U.S. Physical Therapy(US:USPH)2022-11-06 02:58Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2022 was reported at $17 million with operating results per share of $0.58 [24] - Physical therapy revenues reached $117.5 million, an increase of $4.4 million or 3.9% from Q3 2021 [31] - Total salaries and related costs were 58.6% of revenues compared to 56% in the same quarter last year [18] - Interest expense increased from $268,000 in Q3 2021 to $2 million in Q3 2022 due to higher debt and interest rates [36] Business Line Data and Key Metrics Changes - Patient visits per clinic per day averaged 28.8% in Q3 2022, with a 2.8% increase from the prior year quarter [13][26] - Injury prevention revenue reached an all-time high of $20.2 million, a 92.1% increase compared to Q3 2021 [33] - Gross profit for the injury prevention business increased 64.6% year-over-year [17] Market Data and Key Metrics Changes - The payer mix for the quarter included 45.7% commercial insurance, 34.4% Medicare, 4.1% Medicaid, and 9.5% workers' compensation [81] - The average rate for physical therapy operations was $104.1, up from $102.93 in Q3 2021 [29] Company Strategy and Development Direction - The company is focused on reducing administrative burdens and ensuring an adequate supply of therapists to meet the needs of an aging population [5] - There is an ongoing effort to negotiate better payer contracts, with early signs of progress noted [49][50] - The company is actively pursuing acquisitions and has announced a recent acquisition of 14 clinics, indicating a strategy for growth [85] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to inflation and labor costs but expressed confidence in strong volumes and rates [25][44] - The company expects full-year results to be within previous guidance ranges despite elevated costs [44] - Management is optimistic about the potential for improved reimbursement rates and is actively working on legislative efforts to support this [76][79] Other Important Information - The company has a strong balance sheet with $150 million in term loans and a $175 million revolving credit facility, providing flexibility for growth opportunities [39][41] - Corporate office costs decreased to $11.9 million, down from $12.9 million in Q3 2021 [34] Q&A Session Summary Question: Is the recent rate growth a sign of progress in negotiating better rates with payers? - Management indicated that it is early progress and that there is still much work to be done on this front [49][50] Question: How are discussions with acquisition targets evolving in the current environment? - Management noted that conversations have not changed significantly, but the environment has shifted, and multiples may need to adjust [52][53] Question: What is the current situation regarding clinician turnover and recruitment? - Management reported improvements in recruitment efforts and noted that while it is not easy, the situation is feeling better than a few months ago [56][57] Question: Can you quantify the impact of cost control efforts and the outlook for contract labor costs? - Management acknowledged that contract labor will continue to be a factor and that cost control efforts are ongoing but will take time to fully implement [62][63] Question: What is the leverage ratio the company aims to maintain regarding acquisitions? - Management stated that they aim to stay below a leverage ratio of 3x, currently operating around 6x [67][68] Question: What is the current view on reimbursement rates for 2023? - Management expressed hope for rational reimbursement approaches and indicated ongoing efforts to advocate for better rates [74][76]