except percentages)
|
|||||||||||||||||||||||
|
Physical therapy operations
|
$
|
77,796
|
20.2
|
%
|
$
|
70,169
|
20.2
|
%
|
$
|
7,627
|
10.9
|
%
|
||||||||||||
|
Industrial injury prevention services
|
12,178
|
21.0
|
%
|
12,680
|
21.6
|
%
|
(502
|
)
|
(4.0
|
)%
|
||||||||||||||
|
Management contracts
|
1,019
|
16.1
|
%
|
1,344
|
21.2
|
%
|
(325
|
)
|
(24.2
|
)%
|
||||||||||||||
|
Gross profit
|
$
|
90,993
|
20.2
|
%
|
$
|
84,193
|
20.4
|
%
|
$
|
6,800
|
8.1
|
%
|
||||||||||||
|
U.S. Physical Therapy Press Release
|
Page 7
|
|
November 7, 2023
|
Corporate office costs were $38.1 million, or 8.5% of net revenue, for the 2023 Nine Months
compared to $34.2 million, or 8.3% of net revenue, for the 2022 Nine Months. The increase of $3.9 million, or 11.3%, in corporate office costs was primarily due to higher salaries related to merit increases, staff additions to support a
larger number of clinics and inflationary and related impacts.
Operating income increased 5.9%, to $52.9 million, or 11.8% of net revenues, for the 2023 Nine
Months from $50.0 million, or 12.1% of net revenues, in the 2022 Nine Months.
Total other (expense) income, net, was ($3.7) million during the 2023 Nine Months compared to $1.0 million during
the 2022 Nine Months.
|
•
|
Interest expense, net of $2.3 million savings from the interest rate swap arrangement discussed in the “Balance Sheet and Cash Flow” section
below, was $7.3 million for the 2023 Nine Months compared to $3.5 million in the 2022 Nine Months. The increase in interest expense was primarily due to a higher effective interest rate and increased borrowings to fund
acquisitions. The effective interest rate on the Company’s credit facilities, net of the savings from the interest rate swap, was 5.1% for the 2023 Nine Months, with an all-in interest rate, including all associated costs, of
5.7%.
|
|
•
|
Interest income from investing excess cash (proceeds from the secondary offering sale of the Company’s stock completed in May 2023) in a high-yield savings account was $2.2
million during the 2023 Nine Months.
|
|
•
|
The Company revalued the contingent earn-out consideration related to acquisitions and recognized $0.2 million as income (a reduction in the related liability) in the 2023
Nine Months compared to $2.0 million in the 2022 Nine Months.
|
|
•
|
The revaluation of a put-right liability resulted in $0.3 million of expense (an increase in the related liability) for the 2023 Nine Months compared to $0.8 million of
income (a decrease in the related liability) for the 2022 Nine Months. The put-right, which expires in November 2026, 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.
|
|
•
|
During the 2023 Nine Months, the Company recognized $0.5 million of income received under the Coronavirus Aid, Relief and Economic Security Act (“Relief Funds”). The Relief
Funds were received in prior years but were subject to certain compliance requirements which were met in the first quarter of 2023. The Company does not expect to receive or recognize any future Relief Funds. No such income
was recognized in the 2022 Nine Months.
|
The provision for income taxes was $10.8 million for the 2023 Nine
Months compared to $11.0 million for the 2022 Nine Months. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest (effective tax rate) was 28.1% for the 2023 Nine
Months and 27.0% for the 2022 Nine Months. A computation of our effective income tax rate is as follows:
|
Nine Months Ended September 30,
|
||||||||
|
|
2023
|
2022
|
||||||
|
(In thousands, except percentages)
|
||||||||
|
Income before taxes
|
$
|
49,270
|
$
|
51,011
|
||||
|
Less: net income attributable to non-controlling interest:
|
||||||||
|
Redeemable non-controlling interest - temporary equity
|
(7,616
|
)
|
(7,220
|
)
|
||||
|
Non-controlling interest - permanent equity
|
(3,314
|
)
|
(3,288
|
)
|
||||
|
(10,930
|
)
|
(10,508
|
)
|
|||||
|
Income before taxes less net income attributable to non-controlling interest
|
38,340
|
40,503
|
||||||
|
Provision for income taxes
|
$
|
10,757
|
$
|
10,952
|
||||
|
Percentage
|
28.1
|
%
|
27.0
|
%
|
||||
Net income attributable to non-controlling interest (temporary and
permanent) was $10.9 million for the 2023 Nine Months and $10.5 million for the 2022 Nine Months.
Adjusted EBITDA, a non-GAAP measure, was $58.7 million for the 2023
Nine Months, an increase of $2.9 million from $55.8 million for the 2022 Nine Months. The increase in Adjusted EBITDA was primarily associated with clinic additions since the comparable prior year period, partially offset by higher
corporate office costs.
Operating Results, a non-GAAP measure, was $27.4 million, or $1.97 per
share, in the 2023 Nine Months as compared to $27.5 million, or $2.12 per share, in the 2022 Nine Months.
See pages 15 and 16 of this release for the definition and
reconciliation of Adjusted EBITDA and Operating Results to the most directly comparable GAAP measure.
|
U.S. Physical Therapy Press Release
|
Page 8
|
|
November 7, 2023
|
BALANCE SHEET AND CASH FLOW
Total cash and cash equivalents were $147.7 million as of
September 30, 2023, compared to $31.6 million as of December 31, 2022. Additionally, the Company had $145.3 million of outstanding borrowings and $175.0 million in available credit under its credit facilities as of September 30,
2023, compared to $179.1 million of outstanding borrowings and $144.0 million in available credit under its credit facilities as of December 31, 2022.
On May 30, 2023, the Company completed a secondary offering of
its common stock resulting in net proceeds of $163.6 million after deducting fees associated with the transaction. A portion of the net proceeds was used to repay the $35.0 million then outstanding under the Company’s credit
facility while the remainder is expected to be used primarily for acquisitions. The Company’s cash is currently invested in a high-yield savings account which generated interest income of approximately $2.1 million in the 2023
Nine Months.
During the 2023 Nine Months, $55.1 million of cash was provided
by operating activities, $36.6 million was used in investing activities, and $97.5 million was provided by financing activities. The major uses of cash for investing activities included: purchase of majority interest in businesses
($23.0 million), purchase of non-controlling interests from existing partners ($8.1 million) and purchase of fixed assets ($7.1 million), while cash provided by financing activities included: proceeds from the secondary offering
discussed above ($163.6 million) offset by net payments of borrowings under our credit facilities ($33.8 million), dividends paid to shareholders ($17.7 million), and distributions to non-controlling interests ($11.8 million).
The Company entered into an interest rate swap effective on June
30, 2022, which will mature on June 30, 2027. It has a $150.0 million notional value adjusted concurrently with scheduled principal payments made on the Company’s term loan. On September 30, 2023, the fair value of the interest
rate swap was $7.7 million as compared to $5.4 million on December 31, 2022. The fair value of the interest rate swap is included in other assets (current and long term) in the accompanying consolidated balance sheet while the
increase in fair value is presented as unrealized gain in the accompanying consolidated statements of comprehensive income. The interest rate swap arrangement has generated $2.3 million in interest savings since its inception. The
average interest rate for the term loan during the 2023 Nine Months was 4.9%.
RECENT ACQUISITIONS
On July 31, 2023, the Company acquired a
70% equity interest in a five-clinic practice for a purchase price of $2.1 million, with the current practice owners retaining a 30% equity interest. The business currently generates approximately $2.4 million in annual
revenues.
On September 29, 2023, the Company acquired
70% equity interests in two practices with the current practice owners retaining 30% equity interests for a combined purchase price of $13.9 million. The businesses currently generate approximately $7.2 million in combined
annual revenues and approximately 48,000 visits on an annualized basis across five total clinics.
On October 31, 2023, the Company, through
one of its IIP subsidiaries, acquired an IIP services and ergonomics software business for approximately $4.0 million. The Company’s IIP subsidiary purchased all of the IIP services business and 55% of the ergonomics software
business. The businesses currently generate approximately $2.6 million in annual revenue.
The Company’s strategy is to continue acquiring outpatient
physical therapy practices, develop outpatient physical therapy clinics as satellites in existing partnerships, and continue acquiring companies that provide or serve the Company’s industrial injury prevention services.
QUARTERLY DIVIDEND
On November 6, 2023, the Company’s Board of Directors declared
a quarterly dividend of $0.43 per share payable on December 8, 2023, to shareholders of record on November 16, 2023.
2023 EARNINGS GUIDANCE
Management currently expects the Company’s Adjusted EBITDA for 2023 to be within
its previously provided guidance range of $75.0 million to $80.0 million, most likely in the low-to-mid area of such range. Management expects continued strong patient visits through the end of the year. Where the Company
falls within the range will depend largely on the ultimate strength of volumes in the fourth quarter, and the extent of growth in net rate from the third to the fourth quarter. 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.
CONFERENCE CALL INFORMATION
U.S.
Physical Therapy’s management will host a conference call at 10:30 a.m. ET / 9:30 a.m. CT, on November 8, 2023 to discuss the Company’s financial results for the three and nine months ended September 30, 2023. Interested
parties may participate in the call by dialing (800) 274-8461 (Primary) or (203) 518-9814 (Alternate) and conference ID of USPHQ323. Please call in approximately 10 minutes before the call is scheduled to begin. To listen to
the live call, go to the Company’s website at www.usph.com at least 15 minutes early to register, download and install any necessary audio software. If you are unable to listen live, a playback of the conference call
can be accessed until February 6, 2024 at the Company’s website.
|
U.S. Physical Therapy Press Release
|
Page 9
|
|
November 7, 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:
|
•
|
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
|
|
•
|
the impact of future public health crises and epidemics/pandemics, such as was the case with the novel strain of COVID-19 and its variants;
|
|
•
|
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;
|
|
•
|
one of our acquisition agreements contains a put right related to a future purchase of a majority interest in a separate company;
|
|
•
|
the impact of future vaccinations 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;
|
|
•
|
our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing and our ability to operate our
business;
|
|
•
|
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;
|
|
•
|
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;
|
|
•
|
actual or perceived events involving banking volatility or limited liability, defaults or other adverse developments that affect the U.S. or international
financial systems, may result in market wide liquidity problems which could have a material and adverse impact on our available cash and results of operations;
|
|
•
|
our business depends on hiring, training, and retaining qualified employees
|
|
•
|
availability and cost of qualified physical therapists;
|
|
•
|
competitive environment in the industrial injury prevention services business, which could result in the termination or non-renewal 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.
|
|
U.S. Physical Therapy Press Release
|
Page 10
|
|
November 7, 2023
|
Many factors are beyond our control. Given these uncertainties, you should not
place undue reliance on our forward-looking statements. For additional information regarding these and other risks and uncertainties, that could cause actual results to differ materially from those contained in our
forward-looking statements, please refer to “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 and any risk
factors contained in subsequent quarterly and annual reports we file with the SEC. 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 as a result of new information, future events, or otherwise, except as required by law.
GLOSSARY OF TERMS – REVENUE METRICS
Mature clinics are clinics opened or acquired prior to January 1, 2022, and are
still operating as of the balance sheet date.
Net rate per patient visit is net patient revenue related to our physical therapy
operations divided by total number of patient visits (defined below) during the periods presented.
Patient visits is the number of unique patient visits during the periods presented.
Average visits per day per clinic is patient visits divided by the number of days in
which normal business operations were conducted during the periods presented and further divided by the average number of clinics in operation during the periods presented.
ABOUT U.S. PHYSICAL THERAPY, INC.
Founded in 1990, U.S. Physical Therapy, Inc. currently operates 675 outpatient physical therapy clinics in
42 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 42 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 11
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
September 30, 2023
|
September 30, 2022
|
September 30, 2023
|
September 30, 2022
|
|||||||||||||
|
Net patient revenue
|
$
|
127,243
|
$
|
116,710
|
$
|
383,104
|
$
|
344,444
|
||||||||
|
Other revenue
|
22,764
|
22,892
|
66,897
|
67,518
|
||||||||||||
|
Net revenue
|
150,007
|
139,602
|
450,001
|
411,962
|
||||||||||||
|
Operating cost:
|
||||||||||||||||
|
Salaries and related costs
|
89,846
|
81,786
|
262,757
|
236,874
|
||||||||||||
|
Rent, supplies, contract labor and other
|
30,707
|
29,696
|
91,651
|
86,703
|
||||||||||||
|
Provision for credit losses
|
1,525
|
1,336
|
4,600
|
4,192
|
||||||||||||
|
Total operating cost
|
122,078
|
112,818
|
359,008
|
327,769
|
||||||||||||
|
Gross profit
|
27,929
|
26,784
|
90,993
|
84,193
|
||||||||||||
|
Corporate office costs
|
12,048
|
11,889
|
38,052
|
34,186
|
||||||||||||
|
Operating income
|
15,881
|
14,895
|
52,941
|
50,007
|
||||||||||||
|
Other (expense) income
|
||||||||||||||||
|
Interest expense, debt and other
|
(2,101
|
)
|
(2,013
|
)
|
(7,293
|
)
|
(3,540
|
)
|
||||||||
|
Interest income
|
1,673
|
-
|
2,191
|
-
|
||||||||||||
|
Change in fair value of contingent earn-out consideration
|
187
|
2,000
|
197
|
2,000
|
||||||||||||
|
Change in revaluation of put-right liability
|
(145
|
)
|
785
|
(344
|
)
|
771
|
||||||||||
|
Equity in earnings of unconsolidated affiliate
|
206
|
304
|
806
|
983
|
||||||||||||
|
Relief Funds
|
-
|
-
|
467
|
-
|
||||||||||||
|
Other
|
78
|
65
|
305
|
790
|
||||||||||||
|
Total other (expense) income
|
(102
|
)
|
1,141
|
(3,671
|
)
|
1,004
|
||||||||||
|
Income before taxes
|
15,779
|
16,036
|
49,270
|
51,011
|
||||||||||||
|
Provision for income taxes
|
3,557
|
3,215
|
10,757
|
10,952
|
||||||||||||
|
Net income
|
12,222
|
12,821
|
38,513
|
40,059
|
||||||||||||
|
Less: Net income attributable to non-controlling interest:
|
||||||||||||||||
|
Redeemable non-controlling interest - temporary equity
|
(1,976
|
)
|
(2,037
|
)
|
(7,616
|
)
|
(7,220
|
)
|
||||||||
|
Non-controlling interest - permanent equity
|
(992
|
)
|
(1,227
|
)
|
(3,314
|
)
|
(3,288
|
)
|
||||||||
|
(2,968
|
)
|
(3,264
|
)
|
(10,930
|
)
|
(10,508
|
)
|
|||||||||
|
Net income attributable to USPH shareholders
|
$
|
9,254
|
$
|
9,557
|
$
|
27,583
|
$
|
29,551
|
||||||||
|
Basic and diluted earnings per share attributable to USPH shareholders (1)
|
$
|
0.51
|
$
|
0.72
|
$
|
1.72
|
$
|
2.27
|
||||||||
|
Shares used in computation - basic and diluted
|
14,987
|
13,001
|
13,918
|
12,979
|
||||||||||||
|
Dividends declared per common share
|
$
|
0.43
|
$
|
0.41
|
$
|
1.29
|
$
|
1.23
|
||||||||
|
(1)
|
See page 16 for the calculation of basic and diluted earnings per share.
|
|
U.S. Physical Therapy Press Release
|
Page 12
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
|
September 30, 2023
|
September 30, 2022
|
September 30, 2023
|
September 30, 2022
|
||||||||||||
|
|
||||||||||||||||
|
Net income
|
$
|
12,222
|
$
|
12,821
|
$
|
38,513
|
$
|
40,059
|
||||||||
|
Other comprehensive loss
|
||||||||||||||||
|
Unrealized gain on cash flow hedge
|
1,276
|
6,473
|
2,340
|
5,942
|
||||||||||||
|
Tax effect at statutory rate (federal and state)
|
(326
|
)
|
(1,654
|
)
|
(598
|
)
|
(1,518
|
)
|
||||||||
|
Comprehensive income
|
$
|
13,172
|
$
|
17,640
|
$
|
40,255
|
$
|
44,483
|
||||||||
|
|
||||||||||||||||
|
Comprehensive income attributable to non-controlling interest
|
(2,968
|
)
|
(3,264
|
)
|
(10,930
|
)
|
(10,508
|
)
|
||||||||
|
Comprehensive income attributable to USPH shareholders
|
$
|
10,204
|
$
|
14,376
|
$
|
29,325
|
$
|
33,975
|
||||||||
|
|
||||||||||||||||
|
U.S. Physical Therapy Press Release
|
Page 13
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
|
September 30, 2023
|
December 31, 2022
|
|||||||
|
ASSETS
|
(unaudited)
|
|||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
147,685
|
$
|
31,594
|
||||
|
Patient accounts receivable, less allowance for credit losses of $2,847 and $2,829, respectively
|
52,958
|
51,934
|
||||||
|
Accounts receivable - other
|
18,469
|
16,671
|
||||||
|
Other current assets
|
9,387
|
11,067
|
||||||
|
Total current assets
|
228,499
|
111,266
|
||||||
|
Fixed assets:
|
||||||||
|
Furniture and equipment
|
64,507
|
62,074
|
||||||
|
Leasehold improvements
|
46,212
|
42,877
|
||||||
|
Fixed assets, gross
|
110,719
|
104,951
|
||||||
|
Less accumulated depreciation and amortization
|
84,651
|
80,203
|
||||||
|
Fixed assets, net
|
26,068
|
24,748
|
||||||
|
Operating lease right-of-use assets
|
102,665
|
103,004
|
||||||
|
Investment in unconsolidated affiliate
|
12,256
|
12,131
|
||||||
|
Goodwill
|
522,907
|
494,101
|
||||||
|
Other identifiable intangible assets, net
|
112,112
|
108,755
|
||||||
|
Other assets
|
5,679
|
4,149
|
||||||
|
Total assets
|
$
|
1,010,186
|
$
|
858,154
|
||||
|
|
||||||||
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable - trade
|
$
|
4,509
|
$
|
3,300
|
||||
|
Accounts payable - due to seller of acquired business
|
-
|
3,204
|
||||||
|
Accrued expenses
|
35,846
|
37,413
|
||||||
|
Current portion of operating lease liabilities
|
34,446
|
33,709
|
||||||
|
Current portion of term loan and notes payable
|
7,555
|
7,863
|
||||||
|
Total current liabilities
|
82,356
|
85,489
|
||||||
|
Notes payable, net of current portion
|
2,037
|
1,913
|
||||||
|
Revolving facility
|
-
|
31,000
|
||||||
|
Term loan, net of current portion and deferred financing costs
|
139,459
|
142,918
|
||||||
|
Deferred taxes
|
26,487
|
21,303
|
||||||
|
Operating lease liabilities, net of current portion
|
76,884
|
77,934
|
||||||
|
Other long-term liabilities
|
14,758
|
13,029
|
||||||
|
Total liabilities
|
341,981
|
373,586
|
||||||
|
|
||||||||
|
Redeemable non-controlling interest - temporary equity
|
174,697
|
167,515
|
||||||
|
|
||||||||
|
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, 17,202,053 and 15,216,326 shares issued,
respectively
|
172
|
152
|
||||||
|
Additional paid-in capital
|
279,124
|
110,317
|
||||||
|
Accumulated other comprehensive gain
|
5,746
|
4,004
|
||||||
|
Retained earnings
|
238,557
|
232,948
|
||||||
|
Treasury stock at cost, 2,214,737 shares
|
(31,628
|
)
|
(31,628
|
)
|
||||
|
Total USPH shareholders’ equity
|
491,971
|
315,793
|
||||||
|
Non-controlling interest - permanent equity
|
1,537
|
1,260
|
||||||
|
Total USPH shareholders' equity and non-controlling interest - permanent equity
|
493,508
|
317,053
|
||||||
|
Total liabilities, redeemable non-controlling interest,
|
||||||||
|
USPH shareholders' equity and non-controlling interest - permanent equity
|
$
|
1,010,186
|
$
|
858,154
|
||||
|
U.S. Physical Therapy Press Release
|
Page 14
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
|
|
Nine Months Ended
|
|||||||
|
|
September 30, 2023
|
September 30, 2022
|
||||||
|
OPERATING ACTIVITIES
|
||||||||
|
Net income including non-controlling interest
|
$
|
38,513
|
$
|
40,059
|
||||
|
Adjustments to reconcile net income including non-controlling interest to net cash provided by
operating activities:
|
||||||||
|
Depreciation and amortization
|
11,582
|
10,950
|
||||||
|
Provision for credit losses
|
4,600
|
4,192
|
||||||
|
Equity-based awards compensation expense
|
5,451
|
5,462
|
||||||
|
Change in deferred income taxes
|
5,393
|
6,077
|
||||||
|
Change in revaluation of put-right liability
|
344
|
(771
|
)
|
|||||
|
Change in fair value of contingent earn-out consideration
|
(197
|
)
|
(2,000
|
)
|
||||
|
Equity of earnings in unconsolidated affiliate
|
(806
|
)
|
(983
|
)
|
||||
|
Gain on sale of clinics and fixed assets
|
(106
|
)
|
(643
|
)
|
||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Increase in patient accounts receivable
|
(5,415
|
)
|
(7,585
|
)
|
||||
|
Increase in accounts receivable - other
|
(1,631
|
)
|
(4,551
|
)
|
||||
|
Increase (decrease) in other current and long term assets
|
2,489
|
(4,273
|
)
|
|||||
|
Decrease in accounts payable and accrued expenses
|
(5,609
|
)
|
(4,568
|
)
|
||||
|
Increase (decrease) in other long-term liabilities
|
535
|
(128
|
)
|
|||||
|
Net cash provided by operating activities
|
55,143
|
41,238
|
||||||
|
|
||||||||
|
INVESTING ACTIVITIES
|
||||||||
|
Purchase of fixed assets
|
(7,074
|
)
|
(7,290
|
)
|
||||
|
Purchase of majority interest in businesses, net of cash acquired
|
(22,994
|
)
|
(18,573
|
)
|
||||
|
Purchase of redeemable non-controlling interest, temporary equity
|
(7,804
|
)
|
(14,096
|
)
|
||||
|
Purchase of non controlling interest-permanent equity
|
(262
|
)
|
(280
|
)
|
||||
|
Proceeds on sale of partnership interest, clinics and fixed assets
|
7
|
740
|
||||||
|
Proceeds on sale of non-controlling interest, permanent equity
|
30
|
|||||||
|
Proceeds on sale of partnership interest - redeemable non-controlling interest, temporary
equity
|
815
|
401
|
||||||
|
Distributions from unconsolidated affiliate
|
681
|
1,220
|
||||||
|
Net cash used in investing activities
|
(36,601
|
)
|
(37,878
|
)
|
||||
|
|
||||||||
|
FINANCING ACTIVITIES
|
||||||||
|
Distributions to non-controlling interest, permanent and temporary equity
|
(11,777
|
)
|
(11,760
|
)
|
||||
|
Cash dividends paid to shareholders
|
(17,683
|
)
|
(15,990
|
)
|
||||
|
Proceeds from revolving facility
|
24,000
|
61,000
|
||||||
|
Proceeds from term loan
|
-
|
150,000
|
||||||
|
Proceeds from issuance of common stock pursuant to the secondary public offering, net of
issuance costs
|
163,646
|
-
|
||||||
|
Payments on revolving facility
|
(55,000
|
)
|
(175,000
|
)
|
||||
|
Principal payments on notes payable
|
(2,874
|
)
|
(496
|
)
|
||||
|
Payments on term loan
|
(2,813
|
)
|
(1,779
|
)
|
||||
|
Other
|
50
|
12
|
||||||
|
Net cash provided by financing activities
|
97,549
|
5,987
|
||||||
|
|
||||||||
|
Net decrease in cash and cash equivalents
|
116,091
|
9,347
|
||||||
|
Cash and cash equivalents - beginning of period
|
31,594
|
28,567
|
||||||
|
Cash and cash equivalents - end of period
|
$
|
147,685
|
$
|
37,914
|
||||
|
|
||||||||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
|
Cash paid during the period for:
|
||||||||
|
Income taxes
|
$
|
2,731
|
$
|
7,529
|
||||
|
Interest paid
|
$
|
6,992
|
$
|
2,159
|
||||
|
Non-cash investing and financing transactions during the period:
|
||||||||
|
Purchase of businesses - seller financing portion
|
$
|
1,860
|
$
|
824
|
||||
|
Notes payable related to purchase of redeemable non-controlling interest, temporary equity
|
$
|
1,017
|
$
|
1,074
|
||||
|
Notes receivable related to sale of redeemable non-controlling interest, temporary equity
|
$
|
3,064
|
$
|
1,580
|
||||
|
Notes payable related to the purchase of non-controlling interest, permanent equity
|
$
|
200
|
$
|
576
|
||||
|
Notes receivable related to the sale of non-controlling interest, permanent equity
|
$
|
397
|
$
|
-
|
||||
|
|
||||||||
|
U.S. Physical Therapy Press Release
|
Page 15
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
ADJUSTED EBITDA AND OPERATING RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
The following tables provide details of the basic and diluted earnings per share computation and reconcile
net income attributable to USPH shareholders calculated in accordance with GAAP to Adjusted EBITDA and Operating Results. Management believes providing Adjusted EBITDA and Operating Results to investors is useful information for
comparing the Company's period-to-period results.
Adjusted EBITDA, a non-GAAP measure, is defined as net income attributable to USPH shareholders before
interest income, interest expense, taxes, depreciation, amortization, change in fair value of contingent earn-out consideration, Relief Funds, changes in revaluation of put-right liability, equity-based awards compensation expense,
and related portions for non-controlling interests.
Operating Results, a non-GAAP measure, equals net income attributable to USPH shareholders less changes in
revaluation of put-right liability, Relief Funds, changes in fair value of contingent earn-out consideration, and any allocations to non-controlling interests, all net of taxes. Operating Results per share also exclude the impact of
the revaluation of redeemable non-controlling interest and the associated tax impact.
Management uses Adjusted EBITDA and Operating Results, which eliminates certain items described above that
can be subject to volatility and unusual costs, as the principal measures to evaluate and monitor financial performance period over period.Management believes that Adjusted EBITDA and Operating Results are useful measures 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.
Adjusted EBITDA and Operating Results 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 16
|
|
November 7, 2023
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
ADJUSTED EBITDA, EARNINGS PER SHARE AND OPERATING RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||
|
|
September 30, 2023
|
September 30, 2022
|
September 30, 2023
|
September 30, 2022*
|
||||||||||||
|
(In thousands, except per share data)
|
||||||||||||||||
|
Adjusted EBITDA
|
||||||||||||||||
|
Net income attributable to USPH shareholders
|
$
|
9,254
|
$
|
9,557
|
$
|
27,583
|
$
|
29,551
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Provision for income taxes
|
3,557
|
3,215
|
10,757
|
10,953
|
||||||||||||
|
Depreciation and amortization
|
3,966
|
3,652
|
11,582
|
10,950
|
||||||||||||
|
Interest expense, debt and other
|
2,101
|
2,013
|
7,293
|
3,540
|
||||||||||||
|
Equity-based awards compensation expense
|
1,859
|
1,802
|
5,451
|
5,462
|
||||||||||||
|
Change in revaluation of put-right liability
|
145
|
(785
|
)
|
344
|
(771
|
)
|
||||||||||
|
Change in fair value of contingent earn-out consideration
|
(187
|
)
|
(2,000
|
)
|
(197
|
)
|
(2,000
|
)
|
||||||||
|
Interest income
|
(1,673
|
)
|
-
|
(2,191
|
)
|
-
|
||||||||||
|
Other (income) expense
|
(78
|
)
|
(65
|
)
|
(305
|
)
|
(790
|
)
|
||||||||
|
Relief Funds
|
-
|
-
|
(467
|
)
|
-
|
|||||||||||
|
Allocation to non-controlling interests
|
(358
|
)
|
(402
|
)
|
(1,119
|
)
|
(1,098
|
)
|
||||||||
|
Adjusted EBITDA (a non-GAAP measure)
|
$
|
18,586
|
$
|
16,987
|
$
|
58,731
|
$
|
55,797
|
||||||||
|
Operating Results
|
||||||||||||||||
|
Net income attributable to USPH shareholders
|
$
|
9,254
|
$
|
9,557
|
$
|
27,583
|
$
|
29,551
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Change in fair value of contingent earn-out consideration
|
(187
|
)
|
(2,000
|
)
|
(197
|
)
|
(2,000
|
)
|
||||||||
|
Change in revaluation of put-right liability
|
145
|
(785
|
)
|
344
|
(771
|
)
|
||||||||||
|
Relief Funds
|
-
|
-
|
(467
|
)
|
-
|
|||||||||||
|
Allocation to non-controlling interest
|
-
|
33
|
||||||||||||||
|
Tax effect at statutory rate (federal and state)
|
11
|
711
|
73
|
708
|
||||||||||||
|
Operating Results (a non-GAAP measure)
|
$
|
9,223
|
$
|
7,483
|
$
|
27,369
|
$
|
27,488
|
||||||||
|
Operating Results per share (a non-GAAP measure)
|
$
|
0.62
|
$
|
0.58
|
$
|
1.97
|
$
|
2.12
|
||||||||
|
Earnings per share
|
||||||||||||||||
|
Computation of earnings per share - USPH shareholders:
|
||||||||||||||||
|
Net income attributable to USPH shareholders
|
$
|
9,254
|
$
|
9,557
|
$
|
27,583
|
$
|
29,551
|
||||||||
|
Charges to retained earnings:
|
||||||||||||||||
|
Revaluation of redeemable non-controlling interest
|
(2,242
|
)
|
(196
|
)
|
(4,988
|
)
|
(193
|
)
|
||||||||
|
Tax effect at statutory rate (federal and state)
|
573
|
50
|
1,274
|
49
|
||||||||||||
|
$
|
7,585
|
$
|
9,411
|
$
|
23,869
|
$
|
29,407
|
|||||||||
|
Earnings per share (basic and diluted)
|
$
|
0.51
|
$
|
0.72
|
$
|
1.72
|
$
|
2.27
|
||||||||
|
Shares used in computation - basic and diluted
|
14,987
|
13,001
|
13,918
|
12,979
|
||||||||||||
|
* Revised to conform to current year presentation.
|
||||||||||||||||
|
U.S. Physical Therapy Press Release
|
Page 17
|
|
November 7, 2023
|
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
REVENUE METRICS
|
Number of Clinics
|
Net Rate Per Patient Visit (1)
|
Patient Visits (1)
|
Average Visits Per Day Per Clinic (1)
|
|||||||||||||||||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
2023
|
2022
|
|||||||||||||||||||||||||
|
First quarter
|
647
|
601
|
$
|
103.12
|
$
|
103.00
|
1,227,490
|
1,063,519
|
29.8
|
27.9
|
||||||||||||||||||||||
|
Second quarter
|
656
|
608
|
$
|
102.03
|
$
|
103.18
|
1,267,140
|
1,145,554
|
30.4
|
29.5
|
||||||||||||||||||||||
|
Third quarter
|
672
|
614
|
$
|
102.37
|
$
|
104.01
|
1,242,954
|
1,122,070
|
29.7
|
28.8
|
||||||||||||||||||||||
|
Fourth quarter
|
640
|
$
|
104.28
|
1,152,139
|
29.1
|
|||||||||||||||||||||||||||
|
(1)
|
See definition of the metrics above in the Glossary of Terms – Revenue Metrics on page 10.
|