U.S. Physical Therapy(US:USPH)2025-05-09 20:05Business Segments and Operations - The company operates through two reportable business segments: physical therapy and industrial injury prevention services, with a focus on orthopedic-related disorders and sports injuries [158]. - As of March 31, 2025, the company owned or managed a total of 736 clinics, an increase from 679 clinics as of March 31, 2024, reflecting a net addition of 57 clinics [164]. - The company managed 37 clinics owned by third parties as of March 31, 2025, bringing the total owned/managed clinics to 773 [164]. - The company plans to continue acquiring outpatient physical therapy practices and expand its industrial injury prevention services [165]. - The company completed several acquisitions, including a 65% interest in 3 clinics in February 2025 and a 75% interest in 8 clinics in November 2024 [161]. - The company acquired an outpatient home care therapy practice through its 50% owned subsidiary, generating approximately $2.1 million in annual revenue [166]. Financial Performance - Net revenue for the 2025 First Quarter increased by $28.1 million, or 18.1%, to $183.8 million compared to $155.7 million in the 2024 First Quarter [176]. - Net patient revenue rose to $152.5 million, representing an increase of 16.4% from $131.1 million in the prior year [175]. - Operating income was $19.6 million for the 2025 First Quarter, an increase from $14.9 million in the 2024 First Quarter [211]. - Net income attributable to USPH shareholders was $9.9 million, a 23.0% increase from $8.0 million in the 2024 First Quarter [179]. - Earnings per share for the 2025 First Quarter was $0.80, compared to $0.46 in the 2024 First Quarter [181]. - Adjusted EBITDA for the 2025 First Quarter was $19.5 million, an increase of 16.5% from $16.8 million in the prior year [193]. Revenue and Cost Analysis - Operating costs increased by $25.4 million, or 20.0%, to $152.7 million, driven by the addition of 53 net clinics and an increase in patient visits [176]. - Gross profit for the 2025 First Quarter was $31.1 million, or 16.9% of net revenue, down from 18.2% in the previous year [178]. - The net rate per patient visit increased to $105.66, up $2.29 from $103.37 in the 2024 First Quarter, despite a 2.9% Medicare rate reduction [177]. - Industrial Injury Prevention (IIP) revenue increased by $6.1 million, or 28.8%, to $27.4 million for the 2025 First Quarter compared to $21.3 million for the 2024 First Quarter [208]. - Operating costs increased by $20.6 million, or 18.6%, to $130.9 million in the 2025 First Quarter, primarily due to the addition of 53 net new clinics [202]. - Gross profit from physical therapy operations was $25.5 million with a gross profit margin of 16.3% in the 2025 First Quarter, compared to $24.1 million and a margin of 17.9% in the 2024 First Quarter [207]. Cash Flow and Financing - Total cash and cash equivalents were $39.2 million as of March 31, 2025, down from $132.3 million at March 31, 2024 [220]. - Cash used by operating activities was $4.7 million for the 2025 First Quarter, compared to $4.4 million provided by operating activities for the 2024 First Quarter [226]. - Cash used in investing activities for Q1 2025 totaled $6.6 million, primarily for business interests and fixed asset purchases [227]. - Cash provided by financing activities for Q1 2025 was $9.1 million, mainly from $17.0 million in proceeds from the Revolving Facility [228]. - As of March 31, 2025, $135.9 million was outstanding on the Term Facility, with an interest rate of 4.9% for Q1 2025 [237]. Interest Rates and Debt - The company has a $150 million Term Facility with quarterly amortization and a maturity date of June 17, 2027 [234]. - The interest rate swap agreement has a notional value of $150 million, with a fixed rate of 2.815% [238]. - A 1% change in interest rates would yield an additional $0.1 million in interest expense on seller notes and $0.3 million on Credit Facilities due to the interest rate swap [252]. - The company was in compliance with all covenants in the Credit Agreement as of March 31, 2025 [235]. Employee and Operational Considerations - The company emphasizes the importance of hiring and retaining qualified employees, which is critical for its operations [160]. Dividends - The company declared a quarterly dividend of $0.45 per share, payable on June 13, 2025, to shareholders of record on May 23, 2025 [165]. Medicare Reimbursement - The Medicare reimbursement for therapy services decreased by approximately 2.9% for 2025 compared to the rates in effect for most of 2024, following a 1.8% reduction for the balance of 2024 [169]. - The company faced a 3.5% decrease in Medicare payments for therapy services from January 1 to March 8, 2024, which was later minimized to a 1.8% reduction [169].