☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
NEVADA | 76-0364866 | |
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) | (I.R.S. EMPLOYER IDENTIFICATION NO.) |
1300 WEST SAM HOUSTON PARKWAY SOUTH, SUITE 300, HOUSTON, TEXAS | 77042 | |
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $.01 par value | USPH | New York Stock Exchange |
Large accelerated filer | ☑ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
Emerging growth company | ☐ |
Item 1. | 3 | |
3 | ||
4 | ||
5 | ||
6 | ||
7 | ||
8 | ||
Item 2. | 29 | |
Item 3. | ||
Item 4. | ||
PART II—OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 5. | Other Information | 48 |
Item 6. | ||
ITEM 1. | FINANCIAL STATEMENTS. |
June 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||
ASSETS | (unaudited) | (unaudited) | ||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 160,738 | $ | 31,594 | $ | 147,685 | $ | 31,594 | ||||||||
Patient accounts receivable, less allowance for credit losses of $2,800 and $2,829, respectively | 54,285 | 51,934 | ||||||||||||||
Patient accounts receivable, less allowance for credit losses of $2,487 and $2,829, respectively | 52,958 | 51,934 | ||||||||||||||
Accounts receivable - other | 16,852 | 16,671 | 18,469 | 16,671 | ||||||||||||
Other current assets | 9,924 | 11,067 | 9,387 | 11,067 | ||||||||||||
Total current assets | 241,799 | 111,266 | 228,499 | 111,266 | ||||||||||||
Fixed assets: | ||||||||||||||||
Furniture and equipment | 63,429 | 62,074 | 64,507 | 62,074 | ||||||||||||
Leasehold improvements | 45,096 | 42,877 | 46,212 | 42,877 | ||||||||||||
Fixed assets, gross | 108,525 | 104,951 | 110,719 | 104,951 | ||||||||||||
Less accumulated depreciation and amortization | 83,548 | 80,203 | 84,651 | 80,203 | ||||||||||||
Fixed assets, net | 24,977 | 24,748 | 26,068 | 24,748 | ||||||||||||
Operating lease right-of-use assets | 101,582 | 103,004 | 102,665 | 103,004 | ||||||||||||
Investment in unconsolidated affiliate | 12,229 | 12,131 | 12,256 | 12,131 | ||||||||||||
Goodwill | 506,703 | 494,101 | 522,907 | 494,101 | ||||||||||||
Other identifiable intangible assets, net | 107,592 | 108,755 | 112,112 | 108,755 | ||||||||||||
Other assets | 4,699 | 4,149 | 5,679 | 4,149 | ||||||||||||
Total assets | $ | 999,581 | $ | 858,154 | $ | 1,010,186 | $ | 858,154 | ||||||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable - trade | $ | 3,674 | $ | 3,300 | $ | 4,509 | $ | 3,300 | ||||||||
Accounts payable - due to seller of acquired business | - | 3,204 | - | 3,204 | ||||||||||||
Accrued expenses | 43,338 | 37,413 | 35,846 | 37,413 | ||||||||||||
Current portion of operating lease liabilities | 31,274 | 33,709 | 34,446 | 33,709 | ||||||||||||
Current portion of term loan and notes payable | 7,530 | 7,863 | 7,555 | 7,863 | ||||||||||||
Total current liabilities | 85,816 | 85,489 | 82,356 | 85,489 | ||||||||||||
Notes payable, net of current portion | 2,194 | 1,913 | 2,037 | 1,913 | ||||||||||||
Revolving line of credit | - | 31,000 | ||||||||||||||
Revolving facility | - | 31,000 | ||||||||||||||
Term loan, net of current portion and deferred financing costs | 141,266 | 142,918 | 139,459 | 142,918 | ||||||||||||
Deferred taxes | 23,102 | 21,303 | 26,487 | 21,303 | ||||||||||||
Operating lease liabilities, net of current portion | 78,912 | 77,934 | 76,884 | 77,934 | ||||||||||||
Other long-term liabilities | 12,779 | 13,029 | 14,758 | 13,029 | ||||||||||||
Total liabilities | 344,069 | 373,586 | 341,981 | 373,586 | ||||||||||||
Redeemable non-controlling interest - temporary equity | 165,514 | 167,515 | 174,697 | 167,515 | ||||||||||||
Commitments and Contingencies | ||||||||||||||||
U.S. Physical Therapy, Inc. (“USPH”) shareholders’ equity: | ||||||||||||||||
Preferred stock, $0.01 par value, 500,000 shares authorized, no shares issued and outstanding | - | - | - | - | ||||||||||||
Common stock, $0.01 par value, 20,000,000 shares authorized, 17,202,053 and 15,216,326 shares issued, respectively | 172 | 152 | 172 | 152 | ||||||||||||
Additional paid-in capital | 277,493 | 110,317 | 279,124 | 110,317 | ||||||||||||
Accumulated other comprehensive gain | 4,796 | 4,004 | 5,746 | 4,004 | ||||||||||||
Retained earnings | 237,665 | 232,948 | 238,557 | 232,948 | ||||||||||||
Treasury stock at cost, 2,214,737 shares | (31,628 | ) | (31,628 | ) | (31,628 | ) | (31,628 | ) | ||||||||
Total USPH shareholders’ equity | 488,498 | 315,793 | 491,971 | 315,793 | ||||||||||||
Non-controlling interest - permanent equity | 1,500 | 1,260 | 1,537 | 1,260 | ||||||||||||
Total USPH shareholders’ equity and non-controlling interest - permanent equity | 489,998 | 317,053 | 493,508 | 317,053 | ||||||||||||
Total liabilities, redeemable non-controlling interest, USPH shareholders’ equity and non-controlling interest - permanent equity | $ | 999,581 | $ | 858,154 | $ | 1,010,186 | $ | 858,154 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30,2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30,2023 | September 30, 2022 | |||||||||||||||||||||||||
Net patient revenue | $ | 129,280 | $ | 118,196 | $ | 255,861 | $ | 227,734 | $ | 127,243 | $ | 116,710 | $ | 383,104 | $ | 344,444 | ||||||||||||||||
Other revenue | 22,205 | 22,460 | 44,133 | 44,626 | 22,764 | 22,892 | 66,897 | 67,518 | ||||||||||||||||||||||||
Net revenue | 151,485 | 140,656 | 299,994 | 272,360 | 150,007 | 139,602 | 450,001 | 411,962 | ||||||||||||||||||||||||
Operating cost: | ||||||||||||||||||||||||||||||||
Salaries and related costs | 86,871 | 79,939 | 172,911 | 155,088 | 89,846 | 81,786 | 262,757 | 236,874 | ||||||||||||||||||||||||
Rent, supplies, contract labor and other | 30,844 | 28,345 | 60,944 | 57,007 | 30,707 | 29,696 | 91,651 | 86,703 | ||||||||||||||||||||||||
Provision for credit losses | 1,563 | 1,551 | 3,075 | 2,856 | 1,525 | 1,336 | 4,600 | 4,192 | ||||||||||||||||||||||||
Total operating cost | 119,278 | 109,835 | 236,930 | 214,951 | 122,078 | 112,818 | 359,008 | 327,769 | ||||||||||||||||||||||||
Gross profit | 32,207 | 30,821 | 63,064 | 57,409 | 27,929 | 26,784 | 90,993 | 84,193 | ||||||||||||||||||||||||
Corporate office costs | 12,145 | 10,741 | 26,004 | 22,297 | 12,048 | 11,889 | 38,052 | 34,186 | ||||||||||||||||||||||||
Operating income | 20,062 | 20,080 | 37,060 | 35,112 | 15,881 | 14,895 | 52,941 | 50,007 | ||||||||||||||||||||||||
Other (expense) income | ||||||||||||||||||||||||||||||||
Interest expense - debt and other, net | (2,633 | ) | (987 | ) | (5,193 | ) | (1,527 | ) | ||||||||||||||||||||||||
Interest expense, debt and other | (2,101 | ) | (2,013 | ) | (7,293 | ) | (3,540 | ) | ||||||||||||||||||||||||
Interest income | 1,673 | - | 2,191 | - | ||||||||||||||||||||||||||||
Change in fair value of contingent earn-out consideration | 708 | - | 10 | - | 187 | 2,000 | 197 | 2,000 | ||||||||||||||||||||||||
Change in revaluation of put-right liability | (145 | ) | 785 | (344 | ) | 771 | ||||||||||||||||||||||||||
Equity in earnings of unconsolidated affiliate | 326 | 340 | 600 | 679 | 206 | 304 | 806 | 983 | ||||||||||||||||||||||||
Change in revaluation of put-right liability | (50 | ) | (617 | ) | (199 | ) | (14 | ) | ||||||||||||||||||||||||
Relief Funds | - | - | 467 | - | - | - | 467 | - | ||||||||||||||||||||||||
Other and interest income | 682 | 679 | 746 | 725 | ||||||||||||||||||||||||||||
Other | 78 | 65 | 305 | 790 | ||||||||||||||||||||||||||||
Total other (expense) income | (967 | ) | (585 | ) | (3,569 | ) | (137 | ) | (102 | ) | 1,141 | (3,671 | ) | 1,004 | ||||||||||||||||||
Income before taxes | 19,095 | 19,495 | 33,491 | 34,975 | 15,779 | 16,036 | 49,270 | 51,011 | ||||||||||||||||||||||||
Provision for income taxes | 4,231 | 4,239 | 7,200 | 7,737 | 3,557 | 3,215 | 10,757 | 10,952 | ||||||||||||||||||||||||
Net income | 14,864 | 15,256 | 26,291 | 27,238 | 12,222 | 12,821 | 38,513 | 40,059 | ||||||||||||||||||||||||
Less: Net income attributable to non-controlling interest: | ||||||||||||||||||||||||||||||||
Redeemable non-controlling interest - temporary equity | (2,920 | ) | (2,626 | ) | (5,640 | ) | (5,183 | ) | (1,976 | ) | (2,037 | ) | (7,616 | ) | (7,220 | ) | ||||||||||||||||
Non-controlling interest - permanent equity | (1,025 | ) | (1,435 | ) | (2,322 | ) | (2,061 | ) | (992 | ) | (1,227 | ) | (3,314 | ) | (3,288 | ) | ||||||||||||||||
(3,945 | ) | (4,061 | ) | (7,962 | ) | (7,244 | ) | (2,968 | ) | (3,264 | ) | (10,930 | ) | (10,508 | ) | |||||||||||||||||
Net income attributable to USPH shareholders | $ | 10,919 | $ | 11,195 | $ | 18,329 | $ | 19,994 | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||||||||||
Basic and diluted earnings per share attributable to USPH shareholders | $ | 0.64 | $ | 0.87 | $ | 1.22 | $ | 1.55 | $ | 0.51 | $ | 0.72 | $ | 1.72 | $ | 2.27 | ||||||||||||||||
Shares used in computation - basic and diluted | 13,720 | 12,998 | 13,375 | 12,968 | 14,987 | 13,001 | 13,918 | 12,979 | ||||||||||||||||||||||||
Dividends declared per common share | $ | 0.43 | $ | 0.41 | $ | 0.86 | $ | 0.82 | $ | 0.43 | $ | 0.41 | $ | 1.29 | $ | 1.23 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
Net income | $ | 14,864 | $ | 15,256 | $ | 26,291 | $ | 27,238 | $ | 12,222 | $ | 12,821 | $ | 38,513 | $ | 40,059 | ||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedge | 2,881 | (531 | ) | 1,064 | (531 | ) | ||||||||||||||||||||||||||
Unrealized gain on cash flow hedge | 1,276 | 6,473 | 2,340 | 5,942 | ||||||||||||||||||||||||||||
Tax effect at statutory rate (federal and state) | (736 | ) | 136 | (272 | ) | 136 | (326 | ) | (1,654 | ) | (598 | ) | (1,518 | ) | ||||||||||||||||||
Comprehensive income | $ | 17,009 | $ | 14,861 | $ | 27,083 | $ | 26,843 | $ | 13,172 | $ | 17,640 | $ | 40,255 | $ | 44,483 | ||||||||||||||||
Comprehensive income attributable to non-controlling interest | (3,945 | ) | (4,061 | ) | (7,962 | ) | (7,244 | ) | (2,968 | ) | (3,264 | ) | (10,930 | ) | (10,508 | ) | ||||||||||||||||
Comprehensive income attributable to USPH shareholders | $ | 13,064 | $ | 10,800 | $ | 19,121 | $ | 19,599 | $ | 10,204 | $ | 14,376 | $ | 29,325 | $ | 33,975 |
Six Months Ended | Nine Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||
Net income including non-controlling interest | $ | 26,291 | $ | 27,238 | $ | 38,513 | $ | 40,059 | ||||||||
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 7,615 | 7,298 | 11,582 | 10,950 | ||||||||||||
Provision for credit losses | 3,075 | 2,856 | 4,600 | 4,192 | ||||||||||||
Equity-based awards compensation expense | 3,592 | 3,660 | 5,451 | 5,462 | ||||||||||||
Change in deferred income taxes | 1,799 | 4,307 | 5,393 | 6,077 | ||||||||||||
Change in revaluation of put-right liability | 199 | 14 | 344 | (771 | ) | |||||||||||
Earnings in unconsolidated affiliate | (600 | ) | (679 | ) | ||||||||||||
Loss (gain) on sale of clinics and fixed assets | 63 | (614 | ) | |||||||||||||
Change in fair value of contingent earn-out consideration | (197 | ) | (2,000 | ) | ||||||||||||
Equity of earnings in unconsolidated affiliate | (806 | ) | (983 | ) | ||||||||||||
Gain on sale of clinics and fixed assets | (106 | ) | (643 | ) | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Increase in patient accounts receivable | (5,341 | ) | (7,459 | ) | (5,415 | ) | (7,585 | ) | ||||||||
Increase in accounts receivable - other | (85 | ) | (2,862 | ) | (1,631 | ) | (4,551 | ) | ||||||||
Decrease in other assets | 593 | 230 | ||||||||||||||
Increase (decrease ) in accounts payable and accrued expenses | 1,335 | (3,891 | ) | |||||||||||||
Increase (decrease) in other current and long term assets | 2,489 | (4,273 | ) | |||||||||||||
Decrease in accounts payable and accrued expenses | (5,609 | ) | (4,568 | ) | ||||||||||||
Increase (decrease) in other long-term liabilities | 243 | (2,587 | ) | 535 | (128 | ) | ||||||||||
Net cash provided by operating activities | 38,779 | 27,511 | 55,143 | 41,238 | ||||||||||||
INVESTING ACTIVITIES | ||||||||||||||||
Purchase of fixed assets | (4,523 | ) | (4,569 | ) | (7,074 | ) | (7,290 | ) | ||||||||
Purchase of majority interest in businesses, net of cash acquired | (8,040 | ) | (11,799 | ) | (22,994 | ) | (18,573 | ) | ||||||||
Purchase of redeemable non-controlling interest, temporary equity | (7,804 | ) | (8,648 | ) | (7,804 | ) | (14,096 | ) | ||||||||
Purchase of non controlling interest-permanent equity | (39 | ) | (156 | ) | (262 | ) | (280 | ) | ||||||||
Proceeds on sale of partnership interest - redeemable non-controlling interest | 237 | 740 | ||||||||||||||
Proceeds on sales of redeemable non-controlling interest-temporary | - | 344 | ||||||||||||||
Proceeds on sale of partnership interest, clinics and fixed assets | 7 | 740 | ||||||||||||||
Proceeds on sale of non-controlling interest, permanent equity | 30 | - | ||||||||||||||
Proceeds on sale of partnership interest - redeemable non-controlling interest, temporary equity | 815 | 401 | ||||||||||||||
Distributions from unconsolidated affiliate | 502 | 548 | 681 | 1,220 | ||||||||||||
Proceeds on sale of fixed assets | 7 | - | ||||||||||||||
Net cash used in investing activities | (19,660 | ) | (23,540 | ) | (36,601 | ) | (37,878 | ) | ||||||||
FINANCING ACTIVITIES | ||||||||||||||||
Distributions to non-controlling interest, permanent and temporary equity | (8,431 | ) | (7,202 | ) | (11,777 | ) | (11,760 | ) | ||||||||
Cash dividends paid to shareholders | (11,238 | ) | (10,659 | ) | (17,683 | ) | (15,990 | ) | ||||||||
Proceeds from revolving line of credit | 24,000 | 61,000 | ||||||||||||||
Proceeds from revolving facility | 24,000 | 61,000 | ||||||||||||||
Proceeds from term loan | - | 150,000 | - | 150,000 | ||||||||||||
Proceeds from issuance of common stock pursuant to the secondary public offering, net of issuance costs | 163,655 | - | 163,646 | - | ||||||||||||
Payments on revolving line of credit | (55,000 | ) | (175,000 | ) | ||||||||||||
Payments on revolving facility | (55,000 | ) | (175,000 | ) | ||||||||||||
Principal payments on notes payable | (1,086 | ) | (338 | ) | (2,874 | ) | (496 | ) | ||||||||
Payment on term loan | (1,875 | ) | (1,779 | ) | ||||||||||||
Payments on term loan | (2,813 | ) | (1,779 | ) | ||||||||||||
Other | - | 12 | 50 | 12 | ||||||||||||
Net cash provided by financing activities | 110,025 | 16,034 | 97,549 | 5,987 | ||||||||||||
Net increase in cash and cash equivalents | 129,144 | 20,005 | ||||||||||||||
Net decrease in cash and cash equivalents | 116,091 | 9,347 | ||||||||||||||
Cash and cash equivalents - beginning of period | 31,594 | 28,567 | 31,594 | 28,567 | ||||||||||||
Cash and cash equivalents - end of period | $ | 160,738 | $ | 48,572 | $ | 147,685 | $ | 37,914 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||||
Cash paid during the period for: | ||||||||||||||||
Income taxes | $ | 1,241 | $ | 4,524 | $ | 2,731 | $ | 7,529 | ||||||||
Interest paid | 4,011 | 1,319 | $ | 6,992 | $ | 2,159 | ||||||||||
Non-cash investing and financing transactions during the period: | ||||||||||||||||
Purchase of businesses - seller financing portion | 360 | 374 | $ | 1,860 | $ | 824 | ||||||||||
Notes payable related to purchase of redeemable non-controlling interest, temporary equity | 621 | 948 | $ | 1,017 | $ | 1,074 | ||||||||||
Notes payable related to purchase of non-controlling interest, permanent equity | - | 296 | ||||||||||||||
Notes receivable related to sale of partnership interest - redeemable non-controlling interest | 2,687 | 1,476 | ||||||||||||||
Notes receivable related to sale of redeemable non-controlling interest, temporary equity | $ | 3,064 | $ | 1,580 | ||||||||||||
Notes payable related to the purchase of non-controlling interest, permanent equity | $ | 200 | $ | 576 | ||||||||||||
Notes receivable related to the sale of non-controlling interest, permanent equity | $ | 397 | $ | - |
U.S.Physical Therapy, Inc. | U.S.Physical Therapy, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the three months ended June 30, 2023 | Shares | Amount | Paid-In Capital | Comprehensive Gain | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2023 | Shares | Amount | Paid-In Capital | Comprehensive Gain | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2023 | 15,277 | $ | 152 | $ | 112,123 | $ | 2,651 | $ | 234,760 | (2,215 | ) | $ | (31,628 | ) | $ | 318,058 | $ | 1,418 | $ | 319,476 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations | 9 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2023 | 17,202 | $ | 172 | $ | 277,493 | $ | 4,796 | $ | 237,665 | (2,215 | ) | $ | (31,628 | ) | $ | 488,498 | $ | 1,500 | $ | 489,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax | - | - | - | - | (2,865 | ) | - | - | (2,865 | ) | - | (2,865 | ) | - | - | - | - | (2,242 | ) | - | - | (2,242 | ) | - | (2,242 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of non-controlling interest | - | - | - | - | (50) | - | - | (50 | ) | 11 | (39 | ) | - | - | (270 | ) | - | - | - | - | (270 | ) | 21 | (249 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of non-controlling interest | - | - | - | - | - | - | - | - | (30 | ) | (30 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense - equity-based awards | - | - | 1,786 | - | - | - | - | 1,786 | - | 1,786 | - | - | 1,859 | - | - | - | - | 1,859 | - | 1,859 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to USPH shareholders | - | - | - | - | (5,621 | ) | - | - | (5,621 | ) | - | (5,621 | ) | - | - | - | - | (6,445 | ) | - | - | (6,445 | ) | - | (6,445 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity | - | - | - | - | - | - | - | - | (955 | ) | (955 | ) | - | - | - | - | - | - | - | - | (941 | ) | (941 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity | - | - | - | - | 237 | - | - | 237 | - | 237 | - | - | - | - | 323 | - | - | 323 | - | 323 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | (51 | ) | - | 285 | - | - | 234 | 1 | 235 | - | - | 51 | - | 2 | - | - | 53 | (5 | ) | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, pursuant to the secondary public offering, net of issuance costs | 1,916 | 20 | 163,635 | - | - | - | - | 163,655 | - | 163,655 | - | - | (9 | ) | - | - | - | - | (9 | ) | - | (9 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity | - | - | - | - | - | - | - | - | 1,025 | 1,025 | - | - | - | - | - | - | - | - | 992 | 992 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | - | - | - | - | 10,919 | - | - | 10,919 | - | 10,919 | - | - | - | - | 9,254 | - | - | 9,254 | - | 9,254 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive gain | - | - | - | 2,145 | - | - | - | 2,145 | - | 2,145 | - | - | - | 950 | - | - | - | 950 | - | 950 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2023 | 17,202 | $ | 172 | $ | 277,493 | $ | 4,796 | $ | 237,665 | (2,215 | ) | $ | (31,628 | ) | $ | 488,498 | $ | 1,500 | $ | 489,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2023 | 17,202 | $ | 172 | $ | 279,124 | $ | 5,746 | $ | 238,557 | (2,215 | ) | $ | (31,628 | ) | $ | 491,971 | $ | 1,537 | $ | 493,508 |
U .S.Physical Therapy, Inc. | U .S.Physical Therapy, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the six months ended June 30, 2023 | Shares | Amount | Paid-In Capital | Comprehensive Gain | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2023 | Shares | Amount | Paid-In Capital | Comprehensive Gain | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2022 | 15,216 | $ | 152 | $ | 110,317 | $ | 4,004 | $ | 232,948 | (2,215 | ) | $ | (31,628 | ) | $ | 315,793 | $ | 1,260 | $ | 317,053 | 15,216 | $ | 152 | $ | 110,317 | $ | 4,004 | $ | 232,948 | (2,215 | ) | $ | (31,628 | ) | $ | 315,793 | $ | 1,260 | $ | 317,053 | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations | 70 | - | - | - | - | - | - | - | - | - | 70 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest | - | - | - | - | (2,746 | ) | - | - | (2,746 | ) | - | (2,746 | ) | - | - | - | - | (4,988 | ) | - | - | (4,988 | ) | - | (4,988 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of non-controlling interest | - | - | - | - | (50) | - | - | (50 | ) | 11 | (39 | ) | - | - | (320 | ) | - | - | - | - | (320 | ) | 32 | (288 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of non-controlling interest | - | - | - | - | - | - | - | - | (30 | ) | (30 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense - equity-based awards | - | - | 3,592 | - | - | - | - | 3,592 | - | 3,592 | - | - | 5,451 | - | - | - | - | 5,451 | - | 5,451 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to USPH shareholders | - | - | - | - | (11,238 | ) | - | - | (11,238 | ) | - | (11,238 | ) | - | - | - | - | (17,683 | ) | - | - | (17,683 | ) | - | (17,683 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity | - | - | - | - | - | - | - | - | (2,094 | ) | (2,094 | ) | - | - | - | - | - | - | - | - | (3,035 | ) | (3,035 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity | - | - | - | - | 374 | - | - | 374 | - | 374 | - | - | - | - | 697 | - | - | 697 | - | 697 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | (51 | ) | - | 48 | - | - | (3 | ) | 1 | (2 | ) | - | - | 50 | - | - | - | - | 50 | - | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, pursuant to the secondary public offering, net of issuance costs | 1,916 | 20 | 163,635 | - | - | - | - | 163,655 | - | 163,655 | 1,916 | 20 | 163,626 | - | - | - | - | 163,646 | (4 | ) | 163,642 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity | - | - | - | - | - | - | - | - | 2,322 | 2,322 | - | - | - | - | - | - | - | - | 3,314 | 3,314 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | - | - | - | - | 18,329 | - | - | 18,329 | - | 18,329 | - | - | - | - | 27,583 | - | - | 27,583 | - | 27,583 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive gain | - | - | - | 792 | - | - | - | 792 | - | 792 | - | - | - | 1,742 | - | - | - | 1,742 | - | 1,742 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2023 | 17,202 | $ | 172 | $ | 277,493 | $ | 4,796 | $ | 237,665 | (2,215 | ) | $ | (31,628 | ) | $ | 488,498 | $ | 1,500 | $ | 489,998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2023 | 17,202 | $ | 172 | $ | 279,124 | $ | 5,746 | $ | 238,557 | (2,215 | ) | $ | (31,628 | ) | $ | 491,971 | $ | 1,537 | $ | 493,508 |
U.S.Physical Therapy, Inc. | U.S.Physical Therapy, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the three months ended June 30, 2022 | Shares | Amount | Paid-In Capital | Comprehensive Loss | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2022 | Shares | Amount | Paid-In Capital | Comprehensive Loss | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2022 | 15,206 | $ | 151 | $ | 105,205 | - | $ | 227,243 | (2,215 | ) | $ | (31,628 | ) | $ | 300,971 | $ | 1,245 | $ | 302,216 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | 15,219 | $ | 152 | $ | 106,801 | (395 | ) | $ | 232,247 | (2,215 | ) | $ | (31,628 | ) | $ | 307,177 | $ | 1,756 | $ | 308,933 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations | 13 | 1 | - | - | - | - | - | 1 | - | 1 | (3 | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax | - | - | - | - | 116 | - | - | 116 | - | 116 | - | - | - | - | (147 | ) | - | - | (147 | ) | - | (147 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense - equity-based awards | - | - | 1,814 | - | - | - | - | 1,814 | - | 1,814 | - | - | 1,802 | - | - | - | - | 1,802 | - | 1,802 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans | - | - | 1 | - | - | - | - | 1 | - | 1 | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of partnership interests - non-controlling interest | - | - | (219 | ) | - | - | - | - | (219 | ) | 239 | 20 | - | - | (88 | ) | - | - | - | - | (88 | ) | (6 | ) | (94 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends payable to USPH shareholders | - | - | - | - | (5,332 | ) | - | - | (5,332 | ) | - | (5,332 | ) | - | - | - | - | (5,331 | ) | - | - | (5,331 | ) | - | (5,331 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity | - | - | - | - | - | - | - | - | (1,163 | ) | (1,163 | ) | - | - | - | - | - | - | - | - | (1,519 | ) | (1,519 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeeemable non-controlling interest - temporary equity | - | - | - | - | (1,486 | ) | - | - | (1,486 | ) | - | (1,486 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity | - | - | - | - | (643 | ) | - | - | (643 | ) | - | (643 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | - | - | 511 | - | - | 511 | - | 511 | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity | - | - | - | - | - | - | - | - | 1,435 | 1,435 | - | - | - | - | - | - | - | - | 1,227 | 1,227 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | - | - | - | - | 11,195 | - | - | 11,195 | - | 11,195 | - | - | - | - | 9,557 | - | - | 9,557 | - | 9,557 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | - | - | - | (395 | ) | - | - | - | (395 | ) | - | (395 | ) | - | - | - | 4,819 | - | - | - | 4,819 | - | 4,819 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | 15,219 | $ | 152 | $ | 106,801 | $ | (395 | ) | $ | 232,247 | (2,215 | ) | $ | (31,628 | ) | $ | 307,177 | $ | 1,756 | $ | 308,933 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2022 | 15,216 | $ | 152 | $ | 108,515 | $ | 4,424 | $ | 235,683 | (2,215 | ) | $ | (31,628 | ) | $ | 317,146 | $ | 1,458 | $ | 318,604 |
U.S.Physical Therapy, Inc. | U.S.Physical Therapy, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | Common Stock | Additional | Accumulated Other | Retained | Treasury Stock | Total Shareholders’ | Non-Controlling | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the six months ended June 30, 2022 | Shares | Amount | Paid-In Capital | Comprehensive Loss | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2022 | Shares | Amount | Paid-In Capital | Comprehensive Loss | Earnings | Shares | Amount | Equity | Interests | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2021 | 15,126 | $ | 151 | $ | 102,688 | - | $ | 224,395 | (2,215 | ) | $ | (31,628 | ) | $ | 295,606 | $ | 1,575 | $ | 297,181 | 15,126 | $ | 151 | $ | 102,688 | - | $ | 224,395 | (2,215 | ) | $ | (31,628 | ) | $ | 295,606 | $ | 1,575 | $ | 297,181 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of cancellations | 93 | 1 | - | - | - | - | - | 1 | - | 1 | 90 | 1 | - | - | - | - | - | 1 | - | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest, net of tax | - | - | - | - | 3 | - | - | 3 | - | 3 | - | - | - | - | (144 | ) | - | - | (144 | ) | - | (144 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation expense - equity-based awards | - | - | 3,660 | - | - | - | - | 3,660 | - | 3,660 | - | - | 5,462 | - | - | - | - | 5,462 | - | 5,462 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans | - | - | 707 | - | - | - | - | 707 | - | 707 | - | - | 707 | - | - | - | - | 707 | - | 707 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of partnership interests - non-controlling interest | - | - | (265 | ) | - | - | - | - | (265 | ) | (95 | ) | (360 | ) | - | - | (353 | ) | - | - | - | - | (353 | ) | (101 | ) | (454 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid to USPH shareholders | - | - | - | - | (10,659 | ) | - | - | (10,659 | ) | - | (10,659 | ) | - | - | - | - | (15,990 | ) | - | - | (15,990 | ) | - | (15,990 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interest partners - permanent equity | - | - | - | - | - | - | - | - | (2,471 | ) | (2,471 | ) | - | - | - | - | - | - | - | - | (3,990 | ) | (3,990 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeeemable non-controlling interest - temporary equity | - | - | - | - | (1,486 | ) | - | - | (1,486 | ) | - | (1,486 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes related to redeemable non-controlling interest - temporary equity | - | - | - | - | (2,129 | ) | - | - | (2,129 | ) | - | (2,129 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | 11 | - | - | - | - | 11 | 686 | 697 | - | - | 11 | - | - | - | - | 11 | 686 | 697 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interest - permanent equity | - | - | - | - | - | - | - | - | 2,061 | 2,061 | - | - | - | - | - | - | - | - | 3,288 | 3,288 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | - | - | - | - | 19,994 | - | - | 19,994 | - | 19,994 | - | - | - | - | 29,551 | - | - | 29,551 | - | 29,551 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | (395 | ) | - | (395 | ) | (395 | ) | 4,424 | - | 4,424 | 4,424 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | 15,219 | $ | 152 | $ | 106,801 | $ | (395 | ) | $ | 232,247 | (2,215 | ) | $ | (31,628 | ) | $ | 307,177 | $ | 1,756 | $ | 308,933 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2022 | 15,216 | $ | 152 | $ | 108,515 | $ | 4,424 | $ | 235,683 | (2,215 | ) | $ | (31,628 | ) | $ | 317,146 | $ | 1,458 | $ | 318,604 |
1. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
Acquisition | Date | % Interest Acquired | Number of Clinics | Date | % Interest Acquired | Number of Clinics | |||||||||
September 2023 Acquisition 1 | September 29, 2023 | 70% | 4 | ||||||||||||
September 2023 Acquisition 2 | September 29, 2023 | 70% | 1 | ||||||||||||
July 2023 Acquisition | July 31, 2023 | 70% | 7 | ||||||||||||
May 2023 Acquisition | May 31, 2023 | 45%* | 4 | May 31, 2023 | 45% | 4 | |||||||||
February 2023 Acquisition | February 28, 2023 | 80% | 1 | February 28, 2023 | 80% | 1 | |||||||||
November 2022 Acquisition | November 30, 2022 | 80% | 13 | November 30, 2022 | 80% | 13 | |||||||||
October 2022 Acquisition | October 31, 2022 | 60% | 14 | October 31, 2022 | 60% | 14 | |||||||||
September 2022 Acquisition | September 30, 2022 | 80% | 2 | September 30, 2022 | 80% | 2 | |||||||||
August 2022 Acquisition | August 31, 2022 | 70% | 6 | August 31, 2022 | 70% | 6 | |||||||||
March 2022 Acquisition | March 31, 2022 | 70% | 6 | March 31, 2022 | 70% | 6 |
● | Level 1 – Quoted prices in active markets for identical assets or liabilities; |
● | Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; and |
● | Level 3 – Unobservable inputs in which there is little or no market data which require the reporting entity to develop its own assumptions. |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
(In thousands, except per share data) | (In thousands, except per share data) | |||||||||||||||||||||||||||||||
Computation of earnings per share - USPH shareholders: | ||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | $ | 10,919 | $ | 11,195 | $ | 18,329 | $ | 19,994 | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||||||||||
Charges to retained earnings: | ||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest | (2,865 | ) | 210 | (2,746 | ) | 57 | (2,242 | ) | (196 | ) | (4,988 | ) | (193 | ) | ||||||||||||||||||
Tax effect at statutory rate (federal and state) | 732 | (54 | ) | 700 | (15 | ) | 573 | 50 | 1,274 | 49 | ||||||||||||||||||||||
$ | 8,786 | $ | 11,351 | $ | 16,283 | $ | 20,036 | $ | 7,585 | $ | 9,411 | $ | 23,869 | $ | 29,407 | |||||||||||||||||
Earnings per share (basic and diluted) | $ | 0.64 | $ | 0.87 | $ | 1.22 | $ | 1.55 | $ | 0.51 | $ | 0.72 | $ | 1.72 | $ | 2.27 | ||||||||||||||||
Shares used in computation: | ||||||||||||||||||||||||||||||||
Basic and diluted earnings per share - weighted-average shares | 13,720 | 12,998 | 13,375 | 12,968 | 14,987 | 13,001 | 13,918 | 12,979 |
Physical Therapy | Physical Therapy | |||||||
Operations | Operations | |||||||
(In thousands) | (In thousands) | |||||||
Cash paid, net of cash acquired | $ | 8,040 | $ | 22,994 | ||||
Seller note | 360 | 985 | ||||||
Contingent and deferred payments | 380 | |||||||
Deferred payments | 830 | |||||||
Contingent payments | 200 | |||||||
Total consideration | $ | 8,780 | $ | 25,009 | ||||
Estimated fair value of net tangible assets acquired: | ||||||||
Total current assets | $ | 348 | $ | 566 | ||||
Total non-current assets | 1,459 | 2,307 | ||||||
Total liabilities | (1,451 | ) | (1,861 | ) | ||||
Net tangible assets acquired | 356 | 1,012 | ||||||
Customer and referral relationships | 2,101 | 6,819 | ||||||
Non-compete agreement | 101 | 329 | ||||||
Tradenames | 518 | 1,680 | ||||||
Goodwill | 9,627 | 25,932 | ||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (3,923 | ) | (10,763 | ) | ||||
$ | 8,780 | $ | 25,009 |
Physical Therapy | Physical Therapy | |||||||
Operations | Operations | |||||||
(In thousands) | (In thousands) | |||||||
Cash paid, net of cash acquired | $ | 59,788 | $ | 59,788 | ||||
Seller notes | 1,574 | 1,574 | ||||||
Contingent payments | 10,000 | 10,000 | ||||||
Total consideration | $ | 71,362 | $ | 71,362 | ||||
Estimated fair value of net tangible assets acquired: | ||||||||
Total current assets | $ | 1,558 | $ | 1,433 | ||||
Total non-current assets | 7,619 | 7,619 | ||||||
Total liabilities | (9,865 | ) | (9,943 | ) | ||||
Net tangible assets acquired | (688 | ) | (891 | ) | ||||
Customer and referral relationships | 18,955 | 18,741 | ||||||
Non-compete agreements | 983 | 972 | ||||||
Tradenames | 4,417 | 4,871 | ||||||
Goodwill | 74,496 | 74,470 | ||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interest) | (26,801 | ) | (26,801 | ) | ||||
$ | 71,362 | $ | 71,362 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
Revenue related to: | (In thousands) | |||||||||||||||
Net patient revenue | $ | 129,280 | $ | 118,196 | $ | 255,861 | $ | 227,734 | ||||||||
Other revenue | 792 | 898 | 1,591 | 1,770 | ||||||||||||
Physical therapy operations | 130,072 | 119,094 | 257,452 | 229,504 | ||||||||||||
Industrial injury prevention services | 19,246 | 19,437 | 38,596 | 38,505 | ||||||||||||
Management contracts | 2,167 | 2,125 | 3,946 | 4,351 | ||||||||||||
$ | 151,485 | $ | 140,656 | $ | 299,994 | $ | 272,360 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
Revenue related to: | (In thousands) | |||||||||||||||
Net patient revenue | $ | 127,243 | $ | 116,710 | $ | 383,104 | $ | 344,444 | ||||||||
Other revenue | 889 | 753 | 2,479 | 2,523 | ||||||||||||
Physical therapy operations | 128,132 | 117,463 | 385,583 | 346,967 | ||||||||||||
Industrial injury prevention services | 19,486 | 20,155 | 58,082 | 58,660 | ||||||||||||
Management contracts | 2,389 | 1,984 | 6,336 | 6,335 | ||||||||||||
$ | 150,007 | $ | 139,602 | $ | 450,001 | $ | 411,962 |
1. | Prior to the Acquisition, the Therapy Practice exists as a separate legal entity (the “Seller Entity”). The Seller Entity is owned by one or more individuals (the “Selling Shareholders”) most of whom are physical therapists that work in the Therapy Practice and provide physical therapy services to patients. |
2. | In conjunction with the Acquisition, the Seller Entity contributes the Therapy Practice into a newly-formed limited partnership (“NewCo”), in exchange for one hundred percent (100%) of the limited and general partnership interests in NewCo. Therefore, in this step, NewCo becomes a wholly-owned subsidiary of the Seller Entity. |
3. | The Company enters into an agreement (the “Purchase Agreement”) to acquire from the Seller Entity a majority (ranges from 50% to 90%) of the limited partnership interest and in all cases 100% of the general partnership interest in NewCo. The Company does not purchase 100% of the limited partnership interest because the Selling Shareholders, through the Seller Entity, want to maintain an ownership percentage. The consideration for the Acquisition is primarily payable in the form of cash at closing and a small, two-year note in lieu of an escrow (the “Purchase Price”). The Purchase Agreement does not contain any future earn-out or other contingent consideration that is payable to the Seller Entity or the Selling Shareholders. |
4. | The Company and the Seller Entity also execute a partnership agreement (the “Partnership Agreement”) for NewCo that sets forth the rights and obligations of the limited and general partners of NewCo. After the Acquisition, the Company is the general partner of NewCo. |
5. | As noted above, the Company does not purchase 100% of the limited partnership interests in NewCo and the Seller Entity retains a portion of the limited partnership interest in NewCo (“Seller Entity Interest”). |
6. | In most cases, some or all of the Selling Shareholders enter into an employment agreement (the “Employment Agreement”) with NewCo with an initial term that ranges from three to five years (the “Employment Term”), with automatic one-year renewals, unless employment is terminated prior to the end of the Employment Term. As a result, a Selling Shareholder becomes an employee (“Employed Selling Shareholder”) of NewCo. The employment of an Employed Selling Shareholder can be terminated by the Employed Selling Shareholder or NewCo, with or without cause, at any time. In a few situations, a Selling Shareholder does not become employed by NewCo and is not involved with NewCo following the closing; in those situations, such Selling Shareholders sell their entire ownership interest in the Seller Entity as of the closing of the Acquisition. |
7. | The compensation of each Employed Selling Shareholder is specified in the Employment Agreement and is customary and commensurate with his or her responsibilities based on other employees in similar capacities within NewCo, the Company and the industry. |
8. | The Company and the Selling Shareholder (including both Employed Selling Shareholders and Selling Shareholders not employed by NewCo) execute a non-compete agreement (the “Non-Compete Agreement”) which restricts the Selling Shareholder from engaging in competing business activities for a specified period of time (the “Non-Compete Term”). A Non-Compete Agreement is executed with the Selling Shareholders in all cases. That is, even if the Selling Shareholder does not become an Employed Selling Shareholder, the Selling Shareholder is restricted from engaging in a competing business during the Non-Compete Term. |
9. | The Non-Compete Term commences as of the date of the Acquisition and expires on the later of : |
a. | Two years after the date an Employed Selling Shareholders’ employment is terminated (if the Selling Shareholder becomes an Employed Selling Shareholder) or |
b. | Five to six years from the date of the Acquisition, as defined in the Non-Compete Agreement, regardless of whether the Selling Shareholder is employed by NewCo. |
10. | The Non-Compete Agreement applies to a restricted region which is a defined mile radius from the Therapy Practice. That is, an Employed Selling Shareholder is permitted to engage in competing businesses or activities outside the defined mileage (after such Employed Selling Shareholder no longer is employed by NewCo) and a Selling Shareholder who is not employed by NewCo immediately is permitted to engage in the competing business or activities outside the defined mileage. |
1. | Put Right |
a. | In the event that any Selling Shareholder’s employment is terminated under certain circumstances prior to a specified date (the “Specified Date”), the Seller Entity thereafter may have an irrevocable right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below. |
b. | In the event that any Selling Shareholder is not employed by NewCo as of the Specified Date and the Company has not exercised its Call Right with respect to the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, Seller Entity thereafter shall have the Put Right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below. |
c. | In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the Specified Date, the Seller Entity shall have the Put Right, and upon the exercise of the Put Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below. |
2. | Call Right |
a. | If any Selling Shareholder’s employment by NewCo is terminated prior to the Specified Date, the Company thereafter shall have an irrevocable right to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, in each case at the purchase price described in “3” below. |
b. | In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after Specified Date, the Company shall have the Call Right, and upon the exercise of the Call Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below. |
3. | For the Put Right and the Call Right, the purchase price is derived from a formula based on a specified multiple of NewCo’s trailing twelve months of earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of NewCo. NewCo’s earnings are distributed monthly based on available cash within NewCo. Therefore, the undistributed earnings amount is small, if any. |
4. | The Purchase Price for the initial equity interest purchased by the Company is, in almost all cases, also based on the same specified multiple of the trailing twelve-month earnings that is used in the Put Right and the Call Right noted above. |
5. | The Put Right and the Call Right do not have an expiration date, and the Seller Entity Interest is not required to be purchased by the Company or sold by the Seller Entity unless either the Put Right or the Call Right is exercised. |
6. | The Put Right and the Call Right never apply to Selling Shareholders who do not become employed by NewCo, since the Company requires that such Selling Shareholders sell their entire ownership interest in the Seller Entity at the closing of the Acquisition. |
1. | Prior to the acquisition, the Progressive Subsidiaries were owned by a legal entity (“Progressive Parent”) controlled by its individual owners (the “Progressive Selling Shareholders”), who work in and manage the Progressive business. |
2. | In conjunction with the acquisition, the Progressive Selling Shareholders caused the Progressive Parent to transfer its ownership of the Progressive Subsidiaries into a newly-formed limited liability company (“Progressive NewCo”), in exchange for one hundred percent (100%) of the membership interests in Progressive NewCo. Therefore, in this step, Progressive NewCo became wholly-owned by the Progressive Selling Shareholders. |
3. | The Company entered into an agreement (the “Progressive Purchase Agreement”) to acquire from the Progressive Selling Shareholders a majority of the membership interest in Progressive NewCo. The consideration for the acquisition is primarily payable in the form of cash at closing, a relatively small portion paid in cash after the closing contingent on certain performance criteria, and a small note in lieu of an escrow (the “Progressive Purchase Price”). |
4. | The Company and the Progressive Selling Shareholders also executed an operating agreement (the “Progressive Operating Agreement”) for Progressive NewCo that sets forth the rights and obligations of the members of Progressive NewCo. |
5. | As noted above, the Company did not purchase 100% of the membership interests in Progressive NewCo and the Progressive Selling Shareholders retained a portion of the membership interest in Progressive NewCo (“Progressive Selling Shareholders’ Interest”). |
6. | The Company and the Progressive Selling Shareholders executed a non-compete agreement (the “Progressive Non-Compete Agreement”) which restricts the Progressive Selling Shareholders from competing for a specified period of time (the “Progressive Non-Compete Term”). |
7. | The Progressive Non-Compete Term commences as of the date of the Progressive acquisition and expires on the later of: |
a. | Two years after the date a Progressive Selling Shareholder no longer is involved in the management of Progressive NewCo or |
b. | Seven years from the date of the acquisition. |
8. | The Progressive Non-Compete Agreement applies to the entire United States. |
9. | The Progressive Put Right (as defined below) and the Progressive Call Right (as defined below) do not have an expiration date. The Progressive Operating Agreement contains provisions for the redemption of the Progressive Selling Shareholder’s Interest, either at the option of the Company (the “Progressive Call Right”) or at the option of the Progressive Selling Shareholder (the “Progressive Put Right”) as follows: |
1. | Progressive Put Right |
a. | Each of the Progressive Selling Shareholders has the right to sell 30% of their respective residual interests on each of the 4th and 5th anniversaries of the acquisition closing, and then 10% on each of the 6th and 7th |
b. | In the event that any Progressive Selling Shareholder terminates his management relationship with Progressive NewCo for any reason on or after the seventh anniversary of the Closing Date, the Progressive Selling Shareholder has the Put Right, and upon the exercise of the Progressive Put Right, the Progressive Selling Shareholder’s Interest shall be redeemed by the Company at the purchase price described in “3” below. |
2. | Progressive Call |
a. | If any Progressive Selling Shareholder’s ceases to perform management services on behalf of Progressive NewCo, the Company thereafter shall have an irrevocable right to purchase from such Progressive Selling Shareholder his Interest, in each case at the purchase price described in “3” below. |
3. | For the Progressive Put Right and the Progressive Call Right, the purchase price is derived from a formula based on a specified multiple of Progressive NewCo’s trailing twelve months of earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of Progressive NewCo. Progressive NewCo’s earnings are distributed monthly based on available cash within Progressive NewCo; therefore, the undistributed earnings amount is small, if any. |
4. | The Progressive Purchase Price for the initial equity interest purchased by the Company is also based on the same specified multiple of the trailing twelve-month earnings that is used in the Progressive Put Right and the Progressive Call Right noted above. |
5. | The Progressive Put Right and the Progressive Call Right do not have an expiration date. |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||
Beginning balance | $ | 164,283 | $ | 158,008 | $ | 167,515 | $ | 155,262 | $ | 165,513 | $ | 151,400 | $ | 167,515 | $ | 155,262 | ||||||||||||||||
Operating results allocated to redeemable non-controlling interest partners | 2,920 | 2,626 | 5,640 | 5,183 | 1,976 | 2,037 | 7,616 | 7,220 | ||||||||||||||||||||||||
Distributions to redeemable non-controlling interest partners | (4,179 | ) | (2,328 | ) | (6,337 | ) | (4,731 | ) | (2,405 | ) | (3,038 | ) | (8,742 | ) | (7,770 | ) | ||||||||||||||||
Changes in the fair value of redeemable non-controlling interest | 2,865 | (210 | ) | 2,746 | (57 | ) | 2,242 | 196 | 4,988 | 193 | ||||||||||||||||||||||
Purchases of redeemable non-controlling interest | (2,659 | ) | (7,138 | ) | (8,821 | ) | (9,596 | ) | - | (5,574 | ) | (8,821 | ) | (15,170 | ) | |||||||||||||||||
Acquired interest | 2,138 | - | 3,893 | 4,946 | 6,465 | 2,552 | 10,358 | 7,498 | ||||||||||||||||||||||||
Sales of redeemable non-controlling interest - temporary equity | 2,286 | 2,187 | 2,925 | 2,187 | 954 | 143 | 3,879 | 2,331 | ||||||||||||||||||||||||
Changes in notes receivable related to redeemable non-controlling interest - temporary equity | (2,140 | ) | (1,745 | ) | (2,047 | ) | (1,794 | ) | (48 | ) | 439 | (2,096 | ) | (1,409 | ) | |||||||||||||||||
Ending balance | $ | 165,514 | $ | 151,400 | $ | 165,514 | $ | 151,400 | $ | 174,697 | $ | 148,155 | $ | 174,697 | $ | 148,155 |
Nine Months Ended | ||||||||||||||||
June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Contractual time period has lapsed but holder’s employment has not terminated | $ | 73,640 | $ | 73,204 | $ | 75,026 | $ | 74,002 | ||||||||
Contractual time period has not lapsed and holder’s employment has not terminated | 91,874 | 78,196 | 99,671 | 74,153 | ||||||||||||
Holder’s employment has terminated and contractual time period has expired | - | - | - | - | ||||||||||||
Holder’s employment has terminated and contractual time period has not expired | - | - | - | - | ||||||||||||
$ | 165,514 | $ | 151,400 | $ | 174,697 | $ | 148,155 |
Six Months Ended | Year Ended | Nine Months Ended | Year Ended | |||||||||||||
June 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Beginning balance | $ | 494,101 | $ | 434,679 | $ | 494,101 | $ | 434,679 | ||||||||
Goodwill acquired | 9,627 | 72,674 | 25,932 | 72,674 | ||||||||||||
Goodwill adjustments for purchase price allocation of businesses acquired in prior year | 2,975 | (4,140 | ) | 2,874 | (4,140 | ) | ||||||||||
Goodwill impairment | - | (9,112 | ) | - | (9,112 | ) | ||||||||||
Ending balance | $ | 506,703 | $ | 494,101 | $ | 522,907 | $ | 494,101 |
June 30, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Tradenames | $ | 44,291 | $ | 43,373 | ||||
Customer and referral relationships, net of accumulated amortization of $27,039 and $23,736, respectively (weighted average amortization period 12.7 years) | 61,376 | 63,238 | ||||||
Non-compete agreements, net of accumulated amortization of $7,301 and $6,999 respectively (weighted average amortization period 6.0 years) | 1,925 | 2,144 | ||||||
$ | 107,592 | $ | 108,755 |
September 30, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Tradenames | $ | 45,908 | $ | 43,373 | ||||
Customer and referral relationships, net of accumulated amortization of $28,708 and $23,736, respectively (weighted average amortization period 13.0 years) | 64,210 | 63,238 | ||||||
Non-compete agreements, net of accumulated amortization of $7,449 and $6,999 respectively (weighted average amortization period 6.0 years) | 1,994 | 2,144 | ||||||
$ | 112,112 | $ | 108,755 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Customer and referral relationships | $ | 1,639 | $ | 1,339 | $ | 3,303 | $ | 3,011 | $ | 1,669 | $ | 1,404 | $ | 4,972 | $ | 4,415 | ||||||||||||||||
Non-compete agreements | 149 | 120 | 302 | 267 | 148 | 129 | 450 | 396 | ||||||||||||||||||||||||
$ | 1,788 | $ | 1,459 | $ | 3,605 | $ | 3,278 | $ | 1,817 | $ | 1,533 | $ | 5,422 | $ | 4,811 |
Customer and Referral Relationships | Customer and Referral Relationships | Non-Compete Agreements | Customer and Referral Relationships | Non-Compete Agreements | ||||||||||||||||||
(In thousands) | (In thousands) | (In thousands) | ||||||||||||||||||||
Years | Annual Amount | Years | Annual Amount | Annual Amount | Years | Annual Amount | ||||||||||||||||
Ending December 31, | Ending December 31, | Ending December 31, | ||||||||||||||||||||
2023 (excluding the three months ended June 30, 2023) | $ | 3,387 | 2023 (excluding the three months ended June 30, 2023) | $ | 299 | |||||||||||||||||
2023 (excluding the nine months ended September 30, 2023) | $ | 1,780 | 2023 (excluding the nine months ended September 30, 2023) | $ | 159 | |||||||||||||||||
2024 | $ | 6,624 | 2024 | $ | 565 | $ | 6,983 | 2024 | $ | 607 | ||||||||||||
2025 | $ | 6,480 | 2025 | $ | 498 | $ | 6,839 | 2025 | $ | 541 | ||||||||||||
2026 | $ | 6,012 | 2026 | $ | 359 | $ | 6,371 | 2026 | $ | 401 | ||||||||||||
2027 | $ | 5,848 | 2027 | $ | 204 | $ | 6,207 | 2027 | $ | 234 | ||||||||||||
Thereafter | $ | 33,025 | $ | 36,030 | 2028 | $ | 51 |
June 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Salaries and related costs | $ | 23,118 | $ | 22,912 | $ | 17,650 | $ | 22,912 | ||||||||
Credit balances due to patients and payors | 8,033 | 8,094 | 8,183 | 8,094 | ||||||||||||
Group health insurance claims | 2,552 | 1,666 | 2,671 | 1,666 | ||||||||||||
Closure costs | 224 | 243 | 223 | 243 | ||||||||||||
Contingency payable | 2,437 | 620 | 2,437 | 620 | ||||||||||||
Interest payable | 1,288 | - | 272 | - | ||||||||||||
Other property taxes payable | 494 | - | ||||||||||||||
Other | 5,686 | 3,878 | 3,916 | 3,878 | ||||||||||||
Total | $ | 43,338 | $ | 37,413 | $ | 35,846 | $ | 37,413 |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Principal Amount | Unamortized discount and debt issuance cost | Net Debt | Principal Amount | Unamortized discount and debt issuance cost | Net Debt | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Term Facility | $ | 145,313 | $ | 1,587 | $ | 143,726 | $ | 148,125 | $ | 1,861 | $ | 146,264 | ||||||||||||
Revolving Facilitiy | - | - | - | 31,000 | - | 31,000 | ||||||||||||||||||
Other | 5,325 | - | 5,325 | 6,430 | - | 6,430 | ||||||||||||||||||
Total debt | $ | 150,638 | $ | 1,587 | $ | 149,051 | $ | 185,555 | $ | 1,861 | $ | 183,694 | ||||||||||||
Less: Current portion of long-term debt | 7,555 | - | 7,555 | 8,271 | 408 | 7,863 | ||||||||||||||||||
Long-term debt, net of current portion | $ | 143,083 | $ | 1,587 | $ | 141,496 | $ | 177,284 | $ | 1,453 | $ | 175,831 |
June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Principal Amount | Unamortized discount and debt issuance cost | Net Debt | Principal Amount | Unamortized discount and debt issuance cost | Net Debt | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Revolving Facilitiy | $ | - | $ | - | $ | - | $ | 31,000 | $ | - | $ | 31,000 | ||||||||||||
Term Facility | 146,250 | 1,650 | 144,600 | 148,125 | 1,861 | 146,264 | ||||||||||||||||||
Other Debt | 6,390 | - | 6,390 | 6,430 | - | 6,430 | ||||||||||||||||||
Total Debt | $ | 152,640 | $ | 1,650 | $ | 150,990 | $ | 185,555 | $ | 1,861 | $ | 183,694 | ||||||||||||
Less: Current portion of long-term debt | 7,530 | - | 7,530 | 8,271 | 408 | 7,863 | ||||||||||||||||||
Total long-term debt, net of current portion | $ | 145,110 | $ | 1,650 | $ | 143,460 | $ | 177,284 | $ | 1,453 | $ | 175,831 |
1) | Revolving Facility: $175.0 million, five-year, revolving credit facility (“Revolving Facility”), which includes a $12.0 million sublimit for the issuance of standby letters of credit and a $15.0 million sublimit for swingline loans (each, a “Swingline Loan”). |
2) | Term Facility: $150 million term loan facility (the “Term Facility”). The Term Facility amortizes in quarterly installments of: (a) 0.625% in each of the first two years, (b) 1.250% in the third and fourth year, and (c) 1.875% in the fifth year of the Credit Agreement. The remaining outstanding principal balance of all term loans is due on the maturity date. |
For the Three Months Ended | For the Six Months Ended | For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||
Net income | $ | 14,864 | $ | 15,256 | $ | 26,291 | $ | 27,238 | $ | 12,222 | $ | 12,821 | $ | 38,513 | $ | 40,059 | ||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedge | 2,881 | (531 | ) | 1,064 | (531 | ) | ||||||||||||||||||||||||||
Unrealized gain on cash flow hedge | 1,276 | 6,473 | 2,340 | 5,942 | ||||||||||||||||||||||||||||
Tax effect at statutory rate (federal and state) | (736 | ) | 136 | (272 | ) | 136 | (326 | ) | (1,654 | ) | (598 | ) | (1,518 | ) | ||||||||||||||||||
Comprehensive income | $ | 17,009 | $ | 14,861 | $ | 27,083 | $ | 26,843 | $ | 13,172 | $ | 17,640 | $ | 40,255 | $ | 44,483 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||
(In thousands) | (In thousands) | (In thousands) | ||||||||||||||||||||||||||||||
Operating lease cost | $ | 9,410 | $ | 8,700 | $ | 18,775 | $ | 17,104 | $ | 9,725 | $ | 8,870 | $ | 28,500 | $ | 25,974 | ||||||||||||||||
Short-term lease cost | 284 | 259 | 559 | 580 | 292 | 210 | 851 | 790 | ||||||||||||||||||||||||
Variable lease cost | 2,373 | 1,994 | 4,504 | 3,926 | 2,281 | 1,913 | 6,785 | 5,839 | ||||||||||||||||||||||||
Total lease cost * | $ | 12,067 | $ | 10,953 | $ | 23,838 | $ | 21,610 | $ | 12,298 | $ | 10,993 | $ | 36,136 | $ | 32,603 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
(In thousands) | ||||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 9,753 | $ | 8,940 | $ | 19,399 | $ | 17,557 | ||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 9,938 | $ | 15,595 | $ | 16,219 | $ | 21,606 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | | September 30, 2022 | ||||||||||||
(In thousands) | ||||||||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 10,007 | $ | 9,139 | $ | 29,418 | $ | 26,697 | ||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 10,188 | $ | 8,011 | $ | 26,407 | $ | 29,618 |
Fiscal Year | Amount | |||
(In thousands) | ||||
2023 | $ | 19,235 | ||
2024 | 33,687 | |||
2025 | 25,731 | |||
2026 | 18,216 | |||
2027 and therafter | 21,089 | |||
Total lease payments | $ | 117,958 | ||
Less: imputed interest | 7,772 | |||
Total operating lease liabilities | $ | 110,186 |
Fiscal Year | Amount | |||
(In thousands) | ||||
2023 (excluding the nine months ended September 30, 2023) | $ | 9,946 | ||
2024 | 36,216 | |||
2025 | 28,184 | |||
2026 | 20,552 | |||
2027 and therafter | 24,877 | |||
Total lease payments | $ | 119,775 | ||
Less: imputed interest | 8,445 | |||
Total operating lease liabilities | $ | 111,330 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
Weighted-average discount rate - Operating leases | 3.5% | 2.5% | 3.5% | 2.5% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Net revenue: | ||||||||||||||||
Physical therapy operations | $ | 132,239 | $ | 121,219 | $ | 261,398 | $ | 233,855 | ||||||||
Industrial injury prevention services | 19,246 | 19,437 | 38,596 | 38,505 | ||||||||||||
Total Company | $ | 151,485 | $ | 140,656 | $ | 299,994 | $ | 272,360 | ||||||||
Gross profit: | ||||||||||||||||
Physical therapy operations | $ | 28,222 | $ | 26,699 | $ | 55,310 | $ | 49,134 | ||||||||
Industrial injury prevention services | 3,985 | 4,122 | 7,754 | 8,275 | ||||||||||||
Total Company | $ | 32,207 | $ | 30,821 | $ | 63,064 | $ | 57,409 | ||||||||
Total Assets: | ||||||||||||||||
Physical therapy operations | $ | 521,104 | $ | 414,172 | ||||||||||||
Industrial injury prevention services | 478,477 | 382,272 | ||||||||||||||
Total Company | $ | 999,581 | $ | 796,444 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Net revenue: | ||||||||||||||||
Physical therapy operations | $ | 130,521 | $ | 119,447 | $ | 391,919 | $ | 353,302 | ||||||||
Industrial injury prevention services | 19,486 | 20,155 | 58,082 | 58,660 | ||||||||||||
Total Company | $ | 150,007 | $ | 139,602 | $ | 450,001 | $ | 411,962 | ||||||||
Gross profit: | ||||||||||||||||
Physical therapy operations | $ | 23,505 | $ | 22,379 | $ | 78,815 | $ | 71,513 | ||||||||
Industrial injury prevention services | 4,424 | 4,405 | 12,178 | 12,680 | ||||||||||||
Total Company | $ | 27,929 | $ | 26,784 | $ | 90,993 | $ | 84,193 | ||||||||
Total Assets: | ||||||||||||||||
Physical therapy operations | $ | 534,848 | $ | 432,683 | ||||||||||||
Industrial injury prevention services | 475,338 | 367,025 | ||||||||||||||
Total Company | $ | 1,010,186 | $ | 799,708 |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Acquisition | Date | % Interest Acquired | Number of Clinics | Date | % Interest Acquired | Number of Clinics | |||||||
September 2023 Acquisition 1 | September 29, 2023 | 70% | 4 | ||||||||||
September 2023 Acquisition 2 | September 29, 2023 | 70% | 1 | ||||||||||
July 2023 Acquisition | July 31, 2023 | 70% | 7 | ||||||||||
May 2023 Acquisition | May 31, 2023 | 45% * | 4 | May 31, 2023 | 45% | 4 | |||||||
February 2023 Acquisition | February 28, 2023 | 80% | 1 | February 28, 2023 | 80% | 1 | |||||||
November 2022 Acquisition | November 30, 2022 | 80% | 13 | November 30, 2022 | 80% | 13 | |||||||
October 2022 Acquisition | October 31, 2022 | 60% | 14 | October 31, 2022 | 60% | 14 | |||||||
September 2022 Acquisition | September 30, 2022 | 80% | 2 | September 30, 2022 | 80% | 2 | |||||||
August 2022 Acquisition | August 31, 2022 | 70% | 6 | August 31, 2022 | 70% | 6 | |||||||
March 2022 Acquisition | March 31, 2022 | 70% | 6 | March 31, 2022 | 70% | 6 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
Number of clinics, beginning of period | 656 | 608 | 640 | 591 | ||||||||||||
Additions (1) | 19 | 8 | 40 | 33 | ||||||||||||
Closed or sold | (3 | ) | (2 | ) | (8 | ) | (10 | ) | ||||||||
Number of clinics, end of period | 672 | 614 | 672 | 614 |
(1) | Includes clinics added through acquisitions. |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
Number of clinics, beginning of period | 647 | 601 | 640 | 591 | ||||||||||||
Additions (1) | 13 | 11 | 21 | 25 | ||||||||||||
Closed or sold | (4 | ) | (4 | ) | (5 | ) | (8 | ) | ||||||||
Number of clinics, end of period | 656 | 608 | 656 | 608 |
• | Mature clinics are clinics opened or acquired prior to January 1, 2022, and are still operating as of |
• | Net rate per patient visit is net patient revenue related to our physical therapy operations divided by total number of patient visits (defined below) during the periods presented. |
• | Patient visits is the number of unique patient visits during the periods presented. |
• | Average visits per day per clinic is patient visits divided by the number of days in which normal business operations were conducted during the periods presented and further divided by the average number of clinics in operation during the periods presented. |
• | 2023 |
• | 2022 |
• | 2023 |
• | 2022 |
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
(In thousands, except per share data) | (In thousands, except per share data) | |||||||||||||||||||||||||||||||
Earnings per share | ||||||||||||||||||||||||||||||||
Computation of earnings per share - USPH shareholders: | ||||||||||||||||||||||||||||||||
Net income attributable to USPH shareholders | $ | 10,919 | $ | 11,195 | $ | 18,329 | $ | 19,994 | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||||||||||
Charges to retained earnings: | ||||||||||||||||||||||||||||||||
Revaluation of redeemable non-controlling interest | (2,865 | ) | 210 | (2,746 | ) | 57 | (2,242 | ) | (196 | ) | (4,988 | ) | (193 | ) | ||||||||||||||||||
Tax effect at statutory rate (federal and state) | 732 | (54 | ) | 700 | (15 | ) | 573 | 50 | 1,274 | 49 | ||||||||||||||||||||||
$ | 8,786 | $ | 11,351 | $ | 16,283 | $ | 20,036 | $ | 7,585 | $ | 9,411 | $ | 23,869 | $ | 29,407 | |||||||||||||||||
Earnings per share (basic and diluted) | $ | 0.64 | $ | 0.87 | $ | 1.22 | $ | 1.55 | $ | 0.51 | $ | 0.72 | $ | 1.72 | $ | 2.27 | ||||||||||||||||
Shares used in computation: | ||||||||||||||||||||||||||||||||
Basic and diluted earnings per share - weighted-average shares | 14,987 | 13,001 | 13,918 | 12,979 |
Three Months Ended, | Six Months Ended, | |||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022* | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Adjusted EBITDA | ||||||||||||||||
Net income attributable to USPH shareholders | $ | 10,919 | $ | 11,195 | $ | 18,329 | $ | 19,994 | ||||||||
Adjustments: | ||||||||||||||||
Provision for income taxes | 4,231 | 4,240 | 7,200 | 7,737 | ||||||||||||
Depreciation and amortization | 3,827 | 3,474 | 7,615 | 7,298 | ||||||||||||
Interest expense - debt and other, net | 2,633 | 987 | 5,193 | 1,527 | ||||||||||||
Equity-based awards compensation expense | 1,786 | 1,814 | 3,592 | 3,660 | ||||||||||||
Change in fair value of contingent earn-out consideration | (708 | ) | - | (10 | ) | - | ||||||||||
Interest and other income | (682 | ) | (679 | ) | (746 | ) | (725 | ) | ||||||||
Change in revaluation of put-right liability | 50 | 617 | 199 | 14 | ||||||||||||
Relief Funds | - | - | (467 | ) | - | |||||||||||
Allocation to non-controlling interests | (389 | ) | (333 | ) | (761 | ) | (697 | ) | ||||||||
Adjusted EBITDA (a non-GAAP measure) | $ | 21,667 | $ | 21,315 | 40,144 | 38,808 | ||||||||||
Operating Results | ||||||||||||||||
Net income attributable to USPH shareholders | $ | 10,919 | $ | 11,195 | $ | 18,329 | $ | 19,994 | ||||||||
Adjustments: | ||||||||||||||||
Change in fair value of contingent earn-out consideration | (708 | ) | - | (10 | ) | - | ||||||||||
Change in revaluation of put-right liability | 50 | 617 | 199 | 14 | ||||||||||||
Relief Funds | - | - | (467 | ) | - | |||||||||||
Allocation to non-controlling interest | 33 | |||||||||||||||
Tax effect at statutory rate (federal and state) | 168 | (158 | ) | 63 | (4 | ) | ||||||||||
Operating Results (a non-GAAP measure) | $ | 10,429 | $ | 11,654 | $ | 18,147 | $ | 20,004 | ||||||||
Operating Results per share (a non-GAAP measure) | $ | 0.76 | $ | 0.90 | $ | 1.36 | $ | 1.54 | ||||||||
Shares used in computation - basic and diluted | 13,720 | 12,998 | 13,375 | 12,968 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022* | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Adjusted EBITDA | ||||||||||||||||
Net income attributable to USPH shareholders | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||
Adjustments: | ||||||||||||||||
Provision for income taxes | 3,557 | 3,215 | 10,757 | 10,953 | ||||||||||||
Depreciation and amortization | 3,966 | 3,652 | 11,582 | 10,950 | ||||||||||||
Interest expense, debt and other | 2,101 | 2,013 | 7,293 | 3,540 | ||||||||||||
Equity-based awards compensation expense | 1,859 | 1,802 | 5,451 | 5,462 | ||||||||||||
Change in revaluation of put-right liability | 145 | (785 | ) | 344 | (771 | ) | ||||||||||
Change in fair value of contingent earn-out consideration | (187 | ) | (2,000 | ) | (197 | ) | (2,000 | ) | ||||||||
Interest income | (1,673 | ) | - | (2,191 | ) | - | ||||||||||
Other (income) expense | (78 | ) | (65 | ) | (305 | ) | (790 | ) | ||||||||
Relief Funds | - | - | (467 | ) | - | |||||||||||
Allocation to non-controlling interests | (358 | ) | (402 | ) | (1,119 | ) | (1,098 | ) | ||||||||
Adjusted EBITDA (a non-GAAP measure) | $ | 18,586 | $ | 16,987 | 58,731 | 55,797 | ||||||||||
Operating Results | ||||||||||||||||
Net income attributable to USPH shareholders | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||
Adjustments: | ||||||||||||||||
Change in fair value of contingent earn-out consideration | (187 | ) | (2,000 | ) | (197 | ) | (2,000 | ) | ||||||||
Change in revaluation of put-right liability | 145 | (785 | ) | 344 | (771 | ) | ||||||||||
Relief Funds | - | - | (467 | ) | - | |||||||||||
Allocation to non-controlling interest | - | 33 | ||||||||||||||
Tax effect at statutory rate (federal and state) | 11 | 711 | 73 | 708 | ||||||||||||
Operating Results (a non-GAAP measure) | $ | 9,223 | $ | 7,483 | $ | 27,369 | $ | 27,488 | ||||||||
Operating Results per share (a non-GAAP measure) | $ | 0.62 | $ | 0.58 | $ | 1.97 | $ | 2.12 | ||||||||
Earnings per share | ||||||||||||||||
Computation of earnings per share - USPH shareholders: | ||||||||||||||||
Net income attributable to USPH shareholders | $ | 9,254 | $ | 9,557 | $ | 27,583 | $ | 29,551 | ||||||||
Charges to retained earnings: | ||||||||||||||||
Revaluation of redeemable non-controlling interest | (2,242 | ) | (196 | ) | (4,988 | ) | (193 | ) | ||||||||
Tax effect at statutory rate (federal and state) | 573 | 50 | 1,274 | 49 | ||||||||||||
$ | 7,585 | $ | 9,411 | $ | 23,869 | $ | 29,407 | |||||||||
Earnings per share (basic and diluted) | $ | 0.51 | $ | 0.72 | $ | 1.72 | $ | 2.27 | ||||||||
Shares used in computation - basic and diluted | 14,987 | 13,001 | 13,918 | 12,979 |
* | Revised to conform to current year presentation. |
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Net revenue: | ||||||||||||||||
Physical therapy operations | $ | 132,239 | $ | 121,219 | $ | 130,521 | $ | 119,447 | ||||||||
Industrial injury prevention services | 19,246 | 19,437 | 19,486 | 20,155 | ||||||||||||
Total Company | $ | 151,485 | $ | 140,656 | $ | 150,007 | $ | 139,602 | ||||||||
Gross profit: | ||||||||||||||||
Physical therapy operations | $ | 28,222 | $ | 26,699 | $ | 23,505 | $ | 22,379 | ||||||||
Industrial injury prevention services | 3,985 | 4,122 | 4,424 | 4,405 | ||||||||||||
Total Company | $ | 32,207 | $ | 30,821 | $ | 27,929 | $ | 26,784 | ||||||||
Total Assets: | ||||||||||||||||
Physical therapy operations | $ | 521,104 | $ | 414,172 | $ | 534,848 | $ | 432,683 | ||||||||
Industrial injury prevention services | 478,477 | 382,272 | 475,338 | 367,025 | ||||||||||||
Total Company | $ | 999,581 | $ | 796,444 | $ | 1,010,186 | $ | 799,708 |
For the Three Months Ended June 30, | Variance | Three Months Ended September 30, | Variance | ||||||||||||||||||||||||||||||
2023 | 2022 | $ | % | 2023 | 2022 | $ | % | ||||||||||||||||||||||||||
(In thousands, except percentages) | (In thousands, except percentages) | ||||||||||||||||||||||||||||||||
Revenue related to: | |||||||||||||||||||||||||||||||||
Mature Clinics (1) | $ | 115,053 | $ | 113,538 | $ | 1,515 | 1.3 | % | $ | 111,943 | $ | 111,598 | $ | 345 | 0.3 | % | |||||||||||||||||
2023 clinic additions | 1,910 | - | 1,910 | * | (2) | 3,598 | - | 3,598 | * | (2) | |||||||||||||||||||||||
2022 clinic additions | 12,271 | 3,201 | 9,070 | * | (2) | 11,674 | 3,899 | 7,775 | * | (2) | |||||||||||||||||||||||
Clinics sold or closed (3) | 46 | 1,457 | (1,411 | ) | * | (2) | 28 | 1,213 | (1,185 | ) | * | (2) | |||||||||||||||||||||
Net patient revenue from physical therapy operations | 129,280 | 118,196 | 11,084 | 9.4 | % | 127,243 | 116,710 | 10,533 | 9.0 | % | |||||||||||||||||||||||
Other revenue | 792 | 898 | (106 | ) | (11.8 | )% | 889 | 753 | 136 | 18.1 | % | ||||||||||||||||||||||
Physical therapy operations | 130,072 | 119,094 | 10,978 | 9.2 | % | 128,132 | 117,463 | 10,669 | 9.1 | % | |||||||||||||||||||||||
Industrial injury prevention services | 19,246 | 19,437 | (191 | ) | (1.0 | )% | 19,486 | 20,155 | (669 | ) | (3.3 | )% | |||||||||||||||||||||
Management contracts | 2,167 | 2,125 | 42 | 2.0 | % | 2,389 | 1,984 | 405 | 20.4 | % | |||||||||||||||||||||||
$ | 151,485 | $ | 140,656 | $ | 10,829 | 7.7 | % | $ | 150,007 | $ | 139,602 | $ | 10,405 | 7.5 | % |
(1) | See above for defined terms. |
(2) | Not meaningful. |
(3) | Revenue from closed clinics includes revenue from the |
For the Three Months Ended June 30, | Variance | ||||||||||||||||
2023 | 2022 | $ | % | ||||||||||||||
Operating costs related to: | (In thousands, except percentages) | ||||||||||||||||
Mature Clinics (1) | $ | 90,965 | $ | 89,364 | $ | 1,601 | 1.8 | % | |||||||||
2023 clinic additions | 1,832 | - | 1,832 | * | (2) | ||||||||||||
2022 clinic additions | 9,192 | 2,713 | 6,479 | * | (2) | ||||||||||||
Clinics sold or closed (3) | 157 | 821 | (664 | ) | * | (2) | |||||||||||
Physical therapy operations | 102,146 | 92,898 | 9,248 | 10.0 | % | ||||||||||||
Industrial injury prevention services | 15,261 | 15,315 | (54 | ) | (0.4 | )% | |||||||||||
Management contracts | 1,871 | 1,622 | 249 | 15.4 | % | ||||||||||||
$ | 119,278 | $ | 109,835 | $ | 9,443 | 8.6 | % |
Three Months Ended September 30, | Variance | |||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
Operating costs related to: | (In thousands, except percentages) | |||||||||||||||
Mature Clinics (1) | $ | 91,822 | $ | 90,811 | $ | 1,011 | 1.1 | % | ||||||||
2023 Clinic additions | 3,395 | - | 3,395 | * | (2) | |||||||||||
2022 Clinic additions | 9,665 | 3,482 | 6,183 | * | (2) | |||||||||||
Clinics sold or closed (3) | 137 | 1,238 | (1,101 | ) | * | (2) | ||||||||||
Physical therapy operations | 105,019 | 95,531 | 9,488 | 9.9 | % | |||||||||||
Industrial injury prevention services | 15,062 | 15,750 | (688 | ) | (4.4 | )% | ||||||||||
Management contracts | 1,997 | 1,537 | 460 | 29.9 | % | |||||||||||
$ | 122,078 | $ | 112,818 | $ | 9,260 | 8.2 | % |
(1) | See above for defined terms. |
(2) | Not meaningful. |
(3) | Operating costs from closed clinics include costs from the |
For the Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | Margin % | $ | Margin % | $ | % | |||||||||||||||||||||||||||||||||||||
(In thousands, except percentages) | (In thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
Physical therapy operations | $ | 27,926 | 21.6 | % | $ | 26,196 | 22.0 | % | $ | 1,730 | 6.6 | % | $ | 23,113 | 18.0 | % | $ | 21,932 | 18.7 | % | $ | 1,181 | 5.4 | % | ||||||||||||||||||||||||
Industrial injury prevention services | $ | 3,985 | 20.7 | % | 4,122 | 21.2 | % | (137 | ) | (3.3 | )% | 4,424 | 22.7 | % | 4,405 | 21.9 | % | 19 | 0.4 | % | ||||||||||||||||||||||||||||
Management contracts | $ | 296 | 13.7 | % | 503 | 23.7 | % | (207 | ) | (41.2 | )% | 392 | 16.4 | % | 447 | 22.5 | % | (55 | ) | (12.3 | )% | |||||||||||||||||||||||||||
Gross profit | $ | 32,207 | 21.3 | % | $ | 30,821 | 21.9 | % | $ | 1,386 | 4.5 | % | $ | 27,929 | 18.6 | % | $ | 26,784 | 19.2 | % | $ | 1,145 | 4.3 | % |
• | Interest expense, net of $0.9 million savings from the interest rate swap arrangement discussed in the “Liquidity and Capital Resources – Interest Rate Swap” section below, was $2.1 million for the 2023 Third Quarter compared to $2.0 million in the 2022 Third Quarter. The interest rate on the Company’s credit facilities, net of the savings from the interest rate swap, was 4.9% for the 2023 Third Quarter, with an all-in effective interest rate, including all associated costs, of 5.6%. |
Three Months Ended June 30, | Three Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(In thousands, except percentages) | (In thousands, except percentages) | |||||||||||||||
Income before taxes | $ | 19,095 | $ | 19,495 | $ | 15,779 | $ | 16,036 | ||||||||
Less: net loss (income) attributable to non-controlling interest: | ||||||||||||||||
Less: Net income attributable to non-controlling interest: | ||||||||||||||||
Redeemable non-controlling interest - temporary equity | (2,920 | ) | (2,626 | ) | (1,976 | ) | (2,037 | ) | ||||||||
Non-controlling interest - permanent equity | (1,025 | ) | (1,435 | ) | (992 | ) | (1,227 | ) | ||||||||
$ | (3,945 | ) | $ | (4,061 | ) | $ | (2,968 | ) | $ | (3,264 | ) | |||||
Income before taxes less net income attributable to non-controlling interest | $ | 15,150 | $ | 15,434 | $ | 12,811 | $ | 12,772 | ||||||||
Provision for income taxes | $ | 4,231 | $ | 4,239 | $ | 3,557 | $ | 3,215 | ||||||||
Percentage | 27.9 | % | 27.5 | % | ||||||||||||
Effective income tax rate | 27.8 | % | 25.2 | % |
Six Months Ended June 30, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Net revenue: | ||||||||
Physical therapy operations | $ | 261,398 | $ | 233,855 | ||||
Industrial injury prevention services | 38,596 | 38,505 | ||||||
Total Company | $ | 299,994 | $ | 272,360 | ||||
Gross profit: | ||||||||
Physical therapy operations | $ | 55,310 | $ | 49,134 | ||||
Industrial injury prevention services | 7,754 | 8,275 | ||||||
Total Company | $ | 63,064 | $ | 57,409 | ||||
Total Assets: | ||||||||
Physical therapy operations | $ | 521,104 | $ | 414,172 | ||||
Industrial injury prevention services | 478,477 | 382,272 | ||||||
Total Company | $ | 999,581 | $ | 796,444 |
Nine Months Ended September 30, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Net revenue: | ||||||||
Physical therapy operations | $ | 391,919 | $ | 353,302 | ||||
Industrial injury prevention services | 58,082 | 58,660 | ||||||
Total Company | $ | 450,001 | $ | 411,962 | ||||
Gross profit: | ||||||||
Physical therapy operations | $ | 78,815 | $ | 71,513 | ||||
Industrial injury prevention services | 12,178 | 12,680 | ||||||
Total Company | $ | 90,993 | $ | 84,193 | ||||
Total Assets: | ||||||||
Physical therapy operations | $ | 534,848 | $ | 432,683 | ||||
Industrial injury prevention services | 475,338 | 367,025 | ||||||
Total Company | $ | 1,010,186 | $ | 799,708 |
Nine Months Ended September 30, | Variance | |||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
Revenue related to: | (In thousands, except percentages) | |||||||||||||||
Mature Clinics (1) | $ | 340,830 | $ | 332,629 | $ | 8,201 | 2.5 | % | ||||||||
2023 clinic additions | 5,888 | - | 5,888 | * | (2) | |||||||||||
2022 clinic additions | 35,965 | 7,294 | 28,671 | * | (2) | |||||||||||
Clinics sold or closed (3) | 421 | 4,521 | (4,100 | ) | * | (2) | ||||||||||
Net patient revenue from physical therapy operations | 383,104 | 344,444 | 38,660 | 11.2 | % | |||||||||||
Other revenue | 2,479 | 2,523 | (44 | ) | (1.7 | )% | ||||||||||
Physical therapy operations | 385,583 | 346,967 | 38,616 | 11.1 | % | |||||||||||
Industrial injury prevention services | 58,082 | 58,660 | (578 | ) | (1.0 | )% | ||||||||||
Management contracts | 6,336 | 6,335 | 1 | 0.0 | % | |||||||||||
$ | 450,001 | $ | 411,962 | $ | 38,039 | 9.2 | % |
Six Months Ended June 30, | Variance | ||||||||||||||||
2023 | 2022 | $ | % | ||||||||||||||
Revenue related to: | (In thousands, except percentages) | ||||||||||||||||
Mature Clinics (1) | $ | 229,072 | $ | 221,187 | $ | 7,885 | 3.6 | % | |||||||||
2023 clinic additions | 2,282 | - | 2,282 | * | (2) | ||||||||||||
2022 clinic additions | 24,291 | 3,395 | 20,896 | * | (2) | ||||||||||||
Clinics sold or closed (3) | 216 | 3,152 | (2,936 | ) | * | (2) | |||||||||||
Net patient revenue from physical therapy operations | 255,861 | 227,734 | 28,127 | 12.4 | % | ||||||||||||
Other revenue | 1,591 | 1,770 | (179 | ) | (10.1 | )% | |||||||||||
Physical therapy operations | 257,452 | 229,504 | 27,948 | 12.2 | % | ||||||||||||
Industrial injury prevention services | 38,596 | 38,505 | 91 | 0.2 | % | ||||||||||||
Management contracts | 3,946 | 4,351 | (405 | ) | (9.3 | )% | |||||||||||
$ | 299,994 | $ | 272,360 | $ | 27,634 | 10.1 | % |
(1) | See defined terms above. |
(2) | Not meaningful. |
(3) | Revenue from closed clinics includes revenue from the |
For the Six Months Ended June 30, | Variance | Nine Months Ended September 30, | Variance | |||||||||||||||||||||||||||||||
2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||
Operating costs related to: | (In thousands, except percentages) | (In thousands, except percentages) | ||||||||||||||||||||||||||||||||
Mature Clinics (1) | $ | 181,469 | $ | 175,717 | $ | 5,752 | 3.3 | % | $ | 273,031 | $ | 266,324 | $ | 6,707 | 2.5 | % | ||||||||||||||||||
2023 clinic additions | 2,291 | - | 2,291 | * | (2 | ) | ||||||||||||||||||||||||||||
2022 clinic additions | 18,509 | 3,114 | 15,395 | * | (2 | ) | ||||||||||||||||||||||||||||
2023 Clinic additions | 5,701 | - | 5,701 | * | (2) | |||||||||||||||||||||||||||||
2022 Clinic additions | 28,175 | 6,597 | 21,578 | * | (2) | |||||||||||||||||||||||||||||
Clinics sold or closed (3) | 498 | 2,437 | (1,939 | ) | * | (2 | ) | 880 | 3,877 | (2,997 | ) | * | (2) | |||||||||||||||||||||
Physical therapy operations | 202,767 | 181,268 | 21,499 | 11.9 | % | 307,787 | 276,798 | 30,989 | 11.2 | % | ||||||||||||||||||||||||
Industrial injury prevention services | 30,842 | 30,230 | 612 | 2.0 | % | 45,904 | 45,980 | (76 | ) | (0.2 | )% | |||||||||||||||||||||||
Management contracts | 3,321 | 3,453 | (132 | ) | (3.8 | )% | 5,317 | 4,991 | 326 | 6.5 | % | |||||||||||||||||||||||
$ | 236,930 | $ | 214,951 | $ | 21,979 | 10.2 | % | $ | 359,008 | $ | 327,769 | $ | 31,239 | 9.5 | % |
(1) | See Glossary of Terms - Revenue Metrics for the definition. |
(2) | Not meaningful. |
(3) | Operating costs from closed clinics include costs from the |
For the Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | |||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | $ | % | $ | Margin % | $ | Margin % | $ | % | |||||||||||||||||||||||||||||||||||||
(In thousands, except percentages) | (In thousands, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||
Physical therapy operations | $ | 54,685 | 21.2 | % | $ | 48,236 | 21.0 | % | $ | 6,449 | 13.4 | % | $ | 77,796 | 20.2 | % | $ | 70,169 | 20.2 | % | $ | 7,627 | 10.9 | % | ||||||||||||||||||||||||
Industrial injury prevention services | 7,754 | 20.1 | % | 8,275 | 21.5 | % | (521 | ) | (6.3 | )% | 12,178 | 21.0 | % | 12,680 | 21.6 | % | (502 | ) | (4.0 | )% | ||||||||||||||||||||||||||||
Management contracts | 625 | 15.8 | % | 898 | 20.6 | % | (273 | ) | (30.4 | )% | 1,019 | 16.1 | % | 1,344 | 21.2 | % | (325 | ) | (24.2 | )% | ||||||||||||||||||||||||||||
Gross profit | $ | 63,064 | 21.0 | % | $ | 57,409 | 21.1 | % | $ | 5,655 | 9.9 | % | $ | 90,993 | 20.2 | % | $ | 84,193 | 20.4 | % | $ | 6,800 | 8.1 | % |
• | Interest expense, net of $2.3 million savings from the interest rate swap arrangement discussed in the “Balance Sheet and Cash Flow” section below, was $7.3 million for the 2023 Nine Months compared to $3.5 million in the 2022 Nine Months. The increase in interest expense was primarily due to a higher effective interest rate and increased borrowings to fund acquisitions. The effective interest rate on the Company’s credit facilities, net of the savings from the interest rate swap, was 5.1% for the 2023 Nine Months, with an all-in interest rate, including all associated costs, of 5.7%. |
Six Months Ended June 30, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(In thousands, except percentages) | (In thousands, except percentages) | |||||||||||||||
Income before taxes | $ | 33,491 | $ | 34,975 | $ | 49,270 | $ | 51,011 | ||||||||
Less: net income attributable to non-controlling interest: | ||||||||||||||||
Redeemable non-controlling interest - temporary equity | (5,640 | ) | (5,183 | ) | (7,616 | ) | (7,220 | ) | ||||||||
Non-controlling interest - permanent equity | (2,322 | ) | (2,061 | ) | (3,314 | ) | (3,288 | ) | ||||||||
$ | (7,962 | ) | $ | (7,244 | ) | $ | (10,930 | ) | $ | (10,508 | ) | |||||
Income before taxes less net income attributable to non-controlling interest | $ | 25,529 | $ | 27,731 | $ | 38,340 | $ | 40,503 | ||||||||
Provision for income taxes | $ | 7,200 | $ | 7,737 | $ | 10,757 | $ | 10,952 | ||||||||
Percentage | 28.2 | % | 27.9 | % | 28.1 | % | 27.0 | % |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. | CONTROLS AND PROCEDURES. |
ITEM 1. | LEGAL PROCEEDINGS. |
ITEM 1A. | RISK FACTORS. |
ITEM 6. | EXHIBITS. |
Exhibit Number | Description | |
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. | ||
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. | ||
Certification Pursuant to 18 U.S.C 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith |
U.S. PHYSICAL THERAPY, INC. | ||
Date: | By: | /s/ |
Carey Hendrickson | ||
Chief Financial Officer | ||
(Principal financial and accounting officer) |