U.S. Physical Therapy(US:USPH)2020-11-08 20:41Financial Data and Key Metrics Changes - For Q3 2020, earnings per share from operating results excluding relief funds were $0.85, marking the most profitable quarter in the company's history, exceeding analyst expectations by 67% [10] - Revenue for the third quarter was $108.9 million, surpassing analyst consensus estimates by $5.4 million [10] - Operating income increased by 18.5% year-over-year to $19.9 million, with operating income as a percentage of revenue rising by 400 basis points to 18.3% [11] - Adjusted EBITDA was $19.9 million compared to $17 million a year ago, with a significant reduction in debt obligations by 41% from $51.1 million at year-end 2019 to $30.3 million at September 30, 2020 [11] Business Line Data and Key Metrics Changes - Gross profit grew by 11% in Q3 2020, with a gross profit margin of 27.9%, an improvement of 460 basis points compared to Q3 2019 [8] - Physical Therapy gross margin improved to 28%, a 410 basis point increase year-over-year, while the injury prevention business saw margins improve by 870 basis points to 28.6% [8] Market Data and Key Metrics Changes - Average visits per clinic per day increased from 21.8 in June to 27.1 in September, nearing pre-pandemic levels [6][7] - In September 2020, the average visits per day per clinic were 27.2, down from 28.2 in September 2019, indicating a recovery trend but still slightly below pre-COVID levels [22] Company Strategy and Development Direction - The company is focused on maintaining cost control while aiming for growth, with a development engine that is beginning to bear fruit, including new deals announced during the quarter [8] - The balance sheet is in a strong position, with over $100 million in unused availability under the credit line, positioning the company favorably for potential M&A opportunities [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate ongoing challenges, emphasizing the resilience and adaptability of the team [8] - There is optimism regarding the potential for M&A activity, with management noting that the current environment may present more opportunities due to competitors facing difficulties [48] Other Important Information - The company has permanently closed 40 clinics and reopened 30, with ongoing evaluations of clinic performance and potential closures based on market conditions [32][35] - Telehealth services have been integrated into the business model, providing flexibility for patients unable to visit clinics [42] Q&A Session Summary Question: Can you provide insights on the sustainability of the recent margin performance? - Management acknowledged that while margins have improved significantly, they are still assessing the sustainability of these changes as the business stabilizes post-pandemic [15] Question: What are the same-store sales trends? - Management did not generate same-store sales data for the second and third quarters, focusing instead on overall trends which have been improving [17] Question: How is the company positioned for M&A opportunities? - The company is in a strong financial position to pursue M&A, with management indicating that they are well-prepared to capitalize on potential acquisitions [25] Question: What is the impact of potential Medicare cuts on revenue? - Management indicated that while they are preparing budgets with and without the cuts, it is too early to speculate on the exact impact on revenues and earnings [68] Question: How are commercial insurance policies affected by Medicare reimbursement rates? - Most commercial insurance policies are negotiated separately and are not directly tied to Medicare rates, providing some insulation from potential cuts [67]