ATI Physical Therapy(ATIP) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net operating revenue for Q2 2022 was $163.3 million, essentially flat compared to $164 million in Q2 2021 [21] - Net patient revenue increased by 1% year-over-year to $148.5 million, driven by higher volumes but partially offset by a lower rate per visit [21] - Adjusted EBITDA for the quarter was $5.4 million, a decrease from $24 million in the same quarter last year, reflecting the impact of a tight labor market and higher costs [27] Business Line Data and Key Metrics Changes - Visits per day per clinic increased to 24.2, up 1.3 visits from 22.9 in Q1 2022, driven by higher labor productivity [21][22] - The provider productivity metric rose to 9.1 visits per day per clinical FTE, an increase from 8.5 in Q1 2022 [10][17] - The annualized clinician turnover rate increased to 37% in Q2 2022, up from 28% in Q1 2022, indicating challenges in staff retention [18] Market Data and Key Metrics Changes - The company reported a 50% year-over-year growth in its Texas pilot program for workers' compensation and auto personal injury programs [14] - Referrals for ATI services are at approximately 90% to 96% of pre-COVID levels, indicating a recovery in demand [36] Company Strategy and Development Direction - The company is focused on three key areas: pipeline, provider productivity, and provider base, which are critical for near-term growth [9] - A comprehensive location review is underway to assess return on investment and inform future investment decisions [13][74] - The company plans to open approximately 35 new clinics in 2022, having already opened 22 year-to-date [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a tight labor market, which has constrained the ability to meet patient volume projections [11][12] - The revised guidance for 2022 reflects anticipated impacts from the labor market, with revenue guidance adjusted to $635 million to $655 million [28][30] - Management remains optimistic about the company's future, emphasizing the importance of overcoming labor challenges to drive growth [15][78] Other Important Information - The company has made strides in launching technologies to improve treatment plans and clinical outcomes [8] - The company received an exceptional rating under the Merit-based Incentive Payment System for the third consecutive year [19] Q&A Session Summary Question: What is the source of the increase in referrals? - The majority of referrals are from traditional sources, with a mix of existing and new relationships, currently at about 90% to 96% of pre-COVID levels [36] Question: Is the goal to increase visits per day per clinic to the high 20s? - The focus is on adding clinicians to meet demand, which would help achieve higher visit rates [37][40] Question: What is the impact of contract labor on costs? - The reliance on contractors has increased costs per visit by approximately 15%, and contractor wages are about 60% higher than full-time PT salaries [45] Question: Are there any covenant issues with the revised guidance? - There are no covenant issues, and the company expects to maintain liquidity above the required levels [68] Question: What has been learned in the past 100 days? - The company has a strong culture and demand for services, with a focus on improving provider recruitment and retention strategies [76][82]