U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE:
USPH), a national operator of outpatient physical therapy clinics,
today reported results for the first quarter ended March 31,
2017.
For the quarter ended March 31, 2017, USPH’s net income
attributable to common shareholders prior to interest expense –
mandatorily redeemable non-controlling interests – change in
redemption value, net of tax (“operating results”), a non-generally
accepted accounting principles (“non-GAAP”) measure, was $6.4
million as compared to $5.8 million in the comparable 2016 period.
Diluted earnings per share from operating results was $0.51 in the
2017 period as compared to $0.47 in the 2016 period.
For the quarter ended March 31, 2017, USPH’s net income
attributable to its shareholders, in accordance with generally
accepted accounting principles (“GAAP”), was $4.8 million, or $0.38
per diluted share, as compared to $4.5 million, or $0.36 per
diluted share, for the 2016 period. See schedule on page 9 for a
reconciliation of net income attributable to USPH shareholders to
operating results.
First Quarter 2017 Compared to First
Quarter 2016
- Net revenues increased $10.7 million or
12.3% from $86.9 million in the first quarter of 2016 to $97.6
million in the first quarter of 2017, primarily due to a 10.1%
increase in net patient revenues from the physical therapy
operations, higher revenues from management contracts due to an
increase in the number of facilities managed by the Company and one
month of revenues from the workforce performance solutions business
acquired in March 2017.
- Net patient revenues from physical
therapy operations increased approximately $8.6 million to $93.7
million in the 2017 period from $85.1 million in the 2016 period
due to an increase in total patient visits of 10.3% from 808,000 to
892,000 partially offset by a $0.18 decrease in average net patient
revenue per visit to $105.04 from $105.22. For the 2017 period,
revenues from management contracts was $1.9 million as compared to
$1.4 million for the 2016 period. The revenues from the recently
acquired workforce performance solutions business was $1.5 million
for the month of March 2017. Other revenue was $0.5 million for
both periods.
- Total clinic operating costs were $76.8
million, or 78.7% of net revenues, in the first quarter of 2017 as
compared to $66.4 million, or 76.4% of net revenues, in the 2016
period. The increase was primarily attributable to $8.9 million in
operating costs related to new clinics opened or acquired in the
past 12 months, an additional $1.1 million related to a full
quarter of activity in 2017 for clinics opened or acquired in the
first quarter of 2016 and the addition of the workforce performance
solutions business. Total clinic salaries and related costs,
including those from new clinics, were 57.2% of net revenues in the
recent quarter 2017 versus 55.0% for the 2016 period. Rent,
clinic supplies, contract labor and other costs as a percentage of
net revenues were 20.6% for recent quarter versus 20.1% for the
2016 period. The provision for doubtful accounts as a percentage of
net revenues was 0.9% for the first quarter of 2017 as compared to
1.3% in the 2016 period.
- The gross margin for the first quarter
of 2017 was $20.7 million, or 21.3% of revenue, as compared to
$20.5 million, or 23.6% of revenue, for the 2016 quarter. The gross
margin for the Company’s physical therapy clinics was 21.5% in the
recent quarter as compared to 23.6% a year earlier. The gross
margin on management contracts was 14.8% in the first quarter of
2017 as compared to 19.8% in the comparable period of 2016. The
gross margin for the recently acquired workforce performance
solutions business was 14.3%.
- Corporate office costs were $8.5
million in the first quarter of 2017 compared to $9.0 million in
the 2016 first quarter. Corporate office costs were 8.8% of net
revenues for the 2017 quarter compared to 10.4% of net revenues for
the 2016 period.
- Operating income for the recent quarter
increased 6.2% to $12.2 million as compared to $11.5 million in the
first quarter 2016.
- Interest expense – mandatorily
redeemable non-controlling interest – change in redemption value
increased to $2.7 million in the first quarter 2017 from $2.2
million in the 2016 first quarter. The change in redemption value
for acquired partnerships is based on the redemption amount (which
is derived from a formula based on a specified multiple times the
underlying business’ trailing twelve months of earnings before
interest, taxes, depreciation, amortization and our internal
management fee) at the end of the reporting period compared to the
end of the previous period. This is a non-cash item and is directly
related to the increase in the profitability and underlying value
of the Company’s partnerships.
- Interest expense – mandatorily
redeemable non-controlling interest – earnings allocable, which
represent the portion of earnings allocable to the holders of
mandatorily redeemable non-controlling interest, increased to $1.3
million in the 2017 first quarter from $0.9 million in the 2016
period.
- Interest expense – debt and other was
$0.4 million in the first quarter 2017 and $0.3 million in the 2016
period.
- The provision for income taxes for the
2017 first quarter was $1.8 million and for the 2016 first quarter
was $2.2 million. The provision for income taxes as a percentage of
income before taxes less net income attributable to non-controlling
interest was 27.3% in the 2017 first quarter and 32.6% in the 2016
first quarter. Included in the first quarter of 2017 was an excess
tax benefit of $0.8 million related to the adoption of revised
guidance on accounting for stock compensation as compared to $0.5
million in the first quarter of 2016.
- Net income attributable to
non-controlling interests was $1.2 million in the 2017 first
quarter as compared to $1.5 million in the 2016 first quarter.
- Operating results, a non-GAAP measure,
attributable to common shareholders for the three months ended
March 31, 2017 rose 10.6% to $6.4 million as compared to $5.8
million for the 2016 period. Diluted earnings per share from
operating results were $0.51 for the 2017 period and $0.47 for the
2016 period. For the quarter ended March 31, 2017, USPH’s net
income attributable to its shareholders, in accordance with GAAP,
was $4.8 million, or $0.38 per diluted share, as compared to $4.5
million, or $0.36 per diluted share, for the 2016 period. See
schedule on page 9 for a reconciliation of net income attributable
to USPH shareholders to operating results.
- Same store revenues and visits
increased slightly for de novo and acquired clinics open for one
year or more. The same store net rate per visit was flat.
Other Financial Measures
For the first three months of 2017 the Company's Adjusted EBITDA
grew by 7.0% to $13.3 million from $12.5 million in 2016. See
definition and explanation of Adjusted EBITDA on page 9 and
schedule on page 10.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “In the first
quarter we had solid revenue and visit growth driven in large part
by recent acquisitions which are performing very well. Our
development for the year is very strong both organically and
through acquisition. Operating costs have increased in large part
due to acquisitions. Our operations team is actively reducing costs
where needed. The early performance from our industrial prevention
services deal has been solid and we are looking for other
opportunities with the right partners in that space. We are happy
to have now worked our way through the recent period to update all
of our filings. We sincerely appreciate your patience and continued
support as we work to move our Company forward.”
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:
- cost, risks and uncertainties
associated with the Company’s recent restatement of its prior
financial statements due to the correction of its accounting
methodology for redeemable non-controlling partnership interests,
and including any pending and future claims or proceedings relating
to such matters;
- changes as the result of government
enacted national healthcare reform;
- changes in Medicare rules and
guidelines and reimbursement or failure of our clinics to maintain
their Medicare certification status;
- revenue we receive from Medicare and
Medicaid being subject to potential retroactive reduction;
- business and regulatory conditions
including federal and state regulations;
- governmental and other third party
payor inspections, reviews, 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;
- legal actions; which could subject us
to increased operating costs and uninsured liabilities;
- 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 therapists;
- personnel productivity and retaining
key personnel;
- 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;
- acquisitions, purchase of
non-controlling interests (minority interests) and the successful
integration of the operations of the acquired businesses;
- maintaining adequate internal
controls;
- maintaining necessary insurance
coverage;
- our ability to design and maintain
effective internal control over financial reporting and remediate
the material weakness in internal control over financial reporting
related to our accounting for redeemable non-controlling
partnership interests;
- 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 561
outpatient physical therapy clinics in 41 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 27 physical therapy facilities for unaffiliated
third parties, including hospitals and physician groups. The
Company also provides onsite services for clients’ employees
including injury prevention, rehabilitation, ergonomic assessments
and performance optimization.
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)
For the Three Months Ended March
31, 2017 March 31, 2016 Net patient revenues $ 93,654 $
85,049 Other revenues 3,911 1,859 Net
revenues 97,565 86,908 Clinic operating costs: Salaries and related
costs 55,827 47,804 Rent, clinic supplies, contract labor and other
20,087 17,507 Provision for doubtful accounts 898 1,089 Closure
costs 6 13 Total clinic operating costs
76,818 66,413 Gross margin 20,747
20,495 Corporate office costs 8,547 9,004
Operating income 12,200 11,491 Interest and other income,
net 24 20 Interest expense: Mandatorily redeemable non-controlling
interests - change in redemption value (2,669 ) (2,191 )
Mandatorily redeemable non-controlling interests - earnings
allocable (1,294 ) (887 ) Debt and other (415 ) (308
) Total interest expense (4,378 ) (3,386 ) Income before taxes
7,846 8,125 Provision for income taxes 1,812
2,172 Net income 6,034 5,953 Less: net income attributable
to non-controlling interests (1,218 ) (1,465 ) Net
income attributable to USPH shareholders $ 4,816 $ 4,488
Basic and diluted earnings per share attributable to
USPH shareholders $ 0.38 $ 0.36 Shares used in
computation - basic 12,528 12,448
Shares used in computation - diluted 12,528
12,448 Dividends declared per common share $
0.20 $ 0.17
U.S. PHYSICAL THERAPY,
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA) (unaudited)
March 31, 2017 December 31, 2016
ASSETS
Current assets: Cash and cash equivalents $ 25,154 $ 20,047 Patient
accounts receivable, less allowance for doubtful accounts of $1,853
and $1,792, respectively 43,244 38,840 Accounts receivable - other
6,346 2,649 Other current assets 3,827 4,428
Total current assets 78,571 65,964 Fixed assets:
Furniture and equipment
49,820 48,426 Leasehold improvements 27,582
26,765 Fixed assets, gross 77,402 75,191 Less accumulated
depreciation and amortization 57,235 56,018
Fixed assets, net 20,167 19,173 Goodwill 244,446 226,806
Other identifiable intangible assets, net 43,213 38,060 Other
assets 1,274 1,228
Total assets
$ 387,671 $ 351,231 LIABILITIES, USPH SHAREHOLDERS’
EQUITY AND NON-CONTROLLING INTERESTS Current liabilities: Accounts
payable - trade $ 1,996 $ 1,634 Accrued expenses 30,820 21,756
Current portion of notes payable 1,219 1,227
Total current liabilities 34,035 24,617 Notes payable 4,802
4,596 Revolving line of credit 58,000 46,000 Mandatorily redeemable
non-controlling interests 80,154 69,190 Deferred taxes 15,486
15,736 Deferred rent 1,809 1,575 Other long-term liabilities
671 829 Total liabilities 194,957 162,543
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, 14,792,744 and
14,732,699 shares issued, respectively 147 147 Additional paid-in
capital 70,132 68,687 Retained earnings 152,642 150,342 Treasury
stock at cost, 2,214,737 shares (31,628 ) (31,628 )
Total USPH shareholders’ equity 191,293 187,548 Non-controlling
interests 1,421 1,140 Total USPH
shareholders' equity and non-controlling interests 192,714
188,688 Total liabilities, USPH shareholders'
equity and non-controlling interests $ 387,671 $ 351,231
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOWS (IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited) Three
Months Ended March 31, 2017
March 31, 2016 OPERATING ACTIVITIES Net income
including non-controlling interests $ 6,034 $ 5,953 Adjustments to
reconcile net income including non-controlling interests to net
cash provided by operating activities: Depreciation and
amortization 2,356 2,091 Provision for doubtful accounts 898 1,089
Equity-based awards compensation expense 1,280 1,221 Loss on sale
of fixed assets 33 (19 ) Deferred income tax (250 ) 1,823 Changes
in operating assets and liabilities: Increase in patient accounts
receivable (1,542 ) (2,185 ) (Increase) decrease in accounts
receivable - other (3,697 ) 43 Decrease (increase) in other assets
757 (2,282 ) Increase in accounts payable and accrued expenses
5,315 3,857 Increase in mandatorily redeemable non-controlling
interests 2,911 2,578 Increase in other liabilities 76
365 Net cash provided by operating activities
14,171 14,534
INVESTING ACTIVITIES Purchase of fixed assets
(1,587 ) (1,738 ) Purchase of businesses, net of cash acquired
(15,670 ) (12,899 ) Acquisitions of non-controlling interests -
(388 ) Proceeds on sale of fixed assets, net 62
42 Net cash used in investing activities (17,195 )
(14,983 )
FINANCING ACTIVITIES Distributions to
non-controlling interests (937 ) (1,113 ) Cash dividends to
shareholders - funded - (2,125 ) Proceeds from revolving line of
credit 32,000 49,000 Payments on revolving line of credit (20,000 )
(40,500 ) Payments to settle mandatorily redeemable non-controlling
interests (2,230 ) (1,136 ) Principal payments on notes payable
(702 ) (250 ) Other - 1 Net cash used
in financing activities 8,131 3,877 Net increase in cash and
cash equivalents 5,107 3,428 Cash and cash equivalents - beginning
of period 20,047 15,778 Cash and cash
equivalents - end of period $ 25,154 $ 19,206
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid
during the period for: Income taxes $ 86 $ 2,265 Interest $ 599 $
248 Non-cash investing and financing transactions during the
period: Purchase of business - seller financing portion $ 900 $ 500
Acquisition of non-controlling interest - seller financing portion
$ - $ 388 Payment to settle redeemable non-controlling interest -
financing portion $ - $ 126
U. S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
The following tables 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 is defined as USPH’s net income attributable
to common shareholders prior to interest expense – mandatorily
redeemable non-controlling interests – change in redemption value,
net of tax. Management uses operating results, which eliminates
this non-cash item that can be subject to volatility, as one of the
principal measures to evaluate and monitor financial performance
period over period. Management believes that operating results 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 mandatorily redeemable
instruments and therefore have different liability and equity
structures.
Adjusted EBITDA is defined as earnings before interest income,
interest expense – mandatorily redeemable non-controlling interests
– change in redemption value, interest expense – debt and other,
taxes, depreciation, amortization and equity-based awards
compensation expense. 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.
Operating results and Adjusted EBITDA are not measures of
financial performance under GAAP. Adjusted EBITDA and Adjusted Net
Income 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.
Three Months Ended March
31, 2017 2016 Net
income attributable to USPH shareholders $ 4,816 $ 4,488
Adjustments: Interest expense MRNCI * - change in redemption value
2,669 2,191 Tax effect at statutory rate (federal and state) of
39.25% (1,048 ) (860 ) Operating results $ 6,437
$ 5,819 Basic and diluted net income
attributable to USPH shareholders per share $ 0.38 $ 0.36
Basic and diluted operating results per share $ 0.51
$ 0.47 Shares used in computation: Basic and
diluted 12,528 12,448
Three Months Ended March 31, 2017 2016
Net income attributable to USPH shareholders $ 4,816 $ 4,488
Adjustments: Depreciation and amortization 2,356 2,091 Interest
income (24 ) (20 ) Interest expense MRNCI * - change in redemption
value 2,669 2,191 Interest expense - debt and other 415 308
Provision for income taxes 1,812 2,172 Equity-based awards
compensation expense 1,280 1,221
Adjusted EBITDA $ 13,324 $ 12,451 *
Mandatorily redeemable non-controlling interest
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
RECAP OF CLINIC COUNT
March 31, 2016 512 June 30, 2016
516 September 30, 2016 524 December 31, 2016 540
March 31, 2017 558
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170629005105/en/
U.S. Physical Therapy, Inc.Larry McAfee, 713-297-7000Chief
Financial OfficerorChris Reading, 713-297-7000Chief Executive
OfficerorThree Part AdvisorsJoe Noyons, 817-778-8424
US Physical Therapy (NYSE:USPH)
Historical Stock Chart
From Jun 2024 to Jul 2024
US Physical Therapy (NYSE:USPH)
Historical Stock Chart
From Jul 2023 to Jul 2024