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 2024 Results
Reports All-Time High Quarterly Patient Volume
Management Updates Guidance
Houston, TX, August 13, 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 three
and six months ended June 30, 2024.
FINANCIAL HIGHLIGHTS
MANAGEMENT'S COMMENTS
Chris Reading, Chief Executive Officer, said, "Physical therapy volumes, net
rate and injury prevention growth and profitability were all strong for the quarter and a result of our persistent focus in these areas. While our retention has been good with respect to our team members, the new employees who join our team as a
result of turnover are coming in at higher rates. This is especially true of our hourly employees who are more sensitive to escalating prices elsewhere. Additionally, we have a higher than anticipated usage of contract therapists in several
markets around the country. We have made significant recent and ongoing investments in people and processes on the recruiting side of our efforts with more work to be done -- especially in these more challenging markets. Our teams are working
diligently to optimize our ability to address demand while maintaining a close eye on cost and related expense management."
| U.S. Physical Therapy Press Release | Page 2 |
| August 13, 2024 |
2024 SECOND QUARTER VERSUS 2023 SECOND QUARTER
Additional supplemental tables of financial and performance metrics are presented on page 14 of this release.
Physical Therapy Operations
| For the Three Months Ended | Variance | |||||||||||||||||||
| June 30, 2024 | June 30, 2023 | $ | % | |||||||||||||||||
| (In thousands, except percentages) | ||||||||||||||||||||
| Revenue related to: | ||||||||||||||||||||
| Mature Clinics (1) | $ | 129,349 | $ | 126,057 | $ | 3,292 | 2.6 | % | ||||||||||||
| Clinic additions (2) | 10,905 | 1,910 | 8,995 | * | (6) | |||||||||||||||
| Clinics sold or closed (3) | 17 | 1,313 | (1,296 | ) | * | (6) | ||||||||||||||
| Net Patient Revenue | 140,271 | 129,280 | 10,991 | 8.5 | % | |||||||||||||||
| Other (4) | 3,215 | 2,959 | 256 | 8.7 | % | |||||||||||||||
| Total | 143,486 | 132,239 | 11,247 | 8.5 | % | |||||||||||||||
| Operating costs (4) | 114,703 | 104,017 | 10,686 | 10.3 | % | |||||||||||||||
| Gross profit | $ | 28,783 | $ | 28,222 | $ | 561 | 2.0 | % | ||||||||||||
| Financial and operating metrics (not in thousands): | ||||||||||||||||||||
| Net rate per patient visit (1) | $ | 105.05 | $ | 102.03 | $ | 3.02 | 3.0 | % | ||||||||||||
| Patient visits (1) | 1,335,335 | 1,267,140 | 68,195 | 5.4 | % | |||||||||||||||
| Average daily visits per clinic (1) | 30.6 | 30.4 | 0.2 | 0.7 | % | |||||||||||||||
| Gross margin | 20.1 | % | 21.3 | % | ||||||||||||||||
| Salaries and related costs per visit, clinics (5) | $ | 59.66 | $ | 57.59 | $ | 2.07 | 3.6 | % | ||||||||||||
| Operating costs per visit, clinics (5) | $ | 84.46 | $ | 80.61 | $ | 3.85 | 4.8 | % | ||||||||||||
| (1) See Glossary of Terms - Revenue Metrics for definitions. | ||||||||||||||||||||
| (2) Includes 21 clinics added during the six months ended June 30, 2024 and 46 clinic added during the year ended December 31, 2023. | ||||||||||||||||||||
| (3) Includes 11 clinics closed during the six months ended June 30, 2024 and 15 clinics closed during the year ended December 31, 2023. | ||||||||||||||||||||
| (4) Includes revenues and costs from management contracts. | ||||||||||||||||||||
| (5) Per visit costs excludes management contract costs. | ||||||||||||||||||||
| (6) Not meaningful. |
Net revenue from physical therapy operations increased $11.2 million, or 8.5%, to $143.5 million for the 2024 Second Quarter from $132.2 million for the 2023 Second Quarter. This increase was due to the increase in visits from the 25 net new
clinics added since the comparable prior year period, an increase in visits at mature clinics and an increase in net rate per patient visit. The increase in net rate per patient visit was mainly driven by higher reimbursement rates from commercial and
other payors as a result of contract negotiations and an increase in workers compensation as a percent of the Company's total net patient revenues.
Operating costs from physical therapy operations increased $10.7 million, or 10.3%, to $114.7 million in the 2024 Second Quarter from $104.0 million in the 2023 Second Quarter primarily driven by costs associated with the 25 net new clinics added since
the comparable prior year period. Salaries and related costs per visit increased to $59.66 in the 2024 Second Quarter from $57.59 in the 2023 Second Quarter while total operating costs per visit increased to $84.46 from $80.61 over the same periods,
Gross profit from physical therapy operations in the 2024 Second Quarter increased $0.6 million, or 2.0%, to $28.8 million from $28.2 million in the 2023 Second Quarter. The gross profit margin from physical therapy operations was 20.1% in the 2024
| U.S. Physical Therapy Press Release | Page 3 |
| August 13, 2024 |
Industrial Injury Prevention Services
| For the Three Months Ended | Variance | |||||||||||||||
| June 30, 2024 | June 30, 2023 | $ | % | |||||||||||||
| (In thousands, except percentages) | ||||||||||||||||
| Net revenue | $ | 23,704 | $ | 19,246 | $ | 4,458 | 23.2 | % | ||||||||
| Operating costs | 18,625 | 15,261 | 3,364 | 22.0 | % | |||||||||||
| Gross profit | $ | 5,079 | $ | 3,985 | $ | 1,094 | 27.5 | % | ||||||||
| Gross margin | 21.4 | % | 20.7 | % |
IIP revenues increased $4.5 million, or 23.2%, to $23.7 million for the 2024 Second Quarter as compared to $19.2 million for the 2023 Second Quarter. Excluding the Company's IIP acquisition during the 2024 Second Quarter, IIP revenues increased
13.5%. IIP operating costs increased $3.4 million, or 22.0%, versus the comparable prior year period. Gross profit from IIP operations in the 2024 Second Quarter increased $1.1 million, or 27.5%, to $5.1 million from $4.0 million in the 2023 Second
Quarter. Excluding the Company's IIP acquisition in the 2024 Second Quarter, IIP gross profit increased 15.7%. The gross profit margin from IIP operations increased to 21.4% in the 2024 Second Quarter from 20.7% in the 2023 Second Quarter.
Corporate Office and Other Expenses
Corporate office costs were $14.2 million, or 8.5% of revenue, in the 2024 Second Quarter compared to $12.1 million, or 8.0% of revenue in the 2023 Second Quarter.
Operating income was $19.6 million for the 2024 Second Quarter compared to $20.1 million for the 2023 Second Quarter.
Interest expense decreased $0.7 million to $2.0 million for the 2024 Second Quarter compared to $2.6 million in the 2023 Second Quarter due to a lower outstanding balance on our revolver, which was paid down in May 2023. The interest rate on the
Company's credit facility was 4.7% for the 2024 Second Quarter and 5.7% for the 2023 Second Quarter, with an all-in effective interest rate, including all associated costs of 5.4% and 6.0% over the same periods, respectively.
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 $1.1 million during the 2024 Second Quarter compared to $0.5 million in
the 2023 Second Quarter.
The Company revalued contingent and put-right liabilities related to certain acquisitions and recognized a net expense of $4.3 million (an increase in the related liabilities) in the 2024 Second Quarter compared to an income of $0.7 million (a
decrease in the related liabilities) in the 2023 Second Quarter.
The provision for income taxes was $3.1 million in the 2024 Second Quarter compared to $4.2 million during the 2023 Second Quarter while the effective tax rates were 29.1% and 27.9% over the same periods, respectively.
USPH Net Income and Non-GAAP Measures
Net income attributable to non-controlling interest (temporary and permanent) was $4.2 million in the 2024 Second Quarter compared to $3.9 million in the 2023 Second Quarter.
USPH Net Income was $7.5 million for the 2024 Second Quarter as compared to $10.9 million for the 2023 Second Quarter. 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 the 2024 Second Quarter was $0.47 compared to $0.64 for the 2023 Second Quarter, due in part to the increase in
shares outstanding associated with the Company's secondary offering completed in May 2023.
Non-GAAP Adjusted EBITDA was $22.1 million for the 2024 Second Quarter compared to $21.7 million for the 2023 Second Quarter. Non-GAAP Operating Results was $11.0 million, or $0.73 per share, in the 2024 Second Quarter as compared to $10.4
million, or $0.76 per share, in the 2023 Second Quarter, with the decrease in per share amounts being attributable to the increase in shares outstanding associated with the Company's secondary offering completed in May 2023.
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.
| U.S. Physical Therapy Press Release | Page 4 |
| August 13, 2024 |
SIX MONTHS ENDED JUNE 30, 2024 VERSUS SIX MONTH ENDED JUNE 30, 2023
Total net revenue for the six months ended June 30, 2024 ("2024 Six Months") increased $22.9 million, or 7.6%, to $322.9 million from $300.0 million for the six months ended June 30, 2023 ("2023 Six Months") while operating costs increased $23.7 million,
or 10.0%, to $260.6 million from $236.9 million over the same periods, respectively. Gross profit for the 2024 Six Months was $62.3 million, or 19.3% of net revenue, compared to $63.1 million for the 2023 Six Months, or 21.0% of net revenue.
Revenues from physical therapy operations increased $16.5 million, or 6.3%, to $277.9 million in the 2024 Six Months compared to $261.4 million in the 2023 Six Months. This increase was primarily due to the increase in volume from the 25 net new clinics
added since the comparable prior year period as well as an increase in net rate per patient visit to $104.23 for 2024 Six Months from $102.56 for 2023 Six Months. Gross profit from physical therapy operations decreased $2.5 million, or 4.5%, to $52.8
million for the 2024 Six Months from $55.3 million for the 2023 Six Months while the gross profit margin from physical therapy operations decreased to 19.0% for 2024 Six Months from 21.2% for 2023 Six Months.
Revenues from IIP increased $6.4 million, or 16.5%, to $45.0 million for the 2024 Six Months from $38.6 million for the 2023 Six Months. Gross profit from IIP operations increased $1.7 million, or 21.4%, to $9.4 million for the 2024 Six Months from $7.8
million for the 2023 Six Months while the gross profit margin from IIP operations increased to 20.9% for the 2024 Six Months from 20.1% for the 2023 Six Months.
Corporate office costs were $28.3 million, or 8.8% of net revenue, in the 2024 Six Months, compared to $26.0 million, or 8.7% of net revenue, in the 2023 Six Months.
Operating income was $33.9 million for the 2024 Six Months compared to $37.1 million for the 2023 Six Months.
Other expenses were $4.4 million in the 2024 Six Months compared to $3.6 million in the 2023 Six Months, with the increase primarily due to increased net expense related to the fair value adjustments of certain contingent earn-out consideration and put
liability partially offset by lower interest expense as a result of lower outstanding borrowings and higher 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 $6.2 million for the 2024 Six Months and $7.2 million for the 2023 Six Months. The effective tax rate was 28.6% and 28.2% over the same periods, respectively.
USPH Net Income was $15.6 million for the 2024 Six Months as compared to $18.3 million for the 2023 Six Months while earnings per share was $0.93 for the 2024 Six Months compared to $1.22 for the 2023 Six Months, due in part to the increase in shares
outstanding associated with the Company's secondary offering completed in May 2023.
Non-GAAP Adjusted EBITDA decreased $1.2 million to $38.9 million for the 2024 Six Months from $40.1 million in the 2023 Six Months while non-GAAP Operating Results increased $0.6 million to $18.8 million, or $1.25 per share, in the 2024 Six Months from
$18.1 million, or $1.36 per share, in the 2023 Six Months, with the decrease in the per share amounts being attributable to the increase in shares outstanding associated with the Company's secondary offering completed in May 2023.
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 2024 Six Months results, please refer to the Company's Quarterly Report on Form 10-Q which is expected to be filed with the Securities and Exchange Commission on August 14, 2024.
| U.S. Physical Therapy Press Release | Page 5 |
| August 13, 2024 |
BALANCE SHEET AND CASH FLOW
Total cash and cash equivalents were $112.9 million as of June 30, 2024, compared to $152.8 million at December 31, 2023. Additionally, the Company had $142.5 million of outstanding borrowings and $175.0 million in
available credit under its credit facilities as of June 30, 2024, compared to $144.4 million of outstanding borrowings and $175.0 million in available credit under its credit facilities as of December 31, 2023.
On April 30, 2024, one of the Company's primary IIP companies, Briotix Health Limited Partnership, acquired 100% of an
IIP services business for a purchase price of $24.0 million. The business currently generates approximately $11.0 million in annual revenues.
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.
The Company's Board of Directors declared a quarterly dividend of $0.44 per share payable on
September 13, 2024, to shareholders of record on August 23, 2024.
MANAGEMENT UPDATES 2024 EARNINGS GUIDANCE
Management returned its
guidance for Adjusted EBITDA for 2024 to its original range of $80.0 million to $85.0 million. The change in guidance reflects the lingering tough employment environment for both clinical and front office staff which has resulted in greater costs than anticipated in both salaries and contract labor so far this year.
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 August 14, 2024, to discuss the Company's financial results for the second quarter ended June 30, 2024. Interested parties may participate in the call by dialing (800) 245-3047 (Primary) or (203)
518-9765 (Alternate) and conference ID of USPHQ224. 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 November 12, 2024, at the Company's website.
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| August 13, 2024 |
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:
Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our