USPH - Earnings call transcript Q2 2022 | U.S. Physical Therapy, Inc.

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Operator

Good day and thank you for standing by. Welcome to the U.S. Physical Therapy Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I’d like to now turn the call over to Chris Reading, President and CEO. Please go ahead, sir.

Chris Reading

Gretchen. Thanks, welcome and to everyone morning U.S. Good second Therapy quarter earnings call. Physical Rick morning With Reeves, our Officers; Assistant Vice Controller. include Blanchard, Chief Counsel; this and our our General President Financial Operating Graham Hendrickson, our and Carey me Johnny Executive Williams Officer; Co-Chief Binstein, Eric

I’ll Johnny? Before to results, quarter cover to and our begin Johnny a we year-to-date review ask brief disclosure.

Johnny Blanchard

and These the contains see Chris. statements Securities which those views uncertainty. The company’s more and for on based presentation from forward-looking Exchange The and results forward-looking you, the actual are Thank risk statements materially the company’s may assumptions. current involve information. Commission filings vary with Please anticipated.

Chris Reading

you, Thank Johnny.

this bit this. The Before the for prepared to really a really I I through this. want of team with time. same this that’s this of together just comments, good my that’s is a I shape, a morning. team know the disappointment, little I in pandemic start reaction bulk say have long seen been

We have which I really talk happening, going to am about. good some things

come and side find think however are not we environment making that but interest in way inflationary from to in an our good through the shape. are unfortunately rate will we other immune we and We out ourselves the perspective, I

resilient where teams at we quarter So little this and on, and with X.X are where this have finer these the very and only will we exceptions challenges our proves to year the environment highest about history office from X.X% here. still do I quarter, through try what of morning record to to. of year, X.X% high let I clinicians, going the This our a I where amounts that the is operating we really it to Carey how the year-over-year can quarter. and for committed are has working and working we that support effects a earnings work, a generated. this for and XX.X% that the bit the am do and most current am second I way quarter want revenues produced economic are be we progress the we company. talk the covering morning, in to visits cover keep deliver level lifting comments adjustments. not making is high a front where where think the of with corporate This this worked persistence to some COVID, by team through the are what but the of Despite my quarter all-time of by collateral and first back years thanking PT presented start out pandemic partners, to I talented the the team, in quarter details the for our overlaid throughout group intend

prevention injury revenues quarter, industrial doubling revenue, and over which year. up for Our XX% the approached injury prevention up the for same-store XX.X% the

we things like team exemplary absolutely control, an terms feel I So did the that job. in of could

at Clearly, the job the our control? on a credit new part but inflation. securing hedging a team new rates control we we expanding don’t have don’t ability dramatically, terrific risen rate million least facility. did what So anticipating interest borrowing facility, that, with the by caring Both of a $XXX

plans forward busy getting we capacity really very development great look have additional All end. of and long-term been working line on with this which will to give growth group opportunities, on to year a those plans we the and execute finish between over of our us now needed

labor of and of to we workers. second or end began feel some impact macro availability costs. when the comes forces inflation environment We the quarter, ancillary to with in to also don’t have that control rising To over it the those

or We when make negatively adjustments ability grow extent and a cost that we continue volume our downing don’t our to impact the the with to future. to respect hinder possible in where to into

We invested resources are And area, well. effort. getting that on have payers earnings some more to negotiations that in and with in work continue as we rate-based

are We those additional resources. accelerate to working with these

new We providing acquisition comp of investments BP the be group, prevention in with area a in to have helping well injury in and that us development form the prevention the will similar injury for relationships beneficial to targets identify work help is both asset. as great as recruiting in along of opportunities

excited can are with we what have we We in. about very tools invested drive these new

that Volume flow with market. little a bit, missing that, over new seasonal let’s back volume. looking spring quarter, the we the a little we the began allowed I was little later respect Concurrent feel with let’s labor the in start to So in XXXX. the normal think decidedly talk quarter, to was A recruiting given and ebb with leeway in really staff ourselves tight solid.

And up pick quarter result. our think X years. but related, cost has our team, past cooped a not these in our the bit a So folks, up patients, everybody as been also only I team, we our saw

If in going you past first years where taking couple since family, vacation, paid are that all forced People year recently, we airlines our years. the brim. double full they are to vacation of to flown paid real have couple COVID vacations started. past a take ago, these are probably that you the a flight, which My

that I from as am and we through well. the staff as our are X-day as So make way that the doctors impacts ball that we that some remainder Texas, year. well will be of soon, their in our the referrals taking the is because at news with least visits, boosts time here cranking starting up hopeful see will as back staff Good and schools And across country sessions. coverage

cost of our to And our front will intake as in we are considering will tuned important some have moment. time working business Finally, the little environment to we complete, and streamline the to take continue desk we an are our in operations, help of part project finally believe we will hard very but at costs to move forward. we that which PT ultimately get the which a help

my concludes prepared if financials us you go through ahead would, that detail. and please in walk So more the Carey, remarks.

Carey Hendrickson

Thank good do. share a Chris our and team our for company’s produced $X.XX, which the good second Chris of result per was really everyone. consider, amount me you, with things results history. quarterly – morning, excuse noted highest All Will quarter in as the second operating

impact the increasing companies, for reported as finding increasing interest the volumes environment the to company. the this are quarter the second become of the this is Our rates always macro the which impact expected so pressures with was for second only high was possible year, inflationary but produce ways XXXX, million are all of for dealing namely even from rapidly continue the through And down to rising $XX.X of second in we was $XX factors which factors, EBITDA in strong the our quarter, to slightly remainder stakeholders. on adjusted more million can remain team by efficient, we and Like focused historic cost all of U.S. Those results our standards. best quarter

than month, the to in average our were company per which XX.X were seasonally May, data, was similar volumes patient quarter, less second the clinics XX.X therapy XX.X June, day historical visits quarter in in to numbers summer be for in the reflecting increase high in for XX.X per into and first the slightly volume don’t physical XX.X pattern per from all April, low an and clinic of based XXXX. in expect first By the quarter months. have July per clinic day July Our we yet, trend XX.X We but our June. final entering on of

that Our the due to is second rate in year into remaining $XXX.XX net impact the second X. is quarter sequestration X% the in reported slightly effect last $XXX of year. year to into this became went X. in went changes this effective versus The the physical that rate X% April in our $XXX.XX rate sequestration the Medicare was of first and of therapy impact July ‘XX. January for which we up from effect rate quarter, decrease compares quarter in the operations That The

second of of the Our quarter total the X.X% XX since de from the the of few addition acquisitions in year. X,XXX,XXX second increased and of normal course visits second visits quarter with of both a the quarter visits net novos year X,XXX,XXX to through in second closures this clinics in last quarter XXXX sales

Our quarter physical $X the $XXX.X revenues of an year. million were therapy in second increase the from million X.X% last of quarter, or second

the as to operating compared $XX.X in million year. $XX.X Our physical prior million costs therapy were

Our margin in the physical is which XXXX a in healthy was XX.X%, quarter costs. second despite the margin increase of therapy

volumes at operating while our in X%. clinics and revenue New the dollars. year over increased million $X year declined $X.X million million margin $X clinics $X.X mature Revenue or MPT million expenses added to

mature quarter related and $XX.XX a visit year the quarter were were to clinics which therapy $XX.XX increased X.X% clinics. our last our and year, Salaries is of were to of increase quarter second which compared in second XXXX, second X%. $XX.XX compared an of last X.X%. basis, mature our services physical costs in XXXX to an therapy of higher rents Our the XXXX of the the of at total contract second On in $XX.XX out and increase salaries XXXX quarter the costs per in in and physical second also compared quarter at of costs is related

all-time industrial high, of for quarter XX.X% million revenues over injury Our business second $XX.X the is in XXXX, XXXX. an increase the $X.X were which quarter at a the million or second prevention of

increase million million the or of IIP Our $X.X industrial an year. expenses prevention XX.X% margin is in operating $X.X resulting an of increased over $X.X which prior million, in

in November IIP still our revenue second XX.X% IIP our quarter XXXX, year. in versus the Excluding last of acquisition increased

quarter $XX.X of profit second in our the which million profit and quarter to in gross million margin of Our the ‘XX was $XX.X XX.X%. second gross compares was XXXX,

lower ‘XX the Our in of decrease due of XXXX, corporate year. to $XX.X a the this second expense million to million in second quarter primarily with were estimated quarter bonus compared costs $XX.X as

in second XXXX, quarter which X.X% from As of corporate the of quarter ‘XX. the of a X.X% revenues is down costs percent second were revenue, of on

$XXX,XXX includes of November of the liability, acquired loss that remaining to the purchase the related with business IIP we put-right ‘XX. Our of in revaluation of second a portion that’s other associated potential our income of

of first For is the only months XXXX, loss $XX,XXX. X the

the year. interest an the second to in due quarter the we than of and quarter interest higher second expense this the have last in quarter that XXXX since last second increased related primarily of last year to acquisitions Our $XXX,XXX increase year in our closed year of from rates debt, second in $XXX,XXX of quarter

attributable $X year. prior the million in the ‘XX, which net interest non-controlling than of income less quarter in to is $X.X of quarter second second Our was the million the

by in interest in which $X.X reduction $XX.X of purchased the we interests percent in interest XXXX, first a in that due XX.X% a our purchase of million were greater the of done percentage existing to purchased our partners, interest profits, results is second months non-controlling compared from partners the year. have The being existing percentage and USPH. As we another as X the of of quarter to non-controlling profits non-controlling retained from XX% we in million In this non-controlling our XXXX.

Our balance position. an in excellent remains sheet

million. credit very includes a X-year sheet on in XX million million loan at investments. on to had successfully revolver the We We revolver. for $XX.X $XXX facility drawn other a we balance nothing gives are The and had our pleased which have June, and closed of cash a $XXX June greater acquisitions capacity million and on $XXX us term facility

Our fix low associated transaction, we at term sufficient into growth fixes with identify agreement leverage a the us opportunities with loan. with term In the them. capacity million month facility X for The as also connection X SOFR X.XXX% and to tremendous years. our the swap financing coupled for we entered rate right in May expanded provides the $XXX flexibility swap

margin we Our over ratio interest favorable rate X-year total based our The believe swap total rate currently X.XXX%. period. which be environment rate certainty the a our puts leverage in rate will applicable an includes at provides that rising the a at on

we income. in comprehensive net the of adjust swap OCI. the the our we range of of to guidance other $XXX,XXX during adjusted our and We quarter will operating the results EBITDA for to in expect $XX.X tax for today range release value to The second XX, We year that taking at second the earnings million elevated results the in loss which for into each cost of had operating June share the our to million, And in $X.XX. impact to half in wages an issued and unrealized new and noting is of full the be now fair $XX.X of outlook inflation quarter. our our $X.XX other cost, the be of EBITDA year for on range consideration through

in rate guidance year. into environment also since the range U.S., in the change takes results the for initial provided account operating the Our our we interest

on expense guidance is make approximately Specifically, potential remainder XX% in our from loan does fixed that of any Please million interest previous the year, rate the the our in of not interest term impact X.XXX% from debt of an current year-end. our $XXX and versus acquisitions the increase our we of guidance. impact now include the between note

Chris I’ll to Chris. noted, turn front. we intend that to As active that, on the back be call With

Chris Reading

thanks Yes, Carey.

Gretchen, open questions. it and let’s ahead go for So up

Operator

Securities. Solow We from question Instructions] will [Operator from Larry CJS take our first

Chris Reading

Larry. Hi,

Larry Solow

year and the I in the Hi, Carey. first good morning, on volume question, it the QX guess of was a storm amazing re-ramping Chris. outlook, quarter just perfect maybe and or bit COVID. I little Good just guidance, for was last real I the sort taking question. QX back a just terms up the there morning, of because the also guess realized an acceleration trends. Thanks

So, was normally June at bit. in but are came guess month, contemplate, the down know which were seem a little that you down, a end, like your more does little what maybe seasonality, taking little surprising, I but it our than from bit surprising, it I volumes is

half thoughts the volumes in looking your inflationary the it’s you thinking you that half patient So the What again, on pressures. what’s year? back in what about the mentioned back at? of and you are mostly are terms And year, of

Chris Reading

Yes.

about volumes talk quarter, for let’s first all. of the So

So typically, of April, really did when solid. then was pulled tenths We last March, April. good closely. in kind really back April May the good heard pretty time a and the of got But where if came don’t a in guys had three were. That We into you it follows back to And you think little April. remember I more year, pattern. last normal we pulled once memory. think May more, than then a we was compared this from is visit And I June, bit we seasonal

but company, quarantine. Tennessee in That’s with it tell talk from here. in masks has world masks – this got in about right that little places, in the that attitude, that have But been as in little a per markets quarter volume the a never month people was bunch clinic a of a we’re now. back other We’ve variant ‘XX, we’re Nobody XX me I like wants can to we in doesn’t COVID of lot dealing best in and give you highest years still and anymore. COVID want our quarantine which So think that I’ve visit healthcare the combination. the One, in happened a patients places, like impacts people to bit. and don’t in our have and patients I some

a more And so Larry, I into, pattern. I would think call, what normal we’re back seasonal

as time vacation including picks doctors A that little to. to need once away time a I’m – longer start, have amazing an staff, hope have So seasons job. football view and done pick well. God in once vacation little our people a say, summer, going off, bit up rear I put, think, They they slower I little for bit school X-day largely hope the I up, more knows things pent-up in they back again. which But

quarter of rest don’t the – model the where of I the have how We in was year vein of you… the kind know Carey,

Carey Hendrickson

picking it’s September the volume pick have, pattern up volume the full year the it are and usually normal I’d when pattern, December fall just through Yes, summer to standpoint, then like full similar look we be could up And normally year, we in from really the seasonal just to going October in say at year last for standpoint. a from a probably months. strong then

Larry Solow

you’ve grown of Right, that. which pre-COVID X, X, is sort more of And flattish. than sort volumes

higher X-ish, X, it’s grown X, that, always think probably been you’ve X targeted of years COVID. historically X, I but a maybe X, into like X, X, end

time not they as is to, volume out are I’m a are hundred and one for like- room of years, people most next like feel said – cases, you the a do you but seems years, like is fortunately nuisance, there just not growth, – quarter – next X you trying over make all COVID to – but doesn’t that in things just X it’s maybe looking a that certain still is serious, – there trend So so the not difficult more opposed percent efficient. it’s do are

do yourself still over we couple a a quarters. So you call of the kind annual view an I basis? on is modest grower tough look this as volumes, still get, next as in

Chris Reading

Yes, no, markets, we’re I the impacted for markets think. Larry, right job. We’ve now side. labor done in on mean good important just definitely a I certain us,

but those clinical fill people a turnover our hard that that changed, bit longer it’s and markets taken have and really got some. volume spots those Our to that’s impacting working little of been hasn’t some are tired we’ve

I think two I for we So up last quarter rubbed against don’t to continue years, perfect that And grow. few going haven’t us. that X a this quarters have crystal we’re to ball definitely in like look had years. the

We’ve through, So strong we’re way we’ve partners model way is and our strong the capacity partner great and making in that to our got go facilities. think we a got team. but

through get And so bumpy we just patch. this need to

Larry Solow

like an you Yes, no, the absolutely. pricing rates. certainly seems power, is uphill it’s you and you’ve pounding are up it it’s but guys what tough. when been the sort of – about know battle for It on drum on – the going And everything I seems,

hopefully some next for of year point, you there, it some trying government additional the at – there? commentary some to bigger you’re sound commentary any like at get any making help too least but and payers will does the leeway, So out you’re

Chris Reading

reasonably made terms horsepower on been additional investment, just We That’s rate got negotiation done. very that the investment big we a No, of in recent. side. good some finally

wins had here We lately. have some

going expect, a names As not name we’re deal changes making I’m to progress more. but to might you good make or and we [indiscernible] expect

until in so think a as therapy that higher just but be is I And there. that rates. value impacted keep than banging we general that extraordinary. lot we physical important. to we much ‘XX, company will in provide, a And not And get of deserves rather we the think that going it it’s on provides ‘XX think we’re but

Larry Solow

is And next it? this little out I mentioned proposal there yet So terms usually in a CMS we late July? that Did or come given are doesn’t in next no, the vols? the year. anything year’s year been Has miss for of

Chris Reading

it bit late, I July. in Yes, which we totally It’s have. as Yes. late imagine, out little can’t come X.X% And came a we’re for for it on it’s working slated hardly reduction but year, stupid. that out did next but

So I that’s going don’t know land. to how

significant We and on December, will until to work then. we some between know not do that expect but here

Larry Solow

What’s do convoluted X% gets was rate X% Just cut giving the just some so you level they when they It that? equation how are based high rationale CPIU crazy. debtors? a Is behind? layman’s from that to perspective, to it some

Chris Reading

We are out of that years were some ago. CPIU – some adjustments made that

in believe We it’s I will be think back bucket. over, that I XXXX.

was able I change, the rate original so to think we which X And mitigate. were and reduction

is this so think will and we that, And think but work to mitigate residual it we I again. from hope some

Larry Solow

appreciate Okay, great. the Thanks. all color. I

Chris Reading

thank Okay, you.

Operator

Wissink from Jefferies. comes Steph question next Our from

Chris Reading

Stephanie. Hi,

Steph Wissink

you’re to spend on or end. time availability the it about the mix that a you’re time more some wage does cost things be noticing your just sound rate of there I PTO compartmentalizing also talked seeing front But staff. of also occurring. labor everyone. labor, you and Hi. and bit among away like is that Good pressure especially the might a because wanted One of little morning, labor

maybe that components availability help can vacations So think summer some of are the that labor you to see of what substantial come just more you related and would most or mix the fall? transitory into you what burden expect holidays guidance to do on through the that back us revised be

Chris Reading

be that, to vacation and are to going replacement cost prior – pent-up vacation’s find can while I part transitory vacation, and carried think we on be bit bump or people there people a vacation’s a it most certainly are just I little there our that but a Yes, cost banked using from would more Really, might temp mean, cost a the to period. the that little have that it’s We related the normal extent part. thing. over little more bit, somebody’s bit or some for

that’s normalize. So to going

that the could think a see given I other it The When that seen part, I rate higher. was on side. this have mature you desk at we which front particularly non-clinical look facility X.X%, the the lot particularly- it our changes, been higher labor, we’ve environment, honestly, think at

a think sisters of talking APPQI with the that of very We’ve surgical, come very boat. will little volume. for but year, to are same brothers that take Some adjustments precise made at taking down, costs. now adjustments our right everybody’s a very to and remainder time facilities, Everybody match their the in hard my in is look closely I some

then we longer-term efficiencies now, the And projects impact at staffing some right going and load the our labor in desks. front We’re that’ll able. on have

now so, that’s on are that at well. And the right very as moment we focused something

Steph Wissink

in with can, about what projects. risk. That a related Thank if you of CapEx a you. be? is the more second cost which what doing, little us half if secondarily, actually that And back leads bit us there it’s just any without invited my you’re project, is projects, conceptualize question, the related being if P&L sort competitive Maybe to or might for the to share it help

Chris Reading

you. thank Yes, Yes.

the project in my prepared referenced one comments. I So

for on the solid. that it. is name which resource helping the side prevention with connecting are that one And It’s on on the it’s people. want who the side, connection with sweet in now be it’s helping us and identify interested and I helping development therapists side, spot I’ll call and think, So recruiting right identify on it those our front acquisition don’t us, an prevention to things. it’s identifiably very pipeline, time also I because connect may man, but companies with with for injury our us the unbelievable of us injury connect companies resource

actually it an a So, but investment, it’s a I fruit, bear good think doesn’t to isn’t – investment It’s us. for for important big while. going it

know don’t a Front project ongoing. I monetary Carey, I On That’s that’s that’s end speak just if our or think it. want people side, Eric. working on on you big Desk to that investment. way the to really the through don’t time

Carey Hendrickson

Yes. a to of and That’s just talk you do integration And more rollout Eric, it issue. some? about want timing

Eric Williams

It the operation, Yes. are with is do take Front these changes Desk get to a how labor. different systems in that so little timing by improve But figure we issue we and partnerships a all less can automation obviously time. with trying that out there, have we to out

creating are that the verifications we patients in spending front amount now portals reduce So, and people schedule, insurance would time our kiosks. that to allow verifying insurance, electronic of office patient dabbled have patient

of be you people probably when and norm. in used to in That businesses it’s to of these more talk have you different You now. checked lots a now seen

because we are where us for really biggest labor, looking company. so And front turnover the that allow get by to less is our in office would electronic with that’s kiosks

clinical is than percentage we line. And the have below kind Our have is X pre-pandemic. talked average, on clinical lower about points our calls and right turnover now we of told it industry was really as turnover before,

more non-clinical new walking the is So, doing time clinical said more person to that, we door be going pretty bit little every a money. in than walk somebody likely making Having are out or good. does the

that So, long-term right turnover our our really is to go. we a has is office to right by focusing less believe focus percentages, now front labor the systems and on side way get now highest the with

Steph Wissink

so much. Very helpful. Thank you

Operator

Barrington Our comes from Research. question Michael next from Petusky

Carey Hendrickson

Hi Mike.

Michael Petusky

Good morning guys.

in double of the you, then how approach smaller you So, also, gosh, this think I getting and you, M&A sort want how do PT because to you going about guess squeezed. you of are guys whammy sheet? your how do of both of side, away against of inflation impacts government And reimbursement against going terms the in terms you sort companies, think balance from

And got of significant these advantages see sort have are a over size curious of on just the I consolidation Thanks. You entities. just some macro? and scale we if am to going based smaller

Chris Reading

Yes. and levered squeeze doubt well, I unequally, to we don’t don’t think are very just were even a very, to outlined, larger it’s more are it’s going expensive providers ago, are, than It’s parameters than though Carey about that efficient. and as it’s we have which there going squeeze who more year the is that. financial any who highly still

So, going use our balance to sheet. we are

environment people coming are will will guys You going we forward, long-term go us. We opportunities that speak. more think for And that so there see as even are as be over boats, we good to it in the sized to short-term. this punishes be who not equal think

system. There a drivers it’s continue us. on to not healthcare fronts, to are yes, it’s going to So, lot of growth, physical provide value challenging several it’s but the the to just therapy. challenging for the In this profession,

that we that. point to this are are through think I you so catalysts definitely, out, out as get going And come of there are And the to out other period. going side, bumpy good

Michael Petusky

the few things year there like X.X, rule reimbursement do for a think there better there you that at of ridiculous. that you in it smaller just And look cut I mean, a this the have chance proposed guess opportunity back am whatever it is wondering But is when out at is just that it And maybe follow-up thinks there It’s of even given I if deteriorated you for there could it from more APPA of last the last point, an CMS. think this have did providers do is, X.X. what just sort there, months. you I too. givens most feels success on of and just is, some recognition as than given a beating

Chris Reading

we feedback. relief think last hope And year, a directed get I was felt Yes. I feedback. which directed X.XX% year’s I at that We That impact. mean impact X%. we it I impact most sequester of isn’t that got us. Most do sequester of away, last think year going ridiculous. is I think not was will than this at, it’s less unfortunately, was the

so year. we And will same last hopeful am better it or most Time I out that got we this certainty. tell, can of do that’s year a obviously, not the and but

Michael Petusky

great this. question things, missed almost nuance that Chris may is you the to staffing sounded almost just something said of extent, may in terms I impacting the done but alluded obviously guys late that there? macro And in like, have maybe have possibly like, really up and of sounded, you last on the it the or could of you It have that wasn’t quarter piece better pick did to I

Chris Reading

job. Look, incredible team’s a blow our of I materialized quite go QX know perspective. way out I kind of QX we and from expected. done the We the expecting that came don’t think volume an volume

We strong I cost probably think could selectively a let having have real we of folks. now more QX onboarded, not around bit look urgency I at real hiring also and We of we up our a full-time paying little we otherwise. than a part-time ended probably it came volumes. with lot people, very, closely, rear just it’s very, view out anticipating very think but

handle, We sure closely we those volume kind stays that and are on think of very very, a made I dialed a have make to sense here. have We in. adjustments making

that dial-in expect tighter the And I of so rest much from to year. be the to here

Michael Petusky

update. it. appreciate for I the Thanks

Chris Reading

Thanks so much.

Operator

from Sidoti. next comes question from Our Mitra Ramgopal

Mitra Ramgopal

and morning questions. for my Hi. you taking Good Yes. thank Hi.

side, between sound now you in Chris, me. of pretty confident the getting for year-end. couple and on done terms deals a M&A Just

a of it lot drivers where a the areas there? thing etcetera. one attractive are question also maybe any Just increasing year you a being a There in in seeing wondering of retirement, versus is this And more environment of ago. number healthcare, is post-COVID specific maybe case valuations

And also boosting so your pipeline. maybe that’s

Chris Reading

mixed. it’s so Yes,

just, a different. on we little year, land a get the a and active, we been few busy So, have taking bit I all very of planes expect But that has timing bit active longer now. very these very, runway, to are the the to been just little the right

people related isn’t this think I retiring. to

people. that it’s think are folks The have the highly people attracting I years. are to related last really, strong, been few we capable really where

are as They all few all kind expectations they My retire, been not crazy. through ready have therapist, been to have years theory. We for have deals. of rather last through high we like XX unique these a these been very but of

these some some that companies are want among get strong their opportunity help and because they have We that. they we opportunities across or to market, and And market maybe to continue share. grow them to big of support the to they real the smaller well those a most done so do well, provide, in but see tuck and have can a to they see providers support lot done move really of in partner provider

much continue And so pretty forever. to think that that’s they I fact partners our our when than to drive what’s That stay going opportunity come, anything. the and more

been work are at a We for forward. granted. have more good We going hard home. it, really people have good that surround don’t but go with we take the opportunity we We as to ourselves even

Mitra Ramgopal

is Does how be there obviously economic And you it recession? factor Okay. the into you That’s obviously fears heading into on out, in great. company M&A And maybe can us plays of the to remind environment a the talk who want knows year. side, how or tied M&A how but of or next has then, weaker on side? recession also that aggressive in downturn fared

Chris Reading

Yes.

that we for going able everything I are and that factors to are environment the to a I pull yes, at, me, think expect interest and career to and be Mitra. to. others, high in, It has pay So, that willing rate been, they multiples The factors impacts kind multiples back. of have that

returns With where consideration the there And in are the as macro rising interest is great. challenges environment some without taking as that aren’t rate well. environment,

another going I There point… was last – to I that, just things and of speak was those that to influence. part certainly So,

Mitra Ramgopal

Recession.

Chris Reading

Well, on recession. the

at look through period And we of we laying there we this, time. it helped ‘XX When we created if grew doubled us labor glut and recession. end when differently break So, was ‘XX, in people through of and commission-only did our of some companies were things back massive off, the that then. we ‘XX, a kind front a years, that sales those force, sales and force grow

to done multiples continue back then. We get deals good at

when probably I we we don’t it like believe XXXX. in front XXXX know little so I unemployment certainly high I of unemployment. to And situation believe will same-store did that high our bit, – half there a hit get that don’t back a is and

I as right to been. too employment stretched well-positioned for But we that now are we still think have are I think happen. we

balance good a have sheet. We

I some in impact, think an years. making forgot us and huge, not but adjustments It’s next are We to this mention too. going give it’s I to

to are planned and what changing and are well. get But cost some to. efficiencies are or savings have will there of embedded some as from we there be we We terms our we moving we in there buy have resources who things

point. quarter, what think will see, I going we make don’t to we deal – we what this do think So, I this to adjustments some comes changes. at well-positioned have are to on with are have like But to but had depending we

Mitra Ramgopal

company. seen Okay. on time percentage very a I And it’s it in of lowest and side, I always the of had to on then you just terms obviously finally lean know probably have revenue. G&A some run efficient the in

to trying is have should room to limit start obviously we this or back you more just in your So, something if environment, there that up? curious expect kicking costs

Chris Reading

adjustments This lower this the our as team, we made for affects do quarter some we here And each because bonus have exec accrual of reality just some guidance had the we it directly wouldn’t – result this of will made on us but accrual a in to year. quarter. have we it of bonus

think the driver. I so And biggest that’s

that folks We [ph] leaning already are are hard. working to

accrual we that with as I so growth of go forward as this I normal, predictable more And that would and happen pattern go to more hope expect we something year, forward. normal is outside

Carey Hendrickson

to Mitra, the revenue. range that’s typically in been X% X.X% of

it’s as revenue to second XXXX. be more to going normal half the percent for and in range to of think this of I a X% to year, probably X.X% probably closer then patterns back

Mitra Ramgopal

and That’s the taking questions. again for great thanks Okay.

Chris Reading

you. Thank Yes.

Operator

this [Operator no And have time. questions it appears further at Instructions] we

Chris Reading

morning. I any and have for available follow-up, are Okay. if questions you Bye your Thank everyone good and day. this Listen, I Carey time and your you. thanks hope you now. a have

Operator

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

a now You day. great may Have disconnect.

U.S. Physical Therapy (USPH) 7 Aug 222022 Q2 Earnings call transcript