Nevada
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1-11151
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76-0364866
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(State or other jurisdiction
of incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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1300 West Sam Houston Parkway South,
Suite 300, Houston, Texas
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77042
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(Address of Principal Executive Offices)
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(Zip Code)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Exhibits
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Description of Exhibits
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Registrant's press release dated May 3, 2018 * |
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U.S. PHYSICAL THERAPY, INC.
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|||||
Dated: May 3, 2018
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By:
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/s/ LAWRANCE W. MCAFEE
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Lawrance W. McAfee
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||||
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Chief Financial Officer
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(duly authorized officer and principal financial and accounting officer)
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· | Net revenues increased $10.8 million or 11.0% from $97.6 million in the 2017 first quarter to $108.3 million in the 2018 first quarter, primarily due to a 7.4% increase in net patient revenues from the physical therapy operations, an increase of 20.4% in revenue from management contracts and an increase in the revenue from the industrial injury prevention business due to a full quarter of operations versus one month in the 2017 period. The industrial injury prevention business was acquired in March 2017. |
U.S. Physical Therapy Press Release
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Page 2
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May 3, 2018
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Net patient revenues from physical therapy operations increased approximately $6.9 million, or 7.4%, to $100.6 million in the 2018 first quarter from $93.7 million in the 2017 first quarter due to an increase in total patient visits of 7.2% from 892,000 to 956,000 and an increase in the average net patient revenue per visit to $105.15 from $105.04. Of the $6.9 million increase, $5.9 million related to clinics opened or acquired after March 31, 2017 (“New Clinics”) and an increase of $1.0 million in net patient revenues related to clinics opened or acquired prior to April 1, 2017 (“Mature Clinics”).
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| Revenue from management contracts was $2.2 million in the 2018 first quarter as compared to $1.9 million for the 2017 first quarter. The revenue from the industrial injury prevention business was $4.9 million for the 2018 first quarter compared to $1.5 million in the 2017 first quarter. Other revenue was $0.7 million in the 2018 first quarter and $0.5 million in the 2017 period. |
| Total operating costs were $85.1 million, or 78.6% of net revenues, in the 2018 first quarter as compared to $76.8 million, or 78.7% of net revenues, in the 2017 first quarter. The $8.3 million increase was attributable to $5.5 million in operating costs related to New Clinics, an increase of $2.8 million related to the industrial injury prevention business due to a full quarter of operations and an increase of $0.3 million related to management contracts while costs of Mature Clinics were reduced by $0.3 million. Total salaries and related costs, including those from New Clinics, were 57.5% of net revenue in the recent quarter versus 57.2% for the 2017 first quarter. Rent, supplies, contract labor and other costs as a percentage of net revenue were 20.1% for the recent quarter versus 20.6% for the 2017 first quarter. The provision for doubtful accounts as a percentage of net revenue was 1.0% for the 2018 first quarter as compared to 0.9% in the 2017 first quarter. |
| The gross profit for the 2018 first quarter grew by $2.5 million, or 11.9%, to $23.2 million, as compared to $20.7 million in the first quarter of 2017. The gross profit percentage was 21.4% of net revenue in the recent period as compared to 21.3% for the 2017 first quarter. The gross profit percentage for the Company’s physical therapy clinics was 21.9% in the recent quarter as compared to 21.5% in the 2017 first quarter. The gross profit percentage on management contracts was 13.8% in the 2018 first quarter as compared to 14.8% in the 2017 first quarter. The gross profit percentage for the industrial injury prevention business was 15.8% for the recent quarter as compared to 14.3% for the one month of operation in the 2017 period. |
| Corporate office costs were $10.2 million in the 2018 first quarter compared to $8.5 million in the 2017 first quarter. Corporate office costs were 9.4% of net revenues for the 2018 first quarter compared to 8.8% for the 2017 first quarter. |
| Operating income for the recent quarter increased 7.0% to $13.1 million as compared to $12.2 million in the 2017 first quarter. |
| The Company no longer has mandatorily redeemable non-controlling interest. See discussion following – Redeemable Non-Controlling Interests. |
| Interest expense – debt and other was $0.6 million in the 2018 first quarter and $0.4 million in the 2017 first quarter. |
· | The provision for income tax for the 2018 first quarter was $2.5 million and for the 2017 first quarter was $1.8 million both of which are inclusive of the reduction of $0.3 million and $0.8 million, respectively, for the excess tax benefit, which is a component of the provision for income taxes, related to equity compensation. The provision for income tax as a percentage of income before taxes less net income attributable to non-controlling interest was 25.8% and 27.3%, respectively, for the 2018 and 2017 first quarters. |
· | Net income attributable to non-controlling interests (permanent equity) was $1.2 million in the 2018 first quarter as compared to $1.2 million in the 2017 first quarter. Net income attributable to redeemable non-controlling interests (temporary equity) was $1.7 million in the 2018 first quarter. |
| Same store revenues for de novo and acquired clinics open for one year or more increased 1.9%. Visits increased 1.4% for de novo and acquired clinics open for one year or more and the same store net rate increased by approximately 0.5%. |
U.S. Physical Therapy Press Release
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Page 3
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May 3, 2018
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U.S. Physical Therapy Press Release
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Page 4
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May 3, 2018
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·
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changes as the result of government enacted national healthcare reform;
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·
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changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification status;
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·
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revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;
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·
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business and regulatory conditions including federal and state regulations;
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·
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governmental and other third party payor inspections, reviews, investigations and audits;
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·
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compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;
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·
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changes in reimbursement rates or payment methods from third party payors including government agencies and deductibles and co-pays owed by patients;
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·
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revenue and earnings expectations;
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·
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cost, risks and uncertainties associated with the Company's restatement of its prior financial statements due to the correction of its accounting methodology for redeemable non-controlling partnership interests, and including any pending and future claims or proceedings relating to such matters;
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·
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legal actions, which could subject us to increased operating costs and uninsured liabilities;
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·
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general economic conditions;
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·
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availability and cost of qualified physical therapists;
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·
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personnel productivity and retaining key personnel;
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·
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competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and other intangible assets;
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·
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acquisitions, purchase of non-controlling interests (minority interests) and the successful integration of the operations of the acquired businesses;
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·
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maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;
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·
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maintaining adequate internal controls;
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·
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maintaining necessary insurance coverage;
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·
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availability, terms, and use of capital; and
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·
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weather and other seasonal factors.
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U.S. Physical Therapy Press Release
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Page 5
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May 3, 2018
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Three Months Ended
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||||||||
March 31, 2018
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March 31, 2017
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|||||||
Net patient revenues
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$
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100,552
|
$
|
93,654
|
||||
Other revenues
|
7,790
|
3,911
|
||||||
Net revenues
|
108,342
|
97,565
|
||||||
Operating costs:
|
||||||||
Salaries and related costs
|
62,279
|
55,827
|
||||||
Rent, supplies, contract labor and other
|
21,776
|
20,087
|
||||||
Provision for doubtful accounts
|
1,061
|
898
|
||||||
Closure costs
|
12
|
6
|
||||||
Total operating costs
|
85,128
|
76,818
|
||||||
Gross profit
|
23,214
|
20,747
|
||||||
Corporate office costs
|
10,163
|
8,547
|
||||||
Operating income
|
13,051
|
12,200
|
||||||
Interest and other income, net
|
32
|
24
|
||||||
Interest expense:
|
||||||||
Mandatorily redeemable non-controlling interests - change in redemption value
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-
|
(2,669
|
)
|
|||||
Mandatorily redeemable non-controlling interests - earnings allocable
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-
|
(1,294
|
)
|
|||||
Debt and other
|
(553
|
)
|
(415
|
)
|
||||
Total interest expense
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(553
|
)
|
(4,378
|
)
|
||||
Income before taxes
|
12,530
|
7,846
|
||||||
Provision for income taxes
|
2,476
|
1,812
|
||||||
Net income
|
10,054
|
6,034
|
||||||
Less: net income attributable to non-controlling interests
|
(2,937
|
)
|
(1,218
|
)
|
||||
Net income attributable to USPH shareholders
|
$
|
7,117
|
$
|
4,816
|
||||
Basic and diluted earnings per share attributable to USPH shareholders
|
$
|
0.27
|
$
|
0.38
|
||||
Shares used in computation - basic and diluted
|
12,616
|
12,528
|
||||||
Dividends declared per common share
|
$
|
0.23
|
$
|
0.20
|
||||
U.S. Physical Therapy Press Release
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Page 6
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May 3, 2018
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March 31, 2018
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December 31, 2017
|
|||||||
ASSETS
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(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
19,813
|
$
|
21,933
|
||||
Patient accounts receivable, less allowance for doubtful accounts of $2,517 and $2,273, respectively
|
46,228
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44,707
|
||||||
Accounts receivable - other
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6,504
|
5,655
|
||||||
Other current assets
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3,050
|
4,786
|
||||||
Total current assets
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75,595
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77,081
|
||||||
Fixed assets:
|
||||||||
Furniture and equipment
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51,569
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51,100
|
||||||
Leasehold improvements
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29,981
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29,760
|
||||||
Fixed assets, gross
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81,550
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80,860
|
||||||
Less accumulated depreciation and amortization
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61,742
|
60,475
|
||||||
Fixed assets, net
|
19,808
|
20,385
|
||||||
Goodwill
|
273,770
|
271,338
|
||||||
Other identifiable intangible assets, net
|
47,092
|
48,954
|
||||||
Other assets
|
1,357
|
1,224
|
||||||
Total assets
|
$
|
417,622
|
$
|
418,982
|
||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, USPH SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS
|
||||||||
Current liabilities:
|
||||||||
Accounts payable - trade
|
$
|
1,722
|
$
|
2,165
|
||||
Accrued expenses
|
38,342
|
33,342
|
||||||
Current portion of notes payable
|
5,317
|
4,044
|
||||||
Total current liabilities
|
45,381
|
39,551
|
||||||
Notes payable, net of current portion
|
782
|
2,728
|
||||||
Revolving line of credit
|
42,000
|
54,000
|
||||||
Mandatorily redeemable non-controlling interests
|
-
|
327
|
||||||
Deferred taxes
|
10,151
|
10,875
|
||||||
Deferred rent
|
2,005
|
2,116
|
||||||
Other long-term liabilities
|
733
|
743
|
||||||
Total liabilities
|
101,052
|
110,340
|
||||||
Redeemable non-controlling interests
|
108,085
|
102,572
|
||||||
Commitments and contingencies
|
||||||||
U.S. Physical Therapy, Inc. ("USPH") shareholders' equity:
|
||||||||
Preferred stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding
|
-
|
-
|
||||||
Common stock, $.01 par value, 20,000,000 shares authorized, 14,884,676 and 14,809,299 shares issued, respectively
|
149
|
148
|
||||||
Additional paid-in capital
|
75,543
|
73,940
|
||||||
Retained earnings
|
162,907
|
162,406
|
||||||
Treasury stock at cost, 2,214,737 shares
|
(31,628
|
)
|
(31,628
|
)
|
||||
Total USPH shareholders' equity
|
206,971
|
204,866
|
||||||
Non-controlling interests
|
1,514
|
1,204
|
||||||
Total USPH shareholders' equity and non-controlling interests
|
208,485
|
206,070
|
||||||
Total liabilities, redeemable non-controlling interests, USPH shareholders' equity and non-controlling interests
|
$
|
417,622
|
$
|
418,982
|
U.S. Physical Therapy Press Release
|
Page 7
|
May 3, 2018
|
|
|
Three Months Ended
|
|||||||
|
March 31, 2018
|
March 31, 2017
|
||||||
OPERATING ACTIVITIES
|
||||||||
Net income including non-controlling interests
|
$
|
10,054
|
$
|
6,034
|
||||
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
2,468
|
2,356
|
||||||
Provision for doubtful accounts
|
1,061
|
898
|
||||||
Equity-based awards compensation expense
|
1,381
|
1,280
|
||||||
Loss on sale of fixed assets
|
54
|
33
|
||||||
Deferred income taxes
|
(1,162
|
)
|
(250
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Increase in patient accounts receivable
|
(2,782
|
)
|
(1,542
|
)
|
||||
Increase in accounts receivable - other
|
(849
|
)
|
(3,697
|
)
|
||||
(Increase) decrease in other assets
|
(1,238
|
)
|
757
|
|||||
Increase in accounts payable and accrued expenses
|
7,389
|
5,315
|
||||||
Increase in mandatorily redeemable non-controlling interests
|
-
|
2,911
|
||||||
(Decrease) increase in other liabilities
|
(845
|
)
|
76
|
|||||
Net cash provided by operating activities
|
15,531
|
14,171
|
||||||
|
||||||||
INVESTING ACTIVITIES
|
||||||||
Purchase of fixed assets
|
(1,404
|
)
|
(1,587
|
)
|
||||
Purchase of businesses, net of cash acquired
|
(761
|
)
|
(15,670
|
)
|
||||
Purchase of non-controlling interest
|
(246
|
)
|
-
|
|||||
Proceeds on sale of fixed assets
|
-
|
62
|
||||||
Net cash used in investing activities
|
(2,411
|
)
|
(17,195
|
)
|
||||
|
||||||||
FINANCING ACTIVITIES
|
||||||||
Distributions to non-controlling interests, permanent and temporary equity
|
(2,208
|
)
|
(937
|
)
|
||||
Proceeds from revolving line of credit
|
19,000
|
32,000
|
||||||
Payments on revolving line of credit
|
(31,000
|
)
|
(20,000
|
)
|
||||
Payments to settle mandatorily redeemable non-controlling interests
|
(265
|
)
|
(2,230
|
)
|
||||
Principal payments on notes payable
|
(823
|
)
|
(702
|
)
|
||||
Other
|
56
|
-
|
||||||
Net (cash used in) provided by financing activities
|
(15,240
|
)
|
8,131
|
|||||
|
||||||||
Net increase in cash and cash equivalents
|
(2,120
|
)
|
5,107
|
|||||
Cash and cash equivalents - beginning of period
|
21,933
|
20,047
|
||||||
Cash and cash equivalents - end of period
|
$
|
19,813
|
$
|
25,154
|
||||
|
||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes
|
$
|
2,941
|
$
|
86
|
||||
Interest
|
$
|
526
|
$
|
599
|
||||
Non-cash investing and financing transactions during the period:
|
||||||||
Purchase of business - seller financing portion
|
$
|
150
|
$
|
900
|
||||
|
U.S. Physical Therapy Press Release
|
Page 8
|
May 3, 2018
|
|
|
Three Months Ended March 31,
|
|||||||
|
2018
|
2017
|
||||||
Computation of earnings per share - USPH shareholders
|
||||||||
Net income attributable to USPH shareholders
|
$
|
7,117
|
$
|
4,816
|
||||
Charges to retained earnings:
|
||||||||
Revaluation of redeemable non-controlling interest
|
$
|
(5,081
|
)
|
$
|
-
|
|||
Tax effect at statutory rate (federal and state) of 26.25%
|
1,334
|
-
|
||||||
$
|
3,370
|
$
|
4,816
|
|||||
Basic and diluted per share
|
$
|
0.27
|
$
|
0.38
|
||||
|
||||||||
Adjustments:
|
||||||||
Interest expense MRNCI * - change in redemption value
|
-
|
2,669
|
||||||
Revaluation of redeemable non-controlling interest
|
5,081
|
-
|
||||||
Tax effect at statutory rate (federal and state) of 26.25% and 39.25%, respectively
|
(1,334
|
)
|
(1,048
|
)
|
||||
Operating results
|
$
|
7,117
|
$
|
6,437
|
||||
Basic and diluted operating results per share
|
$
|
0.56
|
$
|
0.51
|
||||
Shares used in computation:
|
||||||||
Basic and diluted
|
12,616
|
12,528
|
|
Three Months Ended March 31,
|
|||||||
|
2018
|
2017
|
||||||
|
||||||||
Net income attributable to USPH shareholders
|
$
|
7,117
|
$
|
4,816
|
||||
|
||||||||
Adjustments:
|
||||||||
Depreciation and amortization
|
2,468
|
2,356
|
||||||
Interest income
|
(32
|
)
|
(24
|
)
|
||||
Interest expense MRNCI * - change in redemption value
|
-
|
2,669
|
||||||
Interest expense - debt and other
|
553
|
415
|
||||||
Provision for income taxes
|
2,476
|
1,812
|
||||||
Equity-based awards compensation expense
|
1,381
|
1,280
|
||||||
|
||||||||
Adjusted EBITDA
|
$
|
13,963
|
$
|
13,324
|
U.S. Physical Therapy Press Release
|
Page 9
|
May 3, 2018
|
Date
|
Number of Clinics
|
March 31, 2017
|
558
|
June 30, 2017
|
566
|
September 30, 2017
|
569
|
December 31, 2017
|
578
|
March 31, 2018
|
580
|