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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-39439

Delaware						85-1408039
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

(630) 296-2223

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A common stock, $0.0001 par value

ATIP

New York Stock Exchange

Redeemable Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share

ATIP WS

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Large accelerated filer			☒			Accelerated filer			☐
Non-accelerated filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

			Page
PART I - FINANCIAL INFORMATION - UNAUDITED
Item 1. Financial Statements			6
Condensed Consolidated Balance Sheets			7
Condensed Consolidated Statements of Operations			8
Condensed Consolidated Statements of Comprehensive Loss			9
Condensed Consolidated Statements of Changes in Stockholders' Equity			10
Condensed Consolidated Statements of Cash Flows			11
Notes to Condensed Consolidated Financial Statements			13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			39
Item 3. Quantitative and Qualitative Disclosures About Market Risk			59
Item 4. Controls and Procedures			60
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			62
Item 1A. Risk Factors			62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			64
Item 3. Defaults Upon Senior Securities			64
Item 4. Mine Safety Disclosures			64
Item 5. Other Information			64
Item 6. Exhibits			65
Signatures			66

•our dependence upon governmental and third-party private payors for reimbursement and that decreases in reimbursement rates or changes in payor and service mix may adversely affect our financial results;

•federal and state governments’ continued efforts to contain growth in Medicaid expenditures, which could adversely affect the Company’s revenue and profitability;

•payments that we receive from Medicare and Medicaid being subject to potential retroactive reduction;

•further unfavorable shifts in payor, state and service mix;

•risks associated with public health crises, including COVID-19 (and any existing and future variants) and its direct and indirect impacts on the business, which could lead to a decline in visit volumes and referrals;

•risks related to the impact on our workforce of mandatory COVID-19 vaccination of employees;

•our inability to compete effectively in a competitive industry subject to rapid technological change including competition that could impact our ability to recruit and retain skilled physical therapists;

•failure of steps being taken to reduce attrition of physical therapists and increase hiring of physical therapists and the impact of unfavorable labor market dynamics and wage inflation;

•failure or ineffectiveness of our strategies to improve patient referrals;

•risks associated with future acquisitions, which may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;

•failure of third-party customer service and technical support providers to adequately address customers’ requests;

•our dependence upon the cultivation and maintenance of relationships with customers, suppliers, physicians and other referral sources;

•the severity of climate change or the weather and natural disasters that can occur in the regions of the U.S. in which we operate, which could cause disruption to our business;

•our failure to maintain financial controls and processes over billing and collections or disputes with third-parties could have a significant negative impact on our financial condition and results of operations;

•our operations are subject to extensive regulation and macroeconomic uncertainty;

•risks associated with applicable state laws regarding fee-splitting and professional corporation laws;

•changes in or our failure to comply with existing federal and state laws or regulations or the inability to comply with new government regulations on a timely basis;

•the outcome of any legal and regulatory matters, proceedings or investigations instituted against us or any of our directors or officers, and whether insurance coverage will be available and/or adequate to cover such matters or proceedings;

•inspections, reviews, audits and investigations under federal and state government programs and payor contracts that could have adverse findings that may negatively affect our business, including our results of operations, liquidity, financial condition and reputation;

•our ability to attract and retain talented executives and employees;

•our facilities face competition for experienced physical therapists and other clinical providers that may increase labor costs and reduce profitability;

•risks associated with our reliance on IT in critical areas of our operations;

•risk resulting from the IPO Warrants, Earnout Shares and Vesting Shares being accounted for as liabilities;

•further impairments of goodwill and other intangible assets, which represent a significant portion of our total assets, especially in view of the Company’s recent market valuation;

•our inability to remediate the material weaknesses in internal control over financial reporting related to income taxes and to maintain effective internal control over financial reporting;

•risks related to outstanding indebtedness, compliance with associated covenants and the potential need to incur additional debt in the future;

•risks associated with liquidity and capital markets, including the Company's ability to generate sufficient cash flows, together with cash on hand, to cover liquidity and capital requirements;

•costs related to operating as a public company and our ability to maintain the listing of our securities on the NYSE;

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Form 10-Q are more fully described under the heading “Item 1A. Risk Factors” and elsewhere in this Form 10-Q. The risks described under the heading “Item 1A. Risk Factors” are not exhaustive. Other sections of this Form 10-Q describe additional factors that could adversely affect the business, financial condition or results of operations of the Company. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on the business of the Company or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

			March 31, 2022						December 31, 2021
Assets:
Current assets:
Cash and cash equivalents			$	94,797					$	48,616
Accounts receivable (net of allowance for doubtful accounts of $51,519 and $53,533 at March 31, 2022 and December 31, 2021, respectively)			87,809						82,455
Prepaid expenses			8,706						9,303
Other current assets			6,658						3,204
Total current assets			197,970						143,578
Property and equipment, net			136,776						139,730
Operating lease right-of-use assets			255,372						256,646
Goodwill, net			492,240						608,811
Trade name and other intangible assets, net			372,090						411,696
Other non-current assets			2,811						2,233
Total assets			$	1,457,259					$	1,562,694
Liabilities, Mezzanine Equity and Stockholders' Equity:
Current liabilities:
Accounts payable			$	12,264					$	15,146
Accrued expenses and other liabilities			59,391						64,584
Current portion of operating lease liabilities			50,651						49,433
Current portion of long-term debt			—						8,167
Total current liabilities			122,306						137,330
Long-term debt, net			477,817						543,799
Warrant liability			2,664						4,341
Contingent common shares liability			21,026						45,360
Deferred income tax liabilities			44,178						67,459
Operating lease liabilities			248,354						250,597
Other non-current liabilities			2,348						2,301
Total liabilities			918,693						1,051,187
Commitments and contingencies (Note 17)
Mezzanine equity:
Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; $1,011.67 stated value per share and 0.2 million shares issued and outstanding at March 31, 2022; none issued and outstanding at December 31, 2021			140,340						—
Stockholders' equity:
Class A common stock, $0.0001 par value; 470.0 million shares authorized; 207.4 million shares issued, 197.5 million shares outstanding at March 31, 2022; 207.4 million shares issued, 197.4 million shares outstanding at December 31, 2021			20						20
Treasury stock, at cost, 0.04 million shares and 0.03 million shares at March 31, 2022 and December 31, 2021, respectively			(117)						(95)
Additional paid-in capital			1,373,282						1,351,597
Accumulated other comprehensive income			3,780						28
Accumulated deficit			(984,882)						(847,132)
Total ATI Physical Therapy, Inc. equity			392,083						504,418
Non-controlling interests			6,143						7,089
Total stockholders' equity			398,226						511,507
Total liabilities, mezzanine equity and stockholders' equity			$	1,457,259					$	1,562,694

									Three Months Ended
															March 31, 2022						March 31, 2021
Net patient revenue															$	138,925					$	132,271
Other revenue															14,897						16,791
Net operating revenue															153,822						149,062
Cost of services:
Salaries and related costs															87,415						80,654
Rent, clinic supplies, contract labor and other															51,615						43,296
Provision for doubtful accounts															5,105						7,171
Total cost of services															144,135						131,121
Selling, general and administrative expenses															30,024						24,726
Goodwill and intangible asset impairment charges															155,741						—
Operating loss															(176,078)						(6,785)
Change in fair value of warrant liability (Note 12)															(1,677)						—
Change in fair value of contingent common shares liability (Note 13)															(24,334)						—
Interest expense, net															8,656						16,087
Interest expense on redeemable preferred stock															—						5,308
Other expense, net															2,781						153
Loss before taxes															(161,504)						(28,333)
Income tax benefit															(23,281)						(10,515)
Net loss															(138,223)						(17,818)
Net (loss) income attributable to non-controlling interests															(473)						1,309
Net loss attributable to ATI Physical Therapy, Inc.															$	(137,750)					$	(19,127)
Loss per share of Class A common stock:
Basic															$	(0.70)					$	(0.15)
Diluted															$	(0.70)					$	(0.15)
Weighted average shares outstanding:
Basic and diluted															199,971						128,286

									Three Months Ended
															March 31, 2022						March 31, 2021
Net loss															$	(138,223)					$	(17,818)
Other comprehensive income:
Unrealized gain on interest rate swap															3,752						561
Comprehensive loss															$	(134,471)					$	(17,257)
Net (loss) income attributable to non-controlling interests															(473)						1,309
Comprehensive loss attributable to ATI Physical Therapy, Inc.															$	(133,998)					$	(18,566)

			Common Stock												Treasury Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Non-Controlling Interests						Total Stockholders' Equity
			Shares						Amount						Shares						Amount
Balance at January 1, 2022			197,409,964						$	20					29,791						$	(95)					$	1,351,597					$	28					$	(847,132)					$	7,089					$	511,507
Issuance of 2022 Warrants			—						—						—						—						19,725						—						—						—						19,725
Vesting of restricted shares distributed to holders of ICUs			75,497						—						—						—						—						—						—						—						—
Issuance of common stock upon vesting of restricted stock awards			40,613						—						—						—						—						—						—						—						—
Tax withholdings related to net share settlement of restricted stock awards			(12,824)						—						12,824						(22)						—						—						—						—						(22)
Share-based compensation			—						—						—						—						1,960						—						—						—						1,960
Other comprehensive income (1)			—						—						—						—						—						3,752						—						—						3,752
Distribution to non-controlling interest holders			—						—						—						—						—						—						—						(473)						(473)
Net loss attributable to non-controlling interests			—						—						—						—						—						—						—						(473)						(473)
Net loss attributable to ATI Physical Therapy, Inc.			—						—						—						—						—						—						(137,750)						—						(137,750)
Balance at March 31, 2022			197,513,250						$	20					42,615						$	(117)					$	1,373,282					$	3,780					$	(984,882)					$	6,143					$	398,226

			Common Stock												Treasury Stock												Additional Paid-In Capital						Accumulated Other Comprehensive (Loss) Income						Accumulated Deficit						Non-Controlling Interests						Total Stockholders' Equity
			Shares						Amount						Shares						Amount
Balance at January 1, 2021			938,557						$	9					—						$	—					$	954,732					$	(1,907)					$	(68,804)					$	17,087					$	901,117
Retrospective application of reverse recapitalization			127,346,957						4						—						—						(4)						—						—						—						—
Adjusted balance at January 1, 2021			128,285,514						$	13					—						$	—					$	954,728					$	(1,907)					$	(68,804)					$	17,087					$	901,117
Share-based compensation			—						—						—						—						504						—						—						—						504
Other comprehensive income (1)			—						—						—						—						—						561						—						—						561
Distribution to non-controlling interest holders			—						—						—						—						—						—						—						(3,575)						(3,575)
Net income attributable to non-controlling interests			—						—						—						—						—						—						—						1,309						1,309
Net loss attributable to ATI Physical Therapy, Inc.			—						—						—						—						—						—						(19,127)						—						(19,127)
Balance at March 31, 2021			128,285,514						$	13					—						$	—					$	955,232					$	(1,346)					$	(87,931)					$	14,821					$	880,789

(1)Other comprehensive income related to unrealized gain on interest rate swap

			Three Months Ended
			March 31, 2022						March 31, 2021
Operating activities:
Net loss			$	(138,223)					$	(17,818)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill and intangible asset impairment charges			155,741						—
Depreciation and amortization			10,111						9,619
Provision for doubtful accounts			5,105						7,171
Deferred income tax provision			(23,281)						(10,515)
Amortization of right-of-use assets			11,807						11,055
Share-based compensation			1,960						504
Amortization of debt issuance costs and original issue discount			660						1,045
Non-cash interest expense on redeemable preferred stock			—						5,308
Loss on extinguishment of debt			2,809						—
(Gain) loss on disposal and impairment of assets			(219)						221
Change in fair value of warrant liability			(1,677)						—
Change in fair value of contingent common shares liability			(24,334)						—
Changes in:
Accounts receivable, net			(10,459)						(11,148)
Prepaid expenses and other current assets			588						(5,265)
Other non-current assets			14						(112)
Accounts payable			(928)						1,060
Accrued expenses and other liabilities			(544)						(5,686)
Operating lease liabilities			(11,555)						(15,984)
Other non-current liabilities			(37)						473
Medicare Accelerated and Advance Payment Program Funds			(4,269)						—
Net cash used in operating activities			(26,731)						(30,072)
Investing activities:
Purchases of property and equipment			(8,772)						(8,376)
Purchases of intangible assets			—						(650)
Proceeds from sale of property and equipment			114						16
Proceeds from sale of clinics			—						248
Net cash used in investing activities			(8,658)						(8,762)

Financing activities:
Proceeds from long-term debt			500,000						—
Deferred financing costs			(12,952)						—
Original issue discount			(10,000)						—
Principal payments on long-term debt			(555,048)						(2,042)
Proceeds from issuance of Series A Senior Preferred Stock			144,667						—
Proceeds from issuance of 2022 Warrants			20,333						—
Equity issuance costs and original issue discount			(4,935)						—
Taxes paid on behalf of employees for shares withheld			(22)						—
Distribution to non-controlling interest holders			(473)						(3,575)
Net cash provided by (used in) financing activities			81,570						(5,617)
Changes in cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents			46,181						(44,451)
Cash and cash equivalents at beginning of period			48,616						142,128
Cash and cash equivalents at end of period			$	94,797					$	97,677
Supplemental noncash disclosures:
Derivative changes in fair value			$	(3,752)					$	(561)
Purchases of property and equipment in accounts payable			$	2,223					$	2,161
Other supplemental disclosures:
Cash paid for interest			$	3,932					$	14,990
Cash paid for taxes			$	35					$	1

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. generally accepted accounting principles ("GAAP"). Under this method of accounting, FAII is treated as the acquired company and Wilco Holdco is treated as the acquirer for financial statement reporting and accounting purposes. As a result, the historical operations of Wilco Holdco are deemed to be those of the Company. Therefore, the financial statements included in this report reflect (i) the historical operating results of Wilco Holdco prior to the Business Combination; (ii) the combined results of FAII and Wilco Holdco following the Business Combination on June 16, 2021; (iii) the assets and liabilities of Wilco Holdco at their historical cost; and (iv) the Company’s equity structure for all periods presented. The recapitalization of the number of shares of common stock attributable to the Business Combination is reflected retroactively to the earliest period presented and will be utilized for calculating earnings per share in all prior periods presented. No step-up basis of intangible assets or goodwill was recorded in the Business Combination consistent with the treatment of the transaction as a reverse recapitalization of Wilco Holdco, Inc. Refer to Note 3 - Business Combinations and Divestiture for additional information.

•The Company applied for and obtained approval to receive $26.7 million of Medicare Accelerated and Advance Payment Program ("MAAPP") funds during the quarter ended June 30, 2020. During the three months ended March 31, 2022, the Company applied $4.3 million in MAAPP funds against the outstanding liability. Because the Company has not yet met all required performance obligations or performed the services related to the remaining funds, as of March 31, 2022 and December 31, 2021, $8.0 million and $12.3 million of the funds are recorded in accrued expenses and other liabilities, respectively.

•The Company elected to defer depositing the employer portion of Social Security taxes for payments due from March 27, 2020 through December 31, 2020, interest-free and penalty-free. Related to these payments, as of March 31, 2022 and December 31, 2021, $5.9 million is included in accrued expenses and other liabilities.

The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This standard was subsequently amended by ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. This standard is optional and may be applied by entities after March 12, 2020, but no later than December 31, 2022. As of March 31, 2022, the Company has derivative instruments for which the interest rates are indexed to the London InterBank Offered Rate (“LIBOR”). During the period ended March 31, 2022, the Company modified the reference rate index on its hedged items from LIBOR to the Secured Overnight Financing Rate ("SOFR"). The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives, which is LIBOR. The guidance allows for different expedient elections to be made at different points in time. As of March 31, 2022, the Company does not anticipate that this guidance will have a material impact on its consolidated financial statements, however, the Company will continue to assess the potential impact on its future hedging relationships and expedient elections, as applicable.

Recent accounting pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company is evaluating the effect that the implementation of this standard may have on the Company's consolidated financial statements, but does not currently expect the impact to be material.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which provides guidance to increase the transparency of government assistance transactions with business entities that are accounted for by applying a grant or contribution accounting model. This ASU is effective for the Company's annual financial statements to be issued for the year ended December 31, 2022, with early adoption permitted. The Company expects to adopt this new accounting standard in its Annual Report on Form 10-K for the year ended December 31, 2022, and does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements.

As discussed in Note 1 - Overview of the Company, on June 16, 2021, a business combination between Wilco Holdco and FAII was consummated, which was accounted for as a reverse recapitalization of Wilco Holdco, Inc. At the time of the Business Combination, stockholders of Wilco Holdco, Inc. received 130.3 million shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”), for the outstanding shares of Wilco Holdco common stock, par value $0.01 per share, that such stockholders owned. Upon distribution of shares of Common Stock to holders of vested and unvested Incentive Common Units (“ICUs”) granted prior to the Business Combination under the Wilco Acquisition, LP 2016 Equity Incentive Plan, 2.0 million of these shares were restricted subject to vesting requirements, resulting in total unrestricted shares of 128.3 million and an exchange ratio of 136.7 unrestricted shares of ATI Physical Therapy, Inc. for every previously outstanding Wilco Holdco share.

Immediately following the Business Combination, there were 207.3 million shares issued and 196.6 million outstanding shares of common stock of ATI Physical Therapy, Inc., consisting of the following (in thousands):

			Class A Common Shares
FAII Class A common stock prior to Business Combination			34,500
FAII Class F common stock prior to Business Combination(1)			8,625
Less: FAII Class A common stock redemptions			(8,988)
FAII common shares (Class A and Class F)			34,137
Add: Shares issued to Wilco Holdco stockholders(2, 3)			130,300
Add: Shares issued through PIPE investment			30,000
Add: Shares issued to Wilco Holdco Series A Preferred stockholders			12,845
Total shares issued as of the Closing Date of the Business Combination(4)			207,282
Less: Vesting Shares(1)			(8,625)
Less: Restricted shares(3)			(2,014)
Total shares outstanding as of the Closing Date of the Business Combination(4)			196,643

(1) Per the Merger Agreement, as of the closing of the Business Combination, all Class F shares converted into the equivalent number of Class A common shares and became subject to certain vesting and forfeiture provisions ("Vesting Shares") as detailed in Note 13 - Contingent Common Shares Liability.

(2) Includes 1.2 million unrestricted shares upon distribution to holders of vested ICUs under the Wilco Acquisition, LP 2016 Equity Incentive Plan.

(3) Includes 2.0 million restricted shares upon distribution to holders of unvested ICUs under the Wilco Acquisition, LP 2016 Equity Incentive Plan.

(4) Excludes 15.0 million Earnout Shares, 6.9 million Public Warrants and 3.0 million Private Placement Warrants to purchase Class A common stock. Refer to Note 12 - IPO Warrant Liability and Note 13 - Contingent Common Shares Liability for further details.

Immediately following the Business Combination, all holders of the previously outstanding shares of Wilco Holdco Series A Preferred Stock received a proportionate share of $59.0 million and 12.8 million shares of ATI Physical Therapy, Inc. Class A common stock based on the terms of the Merger Agreement. Refer to Note 11 - Wilco Holdco Redeemable Preferred Stock for further details.

Refer to Note 13 - Contingent Common Shares Liability and Note 14 - Fair Value Measurements for further details.

Refer to Note 13 - Contingent Common Shares Liability and Note 14 - Fair Value Measurements for further details.

Immediately following the Business Combination, the Company had outstanding Public Warrants to purchase an aggregate of 6.9 million shares of the Company’s Class A common stock ("Public Warrants") and outstanding Private Placement Warrants to purchase an aggregate of 3.0 million shares of the Company's Class A common stock ("Private Placement Warrants") (collectively, the “IPO Warrants”). In conjunction with the Business Combination, 3.0 million Private Placement Warrants were transferred and surrendered for no consideration based on terms of the Sponsor Letter Agreement.

Refer to Note 12 - IPO Warrant Liability and Note 14 - Fair Value Measurements for further details.

Cash in trust with FAII as of the Closing Date of the Business Combination			$	345,036
Cash used for redemptions of FAII Class A common stock			(89,877)
FAII transaction costs paid at closing			(25,821)
Cash inflow from Business Combination			229,338
Wilco Holdco, Inc. transaction costs offset against proceeds			(19,233)
Net proceeds from FAII in Business Combination			210,105
Cash proceeds from PIPE investment			300,000
Repayment of second lien subordinated loan			(231,335)
Partial repayment of 2016 first lien term loan			(216,700)
Cash payment to Wilco Holdco Series A Preferred stockholders			(59,000)
Wilco Holdco, Inc. transaction costs expensed during 2021			(5,543)
Net decrease in cash related to Business Combination, PIPE investment and debt repayments			$	(2,473)

During 2021, the Company expensed $5.5 million in transaction costs related to the Business Combination, which were classified as selling, general and administrative expenses in the consolidated statement of operations. In addition, $19.2 million of Wilco Holdco, Inc. transaction costs related to the Business Combination were offset against additional paid-in capital in the consolidated statements of changes in stockholders’ equity as these costs were determined to be directly attributable to the recapitalization.

During 2021, the Company completed 3 acquisitions consisting of 7 total clinics. The Company paid approximately $4.5 million in cash and $1.4 million in future payment consideration, subject to certain time or performance conditions set out in the purchase agreements, to complete the acquisitions. The acquisitions qualified for purchase accounting treatment under ASC Topic 805, Business Combinations, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the respective acquisition dates. Of the total amount of consideration, $5.5 million was allocated to goodwill based on management's valuations, which were preliminary and subject to completion of the Company's valuation analysis through the 12 month measurement period. Management finalized its valuation analysis at March 31, 2022 and valuation adjustments to the assets acquired and liabilities assumed were not material. Goodwill represents the future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized, such as assembled workforce, synergies, and location. The entire amount of goodwill recorded from these purchases will be deductible for income tax purposes. Acquisition-related costs to complete the transactions, net operating revenue and net income recognized in 2021 related to the acquisitions were not material, individually and in the aggregate. Unaudited proforma consolidated financial information for the acquisitions have not been included as the results are not material, individually and in the aggregate.

									Three Months Ended
															March 31, 2022						March 31, 2021
Net patient revenue															$	138,925					$	132,271
ATI Worksite Solutions (1)															8,651						8,493
Management Service Agreements (1)															3,155						3,497
Other revenue (1)															3,091						4,801
															$	153,822					$	149,062

(1)ATI Worksite Solutions, Management Service Agreements and Other revenue are included within other revenue on the face of the condensed consolidated statements of operations.

									Three Months Ended
															March 31, 2022						March 31, 2021
Commercial															56.8		%				55.4		%
Government															23.6		%				22.6		%
Workers’ compensation															13.2		%				16.0		%
Other (1)															6.4		%				6.0		%
															100.0		%				100.0		%

(1) Other is primarily comprised of net patient revenue related to auto personal injury.

						Total Goodwill
Goodwill at December 31, 2021 (1)						$	608,811
Impairment charges						(116,335)
Acquisitions (2)						(236)
Goodwill at March 31, 2022						$	492,240

(1) Net of accumulated impairment losses of $726.8 million.

(2) Represents final valuation adjustments related to 2021 acquisitions. Refer to Note 3 - Business Combinations and Divestiture for additional information.

			March 31, 2022						December 31, 2021
Gross intangible assets:
ATI trade name (1)			$	369,954					$	409,360
Non-compete agreements			2,395						2,405
Other intangible assets			640						640
Accumulated amortization:
Accumulated amortization – non-compete agreements			(604)						(425)
Accumulated amortization – other intangible assets			(295)						(284)
Total trade name and other intangible assets, net			$	372,090					$	411,696

(1) Not subject to amortization. The Company recorded $39.4 million of impairment charges related to the trade name indefinite-lived intangible asset during the three months ended March 31, 2022.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of the Company’s reporting unit and indefinite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include projected revenue growth rates, EBITDA margins, terminal growth rates, discount rates, relevant market multiples, royalty rates and other market factors. If current expectations of future growth rates, margins and cash flows are not met, or if market factors outside of our control change significantly, then our reporting unit or indefinite-lived intangible assets might become impaired in the future, negatively impacting our operating results and financial position. As the carrying amounts of goodwill and the Company’s trade name indefinite-lived intangible asset have been impaired as of March 31, 2022 and written down to fair value, those amounts are more susceptible to an impairment risk if there are unfavorable changes in assumptions and estimates.

			March 31, 2022						December 31, 2021
Equipment			$	37,067					$	36,278
Furniture and fixtures			17,300						17,141
Leasehold improvements			187,489						183,542
Automobiles			19						19
Computer equipment and software			95,855						95,362
Construction-in-progress			4,134						3,793
			341,864						336,135
Accumulated depreciation and amortization			(205,088)						(196,405)
Property and equipment, net			$	136,776					$	139,730

									Three Months Ended
															March 31, 2022						March 31, 2021
Rent, clinic supplies, contract labor and other															$	7,086					$	6,506
Selling, general and administrative expenses															2,835						3,058
Total depreciation expense															$	9,921					$	9,564

			March 31, 2022						December 31, 2021
Salaries and related costs			$	17,174					$	27,257
CARES Act funds (1)			13,910						18,179
Accrued professional fees			8,993						5,649
Credit balance due to patients and payors			4,049						4,240
Accrued interest			4,046						—
Accrued contract labor			3,520						2,057
Transaction-related costs (2)			303						349
Other payables and accrued expenses			7,396						6,853
Total			$	59,391					$	64,584

(1) Includes current portion of MAAPP funds received and deferred employer Social Security tax payments.

(2) Represents costs related to public readiness initiatives and corporate transactions.

			March 31, 2022						December 31, 2021
Senior Secured Term Loan (1) (due February 24, 2028)			$	500,000					$	—
2016 first lien term loan (2)			—						555,048
Less: unamortized debt issuance costs			(12,303)						(1,935)
Less: unamortized original issue discount			(9,880)						(1,147)
Total debt, net			477,817						551,966
Less: current portion of long-term debt			—						(8,167)
Long-term debt, net			$	477,817					$	543,799

(1) Interest rate of 8.25% at March 31, 2022, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 9.2% at March 31, 2022.

(2) Loan balance was repaid in its entirety on February 24, 2022. The effective interest rate for the 2016 first lien term loan was 4.9% at December 31, 2021.

In connection with the 2022 Debt Refinancing, the Company also entered into a preferred stock purchase agreement, consisting of senior preferred stock with detachable warrants to purchase common stock for an aggregate stated value of $165.0 million (collectively, the “Preferred Stock Financing”). See Note 10 - Mezzanine and Stockholders' Equity for further information regarding the Preferred Stock Financing.

2022 (remainder of year)			$	—
2023			—
2024			—
2025			—
2026			—
Thereafter			500,000
Total future maturities			500,000
Unamortized original issue discount and debt issuance costs			(22,183)
Total debt, net			$	477,817

Note 9. Share-Based Compensation

			2022
Weighted-average grant-date fair value of options			$1.01
Risk-free interest rate			1.74%
Term (years)			6.2
Volatility			61.20%
Expected dividend			—%

Gross proceeds allocated to Series A Senior Preferred Stock			$	144,667
Less: original issue discount			(1,447)
Less: issuance costs			(2,880)
Net proceeds received from issuance of Series A Senior Preferred Stock			$	140,340

						Series A Senior Preferred Stock
Aggregate stated value as of February 24, 2022						$	165,000
Accumulated paid in-kind dividends as of March 31, 2022						1,925
Aggregate stated value as of March 31, 2022						$	166,925
Preferred shares issued and outstanding as of March 31, 2022						165
Stated value per share as of March 31, 2022						$	1,011.67

			Series I Warrants						Series II Warrants						Total
Gross proceeds allocated to 2022 Warrants			$	5,101					$	15,232					$	20,333
Less: original issue discount			(51)						(152)						(203)
Less: issuance costs			(102)						(303)						(405)
Net proceeds received from issuance of 2022 Warrants			$	4,948					$	14,777					$	19,725

The Company is authorized to issue 470.0 million shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At March 31, 2022, there were 207.4 million shares of Class A common stock issued and 197.5 million shares outstanding.

			March 31, 2022
Shares available for grant under the ATI 2021 Equity Incentive Plan			9,395
Earnout Shares reserved			15,000
2022 Warrants outstanding			11,498
IPO Warrants outstanding			9,867
Vesting Shares reserved(1)			8,625
Restricted shares(1,2)			1,248
Total shares of common stock reserved			55,633

(1) Represents shares of Class A common stock legally issued, but not outstanding, as of March 31, 2022.

(2) Represents a portion of the 2.0 million restricted shares distributed following the Business Combination to holders of unvested Incentive Common Units under the Wilco Acquisition, LP 2016 Equity Incentive Plan.

Treasury stock

Based on the terms of the Wilco Holdco preferred stockholder agreement, Wilco Holdco, Inc. was required to redeem all outstanding shares of preferred stock upon the occurrence of certain events, such as those related to full repayment of the 2016 first and second lien credit agreements or a deemed liquidating event. Based on these redemption requirements, the Wilco Holdco preferred stock was classified as debt (redeemable preferred stock) in the Company’s historical consolidated balance sheets.

Cumulative dividends related to the Wilco Holdco preferred stock were accrued as preferred dividends that increased the balance of the redeemable preferred stock on the Company’s consolidated balance sheets and were recognized as interest expense on redeemable preferred stock in the Company’s consolidated statements of operations. For the three months ended March 31, 2021, the Company incurred cumulative preferred dividends related to the preferred stock of $5.3 million. No dividends were paid related to the preferred stock.

In connection with the Business Combination, holders of the outstanding shares of Wilco Holdco Series A Preferred Stock received a proportionate share of $59.0 million and 12.8 million shares of Class A common stock based on the settlement terms in the Merger Agreement. During 2021, the Company recorded a loss on settlement of redeemable preferred stock in the condensed consolidated statement of operations of $14.0 million based on the value of the cash and equity provided to preferred stockholders in relation to the outstanding redeemable preferred stock liability. As a result of the Business Combination, the balance of redeemable preferred stock was fully settled.

The Company has outstanding Public Warrants to purchase an aggregate of 6.9 million shares of the Company’s Class A common stock at an exercise price of $11.50 per share and outstanding Private Placement Warrants to purchase an aggregate of 3.0 million shares of the Company's Class A common stock at an exercise price of $11.50 per share. There were no IPO Warrants exercised during the three months ended March 31, 2022.

The Company accounts for its outstanding IPO Warrants in accordance with the guidance contained in Accounting Standards Codification 815-40, Derivatives and Hedging - Contracts on an Entity’s Own Equity, and determined that the IPO Warrants do not meet the criteria for equity treatment thereunder. As such, each IPO Warrant must be recorded as a liability and is subject to re-measurement at each balance sheet date. Refer to Note 14 - Fair Value Measurements for further details. Changes in fair value are recognized in change in fair value of warrant liability in the Company’s condensed consolidated statements of operations.

			Three Months Ended
			March 31, 2022
Fair value, beginning of period			$	1,305
Changes in fair value			(504)
Fair value, end of period			$	801

The following table presents the changes in the fair value of the Public Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the period ending March 31, 2022 (in thousands):

			Three Months Ended
			March 31, 2022
Fair value, beginning of period			$	3,036
Changes in fair value			(1,173)
Fair value, end of period			$	1,863

Subject to the terms and conditions of the Merger Agreement, certain stockholders of Wilco Holdco, Inc. were provided the contingent right to receive, in the aggregate, up to 15.0 million shares of Class A common stock if, from the closing of the Business Combination until the 10th anniversary thereof, the dollar volume-weighted average price (“VWAP”) of Class A common stock exceeds certain thresholds. The Earnout Shares vest in three equal tranches of 5.0 million shares each if the VWAP of Class A common stock exceeds $12.00, $14.00 and $16.00 per share, respectively, over the designated period of time.

The Company accounts for the potential Earnout Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in the Company’s condensed consolidated statements of operations. As of March 31, 2022, no Earnout Shares have been issued as none of the corresponding share price thresholds have been met.

The following table presents the changes in the fair value of the Earnout Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the period ending March 31, 2022 (in thousands):

			Three Months Ended
			March 31, 2022
Fair value, beginning of period			$	28,800
Changes in fair value			(15,450)
Fair value, end of period			$	13,350

Refer to Note 14 - Fair Value Measurements for further details.

Subject to the terms and conditions of the Sponsor Letter Agreement that was executed in connection with the Merger Agreement, 8.6 million shares of Class F common stock of FAII outstanding immediately prior to the Business Combination converted to potential Class A common shares and became subject to vesting and forfeiture provisions. The Vesting Shares vest in three equal tranches of 2.9 million shares each if the VWAP of Class A common stock exceeds $12.00, $14.00 and $16.00 per share, respectively, over the designated period of time.

The Company accounts for the Vesting Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in the Company’s condensed consolidated statements of operations. As of March 31, 2022, no Vesting Shares are outstanding as none of the corresponding share price thresholds have been met.

The following table presents the changes in the fair value of the Vesting Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the period ending March 31, 2022 (in thousands):

			Three Months Ended
			March 31, 2022
Fair value, beginning of period			$	16,560
Changes in fair value			(8,884)
Fair value, end of period			$	7,676

Refer to Note 14 - Fair Value Measurements for further details.

•Level 1: Observable inputs, which include unadjusted quoted prices in active markets for identical instruments.

•Level 2: Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instruments.

•Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of March 31, 2022 and December 31, 2021, respectively, the recorded values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and deferred revenue approximate their fair values due to the short-term nature of these items.

The Company's Senior Secured Term Loan and Revolving Loans are Level 2 fair value measures which have variable interest rates and, as of March 31, 2022, the recorded amounts approximate fair value. The Company utilizes the market approach valuation technique based on interest rates that are currently available to the Company for issuance of debt with similar terms or maturities.

The Company determined the fair value of the Earnout Shares liability and Vesting Shares liability using Level 3 inputs. The contingent common shares contain specific market conditions to determine whether the shares vest based on the Company’s common stock price over a specified measurement period. Given the path-dependent nature of the requirement in which the shares are earned, a Monte-Carlo simulation was used to estimate the fair value of the liability. The Company’s common stock price was simulated to each measurement period based on the above methodology. In each iteration, the simulated stock price was compared to the conditions under which the shares vest. In iterations where the stock price corresponded to shares vesting, the future value of the vesting shares was discounted back to present value. The fair value of the liability was estimated based on the average of all iterations of the simulation.

The key inputs into the Monte Carlo option pricing model were as follows as of March 31, 2022 and December 31, 2021 for the respective Level 3 instruments:

						Earnout Shares												Vesting Shares
						March 31, 2022						December 31, 2021						March 31, 2022						December 31, 2021
Risk-free interest rate						2.33%						1.50%						2.33%						1.50%
Volatility						50.82%						44.86%						50.82%						44.86%
Dividend yield						—%						—%						—%						—%
Expected term (years)						9.2						9.5						9.2						9.5
Share price						$1.88						$3.39						$1.88						$3.39

Refer to Note 13 - Contingent Common Shares Liability for further details on the change in fair value of the Earnout Shares and Vesting Shares.

									Three Months Ended
															March 31, 2022						March 31, 2021
Lease cost
Operating lease cost															$	16,703					$	15,823
Variable lease cost (1)															5,205						4,936
Total lease cost (2)															$	21,908					$	20,759

(1) Includes short term lease costs, which are immaterial .

(2) Sublease income was immaterial .

			Three Months Ended
			March 31, 2022						March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	16,438					$	16,166
Cash payments related to lease terminations			$	—					$	4,570
Right-of-use assets obtained in exchange for new operating lease liabilities			$	5,142					$	5,399

			March 31, 2022						December 31, 2021
Weighted-average remaining lease term:
Operating leases			6.3 years						6.4 years
Weighted-average discount rate:
Operating leases			6.5%						6.5%

Year
2022 (remainder of year after March 31, 2022)			$	50,865
2023			66,781
2024			59,498
2025			50,358
2026			44,009
Thereafter			97,574
Total undiscounted future cash flows			369,085
Less: Imputed Interest			(70,080)
Present value of future cash flows			$	299,005
Presentation on Balance Sheet
Current			$	50,651
Non-current			$	248,354

Note 17. Commitments and Contingencies