U.S. Physical Therapy, Inc. ("USPH") (NYSE: USPH), a national
operator of outpatient physical therapy clinics, today reported
results for the quarter and nine months ended September 30,
2016.
USPH’s net revenues in the third quarter of 2016 increased 5.1%
to $88.3 million from $84.0 million in the third quarter of 2015.
Income before taxes including non-controlling interests was $11.8
million as compared to $11.7 million in the comparable 2015 period.
Due primarily to a higher estimated accrued tax rate of 39.8% for
the recent quarter as compared to 38.6% in the third quarter of
2015, the income attributable to common shareholders from
operations prior to revaluation of redeemable non-controlling
interests, net of tax (“operating results”) declined slightly to
$5.7 million from $5.8 million. Diluted earnings per share from
operating results was $0.46 in the third quarter of 2016 as
compared to $0.47 in the third quarter of 2015.
USPH’s net revenues for the first nine months of 2016 increased
8.6% to $265.7 million from $244.6 million in the first nine months
of 2015. USPH’s operating results for the first nine months of 2016
increased 11.2% to $18.1 million as compared to $16.3 million in
the first nine months of 2015. Diluted earnings per share from
operating results were $1.45 for the 2016 period as compared to
$1.32 in the comparable 2015 period.
Third Quarter 2016 Compared to Third
Quarter 2015
- Net revenues increased $4.3 million or
5.1% from $84.0 million in the third quarter of 2015 to $88.3
million in the third quarter of 2016, due to an increase in total
patient visits of 5.2% from 782,100 to 822,500 and an increase in
the average net revenue per visit to $105.06 for the 2016 third
quarter from $105.04 for the 2015 third quarter. Net revenues from
new clinics opened or acquired in the 12 months prior to September
30, 2016 was $5.2 million.
- Total clinic operating costs were $68.7
million, or 77.7% of net revenues, in the third quarter of 2016, as
compared to $65.2 million, or 77.5% of net revenues, in the 2015
period. Of the net $3.5 million expense increase, $4.1 million was
attributable to operating costs of new clinics opened or acquired
in the 12 months prior to September 30, 2016 offset by a decrease
of $0.6 million in operating costs of clinics opened or acquired
prior to September 30, 2015. Total clinic salaries and related
costs, including those from new clinics, were 56.4% of net revenues
in the recent quarter versus 55.4% in the 2015 period. Rent, clinic
supplies, contract labor and other costs as a percentage of net
revenues were 20.2% for the recent quarter versus 20.7% in the 2015
period. The provision for doubtful accounts as a percentage of net
revenues was 1.0% for the 2016 and 1.3% in the 2015 period.
- The gross margin for the third quarter
of 2016 was $19.7 million or 22.3%, as compared to $18.9
million, or 22.5% in the 2015 third quarter.
- Corporate office costs were $7.6
million in the third quarter of 2016 compared to $6.9 million in
the 2015 third quarter. Corporate office costs were 8.6% of net
revenues for the 2016 third quarter compared to 8.2% of net
revenues for the 2015 period.
- Operating income for the third quarter
of 2016 was $12.1 million or 13.6% compared to $11.9 million
or 14.2% in the 2015 third quarter.
- Interest expense was $0.3 million in
the third quarter of 2016 and in the third quarter of 2015.
- The provision for income taxes for the
2016 period was $3.8 million and for the 2015 period $3.7 million.
The provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
39.8% in the 2016 third quarter and 38.6% in the 2015 third
quarter.
- Net income attributable to
non-controlling interests was $2.3 million in the recent quarter as
compared to $2.2 million in the year earlier period.
- Operating results attributable to
common shareholders for the three months ended September 30, 2016
was $5.7 million versus $5.8 million for the 2015 period. Diluted
earnings per share from operating results were $0.46 for the 2016
period and $0.47 for the 2015 period.
- Same store visits increased 1.2% for de
novo and acquired clinics open for one year or more while same
store revenue remained relatively the same as the average same
store net rate per visit decreased by $1.16.
First Nine Months 2016 Compared to
First Nine Months 2015
- Net revenues increased 8.6% from $244.6
million in the first nine months of 2015 to $265.7 million in the
first nine months quarter of 2016, due to an increase in total
patient visits of 8.8% from 2,271,900 to 2,470,800 and offset by a
slight decrease in the average net revenue per visit to $105.19
from $105.38. Net revenues from new clinics opened or acquired in
the past 12 months was $12.1 million.
- Total clinic operating costs were
$202.5 million, or 76.2% of net revenues, in the first nine months
of 2016, as compared to $187.7 million, or 76.8% of net revenues,
in the 2015 period. Of the $14.7 million expense increase $9.4
million was attributable to operating costs of new clinics opened
or acquired in the past 12 months. Total clinic salaries and
related costs, including those from new clinics, were 55.1% of net
revenues for the 2016 versus 54.8% in the 2015
period. Rent, clinic supplies, contract labor and other costs as a
percentage of net revenues were 19.9% for the 2016 first nine
months versus 20.6% in the 2015 period. The provision for doubtful
accounts as a percentage of net revenues was 1.1% for the 2016 and
1.3% in the 2015 period.
- The gross margin for the first nine
months of 2016 increased 11.2% to $63.2 million, or 23.8% of
revenue, as compared to $56.9 million, or 23.2% of revenue, for the
2015 period.
- Corporate office costs were $24.6
million in the first nine months of 2016 compared to $22.2 million
in the 2015 period. Corporate office costs were 9.3% of net
revenues for the 2016 first nine months compared to 9.1% of net
revenues for the 2015 period.
- Operating income for the first nine
months of 2016 rose 11.2% to $38.6 million compared to $34.7
million in the 2015 first nine months.
- Interest expense was $1.0 million in
the first nine months of 2016 and $0.8 million in the first nine
months of 2015.
- The provision for income taxes for the
2016 period was $12.0 million and for the 2015 period was $10.6
million. The provision for income taxes as a percentage of income
before taxes less net income attributable to non-controlling
interest was 39.8% in the 2016 first nine months and 39.5% in the
2015 first nine months.
- Net income attributable to
non-controlling interests was $7.6 million for the nine months of
2016 as compared to $7.0 million in the year earlier period.
- Operating results attributable to
common shareholders for the nine months ended September 30, 2016
rose 11.2% to $18.1 million as compared to $16.3 million for the
nine months ended September 30, 2015. Diluted earnings per share
from operating results were $1.45 for the 2016 period and $1.32 for
the 2015 period.
- Same store visits increased 3.7% for de
novo and acquired clinics open for one year or more and same store
revenue increased 3.0% as the average net rate per visit decreased
by $0.82.
Other Financial Measures
In the third quarter of 2016, the Company's Adjusted EBITDA was
$13.1 million and $12.8 million in the 2015 third quarter. In
the first nine months of 2016, the Company's Adjusted EBITDA grew
by 11.7% to $40.9 million from $36.7 million in the 2015 first nine
months.
In the third quarter of 2016 and 2015, operating results prior
to equity-based compensation (a non-cash expense) was $6.5 million
for both, and on a per share basis was $0.52 as compared to $0.53,
respectively. In the first nine months of 2016, operating
results prior to equity-based compensation, increased by 11.1% to
$20.4 million versus $18.3 million for the 2015 first nine months,
and on a per share basis grew to $1.63 from $1.48. (See schedule on
page 9.)
Management’s Comments
Chris Reading, Chief Executive Officer, said about the recent
quarter, “While we got off to a slower than expected start in July,
visits rebounded sequentially in August and September.
Additionally, our development activity is strong and we expect to
finish this year with very solid de novo as well as
acquisition-related growth.”
U.S. Physical Therapy Declares
Quarterly Dividend
The fourth quarterly dividend of 2016 for $0.17 per share will
be paid on December 2, 2016 to shareholders of record as of
November 18, 2016.
Third Quarter 2016 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,
November 3, 2016 to discuss the Company's Quarter Ended September
30, 2016 results. Interested parties may participate in the call by
dialing 1-888-335-5539 or 973-582-2857 and entering reservation
number 92445436 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
January 3, 2017.
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;
- 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 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;
- possible 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 and occupational therapists;
- personnel productivity and retaining
personnel;
- 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;
- 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 applicable.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 524
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 22 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
Nine Months Ended
September 30, 2016
September 30, 2015
September 30, 2016
September 30, 2015
Net patient revenues $ 86,411 $ 82,154 $ 259,893 $ 239,412 Other
revenues 1,933 1,895 5,789
5,166 Net revenues 88,344 84,049 265,682
244,578 Clinic operating costs: Salaries and related costs 49,868
46,594 146,509 134,044 Rent, clinic supplies, contract labor and
other 17,885 17,428 52,938 50,434 Provision for doubtful accounts
917 1,067 2,962 3,119 Closure costs 9 88
54 125 Total clinic operating
costs 68,679 65,177 202,463
187,722 Gross margin 19,665 18,872 63,219
56,856 Corporate office costs 7,610 6,923
24,640 22,173 Operating income
12,055 11,949 38,579 34,683 Interest and other income, net 21 24 62
48 Interest expense (326 ) (255 ) (954 )
(765 ) Income before taxes including non-controlling
interests 11,750 11,718 37,687 33,966 Provision for income taxes
3,778 3,654 11,975
10,634 Net income including non-controlling interests 7,972
8,064 25,712 23,332 Less: net income attributable to
non-controlling interests (2,259 ) (2,246 )
(7,600 ) (7,044 ) Net income attributable to common
shareholders $ 5,713 $ 5,818 $ 18,112 $ 16,288
Basic earnings per share attributable to common
shareholders: From operations prior to revaluation of redeemable
non-controlling interests, net of tax $ 0.46 $ 0.47 $ 1.45 $ 1.32
Charges to additional paid-in-capital - revaluation of redeemable
non-controlling interests, net of tax - -
- (0.03 ) Basic $ 0.46 $ 0.47
$ 1.45 $ 1.29 Diluted earnings per
share attributable to common shareholders: From operations prior to
revaluation of redeemable non-controlling interests, net of tax $
0.46 $ 0.47 $ 1.45 $ 1.32 Charges to additional paid-in-capital -
revaluation of redeemable non-controlling interests, net of tax
- - - (0.03 )
Diluted $ 0.46 $ 0.47 $ 1.45 $ 1.29
Shares used in computation: Basic and diluted earnings per
share - weighted average shares 12,520 12,421
12,494 12,382 Dividends
declared per common share $ 0.17 $ 0.15 $ 0.51
$ 0.45
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
September 30, 2016
December 31, 2015
(unaudited) ASSETS Current assets: Cash and cash equivalents $
15,024 $ 15,778 Patient accounts receivable, less allowance for
doubtful accounts of $1,770 and $1,444, respectively 38,522 36,231
Accounts receivable - other, less allowance for doubtful accounts
of $-0- and $198, respectively 2,272 2,388 Other current assets
10,800 5,785 Total current assets
66,618 60,182 Fixed assets: Furniture and equipment 46,996 44,749
Leasehold improvements 26,206 25,160
73,202 69,909 Less accumulated depreciation and amortization
55,760 53,255 17,442 16,654 Goodwill 191,231
171,547 Other identifiable intangible assets, net 33,389 30,296
Other assets 1,221 1,234 $ 309,901
$ 279,913 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable - trade $ 2,181 $ 1,636
Accrued expenses 23,216 16,596 Current portion of notes payable
986 775 Total current liabilities
26,383 19,007 Notes payable 4,546 4,335 Revolving line of credit
36,000 44,000 Deferred rent 1,313 1,395 Deferred taxes 13,727 8,355
Other long-term liabilities 860 868
Total liabilities 82,829 77,960 Commitments and contingencies
Redeemable non-controlling interests 8,334 8,843 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,
14,734,963 and 14,635,874 shares issued, respectively 147 146
Additional paid-in capital 49,506 45,251 Retained earnings 160,746
149,016 Treasury stock at cost, 2,214,737 shares (31,628 )
(31,628 )
Total U.S. Physical Therapy, Inc.
shareholders' equity
178,771 162,785 Non-controlling interests 39,967
30,325 Total equity 218,738
193,110 $ 309,901 $ 279,913
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Nine Months Ended
September 30, 2016
September 30, 2015
OPERATING ACTIVITIES Net income including non-controlling interests
$ 25,712 $ 23,332 Adjustments to reconcile net income including
non-controlling interests to net cash provided by operating
activities: Depreciation and amortization 6,210 5,656 Provision for
doubtful accounts 2,962 3,119 Equity-based awards compensation
expense 3,748 3,368 Loss (gain) on sale of fixed assets 31 3 Excess
tax benefit from equity-based awards (798 ) (816 ) Deferred income
tax 5,688 3,181 Other - 180 Changes in operating assets and
liabilities: Increase in patient accounts receivable (2,548 )
(4,148 ) Decrease (increase) in accounts receivable - other 116
(145 ) Increase in other assets (4,979 ) (1,485 ) Increase
(decrease) in accounts payable and accrued expenses 5,178 (3,766 )
Increase in other liabilities 708 380
Net cash provided by operating activities 42,028 28,859
INVESTING ACTIVITIES Purchase of fixed assets (5,620 )
(4,690 ) Purchase of businesses, net of cash acquired (12,958 )
(14,434 ) Acquisitions of non-controlling interests (including
redeemable non-controlling interests) (1,800 ) (2,802 ) Proceeds on
sale of fixed assets, net 42 71 Net
cash used in investing activities (20,336 ) (21,855 )
FINANCING ACTIVITIES Distributions to non-controlling interests
(including redeemable non-controlling interests) (8,271 ) (6,836 )
Cash dividends to shareholders - funded (6,382 ) (5,586 ) Proceeds
from revolving line of credit 128,000 75,000 Payments on revolving
line of credit (136,000 ) (63,500 ) Principal payments on notes
payable (592 ) (616 ) Tax benefit from equity-based awards 798 816
Other 1 5 Net cash used in financing
activities (22,446 ) (717 ) Net increase in cash and cash
equivalents (754 ) 6,287 Cash and cash equivalents - beginning of
period 15,778 14,271 Cash and cash
equivalents - end of period $
15,024
$
20,558
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION Cash paid during the period for: Income taxes $
10,051 $
5,659
Interest $
770
$
616
Non-cash investing and financing transactions during the period:
Purchase of business - seller financing portion $
514
$
1,240
Acquisition of non-controlling interest - seller financing portion
$
500
$
1,350
Revaluation of redeemable non-controlling interests $ - $
627
Sale of non-controlling interests $ (148 ) $ -
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
ADJUSTED EBITDA AND ADJUSTED NET
INCOME
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
The following tables reconcile net income attributable to
common shareholders calculated in accordance with accounting
principles generally accepted in the United States of America
("GAAP"), to Adjusted EBITDA and Adjusted Net Income. Management
believes providing Adjusted EBITDA and Adjusted Net Income to
investors is useful information for comparing the Company's
period-to-period results. Adjusted EBITDA is defined as earnings
before interest, taxes, depreciation, amortization and equity
compensation expense. Adjusted Net Income is defined as net income
attributable to common shareholders less equity-based compensation,
net of tax. Adjusted EBITDA and Adjusted Net Income 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
common shareholders presented in the consolidated financial
statements.
Three Months Ended September
30,
Nine Months Ended September 30, 2016 2015
2016 2015 Net income attributable to common
shareholders * $ 5,713 $ 5,818 $ 18,112 $ 16,288
Adjustments: Depreciation and amortization 2,052 1,982 6,210 5,656
Interest expense, net of interest income 305 231 892 717 Provision
for income taxes 3,778 3,654 11,975 10,634 Equity-based awards
compensation expense 1,264 1,162 3,748
3,368 Adjusted EBITDA $ 13,112 $ 12,847 $ 40,937 $ 36,663
Three Months Ended September 30, Nine
Months Ended September 30, 2016 2015 2016
2015 Net income attributable to common shareholders *
$ 5,713 $ 5,818 $ 18,112 $ 16,288 Equity-based awards compensation
expense, net of tax 761 713 2,256 2,038
Adjusted net income $ 6,474 $ 6,531 $ 20,368 $ 18,326
Basic and diluted earnings per share attributable to common
shareholders: $ 0.52 $ 0.53 $ 1.63 $ 1.48 Shares used in
computation: Basic and diluted 12,520 12,421
12,494 12,382
* Prior to revaluation of redeemable
non-controlling interests.
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
RECAP OF CLINIC COUNT
Date Number of Clinics
March 31, 2015
494 June 30, 2015 501 September 30, 2015 506 December 31, 2015 508
March 31, 2016 512 June 30, 2016 516 September 30, 2016 524
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version on businesswire.com: http://www.businesswire.com/news/home/20161103005228/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
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