Reports Record Quarterly Patient Volume
Company Provides 2025 Earnings Guidance
HOUSTON–(BUSINESS WIRE)–U.S. Physical Therapy, Inc. (“USPH” or the “Company”) (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of industrial injury prevention services, today reported results for the three months and year ended December 31, 2024.
FINANCIAL HIGHLIGHTS
Year Ended December 31, 2024 versus Year Ended December 31, 2023
- Adjusted EBITDA (1), a non-Generally Accepted Accounting Principles (“GAAP”) measure, was $81.8 million for the year ended December 31, 2024 (“2024 Year”), an increase of $3.9 million, from $77.9 million for the year ended December 31, 2023 (“2023 Year”).
- Operating Results (1), a non-GAAP measure, was $36.9 million for the 2024 Year, an increase of $0.5 million, from $36.4 million in the 2023 Year. On a per share basis, Operating Results were $2.45 in the 2024 Year compared to $2.57 in the 2023 Year due to the increase in the number of shares outstanding associated with the Company’s secondary offering completed in May 2023. In addition, the 2024 Year includes a $1.0 million true-up of income tax expense recorded during the three months ended December 31, 2024 (“2024 Fourth Quarter”).
- Net income attributable to USPH’s shareholders (“USPH Net Income”), a GAAP measure, was $31.4 million for the 2024 Year compared to $28.2 million for the 2023 Year. For the 2024 Year, USPH Net Income included a charge of $4.4 million (prior to allocation of the related minority interest and income taxes) related to the closure of 45 underperforming clinics, a non-cash charge of $2.4 million (prior to allocation of income taxes) related to the impairment of assets held for sale and a $1.0 million true-up of income tax expense. For the 2023 Year, USPH Net Income included a charge of $17.5 million (prior to the allocation of minority interest and income taxes) related to the impairment of goodwill and other intangible assets.
- In accordance with GAAP, the revaluation of noncontrolling 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 share. Earnings per share, was $1.84 for the 2024 Year compared to $1.28 for the 2023 Year.
Fourth Quarter Ended December 31, 2024 versus Fourth Quarter Ended December 31, 2023
- Non-GAAP Adjusted EBITDA (1) for the 2024 Fourth Quarter was $21.8 million compared to $19.0 million for the fourth quarter ended December 31, 2023 (“2023 Fourth Quarter”).
- Non-GAAP Operating Results (1) for the 2024 Fourth Quarter was $7.8 million, or $0.51 per share, compared to $8.9 million, or $0.59 per share, for the 2023 Fourth Quarter. The 2024 Fourth Quarter includes a $1.0 million true-up of income tax expense.
- USPH Net Income was $9.2 million for the 2024 Fourth Quarter compared to $0.7 million for the 2023 Fourth Quarter. For the 2024 Fourth Quarter, USPH Net Income included a charge of $0.2 million (prior to allocation of the related minority interest and income taxes) related to the closure of underperforming clinics, a non-cash charge of $2.4 million (prior to allocation of income taxes) related to the impairment of assets held for sale and a $1.0 million true-up of income tax expense. For the 2023 Fourth Quarter, USPH Net Income included a charge of $17.5 million (prior to the allocation of minority interest and income taxes) related to the impairment of goodwill and other intangible assets.
- In accordance with GAAP, the revaluation of redeemable 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 share. Earnings per share for the 2024 Fourth Quarter was $0.52 compared to net loss per share of $0.38 for the 2023 Fourth Quarter.
- Total revenue from physical therapy operations for the 2024 Fourth Quarter increased $19.2 million, or 14.2%, to $153.8 million.
- Net rate per patient visit for the 2024 Fourth Quarter increased to $104.73 from $103.68 for the 2023 Fourth Quarter, an increase of 1.0%, despite the 1.8% Medicare rate reduction which went into effect at the beginning of 2024 and the impact of acquisitions added during the quarter with net rates below the Company’s average net rate. The increase in net rate per patient visit reflects the Company’s strategic priority of increasing reimbursement rates through contract negotiations with commercial and other payors.
- Average daily patient visits per clinic was 31.7 for the 2024 Fourth Quarter, a record-high for a quarter in the Company’s history, compared to 29.9 in the comparable prior year quarter. Total patient visits were 1,432,801 in the 2024 Fourth Quarter, a 13.0% increase from the 2023 Fourth Quarter.
- Industrial injury prevention services (“IIP”) revenue was $26.6 million for the 2024 Fourth Quarter, an increase of 32.1% as compared to the 2023 Fourth Quarter. IIP gross profit was $4.9 million in the 2024 Fourth Quarter, an increase of $0.7 million, or 15.6%, from $4.3 million in the 2023 Fourth Quarter.
- During the 2024 Fourth Quarter, the Company added 70 clinics (through acquisition or denovos) and closed 2 clinics bringing its total owned and/or managed clinic count to 768 as of December 31, 2024, compared to 714 as of December 31, 2023.
- On October 31, 2024, the Company acquired a 50% equity interest in a management services organization that provides management and administrative services to 50 physical therapy clinics with the original owners retaining a 50% equity interest. Through its managed therapy providers, the acquired company currently generates approximately $64.0 million in annual revenue and approximately $12.0 million in annual EBITDA on a consolidated basis.
- On November 30, 2024, the Company acquired a 75% equity interest in an eight-clinic practice with the practice owners retaining a 25% equity interest. The business currently generates $6.5 million in annual revenues and 43,000 annual visits.
- The Company’s Board of Directors raised the Company’s quarterly dividend rate from $0.44 per share to $0.45 per share, effective immediately, and declared a quarterly dividend for the first quarter of 2025 at the higher rate. The dividend will be payable on April 11, 2025, to shareholders of record on March 14, 2025.
- Management currently expects the Company’s Adjusted EBITDA for 2025 to be in the range of $88 million to $93 million. See “Management Provides 2025 Guidance” below for more information.
| ___________________________ | ||
| (1) |
These are Non-GAAP Measures. See pages 13 to 15 of this release for the definition and reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Operating Results and other Non-GAAP measures to the most directly comparable GAAP measure. |
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MANAGEMENT’S COMMENTS
Chris Reading, Chief Executive Officer, said, “The past few years have been particularly challenging for our industry due in large part to the intersection and impact of Medicare reimbursement reductions done in sequence, and the rising cost of people and goods, impacted by inflation and exacerbated by a tight labor market. Despite those headwinds, our entire team has worked to find a way to grow in volume, rate, and ultimately in profit, although those results are certainly muted due to the cumulative Medicare reductions, which have been significant. As we near what we expect to be the end of these rate headwinds, we have found additional capabilities in terms of visit growth, new market expansions, positive commercial rate renegotiations and other initiatives we believe will deliver additional capacity and profitability in the future. We continue to work on the cost side of our business, which is largely people driven and, being a people-centric company, this has proven to be our greatest challenge and one where we are not (yet) satisfied with our result. To that end, we are piloting several initiatives which we believe could be impactful to our overall cost and labor efficiency while we continue more traditional efforts as well. We expect 2025 to be a solid growth year supported by these initiatives, a continued record demand for our services, further expected rate lift, and recent acquisitions in both physical therapy and our injury prevention business.”
2024 FOURTH QUARTER VERSUS 2023 FOURTH QUARTER
Additional supplemental tables of financial and performance metrics are presented on page 16 of this release.
Physical Therapy Operations
|
Three Months Ended |
|
Variance |
|
||||||||||||
|
December 31, |
|
December 31, |
|
$ |
|
% |
|
||||||||
|
(In thousands, except percentages) |
|||||||||||||||
|
Revenue related to: |
|
|
|
|
|
|
|
|
|||||||
|
Mature Clinics (1) |
$ |
126,129 |
|
$ |
122,235 |
|
$ |
3,894 |
|
3.2 |
% |
||||
|
Clinic additions (2) |
|
23,931 |
|
|
6,526 |
|
|
17,405 |
|
* |
(6) |
||||
|
Clinics sold or closed (3) |
|
– |
|
|
2,691 |
|
|
(2,691 |
) |
* |
(6) |
||||
|
Net patient revenue |
|
150,060 |
|
|
131,452 |
|
|
18,608 |
|
14.2 |
% |
||||
|
Other (4) |
|
3,747 |
|
|
3,177 |
|
|
570 |
|
17.9 |
% |
||||
|
Total |
|
153,807 |
|
|
134,629 |
|
|
19,178 |
|
14.2 |
% |
||||
|
Operating costs (4) |
|
126,214 |
|
|
108,380 |
|
|
17,834 |
|
16.5 |
% |
||||
|
Gross profit |
$ |
27,593 |
|
$ |
26,249 |
|
$ |
1,344 |
|
5.1 |
% |
||||
|
Financial and operating metrics (not in thousands): |
|||||||||||||||
|
Net rate per patient visit (1) |
$ |
104.73 |
|
$ |
103.68 |
|
$ |
1.05 |
|
1.0 |
% |
||||
|
Patient visits (1) |
|
1,432,801 |
|
|
1,267,842 |
|
|
164,959 |
|
13.0 |
% |
||||
|
Average daily visits per clinic (1) |
|
31.7 |
|
|
29.9 |
|
|
1.8 |
|
6.0 |
% |
||||
|
Gross margin |
|
17.9 |
% |
|
19.5 |
% |
|||||||||
|
Salaries and related costs per visit, clinics (5) |
$ |
63.00 |
|
$ |
59.72 |
|
$ |
3.28 |
|
5.5 |
% |
||||
|
Operating costs per visit, clinics (5) |
$ |
86.72 |
|
$ |
84.09 |
|
$ |
2.63 |
|
3.1 |
% |
||||
|
|
|||||||||||||||
|
(1) See Glossary of Terms – Revenue Metrics for definition. |
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|
(2) Includes 103 and 46 clinics added during the years ended December 31, 2024 and 2023, respectively. |
|||||||||||||||
|
(3) Includes 45 and 15 clinics closed during the years ended December 31, 2024 and 2023, respectively. |
|||||||||||||||
|
(4) Includes revenues and costs from management contracts. |
|||||||||||||||
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(5) Excludes costs from management contracts. |
|||||||||||||||
|
(6) Not meaningful. |
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Net revenue from physical therapy operations increased $19.2 million, or 14.2%, to $153.8 million for the 2024 Fourth Quarter from $134.6 million for the 2023 Fourth Quarter. This increase was due to the increase in visits from the 58 net new clinics added since the comparable prior year period, a 3.1% increase in visits at mature clinics and an increase in net rate per patient visit. The increase in net rate per patient visit was mainly driven by higher reimbursement rates from commercial and other payors as a result of contract negotiations.
Operating costs from physical therapy operations increased $17.8 million, or 16.5%, to $126.2 million in the 2024 Fourth from $108.4 million in the 2023 Fourth Quarter primarily driven by the 58 net new clinics added since the comparable prior year period. Salaries and related costs per visit was $63.00 in the 2024 Fourth Quarter compared to $59.72 in the 2023 Fourth Quarter while total operating costs per visit was $86.72 compared to $84.09 over the same periods, respectively.
Gross profit from physical therapy operations in the 2024 Fourth Quarter increased $1.3 million, or 5.1%, to $27.6 million from $26.2 million in the 2023 Fourth Quarter while gross profit margin was 17.9% compared to 19.5% over the same periods, respectively.
Industrial Injury Prevention Services
|
Three Months Ended |
|
Variance |
|||||||||||
|
December 31, 2024 |
|
December 31, 2023 |
|
$ |
|
% |
|||||||
|
(In thousands, except percentages) |
|||||||||||||
|
Net revenue |
$ |
26,639 |
|
$ |
20,172 |
|
$ |
6,467 |
32.1 |
% |
|||
|
Operating costs |
|
21,705 |
|
|
15,905 |
|
|
5,800 |
36.5 |
% |
|||
|
Gross profit |
$ |
4,934 |
|
$ |
4,267 |
|
$ |
667 |
15.6 |
% |
|||
|
Gross margin |
|
18.5 |
% |
|
21.2 |
% |
|||||||
IIP revenues increased $6.5 million, or 32.1%, to $26.6 million for the 2024 Fourth Quarter as compared to $20.2 million for the 2023 Fourth Quarter. Excluding the Company’s IIP acquisitions during the years 2023 and 2024, IIP revenues increased 18.5%. Gross profit from IIP operations in the 2024 Fourth Quarter increased $0.7 million, or 15.6%, to $4.9 million from $4.3 million in the 2023 Fourth Quarter. The gross profit margin from IIP operations was 18.5% in the 2024 Fourth Quarter compared to 21.2% in the 2023 Fourth Quarter.
Corporate Office and Other Expenses
Corporate office costs were $15.6 million, or 8.6% of net revenue, in the 2024 Fourth Quarter compared to $13.9 million, or 9.0% of revenue in the 2023 Fourth Quarter.
A non-cash impairment charge of $2.4 million was recognized during the 2024 Fourth Quarter related to the impairment of assets held for sale, while $17.5 million of a non-cash impairment charge was recognized during the 2023 Fourth Quarter related to a reporting unit in the Company’s IIP segment.
Operating income was $14.5 million for the 2024 Fourth Quarter compared to an operating loss of $0.9 million for the 2023 Fourth Quarter. Excluding the non-cash impairment charges and clinic closure costs, adjusted operating income (1), was $17.2 million in the 2024 Fourth Quarter compared to $16.6 million in the 2023 Fourth Quarter.
Interest expense was $2.0 million for both the 2024 Fourth Quarter and the 2023 Fourth Quarter. The interest rate on the Company’s credit facility was 4.8% for the 2024 Fourth Quarter and 4.7% for the 2023 Fourth Quarter, with an all-in effective interest rate including all associated costs, of 5.5% and 5.4% over the same periods, respectively.
Interest income from investing excess cash (primarily proceeds from the secondary offering sale of the Company’s stock completed in May 2023) in a high-yield savings account decreased to $0.3 million during the 2024 Fourth Quarter from $1.6 million in the 2023 Fourth Quarter due to a lower cash balance as a result of cash used for business acquisitions.
The Company revalued contingent and put-right liabilities related to certain acquisitions and recognized a net gain (a decrease in the related liabilities) of $5.2 million in the 2024 Fourth Quarter compared to $1.2 million in the 2023 Fourth Quarter.
The provision for income taxes was $5.8 million in the 2024 Fourth Quarter compared to $1.4 million in the 2023 Fourth Quarter. The 2024 Fourth Quarter includes a $1.0 million true-up of income tax expense.
| ___________________________ | ||
| (1) |
These are Non-GAAP Measures. See pages 13 to 15 of this release for the definition and reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Operating Results and other Non-GAAP measures to the most directly comparable GAAP measure. |
|
USPH Net Income and Non-GAAP Measures
Net income attributable to non-controlling interest (temporary and permanent) was $3.3 million in the 2024 Fourth Quarter compared to net loss attributable to non-controlling interest of $1.9 million in the 2023 Fourth Quarter.
USPH Net Income was $9.2 million for the 2024 Fourth Quarter compared to $0.7 million for the 2023 Fourth Quarter. For the 2024 Fourth Quarter, USPH Net Income included a charge of $0.2 million (prior to allocation of the related minority interest and income taxes) related to the closure of underperforming clinics, a non-cash charge of $2.4 million (prior to allocation of income taxes) related to the impairment of assets held for sale and a $1.0 million true-up of income tax expense. For the 2023 Fourth Quarter, USPH Net Income included a charge of $17.5 million (prior to the allocation of minority interest and income taxes) related to the impairment of goodwill and other intangible assets.
In accordance with GAAP, the revaluation of redeemable 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 share. Earnings per share for the 2024 Fourth Quarter was $0.52 compared to net loss per share of $0.38 for the 2023 Fourth Quarter.
Non-GAAP Adjusted EBITDA (1) was $21.8 million for the 2024 Fourth Quarter, an increase of $2.8 million, from $19.0 million for the 2023 Fourth Quarter. Non-GAAP Operating Results (1) was $7.8 million, or $0.51 per share, in the 2024 Fourth Quarter, a decrease of $1.2 million, or $0.08 per share, as compared to $8.9 million, or $0.59 per share, in the 2023 Fourth Quarter.
| ___________________________ | ||
| (1) |
These are Non-GAAP Measures. See pages 13 to 15 of this release for the definition and reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Operating Results and other Non-GAAP measures to the most directly comparable GAAP measure. |
|
2024 YEAR VERSUS 2023 YEAR
Total net revenue for the 2024 Year increased $66.5 million, or 11.0%, to $671.3 million from $604.8 million for the 2023 Year while operating costs increased $64.1 million, or 13.3%, to $547.4 million from $483.3 million over the same periods, respectively. Gross profit, which included $4.4 million of costs associated with the 45 clinic closures, was $123.9 million, or 18.5% of net revenue, during the 2024 Year compared to $121.5 million, or 20.1% of net revenue, for the 2023 Year. Excluding the clinic closure costs, Adjusted gross profit (1) for the 2024 Year was $128.3 million, or 19.1% of net revenue, compared to $121.7 million, or 20.1% of net revenue, for the 2023 Year.
Revenues from physical therapy operations increased $47.9 million, or 9.1%, to $574.4 million in the 2024 Year compared to $526.5 million in the 2023 Year. This increase was primarily due to the increase in volume from the 58 net clinics added since the comparable prior year period, a 1.5% increase in visits at mature clinics and an increase in net rate per patient visit to $104.71 for the 2024 Year from $102.80 for the 2023 Year. Gross profit from physical therapy operations, which included $4.4 million of costs associated with the 45 clinic closures, was $103.9 million, or 18.1% of net revenue, for the 2024 Year compared to $105.1 million, or 20.0% of net revenue, for the 2023 Year. Excluding the clinic closure costs, adjusted physical therapy gross profit (1) was $108.3 million, or 18.9% of net revenue, in the 2024 Year compared to $105.2 million, or 20.0% of net revenue, in the 2023 Year.
Revenues from IIP increased $18.7 million, or 23.8%, to $96.9 million for the 2024 Year from $78.3 million for the 2023 Year. Gross profit from IIP operations increased $3.5 million, or 21.5%, to $20.0 million for the 2024 Year from $16.4 million for the 2023 Year while the gross profit margin from IIP operations was 20.6% for the 2024 Year compared to 21.0% for the 2023 Year.
Corporate office costs were $58.3 million, or 8.7% of net revenue, in the 2024 Year, compared to $52.0 million, or 8.6% of net revenue, in the 2023 Year.
A non-cash impairment charge of $2.4 million was recognized during the 2024 Year related to the impairment of assets held for sale while $17.5 million of non-cash impairment charge was recognized during the 2023 Year related to a reporting unit in the Company’s IIP segment.
Operating income was $63.2 million for the 2024 Year compared to $52.1 million for the 2023 Year. Excluding the clinic closure costs and non-cash impairment charges, adjusted operating income (1) was $70.0 million during the 2024 Year compared to $69.7 million during the 2023 Year.
Other expenses were $3.0 million in the 2024 Year compared to $2.7 million in the 2023 Year, with the increase primarily due to increased net expense related to the fair value adjustments of certain contingent earn-out consideration and a put liability partially offset by lower interest expense as a result of lower outstanding borrowings and higher interest income from investing excess cash associated with proceeds from the Company’s secondary offering completed in May 2023.
The provision for income tax was $14.6 million for the 2024 Year and $12.2 million for the 2023 Year while the effective tax rate was 31.7% and 30.1% over the same periods, respectively. The 2024 Year includes a $1.0 million true-up of income tax expense.
USPH Net Income was $31.4 million for the 2024 Year compared to $28.2 million for the 2023 Year. For the 2024 Year, USPH Net Income included a charge of $4.4 million (prior to allocation of the related minority interest and income taxes) related to the closure of 45 underperforming clinics, a non-cash charge of $2.4 million (prior to allocation of income taxes) related to the impairment of assets held for sale and a $1.0 million true-up of income tax expense. For the 2023 Year, USPH Net Income included a charge of $17.5 million (prior to the allocation of minority interest and income taxes) related to the impairment of goodwill and other intangible assets.
In accordance with GAAP, the revaluation of noncontrolling 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 share. Earnings per share, was $1.84 for the 2024 Year compared to $1.28 for the 2023 Year.
Non-GAAP Adjusted EBITDA (1) was $81.8 million for the 2024 Year, an increase of $3.9 million, from $77.9 million for the 2023 Year. Non-GAAP Operating Results (1) was $36.9 million for the 2024 Year, an increase of $0.5 million, from $36.4 million for the 2023 Year. On a per share basis, Operating Results (1) decreased to $2.45 for the 2024 Year from $2.57 for the 2023 Year due to the increase in the number of shares outstanding associated with the Company’s secondary offering completed in May 2023 and a $1.0 million true-up of income tax expense.
For additional information on 2024 Year results, please refer to the Company’s Annual Report on Form 10-K which is expected to be filed with the Securities and Exchange Commission on March 3, 2025.
|
___________________________ |
||
| (1) |
These are Non-GAAP Measures. See pages 13 to 15 of this release for the definition and reconciliation of Non-GAAP Adjusted EBITDA, Non-GAAP Operating Results and other Non-GAAP measures to the most directly comparable GAAP measure. |
|
BALANCE SHEET AND CASH FLOW
Total cash and cash equivalents were $41.4 million as of December 31, 2024, compared to $152.8 million at December 31, 2023, with the decrease primarily related to cash used for acquisitions during the 2024 Year. Additionally, the Company had $151.6 million of outstanding borrowings and $164.0 million in available credit under its credit facilities as of December 31, 2024, compared to $144.4 million of outstanding borrowings and $175.0 million in available credit under its credit facilities as of December 31, 2023.
RECENT ACQUISITIONS
On October 31, 2024, the Company acquired a 50% equity interest in a management services organization that provides management and administrative services to 50 physical therapy clinics with the owners retaining a 50% equity interest. Through its managed therapy providers, the acquired company currently generates approximately $64.0 million in annual revenue and approximately $12.0 million in annual EBITDA on a consolidated basis.
On November 30, 2024, the Company acquired a 75% equity interest in an eight-clinic practice with the practice owners retaining a 25% equity interest. The business currently generates $6.5 million in annual revenues and 43,000 annual visits.
The Company’s strategy is to continue acquiring multi-clinic outpatient physical therapy practices, to develop outpatient physical therapy clinics as satellites in existing partnerships and to continue acquiring companies that provide industrial injury prevention services.
QUARTERLY DIVIDEND
The Company’s Board of Directors increased the Company’s quarterly dividend on February 25, 2025, from $0.44 per share to $0.45 per share. The Board of Directors subsequently declared a quarterly dividend of $0.45 per share payable on April 11, 2025, to shareholders of record on March 14, 2025.
2025 EARNINGS GUIDANCE
Management expects the Company’s Adjusted EBITDA for 2025 to be in the range of $88 million to $93 million. As in previous years, we expect the first quarter to be the lowest quarter for EBITDA, approximately 20% of full year EBITDA, due to normal seasonal factors.
Contacts
U.S. Physical Therapy, Inc.
Carey Hendrickson, Chief Financial Officer
email: chendrickson@usph.com
Chris Reading, Chief Executive Officer
(713) 297-7000
Three Part Advisors
Joe Noyons
(817) 778-8424
