[March 08, 2018] |
|
U.S. Physical Therapy Reports Year-End 2017 Earnings
U.S. Physical Therapy, Inc. ("USPH" or the "Company") (NYSE: USPH), a
national operator of outpatient physical therapy clinics, today reported
results for the fourth quarter and year ended December 31, 2017.
For the fourth quarter ended December 31, 2017, USPH's Operating Results
increased 16.9% to $6.2 million as compared to $5.3 million in the
fourth quarter of 2016. Operating Results, a non-generally accepted
accounting principles ("non-GAAP") measure, is defined as net income
attributable to common shareholders prior to interest expense -
mandatorily redeemable non-controlling interests - change in redemption
value and costs related to restatement of financials, both net of tax,
and the tax benefit of revaluation of deferred tax assets and
liabilities due to the Tax Cuts and Jobs Act ("TCJA"). Diluted earnings
per share from Operating Results was $0.49 in the 2017 fourth quarter
and $0.42 in the 2016 fourth quarter. For the year ended December 31,
2017, Operating Results increased 7.7% to $26.2 million as compared to
$24.3 million in 2016. Diluted earnings per share from Operating Results
was $2.08 in 2017 as compared to $1.94 in 2016.
For the quarter ended December 31, 2017, USPH's net income attributable
to its shareholders, in accordance with generally accepted accounting
principles ("GAAP"), was $7.3 million, or $0.57 per diluted share, as
compared to $5.2 million, or $0.42 per diluted share, for the 2016
period. For the year ended December 31, 2017, USPH's net income
attributable to its shareholders, in accordance with GAAP, was $22.3
million, or $1.76 per diluted share, as compared to $20.6 million, or
$1.64 per diluted share, for the 2016 year. Included in the quarter and
year ended December 31, 2017 is a tax benefit of $4.3 million related to
the revaluation of deferred tax assets and liabilities due to the TCJA.
See schedule on page 12 for a computation of diluted earnings per share
and a reconciliation of net income attributable to USPH shareholders to
Operating Results.
Fourth Quarter 2017 Compared to Fourth Quarter
2016
-
Net revenues increased $18.3 million or 20.2% from $90.9 million in
the fourth quarter of 2016 to $109.2 million in the fourth quarter of
2017, primarily due to a 14.3% increase in net patient revenues from
the physical therapy operations and the revenue from the workforce
performance solutions business acquired in March 2017.
-
Net patient revenues from physical therapy operations increased
approximately $12.7 million, or 14.3%, to $101.6 million in the 2017
period from $88.9 million in the 2016 period due to an increase in
total patient visits of 15.3% from 846,000 to 975,400 offset by a
decrease in average net patient revenue per visit to $104.21 from
$105.14. Of the $12.7 million increase, $7.8 million related to
clinics opened or acquired in 2017 and an increase of $4.0 million in
net patient revenues related to clinics opened or acquired in 2016.
-
Revenue from management contracts was $2.2 million as compared to $1.3
million for the 2016 period. The revenue from the workforce
performance solutions business was $4.7 million for the fourth quarter
of 2017. Other revenue was $0.7 million in both the 2017 and the 2016
periods.
-
Total operating costs were $85.1 million, or 77.9% of net revenues, in
the fourth quarter of 2017 as compared to $72.1 million, or 79.3% of
net revenues, in the 2016 period. The $13.0 million increase was
attributable to $6.9 million in operating costs related to new clinics
opened or acquired in 2017, $4.2 million related to the addition of
the workforce performance solutions business, $1.0 million related to
management contracts opened or acquired in 2017, an increase of $0.4
million related to clinics opened or acquired prior to January 1, 2017
and an increase of $0.5 million in closure costs primarily due to the
write-off of goodwill of $0.4 million related to the closure of a
single clinic acquired partnership which management decided to close
due to the loss of a significant management contract. Total salaries
and related costs, including those from new clinics, were 56.9% of net
revenue in the recent quarter versus 57.2% for the 2016 comparable
period. Rent, supplies, contract labor and other costs as a percentage
of net revenue were 19.6% for the recent quarter versus 20.8% for the
2016 comparable period. The provision for doubtful accounts as a
percentage of net revenue was 0.9% for the fourth quarter of 2017 as
compared to 1.2% in the 2016 comparable period.
-
The gross profit, including closure costs, for the fourth quarter of
2017 was $24.1 million, or 22.1% of revenue, as compared to $18.8
million, or 20.7% of revenue, for the 2016 quarter. The gross profit
percentage for the Company's physical therapy clinics was 22.6% in the
recent quarter as compared to 20.8% a year earlier. The gross profit
percentage on management contracts was 18.9% in the fourth quarter of
2017 as compared to a negative margin in the comparable period of 2016
attributable to a collection issue. The gross profit percentage for
the recently acquired workforce performance solutions business was
10.6%.
-
Corporate office costs were $10.2 million in the fourth quarter of
2017 compared to $7.8 million in the 2016 fourth quarter. Corporate
office costs were 9.3% of net revenues for the 2017 quarter compared
to 8.6% for the 2016 period.
-
Operating income for the recent quarter increased 27.5% to $14.0
million as compared to $11.0 million in the fourth quarter 2016.
-
Interest expense - mandatorily redeemable non-controlling interest -
change in redemption value increased to $5.1 million in the fourth
quarter 2017 from $0.1 million in the 2016 fourth quarter. The change
in redemption value for acquired partnerships is based on the
redemption amount (which is derived from a formula based on a
specified multiple times the underlying business' trailing twelve
months of earnings before interest, taxes, depreciation, amortization
and our internal management fee) at the end of the reporting period
compared to the end of the previous period. The redemption value
increase is directly related to an increase in the profitability and
underlying value of the Company's partnerships as compared to the
prior period.
-
Interest expense - mandatorily redeemable non-controlling interest -
earnings allocable, which represent the portion of earnings allocable
to the holders of mandatorily redeemable non-controlling interest,
increased to $1.7 million in the 2017 fourth quarter from $0.9 million
in the 2016 period.
-
Interest expense - debt and other was $0.5 million in the fourth
quarter 2017 and $0.3 million in the 2016 period.
-
The income tax benefit for the 2017 fourth quarter was $2.0 million.
The provision for the 2016 fourth quarter was $3.2 million. Included
in the fourth quarter of 2017 is a tax benefit of $4.3 million due to
the revaluation of deferred tax assets and liabilities due to the TCJA
which was passed by Congress on December 20, 2017 and signed into law
by the President on December 22, 2017. The provision for income taxes,
prior to the $4.3 million tax benefit, as a percentage of income
before taxes less net income attributable to non-controlling interest
was 43.5% in the 2017 fourth quarter and 37.5% in the 2016 fourth
quarter. Included in the fourth quarter of 2017 was a charge of $0.3
million related to a detailed reconciliation of the federal and state
taxes payable and receivable accounts along with federal and state
deferred tax assets and liability accounts at December 31, 2016.
Without this reconciliation charge, the provision for income taxes as
a percentage of income before taxes less net income attributable to
non-controlling interest was 37.7%.
-
Net income attributable to non-controlling interests (permanent
equity) was $1.2 million in the 2017 fourth quarter as compared to
$1.3 million in the 2016 fourth quarter. Net income attributable to
redeemable non-controlling interests (temporary equity) was $0.2
million in the 2017 fourth quarter.
-
Operating Results, a non-GAAP measure, attributable to common
shareholders for the three months ended December 31, 2017 increased
16.9% to $6.2 million as compared to $5.3 million for the 2016 period.
Diluted earnings per share from Operating Results were $0.49 for the
2017 period and $0.42 for the 2016 period. For the quarter ended
December 31, 2017, USPH's net income attributable to its shareholders,
in accordance with GAAP, was $7.3 million, or $0.57 per diluted share,
as compared to $5.2 million, or $0.42 per diluted share, for the 2016
period. See schedule on page 12 for a computation of reported earnings
per share and a reconciliation of net income attributable to USPH
shareholders to Operating Results.
-
Same store revenues for de novo and acquired clinics open for one year
or more increased 4.6%. Visits increased 3.8% for de novo and acquired
clinics open for one year or more and the same store net rate
increased by approximately 0.8%.
Year 2017 Compared to Year 2016
-
Net revenues increased 16.1% from $356.5 million in 2016 to $414.1
million in 2017, primarily due to an increase in total patient visits
of 11.7% from 3,317,000 to 3,705,000, higher revenues from management
contracts due to an increase in the number of facilities managed by
the Company and revenues from the workforce performance solutions
business acquired in March 2017.
-
Net patient revenues from physical therapy operations increased
approximately $40.4 million, or 11.6%, to $389.2 million in 2017 from
$348.8 million in 2016 due to an increase in total patient visits of
11.7% from 3,317,000 to 3,705,000 offset by a slight decrease in
average net patient revenue per visit to $105.05 from $105.18. Of the
$40.4 million increase, $19.3 million related to clinics opened or
acquired in 2017 coupled with an increase of $21.1 million in net
patient revenues related to clinics opened or acquired prior to 2017.
-
For the year 2017, revenues from management contracts were $7.4
million as compared to $5.5 million for 2016. The revenues from the
recently acquired workforce performance solutions business was $14.9
million for the ten months of operations in 2017. Other revenue was
$2.5 million in 2017 and $2.2 million for 2016.
-
Total operating costs were $323.4 million, or 78.1% of net revenues,
in 2017, as compared to $274.5 million, or 77.0% of net revenues, in
2016. The increase was primarily attributable to $17.3 million in
operating costs related to new clinics opened or acquired in 2017, an
additional $15.6 million related to a full year of activity in 2017
for clinics opened or acquired in 2016, $12.9 million related to the
addition of the workforce performance solutions business, $2.6 million
related to clinics opened or acquired prior to 2016 and an additional
$0.5 million in closure costs as discussed previously. Total salaries
and related costs, including those from new clinics, were 57.3% of net
revenues in 2017 versus 55.7% for 2016. Rent, supplies, contract labor
and other costs as a percentage of net revenues were 19.8% for 2017
and 20.2% for 2016. The provision for doubtful accounts as a
percentage of net revenues was 0.9% for 2017 as compared to 1.1% for
2016.
-
The gross profit for 2017 was $90.6 million, or 21.9% of net revenue,
as compared to $82.0 million, or 23.0% of net revenue, for 2016. The
gross profit percentage for the Company's physical therapy clinics was
22.0% in 2017 as compared to 23.0% a year earlier. The gross profit
percentage on management contracts was 14.9% in 2017 as compared to
14.7% in 2016. The gross profit percentage for the recently acquired
workforce performance solutions business was 13.3%.
-
Corporate office costs were $35.9 million in 2017 compared to $32.5
million in 2016. Corporate office costs were 8.7% of net revenues for
2017 as compared to 9.1% for 2016.
-
Operating income for 2017 rose 10.5% to $54.7 million as compared to
$49.5 million in 2016.
-
Interest expense - mandatorily redeemable non-controlling interest -
change in redemption value increased to $12.9 million in 2017 from
$6.2 million in 2016. The change in redemption value for acquired
partnerships is based on the redemption amount (which is derived from
a formula based on a specified multiple times the underlying business'
trailing twelve months of earnings before interest, taxes,
depreciation, amortization and our internal management fee) at the end
of the reporting period compared to the end of the previous period.
This change is directly related to an increase in the profitability
and underlying value of the Company's partnerships compared to the
respective prior year end.
-
Interest expense - mandatorily redeemable non-controlling interest -
earnings allocable, which represent the portion of earnings allocable
to the holders of mandatorily redeemable non-controlling interest,
increased to $6.1 million in 2017 from $4.1 million in 2016.
-
Interest expense - debt and other was $2.1 million in 2017 and $1.3
million in 2016.
-
The provision for income taxes for 2017 was $6.0 million and for 2016
was $11.9 million. Included in 2017 is a tax benefit of $4.3 million
due to the revaluation of deferred tax assets and liabilities, as
previously discussed. The provision for income taxes, prior to the
$4.3 million tax benefit, as a percentage of income before taxes less
net income attributable to non-controlling interest was 36.6% in 2017
and in 2016.
-
Net income attributable to non-controlling interests (permanent
equity) was $5.2 million in 2017 as compared to $5.7 million in 2016.
Net income attributable to redeemable non-controlling interests
(temporary equity) was $0.2 million in 2017.
-
Operating Results, a non-GAAP measure, attributable to common
shareholders for 2017 rose 7.5% to $26.2 million as compared to $24.3
million for 2016. Diluted earnings per share from Operating Results
were $2.08 for 2017 and $1.94 for the 2016 period. For the year ended
December 31, 2017, USPH's net income attributable to its shareholders,
in accordance with GAAP, was $22.3 million, or $1.76 per diluted
share, as compared to $20.6 million, or $1.64 per diluted share, for
the earlier period. See schedule on page 12 for a computation of
reported earnings per share and a reconciliation of net income
attributable to USPH shareholders to Operating Results.
-
Same store revenues for de novo and acquired clinics open for one year
or more increased 3.6%. Same store visits increased 4.0% while the net
rate declined slightly.
Other Financial Measures
For the fourth quarter of 2017 the Company's Adjusted EBITDA increased
by 19.2% to $15.0 million from $12.6 million in the comparable 2016
quarter. For the year 2017, the Company's Adjusted EBITDA grew by 8.3%
to $57.9 million from $53.5 million in 2016. See definition and
explanation of Adjusted EBITDA in the schedule on pages 12 and 13.
Balance Sheet Change - Redeemable
Non-Controlling Interests
Effective December 31, 2017, the Company entered into amendments to its
acquired limited partnership agreements replacing the mandatory
redemption feature. No monetary consideration was paid to the partners
to amend the agreements. The amended Partnership Agreements provide
that, upon certain events, the Company has a call right (the "Call
Right") and the selling entity has a put right (the "Put Right") for the
purchase and sale of the limited partnership interest held by the
partner. Once triggered, the Put Right and the Call Right do not expire,
even upon an individual partner's death, and contain no mandatory
redemption feature. The purchase price of the partner's limited
partnership interest upon the exercise of either the Put Right or the
Call Right is calculated per the original terms of the respective
agreements. The Company accounted for the amendment of its Partnership
Agreements as an extinguishment of the outstanding Seller Entity
Interests classified as liabilities through the issuance of new Seller
Entity Interests classified in temporary equity. Pursuant to ASC
470-50-40-2, the Company removed the outstanding liability-classified
Seller Entity Interests at their carrying amounts, recognized the new
temporary-equity-classified Seller Entity Interests at their fair value,
and recorded no gain or loss on extinguishment, as management believes
the redemption value (i.e. the carrying amount) and fair value are the
same. In summary, the redemption values of the mandatorily redeemable
non-controlling interest (previously classified as liabilities) were
reclassified as redeemable non-controlling interest (temporary equity)
at fair value on the December 31, 2017 consolidated balance sheet. The
remaining balance of $327,000 in the line item - Mandatorily redeemable
non-controlling interests - relates to one partnership agreement that
was not amended as the non-controlling interest was purchased by the
Company in January 2018.
Management's Comments
Chris Reading, Chief Executive Officer, said, "I am proud of our entire
team for their focus and persistence allowing us to finish the year on a
nice up-note in a variety of key areas. Revenue, patient visits, and
same store growth were strong in the final quarter, while we made
continued progress on our cost and operational realignment initiatives.
Finally and importantly, we produced another very good year from a
development perspective, organically within some of our strongest
partnerships, and through acquisition in great states and new markets
where we see continued opportunity for growth and expansion."
Larry McAfee, Chief Financial Officer, noted, "Despite making five
acquisitions in 2017 for total consideration of $41.3 million and paying
$10.1 million in dividends to shareholders, U.S. Physical Therapy's net
debt increased by only $7.1 million as net cash flow from operations was
strong. Net debt, that is debt less cash, as of year-end 2017 was $38.8
million as compared to $57.9 million in adjusted EBITDA for the past 12
months."
U.S. Physical Therapy Declares Quarterly
Dividend
U.S. Physical Therapy is increasing its quarterly dividend by 15%. The
Company's first quarterly dividend of this year for $0.23 per share will
be paid on April 13, 2018 to shareholders of record as of March 21,
2018. U.S. Physical Therapy began paying quarterly dividends in 2011 and
has increased the dividend amount every year since.
Management Provides 2018 Earnings Guidance
Management currently expects the Company's earnings from Operating
Results for the year 2017 to be in the range of $29.5 million to $30.9
million or $2.34 to $2.44 in diluted earnings per share. This earnings
range is based on an assumed annual corporate tax rate of approximately
28%. Please note that management's guidance range represents projected
earnings from existing operations excluding potential future
acquisitions. The annual guidance figures will not be updated unless
there is a material development that causes management to believe that
earnings will be significantly outside the given range.
Fourth Quarter and Year End 2017 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, March 8, 2018 to
discuss the Company's Fourth Quarter and Year Ended December 31, 2017
results. Interested parties may participate in the call by dialing
1-888-335-5539 or 973-582-2857 and entering reservation number 5473838
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 May 8, 2018.
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 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;
-
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;
-
cost, risks and uncertainties associated with the Company's
restatement of its prior financial statements due to the correction of
its accounting methodology for redeemable non-controlling partnership
interests, and including any pending and future claims or proceedings
relating to such matters;
-
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;
-
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.
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 580 outpatient
physical therapy clinics in 41 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 32
physical therapy facilities for unaffiliated third parties, including
hospitals and physician groups. The Company also provides onsite
services for clients' employees including injury prevention,
rehabilitation, ergonomic assessments and performance optimization.
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)
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net patient revenues
|
|
|
|
|
|
$
|
101,642
|
|
|
$
|
88,946
|
|
|
$
|
389,226
|
|
|
$
|
348,839
|
|
Other revenues
|
|
|
|
|
|
|
7,561
|
|
|
|
1,918
|
|
|
|
24,825
|
|
|
|
7,707
|
|
Net revenues
|
|
|
|
|
|
|
109,203
|
|
|
|
90,864
|
|
|
|
414,051
|
|
|
|
356,546
|
|
Clinic operating costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related costs
|
|
|
|
|
|
|
62,155
|
|
|
|
51,986
|
|
|
|
237,067
|
|
|
|
198,495
|
|
Rent, clinic supplies, contract labor and other
|
|
|
|
|
|
|
21,376
|
|
|
|
18,930
|
|
|
|
82,096
|
|
|
|
71,868
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
956
|
|
|
|
1,078
|
|
|
|
3,672
|
|
|
|
4,040
|
|
Closure costs
|
|
|
|
|
|
|
572
|
|
|
|
77
|
|
|
|
599
|
|
|
|
131
|
|
Total clinic operating costs
|
|
|
|
|
|
|
85,059
|
|
|
|
72,071
|
|
|
|
323,434
|
|
|
|
274,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
24,144
|
|
|
|
18,793
|
|
|
|
90,617
|
|
|
|
82,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate office costs
|
|
|
|
|
|
|
10,182
|
|
|
|
7,839
|
|
|
|
35,889
|
|
|
|
32,479
|
|
Operating income
|
|
|
|
|
|
|
13,962
|
|
|
|
10,954
|
|
|
|
54,728
|
|
|
|
49,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income, net
|
|
|
|
|
|
|
30
|
|
|
|
31
|
|
|
|
88
|
|
|
|
93
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mandatorily redeemable non-controlling interests - change in
redemption value
|
|
|
|
|
|
|
(5,055
|
)
|
|
|
(113
|
)
|
|
|
(12,894
|
)
|
|
|
(6,169
|
)
|
Mandatorily redeemable non-controlling interests - earnings allocable
|
|
|
|
|
|
|
(1,689
|
)
|
|
|
(911
|
)
|
|
|
(6,055
|
)
|
|
|
(4,057
|
)
|
Debt and other
|
|
|
|
|
|
|
(539
|
)
|
|
|
(298
|
)
|
|
|
(2,111
|
)
|
|
|
(1,252
|
)
|
Total interest expense
|
|
|
|
|
|
|
(7,283
|
)
|
|
|
(1,322
|
)
|
|
|
(21,060
|
)
|
|
|
(11,478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
|
|
|
|
|
6,709
|
|
|
|
9,663
|
|
|
|
33,756
|
|
|
|
38,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Benefit) Provision for income taxes
|
|
|
|
|
|
|
(1,997
|
)
|
|
|
3,153
|
|
|
|
6,032
|
|
|
|
11,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
8,706
|
|
|
|
6,510
|
|
|
|
27,724
|
|
|
|
26,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to non-controlling interests and
redeemable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests
|
|
|
|
|
|
|
(1,357
|
)
|
|
|
(1,263
|
)
|
|
|
(5,468
|
)
|
|
|
(5,717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders
|
|
|
|
|
|
$
|
7,349
|
|
|
$
|
5,247
|
|
|
$
|
22,256
|
|
|
$
|
20,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share attributable to USPH
shareholders
|
|
|
|
|
|
$
|
0.57
|
|
|
$
|
0.42
|
|
|
|
1.76
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted
|
|
|
|
|
|
|
12,593
|
|
|
|
12,519
|
|
|
|
12,570
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
|
|
|
$
|
0.20
|
|
|
$
|
0.17
|
|
|
$
|
0.80
|
|
|
$
|
0.68
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE SHEETS
|
(IN THOUSANDS, EXCEPT SHARE DATA)
|
|
|
|
|
|
|
|
December 31,
2017
|
|
|
|
|
December 31,
2016
|
|
ASSETS
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
21,933
|
|
|
|
|
$
|
20,047
|
|
Patient accounts receivable, less allowance for doubtful accounts of
$2,273 and $1,792, respectively
|
|
|
|
|
|
|
44,707
|
|
|
|
|
|
38,840
|
|
Accounts receivable - other
|
|
|
|
|
|
|
5,655
|
|
|
|
|
|
2,649
|
|
Other current assets
|
|
|
|
|
|
|
4,786
|
|
|
|
|
|
4,428
|
|
Total current assets
|
|
|
|
|
|
|
77,081
|
|
|
|
|
|
65,964
|
|
Fixed assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
|
|
|
|
51,100
|
|
|
|
|
|
48,426
|
|
Leasehold improvements
|
|
|
|
|
|
|
29,760
|
|
|
|
|
|
26,765
|
|
Fixed assets, gross
|
|
|
|
|
|
|
80,860
|
|
|
|
|
|
75,191
|
|
Less accumulated depreciation and amortization
|
|
|
|
|
|
|
60,475
|
|
|
|
|
|
56,018
|
|
Fixed assets, net
|
|
|
|
|
|
|
20,385
|
|
|
|
|
|
19,173
|
|
Goodwill
|
|
|
|
|
|
|
271,338
|
|
|
|
|
|
226,806
|
|
Other identifiable intangible assets, net
|
|
|
|
|
|
|
48,954
|
|
|
|
|
|
38,060
|
|
Other assets
|
|
|
|
|
|
|
1,224
|
|
|
|
|
|
1,228
|
|
Total assets
|
|
|
|
|
|
$
|
418,982
|
|
|
|
|
$
|
351,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH
SHAREHOLDERS' EQUITY
AND NON-CONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable - trade
|
|
|
|
|
|
$
|
2,165
|
|
|
|
|
$
|
1,634
|
|
Accrued expenses
|
|
|
|
|
|
|
33,342
|
|
|
|
|
|
21,756
|
|
Current portion of notes payable
|
|
|
|
|
|
|
4,044
|
|
|
|
|
|
1,227
|
|
Total current liabilities
|
|
|
|
|
|
|
39,551
|
|
|
|
|
|
24,617
|
|
Notes payable, net of current portion
|
|
|
|
|
|
|
2,728
|
|
|
|
|
|
4,596
|
|
Revolving line of credit
|
|
|
|
|
|
|
54,000
|
|
|
|
|
|
46,000
|
|
Mandatorily redeemable non-controlling interests
|
|
|
|
|
|
|
327
|
|
|
|
|
|
69,190
|
|
Deferred taxes
|
|
|
|
|
|
|
10,875
|
|
|
|
|
|
15,736
|
|
Deferred rent
|
|
|
|
|
|
|
2,116
|
|
|
|
|
|
1,575
|
|
Other long-term liabilities
|
|
|
|
|
|
|
743
|
|
|
|
|
|
829
|
|
Total liabilities
|
|
|
|
|
|
|
110,340
|
|
|
|
|
|
162,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interests
|
|
|
|
|
|
|
102,572
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
14,809,299 and 14,732,699 shares issued,
respectively
|
|
|
|
|
|
|
148
|
|
|
|
|
|
147
|
|
Additional paid-in capital
|
|
|
|
|
|
|
73,940
|
|
|
|
|
|
68,687
|
|
Retained earnings
|
|
|
|
|
|
|
162,406
|
|
|
|
|
|
150,342
|
|
Treasury stock at cost, 2,214,737 shares
|
|
|
|
|
|
|
(31,628
|
)
|
|
|
|
|
(31,628
|
)
|
Total USPH shareholders' equity
|
|
|
|
|
|
|
204,866
|
|
|
|
|
|
187,548
|
|
Non-controlling interests
|
|
|
|
|
|
|
1,204
|
|
|
|
|
|
1,140
|
|
Total USPH shareholders' equity and non-controlling interests
|
|
|
|
|
|
|
206,070
|
|
|
|
|
|
188,688
|
|
Total liabilities, redeemable non-controlling interests, USPH
shareholders' equity and non-controlling
interests
|
|
|
|
|
|
$
|
418,982
|
|
|
|
|
$
|
351,231
|
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
(unaudited)
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
December 31,
2017
|
|
|
|
December 31,
2016
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Net income including non-controlling interests
|
|
|
|
|
|
$
|
27,724
|
|
|
|
$
|
26,268
|
|
Adjustments to reconcile net income including non-controlling
interests to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
9,710
|
|
|
|
|
8,779
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
3,672
|
|
|
|
|
4,040
|
|
Equity-based awards compensation expense
|
|
|
|
|
|
|
5,032
|
|
|
|
|
4,962
|
|
Deferred income tax
|
|
|
|
|
|
|
(4,550
|
)
|
|
|
|
2,979
|
|
Other
|
|
|
|
|
|
|
621
|
|
|
|
|
152
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in patient accounts receivable
|
|
|
|
|
|
|
(3,447
|
)
|
|
|
|
(3,275
|
)
|
(Increase) decrease in accounts receivable - other
|
|
|
|
|
|
|
(3,022
|
)
|
|
|
|
(400
|
)
|
Increase in other assets
|
|
|
|
|
|
|
2,086
|
|
|
|
|
(1,399
|
)
|
Increase in accounts payable and accrued expenses
|
|
|
|
|
|
|
6,665
|
|
|
|
|
2,994
|
|
Increase in mandatorily redeemable non-controlling interests
|
|
|
|
|
|
|
11,579
|
|
|
|
|
5,598
|
|
Increase in other liabilities
|
|
|
|
|
|
|
456
|
|
|
|
|
352
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
56,526
|
|
|
|
|
51,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
|
|
|
|
(7,095
|
)
|
|
|
|
(8,260
|
)
|
Purchase of businesses, net of cash acquired
|
|
|
|
|
|
|
(36,682
|
)
|
|
|
|
(23,623
|
)
|
Acquisitions of non-controlling interests, net of sale
|
|
|
|
|
|
|
121
|
|
|
|
|
(670
|
)
|
Proceeds on sale of fixed assets, net
|
|
|
|
|
|
|
81
|
|
|
|
|
61
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(43,575
|
)
|
|
|
|
(32,492
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to non-controlling interests
|
|
|
|
|
|
|
(5,572
|
)
|
|
|
|
(5,718
|
)
|
Cash dividends paid to shareholders - funded
|
|
|
|
|
|
|
(10,066
|
)
|
|
|
|
(8,510
|
)
|
Proceeds from revolving line of credit
|
|
|
|
|
|
|
93,000
|
|
|
|
|
168,000
|
|
Payments on revolving line of credit
|
|
|
|
|
|
|
(85,000
|
)
|
|
|
|
(166,000
|
)
|
Payments to settle mandatorily redeemable non-controlling interests
|
|
|
|
|
|
|
(2,361
|
)
|
|
|
|
(1,262
|
)
|
Principal payments on notes payable
|
|
|
|
|
|
|
(1,227
|
)
|
|
|
|
(800
|
)
|
Other
|
|
|
|
|
|
|
161
|
|
|
|
|
1
|
|
Net cash used in financing activities
|
|
|
|
|
|
|
(11,065
|
)
|
|
|
|
(14,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
|
|
|
1,886
|
|
|
|
|
4,269
|
|
Cash and cash equivalents - beginning of period
|
|
|
|
|
|
|
20,047
|
|
|
|
|
15,778
|
|
Cash and cash equivalents - end of period
|
|
|
|
|
|
$
|
21,933
|
|
|
|
$
|
20,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
|
|
|
$
|
8,543
|
|
|
|
$
|
10,584
|
|
Interest
|
|
|
|
|
|
$
|
2,113
|
|
|
|
$
|
784
|
|
Non-cash investing and financing transactions during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of business - seller financing portion
|
|
|
|
|
|
$
|
2,150
|
|
|
|
$
|
1,000
|
|
Acquisition of non-controlling interest - seller financing portion
|
|
|
|
|
|
$
|
-
|
|
|
|
$
|
387
|
|
Payment to settle redeemable non-controlling interest - financing
portion
|
|
|
|
|
|
$
|
-
|
|
|
|
$
|
127
|
|
Receivable from sale of non-controlling interests
|
|
|
|
|
|
$
|
-
|
|
|
|
$
|
(138
|
)
|
|
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
|
|
OPERATING RESULTS AND ADJUSTED EBITDA
|
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
The following tables 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 is defined as USPH's net income attributable to common
shareholders prior to interest expense - mandatorily redeemable
non-controlling interests - change in redemption value and costs related
to the restatement of financial statements, both net of tax, and the tax
benefit of revaluation of deferred tax assets and liabilities due to the
TCJA,. Management uses Operating Results, which eliminates this current
non-cash item 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 earnings before interest income, interest
expense - mandatorily redeemable non-controlling interests - change in
redemption value, interest expense - debt and other, taxes,
depreciation, amortization and equity-based awards compensation expense.
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 Adjusted Net Income 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.
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
Computation of earnings per share - USPH shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders
|
|
|
|
|
|
$
|
7,349
|
|
|
|
$
|
5,247
|
|
|
|
$
|
22,256
|
|
|
|
$
|
20,551
|
|
Charges to additional paid-in capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revaluation of redeemable non-controlling interest
|
|
|
|
|
|
|
(206
|
)
|
|
|
|
-
|
|
|
|
|
(206
|
)
|
|
|
|
-
|
|
Tax effect at statutory rate (federal and state) of 39.25%
|
|
|
|
|
|
|
80
|
|
|
|
|
-
|
|
|
|
|
80
|
|
|
|
|
-
|
|
|
|
|
|
|
|
$
|
7,223
|
|
|
|
$
|
5,247
|
|
|
|
$
|
22,130
|
|
|
|
$
|
20,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income attributable to USPH shareholders per
share
|
|
|
|
|
|
$
|
0.57
|
|
|
|
$
|
0.42
|
|
|
|
$
|
1.76
|
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit - revaluation of deferred tax assets and liabilities
|
|
|
|
|
|
|
(4,325
|
)
|
|
|
|
-
|
|
|
|
|
(4,325
|
)
|
|
|
|
-
|
|
Interest expense MRNCI * - change in redemption value
|
|
|
|
|
|
|
5,055
|
|
|
|
|
113
|
|
|
|
|
12,894
|
|
|
|
|
6,169
|
|
Costs related to restatement of financials - legal and accounting
|
|
|
|
|
|
|
200
|
|
|
|
|
-
|
|
|
|
|
670
|
|
|
|
|
-
|
|
Revaluation of redeemable non-controlling interest
|
|
|
|
|
|
|
206
|
|
|
|
|
-
|
|
|
|
|
206
|
|
|
|
|
-
|
|
Tax effect at statutory rate (federal and state) of 39.25%
|
|
|
|
|
|
|
(2,143
|
)
|
|
|
|
(44
|
)
|
|
|
|
(5,405
|
)
|
|
|
|
(2,421
|
)
|
Operating results
|
|
|
|
|
|
$
|
6,216
|
|
|
|
$
|
5,316
|
|
|
|
$
|
26,170
|
|
|
|
$
|
24,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted operating results per share
|
|
|
|
|
|
$
|
0.49
|
|
|
|
$
|
0.42
|
|
|
|
$
|
2.08
|
|
|
|
$
|
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
|
|
12,593
|
|
|
|
|
12,519
|
|
|
|
|
12,570
|
|
|
|
|
12,500
|
|
|
* Mandatorily redeemable non-controlling interest
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders
|
|
$
|
7,349
|
|
|
$
|
5,247
|
|
|
$
|
22,256
|
|
|
$
|
20,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,441
|
|
|
|
2,570
|
|
|
|
9,710
|
|
|
|
8,779
|
|
Interest income
|
|
|
(30
|
)
|
|
|
(31
|
)
|
|
|
(88
|
)
|
|
|
(93
|
)
|
Interest expense MRNCI * - change in redemption value
|
|
|
5,055
|
|
|
|
113
|
|
|
|
12,894
|
|
|
|
6,169
|
|
Interest expense - debt and other
|
|
|
539
|
|
|
|
298
|
|
|
|
2,111
|
|
|
|
1,252
|
|
Provision for income taxes
|
|
|
(1,997
|
)
|
|
|
3,153
|
|
|
|
6,032
|
|
|
|
11,880
|
|
Equity-based awards compensation expense
|
|
|
1,622
|
|
|
|
1,214
|
|
|
|
5,032
|
|
|
|
4,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
14,979
|
|
|
$
|
12,564
|
|
|
$
|
57,947
|
|
|
$
|
53,500
|
|
|
* Mandatorily redeemable non-controlling interest
|
|
|
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF CLINIC COUNT
|
|
March 31, 2016
|
|
|
|
|
512
|
June 30, 2016
|
|
|
|
|
516
|
September 30, 2016
|
|
|
|
|
524
|
December 31, 2016
|
|
|
|
|
540
|
|
|
|
|
|
|
March 31, 2017
|
|
|
|
|
558
|
June 30, 2017
|
|
|
|
|
566
|
September 30, 2017
|
|
|
|
|
569
|
December 31, 2017
|
|
|
|
|
578
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180308005173/en/
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