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,
2020.
USPH’s results for the first quarter of 2020 were negatively
impacted by the effects of the COVID-19 pandemic. Management
estimates that the Company suffered more than $8 million in lost
revenue and related contribution margin because of the pandemic.
The Company continues to experience significantly lower physical
therapy revenue than normal and in the near term expects to incur
losses. The Company’s physical therapy patient volumes in April
declined to as low as 45% of normal. In a number of our markets,
patient volume is increasing albeit at a slow pace. We are
currently at a little over 60% of normal patient volume but that
varies significantly by region. As of May 20, 2020, the Company has
69 clinics that are closed as a result of this pandemic; 34 of
these clinics are anticipated to be closed only temporarily. At
least 35 clinics likely will not reopen, of which 22 of those were
closed in late March. The Company’s industrial injury prevention
business has also experienced a reduction in business, although not
as significant as experienced by our physical therapy operations.
Management has taken a number of steps to mitigate operating losses
primarily through furloughs and salary cuts and to a lesser extent
through terminations. To date, the Company has furloughed or
terminated more than 2,150 employees (1,400 furloughs and 750
terminations), comprising approximately 40% of the employees across
the Company. In the corporate office, across-the-board employee
salary reductions have been implemented from 20% to 25%, as well as
35% to 40% salary reductions for executives, and a 50% reduction in
fees paid to our Board of Directors. A number of the Company’s
clinic partnerships have made salary reductions as well. Management
estimates that these workforce and pay reductions would equate to
annualized savings of approximately $87 million. The Company
continues to (i) deploy a telehealth and e-visit solutions to
perform services remotely, (ii) renegotiate leases, (iii) slow
development of new clinics, (iv) delay potential acquisitions and
(v) reduce other expenses.
Beginning in mid-March, hospitals and other medical facilities
began to halt elective and non-essential surgeries. Additionally,
state governments in areas with significant growth of COVID-19
infections implemented mandatory closures of non-essential and
non-life sustaining businesses, executed stay-at-home orders,
imposed restrictions on travel and closed schools. These actions
continued to develop and towards the end of March, most states had
significant restrictions on businesses and individuals. The
suspension of elective surgeries, decrease in physician office
visits and recommendations of social distancing along with the
aforementioned limitations had an adverse impact on our volume of
patient visits. Due to these impacts and measures, we have
experienced significant and unpredictable reductions in and
cancellations of patient visits.
Below are certain performance benchmarks and measures for use in
order to understand the adverse impact of COVID-19 on the Company’s
Operating Results (as defined below). For the first quarter ended
March 31, 2020, the Company has defined the pre-COVID-19 period as
the two months ended February 29, 2020 and the post-COVID-19 period
as the month ended March 31, 2020. The following performance
measures and operating data excludes the effects of the clinics in
the partnership sold in June 2019 and should be evaluated in
conjunction with the Operating Results for the entire quarters
ended March 31, 2020 and 2019. The performance measures and
operating data presented for the two months ended February, 29,
2020 and one month ended March 31, 2020 are, when combined, equal
to the performance measures and operating data presented for the
full quarter ended March 31, 2020.
Two months ended February
29,
One month ended March
31,
Three months ended March
31,
2020
2019
% Change
2020
2019
% Change
2020
2019
% Change
Selected Financial Data:
Net revenues (in thousands) - reported
$
78,193
$
75,901
3.0
%
$
34,524
$
40,330
-14.4
%
$
112,717
$
116,231
-3.0
%
Net revenues (in thousands) - without sold
clinics
$
78,193
$
72,232
8.3
%
$
34,524
$
38,314
-9.9
%
$
112,717
$
110,546
2.0
%
Operating Statistics (without sold
clinics):
Number of clinics, at the end of
period
587
561
567
559
567
559
Working Days
42
42
22
21
64
63
Average visits per day per clinic
27.7
26.5
22.7
27.9
26.2
27.0
Total patient visits
676,328
623,943
294,695
328,288
971,023
952,231
Net patient revenue per visit
$
103.06
$
105.89
$
103.22
$
106.29
$
103.11
$
106.02
For the first quarter ended March 31, 2020, USPH’s Operating
Results (as defined below) was $3.9 million, or $0.30 per diluted
share, as compared to $8.4 million, or $0.66 per diluted share in
2019. Operating Results, a non-GAAP measure, equals net income
attributable to USPH shareholders per the consolidated statement of
net income plus charges incurred for closure costs and CFO search,
net of tax. The earnings per share from Operating Results also
excludes the impact of the revaluation of redeemable
non-controlling interest. For the first quarter March 31, 2020,
USPH’s net income attributable to its shareholders, in accordance
with GAAP, was $1.0 million as compared to $8.4 million for the
comparable period of 2019. Inclusive of the credit or charge for
the revaluation of non-controlling interest, net of tax, used to
compute diluted earnings per share, in accordance with GAAP, in the
2020 First Quarter, the amount is $2.6 million, or $0.20 per share,
as compared to $5.0 million, or $0.39 per share. In accordance with
current accounting guidance, the revaluation of redeemable
non-controlling interest, net of tax, is not included in net income
but charged or credited directly to retained earnings; however, the
charge or credit for this change is included in the earnings per
basic and diluted share calculation. See the schedule on page 10
for the computation of diluted earnings per share.
First Quarter 2020 Compared to First
Quarter 2019
- Excluding the loss of revenues from the clinics within the
partnership sold in June of 2019 (“sold clinics”) of $5.7 million
for the 2019 First Quarter, net revenues for the 2020 First Quarter
of $112.7 million increased 2.0% from adjusted revenue of $110.5
million ($116.2 million reported less the $5.7 million) for the
2019 First Quarter despite the adverse effects, beginning in
mid-March, of the COVID-19 pandemic.
- Excluding the $5.7 million mentioned above, net patient
revenues from physical therapy operations decreased $0.8 million,
or 0.8%, to $100.1 million in the 2020 First Quarter from $101.0
million ($106.7 million reported less the $5.7 million) in the 2019
First Quarter, primarily due to the adverse effects of COVID-19.
Management estimates that, due to the virus, the Company lost
approximately 77,000 physical therapy patient visits and more than
$8 million in revenue and contribution margin. Of the $0.8 million
($6.5 million less $5.7 million) decrease in net patient revenues
described above, $5.4 million related to a decrease in business of
clinics opened or acquired prior to April 1, 2019 (“Mature
Clinics”) offset by an increase of $4.6 million related to clinics
opened or acquired after March 31, 2019 (“New Clinics”).
- The average net patient revenue per visit was $103.11 for the
2020 First Quarter and $106.49 for the 2019 First Quarter. Total
patient visits were 971,000 in the 2020 First Quarter and 1,001,510
for the 2019 First Quarter (inclusive of 49,300 for the sold
clinics). Excluding the 49,300 visits, the net patient revenue per
visit was $106.02 for the 2019 First Quarter.
- Revenue from physical therapy management contracts was $2.1
million for both the 2020 and 2019 quarters.
- Revenue from the industrial injury prevention business
increased 43.1% to $9.9 million in the 2020 First Quarter compared
to $6.9 million in the 2019 First Quarter due to internal growth
and an acquisition. Management estimates that the industrial injury
prevention business lost approximately $0.1 million in revenue and
related contribution margin in March 2020 due to the pandemic.
Other miscellaneous revenue was $0.6 million in the 2020 First
Quarter and $0.5 million in the 2019 First Quarter.
- Total operating costs, excluding closure costs, were $93.3
million in the 2020 First Quarter, or 82.7% of net revenues, as
compared to $89.5 million in the 2019 First Quarter, or 77.0% of
net revenues. The $3.8 million increase was attributable to $5.2
million in operating costs related to New Clinics and $2.6 million
related to the industrial injury prevention business, primarily
related to the acquisition, offset by a decrease of $4.0 million
related to Mature Clinics. Closure costs of $3.8 million include
estimates of remaining lease obligations, write-off of goodwill and
other costs. The Company has incurred additional closure costs in
the second quarter. Total salaries and related costs, including
physical therapy operations and the industrial injury prevention
business, were 61.2% of net revenues in the 2020 First Quarter
versus 57.0% in the 2019 First Quarter. Rent, supplies, contract
labor and other costs as a percentage of net revenues were 20.3% in
the 2020 First Quarter versus 19.0% in the 2019 First Quarter. The
provision for doubtful accounts as a percentage of net revenue was
1.2 % in the 2020 First Quarter and 1.0% in the 2019 First
Quarter.
- Gross profit for the 2020 First Quarter, excluding closure
costs, was $19.4 million, as compared to $26.7 million in the 2019
First Quarter. The gross profit percentage, excluding closure
costs, decreased to 17.2% of net revenue in the 2020 First Quarter
as compared to 23.0% in the 2019 First Quarter. The gross profit
percentage for the Company’s physical therapy clinics, excluding
closure costs, was 17.3% in the 2020 First Quarter as compared to
23.1% in the 2019 First Quarter. The gross profit percentage on
physical therapy management contracts was 15.7% in the 2020 First
Quarter as compared to 18.5% in the 2019 First Quarter. The gross
profit for the industrial injury prevention business was $1.7
million, or 16.8%, in the 2020 First Quarter as compared to $1.5
million, or 22.3%, in the 2019 First Quarter.
- Corporate office costs were $11.7 million in the 2020 First
Quarter compared to $11.3 million in the 2019 First Quarter.
Corporate office costs were 10.4% of net revenues for the 2020
First Quarter as compared to 9.7% for the 2019 First Quarter.
- Operating income for the 2020 First Quarter was $4.0 million as
compared to $15.4 million for the 2019 First Quarter. Operating
income as a percentage of net revenue decreased from 13.3% in the
2019 period to 3.6% in 2020. See discussion above related to
effects of COVID-19.
- Interest expense was $427,000 in the 2020 First Quarter and
$358,000 in the 2019 First Quarter due to higher borrowings under
the Company’s revolving credit line.
- The provision for income tax was $0.3 million for the 2020
First Quarter and $2.7 million for the 2019 First Quarter. The
provision for income tax as a percentage of income before taxes
less net income attributable to non-controlling interest was 22.3%
for the 2020 First Quarter and 24.3% for the 2019 First
Quarter.
- Net income attributable to non-controlling interests (permanent
equity) was $0.5 million in the 2020 First Quarter and $1.5 million
in the 2019 First Quarter. Net income attributable to redeemable
non-controlling interests (temporary equity) was $1.8 million in
the 2020 First Quarter and $2.4 million in the 2019 First
Quarter.
Other Financial Measures
For the 2020 First Quarter, the Company's Adjusted EBITDA was
$8.0 million and was $15.6 million in the 2019 First Quarter. See
definition, explanation and calculation of Adjusted EBITDA in the
schedule on pages 10 and 11.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “This has
obviously been a very challenging time for everyone. We were able
to make changes early on which has helped our cash position while
maintaining a high level of needed service in a safe environment
for our patients as well as our staff. We are seeing communities
begin to re-open and our volumes of new patient referrals as well
as patient visits have begun to increase. In our industrial injury
prevention business, the impact has been considerably less than in
our core physical therapy business. Our teams in Houston and around
the country in our individual partnerships are doing everything
possible to conserve resources while working to carefully and
safely ramp up the business. We have a strong partner-centric
Company with an excellent balance sheet and these will continue to
be our strengths as we work our way through this pandemic.”
Subsequent Events
As of the date of this announcement, the Company has
approximately $110.0 million in cash. In addition to collections
from our patient receivables, we have drawn all funds available on
our credit line of $125.0 million, received funds from (a) the
Medicare Accelerated and Advance Payment Program (“MAAPP”) ($12.4
million to date) and (b) the Public Health and Social Services
Emergency Fund (“Relief Fund”) ($5.7 million to date) as part of
the Coronavirus Aid, Relief, and Economics Securities Act (“CARES
Act”). MAAPP funds received will be applied to future Medicare
billings commencing in August 2020, with all such remaining amounts
required to be repaid by us by November 2020. Beginning November
2020, any unpaid balance will begin accruing interest. The Relief
Fund monies do not have to be repaid, are used to fund operations
and will be positively incremental to operating results in the
second quarter of 2020. In addition, we are taking advantage of the
allowed deferral of the employer payroll taxes under the CARES
Act.
As of March 31, 2020, the Company was in compliance with all of
the covenants contained in its credit agreement. Management cannot
be certain whether the Company will be in compliance with covenants
at the end of the second quarter of 2020. Management is in
discussions with our lender regarding an amendment to the facility
so as to maintain compliance with all covenants. Management
anticipates an amendment will be in place by the end of the second
quarter of 2020.
Additional Closure Costs
During April 2020 and May 2020, the Company closed 11 clinics
and 2 clinics, respectively. The Company will record closure costs
in the second quarter of at least $0.9 million.
First Quarter 2020 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 21, 2020
to discuss results for the Company's quarter ended March 31, 2020.
Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number
1788749 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 September 04, 2020
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:
- the multiple effects of the impact of public health crises and
epidemics/pandemics, such as the novel strain of COVID-19
(coronavirus) which the financial magnitude cannot be currently
estimated;
- 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
and/or enrollment 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, which may result in sanctions or
reputational harm and increased costs;
- 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 changes in the
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;
- competitive environment in the industrial injury prevention
business, which could result in the termination or non-renewal of
contractual service arrangements and other adverse financial
consequences for that service line;
- acquisitions and the successful integration of the operations
of the acquired businesses;
- impact on the business and cash reserves resulting from
retirement or resignation of key partners and resulting purchase of
their non controlling interests (minority interests)
- maintaining our information technology systems with adequate
safeguards to protect against cyber-attacks;
- a security breach of our or our third party vendors’
information technology systems may subject us to potential legal
action and reputational harm and may result in a violation of the
Health Insurance Portability and Accountability Act of 1996 of the
Health Information Technology for Economic and Clinical Health
Act;
- maintaining adequate internal controls;
- maintaining necessary insurance coverage;
- availability, terms, and use of capital; and
- weather and other seasonal factors.
See Risk Factors in Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2019 and the additional risk factor
noted on Form 8-K filed on April 24, 2020.
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. operates 555
outpatient physical therapy clinics (of which 34 are not currently
seeing patients) in 39 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 30 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 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
March 31, 2020
March 31, 2019
Net patient revenues
$
100,126
$
106,650
Other revenues
12,591
9,581
Net revenues
112,717
116,231
Operating costs:
Salaries and related costs
69,004
66,267
Rent, supplies, contract labor and
other
22,909
22,044
Provision for doubtful accounts
1,361
1,206
Closure costs - lease and other
1,893
(4
)
Closure costs - write-off of goodwill
1,859
-
Total operating costs
97,026
89,513
Gross profit
15,691
26,718
Corporate office costs
11,677
11,293
Operating income
4,014
15,425
Other income and expense
Interest and other income, net
43
16
Interest expense - debt and other
(427
)
(358
)
Income before taxes
3,630
15,083
Provision for income taxes
292
2,708
Net income
3,338
12,375
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(526
)
(1,537
)
Redeemable non-controlling interests -
temporary equity
(1,796
)
(2,395
)
(2,322
)
(3,932
)
Net income attributable to USPH
shareholders
$
1,016
$
8,443
Basic and diluted earnings per share
attributable to USPH shareholders
$
0.20
$
0.39
Shares used in computation - basic and
diluted
12,796
12,707
Dividends declared per common share
$
0.32
$
0.27
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
(unaudited)
March 31, 2020
December 31, 2019
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
89,551
$
23,548
Patient accounts receivable, less
allowance for doubtful accounts of $2,557 and $2,698,
respectively
42,649
46,228
Accounts receivable - other
11,650
9,823
Other current assets
4,822
5,787
Total current assets
148,672
85,386
Fixed assets:
Furniture and equipment
56,873
54,942
Leasehold improvements
32,873
33,247
Fixed assets, gross
89,746
88,189
Less accumulated depreciation and
amortization
66,764
66,099
Fixed assets, net
22,982
22,090
Operating lease right-of-use assets
83,619
81,586
Goodwill
330,769
317,676
Other identifiable intangible assets,
net
55,648
52,588
Other assets
1,563
1,519
Total assets
$
643,253
$
560,845
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
2,950
$
2,494
Accrued expenses
40,645
30,855
Current portion of operating lease
liabilities
26,826
26,486
Current portion of notes payable
728
728
Total current liabilities
71,149
60,563
Notes payable, net of current portion
4,602
4,361
Revolving line of credit
114,000
46,000
Deferred taxes
7,743
10,071
Operating lease liabilities, net of
current portion
62,577
60,258
Other long-term liabilities
380
141
Total liabilities
260,451
181,394
Redeemable non-controlling interests
140,498
137,750
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, 15,058,804 and 14,989,337 shares issued,
respectively
151
150
Additional paid-in capital
89,756
87,383
Retained earnings
182,785
184,352
Treasury stock at cost, 2,214,737
shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
241,064
240,257
Non-controlling interests
1,240
1,444
Total USPH shareholders' equity and
non-controlling interests
242,304
241,701
Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests
$
643,253
$
560,845
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended
March 31, 2020
March 31, 2019
OPERATING ACTIVITIES
Net income including non-controlling
interests
$
3,338
$
12,375
Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization
2,607
2,400
Provision for doubtful accounts
1,361
1,206
Equity-based awards compensation
expense
1,886
1,728
Deferred income taxes
(1,369
)
2,118
Write-off of goodwill - closed clinics
1,859
-
Other
129
12
Changes in operating assets and
liabilities:
(Decrease) Increase in patient accounts
receivable
3,209
(4,898
)
Increase in accounts receivable -
other
(1,752
)
(495
)
Increase (Decrease) in other assets
2,846
(894
)
Increase in accounts payable and accrued
expenses
2,027
274
Increase (Decrease) in other
liabilities
239
(263
)
Net cash provided by operating
activities
16,380
13,563
INVESTING ACTIVITIES
Purchase of fixed assets
(2,754
)
(2,497
)
Purchase of majority interest in
businesses, net of cash acquired
(11,633
)
-
Purchase of redeemable non-controlling
interest, temporary equity
(1,852
)
(2,053
)
Purchase of non-controlling interest,
permanent equity
-
(139
)
Proceeds on sale of fixed assets
316
59
Net cash used in investing activities
(15,923
)
(4,630
)
FINANCING ACTIVITIES
Distributions to non-controlling
interests, permanent and temporary equity
(2,341
)
(2,576
)
Proceeds from revolving line of credit
88,000
19,000
Payments on revolving line of credit
(20,000
)
(28,000
)
Principal payments on notes payable
(114
)
(482
)
Other
1
(5
)
Net cash provided by (used in) financing
activities
65,546
(12,063
)
Net increase in cash and cash
equivalents
66,003
(3,130
)
Cash and cash equivalents - beginning of
period
23,548
23,368
Cash and cash equivalents - end of
period
$
89,551
$
20,238
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
242
$
313
Interest
$
349
$
343
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
300
$
-
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 statement of
net income plus charges incurred for the closure costs and CFO
search, both net of tax. The earnings per share from Operating
Results also excludes the impact of the revaluation of redeemable
non-controlling interest. In accordance with current accounting
guidance, 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.
Management uses Operating Results, which eliminates certain
items described above 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, taxes,
depreciation, amortization, equity-based awards compensation
expense and write-off of goodwill related to clinic closures.
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.
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended March
31,
2020
2019
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
1,016
$
8,443
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling
interest
$
2,129
$
(4,661
)
Tax effect at statutory rate (federal and
state) of 26.25%
(559
)
1,224
$
2,586
$
5,006
Earnings per share (basic and diluted)
$
0.20
$
0.39
Adjustments:
Charges incurred for CFO search
133
-
Closure costs
3,752
-
Revaluation of redeemable non-controlling
interest
(2,129
)
4,661
Tax effect at statutory rate (federal and
state) of 26.25%
(461
)
(1,224
)
Operating Results
$
3,881
$
8,443
Basic and diluted Operating Results per
share
$
0.30
$
0.66
Shares used in computation - basic and
diluted
12,796
12,707
Three Months Ended March
31,
2020
2019
Net income attributable to USPH
shareholders
$
1,016
$
8,443
Adjustments:
Depreciation and amortization
2,607
2,400
Closure costs - write-off of goodwill
1,859
-
Interest income
(43
)
(16
)
Interest expense - debt and other
427
358
Provision for income taxes
292
2,708
Equity-based awards compensation
expense
1,886
1,728
Adjusted EBITDA
$
8,044
$
15,621
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
RECAP OF CLINIC COUNT
Date
Number of Clinics
March 31, 2019
590
June 30, 2019
564
September 30, 2019
574
December 31, 2019
583
March 31, 2020
567
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200521005118/en/
U.S. Physical Therapy, Inc. Larry McAfee, Chief Financial
Officer Chris Reading, Chief Executive Officer (713) 297-7000 Three
Part Advisors Joe Noyons (817) 778-8424
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