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Mar 31, 2020
US Physical Therapy Q1 2020 Earnings Report
Results were negatively impacted by the effects of the COVID-19 pandemic.
Key Takeaways
U.S. Physical Therapy reported first quarter earnings for 2020, which were negatively impacted by the COVID-19 pandemic, with an estimated loss of more than $8 million in revenue and related contribution margin. The company experienced significantly lower physical therapy revenue and expects to incur losses in the near term. Management has taken steps to mitigate operating losses through furloughs, salary cuts, and expense reductions.
Net revenues for the first quarter of 2020 increased 2.0% to $112.7 million, excluding the loss of revenues from sold clinics in June 2019.
Net patient revenues from physical therapy operations decreased 0.8% to $100.1 million due to the adverse effects of COVID-19, with an estimated loss of 77,000 patient visits and more than $8 million in revenue and contribution margin.
Revenue from the industrial injury prevention business increased 43.1% to $9.9 million due to internal growth and an acquisition, though it also experienced a slight revenue loss of approximately $0.1 million in March due to the pandemic.
Operating income for the first quarter of 2020 was $4.0 million, a decrease compared to $15.4 million for the same period in 2019, with operating income as a percentage of net revenue decreasing from 13.3% to 3.6%.
US Physical Therapy
US Physical Therapy
US Physical Therapy Revenue by Segment
Revenue by Segment
Industrial Injury Prevention Services Revenue
CapyFin.com Forward Guidance
Management cannot be certain whether the Company will be in compliance with covenants at the end of the second quarter of 2020 and anticipates an amendment will be in place by the end of the second quarter of 2020.
Positive Outlook
- Communities begin to re-open.
- Volumes of new patient referrals have begun to increase.
- Patient visits have begun to increase.
- Impact has been considerably less in our industrial injury prevention business than in our core physical therapy business.
- Strong partner-centric Company with an excellent balance sheet.
Challenges Ahead
- The Company continues to experience significantly lower physical therapy revenue than normal.
- The Company expects to incur losses in the near term.
- Management cannot be certain whether the Company will be in compliance with covenants at the end of the second quarter of 2020.
- Additional Closure Costs During April 2020 and May 2020, the Company closed 11 clinics and 2 clinics, respectively.
- The Company will record closure costs in the second quarter of at least $0.9 million.