USPH - Earnings call transcript Q3 2018 | U.S. Physical Therapy, Inc.

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Operator

Good morning. My name is Tammy, and I will be your conference operator today. At this time, I would like to welcome everyone to the U.S. Physical Therapy 2018 Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks session. speakers the will question-and-answer be After call now Mr. [Operator will the over Instructions] I turn to Chris Reading, Chief Executive Officer. Please go ahead, sir.

Christopher Reading

Counsel; Good Binstein, quarter McDowell Reeve, West me Vice President Okay. Controller. Physical and well, include -- Graham you. morning, Chief our our our welcome as East; and and and Thank Executive McAfee, to and Therapy's Jon here third Officers, the Financial conference Chief on With and General Operating Larry call. Bates, Rick line include everyone, U.S. Officer; Glenn

we need Before to a brief begin cover today's call, we disclosure.

do So Jon, if please? you could that,

Jon Bates

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

Christopher Reading

tell before that relatively our lot you, numbers, my initial with ends people, Thank comments of really performance to In Glenn, keep a good I'm so Larry reviews a me. Jon. let XXth with begins and that. our brief couple story, his going which Larry with earlier, story will the XXth before just me company. celebrated I couple of months a of a celebrate begin month my and days, anniversary but

Michels, along Texas, Kevin still Sue very People tremendous the XX us [ph], and nation. and arrived around Bob with Tony Parikh, our day. all a though, with North us strong; groups Cascardo, importantly, John make along capable here long and in year Sirabian, every we we year Jeff patients, Scandon communities like single with ago in continue XX the anniversaries, Vijay Sims, before at going and Hale, years which years serve out. of anniversaries they our More vast between invest going JP celebrate majority partners of the Clair, it in early in Dorf, the David to they In those lives our Mike Thibodeau, difference

Virginia, very away partners going and in record therapist up including serving they in Laurinaitis successful more, and partners are adoption. the partners our employers first acquired more little and in serve. within many to in come ago locations, large pediatric Jackson, we from and clients Northern our Mark of have to And newest a working who among and positively back had in are growing stepped environments partners still partners, see a Northwest time, lead blue-chip get period meeting, our stronger. await stepped Briotix a as eliminate hard. who with from a these far and reduce the fire delivering to and run healthy, to every and and our a being of where and partnership, get new many XX on trails and group the snowboard Got many what of excited he and Caceres, with few teams where so in in Jaime lives at weeks ownership Anna better, very where difference they and than the dear U.S. healthier every And still incredible work Health, we're partner of while work XXX our our effectively by injuries and create employees company one partnerships absolutely them, like partnerships even a like Keeton, Pacific Ben XXXX, newer of Show in day. Richard to young blazed tirelessly day deal to who make And where partnerships. children, short ski teams And wait years as portfolio we Mark China, athletes our faster friends to and Star does those the orphanage home and at at some stronger the community their our our To partners of for staffed Hope, largest impacted now their able of in some their about and friends

a So in thanks summer out teams and ended our summertime partners to all vacations who of very the good being we what and school and doctors, and many, along quarter has more us. many hard Normally, ops patients. up support produce a those with seasonal have slowdown worked for clinicians being for to

accident. a the normal of work and season. us. strong a somebody fall by pretty for the order our good of teams That need in of slack to we've focus into by happen clinical bypass to up It season, sports takes right of pick lot in year, doesn't provide able patients care to dip Although really which that back power busy time is fashion result through and our regardless been is a when the out throes this the the generally level

I So their much this once continued hope appreciate understands today how and efforts. to team our call we listens

as For margin strong our well with been really, growth margins strong us Industrial the has in for with quarter, really the direction sunny And a in especially expansion volumes good same-store push in obviously, with right number. prevention as the volumes and a were good all year. helped Mature to PT spot side, the pretty generally well. there the coupled cost Clinics, control

work rewarding personal many is what a has a cover lot great close those alongside proud more been journey and time details So our more I'll in people, saying one fashion, granular so into am how great years by Larry? for me. to while team to XX Larry going I to

Lawrance McAfee

Well, me worked now. all you got Chris. up Thanks,

quarter for results consensus So share, our $X.XX $X.XX. per was the XX.X%. We operating increased earned estimate

compares was last time $X.XX it That solid obviously, So the to at a $X.XX year. beat. same

highlights results of a the months, hit the as $X.XX year to the earlier. to going quarter XX.X% have nine I'm right, first. third For increased to compared All operating $X.XX

again patient industrial million acquisitions, related and in I'm the an the $XX.X some to $X.X revenue prevention million from was a quarter Our X.X% revenues and the revenue business, to PT from million to patient alluded business revenue industrial $X.X control. million. primarily both growth prevention and increased in which visits million the in increase, increase from acquisitions, to in Clinics. PT related net operations increase operations over good cost was injury from Clinics to growth did to X.X% contract The or revenue, $XX internal average management increase an increase in increased attributable our internal or increase an due Mature revenues X.X% to $XXX an million $XXX.XX. acquisition. Patient $X.X in both $X.X to increased as New Chris and due -- to from an sorry, rate and We $XXX.XX in $X.X injury Of to million million XX% job, which an

last were revenue, industrial increase million same in million XX.X% Clinics to and Of to quarter year. XX.X% of $X.X Our from of injury million, prevention $X.X business. the $X.X the down costs total the was attributable New

represents points percentage from the XX.X% at actually by basis were good of XXX XXXX. profit the third grew XX.X% prevention Mature as which $X.X And quarter XXX PT $XX.X doubled for margin better year period, earlier. million. for gross a the profit in or than than business year industrial percentage of costs ago. compared increase operations their the gross by our increased more The Clinics, XX% to gross we to While profit $X.X to a point XX.X% in million to recent experiencing The the revenue quarter basis XX.X% reduced injury million. third growth, XX.X% or a operating

revenue in X.X% Our versus corporate last of office the X.X% third at costs year. ran quarter

by Our a recent as reduction. year XX.X% to was ago Same-store the operating highlights to of income XX.X% increased I'll X.X%. hit period. to which now Most million. volume, that by for And nine taxes was the before the increased income in XX% revenues compared X.X%. $XX.X attributable month the the of quarter provision tax increased

Our versus interesting $XX.X have that to to patient of net X.X%, attributable revenues Patient million, or increase majority $XX.X primarily that Clinics New note Clinics. to $XX.X increased And XX%. nice the increased note from Mature due million revenue increase operations volume. million in is year-to-date, it's PT year-to-date that over

since gone of to in $XX.X year. lot business quarter million. the last XX.X% the business in industrial obviously first just Our a has revenue up injury got It's from prevention up we

total Our year-to-date operating ago. costs of down from XX.X% year a XX.X% are

XX.X%, increased year-to-date versus has XX.X% and a year-to-date improved XX.X% profit million. XX.X%. has The industrial gross prevention percentage the of PT XX.X% XX% business from gross or margin profit is gross injury to favorably compares by The operations gross Our profit $XX year with XX.X% ago.

Our year-to-date corporate office versus are X.X%. X.X% costs

last is year. And to Our has the million. operating versus increased year-to-date, XX.X% XX.X% income XX% income tax provision $XX.X

the while were For up the have X.X%. Visits rate increased increased X.X%, revenues same-store X%. has year, by our

the to company's by other million. year-to-date, the announced gave again release, million. In third raising to XX.X% that for $X.XX guidance increased initially be results we million terms quarter, again. first the $X.XX grew earnings of We to financial the to X.X% it million We company's currently in In per we're in EBITDA and $XX.X $XX.X the the guidance. measures earnings And raising adjusted week and it's for expect of of will raised range March we're year $XX.X $XX.X it or August, share. had operating that in full the

Xth. less actually excellent. of over As be and despite for expenditures million, $XX.X been has on having I quarter months made $X.XX meaning fourth will And XX our paid debt million operations in reduced acquisitions December cash cash our finally, by net as $XX.X flow we've release, debt, the our of noted dividends past the from dividend

Christopher Reading

we All happy and them. the right, sure so address great. have we'll let's Thank operator, questions, you, up that, I'm to some With Larry. open be lines

Operator

first Solow [Operator Securities. with question Larry you. Thank And CJS of the our from comes line Instructions]

Larry Solow

Larry, the fine-tuning I And is you, this pretty of that. been XX whatnot. the supply salary ago So on of sort for sales thing Great. a in I here. in was so the details maybe -- Chris drove not Congratulations seasonally organizational there improvement Got think year time, for you've what of Congrats improvement think structure good normally really to Thanks, good that ourselves guys, XX more us a run. quarter, this Glenn, only on guys. good go further was you low in but clearly that. impressive began sort you the sort I at that and fair with it's at slower a besides margins. And side? side, quarter been room -- and a that enough, years least? -- a Can know growth just you on quarter to any little the On give your side big your years,

Christopher Reading

we because more shed learn win we ago, you struggling a too I'm stretched a say light to on were they cost. is ago doing year I some people go. room probably learning year think the some, a A And on the And learned see. what were to little going far. you We'll some. just bit little we we

to of trying we're that. be so And mindful

team so our about those enough we done with we're this say great traction last additions of of level And particularly We on year coming level. just good operations getting the want the to hard added not at have with part an investments, working have the And can't how opportunities here. those those only a really I just some on, to our this. with added investments. in operations team. some the And made director upper Everybody's and teams year but job. our and meshed into say decisions focused with. folks sales early We also I within And Graham the sales at folks, team.

forward. On quarter's our recent most lot. a improved side, margin to and caution I the really take not industrial just have you that margins project this prevention would

learned and redundancies. be some around and and we're really we've the we learn, people have and is mindful growing fast to in that also that the win As to in invest what business really, we infrastructure create

a hard be information you do wage the that's our as are, so as But I to as good that little going I'll And deal margins I yet of to we'll prevention it unclear settle to we'll the we've and and that far, just volume we'll expect pressure driven, it's they'll are with don't stay guys to the able been on so continue continue do piece to effectively very where so with where best work know that. leave been economy if there. to is. business. continuing see with but And they But with see.

Lawrance McAfee

note that to two year, I only think last suffered fair quarter it's the from third hurricanes. in we

So our growth about X.X%. visit same-store is

what the just terms If of any been strong strong. whether for you just talking It $X.XX still patient we've But hurricane still, year, take we look a it in would around $X.XX factor we're out measure, is or been would very, that or better earnings, the X%, earnings think factor, year have reported have about then I hurricanes. obviously had volume And for which or $X.XX allowing at you if very last weren't it even very growth. ago. about

Larry Solow

think I occurred, a I think year. a the point you And think had grew whole Absolutely. when it percentage yes, X% impact, on I they only last like So Still, same-store? hurricanes was said the right, so.

So obviously an factor this unemployment on but to your referrals own really but on obviously, has for I mean, guess, -- the for level And a a I guys, little driving easier bit business, driving clearly borrowing great and right? assume? macro I year-to-date outside the is whether a a help, you low I doing number. of of X% job, thing comp, the guess, strongest good that's

Christopher Reading

employment's It doesn't a Yes. for good know. I I don't sure. while. mean, for hurt pretty been

had and in despite not realignment the a there's And the I and and I an will we're that, think job partners well. helped our focus a our week we've you challenges ago. in down I they're some But realignment. I, so in responsiveness and that think the sales as just dock there, great perspective tell market hospital country. done or just operations I think has seeing addition business, of around some Nashville, our we Glenn team but really just they've And some -- and were from -- growing Nashville in all with and

So partners a hats really them. done good and job, off so have our to

Larry Solow

Okay.

efficiency bit more yet of improvements, a sometimes Just on measures light to happen lastly, give your those. some us little the you have

per or visit I per think visit. per units it's patients clinic the the

Glenn McDowell

better that. Yes, Units were is the been is year time. XX.XX, per got or we've bit Visits was last was averaging, at than our is and same a third This per little XX.X. referral quarter visit per it I've is which where clinical X.XX, Glenn. which around the FTE durations about visit running in

Christopher Reading

and that's ago. per visits I have were XX.X, The them? in I the Yes. don't for a day see numbers don't year quarter. Do clinic per the you third know

Glenn McDowell

I improved. know they've

Glenn McDowell

I what. if they've in or range, the were the don't XX They but improved whole visit

Christopher Reading

Yes, September have visits they've strong. in steady been year and XX got over very and all

point for we've a sure. So able to been grow been and that's high

Larry Solow

Right.

Okay, Thank and great again. guys. congrats

Christopher Reading

Larry. Thanks,

Operator

with from comes of question next Brian line Your the Tanquilut Jefferies.

Brian Tanquilut

Chris, why obviously, that business. anything that's volume reason now more you right Congrats, mean, we're to specific share or strong you've and that. Hey. driving just been hi. healthy Good company-specific or is been can organic that's structural PT you're sustained macro morning seeing driving seeing is gaining guys. that on point has the this I more growth? But there you that sector say the more can

Christopher Reading

on particularly and eye new a that us around able with there's then obviously, focused we've people. of again, best group the And world to things and focus the the partners is for sales their team the And our with got be continued while, here deal without I with. and there's have noise noise. who believe that lot training backing support support on with And a to hiring There's a to today's been finding that our taking and both competitors regulatory We the helpful. ball. off do those the extra and have deal to challenges resources the to with have in work for directors, of lot sometimes partners sales.

don't thing of I have a but can And a But to, point it's think that think one -- difference. that I makes things. so number that's I I any

Brian Tanquilut

been the or how stable seeing does all all level I I affect of at the very that potential increase and you you inflation? because does places, we're in all at other any despite Are And at for then, see cost, you I think that. worried that's Amazon labor? of Larry, minimum wage like mean, that these appreciate growth. No, mean, about the low unexpected And do salaries as

Lawrance McAfee

the do the to volume. with able over through Well, because same the some attrition costs patient the extent, you're more margins then to last we is controlled had improved staff, year and way

We minimum higher on side is we the wage, don't the hiring therapists. higher are cost happened -- strong seeing but economy. with paid lower the And what's for with pay turnover the side low new on normally

huge definitely hasn't -- in we but as necessarily So the it have a been had higher impact, inflationary economy. turnover result like a front-office of staff seen our strong

Brian Tanquilut

call ticked a forward? there Is Or you then, be anything there? down And do to using out also Larry, provision account number think the the more. noticed that's going doubtful right I to little

Lawrance McAfee

lower at we quarter-to-quarter. would normally, It be say run mean, to X.X%. varies to probably about say that. was it going is been It's average. used going than I X% the I to from

Brian Tanquilut

then seen your there? well? I really Or think cash for guys Free And to out Okay. this the the are call we've strongest me. just flow humming as one-timers? question quarter. last Anything generating good you along record is and cash this was Any business is

Lawrance McAfee

of of Yes. the mean, getting used average about age well, line a you didn't the of the because change we in at There's than to days, a cash It's ago. to. in bunch up have your cash collection. so XX% tightened -- bottom free running not you from because laws, receivables our nothing I we're tax changed the receivables our coming year flow, XX And more has

right So a off we're just lot -- it I was cash of mean, throwing now. just

Brian Tanquilut

right, awesome. and guys. Congrats That again. thanks All

Lawrance McAfee

Brian. Thanks,

Operator

of next Sidoti. the Ramgopal Mitra Your question line comes with from

Mitra Ramgopal

getting IPP now. first hi. business the the you success more that interest I along. wanted going in you're there the building acquisition, Yes, to side And you're the of guys. scale look as or just acquisitions, with start given Good of that's morning, if terms on how

Christopher Reading

Yes.

and interested in we the find integrated in did Health the last goes and only now to that and work, in we're to work the that in, expected company combined to all deal I've call, done. But into And call, those. work can invest we basis to seems and space, we'll doing said into as the that as of space there's last doing right offerings but things been the we potentially continue pleased be on May that's obviously that. lot has I be of Briotix continue as not when the support a There's well. on in So well, a have, of some to the mentioned still that invest we and with broaden progressing to

so active PT And we've that and opportunities continue in prevention There's a to the to out. it we'll is be organic element we'll all in along, industrial these attractive, as companies the active have also those bring growth and great team in space industrial we selectively space been space. embedded with that be prevention a strong makes

see do you'll So both. us

Mitra Ramgopal

of Okay. in the No, that's in change you're pullback wondering the look Larry, great. opportunities? seeing recent I light it market. And affected valuations as we've potential was Has if any you seen at

Lawrance McAfee

I we're for at No. The looking at, know. been range same looking paying the deals years. several we're we've don't that

Christopher Reading

price Those stock way folks side. this the I else our from other one is. looking or at aren't nobody mean,

really though now a have So have think lot. continue changed conversations. great we're competitive to right market blessed and I attract a it's whole people don't to and we good And multiples

Mitra Ramgopal

was easier also... the for of little private I a hoping making little No, things maybe you. terms will But equity guys ease up Yes. a in Right.

Lawrance McAfee

day Journal that actually Higher is us know. in this highest the five help saw average the The it's rates I year, interest in years. don't leverage I standpoint. used that other from the been probably But

debt. they're on keep looks it So more like piling

Mitra Ramgopal

Right, right.

have have additional you think terms supporting sense as I'm to driving terms XXX cetera, talked base, you in in Okay. et And know a it I at us network front you you force the about right now business. look support? of the as provide in the you need the you of wondering, just and sales add on that to do give to clinic

Christopher Reading

their do. in happy to how a on respective territories. look And to add, are it I'll at in Glenn let to and speak the Graham they it terms that speak deals continue we broad We Glenn base. to particularly of

Glenn McDowell

right Yes. reps total XX the sales now, we pretty company, sales still XXX The for covering about hasn't I That's number really clinics. have us. overall mean, around changed. in stable

reps. well of larger add look We opportunities we continue our pretty markets were might for most covered. sales where major urban additional But partnerships and to

Mitra Ramgopal

mix I Okay. that's No, know Larry, don't if have handy. And great. finally, payer you the

Lawrance McAfee

is segment. based Yes. quarter by the This revenue on third

private the was from care, comp came companies. really were XX.X% managed insurance XX.X, X.X%. Medicaid combined So then Workers' and Medicare XX.X%, was or and other

Mitra Ramgopal

Great again. quarter. thanks Okay,

Lawrance McAfee

Thanks, Mitra.

Operator

with [Operator Instructions] your question Petusky Research. comes Mike next And from Barrington

Michael Petusky

Good Congratulations of some Larry, want is on great maybe industrial there XX morning, business. business? I segmenting point the guess, the start at on XXXX Hey. some that I any to at thought soon, out years. maybe or point, guys.

Lawrance McAfee

to it and some growing it's way more report any a business the do we'll at Well, if segment. we as acquisitions point, have

Michael Petusky

I could that Okay. mean, be...

Lawrance McAfee

get more trying to We're color.

you and in and look the you'll on Qs Ks, more information more If it. see

Michael Petusky

could be as as mean, early Yes. even I doing be that 'XX, can or... that you that

Lawrance McAfee

He we hopes I not don't it. do much now, a right here. report But business so segment. because to before talk have know. probably don't Jon's to going

Michael Petusky

obviously, growing how you on Okay. just right think area? of be that had need I you yes, I terms out have in bit to And sense are maybe -- industrial. little bushes what the is. M&A like do front, in might beating about it's related of still I terms pause business? mean, in M&A the of fast side of now to Or do a you then mean, that that there you there it as a that

Christopher Reading

with comp-related get develop to team, this on Yes. I've But comfort really we're I better I'm feel a and on I'm like lay to their tell to Health side. talking at the handle of of a our I on side the good largest to team Look, is constantly just PT in new handle what people. going the land. the what need country a no, coming in same group, Briotix that I'll got December. and for kind the least, it's to that out be think conference a I me area. new, going there it's up you is

time. I develop over think opportunities to way that's the

finding it's us, For about fit. right the

going look for And and so going that and We're continuously opportunities we're takes stop us. start. not where to to see

Lawrance McAfee

we other we and were They talked they that When as complementary all overlapped. growth highly then and then internally it's regional we of people we surprising business thought It's national to is but think clients is. -- bought groups, I how had interesting. clients the think a almost of be, at would it let It's And lot to InSite Briotix, business be of only eventually markets. because our would it the businesses. the come will a and couple the would you concentrated in certain

Christopher Reading

so and In let different have like different or distribution, footholds certain industries, different companies utilities in transportation things that. be manufacturing or strengths it industries,

product may they though opportunities verticals for us. up other and opens even So have similar lines,

So we're to going look. continue to

Michael Petusky

easier businesses you facilities? it integrating Or little is different them of PT tougher of integration business kind of the those it's leave just because years because actually the basically a last Is alone? than XX

Christopher Reading

integration any is think don't easy. I

it so... because you you always And people have and have people. to pay matter, think I to attention

Lawrance McAfee

acquisition, I'd more stand-alone. because into stay an we difficult say we it's Briotix entity, whereas, and when do InSite one normally, they combined

Michael Petusky

one. Got you. right, last All

both Just terms or of in were as sense mean, forward government and year general hearing that over next pricing. your the I terms what's on of outlook two? you look commercial in for pricing, you things

Christopher Reading

in kept some little don't have that even some year's In end coming aggregate commercial higher people the good this a to pricing really and have guess. update of been saying is a I've pressure, don't I slightly. that. for I up case, foreseeable steady, we're for for be where been offset the telling at that have of focus little consider a year least this continue so year. expect or relatively for We year I and I that government mild future, and years. pricing, until a what would kind I sense the won't bit regional two the has with flat pricing that environment the so with for to Yes, a ever us

Michael Petusky

it. Got

So last one, I promise.

I for this XXXX, modeling about, flat you're down, if to right? slightly Larry, mean, that So is

Lawrance McAfee

the We're turned middle to would Well, in actually pre would it this the we because rate. use we rate. forecast, out It's our budget normally the at of now, slightly budget actually flat up. budgets done of your be a cut. to rate year, I but flat be net Medicare

Michael Petusky

Okay. great. All right, Thanks guys.

Christopher Reading

he Until knows certain. for

Lawrance McAfee

we what set Medicaid know it. until Yes,

Michael Petusky

No, Right. guys. Thanks, absolutely.

Operator

line And your the next with question Stephens. of Dana Hambly comes from

Jacob Johnson

Hey, for thanks. This Dana. is Jacob, on

if I'm next be could not therapists preparing front, for year. Medicare then that are mistaken, Program how think how case? Quality I in if you? And Reporting physical will it participating you MIPS the the so, impact Is the it? On And

Christopher Reading

Yes.

So with our our year, in there. working into that we then lot we'll and a and facilities limited the not compliance particularly our that. really office us hard. the There's out for our first we for XXXX are XXXX that's expert and on a preparing scale work will here that clinical is on PTIP teams the goes basis, services so of very in XXXX. that MIPS from ongoing But yes, have that begin And to roll I'm room,

Jacob Johnson

some years? these maybe program look you operators on some of in sell pressure And practices Do maybe that. physical to their like coming the if maybe have that up could following therapist older any to sense

Christopher Reading

yes, Let's But old regulatory perspective, here pick up not from I XX age been think some guys, a years. challenges opportunity I've aside create sometimes.

the consolidation it or providers think that they phase, the certainly And forward. so have get small resources. when for continues pace as I challenges so many accelerate, market's don't magnified goes whether in same at And a any

is way I right -- think just it now. the think it's that's So I yes,

Jacob Johnson

congrats Thanks for time on and years. it. the your XX Got

Christopher Reading

Thanks, Jacob.

Operator

questions. And are audio further there no

Christopher Reading

an awesome day. now. Okay. Listen, thanks, everybody. attention. your Bye Great and questions. for time Thank you Have

Operator

gentlemen, conference that and does conclude Ladies today's call.

You now may disconnect.

U.S. Physical Therapy (USPH) 4 Nov 182018 Q3 Earnings call transcript