U.S. Physical Therapy(USPH) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue grew by 9.8% for the quarter, driven by strong same-store revenue growth of 5.4% in the physical therapy space and a 64% increase in revenue from the industrial injury prevention business [5][12] - Operating income for the quarter increased by 16.9% to $19.9 million, with operating income as a percentage of revenue rising by 90 basis points to 15.7% [15] - Gross profit for the second quarter grew by 15.7% to $31.4 million, with the gross profit percentage increasing by 130 basis points to 24.9% [14] Business Line Data and Key Metrics Changes - Revenue from physical therapy operations increased by 7% to $113.4 million, with patient visits rising by 6% to over 1.058 million [12] - Revenue from the industrial injury prevention business surged by 64% to $10.3 million, attributed to significant internal growth and an acquisition [12] - Same-store revenue for de novo and acquired clinics open for a year or more increased by 5.4%, with visits increasing by 4.6% [17] Market Data and Key Metrics Changes - The company reported a gross margin for the industrial injury prevention business that grew by 480 basis points to 29.2% [14] - Corporate office costs were 9.1% of revenue in the second quarter, compared to 8.8% the previous year [15] - The tax rate for the first half of the year was 25.8% [20] Company Strategy and Development Direction - The company plans to focus on internal growth through improvement in existing business and organic openings, with a busy second half of the year anticipated for de novo openings [10] - Management emphasized the importance of maintaining a partner-centric approach to expand talent pool and geographic reach [10] - The company is currently more focused on the physical therapy side for acquisitions, with ongoing integration of recent acquisitions [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong same-store growth, attributing it to effective collaboration among partners and staff [28] - The labor market is favorable for hiring physical therapists, which is expected to benefit the company in the long term [32] - The company raised its earnings guidance for 2019, now expecting operating results to be in the range of $36.6 million to $37.9 million [22] Other Important Information - The company announced a third-quarter dividend of $0.30 per share, representing a 30% increase from the previous year [23] - Adjusted EBITDA for the second quarter increased by 12.2% to $19.1 million, with a percentage of revenue increase of 30 basis points to 15.1% [21] Q&A Session Summary Question: What is driving the strong same-store growth? - Management noted that effective collaboration among partners and staff is key, with no new initiatives specifically driving the growth [28] Question: How is the company adapting to changes in home nursing rules? - Management indicated that they have not yet recognized any significant impact from changes in home nursing staffing models but are managing costs effectively [32] Question: Can you provide details on the recent divestiture of a partnership? - Management clarified that the divestiture did not affect quarterly metrics as it finalized at the end of the quarter, and it was an opportunity to focus on key market areas [33] Question: What is the outlook for the industrial injury prevention business? - Management highlighted that while there are opportunities for cross-selling, the industrial injury prevention business has not yet significantly impacted the core physical therapy business [42] Question: What are the company's plans for future acquisitions? - Management stated that there is a lot of activity on the physical therapy side for acquisitions, with a focus on digesting recent acquisitions before pursuing new opportunities [49]