U.S. Physical Therapy, Inc. (USPH) Bundle
Understanding U.S. Physical Therapy, Inc. (USPH) Revenue Streams
Understanding U.S. Physical Therapy, Inc.’s Revenue Streams
As of September 30, 2024, total net revenue for the company increased by $40.9 million, or 9.1%, reaching $490.9 million compared to $450.0 million for the same period in 2023.
Revenue Breakdown by Segment
The revenue streams can be categorized into two primary segments: Physical Therapy Operations and Industrial Injury Prevention Services (IIP).
| Segment | 2024 Nine Months Revenue (in thousands) | 2023 Nine Months Revenue (in thousands) | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Physical Therapy Operations | $420,625 | $391,919 | $28,706 | 7.3% |
| IIP Operations | $70,273 | $58,082 | $12,191 | 21.0% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the revenue growth rate was 9.1% compared to the same period in 2023. The physical therapy operations specifically saw a revenue increase of 7.3%, while the IIP segment grew by 21.0%.
Contribution of Different Business Segments to Overall Revenue
In the nine months ending September 30, 2024, the contributions to total revenue were as follows:
- Physical Therapy Operations: 85.8%
- Industrial Injury Prevention Services: 14.2%
Analysis of Significant Changes in Revenue Streams
The increase in revenue from physical therapy operations was primarily driven by:
- An increase in patient visits by 182,804, or 4.9%, totaling 3,920,388 visits in 2024 compared to 3,737,584 in 2023.
- A rise in the net rate per patient visit to $104.71 in 2024 from $102.50 in 2023.
- Net clinics added during the year, contributing to the overall increase in service volume.
Other revenues, including management contract revenue, also increased by $1.3 million, or 15.0%, totaling $10.1 million for the 2024 Nine Months.
Summary of Key Financial Metrics
| Metric | 2024 Nine Months | 2023 Nine Months | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Net Revenue | $490,900,000 | $450,000,000 | $40,900,000 | 9.1% |
| Operating Costs | $399,504,000 | $359,000,000 | $40,504,000 | 11.3% |
| Gross Profit | $91,394,000 | $91,000,000 | $394,000 | 0.4% |
A Deep Dive into U.S. Physical Therapy, Inc. (USPH) Profitability
Profitability Metrics
Gross Profit: For the nine months ended September 30, 2024, gross profit from physical therapy operations was $76.4 million, or 18.2% of net revenue, compared to $78.8 million, or 20.2% of net revenue for the same period in 2023. Excluding costs associated with clinic closures of $4.1 million, gross profit was $80.5 million, or 19.1% of net revenue.
Operating Profit: Operating income for the nine months ended September 30, 2024, was $48.7 million compared to $52.9 million in 2023. Excluding clinic closure costs, operating income was $52.8 million.
Net Profit: Net income attributable to shareholders for the nine months ended September 30, 2024, was $22.2 million, or $1.32 per share, compared to $27.6 million, or $1.72 per share in the previous year.
| Metric | 2024 Nine Months | 2023 Nine Months | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Gross Profit | $76.4 million (18.2%) | $78.8 million (20.2%) | ($2.4 million) | (3.1%) |
| Operating Income | $48.7 million | $52.9 million | ($4.2 million) | (7.9%) |
| Net Income | $22.2 million ($1.32/share) | $27.6 million ($1.72/share) | ($5.4 million) | (19.6%) |
Trends in Profitability: The gross profit margin decreased from 20.2% in 2023 to 18.2% in 2024. Operating income saw a decline from $52.9 million to $48.7 million, reflecting increased operational costs.
Comparison with Industry Averages: The industry average gross profit margin for physical therapy services is approximately 20%, indicating that the company is currently below the industry norm.
Operational Efficiency: Operating costs increased to $399.5 million for the nine months ended September 30, 2024, up from $359.0 million in the previous year, reflecting a 11.3% increase. The increase in operating costs was primarily driven by the addition of new clinics.
Cost Management Insights: The provision for credit losses was $5.1 million for the 2024 nine months, consistent with 1.2% of net revenues, indicating stable credit management.
Summary of Profitability Metrics: The shift in profitability metrics highlights the challenges faced in maintaining margins amid rising operational costs. The company's focus on managing expenses will be crucial for improving profitability in the future.
Debt vs. Equity: How U.S. Physical Therapy, Inc. (USPH) Finances Its Growth
Debt vs. Equity: How U.S. Physical Therapy, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total debt for U.S. Physical Therapy, Inc. amounted to $143.7 million, which includes both short-term and long-term debt. The breakdown is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Term Facility | $140,625 |
| Other Debt | $3,059 |
| Total Debt | $143,684 |
The long-term debt, net of current portions, was $133.7 million as of the same date.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for U.S. Physical Therapy, Inc. stands at 1.52, calculated by dividing total debt by total equity of approximately $94.5 million. This ratio is above the industry average of 1.0, indicating a higher reliance on debt financing compared to peers in the healthcare sector.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In 2024, the company decreased its interest expense to $6.0 million from $7.3 million in 2023, primarily due to lower outstanding borrowings. The interest rate on the credit facility was 4.7% for the 2024 Third Quarter.
How the Company Balances Between Debt Financing and Equity Funding
U.S. Physical Therapy, Inc. has strategically utilized both debt and equity to finance its growth. The company raised approximately $24 million through a secondary stock offering in May 2023, which contributed to its cash reserves. This balance allows the company to fund acquisitions and expansion while managing its financial leverage effectively.
Debt and Equity Structure Summary
| Metric | Value |
|---|---|
| Total Debt | $143,684,000 |
| Long-term Debt | $133,659,000 |
| Debt-to-Equity Ratio | 1.52 |
| Interest Expense (2024) | $6,000,000 |
| Interest Rate (Credit Facility) | 4.7% |
| Cash from Equity Offering (2023) | $24,000,000 |
Assessing U.S. Physical Therapy, Inc. (USPH) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio, a measure of short-term liquidity, was reported at 0.83 as of September 30, 2024. This indicates that for every dollar of current liabilities, the company has $0.83 in current assets. The quick ratio, which excludes inventory from current assets, stood at 0.67, suggesting potential liquidity challenges since it is below the ideal benchmark of 1.0.
Working Capital Trends
As of September 30, 2024, working capital was calculated at $(10.1) million, a decrease from $8.3 million in the previous year. This reflects a $18.4 million decline in available short-term assets to cover liabilities, raising concerns about the company's ability to meet its obligations without additional financing.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reported the following:
| Cash Flow Categories | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $55,531 | $55,143 |
| Investing Activities | $(54,597) | $(36,601) |
| Financing Activities | $(36,800) | $97,549 |
Net cash provided by operating activities remained relatively stable, increasing slightly from $55.1 million in 2023 to $55.5 million in 2024. However, the company experienced a significant increase in cash used in investing activities, which rose from $36.6 million to $54.6 million. The financing activities also showed a stark contrast, shifting from a cash inflow of $97.5 million in 2023 to a cash outflow of $36.8 million in 2024, indicating a substantial change in capital structure and funding strategy.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents were $117.0 million, a decline from $152.8 million at the end of 2023. The company had $140.6 million of outstanding borrowings and $175.0 million available under its revolving credit facility. With these figures, the company believes it has sufficient liquidity to meet its short-term obligations through at least September 30, 2025.
Is U.S. Physical Therapy, Inc. (USPH) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we'll analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) Ratios
The following table outlines the relevant valuation ratios:
| Ratio | Value |
|---|---|
| Price-to-Earnings (P/E) | 19.1 |
| Price-to-Book (P/B) | 2.4 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | 11.3 |
Stock Price Trends
Over the past 12 months, the stock price has exhibited the following trends:
- 12-Month High: $38.50
- 12-Month Low: $25.75
- Current Stock Price (as of October 2024): $32.10
- Percentage Change (12 months): +8.5%
Dividend Yield and Payout Ratios
Dividend details for the company are as follows:
| Metric | Value |
|---|---|
| Dividend Yield | 1.7% |
| Dividend Payout Ratio | 34.4% |
Analyst Consensus on Stock Valuation
The latest analyst ratings are summarized below:
| Analyst Recommendation | Count |
|---|---|
| Buy | 8 |
| Hold | 5 |
| Sell | 2 |
Analysts generally view the stock as a moderate buy, indicating a preference for its current valuation metrics relative to market performance.
Key Risks Facing U.S. Physical Therapy, Inc. (USPH)
Key Risks Facing U.S. Physical Therapy, Inc.
Industry Competition: The physical therapy industry is highly competitive, with numerous providers vying for market share. The company's ability to maintain its position is challenged by both established players and new entrants. In the 2024 Nine Months, revenues from industrial injury prevention services increased by $12.2 million, or 21.0%, indicating a growing segment but also heightened competition.
Regulatory Changes: Changes in healthcare regulations can significantly impact operations. The company faces potential compliance costs and operational adjustments to align with evolving regulations. The provision for income taxes was $8.8 million in the 2024 Nine Months, compared to $10.8 million in the 2023 Nine Months, reflecting ongoing regulatory challenges.
Market Conditions: Economic fluctuations can affect patient access to physical therapy services. The total net revenue for the 2024 Nine Months was $490.9 million, a 9.1% increase from $450.0 million in the 2023 Nine Months. However, operating costs also increased by $40.5 million, or 11.3%, indicating potential pressure on margins.
Operational Risks
The company reported operating income of $48.7 million for the 2024 Nine Months, down from $52.9 million in the prior year. This decline highlights operational challenges, including the impact of clinic closures, which incurred costs of $4.1 million. The closure of 43 clinics during this period has raised concerns about service availability and revenue generation.
Financial Risks
Financial health is also at risk due to increasing interest expenses, which were $6.0 million in the 2024 Nine Months, down from $7.3 million in the previous year. This reduction indicates a potential improvement in debt management, yet the company still carries significant debt with $140.6 million in outstanding borrowings.
Strategic Risks
The strategic direction of the company involves expansion and acquisitions, which carry inherent risks. The company recognized a loss of $5.3 million from the change in fair value of contingent earn-out consideration for acquisitions. This reflects the financial implications of growth strategies that may not yield expected returns.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition from new and existing players. | Revenues from industrial injury prevention increased by $12.2 million. |
| Regulatory Changes | Compliance costs due to changing healthcare regulations. | Provision for income taxes at $8.8 million. |
| Market Conditions | Economic fluctuations affecting patient access. | Net revenue increased to $490.9 million, but operating costs rose by $40.5 million. |
| Operational Risks | Decline in operating income due to clinic closures. | Operating income at $48.7 million, down from $52.9 million. |
| Financial Risks | Interest expenses and outstanding debt management. | Interest expense at $6.0 million with $140.6 million in borrowings. |
| Strategic Risks | Financial implications of acquisitions. | Loss of $5.3 million from changes in fair value of contingent considerations. |
Mitigation Strategies: The company has been focusing on reducing operating costs and improving efficiency. Corporate office costs for the 2024 Nine Months were $42.7 million, which is 8.7% of net revenue, slightly up from 8.5% in the prior year. This indicates a commitment to maintaining operational discipline while navigating the competitive landscape.
Future Growth Prospects for U.S. Physical Therapy, Inc. (USPH)
Future Growth Prospects for U.S. Physical Therapy, Inc.
Analysis of Key Growth Drivers
U.S. Physical Therapy, Inc. is positioned for substantial growth through several key drivers, including strategic clinic expansions, an increase in patient visits, and enhanced service offerings.
- Clinic Additions: The company added 33 clinics during the nine months ended September 30, 2024, compared to 46 clinics added during the year ended December 31, 2023.
- Market Expansion: Revenues from physical therapy operations increased by $28.7 million, or 7.3%, to $420.6 million in the 2024 Nine Months compared to $391.9 million in the 2023 Nine Months.
- Increased Patient Volume: Total patient visits rose by 182,804, or 4.9%, to 3,920,388 in the 2024 Nine Months from 3,737,584 in the 2023 Nine Months.
Future Revenue Growth Projections
Revenue growth projections indicate a positive trajectory for the company, fueled by organic growth and strategic acquisitions. The estimated revenue for the 2024 fiscal year is projected to reach approximately $490.9 million, reflecting a growth of 9.1% from $450.0 million in 2023.
Earnings Estimates
Earnings per share for the 2024 Nine Months is estimated at $1.32, a decrease from $1.72 in the 2023 Nine Months, primarily due to clinic closure costs.
Strategic Initiatives and Partnerships
Strategic acquisitions continue to be a focus area for growth. Notably, on March 29, 2024, the company acquired a 50% equity interest in a nine-clinic physical therapy practice for approximately $16.4 million. This acquisition strategy enhances market presence and service capabilities.
Competitive Advantages
The company holds several competitive advantages that position it favorably for growth:
- Established Brand Recognition: A strong reputation in the physical therapy market supports patient retention and acquisition.
- Diverse Service Offerings: Expansion into Industrial Injury Prevention Services (IIP) saw revenues increase by $12.2 million, or 21.0%, to $70.3 million for the 2024 Nine Months.
- Operational Efficiency: The gross profit margin from IIP services improved to 21.4% for the 2024 Nine Months.
Financial Metrics Overview
| Metric | 2024 Nine Months | 2023 Nine Months | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Total Revenue | $490.9 million | $450.0 million | $40.9 million | 9.1% |
| Net Income | $22.2 million | $27.6 million | $(5.4) million | (19.6%) |
| Operating Income | $48.7 million | $52.9 million | $(4.2) million | (7.9%) |
| Gross Profit Margin | 18.6% | 20.2% | (1.6%) | (7.9%) |
These financial metrics highlight the company's growth trajectory and operational performance, reflecting both opportunities and challenges in the current market landscape.
U.S. Physical Therapy, Inc. (USPH) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- U.S. Physical Therapy, Inc. (USPH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of U.S. Physical Therapy, Inc. (USPH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View U.S. Physical Therapy, Inc. (USPH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.