Declares Quarterly Dividend
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,
2019.
For the first quarter ended March 31, 2019, USPH’s Operating
Results increased 18.6% to $8.4 million, or $0.66 per diluted
share, as compared to $7.1 million, or $0.56 per diluted share, in
the first quarter of 2018. Operating Results per share, a non-GAAP
measure, equals net income attributable to USPH shareholders per
the consolidated statement of net income, and excludes the impact
of the revaluation of redeemable non-controlling interest, net of
tax, to calculate earnings per share.
For the first quarter ended March 31, 2019, USPH’s net income
attributable to its shareholders was $8.4 million as compared to
$7.1 million in the first quarter of 2018. Inclusive of the charge
for revaluation of non-controlling interest, net of tax, used to
compute diluted earnings per share, in accordance with GAAP, in the
recent quarter, the amount is $5.0 million, or $0.39 per share, as
compared to $3.4 million, or $0.27 per share for the first quarter
of 2018. In accordance with current accounting guidance, the
revaluation of redeemable non-controlling interest, net of tax, is
not included in net income but charged directly to retained
earnings and is included in the earnings per basic and diluted
share calculation. See the schedule on page 10 for a computation of
diluted earnings per share.
First Quarter 2019 Compared to First
Quarter 2018
- Net revenues increased $7.9 million, or
7.3%, from $108.3 million in the first quarter of 2018, to $116.2
million in the first quarter of 2019, due to an increase in net
patient revenues from physical therapy operations and an increase
in the revenue from the industrial injury prevention business. Both
increases are due to internal growth and acquisitions. The first
quarter of 2019 had 63 business days versus 64 in the first quarter
of 2018.
- Net patient revenues from physical
therapy operations increased approximately $6.1 million, or 6.1%,
to $106.7 million in the first quarter of 2019 from $100.6 million
in the first quarter of 2018 due to an increase in total patient
visits of 4.7% from 956,000 to 1,001,500 and an increase in the
average net patient revenue per visit to $106.49 from $105.15. Of
the $6.1 million increase in net patient revenues, $3.3 million
related to an increase in business of clinics opened or acquired
prior to April 1, 2018 (“Mature Clinics”) and $2.8 million related
to clinics opened or acquired after March 31, 2018 (“New Clinics”).
Revenue from physical therapy management contracts was $2.1 million
for the first quarter of 2019 and $2.2 million for the comparable
2018 period.
- Revenue from the industrial injury
prevention business increased 42.2% to $6.9 million in the first
quarter of 2019 compared to $4.9 million in the first quarter 2018
due to internal growth and an April 2018 acquisition. Other
miscellaneous revenue was $0.5 million in the first quarter of 2019
and $0.7 million in the first quarter of 2018.
- Total operating costs were $89.5
million, or 77.0% of net revenues, in the first quarter of 2019 as
compared to $85.1 million, or 78.6% of net revenues, in the first
quarter of 2018. The $4.4 million increase was attributable to $1.9
million in operating costs related to Mature Clinics, an increase
of $1.4 million related to New Clinics, an increase of $1.3 million
related to the industrial injury prevention business and a
reduction in management contracts costs of $0.2 million. Total
salaries and related costs, including physical therapy operations
and the industrial injury prevention business, were 57.0% of net
revenues in the recent quarter versus 57.5% in the first
quarter of 2018. Rent, supplies, contract labor and other costs as
a percentage of net revenues were 19.0% in the first quarter of
2019 versus 20.1% in the first quarter of 2018. The provision for
doubtful accounts as a percentage of net revenue was 1.0% for both
periods.
- The gross profit for the first quarter
of 2019 grew by 15.1% or $3.5 million to $26.7 million, as compared
to $23.2 million in the first quarter of 2018. The gross profit
percentage increased by 160 basis points to 23.0% of net revenue in
the recent period as compared to 21.4% in the first quarter 2018.
The gross profit percentage for the Company’s physical therapy
clinics increased by 120 basis points to 23.1% in the recent
quarter as compared to 21.9% in the first quarter of 2018. The
gross profit percentage on physical therapy management contracts
increased by 470 basis points to 18.5% in the 2019 first quarter as
compared to 13.8% in the 2018 first quarter. The gross profit
percentage for the industrial injury prevention business increased
by 650 basis points to 22.3% in the recent quarter as compared to
15.8% in the 2018 period.
- Corporate office costs were $11.3
million in the first quarter of 2019 compared to $10.2 million in
the first quarter of 2018. Corporate office costs were 9.7% of net
revenues for the first quarter of 2019 quarter as compared to 9.4%
for the first quarter of 2018.
- Operating income for the first quarter
of 2019 increased 18.2% to $15.4 million as compared to $13.1
million in the first quarter of 2018. Operating income as a
percentage of net revenue increased by 130 basis points from 12.0%
in the 2018 period to 13.3% in the recent quarter.
- Interest expense – debt and other was
$358,000 in the first quarter of 2019 and $553,000 in first quarter
of 2018 due to lower borrowings under the Company’s revolving
credit line.
- The provision for income tax for the
first quarter of 2019 was $2.7 million and $2.5 million in the 2018
first quarter. The provision for income tax as a percentage of
income before taxes less net income attributable to non-controlling
interest was 24.3% for the first quarter of 2019 and 25.8% for the
first quarter of 2018.
- Net income attributable to
non-controlling interests (permanent equity) was $1.5 million in
the first quarter of 2019 and $1.2 million in the first quarter of
2018. Net income attributable to redeemable non-controlling
interests (temporary equity) was $2.4 million in the first quarter
of 2019 and $1.7 million in the first quarter of 2018.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 4.7% in the
most recent quarter. Visits increased 3.6% for de novo and acquired
clinics open for one year or more while the same store net rate
increased 1.0%.
Other Financial Measures
For the first quarter of 2019 the Company's Adjusted EBITDA
increased by 11.7% to $15.6 million from $14.0 million in the first
quarter of 2018. Adjusted EBITDA as a percentage of net revenue
increased by 50 basis points from 12.9% to 13.4%. See definition
and explanation of Adjusted EBITDA in the schedule on pages 9 and
10.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “Despite a
historically long and difficult winter our dedicated team of
partners, clinicians and support staff got us started off on the
right foot for 2019. Cost control coupled with good volume helped
to create some meaningful margin improvement in all aspects of our
business. With our recently announced industrial injury prevention
acquisition coupled with continued opportunity, internally and
externally, we look forward to a good year ahead.”
Larry McAfee, Chief Financial Officer, noted, “Strong net cash
flow in the quarter enabled the Company to reduce credit line
borrowings by approximately 24% to $29,000,000, the lowest since
2013.”
U.S. Physical Therapy Declares
Quarterly Dividend
The second quarterly dividend for 2019 of $0.27 per share will
be paid on June 14, 2019 to shareholders of record as of May 17,
2019. U.S. Physical Therapy began paying quarterly dividends in
2011 and has increased the dividend amount every year since.
Operating Leases – Right-to-Use Assets
and Lease Liability
The Company implemented the new lease accounting standard
beginning January 1, 2019. On March 31, 2019, the adoption resulted
in $77.9 million of right-to-use assets and $82.6 million of
operating lease liabilities, of which $26.7 million was classified
as a current liability, in the consolidated balance sheet. For a
detailed discussion of the new lease accounting standard refer to
the Company’s Annual Report on Form 10-K filed with the SEC on
March 18, 2019.
First Quarter 2019 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 May 2, 2019
to discuss the Company's Quarter Ended March 31, 2019 results.
Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number
7918419 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 August 2, 2019 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:
- 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;
- 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;
- legal actions, which could subject us
to increased operating costs and uninsured liabilities;
- 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 our information technology
systems with adequate safeguards to protect against
cyber-attacks;
- maintaining adequate internal
controls;
- maintaining necessary insurance
coverage;
- 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 accurate.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 590
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 28 physical therapy facilities for unaffiliated
third parties, including hospitals and physician groups. The
Company also has an industrial injury prevention business which
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, 2019
March 31, 2018 Net patient revenues $ 106,650 $
100,552 Other revenues 9,581 7,790 Net revenues
116,231 108,342 Operating costs: Salaries and related costs 66,267
62,279 Rent, supplies, contract labor and other 22,044 21,776
Provision for doubtful accounts 1,206 1,061 Closure costs (4
) 12 Total operating costs 89,513 85,128
Gross profit 26,718 23,214 Corporate office costs
11,293 10,163 Operating income 15,425 13,051
Interest and other income, net 16 32 Interest expense - debt and
other (358 ) (553 ) Income before taxes 15,083
12,530 Provision for income taxes 2,708 2,476
Net income 12,375 10,054 Less: net income
attributable to non-controlling interests: Non-controlling
interests - permanent equity (1,537 ) (1,201 ) Redeemable
non-controlling interests - temporary equity (2,395 )
(1,736 ) (3,932 ) (2,937 ) Net income
attributable to USPH shareholders $ 8,443 $ 7,117 Basic and
diluted earnings per share attributable to USPH shareholders $ 0.39
$ 0.27 Shares used in computation - basic and diluted
12,707 12,616 Dividends declared per common share $
0.27 $ 0.23
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
(unaudited)
March 31, 2019 December 31, 2018 ASSETS (unaudited) Current
assets: Cash and cash equivalents $ 20,238 $ 23,368 Patient
accounts receivable, less allowance for doubtful accounts of $2,692
and $2,672, respectively 48,443 44,751 Accounts receivable - other
7,237 6,742 Other current assets 5,238 4,353 Total
current assets 81,156 79,214 Fixed assets: Furniture and equipment
53,267 52,611 Leasehold improvements 33,089 31,712
Fixed assets, gross 86,356 84,323 Less accumulated depreciation and
amortization 65,197 64,154 Fixed assets, net 21,159
20,169 Operating lease right-of-use assets 77,870 - Goodwill
293,338 293,525 Other identifiable intangible assets, net 48,125
48,828 Other assets 1,439 1,430 Total assets $
523,087 $ 443,166
LIABILITIES, REDEEMABLE NON-CONTROLLING
INTERESTS, USPH SHAREHOLDERS’ EQUITYAND NON-CONTROLLING
INTERESTS
Current liabilities: Accounts payable - trade $ 1,894 $ 2,019
Accrued expenses 39,237 38,493 Current portion of operating lease
liabilities 26,733 - Current portion of notes payable 1,066
1,434 Total current liabilities 68,930 41,946 Notes payable,
net of current portion 516 402 Revolving line of credit 29,000
38,000 Deferred taxes 9,872 9,012 Deferred rent - 2,159 Operating
lease liabilities, net of current portion 55,834 - Other long-term
liabilities 566 829 Total liabilities 164,718 92,348
Redeemable non-controlling interests 137,196 133,943
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, 14,975,829 and 14,899,233 shares
issued, respectively 149 149 Additional paid-in capital 82,295
80,028 Retained earnings 168,952 167,396 Treasury stock at cost,
2,214,737 shares (31,628 ) (31,628 ) Total USPH
shareholders’ equity 219,768 215,945 Non-controlling interests
1,405 930 Total USPH shareholders' equity and
non-controlling interests 221,173 216,875
Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests
$ 523,087 $ 443,166
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Three Months Ended March 31, 2019
March 31, 2018 OPERATING ACTIVITIES Net
income including non-controlling interests $ 12,375 $ 10,054
Adjustments to reconcile net income including non-controlling
interests to net cash provided by operating activities:
Depreciation and amortization 2,400 2,468 Provision for doubtful
accounts 1,206 1,061 Equity-based awards compensation expense 1,728
1,381 Deferred income taxes 2,118 (1,162 ) Other 12 54 Changes in
operating assets and liabilities: Increase in patient accounts
receivable (4,898 ) (2,782 ) Increase in accounts receivable -
other (495 ) (849 ) Increase in other assets (894 ) (1,238 )
Increase in accounts payable and accrued expenses 274 7,389
Decrease in other liabilities (263 ) (845 ) Net cash
provided by operating activities 13,563 15,531
INVESTING
ACTIVITIES Purchase of fixed assets (2,497 ) (1,404 ) Purchase
of redeemable non-controlling interest, temporary equity (2,053 )
(761 ) Purchase of non-controlling interest, permanent equity (139
) (246 ) Proceeds on sale of fixed assets 60 - Net
cash used in investing activities (4,629 ) (2,411 )
FINANCING ACTIVITIES Distributions to non-controlling
interests, permanent and temporary equity (2,576 ) (2,208 )
Proceeds from revolving line of credit 19,000 19,000 Payments on
revolving line of credit (28,000 ) (31,000 ) Payments to settle
mandatorily redeemable non-controlling interests - (265 ) Principal
payments on notes payable (482 ) (823 ) Other (5 ) 56
Net cash used in financing activities (12,063 ) (15,240 )
Net decrease in cash and cash equivalents (3,129 ) (2,120 ) Cash
and cash equivalents - beginning of period 23,368
21,933 Cash and cash equivalents - end of period $ 20,239 $ 19,813
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for: Income taxes $ 313 $ 2,941
Interest $ 343 $ 526 Non-cash investing and financing transactions
during the period: Purchase of business - seller financing portion
$ 228 $ 150
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 (as defined below), a non-generally accepted
accounting principles (“non-GAAP”) measure, equals net income
attributable to USPH shareholders. In accordance with current
accounting guidance, the revaluation of redeemable non-controlling
interest, net of tax, is not included in net income but charged
directly to retained earnings and is included in the earnings per
basic and diluted share calculation.
Management uses Operating Results, which eliminates the
non-current cash item related to the revaluation of redeemable
non-controlling interest that can be subject to volatility and
unusual costs, 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 net income attributable to USPH
shareholders before interest income, 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 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.
Three Months Ended March 31,
2019 2018 Computation of
earnings per share - USPH shareholders: Net income attributable to
USPH shareholders $ 8,443 $ 7,117 Charges to retained earnings:
Revaluation of redeemable non-controlling interest $ (4,661 ) $
(5,081 ) Tax effect at statutory rate (federal and state) of 26.25%
1,224 1,334 $ 5,006 $ 3,370 Basic and diluted
per share $ 0.39 $ 0.27 Adjustments: Revaluation of
redeemable non-controlling interest 4,661 5,081 Tax effect at
statutory rate (federal and state) of 26.25% and 39.25%,
respectively (1,224 ) (1,334 ) Operating results $
8,443 $ 7,117 Basic and diluted operating results per share
$ 0.66 $ 0.56 Shares used in computation - basic and diluted
12,707 12,616
Three Months Ended
March 31, 2019 2018 Net income
attributable to USPH shareholders $ 8,443 $ 7,117
Adjustments: Depreciation and amortization 2,375 2,468 Interest
income (16 ) (32 ) Interest expense - debt and other 358 553
Provision for income taxes 2,708 2,476 Equity-based awards
compensation expense 1,728 1,381 Adjusted
EBITDA $ 15,596 $ 13,963
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
RECAP OF CLINIC COUNT
Date Number of Clinics March 31, 2018
580 June 30, 2018 581 September 30, 2018 588 December 31, 2018 591
March 31, 2019 590
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005050/en/
U.S. Physical Therapy, Inc.Larry McAfee, Chief Financial
OfficerChris Reading, Chief Executive Officer(713) 297-7000Three
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