Houston, TX – U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention (“IIP”) services, recently reported results for the three months ended March 31, 2023 (“2023 First Quarter”).
First Quarter Results Summary
- Adjusted EBITDA, a non-Generally Accepted Accounting Principles (“GAAP”) measure, increased $1.0 million to $18.5 million for the 2023 First Quarter, an all-time high first quarter amount, from $17.5 million for the three months ended March 31, 2022 (“2022 First Quarter”). See pages 11 and 12 of this release for the definition and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure.
- Net income attributable to USPH’s shareholders, a GAAP measure, was $7.4 million for the 2023 First Quarter compared to $8.8 million for the 2022 First Quarter. The decrease in net income is primarily due to a $2.0 million increase in interest expense as a result of a higher effective interest rate as well as increased borrowings to fund acquisitions. In accordance with GAAP, the revaluation of non-controlling interest, net of taxes, is not included in net income but is charged directly to retained earnings; however, this change is included in the computation of earnings per diluted share. Earnings per diluted share, in accordance with GAAP, was $0.58 for the 2023 First Quarter as compared to $0.67 for the 2022 First Quarter.
- Operating income increased $2.0 million, or 13.1%, to $17.0 million in the 2023 First Quarter from $15.0 million in the 2022 First Quarter.
- Operating Results per diluted share, a non-GAAP measure, was $0.59 per diluted share for the 2023 First Quarter as compared to $0.65 for 2022 First Quarter, with the decrease primarily due to the increase in interest expense previously described. See pages 11 and 12 of this release for the definition and reconciliation of Operating Results per diluted share to the most directly comparable GAAP measure.
- Net patient revenue from physical therapy operations increased 15.6% to $126.6 million for the 2023 First Quarter from $109.5 million for the 2022 First Quarter.
- Average visits per clinic per day in the 2023 First Quarter was 29.8, an all-time high for the first quarter and the second highest average visits amount for any quarter in the Company’s history. Average visits per clinic per day was 27.9 in the 2022 First Quarter, which was the previous high average visits amount for a first quarter.
- Total patient visits increased 15.4% to 1,227,490 in the 2023 First Quarter from 1,063,519 in the 2022 First Quarter. Patient visits at our mature clinics increased 6.0% in the 2023 First Quarter as compared to the 2022 First Quarter.
- Net rate per patient visit increased to $103.12 in the 2023 First Quarter as compared to $103.00 in the 2022 First Quarter, despite a 2% reduction in Medicare rates at the beginning of 2023 and the discontinuance of 2% sequestration relief on Medicare rates which was present in the first quarter of 2022.
- The Company’s physical therapy operating margin was 21.0% in the 2023 First Quarter as compared to 20.0% in the 2022 First Quarter. Physical therapy average operating costs per patient visit decreased 1.1% to $81.97 per visit in the 2023 First Quarter from $83.09 in the 2022 First Quarter. Physical therapy salaries and related costs were $59.14 per visit in the 2023 First Quarter, a 0.7% increase from $58.74 in the 2022 First Quarter, and have sequentially decreased from $60.99 per visit in the third quarter of 2022 and $60.04 per visit in the fourth quarter of 2022.
- IIP services revenue was $19.4 million for the 2023 First Quarter compared to $19.1 million in the 2022 First Quarter. IIP services operating margin was 19.5% in the 2023 First Quarter as compared to 21.8% in the 2022 First Quarter.
- On February 28, 2023, the Company acquired 80.0% of the equity interest in a one-clinic physical therapy practice with the practice’s founder and owner retaining 20.0% of the interest. The business generates approximately $3.2 million in annual revenue and has approximately 27,000 patient visits per year. In addition, the Company opened seven clinics in the 2023 First Quarter. As of March 31, 2023, the Company operated 647 clinics compared to 601 clinics on March 31, 2022.
- The Company’s Board of Directors declared a quarterly dividend of $0.43 per share payable on June 9, 2023, to shareholders of record on May 18, 2023.
- Management reaffirms that it currently expects the Company’s Adjusted EBITDA for 2023 to be in the range of $75.0 million to $80.0 million. The earnings guidance represents projected Adjusted EBITDA from existing operations and excludes future acquisitions. See “Management Reaffirms 2023 Earnings Guidance” below for more information.
Management’s Comments
Chris Reading, Chief Executive Officer, said, “I am supremely proud of our team for the way they have focused on making a difference for our patients as well as our business. The inflationary environment in the second half of 2022 was extremely challenging, but our partners, staff, leadership, and support teams remained committed to making the necessary adjustments, allowing us to deliver record volumes in what is normally a slower quarter. Our staffing has improved markedly, and our turnover rate has continued to decline to better than pre-pandemic levels for licensed clinical staff. Development activity and related opportunities remain strong.”
Carey Hendrickson, Chief Financial Officer, said, “Our outstanding physical therapy volume in the first quarter, which is typically our seasonally lowest volume quarter of the year, combined with stabilizing expenses, resulted in the best Operating Results and Adjusted EBITDA for a first quarter in our history. Our physical therapy operating costs per visit declined in the first quarter from the higher levels we experienced in the third and fourth quarters of 2022 when we began to feel the effects of inflation, and were actually lower than in the first quarter of the prior year resulting in margin improvement year over year.”
The complete results release is available here: US Physical Therapy First Quarter 2023 Results