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Share Name | Share Symbol | Market | Type |
---|---|---|---|
US Physical Therapy Inc | NYSE:USPH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.30 | 1.29% | 101.83 | 102.07 | 99.70 | 101.50 | 46,794 | 01:00:00 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
|
(I.R.S. EMPLOYER IDENTIFICATION NO.)
|
|
|
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
|
(ZIP CODE)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
|
☑
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
|
Emerging growth company
|
|
PART I—FINANCIAL INFORMATION
|
||
Item 1.
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3
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3
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4
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5
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6
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7
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8
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Item 2.
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30
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Item 3.
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42
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Item 4.
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43
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PART II—OTHER INFORMATION
|
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Item 1.
|
43
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|
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Item 1A.
|
43
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Item 5.
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43
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Item 6.
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44
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45
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ITEM 1. |
FINANCIAL STATEMENTS
|
March 31, 2024
|
December 31, 2023
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Patient accounts receivable, less provision for credit
losses of $
|
|
|
||||||
Accounts receivable - other
|
|
|
||||||
Other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Fixed assets:
|
||||||||
Furniture and equipment
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
Fixed assets, gross
|
|
|
||||||
Less accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
Fixed assets, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Investment in unconsolidated affiliate |
||||||||
Goodwill
|
|
|
||||||
Other identifiable intangible assets, net
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST
|
||||||||
Current liabilities:
|
||||||||
Accounts payable - trade
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Current portion of operating lease liabilities
|
|
|
||||||
Current portion of term loan and notes payable
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Notes payable, net of current portion
|
|
|
||||||
Term loan, net of current portion and deferred financing costs |
||||||||
Deferred taxes
|
|
|
||||||
Operating lease liabilities, net of current portion
|
|
|
||||||
Other long-term liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Redeemable non-controlling interest - temporary equity
|
|
|
||||||
Commitments and Contingencies
|
||||||||
U.S. Physical Therapy, Inc. (“USPH”) shareholders’ equity:
|
||||||||
Preferred stock, $
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated other comprehensive gain
|
||||||||
Retained earnings
|
|
|
||||||
Treasury stock at cost,
|
(
|
)
|
(
|
)
|
||||
Total USPH shareholders’ equity
|
|
|
||||||
Non-controlling interest - permanent equity
|
|
|
||||||
Total USPH shareholders’ equity and non-controlling interest - permanent equity
|
|
|
||||||
Total liabilities, redeemable non-controlling interest, USPH shareholders’ equity and non-controlling interest - permanent
equity
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
Net patient revenue
|
$ | $ | ||||||
Other revenue
|
||||||||
Net revenue
|
||||||||
Operating cost:
|
||||||||
Salaries and related costs
|
||||||||
Rent, supplies, contract labor and other
|
||||||||
Provision for credit losses
|
||||||||
Total operating cost
|
||||||||
Gross profit
|
||||||||
Corporate office costs
|
||||||||
Operating income
|
||||||||
Other income (expense): | ||||||||
Interest expense, debt and other
|
( |
) | ( |
) | ||||
Interest income from investments
|
||||||||
Change in fair value of contingent earn-out consideration
|
( |
) | ||||||
Change in revaluation of put-right liability
|
( |
) | ( |
) | ||||
Equity in earnings of unconsolidated affiliate
|
||||||||
Relief Funds
|
||||||||
Other
|
||||||||
Total other income (expense)
|
( |
) | ||||||
Income before taxes
|
||||||||
Provision for income taxes
|
||||||||
Net income
|
||||||||
Less: Net income attributable to non-controlling interest:
|
||||||||
Redeemable non-controlling interest - temporary equity
|
( |
) | ( |
) | ||||
Non-controlling interest - permanent equity
|
( |
) | ( |
) | ||||
( |
) | ( |
) | |||||
Net income attributable to USPH shareholders
|
$ | $ | ||||||
Basic and diluted earnings per share attributable to USPH shareholders (1)
|
$ | $ | ||||||
Shares used in computation - basic and diluted
|
||||||||
Dividends declared per common share
|
$ | $ |
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
Net income
|
$
|
|
$
|
|
||||
Other comprehensive gain (loss):
|
||||||||
Unrealized gain (loss) on cash flow hedge
|
|
(
|
)
|
|||||
Tax effect at statutory rate (federal and state)
|
(
|
)
|
|
|||||
Comprehensive income
|
$
|
|
$
|
|
||||
Comprehensive income attributable to non-controlling interest
|
(
|
)
|
(
|
)
|
||||
Comprehensive income attributable to USPH shareholders
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net income including non-controlling interest
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Provision for credit losses
|
|
|
||||||
Equity-based awards compensation expense
|
|
|
||||||
Amortization of debt issue costs
|
||||||||
Change in deferred income taxes
|
|
|
||||||
Change in revaluation of put-right liability
|
||||||||
Change in fair value of contingent earn-out consideration |
( |
) | ||||||
Equity of earnings in unconsolidated affiliate
|
( |
) | ( |
) | ||||
Loss on sale of fixed assets
|
||||||||
Other
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in patient accounts receivable
|
(
|
)
|
(
|
)
|
||||
Increase in accounts receivable - other
|
(
|
)
|
(
|
)
|
||||
(Decrease) increase in other current and long term assets
|
(
|
)
|
|
|||||
Decrease in accounts payable and accrued expenses
|
(
|
)
|
(
|
)
|
||||
Increase (decrease) in other long-term liabilities
|
|
(
|
)
|
|||||
Net cash provided by operating activities
|
|
|
||||||
INVESTING ACTIVITIES
|
||||||||
Purchase of fixed assets
|
(
|
)
|
(
|
)
|
||||
Purchase of majority interest in businesses, net of cash acquired
|
(
|
)
|
(
|
)
|
||||
Purchase of redeemable non-controlling interest, temporary equity
|
(
|
)
|
(
|
)
|
||||
Purchase of non controlling interest, permanent equity
|
(
|
)
|
|
|||||
Proceeds on sale of non-controlling interest, permanent equity |
||||||||
Proceeds on sale of partnership interest - redeemable non-controlling interest, temporary equity
|
||||||||
Distributions from unconsolidated affiliate
|
||||||||
Other
|
||||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
FINANCING ACTIVITIES
|
||||||||
Proceeds from revolving facility
|
||||||||
Distributions to non-controlling interest, permanent and temporary equity
|
(
|
)
|
(
|
)
|
||||
Principal payments on notes payable
|
(
|
)
|
(
|
)
|
||||
Payments on term loan
|
( |
) | ( |
) | ||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(
|
)
|
|
|||||
Cash and cash equivalents - beginning of period
|
|
|
||||||
Cash and cash equivalents - end of period
|
$
|
|
$
|
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
|
$
|
|
$
|
|
||||
Interest paid
|
$
|
|
$
|
|
||||
Non-cash investing and financing transactions during the period:
|
||||||||
Purchase of interest in businesses - seller financing portion
|
$
|
|
$
|
|
||||
Notes payable related to purchase of redeemable non-controlling interest, temporary equity
|
$ | $ | ||||||
Offset of notes receivable associated with purchase of redeemable non-controlling interest
|
$ |
$ |
||||||
Notes receivable related to sale of redeemable non-controlling interest, temporary equity
|
$
|
|
$
|
|
||||
Notes receivable related to the sale of non-controlling interest, permanent equity
|
$ | $ | ||||||
Dividends payable to USPH shareholders
|
$ |
$ |
|
U.S.Physical Therapy, Inc.
|
|||||||||||||||||||||||||||||||||||||||
Common Stock | Additional |
Accumulated Other
|
Retained | Treasury Stock |
Total Shareholders’
|
Non-Controlling
|
||||||||||||||||||||||||||||||||||
Shares | Amount |
Paid-In Capital
|
Comprehensive Gain
|
Earnings | Shares | Amount | Equity | Interests | Total | |||||||||||||||||||||||||||||||
Balance December 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||
Net income attributable to USPH shareholders
|
- | - | ||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity
|
- | - | ||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations
|
||||||||||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest
|
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||||||||
Compensation expense - equity-based awards
|
- | - | ||||||||||||||||||||||||||||||||||||||
Sale of non-controlling interest
|
-
|
|
|
|
|
-
|
|
|
|
|
||||||||||||||||||||||||||||||
Purchase of partnership interests - non-controlling interest
|
- | ( |
) | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
Dividends payable to USPH shareholders
|
-
|
|
|
|
(
|
)
|
-
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
|
|
|
|
-
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity
|
-
|
|
|
|
(
|
)
|
-
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||||||||
Other comprehensive gain
|
- |
|
|
-
|
|
|
|
|||||||||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans
|
- | - | ||||||||||||||||||||||||||||||||||||||
Other |
- | ( |
) | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Balance March 31, 2024
|
|
$
|
|
$
|
|
$
|
|
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
U.S.Physical Therapy, Inc.
|
||||||||||||||||||||||||||||||||||||||||
Common Stock
|
Additional
|
Accumulated Other | Retained |
Treasury Stock
|
Total Shareholders’
|
Non-Controlling
|
||||||||||||||||||||||||||||||||||
|
Shares | Amount |
Paid-In Capital
|
Comprehensive Loss |
Earnings
|
Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||
Balance December 31, 2022
|
|
$
|
|
$
|
|
$ |
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||||
Net income attributable to USPH shareholders
|
- | - | ||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity
|
- | - | ||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
|
|
-
|
|
|
|
|||||||||||||||||||||||||||||||||
Dividends payable to USPH shareholders
|
- | ( |
) | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
|
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity
|
- | - | ||||||||||||||||||||||||||||||||||||||
Other comprehensive gain | - | ( |
) | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Other
|
-
|
|
|
|
-
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance March 31, 2023
|
|
$ |
|
$ |
|
$ | $ |
|
(
|
)
|
$ |
(
|
)
|
$ |
|
$ |
|
$ |
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
Acquisition
|
Date
|
% Interest
Acquired
|
Number of
Clinics
|
||||||
March 2024 Acquisition
|
|||||||||
October 2023 Acquisition
|
|||||||||
September 2023 Acquisition 1 |
|
||||||||
September 2023 Acquisition 2 |
|
||||||||
July 2023 Acquisition |
|
||||||||
May 2023 Acquisition | |||||||||
February 2023 Acquisition |
*
|
|
**
|
|
●
|
Level 1 – Quoted prices in active markets for identical assets or
liabilities.
|
●
|
Level 2 – Inputs, other than the quoted prices in active markets, that
are observable either directly or indirectly.
|
●
|
Level 3 – Unobservable inputs based on the Company’s own assumptions.
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands, except per share data)
|
||||||||
Earnings per share
|
||||||||
Computation of earnings per share - USPH shareholders:
|
||||||||
Net income attributable to USPH shareholders
|
$ | $ | ||||||
Charges to retained earnings:
|
||||||||
Revaluation of redeemable non-controlling interest
|
( |
) | ||||||
Tax effect at statutory rate (federal and state)
|
( |
) | ||||||
$ | $ | |||||||
Earnings per share (basic and diluted)
|
$ | $ | ||||||
Shares used in computation - basic and diluted
|
% Interest
|
Number of
|
|||||||||
Acquisition
|
Date
|
Acquired
|
Clinics
|
|||||||
March 2024 Acquisition
|
|
|
|
|
Physical Therapy
|
||||
Operations
|
||||
(In thousands)
|
||||
Cash paid, net of cash acquired
|
$
|
|
||
Seller note
|
|
|||
Deferred payments
|
|
|||
Contingent payments
|
|
|||
Total consideration
|
$
|
|
||
|
||||
Estimated fair value of net tangible assets acquired:
|
||||
Total current assets
|
$
|
|
||
Total non-current assets
|
|
|||
Total liabilities
|
(
|
)
|
||
Net tangible assets acquired
|
|
|||
Customer and referral relationships
|
|
|||
Non-compete agreement
|
|
|||
Tradenames
|
|
|||
Goodwill
|
|
|||
Fair value of non-controlling interest (classified as redeemable non-controlling interest)
|
(
|
)
|
||
$
|
|
% Interest
|
Number of
|
||||||||
Acquisition
|
Date
|
Acquired
|
Clinics
|
||||||
October 2023 Acquisition
|
|
|
|||||||
September 2023 Acquisition 1
|
|
|
|||||||
September 2023 Acquisition 2
|
|
|
|||||||
July 2023 Acquisition
|
|
|
|||||||
May 2023 Acquisition
|
|
|
|||||||
February 2023 Acquisition
|
|
|
* |
IIP business.
|
** |
On October 31, 2023, the Company concurrently acquired
|
Physical Therapy
|
||||||||||||
IIP
|
Operations
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Cash paid, net of cash acquired
|
$
|
|
$
|
|
$
|
|
||||||
Seller note
|
|
|
|
|||||||||
Deferred payments
|
|
|
|
|||||||||
Contingent payments
|
|
|
|
|||||||||
Total consideration
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Estimated fair value of net tangible assets acquired:
|
||||||||||||
Total current assets
|
$
|
|
$
|
|
$
|
|
||||||
Total non-current assets
|
|
|
|
|||||||||
Total liabilities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net tangible assets acquired
|
|
|
|
|||||||||
Customer and referral relationships
|
|
|
|
|||||||||
Non-compete agreement
|
|
|
|
|||||||||
Tradenames
|
|
|
|
|||||||||
Goodwill
|
|
|
|
|||||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
$
|
|
$
|
|
$
|
|
1. |
Prior to the Acquisition, the Therapy Practice exists as a separate legal entity (the “Seller Entity”). The Seller Entity is owned by one or more individuals
(the “Selling Shareholders”) most of whom are physical therapists that work in the acquired Therapy Practice and provide physical therapy services to patients.
|
2. |
In conjunction with the Acquisition, the Seller Entity contributes the Therapy Practice into a newly-formed limited partnership (“NewCo”), in exchange for one
hundred percent (
|
3. |
The Company enters into an agreement (the “Purchase Agreement”) to acquire from the Seller Entity a majority (ranges from
|
4. |
The Company and the Seller Entity also execute a partnership agreement (the “Partnership Agreement”) for NewCo that sets forth the rights and obligations of the
limited and general partners of NewCo. After the Acquisition, the Company is the general partner of NewCo.
|
5. |
As noted above, the Company does not purchase
|
6. |
In most cases, some or all of the Selling Shareholders enter into an employment agreement (the “Employment Agreement”) with NewCo with an initial term that
ranges from
to |
7. |
The compensation of each Employed Selling Shareholder is specified in the Employment Agreement and is customary and commensurate with his or her responsibilities
based on other employees in similar capacities within NewCo, the Company and the industry.
|
8. |
The Company and the Selling Shareholder (including both Employed Selling Shareholders and Selling Shareholders not employed by NewCo) execute a non-compete
agreement (the “Non-Compete Agreement”) which restricts the Selling Shareholder from engaging in competing business activities for a specified period of time (the “Non-Compete Term”). A Non-Compete Agreement is executed with the Selling
Shareholders in all cases. That is, even if the Selling Shareholder does not become an Employed Selling Shareholder, the Selling Shareholder is restricted from engaging in a competing business during the Non-Compete Term.
|
9. |
The Non-Compete Term commences as of the date of the Acquisition and expires on the later
of :
|
a. |
|
b. |
|
10. |
The Non-Compete Agreement applies to a restricted region which is a defined mileage radius from the Therapy Practice. That is, an Employed Selling Shareholder is
permitted to engage in competing Therapy Practices or activities outside the designated geography (after such Employed Selling Shareholder no longer is employed by NewCo) and a Selling Shareholder who is not employed by NewCo immediately is
permitted to engage in the competing Therapy Practice or activities outside the designated geography.
|
1. |
Put Right
|
a. |
In the event that any Selling Shareholder’s employment is terminated under certain circumstances prior to the fifth anniversary of the Closing Date, the Seller
Entity thereafter may have an irrevocable right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below.
|
b. |
In the event that any Selling Shareholder is not employed by NewCo as of the fifth anniversary of the Closing Date and the Company has not exercised its Call
Right with respect to the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, Seller Entity thereafter shall have the Put Right to cause the Company to purchase from Seller Entity the Terminated Selling
Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below.
|
c. |
In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the fifth anniversary of the Closing Date, the Seller
Entity has the Put Right, and upon the exercise of the Put Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below.
|
2. |
Call Right
|
a. |
If any Selling Shareholder’s employment by NewCo is terminated prior to the fifth anniversary of the Closing Date, the Company thereafter has an irrevocable
right to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, in each case at the purchase price described in “3” below.
|
b. |
In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the fifth anniversary of the Closing Date, the Company
has the Call Right, and upon the exercise of the Call Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below.
|
3. |
For the Put Right and the Call Right, the purchase price is derived from a formula based on a specified multiple of NewCo’s trailing twelve months of earnings
before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of NewCo (the “Redemption Amount”). NewCo’s earnings are distributed monthly based on
available cash within NewCo; therefore, the undistributed earnings amount is small, if any.
|
4. |
The Purchase Price for the initial equity interest purchased by the Company, also based on
the same specified multiple of the trailing twelve-month earnings that is used in the Put Right and the Call Right noted above.
|
5. |
The Put Right and the Call Right do not have an expiration date, and the Seller Entity Interest is not required to be purchased by the Company or sold by the
Seller Entity unless either the Put Right or the Call Right is exercised.
|
6. |
The Put Right and the Call Right never apply to Selling Shareholders who do not become employed by NewCo, since the Company requires that such Selling
Shareholders sell their entire ownership interest in the Seller Entity at the closing of the Acquisition.
|
1. |
Prior to the acquisition, the Progressive Subsidiaries were owned by a legal entity (“Progressive Parent”) controlled by its individual
owners (the “ Progressive Selling Shareholders”), who work in and manage the Progressive business.
|
2. |
In conjunction with the acquisition, the Progressive Selling Shareholders caused the Progressive Parent to transfer its ownership of the
Progressive Subsidiaries into a newly-formed limited liability company (“Progressive NewCo”), in exchange for one hundred percent (
|
3. |
The Company entered into an agreement (the “Progressive Purchase Agreement”) to acquire from the Progressive Selling Shareholders a
majority of the membership interest in Progressive NewCo. The consideration for the acquisition is primarily payable in the form of cash at closing, a relatively small portion paid in cash after the closing contingent on certain
performance criteria, and a small note in lieu of an escrow (the “Progressive Purchase Price”).
|
4. |
The Company and the Progressive Selling Shareholders also executed an operating agreement (the “Progressive Operating Agreement”)
for Progressive NewCo that sets forth the rights and obligations of the members of Progressive NewCo.
|
5. |
As noted above, the Company did not purchase
|
6. |
The Company and the Progressive Selling Shareholders executed a non-compete agreement (the “Progressive Non-Compete Agreement”)
which restricts the Progressive Selling Shareholders from competing for a specified period of time (the “Progressive Non-Compete Term”).
|
7. |
The Progressive Non-Compete Term commences as of the date of the Progressive acquisition and expires on the later of:
|
a. |
|
b. |
|
8. |
The Progressive Non-Compete Agreement applies to the entire United States.
|
9. |
The Progressive Put Right (as defined below) and the Progressive Call Right (as defined below) do not have an expiration
date. The Progressive Operating Agreement contains provisions for the redemption of the Progressive Selling Shareholder’s Interest, either at the option of the Company (the “Progressive Call Right”) or at the option of the
Progressive Selling Shareholder (the “Progressive Put Right”) as follows:
|
1. |
Progressive Put Right
|
a. |
Each of the Progressive Selling Shareholders has the right to sell
|
b. |
In the event that any Progressive Selling Shareholder terminates his management relationship with Progressive NewCo for any
reason on or after the seventh anniversary of the Closing Date, the Progressive Selling Shareholder has the Put Right, and upon the exercise of the Progressive Put Right, the Progressive Selling Shareholder’s Interest shall be
redeemed by the Company at the purchase price described in “3” below.
|
2. |
Progressive Call Rights
|
a. |
If any Progressive Selling Shareholder’s ceases to perform management services on behalf of Progressive NewCo, the Company
thereafter shall have an irrevocable right to purchase from such Progressive Selling Shareholder his Interest, in each case at the purchase price described in “3” below.
|
3. |
For the Progressive Put Right and the Progressive Call Right, the purchase price is derived from a formula based on a specified
multiple of Progressive NewCo’s trailing twelve months of earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of
Progressive NewCo. Progressive NewCo’s earnings are distributed monthly based on available cash within Progressive NewCo; therefore, the undistributed earnings amount is small, if any.
|
4. |
The Progressive Purchase Price for the initial equity interest purchased by the Company is also based on the same specified
multiple of the trailing twelve-month earnings that is used in the Progressive Put Right and the Progressive Call Right noted above.
|
5. |
The Progressive Put Right and the Progressive Call Right do not have an expiration date.
|
Three Months Ended
|
Year Ended
|
|||||||
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands)
|
||||||||
Beginning balance
|
$ | $ | ||||||
Net income allocated to redeemable non-controlling interest partners
|
||||||||
Distributions to redeemable non-controlling interest partners
|
( |
) | ( |
) | ||||
Changes in the fair value of redeemable non-controlling interest
|
||||||||
Purchases of redeemable non-controlling interest
|
( |
) | ( |
) | ||||
Acquired interest
|
||||||||
Sales of redeemable non-controlling interest
|
||||||||
Changes in notes receivable related to redeemable non-controlling interest
|
( |
) | ( |
) | ||||
Ending balance
|
$ | $ |
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands)
|
||||||||
Contractual time period has lapsed but holder’s employment has not terminated
|
$
|
|
$
|
|
||||
Contractual time period has not lapsed and holder’s employment has not terminated
|
|
|
||||||
Holder’s employment has terminated and contractual time period has expired
|
|
|
||||||
Holder’s employment has terminated and contractual time period has not expired
|
|
|
||||||
$
|
|
$
|
|
Three Months Ended
|
Year Ended
|
|||||||
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands) | ||||||||
Beginning balance
|
$
|
|
$
|
|
||||
Acquisitions
|
|
|
||||||
Adjustments for purchase price allocation of businesses acquired in prior year
|
(
|
)
|
|
|||||
Impairment of goodwill | ( |
) | ||||||
Ending balance
|
$
|
|
$
|
|
March 31, 2024
|
December 31, 2023
|
|||||||||||||||||||||||
Gross Amount
|
Accumulated Amortization
|
Net Carrying
Amount
|
Gross Amount
|
Accumulated Amortization
|
Net Carrying
Amount
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Customer and referral relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Tradenames
|
|
|
|
|
|
|
||||||||||||||||||
Non-compete agreements
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands) | ||||||||
Customer and referral relationships
|
$ | $ | ||||||
Non-compete agreements
|
||||||||
$ | $ |
For the Year Ended December 31, |
Customer and Referral
Relationships
|
Non-Compete
Agreements
|
||||||
(In thousands) |
||||||||
2024
(excluding the three months ended March 31, 2024)
|
$
|
|
$
|
|
||||
2025
|
|
|
|
|
||||
2026
|
|
|
|
|
||||
2027
|
|
|
|
|
||||
2028
|
|
|
|
|
||||
Thereafter
|
$
|
|
$
|
|
March 31, 2024
|
December 31, 2023
|
|||||||
(In thousands) |
||||||||
Salaries and related costs
|
$
|
|
$
|
|
||||
Credit balances due to patients and payors
|
|
|
||||||
Dividend payable |
||||||||
Group health insurance claims
|
|
|
||||||
Federal income taxes payable |
||||||||
Contingency payable
|
|
|
||||||
Other property taxes payable | ||||||||
Purchase of redeemable non-controlling interests |
||||||||
Interest payable | ||||||||
Closure costs | ||||||||
Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
|
March 31, 2024
|
December 31, 2023
|
||||||||||||||||||||||
|
Principal
Amount
|
Unamortized
discount and
debt issuance
cost
|
Net Debt
|
Principal
Amount
|
Unamortized
discount and
debt issuance
cost
|
Net Debt
|
||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Term Facility
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
Revolving Facility
|
|
|
|
|
|
|
||||||||||||||||||
Other (1)
|
|
|
|
|
|
|
||||||||||||||||||
Total debt
|
|
|
|
(
|
)
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||
Less: Current portion of long-term debt
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
Long-term debt, net of current portion
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(1)
|
|
1)
|
Revolving Facility: $ |
2)
|
Term Facility: $
|
|
Three Months Ended
|
|||||||
|
March 31, 2024
|
March 31, 2023
|
||||||
(In thousands) | ||||||||
Net income |
$ | $ | ||||||
Other comprehensive gain (loss):
|
||||||||
Unrealized gain (loss) on cash flow hedge
|
|
(
|
)
|
|||||
Tax effect at statutory rate (federal and state)
|
(
|
)
|
|
|||||
Comprehensive income
|
|
|
||||||
Comprehensive income attributable to non-controlling interest | ( |
) | ( |
) | ||||
Comprehensive income attributable to USPH shareholders | $ | $ |
March 31,
2024
|
March 31,
2023
|
|||||||
Interest rate swap:
|
(In thousands)
|
|||||||
Other current assets
|
$
|
|
$
|
|
||||
Other assets
|
|
|
||||||
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands) | ||||||||
Operating lease cost
|
$ | $ | ||||||
Short-term lease cost
|
||||||||
Variable lease cost
|
||||||||
Total lease cost *
|
$ | $ |
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands) | ||||||||
Cash paid for amounts included in the measurement of operating lease liabilities
|
$ | $ | ||||||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$ | $ |
Fiscal Year
|
Amount
(In thousands)
|
|||
2024 (excluding the three months ended March 31, 2024) | $ | |||
2025
|
||||
2026
|
||||
2027
|
||||
2028 and thereafter
|
||||
Total lease payments
|
$ | |||
Less: imputed interest
|
||||
Total operating lease liabilities
|
$ |
March 31, 2024
|
March 31, 2023
|
|||||
Weighted-average remaining lease term - Operating leases
|
|
|
||||
Weighted-average discount rate - Operating leases
|
|
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
|
(In thousands) | |||||||
Net revenue: | ||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total Company
|
$ | $ | ||||||
|
||||||||
Operating Costs:
|
||||||||
Salaries and related costs:
|
||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total salaries and related costs
|
$ | $ | ||||||
Rent supplies, contract labor and other:
|
||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total rent, supplies, contract labor and other
|
$ | $ | ||||||
Provision for credit losses:
|
||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total provision for credit losses
|
$ | $ | ||||||
Total Company |
$ | $ | ||||||
Gross profit:
|
||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total Company
|
$ | $ | ||||||
|
||||||||
Total Assets:
|
||||||||
Physical therapy operations
|
$ | $ | ||||||
Industrial injury prevention services
|
||||||||
Total Company
|
$ | $ |
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
• |
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
|
• |
revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
|
• |
changes in reimbursement rates or payment methods from third party payors including government agencies, and changes in the deductibles and co-pays owed by patients;
|
• |
compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;
|
• |
competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and
other intangible assets;
|
• |
the impact of future public health crises and epidemics/pandemics, such as was the case with the novel strain of COVID-19 and its variants;
|
• |
one of our acquisition agreements contains a put right related to a future purchase of a majority interest in a separate company;
|
• |
the impact of future vaccinations and/or testing mandates at the federal, state and/or local level, which could have an adverse impact on staffing, revenue, costs and the results of operations;
|
• |
our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing and our ability to operate our business;
|
• |
changes as the result of government enacted national healthcare reform;
|
• |
business and regulatory conditions including federal and state regulations;
|
• |
governmental and other third party payor inspections, reviews, investigations and audits, which may result in sanctions or reputational harm and increased costs;
|
• |
revenue and earnings expectations;
|
• |
contingent consideration provisions in certain our acquisition agreements, the value of which may impact future financial results;
|
• |
legal actions, which could subject us to increased operating costs and uninsured liabilities;
|
• |
general economic conditions, including but not limited to inflationary and recessionary periods;
|
• |
actual or perceived events involving banking volatility or limited liability, defaults or other adverse developments that affect the U.S. or international financial systems, may result in market wide liquidity problems which could
have a material and adverse impact on our available cash and results of operations;
|
• |
our business depends on hiring, training, and retaining qualified employees;
|
• |
availability and cost of qualified physical therapists;
|
• |
competitive environment in the industrial injury prevention services business, which could result in the termination or non-renewal of contractual service arrangements and other adverse financial consequences for that service line;
|
• |
our ability to identify and complete acquisitions, and the successful integration of the operations of the acquired businesses;
|
• |
impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interest (minority interests);
|
• |
maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;
|
• |
a security breach of our or our third party vendors’ information technology systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and Accountability
Act of 1996 of the Health Information Technology for Economic and Clinical Health Act, or may interfere with our ability to file and process claims for payment which could interfere with our collection of revenues from third party
payors;
|
• |
maintaining clients for which we perform management, industrial injury prevention services, and other services, as a breach or termination of those contractual arrangements by such clients could cause operating results to be less
than expected;
|
•
|
if our noncompetition covenants with employed therapists are nullified, we may lose staff to competitors; |
• |
maintaining adequate internal controls;
|
• |
maintaining necessary insurance coverage;
|
• |
availability, terms, and use of capital; and
|
• |
weather and other seasonal factors.
|
|
% Interest
|
Number of
|
||||
Acquisition
|
Date
|
Acquired
|
Clinics
|
|||
March 2024 Acquisition
|
March 29, 2024
|
50%
|
9
|
|||
October 2023 Acquisition
|
October 31, 2023
|
**
|
*
|
|||
September 2023 Acquisition 1
|
September 29, 2023
|
70%
|
4
|
|||
September 2023 Acquisition 2
|
September 29, 2023
|
70%
|
1
|
|||
July 2023 Acquisition
|
July 31, 2023
|
70%
|
7
|
|||
May 2023 Acquisition
|
May 31, 2023
|
45%
|
4
|
|||
February 2023 Acquisition
|
February 28, 2023
|
80%
|
1
|
* |
IIP business.
|
** |
On October 31, 2023, we concurrently acquired 100% of an IIP business and a 55% equity interest in an ergonomics software business.
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
Number of clinics, beginning of period
|
671
|
640
|
||||||
Additions (1)
|
14
|
8
|
||||||
Closed or sold
|
(6
|
)
|
(1
|
)
|
||||
Number of clinics, end of period
|
679
|
647
|
(1) |
Includes clinics added through acquisitions.
|
• |
Mature clinics are clinics opened or acquired prior to January 1, 2023, and are still operating as of March 31, 2024.
|
• |
Net rate per patient visit is net patient revenue related to our physical therapy operations divided by total number of patient visits (defined below) during the
periods presented.
|
• |
Patient visits is the number of unique patient visits during the periods presented.
|
• |
Average daily visits per clinic is patient visits divided by the number of days in which normal business operations were conducted during the periods presented
and further divided by the average number of clinics in operation during the periods presented.
|
• |
2024 First Quarter refers to the three months ended March 31, 2024.
|
• |
2023 First Quarter refers to the three months ended March 31, 2023.
|
Three Months Ended
|
Variance
|
|||||||||||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ | % |
|||||||||||||||||||||
(In thousands, except percentages)
|
||||||||||||||||||||||||
Net patient revenue
|
$
|
131,075
|
84.2
|
%
|
$
|
126,581
|
85.2
|
%
|
$
|
4,494
|
3.6
|
%
|
||||||||||||
Other revenue
|
24,600
|
15.8
|
%
|
21,928
|
14.8
|
%
|
2,672
|
12.2
|
%
|
|||||||||||||||
Net revenue
|
155,675
|
100.0
|
%
|
148,509
|
100.0
|
%
|
7,166
|
4.8
|
%
|
|||||||||||||||
Operating Cost:
|
||||||||||||||||||||||||
Salaries and related costs
|
93,731
|
60.2
|
%
|
86,040
|
57.9
|
%
|
7,691
|
8.9
|
%
|
|||||||||||||||
Rent, supplies, contract labor and other
|
31,916
|
20.5
|
%
|
30,100
|
20.3
|
%
|
1,816
|
6.0
|
%
|
|||||||||||||||
Provision for credit losses
|
1,627
|
1.0
|
%
|
1,512
|
1.0
|
%
|
115
|
7.6
|
%
|
|||||||||||||||
Total operating cost
|
127,274
|
81.8
|
%
|
117,652
|
79.2
|
%
|
9,622
|
8.2
|
%
|
|||||||||||||||
Gross Profit
|
28,401
|
18.2
|
%
|
30,857
|
20.8
|
%
|
(2,456
|
)
|
-8.0
|
%
|
||||||||||||||
Corporate office costs
|
14,085
|
9.0
|
%
|
13,859
|
9.3
|
%
|
226
|
1.6
|
%
|
|||||||||||||||
Operating Income
|
14,316
|
9.2
|
%
|
16,998
|
11.4
|
%
|
(2,682
|
)
|
-15.8
|
%
|
||||||||||||||
Other (expense) income:
|
||||||||||||||||||||||||
Interest expense, debt and other
|
(1,968
|
)
|
-1.3
|
%
|
(2,560
|
)
|
-1.7
|
%
|
592
|
-23.1
|
%
|
|||||||||||||
Interest income from investments
|
1,543
|
1.0
|
%
|
64
|
0.0
|
%
|
1,479
|
2310.9
|
%
|
|||||||||||||||
Change in fair value of contingent earn-out consideration
|
612
|
0.4
|
%
|
(698
|
)
|
-0.5
|
%
|
1,310
|
-187.7
|
%
|
||||||||||||||
Change in revaluation of put-right liability
|
(80
|
)
|
-0.1
|
%
|
(149
|
)
|
-0.1
|
%
|
69
|
-46.3
|
%
|
|||||||||||||
Equity in earnings of unconsolidated affiliate
|
271
|
0.2
|
%
|
274
|
0.2
|
%
|
(3
|
)
|
-1.1
|
%
|
||||||||||||||
Relief Funds
|
-
|
0.0
|
%
|
467
|
0.3
|
%
|
(467
|
)
|
-100.0
|
%
|
||||||||||||||
Other
|
62
|
0.0
|
%
|
-
|
0.0
|
%
|
62
|
*
|
(1) | |||||||||||||||
Total other (expense) income
|
440
|
0.3
|
%
|
(2,602
|
)
|
-1.8
|
%
|
3,042
|
-116.9
|
%
|
||||||||||||||
Income before taxes
|
14,756
|
9.5
|
%
|
14,396
|
9.7
|
%
|
360
|
2.5
|
%
|
|||||||||||||||
Provision for income taxes
|
3,139
|
2.0
|
%
|
2,969
|
2.0
|
%
|
170
|
5.7
|
%
|
|||||||||||||||
Net income
|
11,617
|
7.5
|
%
|
11,427
|
7.7
|
%
|
190
|
1.7
|
%
|
|||||||||||||||
Less: Net income attributable to non-controlling interest:
|
||||||||||||||||||||||||
Redeemable non-controlling interest - temporary equity
|
(2,227
|
)
|
-1.4
|
%
|
(2,720
|
)
|
-1.8
|
%
|
493
|
-18.1
|
%
|
|||||||||||||
Non-controlling interest - permanent equity
|
(1,344
|
)
|
-0.9
|
%
|
(1,297
|
)
|
-0.9
|
%
|
(47
|
)
|
3.6
|
%
|
||||||||||||
(3,571
|
)
|
-2.3
|
%
|
(4,017
|
)
|
-2.7
|
%
|
446
|
-11.1
|
%
|
||||||||||||||
Net income attributable to USPH shareholders
|
$
|
8,046
|
5.2
|
%
|
$
|
7,410
|
5.0
|
%
|
$
|
636
|
8.6
|
%
|
(1)
|
Not meaningful.
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands, except per share data)
|
||||||||
Earnings per share
|
||||||||
Computation of earnings per share - USPH shareholders:
|
||||||||
Net income attributable to USPH shareholders
|
$
|
8,046
|
$
|
7,410
|
||||
Charges to retained earnings:
|
||||||||
Revaluation of redeemable non-controlling interest
|
(1,439
|
)
|
119
|
|||||
Tax effect at statutory rate (federal and state)
|
368
|
(30
|
)
|
|||||
$
|
6,975
|
$
|
7,499
|
|||||
Earnings per share (basic and diluted)
|
$
|
0.46
|
$
|
0.58
|
||||
Shares used in computation - basic and diluted
|
15,017
|
13,025
|
|
Three Months Ended
|
|||||||
|
March 31, 2024
|
March 31, 2023
|
||||||
(In thousands, except per share data)
|
||||||||
Adjusted EBITDA (a non-GAAP measure)
|
||||||||
Net income attributable to USPH shareholders
|
$
|
8,046
|
$
|
7,410
|
||||
Adjustments:
|
||||||||
Provision for income taxes
|
3,139
|
2,969
|
||||||
Depreciation and amortization
|
4,095
|
3,788
|
||||||
Interest expense, debt and other, net
|
1,968
|
2,560
|
||||||
Interest income from investments
|
(1,543
|
)
|
(64
|
)
|
||||
Equity-based awards compensation expense
|
1,997
|
1,806
|
||||||
Change in revaluation of put-right liability
|
80
|
149
|
||||||
Change in fair value of contingent earn-out consideration
|
(612
|
)
|
698
|
|||||
Relief Funds
|
-
|
(467
|
)
|
|||||
Other income
|
(62
|
)
|
-
|
|||||
Allocation to non-controlling interests
|
(432
|
)
|
(371
|
)
|
||||
$
|
16,676
|
$
|
18,478
|
|||||
Operating Results (a non-GAAP measure)
|
||||||||
Net income attributable to USPH shareholders
|
$
|
8,046
|
$
|
7,410
|
||||
Adjustments:
|
||||||||
Change in fair value of contingent earn-out consideration
|
(612
|
)
|
698
|
|||||
Change in revaluation of put-right liability
|
80
|
149
|
||||||
Relief Funds
|
-
|
(467
|
)
|
|||||
Allocation to non-controlling interests
|
-
|
33
|
||||||
Tax effect at statutory rate (federal and state)
|
136
|
(105
|
)
|
|||||
$
|
7,650
|
$
|
7,718
|
|||||
Operating Results per share (a non-GAAP measure)
|
$
|
0.51
|
$
|
0.59
|
Three Months Ended | Variance | |||||||||||||||
March 31, 2024
|
March 31, 2023
|
$
|
% | |||||||||||||
(In thousands, except percentages)
|
||||||||||||||||
Revenue related to:
|
||||||||||||||||
Mature Clinics (1)
|
$
|
123,267
|
$
|
125,485
|
$
|
(2,218
|
)
|
(1.8
|
)%
|
|||||||
Clinic additions (2)
|
7,561
|
371
|
7,190
|
*
|
(6) | |||||||||||
Clinics sold or closed (3)
|
247
|
725
|
(478
|
)
|
*
|
(6) | ||||||||||
Net Patient Revenue
|
131,075
|
126,581
|
4,494
|
3.6
|
%
|
|||||||||||
Other (4)
|
3,350
|
2,578
|
772
|
29.9
|
%
|
|||||||||||
Total
|
134,425
|
129,159
|
5,266
|
4.1
|
%
|
|||||||||||
Operating costs (4)
|
110,361
|
102,070
|
8,291
|
8.1
|
%
|
|||||||||||
Gross profit
|
$
|
24,064
|
$
|
27,089
|
$
|
(3,025
|
)
|
(11.2
|
)%
|
|||||||
Financial and operating metrics (not in thousands):
|
||||||||||||||||
Net rate per patient visit (1)
|
$
|
103.37
|
$
|
103.12
|
$
|
0.25
|
0.2
|
%
|
||||||||
Patient visits (1)
|
1,268,002
|
1,227,490
|
40,512
|
3.3
|
%
|
|||||||||||
Average daily visits per clinic (1)
|
29.5
|
29.8
|
(0.3
|
)
|
(1.0
|
)%
|
||||||||||
Gross margin
|
17.9
|
%
|
21.0
|
%
|
||||||||||||
Salaries and related costs per visit, clinics (5)
|
$
|
61.42
|
$
|
59.14
|
$
|
2.28
|
3.9
|
%
|
||||||||
Operating costs per visit, clinics (5)
|
$
|
85.50
|
$
|
81.97
|
$
|
3.53
|
4.3
|
%
|
Three Months Ended
|
Variance
|
|||||||||||||||
March 31, 2024
|
March 31, 2023
|
$ |
% |
|||||||||||||
(In thousands, except percentages)
|
||||||||||||||||
Net revenue
|
$
|
21,250
|
$
|
19,350
|
$
|
1,900
|
9.8
|
%
|
||||||||
Operating costs
|
16,913
|
15,582
|
1,331
|
8.5
|
%
|
|||||||||||
Gross profit
|
$
|
4,337
|
$
|
3,768
|
$
|
569
|
15.1
|
%
|
||||||||
Gross margin
|
20.4
|
%
|
19.5
|
%
|
Three Months Ended
|
||||||||
March 31, 2024
|
March 31, 2023
|
|||||||
(In thousands, except percentages)
|
||||||||
Income before taxes
|
$
|
14,756
|
$
|
14,396
|
||||
Less: Net income attributable to non-controlling interest:
|
||||||||
Redeemable non-controlling interest - temporary equity
|
(2,227
|
)
|
(2,720
|
)
|
||||
Non-controlling interest - permanent equity
|
(1,344
|
)
|
(1,297
|
)
|
||||
$
|
(3,571
|
)
|
$
|
(4,017
|
)
|
|||
Income before taxes less net income attributable to non-controlling interest
|
$
|
11,185
|
$
|
10,379
|
||||
Provision for income taxes
|
$
|
3,139
|
$
|
2,969
|
||||
Effective income tax rate
|
28.1
|
%
|
28.6
|
%
|
|
Three Months Ended
|
|||||||
|
March 31, 2024
|
March 31, 2023
|
||||||
Net cash provided by operating activities
|
$
|
4,419
|
$
|
11,349
|
||||
Net cash used in investing activities
|
(20,464
|
)
|
(12,681
|
)
|
||||
Net cash (used in) provided by financing activities
|
(4,490
|
)
|
2,343
|
1)
|
Revolving Facility: $175 million, five-year, revolving credit facility (“Revolving Facility”), which includes a $12 million sublimit for the issuance of standby letters of credit and a $15 million
sublimit for swingline loans (each, a “Swingline Loan”).
|
2)
|
Term Facility: $150 million term loan facility (the “Term Facility”). The Term Facility amortizes in quarterly installments of: (a) 0.625% in each of the first two years, (b) 1.250% in the third and
fourth year, and (c) 1.875% in the fifth year of the Credit Agreement. The remaining outstanding principal balance of all term loans is due on the maturity date.
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 4. |
CONTROLS AND PROCEDURES.
|
ITEM 1. |
LEGAL PROCEEDINGS.
|
ITEM 1A. |
RISK FACTORS.
|
ITEM 5. |
OTHER INFORMATION.
|
ITEM 6. |
EXHIBITS.
|
Exhibit
Number
|
Description
|
U. S. Physical Therapy, Inc. Objective Long-Term Incentive Plan for Senior Management for 2024, effective March 6, 2024 [incorporated by reference to Exhibit 99.1 to the Company Current Report on Form 8-K
filed with the SEC on March 7, 2024].
|
|
U. S. Physical Therapy, Inc. Discretionary Long-Term Incentive Plan for Senior Management for 2024, effective March 6, 2024 [incorporated by reference to Exhibit 99.2 to the Company Current Report on Form
8-K filed with the SEC on March 7, 2024].
|
|
U. S. Physical Therapy, Inc. Objective Cash/RSA Bonus Plan for Senior Management for 2024, effective March 6, 2024 [incorporated by reference to Exhibit 99.3 to the Company Current Report on Form 8-K
filed with the SEC on March 7, 2024].
|
|
U. S. Physical Therapy, Inc. Discretionary Cash/RSA Bonus Plan for Senior Management for 2024, effective March 6, 2024 [incorporated by reference to Exhibit 99.4 to the Company Current Report on Form 8-K
filed with the SEC on March 7, 2024].
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
|
Certification Pursuant to 18 U.S.C 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith
|
U.S. PHYSICAL THERAPY, INC.
|
||
Date: May 8, 2024
|
By:
|
/s/ Carey Hendrickson
|
Carey Hendrickson
|
||
Chief Financial Officer
|
||
(Principal financial and accounting officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of U.S. Physical Therapy, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Christopher Reading
|
|
Christopher Reading
|
|
President and Chief Executive Officer
|
|
Date: May 8, 2024
|
(Principal executive officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of U.S. Physical Therapy, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Carey Hendrickson
|
|
Carey Hendrickson
|
|
Chief Financial Officer
|
|
Date: May 8, 2024
|
(Principal financial and accounting officer)
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
May 8, 2024
|
|
/s/ Christopher J. Reading
|
|
Christopher J. Reading
|
|
Chief Executive Officer
|
|
/s/ Carey Hendrickson
|
|
Carey Hendrickson
|
|
Chief Financial Officer
|
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Current assets: | ||
Provision for credit losses, patient accounts receivable | $ 2,936 | $ 2,736 |
U.S. Physical Therapy, Inc. ("USPH") shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 17,282,822 | 17,202,291 |
Treasury stock (in shares) | 2,214,737 | 2,214,737 |
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net income | $ 11,617 | $ 11,427 |
Other comprehensive gain (loss): | ||
Unrealized gain (loss) on cash flow hedge | 1,781 | (1,817) |
Tax effect at statutory rate (federal and state) | (455) | 464 |
Comprehensive income | 12,943 | 10,074 |
Comprehensive income attributable to non-controlling interest | (3,571) | (4,017) |
Comprehensive income attributable to USPH shareholders | $ 9,372 | $ 6,057 |
Basis of Presentation and Significant Accounting Policies |
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Basis of Presentation and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies |
Nature of Business
U.S.
Physical Therapy, Inc. and its subsidiaries (the “Company”) operates its business through two reportable business segments. The
Company’s reportable segments include the physical therapy operations segment and the industrial injury prevention services (“IIP”) segment. The Company’s physical therapy operations consist of physical therapy and occupational therapy clinics
that provide pre-and post-operative care and treatment for orthopedic-related disorders, sports-related injuries, preventive care, rehabilitation of injured workers and neurological injuries. Services provided by the IIP segment include onsite
injury prevention and rehabilitation, performance optimization and ergonomic assessments.
As of March 31, 2024,
the Company operated 679 clinics in 42
states. In addition to the 679 clinics, the Company also managed 41 physical therapy practices for unrelated physician groups and hospitals as of March 31, 2024.
During the three months ended March 31, 2024, and for the year-ended December
31, 2023, the Company completed the acquisitions of the following clinic practices and IIP businesses:
Basis of Presentation
The accompanying unaudited
consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions for Form 10-Q. However, the
statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Management believes this report contains all necessary
adjustments (consisting only of normal recurring adjustments) to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the interim periods presented. These unaudited consolidated
financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and
Exchange Commission on February 29, 2024. Interim results are not necessarily indicative of the results the Company expects for the entire year.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company. All significant
intercompany transactions have been eliminated.
Segment Reporting
Operating segments are components of an enterprise for which separate financial information is
available and is evaluated regularly by chief operating decision makers in determining the allocation of resources and in assessing performance. The Company currently operates through two segments: physical therapy operations and IIP.
Use of Estimates
In preparing the Company’s consolidated financial statements, management makes certain estimates and assumptions, especially in relation to, but not limited to,
goodwill impairment, tradenames and other intangible assets, allocations of purchase price, allowance for receivables, tax provision and contractual allowances, that affect the amounts reported in the consolidated financial statements and
related disclosures. Actual results may differ from these estimates.
Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill represents the excess of the amount paid and fair value of the non-controlling interests over
the fair value of the acquired business assets, which include certain identifiable intangible assets. Historically, goodwill has been derived from acquisitions and, prior to 2009, from the purchase of some or all of a particular local
management’s equity interest in an existing clinic. Effective January 1, 2009, if the purchase price of a non-controlling interest, permanent equity by the Company exceeds or is less than the book value at the time of purchase, any excess or
shortfall is recognized as an adjustment to additional paid-in capital.
Goodwill and other indefinite-lived intangible assets are not amortized but are instead subject to
periodic impairment evaluations. The fair value of goodwill and other identifiable intangible assets with indefinite lives are evaluated for impairment at least annually and upon the occurrence of certain triggering events or conditions and are
written down to fair value, if considered impaired. These events or conditions include but are not limited to a significant adverse change in the business environment, regulatory environment, or legal factors; a current period operating, or cash
flow, loss combined with a history of such losses or a projection of continuing losses; or a sale or disposition of a significant portion of a reporting unit. The occurrence of one of these triggering events or conditions could significantly
impact an impairment assessment, necessitating an impairment charge. The Company evaluates indefinite-lived tradenames in conjunction with its annual goodwill impairment test.
The Company operates its business through two
segments consisting of physical therapy operations and IIP. The reporting units within the Company’s physical therapy business are comprised of six regions primarily based on each clinic’s location. The IIP business consists of two reporting units.
As part of the impairment analysis, the Company is first required to assess qualitatively if it can
conclude whether goodwill is more likely than not impaired. If goodwill is more likely than not impaired, it is then required to complete a quantitative analysis of whether a reporting unit’s fair value is less than its carrying amount. In
evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company considers relevant events or circumstances that affect the fair value or carrying amount of a reporting unit. The
Company considers both the income and market approach in determining the fair value of its reporting units when performing a quantitative analysis. An impairment loss generally would be recognized when the carrying amount of the net assets of a
reporting unit, inclusive of goodwill and other identifiable intangible assets, exceeds the estimated fair value of the reporting unit.
For the three months ended March 31, 2024, no triggering events or indicators were identified that would require impairment assessments for such period. During the three and twelve months ended December 31, 2023, the Company recorded a
charge of $15.8 million for goodwill impairment and a charge of $1.7 million for impairment of a tradename. The charges for impairment were related to one reporting unit in the IIP business. The impairment is related to a change in the reporting unit’s
current and projected operating income as well as various market inputs based on current market conditions. The Company did not
recognize any impairment as a result of the Company’s annual assessment of goodwill and tradename for the other seven reporting units.
The Company also noted no impairment to long-lived assets for all reporting units.
The
Company will continue to monitor for any triggering events or other indicators of impairment.
Investment in unconsolidated affiliate
Investments in unconsolidated affiliates, in which the Company has less than a controlling interest, are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions,
distributions and the Company’s equity in net earnings or loss of the respective joint venture.
Non-Controlling Interest
The Company recognizes non-controlling interest, in which the Company has no obligation but the right to purchase the non-controlling interest, as permanent
equity in the unaudited consolidated financial statements separate from the parent entity’s equity. The amount of net income attributable to non-controlling interest is included in the consolidated net income on the face of the unaudited
consolidated statements of net income. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The
Company recognizes a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the non-controlling equity investment on the deconsolidation date.
When the purchase price of a non-controlling interest by the Company exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. Additionally,
operating losses are allocated to non-controlling interests even when such allocation creates a deficit balance for the non-controlling interest partner.
Redeemable Non-Controlling Interest
The non-controlling interest that is reflected as redeemable non-controlling interest in the unaudited consolidated financial statements consist of those in which the
owners and the Company have certain redemption rights, whether currently exercisable or not, and which currently, or in the future, require that the Company purchase or the owner sell the non-controlling interest held by the owner, if certain
conditions are met. The purchase price is derived at a predetermined formula based on a multiple of trailing twelve months earnings performance as defined in the respective limited partnership agreements. The redemption rights can be triggered by
the owner or the Company at such time as both of the following events have occurred: 1) termination of the owner’s employment, regardless of the reason for such termination, and 2) the passage of specified number of years after the closing of the
transaction, typically
to five years,
as defined in the limited partnership agreement. The redemption rights are not automatic or mandatory (even upon death) and require either the owner or the Company to exercise its rights when the conditions triggering the redemption rights have been
satisfied.On the date the Company acquires a controlling interest in a partnership, and the limited partnership agreement for such partnership contains redemption rights not under
the control of the Company, the fair value of the non-controlling interest is recorded in the consolidated balance sheet under the caption – Redeemable non-controlling interest – temporary equity. Then, in each reporting period thereafter until it
is purchased by the Company, the redeemable non-controlling interest is adjusted to the greater of its then current redemption value or initial carrying value, based on the predetermined formula defined in the respective limited partnership
agreement. As a result, the value of the non-controlling interest is not adjusted below its initial carrying value. The Company records any adjustments in the redemption value, net of tax, directly to retained earnings and the adjustments are not
reflected in the unaudited consolidated statements of net income. Although the adjustments are not reflected in the unaudited consolidated statements of net income, current accounting rules require that the Company reflects the adjustments, net of
tax, in the earnings per share calculation. The amount of net income attributable to redeemable non-controlling interest owners is included in consolidated net income on the face of the unaudited consolidated statements of net income. Management
believes the redemption value (i.e., the carrying amount) and fair value are the same.
Revenue Recognition
The
Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. For ASC 606, there is an implied contract between the Company and the patient upon each patient visit. Separate contractual arrangements exist between the
Company and third-party payors (e.g. insurers, managed care programs, government programs, workers’ compensation) which establish the amounts the third parties pay on behalf of the patients for covered services rendered. While these agreements are
not considered contracts with the customer, they are used for determining the transaction price for services provided to the patients covered by the third-party payors. The payor contracts do not indicate performance obligations for the Company but
indicate reimbursement rates for patients who are covered by those payors when the services are provided. At that time, the Company is obligated to provide services for the reimbursement rates stipulated in the payor contracts. The execution of the
contract alone does not indicate a performance obligation. For self-paying customers, the performance obligation exists when the Company provides the services at established rates. The difference between the Company’s established rate and the
anticipated reimbursement rate is accounted for as an offset to revenue—contractual allowance. Payments for services rendered are typically due 30
to 120 days after receipt of the invoice.
Patient Revenue
Net patient revenue consists of revenues for physical therapy
and occupational therapy clinics that provide pre- and post-operative care and treatment for orthopedic related disorders, sports-related injuries, preventative care, rehabilitation of injured workers and neurological-related injuries. Net patient
revenue (patient revenue less estimated contractual adjustments – as described below) is recognized at the estimated net realizable amounts from third-party payors, patients and others in exchange for services rendered when obligations under the
terms of the contract are satisfied. There is an implied contract between us and the patient upon each patient visit. Generally, this occurs as the Company provides physical and occupational therapy services, as each service provided is distinct
and future services rendered are not dependent on previously rendered services. The Company has agreements with third-party payors that provide payments to the Company at amounts different from its established rates.
Other Revenue
Revenue from the IIP business, which is included in other
revenue in the consolidated statements of net income, is derived from onsite services the Company provides to clients’ employees including injury prevention, rehabilitation, ergonomic assessments, post-offer employment testing and performance
optimization. Revenue from the Company’s IIP business is recognized when obligations under the terms of the contract are satisfied. Revenues are recognized at an amount equal to the consideration the company expects to receive in exchange for
providing injury prevention services to its clients. The revenue is determined and recognized based on the number of hours and respective rate for services provided in a given period.
Management contract revenue, which is also included in other revenue, is derived from contractual arrangements whereby the Company manages a clinic for third party owners. The Company does not have any ownership interest in these
clinics. Typically, revenue is determined based on the number of visits conducted at the clinic and recognized at a point in time when services are performed. Costs, typically salaries for the Company’s employees, are recorded when incurred.
Management contract revenue was $2.4 million and $1.8 million for the three months ended March 31, 2024, and March 31, 2023, respectively.
Additionally, other revenue from physical therapy
operations includes services the Company provides on-site at locations such as schools and industrial worksites for physical or occupational therapy services, athletic trainers for schools and gym membership fees. Contract terms and rates are
agreed to in advance between the Company and the third parties. Services are typically performed over the contract period and revenue is recorded at the point of service. If the services are paid in advance, revenue is recorded as a contract
liability over the period of the agreement and recognized at the point in time when the services are performed.
Contractual Allowances
The allowance for estimated contractual adjustments is based on terms of payor contracts and historical collection and write-off experience. Contractual allowances result from the differences between the rates charged for services
performed and expected reimbursements by both insurance companies and government sponsored healthcare programs for such services. Medicare regulations and the various third-party payors and managed care contracts are often complex and may
include multiple reimbursement mechanisms payable for the services provided in Company clinics. The Company estimates contractual allowances based on its interpretation of the applicable regulations, payor contracts and historical
calculations. Each month the Company estimates its contractual allowance for each clinic based on payor contracts and the historical collection experience of the clinic and applies an appropriate contractual allowance reserve percentage to
the gross accounts receivable balances for each payor of the clinic. Based on the Company’s historical experience, calculating the contractual allowance reserve percentage at the payor level is sufficient to allow the Company to provide the
necessary detail and accuracy with its collectability estimates. However, the services authorized, provided and related reimbursement are subject to interpretation that could result in payments that differ from the Company’s estimates.
Payor terms are periodically revised necessitating continual review and assessment of the estimates made by management. The Company’s billing system does not capture the exact change in its contractual allowance reserve estimate from period
to period in order to assess the accuracy of its revenues and hence its contractual allowance reserves. Management regularly compares its cash collections to corresponding net revenues measured both in the aggregate and on a
clinic-by-clinic basis. In the aggregate, historically the difference between net revenues and corresponding cash collections for any fiscal year has generally reflected a difference within approximately 1.0% to 1.5% of net revenues.
Additionally, analysis of subsequent periods’ contractual write-offs on a payor basis reflects a difference within approximately 1.0%
to 1.5% between the actual aggregate contractual reserve percentage as compared to the estimated contractual allowance reserve
percentage associated with the same period end balance. As a result, the Company believes that a change in the contractual allowance reserve estimate would not likely be more than 1.0% to 1.5% on each balance sheet date.
Allowance for Credit Losses
The Company determines allowances for credit losses
based on the specific agings and payor classifications at each clinic. The provision for credit losses is included in operating costs in the consolidated statements of net income. Patient accounts receivable, which are stated at the
historical carrying amount net of contractual allowances, write-offs, and allowance for credit losses, includes only those amounts the Company estimates to be collectible.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the
position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount to be recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement with the relevant tax authority.
The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during the three months ended March 31, 2024, and March 31, 2023. The Company records any interest or penalties, if required, in interest and other expense, as appropriate.
Fair Value of Financial Instruments
Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based
upon the transparency of inputs to the valuation at the measurement date.
The three levels of the fair value hierarchy are as follows:
The carrying amounts reported in the balance sheets for cash and cash equivalents, certain contingent earn-out payments, accounts receivable, accounts payable and notes payable approximate their fair values due to the
short-term maturity of these financial instruments. The carrying amount of the debt under the Third Amended and Restated Credit Agreement (defined as “Credit Agreement” in Note 8) approximates the fair value due to the proximity of the debt issue
date and the balance sheet date and the variable component of interest on debt. The interest rate on the Credit Agreement is tied to the Secured Overnight Financing Rate (“SOFR”).
The put right associated with the potential
future purchase of the separate company in an IIP acquisition in 2027 is marked to fair value on a recurring basis using Level 3 inputs. The put right associated with the potential future purchase of the separate company is determined using a
Monte Carlo simulation model utilizing unobservable inputs such as asset volatility and discount rates. The unobservable inputs used in the valuation of the put right as of March 31, 2024, include asset volatility of 25.0% and a discount rate of 11.6%.
The value of this put right increased $80.0 thousand for the three months ended March 31, 2024. The put right was valued at
approximately $1.0 million on March 31, 2024, and December 31, 2023.
The valuations of the Company’s interest rate derivative is measured as the present value of all expected future cash flows based on SOFR-based yield curves. The present value calculation uses discount rates that have been adjusted to
reflect the credit quality of the Company and its counterparty, which is a Level 2 fair value measurement. The fair value of the interest rate swap on March 31, 2024, was $5.5 million, of which $3.0 million has been included within
Other current assets and $2.5 million has been included in Other assets in the accompanying unaudited Consolidated Balance Sheet. The
impact of the interest rate swap on the accompanying unaudited Consolidated Statements of Comprehensive Income was an unrealized gain of $1.3
million, net of tax, for the three months ended March 31, 2024. See Note 9 for more information on the Company’s interest rate derivative.
The redemption value of redeemable non-controlling interests approximates the fair value. See Note 4 for the changes in the fair value of Redeemable non-controlling interest.
The consideration for some of the Company’s acquisitions includes future payments that are contingent upon the occurrence of future operational objectives being met. The Company estimates the fair value of contingent consideration
obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. These fair value measurements are based on significant inputs not
observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the
amount of contingent consideration expense the Company records in any given period. The Company determined the fair value of its contingent consideration obligations to be $10.8 million on March 31, 2024, and $12.5 million on December
31, 2023.
Restricted Stock
Restricted stock issued to employees and directors is subject to continued employment or continued service on the board, respectively. Generally, restrictions on the stock granted to employees lapse in equal annual installments on the
following anniversaries of the date of grant. For those shares granted to directors, the restrictions will lapse in equal
quarterly installments during the year after the date of grant. For those granted to officers, the restriction will lapse in
equal quarterly installments during the four years following the date of grant. Compensation expense for grants of restricted stock is
recognized based on the fair value per share on the date of grant amortized over the vesting period. The Company recognizes any forfeitures as they occur. The restricted stock issued is included in basic and diluted shares for the earnings per
share computation.
New Accounting Pronouncements
In March 2023, the FASB issued ASU 2023-01, Leases (Topic
842): Common Control Arrangements, which requires companies to amortize leasehold improvements associated with related party leases under common control over the useful life of the leasehold improvement to the common control group. The ASU is
effective for annual reporting periods beginning on or after December 15, 2023; however, early adoption is permitted. The ASU can either be applied prospectively or retrospectively. The adoption of ASU 2023-01 did not have a material effect on the
Company’s financial statements.
In November 2023, the FASB issued ASU 2023-07 Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker and included within
the reported measure of segment profit or loss. In addition, the ASU requires disclosure of other segment expenses by reportable segment and a description of their composition to permit the reconciliation between segment revenue, significant
segment expenses and the reported segment measure of profit or loss. The ASU also requires disclosure of the name and title of the chief operating decision maker. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure on an annual basis, a tabular reconciliation, including both amount and percentage of specific
categories of the effective tax rate reconciliation, including state and local income taxes (net of Federal taxes), foreign taxes, effects of changes in tax laws and regulations, effects of cross-border tax laws, tax credits, changes in valuation
allowances, nontaxable and nondeductible items and changes in unrecognized tax benefits. Additional disclosures are required for certain items exceeding five percent of income from continuing operations multiplied by the statutory income tax
rate. The standard also requires disclosure of income taxes paid between Federal, state and foreign jurisdictions, including further disaggregation of those payments exceeding five percent of the total income taxes paid. ASU 2023-09 is effective
for fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
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Earnings Per Share |
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Earnings Per Share |
2. Earnings Per Share
Basic and diluted earnings per share is computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares
and participating securities. The restricted stock the Company grants are participating securities containing non-forfeitable rights to receive dividends. Accordingly, any unvested restricted stock is included in the basic and diluted earnings per
share computation. Additionally, in accordance with current accounting guidance, the revaluation of redeemable non-controlling interest (see Note 4 Redeemable Non-Controlling Interest), net of tax, charged directly to retained earnings is included in
the earnings per basic and diluted share calculation.
The computation of basic and diluted earnings per share are as follows.
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Acquisitions of Businesses |
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Acquisitions of Businesses |
3. Acquisitions of Businesses
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 and serve the IIP sector. The consideration paid for each acquisition is derived through arm’s length negotiations and funded through working capital, borrowings under the Company’s
revolving credit facility or proceeds from completed secondary equity offerings.
The purchase price plus the fair value of the non-controlling interest for the acquisitions after March 31, 2023, were allocated to the fair value of the assets acquired, inclusive of
identifiable intangible assets (i.e. tradenames, referral relationships and non-compete agreements) and liabilities assumed based on the estimated fair values at the acquisition date, with the amount in excess of fair values being recorded as
goodwill. The Company is in the process of completing its formal valuation analysis of the acquisitions, to identify and determine the fair value of tangible and identifiable intangible assets acquired and the liabilities assumed. Thus, the final
allocation of the purchase price may differ from the preliminary estimates used on March 31, 2024, based on additional information obtained and completion of the valuation of the identifiable intangible assets. Changes in the estimated valuation of
the tangible assets acquired, the completion of the valuation of identifiable intangible assets and the completion by the Company of the identification of any unrecorded pre-acquisition contingencies, where the liability is probable and the amount
can be reasonably estimated, will likely result in adjustments to goodwill. The Company does not expect the adjustments to be material. The Company continues to evaluate the components for the purchase price allocations for other acquisitions in
2023 and 2024.
The results of operations of the acquisitions below have been included in the Company’s unaudited consolidated financial statements since their respective date of acquisition. Unaudited proforma consolidated financial information for the acquisitions have not been included, as the results, individually and in the aggregate, were not material to current operations. During the three months ended March 31, 2024, the Company acquired a majority interest in the following businesses:
2024 Acquisitions
On March 29, 2024, the Company acquired a 50% equity interest in a nine-clinic
physical therapy and hand therapy practice. The original owners of the practice retained the remaining 50%. The purchase price for the
50% equity interest was approximately $16.4
million, of which $0.5 million was in the form of a note payable. The note accrues interest at 4.5% per annum and the principal and the interest are payable on March 29, 2026. As part of the transaction, the Company agreed to additional
contingent consideration if future operational objectives are met. There is no maximum payout. The contingent consideration is valued at $0.5
million as of March 31, 2024.
Besides the multi-clinic acquisition referenced above, the Company purchased the assets and business of two physical therapy clinics, which were tucked into larger partnerships in separate transactions.
Total current assets primarily represent accounts receivable while total non-current assets consist of fixed assets and equipment used in the practice.
For the acquisitions in 2024, the values assigned to the customer and referral relationships and non-compete agreement are being amortized on a straight-line basis over their respective estimated lives. For customer and referral relationships, the weighted-average amortization period is 12.0 years. For the non-compete agreements, the weighted-average amortization period is 5.0 years. The values assigned to tradenames are tested annually for impairment. 2023 Acquisitions
On
October 31, 2023, the Company concurrently acquired 100% of an IIP business and a 55% equity interest in an ergonomics software business. The previous owner of the ergonomics software business retained a 45% equity interest. The total purchase price of the combined businesses was approximately $4.0 million and was paid in cash.
On
September 29, 2023, the Company acquired a 70% equity interest in a four-clinic physical therapy practice. The original owner of the practice retained 30%
of the equity interests. The purchase price for the 70% equity interest was approximately $6.0 million, of which $5.4 million was paid in cash, and $0.6 million was in the form of a note payable. The note accrues interest at 5.0% per annum and the principal and interest are payable in two
installments. The first payment of principal and interest of $0.3 million was paid in January 2024 and the second installment of $0.3 million is due on September 30, 2025.
In a separate transaction, on September 29, 2023, the Company acquired a 70%
equity interest in a
clinic physical therapy practice. The owner of the practice retained 30% of the equity interests. The purchase price for the 70%
equity interest was approximately $7.8 million, of which $7.4 million was paid in cash and $0.4 million is a deferred payment due on June
30, 2025.On July 31, 2023, the Company acquired a 70% equity interest in a five-clinic practice. The practice’s owners retained
a 30% equity interest. The purchase price for the 70% equity interest was approximately $2.1 million, of which $1.8 million was paid in cash and $0.3
million is a deferred payment due on June 30, 2025.
On May 31, 2023, the Company and a local partner together acquired a 75% interest in a four-clinic physical therapy practice. After the transaction, the Company’s ownership interest is 45%, the Company’s local partner’s ownership interest is 30%, and the practice’s pre-acquisition owners have a 25% ownership interest. The purchase price for the 75% equity interest was approximately $3.1 million, of which $1.7 million was paid in cash by the
Company, $1.1 million was paid in cash by the local partner, and $0.3 million was in the form of a note payable, (of which $0.2 million will be
paid by the Company and $0.1 million will be paid by the local partner). The note will be paid on July 1, 2024. The Company guaranteed
full payment of $0.3 million on its due date.
On February 28, 2023, the Company acquired an 80% interest in a one-clinic physical therapy practice. The practice’s owners retained 20% of the equity interests. The purchase price for the 80% equity interest was approximately $6.2 million, of which $5.8 million was paid in cash and $0.4 million in the form of a note payable. The note accrues interest at 4.5% per annum and the principal and interest are payable on February 28, 2025.
The aggregate purchase price for the 2023 acquisitions has been
preliminarily allocated as follows:
Besides the multi-clinic acquisitions referenced in the table
above, the Company purchased the assets and business of eight physical therapy clinics in separate transactions.
Total current assets primarily represent accounts receivable
while total non-current assets consist of fixed assets and equipment used in the practice.
For the acquisitions in 2023, the values assigned to the
customer and referral relationships and non-compete agreements are being amortized on a straight-line basis over their respective estimated lives. For customer and referral relationships, the weighted-average amortization period is 12.0 years. For the non-compete agreements, the weighted-average amortization period is 5.1 years. The values assigned to tradenames are tested annually for impairment.
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Redeemable Non-Controlling Interest |
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Redeemable Non-Controlling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Non-Controlling Interest |
4. Redeemable Non-Controlling Interest
Physical Therapy Practice Acquisitions
When the Company acquires a majority interest (the “Acquisition”) in a physical therapy clinic (referred to as “Therapy Practice”), these Therapy Practice transactions
occur in a series of steps which are described below.
The Partnership Agreement contains provisions for the redemption of the Seller Entity Interest, either at the option of the Company (the “Call Right”) or at the option
of the Seller Entity (the “Put Right”) as follows:
ProgressiveHealth Acquisition
On November 30, 2021, the Company acquired a majority interest in ProgressiveHealth Companies, LLC (“Progressive”), which owns a majority interest
in certain subsidiaries (“Progressive Subsidiaries”) that operate in the IIP businesses. The Progressive transaction was completed in a series of steps which are described below.
Neither the Progressive Operating Agreement nor the Progressive Non-Compete Agreement contain any provision to escrow or “claw back” the equity
interest in Progressive NewCo held by the Progressive Selling Shareholders, in the event of a breach of the operating agreement or non-compete terms, or the management services agreement pursuant to which the Progressive Selling Shareholders
perform services on behalf of Progressive NewCo. The Company’s only recourse against the Progressive Selling Shareholder for breach of any of these agreements is to seek damages and other legal remedies under such agreements. There are no
conditions in any of the arrangements with a Progressive Selling Shareholder that would result in a forfeiture of the equity interest in Progressive NewCo held by a Progressive Selling Shareholder.
For both scenarios described above, an Employed Selling Shareholder’s ownership of his or her equity interest in the Seller Entity predates the Acquisition and the
Company’s purchase of its partnership interest in NewCo. The Employment Agreement and the Non-Compete Agreement do not contain any provision to escrow or “claw back” the equity interest in the Seller Entity held by such Employed Selling Shareholder,
nor the Seller Entity Interest in NewCo, in the event of a breach of the employment or non-compete terms. More specifically, even if the Employed Selling Shareholder is terminated for “cause” by NewCo, such Employed Selling Shareholder does not
forfeit his or her right to his or her full equity interest in the Seller Entity and the Seller Entity does not forfeit its right to any portion of the Seller Entity Interest. The Company’s only recourse against the Employed Selling Shareholder for
breach of either the Employment Agreement or the Non-Compete Agreement is to seek damages and other legal remedies under such agreements. There are no conditions in any of the arrangements with an Employed Selling Shareholder that would result in a
forfeiture of the equity interest held in the Seller Entity or of the Seller Entity Interest.
Carrying Amounts of Redeemable Non-Controlling Interests
The following table details the changes in the carrying amount (fair value) of the Company’s redeemable non-controlling interests:
The following table categorizes the carrying amount (fair value) of the redeemable non-controlling interests:
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Goodwill |
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Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
5. Goodwill
The changes in the carrying amount of goodwill consisted of the following:
For the
three months ended March 31, 2024 and 2023, no triggering events or indicators were identified that would require impairment assessments as of such periods. During the year ended December 31, 2023, the Company recorded a charge for goodwill
impairment of $15.8 million related to an IIP acquisition.
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Intangible Assets, Net |
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Intangible Assets, Net |
6. Intangible Assets, Net
The Company’s intangible assets, net, consisted of the following:
Tradenames, customer and referral relationships and non-compete agreements are related to the businesses acquired. The value assigned to tradenames has an indefinite
life and is tested at least annually for impairment using the relief from royalty method in conjunction with the Company’s annual goodwill impairment test. The value assigned to customer and referral relationships is being amortized over their
respective estimated useful lives which range from 7.0 to 14.0 years. Non-compete agreements are amortized over the respective term of the agreements which range from 5.0
to 6.0 years. For the three months ended March 31, 2024, the weighted average amortization period for customer and referral relationships
was 12.7 years and the weighted average amortization period for non-compete agreements was 5.5 years. During the year ended December 31, 2023, the Company recognized a charge of $1.7 million related to the impairment of a tradename related to an IIP acquisition.
The following table details the amount of amortization expense recorded for intangible assets for the periods presented:
Based on the balance of referral relationships and non-compete agreements as of
March 31, 2024, the expected amount to be amortized in 2024 and thereafter by year is as follows:
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Accrued Expenses |
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Accrued Expenses |
7. Accrued Expenses
Accrued expenses consisted of the following:
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Borrowings |
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Borrowings |
8. Borrowings
Amounts outstanding under the Company’s Senior Credit Facilities (as defined below) and notes payable
consisted of the following:
Effective December 5, 2013, the Company entered into an Amended and Restated Credit Agreement with a commitment for a $125.0 million revolving credit facility. This agreement was amended and/or restated in August 2015, January 2016, March 2017, November 2017, and January 2021. On June 17, 2022, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”) among Bank of
America, N.A., as administrative agent (“Administrative Agent”) and the lenders from time-to-time party thereto.
The Credit Agreement, which matures on June 17, 2027, provides for loans in an aggregate principal amount
of $325 million. Such loans were made available through the following facilities
(collectively, the “Senior Credit Facilities”):
The proceeds of the Revolving Facility shall be used by the Company for working capital and other general corporate purposes of the Company and
its subsidiaries, including to fund future acquisitions and invest in growth opportunities. The proceeds of the Term Facility were used by the Company to refinance the indebtedness outstanding under the Amended Credit Agreement, to pay fees and
expenses incurred in connection with the transactions involving the loan facilities, for working capital and other general corporate purposes of the Company and its subsidiaries.
The Company is permitted to increase the Revolving Facility and/or add one or more tranches of term loans in an aggregate amount not to exceed the sum of (i) $100 million plus (ii) an unlimited additional
amount, provided that (in the case of clause (ii)), after giving effect to such increases, the pro forma Consolidated Leverage Ratio (as defined in the Credit Agreement) would not exceed 2.0:1.0, and the aggregate amount of all incremental increases under the Revolving Facility
does not exceed $50,000,000.
The interest rates per annum applicable to the Senior Credit Facilities (other
than in respect of Swingline Loans) will be Term SOFR (as defined in the Credit Agreement) plus an applicable margin or, at the option of the Company, an alternate base rate plus an applicable margin. Each Swingline Loan shall bear interest at
the base rate plus the applicable margin. The applicable margin for Term SOFR borrowings ranges from 1.50% to 2.25%, and the applicable
margin for alternate base rate borrowings ranges from 0.50% to 1.25%, in each case, based on the Consolidated Leverage Ratio of the Company and its subsidiaries. Interest is payable at the end of the selected
interest period but no less frequently than quarterly and on the date of maturity.
The Company is also required to pay to the Administrative Agent, for the account
of each lender under the Revolving Facility, a commitment fee equal to the actual daily excess of each lender’s commitment over its outstanding credit exposure under the Revolving Facility (“unused fee”). Such unused fee will range between 0.25% and 0.35% per annum and is also based on the Consolidated Leverage Ratio of the Company and its subsidiaries. The
Company may prepay and/or repay the revolving loans and the term loans, and/or terminate the revolving loan commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions.
The Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of
liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions,
thresholds and baskets. The Credit Agreement includes certain financial covenants which include the Consolidated Fixed Charge Coverage Ratio, and the Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit Agreement also
contains customary events of default.
The Company’s obligations under the Credit Agreement are guaranteed by its wholly
owned material domestic subsidiaries (each, a “Guarantor”), and the obligations of the Company and any Guarantors are secured by a perfected first priority security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions.
As of March 31, 2024, $143.4 million was outstanding on the Term Facility while none was outstanding under the Revolving Facility
resulting in $175.0 million of credit availability. As of March 31, 2024, the Company was in compliance with all of the covenants contained in the Credit Agreement.
The interest rate on the Company’s term loan was 4.7% for the three months ended March 31, 2024, and 4.9% for the three months ended March 31, 2023, with an all-in effective interest rate, including all associated costs, of 5.3% and 5.5% over the same periods,
respectively.
The Company generally enters into various notes payable as a means of financing a portion of its
acquisitions and purchasing of non-controlling interests. In conjunction with acquisitions in the years ended December 31, 2022, 2023 and 2024, the Company entered into notes payable in the aggregate amount of $3.9 million, of which $3.1 million is
due in 2025 and $0.8 million is due in 2026. Interest accrues in the range of 3.5% to 8.5% per annum and is payable with each principal
installment.
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Derivative Instruments |
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Derivative Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments |
9. Derivative Instruments
The Company is
exposed to certain market risks in the ordinary course of business due to adverse changes in interest rates. The exposure to interest rate risk primarily results from the Company’s variable-rate borrowing. The Company may elect to use derivative
financial instruments to manage risks from fluctuations in interest rates. The Company does not purchase or hold derivatives for trading or speculative purposes. Fluctuations in interest rates can be volatile and the Company’s risk management
activities do not eliminate these risks.
Interest Rate Swap
In May 2022, the Company entered into an interest rate swap
agreement, effective on June 30, 2022, with Bank of America, N.A, which had a $150 million notional value, and a maturity date of June 30, 2027. Beginning in July 2022, the Company receives 1-month SOFR, and pays a fixed rate of interest of 2.815% on 1-month SOFR on a quarterly basis. The total interest rate in any period will also include an applicable margin based on the Company’s consolidated
leverage ratio. In connection with the swap, no cash was exchanged between the Company and the counterparty.
The Company designated its interest rate swap as a cash flow hedge and
structured it to be highly effective. Consequently, unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other comprehensive income (loss), net of tax.
The impact of the Company’s derivative instruments on the accompanying
Consolidated Statements of Comprehensive Income are presented in the table below.
The valuations of the Company’s interest rate derivatives are measured as the
present value of all expected future cash flows based on SOFR-based yield curves. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparty which is a Level 2 fair
value measurement.
The carrying and fair value of the Company’s interest rate derivatives (included in other current assets and other assets) were as follows.
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Leases |
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Leases |
10. Leases
The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract.
Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use
assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the
Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is
recognized on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the
right-of-use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense.
The components of lease expense were as follows.
* Sublease income was immaterial
Lease costs are reflected in the consolidated statement of net income in the line item – rent, supplies, contract labor and other.
The supplemental cash flow information related to leases was as follows.
The aggregate future lease payments for operating leases as of March 31, 2024, were as follows.
Average lease terms and discount rates were as follows.
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Segment Information |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
11. Segment Information
The Company’s reportable segments include the physical therapy operations segment and the IIP segment. Also included in the physical therapy operations segment are
revenues from management contract services and other services which include services the Company provides on-site, such as athletic trainers for schools.
Physical Therapy Operations
The physical therapy operations segment primarily operates
through subsidiary clinic partnerships (“Clinic Partnerships”), in which the Company generally owns a 1% general partnership interest in
all the Clinic Partnerships. The Company’s limited partnership interests generally range from 65% to 75% (the range is 10% - 99%) in the Clinic Partnerships. The managing therapist of each clinic owns, directly or indirectly, the remaining limited partnership interest in most of
the clinics (hereinafter referred to as “Clinic Partnerships”). To a lesser extent, the Company operates some clinics, through wholly-owned subsidiaries, under profit sharing arrangements with therapists (hereinafter referred to as “Wholly-Owned
Facilities”).
The Company continues to seek to attract for employment
physical therapists who have established relationships with physicians and other referral sources, by offering these therapists a competitive salary and incentives based on the profitability of the clinic that they manage. For multi-site clinic
practices in which a controlling interest is acquired by the Company, the prior owners typically continue on as employees to manage the clinic operations, retain a non-controlling ownership interest in the clinics and receive a competitive salary for
managing the clinic operations. In addition, the Company has developed satellite clinic facilities as part of existing Clinic Partnerships and Wholly-Owned Facilities, with the result that a substantial number of Clinic Partnerships and Wholly-Owned
Facilities operate more than one clinic location.
Besides the multi-clinic acquisitions referenced in the table above, during the three months ended March 31, 2024 and the year ended December 31, 2023, the Company
purchased the assets and businesses of two and eight physical therapy clinics, respectively, in separate transactions.
Clinic Partnerships
For non-acquired Clinic Partnerships, the earnings and liabilities attributable to the non-controlling interests, typically owned by the managing therapist, directly or
indirectly, are recorded within the balance sheets and income statements as non-controlling interest—permanent equity. For acquired Clinic Partnerships with redeemable non-controlling interests, the earnings attributable to the redeemable
non-controlling interests are recorded within the consolidated balance sheets and income statements as redeemable non-controlling interest—temporary equity.
Wholly-Owned Facilities
For Wholly-Owned Facilities with profit sharing arrangements, an appropriate accrual is recorded for the amount of profit sharing due the clinic partners/directors. The
amount is expensed as compensation and included in clinic operating costs—salaries and related costs. The respective liability is included in current liabilities—accrued expenses on the consolidated balance sheets.
Industrial Injury Prevention Services
Services provided in the IIP segment include onsite injury prevention and rehabilitation, performance optimization, post offer employment testing, functional capacity
evaluations, and ergonomic assessments. The majority of these services are contracted with and paid for directly by employers, including a number of Fortune 500 companies. Other clients include large insurers and their contractors. The Company
performs these services through Industrial Sports Medicine Professionals, consisting primarily of specialized certified athletic trainers (“ATCs”).
Segment Financials
The Company evaluates performance of the segments based on gross profit. The Company has provided additional information regarding its reportable segments which
contributes to the understanding of the Company and provides useful information.
The following table summarizes selected financial data for the Company’s reportable segments:
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Investment in Unconsolidated Affiliate |
3 Months Ended |
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Mar. 31, 2024 | |
Investment in Unconsolidated Affiliate [Abstract] | |
Investment in Unconsolidated Affiliate |
12. Investment in Unconsolidated
Affiliate
Through one of its subsidiaries, the Company has a 49% joint venture
interest in a company which provides physical therapy services for patients at hospitals. Since the Company is deemed to not have a controlling interest in the company, the Company’s investment is accounted for using the equity method of
accounting. The investment balance of this joint venture as of March 31, 2024, is $12.2 million and the earnings amounted to
approximately $0.3 million.
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Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events |
13. Subsequent Events
On May 7, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.44 per share payable on June 14, 2024, to shareholders of record on May 23, 2024.
On April 30,
2024, one of the Company’s primary IIP businesses, Briotix Health Limited Partnership, acquired 100% of an IIP business for a closing
purchase price of $24.0 million, with provision for additional purchase price based on the financial performance of the acquired
business during the 12-month period after closing.
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Insider Trading Arrangements |
3 Months Ended |
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Mar. 31, 2024 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted [Flag] | false |
Non-Rule 10b5-1 Arrangement Adopted [Flag] | false |
Rule 10b5-1 Arrangement Terminated [Flag] | false |
Non-Rule 10b5-1 Arrangement Terminated [Flag] | false |
Basis of Presentation and Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business |
Nature of Business
U.S.
Physical Therapy, Inc. and its subsidiaries (the “Company”) operates its business through two reportable business segments. The
Company’s reportable segments include the physical therapy operations segment and the industrial injury prevention services (“IIP”) segment. The Company’s physical therapy operations consist of physical therapy and occupational therapy clinics
that provide pre-and post-operative care and treatment for orthopedic-related disorders, sports-related injuries, preventive care, rehabilitation of injured workers and neurological injuries. Services provided by the IIP segment include onsite
injury prevention and rehabilitation, performance optimization and ergonomic assessments.
As of March 31, 2024,
the Company operated 679 clinics in 42
states. In addition to the 679 clinics, the Company also managed 41 physical therapy practices for unrelated physician groups and hospitals as of March 31, 2024.
During the three months ended March 31, 2024, and for the year-ended December
31, 2023, the Company completed the acquisitions of the following clinic practices and IIP businesses:
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Basis of Presentation |
Basis of Presentation
The accompanying unaudited
consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions for Form 10-Q. However, the
statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Management believes this report contains all necessary
adjustments (consisting only of normal recurring adjustments) to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the interim periods presented. These unaudited consolidated
financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and
Exchange Commission on February 29, 2024. Interim results are not necessarily indicative of the results the Company expects for the entire year.
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Principles of Consolidation |
Principles of Consolidation
The consolidated financial statements include the accounts of the Company. All significant
intercompany transactions have been eliminated.
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Segment Reporting |
Segment Reporting
Operating segments are components of an enterprise for which separate financial information is
available and is evaluated regularly by chief operating decision makers in determining the allocation of resources and in assessing performance. The Company currently operates through two segments: physical therapy operations and IIP.
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Use of Estimates |
Use of Estimates
In preparing the Company’s consolidated financial statements, management makes certain estimates and assumptions, especially in relation to, but not limited to,
goodwill impairment, tradenames and other intangible assets, allocations of purchase price, allowance for receivables, tax provision and contractual allowances, that affect the amounts reported in the consolidated financial statements and
related disclosures. Actual results may differ from these estimates.
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Goodwill and Other Indefinite-Lived Intangible Assets |
Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill represents the excess of the amount paid and fair value of the non-controlling interests over
the fair value of the acquired business assets, which include certain identifiable intangible assets. Historically, goodwill has been derived from acquisitions and, prior to 2009, from the purchase of some or all of a particular local
management’s equity interest in an existing clinic. Effective January 1, 2009, if the purchase price of a non-controlling interest, permanent equity by the Company exceeds or is less than the book value at the time of purchase, any excess or
shortfall is recognized as an adjustment to additional paid-in capital.
Goodwill and other indefinite-lived intangible assets are not amortized but are instead subject to
periodic impairment evaluations. The fair value of goodwill and other identifiable intangible assets with indefinite lives are evaluated for impairment at least annually and upon the occurrence of certain triggering events or conditions and are
written down to fair value, if considered impaired. These events or conditions include but are not limited to a significant adverse change in the business environment, regulatory environment, or legal factors; a current period operating, or cash
flow, loss combined with a history of such losses or a projection of continuing losses; or a sale or disposition of a significant portion of a reporting unit. The occurrence of one of these triggering events or conditions could significantly
impact an impairment assessment, necessitating an impairment charge. The Company evaluates indefinite-lived tradenames in conjunction with its annual goodwill impairment test.
The Company operates its business through two
segments consisting of physical therapy operations and IIP. The reporting units within the Company’s physical therapy business are comprised of six regions primarily based on each clinic’s location. The IIP business consists of two reporting units.
As part of the impairment analysis, the Company is first required to assess qualitatively if it can
conclude whether goodwill is more likely than not impaired. If goodwill is more likely than not impaired, it is then required to complete a quantitative analysis of whether a reporting unit’s fair value is less than its carrying amount. In
evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company considers relevant events or circumstances that affect the fair value or carrying amount of a reporting unit. The
Company considers both the income and market approach in determining the fair value of its reporting units when performing a quantitative analysis. An impairment loss generally would be recognized when the carrying amount of the net assets of a
reporting unit, inclusive of goodwill and other identifiable intangible assets, exceeds the estimated fair value of the reporting unit.
For the three months ended March 31, 2024, no triggering events or indicators were identified that would require impairment assessments for such period. During the three and twelve months ended December 31, 2023, the Company recorded a
charge of $15.8 million for goodwill impairment and a charge of $1.7 million for impairment of a tradename. The charges for impairment were related to one reporting unit in the IIP business. The impairment is related to a change in the reporting unit’s
current and projected operating income as well as various market inputs based on current market conditions. The Company did not
recognize any impairment as a result of the Company’s annual assessment of goodwill and tradename for the other seven reporting units.
The Company also noted no impairment to long-lived assets for all reporting units.
The
Company will continue to monitor for any triggering events or other indicators of impairment.
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Investment in Unconsolidated Affiliate |
Investment in unconsolidated affiliate
Investments in unconsolidated affiliates, in which the Company has less than a controlling interest, are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions,
distributions and the Company’s equity in net earnings or loss of the respective joint venture.
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Non-Controlling Interest |
Non-Controlling Interest
The Company recognizes non-controlling interest, in which the Company has no obligation but the right to purchase the non-controlling interest, as permanent
equity in the unaudited consolidated financial statements separate from the parent entity’s equity. The amount of net income attributable to non-controlling interest is included in the consolidated net income on the face of the unaudited
consolidated statements of net income. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The
Company recognizes a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the non-controlling equity investment on the deconsolidation date.
When the purchase price of a non-controlling interest by the Company exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. Additionally,
operating losses are allocated to non-controlling interests even when such allocation creates a deficit balance for the non-controlling interest partner.
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Redeemable Non-Controlling Interest |
Redeemable Non-Controlling Interest
The non-controlling interest that is reflected as redeemable non-controlling interest in the unaudited consolidated financial statements consist of those in which the
owners and the Company have certain redemption rights, whether currently exercisable or not, and which currently, or in the future, require that the Company purchase or the owner sell the non-controlling interest held by the owner, if certain
conditions are met. The purchase price is derived at a predetermined formula based on a multiple of trailing twelve months earnings performance as defined in the respective limited partnership agreements. The redemption rights can be triggered by
the owner or the Company at such time as both of the following events have occurred: 1) termination of the owner’s employment, regardless of the reason for such termination, and 2) the passage of specified number of years after the closing of the
transaction, typically
to five years,
as defined in the limited partnership agreement. The redemption rights are not automatic or mandatory (even upon death) and require either the owner or the Company to exercise its rights when the conditions triggering the redemption rights have been
satisfied.On the date the Company acquires a controlling interest in a partnership, and the limited partnership agreement for such partnership contains redemption rights not under
the control of the Company, the fair value of the non-controlling interest is recorded in the consolidated balance sheet under the caption – Redeemable non-controlling interest – temporary equity. Then, in each reporting period thereafter until it
is purchased by the Company, the redeemable non-controlling interest is adjusted to the greater of its then current redemption value or initial carrying value, based on the predetermined formula defined in the respective limited partnership
agreement. As a result, the value of the non-controlling interest is not adjusted below its initial carrying value. The Company records any adjustments in the redemption value, net of tax, directly to retained earnings and the adjustments are not
reflected in the unaudited consolidated statements of net income. Although the adjustments are not reflected in the unaudited consolidated statements of net income, current accounting rules require that the Company reflects the adjustments, net of
tax, in the earnings per share calculation. The amount of net income attributable to redeemable non-controlling interest owners is included in consolidated net income on the face of the unaudited consolidated statements of net income. Management
believes the redemption value (i.e., the carrying amount) and fair value are the same.
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Revenue Recognition |
Revenue Recognition
The
Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. For ASC 606, there is an implied contract between the Company and the patient upon each patient visit. Separate contractual arrangements exist between the
Company and third-party payors (e.g. insurers, managed care programs, government programs, workers’ compensation) which establish the amounts the third parties pay on behalf of the patients for covered services rendered. While these agreements are
not considered contracts with the customer, they are used for determining the transaction price for services provided to the patients covered by the third-party payors. The payor contracts do not indicate performance obligations for the Company but
indicate reimbursement rates for patients who are covered by those payors when the services are provided. At that time, the Company is obligated to provide services for the reimbursement rates stipulated in the payor contracts. The execution of the
contract alone does not indicate a performance obligation. For self-paying customers, the performance obligation exists when the Company provides the services at established rates. The difference between the Company’s established rate and the
anticipated reimbursement rate is accounted for as an offset to revenue—contractual allowance. Payments for services rendered are typically due 30
to 120 days after receipt of the invoice.
Patient Revenue
Net patient revenue consists of revenues for physical therapy
and occupational therapy clinics that provide pre- and post-operative care and treatment for orthopedic related disorders, sports-related injuries, preventative care, rehabilitation of injured workers and neurological-related injuries. Net patient
revenue (patient revenue less estimated contractual adjustments – as described below) is recognized at the estimated net realizable amounts from third-party payors, patients and others in exchange for services rendered when obligations under the
terms of the contract are satisfied. There is an implied contract between us and the patient upon each patient visit. Generally, this occurs as the Company provides physical and occupational therapy services, as each service provided is distinct
and future services rendered are not dependent on previously rendered services. The Company has agreements with third-party payors that provide payments to the Company at amounts different from its established rates.
Other Revenue
Revenue from the IIP business, which is included in other
revenue in the consolidated statements of net income, is derived from onsite services the Company provides to clients’ employees including injury prevention, rehabilitation, ergonomic assessments, post-offer employment testing and performance
optimization. Revenue from the Company’s IIP business is recognized when obligations under the terms of the contract are satisfied. Revenues are recognized at an amount equal to the consideration the company expects to receive in exchange for
providing injury prevention services to its clients. The revenue is determined and recognized based on the number of hours and respective rate for services provided in a given period.
Management contract revenue, which is also included in other revenue, is derived from contractual arrangements whereby the Company manages a clinic for third party owners. The Company does not have any ownership interest in these
clinics. Typically, revenue is determined based on the number of visits conducted at the clinic and recognized at a point in time when services are performed. Costs, typically salaries for the Company’s employees, are recorded when incurred.
Management contract revenue was $2.4 million and $1.8 million for the three months ended March 31, 2024, and March 31, 2023, respectively.
Additionally, other revenue from physical therapy
operations includes services the Company provides on-site at locations such as schools and industrial worksites for physical or occupational therapy services, athletic trainers for schools and gym membership fees. Contract terms and rates are
agreed to in advance between the Company and the third parties. Services are typically performed over the contract period and revenue is recorded at the point of service. If the services are paid in advance, revenue is recorded as a contract
liability over the period of the agreement and recognized at the point in time when the services are performed.
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Contractual Allowances |
Contractual Allowances
The allowance for estimated contractual adjustments is based on terms of payor contracts and historical collection and write-off experience. Contractual allowances result from the differences between the rates charged for services
performed and expected reimbursements by both insurance companies and government sponsored healthcare programs for such services. Medicare regulations and the various third-party payors and managed care contracts are often complex and may
include multiple reimbursement mechanisms payable for the services provided in Company clinics. The Company estimates contractual allowances based on its interpretation of the applicable regulations, payor contracts and historical
calculations. Each month the Company estimates its contractual allowance for each clinic based on payor contracts and the historical collection experience of the clinic and applies an appropriate contractual allowance reserve percentage to
the gross accounts receivable balances for each payor of the clinic. Based on the Company’s historical experience, calculating the contractual allowance reserve percentage at the payor level is sufficient to allow the Company to provide the
necessary detail and accuracy with its collectability estimates. However, the services authorized, provided and related reimbursement are subject to interpretation that could result in payments that differ from the Company’s estimates.
Payor terms are periodically revised necessitating continual review and assessment of the estimates made by management. The Company’s billing system does not capture the exact change in its contractual allowance reserve estimate from period
to period in order to assess the accuracy of its revenues and hence its contractual allowance reserves. Management regularly compares its cash collections to corresponding net revenues measured both in the aggregate and on a
clinic-by-clinic basis. In the aggregate, historically the difference between net revenues and corresponding cash collections for any fiscal year has generally reflected a difference within approximately 1.0% to 1.5% of net revenues.
Additionally, analysis of subsequent periods’ contractual write-offs on a payor basis reflects a difference within approximately 1.0%
to 1.5% between the actual aggregate contractual reserve percentage as compared to the estimated contractual allowance reserve
percentage associated with the same period end balance. As a result, the Company believes that a change in the contractual allowance reserve estimate would not likely be more than 1.0% to 1.5% on each balance sheet date.
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Allowance for Credit Losses |
Allowance for Credit Losses
The Company determines allowances for credit losses
based on the specific agings and payor classifications at each clinic. The provision for credit losses is included in operating costs in the consolidated statements of net income. Patient accounts receivable, which are stated at the
historical carrying amount net of contractual allowances, write-offs, and allowance for credit losses, includes only those amounts the Company estimates to be collectible.
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Income Taxes |
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the
position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount to be recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement with the relevant tax authority.
The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during the three months ended March 31, 2024, and March 31, 2023. The Company records any interest or penalties, if required, in interest and other expense, as appropriate.
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Fair Value of Financial Instruments |
Fair Value of Financial Instruments
Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based
upon the transparency of inputs to the valuation at the measurement date.
The three levels of the fair value hierarchy are as follows:
The carrying amounts reported in the balance sheets for cash and cash equivalents, certain contingent earn-out payments, accounts receivable, accounts payable and notes payable approximate their fair values due to the
short-term maturity of these financial instruments. The carrying amount of the debt under the Third Amended and Restated Credit Agreement (defined as “Credit Agreement” in Note 8) approximates the fair value due to the proximity of the debt issue
date and the balance sheet date and the variable component of interest on debt. The interest rate on the Credit Agreement is tied to the Secured Overnight Financing Rate (“SOFR”).
The put right associated with the potential
future purchase of the separate company in an IIP acquisition in 2027 is marked to fair value on a recurring basis using Level 3 inputs. The put right associated with the potential future purchase of the separate company is determined using a
Monte Carlo simulation model utilizing unobservable inputs such as asset volatility and discount rates. The unobservable inputs used in the valuation of the put right as of March 31, 2024, include asset volatility of 25.0% and a discount rate of 11.6%.
The value of this put right increased $80.0 thousand for the three months ended March 31, 2024. The put right was valued at
approximately $1.0 million on March 31, 2024, and December 31, 2023.
The valuations of the Company’s interest rate derivative is measured as the present value of all expected future cash flows based on SOFR-based yield curves. The present value calculation uses discount rates that have been adjusted to
reflect the credit quality of the Company and its counterparty, which is a Level 2 fair value measurement. The fair value of the interest rate swap on March 31, 2024, was $5.5 million, of which $3.0 million has been included within
Other current assets and $2.5 million has been included in Other assets in the accompanying unaudited Consolidated Balance Sheet. The
impact of the interest rate swap on the accompanying unaudited Consolidated Statements of Comprehensive Income was an unrealized gain of $1.3
million, net of tax, for the three months ended March 31, 2024. See Note 9 for more information on the Company’s interest rate derivative.
The redemption value of redeemable non-controlling interests approximates the fair value. See Note 4 for the changes in the fair value of Redeemable non-controlling interest.
The consideration for some of the Company’s acquisitions includes future payments that are contingent upon the occurrence of future operational objectives being met. The Company estimates the fair value of contingent consideration
obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. These fair value measurements are based on significant inputs not
observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the
amount of contingent consideration expense the Company records in any given period. The Company determined the fair value of its contingent consideration obligations to be $10.8 million on March 31, 2024, and $12.5 million on December
31, 2023.
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Restricted Stock |
Restricted Stock
Restricted stock issued to employees and directors is subject to continued employment or continued service on the board, respectively. Generally, restrictions on the stock granted to employees lapse in equal annual installments on the
following anniversaries of the date of grant. For those shares granted to directors, the restrictions will lapse in equal
quarterly installments during the year after the date of grant. For those granted to officers, the restriction will lapse in
equal quarterly installments during the four years following the date of grant. Compensation expense for grants of restricted stock is
recognized based on the fair value per share on the date of grant amortized over the vesting period. The Company recognizes any forfeitures as they occur. The restricted stock issued is included in basic and diluted shares for the earnings per
share computation.
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New Accounting Pronouncements |
New Accounting Pronouncements
In March 2023, the FASB issued ASU 2023-01, Leases (Topic
842): Common Control Arrangements, which requires companies to amortize leasehold improvements associated with related party leases under common control over the useful life of the leasehold improvement to the common control group. The ASU is
effective for annual reporting periods beginning on or after December 15, 2023; however, early adoption is permitted. The ASU can either be applied prospectively or retrospectively. The adoption of ASU 2023-01 did not have a material effect on the
Company’s financial statements.
In November 2023, the FASB issued ASU 2023-07 Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker and included within
the reported measure of segment profit or loss. In addition, the ASU requires disclosure of other segment expenses by reportable segment and a description of their composition to permit the reconciliation between segment revenue, significant
segment expenses and the reported segment measure of profit or loss. The ASU also requires disclosure of the name and title of the chief operating decision maker. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure on an annual basis, a tabular reconciliation, including both amount and percentage of specific
categories of the effective tax rate reconciliation, including state and local income taxes (net of Federal taxes), foreign taxes, effects of changes in tax laws and regulations, effects of cross-border tax laws, tax credits, changes in valuation
allowances, nontaxable and nondeductible items and changes in unrecognized tax benefits. Additional disclosures are required for certain items exceeding five percent of income from continuing operations multiplied by the statutory income tax
rate. The standard also requires disclosure of income taxes paid between Federal, state and foreign jurisdictions, including further disaggregation of those payments exceeding five percent of the total income taxes paid. ASU 2023-09 is effective
for fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
|
Basis of Presentation and Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions Within Physical Therapy Operations Segment |
During the three months ended March 31, 2024, and for the year-ended December
31, 2023, the Company completed the acquisitions of the following clinic practices and IIP businesses:
|
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computations of Basic and Diluted Earnings |
The computation of basic and diluted earnings per share are as follows.
|
Acquisitions of Businesses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions of Businesses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Clinic Acquisition |
During the three months ended March 31, 2024, the Company acquired a majority interest in the following businesses:
2024 Acquisitions
2023 Acquisitions
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocation |
The aggregate purchase price for the 2023 acquisitions has been
preliminarily allocated as follows:
|
Redeemable Non-Controlling Interest (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Non-Controlling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest |
The following table details the changes in the carrying amount (fair value) of the Company’s redeemable non-controlling interests:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount of (Fair Value) Redeemable Non-Controlling Interest |
The following table categorizes the carrying amount (fair value) of the redeemable non-controlling interests:
|
Goodwill (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Carrying Amount of Goodwill |
The changes in the carrying amount of goodwill consisted of the following:
|
Intangible Assets, Net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net |
The Company’s intangible assets, net, consisted of the following:
|
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Amortization Expenses |
The following table details the amount of amortization expense recorded for intangible assets for the periods presented:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of Customer and Referral Relationships and Non Competition Agreements |
Based on the balance of referral relationships and non-compete agreements as of
March 31, 2024, the expected amount to be amortized in 2024 and thereafter by year is as follows:
|
Accrued Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consisted of the following:
|
Borrowings (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior Credit Facilities and Notes Payable |
Amounts outstanding under the Company’s Senior Credit Facilities (as defined below) and notes payable
consisted of the following:
|
Derivative Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impacts of Derivative Instruments on Consolidated Statements of Comprehensive Income |
The impact of the Company’s derivative instruments on the accompanying
Consolidated Statements of Comprehensive Income are presented in the table below.
|
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Carrying and Fair Value of Interest Rate Derivatives |
The carrying and fair value of the Company’s interest rate derivatives (included in other current assets and other assets) were as follows.
|
Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense |
The components of lease expense were as follows.
* Sublease income was immaterial
|
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Supplemental Information Related to Leases |
The supplemental cash flow information related to leases was as follows.
|
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Future Lease Payments for Operating Leases |
The aggregate future lease payments for operating leases as of March 31, 2024, were as follows.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Lease Terms and Discount Rates |
Average lease terms and discount rates were as follows.
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Financial Data for Reportable Segments |
The following table summarizes selected financial data for the Company’s reportable segments:
|
Basis of Presentation and Significant Accounting Policies, Segment Reporting (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024
Segment
| |
Segment Reporting [Abstract] | |
Number of business segments | 2 |
Basis of Presentation and Significant Accounting Policies, Goodwill and Other Indefinite-Lived Intangible Assets (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2024
USD ($)
Segment
ReportingUnit
Region
|
Dec. 31, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
|
Goodwill and Other Indefinite-Lived Intangible Assets [Abstract] | |||
Number of business segments | Segment | 2 | ||
Number of regions | Region | 6 | ||
Goodwill impairment | $ 0 | $ 15,800 | |
Impairment of long-lived assets | $ 0 | ||
Industrial Injury Prevention Services [Member] | |||
Goodwill and Other Indefinite-Lived Intangible Assets [Abstract] | |||
Number of reporting units | ReportingUnit | 2 | ||
Goodwill impairment | $ 15,800 | 15,800 | |
Impairment of tradename | $ 1,700 | $ 1,700 | |
Other [Member] | |||
Goodwill and Other Indefinite-Lived Intangible Assets [Abstract] | |||
Number of reporting units | ReportingUnit | 7 | ||
Impairment of goodwill and tradenames | $ 0 |
Basis of Presentation and Significant Accounting Policies, Redeemable Non-Controlling Interest (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Minimum [Member] | |
Redeemable Non-Controlling Interests [Abstract] | |
Redeemable non-controlling interest, redemption rights, commencement period | 3 years |
Maximum [Member] | |
Redeemable Non-Controlling Interests [Abstract] | |
Redeemable non-controlling interest, redemption rights, commencement period | 5 years |
Basis of Presentation and Significant Accounting Policies, Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Revenue Recognition [Abstract] | ||
Revenue | $ 155,675 | $ 148,509 |
Minimum [Member] | ||
Revenue Recognition [Abstract] | ||
Terms for payments due for services rendered | 30 days | |
Maximum [Member] | ||
Revenue Recognition [Abstract] | ||
Terms for payments due for services rendered | 120 days | |
Management Contract Revenue [Member] | ||
Revenue Recognition [Abstract] | ||
Revenue | $ 2,400 | $ 1,800 |
Basis of Presentation and Significant Accounting Policies, Contractual Allowances (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Minimum [Member] | |
Contractual Allowances [Abstract] | |
Difference between net revenues and corresponding cash collections, approximately of net revenues | 1.00% |
Difference between actual aggregate contractual reserve and estimated contractual allowance reserve percentage | 1.00% |
Maximum contractual allowance reserve estimate | 1.00% |
Maximum [Member] | |
Contractual Allowances [Abstract] | |
Difference between net revenues and corresponding cash collections, approximately of net revenues | 1.50% |
Difference between actual aggregate contractual reserve and estimated contractual allowance reserve percentage | 1.50% |
Maximum contractual allowance reserve estimate | 1.50% |
Basis of Presentation and Significant Accounting Policies, Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Taxes [Abstract] | ||
Unrecognized tax benefit | $ 0 | $ 0 |
Accrued interest and penalties associated with any unrecognized tax benefits | 0 | 0 |
Interest expense recognized | $ 0 | $ 0 |
Basis of Presentation and Significant Accounting Policies, Fair Value of Financial Instruments (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
|
Fair Value of Financial Instruments [Abstract] | ||
Increase in put right | $ 80,000 | |
Put right value | 1,000,000 | $ 1,000,000 |
Interest rate derivative | 5,500,000 | |
Unrealized gain from interest rate swap | 1,300,000 | |
Fair value of contingent consideration | 10,800,000 | $ 12,500,000 |
Other Current Assets [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Interest rate derivative | 3,000,000 | |
Other Assets [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Interest rate derivative | $ 2,500,000 | |
Volatility [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Debt instrument, measurement input | 0.25 | |
Discount Rate [Member] | ||
Fair Value of Financial Instruments [Abstract] | ||
Debt instrument, measurement input | 0.116 |
Basis of Presentation and Significant Accounting Policies, Restricted Stock (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Employees [Member] | |
Restricted Stock [Abstract] | |
Period in which restrictions lapse on stock granted | 4 years |
Directors [Member] | |
Restricted Stock [Abstract] | |
Period in which restrictions lapse on stock granted | 1 year |
Officers [Member] | |
Restricted Stock [Abstract] | |
Period in which restrictions lapse on stock granted | 4 years |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Computation of earnings per share - USPH shareholders [Abstract] | ||
Net income attributable to USPH shareholders | $ 8,046 | $ 7,410 |
Charges to retained earnings [Abstract] | ||
Revaluation of redeemable non-controlling interest | (1,439) | 119 |
Tax effect at statutory rate (federal and state) | 368 | (30) |
Net income attributable to common shareholders | $ 6,975 | $ 7,499 |
Earnings per share basic (in dollars per share) | $ 0.46 | $ 0.58 |
Earnings per share diluted (in dollars per share) | $ 0.46 | $ 0.58 |
Shares used in computation [Abstract] | ||
Shares used in computation - basic (in shares) | 15,017 | 13,025 |
Shares used in computation - diluted (in shares) | 15,017 | 13,025 |
Acquisitions of Businesses, 2024 Acquired Majority Interest (Details) - Clinic |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Business Combination, Description [Abstract] | ||
Number of clinics | 2 | 8 |
March 2024 Acquisition [Member] | ||
Business Combination, Description [Abstract] | ||
Acquisition date | Mar. 29, 2024 | |
Percentage of interest acquired | 50.00% | |
Number of clinics | 9 | |
2024 Acquisition [Member] | ||
Business Combination, Description [Abstract] | ||
Number of clinics | 2 |
Acquisitions of Businesses, 2024 Acquisitions (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Mar. 29, 2024
USD ($)
Clinic
|
Jul. 31, 2023
USD ($)
Clinic
|
May 31, 2023
USD ($)
Clinic
|
Feb. 28, 2023
USD ($)
Clinic
|
Mar. 31, 2024
USD ($)
Clinic
|
Mar. 31, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
Clinic
|
|
Business Combination, Description [Abstract] | |||||||
Number of clinics | Clinic | 2 | 8 | |||||
Cash paid, net of cash acquired | $ 15,971 | $ 5,796 | |||||
Contingent payments | $ 10,800 | $ 12,500 | |||||
Customer and Referral Relationships [Member] | |||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||
Estimated useful lives of acquired intangibles | 12 years | 12 years | |||||
Non-compete Agreements [Member] | |||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||
Estimated useful lives of acquired intangibles | 5 years | 5 years 1 month 6 days | |||||
Clinic Practice [Member] | |||||||
Business Combination, Description [Abstract] | |||||||
Percentage of interest acquired | 50.00% | 70.00% | 75.00% | 80.00% | |||
Number of clinics | Clinic | 9 | 5 | 4 | 1 | |||
Percentage of interest retained by practice founder | 50.00% | 30.00% | 20.00% | ||||
Aggregate purchase price for the acquisition | $ 16,400 | $ 2,100 | $ 3,100 | $ 6,200 | |||
Cash paid for acquisition | 1,800 | 1,700 | $ 5,800 | $ 500 | |||
Percentage of interest accrued | 4.50% | 4.50% | |||||
Seller note | $ 300 | $ 400 | |||||
Deferred payments | $ 300 | ||||||
Clinic Practice [Member] | Maximum [Member] | |||||||
Business Combination, Description [Abstract] | |||||||
Contingent payments | $ 500 | ||||||
Acquisitions [Member] | |||||||
Business Combination, Description [Abstract] | |||||||
Number of clinics | Clinic | 8 | ||||||
Cash paid for acquisition | $ 26,582 | ||||||
Cash paid, net of cash acquired | 15,971 | ||||||
Seller note | 500 | 985 | |||||
Deferred payments | 0 | 830 | |||||
Contingent payments | 500 | 200 | |||||
Total consideration | 16,971 | 28,597 | |||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||
Total current assets | 0 | 1,467 | |||||
Total non-current assets | 476 | 3,485 | |||||
Total liabilities | (450) | (3,179) | |||||
Net tangible assets acquired | 26 | 1,773 | |||||
Customer and referral relationships | 6,790 | 8,042 | |||||
Non-compete agreement | 328 | 396 | |||||
Tradenames | 1,672 | 1,767 | |||||
Goodwill | 25,056 | 27,726 | |||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (16,901) | (11,107) | |||||
Total consideration | $ 16,971 | $ 28,597 |
Acquisitions of Businesses, 2023 Acquired Majority Interest (Details) - Clinic |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|||||
Business Combination, Description [Abstract] | ||||||
Number of clinics | 2 | 8 | ||||
October 2023 Acquisition [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | Oct. 31, 2023 | |||||
Percentage of interest acquired | [1] | |||||
Number of clinics | [2] | |||||
September 2023 Acquisition 1 [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | Sep. 29, 2023 | |||||
Percentage of interest acquired | 70.00% | |||||
Number of clinics | 4 | |||||
September 2023 Acquisition 2 [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | Sep. 29, 2023 | |||||
Percentage of interest acquired | 70.00% | |||||
Number of clinics | 1 | |||||
July 2023 Acquisition [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | Jul. 31, 2023 | |||||
Percentage of interest acquired | 70.00% | |||||
Number of clinics | 7 | |||||
May 2023 Acquisition [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | May 31, 2023 | |||||
Percentage of interest acquired | 45.00% | |||||
Number of clinics | 4 | |||||
February 2023 Acquisition [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Acquisition date | Feb. 28, 2023 | |||||
Percentage of interest acquired | 80.00% | |||||
Number of clinics | 1 | |||||
Acquisitions [Member] | ||||||
Business Combination, Description [Abstract] | ||||||
Number of clinics | 8 | |||||
|
Acquisitions of Businesses, 2023 Acquisitions (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Mar. 29, 2024
USD ($)
Clinic
|
Oct. 31, 2023
USD ($)
|
Sep. 29, 2023
USD ($)
Installment
Clinic
|
Jul. 31, 2023
USD ($)
Clinic
|
May 31, 2023
USD ($)
Clinic
|
Feb. 28, 2023
USD ($)
Clinic
|
Mar. 31, 2024
USD ($)
Clinic
|
Dec. 31, 2023
USD ($)
Clinic
|
|
Business Combination, Description [Abstract] | ||||||||
Number of clinics | Clinic | 2 | 8 | ||||||
Contingent payments | $ 10,800 | $ 12,500 | ||||||
IIP Business [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of interest acquired | 100.00% | |||||||
Deferred payments | 0 | |||||||
Contingent payments | 0 | |||||||
Cash paid, net of cash acquired | 3,955 | |||||||
Seller note | 0 | |||||||
Percentage of interest accrued | 100.00% | |||||||
Total consideration | 3,955 | |||||||
Estimated fair value of net tangible assets acquired [Abstract] | ||||||||
Total current assets | 388 | |||||||
Total non-current assets | 335 | |||||||
Total liabilities | (41) | |||||||
Net tangible assets acquired | 682 | |||||||
Customer and referral relationships | 757 | |||||||
Non-compete agreement | 37 | |||||||
Tradenames | 187 | |||||||
Goodwill | 2,566 | |||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (274) | |||||||
Total consideration | $ 3,955 | |||||||
Ergonomics Software Business [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of interest acquired | 55.00% | |||||||
Percentage of pre-acquisition interest retained by practice founder | 45.00% | |||||||
Percentage of interest accrued | 55.00% | |||||||
IIP and Ergonomics Software Business [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Aggregate purchase price for the acquisition | $ 4,000 | |||||||
Acquisitions [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Number of clinics | Clinic | 8 | |||||||
Deferred payments | 0 | $ 830 | ||||||
Contingent payments | 500 | 200 | ||||||
Cash paid, net of cash acquired | 26,582 | |||||||
Seller note | 500 | 985 | ||||||
Total consideration | 16,971 | 28,597 | ||||||
Estimated fair value of net tangible assets acquired [Abstract] | ||||||||
Total current assets | 0 | 1,467 | ||||||
Total non-current assets | 476 | 3,485 | ||||||
Total liabilities | (450) | (3,179) | ||||||
Net tangible assets acquired | 26 | 1,773 | ||||||
Customer and referral relationships | 6,790 | 8,042 | ||||||
Non-compete agreement | 328 | 396 | ||||||
Tradenames | 1,672 | 1,767 | ||||||
Goodwill | 25,056 | 27,726 | ||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (16,901) | (11,107) | ||||||
Total consideration | 16,971 | 28,597 | ||||||
Acquisitions [Member] | Physical Therapy Operations [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Deferred payments | 830 | |||||||
Contingent payments | 200 | |||||||
Cash paid, net of cash acquired | 22,627 | |||||||
Seller note | 985 | |||||||
Total consideration | 24,642 | |||||||
Estimated fair value of net tangible assets acquired [Abstract] | ||||||||
Total current assets | 1,079 | |||||||
Total non-current assets | 3,150 | |||||||
Total liabilities | (3,138) | |||||||
Net tangible assets acquired | 1,091 | |||||||
Customer and referral relationships | 7,285 | |||||||
Non-compete agreement | 359 | |||||||
Tradenames | 1,580 | |||||||
Goodwill | 25,160 | |||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (10,833) | |||||||
Total consideration | $ 24,642 | |||||||
Clinic Practice [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of interest acquired | 50.00% | 70.00% | 75.00% | 80.00% | ||||
Number of clinics | Clinic | 9 | 5 | 4 | 1 | ||||
Deferred payments | $ 300 | |||||||
Percentage of ownership interest after the acquisition | 45.00% | |||||||
Percentage of ownership interest by local partner after the acquisition | 30.00% | |||||||
Percentage of interest retained by practice founder | 50.00% | 30.00% | 20.00% | |||||
Percentage of pre-acquisition interest retained by practice founder | 25.00% | |||||||
Aggregate purchase price for the acquisition | $ 16,400 | $ 2,100 | $ 3,100 | $ 6,200 | ||||
Cash paid by local partner | 1,100 | |||||||
Seller note to be paid by entity | 200 | |||||||
Seller note to be paid by local partner | 100 | |||||||
Cash paid, net of cash acquired | $ 1,800 | 1,700 | 5,800 | $ 500 | ||||
Seller note | $ 300 | $ 400 | ||||||
Percentage of interest accrued | 4.50% | 4.50% | ||||||
September 2023 Multi Clinic Practice Acquisition [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of interest acquired | 70.00% | |||||||
Number of clinics | Clinic | 4 | |||||||
Percentage of interest retained by practice founder | 30.00% | |||||||
Aggregate purchase price for the acquisition | $ 6,000 | |||||||
Cash paid, net of cash acquired | $ 5,400 | |||||||
Number of installments of payment of consideration due | Installment | 2 | |||||||
Seller note | $ 600 | |||||||
Percentage of interest accrued | 5.00% | |||||||
September 2023 Multi Clinic Practice Acquisition [Member] | First Installment Due on January 31, 2024 [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Payment of principal and interest | $ 300 | |||||||
September 2023 Multi Clinic Practice Acquisition [Member] | Second Installment Due on September 30, 2025[Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Payment of principal and interest | $ 300 | |||||||
September 2023 Single Clinic Practice Acquisition [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of interest acquired | 70.00% | |||||||
Number of clinics | Clinic | 1 | |||||||
Deferred payments | $ 400 | |||||||
Percentage of interest retained by practice founder | 30.00% | |||||||
Aggregate purchase price for the acquisition | $ 7,800 | |||||||
Cash paid, net of cash acquired | $ 7,400 |
Redeemable Non-Controlling Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Changes in Carrying Amount of Redeemable Non-Controlling Interests [Roll Forward] | ||
Beginning balance | $ 174,828 | |
Net income allocated to redeemable non-controlling interest partners | 2,227 | $ 2,720 |
Ending balance | 190,733 | |
Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest [Abstract] | ||
Fair value | 190,733 | |
Redeemable Non-Controlling Interest [Member] | ||
Changes in Carrying Amount of Redeemable Non-Controlling Interests [Roll Forward] | ||
Beginning balance | 174,828 | 167,515 |
Net income allocated to redeemable non-controlling interest partners | 2,227 | 4,426 |
Distributions to redeemable non-controlling interest partners | (2,100) | (11,533) |
Changes in the fair value of redeemable non-controlling interest | 1,439 | 13,565 |
Purchases of redeemable non-controlling interest | (2,777) | (12,073) |
Acquired interest | 16,901 | 11,007 |
Sales of redeemable non-controlling interest | 382 | 5,012 |
Changes in notes receivable related to redeemable non-controlling interest | (167) | (3,091) |
Ending balance | 190,733 | 174,828 |
Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest [Abstract] | ||
Contractual time period has lapsed but holder's employment has not terminated | 76,938 | 96,876 |
Contractual time period has not lapsed and holder's employment has not terminated | 113,795 | 77,952 |
Holder's employment has terminated and contractual time period has expired | 0 | 0 |
Holder's employment has terminated and contractual time period has not expired | 0 | 0 |
Fair value | $ 190,733 | $ 174,828 |
Therapy Practice [Member] | Minimum [Member] | ||
Business Combination, Description [Abstract] | ||
Business acquisition, percentage of limited partnership acquired | 50.00% | |
Therapy Practice [Member] | Maximum [Member] | ||
Business Combination, Description [Abstract] | ||
Business acquisition, percentage of limited partnership acquired | 90.00% | |
Therapy Practice [Member] | NewCo. [Member] | ||
Business Combination, Description [Abstract] | ||
Percentage of equity interest of subsidiary contributed for acquisition | 100.00% | |
Business acquisition, percentage of general partnership interest acquired | 100.00% | |
Business acquisition, consideration payable, term of note | 2 years | |
Employment agreement renewal term | 1 year | |
Non-Compete agreement term under condition of termination of employment of employed selling shareholder | 2 years | |
Therapy Practice [Member] | NewCo. [Member] | Minimum [Member] | ||
Business Combination, Description [Abstract] | ||
Employment agreement term | 3 years | |
Non-Compete agreement term regardless of whether the selling shareholder is employed | 5 years | |
Therapy Practice [Member] | NewCo. [Member] | Maximum [Member] | ||
Business Combination, Description [Abstract] | ||
Employment agreement term | 5 years | |
Non-Compete agreement term regardless of whether the selling shareholder is employed | 6 years | |
ProgressiveHealth [Member] | NewCo. [Member] | ||
Business Combination, Description [Abstract] | ||
Percentage of equity interest of subsidiary contributed for acquisition | 100.00% | |
Non-Compete agreement term under condition of termination of employment of employed selling shareholder | 2 years | |
Non-Compete agreement term regardless of whether the selling shareholder is employed | 7 years | |
Percentage of right to sell equity interest on each of the 4th and 5th anniversaries | 30.00% | |
Percentage of right to sell equity interest on each of the 6th and 7th anniversaries | 10.00% |
Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 509,571 | $ 494,101 |
Acquisitions | 25,056 | 28,083 |
Adjustments for purchase price allocation of businesses acquired in prior year | (356) | 3,187 |
Impairment of goodwill | 0 | (15,800) |
Ending balance | $ 534,271 | $ 509,571 |
Intangible Assets, Net, Intangible Assets, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Mar. 31, 2024 |
|
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross amount | $ 147,690 | $ 156,877 |
Accumulated amortization | (38,008) | (39,989) |
Net carrying amount | 109,682 | 116,888 |
Customer and Referral Relationships [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross amount | 93,658 | 100,914 |
Accumulated amortization | (30,414) | (32,231) |
Net carrying amount | 63,244 | $ 68,683 |
Estimated useful life | 12 years 8 months 12 days | |
Customer and Referral Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 7 years | |
Customer and Referral Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 14 years | |
Tradenames [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross amount | 44,573 | $ 46,145 |
Accumulated amortization | 0 | 0 |
Net carrying amount | 44,573 | 46,145 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Impairment of tradename | 1,700 | |
Non-compete Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross amount | 9,459 | 9,818 |
Accumulated amortization | (7,594) | (7,758) |
Net carrying amount | $ 1,865 | $ 2,060 |
Estimated useful life | 5 years 6 months | |
Non-compete Agreements [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 5 years | |
Non-compete Agreements [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 6 years |
Intangible Assets, Net, Amortization Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Amortization of Deferred Charges [Abstract] | ||
Total amortization expenses | $ 1,981 | $ 1,817 |
Customer and Referral Relationships [Member] | ||
Amortization of Deferred Charges [Abstract] | ||
Total amortization expenses | 1,818 | 1,664 |
Non-compete Agreements [Member] | ||
Amortization of Deferred Charges [Abstract] | ||
Total amortization expenses | $ 163 | $ 153 |
Intangible Assets, Net, Amortization of Referral Relationships and Non-Competition Agreements (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
|
---|---|
Customer and Referral Relationships [Member] | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity [Abstract] | |
2024 (excluding the three months ended March 31, 2024) | $ 5,645 |
2025 | 7,428 |
2026 | 6,960 |
2027 | 6,797 |
2028 | 6,528 |
Thereafter | 35,325 |
Non-compete Agreements [Member] | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity [Abstract] | |
2024 (excluding the three months ended March 31, 2024) | 497 |
2025 | 605 |
2026 | 465 |
2027 | 303 |
2028 | 169 |
Thereafter | $ 21 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 17,104 | $ 25,641 |
Credit balances due to patients and payors | 7,905 | 8,847 |
Dividends payable | 6,630 | 0 |
Group health insurance claims | 2,658 | 2,301 |
Federal income taxes payable | 1,915 | 1,006 |
Contingency payable | 10,074 | 12,285 |
Other property taxes payable | 386 | 355 |
Purchase of redeemable non-controlling interests | 1,495 | 0 |
Interest payable | 255 | 235 |
Closure costs | 251 | 231 |
Other | 5,076 | 4,443 |
Total | $ 53,749 | $ 55,344 |
Borrowings, Amended Credit Agreement and Credit Agreement (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
||
---|---|---|---|---|
Debt Instruments [Abstract] | ||||
Principal amount | $ 147,321 | $ 148,150 | ||
Principal amount, current portion | 9,642 | 8,111 | ||
Principal amount, net of current portion | 137,679 | 140,039 | ||
Unamortized discount and debt issuance cost [Abstract] | ||||
Unamortized discount and debt issuance cost | (1,350) | (1,468) | ||
Unamortized discount and debt issuance cost, current portion | (420) | (420) | ||
Unamortized discount and debt issuance cost, net of current portion | (930) | (1,048) | ||
Net debt [Abstract] | ||||
Net debt | 145,971 | 146,682 | ||
Net debt, less current portion | 9,222 | 7,691 | ||
Net debt, net of current portion | 136,749 | 138,991 | ||
Revolving Facility [Member] | ||||
Debt Instruments [Abstract] | ||||
Principal amount | 0 | 0 | ||
Unamortized discount and debt issuance cost [Abstract] | ||||
Unamortized discount and debt issuance cost | 0 | 0 | ||
Net debt [Abstract] | ||||
Net debt | 0 | 0 | ||
Term Facility [Member] | ||||
Debt Instruments [Abstract] | ||||
Principal amount | 143,437 | 144,375 | ||
Unamortized discount and debt issuance cost [Abstract] | ||||
Unamortized discount and debt issuance cost | (1,350) | (1,468) | ||
Net debt [Abstract] | ||||
Net debt | 142,087 | 142,907 | ||
Other [Member] | ||||
Debt Instruments [Abstract] | ||||
Principal amount | [1] | 3,884 | 3,775 | |
Unamortized discount and debt issuance cost [Abstract] | ||||
Unamortized discount and debt issuance cost | [1] | 0 | 0 | |
Net debt [Abstract] | ||||
Net debt | [1] | $ 3,884 | $ 3,775 | |
|
Borrowings, Credit Facilities (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
Dec. 05, 2013 |
|
Debt Instruments [Abstract] | ||||
Aggregate amount of notes payable | $ 147,321,000 | $ 148,150,000 | ||
Notes Payable Related to Acquisitions [Member] | ||||
Debt Instruments [Abstract] | ||||
Aggregate amount of notes payable | 3,900,000 | |||
Aggregate principal payment due in 2025 | 3,100,000 | |||
Aggregate principal payment due in 2026 | $ 800,000 | |||
Notes Payable Related to Acquisitions [Member] | Minimum [Member] | ||||
Debt Instruments [Abstract] | ||||
Interest rate | 3.50% | |||
Notes Payable Related to Acquisitions [Member] | Maximum [Member] | ||||
Debt Instruments [Abstract] | ||||
Interest rate | 8.50% | |||
Term Facility [Member] | ||||
Debt Instruments [Abstract] | ||||
Revolving credit facility commitment | $ 150,000,000 | |||
Frequency of term facility | quarterly | |||
Interest rate on credit facility in first two years | 0.625% | |||
Interest rate on credit facility in third and fourth year | 1.25% | |||
Interest rate on credit facility in fifth year | 1.875% | |||
Outstanding amount | $ 143,400,000 | |||
Aggregate amount of notes payable | 143,437,000 | 144,375,000 | ||
Revolving Facility [Member] | ||||
Debt Instruments [Abstract] | ||||
Revolving credit facility commitment | $ 175,000,000 | $ 125,000,000 | ||
Term of credit facility | 5 years | |||
Outstanding amount | $ 0 | |||
Aggregate amount of notes payable | $ 0 | $ 0 | ||
Revolving Facility [Member] | Minimum [Member] | ||||
Debt Instruments [Abstract] | ||||
Percentage of unused commitment fee | 0.25% | |||
Revolving Facility [Member] | Maximum [Member] | ||||
Debt Instruments [Abstract] | ||||
Increase on limit of credit facility | $ 50,000,000 | |||
Percentage of unused commitment fee | 0.35% | |||
Standby Letters of Credit [Member] | ||||
Debt Instruments [Abstract] | ||||
Revolving credit facility commitment | $ 12,000,000 | |||
Swingline Loans [Member] | ||||
Debt Instruments [Abstract] | ||||
Revolving credit facility commitment | $ 15,000,000 | |||
Swingline Loans [Member] | SOFR [Member] | Minimum [Member] | ||||
Debt Instruments [Abstract] | ||||
Applicable margin for SOFR borrowings rate | 1.50% | |||
Swingline Loans [Member] | SOFR [Member] | Maximum [Member] | ||||
Debt Instruments [Abstract] | ||||
Applicable margin for SOFR borrowings rate | 2.25% | |||
Swingline Loans [Member] | Alternate Base Rate [Member] | Minimum [Member] | ||||
Debt Instruments [Abstract] | ||||
Spread on variable rate | 0.50% | |||
Swingline Loans [Member] | Alternate Base Rate [Member] | Maximum [Member] | ||||
Debt Instruments [Abstract] | ||||
Spread on variable rate | 1.25% | |||
Senior Credit Facility [Member] | ||||
Debt Instruments [Abstract] | ||||
Debt instrument, maturity date | Jun. 17, 2027 | |||
Aggregate principal amount | $ 325,000,000 | |||
Increase on limit of credit facility | $ 100,000,000 | |||
Leverage ratio | 2 | |||
Remaining revolving credit outstanding | $ 175,000,000 | |||
Interest rate | 4.70% | 4.90% | ||
Effective interest rate | 5.30% | 5.50% |
Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Jul. 31, 2022 |
Jun. 30, 2022 |
|
Derivative Instrument, Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 11,617 | $ 11,427 | ||
Other comprehensive gain (loss) [Abstract] | ||||
Unrealized gain (loss) on cash flow hedge | 1,781 | (1,817) | ||
Tax effect at statutory rate (federal and state) | (455) | 464 | ||
Comprehensive income | 12,943 | 10,074 | ||
Comprehensive income attributable to non-controlling interest | (3,571) | (4,017) | ||
Comprehensive income attributable to USPH shareholders | 9,372 | 6,057 | ||
Carrying and Fair Value of Interest Rate Derivatives [Abstract] | ||||
Interest rate derivative | 5,517 | 3,561 | ||
Other Current Assets [Member] | ||||
Carrying and Fair Value of Interest Rate Derivatives [Abstract] | ||||
Interest rate derivative | 2,979 | 2,614 | ||
Other Assets [Member] | ||||
Carrying and Fair Value of Interest Rate Derivatives [Abstract] | ||||
Interest rate derivative | $ 2,538 | $ 947 | ||
Interest Rate Swap [Member] | ||||
Derivative Instruments [Abstract] | ||||
Notional value | $ 150,000 | |||
Debt instrument, maturity date | Jun. 30, 2027 | |||
Interest Rate Swap [Member] | SOFR [Member] | ||||
Derivative Instruments [Abstract] | ||||
Term of variable rate | 1 month | |||
Debt instrument, fixed rate of interest | 2.815% |
Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|||
Components of Lease Expense [Abstract] | ||||
Operating lease cost | $ 9,953 | $ 9,365 | ||
Short-term lease cost | 265 | 274 | ||
Variable lease cost | 2,369 | 2,132 | ||
Total lease cost | [1] | 12,587 | 11,771 | |
Supplemental Information Related to Leases [Abstract] | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | 10,338 | 9,646 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | 7,727 | $ 6,281 | ||
Future Lease Payments for Operating Leases [Abstract] | ||||
2024 (excluding the three months ended March 31, 2024) | 29,610 | |||
2025 | 32,448 | |||
2026 | 24,492 | |||
2027 | 16,571 | |||
2028 and thereafter | 16,512 | |||
Total lease payments | 119,633 | |||
Less: imputed interest | 9,254 | |||
Total operating lease liabilities | $ 110,379 | |||
Average Lease Terms and Discount Rates [Abstract] | ||||
Weighted-average remaining lease term - Operating leases | 3 years 10 months 24 days | 4 years | ||
Weighted-average discount rate - Operating leases | 4.20% | 3.10% | ||
Maximum [Member] | ||||
Operating Lease [Abstract] | ||||
Lease term | 5 years | |||
|
Segment Information, Summary (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2024
Clinic
Location
|
Dec. 31, 2023
Clinic
|
|
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||
Percentage of general partnership interest owned | 1.00% | |
Number of clinic businesses acquired | Clinic | 2 | 8 |
Minimum [Member] | ||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||
Percentage of limited partnership interest owned | 65.00% | |
Percentage range of limited partnership interest owned | 10.00% | |
Number of operating clinic locations | Location | 1 | |
Maximum [Member] | ||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||
Percentage of limited partnership interest owned | 75.00% | |
Percentage range of limited partnership interest owned | 99.00% |
Segment Information, Segment Financials (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Segment Information [Abstract] | |||
Net revenue | $ 155,675 | $ 148,509 | |
Operating Costs [Abstract] | |||
Salaries and related costs | 93,731 | 86,040 | |
Rent, supplies, contract labor and other | 31,916 | 30,100 | |
Provision for credit losses | 1,627 | 1,512 | |
Total operating cost | 127,274 | 117,652 | |
Gross profit | 28,401 | 30,857 | |
Total assets | 1,017,256 | 868,127 | $ 997,238 |
Reportable Segments [Member] | Physical Therapy Operations [Member] | |||
Segment Information [Abstract] | |||
Net revenue | 134,425 | 129,159 | |
Operating Costs [Abstract] | |||
Salaries and related costs | 79,774 | 73,886 | |
Rent, supplies, contract labor and other | 28,960 | 26,672 | |
Provision for credit losses | 1,627 | 1,512 | |
Gross profit | 24,064 | 27,089 | |
Total assets | 872,976 | 726,422 | |
Reportable Segments [Member] | Industrial Injury Prevention Services [Member] | |||
Segment Information [Abstract] | |||
Net revenue | 21,250 | 19,350 | |
Operating Costs [Abstract] | |||
Salaries and related costs | 13,957 | 12,154 | |
Rent, supplies, contract labor and other | 2,956 | 3,428 | |
Provision for credit losses | 0 | 0 | |
Gross profit | 4,337 | 3,768 | |
Total assets | $ 144,280 | $ 141,705 |
Investment in Unconsolidated Affiliate (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Investments in Unconsolidated Affiliate [Abstract] | ||
Investment in unconsolidated affiliate | $ 12,160 | $ 12,256 |
Joint Venture Interest [Member] | ||
Investments in Unconsolidated Affiliate [Abstract] | ||
Percentage of ownership in joint venture interest | 49.00% | |
Investment in unconsolidated affiliate | $ 12,200 | |
Distribution received from investment in unconsolidated affiliate | $ 300 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
May 07, 2024 |
Apr. 30, 2024 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Oct. 31, 2023 |
|
Business Combination, Description [Abstract] | |||||
Dividends declared per common share (in dollars per share) | $ 0.44 | $ 0.43 | |||
IIP Business [Member] | |||||
Business Combination, Description [Abstract] | |||||
Percentage of interest acquired | 100.00% | ||||
Subsequent Event [Member] | |||||
Business Combination, Description [Abstract] | |||||
Dividends declared per common share (in dollars per share) | $ 0.44 | ||||
Dividend payable | Jun. 14, 2024 | ||||
Dividend recorded | May 23, 2024 | ||||
Subsequent Event [Member] | IIP Business [Member] | Briotix Health Limited Partnership [Member] | |||||
Business Combination, Description [Abstract] | |||||
Percentage of interest acquired | 100.00% | ||||
Purchase price of acquisition | $ 24.0 |
1 Year US Physical Therapy Chart |
1 Month US Physical Therapy Chart |
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