Company Provides 2024 Guidance
U.S. Physical Therapy, Inc. (“USPH” or the “Company”) (NYSE:
USPH), a national operator of outpatient physical therapy clinics
and provider of industrial injury prevention services, today
reported results for the fourth quarter and the full year ended
December 31, 2023.
FINANCIAL HIGHLIGHTS
- Adjusted EBITDA (1), a non-Generally Accepted Accounting
Principles (“GAAP”) measure, was $77.7 million for the year ended
December 31, 2023 (“Full Year 2023”), a $4.1 million increase from
the year ended December 31, 2022 (“Full Year 2022").
- Operating Results (1), a non-GAAP measure, for Full Year 2023
were $36.3 million, an increase of $1.3 million from $35.0 million
for Full Year 2022. On a per share basis, Operating Results were
$2.56 in Full Year 2023 compared to $2.70 in Full Year 2022, with
the decrease attributable to the increase in shares outstanding
associated with the Company’s secondary offering completed in May
2023.
- Net income attributable to USPH’s shareholders (“USPH net
income”), a GAAP measure, was $28.2 million for Full Year 2023
compared to $32.2 million for Full Year 2022. USPH net income
included a non-cash impairment charge, prior to allocation to
minority interest and income taxes, of $17.5 million in the three
months ended December 31, 2023 (“Fourth Quarter 2023”) and $9.1
million in the three months ended December 31, 2022 (“Fourth
Quarter 2022”). In accordance with GAAP, the revaluation of
non-controlling interest, net of taxes, is not included in net
income but is charged directly to retained earnings; however, this
change is included in the computation of earnings per share.
Earnings per share for Full Year 2023 were $1.28 compared to $2.25
for Full Year 2022.
- Adjusted EBITDA for Fourth Quarter 2023 was $19.0 million, a
$1.1 million increase over Fourth Quarter 2022.
- Operating Results for Fourth Quarter 2023 were $8.9 million, a
$1.3 million increase over Fourth Quarter 2022.
- USPH net income for Fourth Quarter 2023 was $0.7 million
compared to $2.6 million for Fourth Quarter 2022, including the
non-cash impairment charges previously mentioned in both periods.
In accordance with GAAP, the revaluation of non-controlling
interest, net of taxes, is not included in net income but is
charged directly to retained earnings; however, this change is
included in the computation of earnings per share. Loss per share
for Fourth Quarter 2023 was $0.38 compared to $0.01 for Fourth
Quarter 2022.
- Total net revenue for Fourth Quarter 2023 increased $13.6
million, or 9.6%, to $154.8 million.
- Net rate per patient visit for Fourth Quarter 2023 was $103.68,
which has increased sequentially each quarter since the second
quarter of 2023.
- Average daily visits per clinic were 29.9 for the Fourth
Quarter 2023 and 30.0 for Full Year 2023, both record-high average
daily visits per clinic in the Company’s history for each
respective period. Total patient visits were 1,267,842 in Fourth
Quarter 2023, a 10.0% increase from Fourth Quarter 2022. Full Year
2023 patient visits were 5,005,426, an 11.6% increase over Full
Year 2022.
- Fourth Quarter 2023 gross profit was $30.5 million, a $2.7
million increase from Fourth Quarter 2022.
- During the Full Year 2023, the Company added 46 new clinics
through acquisitions and de novos, and closed 15 clinics bringing
its total clinic count to 671 as of December 31, 2023, as compared
to 640 clinics on December 31, 2022.
- The Company’s Board of Directors raised the Company’s quarterly
dividend rate from $0.43 per share to $0.44 per share, effectively
immediately, and declared a quarterly dividend for the first
quarter of 2024 at the higher rate.
- Management currently expects the Company’s Adjusted EBITDA for
2024 to be in the range of $80 million to $85 million. See
“Management Provides 2024 Guidance” below for more
information.
___________________________
(1)
See pages 12 and 13 of this release for
the definition and reconciliation of non-GAAP Adjusted EBITDA and
Operating Results to the most directly comparable GAAP measure.
MANAGEMENT’S COMMENTS
Chris Reading, Chief Executive Officer, said, “Our team finished
the year strong with record physical therapy volume for each
quarter of 2023 as well as the year. Injury prevention also
finished the year with some acceleration in both progress and
opportunity. Looking forward, we have a great balance sheet
bolstered by our capital raise in 2023 and you will see us put that
to good use this year attracting more partner-owners looking for a
great home for their teams and companies. Our partners across the
entirety of our Company make a huge difference for us and for that
we are all grateful. While we have been operating in a changing and
challenging environment, we have the people and the resources to
continue to grow.”
Carey Hendrickson, Chief Financial Officer, added, “We have
tremendous confidence in our team to produce EBITDA growth in 2024,
despite headwinds from the Medicare rate reduction, with continued
progress in rate negotiations, growth in volumes at our existing
clinics and a continued focus on cost efficiencies. We’ll also
benefit from a full year of operations from clinics we acquired in
2023 and a partial year of operations from acquisitions we expect
to complete in 2024.”
FOURTH QUARTER 2023 VERSUS FOURTH
QUARTER 2022
Additional supplemental tables of financial and performance
metrics are presented on page 14 of this release.
Physical Therapy Operations
Fourth Quarter Ended December
31,
Variance
2023
2022
$
%
(In thousands, except
percentages)
Revenue related to:
Mature Clinics (1)
$
112,721
$
111,066
$
1,655
1.5%
Clinic additions (2)
18,650
7,964
10,686
*
(6)
Clinics sold or closed (3)
81
1,116
(1,035)
*
(6)
Net patient revenue
131,452
120,146
11,306
9.4%
Other (4)
3,177
2,644
533
20.2%
Total
134,629
122,790
11,839
9.6%
Operating costs (4)
108,380
98,247
10,133
10.3%
Gross profit
$
26,249
$
24,543
$
1,706
7.0%
Financial and
operating metrics (not in thousands):
Net rate per patient visit (1)
$
103.68
$
104.28
$
(0.60)
(0.6)%
Patient visits (1)
1,267,842
1,152,139
115,703
10.0%
Average daily visits per clinic (1)
29.9
29.1
0.8
2.7%
Gross margin
19.5%
20.0%
Salaries and related costs per visit,
clinics (5)
$
59.72
$
60.04
$
(0.32)
(0.5)%
Operating costs per visit, clinics (5)
$
84.09
$
84.05
$
0.04
0.0%
___________________________
(1) See Glossary of Terms - Revenue
Metrics for definition.
(2) Clinic additions during the Full Year
2023 and Full Year 2022.
(3) Revenue from closed clinics includes
revenues from the 15 and 16 clinics closed during the Full Year
2023 and Full Year 2022, respectively.
(4) Includes revenues and costs from
management contracts.
(5) Excludes management contract
costs.
(6) Not meaningful.
Net revenue from physical therapy operations increased $11.8
million, or 9.6%, to $134.6 million for the Fourth Quarter 2023
from $122.8 million for the Fourth Quarter 2022. This increase was
primarily due to a record-high average daily visits per clinic for
a fourth quarter in the Company’s history of 29.9 visits, and an
increase in volume from the 31 net new clinics added since the
comparable prior year period, partially offset by a decrease in net
rate per patient visit. The number of patient visits increased
10.0% over the Fourth Quarter 2022, with visits at mature clinics
up 2.2%.
Net rate per patient visit was $103.68 for the Fourth Quarter
2023, sequentially improving from $102.03 in the second quarter of
2023 and $102.37 in the third quarter of 2023. This compares to a
$104.28 net rate per patient visit in the Fourth Quarter 2022. The
decrease in net rate in the Fourth Quarter 2023 compared to the
same period in 2022 was primarily due to the combined Medicare rate
reductions in 2022 and 2023. All other payor categories increased
2.1% on a combined basis as compared to the prior year.
Operating costs from physical therapy operations increased $10.1
million, or 10.3%, to $108.4 million in the Fourth Quarter 2023
from $98.2 million in the Fourth Quarter 2022 driven by costs
associated with the 31 net new clinics since the comparable prior
year period as well as increased patient visits at mature clinics.
Salaries and related costs per visit decreased to $59.72 in the
Fourth Quarter 2023 from $60.04 in the Fourth Quarter 2022 while
total operating costs per visit was roughly flat at $84.09 as
compared to $84.05 over the same periods, respectively. Operating
costs for mature clinics increased $2.4 million, or 2.7%, in the
Fourth Quarter 2023 as compared to the Fourth Quarter 2022.
Gross profit from physical therapy operations in the Fourth
Quarter 2023 increased $1.7 million, or 7.0%, to $26.2 million from
$24.5 million in the Fourth Quarter 2022. The gross profit margin
from physical therapy operations decreased slightly to 19.5% in the
Fourth Quarter 2023 from 20.0% in the Fourth Quarter 2022.
Industrial Injury Prevention Services
(“IIP”)
Fourth Quarter Ended December
31,
Variance
2023
2022
$
%
(In thousands, except
percentages)
Net revenue
$
20,172
$
18,392
$
1,780
9.7%
Operating costs
15,905
15,104
801
5.3%
Gross profit
$
4,267
$
3,288
$
979
29.8%
Gross margin
21.2%
17.9%
IIP revenues increased $1.8 million, or 9.7%, to $20.2 million
for the Fourth Quarter 2023 as compared to $18.4 million for the
Fourth Quarter 2022. IIP operating costs increased $0.8 million, or
5.3%, versus the comparable prior year period. Gross profit from
IIP operations in the Fourth Quarter 2023 increased $1.0 million,
or 29.8%, to $4.3 million from $3.3 million in the Fourth Quarter
2022. The gross profit margin from IIP operations increased to
21.2% in the Fourth Quarter 2023 from 17.9% in the Fourth Quarter
2022.
Corporate Office and Other Expenses
Corporate costs increased $2.0 million, or 16.6%, to $13.9
million in the Fourth Quarter 2023 from $11.9 million in Fourth
Quarter 2022 with an increase in support costs related to the
larger number of clinics and the timing of certain expenses.
A non-cash impairment charge of $17.5 million was recognized
during the Fourth Quarter 2023 related to a reporting unit in the
Company’s IIP segment. This compares to a $9.1 million non-cash
impairment charge in the comparable prior year period related to
the same reporting unit.
Operating loss was $0.9 million for the Fourth Quarter 2023
compared to operating income of $6.8 million for the Fourth Quarter
2022. Excluding the non-cash impairment charge of $17.5 million in
the Fourth Quarter 2023 and $9.1 million in the Fourth Quarter
2022, operating income was $16.6 million and $15.9 million over the
same periods, respectively.
Total other income (expense), net, was $1.0 million in the
Fourth Quarter 2023 compared to ($2.2) million in the Fourth
Quarter 2022.
- Interest expense, net of $0.9 million savings from an interest
rate swap arrangement, was $2.0 million for the Fourth Quarter 2023
compared to $2.2 million in the Fourth Quarter 2022. The interest
rate on the Company’s term loan was 4.7% for the Fourth Quarter
2023, with an all-in effective interest rate, including all
associated costs, of 5.4%.
- Interest income from investing excess cash (primarily proceeds
from the secondary offering sale of the Company’s stock completed
in May 2023) in a high-yield savings account was $1.6 million
during the Fourth Quarter 2023.
- The Company revalued the contingent earn-out consideration
related to certain acquisitions and recognized $1.7 million of
expense (an increase in the related liability) in the Fourth
Quarter 2023 compared to income of $0.5 million (a decrease in the
related liability) in the Fourth Quarter 2022.
- The revaluation of a put-right liability resulted in $2.9
million of income (a decrease in the related liability) for the
Fourth Quarter 2023 compared to $0.8 million of expense (an
increase in the related liability) for the Fourth Quarter 2022. The
put-right, which expires in November 2026, relates to the potential
future purchase of a company that provides physical therapy and
rehabilitation services to hospitals and other ancillary providers
in a distinct market area.
The provision for income taxes was $1.4 million in the Fourth
Quarter 2023 compared to $1.2 million during the Fourth Quarter
2022.
USPH Net Income and Non-GAAP Measures
Net income (loss) attributable to non-controlling interest
(temporary and permanent) was $1.9 million in the Fourth Quarter
2023 compared to ($0.7) million in the Fourth Quarter 2022.
USPH net income was $0.7 million for the Fourth Quarter 2023 as
compared to $2.6 million for the Fourth Quarter 2022 while loss per
share was $0.38 and $0.01 over the same periods, respectively. USPH
net income included a non-cash impairment charge, prior to
allocation to minority interest and income taxes, of $17.5 million
in the Fourth Quarter 2023 ($9.1 million net of $5.2 million
allocated to minority interest and $3.1 million of income tax) and
$9.1 million in the Fourth Quarter 2022 ($4.7 million net of $2.7
million allocated to minority interest and $1.6 million of income
tax).
Non-GAAP Adjusted EBITDA increased $1.1 million to $19.0 million
for the Fourth Quarter 2023 from $17.9 million for the Fourth
Quarter 2022, while non-GAAP Operating Results increased $1.3
million to $8.9 million, or $0.59 per share, in the Fourth Quarter
2023 from $7.5 million, or $0.58 per share, in the Fourth Quarter
2022. The increase in both non-GAAP Adjusted EBITDA and Operating
Results was primarily associated with clinic additions since the
comparable prior year period and increased volume at mature
clinics.
See pages 12 and 13 of this release for the definition and
reconciliation of Adjusted EBITDA and Operating Results to the most
directly comparable GAAP measure.
FULL YEAR 2023 VERSUS FULL YEAR
2022
Total net revenue for the Full Year 2023 increased $51.7
million, or 9.3%, to $604.8 million from $553.1 million for the
Full Year 2022 while operating costs increased $42.2 million, or
9.6%, to $483.3 million from $441.1 million over the same periods,
respectively. Gross profit for the Full Year 2023 was $121.5
million, or 20.1% of net revenue, compared to $112.0 million for
the Full Year 2022, or 20.3% of net revenue.
Revenues from physical therapy operations increased $50.5
million, or 10.6%, to $526.5 million in Full Year 2023 compared to
$476.1 million in Full Year 2022. This increase was primarily due
to a record-high average daily visits per clinic for a full year in
the Company’s history of 30.0 visits, and an increase in volume
from the 31 net new clinics added since the comparable prior year
period, partially offset by a decrease in net rate per patient
visit to $102.80 for Full Year 2023 from $103.63 for Full Year
2022. Gross profit from physical therapy operations increased $9.0
million, or 9.4%, to $105.1 million for Full Year 2023 from $96.1
million for Full Year 2022 while the gross profit margin from
physical therapy operations decreased slightly to 20.0% for Full
Year 2023 from 20.2% for Full Year 2022.
Revenues from IIP increased $1.2 million to $78.3 million for
Full Year 2023 from $77.1 million for Full Year 2022. Gross profit
from IIP operations increased $0.5 million, or 3.0%, to $16.4
million for Full Year 2023 from $16.0 million for Full Year 2022
while the gross profit margin from IIP operations increased
slightly to 21.0% for Full Year 2023 from 20.7% for Full Year
2022.
Corporate office costs were $52.0 million, or 8.6% of net
revenue, in Full Year 2023, compared to $46.1 million, or 8.3% of
net revenue, in Full Year 2022, with an increase in support costs
related to the larger number of clinics.
Operating income was $52.1 million for Full Year 2023 compared
to $56.8 million for Full Year 2022, including the non-cash
impairment charge of $17.5 million in Full Year 2023 and $9.1
million in Full Year 2022.
Other expenses increased $1.5 million to $2.7 million in 2023
from $1.2 million in 2022 primarily due to higher interest expense
and expense related to fair value adjustments of certain contingent
liabilities partially offset by income related to the revaluation
of a put liability and interest income from investing excess cash
associated with proceeds from the Company’s secondary offering
completed in May 2023.
The provision for income tax was $12.2 million for Full Year
2023 and for Full Year 2022. The effective tax rate was 30.1% and
27.4% over the same periods, respectively. The Full Year 2023
includes an adjustment of $1.0 million related to the return to
provision analysis for such period.
USPH net income was $28.2 million for the Full Year 2023 as
compared to $32.2 million for the Full Year 2022 while earnings per
share was $1.28 for Full Year 2023 compared to $2.25 for Full Year
2022. USPH net income included a non-cash impairment charge, prior
to allocation to minority interest and income taxes, of $17.5
million in the Fourth Quarter 2023 ($9.1 million net of $5.2
million allocated to minority interest and $3.1 million income tax)
and $9.1 million in the Fourth Quarter 2022 ($4.7 million net of
$2.7 million allocated to minority interest and $1.6 million income
tax).
Non-GAAP Adjusted EBITDA increased $4.1 million to $77.7 million
for Full Year 2023 from $73.7 million in Full Year 2022 while
non-GAAP Operating Results increased $1.2 million to $36.3 million,
or $2.56 per share, in Full Year 2023 from $35.0 million, or $2.70
per share, in the Full Year 2022. The increase in both non-GAAP
Adjusted EBITDA and Operating Results was primarily associated with
clinic additions since the comparable prior year period and
increased volume at mature clinics.
See pages 12 and 13 of this release for the definition and
reconciliation of Adjusted EBITDA and Operating Results to the most
directly comparable GAAP measure.
For additional information on full year 2023 results, please
refer to the Company’s Annual Report on Form 10-K which is expected
to be filed with the Securities and Exchange Commission on February
29, 2024.
BALANCE SHEET AND CASH
FLOW
Total cash and cash equivalents were $152.8 million as of
December 31, 2023, compared to $31.6 million as of December 31,
2022. Additionally, the Company had $144.4 million of outstanding
borrowings and $175.0 million in available credit under its credit
facilities as of December 31, 2023, compared to $179.1 million of
outstanding borrowings and $144.0 million in available credit under
its credit facilities as of December 31, 2022.
On May 30, 2023, the Company completed a secondary offering of
its common stock resulting in net proceeds of $163.6 million after
deducting fees associated with the transaction. A portion of the
net proceeds was used to repay the $35.0 million then outstanding
under the Company’s credit facility while the remainder is expected
to be used primarily for acquisitions. The Company’s cash is
currently invested in a high-yield savings account which generated
interest income of approximately $3.8 million in 2023.
ACQUISITION ACTIVITIES
The Company is in various stages of completing several
acquisitions that management expects to close in or shortly after
the first half of 2024. The Company’s strategy is to continue
acquiring outpatient physical therapy practices, develop outpatient
physical therapy clinics as satellites in existing partnerships,
and continue acquiring companies that provide or serve the
Company’s industrial injury prevention services.
QUARTERLY DIVIDEND
The Company’s Board of Directors increased the Company’s
quarterly dividend on February 27, 2024, from $0.43 per share to
$0.44 per share. The Board of Directors subsequently declared a
quarterly dividend of $0.44 per share payable on April 5, 2024, to
shareholders of record on March 12, 2024.
2024 EARNINGS GUIDANCE
Management expects the Company’s Adjusted EBITDA for 2024 to be
in the range of $80 million to $85 million. The previously
announced Medicare rate reduction of approximately 3.5% effective
January 1, 2024, is expected to reduce the Company’s revenue by
approximately $6.0 million in 2024 as compared to 2023, which
equates to an EBITDA reduction of approximately $5.3 million net of
non-controlling interests. Management expects to more than offset
the decreases in revenue and EBITDA related to the Medicare rate
reduction from:
- the full-year impact of rate negotiations in commercial and
other payor categories completed during 2023
- the partial-year impact of rate negotiations in commercial and
other payor categories expected to be completed during 2024
- volume increases at the Company’s existing clinics
- continued discipline in expense control
- full-year contribution from acquisitions completed in 2023;
and,
- partial-year impact of EBITDA from acquisitions expected to be
completed during or shortly after the first half of 2024.
As noted previously, the Company is currently in the process of
completing several acquisitions that are expected to close in or
shortly after the first half of 2024. The guidance range includes
the expected EBITDA contribution from such 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.
CONFERENCE CALL
INFORMATION
U.S. Physical Therapy’s management will host a conference call
at 10:30 a.m. ET / 9:30 a.m. CT, on February 29, 2023, to discuss
the Company’s financial results for the fourth quarter and year
ended December 31, 2023. Interested parties may participate in the
call by dialing (800) 267-6316 (Primary) or (203) 518-9783
(Alternate) and conference ID of USPHQ423. Please call
approximately 10 minutes before the call is scheduled to begin. To
listen to the live call, go to the Company’s website at
www.usph.com at least 15 minutes early to register, download and
install any necessary audio software. If you are unable to listen
live, a playback of the conference call can be accessed until May
9, 2024, at the Company’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 in Medicare rules and guidelines and reimbursement or
failure of our clinics to maintain their Medicare certification
and/or enrollment status;
- the impact of future public health crises and
epidemics/pandemics, such as was the case with the novel strain of
COVID-19 and its variants;
- revenue we receive from Medicare and Medicaid being subject to
potential retroactive reduction;
- 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;
- 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;
- 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;
- one of our acquisition agreements contains a put right related
to a future purchase of a majority interest in a separate
company;
- the impact of future vaccinations and/or testing mandates at
the federal, state and/or local level, which could have an adverse
impact on staffing, revenue, costs and the results of
operations;
- our debt and financial obligations could adversely affect our
financial condition, our ability to obtain future financing and our
ability to operate our business;
- changes as the result of government enacted national healthcare
reform;
- 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;
- revenue and earnings expectations;
- some of our acquisition agreements contain contingent
consideration, the value of which may impact future financial
results;
- legal actions, which could subject us to increased operating
costs and uninsured liabilities;
- general economic conditions, including but not limited to
inflationary and recessionary periods;
- actual or perceived events involving banking volatility or
limited liability, defaults or other adverse developments that
affect the U.S. or international financial systems, may result in
market wide liquidity problems which could have a material and
adverse impact on our available cash and results of
operations;
- our business depends on hiring, training, and retaining
qualified employees
- availability and cost of qualified physical therapists;
- competitive environment in the industrial injury prevention
services business, which could result in the termination or
non-renewal of contractual service arrangements and other adverse
financial consequences for that service line;
- our ability to identify and complete 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 interest (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 clients for which we perform management, industrial
injury prevention related services, and other services, as a breach
or termination of those contractual arrangements by such clients
could cause operating results to be less than expected;
- 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. For additional information regarding these and other
risks and uncertainties, that could cause actual results to differ
materially from those contained in our forward-looking statements,
please refer to “Risk Factors” in our Annual Report on Form 10-K
for the year ended December 31, 2022, filed with the Securities and
Exchange Commission (“SEC”) on February 28, 2023 and any risk
factors contained in subsequent quarterly and annual reports we
file with the SEC. 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 as a result of new information, future
events, or otherwise, except as required by law.
GLOSSARY OF TERMS – REVENUE
METRICS
Mature clinics are clinics opened
or acquired prior to January 1, 2022, and are still operating as of
the balance sheet date.
Net rate per patient visit is net
patient revenue related to our physical therapy operations divided
by total number of patient visits (defined below) during the
periods presented.
Patient visits is the number of
unique patient visits during the periods presented.
Average daily visits per clinic is
patient visits divided by the number of days in which normal
business operations were conducted during the periods presented and
further divided by the average number of clinics in operation
during the periods presented.
ABOUT U.S. PHYSICAL THERAPY,
INC.
Founded in 1990, U.S. Physical Therapy, Inc. currently operates
673 outpatient physical therapy clinics in 42 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 42 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 AMOUNTS)
Fourth Quarter Ended December
31,
For the Year Ended December
31,
2023
2022
2023
2022
Net patient revenue
$
131,452
$
120,146
$
514,556
$
464,590
Other revenue
23,349
21,036
90,246
88,554
Net revenue
154,801
141,182
604,802
553,144
Operating cost:
Salaries and related costs
90,633
82,317
353,390
319,191
Rent, supplies, contract labor and
other
32,080
29,678
123,731
116,381
Provision for credit losses
1,572
1,356
6,172
5,548
Total operating cost
124,285
113,351
483,293
441,120
Gross profit
30,516
27,831
121,509
112,024
Corporate office costs
13,901
11,925
51,953
46,111
Impairment of goodwill and other
intangible assets
17,495
9,112
17,495
9,112
Operating (loss) income
(880)
6,794
52,061
56,801
Other (expense) income
Interest expense, debt and other
(2,010)
(2,239)
(9,303)
(5,779)
Interest income from investments
1,583
-
3,774
-
Change in fair value of contingent
earn-out consideration
(1,747)
520
(1,550)
2,520
Change in revaluation of put-right
liability
2,926
(776)
2,582
(5)
Equity in earnings of unconsolidated
affiliate
149
192
955
1,175
Relief Funds
-
-
467
-
Other
85
69
390
859
Total other (expense) income
986
(2,234)
(2,685)
(1,230)
(Loss) income before taxes
106
4,560
49,376
55,571
Provision for income taxes
1,399
1,212
12,156
12,164
Net (loss) income
(1,293)
3,348
37,220
43,407
Less: Net (income) loss attributable to
non-controlling interest:
Redeemable non-controlling interest -
temporary equity
3,190
318
(4,426)
(6,902)
Non-controlling interest - permanent
equity
(1,241)
(1,059)
(4,555)
(4,347)
1,949
(741)
(8,981)
(11,249)
Net income attributable to USPH
shareholders
$
656
$
2,607
$
28,239
$
32,158
Basic and diluted (loss) earnings per
share attributable to USPH shareholders (1)
$
(0.38)
$
(0.01)
$
1.28
$
2.25
Shares used in computation - basic and
diluted
14,987
13,002
14,188
12,985
Dividends declared per common share
$
0.43
$
0.41
$
1.72
$
1.64
(1) See page 13 of this press release for
the calculation of basic and diluted earnings per share.
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(IN THOUSANDS)
Fourth Quarter Ended December
31,
For the Year Ended December
31,
2023
2022
2023
2022
Net (loss) income
$
(1,293)
$
3,348
$
37,220
$
43,407
Other comprehensive loss
Unrealized (loss) gain on cash flow
hedge
(3,982)
(564)
(1,642)
5,378
Tax effect at statutory rate (federal and
state)
1,017
144
420
(1,374)
Comprehensive income (loss)
$
(4,258)
$
2,928
$
35,998
$
47,411
Comprehensive income (loss) attributable
to non-controlling interest
1,949
(741)
(8,981)
(11,249)
Comprehensive income (loss) attributable
to USPH shareholders
$
(2,309)
$
2,187
$
27,017
$
36,162
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
(IN THOUSANDS, EXCEPT SHARES
AND PER SHARE AMOUNTS)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
152,825
$
31,594
Patient accounts receivable, less
provision for credit losses of $2,736 and $2,829, respectively
51,866
51,934
Accounts receivable - other
17,854
16,671
Other current assets
10,830
11,067
Total current assets
233,375
111,266
Fixed assets:
Furniture and equipment
63,982
62,074
Leasehold improvements
46,941
42,877
Fixed assets, gross
110,923
104,951
Less accumulated depreciation and
amortization
(84,821)
(80,203)
Fixed assets, net
26,102
24,748
Operating lease right-of-use assets
103,431
103,004
Investment in unconsolidated affiliate
12,256
12,131
Goodwill
509,571
494,101
Other identifiable intangible assets,
net
109,682
108,755
Other assets
2,821
4,149
Total assets
$
997,238
$
858,154
LIABILITIES, REDEEMABLE
NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND
NON-CONTROLLING INTEREST
Current liabilities:
Accounts payable - trade
$
3,898
$
3,300
Accounts payable - due to seller of
acquired business
-
3,204
Accrued expenses
55,344
37,413
Current portion of operating lease
liabilities
35,252
33,709
Current portion of term loan and notes
payable
7,691
7,863
Total current liabilities
102,185
85,489
Notes payable, net of current portion
1,289
1,913
Revolving facility
31,000
Term loan, net of current portion and
deferred financing costs
137,702
142,918
Deferred taxes
24,815
21,303
Operating lease liabilities, net of
current portion
76,653
77,934
Other long-term liabilities
2,356
13,029
Total liabilities
345,000
373,586
Redeemable non-controlling interest -
temporary equity
174,828
167,515
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, 17,202,291 and 15,216,326 shares issued,
respectively
172
152
Additional paid-in capital
281,096
110,317
Accumulated other comprehensive gain
2,782
4,004
Retained earnings
223,772
232,948
Treasury stock at cost, 2,214,737
shares
(31,628)
(31,628)
Total USPH shareholders’ equity
476,194
315,793
Non-controlling interest - permanent
equity
1,216
1,260
Total USPH shareholders' equity and
non-controlling interest - permanent equity
477,410
317,053
Total liabilities, redeemable
non-controlling interest, USPH shareholders' equity and
non-controlling interest - permanent equity
$
997,238
$
858,154
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(IN THOUSANDS)
For the Year Ended
December 31, 2023
December 31, 2022
OPERATING ACTIVITIES
Net income including non-controlling
interest
$
37,220
$
43,407
Adjustments to reconcile net income
including non-controlling interest to net cash provided by
operating activities:
Depreciation and amortization
15,695
14,743
Provision for credit losses
6,172
5,548
Equity-based awards compensation
expense
7,236
7,264
Amortization of debt issue costs
420
305
Change in deferred income taxes
4,490
4,309
Change in revaluation of put-right
liability
(2,582)
5
Change in fair value of contingent
earn-out consideration
1,550
(2,520)
Equity of earnings in unconsolidated
affiliate
(955)
(1,175)
Loss (gain) on sale of clinics and fixed
assets
166
(643)
Impairment of goodwill and other
intangible assets
17,495
9,112
Other
-
(83)
Changes in operating assets and
liabilities:
Increase in patient accounts
receivable
(5,645)
(10,279)
Increase in accounts receivable -
other
(356)
(307)
Increase (decrease) in other current and
long-term assets
(197)
(5,940)
Decrease (increase) in accounts payable
and accrued expenses
15
(7,755)
Decrease (increase) in other long-term
liabilities
1,254
2,546
Net cash provided by operating
activities
81,978
58,537
INVESTING ACTIVITIES
Purchase of fixed assets
(9,294)
(8,248)
Purchase of majority interest in
businesses, net of cash acquired
(26,582)
(59,788)
Purchase of redeemable non-controlling
interest, temporary equity
(10,986)
(14,987)
Purchase of non-controlling interest,
permanent equity
(281)
(280)
Proceeds on sale of non-controlling
interest, permanent equity
102
-
Proceeds on sale of partnership interest -
redeemable non-controlling interest, temporary equity
875
402
Distributions from unconsolidated
affiliate
830
1,259
Proceeds on sale of partnership interest,
clinics and fixed assets
-
373
Other
321
-
Net cash used in investing activities
(45,015)
(81,269)
FINANCING ACTIVITIES
Proceeds from issuance of common stock
pursuant to the secondary public offering, net of issuance
costs
163,646
-
Proceeds from revolving facility
24,000
101,000
Distributions to non-controlling interest,
permanent and temporary equity
(16,100)
(15,348)
Cash dividends paid to shareholders
(24,128)
(21,321)
Payments on revolving facility
(55,000)
(184,000)
Principal payments on notes payable
(4,400)
(930)
Payments on term loan
(3,750)
(1,875)
Proceeds from term loan
-
150,000
Payment of deferred financing costs
-
(1,779)
Payment of Medicare Accelerated and
Advance Funds
-
-
Other
-
12
Net cash provided by financing
activities
84,268
25,759
Net increase in cash and cash
equivalents
121,231
3,027
Cash and cash equivalents - beginning of
period
31,594
28,567
Cash and cash equivalents - end of
period
$
152,825
$
31,594
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes
$
4,926
$
7,615
Interest paid
$
8,655
$
5,687
Non-cash investing and financing
transactions during the period:
Purchase of businesses - seller financing
portion
$
1,815
$
1,574
Liabilities assumed associated with a
purchase of a business
524
-
Notes payable related to purchase of
redeemable non-controlling interest, temporary equity
1,087
1,074
Notes payable related to the purchase of
non-controlling interest, permanent equity
200
296
Notes receivable related to sale of
redeemable non-controlling interest, temporary equity
4,136
1,580
Notes receivable related to the sale of
non-controlling interest, permanent equity
$
458
$
-
U. S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES ADJUSTED EBITDA AND OPERATING RESULTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following tables provide details of the basic and diluted
earnings per share computation and reconcile net income
attributable to USPH shareholders calculated in accordance with
GAAP to Adjusted EBITDA and Operating Results (non-GAAP measures).
Management believes providing Adjusted EBITDA and Operating Results
to investors is useful information for comparing the Company's
period-to-period results.
Adjusted EBITDA, a non-GAAP measure, is defined as net income
attributable to USPH shareholders before interest income, interest
expense, taxes, depreciation, amortization, non-cash asset
impairment charge, change in fair value of contingent earn-out
consideration, Relief Funds, changes in revaluation of put-right
liability, equity-based awards compensation expense, and related
portions for non-controlling interests.
Operating Results, a non-GAAP measure, equals net income
attributable to USPH shareholders less non-cash asset impairment
charge, changes in revaluation of put-right liability, Relief
Funds, changes in fair value of contingent earn-out consideration,
and any allocations to non-controlling interests, all net of taxes.
Operating Results per share also exclude the impact of the
revaluation of redeemable non-controlling interest and the
associated tax impact.
Management uses Adjusted EBITDA and Operating Results, which
eliminate certain items described above that can be subject to
volatility and unusual costs, as the principal measures to evaluate
and monitor financial performance period over period. Management
believes that Adjusted EBITDA and Operating Results are useful
measures 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.
Adjusted EBITDA and Operating Results 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
ADJUSTED EBITDA, OPERATING
RESULTS AND EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
Fourth Quarter Ended December
31,
For the Year Ended December
31,
2023
2022
2023
2022
(In thousands, except per
share data)
Adjusted EBITDA
(a non-GAAP measure)
Net income attributable to USPH
shareholders
$
656
$
2,607
$
28,239
$
32,158
Adjustments:
Provision for income taxes
1,399
1,212
12,156
12,164
Depreciation and amortization
4,113
3,793
15,695
14,743
Interest expense, debt and other, net
2,010
2,239
9,303
5,779
Interest income from investments
(1,583)
-
(3,774)
-
Impairment of goodwill and other
intangible assets
17,495
9,112
17,495
9,112
Equity-based awards compensation
expense
1,785
1,802
7,236
7,264
Change in revaluation of put-right
liability
(2,926)
776
(2,582)
5
Change in fair value of contingent
earn-out consideration
1,747
(520)
1,550
(2,520)
Relief Funds
-
-
(467)
-
Other income
(85)
(69)
(390)
(859)
Allocation to non-controlling
interests
(5,625)
(3,098)
(6,744)
(4,185)
$
18,986
$
17,854
$
77,717
$
73,661
Operating Results
(a non-GAAP measure)
Net income attributable to USPH
shareholders
$
656
$
2,607
$
28,239
$
32,158
Adjustments:
Impairment of goodwill and other
intangible assets
17,495
9,112
17,495
9,112
Change in fair value of contingent
earn-out consideration
1,747
(520)
1,550
(2,520)
Change in revaluation of put-right
liability
(2,926)
776
(2,582)
5
Relief Funds
-
-
(467)
-
Allocation to non-controlling interest
(5,249)
(2,734)
(5,215)
(2,734)
Tax effect at statutory rate (federal and
state)
(2,828)
(1,695)
(2,755)
(987)
$
8,895
$
7,546
$
36,265
$
35,034
Operating Results per share (a non-GAAP
measure)
$
0.59
$
0.58
$
2.56
$
2.70
Earnings per
share
Computation of earnings per share - USPH
shareholders:
Net income attributable to USPH
shareholders
$
656
$
2,607
$
28,239
$
32,158
Charges to retained earnings:
Revaluation of redeemable non-controlling
interest
(8,577)
(3,697)
(13,565)
(3,890)
Tax effect at statutory rate (federal and
state)
2,191
945
3,466
994
$
(5,730)
$
(145)
$
18,140
$
29,262
Earnings per share (basic and diluted)
$
(0.38)
$
(0.01)
$
1.28
$
2.25
Shares used in computation - basic and
diluted
14,987
13,002
14,188
12,985
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES
REVENUE METRICS
Number of Clinics
Net Rate Per Patient
Visit (1)
Patient Visits (1)
Average Daily Visits
Per Clinic (1)
2023
2022
2023
2022
2023
2022
2023
2022
First quarter
647
601
$103.12
$103.00
1,227,490
1,063,519
29.8
27.9
Second quarter
656
608
$102.03
$103.18
1,267,140
1,145,554
30.4
29.5
Third quarter
672
614
$102.37
$104.01
1,242,954
1,122,070
29.7
28.8
Fourth quarter
671
640
$103.68
$104.28
1,267,842
1,152,139
29.9
29.1
Year
671
640
$102.80
$103.63
5,005,426
4,483,282
30.0
28.7
(1) See definition of the metrics above in
the Glossary of Terms – Revenue Metrics on page 7.
Clinic Count Roll Forward
Fourth Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Number of clinics, beginning of period
672
614
640
591
Additions
6
32
46
65
Closed or sold
(7)
(6)
(15)
(16)
Number of clinics, end of period
671
640
671
640
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228144354/en/
U.S. Physical Therapy, Inc. Carey Hendrickson, Chief Financial
Officer email: chendrickson@usph.com
Chris Reading, Chief Executive Officer (713) 297-7000
Three Part Advisors Joe Noyons (817) 778-8424
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