Company Declares $0.15 Per Share Quarterly
Dividend
Issues Updated Earnings Guidance for 2015
U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of
outpatient physical therapy clinics, today reported results for the
quarter and six months ended June 30, 2015.
U.S. Physical Therapy’s net income attributable to common
shareholders prior to revaluation of redeemable non-controlling
interests, net of tax (“operating results”) was $6.3 million for
the second quarter of 2015 as compared to $6.4 million in the
second quarter of 2014. Diluted earnings per share from operating
results were $0.51 in the recent quarter as compared to $0.53 in
the comparable 2014 period.
U.S. Physical Therapy’s operating results for the first six
months of 2015 were $10.5 million as compared to $10.7 million in
the first six months of 2014. Diluted earnings per share from
operating results were $0.85 in the first half of 2015 as compared
to $0.87 in the comparable 2014 period.
Second Quarter 2015 Compared to Second
Quarter 2014
- Net revenues increased 6.5% from $78.2
million in the second quarter of 2014 to $83.3 million in the
second quarter of 2015, due to an increase in total patient visits
of 8.1% from 718,800 to 776,900 offset by a decrease in the average
net revenue per visit to $104.85 for the 2015 second quarter from
$106.39 for the 2014 second quarter. Net revenues for new clinics
opened or acquired in the past 12 months was $4.4 million.
- Total clinic operating costs were $62.1
million, or 74.6% of net revenues, in the second quarter of 2015,
as compared to $56.4 million, or 72.1% of net revenues, in the 2014
period. The increase was primarily attributable to $3.9 million in
operating costs of new clinics opened or acquired in the past 12
months. Total clinic salaries and related costs, including those
from new clinics, were 53.3% of net revenues in the recent quarter
versus 51.3% in the 2014 period. Rent, clinic supplies, contract
labor and other costs as a percentage of net revenues were 20.0%
for the recent quarter versus 19.4% in the 2014 period. The
provision for doubtful accounts as a percentage of net revenues was
1.3% for both periods.
- The gross margin for the second quarter
of 2015 was $21.1 million or 25.4%, as compared to $21.8 million or
27.9% for the 2014 period.
- Corporate office costs were $7.6
million in the second quarter of 2015 and 2014. Corporate office
costs were 9.1% of net revenues for the 2015 second quarter
compared to 9.7% of net revenues for the 2014 period.
- Operating income for the recent quarter
was $13.5 million compared to $14.2 million in the 2014 second
quarter.
- Interest expense was $0.2 million in
the second quarter of 2015 and $0.3 million in the second quarter
of 2014.
- The provision for income taxes for the
2015 period was $4.2 million and for the 2014 period $4.5 million.
The provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
40.0% in the 2015 second quarter and 41.0% in the 2014 second
quarter.
- Net income attributable to
non-controlling interests was $2.8 million in the recent quarter as
compared to $3.0 million in the year earlier period.
- Net income attributable to common
shareholders prior to revaluation of redeemable non-controlling
interests, net of tax for the three months ended June 30, 2015 was
$6.3 million and $6.4 million for the 2014 period. Diluted earnings
per share from operating results were $0.51 for the 2015 period and
$0.53 for the 2014 period.
- Same store visits increased 2.9% for de
novo and acquired clinics open for one year or more and same store
revenue increased 1.3% as the average net rate per visit decreased
by $1.60.
First Six Months 2015 Compared to First
Six Months 2014
- Net revenues increased 8.5% from $148.0
million in the first six months of 2014 to $160.5 million in the
first six month of 2015, due to an increase in total patient visits
of 9.3% from 1,362,600 to 1,489,700 offset by a decrease in the
average net revenue per visit to $105.56 for the first half of 2015
from $106.31 for the 2014 period. Net revenues from new clinics
opened or acquired in the past 12 months was $7.1 million.
- Total clinic operating costs were
$122.5 million, or 76.3% of net revenues, in the first six months
of 2015, as compared to $109.5 million, or 74.0% of net revenues,
in the 2014 period. The increase includes $6.4 million in operating
costs of new clinics opened or acquired in the past 12 months.
Total clinic salaries and related costs, including those from new
clinics, were 54.5% of net revenues in the first six months versus
52.7% in the 2014 period. Rent, clinic supplies, contract labor and
other costs as a percentage of net revenues were 20.6% for the
recent period versus 19.9% in the 2014 period. The provision for
doubtful accounts as a percentage of net revenues was 1.3% for the
2015 period and 1.4% in the 2014 period.
- The gross margin for the first six
months of 2015 was $38.0 million or 23.7%, as compared to $38.5
million or 26.0% for the 2014 period.
- Corporate office costs were $15.3
million in the first six months of 2015 compared to $14.7 million
in the 2014 period. Corporate office costs were 9.5% of net
revenues for the 2015 first six months as compared to 10.0% of net
revenues for the 2014 period.
- Operating income for the first six
months of 2015 was $22.7 million compared to $23.7 million in the
2014 first six months.
- Interest expense was $0.5 million in
the first six months of 2015 versus $0.6 million in the first six
months of 2014.
- The provision for income taxes for the
2015 period was $7.0 million and for the 2014 period $7.4 million.
The provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
40.0% in the 2015 first six months and 41.0% in the 2014 first six
months.
- Net income attributable to
non-controlling interests was $4.8 million for the six months of
2015 as compared to $5.1 million in the year earlier period.
- Net income attributable to common
shareholders prior to revaluation of redeemable non-controlling
interests, net of tax for the six months ended June 30, 2015 was
$10.5 million compared to $10.7 million for the six months ended
June 30, 2014. Diluted earnings per share from operating results
were $0.85 for the 2015 period and $0.87 for the 2014 period.
- Same store visits increased 3.1% for de
novo and acquired clinics open for one year or more and same store
revenue increased 2.5%. The average net rate per visit decreased by
$0.65.
Chris Reading, Chief Executive Officer, said, “During May and
June we experienced an unexpected net rate decline in an otherwise
busy patient visits quarter. Management, working together with the
affected partnerships, has recently taken a number of operational
steps to improve the net rate and appropriately adjust costs. Our
updated earnings guidance reflects these actions and the rate
change. We continue our emphasis on increasing the workers comp
portion of our payor mix. Internal de novo clinic development
and particularly prospective acquisition activity is strong.”
Larry McAfee, Chief Financial Officer, noted, “During the
quarter, the Company produced excellent net cash flow based on
record receivables collections with the average A/R days
outstanding at 38 days as of June 30th.”
U.S. Physical Therapy Declares
Quarterly Dividend
The third quarterly dividend of 2015 for $0.15 per share will be
paid on September 4 to shareholders of record as of August 18.
2015 Earnings Guidance
Update
Management currently expects the Company’s earnings from
continuing operations for the year 2015 to be in the range of $21.7
million to $22.7 million in net income and $1.75 to $1.83 in
diluted earnings per share. Guidance issued previously was for 2015
net income in the range of $22.3 million to $22.9 million 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.
Second Quarter 2015 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,
August 6, 2015 to discuss the Company’s Quarter Ended June 30, 2015
results. Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number
80627966 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 October 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;
- governmental and other third party
payor investigations and audits;
- 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;
- changes in reimbursement rates or
payment methods from third party payors including government
agencies and deductibles and co-pays owed by patients;
- transition to ICD-10 coding
system;
- 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 501
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 19 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 June 30,
Six Months Ended June 30, 2015 2014
2015 2014 Net patient revenues $ 81,451 $ 76,470 $
157,258 $ 144,867 Other revenues 1,837 1,731
3,271 3,101 Net revenues 83,288
78,201 160,529 147,968 Clinic operating costs: Salaries and related
costs 44,398 40,109 87,450 78,051 Rent, clinic supplies, contract
labor and other 16,681 15,205 33,006 29,421 Provision for doubtful
accounts 1,062 1,054 2,052 2,004 Closure costs 5
(2 ) 37 11 Total clinic
operating costs 62,146 56,366
122,545 109,487 Gross margin 21,142 21,835
37,984 38,481 Corporate office costs 7,593
7,614 15,250 14,746 Operating
income 13,549 14,221 22,734 23,735 Interest and other income, net
16 - 24 1 Interest expense (245 ) (332 ) (510
) (585 ) Income before taxes 13,320 13,889 22,248 23,151
Provision for income taxes 4,203 4,469
6,980 7,408 Net income including
non-controlling interests 9,117 9,420 15,268 15,743 Less: net
income attributable to non-controlling interests (2,813 )
(2,988 ) (4,798 ) (5,083 ) Net income
attributable to common shareholders $ 6,304 $ 6,432 $
10,470 $ 10,660 Basic earnings per share attributable
to common shareholders: From operations prior to revaluation of
redeemable non-controlling interests, net of tax $ 0.51 $ 0.53 $
0.85 $ 0.88 Charges to additional paid-in-capital - revaluation of
redeemable non-controlling interests, net of tax (0.03 )
(0.01 ) (0.03 ) (0.09 ) Basic $ 0.48 $
0.52 $ 0.82 $ 0.79 Diluted earnings per
share attributable to common shareholders: From operations prior to
revaluation of redeemable non-controlling interests, net of tax $
0.51 $ 0.53 $ 0.85 $ 0.87 Charges to additional paid-in-capital -
revaluation of redeemable non-controlling interests, net of tax
(0.03 ) (0.01 ) (0.03 ) (0.09 ) Diluted
$ 0.48 $ 0.52 $ 0.82 $ 0.78 Shares used
in computation: Basic 12,409 12,224
12,362 12,177 Diluted 12,409
12,226 12,362 12,184
Dividends declared per common share $ 0.15 $
0.12 $ 0.30 $ 0.24
U.S. PHYSICAL THERAPY, INC AND
SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Three Months Ended Six Months Ended June 30,
2015 June 30, 2014 June 30, 2015 June 30,
2014 Earnings attributable to common shareholders: From
operations prior to revaluation of redeemable non-controlling
interests, net of tax $ 6,304 $ 6,432 $ 10,470 $ 10,660 Charges to
additional paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax (376 ) (119 )
(376 ) (1,086 ) $ 5,928 $ 6,313 $
10,094 $ 9,574 Basic earnings per share attributable
to common shareholders: From operations prior to revaluation of
redeemable non-controlling interests, net of tax $ 0.51 $ 0.53 $
0.85 $ 0.88 Charges to additional paid-in-capital - revaluation of
redeemable non-controlling interests, net of tax (0.03 )
(0.01 ) (0.03 ) (0.09 ) $ 0.48 $ 0.52
$ 0.82 $ 0.79 Diluted earnings per
share attributable to common shareholders: From operations prior to
revaluation of redeemable non-controlling interests, net of tax $
0.51 $ 0.53 $ 0.85 $ 0.87 Charges to additional paid-in-capital -
revaluation of redeemable non-controlling interests, net of tax
(0.03 ) (0.01 ) (0.03 ) (0.09 ) $ 0.48
$ 0.52 $ 0.82 $ 0.78 Shares used
in computation: Basic earnings per share - weighted-average shares
12,409 12,224 12,362 12,177 Effect of dilutive securities - stock
options - 2 - 7
Denominator for diluted earnings per share - adjusted
weighted-average shares 12,409 12,226
12,362 12,184
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE
DATA) June 30, 2015 December 31, 2014
ASSETS (unaudited) Current assets: Cash and cash equivalents $
12,972 $ 14,271 Patient accounts receivable, less allowance for
doubtful accounts of $1,618 and $1,669, respectively 34,830 32,891
Accounts receivable - other, less allowance for doubtful accounts
of $198 and $198, respectively 1,338 1,503 Other current assets
6,509 6,186 Total current assets 55,649
54,851 Fixed assets: Furniture and equipment 43,495 42,003
Leasehold improvements 24,107 22,806
67,602 64,809 Less accumulated depreciation and amortization
51,098 49,045 16,504 15,764 Goodwill 170,914
147,914 Other intangible assets, net 24,167 24,907 Other assets
1,086 1,115 $ 268,320 $ 244,551
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable - trade $ 1,451 $ 1,782 Accrued
expenses 19,446 22,839 Current portion of notes payable 800
883 Total current liabilities 21,697 25,504
Notes payable 1,059 234 Revolving line of credit 41,000 34,500
Deferred rent 1,040 991 Other long-term liabilities 10,925
8,732 Total liabilities 75,721 69,961
Commitments and contingencies Redeemable non-controlling interests
10,585 7,376 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, 14,635,674 and 14,487,346 shares issued,
respectively
146 145 Additional paid-in capital 45,829 43,577 Retained earnings
140,933 134,186 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 ) Total U. S. Physical Therapy, Inc.
shareholders' equity 155,280 146,280 Non-controlling interests
26,734 20,934 Total equity
182,014 167,214 $ 268,320 $ 244,551
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited)
Six Months Ended June 30, 2015 2014
OPERATING ACTIVITIES Net income including non-controlling
interests $ 15,268 $ 15,743 Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities: Depreciation and amortization 3,674 2,825
Provision for doubtful accounts 2,052 2,004 Equity-based awards
compensation expense 2,206 1,593 Gain on sale or abandonment of
assets, net (13 ) 34 Excess tax benefit from shared-based
compensation (430 ) (215 ) Deferred income tax 2,130 2,422
Write-off of goodwill - closed clinic 111 - Changes in operating
assets and liabilities: Increase in patient accounts receivable
(2,880 ) (4,442 ) Decrease (increase) in accounts receivable -
other 165 (80 ) (Increase) decrease in other assets (13 ) 1,540
Decrease in accounts payable and accrued expenses (3,958 ) (774 )
Increase in other Long term liabilities 927
404 Net cash provided by operating activities 19,239 21,054
INVESTING ACTIVITIES Purchase of fixed assets (2,873 )
(2,132 ) Purchase of businesses, net of cash acquired (14,467 )
(10,750 ) Acquisitions of non-controlling interests (968 ) (4,945 )
Proceeds on sale of business and fixed assets, net 72
38 Net cash used in investing activities (18,236 )
(17,789 )
FINANCING ACTIVITIES Distributions to
non-controlling interests (including redeemable non-controlling
interests) (4,906 ) (4,982 ) Cash Dividends to shareholders (3,723
) (2,932 ) Proceeds from revolving line of credit 51,000 77,000
Payments on revolving line of credit (44,500 ) (72,000 ) Payment of
notes payable (608 ) (575 ) Tax benefit from share-based
compensation 430 215 Other 5 45 Net
cash used in financing activities (2,302 ) (3,229 ) Net (decrease)
increase in cash and cash equivalents (1,299 ) 36 Cash and cash
equivalents - beginning of period 14,271
12,898 Cash - end of period $ 12,972 $ 12,934
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid
during the period for: Income taxes $ 3,835 $ 3,235 Interest $ 460
$ 657 Non-cash investing and financing transactions during the
period: Purchase of business - seller financing portion $ 1,350 $
400 Revaluation of redeemable non-controlling interests $ 627 $
1,841
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES RECAP OF CLINIC COUNT Number
of Date Clinics March 31, 2014 472 June
30, 2014 486 September 30, 2014 489 December 31, 2014 489
March 31, 2015 494 June 30, 2015 501
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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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