U.S. Physical Therapy Inc. Reports Operating Results (10-Q)

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Nov 06, 2009
U.S. Physical Therapy Inc. (USPH, Financial) filed Quarterly Report for the period ended 2009-09-30.

U.S. Physical Therapy Inc. operates outpatient physical and occupational therapy clinics which provide post-operative care and treatment for a variety of orthopedic-related disorders and sports-related injuries. U.s. Physical Therapy Inc. has a market cap of $181.5 million; its shares were traded at around $15.73 with a P/E ratio of 16.7 and P/S ratio of 1.1. U.s. Physical Therapy Inc. had an annual average earning growth of 4.5% over the past 5 years.

Highlight of Business Operations:

In accordance with this guidance, we will no longer record an intangible asset when the purchase price of a noncontrolling interest exceeds the book value at the time of purchase. Any excess or shortfall will be recognized as an adjustment to additional-paid-in-capital. During the nine months ended September 30, 2009, there was no excess or shortfall recognized. Additionally, operating losses will be allocated to noncontrolling interests even when such allocation creates a deficit balance for the noncontrolling interest partner. For the quarter and nine months ended September 30, 2009, the net operating losses allocated to noncontrolling interest had the effect of increasing net income attributable to our common shareholders by $45,000 and $111,000, respectively, net of taxes, and reducing the net income attributable to noncontrolling interest by $74,000 and $183,000, respectively.

Salaries and related costs increased to $26.8 million for the 2009 Third Quarter from $25.7 million for the 2008 Third Quarter, an increase of $1.1 million, or 4.5%. The $1.1 million increase included costs of $1.0 million attributable to the New Clinics. The remaining increase was due to slightly higher costs of $0.1 million at the Mature Clinics. Salaries and related costs as a percentage of net revenues were 52.6% for the 2009 Third Quarter and 54.3% for the 2008 Third Quarter.

Salaries and related costs increased to $78.7 million for the 2009 Nine Months from $74.6 million for the 2008 Nine Months, an increase of $4.1 million, or 5.5%; however, salaries and related costs as a percentage of net revenues decreased to 52.1% for the 2009 Nine Months from 53.3% for the 2008 Nine Months. The $4.1 million increase included costs of $2.3 million attributable to the New Clinics. The remaining increase was due to higher costs of $1.8 million at the Mature Clinics.

Rent, clinic supplies, contract labor and other increased to $30.5 million for the 2009 Nine Months from $29.5 million for the 2008 Nine Months, an increase of $1.0 million, or 3.3%; however, rent, clinic supplies, contract labor and other as a percentage of net revenues decreased to 20.2% for the 2009 Nine Months from 21.1% for the 2008 Nine Months. The $1.0 million increase included $1.6 million incurred at the New Clinics offset by a decrease of $0.6 million for Mature Clinics.

The decrease in cash and cash equivalents of $0.8 million from December 31, 2008 to September 30, 2009 was due primarily to $24.5 million provided by operations offset by major uses of cash which included: purchase of fixed assets ($3.3 million), distributions to noncontrolling interest partners ($7.4 million), purchases of our common stock ($5.6 million), net reduction on our revolving credit facility ($8.0 million) and payments on seller notes ($1.0 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. 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 1.5% to 2.5%. The Credit Agreement has a four year term maturing August 31, 2011, is unsecured and includes standard financial covenants. Proceeds from the Credit Agreement may be used for acquisitions, working capital, purchases of our common stock, capital expenditures and other corporate purposes. Fees under the Credit Agreement include a closing fee of .25% and an unused commitment fee ranging from .1% to .35% depending on our consolidated leverage ratio and the amount of funds outstanding under the Credit Agreement. On September 30, 2009, the outstanding balance on the revolving credit facility was $3.4 million leaving $46.6 million in availability and we were in compliance with all of the covenants thereunder.

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