Raises Dividend and Provides 2015 Earnings
Guidance
U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of
outpatient physical therapy clinics, today reported results for the
fourth quarter and year ended December 31, 2014.
In the fourth quarter of 2014, U.S. Physical Therapy’s net
income attributable to common shareholders from continuing
operations prior to revaluation of redeemable non-controlling
interests, net of tax (“operating results”) increased by 27.5% to
$5.0 million as compared to approximately $3.9 million in the
fourth quarter of 2013. Diluted earnings per share from operating
results rose to $0.41 in the recent quarter as compared to $0.32 in
the comparable 2013 period.
For the year 2014, U.S. Physical Therapy’s operating results
increased by 19.2% to $20.9 million as compared to approximately
$17.5 million for the 2013 year. Diluted earnings per share from
operating results rose to $1.71 in 2014 as compared to $1.45 in
2013.
Fourth Quarter 2014 Compared to Fourth
Quarter 2013 from Continuing Operations Unless Otherwise
Noted
- Net revenues increased 15.7% from $68.6
million in the fourth quarter of 2013 to $79.4 million in the
fourth quarter of 2014, due to an increase in patient visits of
15.6% from 638,000 to 737,000 and an increase in the average net
revenue per visit of $0.32 to $105.79 from $105.47.
- Total clinic operating costs were $60.5
million, or 76.1% of net revenues, in the fourth quarter of 2014,
as compared to $52.5 million, or 76.5% of net revenues, in the 2013
period. Of the dollar increase, $4.3 million was attributable to
operating costs of new clinics opened or acquired in the past 12
months. Total clinic salaries and related costs, including that
from new clinics, were 54.9% of net revenues in the recent quarter
versus 53.2% in the 2013 period. Rent, clinic supplies, contract
labor and other costs as a percentage of net revenues were reduced
to 19.7% for the recent quarter versus 21.5% in the 2013 period.
The provision for doubtful accounts as a percentage of net revenues
was 1.3% for the 2014 period and 1.4% in the 2013 period.
- The gross margin for the fourth quarter
of 2014 increased by 17.4% to $18.9 million from $16.1 million in
the fourth quarter of 2013. The gross margin percentage increased
to 23.9% for the 2014 period as compared to 23.5% for the 2013
period.
- Corporate office costs were $8.2
million in the fourth quarter of 2014 as compared to $6.8 million
in the 2013 fourth quarter. Corporate office costs as a percentage
of net revenues were 10.3% for the 2014 period and 9.9% in the 2013
period.
- Operating income for the recent quarter
increased by 14.8% to $10.8 million as compared to $9.4 million in
the 2013 fourth quarter.
- Interest expense was $0.3 million in
the fourth quarter of 2014 versus $0.1 million in the fourth
quarter of last year. The increase in interest expense is due to a
higher average debt balance as the result of acquisitions.
- The provision for income taxes for the
2014 period was $3.2 million and for the 2013 period $3.4 million.
The provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
39.4% in the 2014 fourth quarter and 46.8% in the 2013 period. In
the current period, after a reconciliation of the 2013 federal and
state tax returns to our book provision, we reduced our 2014 tax
rate to 40.0% from 41.0% previously accrued for the first nine
months of 2014 and recorded an additional provision of $0.2 million
for 2013.
- Net income attributable to
non-controlling interests, inclusive of discontinued operations,
was $2.3 million in the recent quarter as compared to $1.9 million
in the period 2013.
- Net income attributable to common
shareholders for the three months ended December 31, 2014 increased
by 27.5% to $5.0 million compared to $3.9 million for the three
months ended December 31, 2013. Diluted earnings per share from
operating results were $0.41 for the 2014 period and $0.32 for the
2013 period.
- Same store visits increased 2.8% for de
novo and acquired clinics open for one year or more while same
store revenue increased 2.0% as the average net rate per visit
decreased by $0.81.
Year 2014 Compared to Year 2013 from
Continuing Operations Unless Otherwise Noted
- Net revenues increased 15.5% from
$264.1 million in 2013 to $305.1 million in 2014, due to an
increase in patient visits of 15.5% from 2,441,000 to 2,819,000 and
an increase in the average net revenue per visit to $106.08 for the
past year from $105.83 in 2013.
- Total clinic operating costs were
$228.9 million or 75.0% of net revenues for 2014, as compared to
$199.4 million or 75.5% of net revenues, for 2013. The dollar
increase included $10.2 million in operating costs of new clinics
opened or acquired in 2014. Of the remaining increase, $18.5
million was from clinics added throughout 2013. Total clinic
salaries and related costs were 53.6% of net revenues in 2014
versus 53.7% in 2013. Rent, clinic supplies, contract labor and
other costs as a percentage of net revenues were 20.1% for the past
year versus 20.0% in 2013. The provision for doubtful accounts as a
percentage of net revenues was 1.3% for 2014 and 1.7% in 2013.
- The gross margin for 2014 increased by
17.7% to $76.2 million from $64.7 million in 2013. The gross margin
percentage increased to 25.0% in 2014 as compared to 24.5% in
2013.
- Corporate office costs were $30.4
million for 2014 as compared to $25.9 million for 2013. Corporate
office costs were 10.0% of net revenues for 2014 and 9.8% for
2013.
- Operating income increased 18.1% to
$45.8 million in 2014 as compared to $38.8 million in 2013.
- Interest expense was $1.1 million in
2014 versus $0.5 million in 2013. The increase in interest expense
is due to a higher average outstanding debt balance as the result
of acquisitions.
- The provision for income taxes for 2014
was $14.3 million and for 2013 it was $12.2 million. The provision
for income taxes as a percentage of income before taxes less net
income attributable to non-controlling interest was 40.6% in 2014
and 41.1% in 2013.
- Net income attributable to
non-controlling interests, inclusive of discontinued operations,
was $9.6 million in 2014 as compared to $8.3 million in 2013.
- Net income attributable to common
shareholders for the year ended December 31, 2014 increased 19.2%
to $20.9 million as compared to $17.5 million for the year ended
December 31, 2013. Diluted earnings per share from operating
results rose to $1.71 for 2014 versus $1.45 for 2013.
- Same store visits increased 4.6% for de
novo and acquired clinics open for one year or more and same store
revenue increased 3.8% as the average net rate per visit decreased
by $0.79.
Chris Reading, Chief Executive Officer, said, “I am very pleased
with the strong results that our entire team delivered for the
year. Our organic and acquired partnerships are growing, we are
attracting great talent in all areas of our Company and we are
rolling out new programs which will further help us to impact more
patient lives in a very positive way. Our development activities
are generating great results and are bringing some exciting newly
acquired partnerships into our already strong family of partners.
In 2015 we remain focused on all of the core initiatives that
helped to produce an exceptional 2014.”
Larry McAfee, Chief Financial Officer, noted, “Despite
increasing the Company’s dividend and opening or acquiring 35
clinics during the year the Company’s ending debt balance was
reduced by approximately $5.9 million, or 14%, in 2014 as cash flow
from operations remained strong.”
U.S. Physical Therapy Declares
Quarterly Dividend
The Company is increasing its quarterly dividend by 25% to $.15
from $.12. The first quarterly dividend of 2015 will be paid on
April 3, 2015 to shareholders of record as of March 20, 2015.
Management 2015 Earnings
Guidance
Although the Company’s new patient referrals thus far in 2015
have been good, the severe winter weather in many parts of the
country in January and February negatively affected the number of
patient visits by more than 16,000 with an estimated negative
earnings impact of $.05 to $.07 per share. After allowing for that,
management currently expects the Company’s earnings from continuing
operations for the year 2015 to be in the range of $22.3 million to
$22.9 million in net income and $1.80 to $1.86 in diluted earnings
per share. Please note that management’s guidance range represents
projected earnings from existing operations only and excludes
future acquisitions. The annual guidance figures will not be
updated unless there is a material development that causes
management to believe that earnings will be significantly outside
the given range.
Fourth Quarter 2014 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 Thursday,
March 5, 2015 to discuss the Company’s Fourth Quarter and Year
Ended December 31, 2014 results. Interested parties may participate
in the call by dialing 1-888-335-5539 or 973-582-2857 and entering
reservation number 63028333 approximately 10 minutes before the
call is scheduled to begin. To listen to the live call via
web-cast, go to the Company's website at www.usph.com at least 15
minutes early to register, download and install any necessary audio
software. The conference call will be archived and can be accessed
until May 6, 2015.
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 as the result of government
enacted national healthcare reform;
- changes in Medicare guidelines and
reimbursement or failure of our clinics to maintain their Medicare
certification status;
- business and regulatory conditions
including federal and state regulations;
- changes in reimbursement rates or
payment methods from third party payors including government
agencies and deductibles and co-pays owed by patients;
- revenue and earnings expectations;
- general economic conditions;
- availability and cost of qualified
physical and occupational therapists;
- personnel productivity;
- competitive, economic or reimbursement
conditions in our markets which may require us to reorganize or
close certain operations and thereby incur losses and/or closure
costs including the possible write-down or write-off of goodwill
and other intangible assets;
- acquisitions, purchase of
non-controlling interests (minority interests) and the successful
integration of the operations of the acquired businesses;
- maintaining adequate internal
controls;
- availability, terms, and use of
capital; and
- weather and other seasonal
factors.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see our periodic reports filed with the
Securities and Exchange Commission for more information on these
factors. Our forward-looking statements represent our estimates and
assumptions only as of the date of this press release. Except as
required by law, we are under no obligation to update any
forward-looking statement, regardless of the reason the statement
is no longer applicable.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 499
outpatient physical and occupational 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 16 physical therapy
facilities for third parties, including hospitals and physician
groups.
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 NET INCOME (IN
THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
Three Months Ended December 31,
Year Ended December 31, 2014 2013
2014 2013 Net patient revenues $ 77,958 $ 67,256 $
299,009 $ 258,283 Other revenues 1,432 1,349
6,065 5,775 Net revenues 79,390
68,605 305,074 264,058 Clinic operating costs: Salaries and related
costs 43,564 36,522 163,417 141,840 Rent, clinic supplies, contract
labor and other 15,671 14,726 61,209 52,887 Provision for doubtful
accounts 1,018 994 4,112 4,384 Closure costs 197
225 169 246 Total clinic
operating costs 60,450 52,467
228,907 199,357 Gross margin 18,940 16,138
76,167 64,701 Corporate office costs 8,185
6,766 30,399 25,931 Operating
income from continuing operations 10,755 9,372 45,768 38,770
Interest and other income, net 15 2 18 7 Interest expense
(266 ) (140 ) (1,088 ) (538 ) Income before
taxes from continuing operations 10,504 9,234 44,698 38,239
Provision for income taxes 3,241 3,438
14,274 12,236 Net income from
continuing operations including non-controlling interests 7,263
5,796 30,424 26,003 Discontinued operations, net of tax -
(42 ) - (5,007 ) Net income
including non-controlling interests 7,263 5,754 30,424 20,996 Less:
net income attributable to non-controlling interests (2,286
) (1,893 ) (9,571 ) (8,273 ) Net income
attributable to common shareholders $ 4,977 $ 3,861 $
20,853 $ 12,723 Basic earnings per share
attributable to common shareholders: From continuing operations
prior to revaluation of redeemable non-controlling interests, net
of tax $ 0.41 $ 0.32 $ 1.71 $ 1.45 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax - -
(0.09 ) - From continuing operations,
net of tax 0.41 0.32 1.62 1.45 From discontinued operations, net of
tax - - - (0.40 )
Basic $ 0.41 $ 0.32 $ 1.62 $ 1.05 Diluted earnings per share
attributable to common shareholders: From continuing operations
prior to revaluation of redeemable non-controlling interests, net
of tax $ 0.41 $ 0.32 $ 1.71 $ 1.45 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax - -
(0.09 ) - From continuing operations,
net of tax 0.41 0.32 1.62 1.45 From discontinued operations, net of
tax - - - (0.40 )
Diluted $ 0.41 $ 0.32 $ 1.62 $ 1.05 Shares used in
computation: Basic 12,267 12,103
12,217 12,063 Diluted 12,271
12,117 12,221 12,082
Dividends declared per common share $ 0.12 $ 0.10
$ 0.48 $ 0.40 Earnings attributable to common
shareholders: From continuing operations $ 4,977 $ 3,903 $ 20,853 $
17,492 From discontinued operations - (42 )
- (4,769 ) $ 4,977 $ 3,861 $
20,853 $ 12,723
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE (IN THOUSANDS,
EXCEPT PER SHARE DATA) (unaudited)
Three Months Ended Year Ended December 31,
December 31, 2014 2013 2014 2013
Earnings attributable to common shareholders: From continuing
operations prior to revaluation of redeemable non-controlling
interests, net of tax $ 4,977 $ 3,903 $ 20,853 $ 17,492 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax * - -
(1,086 ) - From continuing operations, net of
tax 4,977 3,903 19,767 17,492 From discontinued operations, net of
tax - (42 ) - (4,769 ) $ 4,977 $
3,861 $ 19,767 $ 12,723 Basic earnings
per share attributable to common shareholders: From continuing
operations prior to revaluation of redeemable non-controlling
interests, net of tax $ 0.41 $ 0.32 $ 1.71 $ 1.45 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax * - -
(0.09 ) - From continuing operations, net of
tax 0.41 0.32 1.62 1.45 From discontinued operations, net of tax
- - - (0.40 ) $ 0.41 $
0.32 $ 1.62 $ 1.05 Diluted earnings per share
attributable to common shareholders: From continuing operations
prior to revaluation of redeemable non-controlling interests, net
of tax $ 0.41 $ 0.32 $ 1.71 $ 1.45 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax - -
(0.09 ) - From continuing operations, net of
tax 0.41 0.32 1.62 1.45 From discontinued operations, net of tax
- - - (0.40 ) $ 0.41 $
0.32 $ 1.62 $ 1.05 Shares used in
computation: Basic earnings per share - weighted-average shares
12,267 12,103 12,217 12,063 Effect of dilutive securities - stock
options 4 14 4 19
Denominator for diluted earnings per share
- adjusted weighted-average shares
12,271 12,117 12,221
12,082
* Purchases of non-controlling interests
in two partnerships recorded as a change in
additional-paid-in-capital and per generally accepted accounting
principles ("GAAP") excluded from statement of operations and net
income.
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT
SHARE DATA) December 31, December 31,
2014 2013 (unaudited) ASSETS Current assets:
Cash and cash equivalents $ 14,271 $ 12,898 Patient accounts
receivable, less allowance for doubtful accounts of $1,669 and
$1,430, respectively 32,891 30,820 Accounts receivable - other,
less allowance for doubtful accounts of $198 and $198, respectively
1,503 1,844 Other current assets 6,186 4,098
Total current assets 54,851 49,660 Fixed assets: Furniture
and equipment 42,003 38,965 Leasehold improvements 22,806
21,891 64,809 60,856 Less accumulated
depreciation and amortization 49,045 45,896
15,764 14,960 Goodwill 147,914 143,955 Other intangible
assets, net 24,907 14,479 Other assets 1,115
1,081 $ 244,551 $ 224,135 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable -
trade $ 1,782 $ 1,722 Accrued expenses 22,839 20,625 Current
portion of notes payable 883 825 Total
current liabilities 25,504 23,172 Notes payable 234 650 Revolving
line of credit 34,500 40,000 Deferred rent 991 996 Other long-term
liabilities 8,732 4,196 Total
liabilities 69,961 69,014 Commitments and contingencies Redeemable
non-controlling interests 7,376 4,104 Shareholders' equity: U. S.
Physical Therapy, Inc. 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, 14,487,346 and 14,315,882 shares issued,
respectively
145 143 Additional paid-in capital 43,577 40,569 Retained earnings
134,186 119,206 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 ) Total U. S. Physical Therapy, Inc.
shareholders' equity 146,280 128,290 Non-controlling interests
20,934 22,727 Total equity
167,214 151,017 $ 244,551 $ 224,135
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS(IN THOUSANDS)(unaudited)
Year Ended December 31, 2014 2013
OPERATING ACTIVITIES Net income including non-controlling
interests $ 30,424 $ 20,996 Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization 6,740 5,562 Provision for doubtful
accounts 4,112 4,384 Equity-based awards compensation expense 3,363
2,743 Loss on sale of business and sale or abandonment of assets,
net 35 7,335 Excess tax benefit from exercise of stock options (948
) (695 ) Deferred income tax 6,275 2,369 Impairment charge -
goodwill 135 - Other Changes in operating assets and liabilities:
Increase in patient accounts
receivable
(5,388 ) (5,389 ) Decrease (increase) in accounts receivable -
other 341 (5 ) (Decrease) increase in other assets (2,493 ) 1,803
Increase in accounts payable and accrued expenses 1,868 4,833
Increase in other liabilities 730 859
Net cash provided by operating activities 45,194 44,795
INVESTING ACTIVITIES Purchase of fixed assets (5,167 )
(4,637 ) Purchase of businesses, net of cash acquired (12,270 )
(46,628 ) Acquisitions of non-controlling interests (5,490 ) (1,876
) Sale on non-controlling interests - 233 Proceeds on sale of
business and fixed assets, net 47 459
Net cash used in investing activities (22,880 ) (52,449 )
FINANCING ACTIVITIES Distributions to non-controlling
interests (9,913 ) (9,164 ) Cash dividends to shareholders (5,873 )
(4,838 ) Proceeds from revolving line of credit 134,300 150,800
Payments on revolving line of credit (139,800 ) (128,200 ) Payment
of notes payable (825 ) (459 ) Excess tax benefit from stock
options exercised 948 695 Other 222 47
Net cash (used) provided in financing activities (20,941 ) 8,881
Net increase in cash 1,373 1,227 Cash - beginning of period
12,898 11,671 Cash - end of period $ 14,271
$ 12,898
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION Cash paid during the period for: Income taxes $
9,253 $ 4,111 Interest $ 1,103 $ 352 Non-cash investing and
financing transactions during the period: Purchase of business -
seller financing portion $ 400 $ 1,300 Purchase of non-controlling
interest - seller financing portion $ 67 $ - Revaluation of
redeemable non-controlling interests $ 1,841 $ -
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIESRECAP OF CLINIC COUNT Number
of Date Clinics December 31, 2012 431
March 31, 2013 441 June 30, 2013 449 September 30, 2013 447
December 31, 2013 472 March 31, 2014 472 June 30, 2014 486
September 30, 2014 489 December 31, 2014 489
U.S. Physical Therapy, Inc.Larry McAfee, (713) 297-7000Chief
Financial OfficerorChris Reading, (713) 297-7000Chief Executive
OfficerorWestwicke PartnersBob East, (443) 213-0502
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