U.S. Physical Therapy(USPH) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 7.3% in Q1 2019 to $116.2 million, with PT operations revenue rising by 6.1% to $106.7 million due to a 4.7% increase in patient visits [11][12] - Operating income increased by 18.2% to $15.4 million, with operating income as a percentage of revenue rising by 130 basis points from 12% to 13.3% [12][13] - Adjusted EBITDA grew by 11.7% to $15.6 million, with adjusted EBITDA as a percentage of net revenue increasing by 50 basis points from 12.9% to 13.4% [14] Business Line Data and Key Metrics Changes - Same-store revenue for Physical Therapy increased by 4.7%, with gross profit percentage improving by 120 basis points [6][11] - Industrial injury prevention business revenue increased by 42% to $6.9 million, primarily driven by internal growth rather than acquisitions [11][12] - Gross profit for the industrial injury prevention business improved by 650 basis points compared to Q1 2018 [6] Market Data and Key Metrics Changes - Patient visits exceeded 1 million for the quarter, with average net rate per visit increasing to $106.49 from $105.15 [11] - Average visits per day in clinics increased from 25.7 to 26.9 [11] Company Strategy and Development Direction - The company is focused on margin expansion and cost control, with recent acquisitions aimed at enhancing service offerings and cross-selling opportunities [8][9] - The management expressed confidence in the growth potential of the industrial injury prevention segment, expecting margins to settle higher than those of Physical Therapy [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of adverse weather conditions on performance but expressed optimism about future growth as the weather improves [19] - The company plans to continue investing in its industrial injury prevention business, including hiring additional resources in accounting and technology [53] Other Important Information - The provision for income taxes decreased to 24.3% from 25.8% year-over-year [13] - The company reported exceptional net cash flow, allowing for a significant reduction in its credit line [14] Q&A Session Summary Question: Thoughts on same-store sales growth and weather impact - Management noted that despite poor weather conditions, the performance was strong, and they are optimistic about continuing this trend [19] Question: Pricing trends and expectations - The net rate was higher than budgeted, and while it fluctuates, it is expected to remain at a reasonable level [20][21] Question: Clinic count and growth expectations - Management indicated that clinic openings have been steady, with a focus on meaningful long-term benefits rather than just increasing numbers [28][29] Question: Industrial injury prevention business cross-sell opportunities - Integration between the physical therapy and injury prevention sides is beginning, with expectations for future growth from this collaboration [31][32] Question: Cost per visit trends and efficiency - Management highlighted challenges in managing part-time staff and labor market inflation but remains optimistic about maintaining cost efficiency [35][36] Question: Tax rate assumptions in guidance - The assumed tax rate for guidance was set at 26.5%, with variations in the first quarter due to restricted shares [48] Question: Payer mix for the quarter - The payer mix included 46.4% from insurance companies, 15.5% from Worker's Comp, and 29.4% from Medicare and Medicaid combined [49]