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, 2020.
For the second quarter ended June 30, 2020, USPH’s Operating
Results (as defined below), was $10.9 million, or $0.85 per diluted
share, inclusive of relief funds received from the Public Health
and Social Services Emergency Fund as part of the CARES Act
(“Relief Funds”), as compared to $10.3 million, or $0.81 per
diluted share in 2019. For the second quarter ended June 30, 2020,
USPH’s Operating Results, was $5.0 million, or $0.39 per diluted
share, without the Relief Funds. Operating Results, a non-GAAP
measure, equals net income attributable to USPH shareholders per
the consolidated statement of net income plus charges incurred for
closure costs less gain on sale of partnership interest and clinics
and excludes the ongoing CFO search, all net of tax. The earnings
per share from Operating Results also excludes the impact of the
revaluation of redeemable non-controlling interest. For the second
quarter ended June 30, 2020, USPH’s net income attributable to its
shareholders, in accordance with GAAP, was $10.3 million as
compared to $14.6 million for the comparable period of 2019.
Inclusive of the credit or charge for the revaluation of
non-controlling interest, net of tax, used to compute diluted
earnings per share, in accordance with GAAP, in the 2020 Second
Quarter, the amount is $12.7 million, or $0.99 per share, as
compared to $10.8 million, or $0.85 per share in the second quarter
last year. In accordance with current accounting guidance, the
revaluation of redeemable non-controlling interest, net of tax, is
not included in net income but charged or credited directly to
retained earnings; however, the charge or credit for this change is
included in the earnings per basic and diluted share
calculations.
For the six months ended June 30, 2020, USPH’s Operating
Results, was $14.8 million, or $1.15 per diluted share, including
Relief Funds as compared to $18.8 million, or $1.47 per diluted
share in 2019. For the six months ended June 30, 2020, USPH’s
Operating Results, was $8.9 million, or $0.70 per diluted share,
without Relief Funds. For the six months ended June 30, 2020,
USPH’s net income attributable to its shareholders, in accordance
with GAAP, was $11.2 million as compared to $23.1 million for the
comparable period of 2019. Inclusive of the credit or charge for
the revaluation of non-controlling interest, net of tax, used to
compute diluted earnings per share, in accordance with GAAP, in the
2020 first six months ended June 30, 2020, the amount is $15.3
million, or $1.19 per share, as compared to $15.8 million, or $1.24
per share. In accordance with current accounting guidance, the
revaluation of redeemable non-controlling interest, net of tax, is
not included in net income but charged or credited 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 11 for the computation of diluted earnings
per share.
As previously disclosed in a series of filings with the SEC and
further described in detail in our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2020 filed with the SEC on May 21,
2020, the Company’s results have been negatively impacted by the
effects of the COVID-19 pandemic. Management has taken a number of
steps to reduce costs, stem operating losses incurred in March and
April and increase profits subsequently. The Company continues to
experience lower physical therapy patient volumes and revenues
however it is improving. The Company’s physical therapy daily
patient volumes in April declined to as low as 45% of normal. For
the month of April average visits per day per clinic were 16.4, in
May that increased to 18.6 and in June rose to an average of 21.8
visits per day per clinic. The Company’s industrial injury
prevention business has been less effected by the pandemic and is
currently running at approximately 90% of its normal volume of
activity.
Second Quarter 2020 Compared to Second
Quarter 2019
- Reported net revenues in the second quarter of 2020 was $83.9
million as compared to $126.4 million in the 2019 Second Quarter.
Adjusted for the clinics sold in 2019 and 2020, net patient
revenues were $83.7 million in the 2020 Second Quarter compared to
$118.8 million in the 2019 Second Quarter. The remaining reduction
in revenue of $35.1 million is due to the adverse effects of the
COVID-19 pandemic.
- Net patient revenues from physical therapy operations was
approximately $72.3 million in the 2020 Second Quarter and $113.4
million in the 2019 Second Quarter. Included in net patient
revenues for the 2020 Second Quarter was $5.0 million related to
clinics opened or acquired after June 30, 2019 (“New Clinics”).
Included in net patient revenues for the 2019 Second Quarter was
$7.8 million related in clinics sold in the six months ended June
30, 2019 and 2020. During the 2019 six month period, the Company
sold its interest in a partnership that included 30 clinics and
during the 2020 six month period, the Company sold its interest in
11 closed clinics.
- The average net patient revenue per visit was $106.97 for the
2020 Second Quarter and $107.16 for the 2019 Second Quarter. Total
patient visits were 675,700 in the 2020 Second Quarter and
1,058,000 for the 2019 Second Quarter.
- Revenue from physical therapy management contracts was $1.6
million for the second quarter of 2020 and $2.2 million in 2019
comparable period.
- Revenue from the industrial injury prevention business was $9.7
million in the 2020 Second Quarter compared to $10.3 million in the
2019 Second Quarter.
- Other miscellaneous revenue was $0.3 million in the 2020 Second
Quarter and $0.5 million in the 2019 Second Quarter. Other
miscellaneous revenue include physical therapy services, including
athletic trainers, provided on-site such as for schools.
- Total operating costs, excluding closure costs, were $64.5
million in the 2020 Second Quarter, or 76.9% of net revenues, as
compared to $94.9 million in the 2019 Second Quarter, or 75.1% of
net revenues. Included in operating costs for the 2020 quarter was
$3.8 million related to New Clinics, of which $2.6 million related
the clinics acquired in September 2019 and February 2020. Adjusted
for the operating costs for clinics related to the partnership
interest sold in 2019 of $5.8 million, operating costs for clinic
opened or acquired prior to July 1, 2019 (“Mature Clinics”) were
reduced by $26.9 million in the Second Quarter 2020 compared to the
Second Quarter 2019 . In addition, operating costs related to the
industrial injury prevention business were reduced by $0.8 million
and related to management contracts $0.7 million. Closure costs of
$0.1 million include estimates of remaining lease obligations and
other costs. Total salaries and related costs, including physical
therapy operations and the industrial injury prevention business,
were 51.8% of net revenues in the 2020 Second Quarter versus 55.9%
in the 2019 Second Quarter. Rent, supplies, contract labor and
other costs as a percentage of net revenues were 24.2% in the 2020
Second Quarter versus 18.2% in the 2019 Second Quarter. The
provision for doubtful accounts as a percentage of net revenue was
0.9% in the 2020 Second Quarter and 1.0% in the 2019 Second
Quarter.
- Gross profit for the 2020 Second Quarter, excluding closure
costs, was $19.3 million, as compared to $31.4 million in the 2019
Second Quarter. The gross profit percentage, excluding closure
costs, was 23.1% of net revenue in the 2020 Second Quarter as
compared to 24.9% in the 2019 Second Quarter. The gross profit
percentage for the Company’s physical therapy clinics, excluding
closure costs, was 21.7% in the 2020 Second Quarter as compared to
24.7% in the 2019 Second Quarter. The gross profit percentage on
physical therapy management contracts was 26.9% in the 2020 Second
Quarter as compared to 15.4% in the 2019 Second Quarter. The gross
profit for the industrial injury prevention business was $3.2
million, or 32.9%, in the 2020 Second Quarter as compared to $3.0
million, or 29.2%, in the 2019 Second Quarter.
- Corporate office costs were $9.0 million in the 2020 Second
Quarter compared to $11.5 million in the 2019 Second Quarter.
Corporate office costs were 10.8% of net revenues for the 2020
Second Quarter as compared to 9.1% for the 2019 Second
Quarter.
- Operating income for the 2020 Second Quarter was $10.3 million
as compared to $19.9 million for the 2019 Second Quarter. Operating
income as a percentage of net revenue decreased from 15.7% in the
2019 period to 12.2% in 2020. For the 2020 Second Quarter,
operating income increased $6.2 million or 3.6% compared to the
first quarter of 2020. See discussion above related to effects of
COVID-19.
- Included in other income was the gain of $1.1 million in the
second quarter of 2020 resulting from the sale of 11 previously
closed clinics and, as previously disclosed, a gain of $5.8 million
in the second quarter of 2019 resulted from the sale of a
partnership interest which included 30 clinics. Also, included in
other income in the second quarter of 2020 was $7.9 of Relief
Funds. The Relief Funds do not have to be repaid and were used for
operations and offset of reduced revenues due to the COVID-19
pandemic.
- Interest expense was $653,000 in the 2020 Second Quarter and
$607,000 in the 2019 Second Quarter due to higher borrowings under
the Company’s revolving credit line.
- The provision for income tax was $3.9 million for the 2020
Second Quarter and $5.3 million for the 2019 Second Quarter. The
provision for income tax as a percentage of income before taxes
less net income attributable to non-controlling interest was 27.5%
for the 2020 Second Quarter and 26.7% for the 2019 Second
Quarter.
- Net income attributable to non-controlling interests (permanent
equity) was $1.5 million in the 2020 Second Quarter and $1.8
million in the 2019 Second Quarter. Net income attributable to
redeemable non-controlling interests (temporary equity) was $3.0
million in the 2020 Second Quarter and $3.4 million in the 2019
Second Quarter.
First Six Months 2020 Compared to First
Six Months 2019
- Reported net revenues in the 2020 Six Months was $196.6 million
as compared to $242.6 million in the 2019 Six Months. Adjusted for
the clinics sold in 2019 and 2020, net patient revenues were $195.6
million in the first half of 2020 as compared to $228.4 million in
the first half of 2019. The remaining reduction in revenue of $32.8
million is due to the adverse effects of the COVID-19
pandemic.
- Net patient revenues from physical therapy operations was
approximately $172.4 million in the 2020 Six Months and $220.0
million in the 2019 Six Months. Included in net patient revenues
for the 2020 Six Months was $9.1 million related to New Clinics.
Included in net patient revenues for the 2020 Six Months was $1.0
million related to clinics sold in the six months ended 2020.
Included in net patient revenues for the 2019 Six Months was $14.2
million related to clinics sold in the six months ended June 30,
2019 and 2020. During the 2019 six month period, the Company sold
its interest in a partnership with 30 clinics and during the 2020
six month period, the Company sold its interest in 11 closed
clinics.
- The average net patient revenue per visit was $104.70 for the
2020 Six Months and $106.83 for the 2019 Six Months. Total patient
visits were 1,646,700 in the first half of 2020 and 2,059,000 in
the first half of 2019.
- Revenue from physical therapy management contracts was $3.7
million for the 2020 Six Months and $4.4 million in 2019 Six
Months.
- Revenue from the industrial injury prevention business was
$19.5 million in the 2020 Six Months compared to $17.2 million in
the 2019 Six Months.
- Other miscellaneous revenue was $0.9 million in the 2020 Six
Months and $1.0 million in the 2019 Six Months. Other miscellaneous
revenue include physical therapy services, including athletic
trainers, provided on-site such as for schools.
- Total operating costs, excluding closure costs, were $157.8
million in the 2020 Six Months, or 80.3% of net revenues, as
compared to $184.5 million in the 2019 Six Months, or 76.0% of net
revenues. Included in operating costs for the 2020 Six Months was
$7.3 million related to New Clinics, of which $4.6 million related
the clinics acquired in September 2019 and February 2020. Adjusted
for the operating costs for clinics related to the partnership
interest sold in 2019 of $11.3 million, operating costs for Mature
Clinics were reduced by $24.1 million in the 2020 Six Months
compared to the 2019 Six Months and operating costs related to
management contracts decreased $0.7 million. Operating costs
related to the industrial injury prevention business increased $2.0
million. Closure costs of $3.8 million include estimates of
remaining lease obligations, write-off of goodwill and other costs
related to closed clinics. Total salaries and related costs,
including physical therapy operations and the industrial injury
prevention business, were 57.2% of net revenues in the 2020 Six
Months versus 56.4% in the 2019 Six Months. Rent, supplies,
contract labor and other costs as a percentage of net revenues were
22.0% in the 2020 Six Months versus 18.6% in the 2019 Six Months.
The provision for doubtful accounts as a percentage of net revenue
was 1.1% in the 2020 first six months and 1.0% in the 2019 first
six months.
- Gross profit for the 2020 Six Months, excluding closure costs,
was $38.8 million, as compared to $58.1 million in the 2019 Six
Months. The gross profit percentage, excluding closure costs, was
19.7% of net revenue in the 2020 Six Months as compared to 24.0% in
the 2019 Six Months. The gross profit percentage for the Company’s
physical therapy clinics, excluding closure costs, was 19.2% in the
2020 Six Months as compared to 23.9% in the 2019 Six Months. The
gross profit percentage on physical therapy management contracts
was 20.5% in the 2020 Six Months as compared to 16.9% in the 2019
Six Months. The gross profit for the industrial injury prevention
business was $4.8 million, or 24.8%, in the 2020 Six Months as
compared to $4.5 million, or 26.4%, in the 2019 Six Months.
- Corporate office costs were $20.7 million in the 2020 Six
Months compared to $22.8 million in the 2019 Six Months. Corporate
office costs were 10.5% of net revenues for the 2020 Six Months as
compared to 9.4% for the 2019 Six Months.
- Operating income for the 2020 Six Months was $14.3 million as
compared to $35.3 million for the 2019 Six Months. Operating income
as a percentage of net revenue decreased from 14.6% in the 2019
period to 7.3% in 2020 comparable period. See discussion above
related to effects of COVID-19.
- Included in other income was the gain of $1.1 million in the
2020 Six Months resulting from the sale of 11 previously closed
clinics and, as previously disclosed, a gain of $5.8 million in the
2019 Six Months resulted from the sale of a partnership interest
with 30 clinics. Also, included in other income in the 2020 Six
Months was $7.9 of Relief Funds. The Relief Funds do not have to be
repaid and were used for operations and offset of reduced revenues
due to the COVID-19 pandemic.
- Interest expense was $1.1 million in the 2020 Six Months and
$1.0 in the 2019 Six Months due to higher borrowings under the
Company’s revolving credit line.
- The provision for income tax was $4.2 million for the 2020 Six
Months and $8.0 million for the 2019 Six Months. The provision for
income tax as a percentage of income before taxes less net income
attributable to non-controlling interest was 27.1% for the 2020 Six
Months and 25.8% for the 2019 Six Months.
- Net income attributable to non-controlling interests (permanent
equity) was $2.0 million in the 2020 Six Months and $3.3 million in
the 2019 Six Months. Net income attributable to redeemable
non-controlling interests (temporary equity) was $4.8 million in
the 2020 Six Months and $5.8 million in the 2019 Six Months.
Medicare Accelerated and Advance
Payment Program (“MAAPP Funds”)
In response to the COVID-19 pandemic, the federal government
approved the CARES Act. The CARES Act allowed for qualified
healthcare providers to receive advanced payments under the
existing MAAPP Funds during the COVID-19 pandemic. Under this
program, healthcare providers could choose to receive advanced
payments for future Medicare services provided. The Company applied
for and received approval from Centers for Medicare & Medicaid
Services (“CMS”) in April 2020. The Company recorded these payments
as a liability until all performance obligations have been met as
the payments were made on behalf of patients before services were
provided. Currently, MAAPP funds received will be applied to future
Medicare billings commencing in August 2020, with all such
remaining amounts required to be repaid by November 2020. Beginning
November 2020, any unpaid balance will begin accruing interest.
Included in cash and cash equivalents and accrued liabilities at
June 30, 2020 is $12.9 million of MAAPP Funds.
Other Financial Measures
For the 2020 Second Quarter, the Company's Adjusted EBITDA was
$19.0 million and was $24.9 million in the 2019 Second Quarter. For
the 2020 Second Quarter, the Company's Adjusted EBITDA, excluding
Relief Funds, was $11.1 million.
For the 2020 Six Months, the Company's Adjusted EBITDA was $27.0
million compared to $40.5 million in 2019 Six Months. For the 2020
Six Months, the Company's Adjusted EBITDA, excluding Relief Funds,
was $19.1 million.
See definition, explanation and calculation of Adjusted EBITDA
in the schedule on pages 10 and 11.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “I recognize that
these past five months have been unprecedented and extremely
difficult for our nation, our communities, our schools and our
businesses. As a Company and a team, we have endeavored to be
responsive to the extraordinary demands that have resulted from
this COVID-19 pandemic. Many sacrifices have been made to position
our Company in the best possible way to continue forward
successfully. I am supremely grateful for the tenacity, courage and
the resilience of our partners, employees and leadership as we have
tried to make the best decisions to serve our patients while
maintaining a safe and healthy environment for all. These difficult
decisions along with the tireless work of so many have resulted in
positioning us well to continue our mission to serve our patients,
customers, employees and partners as we continue to navigate the
challenges posed by the ongoing pandemic.”
Larry McAfee, Chief Financial Officer, said, “Net cash flow has
been better than expected and as of the end of the second quarter
borrowings under our $125,000,000 bank credit line were paid down
to $33,000,000.”
Second Quarter 2020 Conference
Call
U.S. Physical Therapy's management will host a conference call
at 10:30 a.m. Eastern Time, 9:30 a.m. Central Time, on August 6,
2020 to discuss results for the Company's second quarter and six
months ended June 30, 2020, 2020. Interested parties may
participate in the call by dialing 1-888-335-5539 or 973-582-2857
and entering reservation number 9978188 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 6, 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:
- the multiple effects of the impact of public health crises and
epidemics/pandemics, such as the novel strain of COVID-19
(coronavirus) which the financial magnitude cannot be currently
estimated;
- changes as the result of government enacted national healthcare
reform;
- changes in Medicare rules and guidelines and reimbursement or
failure of our clinics to maintain their Medicare certification
and/or enrollment status;
- 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 and the successful integration of the operations
of the acquired businesses;
- impact on the business and cash reserves resulting from
retirement or resignation of key partners and resulting purchase of
their non controlling interests (minority interests)
- maintaining our information technology systems with adequate
safeguards to protect against cyber-attacks;
- a security breach of our or our third party vendors’
information technology systems may subject us to potential legal
action and reputational harm and may result in a violation of the
Health Insurance Portability and Accountability Act of 1996 of the
Health Information Technology for Economic and Clinical Health
Act;
- maintaining adequate internal controls;
- maintaining necessary insurance coverage;
- availability, terms, and use of capital; and
- weather and other seasonal factors.
See Risk Factors in Item 1A of our Annual Report on Form 10-K
for the year ended December 31, 2019 and the additional risk factor
disclosed in our Quarterly Report on Form 10-Q for the period ended
March 31, 2020 filed with the SEC on February 28, 2020 and May 21,
2020, respectively.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see the other sections of this report and our
other periodic reports filed with the Securities and Exchange
Commission (the “SEC”) for more information on these factors. Our
forward-looking statements represent our estimates and assumptions
only as of the date of this report. Except as required by law, we
are under no obligation to update any forward-looking statement,
regardless of the reason the statement may no longer be
accurate.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 554
outpatient physical therapy clinics (of which 8 are not currently
seeing patients) 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 29 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, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net patient revenues
$
72,279
$
113,363
$
172,405
$
220,013
Other revenues
11,578
13,010
24,169
22,591
Net revenues
83,857
126,373
196,574
242,604
Operating costs:
Salaries and related costs
43,429
70,669
112,433
136,936
Rent, supplies, contract labor and
other
20,311
23,026
43,220
45,070
Provision for doubtful accounts
739
1,240
2,100
2,446
Closure costs - lease and other
94
13
1,987
9
Closure costs - write-off of goodwill
-
-
1,859
-
Total operating costs
64,573
94,948
161,599
184,461
Gross profit
19,284
31,425
34,975
58,143
Corporate office costs
9,022
11,527
20,699
22,820
Operating income
10,262
19,898
14,276
35,323
Other income and expense
Relief Funds
7,959
-
7,959
-
Gain on sale of partnership interest and
clinics
1,073
5,823
1,073
5,823
Interest and other income, net
4
4
47
20
Interest expense - debt and other
(653
)
(607
)
(1,080
)
(965
)
Total other income and expense
8,383
5,220
7,999
4,878
Income before taxes
18,645
25,118
22,275
40,201
Provision for income taxes
3,882
5,318
4,174
8,026
Net income
14,763
19,800
18,101
32,175
Less: net income attributable to
non-controlling interests:
Non-controlling interests - permanent
equity
(1,535
)
(1,802
)
(2,061
)
(3,339
)
Redeemable non-controlling interests -
temporary equity
(2,996
)
(3,378
)
(4,792
)
(5,773
)
(4,531
)
(5,180
)
(6,853
)
(9,112
)
Net income attributable to USPH
shareholders
$
10,232
$
14,620
$
11,248
$
23,063
Basic and diluted earnings per share
attributable to USPH shareholders
$
0.99
$
0.85
$
1.19
$
1.24
Shares used in computation - basic and
diluted
12,843
12,767
12,820
12,738
Dividends declared per common share
$
-
$
0.27
$
0.32
$
0.54
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT SHARE
DATA)
(unaudited)
June 30, 2020
December 31, 2019
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
43,555
$
23,548
Patient accounts receivable, less
allowance for doubtful accounts of $2,470 and $2,698,
respectively
36,029
46,228
Accounts receivable - other
9,983
9,823
Other current assets
2,572
5,787
Total current assets
92,139
85,386
Fixed assets:
Furniture and equipment
55,914
54,942
Leasehold improvements
33,631
33,247
Fixed assets, gross
89,545
88,189
Less accumulated depreciation and
amortization
67,011
66,099
Fixed assets, net
22,534
22,090
Operating lease right-of-use assets
82,965
81,586
Goodwill
330,894
317,676
Other identifiable intangible assets,
net
54,895
52,588
Other assets
1,591
1,519
Total assets
$
585,018
$
560,845
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
1,802
$
2,494
Accrued expenses
51,325
30,855
Current portion of operating lease
liabilities
29,591
26,486
Current portion of notes payable
4,635
728
Total current liabilities
87,353
60,563
Notes payable, net of current portion
685
4,361
Revolving line of credit
33,000
46,000
Deferred taxes
8,930
10,071
Operating lease liabilities, net of
current portion
61,242
60,258
Other long-term liabilities
392
141
Total liabilities
191,602
181,394
Redeemable non-controlling interests -
temporary equity
136,728
137,750
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, 15,057,859 and 14,989,337 shares issued,
respectively
151
150
Additional paid-in capital
91,258
87,383
Retained earnings
195,473
184,352
Treasury stock at cost, 2,214,737
shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
255,254
240,257
Non-controlling interests - permanent
equity
1,434
1,444
Total USPH shareholders' equity and
non-controlling interests
256,688
241,701
Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests
$
585,018
$
560,845
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Six Months Ended
June 30, 2020
June 30, 2019
OPERATING ACTIVITIES
Net income including non-controlling
interests
$
18,101
$
32,175
Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities:
Depreciation and amortization
5,333
4,958
Provision for doubtful accounts
2,100
2,446
Equity-based awards compensation
expense
3,389
3,558
Deferred income taxes
(1,737
)
5,421
Loss on sale of fixed assets
429
-
Gain on sale of partnership interest, net
of tax
(1,073
)
(5,514
)
Write-off of goodwill - closed clinics
1,859
-
Other
-
21
Changes in operating assets and
liabilities:
Decrease (increase) in patient accounts
receivable
8,880
(4,956
)
Decrease (increase) in accounts receivable
- other
283
(2,468
)
Decrease (increase) in other assets
5,969
(2,759
)
Increase (decrease) in accounts payable
and accrued expenses
4,478
(3,560
)
Increase (decrease) in other
liabilities
345
(701
)
Net cash provided by operating
activities
48,356
28,621
INVESTING ACTIVITIES
Purchase of fixed assets
(4,628
)
(4,876
)
Purchase of majority interest in
businesses, net of cash acquired
(11,633
)
(18,239
)
Purchase of redeemable non-controlling
interest, temporary equity
(2,388
)
(2,053
)
Purchase of non-controlling interest,
permanent equity
(144
)
(138
)
Proceeds on sale of redeemable
non-controlling interest, temporary equity
19
-
Proceeds on sales of partnership interest
and clinics
674
-
Proceeds on sale of fixed assets
21
65
Net cash used in investing activities
(18,079
)
(25,241
)
FINANCING ACTIVITIES
Distributions to non-controlling
interests, permanent and temporary equity
(5,707
)
(7,934
)
Cash dividends paid to shareholders
(4,110
)
(6,891
)
Proceeds from revolving line of credit
99,000
80,000
Payments on revolving line of credit
(112,000
)
(56,000
)
Principal payments on notes payable
(314
)
(1,057
)
Medicare Accelerated and Advance Payment
Funds
12,861
-
Other
-
(7
)
Net cash provided by (used in) financing
activities
(10,270
)
8,111
Net increase in cash and cash
equivalents
20,007
11,491
Cash and cash equivalents - beginning of
period
23,548
23,368
Cash and cash equivalents - end of
period
$
43,555
$
34,859
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
57
$
4,339
Interest
$
944
$
902
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
300
$
4,000
Purchase of business - payable to common
shareholders of acquired business
$
-
$
502
Purchase of redeemable non-controlling
interest - notes payable
$
137
$
-
Payable due to purchase of redeemable
non-controlling interest
$
699
$
-
Receivables related to sale of partnership
interest
$
-
$
11,601
Note receivables related to sale of
partnership interest
$
386
$
2,780
Payable related to purchase of partnership
interest - settlement of redeemable non-controlling interest
$
-
$
2,200
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-GAAP measure, equals net income
attributable to USPH shareholders per the consolidated statement of
net income plus charges incurred for the closure costs and CFO
search less gain on sale of partnership interest and clinics, all
net of tax. The earnings per share from Operating Results also
excludes the impact of the revaluation of redeemable
non-controlling interest. In accordance with current accounting
guidance, the revaluation of redeemable non-controlling interest,
net of tax, is included in the earnings per basic and diluted share
calculation, although it is not included in net income but charged
directly to retained earnings.
Management uses Operating Results, which eliminates certain
items described above that can be subject to volatility and unusual
costs, as one of the principal measures to evaluate and monitor
financial performance period over period. Management believes that
Operating Results is useful information for investors to use in
comparing the Company's period-to-period results as well as for
comparing with other similar businesses since most do not have
mandatorily redeemable instruments and therefore have different
liability and equity structures.
Adjusted EBITDA is defined as net income attributable to USPH
shareholders before interest income, interest expense, taxes,
depreciation, amortization, equity-based awards compensation
expense and write-off of goodwill related to clinic closures.
Management believes reporting Adjusted EBITDA is useful information
for investors in comparing the Company’s period-to-period results
as well as comparing with similar businesses which report adjusted
EBITDA as defined by their company.
Operating Results and Adjusted EBITDA are not measures of
financial performance under GAAP. Adjusted EBITDA and Operating
Results should not be considered in isolation or as an alternative
to, or substitute for, net income attributable to USPH shareholders
presented in the consolidated financial statements.
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
10,232
$
14,620
$
11,248
$
23,063
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling
interest
3,344
(5,169
)
5,473
(9,830
)
Tax effect at statutory rate (federal and
state) of 26.25%
(878
)
1,356
(1,437
)
2,580
$
12,698
$
10,807
$
15,284
$
15,813
Earnings per share (basic and diluted)
$
0.99
$
0.85
$
1.19
$
1.24
Adjustments:
Charges incurred for CFO search
-
-
133
-
Closure costs
94
-
3,846
-
Gain on sale of partnership interest and
clinics
(1,073
)
(5,823
)
(1,073
)
(5,823
)
Relief Funds
(7,958
)
-
(7,958
)
-
Allocation to non-controlling interest
1,900
-
1,900
-
Revaluation of redeemable non-controlling
interest
(3,344
)
5,169
(5,473
)
9,830
Tax effect at statutory rate (federal and
state) of 26.25%
2,725
172
2,264
(1,052
)
Operating Results (without Relief
Funds)
$
5,042
$
10,325
$
8,923
$
18,768
Relief Funds
7,958
-
7,958
-
Tax effect at statutory rate (federal and
state) of 26.25%
(2,089
)
-
(2,089
)
-
Operating Results (including Relief
Funds)
$
10,911
$
10,325
$
14,792
$
18,768
Basic and diluted Operating Results
(without Relief Funds) per share
$
0.39
$
0.81
$
0.70
$
1.47
Basic and diluted Operating Results
(including Relief Funds) per share
$
0.85
$
0.81
$
1.15
$
1.47
Shares used in computation - basic and
diluted
12,843
12,767
12,820
12,738
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Net income attributable to USPH
shareholders
$
10,232
$
14,620
$
11,248
$
23,063
Adjustments:
Depreciation and amortization
2,726
2,520
5,333
4,920
Closure costs - write-off of goodwill
-
-
1,859
-
Relief Funds
(7,958
)
-
(7,958
)
-
Interest income
(4
)
(4
)
(47
)
(20
)
Interest expense - debt and other
653
607
1,080
965
Provision for income taxes
3,882
5,318
4,174
8,026
Equity-based awards compensation
expense
1,503
1,830
3,389
3,558
Adjusted EBITDA (without Relief Funds)
$
11,034
$
24,891
$
19,078
$
40,512
Relief Funds
7,958
-
7,958
-
Adjusted EBITDA
$
18,992
$
24,891
$
27,036
$
40,512
U.S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
RECAP OF CLINIC COUNT
Date
Number of Clinics
March 31, 2019
590
June 30, 2019
564
September 30, 2019
574
December 31, 2019
583
March 31, 2020
567
June 30, 2020
554
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005117/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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