Houston, TX – 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, 2014. U.S. Physical Therapy’s net income attributable to common shareholders from continuing operations for the third quarter of 2014 increased by 12.0% to $5.2 million as compared to approximately $4.7 million in the third quarter of 2013. Diluted earnings per share from continuing operations rose to $.43 in the recent quarter as compared to $.38 in the comparable 2013 period. U.S. Physical Therapy’s net income attributable to common shareholders from continuing operations for the first nine months of 2014 increased by 16.8% to $15.9 million as compared to approximately $13.6 million in the first nine months of 2013. Diluted earnings per share from continuing operations rose to $1.30 in the recent period as compared to $1.12 in the comparable 2013 period.
Third Quarter 2014 Compared to Third Quarter 2013 from Continuing Operations
Net revenues increased 18.1% from $65.8 million in the third quarter of 2013 to $7.7 million in the third quarter of 2014, due to an increase in patient visits of 17.6% from 61,40 to 719,30 and an increase in the average net revenue per visit to $105.92 from $105.27.
Total clinic operating costs were $59.0 million, or 75.9% of net revenues, in the third quarter of 2014, as compared to $49.7 million, or 75.5% of net revenues, in the 2013 period. Total clinic salaries and related costs, including that from new clinics, were 53.8% of net revenues in the recent quarter versus 54.3% in the 2013 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.7% for the recent quarter versus 19.6% in the 2013 period. The provision for doubtful accounts as a percentage of net revenues was 1.4% for the 2014 period and 1.7% in the 2013 period.
The gross margin for the third quarter of 2014 increased by 16.2% to $18.7 million from $16.1 million in the third quarter of 2013. The gross margin percentage was 24.1% for the 2014 period versus 24.5% in the 2013 period.
Corporate office costs were $7.4 million in the third quarter of 2014 as compared to $6.2 million in the 2013 third quarter. Corporate office costs as a percentage of net revenues were 9.6% for the period 2014 and 9.5% in the 2013 period.
Operating income for the recent quarter increased by 13.9% to $1.3 million compared to $9.9 million in the 2013 third quarter.
Interest expense was $0.2 million in the third quarter of 2014 versus $0.1 million in the third quarter of last year. The increase in interest expense is due to a higher average debt balance as the result of acquisitions.
The provision for income taxes for the 2014 period was $3.6 million and for the 2013 period $3.0 million. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest was 41.0% in the 2014 third quarter and 39.0% in the 2013 third quarter.
Net income attributable to non-controlling interests, inclusive of discontinued operations, was $2.2 million in the recent quarter as compared to $2.0 million in the year earlier period.
Net income attributable to common shareholders for the three months ended September 30, 2014 was $5.2 million compared to $4.7 million for the three months ended September 30, 2013. Diluted earnings per share from continuing operations were $.43 for the 2014 period and $.38 for the 2013 period.
Same store visits increased 4.9% for de novo and acquired clinics open for one year or more and same store revenue increased 4.5% as the average net rate per visit decreased by $.42.
First Nine Months 2014 Compared to First Nine Months 2013 from Continuing Operations
Net revenues increased 15.5% from $195.5 million in the first nine months of 2013 to $25.7 million in the first nine months of 2014, due to an increase in patient visits of 15.5% from 1,802,90 to 2,081,90 and a slight increase in the average net revenue per visit to $106.18 for the current period from $105.96 for the comparable 2013 period.
Total clinic operating costs were $168.5 million, or 74.6% of net revenues, in the first nine months of 2014, as compared to $146.9 million, or 75.2% of net revenues, in the 2013 period. Total clinic salaries and related costs were 53.1% of net revenues in the first nine months of 2014 versus 53.9% in the 2013 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.2% for the recent period versus 19.5% in the 2013 period. The provision for doubtful accounts as a percentage of net revenues was 1.4% for the 2014 period and 1.7% in the 2013 period.
The gross margin for the first nine months of 2014 increased by 17.8% to $57.2 million from $48.6 million in the first nine months of 2013. The gross margin percentage was 25.4% for the 2014 first nine months as compared to 24.8% for the comparable 2013 period.
Corporate office costs were $2.2 million in the first nine months of 2014 as compared to $19.2 million in the 2013 first nine months. Corporate office costs were 9.8% of net revenues in both periods.
Operating income for the first nine months of 2014 increased by 19.1% to $35.0 million compared to $29.4 milion in the 2013 first nine months.
Interest expense was $0.8 million in the first nine months of 2014 versus $0.4 million in the first nine months of last year. The increase in interest expense is due to a higher average outstanding debt balance as the result of acquisitions.
The provision for income taxes for the 2014 period was $1.0 million and for the 2013 period $8.8 million. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest was 41.0% in the 2014 first nine months and 38.9% in the 2013 first nine months.
Net income attributable to non-controlling interests, inclusive of discontinued operations, was $7.3 million in the first nine months of 2014 as compared to $6.4 million in the year earlier period.
Net income attributable to common shareholders for the nine months ended September 30, 2014 was $15.9 million compared to $13.6 million for the nine months ended September 30, 2013. Diluted earnings per share from continuing operations were $1.30 for the 2014 period and $1.12 for the 2013 period.
Same store visits increased 3.9% for de novo and acquired clinics open for one year or more and same store revenue increased 3.3% as the average net rate per visit decreased by $.65.
Chris Reading, Chief Executive Officer, said, “I remain grateful to our entire team for their continued efforts on behalf of our patients, referral sources and shareholders to deliver outstanding care and value. Despite having to deal with the summer vacation season, which is always a challenge, our clinics produced same store patient volume growth of 4.9% for the quarter which is well ahead of the same period last year and slightly ahead of the second quarter this year. Many of our legacy as well as acquired partnerships are delivering record results. Our Fit2WRK group continues to assist our partners in further expanding and diversifying their referral portfolios while providing superior outcomes to the companies and their employees we are privileged to serve. Additionally, we expect to see continued acquisition opportunities as a result of ongoing consolidation of our fragmented outpatient physical therapy industry.”
U.S. Physical Therapy Declares Quarterly Dividend
The fourth quarterly dividend of 2014 for $.12 per share will be paid on December 5 to shareholders of record as of November 17.
The complete earnings release is available here: U.S. Physical Therapy Third Quarter 2014 Results (PDF)
Source: USPh