Houston, TX -(BusinessWire)- U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of outpatient physical therapy clinics, recently reported results for the third quarter and nine months ended September 30, 2013.
U.S. Physical Therapy’s net income attributable to common shareholders from continuing operations for the three months ended September 30, 2013 was $4.7 million and diluted earnings per share from continuing operations were $0.38.
During the quarter ended September 30, 2013, the Company sold the remaining piece of its former Physician Services business, which is treated as a discontinued operation for financial reporting purposes. The results for the quarter include losses of $4.4 million, which represents the operational loss of the physician services business and write-down of its net assets, inclusive of intangible assets, less sale proceeds net of appropriate reserves. Net income attributable to common shareholders, inclusive of discontinued operations for the three month period, was $227,000, or $.02 per diluted share.
Net income from continuing operations attributable to common shareholders for the nine months ended September 30, 2013 was $13.6 million and diluted earnings per share from continuing operations were $1.12.
Net income attributable to common shareholders, inclusive of discontinued operations for the nine month period, was $8.9 million, or $.73 per diluted share. As further described above the results for the nine months include $4.7 million in losses from discontinued operations, which represents the operational loss of the physician services business and the write-down of its net assets.
Third Quarter 2013 Compared to Third Quarter 2012 from Continuing Operations (Unless Otherwise Noted)
- Net revenues increased 6.0% from $62,102,000 in the third quarter of 2012 to $65,829,000 in the third quarter of 2013, due to an increase in visits from 575,000 to 611,000 offset by a small decrease in the average net patient revenue per visit to $105.27 from $105.68 in the comparable 2012 period.
- Total clinic operating costs were $49,701,000, or 75.5% of net revenues, in the third quarter of 2013, as compared to $46,660,000, or 75.1% of net revenues, in the 2012 period. The increase was primarily attributable to $4,065,000 in operating costs of new clinics opened or acquired in the past 12 months offset by a reduction in operating costs of $1,024,000 for those clinics opened or acquired prior to the past 12 months. Clinic salaries and related costs were 54.3% of net revenues in the recent quarter versus 53.2% in the 2012 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 19.6% for the recent quarter versus 19.9% in the 2012 period. The provision for doubtful accounts as a percentage of net revenues was 1.7% for the 2013 period and 2.0% in the 2012 period.
- The gross margin for the third quarter of 2013 increased to $16,128,000 from $15,442,000 in the third quarter of 2012. The gross margin percentage was 24.5% for the 2013 quarter as compared to 24.9% for the comparable 2012 period.
- Corporate office costs were $6,224,000 in the third quarter of 2013 as compared to $5,907,000 in the 2012 third quarter. Corporate office costs were 9.5% of net revenues in both the 2013 and 2012 periods.
- Operating income for the recent quarter was $9,904,000 compared to $9,535,000 in the 2012 third quarter.
- Interest expense was $133,000 in the third quarter of 2013 versus $142,000 in the third quarter of last year.
- The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both periods.
- Net income attributable to non-controlling interests, inclusive of discontinued operations, was $2,032,000 in the recent quarter as compared to $1,735,000 in the year earlier period.
- Net income attributable to common shareholders for the three months ended September 30, 2013 was $4,659,000 compared to $4,622,000 for the three months ended September 30, 2012. Diluted earnings per share were $0.38 for both the 2013 and 2012 periods.
- Same store revenue for de novo and acquired clinics open for one year or more decreased 2.0% as and visits decreased by 1% and the average net rate was down slightly. Same store revenue and visits were adjusted to reflect the same number of days in each period as the 2013 period included 64 days of operations while the 2012 period included 63 days.
Nine Months 2013 Compared to Nine Months 2012 from Continuing Operations (Unless Otherwise Noted)
- Net revenues increased 4.4% from $187,270,000 in the first nine months of 2012 to $195,453,000 in the first nine months of 2013, due to an increase in visits from 1,740,000 to 1,803,000 and an increase in the average net patient revenue per visit to $105.96 from $105.23 in the comparable 2012 period.
- Total clinic operating costs were $146,890,000, or 75.2% of net revenues, in the first nine months of 2013, as compared to $138,739,000, or 74.1% of net revenues, in the 2012 period. The increase was primarily attributable to $7,943,000 in operating costs of new clinics opened or acquired in the past 12 months and a slight increase in operating costs of $208,000 for those clinics opened or acquired prior to the past 12 months. Clinic salaries and related costs were 53.9% of net revenues in the recent nine months versus 52.3% in the 2012 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 19.5% for the recent nine months versus 19.8% in the 2012 period. The provision for doubtful accounts as a percentage of net revenues was 1.7% for the 2013 period versus 1.9% in the 2012 period.
- Gross margin for the first nine months of 2013 was $48,563,000, or 24.8%, compared to $48,531,000, or 25.9%, for the comparable 2012 period.
- Corporate office costs were $19,165,000 in the 2013 nine months period as compared to $18,426,000 in the 2012 first nine months. Corporate office costs were 9.8% of net revenues in both the 2013 and 2012 periods.
- Operating income for the first nine months of 2013 was $29,398,000 compared to $30,105,000 in the 2012 first nine months.
- Interest expense was $398,000 in the first nine months of 2013 versus $449,000 in the first nine months of 2012.
- The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both periods.
- Net income attributable to common shareholders was $13,589,000 in the first nine months of 2013 as compared to $13,982,000 in the year earlier period. Diluted earnings per share was $1.12 for the nine month period of 2013 as compared to $1.18 for the 2012 period.
- Same store revenues, visits and net rate per visit for de novo and acquired clinics open for one year or more were flat.
Management Earnings Guidance
U.S. Physical Therapy’s management now expects the Company’s earnings from continuing operations for the year 2013 to be in the range of $17.2 million to $17.8 million in net income and $1.42 to $1.47 in diluted earnings per share. Results for 2013 have been adversely affected by the Federal government’s MPPR and sequestration reimbursement reductions for Medicare patients which it is estimated will impact the Company’s earnings from continuing operations this year by approximately $2.7 million or $.22 in diluted earnings per share. Management’s updated guidance range represents projected earnings from existing operations and excludes future potential acquisitions. The annual guidance figures will not be updated unless there is a material development that causes management to believe that earnings will be significantly outside the given range.
Chris Reading, Chief Executive Officer, said, “Our partners and management team have made progress in overcoming the effect of MPPR and sequestration although there is still work to be done. Additionally, patient visits in July and August were slightly lower than expected but visits picked up in September. We now expect our earnings for 2013 to fall a little short of 2012. We have completed three acquisitions year-to-date and are presently working on several others. Management believes that our continued internal and external development growth will position the Company well for 2014.”
U.S. Physical Therapy Declares Quarterly Dividend
The fourth quarterly dividend of 2013 for $.10 per share will be paid on December 6 to shareholders of record as of November 15.
The complete earnings release is available here: U. S. Physical Therapy Third Quarter and Nine Months 2013 Results (PDF)
Source: BusinessWire