BOLINGBROOK, Ill., Nov. 9, 2021 /PRNewswire/ -- ATI Physical
Therapy – ("ATI" or the "Company") (NYSE: ATIP), the largest
single-branded outpatient physical therapy provider in the United
States, today reported financial results for the third quarter
ended September 30, 2021.
"In October, we previewed select third quarter results and
revised 2021 guidance," said Jack
Larsen, Executive Chairman of ATI Physical Therapy. "During
the quarter, we implemented targeted measures to re-engage our
clinical team and saw improved existing therapist retention and
acceleration of new hire adds with clinical FTE increasing from
2,321 in July 2021 to 2,412 in
September 2021. Through it all, our
nationwide team remained focused on our mission to deliver high
quality care and service to our customers as reflected in our Net
Promotor Score of 73 and Google Star Rating of 4.9 for the
quarter."
Mr. Larsen continued, "As previously reported, volume demand was
essentially flat in the third quarter of 2021 compared to the
second quarter when considering normal seasonality. Our commercial
team is focused on driving visits growth through strengthening
relationships with our partner providers and other referral sources
in each local market across our geographic footprint. I am excited
about the progress made with our clinical staff and the platform
that ATI has built, and we believe we are well positioned to
capitalize on favorable industry tailwinds and long-term growth
opportunities. While we work to restore volume, we are committed to
disclosing expanded performance metrics to enable our stakeholders
to better understand our value proposition and clearly track our
progression."
Joe Jordan, Chief Financial
Officer of ATI Physical Therapy, added, "We remain well capitalized
with $135 million of available
liquidity as of September 30, 2021
comprised of $66 million in cash on
hand and $69 million of availability
on our revolver, and we believe this positions us to weather the
near-term challenges. The leverage ratio under our credit agreement
for the third quarter of 2021 was approximately 4.1x."
Third Quarter 2021 Results
Supplemental tables of key performance metrics for the first
quarter of 2019 through the third quarter of 2021 are presented
after the financial statements at the end of this press
release. Commentary on performance results in the third
quarter of 2021 is as follows:
- Net operating revenue was $159.0
million compared to $164.0
million in the second quarter of 2021 and $148.7 million in the third quarter of 2020, a
decrease of 3.1% quarter over quarter and an increase of 7.0% year
over year
-
- Net patient revenue was $141.9
million compared to $146.7
million in the second quarter of 2021 and $132.8 million in the third quarter of 2020, a
decrease of 3.3% quarter over quarter and an increase of 6.8% year
over year. See below for discussion of drivers to net patient
revenue, i.e. patient visits and Rate per Visit.
- Other revenue was $17.2 million
compared to $17.4 million in the
second quarter of 2021 and $15.9
million in the third quarter of 2020, a decrease of 1.1%
quarter over quarter and an increase of 8.2% year over year. Other
revenue was essentially flat quarter over quarter.
- Visits per Day ("VPD") were 20,674 compared to 21,569 in the
second quarter of 2021 and 18,159 in the third quarter of 2020, a
decrease of 4.1% quarter over quarter and an increase of 13.8% year
over year.
VPD per Clinic was 23.1 compared to 24.3 in the second quarter of
2021 and 20.8 in the third quarter of 2020. In a normal year,
VPD per Clinic in the third quarter is generally seasonally lower
than the second quarter by ~1. While visits performance varied by
region, across the platform VPD per Clinic in the third quarter of
2021 decreased 1.2 quarter over quarter and increased 2.3 year over
year.
- Rate per Visit was $105.56
compared to $106.26 in the second
quarter of 2021 and $112.51 in the
third quarter of 2020, a decrease of 0.7% quarter over quarter and
6.2% year over year. There was no notable change in payor mix in
the third quarter of 2021 compared to the second quarter, and the
marginal quarter over quarter variation was within historical
normal bounds. The decrease year over year was primarily due to
unfavorable mix shifts related to payor classes, states and
services.
- Salaries and related costs were $86.8
million compared to $80.9
million in the second quarter of 2021 and $78.0 million in the third quarter of 2020, an
increase of 7.3% quarter over quarter and 11.3% year over year.
Salaries and related costs per Visit were $64.62 compared to $58.62 in the second quarter of 2021 and
$66.12 in the third quarter of 2020,
an increase of 10.2% quarter over quarter and a decrease of 2.3%
year over year. The sequential quarter increase was primarily
driven by adding staff to reestablish the full clinic support
structure across all our clinics in addition to wage inflation in
certain pockets of the country as we implemented changes to
compensation and benefits.
- Rent, clinic supplies, contract labor and other was
$45.8 million compared to
$44.1 million in the second quarter
of 2021 and $39.2 million in the
third quarter of 2020, an increase of 3.8% quarter over quarter and
16.8% year over year.
Rent, clinic supplies, contract labor and other per Clinic was
$51,074 compared to $49,657 in the second quarter of 2021 and
$44,986 in the third quarter of 2020,
an increase of 2.9% quarter over quarter and 13.5% year over year.
The sequential quarter increase was primarily driven by increased
use of contract labor while we worked to fill open positions.
- Provision for doubtful accounts was $3.5
million compared to $3.6
million in the second quarter of 2021 and $2.9 million in the third quarter of 2020.
Provision as a percent of revenue was 2.2% compared to 2.2% in the
second quarter of 2021 and 2.0% in the third quarter of 2020,
reflecting consistent collections experience.
- Selling, general and administrative expenses were $30.8 million compared to $26.4 million in the second quarter of 2021 and
$26.0 million in the third quarter of
2020, an increase of 16.7% quarter over quarter and 18.3% year over
year. The sequential quarter increase was primarily driven by
one-time reorganization and severance costs of $3.6 million due to executive leadership changes
previously reported in July and August in addition to higher
D&O insurance costs as a public company.
- Non-cash goodwill impairment charge was $299.8 million and trade name indefinite-lived
intangible asset impairment charge was $200.6 million. As a result of further revisions
to our forecasts reported in October
2021, including the factors related to our revisions of the
forecasts that were present as of September
30, 2021, it was determined that the fair value amounts of
goodwill and trade name were below their respective carrying
amounts.
- Income tax benefit (expense) was $28.8
million compared to $20.2
million in the second quarter of 2021 and ($2.3) million in the third quarter of 2020. The
income tax benefit of $28.8 million
in the third quarter of 2021 was primarily driven by the income tax
impacts of the non-cash goodwill and intangible asset impairment
charges, partially offset by an increase in valuation
allowances.
- Net (loss) income was $(325.7)
million compared to $(452.5)
million in the second quarter of 2021 and $1.0 million in the third quarter of 2020.
- Adjusted EBITDA was $8.5 million
compared to $24.0 million in the
second quarter of 2021 and $17.3
million in the third quarter of 2020 (excluding CARES Act
Provider Relief Funds of $23.1
million), a decrease of 64.4% quarter over quarter and 50.7%
year over year. The sequential quarter decrease was primarily
driven by lower revenue and higher salaries and related costs and
higher selling, general and administrative expenses.
Adjusted EBITDA margin was 5.4% compared to 14.6% in the second
quarter of 2021 and 11.7% (excluding CARES Act Provider Relief
Funds) in the third quarter of 2020.
- Net (decrease) increase in cash was $(24.5) million compared to $(7.1) million in the second quarter of 2021 and
$12.0 million in the third quarter of
2020. Cash use in the third quarter of 2021 included $4.7 million repayment in connection with the
Medicare Accelerated and Advance Payment Program.
Summary of key balance sheet items as of September 30, 2021 is as follows:
- Cash and cash equivalents totaled $66.1
million, and the revolving credit facility was undrawn with
available capacity of $68.8 million,
net of usage by letters of credit, equaling $134.9 million in available liquidity.
The revolving credit facility has a springing financial covenant.
When the facility is greater than 30% drawn at quarter-end, the
credit agreement leverage ratio may not exceed 6.25x. With cash and
cash equivalents of $66.1 million and
considering revolver capacity before springing the financial
covenant, this equals $87.1 million
in minimum liquidity.
- The credit agreement leverage ratio for the third quarter of
2021 was approximately 4.1x.
Other notable achievements and/or news in the third quarter of
2021 were as follows:
- Opened 18 new clinics in existing states, including
Arizona, Georgia, Texas and Oregon; and closed 7 clinics primarily in
Illinois. This brings the total
number of new clinics for the year to 38. The company continues to
capitalize on growth opportunities in individual markets, while
optimizing its footprint and financial return in other local
markets.
- Net Promotor Score ("NPS") of 73 and Google Star Rating of 4.9,
reflecting continuing high customer satisfaction and brand
loyalty.
- Providers in every ATI clinic across our geographic footprint
reported data under the Medicare Merit-Based Incentive Payment
System ("MIPS") for performance year 2020. In the third quarter of
2021, CMS advised that ATI received a score in the 100th
percentile across the board and will be receiving the highest
possible bonus adjustment to the 2022 Medicare Physician Fee
Schedule for 2022 Medicare reimbursed services. CMS is currently
completing its calculations and is expected to report final MIPS
2022 adjustments for each applicable provider later this year.
2021 Earnings Guidance
As stated in the company's third quarter 2021 earnings preview
announcement on October 19, 2021, ATI
is projecting revenue to be in a range of $620 million to $630
million and Adjusted EBITDA to be in a range of $40 million to $44
million. ATI expects to open 55 to 65 new clinics in
2021.
Third Quarter 2021 Earnings Conference Call
ATI Physical Therapy will host a conference call to discuss
third quarter 2021 results on November 9,
2021 at 5:00 p.m. Eastern
Time. The conference call can be accessed via a live audio
webcast. To join, please access the following web link, Q3
2021 Earnings Conference Call, on the Company's website at
www.atipt.com at least 15 minutes early to register, and
download and install any necessary audio software. A replay of the
call will be available via webcast for on-demand listening shortly
after the completion of the call, at the same web link, and will
remain available for approximately 90 days.
About ATI Physical Therapy
At ATI Physical Therapy, we are passionate about potential.
Every day, we restore it in our patients and activate it in our
team members in our approximate 900 locations across the U.S. With
outcomes from more than 2.5 million unique patient cases, ATI is
making strides in the industry by setting quality standards that
deliver predictable outcomes for our patients with musculoskeletal
(MSK) issues. ATI's offerings span across a broad spectrum for
MSK-related issues. From preventative services in the workplace and
athletic training support to outpatient clinical services and
online physical therapy via its online platform, CONNECT™, a
complete list of our service offerings can be found at ATIpt.com.
ATI is based in Bolingbrook, Illinois.
Forward-Looking Statements
All statements other than statements of historical facts
contained in this communication are forward-looking statements for
purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may generally be identified by the use of words such as
"believe," "may," "will," "estimate," "continue," "anticipate,"
"intend," "expect," "should," "would," "plan," "project,"
"forecast," "predict," "potential," "seem," "seek," "future,"
"outlook," "target" or other similar expressions (or the negative
versions of such words or expressions) that predict or indicate
future events or trends or that are not statements of historical
matters. These forward-looking statements include, but are not
limited to, statements regarding 2021 forecast and other estimates
of financial and performance metrics and market opportunity. These
statements are based on various assumptions, whether or not
identified in this communication, and on the current expectations
of ATI's management and are not predictions of actual performance.
These forward-looking statements are estimates only and are not
intended to serve as, and must not be relied on by any investor as,
a guarantee, an assurance or a definitive statement of fact or
probability. Actual events and circumstances are difficult or
impossible to predict and may differ from assumptions, and such
differences may be material. Many actual events and circumstances
are beyond the control of ATI. These forward-looking statements are
subject to a number of risks and uncertainties, including, but not
limited to:
(i)
|
changes in domestic
business, market, financial, political and legal conditions,
including shifts and trends in payor mix;
|
(ii)
|
the ability to
maintain the listing of the Company's securities on
NYSE;
|
(iii)
|
the ability of the
Company to realize the anticipated benefits of the business
combination;
|
(iv)
|
risks related to the
rollout of ATI's business strategy and the timing of expected
business milestones;
|
(v)
|
the effects of
competition on ATI's future business and the ability of ATI to grow
and manage growth profitably, maintain relationships with customers
and suppliers and retain its management and key
employees;
|
(vi)
|
the ability of the
Company to retain and to hire physical therapists consistent with
its business plan;
|
(vii)
|
the ability of the
Company to develop new and retain and expand relationships with
referral sources;
|
(viii)
|
the outcome of any
legal proceedings that may be instituted against the Company or any
of its directors or officers;
|
(ix)
|
the ability of the
Company to issue equity or equity-linked securities or obtain debt
financing in the future;
|
(x)
|
risks related to
political and macroeconomic uncertainty;
|
(xi)
|
the impact of the
global COVID-19 pandemic on any of the foregoing risks;
|
(xii)
|
risks related to the
impact on our workforce of mandatory COVID-19 vaccination of
employees; and
|
(xiii)
|
those factors
discussed in our amended S-1 registration statement filed with the
SEC on July 28, 2021 under the heading "Risk Factors," and other
documents filed, or to be filed, by ATI with the SEC.
|
If any of these risks materialize or our assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements, including our forecast
update. There may be additional risks that ATI does not presently
know or that ATI currently believes are immaterial that could also
cause actual results to differ from those contained in the
forward-looking statements. In addition, the forward-looking
statements in this communication reflect ATI's expectations, plans
or forecasts of future events and views as of the date of this
communication. ATI anticipates that subsequent events and
developments will cause ATI's assessments with respect to these
forward-looking statements to change. However, while ATI may elect
to update these forward-looking statements at some point in the
future, ATI specifically disclaims any obligation to publicly
update any forward-looking statement, whether written or oral,
which may be made from time to time, whether as a result of new
information, future developments or otherwise, unless required by
applicable law. These forward-looking statements should not be
relied upon as representing ATI's assessments as of any date
subsequent to the date of this press release. Accordingly, undue
reliance should not be placed upon the forward-looking
statements.
Non-GAAP Financial Measures
To supplement the Company's financial information presented in
accordance with GAAP and aid understanding of the Company's
business performance, the Company uses certain non-GAAP financial
measures, namely "Adjusted EBITDA" and "Adjusted EBITDA margin." We
believe Adjusted EBITDA and Adjusted EBITDA margin (i.e. Adjusted
EBITDA divided by Net Operating Revenue) assist investors and
analysts in comparing our operating performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance.
Management believes these non-GAAP financial measures are useful
to investors in highlighting trends in our operating performance,
while other measures can differ significantly depending on
long-term strategic decisions regarding capital structure, the tax
jurisdictions in which we operate and capital investments.
Management uses these non-GAAP financial measures to supplement
GAAP measures of performance in the evaluation of the effectiveness
of our business strategies, to make budgeting decisions, to
establish discretionary annual incentive compensation and to
compare our performance against that of other peer companies using
similar measures. Management supplements GAAP results with non-GAAP
financial measures to provide a more complete understanding of the
factors and trends affecting the business than GAAP results
alone.
Adjusted EBITDA and Adjusted EBITDA margin are not recognized
terms under GAAP and should not be considered as an alternative to
net income (loss) or the ratio of net income (loss) to net revenue
as a measure of financial performance, cash flows provided by
operating activities as a measure of liquidity, or any other
performance measure derived in accordance with GAAP. Additionally,
these measures are not intended to be a measure of cash available
for management's discretionary use as they do not consider certain
cash requirements such as interest payments, tax payments and debt
service requirements. The presentations of these measures have
limitations as analytical tools and should not be considered in
isolation, or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
Please see "Reconciliation of GAAP to Non-GAAP Financial
Measures" below for reconciliations of non-GAAP financial measures
used in this release to their most directly comparable GAAP
financial measures.
Contact:
Joanne
Fong
SVP, Treasurer and Investor Relations
(630) 296-2222 x 7131
investors@atipt.com
ATI Physical
Therapy
|
Condensed
Consolidated Operations Data
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30, 2021
|
|
September
30, 2020
|
|
September
30, 2021
|
|
September
30, 2020
|
|
|
|
|
|
|
|
|
Net patient
revenue
|
$
|
141,855
|
|
|
$
|
132,803
|
|
|
$
|
420,805
|
|
|
$
|
392,745
|
|
Other
revenue
|
17,158
|
|
|
15,852
|
|
|
51,303
|
|
|
46,402
|
|
Net operating
revenue
|
159,013
|
|
|
148,655
|
|
|
472,108
|
|
|
439,147
|
|
|
|
|
|
|
|
|
|
Clinic operating
costs:
|
|
|
|
|
|
|
|
Salaries and related
costs
|
86,838
|
|
|
78,039
|
|
|
248,409
|
|
|
227,354
|
|
Rent, clinic supplies,
contract labor and other
|
45,765
|
|
|
39,183
|
|
|
133,140
|
|
|
123,320
|
|
Provision for doubtful
accounts
|
3,514
|
|
|
2,938
|
|
|
14,270
|
|
|
12,899
|
|
Total clinic operating
costs
|
136,117
|
|
|
120,160
|
|
|
395,819
|
|
|
363,573
|
|
Selling, general and
administrative expenses
|
30,795
|
|
|
26,026
|
|
|
81,912
|
|
|
74,288
|
|
Goodwill and
intangible asset impairment charges
|
501,362
|
|
|
—
|
|
|
968,480
|
|
|
—
|
|
Operating (loss)
income
|
(509,261)
|
|
|
2,469
|
|
|
(974,103)
|
|
|
1,286
|
|
Change in fair value
of warrant liability
|
(15,885)
|
|
|
—
|
|
|
(20,424)
|
|
|
—
|
|
Change in fair value
of contingent common shares liability
|
(146,317)
|
|
|
—
|
|
|
(167,265)
|
|
|
—
|
|
Loss on settlement of
redeemable preferred stock
|
—
|
|
|
—
|
|
|
14,037
|
|
|
—
|
|
Interest expense,
net
|
7,386
|
|
|
17,346
|
|
|
39,105
|
|
|
52,887
|
|
Interest expense on
redeemable preferred stock
|
—
|
|
|
4,896
|
|
|
10,087
|
|
|
13,877
|
|
Other expense
(income), net
|
52
|
|
|
(23,117)
|
|
|
5,831
|
|
|
(67,088)
|
|
(Loss) income before
taxes
|
(354,497)
|
|
|
3,344
|
|
|
(855,474)
|
|
|
1,610
|
|
Income tax (benefit)
expense
|
(28,842)
|
|
|
2,322
|
|
|
(59,540)
|
|
|
4,098
|
|
Net (loss)
income
|
$
(325,655)
|
|
|
$
1,022
|
|
|
$
(795,934)
|
|
|
$
(2,488)
|
|
ATI Physical
Therapy
|
Condensed
Consolidated Balance Sheets
|
($ in
thousands)
|
(unaudited)
|
|
|
September 30,
2021
|
|
December 31,
2020
|
Assets:
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
66,092
|
|
|
$
|
142,128
|
|
Accounts receivable
(net of allowance for doubtful accounts of $56,759 and
$69,693 at September 30, 2021 and December 31,
2020, respectively)
|
85,001
|
|
|
90,707
|
|
Other current
assets
|
12,317
|
|
|
6,027
|
|
Total current
assets
|
163,410
|
|
|
238,862
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
Property and
equipment, net
|
134,862
|
|
|
137,174
|
|
Operating lease
right-of-use assets
|
253,808
|
|
|
258,227
|
|
Goodwill
|
597,110
|
|
|
1,330,085
|
|
Trade name and other
intangible assets, net
|
411,095
|
|
|
644,339
|
|
Other non-current
assets
|
1,941
|
|
|
1,685
|
|
Total assets
|
$
|
1,562,226
|
|
|
$
|
2,610,372
|
|
|
|
|
|
Liabilities and
Stockholders' Equity:
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
11,022
|
|
|
$
|
12,148
|
|
Accrued expenses and
other liabilities
|
57,505
|
|
|
70,690
|
|
Current portion of
operating lease liabilities
|
48,499
|
|
|
52,395
|
|
Current portion of
long-term debt
|
8,167
|
|
|
8,167
|
|
Total current
liabilities
|
125,193
|
|
|
143,400
|
|
|
|
|
|
Long-term debt,
net
|
545,283
|
|
|
991,418
|
|
Redeemable preferred
stock
|
—
|
|
|
163,329
|
|
Warrant
liability
|
6,512
|
|
|
—
|
|
Contingent common
shares liability
|
53,235
|
|
|
—
|
|
Deferred income tax
liabilities
|
78,875
|
|
|
138,547
|
|
Operating lease
liabilities
|
248,965
|
|
|
253,990
|
|
Other non-current
liabilities
|
7,231
|
|
|
18,571
|
|
Total
liabilities
|
1,065,294
|
|
|
1,709,255
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.0001 par value; 1.0 million shares authorized; none issued
and outstanding at September 30, 2021 and
December 31, 2020
|
—
|
|
|
—
|
|
Class A common stock,
$0.0001 par value; 470.0 million shares authorized; 207.3
million shares issued, 197.3 million shares outstanding at
September 30, 2021;
138.9 million shares issued, 128.3 million shares
outstanding at December 31,
2020
|
20
|
|
|
13
|
|
Additional paid-in
capital
|
1,350,707
|
|
|
954,728
|
|
Accumulated other
comprehensive loss
|
(529)
|
|
|
(1,907)
|
|
Accumulated
deficit
|
(860,169)
|
|
|
(68,804)
|
|
Total ATI Physical
Therapy, Inc. equity
|
490,029
|
|
|
884,030
|
|
Non-controlling
interests
|
6,903
|
|
|
17,087
|
|
Total stockholders'
equity
|
496,932
|
|
|
901,117
|
|
Total liabilities and
stockholders' equity
|
$
|
1,562,226
|
|
|
$
|
2,610,372
|
|
|
|
|
|
|
|
|
|
ATI Physical
Therapy
|
Condensed
Consolidated Statements of Cash Flows
|
($ in
thousands)
|
(unaudited)
|
|
|
Nine Months
Ended
|
|
September 30,
2021
|
|
September 30,
2020
|
Operating
activities:
|
|
|
|
Net loss
|
$
|
(795,934)
|
|
|
$
|
(2,488)
|
|
Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities:
|
|
|
|
Goodwill and
intangible asset impairment charges
|
968,480
|
|
|
—
|
|
Depreciation and
amortization
|
27,990
|
|
|
29,628
|
|
Provision for doubtful
accounts
|
14,270
|
|
|
12,899
|
|
Deferred income tax
provision
|
(59,540)
|
|
|
4,087
|
|
Amortization of
right-of-use assets
|
33,868
|
|
|
33,384
|
|
Share-based
compensation
|
4,864
|
|
|
1,433
|
|
Amortization of debt
issuance costs and original issue discount
|
2,644
|
|
|
3,053
|
|
Non-cash interest
expense
|
—
|
|
|
6,335
|
|
Non-cash interest
expense on redeemable preferred stock
|
10,087
|
|
|
13,877
|
|
Loss on extinguishment
of debt
|
5,534
|
|
|
—
|
|
Loss on settlement of
redeemable preferred stock
|
14,037
|
|
|
—
|
|
Loss on disposal and
impairment of assets
|
219
|
|
|
383
|
|
Change in fair value
of warrant liability
|
(20,424)
|
|
|
—
|
|
Change in fair value
of contingent common shares liability
|
(167,265)
|
|
|
—
|
|
Changes in:
|
|
|
|
Accounts receivable,
net
|
(8,564)
|
|
|
9,021
|
|
Other current
assets
|
(6,580)
|
|
|
3,414
|
|
Other non-current
assets
|
(269)
|
|
|
389
|
|
Accounts
payable
|
151
|
|
|
(552)
|
|
Accrued expenses and
other liabilities
|
(11,820)
|
|
|
5,127
|
|
Operating lease
liabilities
|
(39,084)
|
|
|
(31,223)
|
|
Other non-current
liabilities
|
824
|
|
|
(512)
|
|
Medicare Accelerated
and Advance Payment Program Funds
|
(8,540)
|
|
|
26,732
|
|
Provider Relief Fund
general distribution payments received but not yet
recognized
|
—
|
|
|
24,146
|
|
Transaction-related
amount due to former owners
|
(3,611)
|
|
|
—
|
|
Net cash (used in)
provided by operating activities
|
(38,663)
|
|
|
139,133
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Purchases of property
and equipment
|
(27,701)
|
|
|
(15,688)
|
|
Purchases of intangible
assets
|
(1,375)
|
|
|
(125)
|
|
Proceeds from sale of
property and equipment
|
125
|
|
|
120
|
|
Proceeds from sale of
clinics
|
248
|
|
|
—
|
|
Net cash used in
investing activities
|
(28,703)
|
|
|
(15,693)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Principal payments on
long-term debt
|
(454,160)
|
|
|
(6,125)
|
|
Proceeds from revolving
line of credit
|
—
|
|
|
68,750
|
|
Payments on revolving
line of credit
|
—
|
|
|
(68,750)
|
|
Cash inflow from
Business Combination
|
229,338
|
|
|
—
|
|
Payments to Series A
Preferred stockholders
|
(59,000)
|
|
|
—
|
|
Proceeds from shares
issued through PIPE investment
|
300,000
|
|
|
—
|
|
Payments for equity
issuance costs
|
(19,233)
|
|
|
—
|
|
Distribution to
non-controlling interest holder
|
(5,615)
|
|
|
(1,553)
|
|
Net cash used in
financing activities
|
(8,670)
|
|
|
(7,678)
|
|
|
|
|
|
Changes in cash and
cash equivalents:
|
|
|
|
Net (decrease) increase
in cash and cash equivalents
|
(76,036)
|
|
|
115,762
|
|
Cash and cash
equivalents at beginning of period
|
142,128
|
|
|
38,303
|
|
Cash and cash
equivalents at end of period
|
$
|
66,092
|
|
|
$
|
154,065
|
|
|
|
|
|
Supplemental noncash
disclosures:
|
|
|
|
Derivative changes in
fair value
|
$
|
(1,378)
|
|
|
$
|
692
|
|
Purchases of property
and equipment in accounts payable
|
$
|
1,733
|
|
|
$
|
1,216
|
|
Warrant liability
recognized upon the closing of the Business Combination
|
$
|
(26,936)
|
|
|
$
|
—
|
|
Contingent common
shares liability recognized upon the closing of the Business
Combination
|
$
|
(220,500)
|
|
|
$
|
—
|
|
Shares issued to Wilco
Holdco Series A Preferred stockholders
|
$
|
128,453
|
|
|
$
|
—
|
|
|
|
|
|
Other supplemental
disclosures:
|
|
|
|
Cash paid for
interest
|
$
|
35,334
|
|
|
$
|
43,075
|
|
Cash paid for (received
from) taxes
|
$
|
156
|
|
|
$
|
(836)
|
|
ATI Physical
Therapy
|
Supplemental
Tables of Key Performance Metrics
|
|
|
|
|
|
Financial Metrics
($ in 000's)
|
|
|
|
|
Net Patient
Revenue
|
Other
Revenue
|
Net Operating
Revenue
|
Adjusted
EBITDA(1)
|
Adj EBITDA
margin(1)
|
Q1 2019
|
|
|
|
$170,940
|
$16,277
|
$187,217
|
$25,989
|
13.9%
|
Q2 2019
|
|
|
|
$182,757
|
$16,015
|
$198,772
|
$33,342
|
16.8%
|
Q3 2019
|
|
|
|
$179,561
|
$16,624
|
$196,185
|
$29,455
|
15.0%
|
Q4 2019
|
|
|
|
$184,338
|
$18,946
|
$203,284
|
$39,606
|
19.5%
|
Q1 2020
|
|
|
|
$164,939
|
$17,799
|
$182,738
|
$26,487
|
14.5%
|
Q2 2020
|
|
|
|
$95,003
|
$12,751
|
$107,754
|
$1,189
|
1.1%
|
Q3 2020
|
|
|
|
$132,803
|
$15,852
|
$148,655
|
$17,321
|
11.7%
|
Q4 2020
|
|
|
|
$136,840
|
$16,266
|
$153,106
|
$18,622
|
12.2%
|
Q1 2021
|
|
|
|
$132,271
|
$16,791
|
$149,062
|
$5,590
|
3.8%
|
Q2 2021
|
|
|
|
$146,679
|
$17,354
|
$164,033
|
$23,999
|
14.6%
|
Q3 2021
|
|
|
|
$141,885
|
$17,158
|
$159,013
|
$8,539
|
5.4%
|
|
(1)
|
Excludes CARES
Act Provider Relief Funds of $44.3 million in the second
quarter of 2020, $23.1 million in the third quarter of 2020, and
$24.1 million in the fourth quarter of 2020.
|
|
|
|
Operational
Metrics: PT Clinics
|
|
|
|
Ending
Clinic Count
|
Visits
per Day(1)
|
Clinical
FTE(2)
|
VPD
per cFTE(3)
|
Annualized
Clinician
Adds %(4)
|
Annualized
Clinician
Turnover %(5)
|
Q1 2019
|
|
|
825
|
24,142
|
2,833
|
8.5
|
20%
|
19%
|
Q2 2019
|
|
|
836
|
25,527
|
2,862
|
8.9
|
26%
|
21%
|
Q3 2019
|
|
|
847
|
25,229
|
2,901
|
8.7
|
37%
|
26%
|
Q4 2019
|
|
|
872
|
25,693
|
2,936
|
8.8
|
17%
|
26%
|
Q1 2020
|
|
|
868
|
22,855
|
2,841
|
8.0
|
17%
|
22%
|
Q2 2020
|
|
|
866
|
12,643
|
1,487
|
8.5
|
0%
|
20%
|
Q3 2020
|
|
|
873
|
18,159
|
2,004
|
9.1
|
9%
|
82%
|
Q4 2020
|
|
|
875
|
19,441
|
2,214
|
8.8
|
43%
|
34%
|
Q1 2021
|
|
|
882
|
19,520
|
2,284
|
8.5
|
44%
|
32%
|
Q2 2021
|
|
|
889
|
21,569
|
2,325
|
9.3
|
44%
|
44%
|
Q3 2021
|
|
|
900
|
20,674
|
2,359
|
8.8
|
63%
|
41%
|
|
(1)
|
Equals patient visits
divided by operating days.
|
(2)
|
Represents clinical
staff hours divided by 8 hours divided by number of paid
days.
|
(3)
|
Equals patient visits
divided by operating days divided by clinical full-time equivalent
employees.
|
(4)
|
Represents clinician
headcount new hire adds divided by average clinician headcount,
multiplied by 4 to annualize.
|
(5)
|
Represents clinician
headcount separations divided by average clinician headcount,
multiplied by 4 to annualize.
|
|
Unit Economics: PT
Clinics ($ actual)
|
|
|
Revenue
per Clinic(1)
|
VPD
per Clinic(2)
|
Rate
per Visit(3)
|
Salaries
per Visit(4)
|
Rent
per Clinic(5)
|
Provision as
% Revenue(6)
|
SG&A
per Clinic(7)
|
Adj. EBITDA
per Clinic(8)
|
Q1 2019
|
$208,803
|
29.5
|
$112.39
|
$66.02
|
$50,816
|
4.0%
|
$36,338
|
$31,746
|
Q2 2019
|
$219,748
|
30.7
|
$111.87
|
$63.66
|
$50,465
|
2.9%
|
$35,469
|
$40,091
|
Q3 2019
|
$213,255
|
30.0
|
$111.21
|
$65.34
|
$51,637
|
2.6%
|
$31,867
|
$34,982
|
Q4 2019
|
$213,767
|
29.8
|
$112.10
|
$63.59
|
$50,406
|
1.9%
|
$38,435
|
$45,929
|
Q1 2020
|
$189,657
|
26.3
|
$112.76
|
$65.19
|
$52,237
|
3.3%
|
$26,988
|
$30,456
|
Q2 2020
|
$109,873
|
14.6
|
$117.41
|
$66.69
|
$44,766
|
3.7%
|
$28,672
|
$1,375
|
Q3 2020
|
$152,472
|
20.8
|
$112.51
|
$66.12
|
$44,986
|
2.0%
|
$29,880
|
$19,887
|
Q4 2020
|
$155,914
|
22.2
|
$109.98
|
$63.59
|
$48,793
|
2.2%
|
$34,219
|
$21,218
|
Q1 2021
|
$150,536
|
22.2
|
$107.56
|
$65.58
|
$49,275
|
4.8%
|
$28,140
|
$6,362
|
Q2 2021
|
$165,241
|
24.3
|
$106.26
|
$58.62
|
$49,657
|
2.2%
|
$29,731
|
$27,036
|
Q3 2021
|
$158,311
|
23.1
|
$105.56
|
$64.62
|
$51,074
|
2.2%
|
$34,367
|
$9,530
|
|
|
|
|
|
|
|
|
|
|
|
Note: The
Company operates as one segment and accordingly reports as one
segment. For purposes of above presentation, as net patient revenue
represents the predominance of net operating revenue and outpatient
physical therapy clinics represent the Company's central business
activity, all expenses (with the exception of provision for
doubtful accounts, which is expressed as a percentage of net
operating revenue) have been assigned to PT clinics and/or PT
visits with respect to per clinic and per visit metrics,
respectively.
|
|
(1)
|
Equals net patient
revenue divided by average clinics over the quarter.
|
(2)
|
Equals patient visits
divided by operating days divided by average clinics over the
quarter
|
(3)
|
Equals net patient
revenue divided by patient visits.
|
(4)
|
Equals salaries and
related costs divided by patient visits.
|
(5)
|
Equals rent, clinic
supplies, contract labor and other divided by average clinics over
the quarter.
|
(6)
|
Equals provision for
doubtful accounts divided by net operating revenue.
|
(7)
|
Equals selling,
general and administrative expenses divided by average clinics over
the quarter.
|
(8)
|
Equals Adjusted
EBITDA divided by average clinics over the quarter. Adjusted
EBITDA, as presented here, excludes income related to CARES
Act Provider Relief Funds of $44.3 million in the second
quarter of 2020, $23.1 million in the third quarter of 2020, and
$24.1 million in the fourth quarter of 2020.
|
|
|
|
|
|
|
|
Customer
Satisfaction Metrics
|
|
|
|
|
|
|
|
Net Promotor
Score(1)
|
Google Star
Rating(2)
|
Q1 2019
|
|
|
|
|
|
|
77
|
4.6
|
Q2 2019
|
|
|
|
|
|
|
79
|
4.9
|
Q3 2019
|
|
|
|
|
|
|
78
|
4.9
|
Q4 2019
|
|
|
|
|
|
|
79
|
4.8
|
Q1 2020
|
|
|
|
|
|
|
77
|
4.9
|
Q2 2020
|
|
|
|
|
|
|
77
|
4.9
|
Q3 2020
|
|
|
|
|
|
|
78
|
4.6
|
Q4 2020
|
|
|
|
|
|
|
76
|
4.7
|
Q1 2021
|
|
|
|
|
|
|
75
|
4.9
|
Q2 2021
|
|
|
|
|
|
|
77
|
4.9
|
Q3 2021
|
|
|
|
|
|
|
73
|
4.9
|
|
(1)
|
NPS measures customer
experience from ATI patient survey responses. The score is
calculated as the percentage of promotors less the percentage of
detractors.
|
(2)
|
A Google Star rating
is a five-star rating scale that ranks businesses based on
customer reviews. Customers are given the opportunity to leave a
business review after interacting with a business, which involves
choosing from one star (poor) to five stars (excellent).
|
ATI Physical
Therapy
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ in
thousands)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
June
30,
|
March
31,
|
|
|
2021
|
2021
|
2021
|
Net (loss)
income
|
|
($325,655)
|
($452,461)
|
($17,818)
|
Plus
(minus):
|
|
|
|
|
Net loss (income)
attributable to non-controlling interests
|
|
2,109
|
3,769
|
(1,309)
|
Interest expense,
net
|
|
7,386
|
15,632
|
16,087
|
Interest expense on
redeemable preferred stock
|
|
—
|
4,779
|
5,308
|
Income tax (benefit)
expense
|
|
(28,842)
|
(20,183)
|
(10,515)
|
Depreciation and
amortization expense
|
|
9,222
|
9,149
|
9,619
|
EBITDA
|
|
(335,780)
|
(439,315)
|
1,372
|
Goodwill and
intangible asset impairment charges(1)
|
|
501,362
|
467,118
|
—
|
Goodwill and
intangible asset impairment charges attributable to
non-controlling interest(1)
|
|
(2,928)
|
(5,021)
|
—
|
Changes in fair value
of warrant liability and contingent
common shares liability(2)
|
|
(162,202)
|
(25,487)
|
—
|
Reorganization and
severance costs(3)
|
|
3,551
|
—
|
362
|
Transaction and
integration costs(4)
|
|
2,335
|
3,580
|
2,918
|
Share-based
compensation
|
|
1,248
|
3,112
|
504
|
Pre-opening de novo
costs(5)
|
|
511
|
441
|
434
|
Non-ordinary legal and
regulatory matters(6)
|
|
442
|
—
|
—
|
Loss on debt
extinguishment(7)
|
|
—
|
5,534
|
—
|
Loss on settlement of
redeemable preferred stock(8)
|
|
—
|
14,037
|
—
|
Adjusted
EBITDA
|
|
$8,539
|
$23,999
|
$5,590
|
|
(1)
|
Represents non-cash
charges related to the write-down of goodwill and trade name
indefinite-lived intangible assets.
|
(2)
|
Represents non-cash
amounts related to the change in the estimated fair value of
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(4)
|
Represents costs
related to the Company's business combination with FVAC II, clinic
acquisitions and acquisition-related integration and consulting and
planning costs related to preparation to operate as a public
company.
|
(5)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(6)
|
Represents
non-ordinary course legal costs related to the previously-disclosed
ATIP shareholder class action complaint.
|
(7)
|
Represents charges
related to the derecognition of the proportionate amount of
remaining unamortized deferred financing costs and original
issuance discount associated with the partial repayment of the
first lien term loan and derecognition of the unamortized original
issuance discount associated with the full repayment of the
subordinated second lien term loan.
|
(8)
|
Represents loss on
settlement of redeemable preferred stock based on the value of cash
and equity provided to preferred stockholders in relation to the
outstanding redeemable preferred stock liability at the time of the
closing of the business combination with FVAC II.
|
ATI Physical
Therapy
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|
2020
|
2020
|
2020
|
2020
|
Net income
(loss)
|
$2,190
|
$1,022
|
$4,596
|
($8,106)
|
Plus
(minus):
|
|
|
|
|
Net income
attributable to non-controlling interests
|
(987)
|
(901)
|
(1,855)
|
(1,330)
|
Interest expense,
net
|
16,404
|
17,346
|
17,683
|
17,858
|
Interest expense on
redeemable preferred stock
|
5,154
|
4,896
|
4,604
|
4,377
|
Income tax (benefit)
expense
|
(2,033)
|
2,322
|
3,568
|
(1,792)
|
Depreciation and
amortization expense
|
10,072
|
9,880
|
9,763
|
9,985
|
EBITDA
|
30,800
|
34,565
|
38,359
|
20,992
|
Reorganization and
severance costs(1)
|
679
|
4,436
|
1,255
|
1,142
|
Transaction and
integration costs(2)
|
3,747
|
75
|
100
|
868
|
Share-based
compensation
|
503
|
473
|
466
|
494
|
Pre-opening de novo
costs(3)
|
335
|
368
|
268
|
594
|
Business optimization
costs(4)
|
2,450
|
519
|
5,011
|
2,397
|
Charges related to
lease terminations(5)
|
4,253
|
—
|
—
|
—
|
Adjusted
EBITDA
|
$42,767
|
$40,436
|
$45,459
|
$26,487
|
|
(1)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(2)
|
Represents costs
related to the Company's business combination with FVAC II, clinic
acquisitions and acquisition-related integration and consulting and
planning costs related to preparation to operate as a public
company.
|
(3)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(4)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
(5)
|
Represents charges
related to lease terminations prior to the end of term for
corporate facilities no longer in use.
|
ATI Physical
Therapy
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|
2019
|
2019
|
2019
|
2019
|
Net income
(loss)
|
$31,914
|
($6,046)
|
($4,816)
|
($11,303)
|
Plus
(minus):
|
|
|
|
|
Net income
attributable to non-controlling interests
|
(1,234)
|
(878)
|
(933)
|
(1,355)
|
Interest expense,
net
|
18,022
|
19,263
|
19,927
|
19,760
|
Interest expense on
redeemable preferred stock
|
4,206
|
4,000
|
3,763
|
3,542
|
Income tax
benefit
|
(36,095)
|
(2,055)
|
(1,825)
|
(4,044)
|
Depreciation and
amortization expense
|
9,884
|
9,567
|
9,635
|
10,018
|
EBITDA
|
26,697
|
23,851
|
25,751
|
16,618
|
Reorganization and
severance costs(1)
|
3,401
|
120
|
775
|
4,035
|
Transaction and
integration costs(2)
|
3,998
|
198
|
310
|
29
|
Share-based
compensation
|
(57)
|
559
|
795
|
525
|
Pre-opening de novo
costs(3)
|
438
|
757
|
487
|
593
|
Business optimization
costs(4)
|
5,129
|
3,970
|
5,224
|
4,189
|
Adjusted
EBITDA
|
$39,606
|
$29,455
|
$33,342
|
$25,989
|
|
(1)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(2)
|
Represents costs
related to the Company's business combination with FVAC II, clinic
acquisitions and acquisition-related integration and consulting and
planning costs related to preparation to operate as a public
company.
|
(3)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(4)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
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SOURCE ATI Physical Therapy