U.s. Physical Therapy Inc. has a market cap of $216.1 million; its shares were traded at around $18.6 with a P/E ratio of 17.2 and P/S ratio of 1.1. U.s. Physical Therapy Inc. had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated U.s. Physical Therapy Inc. the business predictability rank of 5-star.USPH is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Salaries and related costs increased to $28.0 million for the 2010 Third Quarter from $26.8 million for the 2009 Third Quarter, an increase of $1.2 million, or 4.4%. The $1.2 million increase included costs of $1.5 million attributable to the New Clinics offset by a $0.3 million decrease in costs related to Mature Clinics. Salaries and related costs as a percentage of net revenues were 52.4% for the 2010 Third Quarter and 52.6% for the 2009 Third Quarter.
Salaries and related costs increased to $82.4 million for the 2010 Nine Months from $78.7 million for the 2009 Nine Months, an increase of $3.7 million, or 4.8%. The $3.7 million increase included costs of $3.2 million attributable to the New Clinics and a $0.5 million increase related to Mature Clinics. Salaries and related costs as a percentage of net revenues were 52.2% for the 2010 Nine Months and 52.1% for the 2009 Nine Months.
The increase in cash of $3.3 million from December 31, 2009 to September 30, 2010 was due to $23.8 million provided by operations, $0.9 million of net proceeds on the sale of fixed assets and business and $0.4 million from exercise of stock options, offset by major uses of cash which included: purchase of businesses and noncontrolling interests ($9.4 million), distributions to noncontrolling interest partners ($7.2 million), purchase of fixed assets ($2.7 million), purchase of our common stock ($1.4 million) and payments on notes payable and net reduction of the balance on the Credit Agreement ($1.1 million).
Effective August 27, 2007, we entered into the Credit Agreement with a commitment for a $30.0 million revolving credit facility which was increased to $50.0 million effective June 4, 2008. Effective March 18, 2009, we amended the Credit Agreement to permit the Company to purchase up to $15,000,000 of its common stock subject to compliance with certain covenants, including the requirement that after giving effect to any stock purchase, our consolidated leverage ratio (as defined in the Credit Agreement) be less than 1.0 to 1.0 and that any stock repurchased be retired within seven days of purchase. Effective October 13, 2010, we amended the Credit Agreement (October Amendment) to extend the maturity date from August 31, 2011 to August 31, 2015. In addition, the Credit Agreement was amended to adjust the pricing grid which is based on our consolidated leverage ratio with the applicable spread over LIBOR ranging from 1.6% to 2.5% or the applicable spread over the Base Rate, as defined in the Credit Agreement, ranging from .1% to 1%. The Credit Agreement is unsecured and has loan covenants, including requirements that we comply with a consolidated fixed charge coverage ratio and consolidated leverage ratio, as defined in the Credit Agreement. Proceeds from the Credit Agreement may be used for working capital, acquisitions, purchases of our common stock, dividend payments to our common stockholders, capital expenditures and other corporate purposes. Fees under the October Amendment include a closing fee of $15,000 and an unused commitment fee ranging from .1% to .25% depending on our consolidated leverage ratio and the amount of funds outstanding under the Credit Agreement. On September 30, 2010, no amounts were outstanding on the revolving credit facility resulting in $50.0 million of availability, and we were in compliance with all of the covenants thereunder.
In connection with the acquisition of a 65% interest in an outpatient rehabilitation practice with four clinics in November 2008, we incurred a note payable in the amount of $400,400 payable in two equal annual installments of $200,200 which began November 18, 2009, plus accrued and unpaid interest. Interest accrues at a fixed rate of 4.00% per annum. The final principal payment and any accrued and unpaid interest then outstanding is due and payable on November 18, 2010. At September 30, 2010, the principal amount outstanding related to this note was $200,200. In addition, we assumed leases with remaining terms ranging from nine months to three years for the operating facilities.
In connection with the acquisition of a 65% interest in Rehab Management Group (RMG) in October 2008, we incurred a note payable in the amount of $157,100 payable in equal annual installments of $78,550 which began October 8, 2009, plus accrued and unpaid interest. Interest accrues at a fixed rate of 5.00% per annum. At September 30, 2010, the principal amount outstanding related to this note was $78,550. The final principal payment and any accrued and unpaid interest was paid in October 2010. The purchase agreement also provides for possible contingent consideration of up to $3,781,000 based on the achievement of a designated level of operating results within a three-year period following the acquisition. In 2009, we paid $1,200,000 of additional consideration related to RMGs operating results for the first year. Such amount was recorded as additional goodwill.
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