Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- US Physical Therapy Inc (USPH, Financial) reported a 6% increase in patient visits and achieved a record high of 30.1 visits per clinic per day for any third quarter.
- Revenue for Q3 2024 increased by 9.3% to $142.2 million, driven by a higher net rate and increased patient visits.
- The company's injury prevention business saw a revenue growth of approximately 30% compared to Q3 last year, with operating profit up over 27%.
- USPH successfully optimized its portfolio by closing underperforming clinics, allowing the operations team to focus on growth initiatives.
- The acquisition of Metro Physical Therapy in New York is expected to be a significant growth engine, contributing positively to future financial performance.
Negative Points
- USPH faced increased costs per visit due to rising salary-related expenses, which increased by 3.5% year-over-year.
- The company is dealing with sequential rate pressure from Medicare and overall wage and inflation challenges.
- Closure of 32 clinics in the third quarter resulted in $3.4 million of closure costs, impacting financial metrics.
- Despite efforts, the company continues to face challenges in managing increased costs for people, products, and services.
- USPH's EBITDA guidance remains unchanged, indicating potential limitations in achieving higher-than-expected financial performance for the year.
Q & A Highlights
Q: Can you discuss the impact of exiting some markets and labor initiatives over the next 6 to 12 months? Are there any further evaluations or moves planned?
A: The impact will be more significant next year as we free up time and resources to focus on growth. We may make further adjustments in markets as needed, but the heavy lifting is mostly done. Some facilities will be sold, which will help us allocate resources better moving forward. - Christopher Reading, CEO
Q: Regarding the Metro acquisition, will it be consolidated going forward, and how does this affect your appetite for similar deals in the next 12 months?
A: Yes, Metro will be consolidated into our metrics. We are open to similar deals if they are a good fit, but currently, we have nothing of the same size in the pipeline. We will continue to focus on typical acquisitions and expansions. - Carey Hendrickson, CFO; Christopher Reading, CEO
Q: Is there any change to your EBITDA guidance for the year, and was the Metro acquisition included in this guidance?
A: There is no change to our EBITDA guidance of $80 million to $85 million, and the Metro acquisition was already contemplated in this range. - Carey Hendrickson, CFO
Q: Can you provide insights into the injury prevention business's growth? Is it driven by new business or deeper relationships with existing customers?
A: Growth is driven by both new business and deeper relationships with existing customers. Our services save companies money, leading to organic expansion opportunities. We've also expanded into new industry verticals, increasing our exposure and cross-selling opportunities. - Christopher Reading, CEO
Q: How do you view the potential impact of the recent election results on Medicare reimbursement cuts?
A: It's difficult to predict the political landscape, but we are prepared for the announced cuts and hopeful for mitigation. We have broad connectivity in Congress, which should help us navigate these challenges. - Christopher Reading, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
