Company Raises Annual Earnings Guidance and
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 second quarter and six months ended
June 30, 2018.
For the quarter ended June 30, 2018, USPH’s Operating Results
increased 24.4% to $9.2 million, or $0.73 per diluted share, as
compared to $7.4 million, or $0.59 per diluted share, in the second
quarter of 2017. For the six months ended June 30, 2018, USPH’s
Operating Results increased 17.3% to $16.4 million, or $1.29 per
diluted share, as compared to $14.0 million, or $1.11 per diluted
share, in the first six months of 2017. Operating Results, a
non-generally accepted accounting principles (“non-GAAP”) measure,
for the 2018 second quarter and first six months results equal net
income attributable to USPH shareholders. For the 2017 second
quarter and first six months, Operating Results is defined as net
income attributable to USPH shareholders prior to charge for
interest expense – mandatorily redeemable non-controlling interests
– change in redemption value and charge for cost related to
restatement of financials – legal and accounting, both charges net
of tax.
For the quarter ended June 30, 2018, USPH’s net income
attributable to its shareholders, in accordance with generally
accepted accounting principles (“GAAP”), was $9.2 million as
compared to $4.9 million for the second quarter of 2017. Earnings
per diluted share of $0.48 in the second quarter of 2018 compares
to $0.39 per diluted share for the 2017 second quarter. For the six
months ended June 30, 2018, USPH’s net income attributable to its
shareholders, in accordance with generally accepted accounting
principles (“GAAP”), was $16.4 million as compared to $9.8 million
for the comparable period of 2017. Earnings per diluted share of
$0.74 in the 2018 first six months compares to $0.78 per diluted
share for the 2017 first six months. For both periods of 2018, in
accordance with current accounting guidance, the revaluation of
redeemable non-controlling interest, net of tax, is not included in
net income but rather charged directly to retained earnings, but is
included in the earnings per basic and diluted share calculation.
See the schedule on page 13 for a computation of diluted earnings
per share and a reconciliation of net income attributable to USPH
shareholders to Operating Results.
Second Quarter 2018 Compared to Second
Quarter 2017
- Net revenues increased $10.8 million,
or 10.4%, from $104.3 million in the 2017 second quarter to $115.1
million in the 2018 second quarter, primarily due to an increase in
net patient revenues from physical therapy operations from both
internal growth and acquisitions, an increase in revenue from
management contracts primarily due to acquired contracts and an
increase in the revenue from the industrial injury prevention
business from a combination of internal growth plus a recent
acquisition. Our first company in the initial industrial injury
prevention business was acquired in March 2017 and, on April 30,
2018, the Company made a second acquisition with the two businesses
then combined.
- Net patient revenues from physical
therapy operations increased approximately $8.3 million, or 8.5%,
to $106.0 million in the 2018 second quarter from $97.7 million in
the 2017 second quarter due to an increase in total patient visits
of 8.1% from 924,000 to 999,000 and an increase in the average net
patient revenue per visit to $106.16 from $105.73. Of the $8.3
million increase in net patient revenues, $4.6 million related to
an increase in business of clinics opened or acquired on or prior
to June 30, 2017 (“Mature Clinics”) and $3.7 million related to
clinics opened or acquired after June 30, 2017 (“New Clinics”).
Revenue from physical therapy management contracts increased 33.6%
to $2.2 million in the 2018 second quarter as compared to $1.6
million in the 2017 second quarter.
- The revenue from the industrial injury
prevention business increased 43.2% to $6.3 million in the 2018
second quarter compared to $4.4 million in the 2017 second quarter
due to internal growth and the acquisition on April 30, 2018. Other
revenue was $0.6 million in both the 2018 and 2017 second
quarters.
- Total operating costs were $87.9
million, or 76.4% of net revenues, in the 2018 second quarter as
compared to $79.7 million, or 76.5% of net revenues, in the 2017
second quarter. The $8.2 million increase was attributable to $3.6
million in operating costs related to New Clinics, an increase of
$3.3 million related to Mature Clinics, an increase of $1.0 million
in the industrial injury prevention business primarily due to the
most recent acquisition and an increase of $0.3 million related to
management contracts. Total salaries and related costs, including
those from New Clinics and the industrial injury prevention
business, were 56.1% of net revenue in the recent quarter versus
56.4% in the 2017 second quarter. Rent, supplies, contract
labor and other costs as a percentage of net revenue were 19.3% in
the recent quarter versus 19.2% in the 2017 second quarter. The
provision for doubtful accounts as a percentage of net revenue was
1.0% in the 2018 second quarter as compared to 0.9% in the 2017
second quarter.
- The gross profit for the 2018 second
quarter grew by 10.7% or $2.6 million to $27.1 million, as compared
to $24.5 million in the second quarter of 2017. The gross profit
percentage was 23.6% of net revenue in the recent period as
compared to 23.5% in the 2017 second quarter. The gross profit
percentage for the Company’s physical therapy clinics was 23.7% in
the recent quarter as compared to 24.2% in the 2017 second quarter.
The gross profit percentage on management contracts was 16.3% in
the 2018 second quarter as compared to 7.4% in the 2017 second
quarter. The gross profit percentage for the industrial injury
prevention business was 24.4% in the recent quarter as compared to
15.0% in the 2017 period.
- Corporate office costs were $10.1
million in the 2018 second quarter compared to $8.8 million in the
2017 second quarter. Corporate office costs were 8.8% of net
revenues for the 2018 quarter compared to 8.5% for the 2017
quarter.
- Operating income for the recent quarter
increased 8.6% to $17.0 million as compared to $15.7 million in the
2017 second quarter.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- Interest expense – debt and other was
$0.5 million both the 2018 and 2017 second quarters.
- The provision for income tax for the
2018 second quarter was $3.3 million and for the 2017 second
quarter was $3.1 million, both of which are inclusive of the
reduction of $0.2 million and $0.1 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 26.1% and 38.4%,
respectively, for the 2018 and 2017 second quarters.
- Net income attributable to
non-controlling interests (permanent equity) was $1.4 million in
both the 2018 and 2017 second quarters. Net income attributable to
redeemable non-controlling interests (temporary equity) was $2.6
million in the 2018 second quarter.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 3.7%. Visits
increased 2.8% for de novo and acquired clinics open for one year
or more and the same store net rate increased by approximately
0.8%.
First Six Months 2018 Compared to First
Six Months 2017
- Net revenues increased $21.7 million,
or 10.7%, from $201.8 million in the first six months of 2017 to
$223.4 million in the first six months of 2018, primarily due to an
increase in net patient revenues from physical therapy operations
from both internal growth and acquisitions, an increase in revenue
from management contracts due to acquired contracts and an increase
in the revenue from the industrial injury prevention business from
a combination of internal growth plus a recent acquisition and due
to a full six months of activity in 2018 for the business acquired
in March 2017. Our first company in the industrial injury
prevention business was acquired in March 2017 and, on April 30,
2018, the Company made a second acquisition with the two businesses
then combined.
- Net patient revenues from physical
therapy operations increased approximately $15.2 million, or 8.0%,
to $206.5 million in the 2018 period from $191.3 million in the
2017 period due to an increase in total patient visits of 7.7% from
1,815,000 to 1,955,000 and an increase in the average net patient
revenue per visit to $105.67 from $105.39. Of the $15.2 million
increase, $8.6 million related to Mature Clinics and $6.6 million
related to New Clinics. Revenue from physical therapy management
contracts increased 26.6% to $4.4 million in the 2018 first six
months as compared to $3.5 million for the 2017 first six
months.
- Revenue from the industrial injury
prevention business increased 89.0% to $11.1 million for the first
six months of 2018 compared to $5.9 million in the first half of
2017 due to internal growth and the recent acquisition. Other
revenue was $1.4 million in the 2018 period and $1.1 million in the
2017 period.
- Total operating costs were $173.1
million, or 77.5% of net revenues, in the first six months of 2018
as compared to $156.5 million, or 77.6% of net revenues, in the
2017 first six months. The $16.5 million increase was attributable
to $6.6 million in operating costs related to New Clinics, an
increase of $5.4 million related to Mature Clinics, an increase of
$3.8 million related to the industrial injury prevention business
primarily due to the most recent acquisition and a full six months
of activity in 2018 for the business acquired in March 2017 versus
four months in 2017, and an increase of $0.7 million related to
management contracts. Total salaries and related costs, including
those from New Clinics and the industrial prevention business, were
56.8% of net revenue for the first six months of 2018 and 2017.
Rent, supplies, contract labor and other costs as a percentage of
net revenue were 19.7% for 2018 period and 19.9% for the 2017
period. The provision for doubtful accounts as a percentage of net
revenue was 1.0% for the 2018 period as compared to 0.9% for the
2017 period.
- The gross profit for the first six
months of 2018 grew by 11.2% or $5.1 million to $50.4 million, as
compared to $45.3 million in the 2017 first six months. The gross
profit percentage was 22.5% of net revenue in the recent period as
compared to 22.4% for the 2017 first six months. The gross profit
percentage for the Company’s physical therapy clinics was 22.8% in
the recent quarter as compared to 22.9% in the first six months of
2017. The gross profit percentage on management contracts was 15.1%
in the first half of 2018 as compared to 11.3% in the 2017 first
six months. The gross profit percentage for the industrial injury
prevention business was 20.6% for the first six months of 2018 as
compared to 14.8% for the four months of operation in the 2017
period.
- Corporate office costs were $20.3
million in the first six months of 2018 compared to $17.4 million
in the 2017 first six months. Corporate office costs were 9.1% of
net revenues for the 2018 first six months compared to 8.6% for the
2017 first six months.
- Operating income for the 2018 first six
months increased 7.9% to $30.1 million as compared to $27.9 million
in the 2017 first six months.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- Interest expense – debt and other was
$1.1 million in the first six months of 2018 and $0.9 million in
the 2017 first six months.
- The provision for income tax for the
2018 first six months was $5.7 million and for the 2017 first six
months was $4.9 million both of which are inclusive of the
reduction of $0.5 million and $0.9 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 26.0% and 33.4%,
respectively, for the 2018 and 2017 first six months.
- Net income attributable to
non-controlling interests (permanent equity) was $2.6 million in
the 2018 first six months as compared to $2.7 million in the 2017
first six months. Net income attributable to redeemable
non-controlling interests (temporary equity) was $4.3 million in
the 2018 first six months.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 3.0%. Visits
increased 2.3% for de novo and acquired clinics open for one year
or more and the same store net rate increased by approximately
0.6%.
Other Financial Measures
For the second quarter of 2018 the Company's Adjusted EBITDA
increased by 6.6% to $17.0 million from $15.9 million in the
comparable 2017 quarter. For the first six months of 2018 the
Company's Adjusted EBITDA increased by 5.8% to $31.0 million from
$29.3 million in the comparable 2017 period. See definition and
explanation of Adjusted EBITDA in the schedule on pages 12 and
13.
Raising 2018 Earnings
Guidance
The Company is raising earnings guidance for the year 2018.
Management currently expects the Company’s Operating Results for
the year 2018 to be in the range of $31.1 million to $32.3 million
or $2.45 to $2.55 per share. Previous 2018 earning guidance had
been for Operating Results of $29.5 million to $30.9 million or
$2.34 to $2.44 per share. Please note that the earnings guidance
represents projected operating results from existing operations but
excludes future acquisitions. The annual guidance figures may not
be updated unless there is a material development that causes
management to believe that operating results will be significantly
outside the given range.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “Last year we
embarked on making a number of changes in order to create the kind
of results we are producing in 2018. I am proud of our partners and
their staffs, our regional operations teams and our Houston-based
support groups for working together to move market share, get a
handle on cost, and to continue our daily focus to make a
difference in the lives of our patients. While we have more work to
do and continued opportunity to improve, I am encouraged by our
performance to date. Additionally and importantly, our industrial
injury prevention business has grown significantly over the past
year, both organically and through the recent acquisition.”
Larry McAfee, Chief Financial Officer, noted, “The gross margin
for the Company’s industrial injury prevention business more than
doubled growing from $.7 million in the second quarter of 2017 to
$1.5 million in the comparable 2018 period. The gross margin
percentage grew from 15.0% to 24.4%.”
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 third quarterly dividend for 2018 of $0.23 per share will be
paid on September 7, 2018 to shareholders of record as of August
14, 2018. U.S. Physical Therapy began paying quarterly dividends in
2011 and has increased the dividend amount every year since.
Second 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 August 2,
2018 to discuss the Company's Quarter and Six Months Ended June 30,
2018 results. Interested parties may participate in the call by
dialing 1-888-335-5539 or 973-582-2857 and entering reservation
number 1791027 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
2, 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 581
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
Six Months Ended
June 30, 2018
June 30, 2017
June 30, 2018
June 30, 2017
Net patient revenues $ 105,989 $ 97,657 $ 206,541 $ 191,311
Other revenues 9,109 6,594 16,899
10,505 Net revenues 115,098 104,251 223,440 201,816 Operating
costs: Salaries and related costs 64,607 58,779 126,886 114,606
Rent, supplies, contract labor and other 22,168 20,033 43,944
40,120 Provision for doubtful accounts 1,151 888 2,212 1,786
Closure costs 18 17 30 23 Total
operating costs 87,944 79,717 173,072
156,535 Gross profit 27,154 24,534 50,368 45,281
Corporate office costs 10,128 8,856 20,291
17,403 Operating income 17,026 15,678 30,077 27,878
Interest and other income, net 22 23 54 47 Interest expense:
Mandatorily redeemable non-controlling interests - change in
redemption value - (3,923 ) - (6,592 ) Mandatorily redeemable
non-controlling interests - earnings allocable - (1,787 ) - (3,081
) Debt and other (545 ) (516 ) (1,098 )
(931 ) Total interest expense (545 ) (6,226 ) (1,098 ) (10,604 )
Income before taxes 16,503 9,475 29,033 17,321
Provision for income taxes 3,267 3,085 5,743
4,897 Net income 13,236 6,390 23,290 12,424
Less: net income attributable to non-controlling interests
(3,990 ) (1,449 ) (6,927 ) (2,667 ) Net
income attributable to USPH shareholders $ 9,246 $ 4,941 $ 16,363 $
9,757 Basic and diluted earnings per share attributable to
USPH shareholders $ 0.48 $ 0.39 $ 0.74 $ 0.78 Shares used in
computation - basic and diluted 12,677 12,579
12,647 12,553 Dividends declared per common share $
0.23 $ 0.20 $ 0.46 $ 0.40
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
June 30, 2018
December 31,2017
ASSETS (unaudited) Current assets: Cash and cash equivalents $
27,148 $ 21,933 Patient accounts receivable, less allowance for
doubtful accounts of $2,790 and $2,273, respectively 45,424 44,707
Accounts receivable - other 8,589 5,655 Other current assets
5,247 4,786 Total current assets 86,408 77,081 Fixed assets:
Furniture and equipment 51,923 51,100 Leasehold improvements
30,421 29,760 Fixed assets, gross 82,344 80,860 Less
accumulated depreciation and amortization 62,652
60,475 Fixed assets, net 19,692 20,385 Goodwill 284,624 271,338
Other identifiable intangible assets, net 48,435 48,954 Other
assets 1,384 1,224 Total assets $ 440,543 $ 418,982
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH
SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS Current
liabilities: Accounts payable - trade $ 1,705 $ 2,165 Accrued
expenses 35,367 33,342 Current portion of notes payable
4,817 4,044 Total current liabilities 41,889 39,551 Notes
payable, net of current portion 607 2,728 Revolving line of credit
56,000 54,000 Mandatorily redeemable non-controlling interests -
327 Deferred taxes 9,584 10,875 Deferred rent 1,913 2,116 Other
long-term liabilities 775 743 Total liabilities
110,768 110,340 Redeemable non-controlling interests 117,027
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, 14,900,575 and 14,809,299 shares issued, respectively
149 148 Additional paid-in capital 77,099 73,940 Retained earnings
165,991 162,406 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 ) Total USPH shareholders' equity 211,611
204,866 Non-controlling interests 1,137 1,204 Total
USPH shareholders' equity and non-controlling interests
212,748 206,070 Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests $ 440,543 $ 418,982
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Six Months Ended June 30, 2018
June 30, 2017 OPERATING ACTIVITIES Net income
including non-controlling interests $ 23,290 $ 12,424 Adjustments
to reconcile net income including non-controlling interests to net
cash provided by operating activities: Depreciation and
amortization 4,866 4,789 Provision for doubtful accounts 2,212
1,786 Equity-based awards compensation expense 2,937 2,345 Loss on
sale of fixed assets 94 65 Deferred income taxes (1,736 ) (985 )
Changes in operating assets and liabilities: Increase in patient
accounts receivable (2,141 ) (4,006 ) Increase in accounts
receivable - other (2,934 ) (3,406 ) Increase in other assets (140
) (2,342 ) Increase in accounts payable and accrued expenses 4,845
5,043 Increase in mandatorily redeemable non-controlling interests
- 6,401 (Decrease) increase in other liabilities (672 )
77 Net cash provided by operating activities 30,621 22,191
INVESTING ACTIVITIES Purchase of fixed assets (3,270
) (3,245 ) Purchase of businesses, net of cash acquired (9,118 )
(33,665 ) Purchase of non-controlling interest (245 ) - Proceeds on
sale of fixed assets 1 62 Net cash used in investing
activities (12,632 ) (36,848 )
FINANCING ACTIVITIES
Distributions to non-controlling interests, permanent and temporary
equity (6,735 ) (2,665 ) Cash dividends paid to shareholders (5,828
) (2,516 ) Proceeds from revolving line of credit 55,000 49,000
Payments on revolving line of credit (53,000 ) (26,000 ) Payments
to settle mandatorily redeemable non-controlling interests (265 )
(2,230 ) Principal payments on notes payable (1,898 ) (777 ) Other
(48 ) 40 Net (cash used in) provided by financing
activities (12,774 ) 14,852 Net increase in cash and cash
equivalents 5,215 195 Cash and cash equivalents - beginning of
period 21,933 20,047 Cash and cash equivalents - end
of period $ 27,148 $ 20,242
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION Cash paid during the period for: Income
taxes $ 7,483 $ 7,516 Interest $ 1,106 $ 104 Non-cash investing and
financing transactions during the period: Purchase of business -
seller financing portion $ 550 $ 1,650
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 and charge for cost related to restatement of
financials – legal and accounting, both charges 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 June
30, Six Months Ended June 30, 2018
2017 2018 2017 Computation of
earnings per share - USPH shareholders Net income attributable to
USPH shareholders $ 9,246 $ 4,941 $ 16,363 $ 9,757 Charges to
retained earnings: Revaluation of redeemable non-controlling
interest $ (4,344 ) $ - (9,425 ) - Tax effect at statutory rate
(federal and state) of 26.25% 1,140 - 2,474
- $ 6,042 $ 4,941 $ 9,412 $ 9,757 Basic and diluted
per share $ 0.48 $ 0.39 $ 0.74 $ 0.78 Adjustments: Interest
expense MRNCI * - change in redemption value - 3,923 - 6,592 Cost
related to restatement of financials - legal and accounting - 177 -
312 Revaluation of redeemable non-controlling interest 4,344 -
9,425 - Tax effect at statutory rate (federal and state) of 26.25%
and 39.25%, respectively (1,140 ) (1,609 )
(2,474 ) (2,710 ) Operating results $ 9,246 $ 7,432 $ 16,363
$ 13,951 Basic and diluted operating results per share $
0.73 $ 0.59 $ 1.29 $ 1.11 Shares used in computation: Basic
and diluted 12,677 12,579 12,647 12,553
Three Months Ended June 30, Six Months
Ended June 30, 2018 2017 2018 2017
Net income attributable to USPH shareholders $ 9,246 $ 4,941
$ 16,363 $ 9,757 Adjustments: Depreciation and amortization
2,398 2,433 4,866 4,789 Interest income (22 ) (23 ) (54 ) (47 )
Interest expense MRNCI * - change in redemption value - 3,923 -
6,592 Interest expense - debt and other 545 516 1,098 931 Provision
for income taxes 3,267 3,085 5,743 4,897 Equity-based awards
compensation expense 1,556 1,065 2,937
2,345 Adjusted EBITDA $ 16,990 $ 15,940 $ 30,953 $ 29,264
* 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 June 30, 2018 581
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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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