U.S. Physical Therapy(USPH) - 2024 Q4 - Annual Report

Revenue and Growth - Medicare net patient revenues for 2024 were approximately $183.4 million, up from $170.7 million in 2023, representing a growth of about 7.9%[112] - In 2024, approximately 64.0% of the company's revenues were derived from private payors, while 36.0% came from Medicare and Medicaid[118] - Total net revenue for the year ended December 31, 2024, increased by $66.5 million, or 11.0%, to $671.3 million compared to $604.8 million for the year ended December 31, 2023[229] - Net patient revenue for 2024 was $560.6 million, representing 83.5% of total revenue, while other revenue was $110.8 million, or 16.5% of total revenue[228] - Operating income for 2024 was $63.2 million, a 21.4% increase from $52.1 million in 2023, with a net income of $45.6 million, up 22.5% from $37.2 million in the previous year[228] - The company added 103 clinics in 2024, bringing the total number of clinics owned or managed to 729 by the end of the year, compared to 671 at the end of 2023[210] - The average daily visits per clinic increased due to the addition of new clinics, contributing to the overall revenue growth[229] - Total revenues from physical therapy operations rose by $47.9 million, or 9.1%, to $574.4 million in 2024, driven by the addition of 58 net clinics and a 1.5% increase in volume at mature clinics[253] - Net patient revenue increased by 8.9% to $560.6 million in 2024, compared to $514.6 million in 2023[251] - The number of clinics at the end of 2024 was 729, an increase of 8.6% from 671 clinics in 2023[251] - The net rate per patient visit increased to $104.71 in 2024 from $102.80 in 2023, reflecting a 1.9% growth[251] Financial Performance - Basic and diluted earnings per share increased to $1.84 in 2024 from $1.28 in 2023, reflecting a growth of 43.8%[236] - Adjusted EBITDA for 2024 was $81.8 million, up $3.9 million or 5% from $77.9 million in 2023[245] - Operating Results for 2024 were $36.9 million, a slight increase of $0.5 million from $36.4 million in 2023, with Operating Results per share at $2.45 compared to $2.57 in 2023[247] - Operating costs for 2024 were $547.4 million, an increase of 13.1% from $483.3 million in 2023[249] - Salaries and related costs for clinics increased to $330.1 million in 2024, up $33.8 million or 11.4% from $296.3 million in 2023, driven by new clinic additions[256] - Gross profit from physical therapy operations was $103.9 million, or 18.1% of net revenue, for the 2024 Year, down from $105.1 million, or 20.0% of net revenue, in 2023[262] - Revenues from Industrial Injury Prevention Services increased by $18.7 million, or 23.8%, to $96.9 million for the 2024 Year from $78.3 million in 2023[263] Debt and Financing - The company has outstanding debt obligations that may limit its ability to implement business strategies and obtain future financing[132] - The company has a $325 million Senior Credit Facilities, consisting of a $175 million revolving facility and a $150 million term loan facility[295] - As of December 31, 2024, the outstanding balance on the Term Facility was $140.6 million, and $11.0 million was outstanding under the Revolving Facility, resulting in $164.0 million of credit availability[302] - The interest rate for the Senior Credit Facilities in 2024 was 4.7%, with an all-in interest rate of 5.5%[302] - The company entered into an interest rate swap agreement with a notional value of $150 million, which generated $3.4 million in interest savings for the 2024 year[303][306] - The company has outstanding notes payable related to acquisitions totaling $3.0 million, with varying payment schedules[307] - The interest rates on the notes payable range from 4.0% to 8.5% per annum[307] Regulatory and Compliance Risks - The company anticipates continued efforts from federal and state governments to contain Medicaid expenditures, which could adversely affect revenue and profitability[125] - Increased post-payment reviews of claims submitted to Medicare may lead to additional costs and potential repayments of overpaid amounts[126] - Compliance with extensive federal and state laws regarding patient privacy is critical, with potential penalties for violations[120] - The company may face significant fines and penalties if found in violation of laws related to fee-splitting and the corporate practice of medicine[139] - The company is subject to extensive regulations and compliance requirements, and failure to comply could result in significant penalties and operational changes[146] Operational Challenges - The company is subject to risks associated with public health crises, which could disrupt operations and impact patient appointments[124] - The company faces challenges in hiring and retaining qualified employees, which could lead to increased labor costs and reduced revenues[156] - The company incurred $4.4 million in costs associated with the closure of 45 underperforming clinics during 2024[230] - The company may incur closure costs and losses if it needs to reorganize or close clinics due to competitive or economic conditions[164] Shareholder and Market Impact - Issuance of shares for financing or stock incentive plans may dilute existing stockholders, impacting their ownership[169] - As of December 31, 2024, the company reserved approximately 424,722 shares for future equity grants, which may adversely affect the market price of its common stock[170] - The company declared dividends of $0.44 per share on four occasions during the year ended December 31, 2024, totaling an aggregate amount of $26,540,000[195] - The quarterly dividend was raised from $0.44 to $0.45 per share, with the first quarter dividend payable on April 11, 2025[214] - The company is restricted from paying dividends on its common stock in excess of $50,000,000 in any fiscal year under its Credit Agreement[195] Cybersecurity - The company has not encountered cybersecurity challenges that materially impaired its operations or financial standing, although it has experienced isolated incidents[179] - The Compliance Committee of the Board of Directors oversees cybersecurity risks, composed of members with diverse expertise in risk management, technology, healthcare operations, and finance[181] - The Chief Information Systems Officer (CISO) is responsible for assessing and managing cybersecurity risks, providing regular briefings to the Compliance Committee[182] - The company has engaged third-party cybersecurity consultants to enhance its understanding and management of cybersecurity risks[176]