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,
2018.
For the quarter ended March 31, 2018, USPH’s Operating Results
increased 10.6% to $7.1 million, or $.56 per diluted share, as
compared to $6.4 million, or $.51 per diluted share, in the first
quarter of 2017. Operating Results, a non-generally accepted
accounting principles (“non-GAAP”) measure, for the 2018 first
quarter equals net income attributable to USPH shareholders. For
the 2017 first quarter, Operating Results, is defined as net income
attributable to common shareholders prior to interest expense –
mandatorily redeemable non-controlling interests – change in
redemption value, net of tax.
For the quarter ended March 31, 2018, USPH’s net income
attributable to its shareholders, in accordance with generally
accepted accounting principles (“GAAP”), was $7.1 million as
compared to $4.8 million for the first quarter of 2017. Earnings
per diluted share of $0.27 in the first quarter of 2018 compares to
$0.38 per diluted share for the 2017 first quarter. For 2018, in
accordance with current accounting guidance, the revaluation of
redeemable non-controlling interest, net of tax, which is charged
directly to retained earnings, is included in the earnings per
basic and diluted share calculation. See the schedule on page 11
for a computation of diluted earnings per share and a
reconciliation of net income attributable to USPH shareholders to
Operating Results.
First Quarter 2018 Compared to First
Quarter 2017
- Net revenues increased $10.8 million or
11.0% from $97.6 million in the 2017 first quarter to $108.3
million in the 2018 first quarter, primarily due to a 7.4% increase
in net patient revenues from the physical therapy operations, an
increase of 20.4% in revenue from management contracts and an
increase in the revenue from the industrial injury prevention
business due to a full quarter of operations versus one month in
the 2017 period. The industrial injury prevention business was
acquired in March 2017.
- Net patient revenues from physical
therapy operations increased approximately $6.9 million, or 7.4%,
to $100.6 million in the 2018 first quarter from $93.7 million in
the 2017 first quarter due to an increase in total patient visits
of 7.2% from 892,000 to 956,000 and an increase in the average net
patient revenue per visit to $105.15 from $105.04. Of the $6.9
million increase, $5.9 million related to clinics opened or
acquired after March 31, 2017 (“New Clinics”) and an increase of
$1.0 million in net patient revenues related to clinics opened or
acquired prior to April 1, 2017 (“Mature Clinics”).
- Revenue from management contracts was
$2.2 million in the 2018 first quarter as compared to $1.9 million
for the 2017 first quarter. The revenue from the industrial injury
prevention business was $4.9 million for the 2018 first quarter
compared to $1.5 million in the 2017 first quarter. Other revenue
was $0.7 million in the 2018 first quarter and $0.5 million in the
2017 period.
- Total operating costs were $85.1
million, or 78.6% of net revenues, in the 2018 first quarter as
compared to $76.8 million, or 78.7% of net revenues, in the 2017
first quarter. The $8.3 million increase was attributable to $5.5
million in operating costs related to New Clinics, an increase of
$2.8 million related to the industrial injury prevention business
due to a full quarter of operations and an increase of $0.3 million
related to management contracts while costs of Mature Clinics were
reduced by $0.3 million. Total salaries and related costs,
including those from New Clinics, were 57.5% of net revenue in the
recent quarter versus 57.2% for the 2017 first quarter. Rent,
supplies, contract labor and other costs as a percentage of net
revenue were 20.1% for the recent quarter versus 20.6% for the 2017
first quarter. The provision for doubtful accounts as a percentage
of net revenue was 1.0% for the 2018 first quarter as compared to
0.9% in the 2017 first quarter.
- The gross profit for the 2018 first
quarter grew by $2.5 million, or 11.9%, to $23.2 million, as
compared to $20.7 million in the first quarter of 2017. The gross
profit percentage was 21.4% of net revenue in the recent period as
compared to 21.3% for the 2017 first quarter. The gross profit
percentage for the Company’s physical therapy clinics was 21.9% in
the recent quarter as compared to 21.5% in the 2017 first quarter.
The gross profit percentage on management contracts was 13.8% in
the 2018 first quarter as compared to 14.8% in the 2017 first
quarter. The gross profit percentage for the industrial injury
prevention business was 15.8% for the recent quarter as compared to
14.3% for the one month of operation in the 2017 period.
- Corporate office costs were $10.2
million in the 2018 first quarter compared to $8.5 million in the
2017 first quarter. Corporate office costs were 9.4% of net
revenues for the 2018 first quarter compared to 8.8% for the 2017
first quarter.
- Operating income for the recent quarter
increased 7.0% to $13.1 million as compared to $12.2 million in the
2017 first quarter.
- The Company no longer has mandatorily
redeemable non-controlling interest. See discussion following –
Redeemable Non-Controlling Interests.
- Interest expense – debt and other was
$0.6 million in the 2018 first quarter and $0.4 million in the 2017
first quarter.
- The provision for income tax for the
2018 first quarter was $2.5 million and for the 2017 first quarter
was $1.8 million both of which are inclusive of the reduction of
$0.3 million and $0.8 million, respectively, for the excess tax
benefit, which is a component of the provision for income taxes,
related to equity compensation. The provision for income tax as a
percentage of income before taxes less net income attributable to
non-controlling interest was 25.8% and 27.3%, respectively, for the
2018 and 2017 first quarters.
- Net income attributable to
non-controlling interests (permanent equity) was $1.2 million in
the 2018 first quarter as compared to $1.2 million in the 2017
first quarter. Net income attributable to redeemable
non-controlling interests (temporary equity) was $1.7 million in
the 2018 first quarter.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 1.9%. Visits
increased 1.4% for de novo and acquired clinics open for one year
or more and the same store net rate increased by approximately
0.5%.
Other Financial Measures
For the first quarter of 2018 the Company's Adjusted EBITDA
increased by 4.8% to $14.0 million from $13.3 million in the
comparable 2017 quarter. See definition and explanation of Adjusted
EBITDA in the schedule on pages 10 and 11.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “We built a good,
sturdy foundation this first quarter to start off the year on solid
footing. Our core physical therapy business as well as our
industrial injury prevention initiatives are growing and realizing
margin expansion despite the extreme weather experienced in the
first part of the year. Our leadership and operations team
additions are working well and their impact should increase as the
year progresses. Finally, we are excited about our newest
acquisition within our industrial injury prevention business and
the opportunities we are seeing to continue to grow and scale that
part of our service offering.”
Larry McAfee, Chief Financial Officer, noted, “The Company’s net
cash flow from operations in the first quarter of 2018 was strong
as evidenced by the $12.7 million or 21% reduction in debt as
compared to year-end 2017.”
Redeemable Non-Controlling
Interests
Effective December 31, 2017, the Company entered into amendments
to its acquired limited partnership agreements replacing the
mandatory redemption feature. No monetary consideration was paid to
the partners to amend the agreements. The amended Partnership
Agreements provide that, upon certain events, the Company has a
call right (the “Call Right”) and the selling entity has a put
right (the “Put Right”) for the purchase and sale of the limited
partnership interest held by the partner. Once the terms are
triggered, the Put Right and the Call Right do not expire, even
upon an individual partner’s death, and contain no mandatory
redemption feature. The purchase price of the partner’s limited
partnership interest upon the exercise of either the Put Right or
the Call Right is calculated per the original terms of the
respective agreements. The Company accounted for the amendment of
its Partnership Agreements as an extinguishment of the outstanding
Seller Entity Interests classified as liabilities through the
issuance of new Seller Entity Interests classified in temporary
equity. Pursuant to ASC 470-50-40-2, the Company removed the
outstanding liability-classified Seller Entity Interests at their
carrying amounts and recognized the new temporary-equity-classified
Seller Entity Interests at their fair value. In summary, the
redemption values of the mandatorily redeemable non-controlling
interest (previously classified as liabilities) were reclassified
as redeemable non-controlling interest (temporary equity) on the
December 31, 2017 consolidated balance sheet. For 2018, in
accordance with current accounting guidance, the revaluation of
redeemable non-controlling interest, net of tax, will be charged
directly to retained earnings and will be included in the earnings
per basic and diluted share calculation.
U.S. Physical Therapy Declares
Quarterly Dividend
The second quarterly dividend for 2018 of $0.23 per share will
be paid on June 8, 2018 to shareholders of record as of May 11,
2018. U.S. Physical Therapy began paying quarterly dividends in
2011 and has increased the dividend amount every year since.
First Quarter 2018 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 3, 2018
to discuss the Company's Quarter Ended March 31, 2018 results.
Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number
4398474 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 3, 2018.
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;
- cost, risks and uncertainties
associated with the Company’s restatement of its prior financial
statements due to the correction of its accounting methodology for
redeemable non-controlling partnership interests, and including any
pending and future claims or proceedings relating to such
matters;
- 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 580
outpatient physical 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 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)
Three Months Ended March 31, 2018 March 31,
2017 Net patient revenues $ 100,552 $ 93,654 Other revenues
7,790 3,911 Net revenues 108,342 97,565 Operating
costs: Salaries and related costs 62,279 55,827 Rent, supplies,
contract labor and other 21,776 20,087 Provision for doubtful
accounts 1,061 898 Closure costs 12 6 Total operating
costs 85,128 76,818 Gross profit 23,214 20,747
Corporate office costs 10,163 8,547 Operating
income 13,051 12,200 Interest and other income, net 32 24
Interest expense: Mandatorily redeemable non-controlling interests
- change in redemption value - (2,669 ) Mandatorily redeemable
non-controlling interests - earnings allocable - (1,294 ) Debt and
other (553 ) (415 ) Total interest expense (553 )
(4,378 ) Income before taxes 12,530 7,846 Provision
for income taxes 2,476 1,812 Net income 10,054
6,034 Less: net income attributable to non-controlling
interests (2,937 ) (1,218 ) Net income
attributable to USPH shareholders $ 7,117 $ 4,816 Basic and
diluted earnings per share attributable to USPH shareholders $ 0.27
$ 0.38 Shares used in computation - basic and diluted
12,616 12,528 Dividends declared per common share $
0.23 $ 0.20
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
March 31, 2018 December 31, 2017 ASSETS (unaudited) Current
assets: Cash and cash equivalents $ 19,813 $ 21,933 Patient
accounts receivable, less allowance for doubtful accounts of $2,517
and $2,273, respectively 46,228 44,707 Accounts receivable - other
6,504 5,655 Other current assets 3,050 4,786 Total
current assets 75,595 77,081 Fixed assets: Furniture and equipment
51,569 51,100 Leasehold improvements 29,981 29,760
Fixed assets, gross 81,550 80,860 Less accumulated depreciation and
amortization 61,742 60,475 Fixed assets, net 19,808
20,385 Goodwill 273,770 271,338 Other identifiable intangible
assets, net 47,092 48,954 Other assets 1,357 1,224
Total assets $ 417,622 $ 418,982 LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS' EQUITY AND
NON-CONTROLLING INTERESTS Current liabilities: Accounts payable -
trade $ 1,722 $ 2,165 Accrued expenses 38,342 33,342 Current
portion of notes payable 5,317 4,044 Total current
liabilities 45,381 39,551 Notes payable, net of current portion 782
2,728 Revolving line of credit 42,000 54,000 Mandatorily redeemable
non-controlling interests - 327 Deferred taxes 10,151 10,875
Deferred rent 2,005 2,116 Other long-term liabilities 733
743 Total liabilities 101,052 110,340 Redeemable
non-controlling interests 108,085 102,572 Commitments and
contingencies 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, 14,884,676 and
14,809,299 shares issued, respectively 149 148 Additional paid-in
capital 75,543 73,940 Retained earnings 162,907 162,406 Treasury
stock at cost, 2,214,737 shares (31,628 ) (31,628 )
Total USPH shareholders' equity 206,971 204,866 Non-controlling
interests 1,514 1,204 Total USPH shareholders' equity
and non-controlling interests 208,485 206,070 Total
liabilities, redeemable non-controlling interests, USPH
shareholders' equity and non-controlling interests $ 417,622 $
418,982
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Three Months Ended March 31, 2018
March 31, 2017 OPERATING ACTIVITIES Net
income including non-controlling interests $ 10,054 $ 6,034
Adjustments to reconcile net income including non-controlling
interests to net cash provided by operating activities:
Depreciation and amortization 2,468 2,356 Provision for doubtful
accounts 1,061 898 Equity-based awards compensation expense 1,381
1,280 Loss on sale of fixed assets 54 33 Deferred income taxes
(1,162 ) (250 ) Changes in operating assets and liabilities:
Increase in patient accounts receivable (2,782 ) (1,542 ) Increase
in accounts receivable - other (849 ) (3,697 ) (Increase) decrease
in other assets (1,238 ) 757 Increase in accounts payable and
accrued expenses 7,389 5,315 Increase in mandatorily redeemable
non-controlling interests - 2,911 (Decrease) increase in other
liabilities (845 ) 76 Net cash provided by operating
activities 15,531 14,171
INVESTING ACTIVITIES
Purchase of fixed assets (1,404 ) (1,587 ) Purchase of businesses,
net of cash acquired (761 ) (15,670 ) Purchase of non-controlling
interest (246 ) - Proceeds on sale of fixed assets -
62 Net cash used in investing activities (2,411 ) (17,195 )
FINANCING ACTIVITIES Distributions to non-controlling
interests, permanent and temporary equity (2,208 ) (937 ) Proceeds
from revolving line of credit 19,000 32,000 Payments on revolving
line of credit (31,000 ) (20,000 ) Payments to settle mandatorily
redeemable non-controlling interests (265 ) (2,230 ) Principal
payments on notes payable (823 ) (702 ) Other 56 -
Net (cash used in) provided by financing activities (15,240 ) 8,131
Net increase in cash and cash equivalents (2,120 ) 5,107
Cash and cash equivalents - beginning of period 21,933
20,047 Cash and cash equivalents - end of period $ 19,813 $
25,154
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION Cash paid during the period for: Income taxes $
2,941 $ 86 Interest $ 526 $ 599 Non-cash investing and financing
transactions during the period: Purchase of business - seller
financing portion $ 150 $ 900
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
The following tables provide a 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.
For 2018, Operating Results equal net income attributable to
USPH shareholders and, in accordance with current accounting
guidance, the revaluation of redeemable non-controlling interest,
net of tax, charged directly to retained earnings is included in
the earnings per diluted share calculation. For the 2017 first
quarter, Operating Results, a non-generally accepted accounting
principles (“non-GAAP”) measure, is defined as net income
attributable to common shareholders prior to interest expense –
mandatorily redeemable non-controlling interests – change in
redemption value, net of tax. Operating Results for the two periods
are comparable, however, the calculations differ. Management uses
Operating Results, which eliminates this current non-cash item 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 earnings before interest income,
interest expense – mandatorily redeemable non-controlling interests
– change in redemption value, 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 Adjusted Net
Income 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, 2018
2017 Computation of earnings per share - USPH
shareholders Net income attributable to USPH shareholders $
7,117 $ 4,816 Charges to retained earnings: Revaluation of
redeemable non-controlling interest $ (5,081 ) $ - Tax effect at
statutory rate (federal and state) of 26.25% 1,334 -
$ 3,370 $ 4,816 Basic and diluted per share $ 0.27 $ 0.38
Adjustments: Interest expense MRNCI * - change in redemption
value - 2,669 Revaluation of redeemable non-controlling interest
5,081 - Tax effect at statutory rate (federal and state) of 26.25%
and 39.25%, respectively (1,334 ) (1,048 ) Operating
results $ 7,117 $ 6,437 Basic and diluted operating results
per share $ 0.56 $ 0.51 Shares used in computation - basic
and diluted 12,616 12,528
Three
Months Ended March 31, 2018 2017 Net
income attributable to USPH shareholders $ 7,117 $ 4,816
Adjustments: Depreciation and amortization 2,468 2,356 Interest
income (32 ) (24 ) Interest expense MRNCI * - change in redemption
value - 2,669 Interest expense - debt and other 553 415 Provision
for income taxes 2,476 1,812 Equity-based awards compensation
expense 1,381 1,280 Adjusted EBITDA $ 13,963 $
13,324
* Mandatorily redeemable non-controlling
interest
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
RECAP OF CLINIC COUNT
Date Number of Clinics March 31, 2017
558 June 30, 2017 566 September 30, 2017 569 December 31, 2017 578
March 31, 2018 580
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180503005186/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
US Physical Therapy (NYSE:USPH)
Historical Stock Chart
From Aug 2024 to Sep 2024
US Physical Therapy (NYSE:USPH)
Historical Stock Chart
From Sep 2023 to Sep 2024