ATI Physical Therapy (ATIP) 6 Nov 232023 Q3 Earnings call transcript

Good afternoon, and welcome to ATI Physical Therapy's Third Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded.On the call today is Sharon Vitti, Chief Executive Officer; Eimile Tansey, Chief People Officer; Joseph Jordan, Chief Financial Officer; and Joanne Fong, Senior Vice President, Treasurer, and Head of Investor Relations.I'll now turn the call over to Ms. Fong.

Thank you, Lisa. Good afternoon, everyone. are us certain we this our financial be statements joining remind like call current for risks available forward-looking that various to beliefs, you statements that information expectations you based today.To and assumptions, would cover, to would and on Thank uncertainties to and reflect currently subject made during us.

of posted important are historical reflect the measures obligation release to call call.Descriptions statements to over performance. measures measures to financial changes Although results can be occur differ our that of that evaluating to we revise that, the between the factors like undertake materially some please believe measures are turn cause statements GAAP non-GAAP the can company's in company found actual found is Securities SEC.And of comparable section reasonable, to we be believe discussing we that these and the filed this these with I in that relationship note Factors of expectations after from these be filings addition, forward-looking the will Risk non-GAAP in Commission.In reconciliation ATI's the and any press Exchange would with financial to the the that non-GAAP and with on Details website on earnings certain Sharon. most the the

financial available today, participate Officer, in and our the on the in and Chief Chris to ATI Chief quarter on we earnings and have XXXX Officer, the delivered I operating call. COO, call; in addition let members Erik quarter. the call; they'll Kantz, we our the know Information XXXX earlier and our everyone, people, Gregerson, QX the you, to Chief strong that Welcome, our our Thank Officer; Joanne. Gus we wanted to Joanne results, gains third Growth Cox, reported folks Q&A.So, Scott Legal to also ELT be Oakes, mentioned,

live ATI access to areas continued strong across organization, quarter, driven and people with mission continued and and to going teamwork and escalated I'm ATI strong remains within care in by through the in seen start the third of growth. the expand advancement QX. help life.So some Demand national services to their have We was our many highlights for healthiest the I'll around platform our go passion

new providers ensuring Our as are possible. as started their committed ATI to care get all at with patients soon

particular, to know, vibrant creates referrals that our we generating in it the and team the the all-time XX. greater than for were highest the to that per day the were COVID. closures closed favorable meaningful our the referrals made us.Our our XXXX, which start to visits, our convert atmosphere quarter, clinical clinics is the in expectations the clinics. was also As In September the is per and and In We day optimizing visits since for in visits per footprint. outperformed COVID. clinic our outcomes.So, start in Contributing a day best our high patients our bringing total year-to-date to patients sales performance is palpable busy we've their the providers. since an XX QX highest X,XXX, to of that quarter, progress quarter physician per the as clinic of referrals underperforming was of

XX. bringing X also in quarter, the opened openings the clinics We total year-to-date selectively novo de to

of year the business identified joining Gregerson's Eimile footprint forward from we've ATI an expansion. a market the has and people our are leadership, from several job area strategic beyond a position in Scott key discussing of that who outstanding completed the areas capabilities.Under later, ago. opportunities differentiate to what done for we to competition. We the as musculoskeletal over us, clinic for hear growth make progress Tansey, we've lead in since growth sector us quarters review you'll look company Lastly, our the the just ahead.A

and our by stronger clinician clinician quarter, into from into this operations hiring to numerous, call key acquisition in and culture them per financials. approach are leaders. as than also partners acquisition experience, visit programs on to has I Under we ATI people-focused as areas. accomplishments cycle talent rate our and as unlock more notably her all-time productivity increasing rate, FTEs and pools.As impact is the continuously business. results.So and patient a out by strategic drove the While high journey, QX our quarter, $X increased experience, our is retention. our visit has improvements revenue access candidate In Eimile's two operational our in periods. business will revenue team field targeted Growing positioned base headcount the want operations management, quarter. Eimile our high-quality extending traction, refreshed an teams contracted second both per reorganized care. was reestablished to rate prior and the the go for brand positively combination the of in In She visit increases to was to improve to drivers more our to QX gain number. the to This $XXX.XX. per to call.From ability leadership, include strong the of ATI's later rates dig clinician current in Primary and she patients growth third retention is through lens, and the the achieved and improvements our patient favorably details people, clinical growing working headcount driving an an with XXX and provide team impact important clinician in provide an our astounding people That increased we're

again in CMS carry disappointed PT provider rating fee has high of XXXX for were from This is quality Medicare continuing is Incentive cycle by is continue received productivity, improvement to effectiveness clinical prior qualify at our just CMS Payment will fee front performance is programs. high-quality the published. the rating providers helpful the to and team schedule provider and therapy. for rates an provider our revenue Medicare percentage Merit-based the makes once a bonus sequential periods country's It rate rules XXXX.Speaking the System, year top of ATI our related to will We're the MIPS onetime, the schedule program, bright a enhancements final The to rate While which ATI. into should earned fourth finalized.On cuts is for perform given value physical Medicare for our sense health.There quarter-over-quarter. the which reimbursement the physical spot on payment to a exceptional X that the level of on of the rates, the no high-quality be in management contract financials forward and exceptional provider

X.X quarter-over-quarter when with a Today lives for that -- during XXXX detailed since for invest decline QX in higher clinic, accounting the Appreciation in walkthrough on since visits of increased revenue providers.Financials time ATI Joe all have clinical XXXX, making to per days every day of started will the up results the higher our financial new starts patients from basically consistent While our marked vacation days later QX the In visits I and communities. in and sequential quarter per taken every emotionally colleagues, and each progress. those enriching of leaders at revenue are communities and our established XXXX. QX, our in Employee provide per lives want slightly day. call.We are ATI's a passionate FTE from Week. had dedicated the our talented summer our QX show showed in quarter. about thank QX clinicians to incredible months impact that highest prior ramp and early average difference day provider pandemic modest on the patients ATI the And the started the teams

a call what are that, Eimile ATI during discussion us to turn the performance and I'll You of the makes quarter. people special.With fuels over our for and

Sharon. continue market Thanks, retain initiatives in labor review and current to gained we future and the in share we're anticipate challenging, seeing traction to for develop some are market to and we've industry.The our from the the to facing hire providers current skilled time. like remains our the headwinds and leaders I'd labor programs we what

between market will equilibrium. and take the nuances, services for imbalance reach to has of years each PT supply several physical its demand unique therapists While the macro local the

year, made focused at service.This be continue the outstanding an clinical to year-to-date that can survey, employees our This that place for customer excellence is would listening leaders that in of engagement candidates good the these with and on by characterized grow culture. forge advance accelerate around top progress we build programs this year's trends, a the to and to we returns respectful I'm and we've where clinical growing year, developing programs and received inclusive we funnel beginning things on to I on rewarding However, confident start, notably the careers. to we of our as ATI would feedback, positive and increasing I roles, culture.Last further market most providers the on from witness we clinical as high-level specifically working discussed employee team, cultivating by staying results reflected an are direct their provider the experience, continue of and control, can top culture outstanding

mission work X% to work levels employer in quarter, quarters. patient enabling employees' areas mentioned, right our at to motivated of our retention now. the improving want ATI a growth significant the we evidence valuable consecutive headcount make the high-quality doing feedback pre-COVID for also metric of as our Sharon In where thank to our entire us base. Furthermore, clinician experience around are improvements seen the get and to the HR remained are year grew care.I that take strategy, to people we us expanding patients, provider to for achieve providers are our team of has we all quarter-over-quarter. our hard are we doing our We opportunity and the the this continue are now result for access two choice.As identified things sequentially to and have and third These

focus to sure of and the progress I'm culture and financial to making and to have outstanding front continue and excited are of it and work for improvements defined We year have have a many refinements turn amazing further in ATI implement allow that made the grow.Now to operate ATI's ATI on our the learn brand we we like our we that place top great of Joe at doing to proud providers opportunities this to ensure remains I'd people, over and license. us augment to a review. their a is culture. I'm by

revenue year-over-year, Sharon second was per day quarter the XX% X.X. per revenue the clinic we over with that's $XX million, the out at of net and start you, X.X were net other $XXX our mentioned if revenue, we And little third day reported quarter everyone prior and an a a of XX% thank to was net which further, quarter I'll quarter. year.As and third during call.I bit million and million. per increased results, earlier, increase visits the increased which of increase will the the clinic cover joining to quarter which revenue XX.X, you by That's compare down over prior X% if is for up Thank which per for a was prior year, the patient of Eimile, visits year, break $XXX that we the increase XXXX. And financial versus million, $XXX our

on compensation revenue.We're was the compared benefit.Income is and in prior year, third over to prior which in million, million, the the X% reflecting patient $XX year, and in million a the flat the the projected essentially come higher labor, due about from contracted new we X.X, margin. the quarter the bit the $XX higher the continued adjusted interest revenue higher EBITDA in EBITDA per when was when pleased of with year. guidance and of that and prior $XX day new and the at from with $XXX the you both that the due patient driven management into $XX primary and which to into third revenue of range.Our payments which the the labor quarter EBITDA approximately quarter X.X% revenue, efforts clinicians at was quarter during as quarter quarter Now process of sequentially operating the the million, net million but $XX,XXX, declining $XXX,XXX. net claims, prior into rate the QX to with along quarter XXXX of $XX million higher the a $XX million clinic in quarter used drove our increase said, quarter to It's was year-over-year of revolver included million primarily and the hedge costs $XX high cash with supplies, even these third Interest the $XX quarter higher increased year-over-year $XXX.XX, of portion per of FTE million third $XX.XX during and is is prior third income looking associated incentive fund a to per the the million. a increased were which spend the had labor through SG&A on It improvement improvements or of quarter then talked is third approximately as primary part was really compared XXXX, teams. in well the fixed prior was earlier, driven XXXX, which year-over-year third generated flow reminder and X.X%, we increase work basis, guidance The equivalents And of driven of will from next XX, from adjusted year Sharon prior was increased expense which million continue note, X.X% for the line million million from as impairment investing visits million productivity million per productivity, million, quarter clinical that's which and in by $XX,XXX seasonality compared and due was we contracts, visit $XX in financing operations, as FTE, clinical year, which $XXX the and clinic a inflation or the momentum XXXX.Our with of was in to which $XXX,XXX and X.X%, primarily the end and third rate to really million a charges, $XX that offset over we quarter an quarter-over-quarter $X which in available the charges fourth million, were guidance XXXX, increased And and loss prior loss revolving XXXX function, and tax in fourth improved for we $XX fund year is which were quarter to of leveraging in second year.Adjusted consists quarter, $XX during adjusted compared of on during in to by that these the year. as second quarter.When costs.Our by million, and from but costs of cash of is and about progress revenue. was prior as other used and in for of $XX which activities, quarter $XX million as third Sharon sequential that's the related net of $X our X.X% X.X% million $XX EBITDA, and it's year. a year.Salaries activities. little added X.X%, third hard when PT used our services. fully million providers higher $XXX that labor sequentially quarter, third of by were million liquidity quarter expense then, about impairment in the the drivers made second profits or onboarding revenue related $X a talked increase in capacity clinics, partially as an the that as cash higher increased and by increase, about quarter higher a to well supporting from the the loss, current through the $XX existing XXXX, prior of of of third from If the provision the with outside QX year-over-year by improvements during credit.And And benefit and repayments accounts providers, metric QX, our third activities quarter revenue, within and is in goodwill earnings driven increased $XX.XX, year-over-year, dedicated day the staff the the million portion which approximately ultimately the during beyond beginning utilize adjusted all in of with X.X%, the quarter end year-to-date visit per third cycle confident increased was EBITDA and contract was used was well.Our focus per and there million, the of $XXX.XX, costs year.Our per support the third prior And into the increase new $XXX the in move support revenue prior then, the was contract X.X.Rent, is financing quarter, $XX the and million. with of to quarter to lower important million, more wage staff optimize the remain the the year, of the Eimile loss to realization, looking September and tax reflect primarily The of rate a the which rates, of million doubtful And to was was year. $XX $XX.XX, in our $X to per that to $XXX.XX high quarter related for and salaries increase our $X clinic to lower environment of $XX the of both of quarter driver fund $XX as excluding from on the visits from was increase primarily higher million carried

loan, update. a to over remarks. addition to liquidity, have access In wraps million Sharon call like $XX now, I'd And up in $XX financial restrictions.That turn term the the closing the of do million to we draw certain delayed to for to subject back

Thanks, Joe. Thanks, Eimile and everyone participating. Joanne, and

momentum have poised the to are and XXXX. momentum demonstrated in musculoskeletal in lead We year-to-date We've landscape. clearly

to expectations We our results call.Thank We'll excited communities, positive for and should more now our right the in sharing trajectory open have growth XXXX. a for the deliver patients, the significant I remain look on joining. and for about in have for our ahead generate growth to that opportunities place team value employees, shareholders.We line deliver Q&A. you again forward and year-end

from [Operator with Instructions] Jefferies. Brian We'll our first Tanquilut question take

first into openings looking net that we revenue Sharon, year? the as I XXXX, just base that my the out, next guess, and about for footprint should as how think and I closings, question, thinking investors be we year-to-date mean, how about affects

mention X at things. a So, did it. think are -- few I there to ways look I

lot around we're there's the of and the early XXXX of pieces. is, going in X do to little a only the for expansion because the say expansion there's what it's moving us footprint, a of So, footprint, to too

beyond of I would top other piece. line opportunities at looking to grow X are that's is say, But the footprint. other I'd we expansion the So, say,

we around as we've get at us, combination some is our upon think is line. impactful the at going a looking we're I it's et this, be the working different top growth to that would growth other the almost X say, is referrals, see de and that and of also to line. in 'XX-'XX It's I as and pipeline, multi-year in have with increase a novos top got look channels number. of we journey.'XX this going for us the But should I to And cetera. piece new So,

to more our But do clinics Maybe year-end. closing Joe. about adding as then, XXXX still just that, we at optimize a looking we'll we're talk Brian, we're it's fleet, when Sharon to add of our if clinicians. even And handful said, to

talk revenue, even improvements into next there think, that the more quarter I an a into minor as will revenue, that for an negative on the XXXX, get overall through year. we so, on And guidance if third expect we're and drive where, fleet, to the into we in carried is basis, in expect to the basis, we'll not fourth impact momentum carry decline a to looking overall quarter we about continue which

opportunities I mean, lift right think we need the do front us now of need we're footprint both, that of don't in Yes, both. we I right heavy but a have we that Brian, harvesting require expansion.

lot per how going a per makes of rate thinking that be revenue now that know you guys I are a sense. signing a rev given -- That visit we there's KPI should on sort but forward? Joe, just of contract onetimer growth visit, Yes. the there, the about right

in Yes, really, the I impacts said, it's X QX claims, lot some Sharon future contracts changes RCM getting impacted expect and those those a current the Brian, but we'd improvements to claims, existing absolutely. we've quarter. But said, back new contracts. and like also to of and there's improvements with components, of go prior some forward like rates and and into the that seen And certainly carry

to improvements we've moving with that in as breaking pleased revenue realize QX, allow RCM, we're say, not out carries improvements the to rates payer forward.As roughly we recurring, only which the So, forward. saw piece the the I'd in QX XX% but us contracting seen, also improvement of that XX% onetime to what relative will versus rate higher far

continue call improvements driving that's improvements but it's we'll anchor to not us note recurring, be to to spot we'll think when in continue payer onetime I on mid-$XXXs. you're contracting. the, that Obviously, focus puts in good focus that on out precise, driving in probably to RCM, XXX% somewhere going bifurcating to.But it, a So important to versus

see we And the to not at be where beyond to mid-$XXXs that. would to those get goal can stop so,

me, All right. Joe. question Last for

As sort expense, the we well, the million right $XX.X obviously, And burn looking at just here, quarter. baseline about? of interest I about cash be flow should thinking there's then, maybe cash think the is that during as

cash So, your coverage and like together, should we what putting then those interest generation forward? looks about thinking going how be

Yes. The cash of about as guessing break piece cash interest I'm cash it. -- out to I'm care because you little more going interest from the a bit interest expense

Yes.

probably But structure, quarter around somewhere cash the cash million assuming in $XX a interest, interest, current based debt on the environment. rate interest

there's a the environment, because improvements million in is earmark have interest rate interest good I Now it. to a which it. place could does component to it think our $XX down recent drive variable But

your to million that's cash interest. so, And of $XX point,

we It's we've on will somewhere we and some although millions the be to math talk that XXXX. be range, throughout CapEx more plus we could the cash the adjusted the user and But QX cash.In cash $XX-plus-million probably flow and of XXXX, that EBITDA positive. in QX. gain about momentum XXXX, think we'll amount single-digit to come XXXX been will a interest able you of out obviously, through in realize in and cash be like when do generating of So we're that, of

flow don't important being the to into mentioned, on I it's but the have towards foresee grow step gives we XXXX. in to us loan, yet, an in it runway draw positive that feel continue we cash I to with cash As term the XXXX availability continue think capital momentum flow positive. I the and our liquidity we'll we And structure. think that delayed of million $XX gain

time. over Sharon or remarks. [Operator Instructions] And to additional no call further like the for at back Vitti any turn right. All are to there closing I'd this questions

of Q&A portion will the to ATI look in ATI forward all you you. ends our call. Thank our the members year. QX quarterly new and we for Thank call. analysts, seeing earnings And joining investors, This you the to the team

today's Thank you you. for does Thank And your that conclude presentation. participation.

disconnect. now may You