Houston, TX – U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of outpatient physical therapy clinics, recently reported results for the quarter and nine months ended September 30, 2015. U.S. Physical Therapy’s net income attributable to common shareholders prior to revaluation of redeemable non-controlling interests, net of tax (“operating results”) increased 11.5% to $5.8 million for the third quarter of 2015 as compared to $5.2 million in the third quarter of 2014. Diluted earnings per share from operating results were $0.47 in the recent quarter as compared to $0.43 in the comparable 2014 period. U.S. Physical Therapy’s operating results for the first nine months of 2015 were $16.3 million, an increase of 2.6% as compared to $15.9 million in the first nine months of 2014. Diluted earnings per share from operating results were $1.32 in the first nine months of 2015 and $1.30 in the comparable 2014 period.
Third Quarter 2015 Compared to Third Quarter 2014
- Net revenues increased 8.1% from $77.7 million in the third quarter of 2014 to $84.0 million in the third quarter of 2015, due to an increase in total patient visits of 8.7% from 719,300 to 782,100 offset by a decrease in the average net revenue per visit to $105.04 for the 2015 third quarter from $105.92 for the 2014 third quarter. Net revenues for new clinics opened or acquired in the past 12 months was $5.4 million.
- Total clinic operating costs were $65.2 million, or 77.5% of net revenues, in the third quarter of 2015, as compared to $59.0 million, or 75.9% of net revenues, in the 2014 period. The increase was primarily attributable to $5.1 million in operating costs of new clinics opened or acquired in the past 12 months. Total clinic salaries and related costs, including those from new clinics, were 55.4% of net revenues in the recent quarter versus 53.8% in the 2014 period. Included in salaries and related costs in the 2015 quarter is $230,000 of compensation and severance costs for employee terminations as part of the Company’s previously announced cost-cutting plan. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.7% for both periods. The provision for doubtful accounts as a percentage of net revenues was 1.3% in 2015 period and 1.4% in the 2014 period.
- The gross margin for the third quarter of 2015 was $18.9 million or 22.5%, as compared to $18.8 million or 24.1% in the 2014 period. Corporate office costs were $6.9 million in the third quarter of 2015 as compared to $7.5 million in the 2014 third quarter. Corporate office costs were 8.2% of net revenues in the 2015 third quarter compared to 9.6% of net revenues in the 2014 period.
- Operating income for the recent quarter was $11.9 million compared to $11.3 million in the 2014 third quarter.
- Interest expense was $0.3 million in the third quarter of 2015 and $0.2 million in the third quarter of 2014.
- The provision for income taxes for the 2015 period was $3.7 million and for the 2014 period $3.6 million. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest was 38.6% in the 2015 third quarter and 41.0% in the 2014 third quarter. The 2015 third quarter includes an adjustment of the 2015 expected annual tax rate to 39.5% from 40.0% based on an analysis of the 2015 results inclusive of non-deductible tax items.
- Net income attributable to non-controlling interests was $2.2 million in both periods.
- The operating results for the three months ended September 30, 2015 was $5.8 million and $5.2 million in the 2014 period. Diluted earnings per share from operating results were $0.47 in the 2015 period and $0.43 in the 2014 period.
- Same store visits increased 3.3% for de novo and acquired clinics open for one year or more and same store revenue increased 2.5% as the average net rate per visit decreased by $0.84.
Nine Months 2015 Compared to Nine Months 2014
- Net revenues increased 8.4% from $225.7 million in the first nine months of 2014 to $244.6 million in the first nine month of 2015, due to an increase in total patient visits of 9.1% from 2,081,900 to 2,271,900 offset by a decrease in the average net revenue per visit to $105.38 for the current period of 2015 from $106.18 for the 2014 period. Net revenues from new clinics opened or acquired in the past 12 months was $10.3 million.
- Total clinic operating costs were $187.7 million, or 76.8% of net revenues, in the first nine months of 2015, as compared to $168.5 million, or 74.6% of net revenues, in the 2014 period. The increase includes $9.6 million in operating costs of new clinics opened or acquired in the past 12 months. Total clinic salaries and related costs, including those from new clinics, were 54.8% of net revenues in the first nine months versus 53.1% in the 2014 period. Included in salaries and related costs in the 2015 period is $230,000 of compensation and severance costs for employee terminations as part of the Company’s previously announced cost-cutting plan. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.6% in the recent period versus 20.2% in the 2014 period. The provision for doubtful accounts as a percentage of net revenues was 1.3% in the 2015 period and 1.4% in the 2014 period.
- The gross margin for the first nine months of 2015 was $56.9 million or 23.2%, as compared to $57.2 million or 25.4% in the 2014 period.
- Corporate office costs were $22.2 million in the first nine months of 2015 and in the 2014 period. Corporate office costs were 9.1% of net revenues in the 2015 first nine months as compared to 9.8% of net revenues in the 2014 period.
- Operating income for the first nine months of 2015 was $34.7 million compared to $35.0 million in the 2014 first nine months.
- Interest expense was $0.8 million in both periods.
- The provision for income taxes for the 2015 period was $10.6 million and for the 2014 period was $11.0 million. The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interest was 39.5% in the 2015 first nine months and 41.0% in the 2014 first nine months.
- Net income attributable to non-controlling interests was $7.0 million in the nine months of 2015 as compared to $7.3 million in the year earlier period.
- The operating results for the nine months ended September 30, 2015 was $16.3 million compared to $15.9 million in the nine months ended September 30, 2014. Diluted earnings per share from operating results were $1.32 in the 2015 and $1.30 in the 2014 period.
- Same store visits increased 4.0% for de novo and acquired clinics open for one year or more and same store revenue increased 3.5%. The average net rate per visit decreased by $0.54.
Chris Reading, Chief Executive Officer, said, “The Company’s total patient volume remains solid. In the third quarter we worked to better align staffing levels at some of our partnerships with their clinics’ average daily patient volumes. Our average net rate improved in the third quarter from the second quarter. Our newly acquired partnerships are doing well. Our organic de novo clinic openings have been strong these past few months and we are on track for another good development year overall.”
U.S. Physical Therapy Declares Quarterly Dividend
The fourth quarterly dividend of 2015 for $0.15 per share will be paid on December 4 to shareholders of record as of November 17.
The complete earnings release is available here: U.S. Physical Therapy Third Quarter and First Nine Months 2015 Results
Source: US Physical Therapy