Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Annual Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-39439 | |
Entity Registrant Name | ATI Physical Therapy, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-1408039 | |
Entity Address, Address Line One | 790 Remington Boulevard | |
Entity Address, City or Town | Bolingbrook | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60440 | |
City Area Code | 630 | |
Local Phone Number | 296-2223 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,395,617 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001815849 | |
Current Fiscal Year End Date | --12-31 | |
Common Class A | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value | |
Trading Symbol | ATIP | |
Security Exchange Name | NYSE | |
Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share | |
Trading Symbol | ATIPW |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Current assets: | |||
Cash and cash equivalents | $ 23,727 | $ 36,802 | |
Accounts receivable (net of allowance for doubtful accounts of $50,443 and $48,055 at March 31, 2024 and December 31, 2023, respectively) | 100,518 | 88,512 | |
Prepaid expenses | 10,515 | 12,920 | |
Insurance recovery receivable | 28,680 | 23,981 | |
Other current assets | 1,125 | 4,367 | |
Assets held for sale | 1,606 | 2,056 | |
Total current assets | 166,171 | 168,638 | |
Property and equipment, net | 93,815 | 100,422 | |
Operating lease right-of-use assets | 191,499 | 194,423 | |
Goodwill, net | 289,650 | 289,650 | |
Trade name and other intangible assets, net | 245,714 | 245,858 | |
Other non-current assets | 4,644 | 4,290 | |
Total assets | 991,493 | 1,003,281 | |
Current liabilities: | |||
Accounts payable | 10,860 | 14,704 | |
Accrued expenses and other liabilities | 76,205 | 88,435 | |
Current portion of operating lease liabilities | 51,339 | 51,530 | |
Liabilities held for sale | 1,319 | 1,778 | |
Total current liabilities | 139,723 | 156,447 | |
Long-term debt, net | [1] | 439,274 | 433,578 |
2L Notes due to related parties, at fair value | 95,615 | 79,472 | |
Deferred income tax liabilities | 21,233 | 21,367 | |
Operating lease liabilities | 181,975 | 185,602 | |
Other non-current liabilities | 2,063 | 2,277 | |
Total liabilities | 879,883 | 878,743 | |
Commitments and contingencies (Note 14) | |||
Mezzanine equity: | |||
Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; 0.2 million shares issued and outstanding; $1,286.53 stated value per share at March 31, 2024; $1,249.06 stated value per share at December 31, 2023 | 225,014 | 220,393 | |
Stockholders' equity: | |||
Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.5 million shares issued, 4.2 million shares outstanding at March 31, 2024; 4.2 million shares issued, 4.0 million shares outstanding at December 31, 2023 | 0 | 0 | |
Treasury stock, at cost, 0.085 million shares and 0.007 million shares at March 31, 2024 and December 31, 2023, respectively | (697) | (219) | |
Additional paid-in capital | 1,305,766 | 1,308,119 | |
Accumulated other comprehensive income | 266 | 406 | |
Accumulated deficit | (1,423,957) | (1,409,306) | |
Total ATI Physical Therapy, Inc. equity | (118,622) | (101,000) | |
Non-controlling interests | 5,218 | 5,145 | |
Total stockholders' equity | (113,404) | (95,855) | |
Total liabilities, mezzanine equity and stockholders' equity | $ 991,493 | $ 1,003,281 | |
[1] Includes $17.0 million of principal amount of debt due to related parties as of March 31, 2024 and December 31, 2023, respectively. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | |
Statement of Financial Position [Abstract] | |||
Allowance for doubtful accounts | $ 50,443 | $ 48,055 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Temporary Equity, Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | |
Temporary Equity, Preferred stock, shares issued (in shares) | 200,000 | 200,000 | |
Temporary Equity, Preferred stock, shares outstanding (in shares) | 200,000 | 200,000 | |
Preferred stock, stated value (in dollars per share) | $ 1,286.53 | $ 1,249.06 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized (in shares) | 470,000,000 | 470,000,000 | |
Common stock, shares Issued (in shares) | 4,500,000 | 4,200,000 | |
Common stock, shares outstanding (in shares) | 4,200,000 | 4,000,000 | |
Treasury stock (in shares) | 85,206 | 7,000 | |
Long-term debt, net | [1] | $ 439,274 | $ 433,578 |
Related Party | |||
Long-term debt, net | $ 17,000 | $ 17,000 | |
[1] Includes $17.0 million of principal amount of debt due to related parties as of March 31, 2024 and December 31, 2023, respectively. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Net revenue | $ 181,472 | $ 166,932 |
Cost of services: | ||
Salaries and related costs | 99,328 | 90,703 |
Rent, clinic supplies, contract labor and other | 55,261 | 52,878 |
Provision for doubtful accounts | 4,981 | 4,125 |
Total cost of services | 159,570 | 147,706 |
Selling, general and administrative expenses | 26,202 | 30,595 |
Goodwill, intangible and other asset impairment charges | 478 | 0 |
Operating loss | (4,778) | (11,369) |
Change in fair value of 2L Notes | (5,407) | 0 |
Change in fair value of warrant liability and contingent common shares liability | (103) | (511) |
Interest expense, net | 14,483 | 13,936 |
Other (income) expense, net | (94) | 354 |
Loss before taxes | (13,657) | (25,148) |
Income tax (benefit) expense | (134) | 62 |
Net loss | (13,523) | (25,210) |
Net income attributable to non-controlling interests | 1,128 | 1,060 |
Net loss attributable to ATI Physical Therapy, Inc. | (14,651) | (26,270) |
Less: Series A Senior Preferred Stock redemption value adjustments | (1,562) | 0 |
Less: Series A Senior Preferred Stock cumulative dividend | 6,183 | 5,303 |
Net loss available to common stockholders, diluted | (19,272) | (31,573) |
Net loss available to common stockholders, basic | $ (19,272) | $ (31,573) |
Loss per share of Class A common stock: | ||
Basic (in dollars per share) | $ (4.61) | $ (7.70) |
Diluted (in dollars per share) | $ (4.61) | $ (7.70) |
Weighted average shares outstanding: | ||
Basic (in shares) | 4,180 | 4,098 |
Diluted (in shares) | 4,180 | 4,098 |
Net patient revenue | ||
Net revenue | $ 165,407 | $ 150,754 |
Other revenue | ||
Net revenue | $ 16,065 | $ 16,178 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (13,523) | $ (25,210) |
Other comprehensive (loss) income: | ||
Cash flow hedges | (140) | (3,456) |
Comprehensive loss | (13,663) | (28,666) |
Net income attributable to non-controlling interests | 1,128 | 1,060 |
Comprehensive loss attributable to ATI Physical Therapy, Inc. | $ (14,791) | $ (29,726) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Non-Controlling Interests |
Beginning balance (in shares) at Dec. 31, 2022 | 3,967,146 | ||||||
Beginning balance at Dec. 31, 2022 | $ 48,447 | $ 0 | $ (146) | $ 1,378,716 | $ 4,899 | $ (1,339,511) | $ 4,489 |
Beginning balance (in shares) at Dec. 31, 2022 | 1,540 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of restricted shares distributed to holders of incentive common units (in shares) | 751 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 25,387 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (3,163) | 3,163 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (51) | $ (51) | |||||
Non-cash share-based compensation | 1,454 | 1,454 | |||||
Other comprehensive loss | (3,456) | (3,456) | |||||
Distribution to non-controlling interest holders | (710) | (710) | |||||
Net income attributable to non-controlling interests | 1,060 | 1,060 | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (26,270) | (26,270) | |||||
Ending balance (in shares) at Mar. 31, 2023 | 3,990,121 | ||||||
Ending balance at Mar. 31, 2023 | $ 20,474 | $ 0 | $ (197) | 1,380,170 | 1,443 | (1,365,781) | 4,839 |
Ending balance (in shares) at Mar. 31, 2023 | 4,703 | ||||||
Beginning balance (in shares) at Dec. 31, 2023 | 4,000,000 | 4,032,621 | |||||
Beginning balance at Dec. 31, 2023 | $ (95,855) | $ 0 | $ (219) | 1,308,119 | 406 | (1,409,306) | 5,145 |
Beginning balance (in shares) at Dec. 31, 2023 | 7,000 | 6,794 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Series A Senior Preferred Stock dividends and redemption value adjustments | $ (4,621) | (4,621) | |||||
Vesting of restricted shares distributed to holders of incentive common units (in shares) | 684 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 263,719 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | 78,412 | (78,412) | 78,412 | ||||
Tax withholdings related to net share settlement of restricted stock units and awards | $ (478) | $ (478) | |||||
Non-cash share-based compensation | 2,268 | 2,268 | |||||
Other comprehensive loss | (140) | (140) | |||||
Distribution to non-controlling interest holders | (1,055) | (1,055) | |||||
Net income attributable to non-controlling interests | 1,128 | 1,128 | |||||
Net loss attributable to ATI Physical Therapy, Inc. | $ (14,651) | (14,651) | |||||
Ending balance (in shares) at Mar. 31, 2024 | 4,200,000 | 4,218,612 | |||||
Ending balance at Mar. 31, 2024 | $ (113,404) | $ 0 | $ (697) | $ 1,305,766 | $ 266 | $ (1,423,957) | $ 5,218 |
Ending balance (in shares) at Mar. 31, 2024 | 85,206 | 85,206 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Operating activities: | |||
Net loss | $ (13,523) | $ (25,210) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Goodwill, intangible and other asset impairment charges | 478 | 0 | |
Depreciation and amortization | 8,883 | 9,691 | |
Provision for doubtful accounts | 4,981 | 4,125 | |
Deferred income tax provision | (134) | 62 | |
Non-cash lease expense related to right-of-use assets | 12,000 | 11,850 | |
Non-cash share-based compensation | 2,268 | 1,454 | |
Amortization of debt issuance costs and original issue discount | 710 | 838 | |
Non-cash interest expense | 0 | 1,736 | |
Loss on disposal and sale of assets | 16 | 489 | |
Change in fair value of 2L Notes | (5,407) | 0 | |
Change in fair value of warrant liability and contingent common shares liability | (103) | (511) | |
Change in fair value of non-designated derivative instrument | (351) | 0 | |
Changes in: | |||
Accounts receivable, net | (16,987) | (5,770) | |
Insurance recovery receivable | (4,699) | 0 | |
Prepaid expenses and other current assets | 2,315 | 4,073 | |
Other non-current assets | (354) | 33 | |
Accounts payable | (3,498) | (2,439) | |
Accrued expenses and other liabilities | (12,229) | (6,168) | |
Operating lease liabilities | (13,383) | (8,476) | |
Other non-current liabilities | (49) | (1) | |
Net cash used in operating activities | (39,066) | (14,224) | |
Investing activities: | |||
Purchases of property and equipment | (2,672) | (5,434) | |
Proceeds from sale of property and equipment | 96 | 0 | |
Proceeds from sale of clinics | 84 | 355 | |
Net cash used in investing activities | (2,492) | (5,079) | |
Financing activities: | |||
Proceeds from 2L Notes from related parties | 25,000 | 0 | |
Proceeds from revolving line of credit | 23,473 | 0 | |
Payments on revolving line of credit | (18,450) | 0 | |
Payment of contingent consideration liabilities | (7) | 0 | |
Taxes paid on behalf of employees for shares withheld | (478) | (51) | |
Distribution to non-controlling interest holders | (1,055) | (710) | |
Net cash provided by (used in) financing activities | 28,483 | (761) | |
Changes in cash and cash equivalents: | |||
Net decrease in cash and cash equivalents | (13,075) | (20,064) | |
Cash and cash equivalents at beginning of period | 36,802 | 83,139 | |
Cash and cash equivalents at end of period | 23,727 | 63,075 | |
Supplemental noncash disclosures: | |||
Derivative changes in fair value | [1] | 140 | 3,456 |
Purchases of property and equipment in accounts payable | 2,299 | 1,771 | |
Series A Senior Preferred Stock dividends and redemption value adjustments | 4,621 | 0 | |
Exchange of delayed draw right for related party 2L Notes | 3,450 | 0 | |
Other supplemental disclosures: | |||
Cash paid for interest | 14,174 | 9,563 | |
Cash received from hedging activities | 134 | 3,418 | |
Cash paid for taxes, net of refunds | $ 17 | $ 0 | |
[1] Derivative changes in fair value related to unrealized loss (gain) on cash flow hedges, including the impact of reclassifications. |
Overview of the Company
Overview of the Company | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview of the Company | Overview of the Company ATI Physical Therapy, Inc., together with its subsidiaries (herein referred to as “we,” "our," “the Company,” “ATI Physical Therapy” or “ATI”), is a nationally recognized healthcare company, specializing in outpatient rehabilitation and adjacent healthcare services. The Company provides outpatient physical therapy services under the name ATI Physical Therapy and, as of March 31, 2024, had 884 clinics located in 24 states (as well as 18 clinics under management service agreements). The Company was founded in 1996 under the name Assessment Technologies Inc. ATI Physical Therapy, Inc., a Delaware corporation, was organized in 2020 originally under the name Fortress Value Acquisition Corp. II (herein referred to as "FAII" or "FVAC"). The Company offers a variety of services within its clinics, including physical therapy to treat spine, shoulder, knee and neck injuries or pain; work injury rehabilitation services, including work conditioning and work hardening; hand therapy; and other specialized treatment services. |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Standards | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recent Accounting Standards | Basis of Presentation and Recent Accounting Standards Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years. Use of estimates The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change. Certain prior year amounts have been reclassified to conform to the current year presentation. The Company's unaudited condensed consolidated financial statements include its wholly-owned subsidiaries. All intercompany balances and accounts are eliminated in consolidation. For further information regarding the Company's accounting policies and other information, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024. Reverse Stock Split On June 14, 2023, the Company effected a one-for-fifty (1-for-50) reverse stock split of its Class A common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on June 13, 2023, and the final reverse split ratio was subsequently approved by the Company’s board of directors (the "Board") on June 14, 2023. The Company's common stock commenced trading on a reverse split-adjusted basis on June 15, 2023. As a result of the Reverse Stock Split, every fifty (50) shares of common stock either issued and outstanding or held as treasury stock were combined into one new share of common stock. Any fractional shares of common stock resulting from the Reverse Stock Split were rounded up to the nearest whole share. All outstanding securities entitling their holders to purchase or acquire shares of common stock, including stock options, warrants, Earnout Shares, Vesting Shares and shares of common stock subject to vesting were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. The Reverse Stock Split did not change the par value of the common stock or the number of shares authorized for issuance. All information included in these unaudited condensed consolidated financial statements and related notes has been adjusted, on a retrospective basis, to reflect the Reverse Stock Split . Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these unaudited condensed consolidated financial statements are issued. As of March 31, 2024, the Company had $23.7 million in cash and cash equivalents and no available capacity under its revolving credit facility. The Company was in compliance with its minimum liquidity covenant under the 2022 Credit Agreement (as defined in Note 8) as of March 31, 2024. The Company has continued to generate negative operating cash flows, operating losses and net losses. For the three months ended March 31, 2024, the Company had cash flows used in operating activities of $39.1 million, operating loss of $4.8 million and net loss of $13.5 million. These results are, in part, due to our current capital structure, including cash interest costs, and continuation of trends experienced by the Company in recent years including a tight labor market for available physical therapy and other healthcare providers in the workforce. The Company has continued to fund cash used in operations primarily from financing activities and expects to need additional liquidity to continue funding working capital requirements, necessary capital expenditures as well as to be available for general corporate purposes, including interest repayments. The Company is at risk of insufficient funding to meet its obligations as they become due as well as non-compliance with its minimum liquidity financial covenant under its 2022 Credit Agreement. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern. On June 15, 2023, the Company completed a debt restructuring transaction under its 2022 Credit Agreement including: (i) a delayed draw new money financing in an aggregate principal amount of $25.0 million, comprised of (A) second lien paid-in-kind convertible notes (the “2L Notes”) and (B) shares of Series B Preferred Stock (as defined in Note 8). The Company utilized the delayed draw of $25.0 million during the quarter. The Company plans to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. Future liquidity needs are expected to require additional sources of liquidity beyond operating results. Additional liquidity sources considered include but are not limited to: • raising additional debt and/or equity capital, • disposal of assets, and/or • other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment. Cash, cash equivalents and restricted cash Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, and our unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2024 and March 31, 2023 was $0.8 million. Recent accounting pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which provides guidance to improve the disclosures for reportable segments through enhanced disclosures about significant segment expenses. This ASU is effective for the Company's annual financial statements to be issued for the year ended December 31, 2024, and the Company's interim financial statements during the year ended December 31, 2025, with early adoption permitted. This ASU shall be applied on a retrospective basis for all prior periods presented in the financial statements. The Company expects to adopt this new accounting standard in its Annual Report on Form 10-K for the year ended December 31, 2024, and does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which provides guidance to improve the disclosures for income taxes primarily through enhanced rate reconciliation and income taxes paid disclosures. This ASU is effective for the Company's annual financial statements to be issued for the year ended December 31, 2025, with early adoption permitted, and shall be applied on a prospective basis. The Company expects to adopt this new accounting standard in its Annual Report on Form 10-K for the year ended December 31, 2025, and does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. |
Divestitures
Divestitures | 3 Months Ended |
Mar. 31, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Clinics held for sale During the fourth quarter of 2023, the Company classified the assets and liabilities of certain clinics as held for sale as a result of the Company's decision to sell the clinics. The divestiture transactions are anticipated to be completed within twelve months. The clinics did not meet the criteria to be classified as discontinued operations. During the first quarter of 2024, the Company completed a portion of its anticipated divestiture transactions, which were immaterial. Major classes of assets and liabilities classified as held for sale as of March 31, 2024 and December 31, 2023 were as follows (in thousands): March 31, 2024 December 31, 2023 Property and equipment, net 646 674 Operating lease right-of-use assets 960 1,382 Total assets held for sale $ 1,606 $ 2,056 Current portion of operating lease liabilities 261 357 Operating lease liabilities 1,058 1,421 Total liabilities held for sale $ 1,319 $ 1,778 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table disaggregates net revenue by major service line for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Net patient revenue $ 165,407 $ 150,754 ATI Worksite Solutions (1) 9,331 9,201 Management Service Agreements (1) 3,733 3,725 Sports Medicine and other revenue (1) 3,001 3,252 $ 181,472 $ 166,932 (1) ATI Worksite Solutions, Management Service Agreements and Sports Medicine and other revenue are included within other revenue on the face of the unaudited condensed consolidated statements of operations. The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below: Three Months Ended March 31, 2024 March 31, 2023 Commercial 58.5 % 58.1 % Government 21.8 % 23.6 % Workers’ compensation 12.2 % 12.0 % Other (1) 7.5 % 6.3 % 100.0 % 100.0 % (1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement. |
Goodwill, Trade Name and Other
Goodwill, Trade Name and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Trade Name and Other Intangible Assets | Goodwill, Trade Name and Other Intangible Assets Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands): Goodwill at December 31, 2023 (1) $ 289,650 Impairment charges (2) — Goodwill at March 31, 2024 (1) $ 289,650 (1) Net of accumulated impairment losses of $1,045.7 million. (2) The Company did not note any triggering events during the three months ended March 31, 2024 that resulted in the recording of an impairment loss. The table below summarizes the Company’s carrying amount of trade name and other intangible assets at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,940) (1,807) Accumulated amortization – other intangible assets (381) (370) Total trade name and other intangible assets, net $ 245,714 $ 245,858 (1) Not subject to amortization. Amortization expense for the three months ended March 31, 2024 and 2023 was immaterial. The Company estimates that amortization expense related to intangible assets will be immaterial over the next five fiscal years and thereafter. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Equipment $ 37,993 $ 37,980 Furniture and fixtures 14,414 14,311 Leasehold improvements 178,350 178,888 Automobiles — 4 Computer equipment and software 111,006 108,749 Construction-in-progress 918 2,134 342,681 342,066 Accumulated depreciation and amortization (248,866) (241,644) Property and equipment, net (1) $ 93,815 $ 100,422 (1) Excludes $0.6 million and $0.7 million reclassified as held for sale as of March 31, 2024 and December 31, 2023, respectively. Refer to Note 3 - Divestitures for additional information. The following table presents the amount of depreciation and amortization expense related to property and equipment recorded in rent, clinic supplies, contract labor and other and selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Rent, clinic supplies, contract labor and other $ 6,006 $ 6,458 Selling, general and administrative expenses 2,733 3,049 Total depreciation expense $ 8,739 $ 9,507 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Salaries and related costs $ 17,822 $ 37,630 Accrued legal settlement (1) 27,608 21,324 Credit balances due to patients and payors 8,188 7,712 Accrued interest 4,834 4,913 Accrued professional fees 3,938 4,146 Accrued occupancy costs 2,738 2,593 Accrued contract labor 2,452 2,255 Other payables and accrued expenses 8,625 7,862 Total $ 76,205 $ 88,435 (1) Includes estimated liability of $26.5 million and $20.0 million related to settlement agreement in principle as of March 31, 2024 and December 31, 2023, respectively. Refer to Note 14 - Commitments and Contingencies for additional information. |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Long-term debt, net consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Senior Secured Term Loan (1, 2) (due February 24, 2028) $ 410,048 $ 410,048 Revolving Loans (3) (due February 24, 2027) 43,473 38,450 Less: unamortized debt issuance costs (7,062) (7,395) Less: unamortized original issue discount (7,185) (7,525) Total debt, net 439,274 433,578 Less: current portion of long-term debt — — Long-term debt, net $ 439,274 $ 433,578 (1) Interest rate of 12.7% at both March 31, 2024 and December 31, 2023, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 13.9% at both March 31, 2024 and December 31, 2023. (2) As of both March 31, 2024 and December 31, 2023, the Company has paid $10.0 million of its interest in-kind on its Senior Secured Term Loan by capitalizing and adding such interest to the principal amount of the debt. (3) Weighted average interest rate of 9.5% at both March 31, 2024 and December 31, 2023, with interest payable in designated installments at a variable interest rate. 2L Notes due to related parties, at fair value consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 2L Notes due to related parties, at fair value $ 95,615 $ 79,472 2023 Debt Restructuring Transaction On June 15, 2023 (the "Closing Date"), the Company completed a debt restructuring transaction to improve the Company's liquidity (the "2023 Debt Restructuring"). On the Closing Date, certain previously executed agreements became effective, including (i) Amendment No. 2 to the Credit Agreement, (ii) a Second Lien Note Purchase Agreement and (iii) certain other definitive agreements relating to the 2023 Debt Restructuring. As part of the 2023 Debt Restructuring, the Company exchanged a principal amount of $100.0 million of the $507.8 million then outstanding Senior Secured Term Loan for an equal amount of 2L Notes, which are convertible into shares of the Company's common stock, stapled with a number of shares of Series B Preferred Stock (the "Series B Preferred Stock"), which represent voting interests only. The exchange was consummated through the Intercreditor and Subordination Agreement and Second Lien Note Purchase Agreement dated April 17, 2023 (the "Signing Date"). The Company accounted for the exchange as a debt extinguishment and recognized $0.4 million in loss on debt extinguishment during the year ended December 31, 2023. The loss on debt extinguishment consisted of various offsetting components, including the derecognition of $4.3 million of unamortized deferred financing costs and original issue discount on the Senior Secured Term Loan and the recognition of $0.7 million of fair value premium at issuance on the 2L Notes, offset by the recognition of $2.8 million in delayed draw right assets related to the commitment provided by certain lenders and the recognition of $1.8 million of incremental original issue discount on the Senior Secured Term Loan. The loss on debt extinguishment associated with the 2023 Debt Restructuring has been reflected in other expense, net in the consolidated statements of operations. Amendment No. 2 to the Credit Agreement Pursuant to Amendment No. 2 to the Credit Agreement, the terms of the remaining unexchanged $407.8 million principal amount of the Senior Secured Term Loan as of the Signing Date were revised to: (i) increase the interest rate in the form of paid-in-kind interest by 1.0% per annum until the achievement of certain financial metrics, (ii) reset the prepayment premiums with respect to any repayment of the Senior Secured Term Loan, and (iii) amend certain covenants. At the completion of the 2023 Debt Restructuring, $391.0 million principal of amended Senior Secured Term Loan was outstanding with HPS Investment Partners, LLC (“HPS”), $16.3 million principal was outstanding with Onex Credit Partners, LLC (“Onex”), $0.3 million principal was outstanding with Knighthead Capital Management, LLC (“Knighthead”), and the remaining $0.2 million principal was outstanding with Marathon Asset Management LP (“Marathon”). Additionally, the terms of the Company's Revolving Loans (as defined below) were revised to increase the cash interest rate by 1.0% until the achievement of certain financial metrics. Amendment No. 2 to the Credit Agreement also provides, among other terms, (i) a reduction of the thresholds applicable to the minimum liquidity financial covenant under the 2022 Credit Agreement for certain periods, (ii) a waiver of the requirement to comply with the Secured Net Leverage Ratio financial covenant under the 2022 Credit Agreement for the fiscal quarters ending June 30, 2024, September 30, 2024 and December 31, 2024 and a modification of the levels and certain component definitions applicable thereto in the fiscal quarters ending after December 31, 2024, (iii) an extension of the minimum liquidity financial covenant for the fiscal quarters in which the Secured Net Leverage Ratio financial covenant was waived, (iv) a waiver of the requirement for the Company to deliver audited financial statements without a going concern explanatory paragraph for the years ended December 31, 2022, December 31, 2023, and December 31, 2024, and (v) board representation and observer rights and other changes to the governance of the Company. Based on the results of the cash flow tests and requirements pursuant to Accounting Standards Codification ("ASC") Topic 470, Debt , the Company accounted for the impacts of Amendment No. 2 to the Credit Agreement related to the amount held by HPS as a modification, and the impacts related to the amounts held by Onex, Knighthead, and Marathon as an extinguishment. As part of the 2023 Debt Restructuring, the Company recognized $1.8 million of incremental original issue discount on the Senior Secured Term Loan related to lenders treated under extinguishment accounting. Second Lien Note Purchase Agreement and Designation of Series B Preferred Stock Knighthead, Marathon, and Onex collectively exchanged a principal amount of $100.0 million of Senior Secured Term Loan for $100.0 million of 2L Notes stapled with a number of shares of Series B Preferred Stock. Of the $100.0 million of 2L Notes issued, approximately $50.8 million were issued to Knighthead, $40.4 million were issued to Marathon, and $8.8 million were issued to Onex. The 2L Notes are subordinated in right of payment and lien priority to the 2022 Credit Facility (as defined below) and mature on August 24, 2028, unless earlier converted, accrue interest at an annual rate of 8.0% payable in-kind on a quarterly basis in the form of additional 2L Notes, and are convertible into shares of common stock, at the holder’s option, at a fixed conversion price of $12.50, subject to certain adjustments in the agreement (the "Conversion Price"). Upon conversion of the 2L Notes, the Company shall deliver to the holder a number of shares of common stock equal to (i) the principal amount of such 2L Notes plus any accrued and unpaid interest divided by (ii) the Conversion Price. The 2L Notes are effectively stapled with one share of the Company’s Series B Preferred Stock for every $1,000 principal amount of the 2L Notes. The Series B Preferred Stock represents voting rights only, with the number of votes being equal to the number of shares of common stock that each share of Series B Preferred Stock would convert into at a conversion price of $12.87 per share (the "Voting Rights Conversion Price"). Additional voting rights accrue to the lenders through the deemed issuance of the annual 8.0% paid-in-kind 2L Notes with stapled shares of Series B Preferred Stock. The Series B Preferred Stock does not have any dividend or redemption rights. Upon conversion of 2L Notes to common stock, the stapled shares of Series B Preferred Stock would be canceled in an amount commensurate with the portion of 2L Notes converted. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes as well as other terms to the 2023 Debt Restructuring, the Company determined that Knighthead, Marathon, and Onex became related parties on the Closing Date. On the Closing Date, an additional $3.2 million of 2L Notes with stapled Series B Preferred Stock were issued as part of the First Amendment to the Second Lien Note Purchase Agreement. The terms of the issued 2L Notes and Series B Preferred Stock are the same as those that were subject to the exchange. The following table presents approximate changes in outstanding shares of Series B Preferred Stock during the current year (in thousands): March 31, 2024 Series B Preferred Stock, shares at beginning of period 108 Increase (decrease) in shares during period 27 Series B Preferred Stock, shares at end of period 135 Common stock voting rights, as converted basis (1) 10,514 (1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share. On or after the second anniversary of the Closing Date and subject to certain conditions, the Company may, at its option, elect to convert (a “Forced Conversion”) a portion of the outstanding 2L Notes into the number of shares of common stock based on the Conversion Price then in effect. The 2L Notes are accounted for as a liability in the Company's unaudited condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments , in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. The interest cost associated with the 2L Notes is accounted for as part of the change in fair value of the 2L Notes. As a result of applying the fair value option, direct costs and fees related to the issuance of the 2L Notes were expensed as incurred. As of March 31, 2024, the principal amount and estimated fair value of the 2L Notes were approximately $135.3 million and $95.6 million, respectively. As of December 31, 2023, the principal amount and estimated fair value of the 2L Notes were approximately, $107.8 million and $79.5 million, respectively. Refer to Note 11 - Fair Value Measurements for further details on the fair value of the 2L Notes. Additionally, as of March 31, 2024, the effective interest rate on the 2L Notes was 8.0%. The following table presents changes in the principal amount of the 2L Notes during the current year (in thousands): March 31, 2024 2L Notes, principal amount at beginning of period $ 107,812 2L Notes issued during period 25,000 Paid-in-kind interest added during period 2,502 2L Notes, principal amount at end of period $ 135,314 As of March 31, 2024, of the 2L Notes principal outstanding and due to related parties, approximately $68.0 million, $52.6 million, $9.7 million, and $5.0 million were outstanding with Knighthead, Marathon, Onex, and Caspian Capital LP ("Caspian"), respectively. As of December 31, 2023, of the 2L Notes principal outstanding and due to related parties, approximately $54.7 million, $43.6 million and $9.5 million were outstanding with Knighthead, Marathon, and Onex, respectively. Delayed Draw Right The Company also obtained the right to cause to be issued to Knighthead, Marathon and Caspian (collectively the "Delayed Draw Purchasers") an additional $25.0 million of aggregate principal in the form of 2L Notes under its delayed draw right ("Delayed Draw Right”), which is governed by the Second Lien Note Purchase Agreement. Upon obtaining the Delayed Draw Right, the Company accounted for the Delayed Draw Right as an asset at fair value, which represented the Company's option to draw funds subject to certain conditions. For Knighthead's and Marathon's portion of the Delayed Draw Right, the asset was recognized as part of the calculation of loss on debt extinguishment. For Caspian, the Delayed Draw Right was recognized as a capital contribution as there was no previous lender relationship with the Company with respect to the Senior Secured Term Loan. At the Closing Date, the Company recognized approximately $3.5 million in Delayed Draw Right assets, which is included in other current assets on the Company's unaudited condensed consolidated balance sheets at December 31, 2023. During the three months ended March 31, 2024, the Company issued $25.0 million of aggregate principal in the form of 2L Notes under its Delayed Draw Right, which are subject to the same terms as the convertible 2L Notes and associated shares of Series B Preferred Stock allowing for voting rights on an as-converted basis prior to conversion. Approximately $12.0 million, $8.0 million, and $5.0 million of the 2L Notes were issued to Knighthead, Marathon and Caspian, respectively. The Delayed Draw Right assets were de-recognized upon issuance of 2L Notes under the Delayed Draw Right which reduced the initial carrying value of the 2L Notes in the form of an original issue discount. 2022 Credit Agreement On February 24, 2022 (the "Refinancing Date"), the Company entered into various financing arrangements to refinance its previous long-term debt (the "2022 Debt Refinancing"). As part of the 2022 Debt Refinancing, ATI Holdings Acquisition, Inc. (the "Borrower"), an indirect subsidiary of the Company, entered into a credit agreement among the Borrower, Wilco Intermediate Holdings, Inc. ("Holdings"), as loan guarantor, Barclays Bank PLC, as administrative agent and issuing bank, and a syndicate of lenders (the "2022 Credit Agreement"). The 2022 Credit Agreement provides a $550.0 million credit facility (the "2022 Credit Facility") that is comprised of a $500.0 million senior secured term loan (the "Senior Secured Term Loan") which was fully funded at closing and a $50.0 million "super priority" senior secured revolver (the "Revolving Loans") with a $10.0 million letter of credit sublimit. In connection with the 2022 Debt Refinancing, the Company also entered into a preferred stock purchase agreement, consisting of senior preferred stock with detachable warrants to purchase common stock for an aggregate stated value of $165.0 million (collectively, the “Preferred Stock Financing”). See Note 10 - Mezzanine and Stockholders' Equity for further information regarding the Preferred Stock Financing. Senior Secured Term Loan The Senior Secured Term Loan matures on February 24, 2028 and bears interest, at the Company's election, at a base interest rate of the Alternate Base Rate ("ABR"), as defined in the agreement, plus an applicable credit spread, or the Adjusted Term Secured Overnight Financing Rate ("SOFR"), as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. The Company was able to elect to pay 2.0% interest in-kind at a 0.5% premium during the first year under the agreement. The Company elected to pay a portion of its interest in-kind beginning in the third quarter of 2022 through the completion of the first year under the agreement. As of March 31, 2024, borrowings on the Senior Secured Term Loan bear interest at 12.7%, consisting of 12-month SOFR, subject to a 1.0% floor, plus a credit spread of 7.25%. As of March 31, 2024, the effective interest rate on the Senior Secured Term Loan was 13.9% and the outstanding principal amount was $410.0 million, of which $17.0 million was due to related parties and is primarily attributable to Onex. Beginning in October 2023, the Company is no longer incurring the incremental 1.0% paid-in-kind interest on its Senior Secured Term Loan based on its achievement of the required financial metrics under the terms of the 2023 Debt Restructuring. Revolving Loans The Revolving Loans are subject to a maximum borrowing capacity of $50.0 million and mature on February 24, 2027. Borrowings on the Revolving Loans bear interest, at the Company's election, at a base interest rate of the ABR, as defined in the agreement, plus an applicable credit spread, or the Adjusted Term SOFR Rate, as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. As of December 31, 2023, $38.5 million in Revolving Loans were outstanding. During the three months ended March 31, 2024, the Company repaid approximately $18.5 million in Revolving Loans and drew an additional $23.5 million in Revolving Loans. As of March 31, 2024, $43.5 million in Revolving Loans were outstanding and bearing interest at a weighted average rate of 9.5%, consisting of 3-month SOFR plus a credit spread of approximately 4.2%. Beginning in October 2023, the Company is no longer incurring the incremental 1.0% interest on its Revolving Loans based on its achievement of the required financial metrics under the terms of the 2023 Debt Restructuring. Commitment fees on the Revolving Loans are payable quarterly at 0.5% per annum on the daily average undrawn portion for the quarter and are expensed as incurred. The balances of unamortized issuance costs related to the Revolving Loans were $0.4 million as of March 31, 2024, and $0.5 million as of December 31, 2023. The 2022 Credit Facility and 2L Notes are guaranteed by certain of the Company’s subsidiaries and are secured by substantially all of the assets of Holdings, the Borrower and the Borrower’s wholly-owned subsidiaries, including a pledge of the stock of the Borrower, in each case, subject to customary exceptions. Pursuant to the terms of the Intercreditor and Subordination Agreement, the 2L Notes (and the guarantees thereof) will rank junior in right of payment to the obligations under the 2022 Credit Agreement, and the liens on the collateral securing the 2L Notes will rank junior to the liens on such collateral securing the obligations under the 2022 Credit Agreement. The 2022 Credit Agreement contains customary covenants and restrictions, including financial and non-financial covenants. In accordance with Amendment No. 2 to the Credit Agreement, the financial covenants require the Company to maintain $10.0 million of minimum liquidity, as defined in the agreement, at each test date through the fourth quarter of 2024. Additionally, beginning in the first quarter of 2025, the Company must maintain a Secured Net Leverage Ratio, as defined in the agreement, not to exceed 11.00:1.00. The net leverage ratio covenant decreases each subsequent quarter through the second quarter of 2026 to 7.00:1.00, which remains applicable through maturity. The financial covenants are tested as of each fiscal quarter end for the respective periods. As of March 31, 2024, the Company is in compliance with its minimum liquidity financial covenant. The 2022 Credit Facility contains customary representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including requirements related to the delivery of independent audit reports without a going concern explanatory paragraph beginning with the report covering fiscal year 2025, limitations on indebtedness, liens, investments, negative pledges, dividends, junior debt payments, fundamental changes and asset sales and affiliate transactions. The Second Lien Note Purchase Agreement includes affirmative and negative covenants (other than financial covenants) that are substantially consistent with the 2022 Credit Agreement, as well as customary events of default. Failure to comply with the 2022 Credit Facility and Second Lien Note Purchase Agreement covenants and restrictions could result in an event of default under the respective borrowing agreements, subject to customary cure periods. In such an event, all amounts outstanding under the 2022 Credit Facility and Second Lien Note Purchase Agreement, together with any accrued interest, could then be declared immediately due and payable. Under the 2022 Credit Facility, the Company may be required to make certain mandatory prepayments upon the occurrence of certain events, including: an event of default, a prepayment asset sale or receipt of net insurance proceeds in excess of $10.0 million, or excess cash flows exceeding certain thresholds. A prepayment asset sale includes dispositions at fair market value, and net insurance proceeds is generally defined as insurance proceeds received on a covered loss or as a result of assets taken under the power of eminent domain, net of costs related to the matter. The Company had letters of credit totaling $6.5 million under the letter of credit sub-facility on the Revolving Loans as of both March 31, 2024 and December 31, 2023. The letters of credit auto-renew on an annual basis and are pledged to insurance carriers as collateral. Aggregate maturities of the Company's borrowings at March 31, 2024 are as follows (in thousands): 2024 (remainder of year) $ — 2025 — 2026 — 2027 43,473 2028 545,362 Thereafter — Total future maturities (1) 588,835 Unamortized original issue discount and debt issuance costs (14,247) 2L Notes due to related parties, principal amount (1, 2) (135,314) Long-term debt, net (1) $ 439,274 (1) Excludes any contractual paid-in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates. (2) The principal amount of the 2L Notes differs from the estimated fair value presented on the unaudited condensed consolidated balance sheet due to the Company's election of the fair value option. Refer to Note 11 - Fair Value Measurements for further details on the fair value of the 2L Notes. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company recognizes compensation expense for all share-based compensation awarded to employees, net of forfeitures, using a fair value-based method. The grant-date fair value of each award is amortized to expense on a straight-line basis over the award’s vesting period. Compensation expense associated with share-based awards is included in salaries and related costs and selling, general and administrative expenses in the unaudited condensed consolidated statements of operations, depending on whether the award recipient is a clinic-level or corporate employee, respectively. Share-based compensation expense is adjusted for forfeitures as incurred. ATI 2021 Equity Incentive Plan The Company adopted the ATI Physical Therapy 2021 Equity Incentive Plan (the "2021 Plan") under which it may grant equity interests of the Company, in the form of stock options, stock appreciation rights, restricted stock awards and restricted stock units, to members of management, key employees and independent directors of the Company and its subsidiaries. The Compensation Committee is authorized to make grants and to make various other decisions under the 2021 Plan. The maximum number of shares reserved for issuance under the 2021 Plan is approximately 1.2 million. As of March 31, 2024, approximately 0.3 million shares were available for future grant. Total non-cash share-based compensation expense recognized in the three months ended March 31, 2024 and 2023 was approximately $2.3 million and $1.5 million, respectively. |
Mezzanine and Stockholders' Equ
Mezzanine and Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Mezzanine and Stockholders' Equity | Mezzanine and Stockholders' Equity Series A Senior Preferred Stock In connection with the 2022 Debt Refinancing, the Company issued 165,000 shares of non-convertible preferred stock (the "Series A Senior Preferred Stock") plus warrants to purchase 0.1 million shares of the Company's common stock at an exercise price of $150.00 per share (the "Series I Warrants") and warrants to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share (the "Series II Warrants"). The shares of the Series A Senior Preferred Stock have a par value of $0.0001 per share and an initial stated value of $1,000 per share, for an aggregate initial stated value of $165.0 million. The Company is authorized to issue 1.0 million shares of preferred stock per the Certificate of Designation. As of March 31, 2024, there was 0.2 million shares of Series A Senior Preferred Stock issued and outstanding. The Series A Senior Preferred Stock has priority over the Company's Class A common stock and all other junior equity securities of the Company, and is junior to the Company's existing or future indebtedness and other liabilities (including trade payables), with respect to payment of dividends, distribution of assets, and all other liquidation, winding up, dissolution, dividend and redemption rights. The Series A Senior Preferred Stock carries an initial dividend rate of 12.0% per annum (the "Base Dividend Rate"), payable quarterly in arrears. Dividends will be paid-in-kind and added to the stated value of the Series A Senior Preferred Stock. The Company may elect to pay dividends on the Series A Senior Preferred Stock in cash beginning on the third anniversary of the Refinancing Date and, with respect to any such dividends paid in cash, the dividend rate then in effect will be decreased by 1.0%. The Base Dividend Rate is subject to certain adjustments, including an increase of 1.0% per annum on the first day following the fifth anniversary of the Refinancing Date and on each one-year anniversary thereafter, and 2.0% per annum upon the occurrence of either an Event of Noncompliance (as defined in the Certificate of Designation) or a failure by the Company to redeem in full all Series A Senior Preferred Stock upon a Mandatory Redemption Event, which includes a change of control, liquidation, bankruptcy or certain restructurings. The paid-in-kind dividends related to the Series A Senior Preferred Stock were $6.2 million and $5.3 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the accumulated paid-in-kind dividends related to the Series A Senior Preferred Stock were $47.3 million and the aggregate stated value was $212.3 million. Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following during the current year (in thousands, except per share data): March 31, 2024 Aggregate stated value, beginning of period $ 206,095 Paid-in-kind dividends 6,183 Aggregate stated value, end of period $ 212,278 Preferred shares issued and outstanding, beginning of period 165 Preferred shares issued and outstanding, end of period 165 Stated value per share, beginning of period $ 1,249.06 Stated value per share, end of period $ 1,286.53 The Company has the right to redeem the Series A Senior Preferred Stock, in whole or in part, at any time (subject to certain limitations on partial redemptions). The Redemption Price for each share of Series A Senior Preferred Stock is equal to the stated value subject to certain price adjustments depending on when such optional redemption takes place, if at all. The Series A Senior Preferred Stock is perpetual and is not mandatorily redeemable at the option of the holders, except upon the occurrence of a Mandatory Redemption Event. Upon the occurrence of a Mandatory Redemption Event, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price. Because the Series A Senior Preferred Stock is mandatorily redeemable contingent on certain events outside the Company’s control, such as a change in control, and since such events are not currently deemed certain to occur, the Series A Senior Preferred Stock is classified as mezzanine equity in the Company's unaudited condensed consolidated balance sheets. If an Event of Noncompliance occurs, then the holders of a majority of the then outstanding shares of Series A Senior Preferred Stock (the “Majority Holders”) have the right to demand that the Company engage in a sale/refinancing process to consummate a Forced Transaction. A Forced Transaction includes a refinancing of the Series A Senior Preferred Stock or a sale of the Company. Upon consummation of any Forced Transaction, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price. Holders of shares of Series A Senior Preferred Stock have no voting rights with respect to the Series A Senior Preferred Stock except as set forth in the Certificate of Designation, other documents entered into in connection with the Purchase Agreement and the transactions contemplated thereby, or as otherwise required by law. For so long as any Series A Senior Preferred Stock is outstanding, the Company is prohibited from taking certain actions without the prior consent of the Majority Holders as set forth in the Certificate of Designation which include: issuing equity securities ranking senior to or pari passu with the Series A Senior Preferred Stock, incurring indebtedness or liens, engaging in affiliate transactions, making restricted payments, consummating certain investments or asset dispositions, consummating a change of control transaction unless the Series A Senior Preferred Stock is redeemed in full, altering the Company’s organizational documents, and making material changes to the nature of the Company’s business. As part of the 2022 Debt Refinancing, the Preferred Equityholders, voting as a separate class, had the right to designate and elect one director to serve on the Company’s Board until such time after the Refinancing Date that (i) as of any applicable fiscal quarter end, the Company’s trailing 12-month Consolidated Adjusted EBITDA (as defined in the Certificate of Designation) exceeds $100.0 million, or (ii) the Lead Purchaser ceases to hold at least 50.1% of the Series A Senior Preferred Stock held by it as of the Refinancing Date. As part of the 2023 Debt Restructuring, (1) the Preferred Equityholders’ preexisting rights as holders of the Company’s Series A Senior Preferred Stock to designate and elect one director to the Board was revised to provide that (a) the Preferred Equityholders have the right to appoint three additional directors to the Board (resulting in the right of the Preferred Equityholders to appoint a total of four directors to the Board) until such time after the Closing Date that the Lead Purchaser (as defined in certain of the transaction agreements entered into in connection with the original issuance of the Series A Senior Preferred Stock) ceases to hold at least 50.1% of the Series A Senior Preferred Stock held by it as of the Closing Date, one of whom must be unaffiliated with (and independent of) the Preferred Equityholders and who must meet the definition of “independent” under the listing standards of the New York Stock Exchange ("NYSE"), and by the SEC; and (b) all such designee directors of the Preferred Equityholders will be subject to consideration by the Board (acting in good faith and consistent with their review of other Board candidates) and (2) the provision in the Certificate of Designation of the Company’s Series A Senior Preferred Stock that eliminated the Preferred Equityholders’ director designation rights upon the Company’s achievement of certain amounts of earnings before interest, taxes, depreciation and amortization ("EBITDA") was deleted. Prior to the closing of the 2023 Debt Restructuring, because the Series A Senior Preferred Stock is classified as mezzanine equity and was not considered redeemable or probable of becoming redeemable, the paid-in-kind dividends that were added to the stated value did not impact the carrying value of the Series A Senior Preferred Stock in the Company’s unaudited condensed consolidated balance sheets. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes issued as part of the 2023 Debt Restructuring, the Company determined that redemption of the Series A Senior Preferred Stock is no longer solely within the control of the Company. As a result, the Company determined that the Series A Senior Preferred Stock is probable of becoming redeemable based on the accounting guidance in ASC Topic 480, Distinguishing Liabilities from Equity . Following the 2023 Debt Restructuring, since the Series A Senior Preferred Stock is probable of becoming redeemable, the Company will recognize changes in the redemption value of the Series A Senior Preferred Stock immediately as they occur and adjust the carrying amount as if redemption were to occur at the end of the reporting period. As of March 31, 2024, the redemption value of the Series A Senior Preferred Stock was $225.0 million, which includes the aggregate stated value at March 31, 2024, inclusive of paid-in-kind dividends, and an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period, based on the terms of the Certificate of Designation. Changes in the carrying value of the Series A Senior Preferred Stock during the three months ended March 31, 2024 consisted of the following (in thousands). There were no changes in the carrying value of the Series A Senior Preferred Stock during the three months ended March 31, 2023: March 31, 2024 Carrying value, beginning of period $ 220,393 Paid-in-kind dividends recognized to carrying value 6,183 Redemption value adjustment (1,562) Carrying value, end of period $ 225,014 2022 Warrants In connection with the Preferred Stock Financing, the Company agreed to issue to the preferred stockholders the Series I Warrants entitling the holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $150.00 per share, exercisable for 5 years from the Refinancing Date; and the Series II Warrants entitling holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share, exercisable for 5 years from the Refinancing Date (collectively, the "2022 Warrants"). Such number of shares of common stock purchasable pursuant to the 2022 Warrant Agreement and related exercise prices may be adjusted from time to time under certain scenarios as set forth in the 2022 Warrant Agreement, which relate to potential changes in the Company's capital structure. The 2022 Warrants are classified as equity instruments. There were no 2022 Warrants exercised during the three months ended March 31, 2024. Class A common stock The Company is authorized to issue 470.0 million shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At March 31, 2024, there were 4.5 million shares of Class A common stock issued and 4.2 million shares outstanding. As of March 31, 2024, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands): March 31, 2024 2L Notes (1) 10,825 Shares available for grant under the 2021 Plan 251 2021 Plan share-based awards outstanding 594 Earnout Shares reserved 300 2022 Warrant shares reserved 230 IPO Warrant shares reserved 197 Vesting Shares reserved (2) 173 Restricted shares (2) 4 Total shares of common stock reserved 12,574 (1) Calculated based on the principal amount of 2L Notes and Conversion Price of $12.50 per share. This figure differs from the contractual Voting Rights Conversion Price of $12.87 as outlined in Note 8 - Borrowings. (2) Represents shares of Class A common stock legally issued, but not outstanding, as of March 31, 2024. Treasury stock During the three months ended March 31, 2024, the Company net settled 78,412 shares of its Class A common stock related to employee tax withholding obligations associated with the Company's share-based compensation program. These shares are reflected at cost as treasury stock in the unaudited condensed consolidated financial statements. As of March 31, 2024, there were 85,206 shares of treasury stock totaling $0.7 million recognized in the unaudited condensed consolidated balance sheets. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company determines fair value measurements used in its unaudited condensed consolidated financial statements based upon the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, with Level 1 having the highest priority and Level 3 having the lowest. • Level 1: Observable inputs, which include unadjusted quoted prices in active markets for identical instruments. • Level 2: Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instruments. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As of March 31, 2024 and December 31, 2023 , respectively, the recorded values of cash, cash equivalents and restricted cash, accounts receivable, other current assets, accounts payable, accrued expenses and deferred revenue approximate their fair values due to the short-term nature of these items. Fair value measurement of debt The Company's Revolving Loans are Level 2 fair value measures which have a variable interest rate structure that resets on a frequent short-term basis and, as of March 31, 2024, the recorded amounts approximate fair value. In connection with the 2023 Debt Restructuring, the Company estimated the fair value of a portion of its Senior Secured Term Loan using a Black-Derman-Toy Lattice Bond Pricing Model, which utilized Level 3 inputs. During the third quarter of 2023, the Company prospectively changed its method to estimate the fair value of its Senior Secured Term Loan to a Discounted Cash Flow Model, noting no material changes to the presentation of fair values relative to the previous method. The Discounted Cash Flow Model utilizes observable and unobservable Level 3 inputs, such as SOFR forward rates and an estimated yield. As of March 31, 2024, the carrying amount and estimated fair value of the Senior Secured Term Loan was approximately $395.8 million and $372.3 million, respectively. As discussed in Note 8 - Borrowings , the Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments . As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's unaudited condensed consolidated statements of operations. The Company determines the fair value of the 2L Notes using Level 3 inputs. In connection with the 2023 Debt Restructuring, the fair value of the 2L Notes was estimated using a Goldman Sachs Convertible Bond Valuation Model to consider the impacts of the conversion feature. During the third quarter of 2023, the Company prospectively changed its method to estimate the fair value of its 2L Notes to a Bond Plus Call Model, which also considers the impacts of the conversion feature, noting no material changes to the presentation of fair values relative to the previous method. Changes in the assumptions of the unobservable inputs may materially affect the estimated fair value of the 2L Notes. The key inputs into the Bond Plus Call Model used to estimate the fair value of the 2L Notes were as follows as of March 31, 2024 and December 31, 2023: 2L Notes March 31, 2024 December 31, 2023 Risk-free interest rate 4.2% 3.8% Volatility 45.0% 45.0% Selected yield 20.9% 20.5% Expected term (years) 4.5 4.7 Share price $5.58 $6.14 The following table presents the changes in the fair value of the 2L Notes that is recognized in change in fair value of 2L Note s in the unaudited condensed consolidated statements of operations for the periods indicated below (in thousands). None of the change in fair value is attributable to instrument-specific credit risk: Three Months Ended March 31, 2024 Fair value, beginning of period $ 79,472 2L Notes issued during the period 25,000 De-recognition of original issuance discount (1) (3,450) Decrease in fair value (5,407) Fair value, end of period $ 95,615 (1) The de-recognition of the Delayed Draw Right assets reduced the initial carrying value of 2L Notes issued under the Delayed Draw Right in the form of an original issuance discount. As the Company accounts for the 2L Notes under the fair value option, the original issuance discount was subsequently de-recognized as a component of the initial fair value calculation of the issued 2L Notes. There were no changes in the fair value of the 2L Notes during the three months ended March 31, 2023 as the 2L Notes were not yet issued. Fair value measurement of interest rate derivative instruments The Company is exposed to interest rate variability with regard to its existing variable-rate debt instrument, which exposure primarily relates to movements in various interest rates, such as SOFR. The Company utilizes interest rate cap derivative instruments for purposes of hedging exposures related to such variable-rate cash payments. The Company's interest rate caps have historically been designated as cash flow hedging instruments. During the third quarter of 2023, the Company made a 12-month SOFR election on its Senior Secured Term Loan and, as a result, the Company's interest rate cap no longer qualifies as a designated cash flow hedging instrument. The Company records derivatives on the balance sheet at fair value, which represents the estimated amounts it would receive or pay upon termination of the derivative prior to the scheduled expiration date. The fair value is derived from model-driven information based on observable Level 2 inputs, such as SOFR forward rates. For derivatives designated and that qualify as a cash flow hedge of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. For derivatives that are considered to be ineffective, or are not designated in a hedging relationship, the gain or loss on the derivative is immediately recognized in other expense (income), net. The following table presents the activity of cash flow hedges included in accumulated other comprehensive income (loss) for the three months ended March 31, 2024 and 2023, respectively (in thousands): Cash Flow Hedges Balance as of December 31, 2023 $ 406 Unrealized (gain) loss recognized in other comprehensive income before reclassifications — Reclassification to interest expense, net (140) Balance as of March 31, 2024 $ 266 Balance as of December 31, 2022 $ 4,899 Unrealized gain recognized in other comprehensive income before reclassifications (99) Reclassification to interest expense, net (3,357) Balance as of March 31, 2023 $ 1,443 For the three months ended March 31, 2024, the change in fair value of the Company's non-designated cash flow hedge was immaterial. The following table presents t he fair value of derivative assets and liabilities within the unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Assets Liabilities Assets Liabilities Derivatives not designated as cash flow hedging instruments: Other current assets $ 187 — $ 33 — Other non-current liabilities — — — $ 62 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate and income tax benefit for the three months ended March 31, 2024 were 1.0% and $0.1 million, compared to an effective tax rate and income tax expense of (0.2)% and $0.1 million for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024 was estimated based on full-year 2024 forecast. The estimated effective tax rate was different than the statutory rate primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax benefit of $0.1 million for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2023 was estimated based on full-year 2023 forecast. The effective tax rate was different than the statutory rate primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax expense of $0.1 million for the three months ended March 31, 2023. In evaluating the Company's ability to recover deferred income tax assets, all available positive and negative evidence is considered, including scheduled reversal of deferred tax liabilities, operating results and forecasts of future taxable income in each of the jurisdictions in which the Company operates. As of March 31, 2024, the Company determined that a significant portion of its federal and state net operating loss carryforwards with definite and certain indefinite carryforward periods and certain deferred tax assets are not more likely than not to be realized based on the weight of available evidence. As a result, the Company recorded valuation allowances against tax benefits related to its current year losses. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Leases The Company leases various facilities and office equipment for its physical therapy operations and administrative support functions under operating leases. The Company’s initial operating lease terms are generally between 7 and 10 years, and typically contain options to renew for varying terms. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease. If the ROU asset has been impaired, lease expense is no longer recognized on a straight-line basis. The lease liability continues to amortize using the effective interest method, while the ROU asset is subsequently amortized on a straight-line basis. Lease costs are included as components of rent, clinic supplies, contract labor and other and selling, general and administrative expenses on the unaudited condensed consolidated statements of operations. Lease charges related to ROU asset impairments are included in goodwill, intangible and other asset impairment charges on the unaudited condensed consolidated statements of operations. The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Lease cost Operating lease cost (1) $ 16,918 $ 16,689 Variable lease cost (2) 5,243 5,362 Total lease cost (3) $ 22,161 $ 22,051 (1) Includes ROU asset impairment charges for the three months ended March 31, 2024, which are immaterial. (2) Includes short term lease costs, which are immaterial. (3) Total lease cost does not include sublease income. Sublease income for the three months ended March 31, 2024 primarily relates to the sublease of the Company's executive offices effective January 1, 2024, and is immaterial. Sublease income for the three months ended March 31, 2023 primarily relates to subleases of certain clinic facilities to third parties, and is immaterial. The Company leases its executive offices under an operating lease expiring in December 2032. In December 2023, the Company entered into an agreement to sublease a portion of the office space effective on January 1, 2024 and the entire office space effective on January 1, 2025. The Company recognized initial broker commissions costs related to executing the sublease in other non-current assets and accrued expenses and other liabilities in the Company's unaudited condensed consolidated balance sheets, which are immaterial. The costs will amortize ratably over the sublease term in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations. During the three months ended March 31, 2024 and 2023, the Company modified the lease terms for a significant number of its real estate leases, primarily related to lease term extensions and renewals in the normal course of business. Modifications during the three months ended March 31, 2024 and 2023 contributed an increase to the Company’s operating lease ROU assets and operating lease liabilities of approximately $9.6 million and $5.9 million, respectively. Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 17,739 $ 13,133 Right-of-use assets obtained in exchange for new operating lease liabilities $ 140 $ 4,898 Average lease terms and discount rates as of March 31, 2024 and December 31, 2023 were as follows: March 31, 2024 December 31, 2023 Weighted-average remaining lease term: Operating leases 5.3 years 5.4 years Weighted-average discount rate: Operating leases 7.8% 7.4% Estimated undiscounted future lease payments under non-cancellable operating leases, along with a reconciliation of the undiscounted cash flows to operating lease liabilities, respectively, at March 31, 2024 were as follows (in thousands): Year Amount (1) 2024 (remainder of year) $ 51,149 2025 59,904 2026 52,293 2027 40,838 2028 29,302 Thereafter 52,910 Total undiscounted future cash flows 286,396 Less: Imputed Interest (53,082) Present value of future cash flows $ 233,314 Presentation on Balance Sheet: Current $ 51,339 Non-current $ 181,975 (1) Excludes $0.3 million of current portion of operating lease liabilities and $1.1 million of operating lease liabilities, respectively, reclassified as held for sale as of March 31, 2024. Refer to Note 3 - Divestitures for additional information. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company has contractual commitments that are not required to be recognized in the unaudited condensed consolidated financial statements related to cloud computing, networking technology and telecommunications services agreements. As of March 31, 2024, minimum amounts due under these agreements are approximately $34.7 million through May of 2029 subject to customary business terms and conditions. From time to time, the Company is a party to legal proceedings, governmental audits and investigations that arise in the ordinary course of business. Management is not aware of any legal proceedings, governmental audits and investigations of which the outcome is probable to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. The outcome of any litigation and claims against the Company cannot be predicted with certainty, and the resolution of current or future claims could materially affect our future results of operations, cash flows or financial condition. The Company recognizes loss contingencies related to legal matters when a loss is both probable and reasonably estimable, and provides disclosures for loss contingencies that do not meet both of these conditions if there is a reasonable possibility that a loss has been incurred. Legal fees are expensed as incurred. Stockholder class action complaints Federal Securities Litigation. On August 16, 2021, two purported ATI stockholders, Kevin Burbige and Ziyang Nie, filed a putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, Labeed Diab, Joe Jordan, and Drew McKnight (collectively, the “ATI Individual Defendants”), and Joshua Pack, Marc Furstein, Leslee Cowen, Aaron Hood, Carmen Policy, Rakefet Russak-Aminoach, and Sunil Gulati (collectively, the “FVAC Defendants”). On October 7, 2021, another purported ATI stockholder, City of Melbourne Firefighters' Retirement System ("City of Melbourne"), filed a nearly identical putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, the ATI Individual Defendants, and the FVAC Defendants. On November 18, 2021, the court consolidated the cases and appointed The Phoenix Insurance Company Ltd. and The Phoenix Pension & Provident Funds as lead plaintiffs (together, “Lead Plaintiffs”). On February 8, 2022, Lead Plaintiffs filed a consolidated amended complaint against ATI, the ATI Individual Defendants, and the FVAC Defendants, which asserts claims against (i) ATI and the ATI Individual Defendants under Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii) the ATI Individual Defendants under Section 20(a) of the Exchange Act (in connection with the Section 10(b) claim); (iii) all defendants under Section 14(a) of the Exchange Act; and (iv) the ATI Individual Defendants and the FVAC Defendants under Section 20(a) of the Exchange Act (in connection with the Section 14(a) claim). Lead Plaintiffs purport to assert these claims on behalf of those ATI stockholders who purchased or otherwise acquired their ATI shares between February 22, 2021 and October 19, 2021, inclusive, and/or held FVAC Class A common shares as of May 24, 2021 and were eligible to vote at FVAC’s June 15, 2021 special meeting. The consolidated amended complaint generally alleges that the proxy materials for the FVAC/ATI merger, as well as other ATI disclosures (including the press release announcing ATI’s financial results for the first quarter of 2021), were false and misleading (and, thus, in violation of Sections 10(b) and 14(a) of the Exchange Act) because they failed to disclose that: (i) ATI was experiencing attrition among its physical therapists; (ii) ATI faced increasing competition for clinicians in the labor market; (iii) as a result, ATI faced difficulty retaining therapists and incurred increased labor costs; (iv) also as a result, ATI would open fewer new clinics; and (v) also as a result, the defendants’ positive statements about ATI’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Lead Plaintiffs, on behalf of themselves and the putative class, seek money damages in an unspecified amount and costs and expenses, including attorneys’ and experts’ fees. On April 11, 2022, defendants filed motions to dismiss the consolidated amended complaint, which were fully briefed as of July 25, 2022. On September 6, 2023, the court granted in part and denied in part the motions to dismiss. On October 19, 2023, ATI, the ATI Individual Defendants, and the FVAC Defendants answered the consolidated amended complaint. Discovery then commenced. Delaware Litigation. On February 7, 2023, another purported ATI stockholder, Wendell Robinson, filed a putative class action complaint in the Court of Chancery of the State of Delaware against Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rakefet Russak-Aminoach, Sunil Gulati, Daniel N. Bass, Micah B. Kaplan and Labeed Diab (the "Robinson Action"). The complaint asserts claims against: (i) Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rafeket Russak-Aminoach, Sunil Gulati, Daniel N. Bass and Micah B. Kaplan for breach of fiduciary duty; and (ii) Labeed Diab for aiding and abetting breach of fiduciary duty. Plaintiff's allegations generally mirror those asserted in the federal stockholder class action described above, and Plaintiff further alleges that the alleged misrepresentations and omissions in the proxy materials for the FVAC/ATI merger prevented stockholders from making a fully informed decision on whether to approve the merger or have their shares redeemed. Defendants filed motions to dismiss on April 28, 2023, which were fully briefed as of June 23, 2023 and remain pending. On June 1, 2023, another purported ATI stockholder, Phillip Goldstein, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John L. Larsen, John Maldonado, Carmine Petrone, Joanne M. Burns, Christopher Krubert, James E. Parisi, Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach (the "Goldstein Action"). The complaint asserts direct and/or derivative claims against: (i) Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John Larsen, John Maldonado, Carmine Petrone, Joanne Burns, Christopher Krubert, and James Parisi for tortious interference with redemption rights, aiding and abetting breach of fiduciary duty, and fraud; and (ii) Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach for breach of fiduciary duty. Plaintiff’s allegations generally mirror those asserted in the Robinson Action referenced above. On August 16, 2023, plaintiffs in the Robinson and Goldstein Actions filed a motion for consolidation of the Robinson and Goldstein Actions and for appointment of lead plaintiff and lead counsel. On August 31, 2023, defendants opposed the motion for consolidation and concurrently moved to stay the Goldstein Action pending a decision on the motions to dismiss in the Robinson Action. The motion for consolidation and the motion to stay were fully briefed as of September 20, 2023. A hearing was held on October 6, 2023, at which the court (i) denied the motion for consolidation (without prejudice to renewing the motion post-decision on the motions to dismiss in the Robinson Action) and (ii) granted the motion to stay the Goldstein Action (pending the same decision). A hearing on defendants’ motions to dismiss the Robinson Action was held on December 1, 2023, after which the court reserved judgment. Stockholder derivative complaint Federal Derivative Litigation. Between December 1, 2021 and September 22, 2022, five purported ATI stockholders filed four derivative actions, purportedly on behalf of ATI, in the U.S. District Court for the Northern District of Illinois. On November 21, 2022, four of these stockholder plaintiffs, Vinay Kumar, Brendan Reginbald, Ziyang Nie and Julia Chang, filed a consolidated amended complaint against Labeed Diab, Joe Jordan, John Larsen, John Maldonado, Carmine Petrone, Christopher Krubert, Joanne Burns and James Parisi (collectively, the “Legacy ATI Defendants”), Drew McKnight, Joshua Pack, Aaron Hood, Carmen Policy, Marc Furstein, Leslee Cowen, Rafeket Russak-Aminoach, and Sunil Gulati (collectively, the “FVACII Individual Defendants”), and Fortress Acquisition Sponsor II, LLC and Fortress Investment Group LLC (together, the "Fortress Entity Defendants," and together with the FVACII Individual Defendants, the “FVACII Defendants”). The consolidated amended complaint asserts claims on behalf of ATI against: (i) the FVACII Defendants for breach of fiduciary duty; (ii) Fortress Acquisition Sponsor II, LLC and the Legacy ATI Defendants for aiding and abetting breach of fiduciary duty; (iii) Labeed Diab, Joe Jordan, and Drew McKnight for contribution under Section 21D of the Exchange Act; (iv) the FVACII Defendants under Section 14(a) of the Exchange Act; (v) the Legacy ATI Defendants for unjust enrichment; and (vi) all defendants for contribution and indemnification under Delaware law. Plaintiffs' allegations generally mirror those asserted in the stockholder class action described above. On January 20, 2023, defendants filed motions to dismiss the consolidated amended complaint, which remain pending. On March 3, 2023, in lieu of filing a response to defendants' motions to dismiss, plaintiffs filed a motion for leave to file an amended complaint, which was fully briefed as of April 7, 2023. On March 31, 2024, the court granted plaintiffs' motion for leave to file an amended complaint. On April 2, 2024, plaintiffs filed their consolidated second amended complaint, which, in addition to the derivative claims described above, asserted direct claims against: (i) the FVACII Defendants for breach of fiduciary duty; (ii) the Legacy ATI Defendants and Fortress Acquisition Sponsor II, LLC for aiding and abetting breach of fiduciary duty; and (iii) the Legacy ATI Defendants for unjust enrichment. Global settlement of the Federal Securities, Delaware, and Federal Derivative Litigations The parties to the foregoing litigations have reached agreements in principle to resolve all four cases. Specifically, the parties have agreed to settle all of the putative class (or direct) claims and all of the derivative claims in these actions for $26.5 million, in the aggregate (to be paid entirely by insurance), which agreements remain subject to the negotiation of formal settlement documentation, notice to the putative class, and court approval. A portion of the proceeds that the Company will be receiving in connection with the settlement of the derivative claims (subject to court approval) is being used to fund in part, the settlement of the putative class claims. In addition, the settlement of the putative class claims is contingent on court approval of the settlement of the derivative claims, and vice versa. The Company has recorded, in the aggregate, an estimated liability of $26.5 million related to these agreements in principle, which is included in accrued expenses and other liabilities in its unaudited condensed consolidated balance sheets as of March 31, 2024, and a corresponding insurance recovery receivable of $26.5 million, which is included in insurance recovery receivable in its unaudited condensed consolidated balance sheets as of March 31, 2024. As of December 31, 2023, the Company previously recorded an estimated liability of $20.0 million and a corresponding insurance recovery receivable of $20.0 million related to these matters. Insurance coverage complaint On March 8, 2023, the Company filed a complaint against Federal Insurance Company, U.S. Specialty Insurance Company and other insurers titled ATI Physical Therapy, Inc. v. Federal Insurance Company et. al., Case No. N23C-03-074, in the Superior Court of the State of Delaware related to a coverage dispute and those certain insurers’ denial of coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests discussed in this section. The complaint asserts claims against Federal Insurance Company for breach of contract and bad faith, and claims for declaratory judgment as to Federal Insurance Company, U.S. Specialty Insurance Company, XL Specialty Insurance Company and the Company’s excess insurance carriers, seeking coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests. On June 26, 2023, the Company filed an amended complaint asserting the same claims and seeking the same relief. On July 18, 2023, the defendants filed their answers to the amended complaint. On July 14, 2023, Federal Insurance Company issued a supplemental coverage position in which, subject to certain reservations and limitations, Federal Insurance Company accepted coverage for certain insureds with respect to the stockholder class action complaints and the stockholder derivative complaints. The insurance coverage litigation remains pending. During the third quarter of 2023, the Company began receiving insurance reimbursements for legal costs incurred related to the stockholder class action complaint and stockholder derivative complaint previously disclosed. The Company received $1.8 million in cash reimbursements during the three months ended March 31, 2024, and recognized $0.3 million of legal cost insurance reimbursements which is included as an offset to selling, general and administrative expenses in its unaudited condensed consolidated statements of operations for the three months ended March 31, 2024. Regulatory matters On November 5, 2021, the Company received from the SEC a voluntary request for the production of documents relating to the earnings forecast and financial information referenced in the Company's July 26, 2021 Form 8-K and related matters. The Company has subsequently received from the SEC additional requests for documents and information related to the same matters, and is cooperating with the SEC's review and investigation of those matters. Indemnifications The Company has agreed to indemnify its current and former directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by them in any action or proceeding to which any of them are, or are threatened to be, made a party by reason of their service as a director or officer. The Company maintains director and officer insurance coverage that would generally enable it to recover a portion of any amounts paid. The ultimate cost of current or potential future litigation may exceed the Company’s current insurance coverages and may have a material adverse impact on our results of operations, cash flows and financial condition. The Company also may be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. |
Loss per Share
Loss per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Loss per Share | Loss per Share Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the impact of securities that would have a dilutive effect on basic loss per share, if any. For the three months ended March 31, 2024 and 2023, shares of Series A Senior Preferred Stock are treated as participating securities and therefore are included in computing earnings per common share using the two-class method. The two-class method is an earnings allocation formula that calculates basic and diluted net earnings per common share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings as if the earnings for the year had been distributed. For the three months ended March 31, 2024 and 2023, the loss available to common stockholders is increased by the amount of the cumulative dividend and any redemption value adjustments for the Series A Senior Preferred Stock that was issued as part of the 2022 Debt Refinancing. As discussed in Note 8 - Borrowings , the Series B Preferred Stock are non-economic and represent voting rights only and, therefore, are not considered in the calculation of basic or diluted loss per share. The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data): Three Months Ended March 31, 2024 March 31, 2023 Basic and diluted loss per share: Net loss $ (13,523) $ (25,210) Less: Net income attributable to non-controlling interests 1,128 1,060 Less: Series A Senior Preferred redemption value adjustments (1) (1,562) — Less: Series A Senior Preferred cumulative dividend 6,183 5,303 Loss available to common stockholders $ (19,272) $ (31,573) Weighted average shares outstanding (2) 4,180 4,098 Basic and diluted loss per share $ (4.61) $ (7.70) (1) For the three months ended March 31, 2024, the Series A Senior Preferred Stock was remeasured to its redemption value. For the three months ended March 31, 2024, this adjustment included an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period. Refer to Note 10 - Mezzanine and Stockholders' Equity for additional information. (2) Included within weighted average shares outstanding following the 2022 Debt Refinancing are common shares issuable upon the exercise of the Series II Warrants, as the Series II Warrants are exercisable at any time for nominal consideration. As such, the shares are considered to be outstanding for the purpose of calculating basic and diluted loss per share. For the periods presented, basic and diluted loss per share were equal. The following number of shares issuable related to outstanding securities could potentially dilute earnings per share in the future (in thousands): Three Months Ended March 31, 2024 March 31, 2023 2L Notes (1) 10,825 — Series I Warrants 105 105 IPO Warrants 197 197 Restricted shares (2) 4 7 Stock options 98 100 RSUs 495 782 RSAs 1 3 Total 11,725 1,194 (1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes as of the end of the periods presented, and Conversion Price of $12.50 per share. (2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods. As the vesting thresholds have not yet been met as of the end of th e reporting period, 0.3 million Earnout Shares and approximately 0.2 million Vesting Shares were excluded from the basic and diluted shares outstanding calculations. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net loss attributable to ATI Physical Therapy, Inc. | $ (14,651) | $ (26,270) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Accounting Standards (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. |
Liquidity and going concern | Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these unaudited condensed consolidated financial statements are issued. As of March 31, 2024, the Company had $23.7 million in cash and cash equivalents and no available capacity under its revolving credit facility. The Company was in compliance with its minimum liquidity covenant under the 2022 Credit Agreement (as defined in Note 8) as of March 31, 2024. The Company plans to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. Future liquidity needs are expected to require additional sources of liquidity beyond operating results. Additional liquidity sources considered include but are not limited to: • raising additional debt and/or equity capital, • disposal of assets, and/or • other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. |
Use of estimates | Use of estimates The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change. Certain prior year amounts have been reclassified to conform to the current year presentation. The Company's unaudited condensed consolidated financial statements include its wholly-owned subsidiaries. All intercompany balances and accounts are eliminated in consolidation. |
Segment reporting | Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment. |
Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cash |
Recent accounting pronouncements | Recent accounting pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which provides guidance to improve the disclosures for reportable segments through enhanced disclosures about significant segment expenses. This ASU is effective for the Company's annual financial statements to be issued for the year ended December 31, 2024, and the Company's interim financial statements during the year ended December 31, 2025, with early adoption permitted. This ASU shall be applied on a retrospective basis for all prior periods presented in the financial statements. The Company expects to adopt this new accounting standard in its Annual Report on Form 10-K for the year ended December 31, 2024, and does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which provides guidance to improve the disclosures for income taxes primarily through enhanced rate reconciliation and income taxes paid disclosures. This ASU is effective for the Company's annual financial statements to be issued for the year ended December 31, 2025, with early adoption permitted, and shall be applied on a prospective basis. The Company expects to adopt this new accounting standard in its Annual Report on Form 10-K for the year ended December 31, 2025, and does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements. |
Divestitures (Tables)
Divestitures (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations | Major classes of assets and liabilities classified as held for sale as of March 31, 2024 and December 31, 2023 were as follows (in thousands): March 31, 2024 December 31, 2023 Property and equipment, net 646 674 Operating lease right-of-use assets 960 1,382 Total assets held for sale $ 1,606 $ 2,056 Current portion of operating lease liabilities 261 357 Operating lease liabilities 1,058 1,421 Total liabilities held for sale $ 1,319 $ 1,778 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Net Operating Revenue By Major Service Line and Associated Payor Class | The following table disaggregates net revenue by major service line for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Net patient revenue $ 165,407 $ 150,754 ATI Worksite Solutions (1) 9,331 9,201 Management Service Agreements (1) 3,733 3,725 Sports Medicine and other revenue (1) 3,001 3,252 $ 181,472 $ 166,932 (1) ATI Worksite Solutions, Management Service Agreements and Sports Medicine and other revenue are included within other revenue on the face of the unaudited condensed consolidated statements of operations. The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below: Three Months Ended March 31, 2024 March 31, 2023 Commercial 58.5 % 58.1 % Government 21.8 % 23.6 % Workers’ compensation 12.2 % 12.0 % Other (1) 7.5 % 6.3 % 100.0 % 100.0 % (1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement. |
Goodwill, Trade Name and Othe_2
Goodwill, Trade Name and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in The Carrying Amount of Goodwill | Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands): Goodwill at December 31, 2023 (1) $ 289,650 Impairment charges (2) — Goodwill at March 31, 2024 (1) $ 289,650 (1) Net of accumulated impairment losses of $1,045.7 million. (2) The Company did not note any triggering events during the three months ended March 31, 2024 that resulted in the recording of an impairment loss. |
Schedule of Carrying Amounts of Indefinite-Lived Intangible Assets | The table below summarizes the Company’s carrying amount of trade name and other intangible assets at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,940) (1,807) Accumulated amortization – other intangible assets (381) (370) Total trade name and other intangible assets, net $ 245,714 $ 245,858 (1) Not subject to amortization. |
Schedule of Carrying Amounts of Finite-Lived Intangible Assets | The table below summarizes the Company’s carrying amount of trade name and other intangible assets at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,940) (1,807) Accumulated amortization – other intangible assets (381) (370) Total trade name and other intangible assets, net $ 245,714 $ 245,858 (1) Not subject to amortization. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment and Depreciation Expense | Property and equipment consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Equipment $ 37,993 $ 37,980 Furniture and fixtures 14,414 14,311 Leasehold improvements 178,350 178,888 Automobiles — 4 Computer equipment and software 111,006 108,749 Construction-in-progress 918 2,134 342,681 342,066 Accumulated depreciation and amortization (248,866) (241,644) Property and equipment, net (1) $ 93,815 $ 100,422 (1) Excludes $0.6 million and $0.7 million reclassified as held for sale as of March 31, 2024 and December 31, 2023, respectively. Refer to Note 3 - Divestitures for additional information. The following table presents the amount of depreciation and amortization expense related to property and equipment recorded in rent, clinic supplies, contract labor and other and selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Rent, clinic supplies, contract labor and other $ 6,006 $ 6,458 Selling, general and administrative expenses 2,733 3,049 Total depreciation expense $ 8,739 $ 9,507 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Salaries and related costs $ 17,822 $ 37,630 Accrued legal settlement (1) 27,608 21,324 Credit balances due to patients and payors 8,188 7,712 Accrued interest 4,834 4,913 Accrued professional fees 3,938 4,146 Accrued occupancy costs 2,738 2,593 Accrued contract labor 2,452 2,255 Other payables and accrued expenses 8,625 7,862 Total $ 76,205 $ 88,435 (1) Includes estimated liability of $26.5 million and $20.0 million related to settlement agreement in principle as of March 31, 2024 and December 31, 2023, respectively. Refer to Note 14 - Commitments and Contingencies for additional information. |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt | Long-term debt, net consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Senior Secured Term Loan (1, 2) (due February 24, 2028) $ 410,048 $ 410,048 Revolving Loans (3) (due February 24, 2027) 43,473 38,450 Less: unamortized debt issuance costs (7,062) (7,395) Less: unamortized original issue discount (7,185) (7,525) Total debt, net 439,274 433,578 Less: current portion of long-term debt — — Long-term debt, net $ 439,274 $ 433,578 (1) Interest rate of 12.7% at both March 31, 2024 and December 31, 2023, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 13.9% at both March 31, 2024 and December 31, 2023. (2) As of both March 31, 2024 and December 31, 2023, the Company has paid $10.0 million of its interest in-kind on its Senior Secured Term Loan by capitalizing and adding such interest to the principal amount of the debt. (3) Weighted average interest rate of 9.5% at both March 31, 2024 and December 31, 2023, with interest payable in designated installments at a variable interest rate. 2L Notes due to related parties, at fair value consisted of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 2L Notes due to related parties, at fair value $ 95,615 $ 79,472 The following table presents changes in the principal amount of the 2L Notes during the current year (in thousands): March 31, 2024 2L Notes, principal amount at beginning of period $ 107,812 2L Notes issued during period 25,000 Paid-in-kind interest added during period 2,502 2L Notes, principal amount at end of period $ 135,314 |
Schedule of Debt Conversions For Voting Rights | The following table presents approximate changes in outstanding shares of Series B Preferred Stock during the current year (in thousands): March 31, 2024 Series B Preferred Stock, shares at beginning of period 108 Increase (decrease) in shares during period 27 Series B Preferred Stock, shares at end of period 135 Common stock voting rights, as converted basis (1) 10,514 (1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share. |
Schedule of Aggregate Maturities of Long-Term Debt | Aggregate maturities of the Company's borrowings at March 31, 2024 are as follows (in thousands): 2024 (remainder of year) $ — 2025 — 2026 — 2027 43,473 2028 545,362 Thereafter — Total future maturities (1) 588,835 Unamortized original issue discount and debt issuance costs (14,247) 2L Notes due to related parties, principal amount (1, 2) (135,314) Long-term debt, net (1) $ 439,274 (1) Excludes any contractual paid-in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates. (2) The principal amount of the 2L Notes differs from the estimated fair value presented on the unaudited condensed consolidated balance sheet due to the Company's election of the fair value option. Refer to Note 11 - Fair Value Measurements for further details on the fair value of the 2L Notes. |
Mezzanine and Stockholders' E_2
Mezzanine and Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of Temporary Equity | Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following during the current year (in thousands, except per share data): March 31, 2024 Aggregate stated value, beginning of period $ 206,095 Paid-in-kind dividends 6,183 Aggregate stated value, end of period $ 212,278 Preferred shares issued and outstanding, beginning of period 165 Preferred shares issued and outstanding, end of period 165 Stated value per share, beginning of period $ 1,249.06 Stated value per share, end of period $ 1,286.53 Changes in the carrying value of the Series A Senior Preferred Stock during the three months ended March 31, 2024 consisted of the following (in thousands). There were no changes in the carrying value of the Series A Senior Preferred Stock during the three months ended March 31, 2023: March 31, 2024 Carrying value, beginning of period $ 220,393 Paid-in-kind dividends recognized to carrying value 6,183 Redemption value adjustment (1,562) Carrying value, end of period $ 225,014 |
Schedule of Shares of Class A Common Stock Reserved for Potential Future Issuance | As of March 31, 2024, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands): March 31, 2024 2L Notes (1) 10,825 Shares available for grant under the 2021 Plan 251 2021 Plan share-based awards outstanding 594 Earnout Shares reserved 300 2022 Warrant shares reserved 230 IPO Warrant shares reserved 197 Vesting Shares reserved (2) 173 Restricted shares (2) 4 Total shares of common stock reserved 12,574 (1) Calculated based on the principal amount of 2L Notes and Conversion Price of $12.50 per share. This figure differs from the contractual Voting Rights Conversion Price of $12.87 as outlined in Note 8 - Borrowings. (2) Represents shares of Class A common stock legally issued, but not outstanding, as of March 31, 2024. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Key Fair Value Measurement Inputs | The key inputs into the Bond Plus Call Model used to estimate the fair value of the 2L Notes were as follows as of March 31, 2024 and December 31, 2023: 2L Notes March 31, 2024 December 31, 2023 Risk-free interest rate 4.2% 3.8% Volatility 45.0% 45.0% Selected yield 20.9% 20.5% Expected term (years) 4.5 4.7 Share price $5.58 $6.14 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents the changes in the fair value of the 2L Notes that is recognized in change in fair value of 2L Note s in the unaudited condensed consolidated statements of operations for the periods indicated below (in thousands). None of the change in fair value is attributable to instrument-specific credit risk: Three Months Ended March 31, 2024 Fair value, beginning of period $ 79,472 2L Notes issued during the period 25,000 De-recognition of original issuance discount (1) (3,450) Decrease in fair value (5,407) Fair value, end of period $ 95,615 (1) The de-recognition of the Delayed Draw Right assets reduced the initial carrying value of 2L Notes issued under the Delayed Draw Right in the form of an original issuance discount. As the Company accounts for the 2L Notes under the fair value option, the original issuance discount was subsequently de-recognized as a component of the initial fair value calculation of the issued 2L Notes. |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table presents the activity of cash flow hedges included in accumulated other comprehensive income (loss) for the three months ended March 31, 2024 and 2023, respectively (in thousands): Cash Flow Hedges Balance as of December 31, 2023 $ 406 Unrealized (gain) loss recognized in other comprehensive income before reclassifications — Reclassification to interest expense, net (140) Balance as of March 31, 2024 $ 266 Balance as of December 31, 2022 $ 4,899 Unrealized gain recognized in other comprehensive income before reclassifications (99) Reclassification to interest expense, net (3,357) Balance as of March 31, 2023 $ 1,443 |
Schedule of Fair Value of Derivative Assets and Liabilities | The following table presents t he fair value of derivative assets and liabilities within the unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Assets Liabilities Assets Liabilities Derivatives not designated as cash flow hedging instruments: Other current assets $ 187 — $ 33 — Other non-current liabilities — — — $ 62 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Lease Cost, Supplemental Cash Flow, and Other Information Related to Leases | The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Lease cost Operating lease cost (1) $ 16,918 $ 16,689 Variable lease cost (2) 5,243 5,362 Total lease cost (3) $ 22,161 $ 22,051 (1) Includes ROU asset impairment charges for the three months ended March 31, 2024, which are immaterial. (2) Includes short term lease costs, which are immaterial. (3) Total lease cost does not include sublease income. Sublease income for the three months ended March 31, 2024 primarily relates to the sublease of the Company's executive offices effective January 1, 2024, and is immaterial. Sublease income for the three months ended March 31, 2023 primarily relates to subleases of certain clinic facilities to third parties, and is immaterial. Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 17,739 $ 13,133 Right-of-use assets obtained in exchange for new operating lease liabilities $ 140 $ 4,898 Average lease terms and discount rates as of March 31, 2024 and December 31, 2023 were as follows: March 31, 2024 December 31, 2023 Weighted-average remaining lease term: Operating leases 5.3 years 5.4 years Weighted-average discount rate: Operating leases 7.8% 7.4% |
Schedule of Estimated Undiscounted Future Lease Payments | Estimated undiscounted future lease payments under non-cancellable operating leases, along with a reconciliation of the undiscounted cash flows to operating lease liabilities, respectively, at March 31, 2024 were as follows (in thousands): Year Amount (1) 2024 (remainder of year) $ 51,149 2025 59,904 2026 52,293 2027 40,838 2028 29,302 Thereafter 52,910 Total undiscounted future cash flows 286,396 Less: Imputed Interest (53,082) Present value of future cash flows $ 233,314 Presentation on Balance Sheet: Current $ 51,339 Non-current $ 181,975 (1) Excludes $0.3 million of current portion of operating lease liabilities and $1.1 million of operating lease liabilities, respectively, reclassified as held for sale as of March 31, 2024. Refer to Note 3 - Divestitures for additional information. |
Loss per Share (Tables)
Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Both Basic and Diluted Loss Per Share | The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data): Three Months Ended March 31, 2024 March 31, 2023 Basic and diluted loss per share: Net loss $ (13,523) $ (25,210) Less: Net income attributable to non-controlling interests 1,128 1,060 Less: Series A Senior Preferred redemption value adjustments (1) (1,562) — Less: Series A Senior Preferred cumulative dividend 6,183 5,303 Loss available to common stockholders $ (19,272) $ (31,573) Weighted average shares outstanding (2) 4,180 4,098 Basic and diluted loss per share $ (4.61) $ (7.70) (1) For the three months ended March 31, 2024, the Series A Senior Preferred Stock was remeasured to its redemption value. For the three months ended March 31, 2024, this adjustment included an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period. Refer to Note 10 - Mezzanine and Stockholders' Equity for additional information. (2) Included within weighted average shares outstanding following the 2022 Debt Refinancing are common shares issuable upon the exercise of the Series II Warrants, as the Series II Warrants are exercisable at any time for nominal consideration. As such, the shares are considered to be outstanding for the purpose of calculating basic and diluted loss per share. |
Schedule of Antidilutive Securities Excluded From Computation of Diluted Shares Outstanding | For the periods presented, basic and diluted loss per share were equal. The following number of shares issuable related to outstanding securities could potentially dilute earnings per share in the future (in thousands): Three Months Ended March 31, 2024 March 31, 2023 2L Notes (1) 10,825 — Series I Warrants 105 105 IPO Warrants 197 197 Restricted shares (2) 4 7 Stock options 98 100 RSUs 495 782 RSAs 1 3 Total 11,725 1,194 (1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes as of the end of the periods presented, and Conversion Price of $12.50 per share. (2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods. |
Overview of the Company (Detail
Overview of the Company (Details) | Mar. 31, 2024 clinic state |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of stores | 884 |
Number of states in which entity operates | state | 24 |
Number of stores under management service agreements | 18 |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Accounting Standards - Narrative (Details) | 3 Months Ended | |||||
Jun. 15, 2023 USD ($) | Jun. 14, 2023 | Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Feb. 24, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Reverse stock split, conversion ratio | 0.02 | |||||
Cash and cash equivalents | $ 23,727,000 | $ 36,802,000 | ||||
Cash used in operations | 39,066,000 | $ 14,224,000 | ||||
Operating loss | 4,778,000 | 11,369,000 | ||||
Net loss | $ 13,523,000 | $ 25,210,000 | ||||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Restricted cash included within cash and cash equivalents | $ 800,000 | $ 800,000 | ||||
Delayed Draw Right | Convertible Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Debt amount | $ 25,000,000 | 25,000,000 | ||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Principal payments on long-term debt | 100,000,000 | |||||
2L Notes | Convertible Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Proceeds from issuance of additional long term debt | 3,200,000 | |||||
Proceeds from long-term debt | $ 100,000,000 | |||||
2022 Credit Agreement | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Debt amount | $ 550,000,000 | |||||
2022 Credit Agreement | Secured Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Debt amount | $ 500,000,000 | |||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Line of credit facility borrowing capacity | $ 0 |
Divestitures - Assets and Liabi
Divestitures - Assets and Liabilities Classified as Held For Sale (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
2024 Clinics Held For Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Property and equipment, net | $ 646 | |
Operating lease right-of-use assets | 960 | |
Total assets held for sale | 1,606 | |
Current portion of operating lease liabilities | 261 | |
Operating lease liabilities | 1,058 | |
Total liabilities held for sale | $ 1,319 | |
2023 Clinics Held For Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Property and equipment, net | $ 674 | |
Operating lease right-of-use assets | 1,382 | |
Total assets held for sale | 2,056 | |
Current portion of operating lease liabilities | 357 | |
Operating lease liabilities | 1,421 | |
Total liabilities held for sale | $ 1,778 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 181,472 | $ 166,932 |
Net patient revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 165,407 | $ 150,754 |
Net operating revenue (as percent) | 100% | 100% |
Net patient revenue | Commercial | ||
Disaggregation of Revenue [Line Items] | ||
Net operating revenue (as percent) | 58.50% | 58.10% |
Net patient revenue | Government | ||
Disaggregation of Revenue [Line Items] | ||
Net operating revenue (as percent) | 21.80% | 23.60% |
Net patient revenue | Workers’ compensation | ||
Disaggregation of Revenue [Line Items] | ||
Net operating revenue (as percent) | 12.20% | 12% |
Net patient revenue | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net operating revenue (as percent) | 7.50% | 6.30% |
ATI Worksite Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 9,331 | $ 9,201 |
Management Service Agreements | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 3,733 | 3,725 |
Sports Medicine and other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 3,001 | $ 3,252 |
Goodwill, Trade Name and Othe_3
Goodwill, Trade Name and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning balance | $ 289,650 | |
Impairment charges | 0 | |
Goodwill, ending balance | 289,650 | |
Accumulated goodwill impairment loss | $ 1,045,700 | $ 1,045,700 |
Goodwill, Trade Name and Othe_4
Goodwill, Trade Name and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Total trade name and other intangible assets, net | $ 245,714 | $ 245,858 |
ATI trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross intangible assets | 245,000 | 245,000 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets: | 2,395 | 2,395 |
Accumulated amortization: | (1,940) | (1,807) |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets: | 640 | 640 |
Accumulated amortization: | $ (381) | $ (370) |
Property and Equipment - Carryi
Property and Equipment - Carrying Amount (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 342,681 | $ 342,066 |
Accumulated depreciation and amortization | (248,866) | (241,644) |
Property and equipment, net | 93,815 | 100,422 |
Disposal Group, Held-for-sale, Not Discontinued Operations | 2024 Clinics Held For Sale | ||
Property, Plant and Equipment [Line Items] | ||
Disposal group, including discontinued operation, property, plant and equipment | 646 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | 2023 Clinics Held For Sale | ||
Property, Plant and Equipment [Line Items] | ||
Disposal group, including discontinued operation, property, plant and equipment | 674 | |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 37,993 | 37,980 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 14,414 | 14,311 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 178,350 | 178,888 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 4 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 111,006 | 108,749 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 918 | $ 2,134 |
Property and Equipment - Deprec
Property and Equipment - Depreciation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Total depreciation expense | $ 8,739 | $ 9,507 |
Rent, clinic supplies, contract labor and other | ||
Property, Plant and Equipment [Line Items] | ||
Total depreciation expense | 6,006 | 6,458 |
Selling, general and administrative expenses | ||
Property, Plant and Equipment [Line Items] | ||
Total depreciation expense | $ 2,733 | $ 3,049 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 17,822 | $ 37,630 |
Accrued legal settlement | 27,608 | 21,324 |
Credit balances due to patients and payors | 8,188 | 7,712 |
Accrued interest | 4,834 | 4,913 |
Accrued professional fees | 3,938 | 4,146 |
Accrued occupancy costs | 2,738 | 2,593 |
Accrued contract labor | 2,452 | 2,255 |
Other payables and accrued expenses | 8,625 | 7,862 |
Total | $ 76,205 | $ 88,435 |
Borrowings - Long-Term Debt (De
Borrowings - Long-Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 15, 2023 | Jun. 14, 2023 | |
Debt Instrument [Line Items] | ||||||
Debt, gross | $ 588,835 | $ 588,835 | ||||
Paid-in-kind interest added during period | 0 | $ 1,736 | ||||
Senior Secured Term Loan And 2022 Credit Agreement | Secured Debt And Line Of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Less: unamortized debt issuance costs | (7,062) | $ (7,395) | (7,062) | |||
Less: unamortized original issue discount | (7,185) | (7,525) | (7,185) | |||
Total debt, net | 439,274 | 433,578 | 439,274 | |||
Less: current portion of long-term debt | 0 | 0 | 0 | |||
Long-term debt, net | $ 439,274 | $ 433,578 | $ 439,274 | |||
Senior Secured Term Loan (due February 24, 2028) | ||||||
Debt Instrument [Line Items] | ||||||
State interest rate (in percent) | 12.70% | 12.70% | 12.70% | |||
Effective interest rate (in percent) | 13.90% | 13.90% | 13.90% | |||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt, gross | $ 410,048 | $ 410,048 | $ 410,048 | $ 407,800 | $ 507,800 | |
Paid-in-kind interest added during period | 10,000 | 10,000 | ||||
2022 Credit Agreement | Secured Debt And Line Of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Total debt, net | 439,274 | 439,274 | ||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt, gross | 43,473 | 38,450 | 43,473 | |||
Less: unamortized debt issuance costs | $ (400) | $ (500) | $ (400) | |||
Weighted average interest rate | 9.50% | 9.50% |
Borrowings - Schedule of Fair V
Borrowings - Schedule of Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Convertible Debt | 2L Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 95,615 | $ 79,472 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2024 USD ($) | Jun. 15, 2023 USD ($) $ / shares shares | Feb. 24, 2022 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Jun. 14, 2023 USD ($) | ||
Debt Instrument [Line Items] | ||||||||
Debt, gross | $ 588,835,000 | $ 588,835,000 | ||||||
Delayed draw right assets | $ 3,500,000 | |||||||
Warrants purchase common stock aggregate stated value | $ 165,000,000 | |||||||
Long-term debt, net | [1] | 439,274,000 | 439,274,000 | $ 433,578,000 | ||||
Payments on revolving line of credit | 18,450,000 | $ 0 | ||||||
Proceeds from revolving line of credit | 23,473,000 | $ 0 | ||||||
Related Party | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt, net | 17,000,000 | 17,000,000 | 17,000,000 | |||||
Series B Preferred Stock, Voting Rights | ||||||||
Debt Instrument [Line Items] | ||||||||
Preferred stock, convertible, conversion price (in dollars per share) | $ / shares | $ 12.87 | |||||||
Convertible Debt | Knighthead Capital Management, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | 12,000,000 | 12,000,000 | ||||||
Convertible Debt | Marathon Asset Management LP | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | 8,000,000 | 8,000,000 | ||||||
Convertible Debt | Caspian Capital L.P | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | 5,000,000 | 5,000,000 | ||||||
2L Notes | Convertible Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from long-term debt | $ 100,000,000 | |||||||
Debt, gross | 135,314,000 | 135,314,000 | 107,812,000 | |||||
Original issuance discount (premium) | (700,000) | |||||||
Delayed draw right assets | $ 2,800,000 | |||||||
State interest rate (in percent) | 8% | |||||||
Debt instrument, convertible, conversion price ( in usd per share) | $ / shares | $ 12.50 | |||||||
Number of shares issued with 1,000 of debt | shares | 0.001 | |||||||
Proceeds from issuance of additional long term debt | $ 3,200,000 | |||||||
Fair value | $ 95,615,000 | $ 95,615,000 | 79,472,000 | |||||
Effective interest rate (in percent) | 8% | 8% | ||||||
2L Notes | Convertible Debt | Onex Credit Partners, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from long-term debt | 8,800,000 | |||||||
Debt, gross | $ 9,700,000 | $ 9,700,000 | 9,500,000 | |||||
2L Notes | Convertible Debt | Knighthead Capital Management, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from long-term debt | 50,800,000 | |||||||
Debt, gross | 68,000,000 | 68,000,000 | 54,700,000 | |||||
2L Notes | Convertible Debt | Marathon Asset Management LP | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from long-term debt | 40,400,000 | |||||||
Debt, gross | 52,600,000 | 52,600,000 | $ 43,600,000 | |||||
2L Notes | Convertible Debt | Caspian Capital L.P | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | $ 5,000,000 | $ 5,000,000 | ||||||
Senior Secured Term Loan (due February 24, 2028) | ||||||||
Debt Instrument [Line Items] | ||||||||
State interest rate (in percent) | 12.70% | 12.70% | 12.70% | |||||
Effective interest rate (in percent) | 13.90% | 13.90% | 13.90% | |||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal payments on long-term debt | 100,000,000 | |||||||
Debt, gross | $ 410,048,000 | 407,800,000 | $ 410,048,000 | $ 410,048,000 | $ 507,800,000 | |||
Loss on extinguishment of debt | 400,000 | |||||||
De-recognition of original issuance discount | 4,300,000 | |||||||
Original issuance discount (premium) | $ 1,800,000 | |||||||
Interest rate period increase | 1% | |||||||
Interest in-kind interest to pay | 2% | |||||||
Premium rate | 0.50% | 0.50% | 0.50% | |||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Floor rate (as a percent) | 1% | |||||||
Basis spread on variable rate (as a percent) | 7.25% | |||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | HPS Investment Partners, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | $ 391,000,000 | |||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Onex Credit Partners, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | 16,300,000 | |||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Knighthead Capital Management, LLC | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | 300,000 | |||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Marathon Asset Management LP | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | $ 200,000 | |||||||
2022 Credit Agreement | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | $ 550,000,000 | |||||||
Prepayment upon insurance proceeds in excess of | $ 10,000,000 | |||||||
2022 Credit Agreement | Through the fourth quarter of 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Minimum liquidity amount | $ 10,000,000 | $ 10,000,000 | ||||||
2022 Credit Agreement | Beginning first quarter of 2025 | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum debt to EBITDA ratio allowed | 11 | |||||||
2022 Credit Agreement | Through second quarter of 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum debt to EBITDA ratio allowed | 7 | |||||||
2022 Credit Agreement | Secured Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | $ 500,000,000 | |||||||
2022 Credit Agreement | Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, commitment fee percentage | 0.50% | |||||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt, gross | 43,473,000 | $ 43,473,000 | 38,450,000 | |||||
Interest rate period increase | 1% | |||||||
Maximum borrowing capacity | $ 50,000,000 | |||||||
Borrowings outstanding | $ 43,500,000 | 43,500,000 | 38,500,000 | |||||
Payments on revolving line of credit | 18,500,000 | |||||||
Proceeds from revolving line of credit | $ 23,500,000 | |||||||
Weighted average interest rate | 9.50% | 9.50% | ||||||
Balance of unamortized issuance costs | $ 400,000 | $ 400,000 | 500,000 | |||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate (as a percent) | 4.20% | |||||||
2022 Credit Agreement | Line of Credit | Letter of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | $ 10,000,000 | |||||||
Letters of credit outstanding | $ 6,500,000 | 6,500,000 | $ 6,500,000 | |||||
Delayed Draw Right | Convertible Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt amount | $ 25,000,000 | $ 25,000,000 | $ 25,000,000 | |||||
[1] Includes $17.0 million of principal amount of debt due to related parties as of March 31, 2024 and December 31, 2023, respectively. |
Borrowings - Schedule of Stock
Borrowings - Schedule of Stock Conversion (Details) - Series B Preferred Stock, Voting Rights - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Jun. 15, 2023 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Series B Preferred Stock, shares at Closing Date (in shares) | 108,000 | |
Increase (decrease) in shares during period (in shares) | 27,000 | |
Series B Preferred Stock, shares at end of period (in shares) | 135,000 | |
Common stock voting rights, as converted basis (in shares) | 10,514,000 | |
Preferred stock, convertible, conversion price (in dollars per share) | $ 12.87 |
Borrowings - Schedule of Princi
Borrowings - Schedule of Principal Amount (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Debt Instrument Principal [Roll Forward] | ||
Paid-in-kind interest added during period | $ 0 | $ 1,736 |
2L Notes, principal amount at end of period | 588,835 | |
2L Notes | Convertible Debt | ||
Debt Instrument Principal [Roll Forward] | ||
2L Notes, principal amount at beginning of period | 107,812 | |
2L Notes issued during period | 25,000 | |
Paid-in-kind interest added during period | 2,502 | |
2L Notes, principal amount at end of period | $ 135,314 |
Borrowings - Maturities (Detail
Borrowings - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Debt Instrument [Line Items] | ||
2024 (remainder of year) | $ 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 43,473 | |
2028 | 545,362 | |
Thereafter | 0 | |
Total future maturities | 588,835 | |
Unamortized original issue discount and debt issuance costs | (14,247) | |
2L Notes | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Total future maturities | $ 135,314 | $ 107,812 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 12,574 | |
Non-cash share-based compensation | $ 2,268 | $ 1,454 |
2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance ( in shares) | 1,200 | |
Common stock, capital shares reserved for future issuance (in shares) | 300 |
Mezzanine and Stockholders' E_3
Mezzanine and Stockholders' Equity - Narrative (Details) | 3 Months Ended | |||||
Mar. 31, 2024 USD ($) vote $ / shares shares | Feb. 24, 2022 USD ($) director $ / shares shares | Mar. 31, 2024 USD ($) vote $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares shares | Jun. 15, 2023 director | |
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | 200,000 | 200,000 | 200,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Preferred stock, stated value (in dollars per share) | $ / shares | $ 1,286.53 | $ 1,286.53 | $ 1,249.06 | |||
Warrants purchase common stock aggregate stated value | $ | $ 165,000,000 | |||||
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred stock, shares outstanding (in shares) | 200,000 | 200,000 | 200,000 | |||
Carrying value | $ | $ 225,014,000 | $ 225,014,000 | $ 220,393,000 | |||
Common stock, shares authorized (in shares) | 470,000,000 | 470,000,000 | 470,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares Issued (in shares) | 4,500,000 | 4,500,000 | 4,200,000 | |||
Common stock, shares outstanding (in shares) | 4,200,000 | 4,200,000 | 4,000,000 | |||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | 78,412 | |||||
Treasury stock (in shares) | 85,206 | 85,206 | 7,000 | |||
Treasury stock, common, value | $ | $ 697,000 | $ 697,000 | $ 219,000 | |||
Series I Warrants | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issuable by each warrant | 100,000 | |||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 150 | |||||
Series II Warrants | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issuable by each warrant | 100,000 | |||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 0.50 | |||||
Series A Preferred | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | 165,000 | 165,000 | 165,000 | 165,000 | ||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||
Preferred stock, stated value (in dollars per share) | $ / shares | $ 1,000 | |||||
Preferred stock, shares authorized (in shares) | 1,000,000 | |||||
Preferred stock, shares outstanding (in shares) | 165,000 | 165,000 | 165,000 | |||
Annual dividend rate | 12% | |||||
Discount on dividends | 1% | |||||
In-kind increasing percentage | 1% | |||||
Dividend rate, occurrence, increase percent | 2% | |||||
Dividends, preferred stock, paid-in-kind | $ | $ 6,183,000 | $ 5,300,000 | ||||
Accumulated paid in-kind dividends | $ | $ 47,300,000 | |||||
Aggregate stated value | $ | 212,278,000 | 212,278,000 | $ 206,095,000 | |||
Number of directors equity holders can elect | director | 1 | |||||
Change in voting rights, ADBITDA threshold | $ | $ 100,000,000 | |||||
Change in voting rights, change in ownership percent | 50.10% | |||||
Carrying value | $ | $ 225,000,000 | $ 225,000,000 | ||||
Series A Senior Preferred Stock | ||||||
Class of Stock [Line Items] | ||||||
Number of additional directors electable by holders | director | 3 | |||||
Number of total directors electable by holders | director | 4 | |||||
Number of unaffiliated directors | director | 1 | |||||
Class A Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares authorized (in shares) | 470,000,000 | 470,000,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common stock voting rights | vote | 1 | 1 | ||||
Common stock, shares Issued (in shares) | 4,500,000 | 4,500,000 | ||||
Common stock, shares outstanding (in shares) | 4,200,000 | 4,200,000 | ||||
Class A Common Stock | Series I Warrants | ||||||
Class of Stock [Line Items] | ||||||
Exercise period | 5 years | |||||
Class A Common Stock | Series II Warrants | ||||||
Class of Stock [Line Items] | ||||||
Exercise period | 5 years |
Mezzanine and Stockholders' E_4
Mezzanine and Stockholders' Equity - Aggregate Stated Value Of Series A Senior Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Feb. 24, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Preferred stock, shares issued (in shares) | 200,000 | 200,000 | ||
Preferred stock, shares outstanding (in shares) | 200,000 | 200,000 | ||
Stated value (in dollars per share) | $ 1,286.53 | $ 1,249.06 | ||
Series A Preferred | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Aggregate stated value, beginning | $ 206,095 | |||
Paid in-kind dividends | 6,183 | $ 5,300 | ||
Aggregate stated value, ending | $ 212,278 | |||
Preferred stock, shares issued (in shares) | 165,000 | 165,000 | 165,000 | |
Preferred stock, shares outstanding (in shares) | 165,000 | 165,000 | ||
Stated value (in dollars per share) | $ 1,000 |
Mezzanine and Stockholders' E_5
Mezzanine and Stockholders' Equity Schedule Of Temporary Equity (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Carrying value, beginning of period | $ 220,393 |
Paid-in-kind dividends recognized to carrying value | 6,183 |
Redemption value adjustment | (1,562) |
Carrying value, end of period | $ 225,014 |
Mezzanine and Stockholders' E_6
Mezzanine and Stockholders' Equity - Reserved Shares (Details) - $ / shares shares in Thousands | Mar. 31, 2024 | Jun. 15, 2023 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 12,574 | |
Series B Preferred Stock, Voting Rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Preferred stock, convertible, conversion price (in dollars per share) | $ 12.87 | |
2L Notes | Convertible Debt | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Debt instrument, convertible, conversion price ( in usd per share) | $ 12.50 | |
2L Notes | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 10,825 | |
Shares available for grant under the 2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 251 | |
Earnout Shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 300 | |
2022 Warrant shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 230 | |
IPO Warrant shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 197 | |
Vesting Shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 173 | |
Restricted shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 4 | |
2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 300 | |
2021 Plan | Shares available for grant under the 2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 594 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Senior Secured Term Loan (due February 24, 2028) $ in Millions | Mar. 31, 2024 USD ($) |
Reported Value Measurement | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Total debt, net | $ 395.8 |
Estimate of Fair Value Measurement | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Total debt, net | $ 372.3 |
Fair Value Measurements - Conve
Fair Value Measurements - Convertible Bond Valuation Model (Details) - 2L Notes - Convertible Debt - Fair Value, Inputs, Level 3 | Mar. 31, 2024 $ / shares yr | Dec. 31, 2023 $ / shares yr |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 0.042 | 0.038 |
Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 0.450 | 0.450 |
Selected yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | 0.209 | 0.205 |
Expected term (years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | yr | 4.5 | 4.7 |
Share price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input | $ / shares | 5.58 | 6.14 |
Fair Value Measurements - Recog
Fair Value Measurements - Recognized in Change in Fair Value (Details) - 2L Notes - Convertible Debt $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Schedule of Changes in Fair Value | |
Fair value, beginning of period | $ 79,472 |
2L Notes issued during period | 25,000 |
De-recognition of original issuance discount | (3,450) |
Decrease in fair value | (5,407) |
Fair value, end of period | $ 95,615 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flow Hedges | ||
Beginning balance | $ (95,855) | $ 48,447 |
Unrealized (gain) loss recognized in other comprehensive income before reclassifications | 0 | (99) |
Reclassification to interest expense, net | (140) | (3,357) |
Ending balance | (113,404) | 20,474 |
Cash Flow Hedges | ||
Cash Flow Hedges | ||
Beginning balance | 406 | 4,899 |
Ending balance | $ 266 | $ 1,443 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Fair Value Reconciliation (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Other current assets | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | $ 187 | $ 33 |
Other non-current liabilities | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | $ 0 | $ 62 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Effect income tax rate (benefit) expense | (1.00%) | 0.20% |
Income tax (benefit) expense | $ (134) | $ 62 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Lessee, Lease, Description [Line Items] | ||
Operating lease assets additions | $ 9.6 | $ 5.9 |
Operating lease liabilities, additions | $ 9.6 | $ 5.9 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Initial operating lease term | 7 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Initial operating lease term | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases [Abstract] | ||
Operating lease cost | $ 16,918 | $ 16,689 |
Variable lease cost | 5,243 | 5,362 |
Total lease cost | 22,161 | $ 22,051 |
Impairment charges | 0 | |
Short-term lease, cost | $ 0 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 17,739 | $ 13,133 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 140 | $ 4,898 |
Leases - Other Information (Det
Leases - Other Information (Details) | Mar. 31, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
Weighted-average remaining lease term: Operating leases | 5 years 3 months 18 days | 5 years 4 months 24 days |
Weighted-average discount rate: Operating leases | 7.80% | 7.40% |
Leases - Maturity (Details)
Leases - Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
2024 (remainder of year) | $ 51,149 | |
2025 | 59,904 | |
2026 | 52,293 | |
2027 | 40,838 | |
2028 | 29,302 | |
Thereafter | 52,910 | |
Total undiscounted future cash flows | 286,396 | |
Less: Imputed Interest | (53,082) | |
Present value of future cash flows | 233,314 | |
Operating Lease, Liability [Abstract] | ||
Current | 51,339 | $ 51,530 |
Non-current | 181,975 | $ 185,602 |
Disposal Group, Held-for-sale, Not Discontinued Operations | 2024 Clinics Held For Sale | ||
Operating Lease, Liability [Abstract] | ||
Current portion of operating lease liabilities | 261 | |
Operating lease liabilities | $ 1,058 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 10 Months Ended | |||
Aug. 16, 2021 plaintiff | Mar. 31, 2024 USD ($) claim | Sep. 22, 2022 plaintiff claim | Dec. 31, 2023 USD ($) | Nov. 21, 2022 plaintiff | |
Loss Contingencies [Line Items] | |||||
Contractual obligation | $ 34,700 | ||||
Number of plaintiffs who filed consolidated amended complaint | plaintiff | 4 | ||||
Insurance recovery receivable | 28,680 | $ 23,981 | |||
Proceeds from legal cost insurance reimbursements | 1,800 | ||||
Insurance recoveries | $ 300 | ||||
ATI Shareholders vs ATI Individual Defendants | |||||
Loss Contingencies [Line Items] | |||||
Number of plaintiffs | plaintiff | 2 | ||||
Number Of Cases | claim | 4 | ||||
Estimated liability | $ 26,500 | 20,000 | |||
Insurance recovery receivable | $ 26,500 | $ 20,000 | |||
Derivative Action | |||||
Loss Contingencies [Line Items] | |||||
Number of plaintiffs | plaintiff | 5 | ||||
Claims filed | claim | 4 |
Loss per Share - Loss per Share
Loss per Share - Loss per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Basic and diluted loss per share: | ||
Net loss | $ (13,523) | $ (25,210) |
Less: Net income attributable to non-controlling interests | 1,128 | 1,060 |
Less: Series A Senior Preferred redemption value adjustments | (1,562) | 0 |
Less: Series A Senior Preferred Stock cumulative dividend | 6,183 | 5,303 |
Loss available to common stockholders, basic | (19,272) | (31,573) |
Loss available to common stockholders, diluted | $ (19,272) | $ (31,573) |
Weighted average shares outstanding, basic (in shares) | 4,180 | 4,098 |
Weighted average shares outstanding, diluted (in shares) | 4,180 | 4,098 |
Basic loss per share (in dollars per share) | $ (4.61) | $ (7.70) |
Diluted loss per share (in dollars per share) | $ (4.61) | $ (7.70) |
Loss per Share - Antidilutive S
Loss per Share - Antidilutive Securities (Details) - $ / shares shares in Thousands | 3 Months Ended | |||
Jun. 16, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 15, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 11,725 | 1,194 | ||
2L Notes | Convertible Debt | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt instrument, convertible, conversion price ( in usd per share) | $ 12.50 | |||
Earnout Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Contingent consideration liability (in shares) | 300 | |||
Vesting Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Contingent consideration liability (in shares) | 200 | |||
2L Notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 10,825 | 0 | ||
Series I Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 105 | 105 | ||
IPO Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 197 | 197 | ||
Restricted shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 1 | 3 | ||
Restricted shares | Wilco Holdco, Inc. | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 4 | 7 | ||
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 98 | 100 | ||
RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities (in shares) | 495 | 782 |