Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 07, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | U S PHYSICAL THERAPY INC /NV | |
Entity Central Index Key | 0000885978 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 12,774,157 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Address, State or Province | TX |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 27,856 | $ 23,368 |
Patient accounts receivable, less allowance for doubtful accounts of $2,569 and $2,672, respectively | 47,118 | 44,751 |
Accounts receivable - other | 10,462 | 6,742 |
Other current assets | 7,098 | 4,353 |
Total current assets | 92,534 | 79,214 |
Fixed assets: | ||
Furniture and equipment | 54,464 | 52,611 |
Leasehold improvements | 31,948 | 31,712 |
Fixed assets, gross | 86,412 | 84,323 |
Less accumulated depreciation and amortization | 65,040 | 64,154 |
Fixed assets, net | 21,372 | 20,169 |
Operating lease right-of-use assets | 79,793 | 0 |
Goodwill | 316,639 | 293,525 |
Other identifiable intangible assets, net | 53,385 | 48,828 |
Other assets | 1,470 | 1,430 |
Total assets | 565,193 | 443,166 |
Current liabilities: | ||
Accounts payable - trade | 2,863 | 2,019 |
Accrued expenses | 33,573 | 38,493 |
Current portion of operating lease liabilities | 25,644 | 0 |
Current portion of notes payable | 718 | 1,434 |
Total current liabilities | 62,798 | 41,946 |
Notes payable, net of current portion | 4,292 | 402 |
Revolving line of credit | 51,000 | 38,000 |
Deferred taxes | 10,336 | 9,012 |
Deferred rent | 0 | 2,159 |
Operating lease liabilities, net of current portion | 58,921 | 0 |
Other long-term liabilities | 718 | 829 |
Total liabilities | 188,065 | 92,348 |
Redeemable non-controlling interests | 139,801 | 133,943 |
U.S. Physical Therapy, Inc. ("USPH") shareholders' equity: | ||
Preferred stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value, 20,000,000 shares authorized, 14,988,894 and 14,899,233 shares issued, respectively | 150 | 149 |
Additional paid-in capital | 85,828 | 80,028 |
Retained earnings | 181,135 | 167,396 |
Treasury stock at cost, 2,214,737 shares | (31,628) | (31,628) |
Total USPH shareholders' equity | 235,485 | 215,945 |
Non-controlling interests | 1,842 | 930 |
Total USPH shareholders' equity and non-controlling interests | 237,327 | 216,875 |
Total liabilities, redeemable non-controlling interests, USPH shareholders' equity and non-controlling interests | $ 565,193 | $ 443,166 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Allowance for doubtful accounts, patient accounts receivable | $ 2,569 | $ 2,672 |
U.S. Physical Therapy, Inc. ("USPH") shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 14,988,894 | 14,899,233 |
Treasury stock (in shares) | 2,214,737 | 2,214,737 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues [Abstract] | ||||
Net revenues | $ 117,251 | $ 113,122 | $ 359,855 | $ 336,562 |
Operating costs: | ||||
Salaries and related costs | 66,748 | 64,524 | 203,684 | 191,410 |
Rent, supplies, contract labor and other | 22,166 | 21,654 | 67,236 | 65,598 |
Provision for doubtful accounts | 962 | 890 | 3,408 | 3,102 |
Closure costs | 3 | (22) | 12 | 8 |
Total operating costs | 89,879 | 87,046 | 274,340 | 260,118 |
Gross Profit | 27,372 | 26,076 | 85,515 | 76,444 |
Corporate office costs | 10,556 | 10,643 | 33,376 | 30,934 |
Operating income | 16,816 | 15,433 | 52,139 | 45,510 |
Other income and expense | ||||
Gain on sale of partnership interest | 0 | 0 | 5,823 | 0 |
Interest and other income, net | 7 | 16 | 27 | 70 |
Interest expense | (557) | (579) | (1,522) | (1,677) |
Income before taxes | 16,266 | 14,870 | 56,467 | 43,903 |
Provision for income taxes | 3,197 | 2,991 | 11,223 | 8,734 |
Net income | 13,069 | 11,879 | 45,244 | 35,169 |
Less: net income attributable to non-controlling interests: | ||||
Non-controlling interests - permanent equity | (1,643) | (1,321) | (4,982) | (3,902) |
Redeemable non-controlling interests - temporary equity | (2,379) | (2,456) | (8,152) | (6,802) |
Less: net income attributable to non-controlling interests | (4,022) | (3,777) | (13,134) | (10,704) |
Net income attributable to USPH shareholders | $ 9,047 | $ 8,102 | $ 32,110 | $ 24,465 |
Basic and diluted earnings per share attributable to USPH shareholders (in dollars per share) | $ 0.66 | $ 0.13 | $ 1.90 | $ 0.88 |
Shares used in computation - basic and diluted (in shares) | 12,774 | 12,685 | 12,750 | 12,660 |
Dividends declared per common share (in dollars per share) | $ 0.30 | $ 0.23 | $ 0.84 | $ 0.69 |
Net Patient Revenues [Member] | ||||
Revenues [Abstract] | ||||
Net revenues | $ 104,392 | $ 103,354 | $ 324,405 | $ 309,895 |
Other Revenues [Member] | ||||
Revenues [Abstract] | ||||
Net revenues | $ 12,859 | $ 9,768 | $ 35,450 | $ 26,667 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
OPERATING ACTIVITIES | ||
Net income including non-controlling interests | $ 45,244 | $ 35,169 |
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 7,377 | 7,335 |
Provision for doubtful accounts | 3,408 | 3,102 |
Equity-based awards compensation expense | 5,262 | 4,453 |
Deferred income taxes | 3,680 | (3,099) |
Gain on sale of partnership interest | (5,823) | 0 |
Other | 120 | 128 |
Changes in operating assets and liabilities: | ||
Increase in patient accounts receivable | (8,171) | (1,092) |
Increase in accounts receivable - other | (1,006) | (3,954) |
(Increase) decrease in other assets | (2,744) | 233 |
(Decrease) increase in accounts payable and accrued expenses | (440) | 9,742 |
(Decrease) increase in other liabilities | (443) | 1,988 |
Net cash provided by operating activities | 46,464 | 54,005 |
INVESTING ACTIVITIES | ||
Purchase of fixed assets | (7,428) | (5,307) |
Purchase of majority interest in businesses | (30,365) | (16,303) |
Purchase of redeemable non-controlling interest, temporary equity | (5,699) | 0 |
Purchase of non-controlling interest, permanent equity | (138) | (272) |
Proceeds on sale of partnership interest, net | 11,601 | 0 |
Proceeds on sale of fixed assets | 64 | 2 |
Net cash used in investing activities | (31,965) | (21,880) |
FINANCING ACTIVITIES | ||
Distributions to non-controlling interests, permanent and temporary equity | (10,862) | (10,470) |
Cash dividends paid to shareholders | (10,723) | (8,746) |
Proceeds from revolving line of credit | 110,000 | 79,000 |
Payments on revolving line of credit | (97,000) | (79,000) |
Payments to settle mandatorily redeemable non-controlling interests | 0 | (265) |
Principal payments on notes payable | (1,409) | (2,294) |
Other | (17) | (42) |
Net cash used in financing activities | (10,011) | (21,817) |
Net increase in cash and cash equivalents | 4,488 | 10,308 |
Cash and cash equivalents - beginning of period | 23,368 | 21,933 |
Cash and cash equivalents - end of period | 27,856 | 32,241 |
Cash paid during the period for: | ||
Income taxes | 9,458 | 8,957 |
Interest | 1,412 | 1,705 |
Non-cash investing and financing transactions during the period: | ||
Purchase of businesses - seller financing portion | 4,300 | 950 |
Purchase of business - payable to common shareholders of acquired business | 502 | 0 |
Notes payable related to purchase of redeemable non-controlling interest, temporary equity | 283 | 0 |
Notes receivable related to sale of partnership interest - redeemable non-controlling interest | $ 2,870 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited) - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total Shareholders' Equity [Member] | Non-Controlling Interests [Member] | Total |
Beginning balance at Dec. 31, 2017 | $ 148 | $ 73,940 | $ 162,406 | $ (31,628) | $ 204,866 | $ 1,204 | $ 206,070 |
Beginning balance (in shares) at Dec. 31, 2017 | 14,809 | (2,215) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of restricted stock, net of cancellations | $ 1 | 0 | 0 | $ 0 | 1 | 0 | 1 |
Issuance of restricted stock, net of cancellations (in shares) | 90 | 0 | |||||
Revaluation of redeemable non-controlling interest, net of tax | $ 0 | 0 | (13,353) | $ 0 | (13,353) | 0 | (13,353) |
Compensation expense - equity-based awards | 0 | 4,453 | 0 | 0 | 4,453 | 0 | 4,453 |
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans | 0 | 373 | 0 | 0 | 373 | 0 | 373 |
Purchase of non-controlling interest | 0 | (224) | 0 | 0 | (224) | (48) | (272) |
Dividends paid to USPH shareholders | 0 | 0 | (8,746) | 0 | (8,746) | 0 | (8,746) |
Other | 0 | 0 | 49 | 0 | 49 | 50 | 99 |
Distributions to non-controlling interest partners, permanent equity | 0 | 0 | 0 | 0 | 0 | (3,894) | (3,894) |
Net income attributable to non-controlling interest - permanent equity | 0 | 0 | 0 | 0 | 0 | 3,902 | 3,902 |
Net income attributable to USPH shareholders | 0 | 0 | 24,465 | 0 | 24,465 | 0 | 24,465 |
Ending balance at Sep. 30, 2018 | $ 149 | 78,542 | 164,821 | $ (31,628) | 211,884 | 1,214 | 213,098 |
Ending balance (in shares) at Sep. 30, 2018 | 14,899 | (2,215) | |||||
Beginning balance at Jun. 30, 2018 | $ 149 | 77,099 | 165,991 | $ (31,628) | 211,611 | 1,137 | 212,748 |
Beginning balance (in shares) at Jun. 30, 2018 | 14,900 | (2,215) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of restricted stock, net of cancellations | 0 | 0 | $ 0 | 0 | 0 | 0 | |
Issuance of restricted stock, net of cancellations (in shares) | (1) | 0 | |||||
Revaluation of redeemable non-controlling interest, net of tax | $ 0 | 0 | (6,402) | $ 0 | (6,402) | 0 | (6,402) |
Compensation expense - equity-based awards | 0 | 1,516 | 0 | 0 | 1,516 | 0 | 1,516 |
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Purchase of non-controlling interest | 0 | (73) | 0 | 0 | (73) | (6) | (79) |
Dividends paid to USPH shareholders | 0 | 0 | (2,918) | 0 | (2,918) | 0 | (2,918) |
Other | 0 | 0 | 48 | 0 | 48 | 0 | 48 |
Distributions to non-controlling interest partners, permanent equity | 0 | 0 | 0 | 0 | 0 | (1,238) | (1,238) |
Net income attributable to non-controlling interest - permanent equity | 0 | 0 | 0 | 0 | 0 | 1,321 | 1,321 |
Net income attributable to USPH shareholders | 0 | 0 | 8,102 | 0 | 8,102 | 0 | 8,102 |
Ending balance at Sep. 30, 2018 | $ 149 | 78,542 | 164,821 | $ (31,628) | 211,884 | 1,214 | 213,098 |
Ending balance (in shares) at Sep. 30, 2018 | 14,899 | (2,215) | |||||
Beginning balance at Dec. 31, 2018 | $ 149 | 80,028 | 167,396 | $ (31,628) | 215,945 | 930 | 216,875 |
Beginning balance (in shares) at Dec. 31, 2018 | 14,899 | (2,215) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of restricted stock, net of cancellations | $ 0 | 0 | 0 | $ 0 | 0 | 0 | 0 |
Issuance of restricted stock, net of cancellations (in shares) | 90 | 0 | |||||
Revaluation of redeemable non-controlling interest, net of tax | $ 0 | 0 | (7,929) | $ 0 | (7,929) | 0 | (7,929) |
Compensation expense - equity-based awards | 0 | 5,262 | 0 | 0 | 5,262 | 0 | 5,262 |
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans | 0 | 636 | 0 | 0 | 636 | 0 | 636 |
Purchase of non-controlling interest | 0 | (97) | 0 | 0 | (97) | (7) | (104) |
Dividends paid to USPH shareholders | 0 | 0 | (10,723) | 0 | (10,723) | 0 | (10,723) |
Purchase of partnership interests - redeemable non-controlling interests | 0 | 0 | 298 | 0 | 298 | 0 | 298 |
Other | 1 | (1) | (17) | 0 | (17) | 0 | (17) |
Distributions to non-controlling interest partners, permanent equity | 0 | 0 | 0 | 0 | 0 | (4,063) | (4,063) |
Net income attributable to non-controlling interest - permanent equity | 0 | 0 | 0 | 0 | 0 | 4,982 | 4,982 |
Net income attributable to USPH shareholders | 0 | 0 | 32,110 | 0 | 32,110 | 0 | 32,110 |
Ending balance at Sep. 30, 2019 | $ 150 | 85,828 | 181,135 | $ (31,628) | 235,485 | 1,842 | 237,327 |
Ending balance (in shares) at Sep. 30, 2019 | 14,989 | (2,215) | |||||
Beginning balance at Jun. 30, 2019 | $ 149 | 84,125 | 176,610 | $ (31,628) | 229,256 | 1,491 | 230,747 |
Beginning balance (in shares) at Jun. 30, 2019 | 14,989 | (2,215) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Revaluation of redeemable non-controlling interest, net of tax | $ 0 | 0 | (679) | $ 0 | (679) | 0 | (679) |
Compensation expense - equity-based awards | 0 | 1,704 | 0 | 0 | 1,704 | 0 | 1,704 |
Dividends paid to USPH shareholders | 0 | 0 | (3,832) | 0 | (3,832) | 0 | (3,832) |
Other | 1 | (1) | (11) | 0 | (11) | 0 | (11) |
Distributions to non-controlling interest partners, permanent equity | 0 | 0 | 0 | 0 | 0 | (1,292) | (1,292) |
Net income attributable to non-controlling interest - permanent equity | 0 | 0 | 0 | 0 | 0 | 1,643 | 1,643 |
Net income attributable to USPH shareholders | 0 | 0 | 9,047 | 0 | 9,047 | 0 | 9,047 |
Ending balance at Sep. 30, 2019 | $ 150 | $ 85,828 | $ 181,135 | $ (31,628) | $ 235,485 | $ 1,842 | $ 237,327 |
Ending balance (in shares) at Sep. 30, 2019 | 14,989 | (2,215) |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements include the accounts of U.S. Physical Therapy, Inc. and its subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated. The Company primarily operates through subsidiary clinic partnerships, in which the Company generally owns a 1% general partnership interest in all the Clinic Partnerships. Our limited partnership interests typically range from 49% to 99% in the Clinic Partnerships. The managing therapist of each clinic owns, directly or indirectly, the remaining limited partnership interest in most of the clinics (hereinafter referred to as “Clinic Partnerships”). To a lesser extent, the Company operates some clinics, through wholly-owned subsidiaries, under profit sharing arrangements with therapists (hereinafter referred to as “Wholly-Owned Facilities”). The Company continues to seek to attract for employment physical therapists who have established relationships with physicians and other referral sources, by offering these therapists a competitive salary and incentives based on the profitability of the clinic that they manage. The Company also looks for therapists with whom to establish new, de novo clinics to be owned jointly by the Company and such therapists. In these situations, the therapist is offered the opportunity to co-invest in the new clinic and also receives a competitive salary for managing the clinic. For multi-site clinic practices in which a controlling interest is acquired by the Company, the prior owners typically continue on as employees to manage the clinic operations, retaining a non-controlling ownership interest in the clinics and receiving a competitive salary for managing the clinic operations. In addition, the Company has developed satellite clinic facilities as part of existing Clinic Partnerships and Wholly-Owned facilities, with the result that a substantial number of Clinic Partnerships and Wholly-Owned facilities operate more than one clinic location. For the foreseeable future, the Company intends to continue to acquire clinic practices and continue to focus on developing new clinics and opening satellite clinics where appropriate, along with increasing our patient volume through marketing and new clinical programs. Since March 2017, the Company has acquired a majority interest in two industrial injury prevention businesses and acquired one company in the industrial injury prevention sector. In March 2017, the Company acquired a 55% interest in the initial industrial injury prevention business. On April 30, 2018, the Company acquired a 65% interest in another business in the industrial injury prevention sector. On April 30, 2018, the Company combined the two businesses. After the combination, the Company owned a 59.45% interest in the combined business, Briotix Health, Limited Partnership (“Briotix Health”), the Company’s industrial injury prevention operation. On April 11, 2019, the Company acquired a third company that is a provider of industrial injury prevention services. The acquired company specializes in delivering injury prevention and care, post offer employment testing, functional capacity evaluations and return-to-work services. It performs these services across a network in 45 states including onsite at eleven client locations. The business was then combined with Briotix Health increasing the Company’s ownership position in the partnership to approximately 76.0%. The purchase price for this acquisition was $23.6 million, which consisted of $19.6 million in cash (of which $0.5 million remained payable at September 30, 2019 to certain shareholders), and a $4.0 million seller note. The note accrues interest at 5.5% and the principal and accrued interest is payable on April 9, 2021. Services provided in the industrial injury prevention businesses include onsite injury prevention and rehabilitation, performance optimization, post offer employment testing, functional capacity evaluations, and ergonomic assessments. The majority of these services are contracted with and paid for directly by employers, including a number of Fortune 500 companies. Other clients include large insurers and their contractors. The Company performs these services through Industrial Sports Medicine Professionals, consisting of both physical therapists and specialized certified athletic trainers (ATCs). On September 30, 2019, the Company acquired a 67% interest in an eleven-clinic physical therapy practice. The purchase price for the 67% interest was $12.4 million, of which $12.1 million was paid in cash and a $0.3 million seller note that is payable in two principal installments totaling $150,000 each, plus accrued interest in September 2020 and September 2021. The note accrues interest at 5.0% per annum. On August 31, 2018, the Company acquired a 70% interest in a four-clinic physical therapy practice. The purchase price for the 70% interest was $7.3 million in cash and $400,000 in a seller note that is payable in two principal installments totaling $200,000 each, plus accrued interest. The first installment was paid in cash in August 2019 and the second installment remains payable in August 2020. Besides the multi-clinic acquisition above, in 2018, the Company, through several of its majority owned Clinic Partnerships, acquired five separate clinic practices. These practices operate as satellites of the respective existing Clinic Partnerships. As of September 30, 2019, the Company operated 574 clinics in 41 states, as well as the industrial injury prevention business. The Company also manages physical therapy facilities for third parties, primarily hospital and physicians, with 26 third-party facilities under management as of September 30, 2019. The results of operations of the acquired clinics have been included in the Company’s consolidated financial statements since the date of their respective acquisition. The Company intends to continue to pursue additional acquisition opportunities, develop new clinics and open satellite clinics. The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions for Form 10-Q. However, the statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Management believes this report contains all necessary adjustments (consisting only of normal recurring adjustments) to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the interim periods presented. For further information regarding the Company’s accounting policies, please read the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on March 18, 2019 (“2018 Annual Report”). The Company believes, and the Chief Executive Officer, Chief Financial Officer and Corporate Controller have certified, that the financial statements included in this report present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the interim periods presented. Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results the Company expects for the entire year. Please also review the Risk Factors section included in the Company’s 2018 Annual Report. Clinic Partnerships For non-acquired Clinic Partnerships, the earnings and liabilities attributable to the non-controlling interests, typically owned by the managing therapist, directly or indirectly, are recorded within the balance sheets as non-controlling interests and within the income statements as non-controlling interests – permanent equity. For acquired Clinic Partnerships with redeemable non-controlling interests, the earnings attributable to the redeemable non-controlling interests are recorded within the consolidated statements of income line item – net income attributable to non-controlling interests – redeemable non-controlling interests – temporary equity redeemable non-controlling interests Wholly-Owned Facilities For Wholly-Owned Facilities with profit sharing arrangements, an appropriate accrual is recorded for the amount of profit sharing due to the profit sharing therapists. The amount is expensed as compensation and included in operating costs – salaries and related costs. The respective liability is included in current liabilities – accrued expenses on the balance sheets. Significant Accounting Policies Cash Equivalents The Company maintains its cash and cash equivalents at financial institutions. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The combined account balances at several institutions typically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related on deposits in excess of FDIC insurance coverage. Management believes that the risk is not significant. Long-Lived Assets Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for furniture and equipment range from three to eight years and for purchased software from three to seven years. Leasehold improvements are amortized over the shorter of the lease term or estimated useful lives of the assets, which is generally three to five years. Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of The Company reviews property and equipment and intangible assets with finite lives for impairment upon the occurrence of certain events or circumstances which indicate that the amounts may be impaired. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Goodwill Goodwill represents the excess of the amount paid and fair value of the non-controlling interests over the fair value of the acquired business assets, which include certain identifiable intangible assets. Historically, goodwill has been derived from acquisitions and, prior to 2009, from the purchase of some or all of a particular local management’s equity interest in an existing clinic. Effective January 1, 2009, if the purchase price of a non-controlling interest by the Company exceeds or is less than the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. The fair value of goodwill and other identifiable intangible assets with indefinite lives are tested for impairment annually and upon the occurrence of certain events, and are written down to fair value if considered impaired. The Company evaluates goodwill for impairment on at least an annual basis (in its third quarter) by comparing the fair value of its reporting units to the carrying value of each reporting unit including related goodwill. The Company evaluates indefinite lived tradenames using the relief from royalty method in conjunction with its annual goodwill impairment test. The Company operates a business which is made up of various clinics within partnerships. The partnerships are components of regions and are aggregated to the operating segment level for the purpose of determining the Company’s reporting units when performing its annual goodwill impairment test. In 2019, there were six regions for which an impairment test was performed. In addition to the six regions, during 2019, the impairment test included a separate analysis for the industrial injury prevention business, a separate reporting unit. An impairment loss generally would be recognized when the carrying amount of the net assets of a reporting unit, inclusive of goodwill and other identifiable intangible assets, exceeds the estimated fair value of the reporting unit. The estimated fair value of a reporting unit is determined using two factors: (i) earnings prior to taxes, depreciation and amortization for the reporting unit multiplied by a price/earnings ratio used in the industry and (ii) a discounted cash flow analysis. A weight is assigned to each factor and the sum of each weight times the factor is considered the estimated fair value. For 2019, the factors (i.e., price/earnings ratio, discount rate and residual capitalization rate) were updated to reflect current market conditions. The evaluation of goodwill in 2019 and 2018 did not result in any goodwill amounts that were deemed impaired. The Company has not identified any triggering events occurring after the testing date that would impact the impairment testing results obtained. The Company will continue to monitor for any triggering events or other indicators of impairment. Redeemable Non-Controlling Interests The non-controlling interests that are reflected as redeemable non-controlling interests in the consolidated financial statements consist of those that the owners and the Company have certain redemption rights, whether currently exercisable or not, and which currently, or in the future, require that the Company purchase or the owner sell the non-controlling interest held by the owner, if certain conditions are met. The purchase price is derived at a predetermined formula based on a multiple of trailing twelve months earnings performance as defined in the respective limited partnership agreements. The redemption rights can be triggered by the owner or the Company at such time as both of the following events have occurred: 1) termination of the owner’s employment, regardless of the reason for such termination, and 2) the passage of specified number of years after the closing of the transaction, typically three to five years, as defined in the limited partnership agreement. The redemption rights are not automatic or mandatory (even upon death) and require either the owner or the Company to exercise its rights when the conditions triggering the redemption rights have been satisfied. On the date the Company acquires a controlling interest in a partnership, and the limited partnership agreement for such partnership contains redemption rights not under the control of the Company, the fair value of the non-controlling interest is recorded in the consolidated balance sheet under the caption – Redeemable non-controlling interests. Then, in each reporting period thereafter until it is purchased by the Company, the redeemable non-controlling interest is adjusted to the greater of its then current redemption value or initial carrying value, based on the predetermined formula defined in the respective limited partnership agreement. As a result, the value of the non-controlling interest is not adjusted below its initial carrying value. The Company records any adjustment in the redemption value, net of tax, directly to retained earnings and are not reflected in the consolidated statements of income. Although the adjustments are not reflected in the consolidated statements of income, current accounting rules require that the Company reflects the adjustments, net of tax, in the earnings per share calculation. The amount of net income attributable to redeemable non-controlling interest owners is included in consolidated net income on the face of the consolidated statements of net income. Management believes the redemption value (i.e. the carrying amount) and fair value are the same. Non-Controlling Interests The Company recognizes non-controlling interests, in which the Company has no obligation but the right to purchase the non-controlling interests, as equity in the consolidated financial statements separate from the parent entity’s equity. Net income is allocated to non-controlling interests (permanent equity), redeemable non-controlling interests (temporary equity) and to the Company’s shareholders. The amount of net income attributable to non-controlling interests is included in consolidated net income on the face of the consolidated statements of net income. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The Company recognizes a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the non-controlling equity investment on the deconsolidation date. When the purchase price of a non-controlling interest by the Company exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. Additionally, operating losses are allocated to non-controlling interests even when such allocation creates a deficit balance for the non-controlling interest partner. Revenue Recognition Revenues are recognized in the period in which services are rendered. See Footnote 4 – Revenue Recognition, for further discussion of revenue recognition. Allowance for Doubtful Accounts The Company determines allowances for doubtful accounts based on the specific agings and payor classifications at each clinic. The provision for doubtful accounts is included in operating costs in the consolidated statements of net income. Net accounts receivable, which are stated at the historical carrying amount net of contractual allowances, write-offs and allowance for doubtful accounts, includes only those amounts the Company estimates to be collectible. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount to be recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during the nine months ended September 30, 2019. The Company records any interest or penalties, if required, in interest and other expense, as appropriate. Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate their fair values due to the short-term maturity of these financial instruments. The carrying amount under the Amended Credit Agreement and the redemption value of Redeemable non-controlling interests approximate the respective fair values. The fair value of the Company’s redeemable non-controlling interests is determined based on “Level 3” inputs. The interest rate on the Amended Credit Agreement, which is tied to LIBOR, is set at various short-term intervals, as detailed in the Amended Credit Agreement. Segment Reporting Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by chief operating decision makers in deciding how to allocate resources and in assessing performance. The Company identifies operating segments based on management responsibility and believes it meets the criteria for aggregating its operating segments into a single reporting segment. Use of Estimates In preparing the Company’s consolidated financial statements, management makes certain estimates and assumptions, especially in relation to, but not limited to, purchase accounting, goodwill impairment, allowance for receivables, tax provision and contractual allowances, that affect the amounts reported in the consolidated financial statements and related disclosures. Actual results may differ from these estimates. Self-Insurance Program The Company utilizes a self-insurance plan for its employee group health insurance coverage administered by a third party. Predetermined loss limits have been arranged with an insurance company to minimize the Company’s maximum liability and cash outlay. Accrued expenses include the estimated incurred but unreported costs to settle unpaid claims and estimated future claims. Management believes that the current accrued amounts are sufficient to pay claims arising from self-insurance claims incurred through September 30, 2019. Restricted Stock Restricted stock issued to employees and directors is normally subject to continued employment or continued service on the board, respectively. Generally, restrictions on the stock granted to employees, other than officers, lapse in equal annual installments on the following four anniversaries of the date of grant. For those shares granted to directors, the restrictions lapse in equal quarterly installments during the first year after the date of grant. For those granted to officers, the restrictions lapse in equal quarterly installments during the four years following the date of grant. Compensation expense for grants of restricted stock is recognized based on the fair value per share on the date of grant amortized over the vesting period. The restricted stock issued is included in basic and diluted shares for the earnings per share computation. Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”), which amended prior accounting standards for leases. The Company implemented the new lease standard, ASC Topic 842 – Leases as of January 1, 2019 using the transition method in ASU 2018-11 issued in July 2018 which allows the Company to initially apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. There was no adjustment required to retained earnings upon adoption. Accordingly, no retrospective adjustments were made to the comparative periods presented. The Company elected certain of the practical expedients permitted, including the expedient that allows the Company to retain its existing lease assessment and classification. Adoption of ASC 842 resulted in an increase to total assets and liabilities due to the recording of operating lease right-of-use assets (“ROU”) and operating lease liabilities of approximately $78.0 million and $82.6 million respectively, as of January 1, 2019 for operating leases as a lessee. The adoption did not materially impact the Company’s consolidated statement of income or cash flows. See Footnote 11 - Leases for further discussion of leases. In August 2018, the Securities Exchange Commission (“SEC”) issued Final Rule 33-10532, Disclosure Update and Simplification, which amends certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements. The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. The rule is effective 30 days after its publication in the Federal Register. The rule was posted on October 4, 2018. On September 25, 2018, the SEC released guidance advising it will not object to a registrant adopting the requirement to include changes in stockholders’ equity in the Form 10-Q for the first quarter beginning after the effective date of the rule. The Company adopted this standard during the first quarter of 2019 Form 10-Q with no material impact on the Consolidated Financial Statements. Recently Issued Accounting Guidance In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment change. ASU 2017-04 is effective prospectively for fiscal years, and the interim periods within those years, beginning after December 15, 2019. The Company does not expect adoption of this ASU to have a material impact. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, including trade receivables. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for the Company on January 1, 2020. The financial instruments subject to ASU 2016-13 are the Company’s accounts receivable and notes receivable. Given the very high rate of collectability of the Company’s financial instruments, the impact of ASU 2016-13 will not be material to the Company’s consolidated statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which amended the fair value measurement guidance by removing or clarifying certain existing disclosure requirements, while also adding new disclosure requirements. Specifically, this update removed certain disclosures related to Level 1 and Level 2 transfers and also removed the discussion regarding valuation processes of Level 3 fair value measurements. The update modifies guidance related to investments in certain entities that calculate net asset value to explicitly require disclosure regarding timing of liquidation of the investee’s assets and timing of redemption restrictions. The update adds disclosures around the changes in unrealized gains and losses in other comprehensive income for recurring Level 3 investments held at the end of the reporting period and adds disclosures regarding certain unobservable inputs on Level 3 fair value measurements. These changes become effective for the Company on January 1, 2020. Pursuant to ASC 820, the fair value of the Company’s redeemable non-controlling interests are determined based on “Level 3” inputs. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. Subsequent Events The Company has evaluated events subsequent to September 30, 2019 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were issued. Based on this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements. |
ACQUISITIONS OF BUSINESSES
ACQUISITIONS OF BUSINESSES | 9 Months Ended |
Sep. 30, 2019 | |
ACQUISITIONS OF BUSINESSES [Abstract] | |
ACQUISITIONS OF BUSINESSES | 2. ACQUISITIONS OF BUSINESSES On April 11, 2019, the Company acquired a company that is a provider of industrial injury prevention services. The acquired company specializes in delivering injury prevention and care, post offer employment testing, functional capacity evaluations and return-to-work services. It performs these services across a network in 45 states including onsite at eleven client locations. The business was then combined with Briotix Health, the Company’s industrial injury prevention operation, increasing the Company’s ownership position in the Briotix Health partnership to approximately 76.0%. The purchase price for the acquired company was $23.6 million, which consisted of $19.6 million in cash, (of which $0.5 million remained payable at September 30, 2019 to certain shareholders), and a $4.0 million seller note. The note accrues interest at 5.5% and the principal and accrued interest is payable, on April 9, 2021. On September 30, 2019, the Company acquired a 67% interest in an eleven-clinic physical therapy practice. The purchase price for the 67% interest was $12.4 million, of which $12.1 million was paid in cash and $0.3 million in a seller note that is payable in two principal installments totaling $150,000 each, plus accrued interest in September 2020 and September 2021. The note accrues interest at 5.0% per annum. The purchase price for the 2019 acquisitions has been preliminarily allocated as follows (in thousands): Cash paid, net of cash acquired $ 30,365 Payable to shareholders of seller 502 Seller note 4,300 Total consideration $ 35,167 Estimated fair value of net tangible assets acquired: Total current assets $ 2,824 Total non-current assets 2,924 Total liabilities (3,034 ) Net tangible assets acquired $ 2,714 Referral relationships 3,000 Non-compete 1,290 Tradename 4,100 Goodwill 30,293 Fair value of non-controlling interest (classified as redeemable non-controlling interests) (6,230 ) $ 35,167 The purchase prices plus the fair value of the non-controlling interests for the acquisition in 2019 was allocated to the fair value of the assets acquired, inclusive of identifiable intangible assets, i.e. trade names, referral relationships and non-compete agreements, and liabilities assumed based on the estimated fair values at the acquisition date, with the amount in excess of fair values being recorded as goodwill. The Company is in the process of completing its formal valuation analysis of the acquisitions, to identify and determine the fair value of tangible and identifiable intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used at September 30, 2019 based on additional information obtained and completion of the valuation of the identifiable intangible assets. Changes in the estimated valuation of the tangible assets acquired, the completion of the valuation of identifiable intangible assets and the completion by the Company of the identification of any unrecorded pre-acquisition contingencies, where the liability is probable and the amount can be reasonably estimated, will likely result in adjustments to goodwill. The Company does not expect the adjustments to be material. For the acquisitions in 2019, the values assigned to the referral relationships and non-compete agreements are being amortized to expense equally over the respective estimated lives. For referral relationships, the amortization period is 11.0 years. For non-compete agreements, the amortization period is 6.0 years. The values assigned to tradenames are tested annually for impairment. For the 2019 acquisitions, a majority of total current assets primarily represents accounts receivable. Total non-current assets are fixed assets and equipment used in the practice. On August 31, 2018, the Company acquired a 70% interest in a four-clinic physical therapy practice. The purchase price for the 70% interest was $7.3 million in cash and $0.4 million in a seller note that is payable in two principal installments totaling $200,000 each plus accrued interest. The first installment was paid in cash in August 2019 and the second installment remains payable in August 2020. In March 2017, the Company acquired a 55% interest in the initial industrial injury prevention business. The purchase price for the 55% interest was $6.2 million in cash and $0.4 million in a seller note that was paid in September 2018. On April 30, 2018, the Company acquired a 65% interest in another business in the industrial injury prevention sector. The aggregate purchase price for the 65% interest was $8.6 million in cash and $400,000 in a seller note that was paid on April 30, 2019. On April 30, 2018, the Company combined the two businesses. After the combination, the Company owned a 59.45% interest in the combined business, Briotix Health, the Company’s industrial injury prevention operation. See discussion above regarding an additional acquisition on April 30, 2019 in the industrial injury prevention business. Services provided include onsite injury prevention and rehabilitation, performance optimization, post offer employment testing, functional capacity evaluations and ergonomic assessments. The majority of these services are contracted with and paid for directly by employers, including a number of Fortune 500 companies. Other clients include large insurers and their contractors. The Company performs these services through Industrial Sports Medicine Professionals, consisting of both physical therapists and highly specialized certified athletic trainers (ATCs). In addition, during 2018, the Company, through several of its majority owned Clinic Partnerships, acquired five separate clinic practices. These practices operate as satellites of the existing Clinic Partnership. The aggregate purchase price was $1.0 million inclusive of cash of $850,000 and a note payable of $150,000. The note accrued interest at 4.5% and the principal and accrued interest, was paid in cash on August 31, 2019. The results of operations of the acquired clinics have been included in the Company’s consolidated financial statements since the date of their respective acquisition. The Company intends to continue to pursue additional acquisition opportunities, develop new clinics and open satellite clinics. The purchase price for the 2018 acquisitions has been allocated as follows (in thousands): Cash paid, net of cash acquired $ 16,367 Seller notes 950 Total consideration $ 17,317 Estimated fair value of net tangible assets acquired: Total current assets $ 1,633 Total non-current assets 305 Total liabilities (525 ) Net tangible assets acquired $ 1,413 Referral relationships 2,926 Non-compete 298 Tradename 990 Goodwill 19,835 Fair value of non-controlling interest (classified as redeemable non-controlling interests) (8,145 ) $ 17,317 The purchase prices plus the fair value of the non-controlling interests for the acquisitions in 2018 were allocated to the fair value of the assets acquired, inclusive of identifiable intangible assets, i.e. trade names, referral relationships and non-compete agreements, and liabilities assumed based on the fair values at the acquisition date, with the amount exceeding the fair values being recorded as goodwill. The Company has completed its formal valuation analyses for the acquisitions in 2018 with immaterial changes to the values. For the acquisitions in 2018, the values assigned to the referral relationships and non-compete agreements are being amortized to expense equally over the respective estimated lives. For referral relationships, the weighted average amortization period was 10.54 years at December 31, 2018. For non-compete agreements, the weighted average amortization period was 6.00 years at December 31, 2018. The values assigned to tradenames are tested annually for impairment. For the 2018 acquisitions, total current assets primarily represent accounts receivable. Total non-current assets are fixed assets, primarily equipment, used in the practices. The consideration paid for each of the acquisitions was derived through arm’s length negotiations. Funding for the cash portions was derived from proceeds from the Company’s revolving credit facility. The results of operations of the acquisitions have been included in the Company’s consolidated financial statements since their respective date of acquisition. Unaudited proforma consolidated financial information for the acquisitions in the 2019 and 2018 acquisitions have not been included as the results, individually and in the aggregate, were not material to current operations. |
SALE OF PARTNERSHIP INTEREST
SALE OF PARTNERSHIP INTEREST | 9 Months Ended |
Sep. 30, 2019 | |
SALE OF PARTNERSHIP INTEREST [Abstract] | |
SALE OF PARTNERSHIP INTEREST | 3. SALE OF PARTNERSHIP INTEREST The Company recognized a non-operating pre-tax gain of $5.8 million during the nine months ended September 30, 2019, which resulted from the sale of its 50% interest in one of its physical therapy partnerships in June 2019, to the founders of the practice. The sales proceeds, all of which was in cash, was $11.6 million. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION [Abstract] | |
REVENUE RECOGNITION | 4. REVENUE RECOGNITION Categories Revenues are recognized in the period in which services are rendered. Net patient revenues consists of revenues for physical therapy and occupational therapy clinics that provide pre-and post-operative care and treatment for orthopedic related disorders, sports-related injuries, preventative care, rehabilitation of injured workers and neurological-related injuries. Net patient revenues (patient revenues less estimated contractual adjustments) are recognized at the estimated net realizable amounts from third-party payors, patients and others in exchange for services rendered when obligations under the terms of the contract are satisfied. There is an implied contract between us and the patient upon each patient visit. Generally, this occurs as the Company provides physical and occupational therapy services, as each service provided is distinct and future services rendered are not dependent on previously rendered services. The Company has agreements with third-party payors that provide for payments to the Company at amounts different from its established rates. The allowance for estimated contractual adjustments is based on terms of payor contracts and historical collection and write-off experience. Management contract revenues, which are included in other revenues in the consolidated statements of net income, are derived from contractual arrangements whereby the Company manages a clinic owned by a third party. The Company does not have any ownership interest in these clinics. Typically, revenues are determined based on the number of visits conducted at the clinic and recognized at the point in time when services are performed. Costs, typically salaries for our employees, are recorded when incurred. Revenues from the industrial injury prevention business, which are also included in other revenues in the consolidated statements of net income, are derived from onsite services the Company provides to clients’ employees including injury prevention, rehabilitation, ergonomic assessments and performance optimization. Revenue from the industrial injury prevention business is recognized when obligations under the terms of the contract are satisfied. Revenues are recognized at an amount equal to the consideration the Company expects to receive in exchange for providing injury prevention services to its clients. The revenue is determined and recognized based on the number of hours and respective rate for services provided in a given period. Additionally, other revenues include services the Company provides on-site, such as schools and industrial worksites, for physical or occupational therapy services, and athletic trainers and gym membership fees. Contract terms and rates are agreed to in advance between the Company and the third parties. Services are typically performed over the contract period and revenue is recorded at the point of service. If the services are paid in advance, revenue is recorded as a contract liability over the period of the agreement and recognized at the point in time, when the services are performed. The Company determines allowances for doubtful accounts based on the specific agings and payor classifications at each clinic. The provision for doubtful accounts is included in clinic operating costs in the statements of net income. Patient accounts receivable, which are stated at the historical carrying amount net of contractual allowances, write-offs and allowance for doubtful accounts, includes only those amounts the Company estimates to be collectible. The following table details the revenue related to the various categories (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Net patient revenues $ 104,392 $ 103,354 $ 324,405 $ 309,895 Management contract revenues 2,174 1,922 6,534 6,319 Industrial injury prevention services revenues 9,948 7,281 27,136 18,407 Other revenues 737 565 1,780 1,941 $ 117,251 $ 113,122 $ 359,855 $ 336,562 Medicare Reimbursement The Medicare program reimburses outpatient rehabilitation providers based on the Medicare Physician Fee Schedule (‘‘MPFS’’). For services provided in 2019, a 0.25% increase has been applied to the fee schedule payment rates before applying the mandatory budget neutrality adjustment. For services provided in 2020 through 2025, a 0.0% percent update will be applied each year to the fee schedule payment rates, before applying the mandatory budget neutrality adjustment. Beginning in 2021, payments to individual therapists (Physical/Occupational Therapist in Private Practice) paid under the fee schedule may be subject to adjustment based on performance in the Merit Based Incentive Payment System (“MIPS”), which measures performance based on certain quality metrics, resource use, and meaningful use of electronic health records. Under the MIPS requirements, a provider’s performance is assessed according to established performance standards each year and then is used to determine an adjustment factor that is applied to the professional’s payment for the corresponding payment year. The provider’s MIPS performance in 2019 will determine the payment adjustment in 2021. Each year from 2019 through 2024, professionals who receive a significant share of their revenues through an alternate payment model (“APM”), (such as accountable care organizations or bundled payment arrangements) that involves risk of financial losses and a quality measurement component will receive a 5% bonus in the corresponding payment year. The bonus payment for APM participation is intended to encourage participation and testing of new APMs and to promote the alignment of incentives across payors. The specifics of the MIPS and APM adjustments will be subject to future notice and comment rule-making. The Budget Control Act of 2011 increased the federal debt ceiling in connection with deficit reductions over the next ten years, and requires automatic reductions in federal spending by approximately $1.2 trillion. Payments to Medicare providers are subject to these automatic spending reductions, subject to a 2% cap. On April 1, 2013, a 2% reduction to Medicare payments was implemented. The Bipartisan Budget Act of 2015, enacted on November 2, 2015, extended the 2% reductions to Medicare payments through fiscal year 2025. The Bipartisan Budget Act of 2018, enacted on February 9, 2018, extends the 2% reductions to Medicare payments through fiscal year 2027. Historically, the total amount paid by Medicare in any one year for outpatient physical therapy, occupational therapy, and/or speech-language pathology services provided to any Medicare beneficiary was subject to an annual dollar limit (i.e., the ‘‘Therapy Cap’’ or ‘‘Limit’’). For 2017, the annual Limit on outpatient therapy services was $1,980 for combined Physical Therapy and Speech Language Pathology services and $1,980 for Occupational Therapy services. As a result of Bipartisan Budget Act of 2018, the Therapy Caps have been eliminated, effective as of January 1, 2018. Under the Middle Class Tax Relief and Job Creation Act of 2012 (‘‘MCTRA’’), since October 1, 2012, patients who met or exceeded $3,700 in therapy expenditures during a calendar year have been subject to a manual medical review to determine whether applicable payment criteria are satisfied. The $3,700 threshold is applied to Physical Therapy and Speech Language Pathology Services; a separate $3,700 threshold is applied to the Occupational Therapy. The MACRA directed Centers for Medicare and Medicaid Services (“CMS”) to modify the manual medical review process such that those reviews will no longer apply to all claims exceeding the $3,700 threshold and instead will be determined on a targeted basis based on a variety of factors that CMS considers appropriate. The Bipartisan Budget Act of 2018 extended the targeted medical review indefinitely, but reduced the threshold to $3,000 through December 31, 2027. For 2028, the threshold amount will be increased by the percentage increase in the Medicare Economic Index (“MEI”) for 2028 and in subsequent years the threshold amount will increase based on the corresponding percentage increase in the MEI for such subsequent year. CMS adopted a multiple procedure payment reduction (‘‘MPPR’’) for therapy services in the final update to the MPFS for calendar year 2011. The MPPR applied to all outpatient therapy services paid under Medicare Part B — occupational therapy, physical therapy and speech-language pathology. Under the policy, the Medicare program pays 100% of the practice expense component of the Relative Value Unit (‘‘RVU’’) for the therapy procedure with the highest practice expense RVU, then reduces the payment for the practice expense component for the second and subsequent therapy procedures or units of service furnished during the same day for the same patient, regardless of whether those therapy services are furnished in separate sessions. Since 2013, the practice expense component for the second and subsequent therapy service furnished during the same day for the same patient was reduced by 50%. Medicare claims for outpatient therapy services furnished by therapy assistants on or after January 1, 2022 must include a modifier indicating the service was furnished by a therapy assistant. CMS was required to develop a modifier to mark services provided by a therapy assistant by January 1, 2019, and then submitted claims have to report the modifier mark starting January 1, 2020. Outpatient therapy services furnished on or after January 1, 2022 in whole or part by a therapy assistant will be paid at an amount equal to 85% of the payment amount otherwise applicable for the service. Statutes, regulations, and payment rules governing the delivery of therapy services to Medicare beneficiaries are complex and subject to interpretation. The Company believes that it is in compliance, in all material respects, with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s financial statements as of September 30, 2019. Compliance with such laws and regulations can be subject to future government review and interpretation, as well as significant regulatory action including fines, penalties, and exclusion from the Medicare program. For the nine months ended September 30, 2019 and 2018, net patient revenue from Medicare were approximately $88.8 million and $76.6 million, respectively. Contractual Allowances Contractual allowances result from the differences between the rates charged for services performed and expected reimbursements by both insurance companies and government sponsored healthcare programs for such services. Medicare regulations and the various third party payors and managed care contracts are often complex and may include multiple reimbursement mechanisms payable for the services provided in Company clinics. The Company estimates contractual allowances based on its interpretation of the applicable regulations, payor contracts and historical calculations. Each month the Company estimates its contractual allowance for each clinic based on payor contracts and the historical collection experience of the clinic and applies an appropriate contractual allowance reserve percentage to the gross accounts receivable balances for each payor of the clinic. Based on the Company’s historical experience, calculating the contractual allowance reserve percentage at the payor level is sufficient to allow the Company to provide the necessary detail and accuracy with its collectability estimates. However, the services authorized and provided and related reimbursement are subject to interpretation that could result in payments that differ from the Company’s estimates. Payor terms are periodically revised necessitating continual review and assessment of the estimates made by management. The Company’s billing system does not capture the exact change in its contractual allowance reserve estimate from period to period in order to assess the accuracy of its revenues and hence its contractual allowance reserves. Management regularly compares its cash collections to corresponding net revenues measured both in the aggregate and on a clinic-by-clinic basis. In the aggregate, historically the difference between net revenues and corresponding cash collections has generally reflected a difference within approximately 1% of net revenues. Additionally, analysis of subsequent periods’ contractual write-offs on a payor basis reflects a difference within approximately 1% between the actual aggregate contractual reserve percentage as compared to the estimated contractual allowance reserve percentage associated with the same period end balance. As a result, the Company believes that a change in the contractual allowance reserve estimate would not likely be more than 1% at September 30, 2019. A contract’s transaction price is allocated to each distinct performance obligation and recognized when, or as, the performance obligation is satisfied. To determine the transaction price, the Company includes the effects of any variable consideration, such as the probability of collecting that amount. The Company applies established rates to the services provided, and adjusts for the terms of payor contracts, as applicable. These contracted amounts are different from the Company’s established rates. The Company has established a “contractual allowance” for this difference. The allowance is based on the terms of payor contracts, historical and current reimbursement information and current experience with the clinic and partners. The Company’s established rates less the contractual allowance is the revenue that is recognized in the period in which the service is rendered. This revenue is deemed the transaction price and stated as “Net Patient Revenue” on the Company’s consolidated statements of income. The Company’s performance obligations are satisfied at a point in time. After the clinic has provided services and satisfied its obligation to the customer for the reimbursement rates stipulated in the payor contracts (i.e. the transaction price), the Company recognizes the revenue, net of contractual allowances, in the period in which the services are rendered. The Company recognizes the full amount of revenue and reports the contractual allowances as a contra (or offset) revenue account to report a net revenue number based on the expected collections. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE [Abstract] | |
EARNINGS PER SHARE | 5. EARNINGS PER SHARE In accordance with current accounting guidance, the revaluation of redeemable non-controlling interest (see Footnote 6 – Redeemable Non-Controlling Interest), net of tax, charged directly to retained earnings is included in the earnings per basic and diluted share calculation. The following table provides a detail of the basic and diluted earnings per share computation (in thousands, except per share data). Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Computation of earnings per share - USPH shareholders: Net income attributable to USPH shareholders $ 9,047 $ 8,102 $ 32,110 $ 24,465 Charges to retained earnings: Revaluation of redeemable non-controlling interest (922 ) (8,680 ) (10,752 ) (18,105 ) Tax effect at statutory rate (federal and state) of 26.25% 242 2,279 2,822 4,753 $ 8,367 $ 1,701 $ 24,180 $ 11,113 Earnings per share (basic and diluted) $ 0.66 $ 0.13 $ 1.90 $ 0.88 Shares used in computation: Basic and diluted earnings per share - weighted-average shares 12,774 12,685 12,750 12,660 |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTEREST | 9 Months Ended |
Sep. 30, 2019 | |
REDEEMABLE NON-CONTROLLING INTEREST [Abstract] | |
REDEEMABLE NON-CONTROLLING INTEREST | 6. REDEEMABLE NON-CONTROLLING INTEREST Since October 2017, when the Company acquires a majority interest (the “Acquisition”) in a physical therapy clinic business (referred to as “Therapy Practice”), these Acquisitions occur in a series of steps which are described below. 1. Prior to the Acquisition, the Therapy Practice exists as a separate legal entity (the “Seller Entity”). The Seller Entity is owned by one or more individuals (the “Selling Shareholders”) most of whom are physical therapists that work in the Therapy Practice and provide physical therapy services to patients. 2. In conjunction with the Acquisition, the Seller Entity contributes the Therapy Practice into a newly-formed limited partnership (“NewCo”), in exchange for one hundred percent (100%) of the limited and general partnership interests in NewCo. Therefore, in this step, NewCo becomes a wholly-owned subsidiary of the Seller Entity. 3. The Company enters into an agreement (the “Purchase Agreement”) to acquire from the Seller Entity a majority (ranges from 50% to 90%) of the limited partnership interest and in all cases 100% of the general partnership interest in NewCo. The Company does not purchase 100% of the limited partnership interest because the Selling Shareholders, through the Seller Entity, want to maintain an ownership percentage. The consideration for the Acquisition is primarily payable in the form of cash at closing and a small, two-year note in lieu of an escrow (the “Purchase Price”). The Purchase Agreement does not contain any future earn-out or other contingent consideration that is payable to the Seller Entity or the Selling Shareholders. 4. The Company and the Seller Entity also execute a partnership agreement (the “Partnership Agreement”) for NewCo that sets forth the rights and obligations of the limited and general partners of NewCo. After the Acquisition, the Company is the general partner of NewCo. 5. As noted above, the Company does not purchase 100% of the limited partnership interests in NewCo and the Seller Entity retains a portion of the limited partnership interest in NewCo (“Seller Entity Interest”). 6. In most cases, some or all of the Selling Shareholders enter into an employment agreement (the “Employment Agreement”) with NewCo with an initial term that ranges from three to five years (the “Employment Term”), with automatic one-year renewals, unless employment is terminated prior to the end of the Employment Term. As a result, a Selling Shareholder becomes an employee (“Employed Selling Shareholder”) of NewCo. The employment of an Employed Selling Shareholder can be terminated by the Employed Selling Shareholder or NewCo, with or without cause, at any time. In a few situations, a Selling Shareholder does not become employed by NewCo and is not involved with NewCo following the closing; in those situations, such Selling Shareholders sell their entire ownership interest in the Seller Entity as of the closing of the Acquisition. 7. The compensation of each Employed Selling Shareholder is specified in the Employment Agreement and is customary and commensurate with his or her responsibilities based on other employees in similar capacities within NewCo, the Company and the industry. 8. The Company and the Selling Shareholder (including both Employed Selling Shareholders and Selling Shareholders not employed by NewCo) execute a non-compete agreement (the “Non-Compete Agreement”) which restricts the Selling Shareholder from engaging in competing business activities for a specified period of time (the “Non-Compete Term”). A Non-Compete Agreement is executed with the Selling Shareholders in all cases. That is, even if the Selling Shareholder does not become an Employed Selling Shareholder, the Selling Shareholder is restricted from engaging in a competing business during the Non-Compete Term. 9. The Non-Compete Term commences as of the date of the Acquisition and expires on the later of : a. Two years after the date an Employed Selling Shareholders’ employment is terminated (if the Selling Shareholder becomes an Employed Selling Shareholder) or b. Five to six years from the date of the Acquisition, as defined in the Non-Compete Agreement, regardless of whether the Selling Shareholder is employed by NewCo. 10. The Non-Compete Agreement applies to a restricted region which is defined as a 15-mile radius from the Therapy Practice. That is, an Employed Selling Shareholder is permitted to engage in competing businesses or activities outside the 15-mile radius (after such Employed Selling Shareholder no longer is employed by NewCo) and a Selling Shareholder who is not employed by NewCo immediately is permitted to engage in the competing business or activities outside the 15-mile radius. The Partnership Agreement contains provisions for the redemption of the Seller Entity Interest, either at the option of the Company (the “Call Right”) or at the option of the Seller Entity (the “Put Right”) as follows: 1. Put Right a. In the event that any Selling Shareholder’s employment is terminated under certain circumstances prior to a specified date (the “Specified Date”), the Seller Entity thereafter may have an irrevocable right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below. b. In the event that any Selling Shareholder is not employed by NewCo as of the Specified Date and the Company has not exercised its Call Right with respect to the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, Seller Entity thereafter shall have the Put Right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below. c. In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the Specified Date, the Seller Entity shall have the Put Right, and upon the exercise of the Put Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below. 2. Call Right a. If any Selling Shareholder’s employment by NewCo is terminated prior to the Specified Date, the Company thereafter shall have an irrevocable right to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, in each case at the purchase price described in “3” below. b. In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after Specified Date, the Company shall have the Call Right, and upon the exercise of the Call Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below. 3. For the Put Right and the Call Right, the purchase price is derived from a formula based on a specified multiple of NewCo’s trailing twelve months of earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of NewCo (the “Redemption Amount”). NewCo’s earnings are distributed monthly based on available cash within NewCo; therefore, the undistributed earnings amount is small, if any. 4. The Purchase Price for the initial equity interest purchased by the Company is also based on the same specified multiple of the trailing twelve-month earnings that is used in the Put Right and the Call Right noted above. 5. The Put Right and the Call Right do not have an expiration date, and the Seller Entity Interest is not required to be purchased by the Company or sold by the Seller Entity unless either; the Put Right and the Call Right is exercised. 6. The Put Right and the Call Right never apply to Selling Shareholders who do not become employed by NewCo, since the Company requires that such Selling Shareholders sell their entire ownership interest in the Seller Entity at the closing of the Acquisition. An Employed Selling Shareholder’s ownership of his or her equity interest in the Seller Entity predates the Acquisition and the Company’s purchase of its partnership interest in NewCo. The Employment Agreement and the Non-Compete Agreement do not contain any provision to escrow or “claw back” the equity interest in the Seller Entity held by such Employed Selling Shareholder, nor the Seller Entity Interest in NewCo, in the event of a breach of the employment or non-compete terms. More specifically, even if the Employed Selling Shareholder is terminated for “cause” by NewCo, such Employed Selling Shareholder does not forfeit his or her right to his or her full equity interest in the Seller Entity and the Seller Entity does not forfeit its right to any portion of the Seller Entity Interest. The Company’s only recourse against the Employed Selling Shareholder for breach of either the Employment Agreement or the Non-Compete Agreement is to seek damages and other legal remedies under such agreements. There are no conditions in any of the arrangements with an Employed Selling Shareholder that would result in a forfeiture of the equity interest held in the Seller Entity or of the Seller Entity Interest. For the three and nine months ended September 30, 2019 and September 30, 2018, the following table details the changes in the carrying amount (fair value) of the redeemable non-controlling interests (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Beginning balance $ 133,366 $ 117,027 $ 133,943 $ 102,572 Operating results allocated to redeemable non-controlling interest partners 2,379 2,456 8,152 6,802 Distributions to redeemable non-controlling interest partners (1,636 ) (2,497 ) (6,799 ) (6,576 ) Changes in the fair value of redeemable non-controlling interest 922 8,681 10,752 18,106 Purchases of redeemable non-controlling interest (1,459 ) - (6,344 ) - Reduction of non-controlling interest due to sale of USPh partnership interest - - (6,132 ) - Acquired interest 6,230 3,282 6,230 8,145 Sales of redeemable non-controlling interest - temporary equity - - 2,870 - Notes receivable related to sales of redeemable non-controlling interest - temporary equity - - (2,870 ) - Other (1 ) (43 ) (1 ) (143 ) Ending balance $ 139,801 $ 128,906 $ 139,801 $ 128,906 In conjunction with the sale of the Company’s 50% interest in a partnership to the founders in 2019, the redeemable non-controlling interest related to this partnership was reduced. For the nine months ended September 30, 2019, the Company purchased additional interests in seven partnerships for an aggregate price of $6.0 million of which $5.7 million was paid in cash and $0.3 million in seller notes. The seller notes are payable in two equal installments plus accrued interest. The excess of the purchase price over the recorded value of the interests (redeemable non-controlling interests) was $0.4 million. The $0.4 million, net of tax of $0.1 million, was recognized directly in retained earnings in accordance with current accounting literature. Also during the nine months ended September 30, 2019, the Company sold various interest in the three partnerships for an aggregate price of $2.8 million, in exchange for notes receivable payable based on distributions of the specific partnerships. The Company continues to own an interest in all three of the partnerships. The following table categorizes the carrying amount (fair value) of the redeemable non-controlling interests (in thousands): September 30, 2019 September 30, 2018 Contractual time period has lapsed but holder’s employment has not been terminated $ 40,958 $ 34,587 Contractual time period has not lapsed and holder’s employment has not been terminated 98,843 94,319 Holder’s employment has terminated and contractual time period has expired - - Holder’s employment has terminated and contractual time period has not expired - - $ 139,801 $ 128,906 |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2019 | |
GOODWILL [Abstract] | |
GOODWILL | 7. GOODWILL The changes in the carrying amount of goodwill consisted of the following (in thousands): Nine Months Ended September 30, 2019 Year Ended December 31, 2018 Beginning balance $ 293,525 $ 271,338 Goodwill acquired 30,293 19,778 Goodwill related to partnership interest sold (7,325 ) - Goodwill adjustments for purchase price allocation of businesses acquired in prior year 146 2,409 Ending balance $ 316,639 $ 293,525 |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS, NET [Abstract] | |
INTANGIBLE ASSETS, NET | 8. INTANGIBLE ASSETS, NET Intangible assets, net as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Tradenames $ 32,049 $ 30,256 Referral relationships, net of accumulated amortization of $10,714 and $9,370, respectively 18,967 16,895 Non-compete agreements, net of accumulated amortization of $4,901 and $4,716, respectively 2,369 1,677 $ 53,385 $ 48,828 Tradenames, referral relationships and non-compete agreements are related to the businesses acquired. The value assigned to tradenames has an indefinite life and is tested at least annually for impairment using the relief from royalty method in conjunction with the Company’s annual goodwill impairment test. The value assigned to referral relationships is being amortized over their respective estimated useful lives which range from six to sixteen years. Non-compete agreements are amortized over the respective term of the agreements which range from five to six years. The following table details the amount of amortization expense recorded for intangible assets for the nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Referral relationships $ 593 $ 569 $ 1,707 $ 1,648 Non-compete agreements 172 172 510 460 $ 765 $ 741 $ 2,217 $ 2,108 Based on the balance of referral relationships and non-compete agreements as of September 30, 2019, the expected amount to be amortized in the last three months of 2019 and thereafter by year is as follows (in thousands): Referral Relationships Non-Compete Agreements Years Annual Amount Years Annual Amount Ending December 31, Ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 601 2019 (excluding the nine months ended September 30, 2019) $ 198 2020 $ 2,403 2020 $ 619 2021 $ 2,403 2021 $ 541 2022 $ 2,354 2022 $ 363 2023 $ 2,247 2023 $ 294 2024 $ 2,082 2024 $ 238 Thereafter $ 6,877 Thereafter $ 116 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2019 | |
ACCRUED EXPENSES [Abstract] | |
ACCRUED EXPENSES | 9. ACCRUED EXPENSES Accrued expenses as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Salaries and related costs $ 21,089 $ 21,726 Credit balances due to patients and payors 5,075 7,293 Group health insurance claims 2,996 3,124 Other 4,413 6,350 Total $ 33,573 $ 38,493 |
NOTES PAYABLE AND AMENDED CREDI
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT | 9 Months Ended |
Sep. 30, 2019 | |
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT [Abstract] | |
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT | 10. NOTES PAYABLE AND AMENDED CREDIT AGREEMENT Amounts outstanding under the Amended Credit Agreement and notes payable as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Credit Agreement average effective interest rate of 4.03% inclusive of unused fee $ 51,000 $ 38,000 Various notes payable with $718 plus accrued interest due in the next year, interest accrues in the range of 3.75% through 5.50% per annum 5,010 1,836 $ 56,010 $ 39,836 Less current portion (718 ) (1,434 ) Long term portion $ 55,292 $ 38,402 Effective December 5, 2013, the Company entered into an Amended and Restated Credit Agreement with a commitment for a $125.0 million revolving credit facility. This agreement was amended in August 2015, January 2016, March 2017 and November 2017 (hereafter referred to as “Amended Credit Agreement”). The Amended Credit Agreement is unsecured and has loan covenants, including requirements that the Company comply with a consolidated fixed charge coverage ratio and consolidated leverage ratio. Proceeds from the Amended Credit Agreement may be used for working capital, acquisitions, purchases of the Company’s common stock, dividend payments to the Company’s common stockholders, capital expenditures and other corporate purposes. The pricing grid which is based on the Company’s consolidated leverage ratio with the applicable spread over LIBOR ranging from 1.25% to 2.0% or the applicable spread over the Base Rate ranging from 0.1% to 1%. Fees under the Amended Credit Agreement include an unused commitment fee ranging from 0.25% to 0.3% depending on the Company’s consolidated leverage ratio and the amount of funds outstanding under the Amended Credit Agreement. The January 2016 amendment to the Amended Credit Agreement increased the cash and noncash consideration that the Company could pay with respect to acquisitions permitted under the Amended Credit Agreement to $50.0 million for any fiscal year, and increased the amount the Company may pay in cash dividends to its shareholders in an aggregate amount not to exceed $10.0 million in any fiscal year. The March 2017 amendment, among other items, increased the amount the Company may pay in cash dividends to its shareholders in an aggregate amount not to exceed $15.0 million in any fiscal year. The November 2017 amendment, among other items, adjusted the pricing grid as described above, increased the aggregate amount the Company may pay in cash dividends to its shareholders to an amount not to exceed $20.0 million and extended the maturity date to November 30, 2021. On September 30, 2019, $51.0 million was outstanding on the Amended Credit Agreement resulting in $74.0 million of availability. As of September 30, 2019 and the date of this report, the Company was in compliance with all of the covenants thereunder. The Company generally enters into various notes payable as a means of financing a portion of its acquisitions and purchases of non-controlling interests. In conjunction with the acquisition on September 30, 2019, the Company entered into a note payable in the amount of $300,000 payable in two equal principal installments due in September 2020 and September 2021 plus accrued interest. Interest accrues at the rate of 5.00% per annum. In conjunction with the acquisition on April 12, 2019, the Company entered into a note payable in the amount of $4,000,000 payable in April 2021 plus accrued interest. Interest accrues at the rate of 5.50% per annum. In March 4, 2019, in conjunction with the purchase of a redeemable non-controlling interest, the Company entered into a note payable in the amount of $228,120 that is payable in two principal installments of $114,080 each, plus accrued interest, in March 2020 and 2021. In conjunction with the acquisition of the four clinic practices on August 31, 2018, the Company entered into a note payable in the amount of $400,000 that is payable in two principal installments of $200,000 each, plus accrued interest. The first installment of principal and accrued interest was paid in August 2019 and the second installment of principal and accrued interest remains payable in August 2020. Interest accrues at the rate of 5.00% per annum. In conjunction with the acquisition of the industrial injury prevention business on April 30, 2018, the Company entered into a note payable in the amount of $400,000 that is payable in two principal installments of $200,000 each, plus accrued interest. The first installment was paid in April 2019 and the second is due in April 2020. Interest accrues at the rate of 4.75% per annum. In conjunction with the acquisition of the two clinic practices on February 28, 2018, the Company entered into a note payable in the amount of $150,000, which was paid in August 2019. Interest accrued at the rate of 4.5% per annum. Subsequent aggregate annual payments of principal required pursuant to the Amended Credit Agreement and outstanding notes payable at September 30, 2019 are as follows (in thousands): During the twelve months ended September 30, 2020 $ 718 During the twelve months ended September 30, 2021 4,292 During the twelve months ended September 30, 2022 51,000 $ 56,010 The revolving credit facility (balance at September 30, 2019 of $51.0 million) matures on November 30, 2021. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES [Abstract] | |
LEASES | 11. LEASES The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract. Effective January 1, 2019, right-of-use assets and operating lease liabilities are included in its consolidated balance sheet. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is recognized on a straight-line basis over the lease term. In accordance with ASC 842, the Company records on its consolidated balance sheet leases with a term greater than 12 months. The Company has elected, in compliance with current accounting standards, not to record leases with an initial terms of 12 months or less in the consolidated balance sheet. ASC 842 requires the separation of the fixed lease components from the variable lease components. The Company has elected the practical expedient to account for separate lease components of a contract as a single lease cost thus causing all fixed payments to be capitalized. Non-lease and variable cost components are not included in the measurement of the right-of-use assets or operating lease liabilities. The Company also elected the package of practical expedients permitted within ASC 842, which among other things, allows the Company to carry forward historical lease classification. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the right-of- use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense. The components of lease expense were as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 7,303 $ 22,598 Short-term lease cost 265 933 Variable lease cost 1,477 4,605 Total lease cost * $ 9,045 $ 28,136 * Sublease income was immaterial Lease cost is reflected in the consolidated statement of net income in the line item – rent, supplies, contract labor and other. Supplemental information related to leases was as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 7,187 $ 22,579 Right-of-use assets obtained in exchange for new operating lease liabilities * $ 6,319 $ 104,833 * For the nine months ended September 30, 2019 includes the right-of-use assets obtained in exchange for lease liabilities of $82.6 million which were recognized upon adoption of ASC Topic 842 at January 1, 2019. The aggregate future lease payments for operating leases as of September 30, 2019 were as follows (in thousands): Fiscal Year Amount 2019 (excluding the nine months ended September, 30, 2019) $ 7,387 2020 27,372 2021 21,344 2022 15,003 2023 9,987 2024 and thereafter 10,407 Total lease payments $ 91,500 Less: imputed interest (6,935 ) Total operating lease liabilities $ 84,565 Average lease terms and discount rates were as follows: Nine Months Ended September 30, 2019 Weighted-average remaining lease term - Operating leases 4.02 Years Weighted-average discount rate - Operating leases 3.9 % |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Sep. 30, 2019 | |
COMMON STOCK [Abstract] | |
COMMON STOCK | 12. COMMON STOCK From September 2001 through December 31, 2008, the Board authorized the Company to purchase, in the open market or in privately negotiated transactions, up to 2,250,000 shares of the Company’s common stock. In March 2009, the Board authorized the repurchase of up to 10% or approximately 1,200,000 shares of its common stock (“March 2009 Authorization”). The Amended Credit Agreement permits share repurchases of up to $15,000,000, subject to compliance with covenants. The Company is required to retire shares purchased under the March 2009 Authorization. Under the March 2009 Authorization, the Company has purchased a total of 859,499 shares. There is no expiration date for the share repurchase program. There are currently an additional estimated 114,899 shares (based on the closing price of $130.55 on September 30, 2019) that may be purchased from time to time in the open market or private transactions depending on price, availability and the Company’s cash position. The Company did not purchase any shares of its common stock during the nine months ended September 30, 2019. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Cash Equivalents | Cash Equivalents The Company maintains its cash and cash equivalents at financial institutions. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The combined account balances at several institutions typically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related on deposits in excess of FDIC insurance coverage. Management believes that the risk is not significant. |
Long-Lived Assets | Long-Lived Assets Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives for furniture and equipment range from three to eight years and for purchased software from three to seven years. Leasehold improvements are amortized over the shorter of the lease term or estimated useful lives of the assets, which is generally three to five years. |
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of | Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of The Company reviews property and equipment and intangible assets with finite lives for impairment upon the occurrence of certain events or circumstances which indicate that the amounts may be impaired. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Goodwill | Goodwill Goodwill represents the excess of the amount paid and fair value of the non-controlling interests over the fair value of the acquired business assets, which include certain identifiable intangible assets. Historically, goodwill has been derived from acquisitions and, prior to 2009, from the purchase of some or all of a particular local management’s equity interest in an existing clinic. Effective January 1, 2009, if the purchase price of a non-controlling interest by the Company exceeds or is less than the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. The fair value of goodwill and other identifiable intangible assets with indefinite lives are tested for impairment annually and upon the occurrence of certain events, and are written down to fair value if considered impaired. The Company evaluates goodwill for impairment on at least an annual basis (in its third quarter) by comparing the fair value of its reporting units to the carrying value of each reporting unit including related goodwill. The Company evaluates indefinite lived tradenames using the relief from royalty method in conjunction with its annual goodwill impairment test. The Company operates a business which is made up of various clinics within partnerships. The partnerships are components of regions and are aggregated to the operating segment level for the purpose of determining the Company’s reporting units when performing its annual goodwill impairment test. In 2019, there were six regions for which an impairment test was performed. In addition to the six regions, during 2019, the impairment test included a separate analysis for the industrial injury prevention business, a separate reporting unit. An impairment loss generally would be recognized when the carrying amount of the net assets of a reporting unit, inclusive of goodwill and other identifiable intangible assets, exceeds the estimated fair value of the reporting unit. The estimated fair value of a reporting unit is determined using two factors: (i) earnings prior to taxes, depreciation and amortization for the reporting unit multiplied by a price/earnings ratio used in the industry and (ii) a discounted cash flow analysis. A weight is assigned to each factor and the sum of each weight times the factor is considered the estimated fair value. For 2019, the factors (i.e., price/earnings ratio, discount rate and residual capitalization rate) were updated to reflect current market conditions. The evaluation of goodwill in 2019 and 2018 did not result in any goodwill amounts that were deemed impaired. The Company has not identified any triggering events occurring after the testing date that would impact the impairment testing results obtained. The Company will continue to monitor for any triggering events or other indicators of impairment. |
Redeemable Non-Controlling Interests | Redeemable Non-Controlling Interests The non-controlling interests that are reflected as redeemable non-controlling interests in the consolidated financial statements consist of those that the owners and the Company have certain redemption rights, whether currently exercisable or not, and which currently, or in the future, require that the Company purchase or the owner sell the non-controlling interest held by the owner, if certain conditions are met. The purchase price is derived at a predetermined formula based on a multiple of trailing twelve months earnings performance as defined in the respective limited partnership agreements. The redemption rights can be triggered by the owner or the Company at such time as both of the following events have occurred: 1) termination of the owner’s employment, regardless of the reason for such termination, and 2) the passage of specified number of years after the closing of the transaction, typically three to five years, as defined in the limited partnership agreement. The redemption rights are not automatic or mandatory (even upon death) and require either the owner or the Company to exercise its rights when the conditions triggering the redemption rights have been satisfied. On the date the Company acquires a controlling interest in a partnership, and the limited partnership agreement for such partnership contains redemption rights not under the control of the Company, the fair value of the non-controlling interest is recorded in the consolidated balance sheet under the caption – Redeemable non-controlling interests. Then, in each reporting period thereafter until it is purchased by the Company, the redeemable non-controlling interest is adjusted to the greater of its then current redemption value or initial carrying value, based on the predetermined formula defined in the respective limited partnership agreement. As a result, the value of the non-controlling interest is not adjusted below its initial carrying value. The Company records any adjustment in the redemption value, net of tax, directly to retained earnings and are not reflected in the consolidated statements of income. Although the adjustments are not reflected in the consolidated statements of income, current accounting rules require that the Company reflects the adjustments, net of tax, in the earnings per share calculation. The amount of net income attributable to redeemable non-controlling interest owners is included in consolidated net income on the face of the consolidated statements of net income. Management believes the redemption value (i.e. the carrying amount) and fair value are the same. |
Non-Controlling Interests | Non-Controlling Interests The Company recognizes non-controlling interests, in which the Company has no obligation but the right to purchase the non-controlling interests, as equity in the consolidated financial statements separate from the parent entity’s equity. Net income is allocated to non-controlling interests (permanent equity), redeemable non-controlling interests (temporary equity) and to the Company’s shareholders. The amount of net income attributable to non-controlling interests is included in consolidated net income on the face of the consolidated statements of net income. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The Company recognizes a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the non-controlling equity investment on the deconsolidation date. When the purchase price of a non-controlling interest by the Company exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. Additionally, operating losses are allocated to non-controlling interests even when such allocation creates a deficit balance for the non-controlling interest partner. |
Revenue Recognition | Revenue Recognition Revenues are recognized in the period in which services are rendered. See Footnote 4 – Revenue Recognition, for further discussion of revenue recognition. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company determines allowances for doubtful accounts based on the specific agings and payor classifications at each clinic. The provision for doubtful accounts is included in operating costs in the consolidated statements of net income. Net accounts receivable, which are stated at the historical carrying amount net of contractual allowances, write-offs and allowance for doubtful accounts, includes only those amounts the Company estimates to be collectible. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount to be recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during the nine months ended September 30, 2019. The Company records any interest or penalties, if required, in interest and other expense, as appropriate. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, accounts payable and notes payable approximate their fair values due to the short-term maturity of these financial instruments. The carrying amount under the Amended Credit Agreement and the redemption value of Redeemable non-controlling interests approximate the respective fair values. The fair value of the Company’s redeemable non-controlling interests is determined based on “Level 3” inputs. The interest rate on the Amended Credit Agreement, which is tied to LIBOR, is set at various short-term intervals, as detailed in the Amended Credit Agreement. |
Segment Reporting | Segment Reporting Operating segments are components of an enterprise for which separate financial information is available that is evaluated regularly by chief operating decision makers in deciding how to allocate resources and in assessing performance. The Company identifies operating segments based on management responsibility and believes it meets the criteria for aggregating its operating segments into a single reporting segment. |
Use of Estimates | Use of Estimates In preparing the Company’s consolidated financial statements, management makes certain estimates and assumptions, especially in relation to, but not limited to, purchase accounting, goodwill impairment, allowance for receivables, tax provision and contractual allowances, that affect the amounts reported in the consolidated financial statements and related disclosures. Actual results may differ from these estimates. |
Self-Insurance Program | Self-Insurance Program The Company utilizes a self-insurance plan for its employee group health insurance coverage administered by a third party. Predetermined loss limits have been arranged with an insurance company to minimize the Company’s maximum liability and cash outlay. Accrued expenses include the estimated incurred but unreported costs to settle unpaid claims and estimated future claims. Management believes that the current accrued amounts are sufficient to pay claims arising from self-insurance claims incurred through September 30, 2019. |
Restricted Stock | Restricted Stock Restricted stock issued to employees and directors is normally subject to continued employment or continued service on the board, respectively. Generally, restrictions on the stock granted to employees, other than officers, lapse in equal annual installments on the following four anniversaries of the date of grant. For those shares granted to directors, the restrictions lapse in equal quarterly installments during the first year after the date of grant. For those granted to officers, the restrictions lapse in equal quarterly installments during the four years following the date of grant. Compensation expense for grants of restricted stock is recognized based on the fair value per share on the date of grant amortized over the vesting period. The restricted stock issued is included in basic and diluted shares for the earnings per share computation. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”), which amended prior accounting standards for leases. The Company implemented the new lease standard, ASC Topic 842 – Leases as of January 1, 2019 using the transition method in ASU 2018-11 issued in July 2018 which allows the Company to initially apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. There was no adjustment required to retained earnings upon adoption. Accordingly, no retrospective adjustments were made to the comparative periods presented. The Company elected certain of the practical expedients permitted, including the expedient that allows the Company to retain its existing lease assessment and classification. Adoption of ASC 842 resulted in an increase to total assets and liabilities due to the recording of operating lease right-of-use assets (“ROU”) and operating lease liabilities of approximately $78.0 million and $82.6 million respectively, as of January 1, 2019 for operating leases as a lessee. The adoption did not materially impact the Company’s consolidated statement of income or cash flows. See Footnote 11 - Leases for further discussion of leases. In August 2018, the Securities Exchange Commission (“SEC”) issued Final Rule 33-10532, Disclosure Update and Simplification, which amends certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements. The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. The rule is effective 30 days after its publication in the Federal Register. The rule was posted on October 4, 2018. On September 25, 2018, the SEC released guidance advising it will not object to a registrant adopting the requirement to include changes in stockholders’ equity in the Form 10-Q for the first quarter beginning after the effective date of the rule. The Company adopted this standard during the first quarter of 2019 Form 10-Q with no material impact on the Consolidated Financial Statements. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350), which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment change. ASU 2017-04 is effective prospectively for fiscal years, and the interim periods within those years, beginning after December 15, 2019. The Company does not expect adoption of this ASU to have a material impact. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, including trade receivables. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. These changes become effective for the Company on January 1, 2020. The financial instruments subject to ASU 2016-13 are the Company’s accounts receivable and notes receivable. Given the very high rate of collectability of the Company’s financial instruments, the impact of ASU 2016-13 will not be material to the Company’s consolidated statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) which amended the fair value measurement guidance by removing or clarifying certain existing disclosure requirements, while also adding new disclosure requirements. Specifically, this update removed certain disclosures related to Level 1 and Level 2 transfers and also removed the discussion regarding valuation processes of Level 3 fair value measurements. The update modifies guidance related to investments in certain entities that calculate net asset value to explicitly require disclosure regarding timing of liquidation of the investee’s assets and timing of redemption restrictions. The update adds disclosures around the changes in unrealized gains and losses in other comprehensive income for recurring Level 3 investments held at the end of the reporting period and adds disclosures regarding certain unobservable inputs on Level 3 fair value measurements. These changes become effective for the Company on January 1, 2020. Pursuant to ASC 820, the fair value of the Company’s redeemable non-controlling interests are determined based on “Level 3” inputs. Management is currently evaluating the potential impact of these changes on the Consolidated Financial Statements. |
Subsequent Events | Subsequent Events The Company has evaluated events subsequent to September 30, 2019 to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were issued. Based on this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the financial statements. |
ACQUISITIONS OF BUSINESSES (Tab
ACQUISITIONS OF BUSINESSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Acquisition [Line Items] | |
Preliminary Purchase Prices Allocation | The purchase price for the 2018 acquisitions has been allocated as follows (in thousands): Cash paid, net of cash acquired $ 16,367 Seller notes 950 Total consideration $ 17,317 Estimated fair value of net tangible assets acquired: Total current assets $ 1,633 Total non-current assets 305 Total liabilities (525 ) Net tangible assets acquired $ 1,413 Referral relationships 2,926 Non-compete 298 Tradename 990 Goodwill 19,835 Fair value of non-controlling interest (classified as redeemable non-controlling interests) (8,145 ) $ 17,317 |
2019 Acquisitions [Member] | |
Business Acquisition [Line Items] | |
Preliminary Purchase Prices Allocation | The purchase price for the 2019 acquisitions has been preliminarily allocated as follows (in thousands): Cash paid, net of cash acquired $ 30,365 Payable to shareholders of seller 502 Seller note 4,300 Total consideration $ 35,167 Estimated fair value of net tangible assets acquired: Total current assets $ 2,824 Total non-current assets 2,924 Total liabilities (3,034 ) Net tangible assets acquired $ 2,714 Referral relationships 3,000 Non-compete 1,290 Tradename 4,100 Goodwill 30,293 Fair value of non-controlling interest (classified as redeemable non-controlling interests) (6,230 ) $ 35,167 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE RECOGNITION [Abstract] | |
Disaggregation of Revenue, Categories | The following table details the revenue related to the various categories (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Net patient revenues $ 104,392 $ 103,354 $ 324,405 $ 309,895 Management contract revenues 2,174 1,922 6,534 6,319 Industrial injury prevention services revenues 9,948 7,281 27,136 18,407 Other revenues 737 565 1,780 1,941 $ 117,251 $ 113,122 $ 359,855 $ 336,562 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS PER SHARE [Abstract] | |
Computations of Basic and Diluted Earnings Per Share | The following table provides a detail of the basic and diluted earnings per share computation (in thousands, except per share data). Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Computation of earnings per share - USPH shareholders: Net income attributable to USPH shareholders $ 9,047 $ 8,102 $ 32,110 $ 24,465 Charges to retained earnings: Revaluation of redeemable non-controlling interest (922 ) (8,680 ) (10,752 ) (18,105 ) Tax effect at statutory rate (federal and state) of 26.25% 242 2,279 2,822 4,753 $ 8,367 $ 1,701 $ 24,180 $ 11,113 Earnings per share (basic and diluted) $ 0.66 $ 0.13 $ 1.90 $ 0.88 Shares used in computation: Basic and diluted earnings per share - weighted-average shares 12,774 12,685 12,750 12,660 |
REDEEMABLE NON-CONTROLLING IN_2
REDEEMABLE NON-CONTROLLING INTEREST (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REDEEMABLE NON-CONTROLLING INTEREST [Abstract] | |
Changes in Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest | For the three and nine months ended September 30, 2019 and September 30, 2018, the following table details the changes in the carrying amount (fair value) of the redeemable non-controlling interests (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Beginning balance $ 133,366 $ 117,027 $ 133,943 $ 102,572 Operating results allocated to redeemable non-controlling interest partners 2,379 2,456 8,152 6,802 Distributions to redeemable non-controlling interest partners (1,636 ) (2,497 ) (6,799 ) (6,576 ) Changes in the fair value of redeemable non-controlling interest 922 8,681 10,752 18,106 Purchases of redeemable non-controlling interest (1,459 ) - (6,344 ) - Reduction of non-controlling interest due to sale of USPh partnership interest - - (6,132 ) - Acquired interest 6,230 3,282 6,230 8,145 Sales of redeemable non-controlling interest - temporary equity - - 2,870 - Notes receivable related to sales of redeemable non-controlling interest - temporary equity - - (2,870 ) - Other (1 ) (43 ) (1 ) (143 ) Ending balance $ 139,801 $ 128,906 $ 139,801 $ 128,906 |
Carrying Amount of (Fair Value) Redeemable Non-Controlling Interest | The following table categorizes the carrying amount (fair value) of the redeemable non-controlling interests (in thousands): September 30, 2019 September 30, 2018 Contractual time period has lapsed but holder’s employment has not been terminated $ 40,958 $ 34,587 Contractual time period has not lapsed and holder’s employment has not been terminated 98,843 94,319 Holder’s employment has terminated and contractual time period has expired - - Holder’s employment has terminated and contractual time period has not expired - - $ 139,801 $ 128,906 |
GOODWILL (Tables)
GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
GOODWILL [Abstract] | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill consisted of the following (in thousands): Nine Months Ended September 30, 2019 Year Ended December 31, 2018 Beginning balance $ 293,525 $ 271,338 Goodwill acquired 30,293 19,778 Goodwill related to partnership interest sold (7,325 ) - Goodwill adjustments for purchase price allocation of businesses acquired in prior year 146 2,409 Ending balance $ 316,639 $ 293,525 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INTANGIBLE ASSETS, NET [Abstract] | |
Intangible Assets, Net | Intangible assets, net as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Tradenames $ 32,049 $ 30,256 Referral relationships, net of accumulated amortization of $10,714 and $9,370, respectively 18,967 16,895 Non-compete agreements, net of accumulated amortization of $4,901 and $4,716, respectively 2,369 1,677 $ 53,385 $ 48,828 |
Amortization Expenses | The following table details the amount of amortization expense recorded for intangible assets for the nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended Nine Months Ended September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018 Referral relationships $ 593 $ 569 $ 1,707 $ 1,648 Non-compete agreements 172 172 510 460 $ 765 $ 741 $ 2,217 $ 2,108 |
Amortization of Tradename, Referral Relationships and Non-Competition Agreements | Based on the balance of referral relationships and non-compete agreements as of September 30, 2019, the expected amount to be amortized in the last three months of 2019 and thereafter by year is as follows (in thousands): Referral Relationships Non-Compete Agreements Years Annual Amount Years Annual Amount Ending December 31, Ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 601 2019 (excluding the nine months ended September 30, 2019) $ 198 2020 $ 2,403 2020 $ 619 2021 $ 2,403 2021 $ 541 2022 $ 2,354 2022 $ 363 2023 $ 2,247 2023 $ 294 2024 $ 2,082 2024 $ 238 Thereafter $ 6,877 Thereafter $ 116 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
ACCRUED EXPENSES [Abstract] | |
Accrued Expenses | Accrued expenses as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Salaries and related costs $ 21,089 $ 21,726 Credit balances due to patients and payors 5,075 7,293 Group health insurance claims 2,996 3,124 Other 4,413 6,350 Total $ 33,573 $ 38,493 |
NOTES PAYABLE AND AMENDED CRE_2
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT [Abstract] | |
Credit Agreement and Notes Payable | Amounts outstanding under the Amended Credit Agreement and notes payable as of September 30, 2019 and December 31, 2018 consisted of the following (in thousands): September 30, 2019 December 31, 2018 Credit Agreement average effective interest rate of 4.03% inclusive of unused fee $ 51,000 $ 38,000 Various notes payable with $718 plus accrued interest due in the next year, interest accrues in the range of 3.75% through 5.50% per annum 5,010 1,836 $ 56,010 $ 39,836 Less current portion (718 ) (1,434 ) Long term portion $ 55,292 $ 38,402 |
Aggregate Annual Payments of Principal Required to Revolving Credit Facility | Subsequent aggregate annual payments of principal required pursuant to the Amended Credit Agreement and outstanding notes payable at September 30, 2019 are as follows (in thousands): During the twelve months ended September 30, 2020 $ 718 During the twelve months ended September 30, 2021 4,292 During the twelve months ended September 30, 2022 51,000 $ 56,010 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASES [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 7,303 $ 22,598 Short-term lease cost 265 933 Variable lease cost 1,477 4,605 Total lease cost * $ 9,045 $ 28,136 * Sublease income was immaterial |
Supplemental Information Related to Leases | Supplemental information related to leases was as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 7,187 $ 22,579 Right-of-use assets obtained in exchange for new operating lease liabilities * $ 6,319 $ 104,833 * For the nine months ended September 30, 2019 includes the right-of-use assets obtained in exchange for lease liabilities of $82.6 million which were recognized upon adoption of ASC Topic 842 at January 1, 2019. |
Future Lease Payments for Operating Leases | The aggregate future lease payments for operating leases as of September 30, 2019 were as follows (in thousands): Fiscal Year Amount 2019 (excluding the nine months ended September, 30, 2019) $ 7,387 2020 27,372 2021 21,344 2022 15,003 2023 9,987 2024 and thereafter 10,407 Total lease payments $ 91,500 Less: imputed interest (6,935 ) Total operating lease liabilities $ 84,565 |
Average Lease Terms and Discount Rates | Average lease terms and discount rates were as follows: Nine Months Ended September 30, 2019 Weighted-average remaining lease term - Operating leases 4.02 Years Weighted-average discount rate - Operating leases 3.9 % |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) | Sep. 30, 2019USD ($)StateInstallmentClinic | Apr. 11, 2019USD ($)StateLocation | Aug. 31, 2018USD ($)InstallmentClinic | Apr. 30, 2018USD ($)Business | Feb. 28, 2018Clinic | Mar. 31, 2017USD ($) | Sep. 30, 2019USD ($)StateInstallmentClinicFacilityRegion | Dec. 31, 2018USD ($)Clinic | Sep. 30, 2018USD ($) |
Basis of Presentation [Abstract] | |||||||||
Cash paid for acquisition of interest in clinic | $ 5,700,000 | ||||||||
Seller notes | $ 283,000 | $ 950,000 | $ 283,000 | $ 0 | |||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Percentage of general partnership interest owned | 1.00% | ||||||||
Number of clinic practices acquired | Clinic | 4 | 2 | 5 | ||||||
Number of clinics operated | Clinic | 574 | 574 | |||||||
Number of states where clinics are operated | State | 41 | 41 | |||||||
Number of third party facilities | Facility | 26 | ||||||||
Goodwill [Abstract] | |||||||||
Number of regions | Region | 6 | ||||||||
Income Taxes [Abstract] | |||||||||
Unrecognized tax benefit | $ 0 | ||||||||
Accrued interest and penalties associated with any unrecognized tax benefits | $ 0 | 0 | |||||||
Interest expense recognized | 0 | ||||||||
Recently Adopted Accounting Guidance [Abstract] | |||||||||
Operating lease right-of-use assets | 79,793,000 | 79,793,000 | $ 0 | ||||||
Lease Liability | 84,565,000 | 84,565,000 | |||||||
ASU 2016-02 [Member] | |||||||||
Recently Adopted Accounting Guidance [Abstract] | |||||||||
Operating lease right-of-use assets | 78,000,000 | 78,000,000 | |||||||
Lease Liability | 82,600,000 | $ 82,600,000 | |||||||
April 2019 Acquisition [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition date | Apr. 11, 2019 | ||||||||
Number of states of network services | State | 45 | ||||||||
Number of onsite client locations | Location | 11 | ||||||||
Percentage of interest acquired | 76.00% | ||||||||
Aggregate purchase price for the acquired clinic practices | $ 23,600,000 | ||||||||
Cash paid for acquisition of interest in clinic | 19,600,000 | ||||||||
Payable to shareholders of seller | $ 500,000 | 502,000 | $ 500,000 | ||||||
Seller notes | $ 4,000,000 | ||||||||
Percentage of interest accrued | 5.50% | ||||||||
September 2019 Acquisition [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition date | Sep. 30, 2019 | ||||||||
Percentage of interest acquired | 67.00% | 67.00% | |||||||
Aggregate purchase price for the acquired clinic practices | $ 12,400,000 | ||||||||
Cash paid for acquisition of interest in clinic | 12,100,000 | ||||||||
Seller notes | $ 300,000 | $ 300,000 | |||||||
Percentage of interest accrued | 5.00% | 5.00% | |||||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Number of clinic practices acquired | Clinic | 11 | ||||||||
September 2019 Acquisition [Member] | September 2020 [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | $ 150,000 | ||||||||
September 2019 Acquisition [Member] | September 2021 [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | $ 150,000 | ||||||||
August 2018 Acquisition [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition date | Aug. 31, 2018 | ||||||||
Percentage of interest acquired | 70.00% | ||||||||
Cash paid for acquisition of interest in clinic | $ 7,300,000 | ||||||||
Seller notes | $ 400,000 | ||||||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Number of clinic practices acquired | Clinic | 4 | ||||||||
August 2018 Acquisition [Member] | August 2019 [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Cash paid for acquisition of interest in clinic | $ 200,000 | ||||||||
August 2018 Acquisition [Member] | August 2020 [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | $ 200,000 | ||||||||
March 2017 Acquisition [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Percentage of interest acquired | 55.00% | ||||||||
Industrial Injury Prevention [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Percentage of interest acquired | 65.00% | 55.00% | |||||||
Cash paid for acquisition of interest in clinic | $ 8,600,000 | $ 6,200,000 | |||||||
Seller notes | $ 400,000 | $ 400,000 | |||||||
Number of businesses merged | Business | 2 | ||||||||
Percentage of combined business interest owned | 59.45% | ||||||||
Employee [Member] | |||||||||
Restricted Stock [Abstract] | |||||||||
Period in which restrictions lapse on stock granted | 4 years | ||||||||
Director [Member] | |||||||||
Restricted Stock [Abstract] | |||||||||
Period in which restrictions lapse on stock granted | 1 year | ||||||||
Officer [Member] | |||||||||
Restricted Stock [Abstract] | |||||||||
Period in which restrictions lapse on stock granted | 4 years | ||||||||
Minimum [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Percentage of limited partnership interest owned | 49.00% | ||||||||
Redeemable Non-Controlling Interests [Abstract] | |||||||||
Redeemable non-controlling interest, redemption rights, commencement period | 3 years | ||||||||
Minimum [Member] | Furniture & Equipment [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 3 years | ||||||||
Minimum [Member] | Software [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 3 years | ||||||||
Minimum [Member] | Leasehold Improvements [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 3 years | ||||||||
Maximum [Member] | |||||||||
Basis of Presentation [Abstract] | |||||||||
Percentage of limited partnership interest owned | 99.00% | ||||||||
Redeemable Non-Controlling Interests [Abstract] | |||||||||
Redeemable non-controlling interest, redemption rights, commencement period | 5 years | ||||||||
Maximum [Member] | Furniture & Equipment [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 8 years | ||||||||
Maximum [Member] | Software [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 7 years | ||||||||
Maximum [Member] | Leasehold Improvements [Member] | |||||||||
Long-Lived Assets [Abstract] | |||||||||
Estimated useful lives | 5 years |
ACQUISITIONS OF BUSINESSES (Det
ACQUISITIONS OF BUSINESSES (Details) $ in Thousands | Sep. 30, 2019USD ($)InstallmentClinic | Apr. 11, 2019USD ($)StateLocation | Aug. 31, 2018USD ($)InstallmentClinic | Apr. 30, 2018USD ($)Business | Feb. 28, 2018Clinic | Mar. 31, 2017USD ($) | Sep. 30, 2019USD ($)Installment | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($)Clinic |
Business Combination, Description [Abstract] | |||||||||
Number of clinics | Clinic | 4 | 2 | 5 | ||||||
Cash paid for acquisition of interest in clinic | $ 5,700 | ||||||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Cash paid, net of cash acquired | $ 16,367 | $ 30,365 | $ 16,303 | ||||||
Seller notes | $ 283 | 950 | $ 283 | $ 0 | |||||
Total consideration | 17,317 | ||||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||||
Total current assets | 1,633 | ||||||||
Total non-current assets | 305 | ||||||||
Total liabilities | (525) | ||||||||
Net tangible assets acquired | 1,413 | ||||||||
Referral relationships | 2,926 | ||||||||
Non-compete | 298 | ||||||||
Tradename | 990 | ||||||||
Goodwill | 19,835 | ||||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interests) | (8,145) | ||||||||
Total consideration | $ 17,317 | ||||||||
Referral Relationships [Member] | |||||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||||
Estimated useful lives of acquired intangibles | 11 years | 10 years 6 months 14 days | |||||||
Non-compete Agreements [Member] | |||||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||||
Estimated useful lives of acquired intangibles | 6 years | 6 years | |||||||
April 2019 Acquisition [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition date | Apr. 11, 2019 | ||||||||
Number of states of network services | State | 45 | ||||||||
Number of onsite client locations | Location | 11 | ||||||||
Percentage of interest acquired | 76.00% | ||||||||
Aggregate purchase price for the acquired clinic practices | $ 23,600 | ||||||||
Cash paid for acquisition of interest in clinic | $ 19,600 | ||||||||
Percentage of interest accrued | 5.50% | ||||||||
Cash paid, net of cash acquired | $ 30,365 | ||||||||
Payable to shareholders of seller | $ 500 | 502 | $ 500 | ||||||
Seller notes | 4,000 | ||||||||
Total consideration | 35,167 | ||||||||
Estimated fair value of net tangible assets acquired [Abstract] | |||||||||
Total current assets | 2,824 | ||||||||
Total non-current assets | 2,924 | ||||||||
Total liabilities | (3,034) | ||||||||
Net tangible assets acquired | 2,714 | ||||||||
Referral relationships | 3,000 | ||||||||
Non-compete | 1,290 | ||||||||
Tradename | 4,100 | ||||||||
Goodwill | 30,293 | ||||||||
Fair value of non-controlling interest (classified as redeemable non-controlling interests) | (6,230) | ||||||||
Total consideration | $ 35,167 | ||||||||
September 2019 Acquisition [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition date | Sep. 30, 2019 | ||||||||
Percentage of interest acquired | 67.00% | 67.00% | |||||||
Number of clinics | Clinic | 11 | ||||||||
Aggregate purchase price for the acquired clinic practices | $ 12,400 | ||||||||
Cash paid for acquisition of interest in clinic | $ 12,100 | ||||||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Percentage of interest accrued | 5.00% | 5.00% | |||||||
Seller notes | $ 300 | $ 300 | |||||||
September 2019 Acquisition [Member] | September 2020 [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | 150 | ||||||||
September 2019 Acquisition [Member] | September 2021 [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | $ 150 | ||||||||
August 2018 Acquisition [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition date | Aug. 31, 2018 | ||||||||
Percentage of interest acquired | 70.00% | ||||||||
Number of clinics | Clinic | 4 | ||||||||
Cash paid for acquisition of interest in clinic | $ 7,300 | ||||||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | ||||||||
Seller notes | $ 400 | ||||||||
August 2018 Acquisition [Member] | August 2019 [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Cash paid for acquisition of interest in clinic | 200 | ||||||||
August 2018 Acquisition [Member] | August 2020 [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Acquisition cost payable in two principal installments including accrued interest | $ 200 | ||||||||
Industrial Injury Prevention [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Percentage of interest acquired | 65.00% | 55.00% | |||||||
Cash paid for acquisition of interest in clinic | $ 8,600 | $ 6,200 | |||||||
Number of businesses merged | Business | 2 | ||||||||
Percentage of combined business interest owned | 59.45% | ||||||||
Seller notes | $ 400 | $ 400 | |||||||
Acquisition of Five Clinic Practices [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Number of clinics | Clinic | 5 | ||||||||
Aggregate purchase price for the acquired clinic practices | $ 1,000 | ||||||||
Cash paid for acquisition of interest in clinic | 850 | ||||||||
Seller notes | $ 150 | ||||||||
Acquisition of Five Clinic Practices [Member] | August 2019 [Member] | |||||||||
Business Combination, Description [Abstract] | |||||||||
Percentage of interest accrued | 4.50% |
SALE OF PARTNERSHIP INTEREST (D
SALE OF PARTNERSHIP INTEREST (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Partnership | Sep. 30, 2018USD ($) | |
SALE OF PARTNERSHIP INTEREST [Abstract] | ||||
Gain on sale of partnership interest | $ 0 | $ 0 | $ 5,823 | $ 0 |
Sale of non-controlling interest percentage in partnership | 50.00% | |||
Number of partnership in which interest sold | Partnership | 1 | |||
Cash proceeds from sale of non-controlling interest | $ 11,600 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Feb. 09, 2018 | Nov. 02, 2015 | Apr. 01, 2013 | |
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract] | |||||||
Revenue related to the various categories | $ 117,251,000 | $ 113,122,000 | $ 359,855,000 | $ 336,562,000 | |||
Medicare Reimbursement [Abstract] | |||||||
Federal debt ceiling in connection with deficit reductions | 10 years | ||||||
Reductions in federal spending | $ 1,200,000,000,000 | ||||||
Medicare spending cut percentage | 2.00% | ||||||
Expected reduction in Medicare spending percentage | 2.00% | 2.00% | 2.00% | ||||
Combined physical therapy/speech language pathology expenses | $ 3,700 | ||||||
Reduction in combined physical therapy/speech language pathology expenses | $ 3,000 | ||||||
Percentage of practice expense component | 100.00% | ||||||
Percentage reduction for service | 50.00% | ||||||
Percentage of payment for outpatient therapy services | 85.00% | ||||||
Net patient revenue from Medicare accounts | $ 88,800,000 | 76,600,000 | |||||
Contractual Allowances [Abstract] | |||||||
Difference between net revenues and corresponding cash collections, approximately of net revenues | 1.00% | ||||||
Difference between actual aggregate contractual reserve and estimated contractual allowance reserve percentage | 1.00% | ||||||
Maximum contractual allowance reserve estimate | 1.00% | ||||||
Year 2017 [Member] | Maximum [Member] | |||||||
Medicare Reimbursement [Abstract] | |||||||
Annual limit on physical therapy and speech language pathology services | $ 1,980 | ||||||
Annual limit occupational therapy services | $ 1,980 | ||||||
Year 2019 [Member] | |||||||
Medicare Reimbursement [Abstract] | |||||||
Percentage of increase in Medicare payment rates | 0.25% | ||||||
From 2019 through 2024 [Member] | |||||||
Medicare Reimbursement [Abstract] | |||||||
Percentage of bonus payment by APM | 5.00% | ||||||
From 2020 through 2025 [Member] | |||||||
Medicare Reimbursement [Abstract] | |||||||
Percentage of increase in Medicare payment rates | 0.00% | ||||||
Net Patient Revenues [Member] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract] | |||||||
Revenue related to the various categories | 104,392,000 | 103,354,000 | $ 324,405,000 | 309,895,000 | |||
Management Contract Revenues [Member] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract] | |||||||
Revenue related to the various categories | 2,174,000 | 1,922,000 | 6,534,000 | 6,319,000 | |||
Industrial Injury Prevention Services Revenues [Member] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract] | |||||||
Revenue related to the various categories | 9,948,000 | 7,281,000 | 27,136,000 | 18,407,000 | |||
Other Revenues [Member] | |||||||
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract] | |||||||
Revenue related to the various categories | $ 737,000 | $ 565,000 | $ 1,780,000 | $ 1,941,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Computation of earnings per share - USPH shareholders [Abstract] | ||||
Net income attributable to USPH shareholders | $ 9,047 | $ 8,102 | $ 32,110 | $ 24,465 |
Charges to retained Earnings [Abstract] | ||||
Revaluation of redeemable non-controlling interest | (922) | (8,680) | (10,752) | (18,105) |
Tax effect at statutory rate (federal and state) of 26.25% | 242 | 2,279 | 2,822 | 4,753 |
Net income attributable to common shareholders | $ 8,367 | $ 1,701 | $ 24,180 | $ 11,113 |
Earnings per share (basic and diluted) (in dollars per share) | $ 0.66 | $ 0.13 | $ 1.90 | $ 0.88 |
Shares used in computation [Abstract] | ||||
Basic and diluted earnings per share - weighted-average shares (in shares) | 12,774 | 12,685 | 12,750 | 12,660 |
Federal and state statutory income tax rate | 26.25% |
REDEEMABLE NON-CONTROLLING IN_3
REDEEMABLE NON-CONTROLLING INTEREST (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)InstallmentPartnership | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Apr. 30, 2018USD ($) | |
Business Combination, Description [Abstract] | ||||||||
Sale of non-controlling interest percentage in partnership | 50.00% | |||||||
Number of partnerships in which interest acquired | Partnership | 7 | |||||||
Purchase price for additional non controlling interest | $ 6,000 | |||||||
Cash paid for aggregate purchase price | $ 5,700 | |||||||
Seller notes | $ 283 | $ 0 | $ 950 | |||||
Business acquisition number of installments for payment of purchase consideration | Installment | 2 | |||||||
Excess of purchase price of non controlling interest | $ 400 | |||||||
Excess of purchase of non controlling interest, net of tax | $ 100 | |||||||
Number of partnerships in which various interest sold | Partnership | 3 | |||||||
Sale price of non controlling interest in partnership | $ 2,870 | $ 0 | ||||||
Changes in Carrying Amount of Redeemable Non-Controlling Interests [Roll Forward] | ||||||||
Beginning balance | 133,943 | |||||||
Ending balance | $ 139,801 | 139,801 | $ 133,943 | |||||
Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest [Abstract] | ||||||||
Fair value | 139,801 | 139,801 | 133,943 | 139,801 | ||||
Redeemable Non-Controlling Interest [Member] | ||||||||
Changes in Carrying Amount of Redeemable Non-Controlling Interests [Roll Forward] | ||||||||
Beginning balance | 133,366 | $ 117,027 | 133,943 | 102,572 | 102,572 | |||
Operating results allocated to redeemable non-controlling interest partners | 2,379 | 2,456 | 8,152 | 6,802 | ||||
Distributions to redeemable non-controlling interest partners | (1,636) | (2,497) | (6,799) | (6,576) | ||||
Changes in the fair value of redeemable non-controlling interest | 922 | 8,681 | 10,752 | 18,106 | ||||
Purchases of redeemable non-controlling interest | (1,459) | 0 | (6,344) | 0 | ||||
Reduction of non-controlling interest due to sale of USPh partnership interest | 0 | 0 | (6,132) | 0 | ||||
Acquired interest | 6,230 | 3,282 | 6,230 | 8,145 | ||||
Sales of redeemable non-controlling interest - temporary equity | 0 | 0 | 2,870 | 0 | ||||
Notes receivable related to sales of redeemable non-controlling interest - temporary equity | 0 | 0 | (2,870) | 0 | ||||
Other | (1) | (43) | (1) | (143) | ||||
Ending balance | 139,801 | 128,906 | 139,801 | 128,906 | 133,943 | |||
Carrying Amount (Fair Value) of Redeemable Non-Controlling Interest [Abstract] | ||||||||
Contractual time period has lapsed but holder's employment has not been terminated | 40,958 | 34,587 | ||||||
Contractual time period has not lapsed and holder's employment has not been terminated | 98,843 | 94,319 | ||||||
Holder's employment has terminated and contractual time period has expired | 0 | 0 | ||||||
Holder's employment has terminated and contractual time period has not expired | 0 | 0 | ||||||
Fair value | $ 133,366 | $ 117,027 | $ 133,943 | $ 102,572 | $ 102,572 | $ 139,801 | $ 128,906 | |
Therapy Practice [Member] | Minimum [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Business acquisition, percentage of limited partnership acquired | 50.00% | |||||||
Therapy Practice [Member] | Maximum [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Business acquisition, percentage of limited partnership acquired | 90.00% | |||||||
Therapy Practice [Member] | NewCo. [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Percentage of equity interest of subsidiary contributed for acquisition | 100.00% | |||||||
Business acquisition, percentage of general partnership interest acquired | 100.00% | |||||||
Business acquisition, consideration payable, term of note | 2 years | |||||||
Employment agreement renewal term | 1 year | |||||||
Non-Compete agreement term under condition of termination of employment of employed selling shareholder | 2 years | |||||||
Therapy Practice [Member] | NewCo. [Member] | Minimum [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Employment agreement term | 3 years | |||||||
Non-Compete agreement term regardless of whether the selling shareholder is employed | 5 years | |||||||
Therapy Practice [Member] | NewCo. [Member] | Maximum [Member] | ||||||||
Business Combination, Description [Abstract] | ||||||||
Employment agreement term | 5 years | |||||||
Non-Compete agreement term regardless of whether the selling shareholder is employed | 6 years |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 293,525 | $ 271,338 |
Goodwill acquired | 30,293 | 19,778 |
Goodwill related to partnership interest sold | (7,325) | 0 |
Goodwill adjustments for purchase price allocation of businesses acquired in prior year | 146 | 2,409 |
Ending balance | $ 316,639 | $ 293,525 |
INTANGIBLE ASSETS, NET - Intang
INTANGIBLE ASSETS, NET - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Total | $ 53,385 | $ 48,828 |
Tradenames [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Total | 32,049 | 30,256 |
Referral Relationships [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Total | 18,967 | 16,895 |
Accumulated amortization | $ 10,714 | 9,370 |
Referral Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 6 years | |
Referral Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 16 years | |
Non-compete Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Total | $ 2,369 | 1,677 |
Accumulated amortization | $ 4,901 | $ 4,716 |
Non-compete Agreements [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 5 years | |
Non-compete Agreements [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Estimated useful life | 6 years |
INTANGIBLE ASSETS, NET - Amorti
INTANGIBLE ASSETS, NET - Amortization Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Amortization of Deferred Charges [Abstract] | ||||
Total amortization expenses | $ 765 | $ 741 | $ 2,217 | $ 2,108 |
Referral Relationships [Member] | ||||
Amortization of Deferred Charges [Abstract] | ||||
Total amortization expenses | 593 | 569 | 1,707 | 1,648 |
Non-compete Agreements [Member] | ||||
Amortization of Deferred Charges [Abstract] | ||||
Total amortization expenses | $ 172 | $ 172 | $ 510 | $ 460 |
INTANGIBLE ASSETS, NET - Amor_2
INTANGIBLE ASSETS, NET - Amortization of Referral Relationships and Non-Competition Agreements (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Referral Relationships [Member] | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity [Abstract] | |
2019 (excluding the nine months ended September 30, 2019) | $ 601 |
2020 | 2,403 |
2021 | 2,403 |
2022 | 2,354 |
2023 | 2,247 |
2024 | 2,082 |
Thereafter | 6,877 |
Non-compete Agreements [Member] | |
Finite-Lived Intangible Assets, Amortization Expense, Maturity [Abstract] | |
2019 (excluding the nine months ended September 30, 2019) | 198 |
2020 | 619 |
2021 | 541 |
2022 | 363 |
2023 | 294 |
2024 | 238 |
Thereafter | $ 116 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 21,089 | $ 21,726 |
Credit balances due to patients and payors | 5,075 | 7,293 |
Group health insurance claims | 2,996 | 3,124 |
Other | 4,413 | 6,350 |
Total | $ 33,573 | $ 38,493 |
NOTES PAYABLE AND AMENDED CRE_3
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT - Summary of Notes Payable and Credit Agreement (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Instruments [Abstract] | ||
Payments/Long term debt, Total | $ 56,010 | $ 39,836 |
Less current portion | (718) | (1,434) |
Long term portion | 55,292 | 38,402 |
Credit Facility [Member] | ||
Debt Instruments [Abstract] | ||
Payments/Long term debt, Total | $ 51,000 | 38,000 |
Average effective interest rate | 4.03% | |
3.75% through 5.50% Notes Payable due in Next Year [Member] | ||
Debt Instruments [Abstract] | ||
Payments/Long term debt, Total | $ 5,010 | $ 1,836 |
Annual installments | $ 718 | |
3.75% through 5.50% Notes Payable due in Next Year [Member] | Minimum [Member] | ||
Debt Instruments [Abstract] | ||
Percentage of interest accrued | 3.75% | |
3.75% through 5.50% Notes Payable due in Next Year [Member] | Maximum [Member] | ||
Debt Instruments [Abstract] | ||
Percentage of interest accrued | 5.50% |
NOTES PAYABLE AND AMENDED CRE_4
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT (Details) | Sep. 30, 2019USD ($)InstallmentClinic | Apr. 30, 2019USD ($) | Mar. 04, 2019USD ($)Installment | Aug. 31, 2018USD ($)InstallmentClinic | Apr. 30, 2018USD ($)Installment | Feb. 28, 2018USD ($)Clinic | Apr. 30, 2020USD ($) | Aug. 31, 2019USD ($) | Nov. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jan. 31, 2016USD ($) | Sep. 30, 2019USD ($)Installment | Dec. 31, 2018Clinic | Apr. 12, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 05, 2013USD ($) |
Debt Instruments [Abstract] | ||||||||||||||||
Number of clinic practices acquired | Clinic | 4 | 2 | 5 | |||||||||||||
Seller notes | $ 283,000 | $ 950,000 | $ 283,000 | $ 0 | ||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
2018 Acquisition [Member] | August 2019 [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Acquisition cost payable in installments including accrued interest | $ 200,000 | |||||||||||||||
2018 Acquisition [Member] | August 2020 [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Acquisition cost payable in installments including accrued interest | $ 200,000 | |||||||||||||||
September 2019 Acquisition [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Number of clinic practices acquired | Clinic | 11 | |||||||||||||||
Seller notes | $ 300,000 | $ 300,000 | ||||||||||||||
Percentage of interest accrued | 5.00% | 5.00% | ||||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
Industrial Injury Prevention [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Seller notes | $ 400,000 | $ 400,000 | ||||||||||||||
Industrial Injury Prevention [Member] | Subsequent Event [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Payment of debt | $ 200,000 | |||||||||||||||
Industrial Injury Prevention [Member] | April 2020 [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Acquisition cost payable in installments including accrued interest | $ 200,000 | |||||||||||||||
Notes Payable [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Average effective interest rate | 5.00% | 4.75% | ||||||||||||||
Notes Payable [Member] | Redeemable Non-Controlling Interest [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Aggregate amount of notes payable | $ 228,120 | |||||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
Notes Payable [Member] | March 2020 [Member] | Redeemable Non-Controlling Interest [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Acquisition cost payable in installments including accrued interest | $ 114,080 | |||||||||||||||
Notes Payable [Member] | March 2021 [Member] | Redeemable Non-Controlling Interest [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Acquisition cost payable in installments including accrued interest | $ 114,080 | |||||||||||||||
Notes Payable [Member] | 2018 Acquisition [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Aggregate amount of notes payable | $ 400,000 | $ 150,000 | ||||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
Average effective interest rate | 4.50% | |||||||||||||||
Payment of debt | $ 150,000 | |||||||||||||||
Notes Payable [Member] | 2019 Acquisition [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Seller notes | $ 4,000,000 | |||||||||||||||
Percentage of interest accrued | 5.50% | |||||||||||||||
Notes Payable [Member] | September 2019 Acquisition [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Seller notes | $ 300,000 | $ 300,000 | ||||||||||||||
Percentage of interest accrued | 5.00% | 5.00% | ||||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
Notes Payable [Member] | Industrial Injury Prevention [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Aggregate amount of notes payable | $ 400,000 | |||||||||||||||
Number of principal installments | Installment | 2 | |||||||||||||||
Minimum [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Spread on Libor variable rate | 1.25% | 1.25% | ||||||||||||||
Spread on variable rate | 0.10% | |||||||||||||||
Percentage of unused commitment fee | 0.25% | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Spread on Libor variable rate | 2.00% | 2.00% | ||||||||||||||
Spread on variable rate | 1.00% | |||||||||||||||
Percentage of unused commitment fee | 0.30% | |||||||||||||||
Credit Facility [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Revolving credit facility commitment | $ 125,000,000 | |||||||||||||||
Revolving credit facility maturity date | Nov. 30, 2021 | |||||||||||||||
Remaining revolving credit outstanding | $ 74,000,000 | $ 74,000,000 | ||||||||||||||
Average effective interest rate | 4.03% | |||||||||||||||
Credit Agreement [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Cash and noncash consideration with respect to acquisition after amendment | $ 50,000,000 | |||||||||||||||
Credit Agreement [Member] | Maximum [Member] | ||||||||||||||||
Debt Instruments [Abstract] | ||||||||||||||||
Cash dividends after amendment | $ 20,000,000 | $ 15,000,000 | $ 10,000,000 |
NOTES PAYABLE AND AMENDED CRE_5
NOTES PAYABLE AND AMENDED CREDIT AGREEMENT- Summary of Aggregate Annual Payments of Principal Required to Revolving Credit Facility (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Long Term Debt By Maturity [Abstract] | ||
During the twelve months ended September 30, 2020 | $ 718 | |
During the twelve months ended September 30, 2021 | 4,292 | |
During the twelve months ended September 30, 2022 | 51,000 | |
Payments/Long term debt, Total | $ 56,010 | $ 39,836 |
LEASES (Details)
LEASES (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |||
Components of Lease Expense [Abstract] | ||||
Operating lease cost | $ 7,303 | $ 22,598 | ||
Short-term lease cost | 265 | 933 | ||
Variable lease cost | 1,477 | 4,605 | ||
Total lease cost | 9,045 | [1] | 28,136 | [1] |
Supplemental Information Related to Leases [Abstract] | ||||
Cash paid for amounts included in the measurement of operating lease liabilities | 7,187 | 22,579 | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | 6,319 | 104,833 | [2] | |
Future Lease Payments for Operating Leases [Abstract] | ||||
2019 (excluding the nine months ended September 30, 2019) | 7,387 | 7,387 | ||
2020 | 27,372 | 27,372 | ||
2021 | 21,344 | 21,344 | ||
2022 | 15,003 | 15,003 | ||
2023 | 9,987 | 9,987 | ||
2024 and thereafter | 10,407 | 10,407 | ||
Total lease payments | 91,500 | 91,500 | ||
Less: imputed interest | (6,935) | (6,935) | ||
Total operating lease liabilities | $ 84,565 | $ 84,565 | ||
Average Lease Terms and Discount Rates [Abstract] | ||||
Weighted-average remaining lease term - Operating leases | 4 years 7 days | 4 years 7 days | ||
Weighted-average discount rate - Operating leases | 3.90% | 3.90% | ||
ASU 2016-02 [Member] | ||||
Future Lease Payments for Operating Leases [Abstract] | ||||
Total operating lease liabilities | $ 82,600 | $ 82,600 | ||
Maximum [Member] | ||||
Operating Lease [Abstract] | ||||
Lease term | 5 years | 5 years | ||
[1] | Sublease income was immaterial | |||
[2] | For the nine months ended September 30, 2019 includes the right-of-use assets obtained in exchange for lease liabilities of $82.6 million which were recognized upon adoption of ASC Topic 842 at January 1, 2019. |
COMMON STOCK (Details)
COMMON STOCK (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Mar. 31, 2009 | Sep. 30, 2019 | Dec. 31, 2008 | |
Class of Treasury Stock [Abstract] | |||
Common stock authorized by the Board of Directors (in shares) | 1,200,000 | 2,250,000 | |
Total purchased shares (in shares) | 859,499 | 0 | |
Additional estimated shares (in shares) | 114,899 | ||
Closing price (in dollars per share) | $ 130.55 | ||
Maximum [Member] | |||
Class of Treasury Stock [Abstract] | |||
Percentage of repurchase of common stock | 10.00% | ||
Bank credit agreement to permit share repurchases of common stock | $ 15,000,000 |