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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 | 01:00:00 |
Management Raises 2021 Earnings Guidance
U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention services, today reported results for the first quarter ended March 31, 2021 (“2021 First Quarter”).
HIGHLIGHTS
SUMMARY OF FIRST QUARTER RESULTS
For the 2021 First Quarter, USPH’s Operating Results was $8.2 million, or $0.64 per diluted share, as compared to $3.9 million, or $0.30 per diluted share, in the three months ended March 31, 2020 (“2020 First Quarter”). Operating Results, a non-Generally Accepted Accounting Principles (“GAAP”) measure, equals net income attributable to USPH shareholders per the consolidated statements of income plus charges incurred for clinic closure costs and expenses related to CFO transition, all net of taxes. The earnings per share from Operating Results also excludes the impact of the revaluation of redeemable non-controlling interest. See table on page 12.
For the 2021 First Quarter, USPH’s net income attributable to its shareholders was $8.2 million, as compared to $1.0 million in the 2020 First Quarter. Inclusive of the charge for revaluation of non-controlling interest, net of taxes, used to compute diluted earnings per share in accordance with GAAP, the amount is $2.8 million, or $0.21 per share, for the 2021 First Quarter as compared to $2.6 million, or $0.20 per share, for the 2020 First Quarter. In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest, net of taxes, is not included in net income but charged directly to retained earnings; however, the charge or credit for this change is included in the earnings per basic and diluted share calculation. See the schedule on page 12 for the computation of diluted earnings per share.
As previously disclosed in a series of filings with the SEC and further described in detail in our Quarterly Reports on Form 10-Q for the first three quarters of 2020 and our Annual Report on Form 10-K, the Company’s results were negatively impacted by the effects of the COVID-19 pandemic in the 2020 First Quarter, especially in March 2020. Physical therapy patient volumes per day per clinic for the 2021 First Quarter were 27.1, which is at or near pre-pandemic levels, compared to 26.2 in the 2020 First Quarter. The Company’s industrial injury prevention business has been less affected by the pandemic.
First Quarter 2021 Compared to First Quarter 2020
Three Months Ended
March 31, 2021
March 31, 2020
Revenues:
Net patient revenues
$
99,254
$
100,126
Management contract revenue
2,559
2,149
Other patient revenues
546
566
Physical therapy operations
102,359
102,841
Industrial injury prevention services
10,009
9,876
$
112,368
$
112,717
Three Months Ended
March 31, 2021
March 31, 2020
Revenue related to Mature Clinics
$
93,820
$
95,639
Revenue related to 2021 Clinic Additions
91
-
Revenue related to 2020 Clinic Additions
5,201
978
Revenue from clinics sold or closed in 2021
116
231
Revenue from clinics sold or closed in 2020
26
3,278
$
99,254
$
100,126
Three Months Ended
March 31, 2021
March 31, 2020
Operating costs related to Mature Clinics
$
71,971
$
78,824
Operating costs related to 2021 Clinic Additions
156
-
Operating costs related to 2020 Clinic Additions
4,638
759
Operating costs related to clinics sold or closed in 2021
156
263
Operating costs related to clinics sold or closed in 2020
(18
)
3,404
Physical therapy management contracts
2,245
1,812
Physical therapy operations
79,148
85,062
Industrial injury prevention services
7,287
8,212
$
86,435
$
93,274
Three Months Ended
March 31, 2021
March 31, 2020
Gross profit, excluding closure costs:
Physical therapy clinics
$
22,897
$
17,442
Management contracts
314
337
Industrial injury prevention services
2,722
1,664
Gross profit, excluding closure costs
$
25,933
$
19,443
Physical therapy operations - closure costs
37
3,752
Gross profit
$
25,896
$
15,691
Three Months Ended
March 31, 2021
March 31, 2020
Income before taxes
$
14,830
$
3,630
Less: net income attributable to non-controlling interests:
Redeemable non-controlling interests - temporary equity
(2,453
)
(1,796
)
Non-controlling interests - permanent equity
(1,260
)
(526
)
$
(3,713
)
$
(2,322
)
Income before taxes less net income attributable to non-controlling interests
$
11,117
$
1,308
Provision for income taxes
$
2,944
$
292
Percentage
26.5
%
22.3
%
Medicare Accelerated and Advance Payment Program (“MAAPP Funds”)
In response to the COVID-19 pandemic, the federal government approved the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act allowed for qualified healthcare providers to receive advanced payments under the MAAPP Funds during the COVID-19 pandemic. Under this program, healthcare providers could choose to receive advanced payments for future Medicare services provided. The Company applied for and received approval from Centers for Medicare & Medicaid Services (“CMS”) in April 2020. The Company recorded the $14.1 million in advance payments received as a liability. During the 2021 First Quarter, the Company repaid the MAAPP Funds of $14.1 million rather than applying them to future services performed.
Relief Funds
On March 27, 2020, the CARES Act was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including $100.0 billion in appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to the coronavirus, and for reimbursing eligible health care providers for lost revenues and health care related expenses that are attributable to COVID-19.
Through December 31, 2020, the Company’s consolidated subsidiaries received approximately $13.5 million of payments under the CARES Act (“Relief Funds”). Under the Company’s accounting policy, these payments were recorded as Other income – Relief Funds. These funds are not required to be repaid upon attestation and compliance with certain terms and conditions, which could change materially based on evolving grant compliance provisions and guidance provided by the U.S. Department of Health and Human Services. Currently, the Company can attest and comply with the terms and conditions. The Company will continue to monitor the evolving guidelines and may record adjustments as additional information is released. There were no Relief Funds received in the 2021 First Quarter.
Other Financial Measures
For the 2021 First Quarter, the Company's Adjusted EBITDA was $15.6 million compared to $8.0 million in the 2020 First Quarter. See definition, explanation and calculation of Adjusted EBITDA in the schedule on pages 11 and 12.
Acquisition in First Quarter 2021
As previously reported, the Company acquired a 70% interest in a five-clinic physical therapy practice in the 2021 First Quarter with the practice founder retaining 30%. The practice is in the process of developing a sixth clinic. The purchase price was approximately $12.0 million, of which $11.7 million was paid in cash and a $0.3 million note payable. The business generates $7.0 million in annual revenue and has approximately 46,000 annual patient visits. 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 industrial injury prevention services.
Quarterly Dividend
On May 3, 2021, the Company’s Board of Directors declared a dividend of $0.35 per share. The quarterly dividend of $0.35 per share will be paid on June 11, 2021 to shareholders of record as of May 14, 2021.
Renewal of Credit Agreement
As previously reported, on January 29, 2021, the Company completed the renewal of its bank credit facility, extending the maturity date from November 30, 2021 to November 30, 2025. The commitment under the facility remains at $125.0 million; however, the accordion feature in the agreement was expanded to provide for capacity up to $150.0 million. Proceeds from the Credit Agreement may be used for working capital, acquisitions, and for other purposes.
Management Revises 2021 Earnings Guidance
Management currently expects the Company’s Operating Results for 2021 to be in the range of $34.5 million to $35.8 million, or $2.68 to $2.78 per share. The increase in the guidance range is attributable to better than expected performance in the 2021 First Quarter, the impact of the acquisition closed in the 2021 First Quarter, and the extension of the 2% sequestration relief applied to all Medicare payments through December 31, 2021, which was signed into law on April 14, 2021; such relief was previously scheduled to end on March 31, 2021.
This earnings range is based on an estimated annual effective tax rate of approximately 27.0%. Please note that the earnings guidance represents projected Operating Results from existing operations and excludes future acquisitions. The 2021 earnings guidance range excludes expenses associated with the previously-announced retirement and replacement of one of the Company’s co-Chief Operating Officers. The annual guidance figures will not be updated unless there is a material development that causes management to believe that Operating Results will be significantly outside the given range.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “I am very pleased by the way our team has navigated and responded throughout the entirety of this ever-evolving pandemic period. We were able to finish this quarter in very strong fashion and we look forward to making continued progress and getting more good things done. I want to especially thank our clinicians who have endured more than a year of frequent adjustments in order to keep our people and our patients safe. They continue to do an excellent job which is evidenced at least in part by how our patient volume has grown throughout this period and now exceeds pre-Covid levels.”
Carey Hendrickson, Chief Financial Officer, said, “Our balance sheet remains in an excellent position. With continued strong cash generation in the first quarter, our line of credit balance was unchanged from the beginning to the end of the quarter and we maintained an overall net cash position at quarter-end, even with the $14.1 million payback of MAAPP funds and the $11.7 million outlay for an acquisition in the first quarter.”
First Quarter 2021 Conference Call
U.S. Physical Therapy's management will host a conference call at 10:30 a.m. Eastern Time, 9:30 a.m. Central Time, on May 6, 2021 to discuss results for the Company's 2021 First Quarter. Interested parties may participate in the call by dialing 1-888-335-5539 or 973-582-2857 and entering reservation number 8072368 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via web-cast, go to the Company's website at www.usph.com at least 15 minutes early to register, download and install any necessary audio software. The conference call will be archived and can be accessed until August 6, 2021 at U.S. Physical Therapy’s website.
Forward-Looking Statements
This press release contains statements that are considered to be forward-looking within the meaning under Section 21E of the Securities Exchange Act of 1934, as amended. These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. These statements (often using words such as “believes”, “expects”, “intends”, “plans”, “appear”, “should” and similar words) involve risks and uncertainties that could cause actual results to differ materially from those we expect. Included among such statements may be those relating to new clinics, availability of personnel and the reimbursement environment. The forward-looking statements are based on our current views and assumptions and actual results could differ materially from those anticipated in such forward-looking statements as a result of certain risks, uncertainties, and factors, which include, but are not limited to:
See Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.
Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Please see the other sections of this report and our other periodic reports filed with the Securities and Exchange Commission (the “SEC”) for more information on these factors. Our forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement may no longer be accurate.
About U.S. Physical Therapy, Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 564 outpatient physical therapy clinics in 39 states. The Company's clinics provide preventative and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, treatment for neurologically-related injuries and rehabilitation of injured workers. In addition to owning and operating clinics, the Company manages 40 physical therapy facilities for unaffiliated third parties, including hospitals and physician groups. The Company also has an industrial injury prevention business which provides onsite services for clients’ employees including injury prevention and rehabilitation, performance optimization, post-offer employment testing, functional capacity evaluations, and ergonomic assessments. More information about U.S. Physical Therapy, Inc. is available at www.usph.com. The information included on that website is not incorporated into this press release.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
Net patient revenues
$
99,254
$
100,126
Other revenues
13,114
12,591
Net revenues
112,368
112,717
Operating costs:
Salaries and related costs
63,815
69,004
Rent, supplies, contract labor and other
21,420
22,909
Provision for credit losses
1,200
1,361
Closure costs - lease and other
37
1,893
Closure costs - derecognition of goodwill
-
1,859
Total operating costs
86,472
97,026
Gross profit
25,896
15,691
Corporate office costs
10,874
11,677
Operating income
15,022
4,014
Other income and expense
Interest and other income, net
54
43
Interest expense - debt and other
(246
)
(427
)
Total other income and expense
(192
)
(384
)
Income before taxes
14,830
3,630
Provision for income taxes
2,944
292
Net income
11,886
3,338
Less: net income attributable to non-controlling interests:
Redeemable non-controlling interests - temporary equity
(2,453
)
(1,796
)
Non-controlling interests - permanent equity
(1,260
)
(526
)
(3,713
)
(2,322
)
Net income attributable to USPH shareholders
$
8,173
$
1,016
Basic and diluted earnings per share attributable to USPH shareholders
$
0.21
$
0.20
Shares used in computation - basic and diluted
12,870
12,796
Dividends declared per common share
$
0.35
$
0.32
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
March 31, 2021
December 31, 2020
ASSETS
(unaudited)
Current assets:
Cash and cash equivalents
$
17,937
$
32,918
Patient accounts receivable, less allowance for credit losses of $2,120 and $2,008, respectively
45,394
41,906
Accounts receivable - other
8,621
9,039
Other current assets
3,846
3,773
Total current assets
75,798
87,636
Fixed assets:
Furniture and equipment
56,754
55,426
Leasehold improvements
35,492
35,320
Fixed assets, gross
92,246
90,746
Less accumulated depreciation and amortization
70,485
69,081
Fixed assets, net
21,761
21,665
Operating lease right-of-use assets
81,553
81,595
Goodwill
360,176
345,646
Other identifiable intangible assets, net
57,593
56,280
Other assets
1,509
1,539
Total assets
$
598,390
$
594,361
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS,
USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTERESTS
Current liabilities:
Accounts payable - trade
$
1,955
$
1,335
Accounts payable - purchase of non-controlling interest
4,828
-
Accrued expenses
51,671
59,746
Current portion of operating lease liabilities
27,292
27,512
Current portion of notes payable
5,079
4,899
Total current liabilities
90,825
93,492
Notes payable, net of current portion
571
596
Revolving line of credit
16,000
16,000
Deferred taxes
8,212
7,779
Operating lease liabilities, net of current portion
62,068
61,985
Other long-term liabilities
4,549
4,539
Total liabilities
182,225
184,391
Redeemable non-controlling interests - temporary equity
138,924
132,340
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,
15,111,309 and 15,066,282 shares issued, respectively
151
151
Additional paid-in capital
97,286
95,622
Retained earnings
210,375
212,015
Treasury stock at cost, 2,214,737 shares
(31,628
)
(31,628
)
Total USPH shareholders’ equity
276,184
276,160
Non-controlling interests - permanent equity
1,057
1,470
Total USPH shareholders' equity and non-controlling interests - permanent equity
277,241
277,630
Total liabilities, redeemable non-controlling interests,
USPH shareholders' equity and non-controlling interests - permanent equity
$
598,390
$
594,361
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
Three Months Ended
March 31, 2021
March 31, 2020
OPERATING ACTIVITIES
Net income including non-controlling interests
$
11,886
$
3,338
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
Depreciation and amortization
2,681
2,607
Provision for credit losses
1,200
1,361
Equity-based awards compensation expense
1,651
1,886
Deferred income taxes
2,181
(1,369
)
Gain on sale of partnership interest
96
-
Derecognition (write-off) of goodwill - closed clinics
-
1,859
Other
-
129
Changes in operating assets and liabilities:
(Increase) decrease in patient accounts receivable
(4,688
)
3,209
Decrease (increase) in accounts receivable - other
220
(1,752
)
Decrease in other assets
221
2,846
Increase in accounts payable and accrued expenses
3,969
2,027
Increase in other long-term liabilities
(1,743
)
239
Net cash provided by operating activities
17,674
16,380
INVESTING ACTIVITIES
Purchase of fixed assets
(1,608
)
(2,754
)
Purchase of majority interest in businesses, net of cash acquired
(11,747
)
(11,633
)
Purchase of redeemable non-controlling interest - temporary equity
-
(1,852
)
Proceeds on sales of partnership interest and clinics
152
316
Net cash used in investing activities
(13,203
)
(15,923
)
FINANCING ACTIVITIES
Distributions to non-controlling interests, permanent and temporary equity
(5,265
)
(2,341
)
Proceeds from revolving line of credit
60,000
88,000
Payments on revolving line of credit
(60,000
)
(20,000
)
Principal payments on notes payable
(145
)
(114
)
Payment of Medicare Accelerated and Advance Funds
(14,054
)
-
Other
12
1
Net cash (used in) provided by financing activities
(19,452
)
65,546
Net (decrease) increase in cash and cash equivalents
(14,981
)
66,003
Cash and cash equivalents - beginning of period
32,918
23,548
Cash and cash equivalents - end of period
$
17,937
$
89,551
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes
$
62
$
242
Interest
$
298
$
349
Non-cash investing and financing transactions during the period:
Purchase of businesses - seller financing portion
$
300
$
300
Payable related to purchase of redeemable non-controlling interest, temporary equity
$
4,829
$
-
Notes receivable related to sale of partnership interest - redeemable non-controlling interest
$
287
$
-
Dividends payable to USPH shareholders
$
4,514
$
4,110
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED EBITDA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
The following tables provide detail of the diluted earnings per share computation and reconcile net income attributable to USPH shareholders calculated in accordance with GAAP to Operating Results and Adjusted EBITDA. Management believes providing Operating Results and Adjusted EBITDA to investors is useful information for comparing the Company's period-to-period results.
Operating Results, a non-Generally Accepted Accounting Principle (“GAAP”) measure, equals net income attributable to USPH shareholders per the consolidated statements of net income plus charges incurred for closure costs and expenses incurred for the CFO recruitment, all net of tax. The earnings per share from Operating Results also excludes the impact of the revaluation of redeemable non-controlling interest. In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest, net of tax, is included in the earnings per basic and diluted share calculation, although it is not included in net income but charged directly to retained earnings.
Management uses Operating Results, which eliminates certain items described above that can be subject to volatility and unusual costs, as one of the principal measures to evaluate and monitor financial performance period over period. Management believes that Operating Results is useful information for investors to use in comparing the Company's period-to-period results as well as for comparing with other similar businesses since most do not have mandatorily redeemable instruments and therefore have different liability and equity structures.
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest income, interest expense, taxes, depreciation, amortization, equity-based awards compensation expense and derecognition of goodwill related to clinic closures. Management believes reporting Adjusted EBITDA is useful information for investors in comparing the Company’s period-to-period results as well as comparing with similar businesses which report adjusted EBITDA as defined by their company.
Operating Results and Adjusted EBITDA are not measures of financial performance under GAAP. Adjusted EBITDA and Operating Results should not be considered in isolation or as an alternative to, or substitute for, net income attributable to USPH shareholders presented in the consolidated financial statements.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED EBITDA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
Three Months Ended March 31,
2021
2020
Computation of earnings per share - USPH shareholders:
Net income attributable to USPH shareholders
$
8,173
$
1,016
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling interest
(7,270
)
2,129
Tax effect at statutory rate (federal and state) of 25.55% and 26.25%, respectively
1,857
(559
)
$
2,760
$
2,586
Earnings per share (basic and diluted)
$
0.21
$
0.20
Adjustments:
Expenses related to CFO transition
-
133
Closure costs
37
3,752
Revaluation of redeemable non-controlling interest
7,270
(2,129
)
Tax effect at statutory rate (federal and state) of 25.55% and 26.25%, respectively
(1,867
)
(461
)
Operating Results
$
8,200
$
3,881
Basic and diluted Operating Results per share
$
0.64
$
0.30
Shares used in computation - basic and diluted
12,870
12,796
Three Months Ended March 31,
2021
2020
Net income attributable to USPH shareholders
$
8,173
$
1,016
Adjustments:
Depreciation and amortization
2,681
2,607
Closure costs - derecognition of goodwill
-
1,859
Interest income
(54
)
(43
)
Interest expense - debt and other
247
427
Provision for income taxes
2,944
292
Equity-based awards compensation expense
1,651
1,886
Adjusted EBITDA
$
15,642
$
8,044
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF PHYSICAL THERAPY OPERATIONS
CLINIC COUNT
Date
Number of Clinics
March 31, 2020
567
June 30, 2020
554
September 30, 2020
550
December 31, 2020
554
March 31, 2021
564
View source version on businesswire.com: https://www.businesswire.com/news/home/20210506005183/en/
U.S. Physical Therapy, Inc. Carey Hendrickson, Chief Financial Officer Email: chendrickson@usph.com Chris Reading, Chief Executive Officer (713) 297-7000 Three Part Advisors Joe Noyons (817) 778-8424
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