Full Press Release Details
Physical Therapy Reports First Quarter Results
HOUSTON--(BUSINESS WIRE)--June 29, 2017--U.S. Physical Therapy, Inc.
("USPH" or the "Company") (NYSE: USPH), a national operator of
outpatient physical therapy clinics, today reported results for the
first quarter ended March 31, 2017.
For the quarter ended March 31, 2017, USPH's net income attributable to
common shareholders prior to interest expense - mandatorily redeemable
non-controlling interests - change in redemption value, net of tax
("operating results"), a non-generally accepted accounting principles
("non-GAAP") measure, was $6.4 million as compared to $5.8 million in
the comparable 2016 period. Diluted earnings per share from operating
results was $0.51 in the 2017 period as compared to $0.47 in the 2016
For the quarter ended March 31, 2017, USPH's net income attributable to
its shareholders, in accordance with generally accepted accounting
principles ("GAAP"), was $4.8 million, or $0.38 per diluted share, as
compared to $4.5 million, or $0.36 per diluted share, for the 2016
period. See schedule on page 9 for a reconciliation of net income
attributable to USPH shareholders to operating results.
First Quarter 2017 Compared to First Quarter 2016
Net revenues increased $10.7 million or 12.3% from $86.9 million in
the first quarter of 2016 to $97.6 million in the first quarter of
2017, primarily due to a 10.1% increase in net patient revenues from
the physical therapy operations, higher revenues from management
contracts due to an increase in the number of facilities managed by
the Company and one month of revenues from the workforce performance
solutions business acquired in March 2017.
Net patient revenues from physical therapy operations increased
approximately $8.6 million to $93.7 million in the 2017 period from
$85.1 million in the 2016 period due to an increase in total patient
visits of 10.3% from 808,000 to 892,000 partially offset by a $0.18
decrease in average net patient revenue per visit to $105.04 from
$105.22. For the 2017 period, revenues from management contracts was
$1.9 million as compared to $1.4 million for the 2016 period. The
revenues from the recently acquired workforce performance solutions
business was $1.5 million for the month of March 2017. Other revenue
was $0.5 million for both periods.
Total clinic operating costs were $76.8 million, or 78.7% of net
revenues, in the first quarter of 2017 as compared to $66.4 million,
or 76.4% of net revenues, in the 2016 period. The increase was
primarily attributable to $8.9 million in operating costs related to
new clinics opened or acquired in the past 12 months, an additional
$1.1 million related to a full quarter of activity in 2017 for clinics
opened or acquired in the first quarter of 2016 and the addition of
the workforce performance solutions business. Total clinic salaries
and related costs, including those from new clinics, were 57.2% of net
revenues in the recent quarter 2017 versus 55.0% for the 2016 period.
Rent, clinic supplies, contract labor and other costs as a percentage
of net revenues were 20.6% for recent quarter versus 20.1% for the
2016 period. The provision for doubtful accounts as a percentage of
net revenues was 0.9% for the first quarter of 2017 as compared to
1.3% in the 2016 period.
The gross margin for the first quarter of 2017 was $20.7 million, or
21.3% of revenue, as compared to $20.5 million, or 23.6% of revenue,
for the 2016 quarter. The gross margin for the Company's physical
therapy clinics was 21.5% in the recent quarter as compared to 23.6% a
year earlier. The gross margin on management contracts was 14.8% in
the first quarter of 2017 as compared to 19.8% in the comparable
period of 2016. The gross margin for the recently acquired workforce
performance solutions business was 14.3%.
Corporate office costs were $8.5 million in the first quarter of 2017
compared to $9.0 million in the 2016 first quarter. Corporate office
costs were 8.8% of net revenues for the 2017 quarter compared to 10.4%
of net revenues for the 2016 period.
Operating income for the recent quarter increased 6.2% to $12.2
million as compared to $11.5 million in the first quarter 2016.
Interest expense - mandatorily redeemable non-controlling interest -
change in redemption value increased to $2.7 million in the first
quarter 2017 from $2.2 million in the 2016 first quarter. The change
in redemption value for acquired partnerships is based on the
redemption amount (which is derived from a formula based on a
specified multiple times the underlying business' trailing twelve
months of earnings before interest, taxes, depreciation, amortization
and our internal management fee) at the end of the reporting period
compared to the end of the previous period. This is a non-cash item
and is directly related to the increase in the profitability and
underlying value of the Company's partnerships.
Interest expense - mandatorily redeemable non-controlling interest -
earnings allocable, which represent the portion of earnings allocable
to the holders of mandatorily redeemable non-controlling interest,
increased to $1.3 million in the 2017 first quarter from $0.9 million
Interest expense - debt and other was $0.4 million in the first
quarter 2017 and $0.3 million in the 2016 period.
The provision for income taxes for the 2017 first quarter was $1.8
million and for the 2016 first quarter was $2.2 million. The provision
for income taxes as a percentage of income before taxes less net
income attributable to non-controlling interest was 27.3% in the 2017
first quarter and 32.6% in the 2016 first quarter. Included in the
first quarter of 2017 was an excess tax benefit of $0.8 million
related to the adoption of revised guidance on accounting for stock
compensation as compared to $0.5 million in the first quarter of 2016.
Net income attributable to non-controlling interests was $1.2 million
in the 2017 first quarter as compared to $1.5 million in the 2016
Operating results, a non-GAAP measure, attributable to common
shareholders for the three months ended March 31, 2017 rose 10.6% to
$6.4 million as compared to $5.8 million for the 2016 period. Diluted
earnings per share from operating results were $0.51 for the 2017
period and $0.47 for the 2016 period. For the quarter ended March 31,
2017, USPH's net income attributable to its shareholders, in
accordance with GAAP, was $4.8 million, or $0.38 per diluted share, as
compared to $4.5 million, or $0.36 per diluted share, for the 2016