Full Press Release Details
U.S. Physical Therapy, Inc.
Carey Hendrickson, Chief Financial Officer
Email: Chendrickson@usph.com
Chris Reading, Chief Executive Officer
U.S. Physical Therapy Reports
Second Quarter 2021 Results
Management Raises Earnings Guidance
Company Increases Quarterly Dividend
Houston, TX, August 5, 2021 -
U.S. Physical Therapy, Inc. ("USPH" or the "Company") (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention services, today reported results for the second quarter and six months ended
June 30, 2021 ("2021 Second Quarter" and "2021 Six Months", respectively).
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| August 5, 2021 |
SUMMARY OF 2021 SECOND QUARTER AND SIX MONTHS RESULTS
For the 2021 Second Quarter, USPH's Operating Results was $12.4 million, or $0.96 per diluted share, an increase
of 30.5% as compared to $9.5 million (inclusive of Relief Funds), or $0.74 per diluted share, for the 2020 Second Quarter. Operating Results per diluted share for the 2021 Second Quarter was also higher than the $0.81 per diluted share for
the pre-pandemic 2019 Second Quarter by $0.15, or 18.5%. For the six months ended June 30, 2021 ("2021 Six Months"), USPH's Operating Results was $20.6 million, or $1.60 per diluted share, an increase of 54.0%, as compared to $13.4 million,
or $1.04 per diluted share, for the six months ended June 30, 2020 ("2020 Six Months"). Operating Results per diluted share for the 2021 Six Months was also higher than the $1.47 per diluted share for the six months ended June 30, 2019
("2019 Six Months) by $0.13, or 8.8%. Operating Results, a non-Generally Accepted Accounting Principles ("GAAP") measure, equals net income attributable to USPH diluted shareholders per the consolidated statements of income less gain on sale
of partnership interests and clinics plus charges incurred for clinic closure costs and expenses related to CFO transition, all net of taxes. Also, Operating Results earnings per diluted share excludes the impact of the revaluation of
redeemable non-controlling interest and the associated tax impact. See tables on pages 13 and 14.
For the 2021 Second Quarter, USPH's net income attributable to its diluted shareholders was $12.4 million, as
compared to $10.2 million for the 2020 Second Quarter and $14.6 million for the 2019 Second Quarter, which includes a $5.8 million gain on the sale of the Company's interest in a physical therapy partnership on June 30, 2019. For the 2021
Six Months, USPH's net income attributable to its diluted shareholders was $20.6 million, as compared to $11.2 million for the 2020 Six Months and $23.0 million for the 2019 Six Months. Inclusive of the charge or credit for revaluation of
non-controlling interest, net of taxes, used to compute diluted earnings per diluted share in accordance with GAAP, the amount is $10.5 million, or $0.82 per diluted share, for the 2021 Second Quarter as compared to $12.7 million, or $0.99
per diluted share, for the 2020 Second Quarter, and $0.85 per diluted share for the 2019 Second Quarter. Inclusive of the charge or credit for revaluation of redeemable non-controlling interest, net of taxes, used to compute diluted earnings
per diluted share in accordance with GAAP, the amount is $13.3 million, or $1.03 per diluted share, for the 2021 Six Months as compared to $15.3 million, or $1.19 per diluted share, for the 2020 Six Months, and $15.8 million or $1.24 per
diluted share for the 2019 Six Months. In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest, net of taxes, is not included in net income but charged directly to retained earnings; however,
the charge or credit for this change is included in the earnings per basic and diluted share calculation. See the schedules on pages 15 and 16 for the computation of earnings per diluted share. In 2020, the valuation of redeemable
non-controlling interests decreased due to the results associated with the pandemic, therefore resulting in a credit to retained earnings. In 2021 and 2019, the valuations increased therefore there was a charge to retained earnings.
As previously disclosed in a series of filings with the SEC and further described in detail
in our Quarterly Reports on Form 10-Q for the first three quarters of 2020 and our Annual Report on Form 10-K, the Company's results were negatively impacted by the effects of the COVID-19 pandemic in the 2020. For 2021 periods as compared to
2020 periods, the increase in revenues and expenses are largely due to the Company returning to pre-pandemic volumes.
| U.S. Physical Therapy Press Release | Page 3 |
| August 5, 2021 |
Second Quarter 2021 Compared to Second Quarter 2020
| Three Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Revenue related to Mature Clinics | $ | 105,223 | $ | 69,567 | ||||
| Revenue related to 2021 Clinic Additions | 2,458 | - | ||||||
| Revenue related to 2020 Clinic Additions | 5,531 | 1,952 | ||||||
| Revenue from clinics sold or closed in 2021 | 24 | 102 | ||||||
| Revenue from clinics sold or closed in 2020 | 2 | 658 | ||||||
| Net patient revenues from physical therapy operations | 113,238 | 72,279 | ||||||
| Other revenue | 918 | 328 | ||||||
| Revenue from physical therapy operations | 114,156 | 72,607 | ||||||
| Management contract revenue | 2,739 | 1,592 | ||||||
| Industrial injury prevention services | 10,033 | 9,658 | ||||||
| Total Revenue | $ | 126,928 | $ | 83,857 |
| Three Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Operating costs related to Mature Clinics | $ | 75,988 | $ | 53,767 | ||||
| Operating costs related to 2021 Clinic Additions | 2,019 | - | ||||||
| Operating costs related to 2020 Clinic Additions | 4,934 | 1,513 | ||||||
| Operating costs related to clinics sold or closed in 2021 | (2 | ) | 132 | |||||
| Operating costs related to clinics sold or closed in 2020 | 14 | 1,425 | ||||||
| Physical therapy operations | 82,953 | 56,837 | ||||||
| Physical therapy management contracts | 2,202 | 1,163 | ||||||
| Industrial injury prevention services | 7,491 | 6,479 | ||||||
| $ | 92,646 | $ | 64,479 |
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| August 5, 2021 |
| Three Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Gross profit, excluding closure costs: | ||||||||
| Physical therapy operations | $ | 31,203 | $ | 15,770 | ||||
| Management contracts | 536 | 429 | ||||||
| Industrial injury prevention services | 2,543 | 3,179 | ||||||
| Gross profit, excluding closure costs | $ | 34,282 | $ | 19,378 | ||||
| Physical therapy operations - closure costs | (22 | ) | 94 | |||||
| Gross profit | $ | 34,304 | $ | 19,284 |
| Three Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Income before taxes | $ | 22,039 | $ | 18,645 | ||||
| Less: net income attributable to non-controlling interests: | ||||||||
| Redeemable non-controlling interests - temporary equity | (3,611 | ) | (2,996 | ) | ||||
| Non-controlling interests - permanent equity | (1,425 | ) | (1,535 | ) | ||||
| $ | (5,036 | ) | $ | (4,531 | ) | |||
| Income before taxes less net income attributable to non-controlling interests | $ | 17,003 | $ | 14,114 | ||||
| Provision for income taxes | $ | 4,567 | $ | 3,882 | ||||
| Percentage | 26.9 | % | 27.5 | % |
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| August 5, 2021 |
2021 Six Months Compared to 2020 Six Months
| For the Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Revenue related to Mature Clinics | $ | 199,068 | $ | 165,277 | ||||
| Revenue related to 2021 Clinic Additions | 2,549 | - | ||||||
| Revenue related to 2020 Clinic Additions | 10,732 | 2,930 | ||||||
| Revenue from clinics sold or closed in 2021 | 141 | 333 | ||||||
| Revenue from clinics sold or closed in 2020 | 2 | 3,865 | ||||||
| Net patient revenues from physical therapy operations | 212,492 | 172,405 | ||||||
| Other revenue | 1,464 | 895 | ||||||
| Revenue from physical therapy operations | 213,956 | 173,300 | ||||||
| Management contract revenue | 5,297 | 3,740 | ||||||
| Industrial injury prevention services | 20,043 | 19,534 | ||||||
| Total Revenue | $ | 239,296 | $ | 196,574 |
| For the Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Operating costs related to Mature Clinics | $ | 147,975 | $ | 132,591 | ||||
| Operating costs related to 2021 Clinic Additions | 2,161 | - | ||||||
| Operating costs related to 2020 Clinic Additions | 9,569 | 2,272 | ||||||
| Operating costs related to clinics sold or closed in 2021 | 154 | 395 | ||||||
| Operating costs related to clinics sold or closed in 2020 | (4 | ) | 4,829 | |||||
| Physical therapy operations | 159,855 | 140,087 | ||||||
| Physical therapy management contracts | 4,448 | 2,975 | ||||||
| Industrial injury prevention services | 14,778 | 14,691 | ||||||
| $ | 179,081 | $ | 157,753 |
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| August 5, 2021 |
| For the Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Gross profit, excluding closure costs: | ||||||||
| Physical therapy operations | $ | 54,101 | $ | 33,213 | ||||
| Management contracts | 849 | 765 | ||||||
| Industrial injury prevention services | 5,265 | 4,843 | ||||||
| Gross profit, excluding closure costs | $ | 60,215 | $ | 38,821 | ||||
| Physical therapy operations - closure costs | 15 | 3,846 | ||||||
| Gross profit | $ | 60,200 | $ | 34,975 |
| For the Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Income before taxes | $ | 36,869 | $ | 22,275 | ||||
| Less: net income attributable to non-controlling interests: | ||||||||
| Non-controlling interests - permanent equity | (6,064 | ) | (4,792 | ) | ||||
| Redeemable non-controlling interests - temporary equity | (2,685 | ) | (2,061 | ) | ||||
| $ | (8,749 | ) | $ | (6,853 | ) | |||
| Income before taxes less net income attributable to non-controlling interests | $ | 28,120 | $ | 15,422 | ||||
| Provision for income taxes | $ | 7,511 | $ | 4,174 | ||||
| Percentage | 26.7 | % | 27.1 | % |
| U.S. Physical Therapy Press Release | Page 7 |
| August 5, 2021 |
Medicare Accelerated and Advance Payment Program ("MAAPP Funds")
In response to the COVID-19 pandemic, the federal government approved the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act allowed for qualified healthcare providers to receive advanced payments under the MAAPP Funds
during the COVID-19 pandemic. Under this program, healthcare providers could choose to receive advanced payments for future Medicare services provided. The Company applied for and received approval from Centers for Medicare & Medicaid Services
("CMS") in April 2020. The Company recorded the $14.1 million in advance payments received as a liability. During the first quarter of 2021, the Company repaid the MAAPP Funds of $14.1 million rather than applying them to future services performed.
On March 27, 2020, the CARES Act was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including $100.0 billion in appropriations for the Public
Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to the coronavirus, and for reimbursing eligible health care providers for lost revenues and health care
related expenses that are attributable to COVID-19.
Through December 31, 2020, the Company's consolidated subsidiaries received approximately $13.5 million of payments under the CARES Act ("Relief Funds"). Under the Company's accounting policy, these payments were recorded as Other income - Relief
Funds. These funds are not required to be repaid upon attestation and compliance with certain terms and conditions, which could change materially based on evolving grant compliance provisions and guidance provided by the U.S. Department of Health and
Human Services. Currently, the Company can attest and comply with the terms and conditions. The Company will continue to monitor the evolving guidelines and may record adjustments as additional information is released. There were no Relief Funds
received in the 2021 Six Months.
Other Financial Measures
For the 2021 Second Quarter, the Company's Adjusted EBITDA was $21.8 million, an increase of $2.8 million, or 14.5%,
compared to $19.0 million for the 2020 Second Quarter, inclusive of Relief Funds and an increase of $2.7 million, or 14.1%, compared to $19.1 million for the 2019 Second Quarter. For the 2021 Six Months, the Company's Adjusted EBITDA was $37.4
million compared to $27.0 million for the 2020 Six Months inclusive of Relief Funds, and $34.7 million for the 2019 Six Months. See definition, explanation and calculation of Adjusted EBITDA in the schedule on pages 13 and 14.
Acquisition in Second Quarter 2021
As previously reported, the Company acquired a 65% interest in an eight-clinic physical therapy practice at the end of the
2021 Second Quarter with the practice founder retaining 35%. The purchase price was approximately $10.3 million, of which $9.0 million was paid in cash, $1.0 million is payable based on certain criteria and $0.3 million is in a note payable. The
business generates $7.3 million in annual revenue and has approximately 65,000 annual patient visits. The Company's strategy is to continue acquiring multi-clinic outpatient physical therapy practices, to develop outpatient physical therapy clinics
as satellites in existing partnerships and to continue acquiring companies that provide industrial injury prevention services.
In response to the Company's strong performance thus far in 2021 and confidence in its future performance, the Company's Board of Directors increased the Company's quarterly dividend on August 3, 2021, from $0.35 per share to $0.38 per share, an
increase of 8.6%. The Board of Directors subsequently declared a quarterly dividend of $0.38 per share which will be paid on September 17, 2021 to shareholders of record as of August 20, 2021.
Management Revises 2021 Earnings Guidance
Management currently expects the Company's Operating Results for 2021 to be in the range of $39.4 million to $40.6 million,
or $3.05 to $3.15 per diluted share. The increase in the guidance range is attributable to the Company's strong performance for the 2021 Second Quarter, the impact of the acquisition closed in the 2021 Second Quarter, and confidence in the
sustainability of the Company's performance through the remainder of 2021.
This earnings range is based on an estimated annual effective tax rate of approximately 27.0%. Please note that the
earnings guidance represents projected Operating Results from existing operations and excludes future acquisitions. The 2021 earnings guidance range excludes expenses associated with the previously-announced retirement and replacement of one of
the Company's co-Chief Operating Officers. The annual guidance figures will not be updated unless there is a material development that causes management to believe that Operating Results will be significantly outside the given range.
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| August 5, 2021 |
Management's Comments
Chris Reading, Chief Executive Officer, said, "Throughout this last year and a half our partners, directors and clinical staff have done a truly exemplary job
providing excellent care in a very challenging environment. As evidenced by our record visits per clinic per day numbers this quarter, our patients and referral sources continue to seek us out for care. I remain very grateful for our entire
team's efforts through this COVID-19 pandemic. It hasn't been easy, but throughout our organization across our many partnerships and in every support department, our people have truly risen to the challenge."
Carey Hendrickson, Chief Financial Officer, said, "Our balance sheet remains in a very solid position and our record-high volumes are
resulting in outstanding cash generation. We are pleased with the excellent results generated by our team in the first half of 2021, and we are confident in the Company's future performance as signaled by the raising of our full year 2021
guidance range for the second time this year and the interim increase in our quarterly dividend rate."
Second Quarter 2021 Conference Call
U.S. Physical Therapy's management will host a conference call at 10:30 a.m. Eastern Time, 9:30 a.m. Central Time, on August 5, 2021 to discuss results for the Company's 2021 Second Quarter. Interested parties may participate in the call by
dialing 1-888-335-5539 or 973-582-2857 and entering reservation number 7486602 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via web-cast, go to the Company's website at www.usph.com at least 15
minutes early to register, download and install any necessary audio software. The conference call will be archived and can be accessed until November 5, 2021 at U.S. Physical Therapy's website.
Forward-Looking Statements
This press release contains statements that are considered to be forward-looking within the meaning under Section 21E of
the Securities Exchange Act of 1934, as amended. These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. These
statements (often using words such as "believes", "expects", "intends", "plans", "appear", "should" and similar words) involve risks and uncertainties that could cause actual results to differ materially from those we expect. Included among
such statements may be those relating to new clinics, availability of personnel and the reimbursement environment. The forward-looking statements are based on our current views and assumptions and actual results could differ materially from those anticipated in such forward-looking statements as a result of certain risks, uncertainties, and factors, which include, but are not limited to:
See Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.
Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking
statements. Please see the other sections of this report and our other periodic reports filed with the Securities and Exchange Commission (the "SEC") for more information on these factors. Our forward-looking statements represent our estimates
and assumptions only as of the date of this report. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement may no longer be accurate.
About U.S. Physical Therapy, Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 575 outpatient physical therapy clinics in 39 states. The Company's
clinics provide preventative and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, treatment for neurologically-related injuries and rehabilitation of injured workers. In addition to owning and