Company Reinstates Dividend and Provides
2021 Earnings Guidance
U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE:
USPH), a national operator of outpatient physical therapy clinics
and provider of industrial injury prevention services, today
reported results for the fourth quarter and year ended December 31,
2020.
For the year ended December 31, 2020, USPH’s Operating Results
(as defined below), including Relief Funds (defined below), was
$38.4 million, or $2.99 per diluted share, as compared to $36.0
million, or $2.82 per diluted share, in 2019. For the fourth
quarter ended December 31, 2020, USPH’s Operating Results,
including Relief Funds, was $13.9 million, or $1.08 per diluted
share, as compared to $8.2 million, or $0.64 per diluted share, in
the fourth quarter of 2019. For the year ended December 31, 2020,
USPH’s Operating Results (as defined below), excluding Relief
Funds, was $30.6 million, or $2.39 per diluted share, as compared
to $36.0 million, or $2.82 per diluted share in 2019. For the
fourth quarter ended December 31, 2020, USPH’s Operating Results,
excluding Relief Funds, was $10.9 million, or $0.85 per diluted
share, as compared to $8.2 million, or $0.64 per diluted share, in
the fourth quarter of 2019. Operating Results, a non-Generally
Accepted Accounting Principles (“GAAP”) measure, equals net income
attributable to USPH shareholders per the consolidated statements
of income plus charges incurred for clinic closure costs, less gain
on the sale of partnership interests and clinics, plus allocated
non-controlling interests, and excludes expenses incurred for the
CFO transition, all net of taxes. The earnings per share from
Operating Results also excludes the impact of the revaluation of
redeemable non-controlling interest. See table on page 15.
For the year ended December 31, 2020, USPH’s net income
attributable to its shareholders, in accordance with GAAP, was
$35.2 million as compared to $40.0 million for the comparable
period of 2019. For the fourth quarter ended December 31, 2020,
USPH’s net income attributable to its shareholders was $13.0
million, as compared to $7.9 million in the fourth quarter of 2019.
Inclusive of the charge for revaluation of non-controlling
interest, net of taxes, used to compute diluted earnings per share,
in accordance with GAAP, the amount is $31.8 million, or $2.48 per
share, for 2020 as compared to $31.3 million, or $2.45 per share,
for 2019. Inclusive of the charge for revaluation of
non-controlling interest, net of taxes, used to compute diluted
earnings per share in accordance with GAAP, the amount is $8.7
million, or $0.68 per share, for the fourth quarter of 2020 as
compared to $7.1 million, or $0.55 per share, for the fourth
quarter of 2019. In accordance with current accounting guidance,
the revaluation of redeemable non-controlling interest, net of
taxes, is not included in net income but charged directly to
retained earnings; however, the charge or credit for this change is
included in the earnings per basic and diluted share calculation.
See the schedule on page 15 for the computation of diluted earnings
per share.
As previously disclosed in a series of filings with the SEC and
further described in detail in our Quarterly Reports on Form 10-Q
for the first three quarters of 2020, the Company’s results were
negatively impacted by the effects of the COVID-19 pandemic in
2020. Following the onset of the pandemic, management took a number
of steps to reduce costs, make up for operating losses incurred in
March and April, and increase profits subsequently. The Company’s
physical therapy patient volumes increased consistently from May
through December 2020, returning to near-normal levels in the
fourth quarter of 2020. The Company’s average physical therapy
patient volumes per day per clinic were 26.2, 18.9, 25.8, and 27.7,
respectively, in the four quarters of 2020. Physical therapy
patient volumes per day per clinic for the fourth quarter of 2020
were 27.7 compared to 28.0 in the fourth quarter of 2019. The
Company’s industrial injury prevention business was less affected
by the pandemic in 2020, with revenues higher by $1.7 million, or
4.6%, in 2020 as compared to 2019, including an acquisition closed
in April 2019.
Year 2020 Compared to Year
2019
- Reported net revenues for year ended December 31, 2020 (“2020”)
was $423.0 million as compared to $482.0 million for the year ended
December 31, 2019 (“2019”). See table below for a detail of
reported net revenues (in thousands):
For the Year Ended
December 31, 2020
December 31, 2019
Revenues:
Net patient revenues
$
373,340
$
433,345
Management contract revenue
8,410
8,676
Other patient revenues
2,020
2,486
Physical therapy operations
$
383,770
$
444,507
Industrial injury prevention services
39,199
37,462
$
422,969
$
481,969
- Net patient revenues from physical therapy operations decreased
approximately 13.8%, or $60.0 million, to $373.3 million in 2020
from $433.3 million in 2019. Included in net patient revenues are
revenues related to clinics sold or closed in 2020 and 2019 of $4.4
million in 2020 and $28.6 million in 2019. During 2020, the Company
sold its interest in 14 clinics and closed 34 clinics. During 2019,
the Company sold its interest in a partnership which included 30
clinics and closed 11 clinics. For comparison purposes, adjusted
for revenue from the clinics sold or closed, net patient revenues
from physical therapy operations was approximately $369.0 million
in 2020, inclusive of $9.7 million related to clinics open or
acquired in 2020 (“New Clinics”) and $404.8 million in 2019. Net
patient revenues related to clinics opened or acquired prior to
2020 and not closed or sold (“Mature Clinics”) decreased by $45.5
million in 2020 compared to 2019. The reduction is largely
attributable to the adverse effects of the COVID-19 pandemic. See
table below for a detail of net patient revenues from physical
therapy operations (in thousands):
For the Year Ended
December 31, 2020
December 31, 2019
Related to Mature Clinics
$
359,294
$
404,784
Related to New Clinics
9,664
-
Related to 2019 sold and closed
clinics
-
13,019
Related to 2020 sold and closed
clinics
4,382
15,542
$
373,340
$
433,345
- Including all clinics operational during 2020 and 2019, the
average net patient revenue per visit was $105.66 and $105.90,
respectively. Total patient visits were 3,533,371 in 2020 and
4,091,967 in 2019. The reduction is largely attributable to the
adverse effects of the COVID-19 pandemic.
- Revenue from physical therapy management contracts was $8.4
million in 2020 and $8.7 million in 2019.
- Revenue from the industrial injury prevention business was
$39.2 million in 2020, an increase of $1.7 million, or 4.6%, as
compared to $37.5 million in 2019, inclusive of an acquisition in
April 2019.
- Other miscellaneous revenue was $2.0 million in 2020 and $2.5
million in 2019. Other miscellaneous revenue includes a variety of
services, including athletic trainers provided for schools and
athletic events.
- Total operating costs, excluding closure costs, were $324.6
million in 2020, as compared to $369.5 million in 2019. Operating
costs were 76.7% as a percentage of net revenues in both 2020 and
2019. Included in operating costs for 2020 was $8.4 million related
to New Clinics. Operating costs for Mature Clinics decreased by
$31.3 million in 2020 compared to 2019. Operating costs related to
management contracts decreased by $0.7 million. Operating costs
related to the industrial injury prevention business stayed
relatively the same. Closure costs in the current period of $3.9
million include estimates of remaining lease obligations,
derecognition of goodwill and other costs related to closed and
sold clinics. See table below for a detail of operating costs,
excluding closure costs (in thousands):
For the Year Ended
December 31, 2020
December 31, 2019
Physical Therapy Operations
Related to Mature Clinics
$
274,781
$
306,128
Related to New Clinics
8,416
-
Related to 2019 sold and closed
clinics
40
12,283
Related to 2020 sold and closed
clinics
5,583
14,588
Physical therapy management contracts
6,654
7,389
Total Physical Therapy Operations
295,474
340,388
Industrial injury prevention services
29,114
29,082
Total operating costs, excluding closure
costs
$
324,588
$
369,470
- Total salaries and related costs, including physical therapy
operations and the industrial injury prevention business, decreased
by $38.6 million in 2020 as compared to 2019 and were 55.7% of net
revenues in 2020 versus 56.9% in 2019. Rent, supplies, contract
labor and other costs decreased by $6.0 million in 2020 as compared
to 2019 and were 19.9% as a percentage of net revenues in 2020
versus 18.8% in 2019. The provision for credit losses as a
percentage of net revenue was 1.1% in 2020 and 1.0% in 2019.
- Gross profit, excluding closure costs, for 2020 was $98.4
million as compared to $112.5 million in 2019. The gross profit
percentage for the Company’s physical therapy clinics was 23.1% in
2020 compared to 23.6% in 2019. The gross profit percentage on
physical therapy management contracts increased to 20.9% in 2020
(an increase of 610 basis points) as compared to 14.8% in the 2019.
The gross profit for the industrial injury prevention business was
$10.1 million, or 25.7% (an increase of 330 basis points), in 2020
as compared to $8.4 million, or 22.4%, in the comparable 2019
period. The table below details the gross profit, excluding closure
costs (in thousands):
For the Year Ended
December 31, 2020
December 31, 2019
Gross profit, excluding closure costs:
Physical therapy clinics
$
86,540
$
102,833
Management contracts
1,755
1,287
Industrial injury prevention services
10,086
8,379
Gross profit, excluding closure costs
$
98,381
$
112,499
- Corporate office costs were $42.0 million in 2020 compared to
$45.0 million in 2019. Corporate office costs were 9.9% of net
revenues for 2020 as compared to 9.3% for 2019.
- Operating income for 2020 was $52.4 million as compared to
$67.4 million for 2019. Operating income as a percentage of net
revenue was 12.4% in 2020 compared to 14.0% in 2019. See discussion
above related to effects of COVID-19.
- Included in other income was the gain of $1.1 million in 2020
resulting from the sale of 14 previously closed clinics and, in
2019, a gain of $5.5 million resulting from the sale of a
partnership interest with 30 clinics. Relief funds of $13.5 million
are also included in other income in 2020. See discussion of Relief
Funds below.
- Interest expense was $1.6 million in 2020 and $2.1 million in
2019.
- The provision for income tax was $13.0 million for 2020 and
$13.6 million for 2019. The provision for income tax as a
percentage of income before taxes less net income attributable to
non-controlling interest (effective tax rate) was 27.0% for 2020
and 25.4% for 2019. See table below detailing computation of the
effective tax rate ($ in thousands):
For the Year Ended
December 31, 2020
December 31, 2019
Income before taxes
$
65,513
$
70,906
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(6,122
)
(6,561
)
Redeemable non-controlling interests -
temporary equity
(11,175
)
(10,659
)
$
(17,297
)
$
(17,220
)
Income before taxes less net income
attributable to non-controlling interests
$
48,216
$
53,686
Provision for income taxes
$
13,022
$
13,647
Effective tax rate
27.0
%
25.4
%
- Net income attributable to non-controlling interests (permanent
equity) was $6.1 million in 2020 and $6.6 million in 2019. Net
income attributable to redeemable non-controlling interests
(temporary equity) was $11.2 million in 2020 and $10.6 million in
2019.
Fourth Quarter 2020 Compared to Fourth
Quarter 2019
- Reported net revenues in the three months ended December 31,
2020 (“2020 Fourth Quarter”) was $117.5 million as compared to
$122.1 million in the three months ended December 31, 2019 (“2019
Fourth Quarter”). See table below for a detail of reported net
revenues (in thousands):
Three Months Ended
December 31, 2020
December 31, 2019
Revenues:
Net patient revenues
$
104,537
$
108,941
Management contract revenue
2,666
2,142
Other patient revenues
613
705
Physical therapy operations
107,816
111,788
Industrial injury prevention services
9,650
10,326
$
117,466
$
122,114
- Net patient revenues from physical therapy operations decreased
$4.4 million, or 4.0%, to $104.5 million in 2020 Fourth Quarter
from $108.9 million in 2019 Fourth Quarter. Included in net patient
revenues are revenues related to clinics sold or closed in 2020 and
2019 of $0.2 million in Fourth Quarter 2020 and $3.7 million in
Fourth Quarter 2019. During 2020, the Company sold its interest in
14 clinics and closed 34 clinics. During 2019, the Company sold its
interest in a partnership which included 30 clinics and closed 11
clinics. For comparison purposes, adjusted for revenue from the
clinics sold or closed, net patient revenues from physical therapy
operations was approximately $104.4 million in Fourth Quarter 2020,
inclusive of $3.9 million related to New Clinics, and $105.2
million in Fourth Quarter 2019. Net patient revenues related to
Mature Clinics decreased $4.7 million in Fourth Quarter 2020
compared to Fourth Quarter 2019. The reduction is largely
attributable to the adverse effects of the COVID-19 pandemic. See
table below for a detail of net patient revenues from physical
therapy operations (in thousands):
Three Months Ended
December 31, 2020
December 31, 2019
Related to Mature Clinics
$
100,495
$
105,237
Related to New Clinics
3,882
-
Related to 2019 sold and closed
clinics
3
4
Related to 2020 sold and closed
clinics
157
3,699
$
104,537
$
108,940
- The average net patient revenue per visit was $107.05 for the
2020 Fourth Quarter as compared to $105.10 for the 2019 period,
including all clinics operational during such periods,. The 2020
Fourth Quarter includes a slight adjustment to net rate for earlier
2020 periods. Including the adjustment, the Company’s net rate for
full year 2020 was $105.66 which compares to $105.90 for full year
2019. Total patient visits were 976,492 in the 2020 Fourth Quarter
and 1,036,516 for the 2019 Fourth Quarter.
- Revenue from physical therapy management contracts was $2.7
million for the 2020 Fourth Quarter as compared to $2.1 million in
the 2019 Fourth Quarter.
- Revenue from the industrial injury prevention business was $9.7
million in the 2020 Fourth Quarter, as compared to $10.3 million in
the 2019 Fourth Quarter. The decrease is attributable to the
adverse effects of the COVID-19 pandemic.
- Other miscellaneous revenue was $0.6 million in the 2020 Fourth
Quarter and $0.7 million in the 2019 Fourth Quarter. Other
miscellaneous revenue includes a variety of services, including
athletic trainers provided for schools and athletic events.
- Total operating costs, excluding closure costs, were $88.3
million in the 2020 Fourth Quarter, or 75.2% of net revenues, a
reduction of 270 basis points as compared to $95.1 million in the
2019 Fourth Quarter, or 77.9% of net revenues. Included in
operating costs for the 2020 Fourth Quarter was $3.9 million
related to New Clinics, of which $2.1 million is associated with
acquired clinics in 2020. Operating costs for Mature Clinics
decreased by $6.6 million in the Fourth Quarter 2020 compared to
the Fourth Quarter 2019. In addition, operating costs related to
the industrial injury prevention business decreased by $0.9
million. See table below for a for a detail of operating costs,
excluding closure costs (in thousands):
Three Months Ended
December 31, 2020
December 31, 2019
Physical Therapy Operations
Related to Mature Clinics
$
74,821
$
81,449
Related to New Clinics
3,908
-
Related to 2019 closed and sold
clinics
-
1
Related to 2020 closed and sold
clinics
266
3,652
Physical therapy management contracts
2,072
1,834
Total Physical Therapy Operations
81,067
86,936
Industrial injury prevention services
7,275
8,206
Total operating costs, excluding closure
costs
$
88,342
$
95,142
- Total salaries and related costs, including physical therapy
operations and the industrial injury prevention business, were
55.9% of net revenues in the 2020 Fourth Quarter versus 57.8% in
the 2019 Fourth Quarter. Rent, supplies, contract labor and other
costs as a percentage of net revenues were 18.2% in the 2020 Fourth
Quarter versus 19.0% in the 2019 Fourth Quarter. The provision for
credit losses as a percentage of net revenue was 1.1% in the 2020
Fourth Quarter and 1.2% in the 2019 Fourth Quarter.
- Gross profit for the 2020 Fourth Quarter, excluding closure
costs, was $29.1 million, an increase of $2.2 million, or
approximately 8.0%, as compared to $27.0 million in the 2019 Fourth
Quarter. The gross profit percentage, excluding closure costs, was
24.8% of net revenue in the 2020 Fourth Quarter, an increase of 270
basis points as compared to 22.1% in the 2019 Fourth Quarter. The
gross profit percentage for the Company’s physical therapy clinics,
excluding closure costs, was 24.9% in the 2020 Fourth Quarter, an
improvement of 230 basis points as compared to 22.6% in the 2019
Fourth Quarter. The gross profit percentage on physical therapy
management contracts was 22.2% in the 2020 Fourth Quarter, up 780
basis points as compared to 14.4% in the 2019 Fourth Quarter. The
gross profit percentage for the industrial injury prevention
business was 24.6% in the 2020 Fourth Quarter, an improvement of
660 basis points as compared to 18.0% in the 2019 Fourth Quarter.
The table below details the gross profit, excluding closure costs
(in thousands):
Three Months Ended
December 31, 2020
December 31, 2019
Gross profit, excluding closure costs:
Physical therapy clinics
$
26,156
$
24,803
Management contracts
593
308
Industrial injury prevention services
2,375
1,861
Gross profit, excluding closure costs
$
29,124
$
26,972
- Corporate office costs were $10.9 million in the 2020 Fourth
Quarter compared to $11.7 million in the 2019 Fourth Quarter.
Corporate office costs were 9.3% of net revenues for the 2020
Fourth Quarter as compared to 9.6% for the 2019 Fourth
Quarter.
- Operating income for the 2020 Fourth Quarter was $18.2 million,
an increase of $2.9 million, or 19.1%, as compared to $15.3 million
for the 2019 Fourth Quarter. Operating income as a percentage of
net revenue increased by 300 basis points from 12.5% in the 2019
period to 15.5% in 2020.
- Included in other income in the 2020 Fourth Quarter was $5.2
million of Relief Funds. See discussion of Relief Funds below.
- Interest expense was $203,000 in the 2020 Fourth Quarter and
$557,000 in the 2019 Fourth Quarter due to reduced borrowings under
the Company’s revolving credit line.
- The provision for income tax was $4.6 million for the 2020
Fourth Quarter and $2.4 million for the 2019 Fourth Quarter. The
provision for income tax as a percentage of income before taxes
less net income attributable to non-controlling interest (effective
tax rate) was 26.0% for the 2020 Fourth Quarter and 23.4% for the
2019 Fourth Quarter. See table below ($ in thousands):
Three Months Ended
December 31, 2020
December 31, 2019
Income before taxes
$
23,196
$
14,439
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(2,233
)
(1,579
)
Redeemable non-controlling interests -
temporary equity
(3,364
)
(2,507
)
$
(5,597
)
$
(4,086
)
Income before taxes less net income
attributable to non-controlling interests
$
17,599
$
10,353
Provision for income taxes
$
4,569
$
2,424
Effective tax rate
26.0
%
23.4
%
- Net income attributable to non-controlling interests (permanent
equity) was $2.2 million in the 2020 Fourth Quarter and $1.6
million in the 2019 Fourth Quarter. Net income attributable to
redeemable non-controlling interests (temporary equity) was $3.4
million in the 2020 Fourth Quarter and $2.5 million in the 2019
Fourth Quarter.
Medicare Accelerated and Advance
Payment Program (“MAAPP Funds”)
In response to the COVID-19 pandemic, the federal government
approved the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”). The CARES Act allowed for qualified healthcare
providers to receive advanced payments under the existing MAAPP
Funds during the COVID-19 pandemic. Under this program, healthcare
providers could choose to receive advanced payments for future
Medicare services provided. The Company applied for and received
approval from Centers for Medicare & Medicaid Services (“CMS”)
in April 2020. The Company recorded these payments as a liability
until all performance obligations have been met as the payments
were made on behalf of patients before services were provided.
Currently, MAAPP funds received are required to be applied to
future Medicare billings commencing in August 2021, with all such
remaining amounts required to be repaid by January 2024. Beginning
January 2024, any unpaid balance will begin accruing interest. The
Company currently intends to repay funds prior to August 2021.
Included in cash and cash equivalents and accrued liabilities at
December 31, 2020 is $14.1 million of MAAPP Funds.
Relief Funds
On March 27, 2020, the CARES Act was enacted. The CARES Act
provided additional waivers, reimbursement, grants and other funds
to assist health care providers during the COVID-19 pandemic,
including $100.0 billion in appropriations for the Public Health
and Social Services Emergency Fund, also referred to as the
Provider Relief Fund, to be used for preventing, preparing, and
responding to the coronavirus, and for reimbursing eligible health
care providers for lost revenues and health care related expenses
that are attributable to COVID-19.
Through December 31, 2020, the Company’s consolidated
subsidiaries received approximately $13.5 million of payments under
the CARES Act (“Relief Funds”). Under the Company’s accounting
policy, these payments have been recorded as Other income – Relief
Funds. For the three months and year ended December 31, 2020, the
Company has recognized approximately $5.2 million and $13.5
million, respectively, as Other income – Relief Funds on the
accompanying consolidated statement of operations. These funds are
not required to be repaid upon attestation and compliance with
certain terms and conditions, which could change materially based
on evolving grant compliance provisions and guidance provided by
the U.S. Department of Health and Human Services. Currently, the
Company can attest and comply with the terms and conditions. The
Company will continue to monitor the evolving guidelines and may
record adjustments as additional information is released.
Other Financial Measures
For the 2020 Fourth Quarter, the Company's Adjusted EBITDA was
$23.5 million compared to $15.3 million in the 2019 Fourth Quarter.
For the 2020 Fourth Quarter, the Company's Adjusted EBITDA,
excluding Relief Funds, was $18.3 million.
For 2020, the Company's Adjusted EBITDA was $70.0 million
compared to $72.8 million in 2019. For 2020, the Company's Adjusted
EBITDA, excluding Relief Funds, was $56.5 million.
See definition, explanation and calculation of Adjusted EBITDA
in the schedule on pages 14 and 15.
Acquistions in Fourth Quarter
2020
As previously reported, the Company acquired a 75% interest in a
three-clinic physical therapy practice in the fourth quarter of
2020 with the practice founder retaining 25%. The purchase price
was approximately $9.1 million. The business generates $4.6 million
in annual revenue and has approximately 54,000 annual patient
visits. The Company’s strategy is to continue acquiring
multi-clinic outpatient physical therapy practices, to develop
outpatient physical therapy clinics as satellites in existing
partnerships and to continue acquiring companies that provide
industrial injury prevention services.
Quarterly Dividend
Reinstated
In April 2020, the Company announced the suspension of it
quarterly dividend to enhance its operational and financial
flexibility during the COVID-19 pandemic. The Company announced
today that its Board of Directors has reinstated its quarterly
dividend and declared a dividend of $0.35 per share, which is an
increase of 9.4% from its previous dividend of $0.32 per share paid
in April 2020. The quarterly dividend of $0.35 per share will be
paid on April 9, 2021 to shareholders of record as of March 12,
2021.
Renewal of Credit
Agreement
On January 29, 2021, the Company completed the renewal of its
bank credit facility, extending the maturity date from November 30,
2021 to November 30, 2025. The commitment under the facility
remains at $125.0 million; however, the accordion feature in the
agreement was expanded to provide for capacity up to $150 million.
Proceeds from the Credit Agreement may be used for working capital,
acquisitions, and for other purposes.
Management Provides 2021 Earnings
Guidance
Management currently expects the Company’s Operating Results for
2021 to be in the range of $30.9 million to $32.5 million, or $2.40
to $2.52 per share, which considers the following:
- The previously-announced Medicare rate reduction for the full
year of 2021 of approximately 3.5%, which is expected to reduce the
Company’s 2021 revenue by approximately $4.5 million, or $0.21 per
share after non-controlling interest and taxes
- The previously-announced cessation of the 2% sequestration
relief applied to all Medicare payments effective April 1, 2021,
which is expected to reduce the Company’s 2021 revenue, beginning
in the second quarter, by approximately $2.0 million, or $0.10 per
share after non-controlling interest and taxes
- Lost revenues related to significant weather-related events in
February, primarily in Texas and Tennessee, of approximately $2.8
million, or $0.13 per share after non-controlling interest and
taxes
This earnings range is based on an estimated annual effective
tax rate of approximately 27.0%. Please note that the earnings
guidance represents projected Operating Results from existing
operations and excludes future acquisitions. The 2021 earnings
guidance range excludes expenses associated with the
previously-announced retirement and replacement of one of the
Company’s co-Chief Operating Officers. The annual guidance figures
will 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, “It is difficult
at best to adequately summarize the year we have just completed.
One thing that isn’t difficult is to highlight the extraordinary
efforts of all of our employees across the entirety of our Company
for their stellar work during this most challenging and
unpredictable year in 2020. I cannot overstate how impressed I am
with the continuous examples of sacrifice, leadership, commitment
and resolve that have been evident to me throughout this past year
(and continuing) as we face the challenges and opportunities before
us. While I may not be the best person to predict the end of this
COVID-19 virus, I am well positioned to say that I believe that the
team we have can work through and overcome whatever obstacles come
our way. We also continue to believe that we are well positioned to
attract truly excellent partners as we work with grit and strong
resolve to grow and scale our Company while we serve those who are
entrusted to us with great care.”
Carey Hendrickson, Chief Financial Officer, said, “As a result
of the early actions we took when the pandemic began and the
outstanding efforts of our team throughout the year, the Company’s
net cash flow in 2020 was stronger than initially expected and our
results improved consistently from May through December, putting
our balance sheet in a strong position as we begin 2021. We are
pleased to reinstate and increase the quarterly dividend and to
extend our credit agreement with Bank of America for an additional
four years on favorable terms.”
Fourth Quarter 2020 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 February 25,
2021 to discuss results for the Company's fourth quarter and year
ended December 31, 2020. Interested parties may participate in the
call by dialing 1-888-335-5539 or 973-582-2857 and entering
reservation number 4396697 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 May 5,
2021 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:
- the multiple effects of the impact of public health crises and
epidemics/pandemics, such as the novel strain of COVID-19
(coronavirus) which the financial magnitude cannot be currently
estimated;
- 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
and/or enrollment status, including the Medicare reimbursement
reductions;
- revenue we receive from Medicare and Medicaid being subject to
potential retroactive reductions;
- business and regulatory conditions including federal and state
regulations;
- governmental and other third-party payor inspections, reviews,
investigations and audits, which may result in sanctions or
reputational harm and increased costs;
- 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 changes in the
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;
- competitive environment in the industrial injury prevention
business, which could result in the termination or non-renewal of
contractual service arrangements and other adverse financial
consequences for that service line;
- 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;
- a security breach of our or our third party vendors’
information technology systems may subject us to potential legal
action and reputational harm and may result in a violation of the
Health Insurance Portability and Accountability Act of 1996 of the
Health Information Technology for Economic and Clinical Health
Act;
- maintaining adequate internal controls;
- maintaining necessary insurance coverage;
- availability, terms, and use of capital; and
- weather and other seasonal factors.
See Risk Factors in Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2019 and the additional risk factor
disclosed in our Quarterly Report on Form 10-Q for the period ended
March 31, 2020 filed with the SEC on February 28, 2020 and May 21,
2020, respectively.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see the other sections of this report and our
other periodic reports filed with the Securities and Exchange
Commission (the “SEC”) for more information on these factors. Our
forward-looking statements represent our estimates and assumptions
only as of the date of this report. Except as required by law, we
are under no obligation to update any forward-looking statement,
regardless of the reason the statement may no longer be
accurate.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 554
outpatient physical therapy clinics in 39 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 38 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 and rehabilitation, performance optimization, post-offer
employment testing, functional capacity evaluations, and ergonomic
assessments. 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
INCOME
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended
For the Year Ended
December 31, 2020
December 31, 2019
December 31, 2020
December 31, 2019
Net patient revenues
$
104,537
$
108,940
$
373,340
$
433,345
Other revenues
12,929
13,174
49,629
48,624
Net revenues
117,466
122,114
422,969
481,969
Operating costs:
Salaries and related costs
65,677
70,549
235,629
274,233
Rent, supplies, contract labor and
other
21,421
23,143
84,336
90,379
Provision for credit losses
1,244
1,450
4,623
4,858
Closure costs - lease and other
6
13
2,072
25
Closure costs - derecognition of
goodwill
-
-
1,859
-
Total operating costs
88,348
95,155
328,519
369,495
Gross profit
29,118
26,959
94,450
112,474
Corporate office costs
10,916
11,673
42,037
45,049
Operating income
18,202
15,286
52,413
67,425
Other income and expense
Relief Funds
5,152
-
13,501
-
Gain on sale of partnership interest and
clinics
-
(309
)
1,091
5,514
Interest and other income, net
45
19
142
46
Interest expense - debt and other
(203
)
(557
)
(1,634
)
(2,079
)
Total other income and expense
4,994
(847
)
13,100
3,481
Income before taxes
23,196
14,439
65,513
70,906
Provision for income taxes
4,569
2,424
13,022
13,647
Net income
18,627
12,015
52,491
57,259
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(2,233
)
(1,579
)
(6,122
)
(6,561
)
Redeemable non-controlling interests -
temporary equity
(3,364
)
(2,507
)
(11,175
)
(10,659
)
(5,597
)
(4,086
)
(17,297
)
(17,220
)
Net income attributable to USPH
shareholders
$
13,030
$
7,929
$
35,194
$
40,039
Basic and diluted earnings per share
attributable to USPH shareholders
$
0.68
$
0.55
$
2.48
$
2.45
Shares used in computation - basic and
diluted
12,851
12,774
12,835
12,756
Dividends declared per common share
$
-
$
0.30
$
0.32
$
1.14
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
(unaudited)
December 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
32,918
$
23,548
Patient accounts receivable, less
allowance for credit losses of $2,008 and $2,698, respectively
41,906
46,228
Accounts receivable - other
9,039
9,823
Other current assets
3,773
5,787
Total current assets
87,636
85,386
Fixed assets:
Furniture and equipment
55,426
54,942
Leasehold improvements
35,320
33,247
Fixed assets, gross
90,746
88,189
Less accumulated depreciation and
amortization
69,081
66,099
Fixed assets, net
21,665
22,090
Operating lease right-of-use assets
81,595
81,586
Goodwill
345,646
317,676
Other identifiable intangible assets,
net
56,280
52,588
Other assets
1,539
1,519
Total assets
$
594,361
$
560,845
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
1,335
$
2,494
Accrued expenses
59,746
30,855
Current portion of operating lease
liabilities
27,512
26,486
Current portion of notes payable
4,899
728
Total current liabilities
93,492
60,563
Notes payable, net of current portion
596
4,361
Revolving line of credit
16,000
46,000
Deferred taxes
7,779
10,071
Operating lease liabilities, net of
current portion
61,985
60,258
Other long-term liabilities
4,539
141
Total liabilities
184,391
181,394
Redeemable non-controlling interests -
temporary equity
132,340
137,750
Commitments and Contingencies (See Note
16)
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, 15,066,282 and 14,989,337 shares issued,
respectively
151
150
Additional paid-in capital
95,622
87,383
Retained earnings
212,015
184,352
Treasury stock at cost, 2,214,737
shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
276,160
240,257
Non-controlling interests - permanent
equity
1,470
1,444
Total USPH shareholders' equity and
non-controlling interests
277,630
241,701
Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests
$
594,361
$
560,845
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Year Ended
December 31, 2020
December 31, 2019
December 31, 2018
OPERATING ACTIVITIES
Net income including non-controlling
interests
$
52,491
$
57,259
$
48,842
Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization
10,533
10,095
9,755
Provision for credit losses
4,623
4,858
4,603
Equity-based awards compensation
expense
7,917
6,985
5,939
Deferred income taxes
(258
)
4,651
4,813
Gain on sale of partnership interest
(1,091
)
(5,514
)
(1,846
)
Derecognition of goodwill - closed
clinics
1,859
-
-
Other
281
96
167
Changes in operating assets and
liabilities:
Decrease (increase) in patient accounts
receivable
899
(6,376
)
(3,434
)
Decrease(increase) in accounts receivable
- other
1,661
(2,499
)
(1,087
)
Decrease (increase) in other assets
4,161
(1,878
)
345
Increase (decrease) in accounts payable
and accrued expenses
12,427
(4,209
)
4,876
Increase (decrease) in other long-term
liabilities
4,492
(1,020
)
32
Net cash provided by operating
activities
99,995
62,448
73,005
INVESTING ACTIVITIES
Purchase of fixed assets
(7,639
)
(10,189
)
(7,193
)
Purchase of majority interest in
businesses, net of cash acquired
(23,907
)
(30,597
)
(16,367
)
Purchase of redeemable non-controlling
interest, temporary equity
(20,385
)
(8,651
)
-
Purchase of non-controlling interest,
permanent equity
(238
)
(428
)
(350
)
Proceeds on sale of redeemable
non-controlling interest, temporary equity
127
207
-
Proceeds on sales of partnership interest,
clinics and fixed assets
839
11,665
1
Net cash used in investing activities
(51,203
)
(37,993
)
(23,909
)
FINANCING ACTIVITIES
Distributions to non-controlling
interests, permanent and temporary equity
(18,331
)
(16,235
)
(15,646
)
Cash dividends paid to shareholders
(4,110
)
(14,555
)
(11,664
)
Proceeds from revolving line of credit
214,000
145,000
103,000
Payments on revolving line of credit
(244,000
)
(137,000
)
(119,000
)
Payments to settle mandatorily redeemable
non-controlling interests
-
-
(265
)
Principal payments on notes payable
(1,037
)
(1,433
)
(4,044
)
Medicare Accelerated and Advance Payment
Funds
14,054
-
Other
2
(52
)
(42
)
Net cash used in financing activities
(39,422
)
(24,275
)
(47,661
)
Net increase in cash and cash
equivalents
9,370
180
1,435
Cash and cash equivalents - beginning of
period
23,548
23,368
21,933
Cash and cash equivalents - end of
period
$
32,918
$
23,548
$
23,368
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
7,677
$
9,856
$
9,183
Interest
$
1,202
$
1,890
$
2,357
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
1,121
$
4,300
$
950
Purchase of business - payable to common
shareholders of acquired business
$
-
$
502
-
Notes payable related to purchase of
redeemable non-controlling interest, temporary equity
$
136
$
283
-
Notes payable related to purchase of
non-controlling interest, permanent equity
$
699
$
103
-
Notes receivable related to sale of
partnership interest - redeemable non-controlling interest
$
-
$
2,870
-
Notes receivables related to sale of
partnership interest
$
994
$
-
-
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, a non-Generally Accepted Accounting Principle
(“GAAP”) measure, equals net income attributable to USPH
shareholders per the consolidated statements of net income plus
charges incurred for closure costs, less gain on the sale of
partnership interests and clinics, less allocated non-controlling
interests, excludes expenses incurred for the CFO recruitment and
charges related to the acceleration of CFO restricted stock, all
net of tax. The earnings per share from Operating Results also
excludes the impact of the revaluation of redeemable
non-controlling interest. In accordance with current accounting
guidance, the revaluation of redeemable non-controlling interest,
net of tax, is included in the earnings per basic and diluted share
calculation, although it is not included in net income but charged
directly to retained earnings.
Management uses Operating Results, which eliminates certain
items described above 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 net income attributable to USPH
shareholders before interest income, interest expense, taxes,
depreciation, amortization, equity-based awards compensation
expense and write-off of goodwill related to clinic closures.
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.
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
13,030
$
7,929
$
35,194
$
40,039
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling
interest
(5,807
)
(1,141
)
(4,632
)
(11,893
)
Tax effect at statutory rate (federal and
state) of 26.25%
1,524
299
1,216
3,121
$
8,747
$
7,087
$
31,778
$
31,267
Earnings per share (basic and diluted)
$
0.68
$
0.55
$
2.48
$
2.45
Adjustments:
Expenses related to CFO transition
1,129
-
1,331
-
Closure costs
6
-
3,931
-
(Gain) adjustment on sale of partnership
interest and clinics
-
309
(1,091
)
(5,514
)
Relief Funds
(5,151
)
-
(13,500
)
-
Allocation to non-controlling interest
1,139
-
3,116
-
Revaluation of redeemable non-controlling
interest
5,807
1,141
4,632
11,893
Tax effect at statutory rate (federal and
state) of 26.25%
(769
)
(380
)
415
(1,674
)
Operating Results (without Relief
Funds)
$
10,908
$
8,157
$
30,612
$
35,972
Relief Funds
5,151
-
13,500
-
Allocation to non-controlling interest
(1,140
)
-
(2,893
)
-
Tax effect at statutory rate (federal and
state) of 26.25%
(1,053
)
-
(2,784
)
-
Operating Results (including Relief
Funds)
$
13,866
$
8,157
$
38,435
$
35,972
Basic and diluted Operating Results
(without Relief Funds) per share
$
0.85
$
0.64
$
2.39
$
2.82
Basic and diluted Operating Results
(including Relief Funds) per share
$
1.08
$
0.64
$
2.99
$
2.82
Shares used in computation - basic and
diluted
12,851
12,774
12,835
12,756
Three Months Ended December
31,
Year Ended December
31,
2020
2019
2020
2019
Net income attributable to USPH
shareholders
$
13,030
$
7,929
$
35,194
$
40,039
Adjustments:
Depreciation and amortization
2,654
2,718
10,533
10,095
Closure costs - write-off of goodwill
-
-
1,859
-
Relief Funds
(5,151
)
-
(13,500
)
-
Interest income
(45
)
(19
)
(142
)
(46
)
Interest expense - debt and other
203
557
1,634
2,079
Provision for income taxes
5,023
2,424
13,022
13,647
Equity-based awards compensation
expense
2,592
1,723
7,917
6,985
Adjusted EBITDA (without Relief Funds)
$
18,306
$
15,332
$
56,517
$
72,799
Relief Funds
5,151
-
13,500
-
Adjusted EBITDA
$
23,457
$
15,332
$
70,017
$
72,799
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
RECAP OF PHYSICAL THERAPY
OPERATIONS
CLINIC COUNT
Date
Number of Clinics
March 31, 2019
590
June 30, 2019
564
September 30, 2019
574
December 31, 2019
583
March 31, 2020
567
June 30, 2020
554
September 30, 2020
550
December 31, 2020
554
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210225005247/en/
U.S. Physical Therapy, Inc. Carey Hendrickson, Chief Financial
Officer Chris Reading, Chief Executive Officer (713) 297-7000 Three
Part Advisors Joe Noyons (817) 778-8424
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