USPH - Earnings call transcript Q4 2021 | U.S. Physical Therapy, Inc.

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Operator

Good day, everyone and welcome to the U.S. Physical Therapy Fourth Quarter and Year End 2021 Conference Call. [Operator Instructions]. It is now my pleasure to turn today's program over to Chris Reading, CEO.

Christopher Reading

Thank you. everyone, us thanks, U.S. and morning for for joining Good XXXX and Physical quarter end earnings Therapy fourth year call. Williams, Officer our road the and on Eric General this of country; morning Chief Several team Executive working new are Rick Binstein, Counsel. opportunities Vice half the Eastern for on our the our of Operating President including

of with On we have COO in Bates, Financial Chief our Reeve, President the Carey our here and along line, Officer; the for the our Vice half Western Houston, Jon Hendrickson with company; Graham Controller. me

color I provide disclosure the Before would, quarter, the we if Jon, to some please? brief on a year and cover you need statement.

Jon Bates

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

Christopher Reading

you, Thank Jon.

to and this want So morning highlights cover on year. I start the some

For million XXXX. or net income increased to XX% XX.X%. XX.X% increased million. revenue $XXX $XX.X the revenue increased with Reported compared operating year, our PT

the straight contract As on services was you're exceeding reduced and XX of revenue impacted year, pricing, prevention slightly day on clinic year of fact beginning XX.X% Mature fourth record were most continuing strong. for the Volumes throughout with injury and the for months. up net the us XX.X% revenue at management Clinics from per part March our in were the aware, most year, we XXXX increased year's XX.X% end, XX% latter XX.X% turn per in in Visits in increased dropped for from of and up the XXXX that in year, year, spite those from the were XX XXXX, through visits highs rate, which in to very strong hit quarter. our $XXX.XX were comparable which also $XXX.XX Medicare Visits in XXXX. of very numbers the

at in impacted of by XX.X% of some net XX.X% cost a all The that slightly Further, equation our escalation. Our total cost labor In spite total in the visit. growth along finished clinic per rate again at In visit in were XXXX decreased in impact we in visit comparison. both we we $XX.XX balance of with really percent along inflation worked and as cost revenue the year the operating year XXXX, total were with the versus day. and has XXXX operating control spite finished from pre-pandemically, Medicare, per $XX.XX in visits with costs operating hard at and per and to XXXX, XXXX. per team per

the well this the of chunk performed ending although compared good at with XXXX up a the significantly latter of for you our included I actually XXXX that, basis think pre-pandemic per-visit of year early XXXX, of know, for they've as to excellent period on in done cost majority XXXX reduced and a Salary In the $XX.XX and $XX.XX salaries XX.X%. cost we salary spite job. level salaries at and percent XXXX, and related related XX.X% through in continuing a some Total a part in experience upward on to pandemic the cost year. we of slight well the did year, compared finished held an of as revenue migration in year.

That's $XX.XX we basis per improvement also compared from in pre-pandemic a visit. were very at favorably We that XXXX to year. XXX point where

just contract on XX the margins to basis gross up XXXX, while to XX.X%. basis margin XX.X% XX better under Our ended points gross of profit XX.X%, was points were slightly PT our XX%. $XXX.X million increase at management an year up margins were in down and

very injury no impacted business travel and which expense in down been was finished attended. slightly from prevention a COVID well major XX.X%, controlled conferences at what little XX.X%, with remote Our and very as workers tightly by as has year XXXX

pretty cash EBITDA share, increase it last of and per done, find strong to the our dividend increase quarter X% in XX.X% performance Operating of continued the grow, has on I what the in with use prevention of the in company's an profile XX.X% in that flow our of confidence very but approximately acquired from included difference XXXX. across Directors XX.X% legacy XXXX in income were paid to is we free is despite compared dividend able fourth be business million average going our the XXXX newly margins capital business ratio dividend, with year Operating lower last $X.XX the has COVID, inflation, you'll industrial approximately largest to voted throughout to announced for increased year. space faced to past injury total $X.XX shape. slightly year. from performance get which XXX quarter think the This deployed Carey keeping area increase a in prevention have the basis date, margin XXXX. late still PT to or to injury significant share we our late from improved to our we and debt and our to company of compared going addition the staffing, in good Our year challenges you the of In an will impressive our margin to and while several our review $XX.X the business XXXX, the our deals the which including when of combined in including and reflective points all Board forward. ability first per Response income acquisition-related many rest. X our

and that fourth recall for sorry, quarters, through -- our dividend. may third quarters the for midway XXXX, third XXXX You increased for I'm the fourth and we

year. appreciative immensely by release, of I'm our and the As all press fine partner-led I results produced teams work stated in our

our worked circumstances for difficult only group have and support them, to Houston not the difficult produce office in company. of a well under along times, home functioned earnings these record year effectively in All we exceedingly changing rapidly with have

Our enjoyable, who lives keep services may the those in well-being. and serious things productive, injury, very make overall health as our of a people's families more do more workforce productive when much. improvement for This needs the musculoskeletal all healthy better, stay as time job their with these have suffered and and allows the on along and people help in which documented they our to the to things people at with with nation enjoyable well ultimately, and

would to address for a market, I Speaking minute. staffing labor like of the

our the a the While rate clinicians both characterize increased environment challenging that to pre-pandemic that staff down current it finding I as actually is for slightly right licensed ran would compared team. now, and do time as on to we for turnover for where takes

of minute. a kind for that Let sit

look were a you hiring normal clinical thought turnover percentage most at where XXXX. in XXXX when compared is which to So our as important our actually down we and environment. group, operating being from very rate We as group, we're a

overcome whereas as staff, year for group with the the unlicensed and result a the of and case and some is top on Now, adjustments hard will worked that. recruiting along too on additional of to But are candidates clinicians. of their volume need and turnover, has them definitely we partners off much strong we as growth a our some where needed our stay rate the which normal that result strong very year some to turnover making been of I say working revamp desk have all expansion higher continued support their our front tails require

So a our in migration while and of by area terms for pretty year are good both think job cost is some this in the as an of seeing evidenced done in in Overall, strong terms definitely growth. salaries. cases, we've I environment earnings our also challenging, result we the upward

if prepared we would, as my that cover it guidance for additional aspects up open before of please So some concludes the financial performance of you as our Carey, our questions. well comments.

Carey Hendrickson

XXXX. his the in had team and everyone. many very all of We Chris, you, in remarks. which metrics, our growth with significant of morning, noted Thank pleased our achieved team Good results Chris in We're

Not that quarter received we year these share of we well. full provided is were as per $X.X high than another included that results and fourth fourth in both which end $X.XX million operating consensus the analysts' finished in $X.XX estimates in quarter were Our share of higher the Funds the for than per excluding at the of higher Relief XXXX. Funds at numbers and our for Relief and CARES guidance recorded

Funds pre-pandemic we XXXX. reported highest operating XX.X% XXXX same reported XX.X% of higher $X.XX the are excluding the they're Our basis of on results year for than the $X.XX Relief and for we

benefited which and slight per higher $X.XX of XXXX. quarter Our XXXX $X.XX from of reported fourth fourth levels it's Relief the XXXX, to to to the and for the Funds periods a quarter due adjustment operating which pre-pandemic than in related reduced of pandemic the $X.XX fourth XX.X% excluding results earlier had expense XXXX we compares quarter we share rate benefited

for of in fourth we it of XXXX. of Our quarter adjusted $XX.X higher of than XXXX full was from the the compared of adjusted an EBITDA, excluding of from XXXX, measurement full quarter in which quarter of XX.X% fourth fourth an increase the for and that pre-pandemic was XXXX The year and Relief year XXXX. was million million X.X% Funds, million $XX.X million XXXX, $XX was reported $XX.X to the same the increase EBITDA XX.X%

increased increased over as XX% quarter and our the revenues XXXX full year which XX.X% year to of $XXX.X fourth a XXXX. Our increase XXXX revenues was quarter $XXX.X million full XXXX million over to increase fourth

per year, were visits of fourth only physical And was at fourth per a the clinic finished real XX.X year, Prior the company's history of to month at single to March and full we'd higher day finishing XXXX XX.X. per our the Our this for per in quarter when XX a The per second clinic pace the average team. XXXX. a XX.X. operating visits record for year XXXX, of continued had therapy at day, day our average our visits the full day per quarter quarter at we've average finished above clinic quarter for in per testament never our visits XX,

in the was XXXX compared as rate full was quarter fourth to Our physical full fourth the XXXX quarter of operations net our in year compared our $XXX.XX for and XXXX. for $XXX.XX to therapy XXXX year of of net $XXX.X $XXX.XX rate the for

January net Medicare reflect levels X.X% visits went Medicare returned XXXX have of which pre-pandemic quarter to in our year Higher workers that in rate quarer well rate in into effect than that pre-pandemic downward our which mix increased mentioned earlier. business. rate average included have earlier as rate that slight rate it full yet at XXXX. fourth cut Our not while rate overall on the above XXXX paid some the high, periods and levels, of shift pressure was XXXX as a a rates are comp visits some Also, fourth overall XXXX the adjustment to lesser of I in put related

related one an of XXXX and were XXXX, acquisition quarter the The the industrial month noted highs and Our was over of revenues year of was prevention Chris industrial the injury physical of XX% business, XXXX fourth full revenues XXXX, there $XXX.X the which fourth of was operations quarter services made over increase year XXXX That for included quarter were for a fourth XX.X over respectively. than therapy fourth and prevention quarter XXXX, all-time we the were of remarks. the XX.X% and of quarter which increase that of the X.X% fourth $XX.X million business. million In XX.X% November his higher increase XX XXXX as injury in million to full a $XXX.X XXXX. a

Chris were Our his in in XXXX operating and well costs aligned well were contained remarks our with revenue. as growth noted in

COVID. due services in to XXXX number to visit a to out our needed the in we support we employees to costs the the higher of most fourth the staff increase with had some continue Our increase contract quarter from cost due higher of volumes. per our levels of having quarter record build And to also, the to third salaries as quarter did fourth

profit a the XX.X% increase full over $XXX.X Our was which gross million year of full for year XXXX XXXX. was

million of fourth in $XX.X quarter Our million gross was the in $XX quarter XXXX to and fourth profit for XXXX million $XX.X the fourth quarter XXXX. the of of compared

so profit it full in margin than year those it XX.X% XX.X% 'XX, full margins. 'XX, XXXX, higher of full year for both full in gross the Our was year and year XX.X% was of was

Our year corporate office quarter. $XX.X the costs for were the million and for full million fourth $XX.X

to and is for the X.X% for XXXX full in equity pre-pandemic retirement which of full we of of X.X% our XXXX, of had year basis, If the our revenues same division, were you exclude of office on west X.X% incremental lower than revenues expense XXXX year the costs related that XXXX. the compensation the revenues COO to for the corporate

fourth we which non-controlling XXXX, income as of our $X.X of non-controlling our purchase fourth of purchased interest million reduction the was full interest profits to In percentage interest million net million XX% $XX quarter quarter due attributable XX.X% for of XX.X% XXXX. those partners to in profits. EBITDA which to of XXXX. non-controlling compares our existing the for existing the was interest XX.X%, a $XX.X interest the approximately year occurring XXXX. our Our to XXXX, purchases partners of percent primarily of was was $XX.X year compares in in for fourth of of of our full from non-controlling In our is with of that million non-controlling in The XXXX. representing XXXX, This the quarter

Our in of credit strong. balance X line XX approximately million December acquisition injury generation on facility, the services business industrial and and We including position the for million sheet $XX prevention on our about acquisition excellent remains cash the an XX. November the to in million clinics the of revolving with remains $XXX $X.X added for year ended

was of in at payroll $X.X payable, debt $X.X on XX, December and under million $XX cash. XXXX, in $XXX taxes CARES, million in which includes net million the $XX.X our Our facility, net credit notes our million, million deferred

XXXX, December million. debt, $XX that's was net it So

debt net XX, XXXX, December was million. $XX at Our

but So in of paid notes taxes from interest partners in non-controlling invested under million, back funded net off million fixed by and acquisitions $X.X we only which we million, million increased of million, we we paid million MAAPP $XX in debt million totaled all our million. position deferred $X.X in CARES, paid approximately our of assets, $XX.X $XX funds, payable, we XXXX, dividends million totaling $XXX.X back in purchased $XX $XX.X payroll $X.X paid

tremendous capacity cash low them. we leverage opportunities flexibility and us for strong our and with growth as Our generation provide the right identify sufficient

we'll to successfully XXXX. In reductions to phase-out operating effective our in the in all and to it second successfully to we results applied team's quarter the rate the our quarters the and these which applied We per which of announced: about operating XXXX so reduction XXXX, and a Medicare of ability payments of range prospects As per physical had approximately January manage optimistic by in the reductions The our managed following, XXXX, rate release, to for expected patient reduction we're assistant therapy results of reduce year of sequestration do considers X% we rate XXXX. range the rate are of decrease the through $X.XX XX% previously XXXX we're which XXXX, a care we also XXXX. our for million, for very X.XX%, to for through third all provided relief rate payments $X.X a revenue again. look a in $X.XX rate the X, Medicare provided the X% confident $X.XX a amounts Medicare reduction reduction a the to XXXX and share includes to in of for for our Medicare full share. year by in Medicare Altogether, approximately Medicare and fourth

represent our Medicare visits. total information, a As of point patient visits of approximately one-third

share XX% operating X.X% As make results, range in Medicare increase including rate back our implies -- potential operating and XXXX. we guidance to in that, I'll toXX% results Chris. in turn rate reductions, increase not the X.X% reductions. an a the the Medicare any With our it does usual, acquisitions per to before The include range a may

Christopher Reading

Yes. Carey. Good job, Thank you.

Okay, I'm we have go sure operator, questions. ahead. let's

questions. So go up let's for ahead and open

Operator

[Operator Instructions] question from Securities. Larry Solow CJS And we'll our take with first

Lawrence Solow

thoughts X if minutes QX, us the And just know of you how the you figure of give but for quarterly, and not than but had situation there. Just I of the level. that? a should great then who flurry sales guidance. about sort without to in would can cadence, quarter, we of, same-store quarter terms guide is be -- of you trying days questions Can employees quickly I all part-B high of of it the same high-level the so -- worse any missed on might first call the or thoughts was are or Maybe you in just that -- sort so obviously their then, guidance. question if especially I directionally, first think self, wife rest there's somebody, X a the year, don't of their couple on maybe give it early us on some thinking what the had guess, volumes? And know your brother sort had just big the out on in margin we if COVID of any we our that just how it, the cadence a be

Christopher Reading

Yes.

me Carey cadence it kick the on other. the over let do Let part talk, I'll and to me

So think for the right. cadence, I exactly you're

a begun result you're quarantines But infected last thing over has of improve of CDC right, but couple the a lot weather. combined periods of lot updated out COVID the out a For and shorter and dramatically and folks going were quarter, while of have in for lighter we will January quarter, doubt. first quarter on heavily the I Omicron, weather, we were a the the no whole the to first be between positive in first note, year, tell quarter's which with the you weeks. to yes, shorter people and COVID, always COVID, guidance, as with

got week work. We're again and some rest through big we've being it'll weather this Drop-off drop-off to rest of the the through we're just but the of an getting seen to then now get a just weather going improvement, there. get we So and it.

Carey Hendrickson

XXXX, the things inside And, far X%. north considered, the Mature as or a rate, guidance to is it's the to X% bit all Clinics and a net then built increase in X% about of growth in and X% -- about for with Larry, as little volume be Clinics, expected within the Mature in going down

Mature pieces XXXX. forward a think from Clinics. the had what we I that from in quarter probably of then that's should margin going fourth the you So And expect something like standpoint, in

Lawrence Solow

price, of pricing. terms Okay. And the government we know in obviously,

So it private about commercial seems pay flat, sounds like, it like is Medicare, right? you're assuming pay

Christopher Reading

a that shoulders Yes, focus Well, placed it's in detail some kick assumed and We've we're the can't the some on around of fill in that into the to we've something as yet straight that Yes. then yes. budget an just dirt a aside losing we off year very result program commercial enormous great help will that from payers, we're contracting with I capable to go about contracting Medicare here. but think a cut. this of

And well. of so the as that's that we're cusp on

working So we're it all it focus a and on year will for be sure.

Lawrence Solow

leverage not I is care just I are mean the you would kind I'm your over but mid-term, that, right, push immediate on you of right? some inflation, the of I -- them always cost going would I payers sure mean think, but back maybe the term, in against And think some to we there have leverage. got

Christopher Reading

don't have that's a don't understand payers go cost up, are is if that seem if rational but going that to I be would it's Yes. everybody's to problem. up rates it know and response going to leverage, certainly

Lawrence Solow

And just turnover. last then question on Right. the

I clinician like right? sounds staff guess, you like back-office more really It's it for not a guys. admin that, and So stuff it's issue

Christopher Reading

you, will it. and Yes, Carey to speak that, even can say with I maybe will I tell and

and tell have to if with this the so, Our many year you in year, know cycle people have but some even them, to really done and hats people to I couple group our just great cases and don't you Carey, they years in stepped not got ways, of the any. struggled year up this a that, replace just But has off I for quickly. last revenue so job

Carey Hendrickson

that in few made previous years, able year, our billing were That's headway line some certainly central close and a been ones kind all of well and more team -- our we just I offices we of with had worked the our pre-pandemic hard throughout were billing and incredibly profitable the in --despite move And this to mean them our We of -- to with in keep things. XXXX. they they've year. number employees where the collections

Christopher Reading

We did great a Yes. job.

Operator

next Our question with Jefferies. Wissink from Steph comes

Stephanie Wissink

have contribution you on another make kind sequentially in of how correctly you those in back. the of growth And the just organic about Thank expect should the follow-up business into last you build of as to I sure terms cadence. late-stage all you completed think nature year, thinking the productivity from for how wheel, of about the information, we're I acquisitions do we that of you question of plugging hearing 'XX. acquisitions want be just those to everybody. the kind the

Christopher Reading

Well, have in the the late will certainly the the ones through benefit this -- will did we entirety year year. of

think in we the small So deal year. one September small we in had injury June, one of a at the of the right then and March, we the PT prevention had at a a end prevention a of then -- deal I at deal end November, big end right cadence, had March, injury in

of for So or the with between with coming all weather cadence January mention had February accordingly COVID. or first more week the so weather. gate just in first layer the the for and to maybe COVID sure on and those of in will out quarter. environment do My January

anything see forward through equal And not than I our more see cadence think you this will therefore, is typical that the some really so, again year. which quarters, weighting but we'll and weighting

Carey Hendrickson

started like and we out the do. issues of weather the we're things of and kinds getting QX normally this just because having kind is us of always for as lower of gates, year,

it was begin and course so typically acquisitions, quarter, up is on then the the quarter of typically is one a -- and fourth point quarters. second I when of quarter XXXX that that continued for -- or did in would the the last well. the case in rest pattern. the a is, quarter to little April would sure really And second pick a I and bit part off the the that the for second that slower start typically summer is third that the expect is from I expect lull The as would along, volumes are of March and the little to November the bit year people year. has off one and because higher quarter the of But perhaps into largest And and and November being in grow as one. first think goes that's And hold of year year we what the from that

Stephanie Wissink

observing And hoping little sounds of I'm can a terms but my over we've in like that Omicron business intense the what or compare of help Delta was time. your and you're recovery just think shorter us more through in you Omicron. how bit period COVID bit that up a of kind It is contrast on a Is of kind seen. your then versus waves of you impact a assessment would fair follow post-wave?

Christopher Reading

think us come Yes. precipitous alphabet off shorter better. assessment. -- the did but fingers pretty Definitely we and not and the out had Omicron that with settled actually it's Greek people right with Omicron letter doing but been now down we're crossed since has there have for waiting things even is so out-time than was fair we more Delta, drop I was another

Stephanie Wissink

on one flag underlying the recruit you've as some retain completed. to the up want acquisitions novo labor is in ability Last hope. for into you're considerations of or any just and on environment Okay. you changes about growth to and We're us us that with staffing de then that for your thinking that you'd

Christopher Reading

Yes.

They're my Let that and COOs so Graham. them front me lining, I'll to over to Eric comment. kick let

Eric Williams

very staff this we're terms our terms points open again, earlier. in in in Chris, biggest we're rates huge office difference well. X a investments Eric. of additional there ability staff, the recruiting, success mean, challenge turnover continue for we to a you that the I The in made made additional Yes. as adding department had as our turnover is competitive from there From to but down for is be pre-pandemic backfill the of recruiting But Yes, perspective, XXXX. not positions. turnover percentage about there recruiting mentioned admin front out rate's just high. and clinically us rates still having And

Christopher Reading

what both novo since could the speak looks for overall there. to de East like novo you you impacts for or staffing and we pipeline? and if year want the to meeting. West finished Eric, that pipeline de how Graham to and just novo this and Graham, you de speak Board

Eric Williams

Yes.

de an even it did in we We piece impact out expected a the permits up timely basis. strong That really but actually pipeline, as from very slowed on on bigger well. to see the is de and contractors us delay. de really pipeline novo result actually really, of, here staffing So strong for for novo front, Chris, was facilities related environment had a a staffing. again down. open The novo was as but the XXXX, very, ability there more But get in competitive to XXXX a bigger

Christopher Reading

answer? that Okay. Does

Stephanie Wissink

does. It

Operator

question Larew Blair. William next from Matt with Our comes

Madeline Mollman

segment. Matt Larew. the touch Prevention I for on Industrial Injury on to Mollman, Madeline is want This just Hi.

We to do be segment new started for the clients wondering in trade restart? shows around declining, that conversations now are is when have of just that you And for to kind sort acquiring expect Omicron -- have have of you you you industrial be the that's do And that going Do in interest to services? to then prevention segment? will think that current pressures there? employee as catalyst the you think and greater environment for a growth currently a lead injury labor follow-up,

Christopher Reading

Yes.

So let unpack me that.

So first shows. trade

I've shows. I do, yet I many I attended don't trade haven't, am we While think hopeful.

back sometime that is later. those come will I than hopeful the think team year this sooner

most normal kind back get of directionally if think to way. everybody anxious headed I that is to very not

as go. all we Our opportunities new new talking opportunities time. ability, we're We're to the signing

will labor wonderful the we got certainly face done there trying the that we've impact has the a to we've staff ability The another. I and some impact think a if In that, got of to job. ability, labor -- environment. help currently to I'm think remember this. spite find a, to does opportunity that's and face been that the accelerate opportunity team felt. we get new then I of environment was do labor signed our environment to The that

pull So sometimes we go person somewhere an existing from X have different geographically ability than people a clinics take that satellite always one seed may else. where the to opportunities, to we staff don't or from

normal. So to be to kind from these scratch. we and longer a little They of than taking find bit have recruited people have onboarded

we So have that's track that the our go clinicians year that been as unfolds. good been we some Since forward. of also able I'm as impact hopeful to will but improve

Madeline Mollman

M&A. just on then quick And one question

some of do think moves uptick been the unfavorable this you pressuring that's an related inbound M&A? Have non-providers? in you to Given last seen reimbursement year,

Christopher Reading

We're now. busy right

scheduled active. necessarily our think get I are the have time we We not much partners and not that environment -- calls in partners -- more always translate and people large, partners, to don't which I'm attract about the talking acquisitions are do we've but smaller, tuck-ins, than don't look always don't I by inbound I'm immediately and but that our cautious ahead kind of too now. some afraid. had calls it's close deals, far because

do to time, series they resources, afraid. are just grow. to or not from What tuck-ins are time people do to I additional in in that, maybe I yes, They're share boat benefit we've want some move maybe to but capital think lengthy need infrastructure take partners think their that and the Our to any are little we're they table cases people potential to of resources opportunities some up off many chips is the been to storms causes to. resources seeing storms they look certainly resources markets and next talking think the bigger it a But that ride are creates have for continue and a lengthy to that there and -- I in. market

So be I will it think helpful.

Operator

Ramgopal comes Sidoti. our [Operator next with Instructions] And from question Mitra

Christopher Reading

Is person you maybe Mitra back don't questions. Tell possible? go him you a about and always we minute. to to what, asking next is Why good in come that can the

Operator

There are questions. no further

Christopher Reading

Mitra, Okay. call. All a right. us give

following for immediately and a your I work my not I'm this We well, great through day. interest call for the Thank and and morning. done Carey We on have time you, Sorry all I you sure everyone. available of for they've team that but all. your this the the technical rest time, thank appreciate the are thank as day. the difficulty,

Operator

This you Thank your conclude today's for does participation. program.

may at disconnect any time. You

U.S. Physical Therapy (USPH) 26 Feb 222021 Q4 Earnings call transcript