Exhibit 99.1
U.S. Physical Therapy Reports Third Quarter Results
HOUSTON--(BUSINESS WIRE)--Oct. 27, 2004--U.S. Physical Therapy,
Inc. (NASDAQ:USPH), a national operator of physical and occupational
therapy outpatient clinics, today reported results for the third
quarter and nine months ended September 30, 2004.
U.S. Physical Therapy's reported net earnings for the third quarter of 2004
were $1.1 million or $0.08 per diluted share. These figures are after a pretax
charge of $966,000 in costs and losses associated with the closure of eight
clinics announced September 2, 2004. Additionally, included in corporate office
cost was $208,000 incurred during the period for recruiting fees principally
related to the Company's recently completed CEO search. Excluding these charges,
reported net earnings for the third quarter of 2004 would have been $1.8 million
or approximately $0.14 per diluted share. Additionally, the hurricanes that hit
Florida and affected other Gulf and east coast states during the quarter are
believed to have resulted in lost visits at 37 clinics in nine states or roughly
15% of the Company's total clinics. Some clinics were closed for days, were
without power or realized significant weather related patient cancellations.
Management estimates that 2,200 to 2,600 visits were lost representing
approximately $215,000 to $255,000 in revenue and at least $0.01 in lost
earnings per diluted share.
Livingston Kosberg, Interim Chief Executive Officer, said "During the third
quarter a number of external and internal factors made for a complicated period.
With the management issue resolved, the Company can now focus on maximizing the
profits of our existing facilities, accelerating the development of new clinics,
increasing the Company's physician owned and hospital PT/OT management business
and seeking tuck-in physical and occupational therapy acquisitions."
Third Quarter 2004 vs. Third Quarter 2003
-- Net revenues rose 10.6% to $29.7 million, from $26.9 million, due to an
8.2% increase in patient visits to 305,000 from 282,000 in the prior
year quarter, combined with a 3.1% increase from $93.14 to $96.06 in net
patient revenues per visit.
-- Earnings were $0.08 per diluted share for the third quarter 2004 as
compared to $0.15 for the comparable prior year period. Net income for
the quarter decreased from $1.9 million to $1.1 million or 44.6% due to
the reasons described.
-- Clinic operating costs in the third quarter of 2004 increased to 72.9%
of net revenues compared to 69.2% a year ago. Average visits per day per
clinic were 18.7 in the most recent period and 19.6 in the third quarter
last year.
-- Corporate office costs as a percentage of net revenues were 14.2% for
both the third quarter 2003 and 2004. As described above, third quarter
2004 corporate costs included higher recruiting fees. Accounting and
legal costs, a large portion of which related to Sarbanes Oxley
compliance, increased $219,000 in the third quarter of 2004 as compared
to the third quarter of 2003.
-- Same store visits for all clinics open for one year or more increased
approximately 2.7%. The net rate per visit for those clinics increased
approximately 3.2% resulting in a same store revenue increase of 5.9%
versus the third quarter of 2003.
Nine Months Ended September 2004 vs. Nine Months Ended September
2003
-- Net revenues rose 12.3% to $88.6 million from $78.9 million due to an
8.4% increase in patient visits to 902,000 and a 3.9% increase in net
patient revenues per visit to $96.31.
-- Earnings per share decreased 16.7% to $0.40 per diluted share from $0.48
in the prior year period. Net income decreased to $4.9 million from $5.9
million or 17.6% due to the reasons described.
-- Clinic operating costs were 71.7% of net revenues for 2004 and 69.7% for
the prior year period. Average daily visits per clinic for the two
periods were 19.1 and 20.3, respectively.
-- Corporate office costs were 14.4% of net revenues versus 13.1% one year
earlier.
-- Same store revenues increased 9.1% for the nine month period on an
increase in same store visits of 5.1% and a net rate increase of 4.0%.
Larry McAfee, Chief Financial Officer said, "Cash and cash equivalents grew
13.3% during the quarter to $24.8 million or approximately 40.0% of total assets
as of September 30. During September 2004, the Company purchased 50,000 shares
of its outstanding common stock at an average price of $13.09 per share. The
shares were acquired pursuant to the Company's September 24, 2001 stock purchase
plan, which had a remaining balance of 17,600 shares available for purchase at
September 30. A second share repurchase plan authorized February 26, 2003, also
remains under which 250,000 shares may be acquired. Management plans to fully
utilize both plans."
Chris Reading, who will become the Company's Chief Executive Officer
effective November 1, 2004 noted, "During the third quarter, we opened 8 clinics
bringing our year-to-date clinic openings to 24. We are on target to meet our
goal of 34 to 38 new clinic openings in 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 Wednesday, October 27 to discuss the
Company's third quarter 2004 results. Interested parties may participate in the
call by dialing (800) 938-0653 or (973) 321-1100 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/or occupational therapy clinics in 35 states.
The Company's clinics provide preventative and post-operative care for
a variety of orthopedic-related disorders and sports-related injuries,
treatment for neurologically-related injuries and rehabilitation of
injured workers. In addition to owning and operating clinics, the
Company manages physical therapy facilities for third parties,
including hospitals and physician groups. U.S. Physical Therapy, Inc.
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 Nine months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- ------- -------- --------
(unaudited) (unaudited)
Net patient revenues $ 29,253 $26,224 $ 86,882 $ 77,089
Management contract revenues 379 588 1,547 1,647
Other revenues 77 42 163 127
-------- ------- -------- --------
Net revenues 29,709 26,854 88,592 78,863
Clinic operating costs:
Salaries and related costs 15,140 13,364 44,253 38,657
Rent, clinic supplies and
other 6,176 5,258 18,207 15,638
Provision for doubtful
accounts 316 (45) 1,027 711
-------- ------- -------- --------
21,632 18,577 63,487 55,006
Corporate office costs 4,213 3,806 12,752 10,328
-------- ------- -------- --------
Clinic closure costs (A) (815) - (815) -
Gain (Loss) on sale or disposal
of fixed assets (7) 1 443 36
-------- ------- -------- --------
Operating income 3,042 4,472 11,981 13,565
Other income (expense)
Interest expense (5) (47) (74) (141)
Minority interests in
subsidiary limited
partnerships (1,328) (1,370) ( 4,055) ( 3,919)
-------- ------- -------- --------
(1,333) (1,417) (4,129) (4,060)
Income before income taxes 1,709 3,055 7,852 9,505
Provision for income taxes 655 1,154 2,987 3,604
-------- ------- -------- --------
Net income $ 1,054 $ 1,901 $ 4,865 $ 5,901
======== ======= ======== ========
Basic earnings per common share
(Note 2) $ 0.09 $ 0.17 $ 0.41 $ 0.54
======== ======= ======== ========
Diluted earnings per common share
(Note 2) $ 0.08 $ 0.15 $ 0.40 $ 0.48
======== ======= ======== ========
Note 1: Certain prior period amounts have been reclassified for comparison
purposes. (A) Includes an $182,000 charge associated with the disposal of
leasehold costs.
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED
EARNINGS PER SHARE
(In thousands, except per share data)
Note 2: The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended Nine months Ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
------- ------- ------- -------
(unaudited) (unaudited)
Numerator:
Net income $ 1,054 $ 1,901 $ 4,865 $ 5,901
------- ------- ------- -------
Numerator for basic earnings per
share 1,054 1,901 4,865 5,901
Effect of dilutive securities:
Interest on convertible
subordinated
notes payable - 31 45 92
------- ------- ------- -------
Numerator for diluted earnings
per share --- income available
to common stockholders
after assumed conversions $ 1,054 $ 1,932 $ 4,910 $ 5,993
======= ======= ======= =======
Denominator:
Denominator for basic earnings
per share --- weighted-average
shares 12,328 11,088 11,772 10,986
Effect of dilutive securities:
Stock options 202 737 310 784
Convertible subordinated notes
payable - 700 338 700
------- ------- ------- -------
Dilutive potential common shares 202 1,437 648 1,484
------- ------- ------- -------
Denominator for diluted earnings
per share --- adjusted weighted-
average shares and assumed
conversions 12,530 12,525 12,420 12,470
======= ======= ======= =======
Basic earnings per common share $ 0.09 $ 0.17 $ 0.41 $ 0.54
======= ======= ======= =======
Diluted earnings per common share $ 0.08 $ 0.15 $ 0.40 $ 0.48
======= ======= ======= =======
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS
(In thousands, except share and per share amounts)
September 30, December 31,
2004 2003
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 24,776 $ 16,822
Patient accounts receivable, less
allowance for doubtful accounts of
$2,790 and $3,456, respectively 16,229 14,135
Accounts receivable -- other 467 266
Other current assets 1,088 1,802
---------- --------
Total current assets 42,560 33,025
Fixed assets:
Furniture and equipment 22,211 20,598
Leasehold improvements 11,307 10,760
---------- --------
33,518 31,358
Less accumulated depreciation and
amortization 21,514 19,550
---------- --------
12,004 11,808
Goodwill, net of amortization of $335 6,011 5,685
Other assets, net of amortization of $432 1,734 1,955
---------- --------
$ 62,309 $ 52,473
========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable -- trade $ 648 $ 498
Accrued expenses 4,280 2,549
Notes payable 70 39
Convertible subordinated notes payable - 2,333
---------- --------
Total current liabilities 4,998 5,419
Notes payable -- long-term portion 94 83
Other long-term liabilities 530 346
---------- --------
Total liabilities 5,622 5,848
Minority interests in subsidiary limited
partnerships 3,475 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, 13,463,997 and
12,242,577 shares issued at September
30, 2004 and December 31, 2003,
respectively 134 122
Additional paid-in capital 32,456 26,808
Retained earnings 33,801 28,939
Treasury stock at cost, 997,100 shares held
at September 30, 2004 and 947,100 shares
at December 31, 2003, respectively (13,179) (12,522)
---------- --------
Total shareholders' equity 53,212 43,347
---------- --------
$ 62,309 $ 52,473
========== ========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Nine months Ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
-------- ------- ------- -------
(unaudited) (unaudited)
Operating activities
Net income $ 1,054 $ 1,901 $ 4,865 $ 5,901
Depreciation and amortization 999 914 2,873 2,636
(Gain) Loss on sale or disposal
of fixed assets 180 (1) (261) (36)
Minority interest in earnings 1,328 1,370 4,055 3,919
Provision for doubtful accounts 316 (45) 1,027 711
Tax benefit from exercise of
options 1,374 599 1,550 1,124
Deferred income taxes (136) (138) (136) (453)
Changes in working capital (535) (338) (107) (351)
-------- ------- ------- -------
Net cash provided by
operating activities 4,580 4,262 13,866 13,451
Investing activities
Purchase of fixed assets (1,122) (1,316) (3,307) (3,935)
Purchase of intangibles (79) (31) (253) (31)
Proceeds on sale of fixed assets 17 - 499 129
-------- ------- ------- -------
Net cash used in investing
activities (1,184) (1,347) (3,061) (3,837)
Financing activities
Payment of notes payable (36) (1) (39) (3)
Repurchase of common stock (657) - (657) (20)
Proceeds from exercise of stock
options 1,554 549 1,704 1,136
Distributions to minority
investors (1,353) (1,356) (3,859) (3,654)
Other - - - -
-------- ------- ------- -------
Net cash used in financing
activities (492) (808) (2,851) (2,541)
Change in cash and cash
equivalents $ 2,904 $ 2,107 $ 7,954 $ 7,073
======== ======= ======= =======
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
Three Months Nine months
Ended Ended
September 30, September 30,
2004 2004
------------- -------------
(unaudited) (unaudited)
Net Income $ 1,054 $ 4,865
------- -------
Reconciling Items:
Closed clinic operating losses (151) (393)
Clinic closure costs (815) (815)
Severance and recruiting fees (208) (925)
Gain (loss) on sale of assets (7) 443
------- -------
(1,181) (1,690)
Tax benefit from reconciling items, net 425 608
------- -------
Net expense from reconciling items (756) (1,082)
------- -------
Pro forma Net Income $ 1,810 $ 5,947
Diluted shares 12,530 12,420
======= =======
Diluted earnings per common share as
reported $ 0.08 $ 0.40
======= =======
Net expense per share from reconciling
items $ 0.06 $ 0.08
------- -------
Adjusted earnings per common share $ 0.14 $ 0.48
======= =======
Note 3: This reconciliation schedule does not include any costs related to the
impact from the hurricanes referenced in the text of the accompanying news
release.
CONTACT: U.S. Physical Therapy, Inc.
Larry McAfee or J. Livingston Kosberg, 713-297-7000
or
Investors Relations:
DRG&E
Jack Lascar, 713-529-6600