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ATI Physical Therapy Reports Second Quarter 2024 Results

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ATI Physical Therapy (NYSE: ATIP) reported strong growth in Q2 2024, with revenue increasing 9.2% to $188.1 million. Key highlights include:

- Patient visits up 6.4% to 24,921 per day
- Rate per Visit increased 3.4% to $108.32
- Adjusted EBITDA grew 77.5% to $16.6 million
- Net loss narrowed to $2.6 million from $21.7 million in Q2 2023

The company received an exceptional MIPS rating for the 5th consecutive year. For Q3 2024, ATI guides revenue between $180-$190 million and Adjusted EBITDA of $9-$14 million.

ATI Physical Therapy (NYSE: ATIP) ha riportato una crescita significativa nel secondo trimestre del 2024, con un aumento del fatturato del 9,2% a $188,1 milioni. I principali punti salienti includono:

- Visite dei pazienti aumentate del 6,4% a 24.921 al giorno
- Costo per visita aumentato del 3,4% a $108,32
- EBITDA rettificato cresciuto del 77,5% a $16,6 milioni
- Perdita netta ridotta a $2,6 milioni rispetto ai $21,7 milioni del secondo trimestre del 2023

La società ha ricevuto un'eccezionale valutazione MIPS per il quinto anno consecutivo. Per il terzo trimestre del 2024, ATI prevede ricavi compresi tra $180 e $190 milioni e un EBITDA rettificato tra $9 e $14 milioni.

ATI Physical Therapy (NYSE: ATIP) reportó un crecimiento notable en el segundo trimestre de 2024, con un aumento del ingreso del 9,2% a $188,1 millones. Los principales aspectos destacados incluyen:

- Visitas de pacientes aumentaron un 6,4% a 24,921 por día
- Tasa por visita aumentó un 3,4% a $108.32
- EBITDA ajustado creció un 77,5% a $16,6 millones
- Pérdida neta se redujo a $2,6 millones desde $21,7 millones en el segundo trimestre de 2023

La compañía recibió una calificación MIPS excepcional por quinto año consecutivo. Para el tercer trimestre de 2024, ATI anticipa ingresos entre $180 y $190 millones y un EBITDA ajustado de $9 a $14 millones.

ATI 물리 치료 (NYSE: ATIP)는 2024년 2분기에 상당한 성장을 보고하며, 수익이 9.2% 증가하여 1억 8,810만 달러에 달했습니다. 주요 하이라이트는 다음과 같습니다:

- 환자 방문 수가 하루 24,921건으로 6.4% 증가
- 방문당 요금이 3.4% 증가하여 108.32달러
- 조정된 EBITDA가 77.5% 증가하여 1,660만 달러
- 순손실이 2023년 2분기의 2,170만 달러에서 260만 달러로 축소됨

회사는 5년 연속으로 우수한 MIPS 등급을 받았습니다. 2024년 3분기에는 ATI가 수익을 1억 8천만에서 1억 9천만 달러로 예상하며, 조정된 EBITDA는 900만에서 1,400만 달러로 추정하고 있습니다.

ATI Physical Therapy (NYSE: ATIP) a annoncé une forte croissance au deuxième trimestre 2024, avec un chiffre d'affaires en hausse de 9,2 % à 188,1 millions de dollars. Les points clés incluent :

- Visites des patients en hausse de 6,4 % à 24 921 par jour
- Taux par visite en augmentation de 3,4 % à 108,32 $
- EBITDA ajusté en croissance de 77,5 % à 16,6 millions de dollars
- Perte nette réduite à 2,6 millions de dollars contre 21,7 millions de dollars au deuxième trimestre 2023

L'entreprise a obtenu une note MIPS exceptionnelle pour la cinquième année consécutive. Pour le troisième trimestre 2024, ATI prévoit un chiffre d'affaires compris entre 180 et 190 millions de dollars et un EBITDA ajusté de 9 à 14 millions de dollars.

ATI Physical Therapy (NYSE: ATIP) berichtete über ein deutliches Wachstum im 2. Quartal 2024, wobei der Umsatz um 9,2 % auf 188,1 Millionen USD stieg. Die wichtigsten Highlights sind:

- Patientenbesuche stiegen um 6,4 % auf 24.921 pro Tag
- Preis pro Besuch erhöhte sich um 3,4 % auf 108,32 USD
- Bereinigtes EBITDA wuchs um 77,5 % auf 16,6 Millionen USD
- Nett verlust verringerte sich auf 2,6 Millionen USD im Vergleich zu 21,7 Millionen USD im 2. Quartal 2023

Das Unternehmen erhielt zum fünften Mal in Folge eine hervorragende MIPS-Bewertung. Für das 3. Quartal 2024 erwartet ATI einen Umsatz zwischen 180 und 190 Millionen USD und ein bereinigtes EBITDA von 9 bis 14 Millionen USD.

Positive
  • Revenue increased 9.2% year-over-year to $188.1 million
  • Patient visits per day grew 6.4% to 24,921
  • Rate per Visit improved 3.4% to $108.32
  • Adjusted EBITDA increased 77.5% to $16.6 million
  • Net loss narrowed significantly from $21.7 million to $2.6 million
  • Received exceptional MIPS rating for 5th consecutive year
Negative
  • Net loss of $2.6 million, although improved from previous year
  • Operating cash used increased to $27.9 million year-to-date
  • Closed 2 clinics and divested 4 clinics during the quarter

Insights

ATI Physical Therapy's Q2 2024 results show positive momentum with 9.2% revenue growth to $188.1 million. Key drivers include a 6.4% increase in visits per day and a 3.4% rise in rate per visit. The company's focus on operational excellence is evident in the 77.5% jump in Adjusted EBITDA to $16.6 million, with margin expansion to 8.8%.

However, challenges persist. Net loss, while improved, remains at $2.6 million. The $27.9 million operating cash use year-to-date is concerning, primarily due to timing issues in collections and payments. The company's reliance on debt financing, including a $25 million 2L note draw, warrants attention to its long-term financial health.

Q3 2024 guidance of $180-190 million in revenue and $9-14 million in Adjusted EBITDA suggests continued growth, but at a potentially slower pace. Investors should monitor the company's ability to sustain visit growth and further improve operational efficiency to drive profitability.

ATI's operational metrics show encouraging trends. The increase in visits per day per clinic from 25.7 to 28.4 demonstrates improved efficiency and capacity utilization. This, coupled with higher clinical FTE productivity (9.6 VPD per clinical FTE vs 9.5), indicates effective management of human resources.

The company's footprint optimization strategy, closing 2 clinics and divesting 4, aligns with the focus on operational excellence. However, the lack of new clinic openings year-to-date might limit future growth potential.

The 5th consecutive exceptional MIPS rating from CMS is a significant achievement, validating ATI's commitment to quality care. This could enhance the company's reputation and potentially lead to favorable reimbursement rates.

Rising costs, particularly in PT salaries and rent per clinic, need careful management to maintain profitability. The increased use of contract labor may pressure margins if not balanced with productivity gains.

ATI's performance suggests a robust demand for physical therapy services. The 10.1% growth in net patient revenue outpacing the 6.4% increase in visits indicates a favorable pricing environment and potentially a shift towards higher-value services.

The company's ability to improve rates with key payers is a positive sign, reflecting strong market positioning. However, the physical therapy market remains competitive and ATI's ability to maintain this momentum will depend on continued service quality and network optimization.

The flat other revenue at $15.4 million suggests potential for diversification of revenue streams. Exploring additional service offerings or partnerships could provide new growth avenues.

ATI's focus on clinical FTE growth and productivity aligns with industry trends of addressing therapist shortages. The company's success in this area could be a key differentiator in a tight labor market.

Drove Continued Growth in Visits, Rate per Visit, Revenue and Adjusted EBITDA

Advanced Company's Capacity to Expand Patient Access to High-Quality Care

BOLINGBROOK, Ill., Aug. 5, 2024 /PRNewswire/ -- ATI Physical Therapy, Inc. (NYSE: ATIP) ("ATI" or the "Company"), a nationally recognized outpatient physical therapy provider in the United States, today reported financial results for the second quarter ended June 30, 2024.

"We again experienced notable growth in the second quarter, with over 1,500 more patient visits each day compared to the same period last year," said Sharon Vitti, Chief Executive Officer of ATI. "Demand for our services remains strong, and our growing clinical base continues to execute on providing access and quality outcomes for our patients.  Because of their hard work, we saw year-over-year growth in the business."

Ms. Vitti added, "We also saw higher rates per visit compared to the prior year due to the dedication of our payor and revenue cycle management teams.  Equally exciting, we were recently notified by CMS that we have received an exceptional MIPS rating for the 5th consecutive year, a distinction recognizing the high-quality care we deliver every day.  The ATI family is proud of this honor."

Joe Jordan, Chief Financial Officer of ATI, commented, "Our financial progress is a direct result of our strategic focus on people and operations.  For the third quarter, we are guiding revenue to be between $180 million and $190 million and Adjusted EBITDA1 to be between $9 to $14 million."

Second Quarter 2024 Results

Supplemental tables of key performance metrics for the first quarter of 2022 through the second quarter of 2024 are presented after the financial statements at the end of this press release. Commentary on performance results in the second quarter of 2024 is as follows:

  • Net revenue was $188.1 million compared to $172.3 million in the second quarter of 2023, an increase of 9.2%.

    • Net patient revenue was $172.8 million compared to $156.9 million in the second quarter of 2023, an increase of 10.1%. See below for discussion of drivers to net patient revenue (i.e., patient visits and Rate per Visit).

    • Other revenue was $15.4 million in both the second quarter of 2024 and 2023.

  • Visits per Day ("VPD") were 24,921 compared to 23,412 in the second quarter of 2023, an increase of 6.4%, driven by the Company's increased capacity to see patients through a higher number of clinical FTE and higher productivity per clinical FTE.

    • VPD per Clinic was 28.4 compared to 25.7 in the second quarter of 2023, an increase of 2.7 visits, primarily driven by the Company's continued focus on clinic operational excellence and footprint optimization.

  • Rate per Visit ("RPV") was $108.32 compared to $104.74 in the second quarter of 2023, an increase of 3.4%, driven primarily by improved rates with certain key payors, operational improvements in revenue cycle management, and service mix.

  • Salaries and related costs were $102.5 million compared to $95.3 million in the second quarter of 2023, an increase of 7.6%, primarily due to added clinicians and support staff and wage inflation.

    • PT salaries and related costs per visit were $56.22 compared to $54.81 in the second quarter of 2023, an increase of 2.6%, mainly due to higher compensation per FTE, partially offset by a higher labor productivity of 9.6 VPD per clinical FTE compared to 9.5 in the second quarter of 2023.

  • Rent, clinic supplies, contract labor and other was $53.2 million compared to $50.4 million in the second quarter of 2023, an increase of 5.4%, primarily driven by higher spending on contract labor and third-party services, partially offset by a lower number of clinics.

    • PT rent and other per clinic was $59,232 compared to $53,866 in the second quarter of 2023, an increase of 10.0%, primarily due to higher contract labor usage and higher spend on third-party services.

  • Provision for doubtful accounts was $2.4 million in both the second quarter of 2024 and 2023. PT provision as a percentage of net patient revenue was 1.4% in the second quarter of 2024 compared to 1.5% in the second quarter of 2023.

  • Selling, general and administrative expenses were $23.1 million compared to $36.6 million in the second quarter of 2023, a decrease of 36.9%, primarily driven by lower transaction costs, higher legal cost insurance reimbursements and lower corporate insurance costs.

  • Non-cash long-lived asset impairment charges totaled $0.3 million compared to no impairment charges in the second quarter of 2023.

  • Fair value remeasurement gains related to the 2L notes, warrant liability, and contingent common shares liability totaled $5.8 million compared to $8.0 million in the second quarter of 2023. The fair value remeasurement gains in the second quarter of 2024 were primarily driven by decreases in the Company's share price during the period.

  • Interest expense during the quarter was $14.9 million compared to $16.7 million in the second quarter of 2023, a decrease of 10.7%, primarily due to lower principal balance outstanding partially offset by lower interest rate hedge benefits recognized.

  • Income tax (benefit) expense was $(0.0) million, compared to $0.1 million in the second quarter of 2023.

  • Net loss was $2.6 million compared to $21.7 million in the second quarter of 2023.

  • Net loss available to common stockholders was $10.6 million compared to $73.1 million in the second quarter of 2023 primarily due to lower net loss and a lower Series A Senior Preferred Stock redemption value adjustment.

    • Fully diluted Class A common stock loss per share was $2.43 compared to $17.74 in the second quarter of 2023.

  • Adjusted EBITDA2 was $16.6 million compared to $9.3 million in the second quarter of 2023, an increase of 77.5%, primarily due to higher revenue net cost of services.

  • Adjusted EBITDA3 margin was 8.8% compared to 5.4% in the second quarter of 2023.

  • Net cash used was $3.8 million year-to-date compared to $45.5 million in the first six months of 2023.

    Operating cash used was $27.9 million year-to-date compared to $5.3 million in the first six months of 2023, with the increase driven primarily by changes in current assets and current liabilities related to timing of collections and payments, as well as by higher incentive compensation paid to employees, partially offset by lower net loss.

    Investing cash use was $5.2 million year-to-date compared to $10.1 million in the first six months of 2023, with the decrease primarily due to fewer new clinic openings.  No clinics were opened year-to-date compared to 10 clinics in the first six months of 2023.

    Financing cash generated was $29.2 million year-to-date, which included a $25.0 million 2L note draw and revolver net proceeds of $6.2 million.  Financing cash used was $30.0 million in the first six months of 2023, which included revolver net repayments of $24.8 million and financing transaction costs of $6.3 million.

  • As of June 30, 2024, total liquidity was $33.0 million comprised of cash and cash equivalents.

Additionally, ATI closed 2 clinics and divested 4 clinics during the quarter in connection with the Company's ongoing footprint optimization initiative, resulting in 878 clinics at the end of the quarter.

Q3-2024 Guidance

For the third quarter of 2024, ATI expects net revenue to be in the range of $180 million to $190 million, which represents approximately 1% to 7% year-over-year growth. The Company anticipates it will continue growing patient visits through 2024 as it executes on its commercial, people, and operations strategies. ATI expects Adjusted EBITDA4 in the third quarter of 2024 to be in the range of $9 million to $14 million.

1 Refer to "Non-GAAP Financial Measures" below.

2 Ibid.

3 Ibid.

4 Ibid.

Second Quarter 2024 Earnings Conference Call

Management will host a conference call at 5 p.m. Eastern Time on August 5, 2024, to review second quarter 2024 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. Q2 2024 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 committed to making every life an active life. We provide convenient access to high-quality care to prevent and treat musculoskeletal (MSK) pain. Our approximately 900 locations in 24 states and virtual practice operate under the largest single-branded platform built to support standardized clinical guidelines and operating processes. With outcomes from more than 3 million unique patient cases, ATI strives to utilize quality standards designed to deliver proven, predictable, and impactful patient outcomes.  From preventative services in the workplace and athletic training support to outpatient clinical services and online physical therapy via our online platform, CONNECT™, a complete list of our service offerings can be found at ATIpt.com. ATI is based in Bolingbrook, Illinois.

Forward-Looking Statements 

All statements other than statements of historical facts contained in this communication are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of the words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "project," "forecast," "predict," "potential," "seem," "seek," "future," "outlook," "target" or similar 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 the impact of physical therapist attrition and ability to achieve and maintain clinical staffing levels and clinician productivity, anticipated visit and referral volumes and other factors on 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 the Company's management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company.

These forward-looking statements are subject to a number of risks and uncertainties, including:

  • our liquidity position raises substantial doubt about our ability to continue as a going concern;
  • risks associated with liquidity and capital markets, including the Company's ability to generate sufficient cash flows, together with cash on hand, to run its business, cover liquidity and capital requirements and resolve substantial doubt about the Company's ability to continue as a going concern;
  • our ability to meet financial covenants as required by our 2022 Credit Agreement, as amended;
  • risks related to outstanding indebtedness and preferred stock, rising interest rates and potential increases in borrowing costs, compliance with associated covenants and provisions and the potential need to seek additional or alternative debt or capital financing in the future;
  • risks related to the Company's ability to access additional financing or alternative options when needed;
  • our dependence upon governmental and third-party private payors for reimbursement and that decreases in reimbursement rates, renegotiation or termination of payor contracts, billing disputes with third-party payors or unfavorable changes in payor, state 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;
  • changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
  • compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;
  • risks associated with public health crises, epidemics and pandemics, as was the case with the novel strain of COVID-19, and their direct and indirect impacts or lingering effects on the business, which could lead to a decline in visit volumes and referrals;
  • our inability to compete effectively in a competitive industry, subject to rapid technological change and cost inflation, including competition that could impact the effectiveness of our strategies to improve patient referrals and our ability to identify, recruit, hire and retain skilled physical therapists;
  • our inability to maintain high levels of service and patient satisfaction;
  • risks associated with the locations of our clinics, including the economies in which we operate and the potential need to close clinics and incur closure costs;
  • 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;
  • risks associated with future acquisitions, divestitures and other business initiatives, which may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;
  • risks associated with our ability to secure renewals of current suppliers and other material agreements that the Company currently depends upon for business operations;
  • failure of third-party vendors, including customer service, technical and information technology ("IT") support providers and other outsourced professional service providers to adequately address customers' requests and meet Company requirements;
  • risks associated with our reliance on IT infrastructure in critical areas of our operations including, but not limited to, cyber and other security threats;
  • a security breach of our IT systems or our third-party vendors' IT systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act;
  • maintaining clients for which we perform management and other services, as a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected;
  • our failure to maintain financial controls and processes over billing and collections or disputes with third-party private payors could have a significant negative impact on our financial condition and results of operations;
  • our operations are subject to extensive regulation and macroeconomic uncertainty;
  • our ability to meet revenue and earnings expectations;
  • risks associated with applicable state laws regarding fee-splitting and professional corporation laws;
  • inspections, reviews, audits and investigations under federal and state government programs and third-party private payor contracts that could have adverse findings that may negatively affect our business, including our results of operations, liquidity, financial condition and reputation;
  • 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;
  • our ability to maintain necessary insurance coverage at competitive rates;
  • 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;
  • general economic conditions, including but not limited to inflationary and recessionary periods;
  • our facilities face competition for experienced physical therapists and other clinical providers that may increase labor costs, result in elevated levels of contract labor and reduce profitability;
  • risks associated with our ability to attract and retain talented executives and employees amidst the impact of unfavorable labor market dynamics, wage inflation and recent reduction in value of our share-based compensation incentives, including potential failure of steps being taken to reduce attrition of physical therapists and increase hiring of physical therapists;
  • risks resulting from the 2L Notes, IPO Warrants, Earnout Shares and Vesting Shares being accounted for as liabilities at fair value and the changes in fair value affecting our financial results;
  • 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 maintain effective internal control over financial reporting;
  • risks related to dilution of Common Stock ownership interests and voting interests as a result of the issuance of 2L Notes and Series B Preferred Stock;
  • costs related to operating as a public company; and
  • risks associated with our efforts and ability to regain and sustain compliance with the listing requirements of our securities on the New York Stock Exchange ("NYSE").

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.

Investors should also review those factors discussed in the Company' Form 10-K and Form 10-Q for the fiscal year ended December 31, 2023, and quarter ended June 30, 2024, respectively, under the heading "Risk Factors," and other documents filed, or to be filed, by ATI with the SEC. 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. Readers should not place undue reliance on forward-looking statements. The Company undertakes no obligations to publicly update or revise any forward-looking statements after the date they are made or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect the beliefs and opinions of the Company on the relevant subject. These statements are based upon information available to the Company, as applicable, as of the date of this communication, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these 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." ATI believes Adjusted EBITDA and Adjusted EBITDA margin (i.e., Adjusted EBITDA divided by Net Revenue) assist investors and analysts in comparing the Company's operating performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of ATI's 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 ATI operates and capital investments. Management uses these non-GAAP financial measures to supplement GAAP measures of performance in the evaluation of the effectiveness of the Company's business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare ATI's 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 the Company's 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. We are unable to provide a reconciliation between forward-looking Adjusted EBITDA to its comparable GAAP financial measure without unreasonable effort, due to the high difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy by the date of this release.

Contacts:

Investor Relations
Joanne Fong
SVP, Treasurer and Head of Investor Relations
ATI Physical Therapy
investors@atipt.com
331-273-4891

Media Inquiries
Genesa Garbarino
Garbo Communications
genesa@garbo.agency
424-499-7025

 

ATI Physical Therapy

Condensed Consolidated Statements of Operations

($ in thousands)

(unaudited)



Three Months Ended


Six Months Ended


June 30,
2024


June 30,
2023


June 30,
2024


June 30,
2023









Net patient revenue

$       172,755


$       156,938


$       338,162


$       307,692

Other revenue

15,357


15,399


31,422


31,577

Net revenue

188,112


172,337


369,584


339,269









Cost of services:








Salaries and related costs

102,541


95,327


201,869


186,030

Rent, clinic supplies, contract labor and other

53,168


50,437


108,429


103,315

Provision for doubtful accounts

2,435


2,360


7,416


6,485

Total cost of services

158,144


148,124


317,714


295,830

Selling, general and administrative expenses

23,082


36,573


49,284


67,168

Long-lived asset impairment charges

260



738


Operating income (loss)

6,626


(12,360)


1,848


(23,729)

Change in fair value of 2L Notes

(5,618)


(7,010)


(11,025)


(7,010)

Change in fair value of warrant liability and contingent common shares liability

(148)


(990)


(251)


(1,501)

Interest expense, net

14,896


16,682


29,379


30,618

Other expense (income), net

61


618


(33)


972

Loss before taxes

(2,565)


(21,660)


(16,222)


(46,808)

Income tax (benefit) expense

(13)


89


(147)


151

Net loss

(2,552)


(21,749)


(16,075)


(46,959)

Net income attributable to non-controlling interests

1,183


956


2,311


2,016

Net loss attributable to ATI Physical Therapy, Inc.

(3,735)


(22,705)


(18,386)


(48,975)

Less: Series A Senior Preferred Stock redemption value adjustments

387


44,696


(1,175)


44,696

Less: Series A Senior Preferred Stock cumulative dividend

6,439


5,709


12,622


11,012

Net loss available to common stockholders

$        (10,561)


$       (73,110)


$       (29,833)


$     (104,683)









Loss per share of Class A common stock:








Basic

$           (2.43)


$         (17.74)


$           (7.00)


$         (25.47)

Diluted

$           (2.43)


$         (17.74)


$           (7.00)


$         (25.47)

Weighted average shares outstanding:








Basic and diluted

4,346


4,122


4,263


4,110

 

ATI Physical Therapy

Condensed Consolidated Balance Sheets

($ in thousands)

(unaudited)



June 30, 2024


December 31, 2023

Assets:




Current assets:




Cash and cash equivalents

$                     32,963


$                     36,802

Accounts receivable (net of allowance for doubtful accounts of $48,823 and
$48,055 at June 30, 2024 and December 31, 2023, respectively)

100,043


88,512

Prepaid expenses

13,039


12,920

Insurance recovery receivable

29,048


23,981

Other current assets

1,054


4,367

Assets held for sale

731


2,056

Total current assets

176,878


168,638





Property and equipment, net

88,574


100,422

Operating lease right-of-use assets

184,756


194,423

Goodwill, net

289,650


289,650

Trade name and other intangible assets, net

245,615


245,858

Other non-current assets

5,063


4,290

Total assets

$                   990,536


$                1,003,281





Liabilities, Mezzanine Equity and Stockholders' Equity:




Current liabilities:




Accounts payable

$                     10,933


$                     14,704

Accrued expenses and other liabilities

89,040


88,435

Current portion of operating lease liabilities

50,520


51,530

Liabilities held for sale

714


1,778

Total current liabilities

151,207


156,447





Long-term debt, net (1)

441,177


433,578

2L Notes due to related parties, at fair value

89,997


79,472

Deferred income tax liabilities

21,220


21,367

Operating lease liabilities

174,623


185,602

Other non-current liabilities

1,927


2,277

Total liabilities

880,151


878,743

Commitments and contingencies




Mezzanine equity:




Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized;
0.2 million shares issued and outstanding; $1,325.56 stated value per share at
June 30, 2024; $1,249.06 stated value per share at December 31, 2023

231,840


220,393



(1)

Includes $17.0 million of principal amount of debt due to related parties as of June 30, 2024 and December 31, 2023, respectively.

 

Stockholders' equity:




Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.5 million
shares issued, 4.2 million shares outstanding at June 30, 2024; 4.2 million shares issued,
4.0 million shares outstanding at December 31, 2023


Treasury stock, at cost, 0.089 million shares and 0.007 million shares at June 30, 2024
and December 31, 2023, respectively

(713)


(219)

Additional paid-in capital

1,300,910


1,308,119

Accumulated other comprehensive income

148


406

Accumulated deficit

(1,427,692)


(1,409,306)

Total ATI Physical Therapy, Inc. equity

(127,347)


(101,000)

Non-controlling interests

5,892


5,145

Total stockholders' equity

(121,455)


(95,855)

Total liabilities, mezzanine equity and stockholders' equity

$                   990,536


$                1,003,281

 

ATI Physical Therapy

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)



Six Months Ended


June 30, 2024


June 30, 2023

Operating activities:




Net loss

$            (16,075)


$            (46,959)

Adjustments to reconcile net loss to net cash used in operating activities:




    Long-lived asset impairment charges

738


    Depreciation and amortization

17,312


19,041

    Provision for doubtful accounts

7,416


6,485

    Deferred income tax provision

(147)


151

    Non-cash lease expense related to right-of-use assets

23,740


23,836

    Non-cash share-based compensation

4,238


4,208

    Amortization of debt issuance costs and original issue discount

1,443


1,554

    Non-cash interest expense


4,318

Loss on extinguishment of debt


444

Gain (Loss) on disposal and sale of assets

(181)


793

Change in fair value of 2L Notes

(11,025)


(7,010)

Change in fair value of warrant liability and contingent common shares liability

(251)


(1,501)

Change in fair value of non-designated derivative instrument

(494)


Changes in:




    Accounts receivable, net

(18,947)


(6,105)

    Insurance recovery receivable

(5,067)


    Prepaid expenses and other current assets

(168)


1,834

    Other non-current assets

(773)


89

    Accounts payable

(3,664)


119

    Accrued expenses and other liabilities

620


15,158

    Operating lease liabilities

(26,530)


(21,830)

    Other non-current liabilities

(37)


56

Net cash used in operating activities

(27,852)


(5,319)





Investing activities:




Purchases of property and equipment

(5,692)


(9,990)

Proceeds from sale of property and equipment

106


Proceeds from sale of clinics

434


355

Payment of holdback liabilities related to acquisitions


(490)

Net cash used in investing activities

(5,152)


(10,125)





Financing activities:




Proceeds from 2L Notes from related parties

25,000


3,243

Financing transaction costs


(6,287)

Deferred financing costs


(84)

Proceeds from revolving line of credit

31,153


Payments on revolving line of credit

(24,923)


(24,750)

Payment of contingent consideration liabilities

(7)


(397)

Taxes paid on behalf of employees for shares withheld

(494)


(66)

Distribution to non-controlling interest holders

(1,564)


(1,675)

Net cash provided by (used in) financing activities

29,165


(30,016)





Changes in cash and cash equivalents:




Net decrease in cash and cash equivalents

(3,839)


(45,460)

Cash and cash equivalents at beginning of period

36,802


83,139

Cash and cash equivalents at end of period

$             32,963


$             37,679





Supplemental noncash disclosures:




Derivative changes in fair value (1)

$                  258


$               4,306

Purchases of property and equipment in accounts payable

$               2,538


$               1,495

Exchange of Senior Secured Term Loan for related party 2L Notes

$                     —


$            100,000

Debt discount on Senior Secured Term Loan

$                     —


$              (1,797)

Capital contribution from recognition of delayed draw right asset

$                     —


$                  690

Series A Senior Preferred Stock dividends and redemption value adjustments

$             11,447


$             73,584

Exchange of delayed draw right for related party 2L Notes

$               3,450


$                     —





Other supplemental disclosures:




Cash paid for interest

$             28,556


$             24,698

Cash received from hedging activities

$                  266


$               5,135

Cash paid for taxes, net of refunds

$                    20


$                      3



(1)

Derivative changes in fair value related to unrealized loss on cash flow hedges, including the impact of reclassifications.

 

ATI Physical Therapy, Inc.

Supplemental Tables of Key Performance Metrics



Financial Metrics ($ in 000's)


Net Patient
Revenue

Other

Revenue

Net Revenue

Adjusted
EBITDA

Adj EBITDA
margin

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) %

Q4 2022

$146,196

$15,568

$161,764

$6,363

3.9 %

Q1 2023

$150,754

$16,178

$166,932

$4,790

2.9 %

Q2 2023

$156,938

$15,399

$172,337

$9,338

5.4 %

Q3 2023

$162,258

$15,197

$177,455

$9,429

5.3 %

Q4 2023

$166,145

$16,147

$182,292

$12,675

7.0 %

Q1 2024

$165,407

$16,065

$181,472

$6,463

3.6 %

Q2 2024

$172,755

$15,357

$188,112

$16,579

8.8 %

 


Operational Metrics


Visits

per Day (1)

Clinical

FTE (2)

VPD

per cFTE (3)

ATI Clinician

Headcount (4)

Contractor
Headcount (5)

ATI Clinician Headcount

Adds (6)

Turnover (7)

Q1 2022

21,062

2,466

8.5

2,658

158

25 %

23 %

Q2 2022

22,403

2,465

9.1

2,647

151

26 %

28 %

Q3 2022

21,493

2,465

8.7

2,691

151

33 %

25 %

Q4 2022

22,316

2,476

9.0

2,662

123

19 %

26 %

Q1 2023

22,701

2,423

9.4

2,629

168

21 %

27 %

Q2 2023

23,412

2,452

9.5

2,681

185

27 %

19 %

Q3 2023

23,435

2,524

9.3

2,786

214

35 %

20 %

Q4 2023

24,238

2,584

9.4

2,759

179

15 %

21 %

Q1 2024

23,837

2,560

9.3

2,787

206

18 %

16 %

Q2 2024

24,921

2,589

9.6

2,797

215

20 %

21 %



(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 ATI employee clinician headcount at end of period.

(5)

Represents contractor clinician headcount at end of period.

(6)

Represents ATI employee clinician headcount new hire adds divided by average headcount, multiplied by 4 to annualize.

(7)

Represents ATI employee clinician headcount separations divided by average headcount, multiplied by 4 to annualize.

 


Unit Economics: PT Clinics ($ actual)


Ending

Clinic Count

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 2022

922

$151,225

22.9

$103.06

$55.47

$54,472

3.7 %

Q2 2022

926

$160,431

24.2

$103.57

$53.64

$53,017

2.4 %

Q3 2022

929

$153,410

23.2

$103.46

$56.20

$53,945

2.0 %

Q4 2022

923

$157,993

24.1

$103.99

$54.92

$51,252

1.7 %

Q1 2023

909

$165,846

25.0

$103.76

$52.98

$56,338

2.7 %

Q2 2023

911

$172,207

25.7

$104.74

$54.81

$53,866

1.5 %

Q3 2023

900

$179,224

25.9

$109.90

$57.47

$57,012

2.1 %

Q4 2023

896

$184,948

27.0

$108.81

$56.56

$57,109

0.9 %

Q1 2024

884

$186,409

26.9

$108.42

$56.68

$60,800

3.0 %

Q2 2024

878

$196,610

28.4

$108.32

$56.22

$59,232

1.4 %



(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 2022






74

4.9

Q2 2022






75

4.9

Q3 2022






76

4.8

Q4 2022






76

4.9

Q1 2023






76

4.8

Q2 2023






74

4.8

Q3 2023






75

4.9

Q4 2023






76

4.9

Q1 2024






74

4.8

Q2 2024






75

4.9



(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


June 30,

March 31,


2024

2024

Net loss

$                      (2,552)

$                  (13,523)

Plus (minus):



Net income attributable to non-controlling interests

(1,183)

(1,128)

Interest expense, net

14,896

14,483

Income tax benefit

(13)

(134)

Depreciation and amortization expense

8,294

8,732

EBITDA

$                    19,442

$                      8,430

Long-lived asset impairment charges (1)

260

478

Change in fair value of 2L Notes (2)

(5,618)

(5,407)

Changes in fair value of warrant liability and contingent common shares liability (3)

(148)

(103)

Share-based compensation (4)

1,972

2,330

Non-ordinary legal and regulatory matters (5)

1,853

1,178

Legal cost insurance reimbursements (6)

(1,039)

(256)

Change in fair value of non-designated derivative instrument (7)

(143)

(351)

Transaction costs (8)

164

Adjusted EBITDA

$                    16,579

$                      6,463

Adjusted EBITDA margin

8.8 %

3.6 %



(1)

Represents non-cash charges related to the write-down of long-lived assets.

(2)

Represents non-cash amounts related to the change in the estimated fair value of the 2L Notes.

(3)

Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares.

(4)

Represents charges related to share-based compensation awards, which vary from period to period based on the timing of awards and vesting conditions.

(5)

Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.

(6)

Represents insurance reimbursements for legal costs incurred related to the previously disclosed ATIP stockholder class action complaints and derivative complaint.

(7)

Represents non-cash amounts related to the change in estimated fair value of derivative not designated in a hedging relationship.

(8)

Represents non-capitalizable debt and capital 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,


2023

2023

2023

2023

Net loss

$                 (4,508)

$             (14,611)

$             (21,749)

$         (25,210)

Plus (minus):





Net income attributable to non-controlling interests

(1,115)

(586)

(956)

(1,060)

Interest expense, net

14,943

15,478

16,682

13,936

Income tax expense

2,286

131

89

62

Depreciation and amortization expense

8,915

9,154

9,211

9,564

EBITDA

$                20,521

$                9,566

$                3,277

$           (2,708)

Goodwill, intangible and other asset impairment charges (1)

5,591

Change in fair value of 2L Notes (2)

(15,976)

(1,485)

(7,010)

Changes in fair value of warrant liability and contingent common shares liability (3)

(457)

(394)

(990)

(511)

Legal cost insurance reimbursements (4)

(3,597)

(4,274)

Non-ordinary legal and regulatory matters (5)

3,646

3,559

2,001

1,523

Share-based compensation

2,274

2,286

2,755

1,478

Transaction costs (6)

131

215

8,714

5,408

Change in fair value of non-designated derivative instrument

542

(67)

Pre-opening de novo costs (7)

23

147

172

Loss on debt extinguishment (8)

444

Non-recurring labor related credits (9)

(702)

Reorganization and severance costs (10)

130

Adjusted EBITDA

$                12,675

$                9,429

$                9,338

$            4,790

Adjusted EBITDA margin

7.0 %

5.3 %

5.4 %

2.9 %



(1)

Represents non-cash charges related to the write-down of long-lived assets.

(2)

Represents non-cash amounts related to the change in the estimated fair value of the 2L Notes.

(3)

Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares.

(4)

Represents insurance reimbursements for legal costs incurred related to the previously disclosed ATIP stockholder class action complaints and derivative complaint.

(5)

Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.

(6)

Represents non-capitalizable debt and capital transaction costs.

(7)

Represents expenses associated with renovation, equipment and marketing costs relating to the start-up and launch of new locations incurred prior to opening.

(8)

Represents charges related to the loss on debt extinguishment recognized as part of the 2023 Debt Restructuring.

(9)

Represents realized benefit of labor related credit, that was not previously considered probable and relates to prior years.

(10)

Represents severance costs related to discrete initiatives focused on reorganization and delayering of the Company's labor model, management structure and support functions.

 

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,


2022

2022

2022

2022

Net loss

$     (102,407)

$     (116,694)

$     (135,723)

$     (138,223)

Plus (minus):





Net (income) loss attributable to non-controlling interests

(358)

376

177

473

Interest expense, net

13,463

11,780

11,379

8,656

Income tax benefit

(4,998)

(7,218)

(13,033)

(23,281)

Depreciation and amortization expense

9,979

9,907

10,055

9,900

EBITDA

$       (84,321)

$     (101,849)

$     (127,145)

$     (142,475)

Goodwill, intangible and other asset impairment charges (1)

96,038

106,663

127,820

155,741

Goodwill, intangible and other asset impairment charges attributable to non-controlling interests (1)

(364)

(457)

(654)

(940)

Changes in fair value of warrant liability and contingent common shares liability (2)

(10,357)

(7,720)

(2,680)

(26,011)

Loss on debt extinguishment (3)

2,809

Loss on legal settlement (4)

3,000

Share-based compensation

1,544

1,920

2,004

1,964

Non-ordinary legal and regulatory matters (5)

937

772

2,202

2,497

Pre-opening de novo costs (6)

101

224

286

381

Transaction costs (7)

1,093

55

603

1,538

Reorganization and severance costs (8)

1,797

Non-recurring labor related credits (9)

(105)

Gain on sale of Home Health service line, net

(199)

Adjusted EBITDA

$           6,363

$            (392)

$           5,436

$         (4,695)

Adjusted EBITDA margin

3.9 %

(0.3) %

3.3 %

(3.1) %



(1)

Represents non-cash charges related to the write-down of goodwill, trade name indefinite-lived intangible and other 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 charge for net settlement liability related to billing dispute.

(5)

Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.

(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 and capital transaction costs.

(8)

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.

(9)

Represents realized benefit of labor related credit, that was not previously considered probable and relates to prior years.

 

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SOURCE ATI Physical Therapy

FAQ

What was ATI Physical Therapy's revenue in Q2 2024?

ATI Physical Therapy (ATIP) reported revenue of $188.1 million in Q2 2024, representing a 9.2% increase from $172.3 million in Q2 2023.

How did ATI's patient visits per day change in Q2 2024?

ATI's patient visits per day increased by 6.4% to 24,921 in Q2 2024, compared to 23,412 in Q2 2023.

What is ATI's revenue guidance for Q3 2024?

ATI Physical Therapy (ATIP) provided revenue guidance for Q3 2024 in the range of $180 million to $190 million, representing approximately 1% to 7% year-over-year growth.

How did ATI's Adjusted EBITDA perform in Q2 2024?

ATI's Adjusted EBITDA increased by 77.5% to $16.6 million in Q2 2024, compared to $9.3 million in Q2 2023.

ATI Physical Therapy, Inc.

NYSE:ATIP

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