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
Fourth Quarter and Full Year 2023 Results
Company Provides 2024 Guidance
Houston, TX, February 28,
2024 - 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
| U.S. Physical Therapy Press Release | Page 2 |
| February 28, 2024 |
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 13 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. |
| U.S. Physical Therapy Press Release | Page 3 |
| February 28, 2024 |
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
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| February 28, 2024 |
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 11 and 12 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 11 and 12 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.
| U.S. Physical Therapy Press Release | Page 5 |
| February 28, 2024 |
BALANCE SHEET AND CASH FLOW