Management Provides 2020 Earnings Guidance
and Raises Dividend
U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE:
USPH), a national operator of outpatient physical therapy clinics,
today reported results for the fourth quarter and year ended
December 31, 2019.
For the year ended December 31, 2019, USPH’s Operating Results
(as defined below) increased 7.3% to $36.0 million, or $2.82 per
diluted share, as compared to $33.5 million, or $2.65 per diluted
share in 2018. For the fourth quarter ended December 31, 2019,
USPH’s Operating Results were $8.2 million, or $0.64 per diluted
share as compared to $9.0 million, or $0.71 per diluted share, in
the fourth quarter of 2018. As discussed further in this release,
in the recent quarter the Company incurred more than $1.0 million
in higher employee healthcare costs than planned. Operating
Results, a non-Generally Accepted Accounting Principle (“GAAP”)
measure, equals net income attributable to USPH shareholders per
the consolidated statements of net income less the gain on the sale
of a partnership interest in 2019 and the gain on the derecognition
of debt in 2018 as described below. The earnings per share from
Operating Results also excludes the impact of the revaluation of
redeemable non-controlling interest. On June 30, 2019, the Company
sold its 50% interest in one physical therapy partnership to the
group’s founders for $11.6 million and recognized a net pre-tax
gain of $5.5 million in 2019 which is not included in Operating
Results.
For the year ended December 31, 2019, USPH’s net income
attributable to its shareholders, in accordance with GAAP, was
$40.0 million as compared to $34.9 million for the comparable
period of 2018. For the fourth quarter ended December 31, 2019,
USPH’s net income attributable to its shareholders was $7.9
million, as compared to $10.4 million in the fourth quarter of
2018. Inclusive of the charge for revaluation of non-controlling
interest, net of tax, used to compute diluted earnings per share,
in accordance with GAAP, in the recent year, the amount is $31.3
million, or $2.45 per share, as compared to $16.6 million, or $1.31
per share, for 2018. Inclusive of the charge for revaluation of
non-controlling interest, net of tax, used to compute diluted
earnings per share in accordance with GAAP, in the recent quarter,
the amount is $7.1 million, or $0.55 per share, as compared to $5.5
million, or $0.43 per share, for the fourth quarter of 2018. In
accordance with current accounting guidance, the revaluation of
redeemable non-controlling interest, net of tax, is not included in
net income but charged directly to retained earnings; however, the
charge or credit for this change is included in the earnings per
basic and diluted share calculation. See the schedule on page 14
for the computation of diluted earnings per share.
Year 2019 Compared to Year
2018
- Net revenues increased $28.1 million, or 6.2%, from $453.9
million in 2018, to $481.9 million in 2019, primarily due to an
increase in net patient revenues from physical therapy operations
due to internal growth and new clinic development plus an
acquisition, and an increase in the revenue from the industrial
injury prevention business due to internal growth and
acquisitions.
- Net patient revenues from physical therapy operations increased
$15.6 million, or 3.7%, to $433.3 million in 2019 from $417.7
million in 2018 due to an increase in total patient visits of 3.4%
from 3,958,000 to 4,092,000 and an increase in the average net
patient revenue per visit to $105.90 from $105.55. Of the $15.6
million increase in net patient revenues, $10.8 million related to
an increase in business of clinics opened or acquired prior to 2019
(“Mature Clinics”) and $4.8 million related to clinics opened or
acquired in 2019 (“New Clinics”). The net patient revenues related
to the 30 clinics sold on June 30, 2019 had the effect of reducing
total net revenues by $11.6 million in 2019 (only the first six
months included for the 2019 year) compared to 2018 (twelve months
total was $23.8 million). Revenue from physical therapy management
contracts was $8.7 million for 2019 and $8.3 million for 2018.
- Revenue from the industrial injury prevention business
increased 47.1% to $37.5 million in 2019 compared to $25.5 million
in 2018 due to internal growth and acquisitions. Other
miscellaneous revenue was $2.4 million in 2019 and in 2018.
- Total operating costs were $369.5 million in 2019, or 76.7% (a
reduction of 90 basis points) of net revenues, as compared to
$352.2 million in 2018, or 77.6% of net revenues. The $17.3 million
increase was attributable to $10.3 million in operating costs
related to New Clinics, an increase of $9.2 million related to
Mature Clinics, an increase of $8.8 million related to the
industrial injury prevention business and an increase in management
contracts costs of $0.1 million offset by a reduction in expenses
related to the clinics sold of $11.1 million. Total salaries and
related costs, including physical therapy operations and the
industrial injury prevention business, were 56.9% (a reduction of
20 basis points) of net revenues in the recent quarter versus 57.1%
in 2018. Rent, supplies, contract labor and other costs as a
percentage of net revenues were 18.8% (a reduction of 70 basis
points) in 2019 versus 19.5% in 2018. The provision for doubtful
accounts as a percentage of net revenue was 1.0 % for both
periods.
- Gross profit for 2019 grew by 10.6% or $10.8 million to $112.5
million, as compared to $101.7 million in 2018. The gross profit
percentage increased by 90 basis points to 23.3% of net revenue in
the recent period as compared to 22.4% in 2018. The gross profit
percentage for the Company’s physical therapy clinics increased by
90 basis points to 23.6% in the recent period as compared to 22.7%
in 2018. The gross profit percentage on physical therapy management
contracts was 14.8% (an increase of 270 basis points) in 2019 as
compared to 12.1% in the 2018. The gross profit for the industrial
injury prevention business was $8.4 million, or 22.4% (an increase
of 200 basis points), in 2019 as compared to $5.2 million, or
20.4%, in the comparable 2018 period.
- Corporate office costs were $45.0 million in 2019 compared to
$41.3 million in 2018. Corporate office costs were 9.3% of net
revenues for 2019 as compared to 9.1% for 2018.
- Included in operating and corporate costs for 2019 was
approximately $1.8 million in higher employee healthcare costs than
planned.
- Operating income for 2019 increased 11.8% to $67.4 million as
compared to $60.3 million in 2018. Operating income as a percentage
of net revenue increased by 70 basis points from 13.3% in the 2018
period to 14.0% in 2019.
- The gain of $5.5 million in 2019 resulted from a sale of
partnership interest. See prior discussion.
- Interest expense was $2.1 million in 2019 and $2.0 million in
2018.
- The provision for income tax for 2019 was $13.6 million and
$11.4 million in 2018. The provision for income tax as a percentage
of income before taxes less net income attributable to
non-controlling interest was 25.4% for 2019 and 24.6% for
2018.
- Net income attributable to non-controlling interests (permanent
equity) was $6.6 million in 2019 and $5.5 million in 2018. Net
income attributable to redeemable non-controlling interests
(temporary equity) was $10.6 million in 2019 and $8.4 million in
2018.
- Same store revenues for de novo and acquired clinics open for
one year or more increased 6.3% in 2019. Visits increased 5.8% for
de novo and acquired clinics open for one year or more while the
same store net rate increased 0.5%.
Fourth Quarter 2019 Compared to Fourth
Quarter 2018
- Net revenues increased $4.8 million, or 4.1%, from $117.3
million in the fourth quarter of 2018, to $122.1 million in the
fourth quarter of 2019, due to an increase in net patient revenues
from physical therapy operations, internal growth, new clinic
development and an acquisition, and an increase in the revenue from
the industrial injury prevention business, due to internal growth
and an acquisition. Included in the fourth quarter of 2018 was
revenue of $5.9 million for clinics within the partnership sold on
June 30, 2019.
- Despite the loss of revenues from the clinics within the
partnership sold of $5.9 million in the fourth quarter of 2018, net
patient revenues from physical therapy operations in the fourth
quarter of 2019 increased approximately $1.1 million, or 1.1%, to
$108.9 million from $107.8 million in the fourth quarter of 2018
due to an increase in total patient visits of 1.3% from 1,023,000
to 1,036,500 offset by a decrease in the average net patient
revenue per visit from $105.38 to $105.10. In the fourth quarter of
2019, net patient revenue from New Clinics amounted to $3.4 million
and net patient revenue from Mature Clinics increased $3.6 million.
Revenue from physical therapy management contracts was $2.1 million
for the fourth quarter of 2019 and $2.0 million for the comparable
2018 period.
- Revenue from the industrial injury prevention business
increased 46.3% to $10.3 million in the fourth quarter of 2019
compared to $7.0 million in the fourth quarter 2018 due to internal
growth and an acquisition in April 2019. Other miscellaneous
revenue was $0.7 million in the fourth quarter of 2019 and $0.4
million in the fourth quarter of 2018.
- Total operating costs were $95.2 million, or 77.9% (an
improvement of 60 basis points) of net revenues, in the fourth
quarter of 2019 as compared to $92.1 million, or 78.5% of net
revenues, in the fourth quarter of 2018. The $3.0 million increase
was attributable to $5.0 million related to New Clinics, an
increase of $2.0 million in operating costs related to Mature
Clinics and an increase of $1.9 million related to the industrial
injury prevention business including a recent acquisition, offset
by a reduction in expenses related to the clinics sold of $5.9
million. The operating costs related to the management contracts
remained constant during the two periods. Total salaries and
related costs, including physical therapy operations and the
industrial injury prevention business, were 57.8% of net revenues
for both the recent quarter and the fourth quarter of 2018. Rent,
supplies, contract labor and other costs as a percentage of net
revenues were 19.0% (an improvement of 50 basis points) in the
fourth quarter of 2019 versus 19.5% in the fourth quarter of 2018.
The provision for doubtful accounts as a percentage of net revenue
was 1.2% in the 2019 fourth quarter versus 1.3% in comparable
period.
- Gross profit for the fourth quarter of 2019 grew by 6.9%, or
$1.7 million, to $27.0 million, as compared to $25.2 million in the
fourth quarter of 2018. The gross profit percentage was 22.1% (an
increase of 60 basis points) of net revenue in the recent period as
compared to 21.5% in the 2018 fourth quarter. The gross profit
percentage for the Company’s physical therapy clinics increased by
290 basis points to 25.4% in the recent quarter as compared to
22.5% in the fourth quarter of 2018. The gross profit percentage on
physical therapy management contracts increased by 660 basis points
to 14.3% in the 2019 fourth quarter as compared to 7.7% in the 2018
fourth quarter. The gross profit for the industrial injury
prevention business increased by 760 basis points. The gross profit
for the industrial injury prevention business, was $1.9 million, or
18.0%, in the recent quarter as compared to $0.7 million, or 10.4%,
in the 2018 period.
- Corporate office costs were $11.7 million in the fourth quarter
of 2019 and $10.4 million in the fourth quarter of 2018. Corporate
office costs were 9.6% of net revenues for the fourth quarter of
2019 as compared to 8.9% for the fourth quarter of 2018. Accrued
incentive comp in the fourth quarter of 2019 was $0.6 million
higher than in the fourth quarter of 2018 but for the full year
2019 was lower than 2018.
- As stated previously, in the fourth quarter of 2019 the Company
incurred more than $1.0 million in higher employee healthcare costs
than planned.
- Operating income for the fourth quarter of 2019 increased 3.3%
to $15.3 million as compared to $14.8 million in the fourth quarter
of 2018. Operating income as a percentage of net revenue was 12.5%
in the fourth quarter of 2019 and 12.6% in the comparable period in
2018.
- Interest expense was $0.6 million in the fourth quarter of 2019
and $0.4 million in the fourth quarter of 2018.
- The provision for income tax for the fourth quarter of 2019 was
$2.4 million and $2.6 million in the 2018 fourth quarter. The
provision for income tax as a percentage of income before taxes
less net income attributable to non-controlling interest was 23.4%
for the fourth quarter of 2019 and 20.2% for the fourth quarter of
2018.
- Net income attributable to non-controlling interests (permanent
equity) was $1.6 million in both the fourth quarter of 2019 and
2018. Net income attributable to redeemable non-controlling
interests (temporary equity) was $2.5 million in the fourth quarter
of 2019 and $1.7 million in the 2018 fourth quarter.
- Same store revenues for de novo and acquired clinics open for
one year or more increased 4.7% in the most recent quarter. Visits
increased 4.6% for de novo and acquired clinics open for one year
or more while the same store net rate remained consistent.
Other Financial Measures
For 2019, the Company's Adjusted EBITDA increased by 8.5% to
$67.3 million from $62.0 million in 2018 and, as a percentage of
net revenue increased by 30 basis points from 13.7% to 14.0%. For
the fourth quarter of 2019, the Company's Adjusted EBITDA increased
by 1.3% to $15.6 million from $15.4 million in the comparable 2018
quarter and as a percentage of net revenue decreased by 40 basis
points from 13.2% to 12.8%. See definition and explanation of
Adjusted EBITDA in the schedule on pages 13 and 14.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “Our team produced
a great many highlights in 2019 including an 11.8% increase in our
operating income as well as significant margin improvement. We
delivered record 6.3% same store revenue growth in physical therapy
and finished the year in strong fashion in all operating
categories. When you dig into the details our businesses performed
quite well overall. We experienced some cost issues in the fourth
quarter, including higher employee healthcare expenses, which are
being addressed. Further, today we announced what will be another
terrific partner-centric acquisition with robust activity on the
development front overall.”
2020 Earnings Guidance
Management currently expects the Company’s Operating Results for
2020 to be in the range of $38.1 million to $39.8 million or $2.98
to $3.10 per share. This earnings range is based on an assumed
annual corporate tax rate of approximately 26.5%. Please note that
the earnings guidance represents projected Operating Results from
existing operations, including the acquisition announced today, and
excludes future acquisitions. The 2020 earnings guidance range
excludes expenses associated with the scheduled retirement and
replacement of the Company’s CFO. 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.
U.S. Physical Therapy Quarterly
Dividend
The first quarterly dividend for 2020 of $0.32 per share will be
paid on April 17, 2020 to shareholders of record as of March 13,
2020. At that quarterly rate the total dividend expected to be paid
in 2020 would be 12.2% higher than what was paid in 2019. U.S.
Physical Therapy began paying quarterly dividends in 2011 and has
increased the dividend amount at least annually every year
since.
Employee Healthcare Plan
Changes
Effective January 1, 2020, in order to reduce costs while
continuing to provide excellent healthcare benefits for employees,
the Company made a number of changes to it prescription drug
program. These included a change in the management company of the
program, guaranteed price reductions and rebates, preauthorization
being required for certain medications, plan design changes to
incentivize employees to utilize generic prescriptions or
over-the-counter alternatives rather than significantly more
expensive brand name drugs, and a number of other changes. This is
expected to reduce the costs of the Company’s prescription
medication plan by more than $1.0 million annually.
In addition, the Company’s various employee healthcare insurance
programs renew annually on May 1. The Company will be making design
changes to those plans which are anticipated to save a substantial
amount.
The Company maintains a self-insured health plan and uses one of
the largest insurance companies in the U.S. to administer the plan
and provide stop loss insurance and terminal run out-coverage.
There are several layers of insurance within the plan to protect
the Company, namely individual stop loss, aggregate stop loss and
terminal liability coverages. The individual stop loss protects the
plan from any one single large claimant whereas the aggregate
insurance protects the entire plan, similar to umbrella coverage,
to provide a known maximum exposure. Lastly, the Company purchases
terminal liability coverage that provides a defined run-out cost in
the event the plan is moved, replaced or terminated.
Operating Leases – Right-to-Use Assets
and Lease Liability
The Company implemented the new lease accounting standard
beginning January 1, 2019. As of December 31, 2019, the adoption
has resulted in $81.6 million of right-to-use assets and $86.7
million of operating lease liabilities, of which $26.5 million was
classified as a current liability, in the consolidated balance
sheet. For a detailed discussion of the new lease accounting
standard refer to the Company’s Annual Report on Form 10-K filed
with the SEC on March 18, 2019.
Fourth Quarter 2019 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 27,
2020 to discuss the Company's Fourth Quarter and Year Ended
December 31, 2019 results. Interested parties may participate in
the call by dialing 1-888-335-5539 or 973-582-2857 and entering
reservation number 4759865 approximately 10 minutes before the call
is scheduled to begin. To listen to the live call via web-cast, go
to the Company's website at www.usph.com at least 15 minutes early
to register, download and install any necessary audio software. The
conference call will be archived and can be accessed until May 27,
2020 at U.S. Physical Therapy’s website.
Forward-Looking
Statements
This press release contains statements that are considered to be
forward-looking within the meaning under Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
contain forward-looking information relating to the financial
condition, results of operations, plans, objectives, future
performance and business of our Company. These statements (often
using words such as “believes”, “expects”, “intends”, “plans”,
“appear”, “should” and similar words) involve risks and
uncertainties that could cause actual results to differ materially
from those we expect. Included among such statements may be those
relating to new clinics, availability of personnel and the
reimbursement environment. The forward-looking statements are based
on our current views and assumptions and actual results could
differ materially from those anticipated in such forward-looking
statements as a result of certain risks, uncertainties, and
factors, which include, but are not limited to:
- changes as the result of government enacted national healthcare
reform;
- changes in Medicare rules and guidelines and reimbursement or
failure of our clinics to maintain their Medicare certification
and/or enrollment status;
- revenue we receive from Medicare and Medicaid being subject to
potential retroactive reduction;
- business and regulatory conditions including federal and state
regulations;
- governmental and other third party payor inspections, reviews,
investigations and audits, 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;
- the potential impact of the coronavirus;
- maintaining adequate internal controls;
- maintaining necessary insurance coverage;
- availability, terms, and use of capital; and
- weather and other seasonal factors.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see our periodic reports filed with the
Securities and Exchange Commission for more information on these
factors. Our forward-looking statements represent our estimates and
assumptions only as of the date of this press release. Except as
required by law, we are under no obligation to update any
forward-looking statement, regardless of the reason the statement
is no longer accurate.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 587
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 26 physical therapy facilities for unaffiliated
third parties, including hospitals and physician groups. The
Company also has an industrial injury prevention business which
provides onsite services for clients’ employees including injury
prevention and rehabilitation, performance optimization, post-offer
employment testing, functional capacity evaluations, and ergonomic
assessments.
More information about U.S. Physical Therapy, Inc. is available
at www.usph.com. The information
included on that website is not incorporated into this press
release.
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended
For the Year Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Net patient revenues
$
108,940
$
107,808
$
433,345
$
417,703
Other revenues
13,174
9,541
48,624
36,208
Net revenues
122,114
117,349
481,969
453,911
Operating costs:
Salaries and related costs
70,549
67,818
274,233
259,228
Rent, supplies, contract labor and
other
23,143
22,828
90,379
88,426
Provision for doubtful accounts
1,450
1,501
4,858
4,603
Closure costs
13
(17
)
25
(9
)
Total operating costs
95,155
92,130
369,495
352,248
Gross profit
26,959
25,219
112,474
101,663
Corporate office costs
11,673
10,415
45,049
41,349
Operating income
15,286
14,804
67,425
60,314
Other income and expense
Gain (adjustment) on sale of partnership
interest
(309
)
-
5,514
-
Gain on derecognition of debt
-
1,846
-
1,846
Interest and other income, net
19
23
46
93
Interest expense - debt and other
(557
)
(365
)
(2,079
)
(2,042
)
Income before taxes
14,439
16,308
70,906
60,211
Provision for income taxes
2,424
2,635
13,647
11,369
Net income
12,015
13,673
57,259
48,842
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(1,579
)
(1,600
)
(6,561
)
(5,536
)
Redeemable non-controlling interests -
temporary equity
(2,507
)
(1,665
)
(10,659
)
(8,433
)
(4,086
)
(3,265
)
(17,220
)
(13,969
)
Net income attributable to USPH
shareholders
$
7,929
$
10,408
$
40,039
$
34,873
Basic and diluted earnings per share
attributable to USPH shareholders
$
0.55
$
0.43
$
2.45
$
1.31
Shares used in computation - basic and
diluted
12,774
12,685
12,756
12,666
Dividends declared per common share
$
0.30
$
0.23
$
1.14
$
0.92
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
December 31, 2019
December 31, 2018
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
23,548
$
23,368
Patient accounts receivable, less
allowance for doubtful accounts of $2,698 and $2,672,
respectively
46,228
44,751
Accounts receivable - other
9,823
6,742
Other current assets
5,787
4,353
Total current assets
85,386
79,214
Fixed assets:
Furniture and equipment
54,942
52,611
Leasehold improvements
33,247
31,712
Fixed assets, gross
88,189
84,323
Less accumulated depreciation and
amortization
66,099
64,154
Fixed assets, net
22,090
20,169
Operating lease right-of-use assets
81,586
-
Goodwill
317,676
293,525
Other identifiable intangible assets,
net
52,588
48,828
Other assets
1,519
1,430
Total assets
$
560,845
$
443,166
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
2,494
$
2,019
Accrued expenses
30,855
38,493
Current portion of operating lease
liabilities
26,486
-
Current portion of notes payable
728
1,434
Total current liabilities
60,563
41,946
Notes payable, net of current portion
4,361
402
Revolving line of credit
46,000
38,000
Deferred taxes
10,071
9,012
Deferred rent
-
2,159
Operating lease liabilities, net of
current portion
60,258
-
Other long-term liabilities
141
829
Total liabilities
181,394
92,348
Redeemable non-controlling interests
137,750
133,943
U.S. Physical Therapy, Inc. ("USPH")
shareholders’ equity:
Preferred stock, $.01 par value, 500,000
shares authorized, no shares issued and outstanding
-
-
Common stock, $.01 par value, 20,000,000
shares authorized, 14,989,337 and 14,899,233 shares issued,
respectively
150
149
Additional paid-in capital
87,383
80,028
Retained earnings
184,352
167,396
Treasury stock at cost, 2,214,737
shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
240,257
215,945
Non-controlling interests
1,444
930
Total USPH shareholders' equity and
non-controlling interests
241,701
216,875
Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests
$
560,845
$
443,166
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Year Ended
December 31, 2019
December 31, 2018
OPERATING ACTIVITIES
Net income including non-controlling
interests
$
57,259
$
48,842
Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization
10,095
9,755
Provision for doubtful accounts
4,858
4,603
Equity-based awards compensation
expense
6,985
5,939
Deferred income taxes
4,651
4,813
Gain on sale of partnership interest
(5,514
)
-
Gain on derecognition of Debt
-
(1,846
)
Other
96
167
Changes in operating assets and
liabilities:
Increase in patient accounts
receivable
(6,376
)
(3,434
)
Increase in accounts receivable -
other
(2,499
)
(1,087
)
(Increase) decrease in other assets
(1,878
)
345
(Decrease) increase in accounts payable
and accrued expenses
(4,209
)
4,876
(Decrease) increase in other
liabilities
(1,020
)
32
Net cash provided by operating
activities
62,448
73,005
INVESTING ACTIVITIES
Purchase of fixed assets
(10,189
)
(7,193
)
Purchase of majority interest in
businesses
(30,597
)
(16,367
)
Purchase of redeemable non-controlling
interest, temporary equity
(8,651
)
-
Purchase of non-controlling interest,
permanent equity
(428
)
(350
)
Sales of non controlling
interest-permanent
207
-
Proceeds on sale of partnership interest,
net
11,601
-
Proceeds on sale of fixed assets
64
1
Net cash used in investing activities
(37,993
)
(23,909
)
FINANCING ACTIVITIES
Distributions to non-controlling
interests, permanent and temporary equity
(16,235
)
(15,646
)
Cash dividends paid to shareholders
(14,555
)
(11,664
)
Proceeds from revolving line of credit
145,000
103,000
Payments on revolving line of credit
(137,000
)
(119,000
)
Payments to settle mandatorily redeemable
non-controlling interests
-
(265
)
Principal payments on notes payable
(1,433
)
(4,044
)
Other
(52
)
(42
)
Net cash used in financing activities
(24,275
)
(47,661
)
Net increase in cash and cash
equivalents
180
1,435
Cash and cash equivalents - beginning of
period
23,368
21,933
Cash and cash equivalents - end of
period
$
23,548
$
23,368
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
9,856
$
9,183
Interest
$
1,890
$
2,357
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
4,300
$
950
Purchase of business - payable to common
shareholders of acquired business
$
502
$
-
Notes payable related to purchase of
redeemable non-controlling interest, temporary equity
$
283
$
-
Notes payable related to purchase of
non-controlling interest, permanent equity
$
103
$
-
Notes receivable related to sale of
partnership interest - redeemable non-controlling interest
$
2,870
$
-
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 per share, a non-GAAP measure, equals net
income attributable to USPH shareholders per the consolidated
statement of net income, and excludes the impact of the gain on the
sale of a partnership interest in 2019 and the gain on the
derecognition of debt in 2018. In addition, the revaluation of
redeemable non-controlling interest, net of tax, is not considered
in calculating Operating Results per share. In accordance with
current accounting guidance, the revaluation of redeemable
non-controlling interest, net of tax, is included in the earnings
per basic and diluted share calculation, although it is not
included in net income but charged directly to retained
earnings.
Management uses Operating Results, which eliminates certain
items described above that can be subject to volatility and unusual
costs, as one of the principal measures to evaluate and monitor
financial performance period over period. Management believes that
Operating Results is useful information for investors to use in
comparing the Company's period-to-period results as well as for
comparing with other similar businesses since most do not have
mandatorily redeemable instruments and therefore have different
liability and equity structures.
Adjusted EBITDA is defined as net income attributable to USPH
shareholders before interest income, interest expense, taxes,
depreciation, amortization, equity-based awards compensation
expense and gain on sale of partnership interest. Management
believes reporting Adjusted EBITDA is useful information for
investors in comparing the Company’s period-to-period results as
well as comparing with similar businesses which report adjusted
EBITDA as defined by their company.
Operating Results and Adjusted EBITDA are not measures of
financial performance under GAAP. Adjusted EBITDA and Operating
Results should not be considered in isolation or as an alternative
to, or substitute for, net income attributable to USPH shareholders
presented in the consolidated financial statements.
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
7,929
$
10,408
$
40,039
$
34,873
Charges to retained earnings:
Revaluation of redeemable non-controlling
interest
(1,141
)
(6,665
)
(11,893
)
(24,770
)
Tax effect at statutory rate (federal and
state) of 26.25%
299
1,749
3,121
6,502
$
7,087
$
5,492
$
31,267
$
16,605
Earnings per share (basic and diluted)
$
0.55
$
0.43
$
2.45
$
1.31
Adjustments:
Gain on derecognition of debt
-
(1,846
)
-
(1,846
)
Gain on sale of partnership interest
309
-
(5,514
)
-
Revaluation of redeemable non-controlling
interest
1,141
6,665
11,893
24,770
Tax effect at statutory rate (federal and
state) of 26.25%
(380
)
(1,265
)
(1,674
)
(6,018
)
Operating Results
$
8,157
$
9,046
$
35,972
$
33,511
Basic and diluted Operating Results per
share
$
0.64
$
0.71
$
2.82
$
2.65
Shares used in computation - basic and
diluted
12,774
12,685
12,756
12,666
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Net income attributable to USPH
shareholders
$
7,929
$
10,408
$
40,039
$
34,873
Adjustments:
Depreciation and amortization
2,718
2,420
10,095
9,755
Gain of derecognition of debt
-
(1,846
)
-
(1,846
)
Gain on sale of partnership interest
309
-
(5,514
)
-
Interest income
(19
)
(23
)
(46
)
(93
)
Interest expense - debt and other
557
365
2,079
2,042
Provision for income taxes
2,424
2,635
13,647
11,369
Equity-based awards compensation
expense
1,723
1,486
6,985
5,939
Adjusted EBITDA
$
15,641
$
15,445
$
67,285
$
62,039
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF CLINIC COUNT
March 31, 2018
580
June 30, 2018
581
September 30, 2018
588
December 31, 2018
591
March 31, 2019
590
June 30, 2019
564
September 30, 2019
574
December 31, 2019
583
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005140/en/
U.S. Physical Therapy, Inc. Larry McAfee, Chief Financial
Officer Chris Reading, Chief Executive Officer (713) 297-7000 Three
Part Advisors Joe Noyons (817) 778-8424
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