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U. S. Physical Therapy Reports Second Quarter And Six Months 2011 Results

Stocks in this article: USPH

U.S. Physical Therapy, Inc. (NasdaqGS: USPH), a national operator of outpatient physical therapy clinics, today reported Company record results for the quarter and six months ended June 30, 2011.

U.S. Physical Therapy’s net income for the quarter ended June 30, 2011 increased 10.1% to $4.9 million from $4.5 million in the second quarter of 2010. Diluted earnings per share rose to $.41 from $.38.

Net income for the six months ended June 30, 2011 increased 13.4% to $8.6 million from $7.6 million in the first six months of 2010. Diluted earnings per share rose to $.72 from $.64.

Second Quarter 2011 compared to Second Quarter 2010

  • Net revenue increased 10.7% from $54,103,000 in the second quarter of 2010 to $59,912,000 in the second quarter of 2011, due to an increase in patient visits of 8.7% from 497,000 to 541,000, offset by a slight decrease in average net patient revenue per visit of $0.35 from $105.12 to $104.77. Other revenues included a $1.3 million year-over-year quarterly increase in physician services revenue.
  • Gross margin was 28.2% for the 2011 second quarter as compared to 28.7% in the 2010 second quarter. Total clinic operating costs were $43,023,000, or 71.8% of net revenue, in the second quarter of 2011, as compared to $38,602,000, or 71.3% of net revenue, in the 2010 period. Clinic salaries and related costs were 51.9% of net revenue in the 2011 period versus 51.1% in the 2010 period. Rent, clinic supplies, contract labor and other costs as a percentage of net revenue were approximately 19.0% in both periods. The provision for doubtful accounts as a percentage of net revenue was 0.8% for the 2011 period versus 1.4% in the 2010 period.
  • Corporate office costs were $6,007,000 in the second quarter of 2011 versus $5,511,000 in the 2010 second quarter. Corporate office costs were approximately 10.0% of net revenues in both periods.
  • Operating income increased in the second quarter of 2011 to $10,882,000 from $9,990,000 in the 2010 second quarter. The operating income margin percentage was 18.2% in the second quarter of 2011 as compared to 18.5% in the second quarter of 2010.
  • Interest expense increased to $109,000 in the second quarter of 2011 from $81,000 in the second quarter of 2010.
  • Provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both periods.
  • Net income attributable to common shareholders in the second quarter of 2011 rose 10.1% to $4,900,000 from $4,451,000 in the second quarter of 2010. Diluted earnings per share increased to $.41 from $.38.
  • Same store revenues for de novo and acquired clinics open for one year or more decreased by 1.2%. The average net rate per visit increased slightly while same store visits decreased slightly.
  • During the second quarter of 2011, the Company opened two start-up de novo clinics and closed one clinic. The Company ended the period with 398 clinics.

Six Months 2011 compared to Six Months 2010

  • Net revenue increased 11.6% from $104,508,000 in the first six months of 2010 to $116,653,000 in the first six months of 2011, due to an increase in patient visits of 9.3% from 966,000 to 1,056,000, and a slight increase in average net patient revenue per visit of $0.05 from $104.62 to $104.67. Other revenues included a $2.4 million increase in physician services revenue between the comparable six months periods.
  • Gross margin increased to 27.5% in the 2011 first six months as compared to 26.8% in the 2010 period. Total clinic operating costs were $84,601,000, or 72.5% of net revenue in 2011, as compared to $76,536,000, or 73.2% of net revenue, in 2010. Clinic salaries and related costs were 52.1% of net revenue in both periods. Rent, clinic supplies, contract labor and other costs as a percentage of net revenue were 19.4% in 2011 versus 19.5% in the 2010 period. The provision for doubtful accounts was 1.0% in the 2011 period and 1.7% in the 2010 period.
  • Corporate office costs were $12,488,000 in the first six months of 2011 versus $11,316,000 in the 2010 first six months. Corporate office costs were approximately 11.0% of net revenues in both periods.
  • Operating income increased in the first six months of 2011 to $19,564,000 from $16,656,000 in the 2010 first six months. The operating income margin percentage was 16.8% in the first six months of 2011 as compared to 15.9% in the first six months of 2010.
  • Other income in the first six months of 2010 included a pre-tax gain of $578,000 from the sale of a five clinic joint venture. That gain equated to net income after taxes of approximately $350,000 or $.03 in earnings per share.
  • Interest expense increased to $182,000 in the first six months of 2011 from $145,000 in the first six months of 2010.
  • Provision for income taxes as a percentage of income before taxes less net income attributable to non-controlling interests was 39.3% in both periods.
  • Net income attributable to common shareholders in the first six months of 2011 rose 13.4% to $8,646,000 from $7,623,000 in the first six months of 2010. Diluted earnings per share increased to $.72 from $.64.
  • Same store revenues for de novo and acquired clinics open for one year or more decreased slightly. The average net rate per visit increased by 1.0% while same store visits decreased by 1.2%. Revenue and visit percentages were adjusted to reflect equivalent days of operations between periods.
  • During the first six months of 2011, the Company opened eight start-up de novo clinics and closed two clinics. The Company ended the period with 398 clinics.

Chris Reading, Chief Executive Officer, said, “In spite of the challenges with respect to pricing (MPPR) and volume pressures, we have delivered another strong quarter and year-to-date period of growth. Our team recognizes that we have opportunity however with respect to operational efficiencies that we need to realize. Given the strength of our partners, combined with the focus of our operational team, I am confident we will make progress within our existing business. We also see continued opportunities to expand our footprint with well placed, partner-centric acquisitions like the 20 clinic transaction we recently announced. These factors, combined with strong growth in our physician services business, provide us with plenty of fuel to further develop and grow our business.”

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