HOUSTON / Feb 23, 2023 / Business Wire / 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 (“IIP”) services, today reported results for the three months and year ended December 31, 2022 (“2022 Fourth Quarter” and “2022 Year”, respectively).
FULL YEAR AND QUARTER HIGHLIGHTS
**The Company is still completing its evaluation of the income tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “I am proud of the work by our partners, clinicians, and leadership team despite significant macroeconomic headwinds present in the second half of 2022. We are making good progress around contract renegotiations, development has been strong, and staffing has begun to improve. Volumes to start the new year have been ahead of our initial expectations. Our team will continue to work on all these important items as we go forward in 2023.”
Carey Hendrickson, Chief Financial Officer, said, “We are pleased to raise our quarterly dividend rate once again in the first quarter of 2023, which we have raised each year since the inception of our dividend in 2011. While we again have some Medicare rate headwinds as we enter 2023, we have tremendous confidence in our team to produce EBITDA growth this year through increased volumes, continued momentum in rate renegotiations and an ongoing focus on making our operations as efficient as possible.”
Fourth Quarter 2022 As Compared to Fourth Quarter 2021
**As noted above, the Company is still completing its evaluation of the income tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
|
| Three Months Ended | |||||
|
| December 31, |
|
| December 31, | ||
Revenue related to Mature Clinics |
| $ | 105,655 |
|
| $ | 106,955 |
Revenue related to 2022 Clinic Additions |
|
| 7,759 |
|
|
| - |
Revenue related to 2021 Clinic Additions |
|
| 6,383 |
|
|
| 5,304 |
Revenue from clinics sold or closed in 2022 |
|
| 349 |
|
|
| 1,252 |
Net patient revenue from physical therapy operations |
|
| 120,146 |
|
|
| 113,511 |
Other revenue |
|
| 883 |
|
|
| 717 |
Revenue from physical therapy operations |
|
| 121,029 |
|
|
| 114,228 |
Revenue from management contracts |
|
| 1,761 |
|
|
| 2,242 |
Revenue from industrial injury prevention services |
|
| 18,392 |
|
|
| 13,363 |
Total revenue |
| $ | 141,182 |
|
| $ | 129,833 |
|
| Three Months Ended | |||||
|
| December 31, |
|
| December 31, | ||
Operating cost related to Mature Clinics |
| $ | 84,846 |
|
| $ | 84,539 |
Operating cost related to 2022 Clinic Additions |
|
| 6,136 |
|
|
| 59 |
Operating cost related to 2021 Clinic Additions |
|
| 5,399 |
|
|
| 4,437 |
Operating cost related to clinics sold or closed in 2022 |
|
| 455 |
|
|
| 1,191 |
Operating cost related to physical therapy operations |
|
| 96,836 |
|
|
| 90,226 |
Operating cost related to management contracts |
|
| 1,411 |
|
|
| 1,814 |
Operating cost related to industrial injury prevention services |
|
| 15,104 |
|
|
| 10,610 |
Total operating cost |
| $ | 113,351 |
|
| $ | 102,650 |
|
| Three Months Ended | |||||
|
| December 31, |
|
| December 31, | ||
|
|
|
|
|
| ||
Physical therapy operations |
| $ | 24,193 |
|
| $ | 24,002 |
Management contracts |
|
| 350 |
|
|
| 428 |
Industrial injury prevention services |
|
| 3,288 |
|
|
| 2,753 |
Gross profit |
| $ | 27,831 |
|
| $ | 27,183 |
|
| Three Months Ended |
| |||||
|
| December 31, |
|
| December 31, |
| ||
Income before taxes |
| $ | 4,560 |
|
| $ | 18,389 |
|
|
|
|
|
|
|
|
|
|
Less: net loss (income) attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
| 318 |
|
|
| (2,689 | ) |
Non-controlling interest - permanent equity |
|
| (1,059 | ) |
|
| (1,541 | ) |
|
| $ | (741 | ) |
| $ | (4,230 | ) |
|
|
|
|
|
|
|
|
|
Income before taxes less net income attributable to non-controlling interest |
| $ | 3,819 |
|
| $ | 14,159 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
| $ | 1,212 |
|
| $ | 3,946 |
|
|
|
|
|
|
|
|
|
|
Percentage |
|
| 31.7 | % |
|
| 27.9 | % |
2022 Year As Compared to 2021 Year
**As noted above, the Company is still completing its evaluation of the income tax expense for the 2022 Fourth Quarter and 2022 Year. As a result, the Company’s presentation of earnings per share, operating results per share and its provision for income taxes may change as a result of this evaluation. Set forth below are the Company’s current estimates for these amounts. The Company will promptly announce any changes upon the completion of the evaluation.
|
| For the Year Ended | |||||
|
| December 31, |
|
| December 31, | ||
Revenue related to Mature Clinics |
| $ | 421,806 |
|
| $ | 420,093 |
Revenue related to 2022 Clinic Additions |
|
| 14,779 |
|
|
| - |
Revenue related to 2021 Clinic Additions |
|
| 25,211 |
|
|
| 12,638 |
Revenue from clinics sold or closed in 2022 |
|
| 2,794 |
|
|
| 5,143 |
Revenue from clinics sold or closed in 2021 |
|
| - |
|
|
| 456 |
Net patient revenue from physical therapy operations |
|
| 464,590 |
|
|
| 438,330 |
Other revenue |
|
| 3,407 |
|
|
| 2,939 |
Revenue from physical therapy operations |
|
| 467,997 |
|
|
| 441,269 |
Revenue - Management contracts |
|
| 8,095 |
|
|
| 9,853 |
Revenue - Industrial injury prevention services |
|
| 77,052 |
|
|
| 43,900 |
Total revenue |
| $ | 553,144 |
|
| $ | 495,022 |
|
|
|
|
|
|
|
|
|
| For the Year Ended | |||||
|
| December 31, |
|
| December 31, | ||
Operating cost related to Mature Clinics |
| $ | 337,606 |
|
| $ | 320,882 |
Operating cost related to 2022 Clinic Additions |
|
| 12,425 |
|
|
| 74 |
Operating cost related to 2021 Clinic Additions |
|
| 20,792 |
|
|
| 10,299 |
Operating cost related to clinics sold or closed in 2022 |
|
| 2,810 |
|
|
| 4,561 |
Operating cost related to clinics sold or closed in 2021 |
|
| - |
|
|
| 512 |
Operating cost - Physical therapy operations |
|
| 373,633 |
|
|
| 336,328 |
Operating cost - Management contracts |
|
| 6,402 |
|
|
| 8,306 |
Operating cost - Industrial injury prevention services |
|
| 61,085 |
|
|
| 33,206 |
Total operating cost |
| $ | 441,120 |
|
| $ | 377,840 |
|
|
|
|
|
|
|
|
|
| For the Year Ended | |||||
|
| December 31, |
|
| December 31, | ||
|
|
|
|
|
| ||
Physical therapy operations |
| $ | 94,364 |
|
| $ | 104,941 |
Management contracts |
|
| 1,693 |
|
|
| 1,547 |
Industrial injury prevention services |
|
| 15,967 |
|
|
| 10,694 |
Gross profit |
| $ | 112,024 |
|
| $ | 117,182 |
|
|
|
|
|
|
|
|
|
| For the Year Ended |
| |||||
|
| December 31, |
|
| December 31, |
| ||
|
|
|
|
|
|
| ||
Income before taxes |
| $ | 55,571 |
|
| $ | 73,196 |
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
| (6,902 | ) |
|
| (11,358 | ) |
Non-controlling interest - permanent equity |
|
| (4,347 | ) |
|
| (5,735 | ) |
|
| $ | (11,249 | ) |
| $ | (17,093 | ) |
|
|
|
|
|
|
|
|
|
Income before taxes less net income attributable to non-controlling interest |
| $ | 44,322 |
|
| $ | 56,103 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
| $ | 12,164 |
|
| $ | 15,272 |
|
|
|
|
|
|
|
|
|
|
Percentage |
|
| 27.4 | % |
|
| 27.2 | % |
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
The Company entered into an interest rate swap agreement in May 2022, which became effective on June 30, 2022. The maturity date of the swap agreement is June 30, 2027. It has a $150 million notional value adjusted concurrently with scheduled principal payments made on the term loan. Beginning in July 2022, the Company pays a fixed one-month SOFR rate of interest of 2.815%. The total interest rate in any period also includes an applicable margin based on the Company’s consolidated leverage ratio. In the 2022 Fourth Quarter and 2022 Full Year, the Company’s interest rate including the applicable margin was 4.665%. Unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other comprehensive income (loss), net of tax. The fair value of the interest rate swap at December 31, 2022, was $5.4 million, which has been included within Other assets (current and long term) in the accompanying Consolidated Balance Sheet. The impact of the interest rate swap on the accompanying Consolidated Statements of Comprehensive Income was an unrealized loss of $0.4 million, net of tax, for the 2022 Fourth Quarter, and an unrealized gain of $4.0 million, net of tax, for the 2022 Year.
Quarterly Dividend
The Company’s Board of Directors increased the Company’s quarterly dividend on February 21, 2023, from $0.41 per share to $0.43 per share, an increase of 4.9%. The Board of Directors subsequently declared a quarterly dividend of $0.43 per share payable on April 7, 2023, to shareholders of record on March 10, 2023.
Impact of COVID-19
Relief Funds
In March 2020 in response to the COVID-19 pandemic, the federal government approved the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). 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. For the 2021 Year, the Company recorded income of approximately $4.6 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.
Medicare Accelerated and Advance Payment Program (“MAAPP Funds”)
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 to receive MAAPP Funds from Centers for Medicare & Medicaid Services in April 2020. The Company recorded the $14.1 million in advance payments received as a liability. During the quarter ended March 31, 2021, the Company repaid the MAAPP funds of $14.1 million rather than applying them to future services performed.
Management Provides 2023 Earnings Guidance
Management currently expects the Company’s Adjusted EBITDA for 2023 to be in the range of $75.0 million to $80.0 million. The range considers that the previously announced 2% reduction in the Medicare rate, which we estimate to impact our revenues by $3.1 million, as well as the 2023 impact of the phase-out of sequestration relief during 2022, which we estimate to be $1.2 million, are expected to be offset by increases in commercial rates from renegotiations completed in 2022 and those anticipated to be accomplished in 2023.
Please note that the earnings guidance represents projected Adjusted EBITDA from existing operations and excludes future acquisitions. The annual guidance figures will not be updated unless there is a material development that causes management to believe that Adjusted EBITDA will be significantly outside the given range.
Fourth Quarter and Year Ended 2022 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 23, 2023, to discuss results for the Company's 2022 Fourth Quarter and Year ended December 31, 2022. Interested parties may participate in the call by dialing (866) 952-8559 Primary or (785) 424-1743 Alternate and entering reservation number USPHQ422 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via webcast, 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 23, 2023, 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:
In addition to the above, see Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 and the additional risk factors below:
Our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing, and our ability to operate our business.
We have outstanding debt obligations that could adversely affect our financial condition and limit our ability to successfully implement our business strategy. Furthermore, from time to time, we may need additional financing to support our business and pursue our business strategy, including strategic acquisitions. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets, and other factors. We cannot assure that additional financing will be available to us on favorable terms when required, or at all.
Our loan agreements contain certain restrictions and requirements that among other things:
Our ability to meet our debt service obligations will depend on our future performance, which will be affected by the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 1, 2022. If we do not generate enough cash flow to pay our debt service obligations, we may be required to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity. There is no guarantee that we will be able to take any of these actions on a timely basis, on terms satisfactory to us, or at all.
If we fail to satisfy our debt service obligations or the other restrictions and requirements in our loan agreements, we could be in default. Unless cured or waived, a default would permit lenders to accelerate the maturity of the debt under the credit agreement and to foreclose upon the collateral securing the debt.
Our outstanding loans bear interest at variable rates. We are exposed to certain market risks during the ordinary course of business due to adverse changes in interest rates. The exposure to interest rate risk primarily results from our variable-rate borrowing. Fluctuations in interest rates can be volatile and the Company’s risk management activities do not eliminate these risks. In May 2022, we entered into an interest rate swap agreement to manage these risks. While intended to reduce the effects of fluctuations in these prices and rates, these transactions may limit our potential gains or expose us to losses. If our counterparties to such transactions or the sponsors fail to honor their obligations due to financial distress, we would be exposed to potential losses or the inability to recover anticipated gains from these transactions. Some of our acquisition agreements contain contingent consideration, the value of which may impact future financial results.
Some of our acquisition agreements include contingent earn-out consideration, the fair value of which is estimated as of the acquisition date based on the present value of the expected contingent payments as determined using weighted probabilities of possible future payments. These fair value estimates contain unobservable inputs and estimates that could materially differ from the actual future results. The fair value of the contingent earn out consideration could increase or decrease, as applicable. Changes in the fair value of contingent earn-outs will be reflected in our results of operations in the period in which they are recognized, the amount of which may be material and cause volatility in our financial results.
Our business depends upon hiring, training and retaining qualified employees.
Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. We compete with rehabilitation companies and other businesses for many of our clinical and non-clinical employees, and turnover in these positions can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. If we are unable to hire, properly train and retain qualified employees, we could experience higher employment costs and reduced revenues, which could adversely affect our earnings.
One of our acquisition agreements contains a Put Right related to a potential future purchase of a majority interest in a separate company.
One of our acquisition agreements includes a Put Right for the potential future purchase of a majority interest in a separate company at a purchase price which is derived based on a specified multiple of the separate company’s historical earnings. The exercise of the Put Right is outside of our control. In the event the Put Right is triggered, we are required to purchase the aforementioned equity interest at the calculated purchase price described above. The resulting purchase price may be greater than the fair value of such equity interests at the time, and we may or may not have the capital necessary to satisfy such contractual purchase obligation, in which case we could be in breach.
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. currently operates 640 outpatient physical therapy clinics in 40 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 40 physical therapy facilities for unaffiliated third parties, including hospitals and physician groups. The Company also has an industrial injury prevention services 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, |
|
| December 31, |
|
| December 31, |
|
| December 31, |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net patient revenue |
| $ | 120,146 |
|
| $ | 113,511 |
|
| $ | 464,590 |
|
| $ | 438,330 |
|
Other revenue |
|
| 21,036 |
|
|
| 16,322 |
|
|
| 88,554 |
|
|
| 56,692 |
|
Net revenue |
|
| 141,182 |
|
|
| 129,833 |
|
|
| 553,144 |
|
|
| 495,022 |
|
Operating cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related costs |
|
| 82,317 |
|
|
| 75,296 |
|
|
| 319,191 |
|
|
| 278,469 |
|
Rent, supplies, contract labor and other |
|
| 29,678 |
|
|
| 25,971 |
|
|
| 116,381 |
|
|
| 94,066 |
|
Provision for credit losses |
|
| 1,356 |
|
|
| 1,383 |
|
|
| 5,548 |
|
|
| 5,305 |
|
Total operating cost |
|
| 113,351 |
|
|
| 102,650 |
|
|
| 441,120 |
|
|
| 377,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 27,831 |
|
|
| 27,183 |
|
|
| 112,024 |
|
|
| 117,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill Impairment |
|
| 9,112 |
|
|
| - |
|
|
| 9,112 |
|
|
| - |
|
Corporate office costs |
|
| 11,925 |
|
|
| 10,718 |
|
|
| 46,111 |
|
|
| 46,533 |
|
Operating income |
|
| 6,794 |
|
|
| 16,465 |
|
|
| 56,801 |
|
|
| 70,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief Funds |
|
| - |
|
|
| 4,597 |
|
|
| - |
|
|
| 4,597 |
|
Resolution of a payor matter |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,216 |
|
Settlement of a legal matter |
|
| - |
|
|
| (2,635 | ) |
|
| - |
|
|
| (2,635 | ) |
Change in fair value of contingent earn-out consideration |
|
| 520 |
|
|
| - |
|
|
| 2,520 |
|
|
| - |
|
Equity in earnings of unconsolidated affiliate |
|
| 192 |
|
|
| 112 |
|
|
| 1,175 |
|
|
| 112 |
|
Other and interest income |
|
| 69 |
|
|
| 41 |
|
|
| 859 |
|
|
| 199 |
|
Change in revaluation of put-right liability |
|
| (776 | ) |
|
| - |
|
|
| (5 | ) |
|
| - |
|
Interest expense - debt and other, net |
|
| (2,239 | ) |
|
| (191 | ) |
|
| (5,779 | ) |
|
| (942 | ) |
Total other income and expense |
|
| (2,234 | ) |
|
| 1,924 |
|
|
| (1,230 | ) |
|
| 2,547 |
|
Income before taxes |
|
| 4,560 |
|
|
| 18,389 |
|
|
| 55,571 |
|
|
| 73,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
| 1,212 |
|
|
| 3,946 |
|
|
| 12,164 |
|
|
| 15,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
| 3,348 |
|
|
| 14,443 |
|
|
| 43,407 |
|
|
| 57,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net loss (income) attributable to non-controlling interest: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity |
|
| 318 |
|
|
| (2,689 | ) |
|
| (6,902 | ) |
|
| (11,358 | ) |
Non-controlling interest - permanent equity |
|
| (1,059 | ) |
|
| (1,541 | ) |
|
| (4,347 | ) |
|
| (5,735 | ) |
|
|
| (741 | ) |
|
| (4,230 | ) |
|
| (11,249 | ) |
|
| (17,093 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders |
| $ | 2,607 |
|
| $ | 10,213 |
|
| $ | 32,158 |
|
| $ | 40,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share attributable to USPH shareholders |
| $ | (0.01 | ) |
| $ | 0.73 |
|
| $ | 2.25 |
|
| $ | 2.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted |
|
| 13,002 |
|
|
| 12,912 |
|
|
| 12,985 |
|
|
| 12,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
| $ | 0.41 |
|
| $ | 0.38 |
|
| $ | 1.64 |
|
| $ | 1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) | ||||||||||||||||
|
| Three Months Ended |
|
| For the Year Ended |
| ||||||||||
|
| December 31, |
|
| December 31, |
|
| December 31, |
|
| December 31, |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 3,348 |
|
| $ | 14,443 |
|
| $ | 43,407 |
|
| $ | 57,924 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on cash flow hedge |
|
| (564 | ) |
|
| - |
|
|
| 5,378 |
|
|
| - |
|
Tax effect at statutory rate (federal and state) of 25.55% |
|
| 144 |
|
|
| - |
|
|
| (1,374 | ) |
|
| - |
|
Comprehensive income |
| $ | 2,928 |
|
| $ | 14,443 |
|
| $ | 47,411 |
|
| $ | 57,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to non-controlling interest |
|
| (741 | ) |
|
| (4,230 | ) |
|
| (11,249 | ) |
|
| (17,093 | ) |
Comprehensive income attributable to USPH shareholders |
| $ | 2,187 |
|
| $ | 10,213 |
|
| $ | 36,162 |
|
| $ | 40,831 |
|
|
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||
|
|
|
| |||||
|
| December 31, |
|
| December 31, |
| ||
ASSETS |
| (unaudited) |
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 31,594 |
|
| $ | 28,567 |
|
Patient accounts receivable, less allowance for credit losses of $2,829 and $2,768, respectively |
|
| 51,934 |
|
|
| 46,272 |
|
Accounts receivable - other |
|
| 16,671 |
|
|
| 16,144 |
|
Other current assets |
|
| 11,067 |
|
|
| 4,183 |
|
Total current assets |
|
| 111,266 |
|
|
| 95,166 |
|
Fixed assets: |
|
|
|
|
|
|
|
|
Furniture and equipment |
|
| 62,074 |
|
|
| 58,743 |
|
Leasehold improvements |
|
| 42,877 |
|
|
| 39,194 |
|
Fixed assets, gross |
|
| 104,951 |
|
|
| 97,937 |
|
Less accumulated depreciation and amortization |
|
| 80,203 |
|
|
| 74,958 |
|
Fixed assets, net |
|
| 24,748 |
|
|
| 22,979 |
|
Operating lease right-of-use assets |
|
| 103,004 |
|
|
| 96,427 |
|
Investment in unconsolidated affiliate |
|
| 12,131 |
|
|
| 12,215 |
|
Goodwill |
|
| 494,101 |
|
|
| 434,679 |
|
Other identifiable intangible assets, net |
|
| 108,755 |
|
|
| 86,382 |
|
Other assets |
|
| 4,149 |
|
|
| 1,578 |
|
Total assets |
| $ | 858,154 |
|
| $ | 749,426 |
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable - trade |
| $ | 3,300 |
|
| $ | 3,268 |
|
Accounts payable - due to seller of acquired business |
|
| 3,204 |
|
|
| 3,203 |
|
Accrued expenses |
|
| 37,413 |
|
|
| 45,705 |
|
Current portion of operating lease liabilities |
|
| 33,709 |
|
|
| 30,475 |
|
Current portion of term loan and notes payable |
|
| 7,863 |
|
|
| 830 |
|
Total current liabilities |
|
| 85,489 |
|
|
| 83,481 |
|
Notes payable, net of current portion |
|
| 1,913 |
|
|
| 3,587 |
|
Revolving line of credit |
|
| 31,000 |
|
|
| 114,000 |
|
Term Loan, net of current portion and deferred financing costs |
|
| 142,918 |
|
|
| - |
|
Deferred taxes |
|
| 21,303 |
|
|
| 14,385 |
|
Operating lease liabilities, net of current portion |
|
| 77,934 |
|
|
| 74,185 |
|
Other long-term liabilities |
|
| 13,029 |
|
|
| 7,345 |
|
Total liabilities |
|
| 373,586 |
|
|
| 296,983 |
|
Redeemable non-controlling interest - temporary equity |
|
| 167,515 |
|
|
| 155,262 |
|
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, |
|
|
|
|
|
|
|
|
15,216,326 and 15,126,160 shares issued, respectively |
|
| 152 |
|
|
| 151 |
|
Additional paid-in capital |
|
| 110,317 |
|
|
| 102,688 |
|
Accumulated other comprehensive gain |
|
| 4,004 |
|
|
| - |
|
Retained earnings |
|
| 232,948 |
|
|
| 224,395 |
|
Treasury stock at cost, 2,214,737 shares |
|
| (31,628 | ) |
|
| (31,628 | ) |
Total USPH shareholders’ equity |
|
| 315,793 |
|
|
| 295,606 |
|
Non-controlling interest - permanent equity |
|
| 1,260 |
|
|
| 1,575 |
|
Total USPH shareholders' equity and non-controlling interest - permanent equity |
|
| 317,053 |
|
|
| 297,181 |
|
Total liabilities, redeemable non-controlling interest, |
|
|
|
|
|
|
|
|
USPH shareholders' equity and non-controlling interest - permanent equity |
| $ | 858,154 |
|
| $ | 749,426 |
|
|
|
|
|
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) | ||||||||
|
| Year Ended |
| |||||
|
| December 31, |
|
| December 30, |
| ||
OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net income including non-controlling interest |
| $ | 43,407 |
|
| $ | 57,924 |
|
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 14,743 |
|
|
| 11,591 |
|
Provision for credit losses |
|
| 5,548 |
|
|
| 5,305 |
|
Equity-based awards compensation expense |
|
| 7,264 |
|
|
| 7,867 |
|
Deferred income taxes |
|
| 4,309 |
|
|
| 5,688 |
|
Change in revaluation of put-right liability |
|
| 5 |
|
|
| - |
|
Change in fair value of contingent earn-out consideration |
|
| (2,520 | ) |
|
| - |
|
(Gain) loss on sale of clinics and fixed assets |
|
| (643 | ) |
|
| - |
|
Impairment of Goodwill |
|
| 9,112 |
|
|
| - |
|
Earnings in unconsolidated affiliate |
|
| (1,175 | ) |
|
| (112 | ) |
Other |
|
| (83 | ) |
|
| (134 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Increase in patient accounts receivable |
|
| (10,279 | ) |
|
| (9,417 | ) |
(Increase) decrease in accounts receivable - other |
|
| (307 | ) |
|
| (1,538 | ) |
(Decrease) increase in other assets |
|
| (5,940 | ) |
|
| (633 | ) |
(Decrease) Increase in accounts payable and accrued expenses |
|
| (7,755 | ) |
|
| 4,657 |
|
(Decrease) increase in other long-term liabilities |
|
| 2,851 |
|
|
| (4,792 | ) |
Net cash provided by operating activities |
|
| 58,537 |
|
|
| 76,406 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of fixed assets |
|
| (8,248 | ) |
|
| (8,201 | ) |
Purchase of majority interest in businesses, net of cash acquired |
|
| (59,788 | ) |
|
| (86,823 | ) |
Purchase of redeemable non-controlling interest, temporary equity |
|
| (14,987 | ) |
|
| (28,465 | ) |
Purchase of non controlling interest-permanent |
|
| (280 | ) |
|
| (1,274 | ) |
Proceeds on sale of partnership interest - redeemable non-controlling interest |
|
| 402 |
|
|
| 69 |
|
Distributions from unconsolidated affiliate |
|
| 1,259 |
|
|
| 152 |
|
Sale of non-controlling interest - permanent |
|
| - |
|
|
| 131 |
|
Proceeds on sales of partnership interest, clinics and fixed assets |
|
| 373 |
|
|
| 275 |
|
Net cash used in investing activities |
|
| (81,269 | ) |
|
| (124,136 | ) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Distributions to non-controlling interest, permanent and temporary equity |
|
| (15,348 | ) |
|
| (16,931 | ) |
Cash dividends paid to shareholders |
|
| (21,321 | ) |
|
| (18,765 | ) |
Proceeds from revolving line of credit |
|
| 101,000 |
|
|
| 316,000 |
|
Proceeds from term loan |
|
| 150,000 |
|
|
| - |
|
Payments on revolving line of credit |
|
| (184,000 | ) |
|
| (218,000 | ) |
Payments on Term Loan |
|
| (1,875 | ) |
|
| - |
|
Principal payments on notes payable |
|
| (930 | ) |
|
| (4,899 | ) |
(Payment) receipt of Medicare Accelerated and Advance Funds |
|
| - |
|
|
| (14,054 | ) |
Payment of loan costs |
|
| (1,779 | ) |
|
| - |
|
Other |
|
| 12 |
|
|
| 28 |
|
Net cash used in financing activities |
|
| 25,759 |
|
|
| 43,379 |
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
| 3,027 |
|
|
| (4,351 | ) |
Cash and cash equivalents - beginning of period |
|
| 28,567 |
|
|
| 32,918 |
|
Cash and cash equivalents - end of period |
| $ | 31,594 |
|
| $ | 28,567 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
| $ | 7,615 |
|
| $ | 12,214 |
|
Interest paid |
| $ | 5,687 |
|
| $ | 1,352 |
|
Non-cash investing and financing transactions during the period: |
|
|
|
|
|
|
|
|
Purchase of businesses - seller financing portion |
| $ | 1,574 |
|
| $ | 3,050 |
|
Notes payable related to purchase of redeemable non-controlling interest, temporary equity |
| $ | 1,074 |
|
| $ | 1,759 |
|
Notes payable related to purchase of non-controlling interest, permanent equity |
| $ | 296 |
|
| $ | - |
|
Notes receivable related to sale of partnership interest - redeemable non-controlling interest |
| $ | 1,580 |
|
| $ | 914 |
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED EBITDA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
The following tables provide details 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-GAAP measure, equals net income attributable to USPH diluted shareholders per the consolidated statements of income, less a goodwill impairment charge related to the IIP Acquisition, changes in fair value of contingent consideration, expenses related to executive officer transitions, settlement of a legal matter, and any allocations to non-controlling interests, all net of taxes. Operating Results per diluted share also exclude the impact of the revaluation of redeemable non-controlling interest and the associated tax impact.
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest income, interest expense, taxes, depreciation, amortization, goodwill impairment charges, change in fair value of contingent earn-out consideration, Relief Funds, changes in revaluation of put-right liability, equity-based awards compensation expense, settlement of a legal matter, and related portion for non-controlling interests. 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 2022 PERIODS COMPARED TO 2021 PERIODS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) | ||||||||||||||||
|
| Three Months Ended December 31, |
|
| Year Ended December 31, |
| ||||||||||
|
| 2022 |
|
|
| 2021 | * |
|
| 2022 |
|
|
| 2021 | * | |
Computation of earnings per share - USPH shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net income attributable to USPH shareholders |
| $ | 2,607 |
|
| $ | 10,213 |
|
| $ | 32,158 |
|
| $ | 40,831 |
|
Charges to retained earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of redeemable non-controlling interest |
|
| (3,697 | ) |
|
| (1,121 | ) |
|
| (3,890 | ) |
|
| (13,011 | ) |
Tax effect at statutory rate (federal and state) of 25.55% |
|
| 945 |
|
|
| 286 |
|
|
| 994 |
|
|
| 3,324 |
|
|
| $ | (145 | ) |
| $ | 9,378 |
|
| $ | 29,262 |
|
| $ | 31,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (basic and diluted) |
| $ | (0.01 | ) |
| $ | 0.73 |
|
| $ | 2.25 |
|
| $ | 2.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment charge |
|
| 9,112 |
|
|
| - |
|
|
| 9,112 |
|
|
| - |
|
Change in fair value of contingent earn-out consideration |
|
| (520 | ) |
|
| - |
|
|
| (2,520 | ) |
|
| - |
|
Change in revaluation of put-right liability |
|
| 776 |
|
|
| - |
|
|
| 5 |
|
|
| - |
|
Expenses related to executive officer transitions |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,301 |
|
Relief Funds |
|
| - |
|
|
| (4,597 | ) |
|
| - |
|
|
| (4,597 | ) |
Settlement of a legal matter |
|
| - |
|
|
| 2,635 |
|
|
| - |
|
|
| 2,635 |
|
Allocation to non-controlling interests |
|
| (2,734 | ) |
|
| 676 |
|
|
| (2,734 | ) |
|
| 676 |
|
Revaluation of redeemable non-controlling interest |
|
| 3,697 |
|
|
| 1,121 |
|
|
| 3,890 |
|
|
| 13,011 |
|
Tax effect at statutory rate (federal and state) |
|
| (2,640 | ) |
|
| 42 |
|
|
| (1,981 | ) |
|
| (3,328 | ) |
Operating Results (a non-GAAP measure) |
| $ | 7,546 |
|
| $ | 9,255 |
|
| $ | 35,034 |
|
| $ | 40,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief Funds |
|
| - |
|
|
| 4,597 |
|
|
| - |
|
|
| 4,597 |
|
Allocation to non-controlling interests |
|
| - |
|
|
| (715 | ) |
|
| - |
|
|
| (715 | ) |
Tax effect at statutory rate (federal and state) of 25.55% |
|
| - |
|
|
| (992 | ) |
|
| - |
|
|
| (992 | ) |
Operating Results (including Relief Funds) (a non-GAAP measure) |
| $ | 7,546 |
|
| $ | 12,145 |
|
| $ | 35,034 |
|
| $ | 43,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted Operating Results per share (a non-GAAP measure) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Including Relief Funds |
| $ | 0.58 |
|
| $ | 0.94 |
|
| $ | 2.70 |
|
| $ | 3.39 |
|
Excluding Relief Funds |
| $ | 0.58 |
|
| $ | 0.72 |
|
| $ | 2.70 |
|
| $ | 3.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted |
|
| 13,002 |
|
|
| 12,912 |
|
|
| 12,985 |
|
|
| 12,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended December 31, |
|
| Year Ended December 31, |
| ||||||||||
|
|
| 2022 |
|
|
| 2021 | * |
|
| 2022 |
|
|
| 2021 | * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders |
| $ | 2,607 |
|
| $ | 10,213 |
|
| $ | 32,158 |
|
| $ | 40,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 3,793 |
|
|
| 3,071 |
|
|
| 14,743 |
|
|
| 11,591 |
|
Goodwill impairment |
|
| 9,112 |
|
|
| - |
|
|
| 9,112 |
|
|
| - |
|
Change in fair value of contingent earn-out consideration |
|
| (520 | ) |
|
| - |
|
|
| (2,520 | ) |
|
| - |
|
Settlement of a legal matter |
|
| - |
|
|
| 2,635 |
|
|
| - |
|
|
| 2,635 |
|
Other and interest income |
|
| (69 | ) |
|
| (41 | ) |
|
| (859 | ) |
|
| (199 | ) |
Change in revaluation of put-right liability |
|
| 776 |
|
|
| - |
|
|
| 5 |
|
|
| - |
|
Interest expense - debt and other, net |
|
| 2,239 |
|
|
| 191 |
|
|
| 5,779 |
|
|
| 942 |
|
Provision for income taxes |
|
| 1,212 |
|
|
| 3,946 |
|
|
| 12,164 |
|
|
| 15,272 |
|
Equity-based awards compensation expense |
|
| 1,802 |
|
|
| 1,587 |
|
|
| 7,264 |
|
|
| 7,867 |
|
Allocation to non-controlling interests |
|
| (3,098 | ) |
|
| (358 | ) |
|
| (4,185 | ) |
|
| (1,277 | ) |
Adjusted EBITDA (including Relief Funds) (a non-GAAP measure) |
|
| 17,854 |
|
|
| 21,244 |
|
|
| 73,661 |
|
|
| 77,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relief Funds |
| $ | - |
|
| $ | (4,597 | ) |
| $ | - |
|
| $ | (4,597 | ) |
Allocation to non-controlling interests |
|
| - |
|
|
| 715 |
|
|
| - |
|
|
| 715 |
|
Adjusted EBITDA (excluding Relief Funds) (a non-GAAP measure) |
| $ | 17,854 |
|
| $ | 17,362 |
|
| $ | 73,661 |
|
| $ | 73,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Revised to conform to current year presentation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES RECAP OF PHYSICAL THERAPY OPERATIONS CLINIC COUNT | |
Date | Number of Clinics |
|
|
March 31, 2021 | 564 |
June 30, 2021 | 575 |
September 30, 2021 | 579 |
December 31, 2021 | 591 |
|
|
March 31, 2022 | 601 |
June 30, 2022 | 608 |
September 30, 2022 | 614 |
December 31, 2022 | 640 |
Last Trade: | US$84.56 |
Daily Change: | -2.22 -2.56 |
Daily Volume: | 47,291 |
Market Cap: | US$1.280B |
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