Other Comprehensive Income
The Company entered into an interest rate swap agreement in May 2022, which has a $150 million notional value, a maturity date of
June 30, 2027, and was effective on June 30, 2022. Beginning in July 2022, the Company pays a fixed one-month SOFR rate of interest of 2.815%. The total interest rate in any period also includes an applicable margin based on the
Company’s consolidated leverage ratio. Currently, the Company’s interest rate including the applicable margin is 4.665%. Unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other
comprehensive income (loss), net of tax. The fair value of the interest rate swap at September 30, 2022, was $5.9 million, which has been included within other assets in the accompanying Consolidated Balance Sheet. The impact of the
interest rate swap on the accompanying Consolidated Statements of Comprehensive Income was an unrealized gain of $4.8 million, net of tax, for the 2022 Third Quarter, and an unrealized gain of $4.4 million, net of tax, for the 2022 Nine
Months.
Quarterly Dividend
The Board of Directors has declared a quarterly dividend of $0.41 per share payable on December 16, 2022 to shareholders of record on November 21, 2022.
Third Quarter 2022 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 November 3, 2022, to discuss results for the Company's 2022 Third Quarter and Nine months ended September 30, 2022. Interested parties may participate in the call by dialing (866) 952-8559 Primary
or (785) 424-1743 Alternate and entering reservation number USPHQ322 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via webcast, 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 February 3, 2023, at U.S. Physical Therapy’s website.
|
U.S. Physical Therapy Press Release
|
Page 9
|
|
November 2, 2022
|
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:
• the multiple effects of the impact of public health crises and epidemics/pandemics, such as the novel strain of COVID-19
and its variants, for which the total financial magnitude cannot be currently estimated;
• changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
• revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
• changes in reimbursement rates or payment methods from third party payors including government agencies, and changes in the deductibles and co-pays owed by patients;
• 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;
• 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;
• the impact of COVID-19 related vaccination and/or testing mandates at the federal, state and/or local level, which could have an adverse impact on staffing, revenue, costs and the results of operations;
• changes as the result of government enacted national healthcare reform;
• business and regulatory conditions including federal and state regulations;
• governmental and other third party payor inspections, reviews, investigations and audits, which may result in sanctions or reputational harm and increased costs;
• revenue and earnings expectations;
• some of our acquisition agreements contain contingent consideration, the value of which may impact future financial results;
• one of our acquisition agreements includes a Put Right for a potential purchase of a company and we may or may not have the capital necessary to satisfy this obligation;
• legal actions, which could subject us to increased operating costs and uninsured liabilities;
• general economic conditions, including but not limited to inflationary and recessionary periods;
• availability and cost of qualified physical therapists;
• personnel productivity and hiring, training and retaining qualified personnel;
• competitive environment in the industrial injury prevention services business, which could result in the termination or nonrenewal of contractual service arrangements and other adverse financial consequences for that service line;
• acquisitions, and the successful integration of the operations of the acquired businesses;
• impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interest (minority interests);
• maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;
• a security breach of our or our third party vendors’ information technology systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and
Accountability Act of 1996 of the Health Information Technology for Economic and Clinical Health Act;
• maintaining clients for which we perform management and other services, as a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected;
• maintaining adequate internal controls;
• maintaining necessary insurance coverage;
• availability, terms, and use of capital; and
• weather and other seasonal factors.
|
U.S. Physical Therapy Press Release
|
Page 10
|
|
November 2, 2022
|
In addition to the above, see Risk Factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 and the additional risk factors below:
Our debt and financial obligations could
adversely affect our financial condition, our ability to obtain future financing, and our ability to operate our business.
We have outstanding debt obligations that could adversely affect our
financial condition and limit our ability to successfully implement our business strategy. Furthermore, from time to time, we may need additional financing to support our business and pursue our business strategy, including
strategic acquisitions. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets, and other factors. We cannot assure that
additional financing will be available to us on favorable terms when required, or at all.
Our loan agreements contain certain restrictions and requirements that among other things:
|
•
|
require us to maintain a quarterly fixed charge coverage ratio and minimum working capital ratio;
|
|
•
|
limit our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions, to fund growth or for general corporate
purposes;
|
|
•
|
limit our future ability to refinance our indebtedness on terms acceptable to us or at all;
|
|
•
|
limit our flexibility in planning for or reacting to changes in our business and market conditions or in funding our strategic growth plan; and
|
|
•
|
impose on us financial and operational restrictions.
|
Our ability to meet our debt service obligations will depend on our future performance,
which will be affected by the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021 filed on March 1, 2022. If we do not generate enough cash flow to pay our debt service obligations, we
may be required to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity. There is no guarantee that we will be able to take any of these actions on a timely basis, on terms satisfactory to
us, or at all.
If we fail to satisfy our debt service obligations or the other restrictions and
requirements in our loan agreements, we could be in default. Unless cured or waived, a default would permit lenders to accelerate the maturity of the debt under the credit agreement and to foreclose upon the collateral securing the
debt.
Our outstanding loans bear interest at variable rates. In response to the variable rates, we entered into an
interest rate swap agreement. We are exposed to certain market risks during the ordinary course of business due to adverse changes in interest rates. The exposure to interest rate risk primarily results from our variable-rate
borrowing. Fluctuations in interest rates can be volatile and the Company’s risk management activities do not eliminate these risks. In May 2022, we entered into an interest rate swap agreement to manage these risks. While
intended to reduce the effects of fluctuations in these prices and rates, these transactions may limit our potential gains or expose us to losses. If our counterparties to such transactions or the sponsors fail to honor their
obligations due to financial distress, we would be exposed to potential losses or the inability to recover anticipated gains from these transactions.
Some of our acquisition agreements contain contingent consideration, the
value of which may impact future financial results.
Some of our acquisition agreements include contingent earn-out consideration, the fair value
of which is estimated as of the acquisition date based on the present value of the expected contingent payments as determined using weighted probabilities of possible future payments. These fair value estimates contain unobservable
inputs and estimates that could materially differ from the actual future results. The fair value of the contingent earn out consideration could increase or decrease, as applicable. Changes in the fair value of contingent earn-outs
will be reflected in our results of operations in the period in which they are recognized, the amount of which may be material and cause volatility in our financial results.
Our business depends upon hiring, training and
retaining qualified employees.
Our workforce costs represent our largest operating expense, and our ability to meet our labor
needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. We compete with rehabilitation companies and other businesses for
many of our clinical and non-clinical employees, and turnover in these positions can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire,
train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. If we are unable to hire, properly train and
retain qualified employees, we could experience higher employment costs and reduced revenues, which could adversely affect our earnings.
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U.S. Physical Therapy Press Release
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Page 11
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November 2, 2022
|
One of our acquisition agreements contains a Put Right related to a potential future purchase of a majority interest in a separate company.
One of our acquisition
agreements includes a Put Right for the potential future purchase of a majority interest in a separate company at a purchase
price which is derived based on a specified multiple of the separate company’s historical earnings. The exercise of the Put Right is outside of our control. In the event the Put Right is triggered, we are required to purchase the aforementioned equity interest at the calculated purchase price described above. The resulting
purchase price may be greater than the fair value of such equity interests at the time, and we may or may not have the capital necessary to satisfy such contractual purchase obligation, in which case we could be in breach.
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. currently operates 629 outpatient
physical therapy clinics in 40 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 services 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.
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U.S. Physical Therapy Press Release
|
Page 12
|
|
November 2, 2022
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
| |
|
Three Months Ended
|
|
|
For the Nine Months Ended
|
|
| |
|
September 30, 2022
|
|
|
September 30, 2021
|
|
|
September 30, 2022
|
|
|
September 30, 2021
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net patient revenue
|
|
$
|
116,710
|
|
|
$
|
112,327
|
|
|
$
|
344,444
|
|
|
$
|
324,819
|
|
|
Other revenue
|
|
|
22,892
|
|
|
|
13,566
|
|
|
|
67,518
|
|
|
|
40,370
|
|
|
Net revenue
|
|
|
139,602
|
|
|
|
125,893
|
|
|
|
411,962
|
|
|
|
365,189
|
|
|
Operating cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related costs
|
|
|
81,786
|
|
|
|
70,492
|
|
|
|
236,874
|
|
|
|
203,173
|
|
|
Rent, supplies, contract labor and other
|
|
|
29,696
|
|
|
|
24,244
|
|
|
|
86,703
|
|
|
|
68,095
|
|
|
Provision for credit losses
|
|
|
1,336
|
|
|
|
1,358
|
|
|
|
4,192
|
|
|
|
3,922
|
|
|
Total operating cost
|
|
|
112,818
|
|
|
|
96,094
|
|
|
|
327,769
|
|
|
|
275,190
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
26,784
|
|
|
|
29,799
|
|
|
|
84,193
|
|
|
|
89,999
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate office costs
|
|
|
11,889
|
|
|
|
12,867
|
|
|
|
34,186
|
|
|
|
35,815
|
|
|
Operating income
|
|
|
14,895
|
|
|
|
16,932
|
|
|
|
50,007
|
|
|
|
54,184
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resolution of a payor matter
|
|
|
-
|
|
|
|
1,216
|
|
|
|
-
|
|
|
|
1,216
|
|
|
Change in fair value of contingent earn-out consideration
|
|
|
2,000
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
Equity in earnings of unconsolidated affiliate
|
|
|
304
|
|
|
|
-
|
|
|
|
983
|
|
|
|
-
|
|
|
Other and interest income
|
|
|
65
|
|
|
|
58
|
|
|
|
790
|
|
|
|
158
|
|
|
Change in revaluation of put-right liability
|
|
|
785
|
|
|
|
-
|
|
|
|
771
|
|
|
|
-
|
|
|
Interest expense - debt and other, net
|
|
|
(2,013
|
)
|
|
|
(268
|
)
|
|
|
(3,540
|
)
|
|
|
(751
|
)
|
|
Total other income and expense
|
|
|
1,141
|
|
|
|
1,006
|
|
|
|
1,004
|
|
|
|
623
|
|
|
Income before taxes
|
|
|
16,036
|
|
|
|
17,938
|
|
|
|
51,011
|
|
|
|
54,807
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
3,215
|
|
|
|
3,815
|
|
|
|
10,952
|
|
|
|
11,326
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
12,821
|
|
|
|
14,123
|
|
|
|
40,059
|
|
|
|
43,481
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income attributable to non-controlling interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity
|
|
|
(2,037
|
)
|
|
|
(2,605
|
)
|
|
|
(7,220
|
)
|
|
|
(8,669
|
)
|
|
Non-controlling interest - permanent equity
|
|
|
(1,227
|
)
|
|
|
(1,509
|
)
|
|
|
(3,288
|
)
|
|
|
(4,194
|
)
|
| |
|
|
(3,264
|
)
|
|
|
(4,114
|
)
|
|
|
(10,508
|
)
|
|
|
(12,863
|
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to USPH shareholders
|
|
$
|
9,557
|
|
|
$
|
10,009
|
|
|
$
|
29,551
|
|
|
$
|
30,618
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share attributable to USPH shareholders
|
|
$
|
0.72
|
|
|
$
|
0.66
|
|
|
$
|
2.27
|
|
|
$
|
1.69
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computation - basic and diluted
|
|
|
13,001
|
|
|
|
12,909
|
|
|
|
12,979
|
|
|
|
12,894
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.41
|
|
|
$
|
0.38
|
|
|
$
|
1.23
|
|
|
$
|
1.08
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Physical Therapy Press Release
|
Page 13
|
|
November 2, 2022
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
| |
|
Three Months Ended
|
|
|
For the Nine Months Ended
|
|
| |
|
September 30, 2022
|
|
|
September 30, 2021
|
|
|
September 30, 2022
|
|
|
September 30, 2021
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12,821
|
|
|
$
|
14,123
|
|
|
$
|
40,059
|
|
|
$
|
43,481
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on cash flow hedge
|
|
|
6,473
|
|
|
|
-
|
|
|
|
5,942
|
|
|
|
-
|
|
|
Tax effect at statutory rate (federal and state) of 25.55%
|
|
|
(1,654
|
)
|
|
|
-
|
|
|
|
(1,518
|
)
|
|
|
-
|
|
|
Comprehensive income
|
|
$
|
17,640
|
|
|
$
|
14,123
|
|
|
$
|
44,483
|
|
|
$
|
43,481
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to non-controlling interest
|
|
|
(3,264
|
)
|
|
|
(4,114
|
)
|
|
|
(10,508
|
)
|
|
|
(12,863
|
)
|
|
Comprehensive income attributable to USPH shareholders
|
|
$
|
14,376
|
|
|
$
|
10,009
|
|
|
$
|
33,975
|
|
|
$
|
30,618
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Physical Therapy Press Release
|
Page 14
|
|
November 2, 2022
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
September 30, 2022
|
|
|
December 31, 2021
|
|
|
ASSETS
|
|
(unaudited)
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
37,914
|
|
|
$
|
28,567
|
|
|
Patient accounts receivable, less allowance for credit losses of $2,964 and $2,768, respectively
|
|
|
49,747
|
|
|
|
46,272
|
|
|
Accounts receivable - other
|
|
|
19,146
|
|
|
|
16,144
|
|
|
Other current assets
|
|
|
6,085
|
|
|
|
4,183
|
|
|
Total current assets
|
|
|
112,892
|
|
|
|
95,166
|
|
|
Fixed assets:
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
62,006
|
|
|
|
58,743
|
|
|
Leasehold improvements
|
|
|
41,961
|
|
|
|
39,194
|
|
|
Fixed assets, gross
|
|
|
103,967
|
|
|
|
97,937
|
|
|
Less accumulated depreciation and amortization
|
|
|
78,960
|
|
|
|
74,958
|
|
|
Fixed assets, net
|
|
|
25,007
|
|
|
|
22,979
|
|
|
Operating lease right-of-use assets
|
|
|
100,967
|
|
|
|
96,427
|
|
|
Investment in unconsolidated affiliate
|
|
|
11,978
|
|
|
|
12,215
|
|
|
Goodwill
|
|
|
449,548
|
|
|
|
434,679
|
|
|
Other identifiable intangible assets, net
|
|
|
93,697
|
|
|
|
86,382
|
|
|
Other assets
|
|
|
5,619
|
|
|
|
1,578
|
|
|
Total assets
|
|
$
|
799,708
|
|
|
$
|
749,426
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable - trade
|
|
$
|
4,471
|
|
|
$
|
3,268
|
|
|
Accounts payable - due to seller of acquired business
|
|
|
3,203
|
|
|
|
3,203
|
|
|
Accrued expenses
|
|
|
33,784
|
|
|
|
45,705
|
|
|
Current portion of operating lease liabilities
|
|
|
32,540
|
|
|
|
30,475
|
|
|
Current portion of term loan and notes payable
|
|
|
7,490
|
|
|
|
830
|
|
|
Total current liabilities
|
|
|
81,488
|
|
|
|
83,481
|
|
|
Notes payable, net of current portion
|
|
|
2,912
|
|
|
|
3,587
|
|
|
Revolving line of credit
|
|
|
-
|
|
|
|
114,000
|
|
|
Term Loan, net of current portion and deferred financing costs
|
|
|
143,778
|
|
|
|
-
|
|
|
Deferred taxes
|
|
|
23,838
|
|
|
|
14,385
|
|
|
Operating lease liabilities, net of current portion
|
|
|
76,907
|
|
|
|
74,185
|
|
|
Other long-term liabilities
|
|
|
4,026
|
|
|
|
7,345
|
|
|
Total liabilities
|
|
|
332,949
|
|
|
|
296,983
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interest - temporary equity
|
|
|
148,155
|
|
|
|
155,262
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
|
|
|
|
15,216,326 and 15,126,160 shares issued, respectively
|
|
|
152
|
|
|
|
151
|
|
|
Additional paid-in capital
|
|
|
108,515
|
|
|
|
102,688
|
|
|
Accumulated other comprehensive gain
|
|
|
4,424
|
|
|
|
-
|
|
|
Retained earnings
|
|
|
235,683
|
|
|
|
224,395
|
|
|
Treasury stock at cost, 2,214,737 shares
|
|
|
(31,628
|
)
|
|
|
(31,628
|
)
|
|
Total USPH shareholders’ equity
|
|
|
317,146
|
|
|
|
295,606
|
|
|
Non-controlling interest - permanent equity
|
|
|
1,458
|
|
|
|
1,575
|
|
|
Total USPH shareholders' equity and non-controlling interest - permanent equity
|
|
|
318,604
|
|
|
|
297,181
|
|
|
Total liabilities, redeemable non-controlling interest,
|
|
|
|
|
|
|
|
|
|
USPH shareholders' equity and non-controlling interest - permanent equity
|
|
$
|
799,708
|
|
|
$
|
749,426
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Physical Therapy Press Release
|
Page 15
|
|
November 2, 2022
|
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
|
|
|
Nine Months Ended
|
|
|
|
|
September 30, 2022
|
|
|
September 30, 2021
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income including non-controlling interest and earnings from unconsolidated affiliates, net
|
|
$
|
40,059
|
|
|
$
|
43,481
|
|
|
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
10,950
|
|
|
|
8,519
|
|
|
Provision for credit losses
|
|
|
4,192
|
|
|
|
3,922
|
|
|
Equity-based awards compensation expense
|
|
|
5,462
|
|
|
|
6,280
|
|
|
Deferred income taxes
|
|
|
6,077
|
|
|
|
1,292
|
|
|
Change in revaluation of put-right liability
|
|
|
(771
|
)
|
|
|
-
|
|
|
Change in fair value of contingent earn-out consideration
|
|
|
(2,000
|
)
|
|
|
-
|
|
|
(Gain) loss on sale of clinics and fixed assets
|
|
|
(643
|
)
|
|
|
113
|
|
|
Earnings in unconsolidated affiliate
|
|
|
(983
|
)
|
|
|
-
|
|
|
Unrealized gain on cash flow hedge
|
|
|
(5,942
|
)
|
|
|
-
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Increase in patient accounts receivable
|
|
|
(7,585
|
)
|
|
|
(7,513
|
)
|
|
(Increase) decrease in accounts receivable - other
|
|
|
(4,551
|
)
|
|
|
(738
|
)
|
|
(Decrease) increase in other assets
|
|
|
1,669
|
|
|
|
(195
|
)
|
|
(Decrease) Increase in accounts payable and accrued expenses
|
|
|
(4,568
|
)
|
|
|
4,529
|
|
|
(Decrease) increase in other long-term liabilities
|
|
|
(128
|
)
|
|
|
811
|
|
|
Net cash provided by operating activities
|
|
|
41,238
|
|
|
|
60,501
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(7,290
|
)
|
|
|
(5,996
|
)
|
|
Purchase of majority interest in businesses, net of cash acquired
|
|
|
(18,573
|
)
|
|
|
(22,589
|
)
|
|
Purchase of redeemable non-controlling interest, temporary equity
|
|
|
(14,096
|
)
|
|
|
(14,916
|
)
|
|
Purchase of non-controlling interest, permanent equity
|
|
|
(280
|
)
|
|
|
(1,093
|
)
|
|
Proceeds on sales of partnership interest, clinics and fixed assets
|
|
|
740
|
|
|
|
136
|
|
|
Distributions from unconsolidated affiliate
|
|
|
1,220
|
|
|
|
-
|
|
|
Sale of non-controlling interest - permanent
|
|
|
-
|
|
|
|
131
|
|
|
Proceeds on sales of redeemable non-controlling interest-temporary
|
|
|
401
|
|
|
|
69
|
|
|
Net cash used in investing activities
|
|
|
(37,878
|
)
|
|
|
(44,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Distributions to non-controlling interest, permanent and temporary equity
|
|
|
(11,760
|
)
|
|
|
(14,330
|
)
|
|
Cash dividends paid to shareholders
|
|
|
(15,990
|
)
|
|
|
(13,934
|
)
|
|
Proceeds from revolving line of credit
|
|
|
61,000
|
|
|
|
193,000
|
|
|
Proceeds from term loan
|
|
|
150,000
|
|
|
|
-
|
|
|
Payments on revolving line of credit
|
|
|
(175,000
|
)
|
|
|
(176,000
|
)
|
|
Principal payments on notes payable
|
|
|
(496
|
)
|
|
|
(4,662
|
)
|
|
(Payment) receipt of Medicare Accelerated and Advance Funds
|
|
|
-
|
|
|
|
(14,054
|
)
|
|
Payment of deferred financing costs
|
|
|
(1,779
|
)
|
|
|
-
|
|
|
Other
|
|
|
12
|
|
|
|
7
|
|
|
Net cash used in financing activities
|
|
|
5,987
|
|
|
|
(29,973
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
9,347
|
|
|
|
(13,730
|
)
|
|
Cash and cash equivalents - beginning of period
|
|
|
28,567
|
|
|
|
32,918
|
|
|
Cash and cash equivalents - end of period
|
|
$
|
37,914
|
|
|
$
|
19,188
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
7,529
|
|
|
$
|
10,777
|
|
|
Interest paid
|
|
$
|
2,159
|
|
|
$
|
1,195
|
|
|
Non-cash investing and financing transactions during the period:
|
|
|
|
|
|
|
|
|
|
Purchase of businesses - seller financing portion
|
|
$
|
824
|
|
|
$
|
1,800
|
|
|
Notes payable related to purchase of redeemable non-controlling interest, temporary equity
|
|
$
|
1,074
|
|
|
$
|
1,302
|
|
|
Notes payable related to purchase of non-controlling interest, permanent equity
|
|
$
|
576
|
|
|
$
|
-
|
|
|
Notes receivable related to sale of partnership interest - redeemable non-controlling interest
|
|
$
|
1,580
|
|
|
$
|
914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Physical Therapy Press Release
|
Page 16
|
|
November 2, 2022
|
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-GAAP measure, equals net income attributable to USPH shareholders per the consolidated
statements of income less the change in the revaluation of the put-right liability and the change in the fair value of a contingent earn-out payment. In accordance with GAAP, 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.
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest
income, interest expense, taxes, depreciation, amortization, gain on revaluation of put-right liability, equity-based awards compensation expense, change in the fair value of a contingent earn-out payment and related portion for
non-controlling interests. 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.
Management uses Operating Results and Adjusted EBITDA, which eliminates certain items
described above that can be subject to volatility and unusual costs, as one the principal measures to evaluate and monitor financial performance period over period. Management believes that Operating Results and Adjusted EBITDA 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 redeemable instruments and therefore have different equity structures.
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.
