U.S. Physical Therapy(USPH) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2020, the company's net earnings from operating results were $10.9 million or $0.85 per share, including CARES Relief Funds, compared to $10.3 million or $0.81 a year ago [19] - Revenue for the second quarter was $83.9 million, down from $126.4 million a year ago, with physical therapy operations revenue at approximately $72.3 million versus $113.4 million in Q2 2019 [20] - Total operating costs, excluding closure costs, were $64.5 million, a 32% reduction compared to the second quarter last year [21] - Adjusted EBITDA was $19 million compared to $24.9 million in the second quarter last year [23] Business Line Data and Key Metrics Changes - The gross profit for physical therapy management contracts increased to 26.9% in Q2 2020 from 15.4% a year ago [22] - The industrial injury prevention business revenue was $9.7 million, down slightly from $10.3 million in Q2 2019, but gross margins improved significantly [20][14] Market Data and Key Metrics Changes - By the end of July, patient visits improved from the 70s into the mid-80s percentage of pre-COVID volumes [11] - The company experienced a peak drop to approximately 45% of pre-COVID volume in early April, but volumes have since stabilized and improved [9][11] Company Strategy and Development Direction - The company has focused on cost control and operational efficiency during the pandemic, reducing people-related costs by an estimated 38% [8] - Telehealth services were implemented rapidly and are expected to remain a part of the care offering [10] - The company aims to maintain a close alignment between volume and cost as it gradually brings back staff [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and emphasized the importance of partnerships during the pandemic [27] - The company anticipates that some costs will return as volumes grow, but expects improved margins compared to pre-COVID levels [28] - Management acknowledged the uncertainty regarding the full recovery of patient volumes but remains optimistic about ongoing improvements [32] Other Important Information - The company has $44 million in cash on its balance sheet, which is $20 million higher than six months ago [23] - The company has temporarily closed 30 clinics, most of which have since reopened [48] Q&A Session Summary Question: What have you learned from the cost rollback efforts? - Management learned they can mobilize quickly and efficiently, and that they were operating with some unnecessary costs [27] Question: What drove the decrease in revenue per patient? - The decrease was attributed to a lower percentage of Medicare and Medicaid patients and an increase in units per visit [30] Question: How do you view the potential for recovery in patient visits? - Management expects to return to pre-COVID levels but acknowledges that some patients may not return until a vaccine is available [32] Question: How has the competitive landscape changed during the pandemic? - The company has benefited from competitors struggling to cope with the pandemic, allowing for quicker recovery [45] Question: What impact will the proposed 9% cut to physical therapy rates have? - Management is preparing for the potential cut but believes they can manage through it as they have in the past [50]