Exhibit 99.1
U.S. Physical Therapy Reports Fourth Quarter and 2005 Results;
Company Reports Record Year
HOUSTON--(BUSINESS WIRE)--March 2, 2006--U.S. Physical Therapy, Inc.
(NASDAQ:USPH), a national operator of physical and occupational therapy
outpatient clinics, today reported results for the year and fourth quarter ended
December 31, 2005.
For the year 2005, net earnings were $8.8 million, an increase of 31.6%
from $6.7 million for 2004. Earnings per share for 2005 were $0.73 per diluted
share, an increase of 35.2% from $0.54 per diluted share in 2004.
Chris Reading, Chief Executive Officer, stated "We are pleased with the
progress U.S. Physical Therapy made in 2005. The Company set new records for
patient visits, revenue, net income, EBITDA and earnings per share. We opened 28
new clinics in 2005, adding 13 new partners. In the fourth quarter we opened 10
new clinics including 7 new partners. Our pipeline of new partner candidates is
excellent and we expect clinic openings in 2006 to exceed the 2005 total."
2005 Year as compared to 2004 Year
-- Net revenue rose 11.7% to $132.1 million from $118.3 million due to an
11.7% increase in patient visits to 1,348,000 and an increase of $0.10
in net patient revenue per visit to $96.50 from $96.40.
-- Clinic operating costs were 73.3% of net revenue versus 72.3% for the
prior year. Corporate office costs were 12.4% of net revenue versus
14.2%.
-- Net income increased 31.6% to $8.8 million from $6.7 million. Earnings
per share increased to $0.73 per diluted share from $0.54.
-- Same store visits for clinics open for one year or more increased
6.0%. The net rate per visit for those clinics increased 0.4%,
resulting in a same store revenue increase of 6.5%.
U.S. Physical Therapy's net earnings for the fourth quarter of 2005 were
$1.6 million or $0.14 per diluted share as compared to $1.8 million or $0.15 per
diluted share reported for the fourth quarter of 2004. In the fourth quarter of
2005 the Company incurred $400,000 in costs and losses associated with the
closing of eight clinics.
Larry McAfee, Chief Financial Officer said, "Even though 2005 was an
excellent year the Company's fourth quarter earnings were less than anticipated.
Three factors impacted fourth quarter results. First, patient visits, which had
been on budget throughout the quarter, fell significantly the last two weeks of
the year due to a combination of bad weather and a more significant holiday
season slowdown than expected, resulting in the total visit count for the month
and quarter coming in at 2,800 less than we expected. The decline appears to
have been confined to the holiday period as patient visits have since rebounded
nicely and year-to-date are ahead of the same period last year. Second, in
conjunction with the 2006 budget process, management performed a thorough review
of all of the Company's clinics. Based on that analysis, we decided to close
eight underperforming clinics which had pre-tax closure costs and operating
losses in the quarter of $400,000. Though this action negatively impacted fourth
quarter financial results, management believes that it is the right long-term
decision as the closed clinics were projected to continue to be a financial
drain. Third, there continues to be a tight market for licensed physical
therapists which has resulted in increased wage rates across the sector. Higher
therapist salary costs cut into our fourth quarter operating margin by about
three percentage points as compared to the comparable period in 2004 but one
point of the increase was offset by lower rent, clinic supplies and other
costs."
Fourth Quarter 2005 as compared to Fourth Quarter 2004
-- Net revenue rose 12.2% to $33.5 million from $29.9 million primarily
due to a 13.0% increase in patient visits to 344,000 from 304,000
offset by a decrease of $0.75 in net patient revenue per visit from
$96.67 to $95.92.
-- Clinic operating costs were 76.2% of net revenue as compared to 72.5%.
The current year quarter operating costs include a pre tax charge of
$.4 million in closure costs and operating losses related to eight
closed clinics. Corporate office costs as a percentage of net revenue
were 12.4%, down from 13.6% last year.
-- Net income for the quarter decreased 10.5% to $1.6 million from $1.8
million. Earnings were $0.14 per diluted share for the fourth quarter
2005 as compared to $0.15 for the same period in 2004.
-- Same store revenue for clinics open for one year or more increased
2.7% primarily due to same store visits increasing 3.1% offset by the
net rate per visit for those clinics decreasing 0.4%.
The Company closed the year with $15.0 million in cash and investments. Net
of acquired clinics seller notes of $727,000 the adjusted cash balance was
approximately $14.3 million or $1.18 per diluted share. EBITDA after minority
interest expense grew by 22.0% from $15.0 million in 2004 to $18.2 million in
2005 as per the Reconciliation of Non-GAAP Financial Measures - EBITDA schedule
attached.
Mr. McAfee stated "We continue to buy back stock under the Company's share
repurchase program." In the fourth quarter the Company acquired 165,900 common
stock shares at prices ranging from $16.16 to $18.15 for an average price during
the period of $17.40. For the full year 2005 the Company purchased 489,282 of
its common stock shares at prices ranging from $13.53 to $18.40 for an average
price of $16.30.
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 10:00 am
Eastern Time, 9:00 am Central Time on March 2, 2006 to discuss the Company's
fourth quarter and year 2005 results. Interested parties may participate in the
call by dialing 800-938-0653 or 973-321-1100 and enter reservation number
6972897 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 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;
-- 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 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 286 outpatient
physical and/or occupational therapy clinics in 37 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 four 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,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(unaudited) (unaudited)
Net patient revenues $32,968 $29,413 $130,030 $116,295
Management contract revenues 508 421 2,022 1,968
Other revenues 20 21 70 45
--------- --------- --------- ---------
Net revenues 33,496 29,855 132,122 118,308
Clinic operating costs:
Salaries and related costs 17,677 14,800 67,567 59,053
Rent, clinic supplies and
other 7,107 6,722 27,197 24,929
Provision for doubtful
accounts 421 266 1,446 1,293
--------- --------- --------- ---------
25,205 21,788 96,210 85,275
Closure costs and
impairment charge 248 (125) 514 690
Loss (gain) on sale or
disposal of fixed assets 67 (9) 90 (452)
Corporate office costs 4,156 4,050 16,425 16,802
--------- --------- --------- ---------
Operating income 3,820 4,151 18,883 15,993
Other income (expense):
Interest income (expense),
net 90 81 361 146
Loss in unconsolidated
joint venture (16) -- (34) --
Minority interests in
subsidiary limited
partnerships (1,245) (1,307) (4,908) (5,362)
--------- --------- --------- ---------
(1,171) (1,226) (4,581) (5,216)
Income before income taxes 2,649 2,925 14,302 10,777
Provision for income taxes 1,027 1,112 5,511 4,099
--------- --------- --------- ---------
Net income $1,622 $1,813 $8,791 $6,678
========= ========= ========= =========
Basic earnings per common
share (Note 1) $0.14 $0.15 $0.74 $0.56
========= ========= ========= =========
Diluted earnings per common
share (Note 1) $0.14 $0.15 $0.73 $0.54
========= ========= ========= =========
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 Year Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(unaudited) (unaudited)
Numerator:
Net income $1,622 $1,813 $8,791 $6,678
--------- --------- --------- ---------
Numerator for basic
earnings per share 1,622 1,813 8,791 6,678
Effect of dilutive
securities:
Interest on convertible
subordinated notes payable -- -- -- 45
--------- --------- --------- ---------
Numerator for diluted
earnings per share ---
income available to common
stockholders after
assumed conversions $1,622 $1,813 $8,791 $6,723
========= ========= ========= =========
Denominator:
Denominator for basic
earnings per share ---
weighted-average shares 11,836 12,348 11,923 11,916
Effect of dilutive
securities:
Stock options 149 158 152 262
Convertible subordinated
notes payable -- -- -- 253
--------- --------- --------- ---------
Dilutive potential common
shares 149 158 152 515
--------- --------- --------- ---------
Denominator for diluted
earnings per share ---
adjusted weighted-average
shares and assumed
conversions 11,985 12,506 12,075 12,431
========= ========= ========= =========
Basic earnings per common
share $0.14 $0.15 $0.74 $0.56
========= ========= ========= =========
Diluted earnings per common
share $0.14 $0.15 $0.73 $0.54
========= ========= ========= =========
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 31, December 31,
2005 2004
------------ ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $15,002 $20,553
Patient accounts receivable, less allowance
for doubtful accounts of $1,621 and
$2,447, respectively 19,661 17,669
Accounts receivable -- other 761 549
Other current assets 1,428 1,835
------------ ------------
Total current assets 36,852 40,606
Fixed assets:
Furniture and equipment 23,010 22,781
Leasehold improvements 14,556 13,912
------------ ------------
37,566 36,693
Less accumulated depreciation and
amortization 23,825 23,043
------------ ------------
13,741 13,650
Goodwill 14,339 6,127
Other assets 1,587 1,225
------------ ------------
$66,519 $61,608
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable -- trade $1,721 $1,181
Accrued expenses 5,150 4,367
Notes payable 244 70
------------ ------------
Total current liabilities 7,115 5,618
Notes payable -- long-term portion 483 --
Deferred rent 1,263 1,518
Other long-term liabilities 1,159 982
------------ ------------
Total liabilities 10,020 8,118
Minority interests in subsidiary limited
partnerships 3,024 3,311
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, 13,645,167 and
13,436,557 shares issued at December 31,
2005 and 2004, respectively 136 134
Additional paid-in capital 35,037 32,534
Retained earnings 44,408 35,617
Treasury stock at cost, 1,809,785 and
1,320,503 shares held at December 31, 2005
and 2004, respectively (26,106) (18,106)
------------ ------------
Total shareholders' equity 53,475 50,179
------------ ------------
$66,519 $61,608
============ ============
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
-------------------------
2005 2004
------------ ------------
(unaudited) (unaudited)
Operating activities
Net income $8,791 $6,678
Depreciation and amortization 4,308 4,322
(Gain) Loss on sale or disposal of fixed
assets 201 (154)
Minority interest in earnings 4,908 5,362
Provision for doubtful accounts 1,446 1,293
Tax benefit from exercise of options 705 1,634
Impairment charge - goodwill 145 --
Deferred income taxes 44 146
Recognition of deferred rent subsidies (391) (350)
Other 45 --
Changes in working capital (1,950) (1,047)
------------ ------------
Net cash provided by operating
activities 18,252 17,884
Investing activities
Purchase of fixed assets (4,527) (4,970)
Acquisition of minority interests,
included in goodwill (1,513) (504)
Purchase of businesses (6,321) --
Proceeds on sale of fixed assets 178 515
------------ ------------
Net cash used in investing activities (12,183) (4,959)
Financing activities
Payment of notes payable (153) (52)
Repurchase of common stock (8,000) (5,584)
Proceeds from exercise of stock options 1,800 1,771
Distributions to minority investors (5,267) (5,329)
------------ ------------
Net cash used in financing activities (11,620) (9,194)
Change in cash and cash equivalents $(5,551) $3,731
============ ============
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - EBITDA
(In thousands)
Year Ended
December 31,
2005 2004
-------------------------
Net revenues $132,122 $118,308
Net income 8,791 6,678
Adjustments:
Depreciation and amortization 4,308 4,322
Minority interest in subsidiary limited
partnerships 4,908 5,362
Interest income, net of interest expense (361) (146)
Provision for income taxes 5,511 4,099
------------ ------------
EBITDA before minority interests 23,157 20,315
EBITDA before minority interests as a %
of revenues 17.5% 17.2%
Minority interest in subsidiary limited
partnerships 4,908 5,362
------------ ------------
EBITDA 18,249 14,953
EBITDA as of % of net revenues 13.8% 12.6%
U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES
RECAP OF CLINIC DEVELOPMENT ACTIVITY
Number
of
Opened Closed Sold Acquired Clinics
------- ------- ------- -------- ---------
As of December 31, 2004 264
First Quarter 2005, March
31, 2005 6 -- (1) -- 269
Second Quarter 2005, June
30, 2005 7 (1) (1) 3 277
Third Quarter 2005,
September 30, 2005 5 -- -- -- 282
Fourth Quarter 2005,
December 31, 2005 10 (8) -- 2 286
------- ------- ------- -------- ---------
Year 2005, December 31, 2005 28 (9) (2) 5 286
======= ======= ======= ======== =========
CONTACT: U.S. Physical Therapy, Inc., Houston
Larry McAfee or Chris Reading, 713-297-7000
or
DRG&E
Investors Relations:
Jack Lascar, 713-529-6600