USPH - Earnings call transcript Q4 2017 | U.S. Physical Therapy, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the U.S. Physical Therapy Fourth Quarter 2017 Year End Earnings Call. [Operator Instructions] Thank you. And it is now my pleasure to turn the call over to Chris Reading to begin, Please go ahead, sir.

Christopher Reading

Thank you. welcome and everyone, morning, to U.S. Good Fourth Therapy's Quarter and Call. Earnings XXXX End Year Physical the are President Controller. McDowell, call Executive on family, President Officer-East; me With today and of member Counsel; and Graham Chief our Financial Jon and Officer-West; Vice newest Vice Binstein, Larry Chief Officer; General Operating Glenn Vice Chief Rick Reeve, Operating and President our McAfee, Bates,

as brief well need Before Jon, as plan our we begin please. we a to for would, to you results read disclosure. discuss if XXXX, our

Jon Bates

Thanks, risks Commission Company's Chris. vary can Company's the forward-looking with filings more based This involve presentation and for contains forward-looking and the information. results the and statements materially the statements, Securities which from on current certain assumptions, actual these views those and uncertainties. anticipated. Exchange And Company's see are Please

Christopher Reading

Jon. Thanks,

Okay, the for have are into the impact some the made progress as I'll quarter then year a on by discussion we future. and changes about this start moving covering our expect to and of which we as some the a year highlights beneficial morning and making, well the and

First, a highlights. few

point quarter a to good strong at results revenue For to We've charge, operational net related which operating costs included Total the the of while quarter financial adding fallen XXXX. of from key large XX% we compared a growth write-off the circumstances. had our cost when XXXX non-cash Inspite contract loss damp facility, were support. improvement with were produced basis to on component hospital which $XXX,XXX XX% a operating row business to of a time able the the local same a represented difficult operating of to revenues quarter goodwill some fourth make in this tied QX [ph] the XX.X% management increased it's of one-time XXXX. increase quarter, our quarter. a past These compared with fourth net the cost operating XXX for

served form people Reeve, comes fourth well. We this who of His quarter key continued progressed first CEO. our our progress the Company leading and to of handle will additional XX X,XXX hospital their licensed business. our Graham group handle eventually half sharing Graham with Glenn some Company Company, by our these of the as deep contracts our operational as Operating a than the will Chief a related us Western adding of our be McDowell Industrial our including as background, eastern the healthcare oversee in are capably will XXXX in as licensed therapist. any quarter Notably half newer among capabilities beds Prevention Western who for half who developing well -- Officer-East, responsibilities operations COO Officer, Operating career Chief ventures. years large to as along include more physical with who a Company as X with with as Graham Injury of

year We throughout to of in same-store more which a to ones the We've rebouncing [ph] first also our get we the alongside coalition an the creation team XXXX. very a responsiveness I XXXX. of good make promotion into staying added in with months alignment. will future. and quarter while a and development the driving acquisition the there. in as quarter, assist XX very necessary It maintaining across do we worked XX total measure will embracing things the business to many expect the last sales and cost began number grown us operational and last sales our the a our also revenue focused oversight, Additionally, provide We've volume of effective opened of acquired our Company with team produced key and and year day training additions year to the offices the and years say regional some regional resources along year the help VPs support, along an perspective, allow to wanted partners growth to very These X%. continued we've to locations, important over needed of significantly was solid will well as denovo us marketing growth support we XXXX. XX and year volumes X clinic and which opened we resources new I'm are larger record key deliver into of for and to and visit moves of territory. start added number provide forward for visit focused teams at we changes the pushing partnerships us locations into proud enjoyed each the of These that with that satellite which region added while tuck-in excellent our from per our per finish greater

few those positive acquisitions which industrial for in in lumpy, touched think was the That first Since and end just I changes little guidance us XXX bumpy times, busy at a little more concludes a that for they our around messy, more enjoyed serves with was Larry and increase detail of One the year clients finish very know the number highlights, a services position little future. well Larry? lightly positive my will country, terrific only a of with a dividend and I of prepared our that along with cover and XXXX. financial our locations company very than very comments. the Company. I XXXX

Lawrance McAfee

review a quarter. fourth the of with start I'll

increased a periods. fourth rate as were $XXX.X XX.X% from $X.X quarter. $X.X Other revenue to Total the at earlier. year the XXXX for Revenue business in from per from million to the was business the Patient the a both, costs year revenue mentioned, in XX.X% due in increased compared increase as by management million average Revenue in performance was was million. operating solutions patient earlier. revenues compared fourth to an physical a to of XX.X% quarter contracts net $XXX,XXX visit. XXXX and XX.X% partially Chris workforce million decrease $X.X therapy XX.X% offset As revenue operations small

to $X.X tax $XXX,XXX the in quarter $XXX,XXX tax income borrowing provision taxes a included was we've As of income to higher a mentioned, debt were reducing from million $XX.X XX.X% operating deferred XX.X% our amount the tax of fourth XX.X% Interest related million made results Chris for points was including made, profit revenue, million, attributable gross the increased to period. estimate business physical $XX increased a XX.X% on earlier, previously to in they year as fourth almost from of the XX.X% versus was we related revenue progress but costs operating consensus year in an due $XXX,XXX. for were to $X.X million was Rent, X.X% The XX.X% was as XX.X%. changes the for was revenue gross of due the The tax in for basis earnings Net on analyst were during income solutions $X.X the Without of XX.X% from and we've up year XX.X% earlier. was interests a was staffing reconciliation quarter to The XX.X% workforce performance profit XX.X%. quarter the the earlier. taxes benefit benefit million. Corporate actually attributable salaries versus of X.X% X.X% a as million the is a while $X.X $X Operating compared to income the that $X.XX. The carried percent compared interests in the those compared profit XXXX period A charge, $X.X we labor The was to and and recent prior was the of charge per as benefit accounts costs XXXX was to quarter act. doubtful provision for improvement year gross recent provision The non-controlling Company's million gross tax XX.X% X.X%. a fourth XX.X% compared revenue, to expense assets to XX.X% was from down. at the income income as million ran in average compared from $X.XX, the as to year $XXX,XXX fourth for liabilities the was contracts the XXXX. was redeemable and provision year new XX.X%. loss was of non-controlling the attributable recent results as earlier Net Operating supplies, on to management versus costs, profit clinics costs a XXX for share clinics acquired $X.X Included a The earlier, XXXX. from reported revaluation a year was therapy million million contract $X.XX. for detailed at solid million. reconciliation quarter. a earlier. other

due in increased higher workforce revenues visits, $X.X compared I'll therapy alluded XXXX same-store XX% in per rate patient visits total run the and million, $X.XX For million, management XXXX. an Net share, to by number or and X.X% patient of the in performance offset to rate. an in revenues fourth million, revenue the Chris quarter an from to or acquired from GAAP income quickly net by increase facilities due increase by business XX.X% as of net decline X.X% to due physical increased XX.X% a increase increase in of the visits now. to $XXX.X revenue contracts in management the operations $X.XX quarter under the increased X.X%, was patient XX.X% $X.X March. higher. to small was Net through revenues from

income primarily XXXX. rose detailed $X.XX. clinics either $X.X For for versus $XX.X XX.X%. $X The million revenue redeemable the business $X.X versus in gross XXXX, and million. of versus $XX.X $X.X versus Company's the rose million contributed versus the million. for XXXX. XX.X% office year revenues, versus or operating year million, the performance The provision and profit The year for income XX.X% difference contributed earlier. the $X.X million, million. physical a for was year or opened release attributable was earlier. The in to in Total press versus full year earlier, earlier. the The Interest contracts of was XX%. versus costs or net solutions XXXX realized. a million income XX% from XX% $X.X income to the workforce share million was management solution contracts Corporate year versus $XX.X XXXX Operating increase management revenue, operating costs $X.X being million therapy of other million as were profit costs gross results was XX.X% and interests year for $X.X X.X% net million $XX.X in revenues XX.X% the The full was to XXXX, on revenues in $XX.X tax taxes was was $X.X in profit acquired were expense versus were $X.XX. operations the gross XXXX to attributable X.X% X.X% performance new was attributable interests million per Net income to to $X.XX $XXX,XXX. non-controlling GAAP benefit non-controlling million we a Operating workforce $X.XX business

terms redeemable the on paid adjusted was redemption outstanding no just EBITDA to having grew other to non-controlling now carrying quarter adjusted have and extinguished amendments the we this, Seller And extinguishment. effective the we XX.X% is there their Interests The note measures the for million. quarter replacing monetary XX, equity as agreements In December Company all $XX recognized partners. mandatory did X.X% classification reported, the fourth entered removed partnerships it's in mandatorily to the Entity $XX fourth liability-classified as limited year grew gain financial at amounts, million, under Company IM an no feature. of loss interests and are of in they EBITDA into XXXX, but to or acquired consideration the We

year making cash strong. last net shareholders, was despite million only million flow As million of $XX.X our total operations as consideration in for noted paying release, the dividends increased our from to debt and I in $XX.X five $X.X acquisitions by

be this year We we are also XX%, Company's $X.XX by will first the paid quarterly of that on dividend our April XX. now increasing dividend released

began XXXX in increased back year As dividends amount dividend paying we've we the every since. recall, you and

We also earnings release. in provided guidance the

management's operating existing $X.XX $X.XX million, results from That's assumed diluted year For based range tax XXXX, represents management to $XX.X to and share. projected on XX%. from guidance the currently future Please be in $XX.X to any potential Company's expects rate that earnings of acquisitions. for earnings in of or range million excludes operations per an the note the earnings

Christopher Reading

Thank That concludes you, prepared Larry. our comments.

up questions. if So operator, the would you lines please for open

Operator

Securities. CJS comes the question Solow Larry first of Our Instructions] [Operator line from of

Lawrence Solow

you've a of just the -- call last adding fine you tuning higher starting the which level, think and territory, like of regionally color talked done organization what you on for obviously, with the about question it you're on and the Chris, more two. sort you've sort up that? about to of maybe on of looks a just is how your sort COO just into new position split completed a on Do you little

Christopher Reading

started focused obviously of team who spread especially be I growth to worked our together, things created to one promoted marketing within conclusion of Glenn opportunities. us and on of on it other a were then a important last referral on we've that we somebody we came long-term rebounced another Operations done, year. all is Director performer the little so region, regions, driving And internally So a regions, the and forward thin, we be the and rebalanced we've will us, those we've think regions. new that focused, for working this going will very sales that strong we added and on

so has began this think relatively extended completion. final we're some And into -- XXXX some hiring that quarter is of approaching, quarter, but I first some that of speaking in

structure. changes and Ops on include year we for and to other team top has we able subtle really added -- the reporting last be adjustments and efficiency who of made up the to somebody in a some cost of see stay nice Some to come additions helped and better changes cost with accountant, us

Glenn week. to in about complex the everybody some where conversant carry a had with us point that good is meeting gives more lot future we've very other board a resources made us facilities we're we key new fruit into so And new the and a trimmed but us busy need getting regulatory very And the I'm here very people, with and the when of much his so tools. the celebrating in noted, those getting capable weren't is environment than been process split will will country; all excited with we some needed, some now around lot and he's this assimilated, here, Graham some believe got producing with produce about we that excited Obviously done and will all And X-day week as work areas of the outstanding the guy. drinking Graham XXX fire so as we're We he's so we the and so adjustments and from growth, hose anniversary people had a still market ever. a in we've elements we I today; changes, X-day and the us all added of good XXX some areas little the bit deals, started been fruit. have of other which undoubtedly about we people, that from

to little speed; you happen and it's would going you year. move the help folks And take got we a that's so some time get new of we but expect them as us will Larry, a to these know, through it lot but of done as are upto

Lawrence Solow

the beyond? As then especially taking data do into And I is store building outlook you guys mentioned, -- where some and team the growth, and suppose see 'XX assume quarter volume you of side are an frankly, the and into this outperforming very you industry share good type year. similar guidance? I in of I and but competitors; know no there likely you your are on

Christopher Reading

little in a supposed expect economists I the that be the same-store built our what we what in of we we've don't honest half really talk economy are we've latter be numbers 'XX. of guidance potentially from we same you the first We if the We've got what a half the to perspective saying, look as 'XX relatively slowing but 'XX, project the done same-store think budget -- remember percentages. is to don't about into so at growth. at provided, never

Lawrance McAfee

a than at better used did the modest it's year we like to rate, last historical we that. same is It's more X% but which figure and at that's closer

we conservative, I So think historical went don't we with averages. just are being

Lawrence Solow

I from we growth rate, pretty the the line? bottom little, outlook, -- on if the only modest tax away if the just a And the take benefit -- tax so in guidance it's lower

Lawrance McAfee

Company cut with $X.XX we $X Well, works be but Medicare per our is that number expect, a that you a That the swing. across reason our and Medicare visits we out, that's visit reduction commercial only announced rate is, which the which the it when actually $X.XX about came affects visit some not of of to take times payers. if rate

most So that to their don't, to I budgeted acquisitions But estimates $X.XX that's that part which reduction, now won't of with Medicare a have well, there effect. that we is -- major rate difference. move in the but mean analysts so doesn't the include swing know we a of mitigate we

Operator

Our of question comes the Sidoti. next Lalishwar Ramgopal of from line

Lalishwar Ramgopal

the First, little wanted last at 'XX? end a question the on was of you mix Larry a reimbursement of regarding if us follow-up pair the just what give the can sense cut; to I

Lawrance McAfee

For and mind workforce XX.X%, insurance performance the was fourth really Medicaid revenue. Medicare as solutions excludes other and commercial quarter, X.X%. comp then other XX.X%. private was was business in or Workers XX.X% the reported keep combined we which were companies that care managed and

Lalishwar Ramgopal

in net really again, And was slight in dip due terms quarter revenue the for to I guess of business the the average mix?

Lawrance McAfee

Yes.

Lalishwar Ramgopal

expectations to for in a your performance business share Chris, the solutions terms little want workforce I you of forward? just going

Christopher Reading

business are it's the but well. guys us for that like new lot, doing very We a

activity We growth that have more space, we planned have in move planned.

to us and on can go it reasons things that focus One well. large because companies to do self-insured we directly know and enables of these we it the like

businesses, deep have businesses develop we do to help that in focus they become within ergonomic the people advance and keep on known we relationships they safe, these ergonomic prevention, we projects. have do [ph] and industries, that So we're ergonomist embedded work, these workforce

So workforce CEOs important and their lot prevention and for growth a based engaged of profitability. upon healthy keeping that's continued their and it's an element CFOs understand really that a

On the have equation, who have that who providers side. the and the in commercial are side other to a ability of insurance of number huge the of plans influence they the employee people

these steadily this just have certainly their the don't in we out done space, can that kind but we many the model, be surface and to as there we're is think there Company So are partner companies we the acquire and Many we many there space. we understand and and of potentially these the think grow as small think and we've to just companies; steadily, but it in We services to going a we the cash think do. there started that a be we're growing more companies think our of are part scratching of with getting our we opportunity now delivery offering. compared PT but it's many, decent facilities business -- will ones good who understand modestly, overtime some within

Lalishwar Ramgopal

of workflow just as in competitors you you acquisitions, the at but the or -- look clinic in comment potential acquisitions more expanding overall could in will And clinic on opportunities again, you on the any pricing? if change still the mentioned side a obviously too. core some for on terms little I'm I wondering be coming environment know focus network

Christopher Reading

-- there tax there, some it's We're differentiate without very not some changes with and lot ultimately environment, pricing to faster culture to put the and are by competitors still because plenty that of we the the equity disruption these help changes lid of pricing. of ourselves competitive on brand founders partners ownership on people life we active, to significant out continue occurred, in continued hopeful major the a how a are that of with continuation, of handle seeing try have yes, I'm of business. any change

continuing year, see fruit don't we I year to expect discussions what continue and that that a little had great we're we kind good to than So last produces whole year. we're lot a active but have the say to of bumpy, to year be want more we'll for and and lumpy this

Lawrance McAfee

But on swing, obviously said have deals down produce sector been with the rate XX%, largest the to It's And to of on our free changes knows, equity so owned a who these -- we more out in elaborate up. go comment, flipside, ambassadors XX%, flow. that's lower most the Chris's as companies more tax it would we normally obviously, estimated would cash cash now XX groups rate the by down we'll flow. tax private tax leverage

rise that the to to limited a things deductibility from that standpoint by of regards Act, rates extent us favorable the those interest with So is competitive to probably the and/or interest are Tax acquisitions.

Christopher Reading

tell going near-term see would any rate, interest I see so up you go what but pretty still don't the it's changes are Now and happens they benign to to expect major overtime. we'll in

Operator

the from [ph] Rachel comes question line of next of Our Legacy Capital.

Unidentified Analyst

redeemable Actually your and I that and new clarifications expense, on math, some mandatory is in on [ph] away all changes just cost put that interest no go the does XXXX given some the zeros? become need relationship; help there mean does

Christopher Reading

yes, now we're Yes, the revaluation, it does. having but

to so And used actually to to it terms. goes account stuff how put for it simple in we back

Unidentified Analyst

and zeros interest is the redemption the both these So this both value interest funky applicable none to going non-controlling -- of non-earnings for with expense forward?

Christopher Reading

line anymore expense. Yes, is over liability equity so from the maybe so there not line, interest the

Unidentified Analyst

P&L? the On

Christopher Reading

are Yes, and value to when the that the change them a interest or more we them then but their out attributable have their you earnings revaluation buy minority no in earnings, interest. obviously

Unidentified Analyst

this your because million me to just math maybe callers on you in based I XXXX but trying versus of XXXX. if operating comparing know backout asked So number help one the about an into I'm guidance the million could previous with to looking the of are number income there so million your that's from year; to $X.XX, the that to $X.XX net net is $X income around of we're get $XX -- if of $XX entity… others, about

Christopher Reading

much too detail. into getting You're

there, takes guidance interest. operating is to Our of non-controlling figures those out redeemable which the results

what analysts with apples-to-apples all that's the use. So

suggest you from So work figures. those would I

Unidentified Analyst

Okay.

operating simplify doing for number -- maybe XXXX, trying when just I'm a it let income number because down Company, versus XXXX that; versus just pre-interest me to I'm a the seeing to XXXX is get correct? XXXX for that I'm So actually

Christopher Reading

No, to not. the we into go but results the again, offline give talk to operating you or be revenues line happy I'll figure. of only items. other about any don't it is to that guidance We

Unidentified Analyst

And just you I my in I same-store sales, I quarter at last the X% doesn't just appear notes, think question; had up patient year just year. something for have maybe wrong it Am that of visit any we is reported but missing patient and looking visits, the sales for increase something? a X% same-store

Christopher Reading

and go these they correct. to complete are have Jon. I'd Go back and we'll check ahead, checks, but double triple numbers,

Jon Bates

calculation comparative when in it in not they it's looking in as a -- because the numbers to of if some the you out see it's at pull reported the same-store. it, that financials No, that -- of your you'll comparative within just not and the but period have you're are components certainly current you revenues, it do time you're pulling out over as same-store period,

and in a it's definition a same-store; period when why try some or comparable and a higher, cases might some be reported be that's because the look at quarter So might you of whether lower you year. cases

answer the that's to long your So question.

Lawrance McAfee

when you get once a So then, year-over-year. -- you'll different you're and quarterly, answer do comparing quarter-over-quarter

Jon Bates

through if to. like We can walk you in would offline

Operator

Our Instructions] of question next Tanquilut line comes of [Operator the Jefferies. from Brian

Brian Tanquilut

you. for question first a just Chris,

pull the of work there of because efforts the the the you've know this the put are is optimized point couple about the I to and talking and the structure that two we've next but the quarters cost last drive margins, is all this for for other been at over P&L levers given corporate it and expense higher a margin line about think that left waiting or I to As initiatives in matter just quarters? to through

Christopher Reading

and week of just have productivity percent small going areas, regulatory maybe we complexity framework so we and that or or but grow And to precise to to slows and side, down Yes, while, areas, are do some some a down guidance add to day incremental it to getting next is still where you that's the there on we're handling their been and some new working it drop reporting people the comes people have some arms of the talk overtime, cost room can fairly given some will then of that and healthcare. the increases; standing think we've and quarters we -- comes We in fairly we've know, really a work I again, that levers we it and a things. other basis any added because the some now about get it's top some through -- we of I cost people volume then by of that. the with around corporate of patient have. trimmed other some pull, right continue the team down burden – we offset documentation the that for overtime few partly that's sophisticated in on have of still unfortunately continued some it everybody on on there resources to. in we And number And as that on have reflective our have involve but think we'll get that's our deals revenue; overhead corporate month,

key the areas. are go those ahead. but -- Larry, so And

Lawrance McAfee

an has And basis increased Brain, was percentages, XX.X% gross lot fourth it margin the profit on to and for said, in at up of percentage which -- some climb again, the a annual has [ph] year our the end actually quarter. and accelerated the dollars the a not percentage we've over the when margin last That half year. day spend you to about talked

how day got bottom-line. rate the Now but you're at really starting you to but the fourth that to slightly many margin was turnaround dollars at again to quarter end the the look the of was getting lower in

Brian Tanquilut

now how But to scheduling follow-up PT about I in and you are as I it the we in is have wage put for is it ability ability to you what all is wage be inflation to right reduce together? to that mean does having your picture inflation your flex; your the do able systems flex, and point, to place -- to what Like, I talked headcount? mean and think or about that; man-hours

Christopher Reading

and to be the So what of across headcount trimming we an going idea. get facilities. to there might part-time not lot has I flex a this people down and if it's that is with literally volume here is let away, that grown up so folks portfolio hours somebody because of done explain, hour A me pretty whose it's be according maybe wrong or large say

And not often occasionally -- the that that through that on for would so to detrition occasionally, and or somebody overtime action, person. not we with dramatic it fill they happen expectation part it's up we and but [ph] have brought doesn't reason the the with we'll if it's schedule

you think going stay to it, always continue I folks on focused, to that going more the happens. what doubt we're it to on to is key we and working we're now been and going work tell it's see in I'm on to have not but be we've we'll perfect

Brian Tanquilut

PT? your for what Chris, inflation me thoughts question Last inflation, -- are on for sorry, the wage

Christopher Reading

and so and there orthopedic healthcare but is is influenced we're some couple over within percent has at a they probably we'll mean, the overtime. hit gotten an great unemployment we've it's undoubtedly inflation, I a plays within we're we'll I PT outpatient. really, out Other we see of out the and or have low, buffer are market sector is physical wage a employment little therapy market, mean, in areas PT home really market, been pressure an other for that have skilled so a Obviously, that's how created good attractive a attractive and is see. employment for but this we been reputation; time. us which bit good involved, where it's numbers, segment facilities there think I long in look years, LTax a [ph], areas, there a of always that nursing part, and a potentially good yes, sure. little facilities

Brian Tanquilut

Last question me. for

is is this just a quarter? could factor prevalent the how As a about in flu QX, flu, I short-term think given provide headwind the that that

Christopher Reading

is start out this part up the volume out least was the see -- the the That lighter nobody expected a January hard, have the people but how I at we'll so flu for of a said, when The in when was rest up, weather and some we bit out. flu, think they we the flu of we ended in the quarter go pretty goes people plays and but of February, be so ended the was addition good to season. little and to bad, tough year, where for about weather

starting although guys first down, couple weeks is are last getting hopefully the flu ramp is will know, weather, northeast other a to you think and hit and flu that But the of weather the hard pass I soon. challenge, quarter between on things. the so the with always pretty

is And a and always yet. so March baked know, us, big an not month for important month that's you

we'll So see. wait to have and just

Operator

for floor any over back [Operator this showing At to Instructions] turn closing management I'd remarks. the to like or additional time I'm questions. further no

Christopher Reading

you we wonderful day. you thank your Okay, questions available for attention have time and we appreciate have and really hope a you if offline any We're it. today, everybody,

Operator

ladies and you, call. gentlemen. conference Thank does today's This conclude

You may now disconnect.

U.S. Physical Therapy (USPH) 8 Mar 182017 Q4 Earnings call transcript