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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 | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 94.48 | 0 | 09:09:52 |
☒ |
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
|
NEVADA
|
76-0364866
|
|
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
|
(I.R.S. EMPLOYER IDENTIFICATION NO.)
|
1300 WEST SAM HOUSTON PARKWAY SOUTH,
SUITE 300, HOUSTON, TEXAS
|
77042
|
|
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
|
(ZIP CODE)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
|
Non-accelerated filer
|
☐
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
Item 1.
|
3
|
|
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
Item 2.
|
22
|
|
Item 3.
|
30
|
|
Item 4.
|
30
|
|
PART II—OTHER INFORMATION
|
||
Item 6.
|
31
|
|
31
|
||
Certifications
|
March 31, 2017
|
December 31, 2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
25,154
|
$
|
20,047
|
||||
Patient accounts receivable, less allowance for doubtful accounts of $1,853 and $1,792, respectively
|
43,244
|
38,840
|
||||||
Accounts receivable - other
|
6,346
|
2,649
|
||||||
Other current assets
|
3,827
|
4,428
|
||||||
Total current assets
|
78,571
|
65,964
|
||||||
Fixed assets:
|
||||||||
Furniture and equipment
|
49,820
|
48,426
|
||||||
Leasehold improvements
|
27,582
|
26,765
|
||||||
Fixed assets, gross
|
77,402
|
75,191
|
||||||
Less accumulated depreciation and amortization
|
57,235
|
56,018
|
||||||
Fixed assets, net
|
20,167
|
19,173
|
||||||
Goodwill
|
244,446
|
226,806
|
||||||
Other identifiable intangible assets, net
|
43,213
|
38,060
|
||||||
Other assets
|
1,274
|
1,228
|
||||||
Total assets
|
$
|
387,671
|
$
|
351,231
|
||||
LIABILITIES, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS
|
||||||||
Current liabilities:
|
||||||||
Accounts payable - trade
|
$
|
1,996
|
$
|
1,634
|
||||
Accrued expenses
|
30,820
|
21,756
|
||||||
Current portion of notes payable
|
1,219
|
1,227
|
||||||
Total current liabilities
|
34,035
|
24,617
|
||||||
Notes payable
|
4,802
|
4,596
|
||||||
Revolving line of credit
|
58,000
|
46,000
|
||||||
Mandatorily redeemable non-controlling interests
|
80,154
|
69,190
|
||||||
Deferred taxes
|
15,486
|
15,736
|
||||||
Deferred rent
|
1,809
|
1,575
|
||||||
Other long-term liabilities
|
671
|
829
|
||||||
Total liabilities
|
194,957
|
162,543
|
||||||
Commitments and contingencies
|
||||||||
U.S. Physical Therapy, Inc. ("USPH") shareholders’ equity:
|
||||||||
Preferred stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding
|
-
|
-
|
||||||
Common stock, $.01 par value, 20,000,000 shares authorized, 14,792,744 and 14,732,699 shares issued, respectively
|
147
|
147
|
||||||
Additional paid-in capital
|
70,132
|
68,687
|
||||||
Retained earnings
|
152,642
|
150,342
|
||||||
Treasury stock at cost, 2,214,737 shares
|
(31,628
|
)
|
(31,628
|
)
|
||||
Total USPH shareholders’ equity
|
191,293
|
187,548
|
||||||
Non-controlling interests
|
1,421
|
1,140
|
||||||
Total USPH shareholders' equity and non-controlling interests
|
192,714
|
188,688
|
||||||
Total liabilities, USPH shareholders' equity and non-controlling interests
|
$
|
387,671
|
$
|
351,231
|
Three Months Ended
|
||||||||
March 31, 2017
|
March 31, 2016
|
|||||||
(restated)
|
||||||||
Net patient revenues
|
$
|
93,654
|
$
|
85,049
|
||||
Other revenues
|
3,911
|
1,859
|
||||||
Net revenues
|
97,565
|
86,908
|
||||||
Clinic operating costs:
|
||||||||
Salaries and related costs
|
55,827
|
47,804
|
||||||
Rent, clinic supplies, contract labor and other
|
20,087
|
17,507
|
||||||
Provision for doubtful accounts
|
898
|
1,089
|
||||||
Closure costs
|
6
|
13
|
||||||
Total clinic operating costs
|
76,818
|
66,413
|
||||||
Gross margin
|
20,747
|
20,495
|
||||||
Corporate office costs
|
8,547
|
9,004
|
||||||
Operating income
|
12,200
|
11,491
|
||||||
Interest and other income, net
|
24
|
20
|
||||||
Interest expense:
|
||||||||
Mandatorily redeemable non-controlling interests - change in redemption value
|
(2,669
|
)
|
(2,191
|
)
|
||||
Mandatorily redeemable non-controlling interests - earnings allocable
|
(1,294
|
)
|
(887
|
)
|
||||
Debt and other
|
(415
|
)
|
(308
|
)
|
||||
Total interest expense
|
(4,378
|
)
|
(3,386
|
)
|
||||
|
||||||||
Income before taxes
|
7,846
|
8,125
|
||||||
Provision for income taxes
|
1,812
|
2,172
|
||||||
|
||||||||
Net income
|
6,034
|
5,953
|
||||||
Less: net income attributable to non-controlling interests
|
(1,218
|
)
|
(1,465
|
)
|
||||
Net income attributable to USPH shareholders
|
$
|
4,816
|
$
|
4,488
|
||||
Basic and diluted earnings per share attributable to USPH shareholders
|
$
|
0.38
|
$
|
0.36
|
||||
Shares used in computation - basic
|
12,528
|
12,448
|
||||||
Shares used in computation - diluted
|
12,528
|
12,448
|
||||||
Dividends declared per common share
|
$
|
0.20
|
$
|
0.17
|
Three Months Ended
|
||||||||
March 31, 2017
|
March 31, 2016
|
|||||||
OPERATING ACTIVITIES
|
(restated)
|
|||||||
Net income including non-controlling interests
|
$
|
6,034
|
$
|
5,953
|
||||
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,356
|
2,091
|
||||||
Provision for doubtful accounts
|
898
|
1,089
|
||||||
Equity-based awards compensation expense
|
1,280
|
1,221
|
||||||
Loss on sale of fixed assets
|
33
|
(19
|
)
|
|||||
Deferred income tax
|
(250
|
)
|
1,823
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Increase in patient accounts receivable
|
(1,542
|
)
|
(2,185
|
)
|
||||
(Increase) decrease in accounts receivable - other
|
(3,697
|
)
|
43
|
|||||
Decrease (increase) in other assets
|
757
|
(2,282
|
)
|
|||||
Increase in accounts payable and accrued expenses
|
5,315
|
3,857
|
||||||
Increase in mandatorily redeemable non-controlling interests
|
2,911
|
2,578
|
||||||
Increase in other liabilities
|
76
|
365
|
||||||
Net cash provided by operating activities
|
14,171
|
14,534
|
||||||
INVESTING ACTIVITIES
|
||||||||
Purchase of fixed assets
|
(1,587
|
)
|
(1,738
|
)
|
||||
Purchase of businesses, net of cash acquired
|
(15,670
|
)
|
(12,899
|
)
|
||||
Acquisitions of non-controlling interests
|
-
|
(388
|
)
|
|||||
Proceeds on sale of fixed assets, net
|
62
|
42
|
||||||
Net cash used in investing activities
|
(17,195
|
)
|
(14,983
|
)
|
||||
FINANCING ACTIVITIES
|
||||||||
Distributions to non-controlling interests
|
(937
|
)
|
(1,113
|
)
|
||||
Cash dividends to shareholders - funded
|
-
|
(2,125
|
)
|
|||||
Proceeds from revolving line of credit
|
32,000
|
49,000
|
||||||
Payments on revolving line of credit
|
(20,000
|
)
|
(40,500
|
)
|
||||
Payments to settle mandatorily redeemable non-controlling interests
|
(2,230
|
)
|
(1,136
|
)
|
||||
Principal payments on notes payable
|
(702
|
)
|
(250
|
)
|
||||
Other
|
-
|
1
|
||||||
Net cash used in financing activities
|
8,131
|
3,877
|
||||||
Net increase in cash and cash equivalents
|
5,107
|
3,428
|
||||||
Cash and cash equivalents - beginning of period
|
20,047
|
15,778
|
||||||
Cash and cash equivalents - end of period
|
$
|
25,154
|
$
|
19,206
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
|
$
|
86
|
$
|
2,265
|
||||
Interest
|
$
|
599
|
$
|
248
|
||||
Non-cash investing and financing transactions during the period:
|
||||||||
Purchase of business - seller financing portion
|
$
|
900
|
$
|
500
|
||||
Acquisition of non-controlling interest - seller financing portion
|
$
|
-
|
$
|
388
|
||||
Payment to settle redeemable non-controlling interest - financing portion
|
$
|
-
|
$
|
126
|
U.S.Physical Therapy, Inc.
|
||||||||||||||||||||||||||||||||||||
Common Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Treasury Stock
|
Total
Shareholders’
Equity
|
Non-Controlling
Interests
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||||||
Balance December 31, 2016
|
14,733
|
$
|
147
|
$
|
68,687
|
$
|
150,342
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
187,548
|
$
|
1,140
|
$
|
188,688
|
||||||||||||||||||
Issuance of restricted stock
|
60
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
-
|
1,280
|
-
|
-
|
-
|
1,280
|
-
|
1,280
|
|||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans
|
-
|
-
|
165
|
-
|
-
|
-
|
165
|
-
|
165
|
|||||||||||||||||||||||||||
Distribution to non-controlling interest partners
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(937
|
)
|
(937
|
)
|
|||||||||||||||||||||||||
Dividends payable to USPT shareholders
|
-
|
-
|
-
|
(2,516
|
)
|
-
|
-
|
(2,516
|
)
|
-
|
(2,516
|
)
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
4,816
|
-
|
-
|
4,816
|
1,218
|
6,034
|
|||||||||||||||||||||||||||
Balance March 31, 2017
|
14,793
|
$
|
147
|
$
|
70,132
|
$
|
152,642
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
191,293
|
$
|
1,421
|
$
|
192,714
|
Date
|
% Interest Acquired
|
Number of Clinics
|
|||||||
2017
|
|||||||||
January 2017 Acquisition
|
January 1
|
70
|
%
|
17
|
|||||
2016
|
|||||||||
February 2016 Acquisition
|
February 29
|
55
|
%
|
8
|
|||||
November 2016 Acquisition
|
November 30
|
60
|
%
|
12
|
· |
cost, risks and uncertainties associated with the Company’s recent restatement of its prior financial statements due to the correction of its accounting methodology for redeemable noncontrolling partnership interests, and including any pending and future claims or proceedings relating to such matters;
|
· |
changes as the result of government enacted national healthcare reform;
|
· |
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification or enrollment status;
|
· |
revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
|
· |
business and regulatory conditions including federal and state regulation;
|
· |
governmental and other third party payor inspections, reviews, investigations and audits;
|
· |
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;
|
· |
legal actions, which could subject us to increased operating costs and uninsured liabilities;
|
· |
changes in reimbursement rates or payment methods from third party payors including government agencies and deductibles and co-pays owed by patients;
|
· |
revenue and earnings expectations;
|
· |
general economic conditions;
|
· |
availability and cost of qualified physical and occupational therapists;
|
· |
personnel productivity and retaining key personnel;
|
· |
competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain operations and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and other intangible assets;
|
· |
acquisitions, purchases of non-controlling interests (minority interests) and the successful integration of the operations of the acquired business;
|
· |
maintaining necessary insurance coverage;
|
· |
availability, terms, and use of capital; and
|
· |
weather and other seasonal factors.
|
Cash paid, net of cash acquired
|
$
|
15,670
|
||
Seller notes
|
900
|
|||
Total consideration
|
$
|
16,570
|
||
Estimated fair value of net tangible assets acquired:
|
||||
Total current assets
|
$
|
3,971
|
||
Total non-current assets
|
1,251
|
|||
Total liabilities
|
(1,761
|
)
|
||
Net tangible assets acquired
|
$
|
3,461
|
||
Referral relationships
|
2,320
|
|||
Non-compete
|
1,042
|
|||
Tradename
|
2,444
|
|||
Goodwill
|
17,586
|
|||
Fair value of non-controlling interest (classified as mandatorily redeemable non-controlling interest)
|
(10,283
|
)
|
||
$
|
16,570
|
Cash paid, net of cash acquired
|
$
|
23,623
|
||
Seller notes
|
1,000
|
|||
Total consideration
|
$
|
24,623
|
||
Estimated fair value of net tangible assets acquired:
|
||||
Total current assets
|
$
|
1,658
|
||
Total non-current assets
|
1,202
|
|||
Total liabilities
|
(398
|
)
|
||
Net tangible assets acquired
|
$
|
2,462
|
||
Referral relationships
|
4,919
|
|||
Non-compete
|
847
|
|||
Tradename
|
3,802
|
|||
Goodwill
|
31,473
|
|||
Fair value of non-controlling interest (classified as mandatorily redeemable non-controlling interest)
|
(18,880
|
)
|
||
$
|
24,623
|
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 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 (100%) of the limited and general partnership interests in NewCo. Therefore, in this step, NewCo becomes a wholly-owned subsidiary of the Seller Entity.
|
3. |
The Company enters into an agreement (the “Purchase Agreement”) to acquire from the Seller Entity a majority (ranges from 50% to 90%) of the limited partnership interest and, in all cases, 100% of the general partnership interest in NewCo. The Company does not purchase 100% of the limited partnership interest because the Selling Shareholders, through the Seller Entity, want to maintain an ownership percentage. The consideration for the Acquisition is primarily payable in the form of cash at closing and a small two-year note in lieu of an escrow (the “Purchase Price”). The Purchase Agreement does not contain any future earn-out or other contingent consideration that is payable to the Seller Entity or the Selling Shareholders.
|
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 100% of the limited partnership interests in NewCo and the Seller Entity retains a portion of the limited partnership interest in NewCo (“Seller Entity Interest”).
|
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 three to five years (the “Employment Term”), with automatic one-year renewals, unless employment is terminated prior to the end of the Employment Term. As a result, a Selling Shareholder becomes an employee (“Employed Selling Shareholder”) of NewCo. The employment of an Employed Selling Shareholder can be terminated by the Employed Selling Shareholder or NewCo, with or without cause, at any time. In a few situations, a Selling Shareholder does not become employed by NewCo and is not involved with NewCo following the closing; in those situations, such Selling Shareholders sell their entire ownership interest in the Seller Entity as of the closing of the Acquisition.
|
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. |
Two years after the date an Employed Selling Shareholders’ employment is terminated (if the Selling Shareholder becomes an Employed Selling Shareholder) or
|
b. |
Five to six years from the date of the Acquisition, as defined in the Non-Compete Agreement, regardless of whether the Selling Shareholder is employed by NewCo.
|
10. |
The Non-Compete Agreement applies to a restricted region which is defined as a 15-mile radius from the Therapy Practice. That is, an Employed Selling Shareholder is permitted to engage in competing businesses or activities outside the 15-mile radius (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 business or activities outside the 15-mile radius.
|
11. |
The Partnership Agreement contains provisions for the redemption of the Seller Entity Interest, either at the option of the Company (the “Call Option”) or on a required basis (the “Required Redemption”):
|
a. |
Required Redemption
|
i. |
Once the Required Redemption is triggered, the Company is obligated to purchase from the Seller Entity and the Seller Entity is obligated to sell to the Company, the allocable portion of the Seller Entity Interest based on the terminated Selling Shareholder’s pro rata ownership interest in the Seller Entity (the “Allocable Portion”). Required Redemption is triggered when both of the following events have occurred:
|
1. |
Termination of an Employed Selling Shareholder’s employment with NewCo, regardless of the reason for such termination, and
|
2. |
The expiration of an agreed upon period of time, typically three to five years, as set forth in the relevant Partnership Agreement (the “Holding Period”).
|
ii. |
In the event an Employed Selling Shareholder’s employment terminates prior to the expiration of the Holding Period, the Required Redemption would occur only upon expiration of the Holding Period.
|
b. |
Call Option
|
i. |
In the event that an Employed Selling Shareholder’s employment terminates prior to expiration of the Holding Period, the Company has the contractual right, but not the obligation, to acquire the Employed Selling Shareholder’s Allocable Portion of the Seller Entity Interest from the Seller Entity through exercise of the Call Option.
|
c. |
For the Required Redemption and the Call Option, 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 Portion 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.
|
d. |
The 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 Required Redemption noted above.
|
e. |
Although, the Required Redemption and the Call Option do not have an expiration date, the Seller Entity Interest eventually will be purchased by the Company.
|
f. |
The Required Redemption and the Call Option 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.
|
12. |
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.
|
Three Months Ended
March 31, 2017
|
||||
Beginning balance
|
$
|
69,190
|
||
Operating results allocated to mandatorily redeemable non-controlling interest partners
|
1,294
|
|||
Distributions to mandatorily redeemable non-controlling interest partners
|
(1,052
|
)
|
||
Changes in the redemption value of mandatorily redeemable non-controlling interest
|
2,669
|
|||
Payments for settlement of mandatorily redeemable non-controlling interest
|
(2,230
|
)
|
||
Purchases of businesses - initial liability related to mandatorily redeemable non-controlling interest
|
10,283
|
|||
Other
|
-
|
|||
Ending balance
|
$
|
80,154
|
Three Months Ended
March 31, 2017
|
||||
Contractual time period has lapsed but holder's employment has not been terminated
|
$
|
25,823
|
||
Contractual time period has not lapsed and holder's employment has not been terminated
|
56,548
|
|||
Holder's employment has terminated and contractual time period has expired
|
-
|
|||
Holder's employment has terminated and contractual time period has not expired
|
-
|
|||
Redemption value prior to excess distributed earnings
|
$
|
82,371
|
||
Excess distributions over earnings and losses
|
(2,217
|
)
|
||
$
|
80,154
|
Three Months Ended
March 31, 2017
|
||||
Beginning balance
|
$
|
226,806
|
||
Goodwill acquired during the period
|
17,586
|
|||
Goodwill adjustments for purchase price allocation of business acquired
|
54
|
|||
Goodwill written-off - closed clinics
|
-
|
|||
Ending balance
|
$
|
244,446
|
March 31, 2017
|
December 31, 2016
|
|||||||
Tradenames
|
$
|
23,678
|
$
|
21,234
|
||||
Referral relationships, net of accumulated amortization of $5,733 and $5,275, respectively
|
16,721
|
14,859
|
||||||
Non-compete agreements, net of accumulated amortization of $3,575 and $3,380, respectively
|
2,814
|
1,967
|
||||||
$
|
43,213
|
$
|
38,060
|
Three Months Ended
|
Three Months Ended
|
|||||||
March 31, 2017
|
March 31, 2016
|
|||||||
Tradenames
|
$
|
-
|
$
|
21
|
||||
Referral relationships
|
458
|
323
|
||||||
Non-compete agreements
|
195
|
134
|
||||||
$
|
653
|
$
|
478
|
Referral Relationships
|
Non-Compete Agreements
|
|||
Years
|
Annual Amount
|
Years
|
Annual Amount
|
|
2017
|
1,878
|
2017
|
782
|
|
2018
|
1,846
|
2018
|
733
|
|
2019
|
1,758
|
2019
|
661
|
|
2020
|
1,758
|
2020
|
448
|
|
2021
|
1,758
|
2021
|
370
|
|
2022
|
1,709
|
2022
|
15
|
|
2023
|
1,601
|
|||
2024
|
1,483
|
|||
2025
|
1,376
|
|||
2026
|
915
|
|||
2027
|
755
|
|||
2028
|
297
|
|||
2029
|
45
|
March 31, 2017
|
December 31, 2016
|
|||||||
Salaries and related costs
|
$
|
16,070
|
$
|
10,569
|
||||
Credit balances due to patients and payors
|
3,998
|
3,880
|
||||||
Group health insurance claims
|
2,331
|
2,499
|
||||||
Dividends payable to USPH shareholders
|
2,516
|
-
|
||||||
Other
|
5,905
|
4,808
|
||||||
Total
|
$
|
30,820
|
$
|
21,756
|
March 31, 2017
|
December 31, 2016
|
|||||||
Credit Agreement average effective interest rate of 2.6% inclusive of unused fee
|
$
|
58,000
|
$
|
46,000
|
||||
Various notes payable with $1,219 plus accrued interest due in the next year interest accrues in the range of 3.25% through 3.75% per annum
|
6,021
|
5,823
|
||||||
64,021
|
51,823
|
|||||||
Less current portion
|
(1,219
|
)
|
(1,227
|
)
|
||||
Long term portion
|
$
|
62,802
|
$
|
50,596
|
During the twelve months ended March 31, 2018
|
$
|
1,219
|
||
During the twelve months ended March 31, 2019
|
60,956
|
|||
During the twelve months ended March 31, 2020
|
1,846
|
|||
$
|
64,021
|
|
Date |
% Interest Acquired
|
Number of Clinics
|
||||||
|
2017 | ||||||||
January 2017 Acquisition
|
January 1
|
70
|
%
|
17
|
|||||
2016
|
|||||||||
February 2016 Acquisition
|
February 29
|
55
|
%
|
8
|
|||||
November 2016 Acquisition
|
November 30
|
60
|
%
|
12
|
For the Three Months Ended
|
||||||||
March 31, 2017
|
March 31, 2016
|
|||||||
Number of clinics, at the end of period
|
558
|
512
|
||||||
Working Days
|
64
|
64
|
||||||
Average visits per day per clinic
|
25.2
|
24.7
|
||||||
Total patient visits
|
891,630
|
808,281
|
||||||
Net patient revenue per visit
|
$
|
105.04
|
$
|
105.22
|
· |
For the quarter ended March 31, 2017 (the “2017 First Quarter”), our net income attributable to our common shareholders prior to interest expense – mandatorily redeemable non-controlling interests – change in redemption value, net of tax (“operating results”), a non-generally accepted accounting principle measure (non-GAAP), was $6.4 million as compared to $5.8 million in the quarter ended March 31, 2016 (the “2016 First Quarter”). Diluted earnings per share from operating results, a non-GAAP measure, was $0.51 in the 2017 First Quarter as compared to $0.47 in the 2016 First Quarter.
|
· |
For the 2017 First Quarter, our net income attributable to our common shareholders, in accordance with generally accepted accounting principles (“GAAP”), was $4.8 million, or $0.38 per diluted share, as compared to $4.5 million, or $0.36 per diluted share, for the 2016 First Quarter. See schedule below for a reconciliation of net income attributable to our shareholders, in accordance with GAAP, to operating results.
|
Three Months Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income attributable to USPH shareholders
|
$
|
4,816
|
$
|
4,488
|
||||
Adjustments:
|
||||||||
Interest expense MRNCI * - change in redemption value
|
2,669
|
2,191
|
||||||
Tax effect at statutory rate (federal and state) of 39.25%
|
(1,048
|
)
|
(860
|
)
|
||||
Operating results
|
$
|
6,437
|
$
|
5,819
|
||||
Basic and diluted net income attributable to USPH shareholders per share
|
$
|
0.38
|
$
|
0.36
|
||||
Basic and diluted operating results per share
|
$
|
0.51
|
$
|
0.47
|
||||
Shares used in computation:
|
||||||||
Basic and diluted
|
12,528
|
12,448
|
· |
Mandatorily redeemable non-controlling interest
|
· |
Net revenues increased $10.7 million or 12.3% from $86.9 million in the first quarter of 2016 to $97.6 million in the first quarter of 2017, primarily due to a 10.1% increase in net patient revenues from the physical therapy operations, higher revenues from management contracts due to an increase in the number of facilities managed by the Company and one month of revenues from the workforce performance solutions business acquired in March 2017.
|
· |
Net patient revenues from physical therapy operations increased approximately $8.6 million to $93.7 million in the 2017 period from $85.0 million in the 2016 period due to an increase in total patient visits of 10.3% from 808,000 to 892,000 partially offset by a $0.18 decrease in average net patient revenue per visit to $105.04 from $105.22. For the 2017 period, revenues from management contracts was $1.9 million as compared to $1.4 million for the 2016 period. The revenues from the recently acquired workforce performance solutions business was $1.5 million for the month of March 2017. Other revenue was $0.5 million for both periods.
|
· |
cost, risks and uncertainties associated with the Company’s recent restatement of its prior financial statements due to the correction of its accounting methodology for redeemable noncontrolling partnership interests, and including any pending and future claims or proceedings relating to such matters;
|
· |
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification or enrollment status;
|
· |
revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
|
· |
business and regulatory conditions including federal and state regulations;
|
· |
governmental and other third party payor inspections, reviews, investigations and audits;
|
· |
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;
|
· |
legal actions, which could subject us to increased operating costs and uninsured liabilities;
|
· |
changes in reimbursement rates or payment methods from third party payors including government agencies and deductibles and co-pays owed by patients;
|
· |
revenue and earnings expectations;
|
· |
general economic conditions;
|
· |
availability and cost of qualified physical therapists;
|
· |
personnel productivity and retaining key personnel;
|
· |
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;
|
· |
acquisitions, purchase of non-controlling interests (minority interests) and the successful integration of the operations of the acquired businesses;
|
· |
our ability to design and maintain effective internal control over financial reporting and remediate the material weakness in internal control over financial reporting related to our accounting for redeemable non-controlling partnership interests;
|
· |
maintaining necessary insurance coverage;
|
· |
availability, terms, and use of capital; and
|
· |
weather and other seasonal factors.
|
· |
cost, risks and uncertainties associated with the Company’s recent restatement of its prior financial statements due to the correction of its accounting methodology for redeemable noncontrolling partnership interests, and including any pending and future claims or proceedings relating to such matters;
|
· |
changes as the result of government enacted national healthcare reform;
|
· |
changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification status;
|
· |
revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
|
· |
business and regulatory conditions including federal and state regulations;
|
· |
governmental and other third party payor inspections, reviews, investigations and audits;
|
· |
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;
|
· |
legal actions; which could subject us to increased operating costs and uninsured liabilities;
|
· |
changes in reimbursement rates or payment methods from third party payors including government agencies and deductibles and co-pays owed by patients;
|
· |
revenue and earnings expectations;
|
· |
general economic conditions;
|
· |
availability and cost of qualified physical therapists;
|
· |
personnel productivity and retaining key personnel;
|
· |
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;
|
· |
acquisitions, purchase of non-controlling interests (minority interests) and the successful integration of the operations of the acquired businesses;
|
· |
maintaining adequate internal controls;
|
· |
maintaining necessary insurance coverage;
|
· |
our ability to design and maintain effective internal control over financial reporting and remediate the material weakness in internal control over financial reporting related to our accounting for redeemable non-controlling partnership interests;
|
· |
availability, terms, and use of capital; and
|
· |
weather and other seasonal factors.
|
(a) |
Evaluation of Disclosure Controls and Procedures
|
(b) |
Previously Reported Material Weaknesses in Internal Control over Financial Reporting
|
· |
The Assistant Controller reviews the language and terms of any new standard limited partnership agreement created by the Company’s legal department. The sections which contain language having a potential accounting impact are identified and listed on the “Accounting Considerations for Limited Partnership Agreements” checklist.
|
· |
For each new limited partnership agreement executed by the company’s legal department, the Assistant Controller obtains a completed and signed “Accounting Considerations for Limited Partnership Agreements” checklist from the company’s General Counsel indicating if the language having a potential accounting impact denoted on the checklist referenced above has changed.
|
· |
If a change is denoted on the “Accounting Considerations for Limited Partnership Agreements” checklist, the Corporate or Assistant Controller will review the agreement and research the changed language for accounting and disclosure implications. If the nature of the language is such that interpretation is subjective, and Management does not believe they have the technical experience in that transaction type, research will include seeking outside counsel from a third party accounting expert, such as a consulting or accounting firm. A memo is drafted with the appropriate facts and resolution and approved by the Corporate Controller and Chief Financial Officer.
|
Exhibit
Number
|
Description
|
31.1*
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
31.2*
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
31.3*
|
Rule 13a-14(a)/15d-14(a) Certification of Corporate Controller.
|
32*
|
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: June 29, 2017
|
By:
|
/s/ LAWRANCE W. MCAFEE
|
Lawrance W. McAfee
|
||
Chief Financial Officer
|
||
(duly authorized officer and principal financial and accounting officer)
|
||
By:
|
/s/ JON C. BATES
|
|
Jon C. Bates
|
||
Vice President/Corporate Controller
|
Exhibit
Number
|
Description
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
|
Rule 13a-14(a)/15d-14(a) Certification of Corporate Controller.
|
|
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
|
1 Year US Physical Therapy Chart |
1 Month US Physical Therapy Chart |
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