U.S. Physical Therapy(USPH)2019-03-07 18:18Financial Data and Key Metrics Changes - For the fourth quarter, revenue increased by $8.1 million or 7.5% to $117 million, with patient revenues from physical therapy operations rising by 6.1% [10][11] - For the full year, revenue increased by 9.6% to $454 million, with physical therapy operations revenue growing by 7.3% to $417.7 million [12][14] - Operating income for the fourth quarter increased by 6% to $14.8 million, while for the full year, it rose by 10.2% to $60.3 million [10][14] - The gross profit for the fourth quarter grew by $1.1 million to $25.2 million, and for the full year, it increased by 12.2% or $11.1 million [10][14] - Adjusted EBITDA for the fourth quarter grew by 3.1% to $15.5 million, while for the full year, it increased by 7.1% to $62.1 million [15] Business Line Data and Key Metrics Changes - Revenue from the industrial injury prevention business increased almost 52% in the fourth quarter and nearly 71% for the full year [10][13] - Same-store revenue for de novo and acquired clinics open for a year or more increased by 3.9% in the fourth quarter, while visits increased by 3.2% [11] - The gross profit percentage for the industrial injury prevention business grew to 20.4% compared to 13.3% the previous year [14] Market Data and Key Metrics Changes - The payer mix in the fourth quarter was approximately 50% insurance, 14.4% workers' compensation, 28% Medicare and Medicaid combined, and around 8% other [51] - Medicare reimbursement saw a slight decline of 0.5% in 2018, with a modest increase expected for the current year [50] Company Strategy and Development Direction - The company remains committed to its physical therapy business and aims to attract excellent partners and leaders to enhance growth [7] - The integration of the Briotix acquisition has positioned the company to scale and expand its service offerings [6] - The company is focused on reducing administrative burdens and improving efficiency within the healthcare system [8][78] Management's Comments on Operating Environment and Future Outlook - Management expects operating results for 2019 to be in the range of $35.1 million to $36.4 million, with a conservative outlook due to weather impacts [16][65] - The company anticipates a steady operating cost structure in 2019, with no significant changes expected [36] - Management expressed optimism about the potential for organic growth and continued investment in the physical therapy business [39] Other Important Information - The company announced a 17.4% increase in its dividend for 2019, with the first quarterly dividend of $0.27 per share to be paid in April [17] - Cash flow from operations in 2018 was at a record level, fully funding clinic development and acquisitions while reducing net debt by $22.4 million or 58% [16] Q&A Session Summary Question: Guidance for 2019 and volume assumptions - Management expects net rate to remain flat and anticipates lower same-store growth compared to 2018 [20][25] Question: Bad debt expense increase - Bad debt for PT operations ran at about 1%, primarily due to the PG&E bankruptcy [26][28] Question: Wage pressure and salary increases - Management noted some wage pressure but indicated that strategic investments in key areas have led to volume growth [29][30] Question: Clinic openings and acquisitions - The company opened 23 new clinics and is actively pursuing further acquisitions in both PT and industrial injury prevention [40][39] Question: Payer mix and reimbursement pressures - Medicare had a modest increase, and the payer mix was detailed, with insurance being the largest segment [51][50] Question: Sales force and investment needs - The company plans to gradually add to its sales force as opportunities arise, maintaining separate teams for PT and industrial injury prevention [60][64] Question: CapEx for 2019 - Expected CapEx is around $5 million to $6 million, consistent with previous years [70][72]