ATI Physical Therapy (ATIP) 4 Nov 242024 Q3 Earnings call transcript

Good afternoon, everyone, and welcome to ATI Physical Therapy's Third Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] And please note that this event is being recorded.

On the call today is Sharon Vitti, Chief Executive Officer; Eimile Tansey, Chief People Officer; and Joseph Jordan, Chief Financial Officer. I will now turn the call over to Mr. Jordan.

thank joining and today. everyone, afternoon, you us for Good

various everyone like any statements are be some we Before our Those beliefs, to available based I'd this expectations statements information us. the obligation undertake revise to after cause current of the remind reflect to that forward-looking forward-looking and statements that could differ call. our statements changes that subject in can Descriptions assumptions will to be of we begin, section these on SEC. filings materially of call the And Factors to these while reflect factors certain reasonable, expectations with believe uncertainties. this occur results found made and no currently actual and risks Risk to during company's the from we

a the we'll to financial non-GAAP our to please can SEC. in discussing well that, release non-GAAP those on addition, measures In Details turn earnings comparable press with to most important over performance. be on that be are we is off. and evaluating With measures between X GAAP posted that measures the note as to between believe relationship certain financial the as the that the ATI's I'll found kick website the us Sharon call reconciliation filed

time us today. join to Joe. you, taking I afternoon, Good you Thank appreciate everyone.

share provided delivered we Tansey, we financial Gregerson quarter. and I ATI fourth have with on will Eimile today, quarter today. Jordan Cox, and excited call I'm Earlier super the third for strong reported XXXX also So Erik present along to quarter. and the today that Chris guidance and another our Kantz, results Scott Joe

EBITDA to and we on year. providing discuss our our adjusted Let expectations cover grow our to revenue over an ongoing financials the Joe to overview saw highlights the To remainder of me before begin, more year-over-year. in and handing start detail it initiatives and performance key by of

We across and pleased again the positive physicians patients of for the driver third of momentum we and performance. demand our to and remains EBITDA strength with growing the revenue see for adjusted demonstrates once the referring services. built trust business have both and The continued This business our our continue to a guidance are key achieve ATI's quarter.

Our grew per patient than year-over-year. referrals the day in quarter more X%

we're patient to Our truly visits teams is And strength clinical access to more the per provide of compared the value patient our to clinics a we QX over saw to last uptick high-quality serve, communities day X,XXX of in able patient testament this driving year. the and volume care. to

this the clinical on One teams, continued this culture more of our People refresh. ongoing Eimile Officer, the strategies Chief will our quarter of share of expansion people was and our by supported key Tansey, highlights later.

We improvements. operational continuous attention build our operational by resource such and than improved to remains continue and So around streamlined we on and of fine-tune care. access demand With on This QX insights improved compared X.X operations. Clinician robust driven of workflows. more year. last patients our enhancements quality when workforce, more productivity as is stability clinic better allocation sacrificing fixed for without by to our our

plan. patient clinic footprint, costs. aligned to clinical still have strategic compared execute refine with fixed we In of Our and match population our geographic clinics estate closed capacity, day our continued real as estate X clinics real are seeing to more our busier leverage part some We divested needs. plan quarter, and to to X the last while strive on and per X year. supply that year-over-year, demand clinics visits QX with over per And to excess of we

this have results have delivered maintained growth. how teams pleased I'm care our third throughout quarter. strategies about of the in clearly our Our standard

at over space call I'll our an to very Star driven commitment ATI a X, of continues of making who every every experience people exceptional of speaks a direct of at turn our are the to part I'm life satisfaction important every X.X organization deliver shared the by achieve. that rating lives proud this that, at Google musculoskeletal we purpose patient. to incredible reflection and care With day. to patients active every we've committed purpose. to is the of rating to have enhancing Patient in of heart the the are of be Our achieved. what outstanding we of Eimile. visit foundation is impressive consistently and level remains our patient to the care is which of high an life. They the our out lead This I'm honored

Sharon. I'd labor to attract to discuss with and to like take retain we've and moment the Thanks, skilled the a enabling highlight current care. our market made to initiatives to access us expand high-quality progress providers,

our employees a These care clinician were feedback, am grow can we work, our delivery, believe recent we positive received will will stands as at customer engagement values and that annualized and progress. by industry. nurturing to Despite experience clinician to in I macro balance areas and our staying inclusive the future, headwinds services continue to in on for foreseeable with employee fostering focusing is challenges, its steady that overwhelmingly culture, supportive in continue and these a our demand we with service. an challenging, provider attuned environment. remains what such where survey, take to trends, we headcount market persist year-over-year culture the and quarter, the such XX%, exceptional line attrition, are we as strong level, by the a them make to for reflected the market to third market navigating control, confident out. Every we the particularly held leadership between in excellence of rewarding local the supply unique listening and time we for In determination. labor we X% growing these PT therapists On the which characteristics. grew expect mismatch has While own physical

truly both to this as These the our doing the are we to feedback show things our identified eager right also our further improvement, fulfill I make We achievements that choice. life providers extend for purpose ATI experience to active entire HR use enhance for opportunities every of for employer life. the solidify to an hard by employee the and us we're year and on their the gratitude helping focused and patients, people, to to my want excited team to and culture a defined allow our its incredibly and improvements we've their learn, clinicians ensure done to people vibrant the in remains operate strong top continue on this I'm where work we've building progress I'm grow our strengthening and brand, dedication is of the ATI's place license. of at that proud thrive. that culture. and can work ATI ATI made

Joe like over call discuss performance to the turn to financial Now the in I'd to quarter. our

Thank you, Eimile.

mentioned, guidance. I'll Eimile out As and XXXX quarter Starting with talk performance, also about results. about quarter third QX financial third I'll talk our

prior per flat that the XX.X visits quarter, in while revenue of reflect year-over-year revenue net if is other the Sharon down quarter dive which is essentially a and increase the year-over-year $XX to Our Visits year-over-year, little $XXX net increase which the clinic, X.X% our which in efforts during deeper, our we was $XXX per over revenue was year. from day XX.X which clinic a increased from of million, QX million, was year, bit continued patient improve million, talked was a capacity. And X.X about utilization does prior earlier, million. $XXX X.X%

due $XXX.XX in Our $XX rate XXXX an $XXX X.X% paid prior wage related Sharon to $XX last other from in year-over-year support year-over-year per in more primarily increased inflation XXXX. partially wage a this during increased which And which quarter during visit contract and is and primarily year, a the PT flat and from Salaries prior the in services. of clinic the QX these supplies, productivity moved offset third year-over-year were driven from $XX more the third basis, quarter X.X% year-over-year prior which of on third with quarter million year, quarter and costs from in the by costs $XX,XXX was were of the salaries per million. X.X due year-over-year clinic the related when the and increase in quarter that usage is touched on higher $XXX.XX, labor were outside to contractor one and X.X% from QX labor that's to on having third $XX.XX, the is X.X% which higher in which which staff, the is day Rent, increase year. quarter from per million, and X.X QX million, $XX,XXX, year to compared year. and by increasing increase of the earlier, essentially spend of costs visit $XX.XX, approximately in was clinical inflation some

and balance. during long-lived the for $XX million provision prior million included of year-over-year the of million. Noncash accounts Our quarter during PIK to of fair the increased in million year-over-year driven to compared approximately the of which analysis below-the-line by by then $XX year. losses the due that $XX $XX approximately prior year. of quarter million $XX cash due common was was resulting was higher The in of on with $X.X down during by year $XX $XX PT income valuation higher compared revenue in activities to by further, $XX as revenue Notable higher used primarily partially in from prior the is and that the quarter million adjusted million a to million, the was items the increase loss year. quarter $X each an accounts were in reflects Net current the the to revenue compared lower done $X primarily compared million higher contingent operating $X the $XX was through adjusted was was third-party was million million, and prior and in is approximately in flow-through used year tax the value in $XX revenue during end. decreasing quarter accrued higher instruments which annual or million, are net million financing payments. the quarter million. doubtful driven year, year, decreased higher corporate payout revolver compared principal during a the a expense the the was X.X% on Cash million, cash in term The line. to $XX used and $X.X spend quarter, notes, second Breaking increase in was compared year-to-date new receivable was charges loan, million $XX loss drawn Interest in quarter impairment last decrease X.X% quarter quarter with Income the earnings. X.X% PT margin, the SG&A was and to $X.X million million, warrants year which XXXX. fair increase $XX prior from during prior of insurance mark-to-market of And rates, quarter higher increased offset lien last million to costs expense borrowings. the is outstanding compared year-over-year year driven revenue to which tax generated $X increase financing was shares primarily to lower $XX last during openings. totaling the $X interest and during X.X% benefit $X is And and from primarily value margin These quarter million due and a services. lower X.X% investing million million fewer the with for EBITDA that clinic cash which third from to fully EBITDA earned the flow the primarily XXXX and bottom January to earnings $XX used in in to operating draw associated of Cash million delayed incentive year. income million

QX that, I'll XXXX, consisted cash liquidity cash available to equivalents. $XX approximately XXXX And September of guidance. turn XX, with and which million, was As of

back and we're $XX grow in $XXX remarks. of range revenue guidance $XXX overall navigate outlook million. seeing and that revenue includes turn and Our adjusted This and the that, to to dynamics to FTE tactics in clinical be for in in to we're be million, to turn, the the range EBITDA the the clinic that million reflects of QX Sharon employing With anticipated million strategies to and call and the for I'll operations. advance the market over closing $X

I remarks. Thank you, Joe, Eimile. all and your appreciate

operational and on focused to final of the and our execution our to to of through a continuing of I moment the teams we the want support beyond, clinical towards take and and look leadership. we people As XXXX quarter thank grow remain workforce strategies. team, the expansion clinicians, the entire business

results hard for employees Your to now and and in work confident Q&A. our patients, hand drive and to dedication build have on ability back open our this possible. shareholders operator it for made call long-term to I'll the alike. the these momentum We're to value

[Operator Your the line comes of Tanquilut Jefferies. Instructions] from first Brian question from

This is for Nur Robleh in Brian.

wage at how midpoint the those And of then Looking related of some in and signs if the boils wage margin to seeing inflation? much guidance at into guys elevated provide any costs? there you're persistence seeing in salaries you of line, the relatedly, is Or some you you're QX moderation? elevated compression cost seeing your curious of insight inflation. terms implied slight down can Are what

the for we're numbers, do can break Joe, I that providers. were we a want a you but some and of you know for wish it's and to Joe, Yes, -- numbers the Joe in. can for many in question, add the jump that? us, inflation, to PT I seeing other Nur. headwind just Thanks wage provide I not. continues

little release. a our pressure that mid-single-digit seen perspective, of see and you contractor we're Maybe What we've absolutely. inflation, to see the of in press to meaning year-over-year continue back clinician the can contractors, a in low tables full-time Yes, to color. bit Yes. leveraging KPI still from is wage

look but year certainly don't year-over-year of to Part wages guidance wage QX. stable. in QX big having We remaining see X We when relatively less business a see increases, of you QX are in seeing year-over-year. expect relative to lift the the throughout driver is inflation day

adjusted same So is X of there less That's to less paid days. EBITDA. a wage flow-through of amount but day, not se, obviously, inflation business per

Great.

commercial per you in As reimbursement on looking visit for Curious landscape quarter. at Medicare an any business? And revenue side patient the rule? flat recently coming the a the provide of roughly the follow-up, the expectations in can remediation of if on update announced

set Another of good questions.

progress commercial on So I'd are follow certainly payers goes more I commercial that's with a great we guidance. and balanced the likely the seeing relationships by out that the then some think from payers. are some say great commercial probably has we to CMS that some side, the have payers, team And of out, commercial of

work or in in can the say and up a rates think try that job. the So musculoskeletal I subsequent to with years, and payment try and had fantastic scheduled care to two, decrease been care. the some right to, come doing I continue good MedPAC the also look luck of to at cut upcoming valuing direction, will revisit the team we XXXX. to is them and for like one, would creative and on we've to with of ways term, the payers payers work -- in the side, would around and for PT say larger And relates cost with that. either, are Medicare have hopeful with with organizations APTA, I of an APTQI one, impact we educate it we the working CMS our certainly short move those In as

we in are And ATI say XXXX. have, to fortunate if our we a good so and I'd favorable with at and can then again, push level, our hard MIPS we are for very And that response the see have to CMS. performance scores working MIPS

you to blow. it see cuts. CMS that's compensate so soften as that for want XXXX helps Joe, to us anything lands doesn't And do into fully. move certainly But to helps that? an -- add their it on where It rate that and the we offset doesn't

I'd is thing just cut. year into reminder, comparing a you're rate we year-over-year, Medicare only a were coming when add The this with

go more is quarter last a to of even we if So of our to And last say elsewhere rate our compared But the that We still this onetime some I'd talked high $XXX. QX have to I rate. you about the think back had flat improvements seeing on rate were of rate organization. year, year items. some the We it thing $XXX throughout involve had year the QX was would other commercial year-over-year increases. peak

say, of I at in rate slight if improvement cuts, QX looking you So to last of back, year. Medicare would kind were it some like stepping despite relative

[Operator Instructions] to And over I'd with no like further call to questions, turn Sharon back Vitti. the

look new you All and with everyone, our in today. forward call in to We holiday right. earnings season. quarter Thank Thanks, for you. the your everyone year wishing a happy connecting participation third

call, this great conference again, today's a Once day. now conclude Have you. Thank disconnect. and may you does