Management Raises Earnings Guidance
Company Increases Quarterly Dividend
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 second quarter and six months ended June
30, 2021 (“2021 Second Quarter” and “2021 Six Months”,
respectively).
HIGHLIGHTS
- Operating Results (defined below) per diluted share for the
2021 Second Quarter was $0.96, a record-high for the Company
(exclusive of Relief Funds (defined below) in the fourth quarter of
2020). 2021 Operating Results per diluted share increased $0.57, or
146.2%, from Operating Results per diluted share of $0.39 for the
second quarter ended June 30, 2020 (“2020 Second Quarter”).
Inclusive of Relief Funds, Operating Results for the 2020 Second
Quarter was $0.74 per diluted share. Operating Results per diluted
share for the 2021 Second Quarter was $0.15, or 18.5%, higher than
the $0.81 per diluted share for the pre-pandemic second quarter of
2019 (“2019 Second Quarter”).
- Adjusted EBITDA (defined below) was $21.8 million for the 2021
Second Quarter, a record-high for the Company (exclusive of Relief
Funds in the fourth quarter of 2020). 2021 Adjusted EBITDA
increased $2.8 million, or 14.5%, from Adjusted EBITDA of $19.0
million for the 2020 Second Quarter, which included $8.0 million in
Relief Funds. Excluding Relief Funds, Adjusted EBITDA increased
$10.7 million, or 97.1%, in the 2021 Second Quarter as compared to
the 2020 Second Quarter. 2021 Second Quarter Adjusted EBITDA
increased $2.7 million, or 14.1%, as compared to the 2019 Second
Quarter. See pages 14 through 16 for a discussion and comparisons
to results according to GAAP.
- Average visits per clinic per day was 30.0 for the 2021 Second
Quarter, the highest number of average visits per clinic per day
for a quarter in the Company’s history, and exceeding pre-pandemic
patient volume levels. The 30.0 average visits per clinic per day
for the 2021 Second Quarter was 58.7% higher than the 18.9 average
visits per clinic per day for the 2020 Second Quarter and was 6.4%
higher than the 28.2 average visits per clinic per day for the 2019
Second Quarter.
- The net rate per patient visit of $104.46 for the 2021 Second
Quarter was consistent with the net rate per patient visit of
$104.72 in the first quarter of 2021. Net rate per patient visit
was $106.97 for the 2020 Second Quarter and $107.16 for the 2019
Second Quarter.
- Net patient revenues was $113.2 million for the 2021 Second
Quarter, an increase of 56.7% from $72.3 million for the 2020
Second Quarter. Net patient revenues for the 2021 Second Quarter
was only slightly less than net patient revenues of $113.4 million
in the second quarter of 2019, even with 21 fewer clinics open on
average in the 2021 Second Quarter than in the 2019 Second
Quarter.
- Net revenues was $126.9 million for the 2021 Second Quarter, a
record-high for the Company. 2021 Second Quarter net revenues was
$43.1 million, or 51.4%, higher than net revenues for the 2020
Second Quarter, and was $0.6 million, or 0.4%, higher than net
revenues for the 2019 Second Quarter.
- On June 30, 2021, the Company acquired 65% of the equity
interest in an eight-clinic physical therapy practice.
- The Company’s Board of Directors raised the Company’s quarterly
dividend from $0.35 per share to $0.38 per share, an 8.6% increase,
effective immediately, and declared a dividend for the third
quarter of 2021 at the higher rate.
- Management increased its range of earnings guidance for full
year 2021 to Operating Results per share of $3.05 to $3.15 from the
previous range of $2.68 to $2.78 due to the Company’s strong
performance in the 2021 Second Quarter, the impact of the
acquisition closed in the 2021 Second Quarter and confidence in the
sustainability of the Company’s performance for the remainder of
2021.
SUMMARY OF 2021 SECOND QUARTER AND SIX
MONTHS RESULTS
For the 2021 Second Quarter, USPH’s Operating Results was $12.4
million, or $0.96 per diluted share, an increase of 30.5% as
compared to $9.5 million (inclusive of Relief Funds), or $0.74 per
diluted share, for the 2020 Second Quarter. Operating Results per
diluted share for the 2021 Second Quarter was also higher than the
$0.81 per diluted share for the pre-pandemic 2019 Second Quarter by
$0.15, or 18.5%. For the six months ended June 30, 2021 (“2021 Six
Months”), USPH’s Operating Results was $20.6 million, or $1.60 per
diluted share, an increase of 54.0%, as compared to $13.4 million,
or $1.04 per diluted share, for the six months ended June 30, 2020
(“2020 Six Months”). Operating Results per diluted share for the
2021 Six Months was also higher than the $1.47 per diluted share
for the six months ended June 30, 2019 (“2019 Six Months) by $0.13,
or 8.8%. Operating Results, a non-Generally Accepted Accounting
Principles (“GAAP”) measure, equals net income attributable to USPH
diluted shareholders per the consolidated statements of income less
gain on sale of partnership interests and clinics plus charges
incurred for clinic closure costs and expenses related to CFO
transition, all net of taxes. Also, Operating Results earnings per
diluted share excludes the impact of the revaluation of redeemable
non-controlling interest and the associated tax impact. See tables
on pages 15 and 16.
For the 2021 Second Quarter, USPH’s net income attributable to
its diluted shareholders was $12.4 million, as compared to $10.2
million for the 2020 Second Quarter and $14.6 million for the 2019
Second Quarter, which includes a $5.8 million gain on the sale of
the Company’s interest in a physical therapy partnership on June
30, 2019. For the 2021 Six Months, USPH’s net income attributable
to its diluted shareholders was $20.6 million, as compared to $11.2
million for the 2020 Six Months and $23.0 million for the 2019 Six
Months. Inclusive of the charge or credit for revaluation of
non-controlling interest, net of taxes, used to compute diluted
earnings per diluted share in accordance with GAAP, the amount is
$10.5 million, or $0.82 per diluted share, for the 2021 Second
Quarter as compared to $12.7 million, or $0.99 per diluted share,
for the 2020 Second Quarter, and $0.85 per diluted share for the
2019 Second Quarter. Inclusive of the charge or credit for
revaluation of redeemable non-controlling interest, net of taxes,
used to compute diluted earnings per diluted share in accordance
with GAAP, the amount is $13.3 million, or $1.03 per diluted share,
for the 2021 Six Months as compared to $15.3 million, or $1.19 per
diluted share, for the 2020 Six Months, and $15.8 million or $1.24
per diluted share for the 2019 Six Months. 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 schedules on pages 15
and 16 for the computation of earnings per diluted share. In 2020,
the valuation of redeemable non-controlling interests decreased due
to the results associated with the pandemic, therefore resulting in
a credit to retained earnings. In 2021 and 2019, the valuations
increased therefore there was a charge to retained earnings.
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 and our Annual Report on Form
10-K, the Company’s results were negatively impacted by the effects
of the COVID-19 pandemic in the 2020. For 2021 periods as compared
to 2020 periods, the increase in revenues and expenses are largely
due to the Company returning to pre-pandemic volumes.
Second Quarter 2021 Compared to Second
Quarter 2020
- Reported net revenues for the 2021 Second Quarter was $126.9
million, an increase of 51.4% as compared to $83.9 million for the
2020 Second Quarter. See table below for a detail of reported net
revenues (in thousands):
Three Months Ended
June 30, 2021
June 30, 2020
Revenue related to Mature Clinics
$
105,223
$
69,567
Revenue related to 2021 Clinic
Additions
2,458
-
Revenue related to 2020 Clinic
Additions
5,531
1,952
Revenue from clinics sold or closed in
2021
24
102
Revenue from clinics sold or closed in
2020
2
658
Net patient revenues from physical therapy
operations
113,238
72,279
Other revenue
918
328
Revenue from physical therapy
operations
114,156
72,607
Management contract revenue
2,739
1,592
Industrial injury prevention services
10,033
9,658
Total Revenue
$
126,928
$
83,857
- Net patient revenues from physical therapy operations increased
$41.0 million, or 56.7%, to $113.2 million for the 2021 Second
Quarter from $72.3 million for the 2020 Second Quarter. Included in
net patient revenues are revenues related to clinics sold or closed
in 2021 and 2020 of $26 thousand for the 2021 Second Quarter and
$0.8 million for the 2020 Second Quarter. During the full year of
2020, the Company sold its interest in 14 clinics and closed 34
clinics. For comparison purposes, net patient revenues from
physical therapy operations, adjusted for revenue from the clinics
sold or closed, was approximately $113.2 million for Second Quarter
2021, inclusive of $8.0 million related to clinics opened or
acquired in the 2021 Second Quarter (“2021 Clinic Additions”) and
2020 year (“2020 Clinic Additions”), together referred to as Clinic
Additions, and $71.5 million for the Second Quarter 2020, inclusive
of $2.0 million for 2020 Clinic Additions. Net patient revenues
related to clinics opened or acquired prior to 2020 and still in
operation at June 30, 2021 (“Mature Clinics”) increased $35.7
million, or 51.3%, to $105.2 million for the 2021 Second Quarter
compared to $69.6 million for the 2020 Second Quarter.
- The average net patient revenue per visit was $104.46 for the
2021 Second Quarter as compared to $106.97 for the 2020 Second
Quarter, including all clinics operational during such periods.
Total patient visits increased 60.4% to 1,084,070 for the 2021
Second Quarter from 675,701 for the 2020 Second Quarter.
- Revenue from physical therapy management contracts increased
72.0% to $2.7 million for the 2021 Second Quarter as compared to
$1.6 million for the 2020 Second Quarter.
- Revenue from the industrial injury prevention business
increased 3.9% to $10.0 million for the 2021 Second Quarter as
compared to $9.7 million for the 2020 Second Quarter.
- Other miscellaneous revenue was $0.9 million for the 2021
Second Quarter and $0.3 million for the 2020 Second Quarter. Other
miscellaneous revenue includes a variety of services, including
athletic trainers provided for schools and athletic events.
- Total operating costs, excluding closure costs, was $92.6
million for the 2021 Second Quarter, or 73.0% of net revenues, an
improvement of 390 basis points as compared to $64.5 million for
the 2020 Second Quarter, or 76.9% of net revenues. Included in
operating costs for the 2021 Second Quarter was $7.0 million
related to Clinic Additions. Operating costs for Mature Clinics
increased by $22.2 million for the 2021 Second Quarter compared to
the 2020 Second Quarter. In addition, operating costs related to
the industrial injury prevention business increased by $1.0
million. See table below for a detail of operating costs, excluding
closure costs (in thousands):
Three Months Ended
June 30, 2021
June 30, 2020
Operating costs related to Mature
Clinics
$
75,988
$
53,767
Operating costs related to 2021 Clinic
Additions
2,019
-
Operating costs related to 2020 Clinic
Additions
4,934
1,513
Operating costs related to clinics sold or
closed in 2021
(2
)
132
Operating costs related to clinics sold or
closed in 2020
14
1,425
Physical therapy operations
82,953
56,837
Physical therapy management contracts
2,202
1,163
Industrial injury prevention services
7,491
6,479
$
92,646
$
64,479
- Total salaries and related costs, including physical therapy
operations and the industrial injury prevention business, were
54.3% of net revenues for the 2021 Second Quarter versus 51.8% for
the 2020 Second Quarter. Rent, supplies, contract labor and other
costs as a percentage of net revenues were 17.7% for the 2021
Second Quarter versus 24.2% for the 2020 Second Quarter. The
provision for credit losses as a percentage of net revenue was 1.1%
for the 2021 Second Quarter and 0.9% for the 2020 Second
Quarter.
- Gross profit for the 2021 Second Quarter, excluding closure
costs, was $34.3 million, an increase of $14.9 million, or
approximately 76.9%, as compared to $19.4 million for the 2020
Second Quarter. The gross profit percentage, excluding closure
costs, was 27.0% of net revenue for the 2021 Second Quarter, an
increase of 390 basis points as compared to 23.1% for the 2020
Second Quarter. The gross profit percentage for the Company’s
physical therapy clinics, excluding closure costs, was 27.3% for
the 2021 Second Quarter, an improvement of 560 basis points as
compared to 21.7% for the 2020 Second Quarter. The gross profit
percentage on physical therapy management contracts was 19.6% for
the 2021 Second Quarter, a decrease of 730 basis points as compared
to 26.9% for the 2020 Second Quarter. The gross profit percentage
for the industrial injury prevention business was 25.3% for the
2021 Second Quarter, a decrease of 760 basis points as compared to
32.9% for the 2020 Second Quarter. The table below details the
gross profit, excluding closure costs (in thousands):
Three Months Ended
June 30, 2021
June 30, 2020
Gross profit, excluding closure costs:
Physical therapy operations
$
31,203
$
15,770
Management contracts
536
429
Industrial injury prevention services
2,543
3,179
Gross profit, excluding closure costs
$
34,282
$
19,378
Physical therapy operations - closure
costs
(22
)
94
Gross profit
$
34,304
$
19,284
- Corporate office costs were $12.1 million for the 2021 Second
Quarter compared to $9.0 million for the 2020 Second Quarter.
Corporate office costs were 9.5% of net revenues for the 2021
Second Quarter as compared to 10.8% for the 2020 Second Quarter.
The increase in costs was primarily due to higher salaries and
benefits for the 2021 Second Quarter compared to the 2020 Second
Quarter, which included salary reductions and furloughs related to
the pandemic.
- Operating income for the 2021 Second Quarter was $22.2 million,
an increase of $12.0 million, or 116.6%, as compared to $10.3
million for the 2020 Second Quarter. Operating income as a
percentage of net revenue increased by 530 basis points from 12.2%
for the 2020 period to 17.5% for the 2021 period.
- Interest expense was $237,000 for the 2021 Second Quarter and
$653,000 for the 2020 Second Quarter due to reduced borrowings
under the Company’s revolving credit line.
- The provision for income tax was $4.6 million for the 2021
Second Quarter and $3.9 million for the 2020 Second Quarter. The
provision for income tax as a percentage of income before taxes
less net income attributable to non-controlling interest (effective
tax rate) was 26.9% for the 2021 Second Quarter and 27.5% for the
2020 Second Quarter. See table below ($ in thousands):
Three Months Ended
June 30, 2021
June 30, 2020
Income before taxes
$
22,039
$
18,645
Less: net income attributable to
non-controlling interests:
Redeemable non-controlling interests -
temporary equity
(3,611
)
(2,996
)
Non-controlling interests - permanent
equity
(1,425
)
(1,535
)
$
(5,036
)
$
(4,531
)
Income before taxes less net income
attributable to non-controlling interests
$
17,003
$
14,114
Provision for income taxes
$
4,567
$
3,882
Percentage
26.9
%
27.5
%
- Net income attributable to redeemable non-controlling interests
(temporary equity) was $3.6 million for the 2021 Second Quarter and
$3.0 million for the 2020 Second Quarter. Net income attributable
to non-controlling interests (permanent equity) was $1.4 million
for the 2021 Second Quarter and $1.5 million for the 2020 Second
Quarter.
2021 Six Months Compared to 2020 Six
Months
- Reported net revenues for the 2021 Six Months increased $42.7
million, or 21.7% to $239.3 million as compared to $196.6 million
for the 2020 Six Months. See table below for a detail of reported
net revenues (in thousands):
For the Six Months
Ended
June 30, 2021
June 30, 2020
Revenue related to Mature Clinics
$
199,068
$
165,277
Revenue related to 2021 Clinic
Additions
2,549
-
Revenue related to 2020 Clinic
Additions
10,732
2,930
Revenue from clinics sold or closed in
2021
141
333
Revenue from clinics sold or closed in
2020
2
3,865
Net patient revenues from physical therapy
operations
212,492
172,405
Other revenue
1,464
895
Revenue from physical therapy
operations
213,956
173,300
Management contract revenue
5,297
3,740
Industrial injury prevention services
20,043
19,534
Total Revenue
$
239,296
$
196,574
- Net patient revenues from physical therapy operations increased
$40.1 million, or 23.3%, to $212.5 million for the 2021 Six Months
from $172.4 million for the 2020 Six Months. Included in net
patient revenues are revenues related to clinics sold or closed in
2021 and 2020 of $0.1 million for the 2021 Six Months and $4.2
million for the 2020 Six Months. During 2021 Six Months, the
Company sold its interest in 2 clinics and closed 1 clinic. During
the full year of 2020, the Company sold its interest in 14 clinics
and closed 34 clinics. For comparison purposes, adjusted for
revenue from the clinics sold or closed, net patient revenues from
physical therapy operations was approximately $212.3 million for
the Six Months 2021, inclusive of $13.3 million related Clinic
Additions and $168.2 million for the 2020 Six Months, inclusive of
$2.9 million for 2020 Clinic Additions. Net patient revenues
related to Mature Clinics increased $33.8 million for the 2021 Six
Months compared to the 2020 Six Months. The average net patient
revenue per visit was $104.58 for the 2021 Six Months as compared
to $104.70 for the 2020 Six Months, including all clinics
operational during such periods. Total patient visits were
2,031,858 for the 2021 Six Months and 1,646,724 for the 2020 Six
Months, an increase of 23.4%.
- Revenue from physical therapy management contracts was $5.3
million for the 2021 Six Months, an increase of 41.6%, as compared
to $3.7 million for the 2020 Six Months.
- Revenue from the industrial injury prevention business
increased 2.6% to $20.0 million for the 2021 Six Months as compared
to $19.5 million for the 2020 Six Months.
- Other miscellaneous revenue was $1.5 million for the 2021 Six
Months and $0.9 million for the 2020 Six Months. Other
miscellaneous revenue includes a variety of services, including
athletic trainers provided for schools and athletic events.
- Total operating costs, excluding closure costs, were $179.1
million for the 2021 Six Months, or 74.8% of net revenues, an
improvement of 550 basis points as compared to $157.8 million for
the 2020 Six Months, or 80.3% of net revenues. Included in
operating costs for the 2021 Six Months was $11.7 million related
to Clinic Additions, of which $9.6 million is associated with 2020
Clinic Additions. Operating costs for Mature Clinics decreased by
$15.4 million for the 2021 Six Months compared to the 2020 Six
Months. In addition, operating costs related to the industrial
injury prevention business increased by $0.1 million. See table
below for a detail of operating costs, excluding closure costs (in
thousands):
For the Six Months
Ended
June 30, 2021
June 30, 2020
Operating costs related to Mature
Clinics
$
147,975
$
132,591
Operating costs related to 2021 Clinic
Additions
2,161
-
Operating costs related to 2020 Clinic
Additions
9,569
2,272
Operating costs related to clinics sold or
closed in 2021
154
395
Operating costs related to clinics sold or
closed in 2020
(4
)
4,829
Physical therapy operations
159,855
140,087
Physical therapy management contracts
4,448
2,975
Industrial injury prevention services
14,778
14,691
$
179,081
$
157,753
- Total salaries and related costs, including physical therapy
operations and the industrial injury prevention business, were
55.4% of net revenues for the 2021 Six Months versus 57.2% for the
2020 Six Months. Rent, supplies, contract labor and other costs as
a percentage of net revenues were 18.3% for the 2021 Six Months
versus 22.0% for the 2020 Six Months. The provision for credit
losses as a percentage of net revenue was 1.1% for the 2021 Six
Months and 2020 Six Months.
- Gross profit for the 2021 Six Months, excluding closure costs,
was $60.2 million, an increase of $21.4 million, or 55.1%, as
compared to $38.8 million for the 2020 Six Months. The gross profit
percentage, excluding closure costs, was 25.2% of net revenue for
the 2021 Six Months, an increase of 550 basis points as compared to
19.7% for the 2020 Six Months. The gross profit percentage for the
Company’s physical therapy clinics, excluding closure costs, was
25.3% for the 2021 Six Months, an improvement of 610 basis points
as compared to 19.2% for the 2020 Six Months. The gross profit
percentage on physical therapy management contracts was 16.0% for
the 2021 Six Months, a decrease of 450 basis points as compared to
20.5% for the 2020 Six Months. The gross profit percentage for the
industrial injury prevention business was 26.3% for the 2021 Six
Months, an improvement of 150 basis points as compared to 24.8% for
the 2020 Six Months. The table below details the gross profit,
excluding closure costs (in thousands):
For the Six Months
Ended
June 30, 2021
June 30, 2020
Gross profit, excluding closure costs:
Physical therapy operations
$
54,101
$
33,213
Management contracts
849
765
Industrial injury prevention services
5,265
4,843
Gross profit, excluding closure costs
$
60,215
$
38,821
Physical therapy operations - closure
costs
15
3,846
Gross profit
$
60,200
$
34,975
- Corporate office costs were $22.9 million for the 2021 Six
Months compared to $20.7 million for the 2020 Six Months. Corporate
office costs were 9.6% of net revenues for the 2021 Six Months as
compared to 10.5% for the 2020 Six Months. The increase was
primarily due to higher salaries and benefits for the 2021 Six
Months compared to the 2020 Six Months. The 2020 Six Months
included salary reductions and furloughs related to the
pandemic.
- Operating income for the 2021 Six Months was $37.3 million, an
increase of $23.0 million, or 160.9%, as compared to $14.3 million
for the 2020 Six Months. Operating income as a percentage of net
revenue increased by 830 basis points from 7.3% for the 2020 period
to 15.6% for the 2021 period.
- Interest expense was $483,000 for the 2021 Six Months and $1.1
million for the 2020 Six Months due to reduced borrowings under the
Company’s revolving credit line.
- The provision for income tax was $7.5 million for the 2021 Six
Months and $4.2 million for the 2020 Six Months. The provision for
income tax as a percentage of income before taxes less net income
attributable to non-controlling interest (effective tax rate) was
26.7% for the 2021 Six Months and 27.1% for the 2020 Second
Quarter. See table below ($ in thousands):
For the Six Months
Ended
June 30, 2021
June 30, 2020
Income before taxes
$
36,869
$
22,275
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(6,064
)
(4,792
)
Redeemable non-controlling interests -
temporary equity
(2,685
)
(2,061
)
$
(8,749
)
$
(6,853
)
Income before taxes less net income
attributable to non-controlling interests
$
28,120
$
15,422
Provision for income taxes
$
7,511
$
4,174
Percentage
26.7
%
27.1
%
- Net income attributable to redeemable non-controlling interests
(temporary equity) was $6.6 million for the 2021 Six Months and
$4.8 million for the 2020 Six Months. Net income attributable to
non-controlling interests (permanent equity) was $2.7 million for
the 2021 Six Months and $2.1 million for the 2020 Six Months.
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 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 the $14.1 million in advance payments
received as a liability. During the first quarter of 2021, the
Company repaid the MAAPP Funds of $14.1 million rather than
applying them to future services performed.
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 were recorded as Other income – Relief
Funds. 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. There were no Relief Funds received in the
2021 Six Months.
Other Financial Measures
For the 2021 Second Quarter, the Company's Adjusted EBITDA was
$21.8 million, an increase of $2.8 million, or 14.5%, compared to
$19.0 million for the 2020 Second Quarter, inclusive of Relief
Funds and an increase of $2.7 million, or 14.1%, compared to $19.1
million for the 2019 Second Quarter. For the 2021 Six Months, the
Company's Adjusted EBITDA was $37.4 million compared to $27.0
million for the 2020 Six Months inclusive of Relief Funds, and
$34.7 million for the 2019 Six Months. See definition, explanation
and calculation of Adjusted EBITDA in the schedule on pages 15 and
16.
Acquisition in Second Quarter
2021
As previously reported, the Company acquired a 65% interest in
an eight-clinic physical therapy practice at the end of the 2021
Second Quarter with the practice founder retaining 35%. The
purchase price was approximately $10.3 million, of which $9.0
million was paid in cash, $1.0 million is payable based on certain
criteria and $0.3 million is in a note payable. The business
generates $7.3 million in annual revenue and has approximately
65,000 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
In response to the Company’s strong performance thus far in 2021
and confidence in its future performance, the Company’s Board of
Directors increased the Company’s quarterly dividend on August 3,
2021, from $0.35 per share to $0.38 per share, an increase of 8.6%.
The Board of Directors subsequently declared a quarterly dividend
of $0.38 per share which will be paid on September 17, 2021 to
shareholders of record as of August 20, 2021.
Management Revises 2021 Earnings
Guidance
Management currently expects the Company’s Operating Results for
2021 to be in the range of $39.4 million to $40.6 million, or $3.05
to $3.15 per diluted share. The increase in the guidance range is
attributable to the Company’s strong performance for the 2021
Second Quarter, the impact of the acquisition closed in the 2021
Second Quarter, and confidence in the sustainability of the
Company’s performance through the remainder of 2021.
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, “Throughout this
last year and a half our partners, directors and clinical staff
have done a truly exemplary job providing excellent care in a very
challenging environment. As evidenced by our record visits per
clinic per day numbers this quarter, our patients and referral
sources continue to seek us out for care. I remain very grateful
for our entire team’s efforts through this COVID-19 pandemic. It
hasn’t been easy, but throughout our organization across our many
partnerships and in every support department, our people have truly
risen to the challenge.”
Carey Hendrickson, Chief Financial Officer, said, “Our balance
sheet remains in a very solid position and our record-high volumes
are resulting in outstanding cash generation. We are pleased with
the excellent results generated by our team in the first half of
2021, and we are confident in the Company’s future performance as
signaled by the raising of our full year 2021 guidance range for
the second time this year and the interim increase in our quarterly
dividend rate.”
Second Quarter 2021 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 5,
2021 to discuss results for the Company's 2021 Second Quarter.
Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number
7486602 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 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:
- occurrence of 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 and timing
cannot be 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, 2020.
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 575
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 39 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 Six Months
Ended
June 30, 2021
June 30, 2020
June 30, 2021
June 30, 2020
Net patient revenues
$
113,238
$
72,279
$
212,492
$
172,405
Other revenues
13,690
11,578
26,804
24,169
Net revenues
126,928
83,857
239,296
196,574
Operating costs:
Salaries and related costs
68,866
43,429
132,681
112,433
Rent, supplies, contract labor and
other
22,416
20,311
43,836
43,220
Provision for credit losses
1,364
739
2,564
2,100
Closure costs - lease and other
(22
)
94
15
1,987
Closure costs - derecognition of
goodwill
-
-
-
1,859
Total operating costs
92,624
64,573
179,096
161,599
Gross profit
34,304
19,284
60,200
34,975
Corporate office costs
12,074
9,022
22,948
20,699
Operating income
22,230
10,262
37,252
14,276
Other income and expense
Relief Funds
-
7,959
-
7,959
Gain on sale of partnership interest and
clinics
-
1,073
-
1,073
Interest and other income, net
46
4
100
47
Interest expense - debt and other
(237
)
(653
)
(483
)
(1,080
)
Total other income and expense
(191
)
8,383
(383
)
7,999
Income before taxes
22,039
18,645
36,869
22,275
Provision for income taxes
4,567
3,882
7,511
4,174
Net income
17,472
14,763
29,358
18,101
Less: net income attributable to
non-controlling interests:
Redeemable non-controlling interests -
temporary equity
(3,611
)
(2,996
)
(6,064
)
(4,792
)
Non-controlling interests - permanent
equity
(1,425
)
(1,535
)
(2,685
)
(2,061
)
(5,036
)
(4,531
)
(8,749
)
(6,853
)
Net income attributable to USPH
shareholders
$
12,436
$
10,232
$
20,609
$
11,248
Basic and diluted earnings per share
attributable to USPH shareholders
$
0.82
$
0.99
$
1.03
$
1.19
Shares used in computation - basic and
diluted
12,902
12,843
12,886
12,820
Dividends declared per common share
$
0.35
$
-
$
0.70
$
0.32
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
June 30, 2021
December 31, 2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
20,419
$
32,918
Patient accounts receivable, less
allowance for credit losses of $2,435 and $2,008, respectively
45,144
41,906
Accounts receivable - other
9,025
9,039
Other current assets
5,111
3,773
Total current assets
79,699
87,636
Fixed assets:
Furniture and equipment
57,538
55,426
Leasehold improvements
35,986
35,320
Fixed assets, gross
93,524
90,746
Less accumulated depreciation and
amortization
71,964
69,081
Fixed assets, net
21,560
21,665
Operating lease right-of-use assets
87,090
81,595
Goodwill
373,887
345,646
Other identifiable intangible assets,
net
59,216
56,280
Other assets
1,506
1,539
Total assets
$
622,958
$
594,361
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
1,782
$
1,335
Accrued expenses
44,720
59,746
Current portion of operating lease
liabilities
27,860
27,512
Current portion of notes payable
1,017
4,899
Total current liabilities
75,379
93,492
Notes payable, net of current portion
821
596
Revolving line of credit
38,000
16,000
Deferred taxes
8,281
7,779
Operating lease liabilities, net of
current portion
66,887
61,985
Other long-term liabilities
5,442
4,539
Total liabilities
194,810
184,391
Redeemable non-controlling interests -
temporary equity
143,337
132,340
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,
15,121,669 and 15,066,282 shares issued,
respectively
151
151
Additional paid-in capital
99,039
95,622
Retained earnings
216,286
212,015
Treasury stock at cost, 2,214,737
shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
283,848
276,160
Non-controlling interests - permanent
equity
963
1,470
Total USPH shareholders' equity and
non-controlling interests - permanent equity
284,811
277,630
Total liabilities, redeemable
non-controlling interests,
USPH shareholders' equity and
non-controlling interests - permanent equity
$
622,958
$
594,361
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Six Months Ended
June 30, 2021
June 30, 2020
OPERATING ACTIVITIES
Net income including non-controlling
interests
$
29,358
$
18,101
Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization
5,484
5,333
Provision for credit losses
2,564
2,100
Equity-based awards compensation
expense
3,405
3,389
Deferred income taxes
3,160
(1,737
)
Loss on sale of fixed assets
106
429
Gain on sale of partnership interest
-
(1,073
)
Derecognition (write-off) of goodwill -
closed clinics
-
1,859
Changes in operating assets and
liabilities:
(Increase) decrease in patient accounts
receivable
(5,325
)
8,880
Decrease in accounts receivable -
other
129
283
(Increase) decrease in other assets
(255
)
5,969
(Decrease) increase in accounts payable
and accrued expenses
(3,672
)
4,478
Increase in other long-term
liabilities
602
345
Net cash provided by operating
activities
35,556
48,356
INVESTING ACTIVITIES
Purchase of fixed assets
(3,301
)
(4,628
)
Purchase of majority interest in
businesses, net of cash acquired
(20,402
)
(11,633
)
Purchase of redeemable non-controlling
interest, temporary equity
(9,536
)
(2,388
)
Purchase of non-controlling interest,
permanent equity
-
(144
)
Proceeds on sale of redeemable
non-controlling interest, temporary equity
32
19
Proceeds on sales of partnership interest,
clinics and fixed assets
(168
)
695
Net cash used in investing activities
(33,375
)
(18,079
)
FINANCING ACTIVITIES
Distributions to non-controlling
interests, permanent and temporary equity
(9,398
)
(5,707
)
Cash dividends paid to shareholders
(9,028
)
(4,110
)
Proceeds from revolving line of credit
128,000
99,000
Payments on revolving line of credit
(106,000
)
(112,000
)
Principal payments on notes payable
(4,207
)
(314
)
(Payment) receipt of Medicare Accelerated
and Advance Funds
(14,054
)
12,861
Other
7
-
Net cash used in financing activities
(14,680
)
(10,270
)
Net (decrease) increase in cash and cash
equivalents
(12,499
)
20,007
Cash and cash equivalents - beginning of
period
32,918
23,548
Cash and cash equivalents - end of
period
$
20,419
$
43,555
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
6,967
$
57
Interest
$
741
$
944
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
550
$
300
Purchase of businesses - payable
$
1,000
$
-
Purchase of redeemable non-controlling
interest - notes payable
$
-
$
137
Notes payable due to purchase of
non-controlling interest, permanent equity
$
-
$
699
Note receivables related to sale of
partnership interest
$
287
$
386
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
Principles (“GAAP”) measure, equals net income attributable to USPH
diluted shareholders per the consolidated statements of income less
gain on sale of partnership interests and clinics plus charges
incurred for clinic closure costs and expenses related to 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. 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.
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 derecognition 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.
Management uses Operating Results and Adjusted EBITDA, which
eliminates certain items described above that can be subject to
volatility and unusual costs, as one the principal measures to
evaluate and monitor financial performance period over period.
Management believes that Operating Results and Adjusted EBITDA 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 redeemable instruments
and therefore have different equity structures.
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
2021 PERIODS COMPARED TO 2020
PERIODS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
12,436
$
10,232
$
20,609
$
11,248
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling
interest
(2,549
)
3,344
(9,819
)
5,473
Tax effect at statutory rate (federal and
state) of 25.55% and 26.25%, respectively
651
(878
)
2,508
(1,437
)
$
10,538
$
12,698
$
13,298
$
15,284
Earnings per share (basic and diluted)
$
0.82
$
0.99
$
1.03
$
1.19
Adjustments:
Closure costs
(22
)
94
15
3,846
Expenses related to CFO transition
-
-
-
133
Gain on sale of partnership interest and
clinics
-
(1,073
)
-
(1,073
)
Relief Funds
-
(7,958
)
-
(7,958
)
Allocation to non-controlling interest
-
1,900
-
1,900
Revaluation of redeemable non-controlling
interest
2,549
(3,344
)
9,819
(5,473
)
Tax effect at statutory rate (federal and
state) of 25.55% and 26.25%, respectively
(651
)
2,725
(2,508
)
2,264
Operating Results (without Relief
Funds)
$
12,414
$
5,042
$
20,624
$
8,923
Relief Funds
$
-
7,958
$
-
7,958
Allocation to non-controlling interest
-
(1,900
)
-
(1,900
)
Tax effect at statutory rate (federal and
state) of 26.25%
-
(1,590
)
-
(1,590
)
Operating Results (including Relief
Funds)
$
12,414
$
9,510
$
20,624
$
13,391
Basic and diluted Operating Results
(without Relief Funds) per share
$
0.96
$
0.39
$
1.60
$
0.70
Basic and diluted Operating Results
(including Relief Funds) per share
$
0.96
$
0.74
$
1.60
$
1.04
Shares used in computation - basic and
diluted
12,902
12,843
12,886
12,820
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net income attributable to USPH
shareholders
$
12,436
$
10,232
$
20,609
$
11,248
Adjustments:
Depreciation and amortization
2,803
2,726
5,484
5,333
Closure costs - derecognition of
goodwill
-
-
-
1,859
Relief Funds
-
(7,958
)
(7,958
)
Interest income
(46
)
(4
)
(100
)
(47
)
Interest expense - debt and other
236
653
483
1,080
Provision for income taxes
4,567
3,882
7,511
4,174
Equity-based awards compensation
expense
1,754
1,503
3,405
3,389
Adjusted EBITDA (without Relief Funds)
$
21,750
$
11,034
$
37,392
$
19,078
Relief Funds
-
7,958
7,958
Adjusted EBITDA
$
21,750
$
18,992
$
37,392
$
27,036
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
2021 PERIODS COMPARED TO 2019
PERIODS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2019
2021
2019
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
12,436
$
14,620
$
20,609
$
23,063
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling
interest
(2,549
)
(5,169
)
(9,819
)
(9,830
)
Tax effect at statutory rate (federal and
state) of 25.55% and 26.25%, respectively
651
1,356
2,508
2,580
$
10,538
$
10,807
$
13,298
$
15,813
Earnings per share (basic and diluted)
$
0.82
$
0.85
$
1.03
$
1.24
Adjustments:
Closure costs
(22
)
-
15
-
Expenses related to CFO transition
-
-
-
-
Gain on sale of partnership interest and
clinics
-
(5,823
)
-
(5,823
)
Revaluation of redeemable non-controlling
interest
2,549
5,169
9,819
9,830
Tax effect at statutory rate (federal and
state) of 25.55% and 26.25%, respectively
(651
)
172
(2,508
)
(1,052
)
Operating Results
$
12,414
$
10,325
$
20,624
$
18,768
Basic and diluted Operating Results per
share
$
0.96
$
0.81
$
1.60
$
1.47
Shares used in computation - basic and
diluted
12,902
12,767
12,886
12,738
Three Months Ended June
30,
Six Months Ended June
30,
2021
2019
2021
2019
Net income attributable to USPH
shareholders
$
12,436
$
14,620
$
20,609
$
23,063
Adjustments:
Depreciation and amortization
2,803
2,520
5,484
4,920
Gain on sale of partnership interest
-
(5,823
)
-
(5,823
)
Interest income
(46
)
(4
)
(100
)
(20
)
Interest expense - debt and other
236
607
483
965
Provision for income taxes
4,567
5,318
7,511
8,026
Equity-based awards compensation
expense
1,754
1,830
3,405
3,558
Adjusted EBITDA
$
21,750
$
19,068
$
37,392
$
34,689
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
RECAP OF PHYSICAL THERAPY
OPERATIONS
CLINIC COUNT
Date
Number of Clinics
March 31, 2020
567
June 30, 2020
554
September 30, 2020
550
December 31, 2020
554
March 31, 2021
564
June 30, 2021
575
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005193/en/
U.S. Physical Therapy, Inc. Carey Hendrickson, Chief Financial
Officer email: chendrickson@usph.com Chris Reading, Chief Executive
Officer (713) 297-7000 Three Part Advisors Joe Noyons (817)
778-8424
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