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
Third Quarter 2024 Results
Reports Record Quarterly Patient Volume
Houston, TX, November 5, 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 nine months ended September 30, 2024.
FINANCIAL HIGHLIGHTS
MANAGEMENT'S COMMENTS
Chris Reading, Chief Executive Officer, said, "In any challenging environment, action is necessary to adjust one's trajectory and our team has been taking action that will assist us in our
path forward. First, we have made a number of adjustments to our footprint in terms of very important larger additions, and reciprocally in paring assets that aren't providing an adequate return but require resources and attention. Next our
operations team, along with our partners, have moved to make some subtle individual clinic adjustments that, while mostly minor in nature, aggregate to a significant amount across our current portfolio in excess of 700 clinics. These efforts
will primarily begin to bear fruit in the final quarter of this year. Demand for our services remains at an all-time high with visits per clinic per day at record levels for any third quarter, and our IIP growth continues at a significant pace.
Finally, all of the work that has been done on rate support is now starting to show up and that will help us meaningfully along with our cost alignment as we close out the year and begin to implement our plans for 2025."
| U.S. Physical Therapy Press Release | Page 2 |
| November 5, 2024 |
2024 THIRD QUARTER VERSUS 2023 THIRD QUARTER
Additional supplemental tables of financial and performance metrics are presented on page 15 of this release.
Physical Therapy Operations
| For the Three Months Ended | Variance | |||||||||||||||||||
| September 30, 2024 | September 30, 2023 | $ | % | |||||||||||||||||
| (In thousands, except percentages) | ||||||||||||||||||||
| Revenue related to: | ||||||||||||||||||||
| Mature Clinics (1) | $ | 126,173 | $ | 120,612 | $ | 5,561 | 4.6 | % | ||||||||||||
| Clinic additions (2) | 11,337 | 3,585 | 7,752 | * | (9) | |||||||||||||||
| Clinics sold or closed (3) | 1,636 | 3,046 | (1,410 | ) | * | (9) | ||||||||||||||
| Net Patient Revenue | 139,146 | 127,243 | 11,903 | 9.4 | % | |||||||||||||||
| Other (4) | 3,568 | 3,278 | 290 | 8.8 | % | |||||||||||||||
| Total | 142,714 | 130,521 | 12,193 | 9.3 | % | |||||||||||||||
| Operating costs (4)(7) | 119,207 | 107,016 | 12,191 | 11.4 | % | |||||||||||||||
| Gross profit (7) | $ | 23,507 | $ | 23,505 | $ | 2 | 0.0 | % | ||||||||||||
| Financial and operating metrics (not in thousands): | ||||||||||||||||||||
| Net rate per patient visit (1) | $ | 105.65 | $ | 102.37 | $ | 3.28 | 3.2 | % | ||||||||||||
| Patient visits (1) | 1,317,051 | 1,242,954 | 74,097 | 6.0 | % | |||||||||||||||
| Average daily visits per clinic (1) | 30.1 | 29.7 | 0.4 | 1.3 | % | |||||||||||||||
| Gross margin | 16.5 | % | 18.0 | % | ||||||||||||||||
| Gross margin, excluding closure costs, Non-GAAP (6)(8) | 18.9 | % | 18.0 | % | ||||||||||||||||
| Salaries and related costs per visit, clinics (5) | $ | 62.47 | $ | 60.35 | $ | 2.12 | 3.5 | % | ||||||||||||
| Operating costs per visit, clinics (5)(7) | $ | 88.98 | $ | 84.49 | $ | 4.49 | 5.3 | % | ||||||||||||
| Operating costs per visit, clinics, excluding closure costs (5)(6) | $ | 86.37 | $ | 84.47 | $ | 1.90 | 2.2 | % | ||||||||||||
| (1) See Glossary of Terms - Revenue Metrics for definitions. | ||||||||||||||||||||
| (2) Includes 33 clinics added during the nine months ended September 30, 2024 and 46 clinic added during the year ended December 31, 2023. | ||||||||||||||||||||
| (3) Includes 43 clinics closed during the nine months ended September 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) Excludes $3.4 million of costs associated with the closure of 32 clinics during the 2024 Third Quarter. | ||||||||||||||||||||
| (7) Includes $3.4 million of costs associated with the closure of 32 clinics during the 2024 Third Quarter. | ||||||||||||||||||||
| (8) Refer to reconciliation of non-GAAP measures to most comparable GAAP measures for more information. | ||||||||||||||||||||
| (9) Not meaningful. |
Net revenue from physical therapy operations increased $12.2 million, or 9.3%, to $142.7 million for the 2024 Third Quarter from $130.5 million
for the 2023 Third Quarter. This increase was due to the increase in visits from the 21 net clinics added since the comparable prior year period, a 2.4% 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
Operating costs from physical therapy operations increased $12.2 million, or 11.4%, to $119.2 million in the 2024 Third Quarter from $107.0
million in the 2023 Third Quarter primarily driven by the 21 net new clinics added since the comparable prior year period and $3.4 million of costs associated with the closure of 32 clinics during the 2024 Third Quarter. Excluding the clinic closure
costs, operating costs increased 8.2% (1). Salaries and related costs per visit was $62.47 in the 2024 Third Quarter compared to $60.35 in the 2023 Third Quarter while total operating costs per visit was $88.98 compared to $84.49 over the
same periods, respectively. Excluding the clinic closure costs, operating costs per visit was $86.37 in the 2024 Third Quarter.
Gross profit from physical therapy operations in the 2024 Third Quarter was $23.5 million with a gross profit margin of 16.5%. Excluding closure
costs, gross profit from physical therapy operations was $26.9 million (1), an increase of $3.4 million, or 14.5%, over the 2023 Third Quarter, and the gross profit margin from physical therapy operations was 18.9% (1) in the
2024 Third Quarter, an increase of 90 basis points from 18.0% in the 2023 Third Quarter.
(1) These are Non-GAAP Measures. Refer
to reconciliation of non-GAAP measures to most comparable GAAP measures for more information
| U.S. Physical Therapy Press Release | Page 3 |
| November 5, 2024 |
Industrial Injury Prevention Services
| For the Three Months Ended | Variance | |||||||||||||||
| September 30, 2024 | September 30, 2023 | $ | % | |||||||||||||
| (In thousands, except percentages) | ||||||||||||||||
| Net revenue | $ | 25,319 | $ | 19,486 | $ | 5,833 | 29.9 | % | ||||||||
| Operating costs | 19,695 | 15,062 | 4,633 | 30.8 | % | |||||||||||
| Gross profit | $ | 5,624 | $ | 4,424 | $ | 1,200 | 27.1 | % | ||||||||
| Gross margin | 22.2 | % | 22.7 | % |
IIP revenues increased $5.8 million, or 29.9%, to $25.3 million for the 2024 Third Quarter as compared to $19.5 million for
the 2023 Third Quarter. Excluding the Company's IIP acquisitions during the years 2023 and 2024, IIP revenues increased 12.9%. Gross profit from IIP operations in the 2024 Third Quarter increased $1.2 million, or 27.1%, to $5.6 million from $4.4
million in the 2023 Third Quarter. Excluding the Company's IIP acquisitions during the years 2023 and 2024, IIP gross profit increased 13.2%. The gross profit margin from IIP operations was 22.2% in the 2024 Third Quarter compared to 22.7% in the
Corporate Office and Other Expenses
Corporate office costs were $14.4 million, or 8.6% of net revenue, in the 2024 Third Quarter compared to $12.0 million, or 8.0% of revenue in the
Operating income was $14.7 million for the 2024 Third Quarter compared to $15.9 million for the 2023 Third Quarter. Excluding the clinic closure
costs, operating income was $18.2 million (1) in the 2024 Third Quarter.
Interest expense decreased $0.1 million to $2.0 million for the 2024 Third Quarter compared to $2.1 million in the 2023 Third
Quarter due to a lower outstanding balance on our term loan. The interest rate on the Company's credit facility was 4.7% for the 2024 Third Quarter and 4.9% for the 2023 Third Quarter, with an all-in effective interest rate, including all associated
costs of 5.4% and 5.6% 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 decreased to $1.0 million during the 2024 Third Quarter from $1.7 million in the 2023 Third Quarter as a result of the Company's lower cash balance in the 2024 Third Quarter, due to cash used for
acquisitions since the comparable prior year period.
The Company revalued contingent and put-right liabilities related to certain acquisitions and recognized a net non-cash
expense (an increase in the related liabilities) of $1.7 million in the 2024 Third Quarter.
The provision for income taxes was $2.6 million in the 2024 Third Quarter compared to $3.6 million during the 2023 Third Quarter while the
effective tax rate was 27.9% and 27.8% over the same periods, respectively.
(1) These are Non-GAAP Measures. Refer to
reconciliation of non-GAAP measures to most comparable GAAP measures for more information.
USPH Net Income and Non-GAAP Measures
Net income attributable to non-controlling interest (temporary and permanent) was $3.1 million in the 2024 Third Quarter compared to $3.0 million
in the 2023 Third Quarter.
USPH Net Income was $6.6 million for the 2024 Third Quarter. In accordance with GAAP, the revaluation of redeemable
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 Third Quarter was $0.39.
USPH Net Income and earnings per share included a charge of $2.5 million, net of $1.0 million tax, or $0.16 per share, associated with the closure of 32 clinics during the 2024 Third Quarter. Excluding the clinic closure costs, USPH Net Income was
$9.1 million (1) compared to $9.3 million (1) in the comparable prior year period while earnings per share was $0.55 (1) and $0.51 (1) over the same periods, respectively.
Non-GAAP Adjusted EBITDA (1) was $21.1 million for the 2024 Third Quarter, an increase of $2.5 million, from $18.6 million for the
2023 Third Quarter. Non-GAAP Operating Results (1) was $10.4 million, or $0.69 per share, in the 2024 Third Quarter, an increase of $1.1 million, or $0.07 per share, as compared to $9.2 million, or $0.62 per share, in the 2023 Third
| U.S. Physical Therapy Press Release | Page 4 |
| November 5, 2024 |
NINE MONTHS ENDED SEPTEMBER 30, 2024 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 2023
Total net revenue for the nine months ended September 30, 2024 ("2024 Nine Months") increased $40.9 million, or 9.1%, to $490.9 million from $450.0
million for the nine months ended September 30, 2023 ("2023 Nine Months") while operating costs increased $40.5 million, or 11.3%, to $399.5 million from $359.0 million over the same periods, respectively. Gross profit, which included $4.1 million of
costs associated with the 43 clinic closures, was $91.4 million, or 18.6% of net revenue, during the 2024 Nine Months compared to $91.0 million, or 20.2% of net revenue, for the 2023 Nine Months. Excluding the clinic closure costs, gross profit for the
2024 Nine Months was $95.5 million (1), or 19.5% of net revenue (1), compared to $91.2 million (1), or 20.3% of net revenue (1), for the 2023 Nine Months.
Revenues from physical therapy operations increased $28.7 million, or 7.3%, to $420.6 million in the 2024 Nine Months compared to $391.9 million in
the 2023 Nine Months. This increase was primarily due to the increase in volume from the 21 net clinics added since the comparable prior year period as well as an increase in net rate per patient visit to $104.71 for 2024 Nine Months from $102.50 for
2023 Nine Months. Gross profit from physical therapy operations, which included $4.1 million of costs associated with the 43 clinic closures, was $76.4 million, or 18.2% of net revenue, for the 2024 Nine Months compared to $78.8 million, or 20.1% of
net revenue, for the 2023 Nine Months. Excluding the clinic closure costs, physical therapy gross profit was $80.5 million (1), or 19.1% of net revenue (1), in the 2024 Nine Months compared to $79.0 million (1), or
20.2% of net revenue (1), in the 2023 Nine Months.
Revenues from IIP increased $12.2 million, or 21.0%, to $70.3 million for the 2024 Nine Months from $58.1 million for the 2023 Nine Months. Gross
profit from IIP operations increased $2.9 million, or 23.5%, to $15.0 million for the 2024 Nine Months from $12.2 million for the 2023 Nine Months while the gross profit margin from IIP operations increased to 21.4% for the 2024 Nine Months from 21.0%
for the 2023 Nine Months.
Corporate office costs were $42.7 million, or 8.7% of net revenue, in the 2024 Nine Months, compared to $38.1 million, or 8.5% of net revenue, in
the 2023 Nine Months.
Operating income was $48.7 million for the 2024 Nine Months compared to $52.9 million for the 2023 Nine Months. Excluding the clinic closure costs,
operating income was $52.8 million (1) in the 2024 Nine Months.
Other expenses were $6.8 million in the 2024 Nine Months compared to $3.7 million in the 2023 Nine Months, with the increase primarily due to
increased net expense related to the fair value adjustments of certain contingent earn-out consideration and a 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 $8.8 million for the 2024 Nine Months and $10.8 million for the 2023 Nine Months while the effective tax rate was
28.4% and 28.1% over the same periods, respectively.
USPH Net Income was $22.2 million for the 2024 Nine Months as compared to $27.6 million for the 2023 Nine Months while
earnings per share was $1.32 for the 2024 Nine Months compared to $1.72 for the 2023 Nine Months. USPH Net Income and earnings per share included a charge of $2.9 million, net of $1.2 million tax, or $0.20 per share, associated with the closure of 43
clinics during the 2024 Nine Months. Excluding the clinic closure costs, USPH Net Income was $25.1 million (1) compared to $27.7 million (1) in the comparable period while earnings per share was $1.52 (1) and
$1.73 (1) over the same periods, respectively.
Non-GAAP Adjusted EBITDA (1) increased $1.1 million to $60.0 million for the 2024 Nine Months from $58.9 million in the 2023 Nine
Months while non-GAAP Operating Results (1) increased $1.7 million to $29.2 million, or $1.94 per share, in the 2024 Nine Months from $27.5 million, or $1.97 per share, in the 2023 Nine Months.
For additional information on 2024 Nine 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 November 8, 2024.
| U.S. Physical Therapy Press Release | Page 5 |
| November 5, 2024 |
BALANCE SHEET AND CASH FLOW
Total cash and cash equivalents were $117.0 million as of September 30, 2024, compared to $152.8 million at December 31,
2023, with the decrease primarily related to cash used for acquisitions during 2024. Additionally, the Company had $140.6 million of outstanding borrowings and $175.0 million in available credit under its credit facilities as of September 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.