Management Provides 2019 Earnings Guidance
and Raises 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 fourth quarter and year ended
December 31, 2018.
For the fourth quarter ended December 31, 2018, USPH’s Operating
Results increased 45.5% to $9.0 million, or $0.71 per diluted
share, as compared to $6.2 million, or $0.49 per diluted share, in
the fourth quarter of 2017. For the year ended December 31, 2018,
USPH’s Operating Results increased 28.1% to $33.5 million, or $2.65
per diluted share, as compared to $26.2 million, or $2.08 per
diluted share, for the 2017 year. Operating Results, a
non-generally accepted accounting principles (“non-GAAP”) measure,
for the 2018 fourth quarter and for the 2018 year, equals net
income attributable to USPH shareholders less a gain resulting from
a liability no longer deemed payable, net of taxes. For the 2017
fourth quarter and 2017 year, Operating Results is defined as net
income attributable to USPH shareholders prior to the benefit due
to the revaluation of deferred tax assets and liabilities due to
the 2017 Tax Cuts and Jobs Act (“TCJA”), and prior to charges for
interest expense – mandatorily redeemable non-controlling interests
– change in redemption value and charges for costs related to
restatement of financials – legal and accounting, both charges net
of tax.
For the fourth quarter ended December 31, 2018, USPH’s net
income attributable to its shareholders, in accordance with GAAP,
was $10.4 million, or $0.43 per share, as compared to $7.3 million,
or $0.57 per share for the fourth quarter of 2017. For the year
ended December 31, 2018, USPH’s net income attributable to its
shareholders, in accordance with GAAP, was $34.9 million, $1.31 per
share, as compared to $22.3 million, or $1.76 per share, for the
2017 year. 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 14 for a computation of diluted earnings per share and a
reconciliation of net income attributable to USPH shareholders to
Operating Results.
Fourth Quarter 2018 Compared to Fourth
Quarter 2017
- Net revenues increased $8.1 million, or
7.5%, from $109.2 million in the fourth quarter of 2017, to $117.3
million in the fourth quarter of 2018, primarily due to an increase
in net patient revenues from physical therapy operations from both
internal growth and acquisitions, 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 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 $6.2 million, or 6.1%,
to $107.8 million in the fourth quarter of 2018 from $101.6 million
in the fourth quarter of 2017 due to an increase in total patient
visits of 4.9% from 975,400 to 1,023,000 and an increase in the
average net patient revenue per visit from $104.21 to $105.38. Of
the $6.2 million increase in net patient revenues, $3.6 million
related to an increase in business of clinics opened or acquired
prior to 2018 (“Mature Clinics”) and $2.6 million related to
clinics opened or acquired in 2018 (“New Clinics”). Revenue from
physical therapy management contracts was $2.0 million for the
fourth quarter of 2018 and $2.2 million for the comparable 2017
period.
- The revenue from the industrial injury
prevention business increased 51.6% to $7.1 million in the fourth
quarter of 2018 compared to $4.7 million in the fourth quarter 2017
due to internal growth plus the acquisition in April of 2018. Other
miscellaneous revenue was $0.5 million in the fourth quarter of
2018 and $0.7 million in the fourth quarter of 2017.
- Total operating costs were $92.1
million, or 78.5% of net revenues, in the fourth quarter of 2018 as
compared to $85.1 million, or 77.9% of net revenues, in the fourth
quarter of 2017. The $7.0 million increase was attributable to $2.7
million in operating costs related to New Clinics, an increase of
$2.7 million related to Mature Clinics, an increase of $2.2 million
in the industrial injury prevention business primarily due to the
recent acquisition offset by a reduction in closure costs of $0.6
million. Total salaries and related costs, including those from New
Clinics and the industrial injury prevention business, were 57.8%
of net revenues in the recent quarter versus 56.9% in the
fourth quarter of 2017. Rent, supplies, contract labor and other
costs as a percentage of net revenues were 19.5% in the fourth
quarter of 2018 versus 19.6% in the fourth quarter of 2017. The
provision for doubtful accounts as a percentage of net revenue was
1.3% in the fourth quarter of 2018 as compared to 0.9% in the
fourth quarter of 2017.
- For the fourth quarter of 2018 and
2017, closure costs amounted to a credit of $17,000 and a charge of
$0.6 million, respectively. For the fourth quarter of 2017, closure
costs were primarily due to the closure of a single clinic acquired
partnership due to the loss of a significant management
contract.
- The gross profit for the fourth quarter
of 2018 grew by 4.5% or $1.1 million to $25.2 million, as compared
to $24.1 million in the fourth quarter of 2017. The gross profit
percentage was 21.5% of net revenue in the recent period as
compared to 22.1% in the fourth quarter 2017. The gross profit
percentage for the Company’s physical therapy clinics was 22.5% in
the recent quarter as compared to 22.8% in the fourth quarter of
2017. The gross profit percentage on physical therapy management
contracts was 7.7% in the 2018 fourth quarter as compared to 18.9%
in the 2017 fourth quarter. The gross profit percentage for the
industrial injury prevention business was 10.4% in the recent
quarter as compared to 10.6% in the 2017 period. The gross profit
for the industrial injury prevention business was negatively
impacted by the write-off of a $297,000 receivable from Pacific Gas
& Electric which has filed for bankruptcy.
- Corporate office costs were $10.4
million in the fourth quarter of 2018 compared to $10.2 million in
the fourth quarter of 2017. Corporate office costs were 8.9% of net
revenues for the fourth quarter of 2018 quarter as compared to 9.3%
for the fourth quarter of 2017.
- Operating income for the recent quarter
increased 6.0% to $14.8 million as compared to $14.0 million in the
fourth quarter 2017.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- A gain of $1.8 million was recognized
in the fourth quarter of 2018 on a partnership liability no longer
deemed payable.
- Interest expense – debt and other was
$0.4 million in the fourth quarter of 2018 and $0.5 million in
fourth quarter of 2017.
- The provision for income tax for the
fourth quarter of 2018 was $2.6 million, inclusive of a $0.5
million benefit related to the reconciliation of the 2017 federal
and state returns to our book provision and a $0.3 million benefit
due to an analysis of our current year tax provision. Excluding
those benefits, the provision for income taxes as a percentage of
income before taxes less net income attributable to non-controlling
interest was 26.3%. The income tax benefit for the 2017 fourth
quarter was $2.0 million. Included in the fourth quarter of 2017 is
a tax benefit of $4.3 million due to the revaluation of deferred
tax assets and liabilities due to the TCJA. Also, included in the
fourth quarter of 2017 was a charge of $0.3 million related to a
detailed reconciliation of the federal and state taxes payable and
receivable accounts along with federal and state deferred tax
assets and liability accounts at December 31, 2016. Excluding this
reconciliation charge and prior to the $4.3 million tax benefit,
the provision for income taxes as a percentage of income before
taxes less net income attributable to non-controlling interest was
37.9%. As reported, the provision for income tax as a percentage of
income before taxes less net income attributable to non-controlling
interest was 20.2% for the fourth quarter of 2018 and a tax benefit
of 37.3% for the fourth quarter of 2017.
- Net income attributable to
non-controlling interests (permanent equity) was $1.6 million in
the fourth quarter of 2018 and $1.2 million in the fourth quarter
of 2017. Net income attributable to redeemable non-controlling
interests (temporary equity) was $1.6 million in the fourth quarter
of 2018 and $0.2 million in the fourth quarter of 2017.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 3.9%. Visits
increased 3.2% for de novo and acquired clinics open for one year
or more while the same store net rate increased slightly.
Year 2018 Compared to Year
2017
- Net revenues increased $39.8 million,
or 9.6%, from $414.1 million in 2017 to $453.9 million in 2018,
primarily due to an increase in net patient revenues from physical
therapy operations from both internal growth and acquisitions, an
increase in the revenue from the industrial injury prevention
business from a combination of internal growth plus an acquisition
and an increase in revenue from management contracts due to
acquired contracts. 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.
- Net patient revenues from physical
therapy operations increased approximately $28.5 million, or 7.3%,
to $417.7 million in 2018 from $389.2 million in 2017 due to an
increase in total patient visits of 6.8% from 3,705,000 to
3,958,000 and an increase in the average net patient revenue per
visit from $105.05 to $105.55. Of the $28.5 million increase, $23.8
million related to Mature Clinics and $4.7 million related to New
Clinics. Revenue from physical therapy management contracts
increased 12.1% to $8.3 million in 2018 as compared to $7.4 million
in 2017.
- Revenue from the industrial injury
prevention business increased 70.8% to $25.5 million in 2018
compared to $14.9 in 2017 due to internal growth and the recent
acquisition. Other miscellaneous revenue was $2.4 million in 2018
and $2.5 million in 2017.
- Total operating costs were $352.2
million, or 77.6% of net revenues, in 2018 as compared to $323.4
million, or 78.1% of net revenues, in 2017. The $28.8 million
increase was attributable to $5.3 million in operating costs
related to New Clinics, an increase of $15.1 million related to
Mature Clinics, an increase of $7.4 million related to the
industrial injury prevention business primarily due to the recent
acquisition and a full year of activity in 2018 for the business
acquired in March 2017 versus ten months in 2017, and an increase
of $1.0 million related to management contracts. Total salaries and
related costs, including those from New Clinics and the industrial
injury prevention business, were 57.1% of net revenue for 2018 as
compared to 57.3% for 2017. Rent, supplies, contract labor and
other costs as a percentage of net revenue were 19.5% for 2018 and
19.8% for 2017. The provision for doubtful accounts as a percentage
of net revenue was 1.0% for 2018 and 0.9% for 2017.
- For 2018 and 2017, closure costs
amounted to a credit of $9,000 and a charge of $0.6 million,
respectively.
- The gross profit, inclusive of closure
costs, in 2018 grew by 12.2% or $11.1 million to $101.7 million, as
compared to $90.6 million in 2017. The gross profit percentage grew
to 22.4% of net revenue in the recent year as compared to 21.9% for
2017. The gross profit percentage for the Company’s physical
therapy clinics was 22.7% for 2018 as compared to 22.5% for 2017.
The gross profit percentage on management contracts was 12.1% for
2018 as compared to 14.9% for 2017. The gross profit percentage for
the industrial injury prevention business was 20.4% for 2018 as
compared to 13.3% for 2017.
- Corporate office costs were $41.3
million in 2018 compared to $35.9 million in 2017. Corporate office
costs were 9.1% of net revenues for 2018 compared to 8.7% for
2017.
- Operating income for 2018 increased
10.2% to $60.3 million as compared to $54.7 million in 2017.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- A gain of $1.8 million was recognized
in 2018 on a partnership liability no longer deemed payable.
- Interest expense – debt and other was
$2.0 million in 2018 and $2.1 million in 2017.
- The provision for income tax in 2018
was $11.4 million, inclusive of a $0.5 million benefit related to
the reconciliation of the 2017 federal and state returns to our
book provision. Without this benefit, the provision for income
taxes as a percentage of income before taxes less net income
attributable to non-controlling interest was 25.7%. The income tax
benefit in 2017 was $6.0 million. Included in 2017 is a tax benefit
of $4.3 million due to the revaluation of deferred tax assets and
liabilities due to the TCJA. Also, included in 2017 was a charge of
$0.3 million related to a detailed reconciliation of the federal
and state taxes payable and receivable accounts along with federal
and state deferred tax assets and liability accounts at December
31, 2016. Without this reconciliation charge and prior to the $4.3
million tax benefit, the provision for income taxes as a percentage
of income before taxes less net income attributable to
non-controlling interest was 35.6%. As reported, the provision for
income tax as a percentage of income before taxes less net income
attributable to non-controlling interest was 24.6% in 2018 and
21.3% in 2017.
- Net income attributable to
non-controlling interests (permanent equity) was $5.5 million in
2018 as compared to $5.2 million in 2017. Net income attributable
to redeemable non-controlling interests (temporary equity) was $8.4
million in 2018 and $0.2 million in 2017.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 4.6%. Visits
increased 4.6% for de novo and acquired clinics open for one year
or more and the same store net rate remained relatively the
same.
Other Financial Measures
For the fourth quarter of 2018 the Company's Adjusted EBITDA
increased by 3.1% to $15.5 million from $15.0 million in the fourth
quarter of 2017. For 2018, the Company's Adjusted EBITDA increased
by 7.1% to $62.1 million from $57.9 million in 2017. See definition
and explanation of Adjusted EBITDA in the schedule on pages 13 and
14.
Management Provides 2019 Earnings
Guidance
Management currently expects the Company’s Operating Results for
2019 to be in the range of $35.1 million to $36.4 million or $2.76
to $2.85 per share. This earnings range is based on an assumed
annual corporate tax rate of approximately 26.5%. 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, “2018 was another
very positive year for our Company as well as our shareholders. I
continue to be very proud of our entire team for the work that they
do every day. We made a number of key investments in 2018 which are
bearing great fruit. Our industrial injury prevention business has
expanded significantly from our start in early 2017. Our corporate
support infrastructure, especially for operations, was also
strengthened this past year. We continue to attract amazing people
as well as partners which have further enhanced our Company and, I
believe, will facilitate our continued growth into the future.”
Larry McAfee, Chief Financial Officer, noted, “Net cash flow
from operations ran at a record level in 2018, funding both de novo
clinic development and acquisitions while net debt, that is debt
less cash, was reduced by $22.4 million or 58%.”
U.S. Physical Therapy Declares
Quarterly Dividend
The Company is increasing its dividend by 17.4%. The first
quarterly dividend for 2019 of $0.27 per share will be paid on
April 19, 2019 to shareholders of record as of March 20, 2019. U.S.
Physical Therapy began paying quarterly dividends in 2011 and has
increased the dividend amount every year since.
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, is not charged to
net income but is charged to retained earnings and is included in
the earnings per basic and diluted share calculation.
Fourth Quarter and Year End 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 March 7,
2019 to discuss the Company's Fourth Quarter and Year Ended
December 31, 2018 results. Interested parties may participate in
the call by dialing 1-888-335-5539 or 973-582-2857 and entering
reservation number 1948767 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 June 7,
2019 at U.S. Physical Therapy’s website.
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;
- 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 591
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)
For the Three Months Ended For the Year Ended
December 31, 2018
December 31, 2017
December 31, 2018
December 31, 2017
Net patient revenues $ 107,808 $ 101,642 $ 417,703 $ 389,226
Other revenues 9,541 7,561 36,208
24,825 Net revenues 117,349 109,203 453,911 414,051 Operating
costs: Salaries and related costs 67,818 62,155 259,228 237,067
Rent, supplies, contract labor and other 22,828 21,376 88,426
82,096 Provision for doubtful accounts 1,501 956 4,603 3,672
Closure costs (17 ) 572 (9 ) 599 Total
operating costs 92,130 85,059 352,248
323,434 Gross profit 25,219 24,144 101,663 90,617
Corporate office costs 10,415 10,182 41,349
35,889 Operating income 14,804 13,962 60,314 54,728
Gain on derecognition of debt 1,846 - 1,846 - Interest and other
income, net 23 30 93 88 Interest expense: Mandatorily redeemable
non-controlling interests - change in redemption value - (5,055 ) -
(12,894 ) Mandatorily redeemable non-controlling interests -
earnings allocable - (1,689 ) - (6,055 ) Debt and other (365
) (539 ) (2,042 ) (2,111 ) Total interest
expense (365 ) (7,283 ) (2,042 ) (21,060 ) Income before
taxes 16,308 6,709 60,211 33,756 Provision for income taxes
2,635 (1,997 ) 11,369 6,032 Net
income 13,673 8,706 48,842 27,724 Less: net income
attributable to non-controlling interests (3,265 )
(1,357 ) (13,969 ) (5,468 ) Net income
attributable to USPH shareholders $ 10,408 $ 7,349 $ 34,873 $
22,256 Basic and diluted earnings per share attributable to
USPH shareholders $ 0.43 $ 0.57 $ 1.31 $ 1.76 Shares used in
computation - basic and diluted 12,685 12,593
12,666 12,570 Dividends declared per common share $
0.23 $ 0.20 $ 0.92 $ 0.80
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
(unaudited)
December 31, 2018
December 31, 2017
ASSETS Current assets: Cash and cash equivalents $ 23,368 $ 21,933
Patient accounts receivable, less allowance for doubtful accounts
of $2,672 and $2,273, respectively 44,751 44,707 Accounts
receivable - other 6,742 5,655 Other current assets 4,353
4,786 Total current assets 79,214 77,081 Fixed assets:
Furniture and equipment 52,611 51,100 Leasehold improvements
31,712 29,760 Fixed assets, gross 84,323 80,860 Less
accumulated depreciation and amortization 64,154
60,475 Fixed assets, net 20,169 20,385 Goodwill 293,525 271,338
Other identifiable intangible assets, net 48,828 48,954 Other
assets 1,430 1,224 Total assets $ 443,166 $ 418,982
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH
SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS Current
liabilities: Accounts payable - trade $ 2,019 $ 2,165 Accrued
expenses 38,493 33,342 Current portion of notes payable
1,434 4,044 Total current liabilities 41,946 39,551 Notes
payable, net of current portion 402 2,728 Revolving line of credit
38,000 54,000 Mandatorily redeemable non-controlling interests -
327 Deferred taxes 9,012 10,875 Deferred rent 2,159 2,116 Other
long-term liabilities 829 743 Total liabilities
92,348 110,340 Redeemable non-controlling interests 133,943
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, 14,899,233 and 14,809,299 shares issued, respectively
149 148 Additional paid-in capital 80,028 73,940 Retained earnings
167,396 162,406 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 ) Total USPH shareholders’ equity 215,945
204,866 Non-controlling interests 930 1,204 Total
USPH shareholders' equity and non-controlling interests
216,875 206,070 Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests $ 443,166 $ 418,982
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
Year Ended
December 31, 2018
December 31, 2017
OPERATING ACTIVITIES Net income including non-controlling
interests $ 48,842 $ 27,724 Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities: Depreciation and amortization 9,755 9,710
Provision for doubtful accounts 4,603 3,672 Equity-based awards
compensation expense 5,939 5,032 Deferred income taxes 4,813 (4,864
) Other 167 621 Gain on derecognition of debt (1,846 ) - Changes in
operating assets and liabilities: Increase in patient accounts
receivable (3,434 ) (3,447 ) Increase in accounts receivable -
other (1,087 ) (3,022 ) Decrease in other assets 345 2,086 Increase
in accounts payable and accrued expenses 4,876 6,979 Increase in
mandatorily redeemable non-controlling interests - 11,579 Increase
in other liabilities 32 456 Net cash provided by
operating activities 73,005 56,526
INVESTING
ACTIVITIES Purchase of fixed assets (7,193 ) (7,095 ) Purchase
of businesses, net of cash acquired (16,367 ) (36,682 ) (Purchase)
sale of non-controlling interest (350 ) 121 Proceeds on sale of
fixed assets 1 81 Net cash used in investing
activities (23,909 ) (43,575 )
FINANCING ACTIVITIES
Distributions to non-controlling interests, permanent and temporary
equity (15,646 ) (5,572 ) Cash dividends paid to shareholders -
funded (11,664 ) (10,066 ) Proceeds from revolving line of credit
103,000 93,000 Payments on revolving line of credit (119,000 )
(85,000 ) Payments to settle mandatorily redeemable non-controlling
interests (265 ) (2,361 ) Principal payments on notes payable
(4,044 ) (1,227 ) Other (42 ) 161 Net (cash used in)
provided by financing activities (47,661 ) (11,065 ) Net
increase in cash and cash equivalents 1,435 1,886 Cash and cash
equivalents - beginning of period 21,933 20,047 Cash
and cash equivalents - end of period $ 23,368 $ 21,933
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid
during the period for: Income taxes $ 9,183 $ 8,543 Interest $
2,357 $ 2,113 Non-cash investing and financing transactions during
the period: Purchase of business - seller financing portion $ 950 $
2,150
U.S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
The following tables provide 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.
Operating Results (as defined below), a non-generally accepted
accounting principles (“non-GAAP”) measure, for the 2018 fourth
quarter and for the 2018 year, equals net income attributable to
USPH shareholders less gain on derecognition of debt, net of taxes.
For the 2017 fourth quarter and 2017 year, Operating Results is
defined as net income attributable to USPH shareholders prior to
the benefit due to the revaluation of deferred tax assets and
liabilities due to the TCJA which was passed by Congress on
December 20, 2017 and signed into law by the President on December
22, 2017 and prior to charges for interest expense – mandatorily
redeemable non-controlling interests – change in redemption value
and charges for costs 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 gain on
derecognition of debt, 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 Operating
Results 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 December
31,
Year Ended December 31, 2018
2017 2018 2017 Computation of
earnings per share - USPH shareholders Net income attributable to
USPH shareholders $ 10,408 $ 7,349 $ 34,873 $ 22,256 Charges to
retained earnings: Revaluation of redeemable non-controlling
interest $ (6,665 ) $ (201 ) (24,770 ) (201 ) Tax effect at
statutory rate (federal and state) of 26.25% 1,749 75
6,502 75 $ 5,492 $ 7,223 $ 16,605 $ 22,130
Basic and diluted per share $ 0.43 $ 0.57 $ 1.31 $ 1.76
Adjustments: Tax benefit - revaluation of deferred tax assets and
liabilities - (4,325 ) - (4,325 ) Gain on derecognition of debt
(1,846 ) - (1,846 ) - Interest expense MRNCI * - change in
redemption value - 5,055 - 12,894 Cost related to restatement of
financials - legal and accounting - 200 - 670 Revaluation of
redeemable non-controlling interest 6,665 201 24,770 201 Tax effect
at statutory rate (federal and state) of 26.25% and 39.25%,
respectively (1,265 ) (2,143 ) (6,018 )
(5,405 )
Operating results $ 9,046 $ 6,211 $ 33,511 $ 26,165 Basic
and diluted operating results per share $ 0.71 $ 0.49 $ 2.65 $ 2.08
Shares used in computation: Basic and diluted 12,685
12,593 12,666 12,570
Three Months Ended December
31,
Year Ended December 31, 2018 2017 2018
2017 Net income attributable to USPH shareholders $
10,408 $ 7,349 $ 34,873 $ 22,256 Adjustments: Depreciation
and amortization 2,420 2,441 9,755 9,710 Gain of derecognition of
debt (1,846 ) - (1,846 ) - Interest income (23 ) (30 ) (93 ) (88 )
Interest expense MRNCI * - change in redemption value - 5,055 -
12,894 Interest expense - debt and other 365 539 2,042 2,111
Provision for income taxes 2,635 (1,997 ) 11,369 6,032 Equity-based
awards compensation expense 1,486 1,622 5,939
5,032 Adjusted EBITDA $ 15,445 $ 14,979 $ 62,039 $
57,947
* 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
September 30, 2018 588 December 31, 2018 591
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190307005091/en/
U.S. Physical Therapy, Inc.Larry McAfee, Chief Financial
OfficerChris Reading, Chief Executive Officer(713) 297-7000Three
Part AdvisorsJoe Noyons(817) 778-8424
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