U.s. Physical Therapy, Inc. · NYSE:USPH
U.s. Physical Therapy — Investor Presentation (November 2022)
41 slides from U.s. Physical Therapy's investor presentation, Nov 7, 2022
Slide 1: Investor Presentation November 7, 2022
TM Investor Presentation November 7, 2022
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements, which involve numerous risks and uncertainties. Included are statements relating to opening of new clinics, availability of personnel and reimbursement environment. The forward-looking statements are based on the Compa
Slide 3: Investment Highlights
Investment Highlights • Currently 629 outpatient physical and occupational therapy clinics across 40 states Established • One of the largest owner/operator of PT clinics Company • Growing Industrial Injury Prevention business • One of two publicly-traded, pure play providers • US rehab market > $30B
Slide 4: Focused Business Model
Focused Business Model • Specialize in trauma, sports, work-related and pre and post surgical cases • Partner with experienced physical therapists – Drive volume via referrals – Augment sales with marketing reps • Historical focus on organic growth via lower cost de novo (start-up) clinics • Strateg
Slide 5: Large and Growing Market Opportunity
Large and Growing Market Opportunity • $30B+ U.S. rehab market with projected growth • Favorable demographics – physically active, aging and obese population segments • Untapped market potential – each year ~50% of Americans over the age of 18 develop a musculoskeletal injury that lasts more than 3
Slide 6: Setting for Physical Therapy Care
Setting for Physical Therapy Care Within physical therapy, outpatient clinics are the leading setting for care. 100% Other Offices of physicians 80% Home health total 60% Hospitals; state, local, and private 40% 20% Outpatient clinics 0% • Orthopedic rehab is the primary driver of physical therapy s
Slide 7: Payers See Significant ROI for Physical Therapy
Payers See Significant ROI for Physical Therapy Without PT Hip replacement Hip replacement surgery ($56,000) surgery ($56,000) Inpatient care Inpatient care ($15,000) ($15,000) Outpatient Physical Home Therapy Clinic Readmission Readmission Rate of 10% Rate of 20% Full Recovery Full Recovery Total T
Slide 8: Competitive Landscape
Competitive Landscape • Highly fragmented U.S. outpatient rehab market with 37,000 + clinics(1) • No company with >10% market share • USPh is one of the largest owner/operator of PT clinics – Select Medical/Physio 1,933 Clinics – ATI 900 Clinics+ – USPh 629 Clinics (1)Source: “Industry Trends in M&A
Slide 9: Growth Strategy
Growth Strategy Drive organic growth through de novo PT/OT clinic openings, utilize true partnership model Maximize profits of existing facilities by growing patient volume, improving pricing and increasing efficiencies Augment organic growth through strategic acquisitions 9
Slide 10: USPH Partnership Advantages
USPH Partnership Advantages Less Administrative More Resources Burden Accounting Access to Capital for Development of Additional HR Clinics Real Estate Less Personal Financial Risk Construction Unlimited Earnings Potential Purchasing Full Benefit Package Marketing Ongoing Guida
Slide 11: National Footprint
National Footprint 614 Clinics in 40 States as of September 30, 2022 USPh »
Slide 12: Acquisition Strategy
Acquisition Strategy • Completed 45 acquisitions since 2005 • Range in size from 3 to 52 clinics • Acquisitions include five industrial injury prevention services businesses • Acquisition criteria: Owner therapists continue to operate clinics and retain significant equity interest Immediately ac
Slide 13: Scale Advantages Create a Robust Business Case for Consolidation
Scale Advantages Create a Robust Business Case for Consolidation • Increased likelihood of selection for payor networks Scale is cited as a core criterion by specialty network managers and payors. Some limited leverage in negotiations with payors for reimbursement • Higher likelihood of referrer
Slide 14: New Clinics / Brands 2022
New Clinics / Brands 2022 From 1/1/2021 – 9/30/2022 14
Slide 15: Executive Management
Executive Management • Chris Reading – Chief Executive Officer – Joined USPh as COO in November 2003 – Promoted to CEO and Board in November 2004 – Previously Senior Vice President of Operations with HealthSouth, managed over 200 facilities including OP, ASC, DX Imaging and rehab hospital operations
Slide 16: USPH Physical Therapy Operations Revenue Mix
USPH Physical Therapy Operations Revenue Mix Percentage of Physical Therapy Percentage of Physical Therapy Operations Revenue For Operations Revenue For Nine Months Ended September 30, 2022 Year Ended December 31, 2021 Other Other Workers Comp 7% Workers Comp 8% 10% 10% Medicaid Private 4% Insurance
Slide 17: Industrial Injury Prevention
Industrial Injury Prevention • Both internally and through acquisition, USPh has expanded its industry-focused Industrial Injury Prevention Services business. • USPh made its initial acquisition in the Industrial Injury Prevention Services space in March 2017. • Since then, the business has grown bo
Slide 18: USPH Total Revenue Mix
USPH Total Revenue Mix Percentage of Revenue For Percentage of Revenue For Nine Months Ended Year Ended December 31, 2021 September 30, 2022 Industrial Injury Industrial Injury Prevention Services Prevention Services 14% 9% 86% 91% Physical Therapy Operations Physical Therapy Operations (including m
Slide 19: USPH Physical Therapy Growth Drivers
USPH Physical Therapy Growth Drivers Prior to Covid-19 pandemic and in 2021 each driver showed robust growth Number of Clinics* Daily Patient Visits Per Clinic 578 591 583 554 591 540 489 508 29.1 472 26.6 27.6 24.6 431 25 25.9 24.1 21.7 21.5 22.9 2012-21 2012-2021 CAGR+3.6% CAGR +3.3% 12 13 14 15 1
Slide 20: USPH Physical Therapy Operations Margin
USPH Physical Therapy Operations Margin Annual Margins 26.0% 25.0% 24.0% 23.8% 23.6% 23.1% 23.0% 22.7% 22.5% 22.0% 21.0% 20.0% 2017 2018 2019 2020 2021 20
Slide 21: USPH Physical Therapy Operations Margin Third Quarter
USPH Physical Therapy Operations Margin Third Quarter Margins 30.0% 28.0% 28.0% 26.0% 23.9% 23.8% 24.0% 22.8% 22.0% 20.0% 18.7% 18.0% 16.0% 14.0% 12.0% Q32018 Q32019 Q32020 Q32021 Q32022 21
Slide 22: Industrial Injury Prevention Annual Progression
Industrial Injury Prevention Annual Progression $50.0 Revenue (In millions) 30.0% Margin Percentage (%) $43.9 25.7% $45.0 24.4% $39.2 25.0% $40.0 $37.5 22.4% 20.4% $35.0 20.0% $30.0 $25.5 $25.0 15.0% 13.3% $20.0 10.0% $15.0 $10.0 $4.9 5.0% $5.0 $0.0 0.0% 2017 2018 2019 2020 2021 2017 2018 2019 2020
Slide 23: Industrial Injury Prevention Third Quarter Progression
Industrial Injury Prevention Third Quarter Progression $25.0 Revenue (in millions) Margin Percentage (%) 35.0% $20.2 $20.0 29.7% 30.0% 28.6% 25.5% 25.0% $15.0 21.9% 19.9% 20.0% $10.5 $9.9 $10.0 $10.0 15.0% $7.3 10.0% $5.0 5.0% $0.0 0.0% Q3 2018 Q3 2019 Q3 2020 Q3 2021 Q3 2022 Q3 2018 Q3 2019 Q3 2020
Slide 24: Dividend
Dividend • The Company initiated a quarterly dividend in 2011, and has subsequently raised the quarterly dividend rate each year. • Temporarily suspended quarterly dividend after Q1 2020 due to uncertainty associated with Covid-19 pandemic • Reinstated the quarterly dividend in Q1 2021 at $0.35 per
Slide 25: COVID-19
COVID-19 • With the March onset of the pandemic, the Company took a number of actions to preserve cash and mitigate losses including staffing adjustments and clinic closures • Initially, 70 out of 585 clinics were closed (30 temporarily and 40 permanently) based on the presumption of lower patient v
Slide 26: COVID-19 Recovery
COVID-19 RECOVERY Record High Average Visits per Clinic per Day 30.0 29.5 29.8 29.5 28.8 28.2 27.5 28.0 27.7 27.1 27.9 26.9 26.2 25.8 18.9 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 In April 2020, patient volumes were approximately 45% of pre-COVID volumes. Volumes
Slide 27: Strong Cash Flow and Balance Sheet
Strong Cash Flow and Balance Sheet • At September 30, 2022, we had $37.9 million in cash and $150 million outstanding on our term note. We have not drawn on our line of credit, therefore, we have $175 million available. • De novo clinics (new clinic development) are financed through free cash flow,
Slide 28: Strong Return to Shareholders
Strong Return to Shareholders • CEO joined Company in Fall of 2003 • Total Cumulative Return through December, 2021 including dividends is $91.22. • Total Cumulative Return Percentage is 747.1%. • Average Annual Return is 40.9% • Market Cap Increase during time period is from $154.7 million to $1.2
Slide 29: Third Quarter 2022 Results
Third Quarter 2022 Results Three Months Ended September 30, 2022 September 30, 2021 Operations (in millions, except per share data) Revenue $ 139.6 M $ 125.9 M Gross Profit $ 26.8 M $ 29.8 M Operating Income $ 15.0 M $ 16.9 M Net Income (GAAP)* $ 12.8 M $ 14.1 M Operating Results (Non GAAP)** $ 7.5
Slide 30: Nine Months Ended September 30, 2022, and 2021 Results
Nine Months Ended September 30, 2022, and 2021 Results Nine Months Ended September 30, 2022 September 30, 2021 Operations (in millions, except per share data) Revenue $ 412.0 M $ 365.2 M Gross Profit $ 84.2 M $ 90.0 M Operating Income $ 50.0 M $ 54.2 M Net Income (GAAP)* $ 29.6 M $ 30.6 M Operating
Slide 31: Year Ended December 31, 2021 Results
Year Ended December 31, 2021 Results Year Ended December 30, 2021 Operations (in millions, except per share data) Revenue $ 495.0 M Gross Profit $ 117.2 M Operating Income $ 70.6 M Net Income (GAAP)* $ 40.8 M Operating Results (without Relief Funds)** $ 40.9 M Operating Results (with Relief Funds)**
Slide 32: Nine Months Ended September 30, 2022, and 2021 Results
Nine Months Ended September 30, 2022, and 2021 Results Nine Months Ended (in thousands) September 30, 2022 September 30, 2021 Gross Profit $ 84,193 $ 89,999 PT Gross Margin $ 70,169 $ 80,959 PT Gross Margin Percentage 20.2% 24.8% Management Contracts Margin $ 1,344 $1,119 Management Contracts Margin
Slide 33: Three Months Ended September 30, 2022 Results
Three Months Ended September 30, 2022 Results Three Months Ended (in thousands) September 30, 2022 September 30, 2021 Gross Profit $ 26,784 $ 29,799 Gross Profit $ 26,784 $ 29,799 PT Gross Margin $ 21,932 $ 26,854 PT Gross Margin Percentage 18.7% 23.7% Management Contracts Margin $ 447 $ 269 Managem
Slide 34: Summary
Summary Publicly-traded, pure play operator of rehab clinics Proven business model, driven by organic growth and acquisitions Significant scale with national footprint Large and growing market/favorable demographics Strong cash flow and balance sheet 34
Slide 35: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA Three Months Ended September 30, (in thousands) Adjusted EBITDA 2022 2021* Net revenue $ 139,602 $ 125,893 Net income attributable to USPh shareholders $ 9,557 $ 10,009 Depreciation and amortization $ 3,652 $ 3,036 Interest income $ (65
Slide 36: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA Nine Months Ended September 30, (in thousands) Adjusted EBITDA 2022 2021* Net revenue $ 411,962 $ 365,189 Net income attributable to USPh $ 29,551 $ 30,618 Depreciation and amortization $ 10,950 $ 8,520 Other and Interest income $ (790)
Slide 37: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA 2021* Adjusted EBITDA (in thousands) Net Revenue $ 495,022 Net income attributable to USPH $ 40,831 Depreciation and amortization $ 11,591 Relief funds $ (4,597) Interest income $ (199) Settlement of a legal matter $ 2,635 Interest expe
Slide 38: Reconciliation of Non-GAAP Financial Measures – Operating Results
Reconciliation of Non-GAAP Financial Measures – Operating Results Three Months Ended September 30, (in thousands except per share data) Operating Results 2022 2021 * Computation of earnings per share – USPH shareholders: Net Income attributable to USPh Shareholders $ 9,557 $ 10,009 Charges to retain
Slide 39: Reconciliation of Non-GAAP Financial Measures – Operating Results
Reconciliation of Non-GAAP Financial Measures – Operating Results Nine Months Ended September 30, (in thousands except per share data) Operating Results 2022 2021 * Computation of earnings per share – USPH shareholders: Net Income attributable to USPh Shareholders $ 29,551 $ 30,618 Charges to retain
Slide 40: Reconciliation of Non-GAAP Financial Measures – Operating Results
Reconciliation of Non-GAAP Financial Measures – Operating Results Year Ended December 31, (in thousands except per share data) 2021 2020 Computation of earnings per share – USPH shareholders: $ 40,831 $ 35,194 Net Income attributable to USPh Shareholders Charges (credits) to retained earnings: $ (13
Slide 41: USPH One Partner
USP ONE PARTNER
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