Exhibit 99.1
U.S. Physical Therapy Reports Strong Second Quarter Results;
Record Quarterly Revenues and Earnings
HOUSTON--(BUSINESS WIRE)--July 29, 2004--U.S. Physical Therapy, Inc.
(NASDAQ:USPH), a national operator of physical and occupational therapy
outpatient clinics, today reported results for the second quarter and six-months
ended June 30, 2004.
U.S. Physical Therapy's net earnings, as reported, for the second quarter of
2004 were $2.3 million or $0.19 per diluted share. These figures include a
pretax charge of $717,000 for severance to the Company's former CEO and fees for
the recruitment of a new chief executive officer which are included in corporate
office costs and a pretax gain of $444,000 primarily from the sale of a clinic.
Excluding the charge and gain, reported net earnings for the second quarter of
2004 would have been $2.4 million or approximately $0.20 per diluted share.
Livingston Kosberg, Interim Chief Executive Officer, said "We are pleased
with the Company's second quarter results, yet there is still work to be done.
The main focus of the board of directors and management is to make U.S. Physical
Therapy into a significant health care services company with sustainable long
term earnings growth."
Second Quarter 2004 vs. Second Quarter 2003
-- Net revenues rose 13.2 percent to $30.6 million, from $27.0 million, due
to a 7.7 percent increase in patient visits to 307,000 from 285,000 in
the prior year quarter, combined with a 5.1 percent increase from $92.64
to $97.33 in net patient revenues per visit.
-- Earnings were $0.19 per diluted share for the second quarter 2004 as
compared to $0.18 for the comparable prior year period. Net income for
the quarter increased to $2.3 million from $2.2 million or 3 percent.
Excluding the effect of a pretax charge to record severance and
recruiting fees related to the resignation of the CEO of $717,000 and a
pretax gain on sale of clinic assets of $444,000, earnings would have
been $0.20 per diluted share.
-- Clinic operating costs in the second quarter of 2004 were reduced to
68.2 percent of net revenues compared to 69.0 percent a year ago because
of staffing reductions made in 2004 and an increase in total visits.
Average visits per day per clinic were 19.3 in the most recent period
and 20.7 in the second quarter last year.
-- Corporate office costs as a percentage of net revenues were 16.1 percent
compared to 12.4 percent in the prior year quarter with the increase due
primarily to the pretax charge of $717,000 for the CEO resignation.
Excluding this charge, corporate office costs were 13.7 percent of net
revenues.
-- Same store visits for all clinics open for one year or more were down
approximately 1 percent. The net rate per visit for those clinics
increased approximately 5 percent resulting in a same store revenue
increase of 4.4 percent as compared to the second quarter of 2003.
Six Months Ended June 2004 vs. Six Months Ended June 2003
-- Net revenues rose 13.2 percent to $58.9 million, from $52.0 million, due
to an 8.6 percent increase in patient visits to 598,000 and a 4.3
percent increase in net patient revenues per visit to $96.44.
-- Earnings per share decreased 6.1 percent to $0.31 per diluted share from
$0.33 in the prior year period. Net income decreased to $3.8 million
from $4.0 million or 4.7 percent. Excluding the effect of the second
quarter charge and gain described above, earnings would have been $0.32
per diluted share.
-- Clinic operating costs were 71.1 percent of net revenues for 2004 and
70.0 percent for the prior year period. Average daily visits per clinic
for the two periods were 19.0 and 20.7, respectively.
-- Corporate office costs were 14.5 percent of net revenues versus 12.5
percent one year earlier. Excluding the effect of the second quarter
pretax charge, corporate office costs as a percentage of net revenues
would have been 13.3 percent of net revenues.
-- Same store revenues increased 5.8 percent for the six month period on an
increase in same store visits of 1.4 percent and a net rate increase of
4.3 percent.
Mr. Kosberg stated, "U.S. Physical Therapy is in the midst of a transition
that began last fall with the hiring of a new Chief Financial Officer and a new
Chief Operating Officer. The management team then developed an action plan to
improve operating results and increase profits, which was initiated in the
spring of 2004. During the first and second quarters, new internal reporting
systems were developed and several major initiatives were implemented. The next
step in this process will be the hiring of a new Chief Executive Officer."
Chris Reading, Chief Operating Officer, stated, "Included in this action
plan were new marketing plans, renegotiation of payor contracts, a heightened
focus on reducing patient cancellation rates, better scheduling management and
in some clinics staffing reductions were made to improve staff-to-volume
efficiencies. Average daily visits per clinic improved from 18.7 in the first
quarter this year to 19.3 in the second quarter and the Company's net
reimbursement rate per visit increased from $95.49 to $97.33. Concurrently we
were able to reduce clinic operating salaries and related costs per visit from
$50.35 to $47.17."
Larry McAfee, Chief Financial Officer, noted, "The positive impact of those
actions is reflected in U.S. Physical Therapy's second quarter results. Payroll
and fixed expenses measured as a percent of revenue have been cut, patient
visits per full time equivalent (FTE) employee have improved and cancellation
rates have been reduced, all of which has lead to an improvement in operating
margins."
Mr. McAfee continued, "Cash and cash equivalents grew $3.4 million or 18.6
percent during the second quarter to $21.9 million. As of June 30th, cash and
equivalents represented 36.8 percent of total assets. During the quarter the
last of the Company's convertible subordinated notes were exchanged by holders
for stock resulting in U.S. Physical Therapy now having virtually no funded
debt."
Mr. Kosberg stated that, "With the recent management change, the decision
has been made that the Company will again focus on traditional partner and
profit sharing arrangements and will deemphasize opening as many company stores.
U.S. Physical Therapy was built by de novo clinic development through partnering
with outstanding physical and occupational therapists; it is our lifeblood.
Partner locations typically require less management time, have a faster ramp up,
higher average patient visits per clinic and are more profitable than company
stores." With this change, management now anticipates that the Company will open
38 to 43 clinics in 2004 rather than 45 to 50 previously projected. The Company
opened 12 clinics, closed one clinic and sold one clinic during the second
quarter resulting in 254 clinics as of June 30, 2004.
This press release contains non-GAAP financial measures as defined by
Regulation G of the Securities and Exchange Commission. The attached financial
summary contains a schedule which reconciles these measures to the most directly
comparable GAAP measures. These non-GAAP financial measures may be considered in
addition to, not as a substitute for the financial measures prepared in
accordance with GAAP (generally accepted accounting principles).
U.S. Physical Therapy's management will host a conference call at 10:30 am
Eastern Time, 9:30 am Central Time on Thursday, July 29 to discuss the Company's
second quarter 2004 results. Interested parties may participate in the call by
dialing 888-694-4676 or 973-935-8511 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 forward-looking statements (often using words
such as "believes," "expects," "intends," "plans," "appear," "should" and
similar words), which involve numerous risks and uncertainties. Included among
such statements are those relating to opening of new clinics, availability of
personnel and reimbursement environment. The forward-looking statements are
based on the Company's current views and assumptions and the Company's 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:
-- revenue and earnings expectations;
-- general economic and business conditions;
-- availability of qualified physical and occupational
therapists;
-- competition;
-- federal and state regulations;
-- reimbursement rates from third party payors and deductibles
and co-pays by patients;
-- availability, terms, and use of capital;
-- acquisitions; and
-- weather.
Given these uncertainties, you should not place undue reliance on our
forward-looking statements. Please see our other periodic reports filed with the
Securities and Exchange Commission for more information on these factors.
Management undertakes no obligation to update any forward-looking statement,
whether as the result of actual results, changes in assumptions, new
information, future events, or otherwise.
About U.S. Physical Therapy, Inc.
Founded in 1990, U.S. Physical Therapy, Inc. operates 254 outpatient
physical and occupational therapy clinics in 35 states and manages three
physical therapy facilities for third parties. The Company's clinics provide
post-operative care for a variety of orthopedic-related disorders and
sports-related injuries, treatment for neurologically-related injuries,
rehabilitation of injured workers and preventative care. U.S. Physical Therapy
has been named for three consecutive years in Forbes Magazine's Best 200 Small
Companies List.
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 OPERATIONS (In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
--------- -------- --------- --------
(unaudited) (unaudited)
Net patient revenues $29,914 $26,382 $57,629 $50,865
Management contract revenues 602 582 1,168 1,059
Other revenues 50 39 86 85
--------- -------- --------- --------
Net revenues 30,566 27,003 58,883 52,009
Clinic operating costs:
Salaries and related costs 14,498 13,019 29,117 25,293
Rent, clinic supplies and
other 6,020 5,205 12,019 10,380
Provision for doubtful
accounts 314 418 711 756
--------- -------- --------- --------
20,832 18,642 41,847 36,429
Corporate office costs 4,917 3,344 8,540 6,522
--------- -------- --------- --------
Gain on sale of fixed assets 444 1 441 35
--------- -------- --------- --------
Operating income 5,261 5,018 8,937 9,093
Other income (expense)
Interest expense (32) (48) (68) (94)
Minority interests in
subsidiary limited
partnerships (1,544) (1,404) ( 2,726) ( 2,549)
--------- -------- --------- --------
(1,576) (1,452) (2,794) (2,643)
Income before income taxes 3,685 3,566 6,143 6,450
Provision for income taxes 1,406 1,353 2,332 2,450
--------- -------- --------- --------
Net income $2,279 $2,213 $3,811 $4,000
========= ======== ========= ========
Basic earnings per common share
(Note 1) $0.20 $0.20 $0.33 $0.37
========= ======== ========= ========
Diluted earnings per common
share (Note 1) $0.19 $0.18 $0.31 $0.33
========= ======== ========= ========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED
EARNINGS PER SHARE
(In thousands, except per share data)
Note 1: The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
(unaudited) (unaudited)
Numerator:
Net income $2,279 $2,213 $3,811 $4,000
-------- -------- -------- --------
Numerator for basic earnings
per share 2,279 2,213 3,811 4,000
Effect of dilutive securities:
Interest on convertible
subordinated notes payable 22 31 45 61
-------- -------- -------- --------
Numerator for diluted earnings
per share ---
income available to common
stockholders after
assumed conversions $2,301 $2,244 $3,856 $4,061
======== ======== ======== ========
Denominator:
Denominator for basic earnings
per share ---
weighted-average shares 11,509 10,956 11,490 10,933
Effect of dilutive securities:
Stock options 361 798 365 810
Convertible subordinated notes
payable 495 700 509 700
-------- -------- -------- --------
Dilutive potential common
shares 856 1,498 874 1,510
-------- -------- -------- --------
Denominator for diluted
earnings per share ---
adjusted weighted-average
shares and assumed
conversions 12,365 12,454 12,364 12,443
======== ======== ======== ========
Basic earnings per common
share $0.20 $0.20 $0.33 $0.37
======== ======== ======== ========
Diluted earnings per common
share $0.19 $0.18 $0.31 $0.33
======== ======== ======== ========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS
(In thousands, except share and per share amounts)
June 30, December 31,
2004 2003
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $21,872 $16,822
Patient accounts receivable, less
allowance for doubtful accounts
of $3,118 and $3,456, respectively 16,207 14,135
Accounts receivable -- other 346 266
Other current assets 974 1,802
------------ ------------
Total current assets 39,399 33,025
Fixed assets:
Furniture and equipment 21,747 20,598
Leasehold improvements 11,288 10,760
------------ ------------
33,035 31,358
Less accumulated depreciation and
amortization 20,957 19,550
------------ ------------
12,078 11,808
Goodwill, net of amortization of $335 5,859 5,685
Other assets, net of amortization of $432 2,052 1,955
------------ ------------
$59,388 $52,473
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable -- trade $539 $498
Accrued expenses 4,903 2,549
Notes payable 36 39
Convertible subordinated notes payable - 2,333
------------ ------------
Total current liabilities 5,478 5,419
Notes payable -- long-term portion 143 83
Other long-term liabilities 451 346
------------ ------------
Total liabilities 6,072 5,848
Minority interests in subsidiary limited
partnerships 3,499 3,278
Commitments and contingencies
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, 12,988,787 and
12,242,577 shares issued at
June 30, 2004 and December 31, 2003,
respectively 130 122
Additional paid-in capital 29,459 26,808
Retained earnings 32,750 28,939
Treasury stock at cost, 947,100 shares held (12,522) (12,522)
------------ ------------
Total shareholders' equity 49,817 43,347
------------ ------------
$59,388 $52,473
============ ============
Note 2: Certain prior period amounts have been reclassified for comparison
purposes.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
--------- -------- -------- ---------
(unaudited) (unaudited)
Operating activities
Net income $2,279 $2,213 $3,811 $4,000
Depreciation and amortization 969 881 1,874 1,722
Gain on sale of fixed assets (444) (1) (441) (35)
Minority interest in earnings 1,544 1,404 2,726 2,549
Provision for doubtful
accounts 314 418 711 756
Tax benefit from exercise of
options 153 354 176 525
Deferred income taxes (226) - - -
Changes in working capital 1,492 (616) 428 (328)
--------- -------- -------- ---------
Net cash provided by
operating activities 6,081 4,653 9,285 9,189
Investing activities
Purchase of fixed assets (1,594) (1,149) (2,185) (2,619)
Purchase of intangibles (174) - (174) -
Proceeds on sale of fixed
assets 479 - 482 129
--------- -------- -------- ---------
Net cash used in investing
activities (1,289) (1,149) (1,877) (2,490)
Financing activities
Payment of notes payable (3) (1) (3) (2)
Repurchase of common stock - (20) - (20)
Proceeds from exercise of
stock options 147 385 150 587
Distributions to minority
investors (1,503) (1,446) (2,505) (2,298)
Other - 20 - -
--------- -------- -------- ---------
Net cash used in financing
activities (1,359) (1,062) (2,358) (1,733)
Change in cash and cash
equivalents $3,433 $2,442 $5,050 $4,966
========= ======== ======== =========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(In thousands, except share and per share amounts)
Three Months Six Months
Ended Ended
June 30, 2004 June 30, 2004
-------------- --------------
(unaudited) (unaudited)
Net Income $2,279 $3,811
-------------- --------------
Reconciling Items:
CEO severance and recruiting fees (717) (717)
Gain on sale of assets 444 441
-------------- --------------
(273) (276)
Tax benefit from reconciling items, net 104 105
-------------- --------------
Net expense from reconciling items (169) (171)
-------------- --------------
Pro forma Net Income $2,448 $3,982
Diluted shares 12,365,000 12,364,000
============== ==============
Diluted earnings per common share as
reported $0.19 $0.31
============== ==============
Net expense per share reconciling items $0.01 $0.01
-------------- --------------
Adjusted earnings per common share $0.20 $0.32
============== ==============
CONTACT: U.S. Physical Therapy, Inc.
Larry McAfee or J. Livingston Kosberg, 713-297-7000
or
Investor Relations:
DRG&E
Jack Lascar, 713-529-6600