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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
|
☐ |
Title of each class |
Trading
Symbol(s)
|
Name of each exchange on which registered |
Common Stock, $.01 par value
|
USPH
|
New York Stock Exchange
|
Item 1.
|
3
|
|
3
|
||
4
|
||
5
|
||
6
|
||
8
|
||
Item 2.
|
27
|
|
Item 3.
|
39
|
|
Item 4.
|
39
|
|
PART II—OTHER INFORMATION
|
||
Item 1. | Legal Proceedings |
40
|
Item 6.
|
40
|
|
41 | ||
Certifications
|
September 30, 2019
|
December 31, 2018
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
27,856
|
$
|
23,368
|
||||
Patient accounts receivable, less allowance for doubtful accounts of $2,569 and $2,672, respectively
|
47,118
|
44,751
|
||||||
Accounts receivable - other
|
10,462
|
6,742
|
||||||
Other current assets
|
7,098
|
4,353
|
||||||
Total current assets
|
92,534
|
79,214
|
||||||
Fixed assets:
|
||||||||
Furniture and equipment
|
54,464
|
52,611
|
||||||
Leasehold improvements
|
31,948
|
31,712
|
||||||
Fixed assets, gross
|
86,412
|
84,323
|
||||||
Less accumulated depreciation and amortization
|
65,040
|
64,154
|
||||||
Fixed assets, net
|
21,372
|
20,169
|
||||||
Operating lease right-of-use assets
|
79,793
|
-
|
||||||
Goodwill
|
316,639
|
293,525
|
||||||
Other identifiable intangible assets, net
|
53,385
|
48,828
|
||||||
Other assets
|
1,470
|
1,430
|
||||||
Total assets
|
$
|
565,193
|
$
|
443,166
|
||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS
|
||||||||
Current liabilities:
|
||||||||
Accounts payable - trade
|
$
|
2,863
|
$
|
2,019
|
||||
Accrued expenses
|
33,573
|
38,493
|
||||||
Current portion of operating lease liabilities
|
25,644
|
-
|
||||||
Current portion of notes payable
|
718
|
1,434
|
||||||
Total current liabilities
|
62,798
|
41,946
|
||||||
Notes payable, net of current portion
|
4,292
|
402
|
||||||
Revolving line of credit
|
51,000
|
38,000
|
||||||
Deferred taxes
|
10,336
|
9,012
|
||||||
Deferred rent
|
-
|
2,159
|
||||||
Operating lease liabilities, net of current portion
|
58,921
|
-
|
||||||
Other long-term liabilities
|
718
|
829
|
||||||
Total liabilities
|
188,065
|
92,348
|
||||||
Redeemable non-controlling interests
|
139,801
|
133,943
|
||||||
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, 14,988,894 and 14,899,233 shares issued, respectively
|
150
|
149
|
||||||
Additional paid-in capital
|
85,828
|
80,028
|
||||||
Retained earnings
|
181,135
|
167,396
|
||||||
Treasury stock at cost, 2,214,737 shares
|
(31,628
|
)
|
(31,628
|
)
|
||||
Total USPH shareholders’ equity
|
235,485
|
215,945
|
||||||
Non-controlling interests
|
1,842
|
930
|
||||||
Total USPH shareholders’ equity and non-controlling interests
|
237,327
|
216,875
|
||||||
Total liabilities, redeemable non-controlling interests, USPH shareholders’ equity and non-controlling interests
|
$
|
565,193
|
$
|
443,166
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Net patient revenues
|
$
|
104,392
|
$
|
103,354
|
$
|
324,405
|
$
|
309,895
|
||||||||
Other revenues
|
12,859
|
9,768
|
35,450
|
26,667
|
||||||||||||
Net revenues
|
117,251
|
113,122
|
359,855
|
336,562
|
||||||||||||
Operating costs:
|
||||||||||||||||
Salaries and related costs
|
66,748
|
64,524
|
203,684
|
191,410
|
||||||||||||
Rent, supplies, contract labor and other
|
22,166
|
21,654
|
67,236
|
65,598
|
||||||||||||
Provision for doubtful accounts
|
962
|
890
|
3,408
|
3,102
|
||||||||||||
Closure costs
|
3
|
(22
|
)
|
12
|
8
|
|||||||||||
Total operating costs
|
89,879
|
87,046
|
274,340
|
260,118
|
||||||||||||
Gross profit
|
27,372
|
26,076
|
85,515
|
76,444
|
||||||||||||
Corporate office costs
|
10,556
|
10,643
|
33,376
|
30,934
|
||||||||||||
Operating income
|
16,816
|
15,433
|
52,139
|
45,510
|
||||||||||||
Other income and expense
|
||||||||||||||||
Gain on sale of partnership interest
|
-
|
-
|
5,823
|
-
|
||||||||||||
Interest and other income, net
|
7
|
16
|
27
|
70
|
||||||||||||
Interest expense
|
(557
|
)
|
(579
|
)
|
(1,522
|
)
|
(1,677
|
)
|
||||||||
Income before taxes
|
16,266
|
14,870
|
56,467
|
43,903
|
||||||||||||
Provision for income taxes
|
3,197
|
2,991
|
11,223
|
8,734
|
||||||||||||
Net income
|
13,069
|
11,879
|
45,244
|
35,169
|
||||||||||||
Less: net income attributable to non-controlling interests:
|
||||||||||||||||
Non-controlling interests - permanent equity
|
(1,643
|
)
|
(1,321
|
)
|
(4,982
|
)
|
(3,902
|
)
|
||||||||
Redeemable non-controlling interests - temporary equity
|
(2,379
|
)
|
(2,456
|
)
|
(8,152
|
)
|
(6,802
|
)
|
||||||||
(4,022
|
)
|
(3,777
|
)
|
(13,134
|
)
|
(10,704
|
)
|
|||||||||
Net income attributable to USPH shareholders
|
$
|
9,047
|
$
|
8,102
|
$
|
32,110
|
$
|
24,465
|
||||||||
Basic and diluted earnings per share attributable to USPH shareholders
|
$
|
0.66
|
$
|
0.13
|
$
|
1.90
|
$
|
0.88
|
||||||||
Shares used in computation - basic and diluted
|
12,774
|
12,685
|
12,750
|
12,660
|
||||||||||||
Dividends declared per common share
|
$
|
0.30
|
$
|
0.23
|
$
|
0.84
|
$
|
0.69
|
Nine Months Ended
|
||||||||
September 30, 2019
|
September 30, 2018
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net income including non-controlling interests
|
$
|
45,244
|
$
|
35,169
|
||||
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
7,377
|
7,335
|
||||||
Provision for doubtful accounts
|
3,408
|
3,102
|
||||||
Equity-based awards compensation expense
|
5,262
|
4,453
|
||||||
Deferred income taxes
|
3,680
|
(3,099
|
)
|
|||||
Gain on sale of partnership interest
|
(5,823
|
)
|
-
|
|||||
Other
|
120
|
128
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in patient accounts receivable
|
(8,171
|
)
|
(1,092
|
)
|
||||
Increase in accounts receivable - other
|
(1,006
|
)
|
(3,954
|
)
|
||||
(Increase) decrease in other assets
|
(2,744
|
)
|
233
|
|||||
(Decrease) increase in accounts payable and accrued expenses
|
(440
|
)
|
9,742
|
|||||
(Decrease) increase in other liabilities
|
(443
|
)
|
1,988
|
|||||
Net cash provided by operating activities
|
46,464
|
54,005
|
||||||
INVESTING ACTIVITIES
|
||||||||
Purchase of fixed assets
|
(7,428
|
)
|
(5,307
|
)
|
||||
Purchase of majority interest in businesses
|
(30,365
|
)
|
(16,303
|
)
|
||||
Purchase of redeemable non-controlling interest, temporary equity
|
(5,699
|
)
|
-
|
|||||
Purchase of non-controlling interest, permanent equity
|
(138
|
)
|
(272
|
)
|
||||
Proceeds on sale of partnership interest, net
|
11,601
|
-
|
||||||
Proceeds on sale of fixed assets
|
64
|
2
|
||||||
Net cash used in investing activities
|
(31,965
|
)
|
(21,880
|
)
|
||||
FINANCING ACTIVITIES
|
||||||||
Distributions to non-controlling interests, permanent and temporary equity
|
(10,862
|
)
|
(10,470
|
)
|
||||
Cash dividends paid to shareholders
|
(10,723
|
)
|
(8,746
|
)
|
||||
Proceeds from revolving line of credit
|
110,000
|
79,000
|
||||||
Payments on revolving line of credit
|
(97,000
|
)
|
(79,000
|
)
|
||||
Payments to settle mandatorily redeemable non-controlling interests
|
-
|
(265
|
)
|
|||||
Principal payments on notes payable
|
(1,409
|
)
|
(2,294
|
)
|
||||
Other
|
(17
|
)
|
(42
|
)
|
||||
Net cash used in financing activities
|
(10,011
|
)
|
(21,817
|
)
|
||||
Net increase in cash and cash equivalents
|
4,488
|
10,308
|
||||||
Cash and cash equivalents - beginning of period
|
23,368
|
21,933
|
||||||
Cash and cash equivalents - end of period
|
$
|
27,856
|
$
|
32,241
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
|
$
|
9,458
|
$
|
8,957
|
||||
Interest
|
$
|
1,412
|
$
|
1,705
|
||||
Non-cash investing and financing transactions during the period:
|
||||||||
Purchase of businesses - seller financing portion
|
$
|
4,300
|
$
|
950
|
||||
Purchase of business - payable to common shareholders of acquired business
|
$
|
502
|
$
|
-
|
||||
Notes payable related to purchase of redeemable non-controlling interest, temporary equity
|
$
|
283
|
$
|
-
|
||||
Notes receivable related to sale of partnership interest - redeemable non-controlling interest
|
$
|
2,870
|
$
|
-
|
For the three months ended September 30, 2019
|
Common Stock
|
Additional
Paid-In Capital
|
Retained
Earnings
|
Treasury Stock
|
Total Shareholders’
Equity
|
Non-Controlling
Interests
|
Total
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||
Balance June 30, 2019
|
14,989
|
$
|
149
|
$
|
84,125
|
$
|
176,610
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
229,256
|
$
|
1,491
|
$
|
230,747
|
||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax
|
-
|
-
|
-
|
(679
|
)
|
-
|
-
|
(679
|
)
|
-
|
(679
|
)
|
||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
-
|
1,704
|
-
|
-
|
-
|
1,704
|
-
|
1,704
|
|||||||||||||||||||||||||||
Dividends paid to USPH shareholders
|
-
|
-
|
-
|
(3,832
|
)
|
-
|
-
|
(3,832
|
)
|
-
|
(3,832
|
)
|
||||||||||||||||||||||||
Other
|
-
|
1
|
(1
|
)
|
(11
|
)
|
-
|
-
|
(11
|
)
|
-
|
(11
|
)
|
|||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,292
|
)
|
(1,292
|
)
|
|||||||||||||||||||||||||
Net income attributable to non-controlling interests - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,643
|
1,643
|
|||||||||||||||||||||||||||
Net income attributable to USPH shareholders
|
-
|
-
|
-
|
9,047
|
-
|
-
|
9,047
|
-
|
9,047
|
|||||||||||||||||||||||||||
Balance September 30, 2019
|
14,989
|
$
|
150
|
$
|
85,828
|
$
|
181,135
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
235,485
|
$
|
1,842
|
$
|
237,327
|
For the nine months ended September 30, 2019
|
Common Stock
|
Additional
Paid-In Capital
|
Retained
Earnings
|
Treasury Stock
|
Total Shareholders’
Equity
|
Non-Controlling
Interests
|
Total
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||
Balance December 31, 2018
|
14,899
|
$
|
149
|
$
|
80,028
|
$
|
167,396
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
215,945
|
$
|
930
|
$
|
216,875
|
||||||||||||||||||
Issuance of restricted stock, net of cancellations
|
90
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax
|
-
|
-
|
-
|
(7,929
|
)
|
-
|
-
|
(7,929
|
)
|
-
|
(7,929
|
)
|
||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
-
|
5,262
|
-
|
-
|
-
|
5,262
|
-
|
5,262
|
|||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans
|
-
|
-
|
636
|
-
|
-
|
-
|
636
|
-
|
636
|
|||||||||||||||||||||||||||
Purchase of non-controlling interest
|
-
|
-
|
(97
|
)
|
-
|
-
|
-
|
(97
|
)
|
(7
|
)
|
(104
|
)
|
|||||||||||||||||||||||
Dividends paid to USPH shareholders
|
-
|
-
|
-
|
(10,723
|
)
|
-
|
-
|
(10,723
|
)
|
-
|
(10,723
|
)
|
||||||||||||||||||||||||
Purchase of partnership interests - redeemable non-controlling interests
|
-
|
-
|
-
|
298
|
-
|
-
|
298
|
-
|
298
|
|||||||||||||||||||||||||||
Other
|
-
|
1
|
(1
|
)
|
(17
|
)
|
-
|
-
|
(17
|
)
|
-
|
(17
|
)
|
|||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
(4,063
|
)
|
(4,063
|
)
|
||||||||||||||||||||||||||
Net income attributable to non-controlling interests - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
4,982
|
4,982
|
||||||||||||||||||||||||||||
Net income attributable to USPH shareholders
|
-
|
-
|
-
|
32,110
|
-
|
-
|
32,110
|
-
|
32,110
|
|||||||||||||||||||||||||||
Balance September 30, 2019
|
14,989
|
$
|
150
|
$
|
85,828
|
$
|
181,135
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
235,485
|
$
|
1,842
|
$
|
237,327
|
For the three months ended September 30, 2018
|
Common Stock
|
Additional
Paid-In Capital
|
Retained
Earnings
|
Treasury Stock
|
Total Shareholders’
Equity
|
Non-Controlling
Interests
|
Total
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||
Balance June 30, 2018
|
14,900
|
$
|
149
|
$
|
77,099
|
$
|
165,991
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
211,611
|
$
|
1,137
|
$
|
212,748
|
||||||||||||||||||
Issuance of restricted stock, net of cancellation
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax
|
-
|
-
|
-
|
(6,402
|
)
|
-
|
-
|
(6,402
|
)
|
-
|
(6,402
|
)
|
||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
-
|
1,516
|
-
|
-
|
-
|
1,516
|
-
|
1,516
|
|||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Purchase of non-controlling interest
|
-
|
-
|
(73
|
)
|
-
|
-
|
-
|
(73
|
)
|
(6
|
)
|
(79
|
)
|
|||||||||||||||||||||||
Dividends paid to USPH shareholders
|
-
|
-
|
-
|
(2,918
|
)
|
-
|
-
|
(2,918
|
)
|
-
|
(2,918
|
)
|
||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,238
|
)
|
(1,238
|
)
|
|||||||||||||||||||||||||
Other
|
-
|
-
|
-
|
48
|
-
|
-
|
48
|
-
|
48
|
|||||||||||||||||||||||||||
Net income attributable to non-controlling interests - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
1,321
|
1,321
|
||||||||||||||||||||||||||||
Net income attributable to USPH shareholders
|
-
|
-
|
-
|
8,102
|
-
|
-
|
8,102
|
-
|
8,102
|
|||||||||||||||||||||||||||
Balance September 30, 2018
|
14,899
|
$
|
149
|
$
|
78,542
|
$
|
164,821
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
211,884
|
$
|
1,214
|
$
|
213,098
|
For the nine months ended September 30, 2018
|
Common Stock
|
Additional
Paid-In Capital
|
Retained
Earnings
|
Treasury Stock
|
Total Shareholders’
Equity
|
Non-Controlling
Interests
|
Total
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||
Balance December 31, 2017
|
14,809
|
$
|
148
|
$
|
73,940
|
$
|
162,406
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
204,866
|
$
|
1,204
|
$
|
206,070
|
||||||||||||||||||
Issuance of restricted stock, net of cancellation
|
90
|
1
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
|||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax
|
-
|
-
|
-
|
(13,353
|
)
|
-
|
-
|
(13,353
|
)
|
-
|
(13,353
|
)
|
||||||||||||||||||||||||
Compensation expense - equity-based awards
|
-
|
-
|
4,453
|
-
|
-
|
-
|
4,453
|
-
|
4,453
|
|||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans
|
-
|
-
|
373
|
-
|
-
|
-
|
373
|
-
|
373
|
|||||||||||||||||||||||||||
Purchase of non-controlling interest
|
-
|
-
|
(224
|
)
|
-
|
-
|
-
|
(224
|
)
|
(48
|
)
|
(272
|
)
|
|||||||||||||||||||||||
Dividends paid to USPH shareholders
|
-
|
-
|
-
|
(8,746
|
)
|
-
|
-
|
(8,746
|
)
|
-
|
(8,746
|
)
|
||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,894
|
)
|
(3,894
|
)
|
|||||||||||||||||||||||||
Other
|
-
|
-
|
-
|
49
|
-
|
-
|
49
|
50
|
99
|
|||||||||||||||||||||||||||
Net income attributable to non-controlling interests - permanent equity
|
-
|
-
|
-
|
-
|
-
|
-
|
3,902
|
3,902
|
||||||||||||||||||||||||||||
Net income attributable to USPH shareholders
|
-
|
-
|
-
|
24,465
|
-
|
-
|
24,465
|
-
|
24,465
|
|||||||||||||||||||||||||||
Balance September 30, 2018
|
14,899
|
$
|
149
|
$
|
78,542
|
$
|
164,821
|
(2,215
|
)
|
$
|
(31,628
|
)
|
$
|
211,884
|
$
|
1,214
|
$
|
213,098
|
Cash paid, net of cash acquired
|
$
|
30,365
|
||
Payable to shareholders of seller
|
502
|
|||
Seller note
|
4,300
|
|||
Total consideration
|
$
|
35,167
|
||
Estimated fair value of net tangible assets acquired:
|
||||
Total current assets
|
$
|
2,824
|
||
Total non-current assets
|
2,924
|
|||
Total liabilities
|
(3,034
|
)
|
||
Net tangible assets acquired
|
$
|
2,714
|
||
Referral relationships
|
3,000
|
|||
Non-compete
|
1,290
|
|||
Tradename
|
4,100
|
|||
Goodwill
|
30,293
|
|||
Fair value of non-controlling interest (classified as redeemable non-controlling interests)
|
(6,230
|
)
|
||
$
|
35,167
|
Cash paid, net of cash acquired
|
$
|
16,367
|
||
Seller notes
|
950
|
|||
Total consideration
|
$
|
17,317
|
||
Estimated fair value of net tangible assets acquired:
|
||||
Total current assets
|
$
|
1,633
|
||
Total non-current assets
|
305
|
|||
Total liabilities
|
(525
|
)
|
||
Net tangible assets acquired
|
$
|
1,413
|
||
Referral relationships
|
2,926
|
|||
Non-compete
|
298
|
|||
Tradename
|
990
|
|||
Goodwill
|
19,835
|
|||
Fair value of non-controlling interest (classified as redeemable non-controlling interests)
|
(8,145
|
)
|
||
$
|
17,317
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Net patient revenues
|
$
|
104,392
|
$
|
103,354
|
$
|
324,405
|
$
|
309,895
|
||||||||
Management contract revenues
|
2,174
|
1,922
|
6,534
|
6,319
|
||||||||||||
Industrial injury prevention services revenues
|
9,948
|
7,281
|
27,136
|
18,407
|
||||||||||||
Other revenues
|
737
|
565
|
1,780
|
1,941
|
||||||||||||
$
|
117,251
|
$
|
113,122
|
$
|
359,855
|
$
|
336,562
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Computation of earnings per share - USPH shareholders:
|
||||||||||||||||
Net income attributable to USPH shareholders
|
$
|
9,047
|
$
|
8,102
|
$
|
32,110
|
$
|
24,465
|
||||||||
Charges to retained earnings:
|
||||||||||||||||
Revaluation of redeemable non-controlling interest
|
(922
|
)
|
(8,680
|
)
|
(10,752
|
)
|
(18,105
|
)
|
||||||||
Tax effect at statutory rate (federal and state) of 26.25%
|
242
|
2,279
|
2,822
|
4,753
|
||||||||||||
$
|
8,367
|
$
|
1,701
|
$
|
24,180
|
$
|
11,113
|
|||||||||
Earnings per share (basic and diluted)
|
$
|
0.66
|
$
|
0.13
|
$
|
1.90
|
$
|
0.88
|
||||||||
Shares used in computation:
|
||||||||||||||||
Basic and diluted earnings per share - weighted-average shares
|
12,774
|
12,685
|
12,750
|
12,660
|
|
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.
|
|
1. |
Put Right
|
|
a. |
In the event that any Selling Shareholder’s employment is terminated under certain circumstances prior to a specified date (the “Specified 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 Specified 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 Specified Date, the Seller Entity shall have 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 Specified Date, the Company thereafter shall have 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 Specified Date, the Company shall have 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 is 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 and 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.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Beginning balance
|
$
|
133,366
|
$
|
117,027
|
$
|
133,943
|
$
|
102,572
|
||||||||
Operating results allocated to redeemable non-controlling interest partners
|
2,379
|
2,456
|
8,152
|
6,802
|
||||||||||||
Distributions to redeemable non-controlling interest partners
|
(1,636
|
)
|
(2,497
|
)
|
(6,799
|
)
|
(6,576
|
)
|
||||||||
Changes in the fair value of redeemable non-controlling interest
|
922
|
8,681
|
10,752
|
18,106
|
||||||||||||
Purchases of redeemable non-controlling interest
|
(1,459
|
)
|
-
|
(6,344
|
)
|
-
|
||||||||||
Reduction of non-controlling interest due to sale of USPh partnership interest
|
-
|
-
|
(6,132
|
)
|
-
|
|||||||||||
Acquired interest
|
6,230
|
3,282
|
6,230
|
8,145
|
||||||||||||
Sales of redeemable non-controlling interest - temporary equity
|
-
|
-
|
2,870
|
-
|
||||||||||||
Notes receivable related to sales of redeemable non-controlling interest - temporary equity
|
-
|
-
|
(2,870
|
)
|
-
|
|||||||||||
Other
|
(1
|
)
|
(43
|
)
|
(1
|
)
|
(143
|
)
|
||||||||
Ending balance
|
$
|
139,801
|
$
|
128,906
|
$
|
139,801
|
$
|
128,906
|
September 30, 2019
|
September 30, 2018
|
|||||||
Contractual time period has lapsed but holder’s employment has not been terminated
|
$
|
40,958
|
$
|
34,587
|
||||
Contractual time period has not lapsed and holder’s employment has not been terminated
|
98,843
|
94,319
|
||||||
Holder’s employment has terminated and contractual time period has expired
|
-
|
-
|
||||||
Holder’s employment has terminated and contractual time period has not expired
|
-
|
-
|
||||||
$
|
139,801
|
$
|
128,906
|
Nine Months Ended
September 30, 2019
|
Year Ended
December 31, 2018
|
|||||||
Beginning balance
|
$
|
293,525
|
$
|
271,338
|
||||
Goodwill acquired
|
30,293
|
19,778
|
||||||
Goodwill related to partnership interest sold
|
(7,325
|
)
|
-
|
|||||
Goodwill adjustments for purchase price allocation of businesses acquired in prior year
|
146
|
2,409
|
||||||
Ending balance
|
$
|
316,639
|
$
|
293,525
|
September 30, 2019
|
December 31, 2018
|
|||||||
Tradenames
|
$
|
32,049
|
$
|
30,256
|
||||
Referral relationships, net of accumulated amortization of $10,714 and $9,370, respectively
|
18,967
|
16,895
|
||||||
Non-compete agreements, net of accumulated amortization of $4,901 and $4,716, respectively
|
2,369
|
1,677
|
||||||
$
|
53,385
|
$
|
48,828
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Referral relationships
|
$
|
593
|
$
|
569
|
$
|
1,707
|
$
|
1,648
|
||||||||
Non-compete agreements
|
172
|
172
|
510
|
460
|
||||||||||||
$
|
765
|
$
|
741
|
$
|
2,217
|
$
|
2,108
|
Referral Relationships
|
Non-Compete Agreements
|
||||||||||
Years
|
Annual Amount
|
Years
|
Annual Amount
|
||||||||
Ending December 31,
|
Ending December 31,
|
||||||||||
2019 (excluding the nine months ended September 30, 2019)
|
$
|
601
|
2019 (excluding the nine months ended September 30, 2019)
|
$
|
198
|
||||||
2020
|
$
|
2,403
|
2020
|
$
|
619
|
||||||
2021
|
$
|
2,403
|
2021
|
$
|
541
|
||||||
2022
|
$
|
2,354
|
2022
|
$
|
363
|
||||||
2023
|
$
|
2,247
|
2023
|
$
|
294
|
||||||
2024
|
$
|
2,082
|
2024
|
$
|
238
|
||||||
Thereafter
|
$
|
6,877
|
Thereafter
|
$
|
116
|
September 30, 2019
|
December 31, 2018
|
|||||||
Salaries and related costs
|
$
|
21,089
|
$
|
21,726
|
||||
Credit balances due to patients and payors
|
5,075
|
7,293
|
||||||
Group health insurance claims
|
2,996
|
3,124
|
||||||
Other
|
4,413
|
6,350
|
||||||
Total
|
$
|
33,573
|
$
|
38,493
|
September 30, 2019
|
December 31, 2018
|
|||||||
Credit Agreement average effective interest rate of 4.03% inclusive of unused fee
|
$
|
51,000
|
$
|
38,000
|
||||
Various notes payable with $718 plus accrued interest due in the next year, interest accrues in the range of 3.75% through 5.50% per annum
|
5,010
|
1,836
|
||||||
$
|
56,010
|
$
|
39,836
|
|||||
Less current portion
|
(718
|
)
|
(1,434
|
)
|
||||
Long term portion
|
$
|
55,292
|
$
|
38,402
|
During the twelve months ended September 30, 2020
|
$
|
718
|
||
During the twelve months ended September 30, 2021
|
4,292
|
|||
During the twelve months ended September 30, 2022
|
51,000
|
|||
$
|
56,010
|
Three Months Ended
September 30, 2019
|
Nine Months Ended
September 30, 2019
|
|||||||
Operating lease cost
|
$
|
7,303
|
$
|
22,598
|
||||
Short-term lease cost
|
265
|
933
|
||||||
Variable lease cost
|
1,477
|
4,605
|
||||||
Total lease cost *
|
$
|
9,045
|
$
|
28,136
|
Fiscal Year
|
Amount
|
|||
2019 (excluding the nine months ended September, 30, 2019)
|
$
|
7,387
|
||
2020
|
27,372
|
|||
2021
|
21,344
|
|||
2022
|
15,003
|
|||
2023
|
9,987
|
|||
2024 and thereafter
|
10,407
|
|||
Total lease payments
|
$
|
91,500
|
||
Less: imputed interest
|
(6,935
|
)
|
||
Total operating lease liabilities
|
$
|
84,565
|
Nine Months Ended
September 30, 2019
|
||||
Weighted-average remaining lease term - Operating leases
|
4.02 Years
|
|||
Weighted-average discount rate - Operating leases
|
3.9
|
%
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2019
|
September 30, 2018
|
September 30, 2019
|
September 30, 2018
|
|||||||||||||
Number of clinics, at the end of period
|
574
|
588
|
574
|
588
|
||||||||||||
Working Days
|
64
|
63
|
191
|
191
|
||||||||||||
Average visits per day per clinic
|
27.5
|
26.6
|
27.5
|
26.4
|
||||||||||||
Total patient visits
|
996,063
|
979,875
|
3,055,451
|
2,934,515
|
||||||||||||
Net patient revenue per visit
|
$
|
104.80
|
$
|
105.48
|
$
|
106.17
|
$
|
105.60
|
|
• |
For the third quarter ended September 30, 2019, our Operating Results (as defined below) increased 11.7% to $9.0 million, or $0.71 per diluted share, as compared to $8.1 million, or $0.64 per diluted share, in
the third quarter of 2018. For the nine months ended September 30, 2019, our Operating Results increased 13.7% to $27.8 million, or $2.18 per diluted share, as compared to $24.5 million, or $1.93 per diluted share, in the first nine
months of 2018. Operating Results, a non-Generally Accepted Accounting Principle (“GAAP”) measure, equals net income attributable to our shareholders per the consolidated statements of net income less the gain on the sale of a
partnership interest as described below. The earnings per share from Operating Results also excludes the impact of the revaluation of redeemable non-controlling interest. On June 30, 2019, the Company sold its 50% interest in one
physical therapy partnership to the group’s founders for $11.6 million and recognized a pre-tax gain of $5.8 million on the sale.
|
|
• |
For the third quarter ended September 30, 2019, the net income attributable to our shareholders was $9.0 million, as compared to $8.1 million in the third quarter of 2018. Inclusive of the charge for
revaluation of non-controlling interest, net of tax, used to compute diluted earnings per share, in accordance with GAAP, in the recent quarter, the amount is $8.4 million, or $0.66 per share, as compared to $1.7 million, or $0.13 per
share for the third quarter of 2018. In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest, net of tax, is not included in net income but charged directly to retained earnings but is
included in the earnings per basic and diluted share calculation.
|
Three Months Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Computation of earnings per share - USPH shareholders:
|
||||||||
Net income attributable to USPH shareholders
|
$
|
9,047
|
$
|
8,102
|
||||
Charges to retained earnings:
|
||||||||
Revaluation of redeemable non-controlling interest
|
(922
|
)
|
(8,680
|
)
|
||||
Tax effect at statutory rate (federal and state) of 26.25%
|
242
|
2,279
|
||||||
$
|
8,367
|
$
|
1,701
|
|||||
Earnings per share (basic and diluted)
|
$
|
0.66
|
$
|
0.13
|
||||
Adjustments:
|
||||||||
Gain on sale of partnership interest
|
-
|
-
|
||||||
Revaluation of redeemable non-controlling interest
|
922
|
8,680
|
||||||
Tax effect at statutory rate (federal and state) of 26.25%
|
(242
|
)
|
(2,279
|
)
|
||||
Operating Results
|
$
|
9,047
|
$
|
8,102
|
||||
Basic and diluted Operating Results per share
|
$
|
0.71
|
$
|
0.64
|
||||
Shares used in computation - basic and diluted
|
12,774
|
12,685
|
|
• |
Net revenues increased $4.1 million or 3.7% from $113.1 million in the 2018 Third Quarter to $117.2 million in the 2019 Third Quarter, due to an increase in net patient revenues from physical therapy
operations, internal growth, new clinic development and an acquisition, and an increase in the revenue from the industrial injury prevention business, due to internal growth and an acquisition. Included in the 2018 Third Quarter was
revenue of $5.9 million for clinics within the partnership sold on June 30, 2019. The 2019 Third Quarter had 64 business days versus 63 in the 2018 Third Quarter.
|
|
• |
Despite the loss of net patient revenues in the clinics of the sold partnership mentioned previously, net patient revenues from physical therapy operations increased approximately $1.0 million, or 1.0%, to
$104.4 million in the 2019 Third Quarter from $103.4 million in the 2018 Third Quarter due to an increase in total patient visits of 1.7% from 980,000 to 996,000 offset by a decrease in the average net patient revenue per visit of $0.68
to $104.80 from $105.48. The reduction in net rate is largely attributable to an $825,000 overpayment relating to a single payor for one partnership of which $525,000 affected the third quarter of 2019. The overpayment was discovered
by management this summer. It occurred over several years and following a thorough review was accounted for in the two recent quarterly periods. Of the $1.0 million increase in net patient revenues, $1.6 million of the increase related
to clinics opened or acquired after September 30, 2018 (“New Clinics”). Net patient revenues related to clinics opened or acquired prior to October 1, 2018 excluding the clinics sold (“Mature Clinics”) increased by $5.3 million. Net
patient revenues related to the clinics sold was $5.9 million in the 2018 Third Quarter. Revenue from physical therapy management contracts was $2.2 million for the 2019 Third Quarter and $1.9 million for the 2018 Third Quarter.
|
|
• |
Revenue from the industrial injury prevention business increased 36.6% to $9.9 million in the 2019 Third Quarter compared to $7.3 million in the 2018 Third Quarter due to internal growth and an acquisition in
April 2019.
|
|
• |
Other miscellaneous revenue was $0.7 million in the 2019 Third Quarter and $0.6 million in the 2018 Third Quarter.
|
Three Months Ended
|
||||||||
September 30, 2019
|
September 30, 2018
|
|||||||
Income before taxes
|
$
|
16,266
|
$
|
14,870
|
||||
Less: net income attributable to non-controlling interests:
|
||||||||
Non-controlling interests - permanent equity
|
(1,643
|
)
|
(1,321
|
)
|
||||
Redeemable non-controlling interests - temporary equity
|
(2,379
|
)
|
(2,456
|
)
|
||||
$
|
(4,022
|
)
|
$
|
(3,777
|
)
|
|||
Income before taxes less net income attributable to non-controlling interests
|
$
|
12,244
|
$
|
11,093
|
||||
Provision for income taxes
|
$
|
3,197
|
$
|
2,991
|
||||
Percentage
|
26.1
|
%
|
27.0
|
%
|
• |
For the nine months ended September 30, 2019 (“2019 First Nine Months”), our Operating Results increased 13.7% to $27.8 million, or $2.18 per diluted share, as compared to $24.5 million, or $1.93 per
diluted share during the nine months ended September 30, 2018 (the “2018 First Nine Months” Operating Results, a non-GAAP measure, equals net income
attributable to our shareholders per the consolidated statements of net income less the gain on the sale of a partnership interest as described below. The earnings per share from Operating Results also excludes the impact of the
revaluation of redeemable non-controlling interest. On June 30, 2019, the Company sold its 50% interest in one physical therapy partnership to the group’s founders for $11.6 million and recognized a pre-tax gain of $5.8 million on the
sale.
|
• |
For the 2019 First Nine Months, our net income attributable to its shareholders, in accordance with GAAP, was $32.1 million as compared to $24.5 million for the comparable period of 2018. Inclusive of the
charge for revaluation of non-controlling interest, net of tax, used to compute diluted earnings per share, in accordance with GAAP, in the recent nine months, the amount is $24.2 million, or $1.90 per share, as compared to $11.1
million, or $0.88 per share for the 2018 First Nine Months. In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest, net of tax, is not included in net income but charged directly to
retained earnings but is included in the earnings per basic and diluted share calculation.
|
Nine Months Ended September 30,
|
||||||||
2019
|
2018
|
|||||||
Computation of earnings per share - USPH shareholders:
|
||||||||
Net income attributable to USPH shareholders
|
$
|
32,110
|
$
|
24,465
|
||||
Charges to retained earnings:
|
||||||||
Revaluation of redeemable non-controlling interest
|
(10,752
|
)
|
(18,105
|
)
|
||||
Tax effect at statutory rate (federal and state) of 26.25%
|
2,822
|
4,753
|
||||||
$
|
24,180
|
$
|
11,113
|
|||||
Earnings per share (basic and diluted)
|
$
|
1.90
|
$
|
0.88
|
||||
Adjustments:
|
||||||||
Gain on sale of partnership interest
|
(5,823
|
)
|
-
|
|||||
Revaluation of redeemable non-controlling interest
|
10,752
|
18,105
|
||||||
Tax effect at statutory rate (federal and state) of 26.25%
|
(1,293
|
)
|
(4,753
|
)
|
||||
Operating Results
|
$
|
27,816
|
$
|
24,465
|
||||
Basic and diluted Operating Results per share
|
$
|
2.18
|
$
|
1.93
|
||||
Shares used in computation - basic and diluted
|
12,750
|
12,660
|
|
• |
Net revenues increased $23.3 million, or 6.9% from $336.6 million in the First Nine Months of 2018 to $359.9 million in the 2019 First Nine Months, primarily due to an increase in net patient revenues from
physical therapy operations due to internal growth and new clinic development plus an acquisition, and an increase in the revenue from the industrial injury prevention business due to internal growth and acquisitions. Both the 2019 and
2018 First Nine Months had 191 business days.
|
|
• |
Net patient revenues from physical therapy operations increased approximately $14.5 million, or 4.7%, to $324.4 million in the 2019 First Nine Months from $309.9 million in the 2018 First Nine Months due to an
increase in total patient visits of 4.1% from 2,935,000 to 3,055,000 and an increase in the average net patient revenue per visit to $106.17 from $105.60. The net rate was affected by an $825,000 overpayment relating to a single payor
for one partnership. The overpayment was discovered by management this summer. It occurred over several years and following a thorough review was accounted for in the two recent quarterly periods. Of the $14.5 million increase in net
patient revenues, $16.5 million related to Mature Clinics and $3.7 million related to New Clinics. The net patient revenues related to the clinics sold on June 30, 2019 had the effect of reducing total net revenues by $5.7 million in
the 2019 First Nine Months (only six months included - $17.9 million) compared to the same period in 2018 (nine months included - $12.2 million). Revenue from physical therapy management contracts was $6.5 million for the 2019 First
Nine Months and $6.3 million for the 2018 comparable period.
|
|
• |
Revenue from the industrial injury prevention business increased 47.4% to $27.1 million in the 2019 First Nine Months compared to $18.4 million in the 2018 First Nine Months due to internal growth and recent
acquisitions.
|
|
• |
Other miscellaneous revenue was $1.8 million in the 2019 First Nine Months and $1.9 million in the 2018 First Nine Months.
|
Nine Months Ended
|
||||||||
September 30, 2019
|
September 30, 2018
|
|||||||
Income before taxes
|
$
|
56,467
|
$
|
43,903
|
||||
Less: net income attributable to non-controlling interests:
|
||||||||
Non-controlling interests - permanent equity
|
(4,982
|
)
|
(3,902
|
)
|
||||
Redeemable non-controlling interests - temporary equity
|
(8,152
|
)
|
(6,802
|
)
|
||||
$
|
(13,134
|
)
|
$
|
(10,704
|
)
|
|||
Income before taxes less net income attributable to non-controlling interests
|
$
|
43,333
|
$
|
33,199
|
||||
Provision for income taxes
|
$
|
11,223
|
$
|
8,734
|
||||
Percentage
|
25.9
|
%
|
26.3
|
%
|
|
• |
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 and/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; which may result in sanctions or reputable harm and increased costs;
|
|
• |
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;
|
|
• |
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;
|
|
• |
revenue and earnings expectations;
|
|
• |
legal actions, which could subject us to increased operating costs and uninsured liabilities;
|
|
• |
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 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 hard 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;
|
|
• |
maintaining adequate internal controls;
|
|
• |
maintaining necessary insurance coverage;
|
|
• |
availability, terms, and use of capital; and
|
|
• |
weather and other seasonal factors.
|
(a) |
Evaluation of Disclosure Controls and Procedures
|
(b) |
Changes in Internal Control Over Financial Reporting
|
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: November 8, 2019
|
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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