US Physical Therapy (NYSE: USPH) reported Q3 EPS of $0.61, $0.10 better than the analyst estimate of $0.51. Revenue for the quarter came in at $108.9 million versus the consensus estimate of $103.52 million.

Third Quarter 2020 Compared to Third Quarter 2019

• Reported net revenues in the Third quarter of 2020 was $108.9 million as compared to $117.3 million in the 2019 Third Quarter. See detailed discussion below for each category of reported revenue.
• Net patient revenues from physical therapy operations was approximately $96.4 million in the 2020 Third Quarter and $104.4 million in the 2019 Third Quarter. Included in net patient revenues for the 2019 Third Quarter was $3.2 million related to clinics subsequently closed or sold as compared in $0.1 million related to those same clinics in the 2020 Third Quarter. During the 2020 nine month period, the Company sold its interest in 12 closed clinics. For comparison purposes, adjusted for revenue from the clinics sold or closed, net patient revenues from physical therapy operations was approximately $96.3 million in the 2020 Third Quarter and $101.2 million in the 2019 Third Quarter. Included in the $96.3 million in net patient revenues for the 2020 Third Quarter was $3.8 million related to clinics opened or acquired after September 30, 2019 (“New Clinics”). Net patient revenues related to clinics opened or acquired prior to October 1, 2019 decreased by $8.7 million (“Mature Clinics”).
• Including all clinics operational during the periods, the average net patient revenue per visit was $105.91 for the 2020 Third Quarter as compared to $104.80 for the 2019 period. Total patient visits were 910,200 in the 2020 Third Quarter and 996,100 for the 2019 Third Quarter.
• Revenue from physical therapy management contracts was $2.0 million for the Third Quarter of 2020 as compared to $2.1 million in the 2019 comparable period.
• Revenue from the industrial injury prevention business was $10.0 million in the 2020 Third Quarter, an increase of $0.1 million or approximately 0.7% as compared to $9.9 million in the 2019 Third Quarter.
• Other miscellaneous revenue was $0.5 million in the 2020 Third Quarter and $0.7 million in the 2019 Third Quarter. Other miscellaneous revenue includes physical therapy services, including athletic trainers, provided on-site such as for schools.
• Total operating costs, excluding closure costs, were $78.5 million in the 2020 Third Quarter, or 72.1% of net revenues, a reduction of 460 basis points as compared to $89.9 million in the 2019 Third Quarter, or 76.7% of net revenues. Included in operating costs for the 2020 quarter was $3.1 million related to New Clinics, of which $1.2 million related to clinics acquired in February 2020. Adjusted for the operating costs for clinics sold or closed in 2020 and 2019 of $0.0 and $3.1 million recorded in the 2020 and 2019 Third Quarters, respectively, operating costs for Mature Clinics were reduced by $7.2 million in the Third Quarter 2020 compared to the Third Quarter 2019. In addition, operating costs related to the industrial injury prevention business and management contracts were reduced by $0.8 million. Total salaries and related costs, including physical therapy operations and the industrial injury prevention business, were 52.8% of net revenues in the 2020 Third Quarter, a 410 basis points reduction versus 56.9% in the 2019 Third Quarter. Rent, supplies, contract labor and other costs as a percentage of net revenues were 18.1% in the 2020 Third Quarter versus 18.9% in the 2019 Third Quarter. The provision for doubtful accounts as a percentage of net revenue was 1.2% in the 2020 Third Quarter and 0.8% in the 2019 Third Quarter.
• Gross profit for the 2020 Third Quarter, excluding closure costs, was $30.4 million, an increase of $3.0 million or approximately 11% as compared to $27.4 million in the 2019 Third Quarter. The gross profit percentage, excluding closure costs, was 27.9% of net revenue in the 2020 Third Quarter, an increase of 460 basis points as compared to 23.3% in the 2019 Third Quarter. The gross profit percentage for the Company’s physical therapy clinics, excluding closure costs, was 28.0% in the 2020 Third Quarter an improvement of 410 basis points as compared to 23.9% in the 2019 Third Quarter. The gross profit percentage on physical therapy management contracts was 19.8% in the 2020 Third Quarter, up 860 basis points as compared to 11.2% in the 2019 Third Quarter. The gross profit for the industrial injury prevention business was $2.9 million, or 28.6%, in the 2020 Third Quarter an improvement of $1.0 million or 870 basis points as compared to $2.0 million, or 19.9%, in the 2019 Third Quarter.
• Corporate office costs were $10.4 million in the 2020 Third Quarter compared to $10.5 million in the 2019 Third Quarter. Corporate office costs were 9.6% of net revenues for the 2020 Third Quarter as compared to 9.0% for the 2019 Third Quarter.
• Operating income for the 2020 Third Quarter was $19.9 million an increase of $3.1 million or 18.5% as compared to $16.8 million for the 2019 Third Quarter. Operating income as a percentage of net revenue increased by 400 basis points from 14.3% in the 2019 period to 18.3% in 2020. As compared to the Second Quarter of 2020, operating income in the Third Quarter of this year increased $9.6 million or 94.3%. See discussion above related to effects of COVID-19.
• Included in other income in the third quarter of 2020 was $0.4 million pre-tax of Relief Funds. See discussion of Relief Funds below.
• Interest expense was $351,000 in the 2020 Third Quarter and $557,000 in the 2019 Third Quarter due to reduced borrowings under the Company’s revolving credit line.
• The provision for income tax was $4.3 million for the 2020 Third Quarter and $3.2 million for the 2019 Third Quarter. The provision for income tax as a percentage of income before taxes less net income attributable to non-controlling interest was 28.2% for the 2020 Third Quarter and 26.1% for the 2019 Third Quarter.
• Net income attributable to non-controlling interests (permanent equity) was $1.8 million in the 2020 Third Quarter and $1.6 million in the 2019 Third Quarter. Net income attributable to redeemable non-controlling interests (temporary equity) was $3.0 million in the 2020 Third Quarter and $2.4 million in the 2019 Third Quarter.

For earnings history and earnings-related data on US Physical Therapy (USPH) click here.