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U.S. Physical CEO Discusses Q3 2010 Results - Earnings Call Transcript

First, let me discuss our net rate, which for the quarter grew to $107.11, up from the prior-year quarter of $103.42. At little under a 4% improvement, it was accomplished in a very thoughtful and systematic way. One of the things we have set out to do most recently was systematically create a meaningful shift in our payor mix by adding a very robust product offering which we refer to as Fit2Work program, designed to deliver a number of industrial and work comp friendly programs, services and resources, which we believe would be very marketable to industry and which will assist us in growing additional value in revenue impacting our net rate per visit along with our payor mix as we have got more and more traction with this program.

That has happened and will continue to unfold in a very meaningful and beneficial way for us and for our company. We have tracked our percent work comp mix across all four regions systematically over the last few months, and it’s seen improvement across each of these regions sequentially over these past months. The initiative which is driving new business as well as volume generally comes at an incrementally higher rate than our average visits across the rest of the company. It is one that will continue to be important as we look to further expand our revenues.

Also notable for the quarter was another 180 basis points improvement in our gross margins, now up to 27.2% for the quarter. You might recall on top of a very strong margin improvement for the year ending 2009, I mentioned in our last quarterly earnings call that we were always striving to pull out all the stocks and have everything exactly where we would like to be and recognize that in our current environment, with persistent and high unemployment, weak job market and lower than usual consumer confidence, that a quarter with net income growth of 25%, 21% for the year, a large net rate increase, significant margin expansion and 25% improvement in EPS is pretty strong improvement in this environment. So, what’s left?

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