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 third quarter and nine months ended September 30, 2022 (“2022 Third Quarter” and “2022 Nine Months, respectively).
QUARTER HIGHLIGHTS
Management’s Comments
Chris Reading, Chief Executive Officer, said, “While our third quarter results were impacted by higher labor and other inflation-driven costs, volumes have remained solid, and I am encouraged by some early progress with respect to payer contract negotiations. On the development front, we are very excited to continue to add exceptional practices to our partner-centric portfolio of companies. Our industrial injury prevention business has almost doubled from the same period a year ago and our organic growth in that business has been considerable this year as well.”
Carey Hendrickson, Chief Financial Officer, said, “The cost mitigation efforts we began early in the third quarter are ongoing; however, we expect elevated costs to continue to impact our near-term results. With solid volumes and rates, we expect our full year results to be within our previous guidance ranges for Operating Results and Adjusted EBITDA, but most likely on the low end of our ranges.”
As previously disclosed, the Company’s guidance range for Adjusted EBITDA for the full year of 2022 is a range of $73.5 million to $75.4 million and for Operating Results is a range of $34.4 million to $35.8 million, or $2.65 to $2.75 per share.
Third Quarter 2022 Compared to Third Quarter 2021
|
|
Three Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
Revenue related to Mature Clinics |
|
$ |
106,485 |
|
|
$ |
106,631 |
|
Revenue related to 2022 Clinic Additions |
|
|
3,707 |
|
|
|
- |
|
Revenue related to 2021 Clinic Additions |
|
|
6,481 |
|
|
|
4,869 |
|
Revenue from clinics sold or closed in 2022 |
|
|
37 |
|
|
|
762 |
|
Revenue from clinics sold or closed in 2021 |
|
|
- |
|
|
|
65 |
|
Net patient revenue from physical therapy operations |
|
|
116,710 |
|
|
|
112,327 |
|
Other revenue |
|
|
753 |
|
|
|
759 |
|
Revenue from physical therapy operations |
|
|
117,463 |
|
|
|
113,086 |
|
Revenue from management contracts |
|
|
1,984 |
|
|
|
2,313 |
|
Revenue from industrial injury prevention services |
|
|
20,155 |
|
|
|
10,494 |
|
Total revenue |
|
$ |
139,602 |
|
|
$ |
125,893 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
Operating cost related to Mature Clinics |
|
$ |
86,177 |
|
|
$ |
81,911 |
|
Operating cost related to 2022 Clinic Additions |
|
|
3,267 |
|
|
|
- |
|
Operating cost related to 2021 Clinic Additions |
|
|
5,366 |
|
|
|
3,748 |
|
Operating cost related to clinics sold or closed in 2022 |
|
|
721 |
|
|
|
504 |
|
Operating cost related to clinics sold or closed in 2021 |
|
|
- |
|
|
|
69 |
|
Operating cost related to physical therapy operations |
|
|
95,531 |
|
|
|
86,232 |
|
Operating cost related to management contracts |
|
|
1,537 |
|
|
|
2,044 |
|
Operating cost related to industrial injury prevention services |
|
|
15,750 |
|
|
|
7,818 |
|
Total operating cost |
|
$ |
112,818 |
|
|
$ |
96,094 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
|
|
|
|
|
|
|
||
Physical therapy operations |
|
$ |
21,932 |
|
|
$ |
26,854 |
|
Management contracts |
|
|
447 |
|
|
|
269 |
|
Industrial injury prevention services |
|
|
4,405 |
|
|
|
2,676 |
|
Gross profit |
|
$ |
26,784 |
|
|
$ |
29,799 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
Income before taxes |
|
$ |
16,036 |
|
|
$ |
17,938 |
|
Less: net income attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
|
(2,037 |
) |
|
|
(2,605 |
) |
Non-controlling interest - permanent equity |
|
|
(1,227 |
) |
|
|
(1,509 |
) |
|
|
$ |
(3,264 |
) |
|
$ |
(4,114 |
) |
Income before taxes less net income attributable to non-controlling interest |
|
$ |
12,772 |
|
|
$ |
13,824 |
|
Provision for income taxes |
|
$ |
3,215 |
|
|
$ |
3,815 |
|
Percentage |
|
|
25.2 |
% |
|
|
27.6 |
% |
2022 Nine Months Compared to 2021 Nine Months
|
|
For the Nine Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
Revenue related to Mature Clinics |
|
$ |
317,514 |
|
|
$ |
314,969 |
|
Revenue related to 2022 Clinic Additions |
|
|
7,019 |
|
|
|
- |
|
Revenue related to 2021 Clinic Additions |
|
|
18,827 |
|
|
|
7,334 |
|
Revenue from clinics sold or closed in 2022 |
|
|
1,084 |
|
|
|
2,058 |
|
Revenue from clinics sold or closed in 2021 |
|
|
- |
|
|
|
458 |
|
Net patient revenue from physical therapy operations |
|
|
344,444 |
|
|
|
324,819 |
|
Other revenue |
|
|
2,523 |
|
|
|
2,222 |
|
Revenue from physical therapy operations |
|
|
346,967 |
|
|
|
327,041 |
|
Revenue - Management contracts |
|
|
6,335 |
|
|
|
7,611 |
|
Revenue - Industrial injury prevention services |
|
|
58,660 |
|
|
|
30,537 |
|
Total revenue |
|
$ |
411,962 |
|
|
$ |
365,189 |
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
Operating cost related to Mature Clinics |
|
$ |
253,899 |
|
|
$ |
237,982 |
|
Operating cost related to 2022 Clinic Additions |
|
|
6,271 |
|
|
|
- |
|
Operating cost related to 2021 Clinic Additions |
|
|
15,393 |
|
|
|
5,877 |
|
Operating cost related to clinics sold or closed in 2022 |
|
|
1,233 |
|
|
|
1,733 |
|
Operating cost related to clinics sold or closed in 2021 |
|
|
2 |
|
|
|
510 |
|
Operating cost - Physical therapy operations |
|
|
276,798 |
|
|
|
246,102 |
|
Operating cost - Management contracts |
|
|
4,991 |
|
|
|
6,492 |
|
Operating cost - Industrial injury prevention services |
|
|
45,980 |
|
|
|
22,596 |
|
Total operating cost |
|
$ |
327,769 |
|
|
$ |
275,190 |
|
|
|
For the Nine Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
|
|
|
|
|
|
|
||
Physical therapy operations |
|
$ |
70,169 |
|
|
$ |
80,939 |
|
Management contracts |
|
|
1,344 |
|
|
|
1,119 |
|
Industrial injury prevention services |
|
|
12,680 |
|
|
|
7,941 |
|
Gross profit |
|
$ |
84,193 |
|
|
$ |
89,999 |
|
|
|
For the Nine Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
|
|
|
|
|
|
|
||
Income before taxes |
|
$ |
51,011 |
|
|
$ |
54,807 |
|
Less: net income attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
|
(7,220 |
) |
|
|
(8,669 |
) |
Non-controlling interest - permanent equity |
|
|
(3,288 |
) |
|
|
(4,194 |
) |
|
|
$ |
(10,508 |
) |
|
$ |
(12,863 |
) |
Income before taxes less net income attributable to non-controlling interest |
|
$ |
40,503 |
|
|
$ |
41,944 |
|
Provision for income taxes |
|
$ |
10,952 |
|
|
$ |
11,326 |
|
Percentage |
|
|
27.0 |
% |
|
|
27.0 |
% |
Other Comprehensive Income
The Company entered into an interest rate swap agreement in May 2022, which has a $150 million notional value, a maturity date of June 30, 2027, and was effective on June 30, 2022. 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. Currently, the Company’s interest rate including the applicable margin is 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 September 30, 2022, was $5.9 million, which has been included within other assets in the accompanying Consolidated Balance Sheet. The impact of the interest rate swap on the accompanying Consolidated Statements of Comprehensive Income was an unrealized gain of $4.8 million, net of tax, for the 2022 Third Quarter, and an unrealized gain of $4.4 million, net of tax, for the 2022 Nine Months.
Quarterly Dividend
The Board of Directors has declared a quarterly dividend of $0.41 per share payable on December 16, 2022 to shareholders of record on November 21, 2022.
Third Quarter 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 November 3, 2022, to discuss results for the Company's 2022 Third Quarter and Nine months ended September 30, 2022. Interested parties may participate in the call by dialing (866) 952-8559 Primary or (785) 424-1743 Alternate and entering reservation number USPHQ322 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 February 3, 2023, at U.S. Physical Therapy’s website.
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:
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:
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.
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. In response to the variable rates, we entered into an interest rate swap agreement. 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 629 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, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net patient revenue |
|
$ |
116,710 |
|
|
$ |
112,327 |
|
|
$ |
344,444 |
|
|
$ |
324,819 |
|
Other revenue |
|
|
22,892 |
|
|
|
13,566 |
|
|
|
67,518 |
|
|
|
40,370 |
|
Net revenue |
|
|
139,602 |
|
|
|
125,893 |
|
|
|
411,962 |
|
|
|
365,189 |
|
Operating cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related costs |
|
|
81,786 |
|
|
|
70,492 |
|
|
|
236,874 |
|
|
|
203,173 |
|
Rent, supplies, contract labor and other |
|
|
29,696 |
|
|
|
24,244 |
|
|
|
86,703 |
|
|
|
68,095 |
|
Provision for credit losses |
|
|
1,336 |
|
|
|
1,358 |
|
|
|
4,192 |
|
|
|
3,922 |
|
Total operating cost |
|
|
112,818 |
|
|
|
96,094 |
|
|
|
327,769 |
|
|
|
275,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
26,784 |
|
|
|
29,799 |
|
|
|
84,193 |
|
|
|
89,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate office costs |
|
|
11,889 |
|
|
|
12,867 |
|
|
|
34,186 |
|
|
|
35,815 |
|
Operating income |
|
|
14,895 |
|
|
|
16,932 |
|
|
|
50,007 |
|
|
|
54,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resolution of a payor matter |
|
|
- |
|
|
|
1,216 |
|
|
|
- |
|
|
|
1,216 |
|
Change in fair value of contingent earn-out consideration |
|
|
2,000 |
|
|
|
- |
|
|
|
2,000 |
|
|
|
- |
|
Equity in earnings of unconsolidated affiliate |
|
|
304 |
|
|
|
- |
|
|
|
983 |
|
|
|
- |
|
Other and interest income |
|
|
65 |
|
|
|
58 |
|
|
|
790 |
|
|
|
158 |
|
Change in revaluation of put-right liability |
|
|
785 |
|
|
|
- |
|
|
|
771 |
|
|
|
- |
|
Interest expense - debt and other, net |
|
|
(2,013 |
) |
|
|
(268 |
) |
|
|
(3,540 |
) |
|
|
(751 |
) |
Total other income and expense |
|
|
1,141 |
|
|
|
1,006 |
|
|
|
1,004 |
|
|
|
623 |
|
Income before taxes |
|
|
16,036 |
|
|
|
17,938 |
|
|
|
51,011 |
|
|
|
54,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
3,215 |
|
|
|
3,815 |
|
|
|
10,952 |
|
|
|
11,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
12,821 |
|
|
|
14,123 |
|
|
|
40,059 |
|
|
|
43,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
|
(2,037 |
) |
|
|
(2,605 |
) |
|
|
(7,220 |
) |
|
|
(8,669 |
) |
Non-controlling interest - permanent equity |
|
|
(1,227 |
) |
|
|
(1,509 |
) |
|
|
(3,288 |
) |
|
|
(4,194 |
) |
|
|
|
(3,264 |
) |
|
|
(4,114 |
) |
|
|
(10,508 |
) |
|
|
(12,863 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders |
|
$ |
9,557 |
|
|
$ |
10,009 |
|
|
$ |
29,551 |
|
|
$ |
30,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share attributable to USPH shareholders |
|
$ |
0.72 |
|
|
$ |
0.66 |
|
|
$ |
2.27 |
|
|
$ |
1.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted |
|
|
13,001 |
|
|
|
12,909 |
|
|
|
12,979 |
|
|
|
12,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
|
$ |
0.41 |
|
|
$ |
0.38 |
|
|
$ |
1.23 |
|
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
For the Nine Months Ended |
|
||||||||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
12,821 |
|
|
$ |
14,123 |
|
|
$ |
40,059 |
|
|
$ |
43,481 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on cash flow hedge |
|
|
6,473 |
|
|
|
- |
|
|
|
5,942 |
|
|
|
- |
|
Tax effect at statutory rate (federal and state) of 25.55% |
|
|
(1,654 |
) |
|
|
- |
|
|
|
(1,518 |
) |
|
|
- |
|
Comprehensive income |
|
$ |
17,640 |
|
|
$ |
14,123 |
|
|
$ |
44,483 |
|
|
$ |
43,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to non-controlling interest |
|
|
(3,264 |
) |
|
|
(4,114 |
) |
|
|
(10,508 |
) |
|
|
(12,863 |
) |
Comprehensive income attributable to USPH shareholders |
|
$ |
14,376 |
|
|
$ |
10,009 |
|
|
$ |
33,975 |
|
|
$ |
30,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||||||
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
||
ASSETS |
|
(unaudited) |
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
37,914 |
|
|
$ |
28,567 |
|
Patient accounts receivable, less allowance for credit losses of $2,964 and $2,768, respectively |
|
|
49,747 |
|
|
|
46,272 |
|
Accounts receivable - other |
|
|
19,146 |
|
|
|
16,144 |
|
Other current assets |
|
|
6,085 |
|
|
|
4,183 |
|
Total current assets |
|
|
112,892 |
|
|
|
95,166 |
|
Fixed assets: |
|
|
|
|
|
|
|
|
Furniture and equipment |
|
|
62,006 |
|
|
|
58,743 |
|
Leasehold improvements |
|
|
41,961 |
|
|
|
39,194 |
|
Fixed assets, gross |
|
|
103,967 |
|
|
|
97,937 |
|
Less accumulated depreciation and amortization |
|
|
78,960 |
|
|
|
74,958 |
|
Fixed assets, net |
|
|
25,007 |
|
|
|
22,979 |
|
Operating lease right-of-use assets |
|
|
100,967 |
|
|
|
96,427 |
|
Investment in unconsolidated affiliate |
|
|
11,978 |
|
|
|
12,215 |
|
Goodwill |
|
|
449,548 |
|
|
|
434,679 |
|
Other identifiable intangible assets, net |
|
|
93,697 |
|
|
|
86,382 |
|
Other assets |
|
|
5,619 |
|
|
|
1,578 |
|
Total assets |
|
$ |
799,708 |
|
|
$ |
749,426 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable - trade |
|
$ |
4,471 |
|
|
$ |
3,268 |
|
Accounts payable - due to seller of acquired business |
|
|
3,203 |
|
|
|
3,203 |
|
Accrued expenses |
|
|
33,784 |
|
|
|
45,705 |
|
Current portion of operating lease liabilities |
|
|
32,540 |
|
|
|
30,475 |
|
Current portion of term loan and notes payable |
|
|
7,490 |
|
|
|
830 |
|
Total current liabilities |
|
|
81,488 |
|
|
|
83,481 |
|
Notes payable, net of current portion |
|
|
2,912 |
|
|
|
3,587 |
|
Revolving line of credit |
|
|
- |
|
|
|
114,000 |
|
Term Loan, net of current portion and deferred financing costs |
|
|
143,778 |
|
|
|
- |
|
Deferred taxes |
|
|
23,838 |
|
|
|
14,385 |
|
Operating lease liabilities, net of current portion |
|
|
76,907 |
|
|
|
74,185 |
|
Other long-term liabilities |
|
|
4,026 |
|
|
|
7,345 |
|
Total liabilities |
|
|
332,949 |
|
|
|
296,983 |
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
|
148,155 |
|
|
|
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 |
|
|
108,515 |
|
|
|
102,688 |
|
Accumulated other comprehensive gain |
|
|
4,424 |
|
|
|
- |
|
Retained earnings |
|
|
235,683 |
|
|
|
224,395 |
|
Treasury stock at cost, 2,214,737 shares |
|
|
(31,628 |
) |
|
|
(31,628 |
) |
Total USPH shareholders’ equity |
|
|
317,146 |
|
|
|
295,606 |
|
Non-controlling interest - permanent equity |
|
|
1,458 |
|
|
|
1,575 |
|
Total USPH shareholders' equity and non-controlling interest - permanent equity |
|
|
318,604 |
|
|
|
297,181 |
|
Total liabilities, redeemable non-controlling interest, |
|
|
|
|
|
|
|
|
USPH shareholders' equity and non-controlling interest - permanent equity |
|
$ |
799,708 |
|
|
$ |
749,426 |
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) |
||||||||
|
|
Nine Months Ended |
|
|||||
|
|
September 30, 2022 |
|
|
September 30, 2021 |
|
||
OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net income including non-controlling interest and earnings from unconsolidated affiliates, net |
|
$ |
40,059 |
|
|
$ |
43,481 |
|
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10,950 |
|
|
|
8,519 |
|
Provision for credit losses |
|
|
4,192 |
|
|
|
3,922 |
|
Equity-based awards compensation expense |
|
|
5,462 |
|
|
|
6,280 |
|
Deferred income taxes |
|
|
6,077 |
|
|
|
1,292 |
|
Change in revaluation of put-right liability |
|
|
(771 |
) |
|
|
- |
|
Change in fair value of contingent earn-out consideration |
|
|
(2,000 |
) |
|
|
- |
|
(Gain) loss on sale of clinics and fixed assets |
|
|
(643 |
) |
|
|
113 |
|
Earnings in unconsolidated affiliate |
|
|
(983 |
) |
|
|
- |
|
Unrealized gain on cash flow hedge |
|
|
(5,942 |
) |
|
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Increase in patient accounts receivable |
|
|
(7,585 |
) |
|
|
(7,513 |
) |
(Increase) decrease in accounts receivable - other |
|
|
(4,551 |
) |
|
|
(738 |
) |
(Decrease) increase in other assets |
|
|
1,669 |
|
|
|
(195 |
) |
(Decrease) Increase in accounts payable and accrued expenses |
|
|
(4,568 |
) |
|
|
4,529 |
|
(Decrease) increase in other long-term liabilities |
|
|
(128 |
) |
|
|
811 |
|
Net cash provided by operating activities |
|
|
41,238 |
|
|
|
60,501 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of fixed assets |
|
|
(7,290 |
) |
|
|
(5,996 |
) |
Purchase of majority interest in businesses, net of cash acquired |
|
|
(18,573 |
) |
|
|
(22,589 |
) |
Purchase of redeemable non-controlling interest, temporary equity |
|
|
(14,096 |
) |
|
|
(14,916 |
) |
Purchase of non-controlling interest, permanent equity |
|
|
(280 |
) |
|
|
(1,093 |
) |
Proceeds on sales of partnership interest, clinics and fixed assets |
|
|
740 |
|
|
|
136 |
|
Distributions from unconsolidated affiliate |
|
|
1,220 |
|
|
|
- |
|
Sale of non-controlling interest - permanent |
|
|
- |
|
|
|
131 |
|
Proceeds on sales of redeemable non-controlling interest-temporary |
|
|
401 |
|
|
|
69 |
|
Net cash used in investing activities |
|
|
(37,878 |
) |
|
|
(44,258 |
) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Distributions to non-controlling interest, permanent and temporary equity |
|
|
(11,760 |
) |
|
|
(14,330 |
) |
Cash dividends paid to shareholders |
|
|
(15,990 |
) |
|
|
(13,934 |
) |
Proceeds from revolving line of credit |
|
|
61,000 |
|
|
|
193,000 |
|
Proceeds from term loan |
|
|
150,000 |
|
|
|
- |
|
Payments on revolving line of credit |
|
|
(175,000 |
) |
|
|
(176,000 |
) |
Principal payments on notes payable |
|
|
(496 |
) |
|
|
(4,662 |
) |
(Payment) receipt of Medicare Accelerated and Advance Funds |
|
|
- |
|
|
|
(14,054 |
) |
Payment of deferred financing costs |
|
|
(1,779 |
) |
|
|
- |
|
Other |
|
|
12 |
|
|
|
7 |
|
Net cash used in financing activities |
|
|
5,987 |
|
|
|
(29,973 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
9,347 |
|
|
|
(13,730 |
) |
Cash and cash equivalents - beginning of period |
|
|
28,567 |
|
|
|
32,918 |
|
Cash and cash equivalents - end of period |
|
$ |
37,914 |
|
|
$ |
19,188 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
7,529 |
|
|
$ |
10,777 |
|
Interest paid |
|
$ |
2,159 |
|
|
$ |
1,195 |
|
Non-cash investing and financing transactions during the period: |
|
|
|
|
|
|
|
|
Purchase of businesses - seller financing portion |
|
$ |
824 |
|
|
$ |
1,800 |
|
Notes payable related to purchase of redeemable non-controlling interest, temporary equity |
|
$ |
1,074 |
|
|
$ |
1,302 |
|
Notes payable related to purchase of non-controlling interest, permanent equity |
|
$ |
576 |
|
|
$ |
- |
|
Notes receivable related to sale of partnership interest - redeemable non-controlling interest |
|
$ |
1,580 |
|
|
$ |
914 |
|
|
|
|
|
|
|
|
|
|
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, INC. AND SUBSIDIARIES OPERATING RESULTS AND ADJUSTED EBITDA 2022 PERIODS COMPARED TO 2021 PERIODS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) |
||||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
2022 |
|
|
|
2021 |
* |
|
|
2022 |
|
|
|
2021 |
* |
|
Computation of earnings per share - USPH shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders |
|
$ |
9,557 |
|
|
$ |
10,009 |
|
|
$ |
29,551 |
|
|
$ |
30,618 |
|
Charges to retained earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of redeemable non-controlling interest |
|
|
(196 |
) |
|
|
(2,070 |
) |
|
|
(193 |
) |
|
|
(11,889 |
) |
Tax effect at statutory rate (federal and state) of 25.55% |
|
|
50 |
|
|
|
529 |
|
|
|
49 |
|
|
|
3,038 |
|
|
|
$ |
9,411 |
|
|
$ |
8,468 |
|
|
$ |
29,407 |
|
|
$ |
21,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (basic and diluted) |
|
$ |
0.72 |
|
|
$ |
0.66 |
|
|
$ |
2.27 |
|
|
$ |
1.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in value of contingency payment |
|
|
(2,000 |
) |
|
|
- |
|
|
|
(2,000 |
) |
|
|
- |
|
Change in revaluation of put-right liability |
|
|
(785 |
) |
|
|
- |
|
|
|
(771 |
) |
|
|
- |
|
Revaluation of redeemable non-controlling interest |
|
|
196 |
|
|
|
2,070 |
|
|
|
193 |
|
|
|
11,889 |
|
Tax effect at statutory rate (federal and state) |
|
|
661 |
|
|
|
(529 |
) |
|
|
659 |
|
|
|
(3,037 |
) |
Operating Results (a non-GAAP measure) |
|
$ |
7,483 |
|
|
$ |
10,009 |
|
|
$ |
27,488 |
|
|
$ |
30,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted Operating Results per share (a non-GAAP measure) |
|
$ |
0.58 |
|
|
$ |
0.78 |
|
|
$ |
2.12 |
|
|
$ |
2.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted |
|
|
13,001 |
|
|
|
12,909 |
|
|
|
12,979 |
|
|
|
12,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
|
2022 |
|
|
|
2021 |
* |
|
|
2022 |
|
|
|
2021 |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders |
|
$ |
9,557 |
|
|
$ |
10,009 |
|
|
$ |
29,551 |
|
|
$ |
30,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,652 |
|
|
|
3,036 |
|
|
|
10,950 |
|
|
|
8,520 |
|
Change in value of contingency payment |
|
|
(2,000 |
) |
|
|
- |
|
|
|
(2,000 |
) |
|
|
- |
|
Other and interest income |
|
|
(65 |
) |
|
|
(58 |
) |
|
|
(790 |
) |
|
|
(158 |
) |
Change in revaluation of put-right liability |
|
|
(785 |
) |
|
|
- |
|
|
|
(771 |
) |
|
|
- |
|
Interest expense - debt and other, net |
|
|
2,013 |
|
|
|
268 |
|
|
|
3,540 |
|
|
|
751 |
|
Provision for income taxes |
|
|
3,215 |
|
|
|
3,815 |
|
|
|
10,952 |
|
|
|
11,326 |
|
Equity-based awards compensation expense |
|
|
1,802 |
|
|
|
2,875 |
|
|
|
5,462 |
|
|
|
6,280 |
|
Allocation to non-controlling interests |
|
|
(402 |
) |
|
|
(317 |
) |
|
|
(1,099 |
) |
|
|
(919 |
) |
Adjusted EBITDA (a non-GAAP measure) |
|
$ |
16,987 |
|
|
$ |
19,628 |
|
|
$ |
55,795 |
|
|
$ |
56,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Revised to conform to current year presentation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221102006016/en/
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