BOLINGBROOK, Ill., Nov. 7, 2022
/PRNewswire/ -- ATI Physical Therapy, Inc. ("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, 2022.
"Despite a continuing tight labor market and other secular
headwinds, we are forging ahead with provider recruitment while
other key performance metrics in the third quarter followed
seasonal trends. We are not waiting for the external markets
to recover and are operating with urgency to increase patient
access to timely care," said Sharon
Vitti, Chief Executive Officer of ATI. "Through strong
leadership and accountability, we are accelerating our pace of
transformation through the launch of immediate term efficiency
projects while continuing to map longer-term care delivery
strategies."
Joe Jordan, Chief Financial
Officer of ATI, said, "While we navigate the macro labor
environment in our industry, we are focused on optimizing the
clinic footprint and financial return at the local market level and
controlling costs at corporate. Fiscal discipline drove
incrementally lower general and administrative expenses in the
third quarter compared to prior quarter and prior year.
Primarily due to the rising interest rate environment, we recorded
non-cash goodwill and intangible asset impairment charges in the
quarter totaling approximately $107
million."
Ms. Vitti continued, "We have a plan, and we are aggressively
working to implement the changes. Our talented people and
clinical practices continue to be the chassis of ATI, and I am
excited to write ATI's next chapter. This work takes time,
and I am confident this dedicated team will deliver the expected
results."
Third Quarter 2022 Results
Supplemental tables of key performance metrics for the first
quarter of 2019 through the third quarter of 2022 are presented
after the financial statements at the end of this press
release. Commentary on performance results in the third
quarter of 2022 is as follows:
- Net operating revenue was $156.8
million compared to $163.3
million in the second quarter of 2022 and $159.0 million in the third quarter of 2021, a
decrease of 4% quarter over quarter and 1% year over year.
-
- Net patient revenue was $142.3
million compared to $148.5
million in the second quarter of 2022 and $141.9 million in the third quarter of 2021, a
decrease of 4% quarter over quarter and essentially flat year over
year. See below for discussion of drivers to net patient
revenue i.e., patient visits and Rate per Visit.
- Other revenue was $14.5 million
compared to $14.8 million in the
second quarter of 2022 and $17.2
million in the third quarter of 2021, a decrease of 2%
quarter over quarter and 16% year over year. The year over
year decrease was primarily due to sale of the Home Health service
line on October 1, 2021.
- Visits per Day ("VPD") were 21,493 compared to 22,403 in the
second quarter of 2022 and 20,674 in the third quarter of 2021, a
decrease of 4% quarter over quarter primarily due to seasonality
and scheduled vacations and an increase of 4% year over year mostly
due to higher clinical FTE.
VPD per Clinic were 23.2 compared to 24.2 in the second quarter of
2022 and 23.1 in the third quarter of 2021, a decrease of 1.0 visit
quarter over quarter and an increase of 0.1 visit year over
year.
- Rate per Visit was $103.46
compared to $103.57 in the second
quarter of 2022 and $105.56 in the
third quarter of 2021, essentially flat quarter over quarter and a
decrease of 2% year over year. The year over year decrease
was primarily due to the 2022 Medicare Physician Fee Schedule,
which introduced a 0.75% decrease in overall rates and an
additional 15% decrease in rates paid for services performed by
physical therapy assistants, and unfavorable mix shifts in payors
and states. This decrease was partially offset by favorable
mix shift in services.
- Salaries and related costs were $90.3
million compared to $89.6
million in the second quarter of 2022 and $86.8 million in the third quarter of 2021, an
increase of 1% quarter over quarter due to wage inflation and an
increase of 4% year over year due to higher number of clinical FTE
and wage inflation.
PT salaries and related costs per Visit were $56.20 compared to $53.64 in the second quarter of 2022 and
$53.70 in the third quarter of 2021,
an increase of 5% quarter over quarter primarily due to lower labor
productivity and wage inflation and an increase of 5% year over
year primarily due to wage inflation, adding clinic support staff,
and lower labor productivity.
- Rent, clinic supplies, contract labor and other was
$51.4 million compared to
$50.4 million in the second quarter
of 2022 and $45.8 million in the
third quarter of 2021, an increase of 2% quarter over quarter due
to higher expenditures on a per clinic basis and an increase of 12%
year over year due to more clinics and higher expenditures on a per
clinic basis.
PT rent, clinic supplies, contract labor and other per Clinic was
$53,945 compared to $53,017 in the second quarter of 2022 and
$49,499 in the third quarter of 2021,
an increase of 2% quarter over quarter and 9% year over year
primarily driven by greater use of contract labor compared to prior
respective periods while the Company works to fill open
positions.
- Provision for doubtful accounts was $2.8
million compared to $3.5
million in the third quarter of 2021.
PT provision as a percent of net patient revenue was 2% in
both quarters.
- Selling, general and administrative expenses were $25.3 million compared to $31.8 million in the second quarter of 2022 and
$30.8 million in the third quarter of
2021. The quarter over quarter decrease of 21% was primarily due to
a $3.0 million one-time loss on a
probable legal settlement recorded in the second quarter of 2022
and lower non-ordinary legal and regulatory matters expense and
reorganization and severance costs. The year over year decrease of
18% was due to lower reorganization and severance costs and
transaction costs.
- Non-cash goodwill and intangible assets charge was
approximately $106.7 million.
Primarily due to an increase in discount rates and lower public
company comparative multiples, it was determined that the fair
value amounts of goodwill and intangible assets were below their
respective carrying amounts.
- Income tax benefit was $7.2
million compared to $13.0
million in the second quarter of 2022 and $35.3 million in the third quarter of 2021.
- Net loss was $116.7 million
compared to $135.7 million in the
second quarter of 2022 and $326.8
million in the third quarter of 2021.
- Adjusted EBITDA[1] was $(0.4)
million compared to $5.4
million in the second quarter of 2022 and $8.5 million in the third quarter of 2021.
Quarter over quarter and year over year, the decreases were
primarily driven by lower revenue and higher clinic operating costs
partially offset by lower provision for doubtful accounts and
selling, general, and administrative expenses as detailed
above.
Adjusted EBITDA margin was approximately (0)% compared to 3% in the
second quarter of 2022 and 5% in the third quarter of 2021.
- Net increase (decrease) in cash was approximately $(0.0) million year-to-date 2022 compared to
$(76.0) million in the first nine
months of 2021.
Operating cash use was $59.1 million
year-to-date 2022 compared to $38.7
million in the first nine months of 2021 due to lower
earnings and higher net working capital. Cash repaid in
connection with the Medicare Accelerated and Advance Payment
Program ("MAAPP") under the CARES Act was $12.3 million year-to-date 2022 compared to
$8.5 million in the first nine months
of 2021.
Investing cash use was $21.9 million
year-to-date 2022, with 33 new clinics opened, compared to
$28.7 million in the first nine
months of 2021 and 38 new clinics opened.
Financing cash generation (use) was $80.9
million year-to-date 2022 compared to $(8.7) million in the first nine months of
2021. In February 2022, the
Company refinanced its first lien term loan with a new credit
agreement and issued Series A preferred stock with detachable
warrants, adding approximately $77
million to the balance sheet after payment of interest and
transaction fees.
Summary of key balance sheet items as of September 30, 2022 is as follows:
- Cash and cash equivalents totaled $48.6
million, and the revolving credit facility was undrawn with
available capacity of $48.2 million,
net of usage by letters of credit, equaling $96.8 million in available liquidity.
The Company's credit agreement includes a minimum liquidity
covenant of $30.0 million through the
first quarter of 2024. Liquidity, as defined under the
Company's credit agreement, was $99.6
million as of September 30,
2022.
Other notable achievements in the third quarter of 2022 were as
follows:
- Opened 11 new clinics in existing states, including
Alabama, Pennsylvania, and Texas; and 8 clinics were closed. This
brings the total number of clinics to 929. 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 76 and Google Star Rating of 4.8,
reflecting continued high customer satisfaction and brand
loyalty.
|
|
|
1
|
Refer to "Non-GAAP
Financial Measures" below.
|
|
|
Third Quarter 2022 Earnings Conference Call
Management will host a conference call at 5:00 p.m. Eastern Time on November 7, 2022 to review second quarter 2022
financial results. The conference call can be accessed via a
live audio webcast. To join, please access the following web link,
ATI Physical Therapy, Inc. Q3 2022 Earnings Conference Call, on the
Company's investor relations website at
https://investors.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 more than 900 locations in 25 states.
With outcomes from more than 2.5 million unique patient
cases, ATI is making strides in the industry by setting quality
standards designed to 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 our online platform, CONNECTâ„¢, 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
expected clinical FTE, the impact of physical therapist attrition,
anticipated visit and referral volumes and other factors that may
impact the Company's overall profitability and estimates and
forecasts of other financial and performance metrics and
projections of 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 execute
on our sales and marketing strategies;
|
(iii)
|
the ability to maintain
the listing of the Company's securities on NYSE;
|
(iv)
|
risks related to the
execution of ATI's business strategy, including but not limited to
ramping of visits, growing clinical headcount, and opening new
clinics, 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 patients,
payors and referral sources and retain its management and key
employees;
|
(vi)
|
the ability of the
Company to attract and retain 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 or regulatory investigations that have or may be
instituted against the Company or any of its directors or officers
and the availability of insurance coverage for such
matters;
|
(ix)
|
the ability of the
company to comply with its covenants in its credit facility and
preferred stock financing arrangements or to redeem preferred
stock;
|
(x)
|
the ability of the
company to generate sufficient cash flow to run its business,
comply with its covenants in its credit facility, and continue to
operate as a going concern;
|
(xi)
|
the ability of the
Company to issue equity or equity-linked securities or obtain debt
financing in the future;
|
(xii)
|
risks related to
political and macroeconomic uncertainty, including recession,
inflation, higher interest rates and the ongoing conflict between
Russia and Ukraine;
|
(xiii)
|
the impact of the
global COVID-19 pandemic (and existing or emerging variants) on any
of the foregoing risks;
|
(xiv)
|
risks related to the
impact on our workforce of mandatory COVID-19 vaccination of
employees;
|
(xv)
|
risks related to
further impairments of goodwill and other intangible assets, which
represent a significant portion of the Company's total assets,
especially in view of the Company's recent market
valuation;
|
(xvi)
|
risks associated with
the Company's inability to remediate material weaknesses in
internal controls over financial reporting related to income taxes
and to maintain effective internal controls over financial
reporting; and
|
|
|
those factors discussed in our amended S-1 registration
statement filed with the SEC on April 12,
2022 under the heading "Risk Factors," our Form 10-K for the
fiscal year ended December 31, 2021,
the S-3 registration statement and amendments thereto dated
August 10, 2022 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.
Contacts
Investors:
Joanne Fong
SVP, Treasurer and Head of Investor Relations
ATI Physical Therapy
investors@atipt.com
(630) 296-2222 x 7131
Press Inquiries:
Rob Manker
Director of Customer Marketing & Public Relations
ATI Physical Therapy
warren.manker@atipt.com
630-296-2222 ext. 7432
Sean Leous
ICR Westwicke
Sean.Leous@Westwicke.com
646-866-4012
ATI Physical
Therapy, Inc.
|
Condensed
Consolidated Statements of Operations
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30, 2022
|
|
September
30, 2021
|
|
September
30, 2022
|
|
September
30, 2021
|
|
|
|
|
|
|
|
|
Net patient
revenue
|
$
142,313
|
|
$
141,855
|
|
$
429,744
|
|
$
420,805
|
Other
revenue
|
14,479
|
|
17,158
|
|
44,163
|
|
51,303
|
Net operating
revenue
|
156,792
|
|
159,013
|
|
473,907
|
|
472,108
|
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Salaries and related
costs
|
90,309
|
|
86,838
|
|
267,330
|
|
248,409
|
Rent, clinic supplies,
contract labor and other
|
51,417
|
|
45,765
|
|
153,437
|
|
133,140
|
Provision for doubtful
accounts
|
2,797
|
|
3,514
|
|
11,408
|
|
14,270
|
Total cost of
services
|
144,523
|
|
136,117
|
|
432,175
|
|
395,819
|
Selling, general and
administrative expenses
|
25,263
|
|
30,795
|
|
87,095
|
|
81,912
|
Goodwill and intangible
asset impairment charges
|
106,663
|
|
508,972
|
|
390,224
|
|
962,303
|
Operating
loss
|
(119,657)
|
|
(516,871)
|
|
(435,587)
|
|
(967,926)
|
Change in fair value of
warrant liability
|
(790)
|
|
(15,885)
|
|
(3,651)
|
|
(20,424)
|
Change in fair value of
contingent common shares liability
|
(6,930)
|
|
(146,317)
|
|
(32,760)
|
|
(167,265)
|
Loss on settlement of
redeemable preferred stock
|
—
|
|
—
|
|
—
|
|
14,037
|
Interest expense,
net
|
11,780
|
|
7,386
|
|
31,815
|
|
39,105
|
Interest expense on
redeemable preferred stock
|
—
|
|
—
|
|
—
|
|
10,087
|
Other expense,
net
|
195
|
|
52
|
|
3,181
|
|
5,831
|
Loss before
taxes
|
(123,912)
|
|
(362,107)
|
|
(434,172)
|
|
(849,297)
|
Income tax
benefit
|
(7,218)
|
|
(35,333)
|
|
(43,532)
|
|
(65,579)
|
Net loss
|
$ (116,694)
|
|
$ (326,774)
|
|
$ (390,640)
|
|
$ (783,718)
|
ATI Physical
Therapy, Inc.
|
Condensed
Consolidated Balance Sheets
|
($ in
thousands)
|
(unaudited)
|
|
|
September 30,
2022
|
|
December 31,
2021
|
Assets:
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
48,569
|
|
$
48,616
|
Accounts receivable
(net of allowance for doubtful accounts of $50,910 and
$53,533 at June 30, 2022 and December 31, 2021,
respectively)
|
82,323
|
|
82,455
|
Prepaid
expenses
|
12,470
|
|
9,303
|
Other current
assets
|
13,765
|
|
3,204
|
Total current
assets
|
157,127
|
|
143,578
|
|
|
|
|
Property and equipment,
net
|
129,761
|
|
139,730
|
Operating lease
right-of-use assets
|
238,476
|
|
256,646
|
Goodwill,
net
|
338,011
|
|
608,811
|
Trade name and other
intangible assets, net
|
291,767
|
|
411,696
|
Other non-current
assets
|
2,068
|
|
2,233
|
Total assets
|
$
1,157,210
|
|
$
1,562,694
|
|
|
|
|
Liabilities,
Mezzanine Equity and Stockholders' Equity:
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
11,099
|
|
$
15,146
|
Accrued expenses and
other liabilities
|
52,511
|
|
64,584
|
Current portion of
operating lease liabilities
|
52,366
|
|
49,433
|
Current portion of
long-term debt
|
—
|
|
8,167
|
Total current
liabilities
|
115,976
|
|
137,330
|
|
|
|
|
Long-term debt,
net
|
479,906
|
|
543,799
|
Warrant
liability
|
690
|
|
4,341
|
Contingent common
shares liability
|
12,600
|
|
45,360
|
Deferred income tax
liabilities
|
23,927
|
|
67,459
|
Operating lease
liabilities
|
229,460
|
|
250,597
|
Other non-current
liabilities
|
1,944
|
|
2,301
|
Total
liabilities
|
864,503
|
|
1,051,187
|
Commitments and
contingencies
|
|
|
|
Mezzanine
equity:
|
|
|
|
Series A Senior
Preferred Stock, $0.0001 par value; 1.0 million shares
authorized; $1,074.32 stated value per share and 0.2 million shares
issued and
outstanding at June 30, 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;
207.3 million shares issued, 198.1 million shares outstanding at
September 30,
2022; 207.4 million shares issued, 197.4 million shares outstanding
at
December 31, 2021
|
20
|
|
20
|
Treasury stock, at
cost, 0.06 million shares and 0.03 million shares at
September 30, 2022 and December 31, 2021, respectively
|
(136)
|
|
(95)
|
Additional paid-in
capital
|
1,377,152
|
|
1,351,597
|
Accumulated other
comprehensive income
|
7,143
|
|
28
|
Accumulated
deficit
|
(1,236,746)
|
|
(847,132)
|
Total ATI Physical
Therapy, Inc. equity
|
147,433
|
|
504,418
|
Non-controlling
interests
|
4,934
|
|
7,089
|
Total stockholders'
equity
|
152,367
|
|
511,507
|
Total liabilities,
mezzanine equity and stockholders' equity
|
$
1,157,210
|
|
$
1,562,694
|
ATI Physical
Therapy, Inc.
|
Condensed
Consolidated Statements of Cash Flows
|
($ in
thousands)
|
(unaudited)
|
|
|
Nine Months
Ended
|
|
September 30,
2022
|
|
September 30,
2021
|
Operating
activities:
|
|
|
|
Net loss
|
$
(390,640)
|
|
$
(783,718)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Goodwill and
intangible asset impairment charges
|
390,224
|
|
962,303
|
Depreciation and
amortization
|
30,477
|
|
27,990
|
Provision for doubtful
accounts
|
11,408
|
|
14,270
|
Deferred income tax
provision
|
(43,532)
|
|
(65,579)
|
Amortization of
right-of-use assets
|
36,155
|
|
33,868
|
Non-cash share-based
compensation
|
5,830
|
|
4,864
|
Amortization of debt
issuance costs and original issue discount
|
1,934
|
|
2,644
|
Non-cash interest
expense
|
889
|
|
—
|
Non-cash interest
expense on redeemable preferred stock
|
—
|
|
10,087
|
Loss on extinguishment
of debt
|
2,809
|
|
5,534
|
Loss on settlement of
redeemable preferred stock
|
—
|
|
14,037
|
(Gain) loss on
disposal and impairment of assets
|
(42)
|
|
219
|
Change in fair value
of warrant liability
|
(3,651)
|
|
(20,424)
|
Change in fair value
of contingent common shares liability
|
(32,760)
|
|
(167,265)
|
Changes in:
|
|
|
|
Accounts receivable,
net
|
(11,276)
|
|
(8,564)
|
Prepaid expenses and
other current assets
|
(5,507)
|
|
(6,580)
|
Other non-current
assets
|
52
|
|
(269)
|
Accounts
payable
|
(2,100)
|
|
151
|
Accrued expenses and
other liabilities
|
(702)
|
|
(11,820)
|
Operating lease
liabilities
|
(36,431)
|
|
(39,084)
|
Other non-current
liabilities
|
52
|
|
824
|
Medicare Accelerated
and Advance Payment Program Funds
|
(12,269)
|
|
(8,540)
|
Transaction-related
amount due to former owners
|
—
|
|
(3,611)
|
Net cash used in
operating activities
|
(59,080)
|
|
(38,663)
|
|
|
|
|
Investing
activities:
|
|
|
|
Purchases of property
and equipment
|
(22,091)
|
|
(27,701)
|
Purchases of intangible
assets
|
—
|
|
(1,375)
|
Proceeds from sale of
property and equipment
|
152
|
|
125
|
Proceeds from sale of
clinics
|
77
|
|
248
|
Net cash used in
investing activities
|
(21,862)
|
|
(28,703)
|
|
|
|
|
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)
|
|
(454,160)
|
Proceeds from issuance
of Series A Senior Preferred Stock
|
144,667
|
|
—
|
Proceeds from issuance
of 2022 Warrants
|
20,333
|
|
—
|
Cash inflow from
Business Combination
|
—
|
|
229,338
|
Payments to Series A
Preferred stockholders
|
—
|
|
(59,000)
|
Proceeds from shares
issued through PIPE investment
|
—
|
|
300,000
|
Equity issuance costs
and original issue discount
|
(4,935)
|
|
(19,233)
|
Taxes paid on behalf of
employees for shares withheld
|
(41)
|
|
—
|
Distribution to
non-controlling interest holders
|
(1,129)
|
|
(5,615)
|
Net cash provided by
(used in) financing activities
|
80,895
|
|
(8,670)
|
|
|
|
|
Changes in cash and
cash equivalents:
|
|
|
|
Net decrease in cash
and cash equivalents
|
(47)
|
|
(76,036)
|
Cash and cash
equivalents at beginning of period
|
48,616
|
|
142,128
|
Cash and cash
equivalents at end of period
|
$
48,569
|
|
$
66,092
|
|
|
|
|
Supplemental noncash
disclosures:
|
|
|
|
Derivative changes in
fair value
|
$
(7,115)
|
|
$
(1,378)
|
Purchases of property
and equipment in accounts payable
|
$
2,230
|
|
$
1,733
|
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
|
$
29,453
|
|
$
35,334
|
Cash received from
hedging activities
|
$
1,080
|
|
$
—
|
Cash paid for
taxes
|
$
82
|
|
$
156
|
ATI Physical
Therapy, Inc.
|
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
|
$141,855
|
$17,158
|
$159,013
|
$8,539
|
5.4 %
|
Q4 2021
|
$140,275
|
$15,488
|
$155,763
|
$1,643
|
1.1 %
|
Q1 2022
|
$138,925
|
$14,897
|
$153,822
|
$(4,695)
|
(3.1) %
|
Q2 2022
|
$148,506
|
$14,787
|
$163,293
|
$5,436
|
3.3 %
|
Q3 2022
|
$142,313
|
$14,479
|
$156,792
|
$(392)
|
(0.3) %
|
|
|
|
|
|
|
|
|
(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 $24.1 million
in the fourth quarter of 2020.
|
|
|
|
Operational Metrics:
PT Clinics
|
|
|
|
Ending
Clinic Count
|
Visits
per
Day(1)
|
Clinical
FTE(2)
|
VPD
per
cFTE(3)
|
Annualized
Clinician
Adds
%(4)
|
Annualized
Clinician
Turnover %(5)
|
Q1 2019
|
|
|
825
|
24,142
|
2,833
|
8.5
|
20 %
|
19 %
|
Q2 2019
|
|
|
836
|
25,527
|
2,862
|
8.9
|
26 %
|
21 %
|
Q3 2019
|
|
|
847
|
25,229
|
2,901
|
8.7
|
37 %
|
26 %
|
Q4 2019
|
|
|
872
|
25,693
|
2,936
|
8.8
|
17 %
|
26 %
|
Q1 2020
|
|
|
868
|
22,855
|
2,841
|
8.0
|
17 %
|
22 %
|
Q2 2020
|
|
|
866
|
12,643
|
1,487
|
8.5
|
0 %
|
20 %
|
Q3 2020
|
|
|
873
|
18,159
|
2,004
|
9.1
|
9 %
|
82 %
|
Q4 2020
|
|
|
875
|
19,441
|
2,214
|
8.8
|
43 %
|
34 %
|
Q1 2021
|
|
|
882
|
19,520
|
2,284
|
8.5
|
44 %
|
32 %
|
Q2 2021
|
|
|
889
|
21,569
|
2,325
|
9.3
|
44 %
|
44 %
|
Q3 2021
|
|
|
900
|
20,674
|
2,359
|
8.8
|
63 %
|
41 %
|
Q4 2021
|
|
|
910
|
20,649
|
2,490
|
8.3
|
44 %
|
37 %
|
Q1 2022
|
|
|
922
|
21,062
|
2,466
|
8.5
|
39 %
|
28 %
|
Q2 2022
|
|
|
926
|
22,403
|
2,465
|
9.1
|
38 %
|
37 %
|
Q3 2022
|
|
|
929
|
21,493
|
2,465
|
8.7
|
45 %
|
36 %
|
|
|
(1)
|
Equals patient visits
divided by operating days.
|
(2)
|
Represents clinical
staff hours divided by 8 hours divided by number of paid
days.
|
(3)
|
Equals patient visits
divided by operating days divided by clinical full-time equivalent
employees.
|
(4)
|
Represents clinician
headcount new hire adds divided by average clinician headcount,
multiplied by 4 to annualize.
|
(5)
|
Represents clinician
headcount separations divided by average clinician headcount,
multiplied by 4 to annualize.
|
|
Unit Economics: PT
Clinics ($ actual)
|
|
PT Revenue
per
Clinic(1)
|
VPD
per
Clinic(2)
|
PT Rate
per
Visit(3)
|
PT Salaries
per
Visit(4)
|
PT Rent
and Other
per
Clinic(5)
|
PT Provision
as % PT
Revenue(6)
|
Q1 2019
|
$208,803
|
29.5
|
$112.39
|
$57.21
|
$48,682
|
4.3 %
|
Q2 2019
|
$219,748
|
30.7
|
$111.87
|
$55.21
|
$48,130
|
3.2 %
|
Q3 2019
|
$213,255
|
30.0
|
$111.21
|
$56.47
|
$48,995
|
2.8 %
|
Q4 2019
|
$213,767
|
29.8
|
$112.10
|
$54.65
|
$47,843
|
2.1 %
|
Q1 2020
|
$189,658
|
26.3
|
$112.76
|
$55.11
|
$50,258
|
3.6 %
|
Q2 2020
|
$109,872
|
14.6
|
$117.41
|
$53.39
|
$43,621
|
4.1 %
|
Q3 2020
|
$152,472
|
20.8
|
$112.51
|
$53.83
|
$44,140
|
2.2 %
|
Q4 2020
|
$155,913
|
22.2
|
$109.98
|
$52.16
|
$47,168
|
2.4 %
|
Q1 2021
|
$150,536
|
22.2
|
$107.56
|
$54.14
|
$47,722
|
5.4 %
|
Q2 2021
|
$165,241
|
24.3
|
$106.26
|
$48.22
|
$47,857
|
2.4 %
|
Q3 2021
|
$158,556
|
23.1
|
$105.56
|
$53.70
|
$49,499
|
2.5 %
|
Q4 2021
|
$154,772
|
22.8
|
$104.51
|
$55.73
|
$50,976
|
1.5 %
|
Q1 2022
|
$151,225
|
22.9
|
$103.06
|
$55.47
|
$54,472
|
3.7 %
|
Q2 2022
|
$160,431
|
24.2
|
$103.57
|
$53.64
|
$53,017
|
2.4 %
|
Q3 2022
|
$153,410
|
23.2
|
$103.46
|
$56.20
|
$53,945
|
2.0 %
|
|
|
(1)
|
Equals Net Patient
Revenue divided by average clinics over the quarter.
|
(2)
|
Equals patient visits
divided by operating days divided by average clinics over the
quarter
|
(3)
|
Equals Net Patient
Revenue divided by patient visits.
|
(4)
|
Equals estimated
patient-related portion of Salaries and Related Costs divided by
patient visits.
|
(5)
|
Equals estimated
patient-related portion of Rent, Clinic Supplies, Contract Labor
and Other divided by average clinics over the quarter.
|
(6)
|
Equals estimated
patient-related portion of Provision for Doubtful Accounts divided
by Net Patient Revenue.
|
|
|
|
|
|
|
|
Customer
Satisfaction Metrics
|
|
|
|
|
|
|
|
Net Promoter
Score(1)
|
Google Star
Rating(2)
|
|
Q1 2019
|
|
|
|
|
|
|
77
|
4.6
|
|
Q2 2019
|
|
|
|
|
|
|
79
|
4.9
|
|
Q3 2019
|
|
|
|
|
|
|
78
|
4.9
|
|
Q4 2019
|
|
|
|
|
|
|
79
|
4.8
|
|
Q1 2020
|
|
|
|
|
|
|
77
|
4.9
|
|
Q2 2020
|
|
|
|
|
|
|
77
|
4.9
|
|
Q3 2020
|
|
|
|
|
|
|
78
|
4.6
|
|
Q4 2020
|
|
|
|
|
|
|
76
|
4.7
|
|
Q1 2021
|
|
|
|
|
|
|
75
|
4.9
|
|
Q2 2021
|
|
|
|
|
|
|
77
|
4.9
|
|
Q3 2021
|
|
|
|
|
|
|
73
|
4.9
|
|
Q4 2021
|
|
|
|
|
|
|
78
|
4.8
|
|
Q1 2022
|
|
|
|
|
|
|
74
|
4.9
|
|
Q2 2022
|
|
|
|
|
|
|
75
|
4.9
|
|
Q3 2022
|
|
|
|
|
|
|
76
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
NPS measures customer
experience from ATI patient survey responses. The score is
calculated as the percentage of promoters less the percentage of
detractors.
|
(2)
|
A Google Star rating is
a five-star rating scale that ranks businesses based on customer
reviews. Customers are given the opportunity to leave a business
review after interacting with a business, which involves choosing
from one star (poor) to five stars (excellent).
|
ATI Physical
Therapy, Inc.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
September
30,
|
June
30,
|
March
31,
|
|
2022
|
2022
|
2022
|
Net
loss
|
$
(116,694)
|
$
(135,723)
|
$
(138,223)
|
Plus
(minus):
|
|
|
|
Net loss attributable
to non-controlling interests
|
376
|
177
|
473
|
Interest expense,
net
|
11,780
|
11,379
|
8,656
|
Income tax
benefit
|
(7,218)
|
(13,033)
|
(23,281)
|
Depreciation and
amortization expense
|
9,907
|
10,055
|
9,900
|
EBITDA
|
$
(101,849)
|
$
(127,145)
|
$
(142,475)
|
Goodwill and
intangible asset impairment charges(1)
|
106,663
|
127,820
|
155,741
|
Goodwill and
intangible asset impairment charges attributable to non-controlling
interests(1)
|
(457)
|
(654)
|
(940)
|
Changes in fair value
of warrant liability and contingent common shares
liability(2)
|
(7,720)
|
(2,680)
|
(26,011)
|
Loss on debt
extinguishment(3)
|
—
|
—
|
2,809
|
Loss on legal
settlement(4)
|
—
|
3,000
|
—
|
Share-based
compensation
|
1,920
|
2,004
|
1,964
|
Non-ordinary legal and
regulatory matters(5)
|
772
|
2,202
|
2,497
|
Pre-opening de novo
costs(6)
|
224
|
286
|
381
|
Transaction and
integration costs(7)
|
55
|
603
|
1,538
|
Gain on sale of Home
Health service line, net
|
—
|
—
|
(199)
|
Adjusted
EBITDA
|
$
(392)
|
$
5,436
|
$
(4,695)
|
|
|
(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 IPO
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents charges
related to the derecognition of the unamortized deferred financing
costs and original issuance discount associated with the full
repayment of the 2016 first lien term loan.
|
(4)
|
Represents estimated
charge for probable net settlement liability related to billing
dispute.
|
(5)
|
Represents non-ordinary
course legal costs related to the previously disclosed ATIP
shareholder class action complaints, derivative complaint and SEC
inquiry.
|
(6)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(7)
|
Represents costs
related to the Business Combination with FVAC II and
non-capitalizable debt transaction costs.
|
ATI Physical
Therapy, Inc.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ in
thousands)
|
(unaudited)
|
|
|
Three Months
Ended
|
|
December
31,
|
September
30,
|
June
30,
|
March
31,
|
|
2021
|
2021
|
2021
|
2021
|
Net income
(loss)
|
$1,690
|
($326,774)
|
($439,126)
|
($17,818)
|
Plus
(minus):
|
|
|
|
|
Net (income) loss
attributable to non-controlling interests
|
(869)
|
2,109
|
3,769
|
(1,309)
|
Interest expense,
net
|
7,215
|
7,386
|
15,632
|
16,087
|
Interest expense on
redeemable preferred stock
|
—
|
—
|
4,779
|
5,308
|
Income tax
benefit
|
(5,381)
|
(35,333)
|
(19,731)
|
(10,515)
|
Depreciation and
amortization expense
|
10,005
|
9,222
|
9,149
|
9,619
|
EBITDA
|
12,660
|
(343,390)
|
(425,528)
|
1,372
|
Goodwill and
intangible asset impairment charges(1)
|
—
|
508,972
|
453,331
|
—
|
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)
|
(10,046)
|
(162,202)
|
(25,487)
|
—
|
Gain on sale of Home
Health service line, net
|
(5,846)
|
—
|
—
|
—
|
Reorganization and
severance costs(3)
|
—
|
3,551
|
—
|
362
|
Transaction and
integration costs(4)
|
955
|
2,335
|
3,580
|
2,918
|
Share-based
compensation
|
905
|
1,248
|
3,112
|
504
|
Pre-opening de novo
costs(5)
|
543
|
511
|
441
|
434
|
Non-ordinary legal and
regulatory matters(6)
|
2,472
|
442
|
—
|
—
|
Loss on debt
extinguishment(7)
|
—
|
—
|
5,534
|
—
|
Loss on settlement of
redeemable preferred stock(8)
|
—
|
—
|
14,037
|
—
|
Adjusted
EBITDA
|
$1,643
|
$8,539
|
$23,999
|
$5,590
|
|
|
|
|
|
|
(1)
|
Represents non-cash
charges related to the write-down of goodwill and trade name
indefinite-lived intangible assets.
|
(2)
|
Represents non-cash
amounts related to the change in the estimated fair value of
Warrants, Earnout Shares and Vesting Shares.
|
(3)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(4)
|
Represents costs
related to the Company's business combination with FVAC II,
non-capitalizable debt transaction costs, clinic acquisitions and
acquisition-related integration and consulting and planning costs
related to preparation to operate as a public company.
|
(5)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(6)
|
Represents non-ordinary
course legal costs related to the previously disclosed ATIP
shareholder class action complaints, derivative complaint and SEC
inquiry.
|
(7)
|
Represents charges
related to the derecognition of the proportionate amount of
remaining unamortized deferred financing costs and original
issuance discount associated with the partial repayment of the
first lien term loan and derecognition of the unamortized original
issuance discount associated with the full repayment of the
subordinated second lien term loan.
|
(8)
|
Represents loss on
settlement of redeemable preferred stock based on the value of cash
and equity provided to preferred stockholders in relation to the
outstanding redeemable preferred stock liability at the time of the
closing of the business combination with FVAC II.
|
ATI Physical
Therapy, Inc.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ 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
|
$26,487
|
|
|
|
|
|
|
(1)
|
Represents severance,
consulting and other costs related to discrete initiatives focused
on reorganization and delayering of the Company's labor model,
management structure and support functions.
|
(2)
|
Represents costs
related to the Company's business combination with FVAC II, clinic
acquisitions and acquisition-related integration and consulting and
planning costs related to preparation to operate as a public
company.
|
(3)
|
Represents expenses
associated with renovation, equipment and marketing costs relating
to the start-up and launch of new locations incurred prior to
opening.
|
(4)
|
Represents
non-recurring costs to optimize our platform and ATI transformative
initiatives. Costs primarily relate to duplicate costs driven by IT
and Revenue Cycle Management conversions, labor related costs
during the transition of key positions and other incremental costs
of driving optimization initiatives.
|
(5)
|
Represents charges
related to lease terminations prior to the end of term for
corporate facilities no longer in use.
|
ATI Physical
Therapy, Inc.
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
($ 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