Delivered on 2022 Revenue and Adjusted
EBITDA1 Updated
Guidance
Completed Refreshment of Corporate Leadership
Team with the Appointment of New Chief Operating Officer and Chief
Growth Officer in the Fourth Quarter
Enters Into Transaction Support Agreement to
Increase Liquidity and Financial Flexibility
BOLINGBROOK, Ill., March 16,
2023 /PRNewswire/ -- ATI Physical Therapy ("ATI" or
the "Company") (NYSE: ATIP), a nationally recognized outpatient
physical therapy provider in the United States, today reported
financial results for the fourth quarter and full year ended
December 31, 2022.
"2022 was an important year of transformation for ATI as we
completed a full refresh of our corporate leadership team, adding
four seasoned executives – including two in the fourth quarter –
with extensive experience in the healthcare sector," said
Sharon Vitti, Chief Executive
Officer of ATI. "I am also pleased that we met our 2022 revenue and
Adjusted EBITDA1 updated guidance. As we head into
2023, demand for physical therapy remains strong, underscoring the
relevance of our central mission to deliver high quality care and
service to our patients."
Ms. Vitti continued, "During the fourth quarter, our
provider teams maintained their focus on meeting the needs of our
patients, which drove a recent high for clinician productivity for
the period. Importantly, this momentum has continued into the new
year, with January and February
2023 patient visits per clinical FTE per day also among
historical highs. We also incrementally grew our provider base in
the quarter, despite a continuing tight labor market, and our
referral pipeline is now back to pre-pandemic levels. We look
forward to building on this favorable start to 2023 as we continue
executing on our strategic initiatives and delivering value to our
patients, shareholders and other stakeholders."
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1 The
Company did not provide guidance on a GAAP basis. Refer to
"Non-GAAP Financial Measures" below.
|
Fourth Quarter 2022 Results
Supplemental tables of key performance metrics for the first
quarter of 2020 through the fourth quarter of 2022 are presented
after the financial statements at the end of this press release.
Commentary on performance results in the fourth quarter of 2022 is
as follows:
- Net revenue was $161.8 million
compared to $156.8 million in the
third quarter of 2022 and $155.8
million in the fourth quarter of 2021, an increase of 3%
quarter over quarter and 4% year over year.
-
- Net patient revenue was $146.2
million compared to $142.3
million in the third quarter of 2022 and $140.3 million in the fourth quarter of 2021, an
increase of 3% quarter over quarter and 4% year over year. See
below for discussion of drivers to net patient revenue (i.e.,
patient visits and Rate per Visit).
- Other revenue was $15.6 million
compared to $14.5 million in the
third quarter of 2022 and $15.5
million in the fourth quarter of 2021, an increase of 8%
quarter over quarter and 1% year over year.
- Visits per Day ("VPD") were 22,316 compared to 21,493 in the
third quarter of 2022 and 20,649 in the fourth quarter of 2021, an
increase of 4% quarter over quarter and 8% year over year as the
business continues to ramp from the impact of COVID.
VPD per Clinic was 24.1 compared to 23.2 in the third quarter of
2022 and 22.8 in the fourth quarter of 2021, an increase of 0.9
quarter over quarter and 1.3 year over year.
- Rate per Visit was $103.99
compared to $103.46 in the third
quarter of 2022 and $104.51 in the
fourth quarter of 2021, an increase of 1% quarter over quarter and
a decrease of 1% year over year.
- Salaries and related costs were $90.7
million compared to $90.3
million in the third quarter of 2022 and $88.1 million in the fourth quarter of 2021,
essentially flat quarter over quarter and an increase of 3% year
over year. The increase was primarily due to wage inflation and a
higher proportion of physical therapists versus physical therapy
assistants in support of ATI's patient care model.
PT salaries and related costs per visit were $54.92 compared to $56.20 in the third quarter of 2022 and
$55.73 in the fourth quarter of 2021,
a decrease of 2% quarter over quarter and 1% year over year. The
decreases were due to higher labor productivity of 9.0 VPD per
clinical FTE compared to 8.7 in the third quarter of 2022 and 8.3
in the fourth quarter of 2021. The year over year decrease was
partially offset by higher labor costs per clinical FTE.
- Rent, clinic supplies, contract labor and other was
$49.1 million compared to
$51.4 million in the third quarter of
2022 and $47.8 million in the fourth
quarter of 2021, a decrease of 4% quarter over quarter with 3 less
clinics on average and an increase of 3% year over year with 19
more clinics on average.
PT rent, clinic supplies, contract labor and other per clinic was
$51,252 compared to $53,945 in the third quarter of 2022 and
$50,976 in the fourth quarter of
2021, a decrease of 5% quarter over quarter and an increase of 1%
year over year. The quarter over quarter decrease was primarily
driven by lower use of contract labor and the impact of cost
control actions. The year over year increase was primarily due to
greater use of contract labor in addition to a higher cost for
contract labor.
- Provision for doubtful accounts was $2.5
million compared to $2.8
million in the third quarter of 2022 and $2.1 million in the fourth quarter of
2021. PT provision as a percent of
net patient revenue was 1.7% compared to 2.0% in the third quarter
of 2022 and 1.5% in the fourth quarter of 2021, reflecting steady
collections.
- Selling, general and administrative expenses were $27.6 million compared to $25.3 million in the third quarter of 2022 and
$29.9 million in the fourth quarter
of 2021, an increase of 9% quarter over quarter primarily due to
higher severance costs and a decrease of 8% year over year
primarily due to lower non-ordinary legal and regulatory costs and
executive search fees partially offset by higher severance
costs.
- Non-cash goodwill, intangible and other asset impairment
charges totaled $96.0 million. Due to
an estimated increase in the industry Weighted Average Cost of
Capital, revised near-term Company expectations given current labor
market headwinds and lower guideline public company market
multiples, it was determined that the fair value amounts of
goodwill, trade name and other assets were below their respective
carrying amounts.
- Income tax benefit was $5.0
million compared to $7.2
million in the third quarter of 2022 and $5.4 million in the fourth quarter of 2021.
- Net (loss) income was $(102.4)
million compared to $(116.7)
million in the third quarter of 2022 and $1.7 million in the fourth quarter of 2021. The
fourth quarter 2022 net loss included significant non-cash items,
notably goodwill, intangible and other asset impairment charges of
$96.0 million and change in fair
value of warrant liability and contingent common shares liability
gain of $10.4 million.
- Adjusted EBITDA1 was $6.4 million compared to $(0.4) million in the third quarter of 2022 and
$1.6 million in the fourth quarter of
2021. The increases were predominantly driven by higher
revenue.
Adjusted EBITDA1 margin was 3.9% compared to (0.3)%
in the third quarter of 2022 and 1.1% in the fourth quarter of
2021.
- Net increase in cash and cash equivalents was $34.6 million. Excluding revolver activity, the
change in cash was a net decrease of $13.6
million compared to a net decrease of $31.1 million in the third quarter of 2022 and
$17.5 million in the fourth quarter
of 2021.
Summary of key balance sheet items as of December 31, 2022 is as follows:
- Cash and cash equivalents totaled $83.1
million and no revolving credit facility remaining
capacity.
Full Year 2022 Results
Commentary on performance results for full year 2022 is as
follows:
- Net revenue was $635.7 million
compared to $627.9 million for full
year 2021, an increase of 1% year over year.
-
- Net patient revenue was $575.9
million compared to $561.1
million for full year 2021, an increase of 3% year over
year.
- Other revenue was $59.7 million
compared to $66.8 million for full
year 2021, a decrease of 11% year over year primarily due to sale
of the Home Health service line on October
1, 2021.
- Salaries and related costs were $358.0
million compared to $336.5
million for full year 2021, an increase of 6% year over
year.
- Rent, clinic supplies, contract labor and other was
$202.6 million compared to
$180.9 million for full year 2021, an
increase of 12% year over year.
- Provision for doubtful accounts was $13.9 million compared to $16.4 million for full year 2021. Provision as a
percent of net revenue was 2.4% compared to 2.9% for full year
2021.
- Selling, general and administrative expenses were $114.7 million compared to $111.8 million for full year 2021, an increase of
3% year over year.
- Non-cash goodwill, intangible and other asset impairment
charges totaled $486.3 million
compared to $962.3 million for full
year 2021, a decrease of 49% year over year.
- Income tax benefit was $48.5
million compared to an expense of $71.0 million for full year 2021.
- Net loss was $493.0 million
compared to $782.0 million for the
full year 2021. The full year 2022 net loss included significant
non-cash items, notably goodwill, intangible and other asset
impairment charges of $486.3 million
and change in fair value of warrant liability and contingent common
shares liability gain of $46.8
million. The full year 2021 net loss included significant
non-cash items, notably goodwill, intangible and other asset
impairment charges of $962.3 million
and change in fair value of warrant liability and contingent common
shares liability gain of $197.7
million.
- Adjusted EBITDA1 was $6.7 million compared to $39.8 million for the full year 2021, a decrease
of 83% year over year.
Adjusted EBITDA1 margin was 1.1% compared to 6.3%
for full year 2021.
- Net increase in cash and cash equivalents was $34.5 million. Excluding revolver activity and
the February 2022 refinancing, the
change in cash was a net decrease of $94.9
million compared to a net decrease of $93.5 million for full year 2021.
- Opened 36 new clinics and closed 23 clinics in various states
across the national footprint, bringing the total number of clinics
for the year to 923.
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1 Refer to
"Non-GAAP Financial Measures" below.
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Transaction Support Agreement to Increase Liquidity and
Financial Flexibility
ATI also announced today that it entered into a Transaction
Support Agreement (the "TSA") with certain of its lenders, holders
of preferred equity and holders of the majority of its common
stock. If the transactions contemplated in the TSA are finalized,
which is expected to occur in the second quarter of 2023, ATI will
obtain a $25 million delayed draw
facility in the form of new second lien PIK exchangeable notes and
exchange $100 million of first lien
term loan into new second lien PIK exchangeable notes. The TSA also
provides for an amendment to the Company's 2022 credit agreement
to, among other things, reset certain financial covenant
thresholds.
Joe Jordan, Chief Financial
Officer of ATI, said, "We are pleased to have entered into this
TSA, underscoring the parties' continued support and confidence in
our long-term value proposition. The transactions contemplated by
this support agreement would position ATI to reset our covenants
and move forward with additional financial flexibility as we focus
on creating value for the business and all our stakeholders."
Fourth Quarter and Year End 2022 Earnings Conference
Call
Management will host a conference call at 5:00 p.m. Eastern Time on March 16, 2023 to review fourth quarter and full
year 2022 financial results. Management will offer commentary and
additional insights but will not be taking questions due to its
ongoing discussions to execute the transaction outlined in the
Transaction Support Agreement. The conference call can be accessed
via a live audio webcast. To join, please access the following
web link, ATI Physical Therapy, Inc. Q4 2022 Year-End Earnings
Conference Call, on the Company's Investor Relations website at
https://investors.atipt.com at least 15 minutes early to
register and download and install any necessary audio software. A
replay of the call will be available via webcast for on-demand
listening shortly after the completion of the call, at the same web
link, and will remain available for approximately 90 days.
About ATI Physical Therapy
At ATI Physical Therapy, we are passionate about potential.
Every day, we restore it in our patients and activate it in our
team members in our more than 900 locations in 24 states. With
outcomes from more than 2.5 million unique patient cases, ATI is
making strides in the industry by setting quality standards
designed to deliver predictable outcomes for our patients with
musculoskeletal (MSK) issues. ATI's offerings span across a broad
spectrum for MSK-related issues. From preventative services in the
workplace and athletic training support to outpatient clinical
services and online physical therapy via our online platform,
CONNECT™, a complete list of our service offerings can be found
at ATIpt.com. ATI is based in Bolingbrook, Illinois.
Forward-Looking Statements
All statements other than statements of historical facts
contained in this communication are forward-looking statements for
purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of the words such as
"believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect," "should," "would," "plan," "project,"
"forecast," "predict," "potential," "seem," "seek," "future,"
"outlook," "target" or similar expressions that predict or indicate
future events or trends or that are not statements of historical
matters. These forward-looking statements include, but are not
limited to, statements regarding the impact of physical therapist
attrition and ability to achieve and maintain clinical staffing
levels and clinician productivity, anticipated visit and referral
volumes and other factors on the Company's overall profitability,
and estimates and forecasts of other financial and performance
metrics and projections of market opportunity. These statements are
based on various assumptions, whether or not identified in this
communication, and on the current expectations of the Company's
management and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on by
any investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and will
differ from assumptions. Many actual events and circumstances are
beyond the control of the Company.
These forward-looking statements are subject to a number of
risks and uncertainties, including:
- our liquidity position raises substantial doubt about our
ability to continue as a going concern;
- risks associated with liquidity and capital markets, including
the Company's ability to generate sufficient cash flows, together
with cash on hand, to run its business, cover liquidity and capital
requirements and resolve substantial doubt about the Company's
ability to continue as a going concern;
- our ability to meet certain financial covenants as required by
our 2022 Credit Agreement, including maintaining $30.0 million of minimum liquidity;
- risks related to outstanding indebtedness and preferred stock,
rising interest rates and potential increases in borrowing costs,
compliance with associated covenants and provisions and the
potential need to seek additional or alternative debt or capital
financing in the future;
- risks related to the Company's ability to access additional
financing or alternative options when needed;
- our dependence upon governmental and third-party private payors
for reimbursement and that decreases in reimbursement rates,
renegotiation or termination of payor contracts or unfavorable
changes in payor, state and service mix may adversely affect our
financial results;
- federal and state governments' continued efforts to contain
growth in Medicaid expenditures, which could adversely affect the
Company's revenue and profitability;
- payments that we receive from Medicare and Medicaid being
subject to potential retroactive reduction;
- changes in Medicare rules and guidelines and reimbursement or
failure of our clinics to maintain their Medicare certification
and/or enrollment status;
- 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;
- risks associated with public health crises, including COVID-19
(and any existing and future variants) and its direct and indirect
impacts on the business, which could lead to a decline in visit
volumes and referrals;
- risks related to the impact on our workforce of mandatory
COVID-19 vaccination of employees;
- our inability to compete effectively in a competitive industry,
subject to rapid technological change and cost inflation, including
competition that could impact our effectiveness of strategies to
improve patient referrals and our ability to identify, recruit and
retain skilled physical therapists;
- our inability to maintain high levels of service and patient
satisfaction;
- risks associated with the locations of our clinics, including
the economies in which we operate, size and expected growth of our
addressable markets, and the potential need to close clinics and
incur closure costs;
- our dependence upon the cultivation and maintenance of
relationships with customers, suppliers, physicians and other
referral sources;
- the severity of climate change or the weather and natural
disasters that can occur in the regions of the U.S. in which we
operate, which could cause disruption to our business;
- risks associated with future acquisitions, which may use
significant resources, may be unsuccessful and could expose us to
unforeseen liabilities;
- failure of third-party vendors, including customer service,
technical and IT support providers and other outsourced
professional service providers to adequately address customers'
requests and meet Company requirements;
- risks associated with our reliance on IT infrastructure in
critical areas of our operations including, but not limited to,
cyber and other security threats;
- a security breach of our IT systems or our third-party vendors'
IT 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 or 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;
- our failure to maintain financial controls and processes over
billing and collections or disputes with third-parties could have a
significant negative impact on our financial condition and results
of operations;
- our operations are subject to extensive regulation and
macroeconomic uncertainty;
- our ability to meet revenue and earnings expectations;
- risks associated with applicable state laws regarding
fee-splitting and professional corporation laws;
- inspections, reviews, audits and investigations under federal
and state government programs and payor contracts that could have
adverse findings that may negatively affect our business, including
our results of operations, liquidity, financial condition and
reputation;
- changes in or our failure to comply with existing federal and
state laws or regulations or the inability to comply with new
government regulations on a timely basis;
- the outcome of any legal and regulatory matters, proceedings or
investigations instituted against us or any of our directors or
officers, and whether insurance coverage will be available and/or
adequate to cover such matters or proceedings;
- our facilities face competition for experienced physical
therapists and other clinical providers that may increase labor
costs and reduce profitability;
- risks associated with our ability to attract and retain
talented executives and employees amidst the impact of unfavorable
labor market dynamics and wage inflation, including potential
failure of steps being taken to reduce attrition of physical
therapists and increase hiring of physical therapists;
- risk resulting from the IPO Warrants, Earnout Shares and
Vesting Shares being accounted for as liabilities;
- further impairments of goodwill and other intangible assets,
which represent a significant portion of our total assets,
especially in view of the Company's recent market valuation;
- our inability to remediate the material weaknesses in internal
control over financial reporting related to income taxes and to
maintain effective internal control over financial reporting;
- costs related to operating as a public company; and
- risks associated with our ability to regain and sustain
compliance with the listing requirements of our securities on the
New York Stock Exchange ("NYSE").
If any of these risks materialize or our assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements.
Investors should also review those factors discussed in the
Company's amended S-1 registration statement filed with the SEC on
April 12, 2022 under the heading
"Risk Factors," our Form 10-K for the fiscal year ended
December 31, 2022, the S-3
registration statement and amendments thereto dated August 10, 2022 and other documents filed, or to
be filed, by ATI with the SEC. New risk factors emerge from
time to time and it is not possible to predict all such risk
factors, nor can the Company assess the impact of all such risk
factors on the business of the Company or the extent to which any
factor or combination of factors may cause actual results to differ
materially from those contained in any forward-looking statements.
All forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their
entirety by the foregoing cautionary statements. Readers should not
place undue reliance on forward-looking statements. The Company
undertakes no obligations to publicly update or revise any
forward-looking statements after the date they are made or to
reflect the occurrence of unanticipated events, whether as a result
of new information, future events or otherwise, except as required
by law.
In addition, statements of belief and similar statements reflect
the beliefs and opinions of the Company on the relevant subject.
These statements are based upon information available to the
Company, as applicable, as of the date of this communication, and
while the Company believes such information forms a reasonable
basis for such statements, such information may be limited or
incomplete, and statements should not be read to indicate that the
Company has conducted an exhaustive inquiry into, or review of, all
potentially available relevant information. These statements are
inherently uncertain and you are cautioned not to unduly rely upon
these statements.
Non-GAAP Financial Measures
To supplement the Company's financial information presented in
accordance with GAAP and aid understanding of the Company's
business performance, the Company uses certain non-GAAP financial
measures, namely "Adjusted EBITDA" and "Adjusted EBITDA margin."
ATI believes Adjusted EBITDA and Adjusted EBITDA margin (i.e.,
Adjusted EBITDA divided by Net Revenue) assist investors and
analysts in comparing the Company's operating performance across
reporting periods on a consistent basis by excluding items that it
does not believe are indicative of ATI's core operating
performance.
Management believes these non-GAAP financial measures are useful
to investors in highlighting trends in our operating performance,
while other measures can differ significantly depending on
long-term strategic decisions regarding capital structure, the tax
jurisdictions in which ATI operates and capital investments.
Management uses these non-GAAP financial measures to supplement
GAAP measures of performance in the evaluation of the effectiveness
of the Company's business strategies, to make budgeting decisions,
to establish discretionary annual incentive compensation and to
compare ATI's performance against that of other peer companies
using similar measures. Management supplements GAAP results with
non-GAAP financial measures to provide a more complete
understanding of the factors and trends affecting the business than
GAAP results alone.
Adjusted EBITDA and Adjusted EBITDA margin are not recognized
terms under GAAP and should not be considered as an alternative to
net income (loss) or the ratio of net income (loss) to net revenue
as a measure of financial performance, cash flows provided by
operating activities as a measure of liquidity, or any other
performance measure derived in accordance with GAAP. Additionally,
these measures are not intended to be a measure of cash available
for management's discretionary use as they do not consider certain
cash requirements such as interest payments, tax payments and debt
service requirements. The presentations of these measures have
limitations as analytical tools and should not be considered in
isolation, or as a substitute for analysis of the Company's results
as reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
Please see "Reconciliation of GAAP to Non-GAAP Financial
Measures" below for reconciliations of non-GAAP financial measures
used in this release to their most directly comparable GAAP
financial measures. We are unable to provide a reconciliation
between forward-looking Adjusted EBITDA to its comparable GAAP
financial measure without unreasonable effort, due to the high
difficulty and impracticability of predicting certain amounts
required by GAAP with a reasonable degree of accuracy by the date
of this release.
Contacts:
Investors:
Joanne Fong
SVP, Treasurer and Investor Relations
ATI Physical Therapy
investors@atipt.com
(630) 296-2222 x 7131
Media
Rob Manker
Director of Customer Marketing & Public Relations
ATI Physical Therapy
warren.manker@atipt.com
630-296-2222 ext. 7432
ATI Physical Therapy
Condensed Consolidated Statements of Operations ($ in
thousands)
(unaudited)
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December
31, 2022
|
|
December
31, 2021
|
|
December
31, 2022
|
|
December
31, 2021
|
|
|
|
|
|
|
|
|
|
|
Net patient
revenue
|
$
|
146,196
|
|
|
$
|
140,275
|
|
|
$
|
575,940
|
|
|
$
561,080
|
|
|
Other
revenue
|
15,568
|
|
|
15,488
|
|
|
59,731
|
|
|
66,791
|
|
|
Net revenue
|
161,764
|
|
|
155,763
|
|
|
635,671
|
|
|
627,871
|
|
|
|
|
|
|
|
|
|
|
|
Clinic operating
costs:
|
|
|
|
Salaries and related
costs
|
90,652
|
|
|
88,087
|
|
|
357,982
|
|
|
336,496
|
|
Rent, clinic supplies,
contract labor and other
|
49,131
|
|
|
47,792
|
|
|
202,568
|
|
|
180,932
|
|
|
Provision for doubtful
accounts
|
2,461
|
|
|
2,099
|
|
|
13,869
|
|
|
16,369
|
|
|
Total clinic operating
costs
|
142,244
|
|
|
137,978
|
|
|
574,419
|
|
|
533,797
|
|
|
Selling, general and
administrative expenses
|
27,629
|
|
|
29,897
|
|
|
114,724
|
|
|
111,809
|
|
|
Goodwill, intangible
and other asset impairment charges
|
96,038
|
|
|
—
|
|
|
486,262
|
|
|
962,303
|
|
|
Operating
loss
|
(104,147)
|
|
|
(12,112)
|
|
|
(539,734)
|
|
|
(980,038)
|
|
|
Change in fair value of
warrant liability
|
(592)
|
|
|
(2,171)
|
|
|
(4,243)
|
|
|
(22,595)
|
|
|
Change in fair value of
contingent common shares liability
|
(9,765)
|
|
|
(7,875)
|
|
|
(42,525)
|
|
|
(175,140)
|
|
|
Loss on settlement of
redeemable preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
14,037
|
|
|
Interest expense,
net
|
13,463
|
|
|
7,215
|
|
|
45,278
|
|
|
46,320
|
|
|
Interest expense on
redeemable preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
10,087
|
|
|
Other expense (income),
net
|
152
|
|
|
(5,590)
|
|
|
3,333
|
|
|
241
|
|
|
Loss before
taxes
|
(107,405)
|
|
|
(3,691)
|
|
|
(541,577)
|
|
|
(852,988)
|
|
|
Income tax (benefit)
expense
|
(4,998)
|
|
|
(5,381)
|
|
|
(48,530)
|
|
|
(70,960)
|
|
|
Net (loss)
income
|
(102,407)
|
|
|
1,690
|
|
|
(493,047)
|
|
|
(782,028)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATI Physical Therapy
Condensed Consolidated Balance Sheets ($ in
thousands)
(unaudited)
|
|
|
December 31, 2022
|
|
December 31, 2021
|
Assets:
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
83,139
|
|
$
48,616
|
Accounts receivable
(net of allowance for doubtful accounts of $47,620 and $53,533 at
December 31, 2022 and December 31, 2021,
respectively)
|
80,673
|
|
82,455
|
Prepaid
expenses
|
13,526
|
|
9,303
|
Other current
assets
|
10,040
|
|
3,204
|
Assets held for
sale
|
6,755
|
|
—
|
Total current
assets
|
194,133
|
|
143,578
|
|
|
|
|
Property and equipment,
net
|
123,690
|
|
139,730
|
Operating lease
right-of-use assets
|
226,092
|
|
256,646
|
Goodwill,
net
|
286,458
|
|
608,811
|
Trade name and other
intangible assets, net
|
246,582
|
|
411,696
|
Other non-current
assets
|
2,030
|
|
2,233
|
Total assets
|
$
1,078,985
|
|
$
1,562,694
|
|
|
|
|
Liabilities, Mezzanine Equity and Stockholders'
Equity:
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
12,559
|
|
$
15,146
|
Accrued expenses and
other liabilities
|
53,672
|
|
64,584
|
Current portion of
operating lease liabilities
|
47,676
|
|
49,433
|
Current portion of
long-term debt
|
—
|
|
8,167
|
Liabilities held for
sale
|
2,614
|
|
—
|
Total current
liabilities
|
116,521
|
|
137,330
|
|
|
|
|
Long-term debt,
net
|
531,600
|
|
543,799
|
Warrant
liability
|
98
|
|
4,341
|
Contingent common
shares liability
|
2,835
|
|
45,360
|
Deferred income tax
liabilities
|
18,886
|
|
67,459
|
Operating lease
liabilities
|
218,424
|
|
250,597
|
Other non-current
liabilities
|
1,834
|
|
2,301
|
Total
liabilities
|
890,198
|
|
1,051,187
|
Commitments and
contingencies
|
|
|
|
Mezzanine
equity:
|
|
|
|
Series A Senior
Preferred Stock, $0.0001 par value; 1.0 million shares authorized;
$1,108.34 stated value per share and 0.2 million shares issued and
outstanding at December 31, 2022; none issued and outstanding
at December 31, 2021
|
140,340
|
|
—
|
Stockholders'
equity:
|
|
|
|
Class A common stock,
$0.0001 par value; 470.0 million shares authorized; 207.5 million
shares issued, 198.4 million shares outstanding at
December 31, 2022; 207.4 million shares issued, 197.4 million
shares outstanding at December 31, 2021
|
20
|
|
20
|
Treasury stock, at
cost, 0.08 million shares and 0.03 million shares at
December 31, 2022 and December 31, 2021,
respectively
|
(146)
|
|
(95)
|
Additional paid-in
capital
|
1,378,696
|
|
1,351,597
|
Accumulated other
comprehensive income
|
4,899
|
|
28
|
Accumulated
deficit
|
(1,339,511)
|
|
(847,132)
|
Total ATI Physical
Therapy, Inc. equity
|
43,958
|
|
504,418
|
Non-controlling
interests
|
4,489
|
|
7,089
|
Total stockholders'
equity
|
48,447
|
|
511,507
|
Total liabilities,
mezzanine equity and stockholders' equity
|
$
1,078,985
|
|
$
1,562,694
|
ATI Physical Therapy
Condensed Consolidated Statements of Cash Flows ($ in
thousands)
(unaudited)
|
|
|
Year Ended
|
|
December 31,
2022
|
|
December 31,
2021
|
Operating activities:
|
|
|
|
Net loss
|
$
(493,047)
|
|
$
(782,028)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Goodwill, intangible
and other asset impairment charges
|
486,262
|
|
962,303
|
Depreciation and
amortization
|
40,590
|
|
37,995
|
Provision for doubtful
accounts
|
13,869
|
|
16,369
|
Deferred income tax
provision
|
(48,573)
|
|
(71,088)
|
Amortization of
right-of-use assets
|
48,253
|
|
45,536
|
Non-cash share-based
compensation
|
7,374
|
|
5,754
|
Amortization of debt
issuance costs and original issue discount
|
2,873
|
|
3,252
|
Non-cash interest
expense
|
3,481
|
|
—
|
Non-cash interest
expense on redeemable preferred stock
|
—
|
|
10,087
|
Loss on extinguishment
of debt
|
2,809
|
|
5,534
|
Loss on settlement of
redeemable preferred stock
|
—
|
|
14,037
|
Loss (gain) on
disposal and impairment of assets
|
9
|
|
(5,189)
|
Change in fair value
of warrant liability
|
(4,243)
|
|
(22,595)
|
Change in fair value
of contingent common shares liability
|
(42,525)
|
|
(175,140)
|
Changes in:
|
|
|
|
Accounts receivable,
net
|
(12,573)
|
|
(10,201)
|
Prepaid expenses and
other current assets
|
(5,024)
|
|
(6,688)
|
Other non-current
assets
|
39
|
|
(284)
|
Accounts
payable
|
(48)
|
|
1,831
|
Accrued expenses and
other liabilities
|
854
|
|
(5,288)
|
Operating lease
liabilities
|
(53,628)
|
|
(50,942)
|
Other non-current
liabilities
|
28
|
|
861
|
Medicare Accelerated
and Advance Payment Program Funds
|
(12,288)
|
|
(12,605)
|
Transaction-related
amount due to former owners
|
—
|
|
(3,611)
|
Net cash used in
operating activities
|
(65,508)
|
|
(42,100)
|
|
|
|
|
Investing activities:
|
|
|
|
Purchases of property
and equipment
|
(28,147)
|
|
(40,293)
|
Purchases of intangible
assets
|
—
|
|
(1,675)
|
Proceeds from sale of
property and equipment
|
157
|
|
223
|
Proceeds from sale of
clinics
|
77
|
|
248
|
Proceeds from sale of
Home Health service line
|
—
|
|
6,131
|
Business acquisitions,
net of cash acquired
|
—
|
|
(4,523)
|
Payment of holdback
liabilities related to acquisitions
|
(135)
|
|
—
|
Net cash used in
investing activities
|
(28,048)
|
|
(39,889)
|
|
|
|
|
Financing activities:
|
|
|
|
Proceeds from long-term
debt
|
500,000
|
|
—
|
Deferred financing
costs
|
(12,952)
|
|
—
|
Original issue
discount
|
(10,000)
|
|
—
|
Principal payments on
long-term debt
|
(555,048)
|
|
(456,202)
|
Proceeds from issuance
of Series A Senior Preferred Stock
|
144,667
|
|
—
|
Proceeds from issuance
of 2022 Warrants
|
20,333
|
|
—
|
Proceeds from revolving
line of credit
|
48,200
|
|
—
|
Cash inflow from
Business Combination
|
—
|
|
229,338
|
Payments to Series A
Preferred stockholders
|
—
|
|
(59,000)
|
Proceeds from shares
issued through PIPE investment
|
—
|
|
300,000
|
Equity issuance costs
and original issue discount
|
(4,935)
|
|
(19,233)
|
Payment of contingent
consideration liabilities
|
(203)
|
|
—
|
Taxes paid on behalf of
employees for shares withheld
|
(51)
|
|
(128)
|
Distribution to
non-controlling interest holders
|
(1,932)
|
|
(6,298)
|
Net cash provided by
(used in) financing activities
|
128,079
|
|
(11,523)
|
|
|
|
|
Changes in cash and cash
equivalents:
|
|
|
|
Net increase (decrease)
in cash and cash equivalents
|
34,523
|
|
(93,512)
|
Cash and cash
equivalents at beginning of period
|
48,616
|
|
142,128
|
Cash and cash
equivalents at end of period
|
$
83,139
|
|
$
48,616
|
|
|
|
|
Supplemental noncash
disclosures:
|
|
|
|
Derivative changes in
fair value
|
$
(4,871)
|
|
$
(1,935)
|
Purchases of property
and equipment in accounts payable
|
$
1,660
|
|
$
4,177
|
Warrant liability
recognized upon the closing of the Business Combination
|
$
—
|
|
$ (26,936)
|
Contingent common
shares liability recognized upon the closing of the Business
Combination
|
$
—
|
|
$
(220,500)
|
Shares issued to Wilco
Holdco Series A Preferred stockholders
|
$
—
|
|
$ 128,453
|
|
|
|
|
Other supplemental disclosures:
|
|
|
|
Cash paid for
interest
|
$
41,617
|
|
$
41,937
|
Cash received from
hedging activities
|
$
3,497
|
|
$
—
|
Cash paid for
taxes
|
$
84
|
|
$
81
|
ATI Physical Therapy, Inc.
Supplemental Tables of Key Performance
Metrics
|
|
|
Financial Metrics ($ in 000's)
|
|
|
Net Patient
Revenue
|
Other
Revenue
|
Net
Revenue
|
Adjusted
EBITDA (1)
|
Adj EBITDA
margin (1)
|
Q1 2020
|
$164,939
|
$17,799
|
$182,738
|
$26,487
|
14.5 %
|
Q2 2020
|
$95,003
|
$12,751
|
$107,754
|
$1,189
|
1.1 %
|
Q3 2020
|
$132,803
|
$15,852
|
$148,655
|
$17,321
|
11.7 %
|
Q4 2020
|
$136,840
|
$16,266
|
$153,106
|
$18,622
|
12.2 %
|
Q1 2021
|
$132,271
|
$16,791
|
$149,062
|
$5,590
|
3.8 %
|
Q2 2021
|
$146,679
|
$17,354
|
$164,033
|
$23,999
|
14.6 %
|
Q3 2021
|
$141,855
|
$17,158
|
$159,013
|
$8,539
|
5.4 %
|
Q4 2021
|
$140,275
|
$15,488
|
$155,763
|
$1,643
|
1.1 %
|
Q1 2022
|
$138,925
|
$14,897
|
$153,822
|
$(4,695)
|
(3.1) %
|
Q2 2022
|
$148,506
|
$14,787
|
$163,293
|
$5,436
|
3.3 %
|
Q3 2022
|
$142,313
|
$14,479
|
$156,792
|
$(392)
|
(0.3) %
|
Q4 2022
|
$146,196
|
$15,568
|
$161,764
|
$6,363
|
3.9 %
|
|
|
(1)
|
Excludes CARES Act
Provider Relief Funds of $44.3 million in the second quarter of
2020, $23.1 million in the third quarter of 2020, and $24.1 million
in the fourth quarter of 2020.
|
|
|
|
|
|
|
|
|
|
Operational Metrics
|
|
Visits
per Day
(1)
|
Clinical
FTE
(2)
|
VPD
per cFTE
(3)
|
ATI
Clinician
Headcount
(4)
|
Contractor
Headcount (5)
|
ATI Clinician
Headcount
|
Adds
(6)
|
Turnover
(7)
|
Q1 2020
|
22,855
|
2,841
|
8.0
|
3,113
|
57
|
11 %
|
19 %
|
Q2 2020
|
12,643
|
1,487
|
8.5
|
3,012
|
3
|
0 %
|
14 %
|
Q3 2020
|
18,159
|
2,004
|
9.1
|
2,448
|
3
|
7 %
|
86 %
|
Q4 2020
|
19,441
|
2,214
|
8.8
|
2,508
|
3
|
42 %
|
34 %
|
Q1 2021
|
19,520
|
2,284
|
8.5
|
2,558
|
16
|
41 %
|
31 %
|
Q2 2021
|
21,569
|
2,325
|
9.3
|
2,526
|
43
|
37 %
|
44 %
|
Q3 2021
|
20,674
|
2,359
|
8.8
|
2,583
|
108
|
51 %
|
42 %
|
Q4 2021
|
20,649
|
2,490
|
8.3
|
2,650
|
109
|
37 %
|
31 %
|
Q1 2022
|
21,062
|
2,466
|
8.5
|
2,658
|
158
|
25 %
|
23 %
|
Q2 2022
|
22,403
|
2,465
|
9.1
|
2,647
|
151
|
26 %
|
28 %
|
Q3 2022
|
21,493
|
2,465
|
8.7
|
2,691
|
151
|
33 %
|
25 %
|
Q4 2022
|
22,316
|
2,476
|
9.0
|
2,662
|
123
|
19 %
|
26 %
|
|
|
(1)
|
Equals patient visits
divided by operating days.
|
(2)
|
Represents clinical
staff hours divided by 8 hours divided by number of paid
days.
|
(3)
|
Equals patient visits
divided by operating days divided by clinical full-time equivalent
employees.
|
(4)
|
Represents ATI employee
clinician headcount at end of period.
|
(5)
|
Represents contractor
clinician headcount at end of period.
|
(6)
|
Represents ATI employee
clinician headcount new hire adds divided by average headcount,
multiplied by 4 to annualize.
|
(7)
|
Represents ATI employee
clinician headcount separations divided by average headcount,
multiplied by 4 to annualize.
|
|
|
Unit Economics: PT Clinics ($
actual)
|
|
Ending
Clinic
Count
|
PT
Revenue
per Clinic
(1)
|
VPD
per Clinic
(2)
|
PT Rate
per Visit
(3)
|
PT
Salaries
per Visit
(4)
|
PT Rent
and Other
per Clinic
(5)
|
PT
Provision
as % PT
Revenue (6)
|
Q1 2020
|
868
|
$189,658
|
26.3
|
$112.76
|
$55.11
|
$50,258
|
3.6 %
|
Q2 2020
|
866
|
$109,872
|
14.6
|
$117.41
|
$53.39
|
$43,621
|
4.1 %
|
Q3 2020
|
873
|
$152,472
|
20.8
|
$112.51
|
$53.83
|
$44,140
|
2.2 %
|
Q4 2020
|
875
|
$155,913
|
22.2
|
$109.98
|
$52.16
|
$47,168
|
2.4 %
|
Q1 2021
|
882
|
$150,536
|
22.2
|
$107.56
|
$54.14
|
$47,722
|
5.4 %
|
Q2 2021
|
889
|
$165,241
|
24.3
|
$106.26
|
$48.22
|
$47,857
|
2.4 %
|
Q3 2021
|
900
|
$158,556
|
23.1
|
$105.56
|
$53.70
|
$49,499
|
2.5 %
|
Q4 2021
|
910
|
$154,772
|
22.8
|
$104.51
|
$55.73
|
$50,976
|
1.5 %
|
Q1 2022
|
922
|
$151,225
|
22.9
|
$103.06
|
$55.47
|
$54,472
|
3.7 %
|
Q2 2022
|
926
|
$160,431
|
24.2
|
$103.57
|
$53.64
|
$53,017
|
2.4 %
|
Q3 2022
|
929
|
$153,410
|
23.2
|
$103.46
|
$56.20
|
$53,945
|
2.0 %
|
Q4 2022
|
923
|
$157,993
|
24.1
|
$103.99
|
$54.92
|
$51,252
|
1.7 %
|
|
|
(1)
|
Equals Net Patient
Revenue divided by average clinics over the quarter.
|
(2)
|
Equals patient visits
divided by operating days divided by average clinics over the
quarter
|
(3)
|
Equals Net Patient
Revenue divided by patient visits.
|
(4)
|
Equals estimated
patient-related portion of Salaries and Related Costs divided by
patient visits.
|
(5)
|
Equals estimated
patient-related portion of Rent, Clinic Supplies, Contract Labor
and Other divided by average clinics over the quarter.
|
(6)
|
Equals estimated
patient-related portion of Provision for Doubtful Accounts divided
by Net Patient Revenue.
|
|
|
Customer Satisfaction Metrics
|
|
|
Net Promoter
Score (1)
|
Google Star
Rating (2)
|
Q1 2020
|
|
77
|
4.9
|
Q2 2020
|
|
77
|
4.9
|
Q3 2020
|
|
78
|
4.6
|
Q4 2020
|
|
76
|
4.7
|
Q1 2021
|
|
75
|
4.9
|
Q2 2021
|
|
77
|
4.9
|
Q3 2021
|
|
73
|
4.9
|
Q4 2021
|
|
78
|
4.8
|
Q1 2022
|
|
74
|
4.9
|
Q2 2022
|
|
75
|
4.9
|
Q3 2022
|
|
76
|
4.8
|
Q4 2022
|
|
76
|
4.9
|
|
|
(1)
|
NPS measures customer
experience from ATI patient survey responses. The score is
calculated as the percentage of promoters less the percentage of
detractors.
|
(2)
|
A Google Star rating is
a five-star rating scale that ranks businesses based on customer
reviews. Customers are given the opportunity to leave a business
review after interacting with a business, which involves choosing
from one star (poor) to five stars (excellent).
|
ATI Physical Therapy, Inc.
Reconciliation of GAAP to Non-GAAP Financial
Measures ($ in thousands)
(unaudited)
|
|
|
Three Months Ended
|
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
|
2022
|
2022
|
2022
|
2022
|
Net loss
|
$
(102,407)
|
$
(116,694)
|
$
(135,723)
|
$
(138,223)
|
Plus (minus):
|
|
|
|
|
Net (income) loss
attributable to non-controlling interests
|
(358)
|
376
|
177
|
473
|
Interest expense,
net
|
13,463
|
11,780
|
11,379
|
8,656
|
Income tax
benefit
|
(4,998)
|
(7,218)
|
(13,033)
|
(23,281)
|
Depreciation and
amortization expense
|
9,979
|
9,907
|
10,055
|
9,900
|
EBITDA
|
$
(84,321)
|
$
(101,849)
|
$
(127,145)
|
$
(142,475)
|
Goodwill, intangible
and other asset impairment charges (1)
|
96,038
|
106,663
|
127,820
|
155,741
|
Goodwill, intangible
and other asset impairment charges attributable to non-controlling
interests (1)
|
(364)
|
(457)
|
(654)
|
(940)
|
Changes in fair value
of warrant liability and contingent common shares liability
(2)
|
(10,357)
|
(7,720)
|
(2,680)
|
(26,011)
|
Loss on debt
extinguishment (3)
|
—
|
—
|
—
|
2,809
|
Loss on legal
settlement (4)
|
—
|
—
|
3,000
|
—
|
Share-based
compensation
|
1,544
|
1,920
|
2,004
|
1,964
|
Non-ordinary legal and
regulatory matters (5)
|
937
|
772
|
2,202
|
2,497
|
Pre-opening de novo
costs (6)
|
101
|
224
|
286
|
381
|
Transaction and
integration costs (7)
|
1,093
|
55
|
603
|
1,538
|
Reorganization and
severance costs (8)
|
1,797
|
—
|
—
|
—
|
Business optimization
costs (9)
|
(105)
|
—
|
—
|
—
|
Gain on sale of Home
Health service line, net
|
—
|
—
|
—
|
(199)
|
Adjusted EBITDA
|
$
6,363
|
$
(392)
|
$
5,436
|
$
(4,695)
|
|
|
(1)
|
Represents non-cash
charges related to the write-down of goodwill, trade name
indefinite-lived intangible and other assets.
|
(2)
|
Represents non-cash
amounts related to the change in the estimated fair value of IPO
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents charges
related to the derecognition of the unamortized deferred financing
costs and original issuance discount associated with the full
repayment of the 2016 first lien term loan.
|
(4)
|
Represents charge for
net settlement liability related to billing dispute.
|
(5)
|
Represents non-ordinary
course legal costs related to the previously disclosed ATIP
stockholder class action complaints, derivative complaint and SEC
inquiry.
|
(6)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(7)
|
Represents costs
related to the Business Combination with FVAC II and
non-capitalizable debt and capital transaction costs.
|
(8)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(9)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
ATI Physical Therapy, Inc.
Reconciliation of GAAP to Non-GAAP Financial
Measures ($ in thousands)
(unaudited)
|
|
|
Year Ended
|
|
December 31, 2022
|
|
December 31, 2021
|
Net loss
|
$
(493,047)
|
|
$
(782,028)
|
Plus (minus):
|
|
|
|
Net loss attributable
to non-controlling interests
|
668
|
|
3,700
|
Interest expense,
net
|
45,278
|
|
46,320
|
Interest expense on
redeemable preferred stock
|
—
|
|
10,087
|
Income tax (benefit)
expense
|
(48,530)
|
|
(70,960)
|
Depreciation and
amortization expense
|
39,841
|
|
37,995
|
EBITDA
|
$
(455,790)
|
|
$
(754,886)
|
Goodwill, intangible
and other asset impairment charges (1)
|
486,262
|
|
962,303
|
Goodwill, intangible
and other asset impairment charges attributable to non-controlling
interests (1)
|
(2,415)
|
|
(7,949)
|
Changes in fair value
of warrant liability and contingent common shares liability
(2)
|
(46,768)
|
|
(197,735)
|
Share-based
compensation
|
7,432
|
|
5,769
|
Non-ordinary legal and
regulatory matters (3)
|
6,408
|
|
2,914
|
Loss on legal
settlement (4)
|
3,000
|
|
—
|
Loss on debt
extinguishment (5)
|
2,809
|
|
5,534
|
Transaction and
integration costs (6)
|
3,289
|
|
9,788
|
Reorganization and
severance costs (7)
|
1,797
|
|
3,913
|
Pre-opening de novo
costs (8)
|
992
|
|
1,929
|
Gain on sale of Home
Health service line, net
|
(199)
|
|
(5,846)
|
Business optimization
costs (9)
|
(105)
|
|
—
|
Loss on settlement of
redeemable preferred stock (10)
|
—
|
|
14,037
|
Adjusted EBITDA
|
$
6,712
|
|
$
39,771
|
|
|
(1)
|
Represents non-cash
charges related to the write-down of goodwill, trade name
indefinite-lived intangible and other assets.
|
(2)
|
Represents non-cash
amounts related to the change in the estimated fair value of IPO
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents non-ordinary
course legal costs related to the previously disclosed ATIP
stockholder class action complaints, derivative complaint and SEC
inquiry.
|
(4)
|
Represents charge for
net settlement liability related to billing dispute.
|
(5)
|
Represents charges
related to the derecognition of the unamortized deferred financing
costs and original issuance discount associated with the full
repayment of the 2016 first lien term loan and the partial and full
repayment of the 2016 first and second lien term loans,
respectively.
|
(6)
|
Represents costs
related to the Business Combination with FVAC II, non-capitalizable
debt and capital transaction costs and consulting and planning
costs related to preparation to operate as a public
company.
|
(7)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(8)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(9)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
(10)
|
Represents loss on
settlement of redeemable preferred stock based on the value of cash
and equity provided to preferred stockholders in relation to the
outstanding redeemable preferred stock liability at the time of the
closing of the Business Combination with FVAC II.
|
ATI Physical
Therapy, Inc. Reconciliation of GAAP to Non-GAAP
Financial Measures ($ in thousands)
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|
2021
|
2021
|
2021
|
2021
|
Net income
(loss)
|
$1,690
|
($326,774)
|
($439,126)
|
($17,818)
|
Plus
(minus):
|
|
|
|
|
Net (income) loss
attributable to non-controlling interests
|
(869)
|
2,109
|
3,769
|
(1,309)
|
Interest expense,
net
|
7,215
|
7,386
|
15,632
|
16,087
|
Interest expense on
redeemable preferred stock
|
—
|
—
|
4,779
|
5,308
|
Income tax
benefit
|
(5,381)
|
(35,333)
|
(19,731)
|
(10,515)
|
Depreciation and
amortization expense
|
10,005
|
9,222
|
9,149
|
9,619
|
EBITDA
|
12,660
|
(343,390)
|
(425,528)
|
1,372
|
Goodwill, intangible
and other asset impairment charges (1)
|
—
|
508,972
|
453,331
|
—
|
Goodwill, intangible
and other asset impairment charges attributable to non-controlling
interest (1)
|
—
|
(2,928)
|
(5,021)
|
—
|
Changes in fair value
of warrant liability and contingent common shares liability
(2)
|
(10,046)
|
(162,202)
|
(25,487)
|
—
|
Gain on sale of Home
Health service line, net
|
(5,846)
|
—
|
—
|
—
|
Reorganization and
severance costs (3)
|
—
|
3,551
|
—
|
362
|
Transaction and
integration costs (4)
|
955
|
2,335
|
3,580
|
2,918
|
Share-based
compensation
|
905
|
1,248
|
3,112
|
504
|
Pre-opening de novo
costs (5)
|
543
|
511
|
441
|
434
|
Non-ordinary legal and
regulatory matters (6)
|
2,472
|
442
|
—
|
—
|
Loss on debt
extinguishment (7)
|
—
|
—
|
5,534
|
—
|
Loss on settlement of
redeemable preferred stock (8)
|
—
|
—
|
14,037
|
—
|
Adjusted
EBITDA
|
$1,643
|
$8,539
|
$23,999
|
$5,590
|
|
|
(1)
|
Represents non-cash
charges related to the write-down of goodwill, trade name
indefinite-lived intangible and other assets.
|
(2)
|
Represents non-cash
amounts related to the change in the estimated fair value of IPO
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(4)
|
Represents costs
related to the Business Combination with FVAC II, non-capitalizable
debt transaction costs, clinic acquisitions and acquisition-related
integration and consulting and planning costs related to
preparation to operate as a public company.
|
(5)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(6)
|
Represents non-ordinary
course legal costs related to the previously disclosed ATIP
stockholder class action complaints, derivative complaint and SEC
inquiry.
|
(7)
|
Represents charges
related to the derecognition of the proportionate amount of
remaining unamortized deferred financing costs and original
issuance discount associated with the partial repayment of the
first lien term loan and derecognition of the unamortized original
issuance discount associated with the full repayment of the
subordinated second lien term loan.
|
(8)
|
Represents loss on
settlement of redeemable preferred stock based on the value of cash
and equity provided to preferred stockholders in relation to the
outstanding redeemable preferred stock liability at the time of the
closing of the Business Combination with FVAC II.
|
ATI Physical
Therapy, Inc. Reconciliation of GAAP to Non-GAAP
Financial Measures ($ in thousands)
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|
2020
|
2020
|
2020
|
2020
|
Net income
(loss)
|
$2,190
|
$1,022
|
$4,596
|
($8,106)
|
Plus
(minus):
|
|
|
|
|
Net income
attributable to non-controlling interests
|
(987)
|
(901)
|
(1,855)
|
(1,330)
|
Interest expense,
net
|
16,404
|
17,346
|
17,683
|
17,858
|
Interest expense on
redeemable preferred stock
|
5,154
|
4,896
|
4,604
|
4,377
|
Income tax (benefit)
expense
|
(2,033)
|
2,322
|
3,568
|
(1,792)
|
Depreciation and
amortization expense
|
10,072
|
9,880
|
9,763
|
9,985
|
EBITDA
|
30,800
|
34,565
|
38,359
|
20,992
|
Reorganization and
severance costs (1)
|
679
|
4,436
|
1,255
|
1,142
|
Transaction and
integration costs (2)
|
3,747
|
75
|
100
|
868
|
Share-based
compensation
|
503
|
473
|
466
|
494
|
Pre-opening de novo
costs (3)
|
335
|
368
|
268
|
594
|
Business optimization
costs (4)
|
2,450
|
519
|
5,011
|
2,397
|
Charges related to
lease terminations (5)
|
4,253
|
—
|
—
|
—
|
Adjusted
EBITDA
|
$42,767
|
$40,436
|
$45,459
|
$26,487
|
|
|
(1)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(2)
|
Represents costs
related to the Business Combination with FVAC II, clinic
acquisitions and acquisition-related integration and consulting and
planning costs related to preparation to operate as a public
company.
|
(3)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(4)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
(5)
|
Represents charges
related to lease terminations prior to the end of term for
corporate facilities no longer in use.
|
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SOURCE ATI Physical Therapy