U.S. Physical Therapy Reports Record First Quarter Results

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
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US Physical Therapy (NYSE:USPH)
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Company Declares $.17 Per Share Quarterly Dividend

U.S. Physical Therapy, Inc. (“USPH”) (NYSE: USPH), a national operator of outpatient physical therapy clinics, today reported results for the first quarter ended March 31, 2016.

USPH’s net income attributable to common shareholders, net of tax (“operating results”) increased 27.9% to $5.3 million for the first quarter of 2016 as compared to $4.2 million for the first quarter of 2015. Diluted earnings per share from operating results rose to $0.43 from $0.34.

First Quarter 2016 Compared to First Quarter 2015

Net revenues increased by $9.7 million or 12.5% from $77.2 million in the first quarter of 2015 to $86.9 million in the first quarter of 2016, due to an increase in total patient visits of 13.4% from 712,900 to 808,300 and offset by a decrease in the average net revenue per visit to $105.22 from $106.34. Net revenues from new clinics opened or acquired in the past 12 months was $5.8 million.

Total clinic operating costs were $66.4 million, or 76.4% of net revenues, in the first quarter of 2016, as compared to $60.4 million, or 78.2% of net revenues, in the 2015 period. Most of the dollar expense increase was attributable to $4.9 million in operating costs of new clinics opened or acquired in the past 12 months. Total clinic salaries and related costs, including those from new clinics, were 55.0% of net revenues in the recent quarter versus 55.7% in the 2015 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.1% for the recent quarter versus 21.1% in the 2015 period. The provision for doubtful accounts as a percentage of net revenues was 1.3% for the 2016 and 2015 periods.
The gross margin for the first quarter of 2016 was $20.5 million, or 23.6%, as compared to $16.8 million, or 21.8%, for the 2015 quarter.
Corporate office costs were $9.0 million in the first quarter of 2016 compared to $7.7 million in the 2015 first quarter. Corporate office costs were 10.4% of net revenues for the 2016 quarter compared to 9.9% of net revenues for the 2015 period.
Operating income for the recent quarter increased 25.1% to $11.5 million compared to $9.2 million in the 2015 first quarter.
Interest expense was $0.3 million in the first quarter of 2016 and 2015.
The provision for income taxes for the 2016 period was $3.5 million and for the 2015 quarter was $2.8 million. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest was 39.8% in the 2016 first quarter and 40.0% in the 2015 first quarter.
Net income attributable to non-controlling interests was $2.4 million in the recent quarter as compared to $2.0 million in the year earlier period.
Operating results attributable to common shareholders for the three months ended March 31, 2016 were $5.3 million and $4.2 million in the 2015 period. Diluted earnings per share from operating results were $0.43 for the 2016 period and $0.34 for the 2015 period.
Same store visits increased 6.7% for de novo and acquired clinics open for one year or more and same store revenue increased 4.9% as the average net rate per visit decreased by $1.84 or 1.7%.

Other Financial Measures

In the first quarter of 2016 the Company’s Adjusted EBITDA grew by 24.6% to $12.5 million from $10 million in the 2015 first quarter. Operating results prior to equity-based compensation (a non-cash expense), increased by 27.4% to $6.1 million versus $4.8 million, and on a per share basis grew to $0.49 from $0.39. (See schedule on page 8.)

Chris Reading, Chief Executive Officer, said, “I am very proud of our entire team who have worked hard to produce great results for our patients, physicians, industry customers and shareholders. The end result of these efforts produced record same store visit growth this quarter of 6.7%. Our partners continue to push to deliver meaningful growth, underpinned with great care, while maintaining a close eye on appropriate cost control.”

Larry McAfee, Chief Financial Officer, noted, “Average visits per clinic per day in the first quarter this year were 24.7, an increase of 7.9% as compared to 22.9 in the first quarter last year.”

U.S. Physical Therapy Declares Quarterly Dividend

The second quarterly dividend of 2016 for $.17 per share will be paid on June 3 to shareholders of record as of May 17, 2016.

First Quarter 2016 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 Thursday, May 5, 2016 to discuss the Company’s Quarter Ended March 31, 2016 results. Interested parties may participate in the call by dialing 1-888-335-5539 or 973-582-2857 and entering reservation number 86462697 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 July 5, 2016.

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:

changes as the result of government enacted national healthcare reform;
changes in Medicare 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 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;
possible 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 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, 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;
availability, terms, and use of capital; and
weather and other seasonal factors.

Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Please see our periodic reports filed with the Securities and Exchange Commission for more information on these factors. Our forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement is no longer applicable.

About U.S. Physical Therapy, Inc.

Founded in 1990, U.S. Physical Therapy, Inc. operates 512 outpatient physical and occupational therapy clinics in 42 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 22 physical therapy facilities for third parties, including hospitals and physician groups.

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 NET INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) Three Months Ended

March 31,2016

March 31,2015

Net patient revenues $ 85,049 $ 75,807 Other revenues 1,859 1,434 Net revenues 86,908 77,241 Clinic operating costs: Salaries and related costs 47,804 43,052 Rent, clinic supplies, contract labor and other 17,507 16,325 Provision for doubtful accounts 1,089 990 Closure costs 13 32 Total clinic operating costs 66,413 60,399 Gross margin 20,495 16,842 Corporate office costs 9,004 7,657 Operating income 11,491 9,185 Interest and other income, net 20 8 Interest expense (308 ) (265 ) Income before taxes including non-controlling interests 11,203 8,928 Provision for income taxes 3,523 2,777 Net income including non-controlling interests 7,680 6,151 Less: net income attributable to non-controlling interests (2,352 ) (1,985 ) Net income attributable to common shareholders $ 5,328 $ 4,166 Basic earnings per share attributable to common shareholders: $ 0.43 $ 0.34 Diluted earnings per share attributable to common shareholders: $ 0.43 $ 0.34 Shares used in computation: Basic 12,448 12,313 Diluted 12,448 12,313 Dividends declared per common share $ 0.17 $ 0.15

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)

March 31,2016

December 31,2015

(unaudited) ASSETS Current assets: Cash and cash equivalents $ 19,206 $ 15,778 Patient accounts receivable, less allowance for doubtful accounts of $1,568 and $1,444, respectively 38,217 36,231 Accounts receivable - other, less allowance for doubtful accounts of $-0- and $198, respectively 2,345 2,388 Other current assets 8,298 5,785 Total current assets 68,066 60,182 Fixed assets: Furniture and equipment 45,654 44,749 Leasehold improvements 25,547 25,160 71,201 69,909 Less accumulated depreciation and amortization 54,512 53,255 16,689 16,654 Goodwill 191,051 171,547 Other identifiable intangible assets, net 34,428 30,296 Other assets 1,200 1,234 $ 311,434 $ 279,913 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 2,244 $ 1,636 Accrued expenses 20,684 16,596 Current portion of notes payable 1,253 775 Total current liabilities 24,181 19,007 Notes payable 4,621 4,335 Revolving line of credit 52,500 44,000 Deferred rent 1,391 1,395 Deferred taxes 10,789 8,355 Other long-term liabilities 914 868 Total liabilities 94,396 77,960 Commitments and contingencies Redeemable non-controlling interests 7,591 8,843 Shareholders' equity:

U.S. Physical Therapy, Inc. 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, 14,717,463 and 14,635,874 shares issued, respectively 147 146 Additional paid-in capital 46,563 45,251 Retained earnings 152,219 149,016 Treasury stock at cost, 2,214,737 shares (31,628 ) (31,628 )

Total U.S. Physical Therapy, Inc. shareholders' equity

167,301 162,785 Non-controlling interests 42,146 30,325 Total equity 209,447 193,110 $ 311,434 $ 279,913

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE DATA) (unaudited) Three Months Ended

March 31, 2016

March 31, 2015

OPERATING ACTIVITIES Net income including non-controlling interests $ 7,680 $ 6,151 Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: Depreciation and amortization 2,091 1,807 Provision for doubtful accounts 1,089 990 Equity-based awards compensation expense 1,221 990 Loss on sale of business and sale or abandonment of assets, net (19 ) 17 Excess tax benefit from equity-based awards (323 ) (271 ) Deferred income tax 2,709 565 Other - 35 Changes in operating assets and liabilities: Increase in patient accounts receivable (2,185 ) (2,185 ) Decrease in accounts receivable - other 43 125 (Increase) decrease in other assets (2,282 ) 106 Increase (decrease) in accounts payable and accrued expenses 4,322 (5,976 ) Increase in other liabilities 365 665 Net cash provided by operating activities 14,711 3,019 INVESTING ACTIVITIES Purchase of fixed assets (1,738 ) (1,419 ) Purchase of businesses, net of cash acquired (12,899 ) (6,445 ) Acquisitions of non-controlling interests (including redeemable non-controlling interests) (1,524 ) (359 ) Proceeds on sale of fixed assets, net 42 8 Net cash used in investing activities (16,119 ) (8,215 ) FINANCING ACTIVITIES Distributions to non-controlling interests (including redeemable non-controlling interests) (1,613 ) (1,589 ) Cash dividends to shareholders (2,125 ) - Proceeds from revolving line of credit 49,000 34,000 Payments on revolving line of credit (40,500 ) (27,000 ) Principal payment on notes payable (250 ) (200 ) Tax benefit from stock based awards 323 271 Other 1 - Net cash provided by financing activities 4,836 5,482 Net increase in cash 3,428 286 Cash - beginning of period 15,778 14,271 Cash - end of period $ 19,206 $ 14,557 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Income taxes $ 2,265 $ 1,275 Interest $ 248 $ 235 Non-cash investing and financing transactions during the period: Purchase of business - seller financing portion $ 500 $ 500 Purchase of non-controlling interest - seller financing portion $ 514 $ -

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

ADJUSTED EBITDA AND ADJUSTED NET INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following tables reconcile net income attributable to common shareholders calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”), to Adjusted EBITDA and Adjusted Net Income. Management believes providing Adjusted EBITDA and Adjusted Net Income to investors is useful information for comparing the Company’s period-to-period results. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and equity compensation expense. Adjusted Net Income is defined as net income attributable to common shareholders less equity-based compensation, net of tax. Adjusted EBITDA and Adjusted Net Income are not measures of financial performance under GAAP. Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as an alternative to, or substitute for, net income attributable to common shareholders presented in the consolidated financial statements.

Three Months EndedMarch 31,

2016 2015 Net income attributable to common shareholders $ 5,328 $ 4,166 Adjustments: Depreciation and amortization 2,092 1,807 Interest expense, net of interest income 288 257 Provision for income taxes 3,523 2,777 Equity-based awards compensation expense 1,221 990 Adjusted EBITDA $ 12,452 $ 9,997

Three Months EndedMarch 31,

2016 2015 Net income attributable to common shareholders $ 5,328 $ 4,166 Equity-based awards compensation expense, net of tax 735 594 Adjusted net income $ 6,063 $ 4,760 Basic and diluted earnings per share attributable to common shareholders: $ 0.49 $ 0.39 Shares used in computation: Basic and diluted 12,448 12,313 U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES RECAP OF CLINIC COUNT Number of Date Clinics March 31, 2015 494 June 30, 2015 501 September 30, 2015 506 December 31, 2015 508 March 31, 2016 512

View source version on businesswire.com: http://www.businesswire.com/news/home/20160505005158/en/

U.S. Physical Therapy, Inc.Larry McAfee, (713) 297-7000Chief Financial OfficerorChris Reading, (713) 297-7000Chief Executive OfficerorThree Part AdvisorsJoe Noyons, (817) 778-8424

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