Management Again Raises 2018 Earnings
Guidance
U.S. Physical Therapy, Inc. ("USPH" or the “Company”) (NYSE:
USPH), a national operator of outpatient physical therapy clinics,
today reported results for the third quarter and nine months ended
September 30, 2018.
For the quarter ended September 30, 2018, USPH’s Operating
Results increased 34.9% to $8.1 million, or $0.64 per diluted
share, as compared to $6.0 million, or $0.48 per diluted share, in
the third quarter of 2017. For the nine months ended September 30,
2018, USPH’s Operating Results increased 22.6% to $24.5 million, or
$1.93 per diluted share, as compared to $20.0 million, or $1.59 per
diluted share, in the first nine months of 2017. Operating Results
(as defined below), a non-generally accepted accounting principles
(“non-GAAP”) measure, for the 2018 third quarter and first nine
months results equal net income attributable to USPH shareholders.
For the 2017 third quarter and first nine months, Operating Results
is defined as net income attributable to USPH shareholders prior to
charge for interest expense – mandatorily redeemable
non-controlling interests – change in redemption value and charge
for cost related to restatement of financials – legal and
accounting, both charges net of tax.
For the quarter ended September 30, 2018, USPH’s net income
attributable to its shareholders, in accordance with GAAP, was $8.1
million as compared to $5.2 million for the third quarter of 2017.
Earnings per diluted share of $0.13 in the third quarter of 2018
compares to $0.41 per diluted share for the 2017 third quarter. For
the nine months ended September 30, 2018, USPH’s net income
attributable to its shareholders, in accordance with GAAP, was
$24.5 million as compared to $14.9 million for the comparable
period of 2017. Earnings per diluted share of $0.88 in the 2018
first nine months compares to $1.19 per diluted share for the 2017
first nine months. For both periods of 2018, in accordance with
current accounting guidance, the revaluation of redeemable
non-controlling interest, net of tax, is not included in net income
but rather charged directly to retained earnings, but is included
in the earnings per basic and diluted share calculation. See the
schedule on page 13 for a computation of diluted earnings per share
and a reconciliation of net income attributable to USPH
shareholders to Operating Results.
Third Quarter 2018 Compared to Third
Quarter 2017
- Net revenues increased $10.1 million,
or 9.8%, from $103.0 million in the 2017 third quarter to $113.1
million in the 2018 third quarter, primarily due to an increase in
net patient revenues from physical therapy operations from both
internal growth and acquisitions, an increase in revenue from
management contracts primarily due to acquired contracts and an
increase in the revenue from the industrial injury prevention
business from a combination of internal growth plus a recent
acquisition. Our first company in the initial industrial injury
prevention business was acquired in March 2017 and, on April 30,
2018, the Company made a second acquisition with the two businesses
then combined.
- Net patient revenues from physical
therapy operations increased approximately $7.1 million, or 7.4%,
to $103.4 million in the 2018 third quarter from $96.3 million in
the 2017 third quarter due to an increase in total patient visits
of 7.1% from 915,000 to 980,000 and an increase in the average net
patient revenue per visit to $105.48 from $105.26. Of the $7.1
million increase in net patient revenues, $4.2 million related to
clinics opened or acquired after September 30, 2017 (“New Clinics”)
and $2.9 million related to an increase in business of clinics
opened or acquired on or prior to September 30, 2017 (“Mature
Clinics”). Revenue from physical therapy management contracts
increased 12.9% to $1.9 million in the 2018 third quarter as
compared to $1.7 million in the 2017 third quarter.
- The revenue from the industrial injury
prevention business increased 66.8% to $7.3 million in the 2018
third quarter compared to $4.4 million in the 2017 third quarter
due to internal growth plus the acquisition on April 30, 2018.
Other revenue was $0.6 million in the 2018 third quarter and $0.7
million in the 2017 third quarter.
- Total operating costs were $87.0
million, or 76.9% of net revenues, in the 2018 third quarter as
compared to $81.8 million, or 79.4% of net revenues, in the 2017
third quarter. The $5.2 million increase was attributable to $3.7
million in operating costs related to New Clinics, a decrease of
$0.1 million related to Mature Clinics, an increase of $1.4 million
in the industrial injury prevention business primarily due to the
recent acquisition and an increase of $0.2 million related to
management contracts. Total salaries and related costs, including
those from New Clinics and the industrial injury prevention
business, were 57.0% of net revenue in the recent quarter versus
58.5% in the 2017 third quarter. Rent, supplies, contract
labor and other costs as a percentage of net revenue were 19.1% in
the recent quarter versus 20.0% in the 2017 third quarter. The
provision for doubtful accounts as a percentage of net revenue was
0.8% in the 2018 third quarter as compared to 0.9% in the 2017
third quarter.
- The gross profit for the 2018 third
quarter grew by 23.0% or $4.9 million to $26.1 million, as compared
to $21.2 million in the third quarter of 2017. The gross profit
percentage was 23.1% of net revenue in the recent period as
compared to 20.6% in the 2017 third quarter. The gross profit
percentage for the Company’s physical therapy clinics was 22.8% in
the recent quarter as compared to 20.9% in the 2017 third quarter.
The gross profit percentage on physical therapy management
contracts was 9.9% in the 2018 third quarter as compared to 16.8%
in the 2017 third quarter. The gross profit percentage for the
industrial injury prevention business was 29.7% in the recent
quarter as compared to 14.1% in the 2017 period.
- Corporate office costs were $10.6
million in the 2018 third quarter compared to $8.3 million in the
2017 third quarter. Corporate office costs were 9.4% of net
revenues for the 2018 quarter compared to 8.1% for the 2017
quarter.
- Operating income for the recent quarter
increased 19.7% to $15.4 million as compared to $12.9 million in
the 2017 third quarter.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- Interest expense – debt and other was
$0.6 million both the 2018 and 2017 third quarters.
- The provision for income tax for the
2018 third quarter was $3.0 million and for the 2017 third quarter
was $3.1 million. The provision for income tax as a percentage of
income before taxes less net income attributable to non-controlling
interest was 27.0% and 37.8%, respectively, for the 2018 and 2017
third quarters.
- Net income attributable to
non-controlling interests (permanent equity) was $1.3 million in
both the 2018 and 2017 third quarters. Net income attributable to
redeemable non-controlling interests (temporary equity) was $2.5
million in the 2018 third quarter.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 4.6%. Visits
increased 4.5% for de novo and acquired clinics open for one year
or more while the same store net rate remained relatively the
same.
First Nine Months 2018 Compared to
First Nine Months 2017
- Net revenues increased $31.7 million,
or 10.4%, from $304.8 million in the first nine months of 2017 to
$336.5 million in the first nine months of 2018, primarily due to
an increase in net patient revenues from physical therapy
operations from both internal growth and acquisitions, an increase
in revenue from management contracts due to acquired contracts and
an increase in the revenue from the industrial injury prevention
business from a combination of internal growth plus an acquisition.
Our first company in the industrial injury prevention business was
acquired in March 2017 and, on April 30, 2018, the Company made a
second acquisition with the two businesses then combined.
- Net patient revenues from physical
therapy operations increased approximately $22.3 million, or 7.8%,
to $309.9 million in the 2018 period from $287.6 million in the
2017 period due to an increase in total patient visits of 7.5% from
2,730,000 to 2,935,000 and an increase in the average net patient
revenue per visit to $105.60 from $105.35. Of the $22.3 million
increase, $12.7 million related to Mature Clinics and $9.6 million
related to New Clinics. Revenue from physical therapy management
contracts increased 22.1% to $6.3 million in the 2018 first nine
months as compared to $5.1 million for the 2017 first nine
months.
- Revenue from the industrial injury
prevention business increased 79.5% to $18.4 million for the first
nine months of 2018 compared to $10.2 million in the first nine
months of 2017 due to internal growth and the recent acquisition.
Other revenue were $2.0 million for 2018 period and $1.8 million in
the 2017 period.
- Total operating costs were $260.1
million, or 77.3% of net revenues, in the first nine months of 2018
as compared to $238.4 million, or 78.2% of net revenues, in the
2017 first nine months. The $21.7 million increase was attributable
to $8.8 million in operating costs related to New Clinics, an
increase of $5.4 million related to Mature Clinics, an increase of
$5.2 million related to the industrial injury prevention business
primarily due to the recent acquisition and a full nine months of
activity in 2018 for the business acquired in March 2017 versus
four months in 2017, and an increase of $2.3 million related to
management contracts, primarily due to new management contracts
from acquisitions. Total salaries and related costs, including
those from New Clinics and the industrial injury prevention
business, were 56.9% of net revenue for the first nine months of
2018 and 57.4% for 2017 period. Rent, supplies, contract labor and
other costs as a percentage of net revenue were 19.5% for 2018
period and 19.9% for the 2017 period. The provision for doubtful
accounts as a percentage of net revenue was 0.9% for both 2018 and
2017 periods.
- The gross profit for the first nine
months of 2018 grew by 15.0% or $10.0 million to $76.4 million, as
compared to $66.4 million in the 2017 first nine months. The gross
profit percentage was 22.7% of net revenue in the recent period as
compared to 21.8% for the 2017 first nine months. The gross profit
percentage for the Company’s physical therapy clinics was 22.6% in
the first nine months of 2018 as compared to 22.2% in the first
nine months of 2017. The gross profit percentage on management
contracts was 22.0% in the first nine months of 2018 as compared to
13.1% in the 2017 first nine months. The gross profit percentage
for the industrial injury prevention business was 24.2% for the
first nine months of 2018 as compared to 14.5% for the nine months
of operation in the 2017 period.
- Corporate office costs were $30.9
million in the first nine months of 2018 compared to $25.7 million
in the 2017 first nine months. Corporate office costs were 9.2% of
net revenues for the 2018 first nine months compared to 8.4% for
the 2017 first nine months.
- Operating income for the 2018 first
nine months increased 11.6% to $45.5 million as compared to $40.7
million in the 2017 first nine months.
- The Company no longer has mandatorily
redeemable non-controlling interests. See discussion following –
Redeemable Non-Controlling Interests.
- Interest expense – debt and other was
$1.7 million in the first nine months of 2018 and $1.6 million in
the 2017 first nine months.
- The provision for income tax for the
2018 first nine months was $8.7 million and for the 2017 first nine
months was $8.0 million. The provision for income tax as a
percentage of income before taxes less net income attributable to
non-controlling interest was 26.3% and 35.0%, respectively, for the
2018 and 2017 first nine months.
- Net income attributable to
non-controlling interests (permanent equity) was $3.9 million in
the 2018 first nine months as compared to $4.1 million in the 2017
first nine months. Net income attributable to redeemable
non-controlling interests (temporary equity) was $6.8 million in
the 2018 first nine months.
- Same store revenues for de novo and
acquired clinics open for one year or more increased 4.0%. Visits
increased 3.5% for de novo and acquired clinics open for one year
or more and the same store net rate increased by 0.4%.
Other Financial Measures
For the third quarter of 2018 the Company's Adjusted EBITDA
increased by 14.1% to $15.6 million from $13.7 million in the
comparable 2017 quarter. For the first nine months of 2018 the
Company's Adjusted EBITDA increased by 8.4% to $46.6 million from
$43.0 million in the comparable 2017 period. See definition and
explanation of Adjusted EBITDA in the schedule on pages 12 and
13.
Management Raises 2018 Earnings
Guidance
The Company is again raising earnings guidance for the year
2018. Management currently expects the Company’s Operating Results
for the year 2018 to be in the range of $31.7 million to $32.7
million or $2.50 to $2.57 per share. The Company’s original
earnings guidance, issued in March 2018, was for Operating Results
of $29.5 million to $30.9 million or $2.34 to $2.44 per share. In
August the guidance for Operating results was increased to $31.1
million to $32.3 million or $2.45 to $2.55 per share. Please note
that the earnings guidance represents projected Operating Results
from existing operations but excludes future acquisitions. The
annual guidance figures may not be updated unless there is a
material development that causes management to believe that
Operating Results will be significantly outside the given
range.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “I am extremely
proud of our entire team of clinicians, partners and support staff
for their efforts and results thus far this year. Summer is a
traditionally slower time for us and yet by almost every measure we
were able to produce meaningful improvement. We will continue our
focused efforts to finish 2018 in a strong fashion while we work to
support our partnerships and attract new opportunities in physical
therapy as well as our industrial injury prevention services
business.”
Larry McAfee, Chief Financial Officer, noted, “Despite having
made two acquisitions in the past 12 months for total consideration
of $16.4 million and having paid more than $11.3 million in
dividends to shareholders, the Company’s net debt (debt minus cash)
was reduced from $45.3 million as of September 30, 2017 down to
$27.2 million as of September 30, 2018. Net cash flow from
operations remains strong and the average age of the Company’s
receivables at the end of the quarter was approximately 38
days.”
U.S. Physical Therapy Declares
Quarterly Dividend
The fourth quarterly dividend for 2018 of $0.23 per share will
be paid on December 7, 2018 to shareholders of record as of
November 9, 2018. U.S. Physical Therapy began paying quarterly
dividends in 2011 and has increased the dividend amount every year
since.
Redeemable Non-Controlling
Interests
Effective December 31, 2017, the Company entered into amendments
to its acquired limited partnership agreements replacing the
mandatory redemption feature. No monetary consideration was paid to
the partners to amend the agreements. The amended Partnership
Agreements provide that, upon certain events, the Company has a
call right (the “Call Right”) and the selling entity has a put
right (the “Put Right”) for the purchase and sale of the limited
partnership interest held by the partner. Once the terms are
triggered, the Put Right and the Call Right do not expire, even
upon an individual partner’s death, and contain no mandatory
redemption feature. The purchase price of the partner’s limited
partnership interest upon the exercise of either the Put Right or
the Call Right is calculated per the original terms of the
respective agreements. The Company accounted for the amendment of
its Partnership Agreements as an extinguishment of the outstanding
Seller Entity Interests classified as liabilities through the
issuance of new Seller Entity Interests classified in temporary
equity. Pursuant to ASC 470-50-40-2, the Company removed the
outstanding liability-classified Seller Entity Interests at their
carrying amounts and recognized the new temporary-equity-classified
Seller Entity Interests at their fair value. In summary, the
redemption values of the mandatorily redeemable non-controlling
interest (previously classified as liabilities) were reclassified
as redeemable non-controlling interest (temporary equity) on the
December 31, 2017 consolidated balance sheet. For 2018, in
accordance with current accounting guidance, the revaluation of
redeemable non-controlling interest, net of tax, is not charged to
net income but is charged to retained earnings and is included in
the earnings per basic and diluted share calculation.
Third Quarter 2018 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 1,
2018 to discuss the Company's Quarter and Nine Months Ended
September 30, 2018 results. Interested parties may participate in
the call by dialing 1-888-335-5539 or 973-582-2857 and entering
reservation number 5977355 approximately 10 minutes before the call
is scheduled to begin. To listen to the live call via web-cast, go
to the Company's website at www.usph.com at least 15 minutes early
to register, download and install any necessary audio software. The
conference call will be archived and can be accessed until February
2, 2019.
Forward-Looking
Statements
This press release contains statements that are considered to be
forward-looking within the meaning under Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
contain forward-looking information relating to the financial
condition, results of operations, plans, objectives, future
performance and business of our Company. These statements (often
using words such as “believes”, “expects”, “intends”, “plans”,
“appear”, “should” and similar words) involve risks and
uncertainties that could cause actual results to differ materially
from those we expect. Included among such statements may be those
relating to new clinics, availability of personnel and the
reimbursement environment. The forward-looking statements are based
on our current views and assumptions and actual results could
differ materially from those anticipated in such forward-looking
statements as a result of certain risks, uncertainties, and
factors, which include, but are not limited to:
- changes as the result of government
enacted national healthcare reform;
- changes in Medicare rules and
guidelines and reimbursement or failure of our clinics to maintain
their Medicare certification status;
- revenue we receive from Medicare and
Medicaid being subject to potential retroactive reduction;
- business and regulatory conditions
including federal and state regulations;
- governmental and other third party
payor inspections, reviews, investigations and audits;
- compliance with federal and state laws
and regulations relating to the privacy of individually
identifiable patient information, and associated fines and
penalties for failure to comply;
- changes in reimbursement rates or
payment methods from third party payors including government
agencies and deductibles and co-pays owed by patients;
- revenue and earnings expectations;
- legal actions, which could subject us
to increased operating costs and uninsured liabilities;
- general economic conditions;
- availability and cost of qualified
physical therapists;
- personnel productivity and retaining
key personnel;
- competitive, economic or reimbursement
conditions in our markets which may require us to reorganize or
close certain clinics and thereby incur losses and/or closure costs
including the possible write-down or write-off of goodwill and
other intangible assets;
- acquisitions, purchase of
non-controlling interests (minority interests) and the successful
integration of the operations of the acquired businesses;
- maintaining our information technology
systems with adequate safeguards to protect against
cyber-attacks;
- maintaining adequate internal
controls;
- maintaining necessary insurance
coverage;
- availability, terms, and use of
capital; and
- weather and other seasonal
factors.
Many factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking
statements. Please see our periodic reports filed with the
Securities and Exchange Commission for more information on these
factors. Our forward-looking statements represent our estimates and
assumptions only as of the date of this press release. Except as
required by law, we are under no obligation to update any
forward-looking statement, regardless of the reason the statement
is no longer accurate.
About U.S. Physical Therapy,
Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 588
outpatient physical therapy clinics in 42 states. The Company's
clinics provide preventative and post-operative care for a variety
of orthopedic-related disorders and sports-related injuries,
treatment for neurologically-related injuries and rehabilitation of
injured workers. In addition to owning and operating clinics, the
Company manages 26 physical therapy facilities for unaffiliated
third parties, including hospitals and physician groups. The
Company also has an industrial injury prevention business which
provides onsite services for clients’ employees including injury
prevention, rehabilitation, ergonomic assessments and performance
optimization.
More information about U.S. Physical Therapy, Inc. is available
at www.usph.com. The information
included on that website is not incorporated into this press
release.
U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME (IN THOUSANDS,
EXCEPT PER SHARE DATA) (unaudited)
Three Months Ended Nine Months Ended
September 30,2018
September 30,2017
September 30,2018
September 30,2017
Net patient revenues $ 103,354 $ 96,273 $ 309,895 $ 287,584
Other revenues 9,768 6,759 26,667
17,264 Net revenues 113,122 103,032 336,562 304,848 Operating
costs: Salaries and related costs 64,524 60,306 191,410 174,912
Rent, supplies, contract labor and other 21,654 20,600 65,598
60,720 Provision for doubtful accounts 890 930 3,102 2,716 Closure
costs (22 ) 4 8 27 Total operating
costs 87,046 81,840 260,118 238,375
Gross profit 26,076 21,192 76,444 66,473 Corporate
office costs 10,643 8,304 30,934 25,707
Operating income 15,433 12,888 45,510 40,766 Interest and
other income, net 16 11 70 58 Interest expense: Mandatorily
redeemable non-controlling interests - change in redemption value -
(1,247 ) - (7,839 ) Mandatorily redeemable non-controlling
interests - earnings allocable - (1,285 ) - (4,366 ) Debt and other
(579 ) (641 ) (1,677 ) (1,572 ) Total
interest expense (579 ) (3,173 ) (1,677 ) (13,777 ) Income
before taxes 14,870 9,726 43,903 27,047 Provision for income
taxes 2,991 3,132 8,734 8,029
Net income 11,879 6,594 35,169 19,018 Less: net income
attributable to non-controlling interests (3,777 )
(1,444 ) (10,704 ) (4,111 ) Net income
attributable to USPH shareholders $ 8,102 $ 5,150 $ 24,465 $ 14,907
Basic and diluted earnings per share attributable to USPH
shareholders $ 0.13 $ 0.41 $ 0.88 $ 1.19 Shares used in
computation - basic and diluted 12,685 12,581
12,660 12,563 Dividends declared per common share $
0.23 $ 0.20 $ 0.69 $ 0.60
U. S. PHYSICAL THERAPY, INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
September 30,2018
December 31,2017
ASSETS (unaudited) Current assets: Cash and cash equivalents $
32,241 $ 21,933 Patient accounts receivable, less allowance for
doubtful accounts of $2,690 and $2,273, respectively 43,899 44,707
Accounts receivable - other 9,609 5,655 Other current assets
4,908 4,786 Total current assets 90,657 77,081 Fixed assets:
Furniture and equipment 52,473 51,100 Leasehold improvements
31,101 29,760 Fixed assets, gross 83,574 80,860 Less
accumulated depreciation and amortization 63,608
60,475 Fixed assets, net 19,966 20,385 Goodwill 293,630 271,338
Other identifiable intangible assets, net 49,311 48,954 Other
assets 1,405 1,224 Total assets $ 454,969 $ 418,982
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH
SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS Current
liabilities: Accounts payable - trade $ 2,067 $ 2,165 Accrued
expenses 40,128 33,342 Current portion of notes payable
4,769 4,044 Total current liabilities 46,964 39,551 Notes
payable, net of current portion 659 2,728 Revolving line of credit
54,000 54,000 Mandatorily redeemable non-controlling interests -
327 Deferred taxes 8,643 10,875 Deferred rent 1,864 2,116 Other
long-term liabilities 835 743 Total liabilities
112,965 110,340 Redeemable non-controlling interests 128,906
102,572 Commitments and contingencies U.S. Physical
Therapy, Inc. ("USPH") shareholders' equity: Preferred stock, $.01
par value, 500,000 shares authorized, no shares issued and
outstanding - - Common stock, $.01 par value, 20,000,000 shares
authorized, 14,899,409 and 14,809,299 shares issued, respectively
149 148 Additional paid-in capital 78,542 73,940 Retained earnings
164,821 162,406 Treasury stock at cost, 2,214,737 shares
(31,628 ) (31,628 ) Total USPH shareholders' equity 211,884
204,866 Non-controlling interests 1,214 1,204 Total
USPH shareholders' equity and non-controlling interests
213,098 206,070 Total liabilities, redeemable
non-controlling interests, USPH shareholders' equity and
non-controlling interests $ 454,969 $ 418,982
U. S.
PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE
DATA) (unaudited) Nine Months Ended
September 30,2018
September 30,2017
OPERATING ACTIVITIES Net income including non-controlling
interests $ 35,169 $ 19,018 Adjustments to reconcile net income
including non-controlling interests to net cash provided by
operating activities: Depreciation and amortization 7,335 7,269
Provision for doubtful accounts 3,102 2,716 Equity-based awards
compensation expense 4,453 3,410 Loss on sale of fixed assets 128
83 Deferred income taxes (3,099 ) 291 Changes in operating assets
and liabilities: Increase in patient accounts receivable (1,092 )
(1,914 ) Increase in accounts receivable - other (3,954 ) (4,736 )
Decrease (increase) in other assets 233 (787 ) Increase in accounts
payable and accrued expenses 9,742 8,126 Increase in mandatorily
redeemable non-controlling interests - 7,069 Increase in other
liabilities 1,988 286 Net cash provided by operating
activities 54,005 40,831
INVESTING ACTIVITIES
Purchase of fixed assets (5,307 ) (5,576 ) Purchase of businesses,
net of cash acquired (16,303 ) (33,740 ) Purchase of
non-controlling interest (272 ) - Proceeds on sale of fixed assets
2 67 Net cash used in investing activities (21,880 )
(39,249 )
FINANCING ACTIVITIES Distributions to
non-controlling interests, permanent and temporary equity (10,470 )
(3,698 ) Cash dividends paid to shareholders (8,746 ) (7,547 )
Proceeds from revolving line of credit 79,000 63,000 Payments on
revolving line of credit (79,000 ) (53,000 ) Payments to settle
mandatorily redeemable non-controlling interests (265 ) (2,230 )
Principal payments on notes payable (2,294 ) (776 ) Other
(42 ) 40 Net (cash used in) provided by financing activities
(21,817 ) (4,211 ) Net increase in cash and cash equivalents
10,308 (2,629 ) Cash and cash equivalents - beginning of period
21,933 20,047 Cash and cash equivalents - end of
period $ 32,241 $ 17,418
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION Cash paid during the period for: Income taxes
$ 8,957 $ 8,059 Interest $ 1,705 $ 1,616 Non-cash investing and
financing transactions during the period: Purchase of business -
seller financing portion $ 950 $ 1,650
U. S. PHYSICAL THERAPY, INC. AND
SUBSIDIARIES
OPERATING RESULTS AND ADJUSTED
EBITDA
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
(unaudited)
The following tables provide a 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.
For 2018, Operating Results equal net income attributable to
USPH shareholders and, in accordance with current accounting
guidance, the revaluation of redeemable non-controlling interest,
net of tax, charged directly to retained earnings is included in
the earnings per diluted share calculation. For the 2017 first nine
months, Operating Results, a non-generally accepted accounting
principles (“non-GAAP”) measure, is defined as net income
attributable to common shareholders prior to interest expense –
mandatorily redeemable non-controlling interests – change in
redemption value and charge for cost related to restatement of
financials – legal and accounting, both charges net of tax.
Operating Results for the two periods are comparable, however,
the calculations differ. Management uses Operating Results, which
eliminates this current non-cash item that can be subject to
volatility and unusual costs, as one of the principal measures to
evaluate and monitor financial performance period over period.
Management believes that Operating Results is useful information
for investors to use in comparing the Company's period-to-period
results as well as for comparing with other similar businesses
since most do not have mandatorily redeemable instruments and
therefore have different liability and equity structures.
Adjusted EBITDA is defined as earnings before interest income,
interest expense – mandatorily redeemable non-controlling interests
– change in redemption value, interest expense – debt and other,
taxes, depreciation, amortization and equity-based awards
compensation expense. Management believes reporting Adjusted EBITDA
is useful information for investors in comparing the Company’s
period-to-period results as well as comparing with similar
businesses which report adjusted EBITDA as defined by their
company.
Operating Results and Adjusted EBITDA are not measures of
financial performance under GAAP. Adjusted EBITDA and Adjusted Net
Income should not be considered in isolation or as an alternative
to, or substitute for, net income attributable to USPH shareholders
presented in the consolidated financial statements.
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018 2017 Computation of
earnings per share - USPH shareholders Net income attributable to
USPH shareholders $ 8,102 $ 5,150 $ 24,465 $ 14,907 Charges to
retained earnings: Revaluation of redeemable non-controlling
interest $ (8,680 ) $ - (18,105 ) - Tax effect at statutory rate
(federal and state) of 26.25% 2,279 - 4,753
- $ 1,701 $ 5,150 $ 11,113 $ 14,907 Basic and diluted
per share $ 0.13 $ 0.41 $ 0.88 $ 1.19 Adjustments: Interest
expense MRNCI * - change in redemption value - 1,247 - 7,839 Cost
related to restatement of financials - legal and accounting - 158 -
470 Revaluation of redeemable non-controlling interest 8,680 -
18,105 - Tax effect at statutory rate (federal and state) of 26.25%
and 39.25%, respectively (2,279 ) (551 )
(4,753 ) (3,261 ) Operating results $ 8,102 $ 6,004 $ 24,465
$ 19,955 Basic and diluted operating results per share $
0.64 $ 0.48 $ 1.93 $ 1.59 Shares used in computation: Basic
and diluted 12,685 12,581 12,660 12,563
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Net income attributable to USPH shareholders $
8,102 $ 5,150 $ 24,465 $ 14,907 Adjustments: Depreciation
and amortization 2,469 2,480 7,335 7,269 Interest income (16 ) (11
) (70 ) (58 ) Interest expense MRNCI * - change in redemption value
- 1,247 - 7,839 Interest expense - debt and other 579 641 1,677
1,572 Provision for income taxes 2,991 3,132 8,734 8,029
Equity-based awards compensation expense 1,516 1,065
4,453 3,410 Adjusted EBITDA $ 15,641 $ 13,704
$ 46,594 $ 42,968
* Mandatorily redeemable non-controlling
interest
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES RECAP
OF CLINIC COUNT Date Number of Clinics
March 31, 2017 558 June 30, 2017 566 September 30, 2017 569
December 31, 2017 578 March 31, 2018 580 June 30, 2018 581
September 30, 2018 588
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U.S. Physical Therapy, Inc.Larry McAfee, (713) 297-7000Chief
Financial OfficerorChris Reading, (713) 297-7000Chief Executive
OfficerorThree Part AdvisorsJoe Noyons, (817) 778-8424
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