U.S. Physical Therapy(USPH) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported operating results per share of $0.90, marking the second highest quarterly amount in its history [16] - Adjusted EBITDA for Q2 was $21.3 million, slightly down from $24 million in Q2 2021 [17] - Physical therapy revenues reached $119.1 million, an increase of $5 million or 4.3% from the previous year [20] - Gross profit was $30.8 million, down from $34.3 million in Q2 2021, with a gross profit margin of 21.9% [22] - Interest expense increased from $237,000 in Q2 2021 to $987,000 in Q2 2022 due to higher debt and interest rates [23] Business Line Data and Key Metrics Changes - Industrial injury prevention revenue reached an all-time high of $19.4 million, a 93.7% increase year-over-year [21] - Physical therapy patient volumes per day per clinic were 29.5, up from 27.9 in Q1 but slightly below the 30.0 in Q2 2021 [18] - Total visits increased by 5.7% from 1,084,070 in Q2 2021 to 1,145,554 in Q2 2022 [19] Market Data and Key Metrics Changes - The company experienced rising labor and ancillary costs due to the tight labor market and inflationary pressures [10] - The net rate for physical therapy operations was $103.18, down from $104.46 in Q2 2021, attributed to Medicare rate changes [19] Company Strategy and Development Direction - The company secured a new $325 million credit facility to enhance its borrowing capacity for long-term growth plans [9][25] - Investments were made in rate negotiations with payers and in the work comp area to improve recruitment and identify acquisition targets [11] - The company is focused on streamlining operations and improving efficiency, particularly in front desk operations [14][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising interest rates and inflation but expressed confidence in the company's resilience and ability to navigate these issues [5][10] - The company anticipates a return to normal seasonal patterns in patient volumes as schools reopen and vacations conclude [13][38] - Guidance for adjusted EBITDA for the full year is set between $73.5 million to $75.4 million, considering inflationary impacts [28] Other Important Information - The company is actively pursuing M&A opportunities, expecting to capitalize on the current market environment to acquire smaller providers facing financial pressures [61][69] - The company has a strong balance sheet, with cash on hand of $48.6 million and no amounts drawn on its revolver as of June 30 [25] Q&A Session Summary Question: Guidance and Volume Trends - Management discussed the impact of seasonal patterns on volumes, noting a decline in June but expecting a rebound as schools reopen [34][36] Question: Rate Negotiations - Management confirmed ongoing efforts to negotiate better rates with payers, with some recent successes expected to impact 2023 more than 2022 [41][42] Question: M&A Strategy - Management expressed confidence in pursuing M&A opportunities, highlighting the potential for consolidation in the industry due to economic pressures on smaller providers [60][69] Question: Labor and Wage Pressures - Management detailed the mix of labor availability and wage pressures, indicating that vacation-related absences are transitory while wage pressures are more persistent [51][52] Question: Economic Downturn Impact - Management reflected on past performance during economic downturns, indicating a strong position to navigate potential challenges ahead [72]