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Organization, Nature of Operations and Basis of Presentation | 12 Months Ended
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Dec. 31, 2016
Organization, Nature of Operations and Basis of Presentation [Abstract] |
Organization, Nature of Operations and Basis of Presentation | 1. Organization, Nature of Operations and Basis of Presentation U.S. Physical Therapy, Inc. and its subsidiaries (together, the “Company”) operate outpatient physical therapy clinics that provide pre-and post-operative care and treatment for orthopedic-related disorders, sports-related injuries, preventative care, rehabilitation of injured workers and neurological-related injuries. As of December 31, 2016 the Company owned and/or operated 540 clinics in 42 states. The clinics’ business primarily originates from physician referrals. The principal sources of payment for the clinics’ services are managed care programs, commercial health insurance, Medicare/Medicaid, workers’ compensation insurance and proceeds from personal injury cases. In addition to the Company’s ownership and operation of outpatient physical therapy clinics, it also manages physical therapy facilities for third parties, such as physicians and hospitals, with 20 such third-party facilities under management as of December 31, 2016. The consolidated financial statements include the accounts of U.S. Physical Therapy, Inc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company primarily operates through subsidiary clinic partnerships, in which the Company generally owns a 1% general partnership interest and a 49% to 99% limited partnership interest. The managing therapist of each clinic owns the remaining limited partnership interest in the majority of the clinics (hereinafter referred to as “Clinic Partnership”). To a lesser extent, the Company operates some clinics through wholly-owned subsidiaries under profit sharing arrangements with therapists (hereinafter referred to as “Wholly-Owned Facilities”). During the last three years, the Company completed the following multi-clinic acquisitions:
| Date |  |  | % Interest Acquired |  |  | Number of Clinics |
| 2016 |  |  |  |  |  |  |
February 2016 Acquisition | February 29 |  |  |  | 55 | % |  |  | 8 |
November 2016 Acquisition | November 30 |  |  |  | 60 | % |  |  | 12 |
| 2015 |  |  |  |  |  |  |  |  |
January 2015 Acquisition | January 31 |  |  |  | 60 | % |  |  | 9 |
April 2015 Acquisition | April 30 |  |  |  | 70 | % |  |  | 3 |
June 2015 Acquisition | June 30 |  |  |  | 70 | % |  |  | 4 |
December 2015 Acquisition | December 31 |  |  |  | 59 | % |  |  | 4 |
| 2014 |  |  |  |  |  |  |  |  |
April 2014 Acquisition | April 30 |  |  |  | 70 | % |  |  | 13 |
August 2014 Acquisition | August 1 |  |  |  | 100 | % |  |  | 3 |
In addition to the multi-clinic acquisitions, the Company acquired two single clinic practices in separate transactions during 2016. During 2015, the Company acquired a 60% interest in a single clinic practice and, during 2014, the Company acquired four individual clinics in separate transactions. Clinic Partnerships For non-acquired Clinic Partnerships, the earnings and liabilities attributable to the non-controlling interest, typically owned by the managing therapist, directly or indirectly, are recorded within the statements of net income and balance sheets as non-controlling interests. For acquired Clinic Partnerships, the earnings and liabilities attributable to the non-controlling interest are recorded within the statements of net income line item: Interest expense – mandatorily redeemable non-controlling interests and in the balance sheet line item: Mandatorily redeemable non-controlling interests. Wholly-Owned Facilities For Wholly-Owned Facilities with profit sharing arrangements, an appropriate accrual is recorded for the amount of profit sharing due the clinic partners/directors. The amount is expensed as compensation and included in clinic operating costs—salaries and related costs. The respective liability is included in current liabilities—accrued expenses on the balance sheets. Restatement of Prior Financial Statements Prior to issuing the 2016 annual financial statements, the Company determined it had previously incorrectly accounted for the non-controlling interests which were mandatorily redeemable. See Footnote 2 – Significant Accounting Policies – Mandatorily Redeemable Non-Controlling Interests – for a description of the accounting for mandatorily redeemable non-controlling interests. Management determined this correction was material to previously issued annual and quarterly consolidated financial statements. The Company, in this Annual Report on Form 10-K for the year ended December 31, 2016, is correcting its consolidated financial statements for the balance sheet as of December 31, 2015 and the statements of net income, cash flows and equity for the years ended December 31, 2015 and 2014, which includes a cumulative adjustment to the beginning balances as of January 1, 2014 (reported balances as of December 31, 2013). In addition, any prior information within footnotes, including quarterly data affected by this correction, is restated within the financial statements in this report. The following schedules present the impact of this correction on the Company’s previously reported consolidated balance sheet for the year ended December 31, 2015 and the consolidated statements of net income for the years ended December 31, 2015 and 2014 (in thousands, except share and per share data): Consolidated Balance Sheet on December 31, 2015:
Description |  | As Reported |  |  | Adjustment |  |  | As Restated |
Goodwill |  | $ | 171,457 |  |  | $ | 23,916 |  |  | $ | 195,373 |
Total assets |  | $ | 279,913 |  |  | $ | 23,844 |  |  | $ | 303,757 |
MRNCI (1) |  |  | - |  |  | $ | 45,974 |  |  | $ | 45,974 |
Deferred taxes (liability) |  | $ | 8,355 |  |  | $ | 7,153 |  |  | $ | 15,508 |
Total liabilities |  | $ | 77,960 |  |  | $ | 53,487 |  |  | $ | 131,447 |
RNCI (2) |  | $ | 8,843 |  |  | $ | (8,843 | ) |  |  | - |
Additional paid-in capital |  | $ | 45,251 |  |  | $ | 18,987 |  |  | $ | 64,238 |
Retained earnings |  | $ | 149,016 |  |  | $ | (10,715 | ) |  | $ | 138,301 |
Total liabilities and equity |  | $ | 279,913 |  |  | $ | 23,844 |  |  | $ | 303,757 |
| (1) | Mandatorily redeemable non-controlling interests
| (2) | Redeemable non-controlling interests
Consolidated Statement of Net Income for the Year Ended December 31, 2015:
Description |  | As Reported |  |  | Adjustment |  |  | As Restated |
Interest expense |  |  |  |  |  |  |  |  |
MRNCI (1) – changes in redemption value |  |  | - |  |  | $ | 2,670 |  |  | $ | 2,670 |
MRNCI (1) – earnings allocable |  |  | - |  |  | $ | 3,538 |  |  | $ | 3,538 |
Total interest expense |  | $ | 1,031 |  |  | $ | 6,208 |  |  | $ | 7,239 |
Net income before taxes |  | $ | 46,344 |  |  | $ | (6,208 | ) |  | $ | 40,136 |
Provision for income taxes |  | $ | 14,653 |  |  | $ | (1,006 | ) |  | $ | 13,647 |
Net income |  | $ | 31,691 |  |  | $ | (5,202 | ) |  | $ | 26,489 |
Less: net income attributable to non-controlling interests |  | $ | 9,412 |  |  | $ | (3,538 | ) |  | $ | 5,874 |
Net income attributable to USPH shareholders |  | $ | 22,279 |  |  | $ | (1,664 | ) |  | $ | 20,615 |
Earnings per share |  | $ | 1.77 |  |  | $ | (0.11 | ) |  | $ | 1.66 |
| (1) | See above.
Consolidated Statement of Net Income for the Year Ended December 31, 2014:
Description |  | As Reported |  |  | Adjustment |  |  | As Restated |
Interest expense |  |  |  |  |  |  |  |  |
MRNCI (1) – change in redemption value |  |  | - |  |  | $ | 2,978 |  |  | $ | 2,978 |
MRNCI (1) – earnings allocable |  |  | - |  |  | $ | 3,388 |  |  | $ | 3,388 |
Total interest expense |  | $ | 1,088 |  |  | $ | 6,366 |  |  | $ | 7,454 |
Net income before taxes |  | $ | 44,698 |  |  | $ | (6,366 | ) |  | $ | 38,332 |
Provision for income taxes |  | $ | 14,274 |  |  | $ | (1,256 | ) |  | $ | 13,018 |
Net income |  | $ | 30,424 |  |  | $ | (5,110 | ) |  | $ | 25,314 |
Less: net income attributable to non-controlling interests |  | $ | 9,571 |  |  | $ | (3,388 | ) |  | $ | 6,183 |
Net income attributable to USPH shareholders |  | $ | 20,853 |  |  | $ | (1,722 | ) |  | $ | 19,131 |
Earnings per share |  | $ | 1.62 |  |  | $ | (0.05 | ) |  | $ | 1.57 |
| (1) | See above.
The following schedules present the impact of this correction on the Company’s previously reported consolidated statements of cash flows for the years ended December 31, 2015 and 2014: Consolidated Statement of Cash Flows for the Year Ended December 31, 2015:
Description |  | As Reported |  |  | Adjustment |  |  | As Restated |
Net income |  | $ | 31,691 |  |  | $ | (5,202 | ) |  | $ | 26,489 |
Deferred taxes |  | $ | 7,001 |  |  | $ | (1,048 | ) |  | $ | 5,953 |
(Increase) decrease in other assets |  | $ | (1,477 | ) |  | $ | 102 |  |  | $ | (1,375 | )
(Decrease) increase in accounts payable and accrued expenses |  | $ | (7,013 | ) |  | $ | 2 |  |  | $ | (7,011 | )
Increase in mandatorily redeemable non-controlling interest |  | $ | - |  |  | $ | 2,509 |  |  | $ | 2,509 |
(Decrease) increase in other liabilities |  | $ | 1,482 |  |  | $ | (86 | ) |  | $ | 1,396 |
Net cash provided by operating activities |  | $ | 41,243 |  |  | $ | (3,723 | ) |  | $ | 37,520 |
Acquisitions of non-controlling interests |  | $ | (7,083 | ) |  | $ | 6,115 |  |  | $ | (968 | )
Net cash used in investing activities |  | $ | (32,240 | ) |  | $ | 6,115 |  |  | $ | (26,125 | )
Distributions to non-controlling interests (including redeemable non-controlling interests) |  | $ | (9,632 | ) |  | $ | 9,632 |  |  | $ | - |
Distributions to non-controlling interests |  | $ | - |  |  | $ | (5,892 | ) |  | $ | (5,892 | )
Payments to settle mandatorily redeemable non-controlling interests |  | $ | - |  |  | $ | (6,115 | ) |  | $ | (6,115 | )
Other |  | $ | 22 |  |  | $ | (17 | ) |  | $ | 5 |
Net cash used in financing activities |  | $ | (7,496 | ) |  | $ | (2,392 | ) |  | $ | (9,888 | )
Consolidated Statement of Cash Flows for the Year Ended December 31, 2014:
Description |  | As Reported |  |  | Adjustment |  |  | As Restated |
Net income |  | $ | 30,424 |  |  | $ | (5,110 | ) |  | $ | 25,314 |
Deferred taxes |  | $ | 6,275 |  |  | $ | (1,169 | ) |  | $ | 5,106 |
(Increase) decrease in other assets |  | $ | (2,493 | ) |  | $ | 3,648 |  |  | $ | 1,155 |
Increase in mandatorily redeemable non-controlling interest |  | $ | - |  |  | $ | 2,936 |  |  | $ | 2,936 |
(Decrease) increase in other liabilities |  | $ | 730 |  |  | $ | (4,108 | ) |  | $ | (3,378 | )
Net cash provided by operating activities |  | $ | 45,194 |  |  | $ | (3,803 | ) |  | $ | 41,391 |
Acquisitions of non-controlling interests |  | $ | (5,490 | ) |  | $ | 5,263 |  |  | $ | (227 | )
Net cash used in investing activities |  | $ | (22,880 | ) |  | $ | 5,263 |  |  | $ | (17,617 | )
Distributions to non-controlling interests (including redeemable non-controlling interests) |  | $ | (9,913 | ) |  | $ | 9,913 |  |  | $ | - |
Distributions to non-controlling interests |  | $ | - |  |  | $ | (5,963 | ) |  | $ | (5,963 | )
Payments to settle mandatorily redeemable non-controlling interests |  | $ | - |  |  | $ | (5,233 | ) |  | $ | (5,233 | )
Other |  | $ | 222 |  |  | $ | (177 | ) |  | $ | 45 |
Net cash used in financing activities |  | $ | (20,941 | ) |  | $ | (1,460 | ) |  | $ | (22,401 | )

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