U.S. Physical Therapy(US:USPH)2022-08-08 16:38Financial Performance - For the second quarter of 2022, the company reported a net income of $11.2 million, a decrease of 9.0% from $12.4 million in the same period of 2021[183]. - Total revenue for the second quarter of 2022 was $140.7 million, representing a 10.8% increase compared to $126.9 million in the second quarter of 2021[192]. - Revenue from physical therapy operations increased by $4.9 million, or 4.3%, to $119.1 million for the second quarter of 2022 from $114.2 million for the same period in 2021[192]. - Revenue from the industrial injury prevention services business surged 93.7% to $19.4 million in the second quarter of 2022 compared to $10.0 million in the second quarter of 2021[195]. - The company's Operating Results for the second quarter of 2022 was $11.7 million, or $0.90 per diluted share, compared to $12.4 million, or $0.96 per diluted share, in the second quarter of 2021[184]. - Net operating revenue for the first six months of 2022 was $272.4 million, an increase of 13.8% from $239.3 million in the same period of 2021[213]. - Revenue from industrial injury prevention services surged 92.1% to $38.5 million in the first six months of 2022 compared to $20.0 million in 2021[216]. - Operating income for Q2 2022 was $20.1 million, representing 14.3% of total revenue, down from $22.2 million or 17.5% in Q2 2021[206]. - Operating income for the 2022 Six Months was $35.1 million, which is 12.9% of total revenue, down from $37.3 million or 15.6% in the 2021 Six Months[228]. Patient Metrics - The average net patient revenue per visit decreased to $103.18 in the second quarter of 2022 from $104.46 in the second quarter of 2021[193]. - Total patient visits increased by 5.7% to 1,145,554 in the second quarter of 2022 compared to 1,084,070 in the same period of 2021[193]. - Total patient visits increased by 8.7% to 2,209,073 in the first six months of 2022 from 2,031,858 in the same period of 2021[214]. - Average net patient revenue per visit was $103.09 for the first six months of 2022, down from $104.58 in the same period of 2021[214]. Operating Costs - Total operating cost for Q2 2022 was $109.8 million, representing 78.1% of total revenue, up from $92.6 million or 73.0% in Q2 2021[197]. - Total operating cost for the 2022 Six Months was $215.0 million, representing 78.9% of total revenue, compared to $179.1 million or 74.8% for the 2021 Six Months[219]. - Salaries and related costs for physical therapy operations increased to $66.7 million in Q2 2022, accounting for 56.1% of physical therapy operations revenue, compared to 53.1% in Q2 2021[198]. - Salaries and related costs were 56.9% of net revenue for the 2022 Six Months, up from 55.4% in the 2021 Six Months, with physical therapy operations salaries at $129.2 million[220]. - Corporate office costs decreased to $10.7 million in Q2 2022, representing 7.6% of total revenue, down from 9.5% in Q2 2021[205]. Profitability - Gross profit for Q2 2022 decreased to $30.8 million, a decline of 10.2% from $34.3 million in Q2 2021, with a gross profit percentage of 21.9% compared to 27.0%[204]. - Gross profit for the 2022 Six Months was $57.4 million, a decrease of $2.8 million or approximately 4.6% from $60.2 million in the 2021 Six Months, with a gross profit percentage of 21.1%[226]. Tax and Legal Matters - The provision for income tax was $4.2 million in Q2 2022, with an effective tax rate of 27.5%, slightly up from 26.9% in Q2 2021[209]. - Provision for income tax was $7.7 million for the 2022 Six Months, with an effective tax rate of 27.9%, compared to $7.5 million and 26.7% for the 2021 Six Months[231]. - The company is involved in various legal actions and regulatory audits that could potentially have a material adverse effect on its business and financial position[278]. - The company may face qui tam lawsuits under the federal False Claims Act, which can involve significant monetary damages and penalties[279]. Acquisitions and Growth Strategy - The company expects to continue adding personnel to support growth and potential acquisitions[182]. - The company completed acquisitions of four multi-clinic practices and two industrial injury services businesses during the 2021 year and the first half of 2022[175]. - The company plans to continue developing new clinics and making additional acquisitions, funded through a combination of cash and financing[254]. - The company acquired a 70% interest in a six-clinic physical therapy practice for approximately $11.5 million, with $11.2 million paid in cash and $0.3 million as a note payable[245]. - A 75% interest in a three-clinic physical therapy practice was acquired for about $3.7 million, with $3.5 million in cash and $0.2 million as a note payable[246]. - The company secured a $150 million term loan facility, amortizing at rates of 0.625% for the first two years, 1.250% for the third and fourth years, and 1.875% in the fifth year[247]. - An acquisition of a leading provider of industrial injury prevention services was made for approximately $63.2 million, generating annual revenue of about $27.0 million at a 20% margin[248]. - The company acquired a company specializing in return-to-work services for approximately $3.3 million, with an annual revenue exceeding $2.0 million[249]. - A 65% interest in an eight-clinic physical therapy practice was purchased for about $10.3 million, with an additional contingent payment of up to $0.8 million based on future operational objectives[250]. Financial Position and Credit Facilities - Cash and cash equivalents increased by $20.4 million from December 31, 2021, to June 30, 2022, totaling $48.6 million[235]. - The company entered into a Third Amended and Restated Credit Agreement providing for loans of $325 million, maturing on June 17, 2027[236]. - The interest rate for the Senior Credit Facilities is currently 4.665%[240]. - The provision for credit losses as a percentage of net revenue was 1.0% in the 2022 Second Quarter, down from 1.1% in the comparable period in 2021[224]. - As of June 30, 2022, the balance on outstanding notes payable was $5.7 million, with interest rates ranging from 3.25% to 5.5% per annum[257]. - The company has accrued $7.9 million related to credit balances due to patients and payors, expected to be paid in the next twelve months[259]. Risk Management and Internal Controls - The company entered into an interest rate swap agreement with a notional value of $150 million, effective June 30, 2022, maturing on June 30, 2027, receiving 1-month SOFR and paying a fixed interest rate of 2.815% plus an additional margin[273]. - The interest rate swap is designated as a cash flow hedge, with unrealized gains and losses recorded in accumulated other comprehensive income (loss), net of tax[274]. - The company's management evaluated the effectiveness of disclosure controls and procedures, concluding they are designed to ensure timely and accurate reporting as required by the SEC[276]. - There have been no changes in internal control over financial reporting that materially affected the company's financial reporting during the covered period[277].