Company Declares Quarterly Dividend
U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of
outpatient physical therapy clinics, today reported results for the
first quarter ended March 31, 2014.
Despite unusually bad weather in the first quarter of 2014, U.S.
Physical Therapy’s net income attributable to common shareholders
from continuing operations increased by 9.8% to over $4.2 million
as compared to approximately $3.9 million in the first quarter of
2013. Diluted earnings per share from continuing operations rose to
$.35 in the recent quarter as compared to $.32 in the comparable
2013 period. The Company previously announced in early March, 2014
that the adverse weather prevalent in many parts of the country in
January and February had resulted in more than 10,000 patient
visits having been cancelled with an estimated earnings impact of
$.04 per share.
First Quarter 2014 Compared to First
Quarter 2013 from Continuing Operations
- Net revenues increased 11.2% from $62.8
million in the first quarter of 2013 to $69.8 in the first quarter
of 2014, due to an increase in patient visits of 11.5% from 577,600
to 643,900 offset by a slight decrease in the average net revenue
per visit to $106.23 from $106.36.
- Total clinic operating costs were $53.1
million, or 76.1% of net revenues, in the first quarter of 2014, as
compared to $47.9 million, or 76.3% of net revenues, in the 2013
period. The increase was attributable to $6.6 million in operating
costs of new clinics opened or acquired in the past 12 months
offset by a reduction in operating costs of $1.4 million for those
clinics opened or acquired prior to the past 12 months. Total
clinic salaries and related costs, including that from new clinics,
were 54.4% of net revenues in the recent quarter versus 54.3% in
the 2013 period. Rent, clinic supplies, contract labor and other
costs as a percentage of net revenues were 20.4% for the recent
quarter versus 20.3% in the 2013 period. The provision for doubtful
accounts as a percentage of net revenues was 1.4% for the 2014
period and 1.7% in the 2013 period.
- The gross margin for the first quarter
of 2014 increased by 12.1% to $16.6 million from $14.8 million in
the first quarter of 2013. The gross margin percentage was 23.9%
for the 2014 quarter as compared to 23.7% for the comparable 2013
period.
- Corporate office costs were $7.1
million in the first quarter of 2014 as compared to $6.4 million in
the 2013 first quarter. Corporate office costs were 10.2% of net
revenues in both periods.
- Operating income for the recent quarter
increased by 12.8% to $9.5 million compared to $8.4 million in the
2013 first quarter.
- Interest expense was $0.3 million in
the first quarter of 2014 versus $0.1 million in the first quarter
of last year. The increase in interest expense is due to a higher
average outstanding balance on the Company’s line of credit as the
result of acquisitions.
- The provision for income taxes for the
2014 period was $2.9 million and for the 2013 period $2.5 million.
The provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
41.0% in the 2014 first quarter and 38.9% in the 2013 first
quarter.
- Net income attributable to
non-controlling interests, inclusive of discontinued operations,
was $2.1 million in the recent quarter as compared to $1.9 million
in the year earlier period.
- Net income attributable to common
shareholders for the three months ended March 31, 2014 was $4.2
million compared to $3.9 million for the three months ended March
31, 2013. Diluted earnings per share from continuing operations
were $0.35 for the 2014 period and $0.32 for the 2013 period.
- Same store visits increased slightly
for de novo and acquired clinics open for one year or more while
revenue decreased 1.7% as the average net rate per visit decreased
by $1.91. In April, 2013, both the Medicare Multiple Procedure
Payment Reduction (“MPPR”) and Sequestration went into effect which
reduced the Company’s reimbursement for Medicare patients by
approximately 10%.
Larry McAfee, Chief Financial Officer, noted, “The first week of
March we announced that patient visits and earnings had been
adversely affected by the especially poor weather in January and
February. At the same time we also noted that patient referrals
year-to-date were ahead of budget. The combination of improving
weather and the strong referral backlog resulted in a significant
improvement in patient visits in the month of March.”
Chris Reading, Chief Executive Officer, said, “Despite the
incredibly challenging weather for the first few months of this
year, I am very pleased at our team’s persistence and perseverance
as they have continuously strived to produce a good result for our
patients as well as our shareholders. Integration of the
acquisitions completed last year is going very well and we are
excited about the talent we have added through these deals
including our newest acquisition announced just last week. Lastly I
am encouraged by our improving expense management which has been a
key focus for us and where we have continued room to improve
further.”
U.S. Physical Therapy Declares
Quarterly Dividend
The second quarterly dividend of 2014 for $.12 per share will be
paid on June 6 to shareholders of record as of May 20.
First Quarter 2014 Conference
Call
U.S. Physical Therapy's management will host a conference call
at 10:30 a.m. Eastern Time, 9:30 a.m. Central Time, on Thursday,
May 8, 2014 to discuss the Company’s Quarter Ended March 31, 2014
results. Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and enter reservation number
26703696 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 7, 2014.
Forward-Looking
Statements
This press release contains statements that are considered to be
forward-looking within the meaning under Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
contain forward-looking information relating to the financial
condition, results of operations, plans, objectives, future
performance and business of our Company. These statements (often
using words such as “believes”, “expects”, “intends”, “plans”,
“appear”, “should” and similar words) involve risks and
uncertainties that could cause actual results to differ materially
from those we expect. Included among such statements may be those
relating to new clinics, availability of personnel and the
reimbursement environment. The forward-looking statements are based
on our current views and assumptions and actual results could
differ materially from those anticipated in such forward-looking
statements as a result of certain risks, uncertainties, and
factors, which include, but are not limited to:
- changes as the result of government
enacted national healthcare reform;
- changes in Medicare guidelines and
reimbursement or failure of our clinics to maintain their Medicare
certification status;
- business and regulatory conditions
including federal and state regulations;
- changes in reimbursement rates or
payment methods from third party payors including government
agencies and deductibles and co-pays owed by patients;
- revenue and earnings expectations;
- general economic conditions;
- availability and cost of
qualified physical and occupational therapists;
- personnel productivity;
- competitive, economic or reimbursement
conditions in our markets which may require us to reorganize or
close certain operations and thereby incur losses and/or closure
costs including the possible write-down or write-off of goodwill
and other intangible assets;
- acquisitions, purchase of
non-controlling interests (minority interests) and the successful
integration of the operations of the acquired businesses;
- maintaining adequate internal
controls;
- availability, terms, and use of
capital; and
- weather and other seasonal
factors.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see our periodic reports filed with the
Securities and Exchange Commission for more information on these
factors. Our forward-looking statements represent our estimates and
assumptions only as of the date of this press release. Except as
required by law, we are under no obligation to update any
forward-looking statement, regardless of the reason the statement
is no longer applicable.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 487
outpatient physical and occupational therapy clinics in 43 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 17 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 Three Months
Ended March 31, 2014 2013 (In thousands, except per share data)
Net patient revenues $ 68,397 $ 61,432 Other revenues
1,370 1,324 Net revenues 69,767 62,756
Clinic operating costs: Salaries and related costs 37,942 34,059
Rent, clinic supplies, contract labor and other 14,216 12,734
Provision for doubtful accounts 950 1,097 Closure costs 13
18 Total clinic operating costs 53,121
47,908 Gross margin 16,646 14,848
Corporate office costs 7,132 6,413
Operating income from continuing operations 9,514
8,435 Interest and other income, net 1 2 Interest expense
(253 ) (135 ) Income before taxes from
continuing operations 9,262 8,302 Provision for income taxes
2,939 2,493 Net income from continuing
operations including non-controlling interests 6,323 5,809
Discontinued operations, net of tax benefit of $0 and $84 -
(200 ) Net income including non-controlling interests
6,323 5,609 Less: net income attributable to non-controlling
interests (2,095 ) (1,888 ) Net income attributable
to common shareholders $ 4,228 $ 3,721 Basic
earnings per share attributable to common shareholders: From
continuing operations $ 0.35 $ 0.32 From discontinued operations
- (0.01 ) $ 0.35 $ 0.31
Diluted earnings per share attributable to common shareholders:
From continuing operations $ 0.35 $ 0.32 From discontinued
operations - (0.01 ) $ 0.35 $ 0.31
Shares used in computation: Basic 12,129
11,955 Diluted 12,144
11,979 Dividends declared per common share $ 0.12
$ 0.10 Earnings attributable to common
shareholders: From continuing operations $ 4,228 $ 3,851 From
discontinued operations - (130 ) $ 4,228
$ 3,721
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE Three Months Ended
March 31, 2014 2013 (In thousands, except per share data) Earnings
attributable to common shareholders: From continuing operations $
4,228 $ 3,851 From discontinued operations -
(130 ) 4,228 3,721 Charges to additional-paid-in-capital
Revaluation of redeemable non-controlling interests, net of tax *
(967 ) - $ 3,261 $ 3,721
Diluted earnings per share attributable to common shareholders:
From continuing operations $ 0.35 $ 0.32 Basic
earnings per share attributable to common shareholders: From
continuing operations $ 0.35 $ 0.32 From discontinued operations
- (0.01 ) $ 0.35 $ 0.31 Charges to
additional-paid-in-capital - revaluation of redeemable
non-controlling interests * (0.08 ) - $ 0.27
$ 0.31 Diluted earnings per share attributable
to common shareholders: From continuing operations $ 0.35 $ 0.32
From discontinued operations - (0.01 ) $ 0.35
$ 0.31 Charges to additional-paid-in-capital - revaluation of
redeemable non-controlling interests * (0.08 ) -
$ 0.27 $ 0.31 Shares used in
computation: Basic 12,129 11,955
Diluted 12,144 11,979
*
Actual and proposed purchases of
non-controlling interests in two partnerships;
recorded as a change in additional-paid-in capital, not reflected
in statement of operations or net income.
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2014 2013
(In thousands, except per share data)
ASSETS
Current assets: Cash and cash equivalents $ 16,761 $ 12,898
Patient accounts receivable, less allowance for doubtful accounts
of $1,583 and $1,430, respectively 32,755 30,820 Accounts
receivable - other, less allowance for doubtful accounts of $198
and $198, respectively 1,698 1,844 Other current assets
3,040 4,098 Total current assets 54,254 49,660
Fixed assets: Furniture and equipment 39,472 38,965
Leasehold improvements 21,701 21,891
61,173 60,856 Less accumulated depreciation and amortization
46,543 45,896 14,630 14,960 Goodwill 142,517
143,955 Other intangible assets, net 15,916 14,479 Other assets
1,317 1,081 $ 228,634 $ 224,135
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable - trade $ 1,423 $ 1,722 Accrued
expenses 17,147 20,625 Current portion of notes payable 775
825 Total current liabilities 19,345 23,172
Notes payable 450 650 Revolving line of credit 45,500 40,000
Deferred rent 1,022 996 Other long-term liabilities 5,031
4,196 Total liabilities 71,348 69,014
Commitments and contingencies Redeemable non-controlling
interests 2,967 4,104 Shareholders' equity:
U.S. Physical Therapy, Inc. shareholders'
equity:
Preferred stock, $.01 par value, 500,000 shares authorized, no
shares issued and outstanding - - Common stock, $.01 par value,
20,000,000 shares authorized, 14,413,102 and 14,315,882 shares
issued, respectively 144 143 Additional paid-in capital 40,435
40,569 Retained earnings 121,970 119,206 Treasury stock at cost,
2,214,737 shares (31,628 ) (31,628 )
Total U.S. Physical Therapy, Inc.
shareholders' equity
130,921 128,290 Non-controlling interests 23,398
22,727 Total equity 154,319
151,017 $ 228,634 $ 224,135
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months Ended March 31, 2014 2013 (In thousands)
OPERATING ACTIVITIES Net income including non-controlling
interests $ 6,323 $ 5,609 Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities: Depreciation and amortization 1,387 1,352
Provision for doubtful accounts 950 1,089 Equity-based awards
compensation expense 735 639 Loss on sale of business and fixed
assets 19 14 Excess tax benefit from exercise of stock options (126
) - Deferred income tax 1,580 (219 ) Other - 33 Changes in
operating assets and liabilities: Increase in patient accounts
receivable (3,002 ) (3,429 ) Decrease in accounts receivable -
other 146 74 Decrease in other assets 735 2,095 (Decrease) in
accounts payable and accrued expenses (5,241 ) (2,460 ) Increase in
other liabilities 184 56 Net cash
provided by operating activities 3,690 4,853
INVESTING
ACTIVITIES Purchase of fixed assets (849 ) (1,270 ) Purchase of
businesses, net of cash acquired (125 ) (4,215 ) Acquisitions of
non-controlling interests (2,833 ) (956 ) Proceeds on sale of
business and fixed assets, net 16 14
Net cash used in investing activities (3,791 ) (6,427 )
FINANCING ACTIVITIES Distributions to non-controlling
interests (1,413 ) (1,594 ) Cash dividends to shareholders - (1,207
) Proceeds from revolving line of credit 29,000 30,600 Payments on
revolving line of credit (23,500 ) (27,600 ) Payment of notes
payable (250 ) (50 ) Tax benefit from equity grants 126 33 Other
1 5 Net cash provided by financing
activities 3,964 187 Net increase (decrease) in cash and
cash equivalents 3,863 (1,387 ) Cash and cash equivalents -
beginning of period 12,898 11,671 Cash
and cash equivalents - end of period $ 16,761 $ 10,284
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION Cash paid during the period for: Income taxes $ 242
$ 177 Interest $ 345 $ 119 Non-cash investing and financing
transactions during the period: Purchase of business - seller
financing portion $ - $ 400 Revaluation of redeemable
non-controlling interests $ 1,689 $ -
U.S. PHYSICAL
THERAPY, INC. AND SUBSIDIARIESRECAP OF CLINIC COUNT
Number of Date
Clinics December 31, 2012 431 March 31, 2013
441 June 30, 2013 449 September 30, 2013 447 December 31, 2013 472
March 31, 2014 472
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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