U.S. Physical Therapy (USPH) 8-K U. S. Physical Therapy Reports Third Quarter and Nine Months Results

Exhibit 99.1

U. S. Physical Therapy Reports Third Quarter and Nine Months Results

Declares Quarterly Dividend

HOUSTON--(BUSINESS WIRE)--November 8, 2012--U.S. Physical Therapy, Inc. (NYSE: USPH), a national operator of outpatient physical therapy clinics, today reported results for the third quarter and nine months ended September 30, 2012.

U.S. Physical Therapy’s net income for the nine months ended September 30, 2012 increased 9.0% to $13.9 million from $12.7 million for the nine months ended September 30, 2011. Diluted earnings per share rose to $1.17 for the 2012 period versus $1.06 for the 2011 period.

U.S. Physical Therapy’s net income for the third quarter ended September 30, 2012 increased 11.3% to $4.6 million from $4.1 million for the 2011 third quarter. Diluted earnings per share were $.38 for the 2012 quarter as compared to $.34 for the 2011 period.

Nine Months 2012 compared to Nine Months 2011

• Net revenues increased 7.4% from $176,328,000 in the first nine months of 2011 to $189,394,000 in the first nine months of 2012, primarily due to an increase in patient visits of 8.5% from 1,605,000 to 1,741,000. The average net patient revenue per visit for the 2012 period was $105.31 as compared to $104.59 in the comparable 2011 period. The increase in net revenues was partially offset by a decrease in other revenues of $2,385,000 due to a reduction in revenue from physician services.
• Total clinic operating costs were $140,898,000, or 74.4% of net revenues, in the 2012 period, as compared to $130,482,000, or 74.0% of net revenues, in the 2011 period. The increase was primarily attributable to $6,711,000 for increased costs related to the clinics acquired in July 2011 due to a full nine months of operations in 2012 versus two months in the 2011 period and $4,002,000 in operating costs of new clinics opened or acquired in the past 12 months. Clinic salaries and related costs were 52.2% of net revenues in the recent period versus 52.8% in the 2011 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.2% in the recent period versus 19.7% in the 2011 period. The provision for doubtful accounts as a percentage of net revenues was 1.9% for the 2012 period versus 1.4% in the 2011 period. In the first nine months of 2012, the gross margin from the Company’s core physical therapy business increased by $4,966,000 or 11.4% as compared to the first nine months of 2011 which was partially offset by a $2,316,000 decrease in margin from the physician services business.
• Corporate office costs increased 5.7% to $18,635,000 in the 2012 period from $17,630,000 in the 2011 period. However, corporate office costs were reduced as a percentage of net revenues to 9.8% in the 2012 period as compared to 10.0% in the 2011 period.
• Operating income for the first nine months of 2012 rose to $29,861,000 compared to $28,216,000 in the 2011 nine months.
• Interest expense increased to $449,000 in the 2012 period from $331,000 in the 2011 period due to higher average borrowings in 2012.
• Net income attributable to non-controlling interests was $6,534,000 year-to-date in 2012 as compared to $6,896,000 in the year earlier period.
• The provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both the 2012 and 2011 periods.
• Reported net income attributable to common shareholders in the 2012 period was $13,890,000 compared to $12,745,000 in the 2011 period. Diluted earnings per share increased to $1.17 from $1.06.
• Same store revenues for de novo and acquired clinics open for one year or more increased 5.0%, adjusted to reflect same number of days in each period. The 2012 period included 191 days of operations while the 2011 period included 192. Higher same store visits and slightly higher average net rate per visit accounted for the same store revenues increase.

Third Quarter 2012 compared to Third Quarter 2011

• Net revenues increased 5.3% from $59,675,000 in the third quarter of 2011 to $62,853,000 in the third quarter of 2012, primarily due to an increase in patient visits of 4.7% from 549,000 to 575,000. The average net patient revenue per visit for the recent quarter was $105.73 as compared to $104.43 in the comparable 2011 period.
• Total clinic operating costs were $47,484,000, or 75.5% of net revenues, in the third quarter of 2012, as compared to $45,881,000, or 76.9% of net revenues, in the 2011 period. The increase was attributable to $2,197,000 in operating costs of new clinics opened or acquired in the past 12 months. Clinic salaries and related costs were 53.1% of net revenues in the recent quarter versus 54.3% in the 2011 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenues were 20.4% for the recent quarter versus 20.1% in the 2011 period. The provision for doubtful accounts as a percentage of net revenues was 2.0% for the 2012 period versus 2.4% in the 2011 quarter. In the third quarter of 2012 the gross margin from the Company’s core physical therapy business increased by $1,288,000 or 9.1% as compared to the third quarter of 2011.
• Corporate office costs were $5,977,000 in the third quarter of 2012 as compared to $5,142,000 in the 2011 third quarter. Corporate office costs were 9.5% of net revenues in 2012 period versus 8.6% in 2011.
• Operating income for the third quarter of 2012 was $9,392,000 compared to $8,652,000 in the 2011 third quarter.
• Interest expense was comparable between the periods. Interest expense was $142,000 in the third quarter of 2012 versus $149,000 in the third quarter of 2011.
• Net income attributable to non-controlling interests was $1,735,000 in the recent quarter as compared to $1,754,000 in the year earlier period.
• Provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both the 2012 and 2011 quarters.
• Reported net income attributable to common shareholders in the third quarter of 2012 was $4,563,000 compared to $4,099,000 in the third quarter of 2011. Diluted earnings per share increased to $0.38 for the 2012 period from $0.34 for the 2011 period.
• Same store revenues for de novo and acquired clinics open for one year or more increased 4.3% adjusted to reflect same number of days in each period. The 2012 period included 63 days of operations while the 2011 period included 64. Higher same store visits and higher average net rate per visit accounted for the same store revenue increase.

Chris Reading, Chief Executive Officer, said, “We continue to build on the strength of our partnership model with another successful quarter of solid operational results and strong same store growth. Development has recently been picking up nicely through a combination of organic de novo and acquired tuck-in clinics. Given the complexities of the current healthcare environment, coupled with the fragmented nature of our industry, we expect that private practices will continue to show interest in our Company as a preferred partner to assist them in these challenging times. We remain well resourced to execute on our future growth plans.”

Larry McAfee, Chief Financial Officer, noted, “Continued strong free cash flow from operations has enabled the Company to reduce combined short and long-term debt by more than $7.3 million or 30% thus far in 2012.”

U.S. Physical Therapy Declares Quarterly Dividend

The Company announced that a regular quarterly dividend of $0.09 per share will be paid on December 7, 2012 to shareholders of record as of November 16, 2012.

Third Quarter Conference Call

U.S. Physical Therapy's management will host a conference call at 10:30 a.m. Eastern Time, 9:30 a.m. Central Time, on Thursday, November 8, 2012 to discuss the Company’s Quarter and Nine Months Ended September 30, 2012 results. Interested parties may participate in the call by dialing 1-888-335-5539 or 973-582-2857 and enter reservation number 39781800 approximately 10 minutes before the call is scheduled to begin. To listen to the live call via web-cast, go to the Company's website at www.usph.com at least 15 minutes early to register, download and install any necessary audio software. The conference call will be archived and can be accessed for approximately 90 days at this website.

Forward-Looking Statements

This press release contains statements that are considered to be forward-looking within the meaning under Section 21E of the Securities Exchange Act of 1934. These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. These statements (often using words such as “believes”, “expects”, “intends”, “plans”, “appear”, “should” and similar words) involve risks and uncertainties that could cause actual results to differ materially from those we project. Included among such statements are those relating to new clinics, availability of personnel and the reimbursement environment. The forward-looking statements are based on our current views and assumptions and actual results could differ materially from those anticipated in such forward-looking statements as a result of certain risks, uncertainties, and factors, which include, but are not limited to:

• changes in Medicare guidelines and reimbursement or failure of our clinics to maintain their Medicare certification status;
• revenue and earnings expectations;
• general economic conditions;
• business and regulatory conditions including federal and state regulations;
• changes as the result of government enacted national healthcare reform;
• availability and cost of qualified physical and occupational therapists;
• personnel productivity;
• competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and other intangible assets;
• changes in reimbursement rates or payment methods from third party payors including government agencies and deductibles and co-pays owed by patients;
• maintaining adequate internal controls;
• availability, terms, and use of capital;
• acquisitions, purchase of non controlling interests (minority interests) and the successful integration of the operations of the acquired businesses; and
• weather and other seasonal factors.

Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Please see our periodic reports filed with the Securities and Exchange Commission (the "SEC") for more information on these factors. Our forward-looking statements represent our estimates and assumptions only as of the date of this press release. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement is no longer accurate.

About U.S. Physical Therapy, Inc.

Founded in 1990, U.S. Physical Therapy, Inc. operates 423 clinics in 42 states. The Company's clinics provide preventative and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, non-surgical treatment of osteoarthritis, treatment for neurologically-related injuries and rehabilitation of injured workers. In addition to owning and operating clinics, the Company manages 15 physical therapy facilities for third parties, including hospitals and physician groups.

More information about U.S. Physical Therapy, Inc. is available at www.usph.com. The information included on that website is not incorporated into this press release.

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net patient revenues	$	60,782		$	57,332		$	183,333		$	167,882
Other revenues		2,071			2,343			6,061			8,446
Net revenues		62,853			59,675			189,394			176,328
Clinic operating costs:
Salaries and related costs		33,376			32,430			98,846			93,189
Rent, clinic supplies, contract labor and other		12,844			12,012			38,320			34,695
Provision for doubtful accounts		1,259			1,426			3,656			2,554
Closure costs		5			13			76			44
Total clinic operating costs		47,484			45,881			140,898			130,482
Gross margin		15,369			13,794			48,496			45,846
Corporate office costs		5,977			5,142			18,635			17,630
Operating income		9,392			8,652			29,861			28,216
Interest and other income, net		1			4			4			8
Interest expense		(142	)		(149	)		(449	)		(331	)
Income before taxes		9,251			8,507			29,416			27,893
Provision for income taxes		2,953			2,654			8,992			8,252
Net income including noncontrolling interests		6,298			5,853			20,424			19,641
Less: net income attributable to noncontrolling interests		(1,735	)		(1,754	)		(6,534	)		(6,896	)
Net income attributable to common shareholders	$	4,563		$	4,099		$	13,890		$	12,745
Earnings per share attributable to common shareholders:
Basic	$	0.39		$	0.35		$	1.18		$	1.08
Diluted	$	0.38		$	0.34		$	1.17		$	1.06
Shares used in computation:
Basic		11,827			11,886			11,778			11,824
Diluted		11,928			12,011			11,892			12,007
Dividends declared per common share	$	0.09		$	0.08		$	0.27		$	0.24

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
DETAIL OF GROSS MARGIN
(IN THOUSANDS)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Gross margin - physical therapy services	$	15,449		$	14,161		$	48,555		$	43,589
Gross margin - physician services		(80	)		(367	)		(59	)		2,257
Gross margin	$	15,369		$	13,794		$	48,496		$	45,846

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(unaudited)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Numerator:
Net income attributable to common shareholders	$	4,563	$	4,099	$	13,890	$	12,745
Denominator:
Denominator for basic earnings per share -
weighted-average shares		11,827		11,886		11,778		11,824
Effect of dilutive securities -
Stock options		101		125		114		183
Denominator for diluted earnings per share -
adjusted weighted-average shares		11,928		12,011		11,892		12,007
Earnings per share attributable to common shareholders:
Basic	$	0.39	$	0.35	$	1.18	$	1.08
Diluted	$	0.38	$	0.34	$	1.17	$	1.06

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
	September 30,			December 31,
	2012			2011
	(unaudited)
ASSETS
Current assets:
Cash	$	10,683		$	9,983
Patient accounts receivable, less allowance for doubtful accounts of $1,687 and $2,154, respectively		26,784			28,333
Accounts receivable - other, less allowance for doubtful accounts of $373 and $883, respectively		1,640			1,614
Other current assets		4,956			5,737
Total current assets		44,063			45,667
Fixed assets:
Furniture and equipment		35,853			35,103
Leasehold improvements		20,598			20,385
		56,451			55,488
Less accumulated depreciation and amortization		43,634			42,299
		12,817			13,189
Goodwill		99,716			92,750
Other intangible assets, net		12,326			9,603
Other assets		1,018			2,043
	$	169,940		$	163,252
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	1,665		$	1,809
Accrued expenses		12,672			14,082
Current portion of notes payable		609			433
Total current liabilities		14,946			16,324
Notes payable		175			284
Revolving line of credit		16,100			23,500
Deferred rent		894			941
Other long-term liabilities		1,434			623
Total liabilities		33,549			41,672
Commitments and contingencies
Shareholders' equity:
U. S. Physical Therapy, Inc. shareholders' equity:
Preferred stock, $.01 par value, 500,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.01 par value, 20,000,000 shares authorized, 14,081,802 and 13,919,588 shares issued, respectively		141			139
Additional paid-in capital		37,769			36,133
Retained earnings		113,112			102,405
Treasury stock at cost, 2,214,737 shares		(31,628	)		(31,628	)
Total U. S. Physical Therapy, Inc. shareholders' equity		119,394			107,049
Noncontrolling interests		16,997			14,531
Total equity		136,391			121,580
	$	169,940		$	163,252

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
		Nine Months Ended September 30,
		2012			2011
OPERATING ACTIVITIES
Net income including noncontrolling interests		$	20,424		$	19,641
Adjustments to reconcile net income including noncontrolling interests
to net cash provided by operating activities:
	Depreciation and amortization		4,016			4,108
	Provision for doubtful accounts		3,656			2,554
	Equity-based awards compensation expense		1,589			1,491
	Loss on sale or abandonment of assets, net		129			140
	Deferred income tax		2,535			1,432
	Other		-			(771	)
Changes in operating assets and liabilities:
	Increase in patient accounts receivable		(1,298	)		(3,811	)
	Increase in accounts receivable - other		(482	)		(1,277	)
	Decrease (increase) in other assets		471			(2,027	)
	Decrease in accounts payable and accrued expenses		(1,709	)		(1,494	)
	Increase in other liabilities		19			607
Net cash provided by operating activities			29,350			20,593
INVESTING ACTIVITIES
Purchase of fixed assets			(2,948	)		(2,428	)
Purchase of businesses, net of cash acquired			(7,402	)		(8,149	)
Acquisitions of noncontrolling interests			(1,314	)		(18,935	)
Sale of noncontrolling interests			239			-
Net proceeds on sale of fixed assets and business			58			5
Net cash used in investing activities			(11,367	)		(29,507	)
FINANCING ACTIVITIES
Distributions to noncontrolling interests			(6,850	)		(7,282	)
Cash dividends to shareholders			(3,183	)		(2,843	)
Purchase and retirement of common stock			-			(2,269	)
Proceeds from revolving line of credit			55,900			94,000
Payments on revolving line of credit			(63,300	)		(73,100	)
Payment of notes payable			(284	)		(100	)
Excess tax benefit from stock options exercised			381			802
Other			53			2
Net cash (used in) provided by financing activities			(17,283	)		9,210
Net increase in cash			700			296
Cash - beginning of period			9,983			9,179
Cash - end of period		$	10,683		$	9,475
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
	Income taxes	$	5,200		$	7,881
	Interest	$	538		$	315
Non-cash investing and financing transactions during the period:
	Purchase of business - seller financing portion	$	350		$	200
	Acquisition of noncontrolling interest - seller financing portion	$	-		$	367

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF CLINIC COUNT
	Number
	of
	Clinics
31-Dec-10	392
March 31, 2011	397
June 30, 2011	398
September 30, 2011	420
December 31, 2011	416
March 31, 2012	414
June 30, 2012	419
September 30, 2012	423

CONTACT:
U.S. Physical Therapy, Inc.
Larry McAfee, 713-297-7000
Chief Financial Officer
or
Chris Reading, 713-297-7000
Chief Executive Officer
or
The Ruth Group
Stephanie Carrington, 646-536-7017
or
Amy Glynn, 646-536-7023