U.S. Physical Therapy(US:USPH)2023-02-23 21:52Financial Data and Key Metrics Changes - The company reported total revenue of $553.1 million for 2022, an increase of 11.7% from $495 million in 2021 [14] - Adjusted EBITDA for Q4 2022 was $17.9 million, up 2.8% from $17.4 million in Q4 2021 [13] - Operating results for Q4 2022 were $0.58 per share, with a full-year result of $2.70 per share [14] - Interest expense increased significantly from $191,000 in Q4 2021 to $2.2 million in Q4 2022 due to higher debt and interest rates [22] Business Line Data and Key Metrics Changes - Physical therapy revenues for Q4 2022 were $121 million, a 6% increase from the previous year [18] - Industrial injury prevention (IIP) revenues reached $18.9 million in Q4 2022, a 37.6% increase year-over-year [19] - IIP revenue for the full year increased by 75.5%, with operating income up 49.3% [19] Market Data and Key Metrics Changes - The average visits per clinic per day were 29.1 for Q4 2022, marking the second-highest volume in the company's history [15] - The net rate for physical therapy operations improved to $104.28 in Q4 2022, up from $103.53 in Q4 2021 [15][17] - The company experienced a slight decrease in physical therapy operating costs per visit, down $1.09 from Q3 2022 [18] Company Strategy and Development Direction - The company is focusing on renegotiating contracts with payers to ensure fair compensation for services, including dropping low-margin contracts [8][9] - There is an ongoing strategy to expand through acquisitions, with five acquisitions completed in 2022 and plans for further development in 2023 [10][11] - The company aims to leverage automation in operations to improve efficiency and reduce costs, particularly in front office functions [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong volume momentum and expects adjusted EBITDA to be in the range of $75 million to $80 million in 2023 [25] - The company anticipates challenges from a 2% Medicare rate reduction and the phase-out of sequestration relief, impacting revenue by approximately $44.3 million in 2023 [24] - Management noted improvements in staffing and hiring, indicating a better position entering 2023 compared to the previous year [29] Other Important Information - The company recorded a $9.1 million impairment related to an acquisition in the industrial injury prevention sector [21] - Corporate office costs as a percentage of revenue remained stable at 8.4% in Q4 2022, compared to 8.3% in Q4 2021 [20] - The company increased its quarterly dividend rate from $0.41 to $0.43 per share [23] Q&A Session Summary Question: Market share opportunities amidst competitor struggles - Management acknowledged that tough operating environments affect providers differently and noted opportunities to acquire distressed assets [27] Question: Labor market challenges and hiring - Management indicated improvements in hiring qualified candidates and a reduction in time to fill positions, although labor pressures remain [29][30] Question: Volume growth expectations for 2023 - Management expressed confidence in volume growth for 2023, citing strong early performance and improvements in staffing [34][35] Question: Pricing negotiations with payers - Management is focused on renegotiating contracts to ensure fair compensation and is prepared to opt out of low-margin contracts [40][42] Question: Acquisition strategy and leverage - Management is open to increasing leverage for the right deals but emphasizes the importance of smart deal-making [38][39] Question: Progress with GPO and partner engagement - Management reported positive reception of the GPO rollout, set to go live at 180 locations [48]