U.S. Physical Therapy(US:USPH)2023-11-08 21:03Clinic Operations - As of September 30, 2023, the company operated 672 clinics across 42 states, an increase from 656 clinics at the beginning of the period[155] - The company completed several acquisitions in 2023, including 19 clinics added in the third quarter and 40 clinics added in the nine months ended September 30, 2023[157] - The company has 42 third-party facilities under management as of September 30, 2023, in addition to its owned clinics[155] - The company has made strategic acquisitions, including a 70% interest in 4 clinics in September 2023 and a 45% interest in 4 clinics in May 2023[155] - The company reported a total of 19 new clinics added in the third quarter of 2023, compared to 8 in the same quarter of 2022[157] Financial Performance - For the nine months ended September 30, 2023, net patient revenues from Medicare were approximately $128.5 million, compared to $115.1 million for the same period in 2022, reflecting a growth of about 11.8%[171] - Net income attributable to shareholders for Q3 2023 was $9.3 million, a decrease of 3.1% from $9.6 million in Q3 2022[174] - Basic and diluted earnings per share for Q3 2023 were $0.51, down 29.2% from $0.72 in Q3 2022[174] - Total net revenue for Q3 2023 was $150.0 million, representing a 7.5% increase compared to $139.6 million in Q3 2022[190] - Total net revenue for the first nine months of 2023 was $450.0 million, a 9.2% increase from $412.0 million in the same period of 2022[214] Patient Visits - The number of patient visits increased by 10.8% to 1,242,954 in Q3 2023, compared to 1,122,070 in Q3 2022[193] - The number of patient visits increased by 12.2% to 3,737,584 in the first nine months of 2023 compared to 3,331,143 in the same period of 2022[216] - The average patient visits per day per clinic reached a record-high of 29.7 in Q3 2023, compared to 28.8 in Q3 2022[193] Operating Costs - Operating costs increased to $122.1 million in Q3 2023, representing 81.4% of net revenue, up from $112.8 million or 80.8% in Q3 2022[196] - Operating costs for the first nine months of 2023 were $359.0 million, or 79.8% of net revenue, compared to $327.8 million, or 79.6% in the same period of 2022[220] - Physical therapy operating costs rose by $9.5 million, or 9.9%, to $105.0 million in Q3 2023, driven by new clinics and increased patient visits[198] - Physical therapy operating costs rose by $31.0 million, or 11.2%, to $307.8 million in the 2023 Nine Months, driven by the addition of 58 net new clinics and a 3.2% increase in patient visits at mature clinics[222] Profitability Metrics - Adjusted EBITDA for Q3 2023 was $18.6 million, an increase of $1.6 million from $17.0 million in Q3 2022[187] - For the first nine months of 2023, Adjusted EBITDA was $58.7 million, an increase of $2.9 million from $55.8 million in the same period of 2022[188] - Gross profit for Q3 2023 increased by $1.1 million, or 4.3%, to $27.9 million, with a gross profit margin of 18.6%, down from 19.2% in Q3 2022[203] - Gross profit increased by $6.8 million, or 8.1%, to $91.0 million for the 2023 Nine Months, with a gross profit margin slightly decreasing to 20.2% from 20.4% in the 2022 Nine Months[228] - Operating income rose by 5.9% to $52.9 million, representing 11.8% of net revenues for the 2023 Nine Months, down from 12.1% in the previous year[231] Cash Flow and Liquidity - Cash and cash equivalents increased significantly to $147.7 million as of September 30, 2023, compared to $31.6 million at the end of 2022[240] - The company generated $55.1 million in cash from operating activities during the 2023 Nine Months, while $36.6 million was used in investing activities[246] Tax and Interest Expenses - The provision for income taxes was $3.6 million in Q3 2023, with an effective tax rate of 27.8%, up from 25.2% in Q3 2022[208] - The provision for income taxes was $10.8 million for the 2023 Nine Months, with an effective tax rate of 28.1%, compared to 27.0% in the 2022 Nine Months[236] - Interest expense increased to $7.3 million for the 2023 Nine Months, primarily due to a higher effective interest rate and increased borrowings for acquisitions[234] Future Plans and Risks - The company plans to continue developing new clinics and making additional acquisitions, supported by cash generated from operations[243] - The company is subject to various risks, including changes in Medicare rules and potential retroactive reductions in revenue from Medicare and Medicaid[147] Debt and Financing - As of September 30, 2023, the outstanding balance on the Term Facility was $143.7 million, with $175.0 million of credit availability under the Revolving Facility[257] - The average effective interest rate for borrowings under the Senior Credit Facility was 5.6% for the 2023 Third Quarter and 5.7% for the 2023 Nine Months[257] - The company has outstanding notes payable related to acquisitions totaling $5.3 million, with varying payment schedules and interest rates from 3.25% to 8.0% per annum[262] - A 1% change in the interest rate would yield no additional interest expense on the Revolving Facility due to the interest rate swap arrangement[279] Acquisitions - The company acquired a 70% equity interest in a four-clinic physical therapy practice for approximately $6.0 million, with $5.4 million paid in cash[263] - The company acquired a 70% equity interest in a single clinic physical therapy practice for approximately $7.8 million, with $7.4 million paid in cash[264] - The company acquired a 70% equity interest in a five-clinic practice for approximately $2.1 million, with $1.8 million paid in cash[265] Interest Rate Management - The company has an interest rate swap agreement with a notional value of $150 million, effective from June 30, 2022, which has generated $2.3 million in interest savings since inception[261] - The fair value of the redeemable non-controlling interest was $174.7 million as of September 30, 2023[274] - The company did not purchase any shares of common stock during the three and nine months ended September 30, 2023[277]