U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of
outpatient physical therapy clinics, today reported results for the
second quarter and six months ended June 30, 2014.
U.S. Physical Therapy’s net income attributable to common
shareholders from continuing operations for the second quarter of
2014 increased by 26.6% to $6.4 million as compared to
approximately $5.1 million in the second quarter of 2013. Diluted
earnings per share from continuing operations rose to $.53 in the
recent quarter as compared to $.42 in the comparable 2013
period.
U.S. Physical Therapy’s net income attributable to common
shareholders from continuing operations for the first six months of
2014 increased by 19.4% to $10.7 million as compared to
approximately $8.9 million in the first six months of 2013. Diluted
earnings per share from continuing operations rose to $.87 in the
recent period as compared to $.74 in the comparable 2013
period.
Second Quarter 2014 Compared to Second
Quarter 2013 from Continuing Operations
- Net revenues increased 16.9% from $66.9
million in the second quarter of 2013 to $78.2 million in the
second quarter of 2014, due to an increase in patient visits of
17.1% from 613,900 to 718,800 and a slight increase in the average
net revenue per visit to $106.39 from $106.25.
- Total clinic operating costs were $56.4
million, or 72.1% of net revenues, in the second quarter of 2014,
as compared to $49.3 million, or 73.7% of net revenues, in the 2013
period. Total clinic salaries and related costs, including that
from new clinics, were 51.3% of net revenues in the recent quarter
versus 53.1% in the 2013 period. Rent, clinic supplies, contract
labor and other costs as a percentage of net revenues were 19.4%
for the recent quarter versus 18.8% in the 2013 period. The
provision for doubtful accounts as a percentage of net revenues was
1.3% for the 2014 period and 1.8% in the 2013 period.
- The gross margin for the second quarter
of 2014 increased by 24.2% to $21.8 million from $17.6 million in
the second quarter of 2013. The gross margin percentage was 27.9%
for the 2014 quarter as compared to 26.3% for the comparable 2013
period.
- Corporate office costs were $7.6
million in the second quarter of 2014 as compared to $6.5 million
in the 2013 second quarter. Corporate office costs were 9.7% of net
revenues in the current period and 9.8% for the comparable 2013
period.
- Operating income for the recent quarter
increased by 28.6% to $14.2 million compared to $11.1 million in
the 2013 second quarter.
- Interest expense was $0.3 million in
the second quarter of 2014 versus $0.1 million in the second
quarter of last year. The increase in interest expense is due to a
higher average debt balance as the result of acquisitions.
- The provision for income taxes for the
2014 period was $4.5 million and for the 2013 period $3.3 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 second quarter and 38.8% in the 2013 second
quarter.
- Net income attributable to
non-controlling interests, inclusive of discontinued operations,
was $3.0 million in the recent quarter as compared to $2.5 million
in the year earlier period.
- Net income attributable to common
shareholders for the three months ended June 30, 2014 was $6.4
million compared to $5.1 million for the three months ended June
30, 2013. Diluted earnings per share from continuing operations
were $.53 for the 2014 period and $.42 for the 2013 period.
- Same store visits increased 4.6% for de
novo and acquired clinics open for one year or more and same store
revenue increased 4.1% as the average net rate per visit decreased
by $.58.
First Six Months 2014 Compared to First
Six Months 2013 from Continuing Operations
- Net revenues increased 14.2% from
$129.6 million in the first six months of 2013 to $148.0 million in
the first six months of 2014, due to an increase in patient visits
of 14.4% from 1,191,000 to 1,363,000. The average net revenue per
visit remained relatively the same for the two periods at $106.31
for the current period and $106.30 for the comparable 2013
period.
- Total clinic operating costs were
$109.5 million, or 74.0% of net revenues, in the first six months
of 2014, as compared to $97.2 million, or 75.0% of net revenues, in
the 2013 period. Total clinic salaries and related costs were 52.7%
of net revenues in the first six months of 2014 versus 53.7% in the
2013 period. Rent, clinic supplies, contract labor and other costs
as a percentage of net revenues were 19.9% for the recent period
versus 19.5% in the 2013 period. The provision for doubtful
accounts as a percentage of net revenues was 1.4% for the 2014
period and 1.8% in the 2013 period.
- The gross margin for the first six
months of 2014 increased by 18.6% to $38.5 million from $32.4
million in the first six months of 2013. The gross margin
percentage was 26.0% for the 2014 first six months as compared to
25.0% for the comparable 2013 period.
- Corporate office costs were $14.7
million in the first six months of 2014 as compared to $12.9
million in the 2013 first six months. Corporate office costs were
10.0% of net revenues in both periods.
- Operating income for the first six
months of 2014 increased by 21.8% to $23.7 million compared to
$19.5 million in the 2013 first six months.
- Interest expense was $0.6 million in
the first six months of 2014 versus $0.3 million in the first six
months of last year. The increase in interest expense is due to a
higher average outstanding debt balance as the result of
acquisitions.
- The provision for income taxes for the
2014 period was $7.4 million and for the 2013 period $5.8 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 six months and 38.8% in the 2013 first six
months.
- Net income attributable to
non-controlling interests, inclusive of discontinued operations,
was $5.1 million in the first six months of 2014 as compared to
$4.3 million in the year earlier period.
- Net income attributable to common
shareholders for the six months ended June 30, 2014 was $10.7
million compared to $8.9 million for the six months ended June 30,
2013. Diluted earnings per share from continuing operations were
$.87 for the 2014 period and $.74 for the 2013 period.
- Same store visits increased 2.7% for de
novo and acquired clinics open for one year or more and revenue
increased 1.9% as the average net rate per visit decreased by
$.83.
Chris Reading, Chief Executive Officer, said, “I am extremely
proud of our entire team for their persistence and perseverance in
executing our Company’s plan for this year. Our partners, directors
and sales teams are working well together to drive referrals and
deliver superior service. Our Fit2WRK group continues to land
terrific employer accounts which have assisted us in further
improving our payor base while also driving new customers into our
many partnerships around the country. Our abundant internal
development resources are assisting our very capable acquired and
long-standing de novo partnerships with organic as well as tuck-in
opportunities which will further assist in our ability to
positively impact more patients' lives in the communities in which
we serve. While the environment is challenging many providers, we
continue to be delighted with the quality of the people we are
attracting to our team.”
Larry McAfee, Chief Financial Officer, noted, “U.S. Physical
Therapy’s net free cash flow remains strong. During the second
quarter the Company’s total debt was reduced slightly despite a 13
clinic acquisition for $11.2 million in April.”
Management Earnings
Guidance
U.S. Physical Therapy’s management is revising and raising the
Company’s earnings guidance from continuing operations for the year
2014 to be in the range of $20.0 million to $20.9 million in net
income and $1.64 to $1.70 in diluted earnings per share. Earlier
guidance issued in March was for annual net income in the range of
$18.8 million to $19.6 million and $1.53 to $1.60 in diluted
earnings per share. Management’s guidance range represents
projected earnings from existing operations only and excludes
future potential acquisitions. The annual guidance figures will not
be updated unless there is a material development that causes
management to believe that earnings will be significantly outside
the given range.
U.S. Physical Therapy Declares
Quarterly Dividend
The third quarterly dividend of 2014 for $.12 per share will be
paid on September 5 to shareholders of record as of August 18.
Second 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,
August 7, 2014 to discuss the Company’s Quarter and First Six
Months Ended June 30, 2014 results. Interested parties may
participate in the call by dialing 1-888-335-5539 or 973-582-2857
and entering reservation number 70143106 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 November 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 491
outpatient physical and occupational therapy clinics in 42 states.
The Company's clinics provide preventative and post-operative care
for a variety of orthopedic-related disorders and sports-related
injuries, treatment for neurologically-related injuries and
rehabilitation of injured workers. In addition to owning and
operating clinics, the Company manages 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 (IN THOUSANDS, EXCEPT PER SHARE
DATA) (unaudited) Three Months Ended June
30, Six Months Ended June 30, 2014 2013
2014 2013 Net patient revenues $ 76,470 $ 65,227 $
144,867 $ 126,659 Other revenues 1,731 1,642
3,101 2,966 Net revenues 78,201
66,869 147,968 129,625 Clinic operating costs: Salaries and related
costs 40,109 35,526 78,051 69,585 Rent, clinic supplies, contract
labor and other 15,205 12,550 29,421 25,284 Provision for doubtful
accounts 1,054 1,198 2,004 2,295 Closure costs (2 ) 8
11 26 Total clinic operating
costs 56,366 49,282 109,487
97,190 Gross margin 21,835 17,587 38,481
32,435 Corporate office costs 7,614 6,528
14,746 12,941 Operating income
from continuing operations 14,221 11,059 23,735 19,494 Interest and
other income, net - 1 1 3 Interest expense (332 )
(130 ) (585 ) (265 ) Income before taxes from
continuing operations 13,889 10,930 23,151 19,232 Provision for
income taxes 4,469 3,288 7,408
5,781 Net income from continuing operations
including non-controlling interests 9,420 7,642 15,743 13,451
Discontinued operations, net of tax - (268 )
- (468 ) Net income including non-controlling
interests 9,420 7,374 15,743 12,983 Less: net income attributable
to non-controlling interests (2,988 ) (2,460 )
(5,083 ) (4,348 ) Net income attributable to common
shareholders $ 6,432 $ 4,914 $ 10,660 $ 8,635
Basic earnings per share attributable to common
shareholders: From continuing operations $ 0.53 $ 0.42 $ 0.88 $
0.74 From discontinued operations - (0.01 )
- (0.02 ) Basic $ 0.53 $ 0.41 $
0.88 $ 0.72 Diluted earnings per share attributable
to common shareholders: From continuing operations $ 0.53 $ 0.42 $
0.87 $ 0.74 From discontinued operations -
(0.01 ) - (0.02 ) Diluted $ 0.53 $ 0.41
$ 0.87 $ 0.72 Shares used in computation:
Basic 12,224 12,089 12,177
12,022 Diluted 12,226
12,110 12,184 12,044
Dividends declared per common share $ 0.12 $ 0.10 $
0.24 $ 0.20 Earnings attributable to common
shareholders: From continuing operations $ 6,432 $ 5,079 $ 10,660 $
8,930 From discontinued operations - (165 )
- (295 ) $ 6,432 $ 4,914 $
10,660 $ 8,635
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE(IN THOUSANDS,
EXCEPT PER SHARE DATA)(unaudited) Three Months
Ended Six Months Ended June 30, June 30,
2014 2013 2014 2013 Earnings
attributable to common shareholders: From continuing operations $
6,432 $ 5,079 $ 10,660 $ 8,930 From discontinued operations
- (165 ) - (295 ) 6,432 4,914
10,660 8,635 Revaluation of redeemable non-controlling interests,
net of tax * (119 ) - (1,086 ) -
$ 6,313 $ 4,914 $ 9,574 $ 8,635
Diluted earnings per share attributable to common
shareholders: From continuing operations $ 0.53 $ 0.42
$ 0.87 $ 0.74 Basic earnings per share
attributable to common shareholders: From continuing operations $
0.53 $ 0.42 $ 0.88 $ 0.74 Charges to additional-paid-in-capital -
revaluation of redeemable non-controlling interests, net of tax
(0.01 ) - (0.09 ) - From discontinued operations -
(0.01 ) - (0.02 ) Basic $ 0.52 $
0.41 $ 0.79 $ 0.72 Diluted earnings per share
attributable to common shareholders: From continuing operations $
0.53 $ 0.42 $ 0.87 $ 0.74 Charges to additional-paid-in-capital -
revaluation of redeemable non-controlling interests, net of tax
(0.01 ) - (0.09 ) - From discontinued operations -
(0.01 ) - (0.02 ) Diluted $ 0.52
$ 0.41 $ 0.78 $ 0.72 Shares used in
computation: Basic earnings per share - weighted-average shares
12,224 12,089 12,177 12,022 Effect of dilutive securities - stock
options 2 21 7 22
Denominator for diluted earnings per share - adjusted
weighted-average
shares
12,226 12,110 12,184
12,044 * Actual 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(IN THOUSANDS, EXCEPT
SHARE DATA) June 30, December 31,
2014 2013 (unaudited) ASSETS Current assets:
Cash and cash equivalents $ 12,934 $ 12,898 Patient accounts
receivable, less allowance for doubtful accounts of $1,713 and
$1,430, respectively 34,286 30,820 Accounts receivable - other,
less allowance for doubtful accounts of $198 and $198, respectively
1,924 1,844 Other current assets 2,703 4,098
Total current assets 51,847 49,660 Fixed assets: Furniture
and equipment 41,310 38,965 Leasehold improvements 22,065
21,891 63,375 60,856 Less accumulated
depreciation and amortization 47,517 45,896
15,858 14,960 Goodwill 156,207 143,955 Other intangible
assets, net 15,727 14,479 Other assets 1,141
1,081 $ 240,780 $ 224,135 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable -
trade $ 1,835 $ 1,722 Accrued expenses 20,112 20,625 Current
portion of notes payable 850 825 Total
current liabilities 22,797 23,172 Notes payable 450 650 Revolving
line of credit 45,000 40,000 Deferred rent 1,095 996 Other
long-term liabilities 6,053 4,196 Total
liabilities 75,395 69,014 Commitments and contingencies Redeemable
non-controlling interests 1,086 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,
14,450,836 and 14,315,882 shares
issued, respectively
145 143 Additional paid-in capital 41,306 40,569 Retained earnings
126,934 119,206 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 )
Total U.S. Physical Therapy, Inc.
shareholders' equity
136,757 128,290 Non-controlling interests 27,542
22,727 Total equity 164,299
151,017 $ 240,780 $ 224,135
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN
THOUSANDS) (unaudited) Six Months Ended June
30, 2014 2013 OPERATING ACTIVITIES Net
income including non-controlling interests $ 15,743 $ 12,983
Adjustments to reconcile net income including non-controlling
interests to net cash provided by operating activities: - -
Depreciation and amortization 2,825 2,730 Provision for doubtful
accounts 2,004 2,282 Equity-based awards compensation expense 1,593
1,370 Loss on sale of business and sale or abandonment of assets,
net 34 84 Excess tax benefit from exercise of stock options (215 )
- Deferred income tax 2,422 (796 ) Other - 33 Changes in operating
assets and liabilities: - - Increase in patient accounts receivable
(4,442 ) (2,542 ) (Increase) decrease in accounts receivable -
other (80 ) 4 Decrease in other assets 1,540 3,867 (Decrease)
increase in accounts payable and accrued expenses (774 ) 682
Increase in other liabilities 404 19
Net cash provided by operating activities 21,054 20,716
INVESTING ACTIVITIES - Purchase of fixed assets (2,132 )
(2,394 ) Purchase of businesses, net of cash acquired (10,750 )
(9,998 ) Acquisitions of non-controlling interests (4,945 ) (1,064
) Proceeds on sale of business and fixed assets, net 38
15 Net cash used in investing activities
(17,789 ) (13,441 )
FINANCING ACTIVITIES Distributions to
non-controlling interests (4,982 ) (4,410 ) Cash dividends to
shareholders (2,932 ) (2,418 ) Proceeds from revolving line of
credit 77,000 62,550 Payments on revolving line of credit (72,000 )
(64,200 ) Payment of notes payable (575 ) (234 ) Excess tax benefit
from stock options exercised 215 33 Other 45
20 Net cash used in financing activities (3,229 ) (8,659 )
Net increase in cash 36 (1,384 ) Cash - beginning of period
12,898 11,671 Cash - end of period $ 12,934
10,287
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION Cash paid during the period for: Income taxes
$ 3,235 $ 1,999 Interest $ 657 $ 237 Non-cash investing and
financing transactions during the period: Purchase of business -
seller financing portion $ 400 $ 800 Revaluation of redeemable
non-controlling interests $ 1,841 $ -
U.S. PHYSICAL
THERAPY, INC. AND SUBSIDIARIES RECAP 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 June 30, 2014 486
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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