Exhibit 99.1
U.S. Physical Therapy Reports Fourth Quarter and Year 2004 Results
HOUSTON--(BUSINESS WIRE)--March 3, 2005--U.S. Physical Therapy,
Inc. (Nasdaq:USPH), a national operator of physical and occupational
therapy outpatient clinics, today reported results for the fourth
quarter and year-ended December 31, 2004.
U.S. Physical Therapy's reported net earnings for the fourth
quarter of 2004 were $1.8 million or $0.15 per diluted share. For the
year ended December 31, 2004, the reported net earnings were $6.7
million or $0.54 per diluted share. The results for the year include
charges of $1.2 million after tax related primarily to costs
associated with the Company's former CEO departure and costs and
losses associated with clinic closures. Additionally, on February 7,
2005 the Securities and Exchange Commission issued a letter clarifying
the staff's interpretation of certain accounting principles relating
to operating leases. In accordance with that interpretation, the
Company booked in the fourth quarter an accumulated accrual for
straight line rents principally for the combined years of 2001 through
2004 of $157 thousand after tax. Excluding these charges, offset by a
gain recorded on the sale of a clinic, reported net earnings for 2004
would have been $7.8 million or approximately $0.63 per diluted share.
A schedule detailing this information is attached.
Chris Reading, Chief Executive Officer, said, "2004 was a
transitional year and we are pleased to end it on a positive note.
During the quarter we ramped up development opening 11 new clinics.
For the year, we opened 35 clinics, closed 12 and sold one bringing
our year end total to 264 clinics."
Larry McAfee, Chief Financial Officer, said, "From September
through December we repurchased 373,403 U.S. Physical Therapy common
stock shares at an average price of $14.95 per share. As of year end,
we had an additional 444,000 shares available for purchase under the
Company's authorized share repurchase program. Even after using $5.6
million for stock purchases, cash and cash equivalents totaled $20.6
million at year end representing a $3.7 million increase over 2003
year end."
Fourth Quarter 2004 as compared to Fourth Quarter 2003
-- Net revenue rose 11.8% to $29.9 million, from $26.7 million,
due to an 8.6% increase in patient visits to 304,000 from
280,000, combined with a 3.6% increase from $93.34 to $96.67
in net patient revenue per visit.
-- Clinic operating costs decreased to 72.5% of net revenue
compared to 73.5%. Corporate office cost as a percentage of
net revenues was 13.6% for both quarters.
-- Net income for the quarter increased 26.8% from $1.4 million
to $1.8 million. Reported earnings were $0.15 per diluted
share for the fourth quarter 2004 as compared to $0.12.
-- Average visits per day per clinic were 18.7 for both quarters.
These averages include all of the Company's clinics including
those opened during the periods.
-- Same store visits for clinics open for one year or more
increased 3.4%. The net rate per visit for those clinics also
increased 3.4% resulting in a same store revenue increase of
6.9%.
Year 2004 as compared to Year 2003
-- Net revenue rose 12.1% to $118.3 million, from $105.5 million,
due to an 8.5% increase in patient visits to 1.2 million and a
3.8% increase in net patient revenue per visit to $96.40.
-- Clinic operating costs were 72.3% of net revenue versus 70.7%
for the prior year. Corporate office costs were 14.2% of net
revenues versus 13.2%. Corporate office costs for 2004 include
a pre tax charge of $0.9 million primarily related to
severance payments and recruiting fees associated with the CEO
change in July.
-- Net income decreased 8.9% to $6.7 million from $7.3 million.
Earnings per share decreased to $0.54 per diluted share from
$0.61. As further described in an attached schedule, excluding
reconciling items the 2004 adjusted net earnings was $7.8
million or $.63 per diluted share.
-- Average daily visits per clinic were 18.8 and 19.9 for 2004
and 2003, respectively. These averages include all of the
Company's clinics including those opened in the past year.
-- Same store visits for clinics open for one year or more
increased 6.2%. The net rate per visit for those clinics
increased 3.8% resulting in a same store revenue increase of
10.0%.
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 March 3, 2005 to
discuss the Company's fourth quarter and year 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 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 opening 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:
-- revenue and earnings expectations;
-- general economic, business, and regulatory conditions
including federal and state regulations;
-- availability of qualified physical and occupational
therapists;
-- the failure of our clinics to maintain their Medicare
certification status or changes in Medicare admission
guidelines;
-- competitive and/or economic conditions in our markets which
may require us to close certain clinics and thereby incur
closure costs and losses including the possible write-off or
write-down of goodwill;
-- changes in reimbursement rates or 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;
-- future acquisitions; and
-- weather.
These factors are beyond our control. Given these uncertainties,
you should not place undue reliance on our forward-looking statements.
Please see the other sections of this report and our other 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
report. 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 264
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.
(See Attached Tables)
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
(unaudited) (unaudited)
Net patient revenues $29,413 $26,136 $116,295 $103,225
Management contract revenues 421 563 1,968 2,210
Other revenues 21 6 45 78
--------- --------- --------- ---------
Net revenues 29,855 26,705 118,308 105,513
Clinic operating costs:
Salaries and related costs 14,800 13,749 59,053 52,406
Rent, clinic supplies and
other 6,722 5,588 24,929 21,226
Provision for doubtful
accounts 266 221 1,293 932
--------- --------- --------- ---------
21,788 19,558 85,275 74,564
Closure (costs)
adjustment (A) 125 (40) (690) (40)
Gain (loss) on sale or
disposal of fixed assets 9 (36) 452 --
Corporate office costs 4,050 3,639 16,802 13,967
--------- --------- --------- ---------
Operating income 4,151 3,432 15,993 16,942
Other income (expense)
Interest income (expense),
net 81 (48) 146 (134)
Minority interests in
subsidiary limited
partnerships (1,307) (1,106) ( 5,362) ( 5,025)
--------- --------- --------- ---------
(1,226) (1,154) (5,216) (5,159)
Income before income taxes 2,925 2,278 10,777 11,783
Provision for income taxes 1,112 848 4,099 4,452
--------- --------- --------- ---------
Net income $1,813 $1,430 $6,678 $7,331
========= ========= ========= =========
Basic earnings per common
share (Note 2) $0.15 $0.13 $0.56 $0.66
========= ========= ========= =========
Diluted earnings per common
share (Note 2) $0.15 $0.12 $0.54 $0.61
========= ========= ========= =========
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 recorded in the third quarter 2004.
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 Year Ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
(unaudited) (unaudited)
Numerator:
Net income $1,813 $1,430 $6,678 $7,331
--------- --------- --------- ---------
Numerator for basic earnings
per share 1,813 1,430 6,678 7,331
Effect of dilutive
securities:
Interest on convertible
subordinated notes payable - 31 45 123
--------- --------- --------- ---------
Numerator for diluted
earnings per share ---
income available to common
stockholders after assumed
conversions $1,813 $1,461 $6,723 $7,454
========= ========= ========= =========
Denominator:
Denominator for basic
earnings per share ---
weighted-average shares 12,348 11,245 11,916 11,051
Effect of dilutive
securities:
Stock options 158 394 262 476
Convertible subordinated
notes payable - 700 253 700
--------- --------- --------- ---------
Dilutive potential common
shares 159 1,094 515 1,176
--------- --------- --------- ---------
Denominator for diluted
earnings per share ---
adjusted weighted-average
shares and assumed
conversions 12,506 12,339 12,431 12,227
========= ========= ========= =========
Basic earnings per common
share $0.15 $0.13 $0.56 $0.66
========= ========= ========= =========
Diluted earnings per common
share $0.15 $0.12 $0.54 $0.61
========= ========= ========= =========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 31, December 31,
2004 2003
-------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $20,553 $16,822
Patient accounts receivable, less
allowance for doubtful accounts of
$2,447 and $3,456, respectively 17,669 15,008
Accounts receivable -- other 549 758
Other current assets 1,835 2,432
-------------- --------------
Total current assets 40,606 35,020
Fixed assets:
Furniture and equipment 22,781 20,598
Leasehold improvements 13,912 12,644
-------------- --------------
36,693 33,242
Less accumulated depreciation and
amortization 23,043 19,941
-------------- --------------
13,650 13,301
Goodwill, net of amortization of $335 6,127 5,685
Other assets, net of amortization of
$432 1,225 833
-------------- --------------
$61,608 $54,839
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable -- trade $1,181 $498
Accrued expenses 4,367 3,422
Notes payable 70 39
Convertible subordinated notes payable - 2,333
-------------- --------------
Total current liabilities 5,618 6,292
Notes payable -- long-term portion -- 83
Deferred rent 1,518 1,493
Other long-term liabilities 982 346
-------------- --------------
Total liabilities 8,118 8,214
Minority interests in subsidiary limited
partnerships 3,311 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,
13,436,577 and 12,242,577 shares
issued at December 31, 2004
and December 31, 2003, respectively 134 122
Additional paid-in capital 32,534 26,808
Retained earnings 35,617 28,939
Treasury stock at cost, 1,320,503
shares held at December 31, 2004
and 947,100 shares at December 31,
2003, respectively (18,106) (12,522)
-------------- --------------
Total shareholders' equity 50,179 43,347
-------------- --------------
$61,608 $54,839
============== ==============
Note 1: 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)
Year Ended
December 31,
-----------------------------
2004 2003
-------------- --------------
(unaudited)
Operating activities
Net income $6,678 $7,331
Depreciation and amortization 4,322 3,863
(Gain) Loss on sale or disposal of
fixed assets (154) --
Minority interest in earnings 5,362 5,025
Provision for doubtful accounts 1,293 932
Tax benefit from exercise of options 1,634 2,037
Deferred rent (350) (272)
Deferred income taxes 146 474
Other -- 14
Changes in working capital (1,047) (1,872)
-------------- --------------
Net cash provided by operating
activities 17,884 17,532
Investing activities
Purchase of fixed assets (4,970) (5,133)
Purchase of intangibles (504) (31)
Proceeds on sale of fixed assets 515 --
Other -- 136
-------------- --------------
Net cash used in investing
activities (4,959) (5,028)
Financing activities
Payment of notes payable (52) (38)
Repurchase of common stock (5,584) (20)
Proceeds from exercise of stock
options 1,771 1,462
Distributions to minority investors (5,329) (4,696)
-------------- --------------
Net cash used in financing
activities (9,194) (3,292)
Change in cash and cash
equivalents $3,731 $9,212
============== ==============
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED INCOME
(In thousands, except per share amounts)
Fourth Quarter 2004
-----------------------------------------
Per Diluted
Before Taxes After Taxes Share
------------ ------------ -------------
Net income $2,925 $1,813 $0.15
Reconciling items:
Clinic closure costs
revision (125) (77) (0.01)
Accrual for straight line
rents, net of minority
interest 254 157 0.01
------------ ------------ -------------
Adjusted income $3,054 $1,893 $0.15
============ ============ =============
Year 2004
-----------------------------------------
Per Diluted
Before Taxes After Taxes Share
------------ ------------ -------------
Net income $10,777 $6,678 $0.54
Reconciling items:
Closed clinic operating
losses 393 244 0.02
Clinic closure costs 690 428 0.03
Severance and recruiting
fees 925 573 0.05
Gain on sale of assets (452) (280) (0.02)
Accrual for straight line
rents, net of minority
interest 254 157 0.01
------------ ------------ -------------
Adjusted income $12,587 $7,800 $0.63
============ ============ =============
Note: In response to the February 7, 2005 letter from the Chief
Accountant of the Security and Exchange Commission to the American
Institute of Certified Public Accountants, the Company undertook a
comprehensive review of its accounting practices for leases. As a
result of this review, the Company made an accounting adjustment that
resulted in an acceleration of rent expense under certain leases that
contained rent abatements and fixed escalations in rental payments.
The Company recorded a cumulative rent expense adjustment relating to
this matter of approximately $254,000 pre tax, or $157,000 after tax,
in the fourth quarter of 2004, which equates to $.01 per diluted share
for the fourth quarter and full year 2004. This accounting adjustment
does not affect the Company's historical or future cash flows or the
timing or amounts of rental payments. Additionally, this correction is
not material to prior periods.
CONTACT: U.S. Physical Therapy, Inc., Houston
Larry McAfee, 713-297-7000
or
Chris Reading, 713-297-7000
or
Investors Relations:
DRG&E
Jack Lascar, 713-529-6600