U.S. Physical Therapy: Flexing some muscle
How’s the ankle feeling today? Still a wee bit sore from last weekend’s pickup basketball game? Does the shoulder feel funny since you lifted that crate at work?
If you’re starting to feel your age, then let’s get physical — therapy, that is.
Chances are, if you seek treatment for a malady, the doctor might order up some PT, quite possibly at a center run by U.S. Physical Therapy, Inc. (Nasdaq:USPH). The Houston company is the third-largest operator of outpatient physical- and occupational-therapy clinics, and is the sector’s only public company. The company has some 350 clinics in 42 states, and manages other facilities for third parties such as physicians groups.
With the stock market licking the gaping wounds exacerbated by the nearly daily dose of sinking economic data, health care is a sector that traditionally does well in a downturn. An illness or injury requires treatment, no matter what the financial situation. With U.S. Physical Therapy’s shares gaining about 8% in value this year, the stock might help rehabilitate sagging portfolios.
Of the five analysts who regularly follow U.S. Physical Therapy, according to Thomson Financial, one has the stock as a “strong buy,” two rate it a “buy,” and the other two have it at “hold.” The Thomson Financial 12-month price target is $19.
It’s a given that Americans aren’t in the best of shape, and with millions of aging baby boomers, more people are likely to come knocking for therapy from U.S. Physical Therapy or another provider.
There are more than 16,000 U.S. physical-therapy clinics, but the sector is highly fragmented, with no company holding more than 7% market share. U.S. Physical Therapy wants to change that, and has made four key acquisitions since 2005 — including a deal last September for a 70% stake in Star Physical Therapy, and its 52 outpatient clinics.
While U.S. Physical Therapy does snap up existing operations, the company says that more than 80% of its clinics started from scratch. Each is directed by a licensed therapist, who often has an existing base of referral relationships. The therapist usually enters into a partnership with the company on an ownership or profit-sharing basis. Startup costs average $170,000 and clinics are typically profitable in six to 12 months.
What U.S. Physical Therapy offers is the management expertise to efficiently treat patients, and efficiencies of scale, and most services are covered by insurance. Since last September, the small cap has had a contract with Ford Motor Co. (NYSE:F) to provide services to employees.
The company has little debt, and a P/E of around 20. Its shares have been on the move, especially since the start of the year, rising about 8%.
Historically, shares of U.S. Physical Therapy have nipped at the $20 level a few times, most recently in late 2005, but have not stayed there. Still, the stock hit a 52-week high of $15.90 on April 10, climbing from the 52-week low of $12.35 seen last Aug. 17. U.S. Physical Therapy closed Wednesday at $15.42.
In 2004, the company had a leadership change, with founder J. Livingston Kosberg stepping in as interim CEO. Kosberg remained a board member after Christopher Reading, the chief operating officer, was promoted to CEO and president.
Since the shakeup, revenue has increased by roughly 50% to $151.7 million for 2007, and 12% year-over-year. Earnings per share grew nearly 40% to $0.75 last year, from $0.54 a share in 2006. The Thomson Financial consensus estimate calls for the company to post $0.87 EPS this year, including $0.20 a share for the March quarter when results are released May 8. Company guidance calls for full-year net income of $9.9 million to $10.6 million, or $0.83 to $0.89 a share.
In SEC filings last month, U.S. Physical Therapy noted that three of its insiders had bought up more than $452,000 worth of shares, including founder Kosberg who grabbed 20,000 on March 10 at $13.85 each. Analyst David Bachman of Longbow Research called the moves “intriguing” since insiders hadn’t acquired any stock in nearly 18 months.
Bachman, who initiated coverage at “neutral” in late December, maintained that mark following the company’s posting in early March of a strong fourth quarter: revenue rose 30% to $44.2 million, and earnings of $0.21 per share beat the consensus estimate by $0.03. “We believe that USPH has carved out a solid niche in the fragmented outpatient therapy business and is well-positioned to gain longer term from the secular shift in health care towards focused low-cost, high-quality providers.” But with an aging clinic roster and less visible organic growth, “We currently see no near-term catalyst that is likely to move shares significantly higher,” he wrote in a March 6 note, which included a $17 target price.
Following the Q4 earnings release, after having the company at “neutral,” Sidoti and Co. analyst Mitra Ramgopal boosted the stock to a “buy.” At Stifel Nicolaus, analyst Rob Hawkins kept U.S. Physical Therapy at “hold,” writing to clients that while he spotted gradual improvement in the year-end report, his valuation remained unchanged.
In its recent annual report, U.S. Physical Therapy indicated that it intended to focus on organic growth.
If you’re starting to feel your age, then let’s get physical — therapy, that is.
Chances are, if you seek treatment for a malady, the doctor might order up some PT, quite possibly at a center run by U.S. Physical Therapy, Inc. (Nasdaq:USPH). The Houston company is the third-largest operator of outpatient physical- and occupational-therapy clinics, and is the sector’s only public company. The company has some 350 clinics in 42 states, and manages other facilities for third parties such as physicians groups.
With the stock market licking the gaping wounds exacerbated by the nearly daily dose of sinking economic data, health care is a sector that traditionally does well in a downturn. An illness or injury requires treatment, no matter what the financial situation. With U.S. Physical Therapy’s shares gaining about 8% in value this year, the stock might help rehabilitate sagging portfolios.
Of the five analysts who regularly follow U.S. Physical Therapy, according to Thomson Financial, one has the stock as a “strong buy,” two rate it a “buy,” and the other two have it at “hold.” The Thomson Financial 12-month price target is $19.
It’s a given that Americans aren’t in the best of shape, and with millions of aging baby boomers, more people are likely to come knocking for therapy from U.S. Physical Therapy or another provider.
There are more than 16,000 U.S. physical-therapy clinics, but the sector is highly fragmented, with no company holding more than 7% market share. U.S. Physical Therapy wants to change that, and has made four key acquisitions since 2005 — including a deal last September for a 70% stake in Star Physical Therapy, and its 52 outpatient clinics.
While U.S. Physical Therapy does snap up existing operations, the company says that more than 80% of its clinics started from scratch. Each is directed by a licensed therapist, who often has an existing base of referral relationships. The therapist usually enters into a partnership with the company on an ownership or profit-sharing basis. Startup costs average $170,000 and clinics are typically profitable in six to 12 months.
What U.S. Physical Therapy offers is the management expertise to efficiently treat patients, and efficiencies of scale, and most services are covered by insurance. Since last September, the small cap has had a contract with Ford Motor Co. (NYSE:F) to provide services to employees.
The company has little debt, and a P/E of around 20. Its shares have been on the move, especially since the start of the year, rising about 8%.
Historically, shares of U.S. Physical Therapy have nipped at the $20 level a few times, most recently in late 2005, but have not stayed there. Still, the stock hit a 52-week high of $15.90 on April 10, climbing from the 52-week low of $12.35 seen last Aug. 17. U.S. Physical Therapy closed Wednesday at $15.42.
In 2004, the company had a leadership change, with founder J. Livingston Kosberg stepping in as interim CEO. Kosberg remained a board member after Christopher Reading, the chief operating officer, was promoted to CEO and president.
Since the shakeup, revenue has increased by roughly 50% to $151.7 million for 2007, and 12% year-over-year. Earnings per share grew nearly 40% to $0.75 last year, from $0.54 a share in 2006. The Thomson Financial consensus estimate calls for the company to post $0.87 EPS this year, including $0.20 a share for the March quarter when results are released May 8. Company guidance calls for full-year net income of $9.9 million to $10.6 million, or $0.83 to $0.89 a share.
In SEC filings last month, U.S. Physical Therapy noted that three of its insiders had bought up more than $452,000 worth of shares, including founder Kosberg who grabbed 20,000 on March 10 at $13.85 each. Analyst David Bachman of Longbow Research called the moves “intriguing” since insiders hadn’t acquired any stock in nearly 18 months.
Bachman, who initiated coverage at “neutral” in late December, maintained that mark following the company’s posting in early March of a strong fourth quarter: revenue rose 30% to $44.2 million, and earnings of $0.21 per share beat the consensus estimate by $0.03. “We believe that USPH has carved out a solid niche in the fragmented outpatient therapy business and is well-positioned to gain longer term from the secular shift in health care towards focused low-cost, high-quality providers.” But with an aging clinic roster and less visible organic growth, “We currently see no near-term catalyst that is likely to move shares significantly higher,” he wrote in a March 6 note, which included a $17 target price.
Following the Q4 earnings release, after having the company at “neutral,” Sidoti and Co. analyst Mitra Ramgopal boosted the stock to a “buy.” At Stifel Nicolaus, analyst Rob Hawkins kept U.S. Physical Therapy at “hold,” writing to clients that while he spotted gradual improvement in the year-end report, his valuation remained unchanged.
In its recent annual report, U.S. Physical Therapy indicated that it intended to focus on organic growth.
About the Author
Contributing author Paul Rolfes is assistant business editor at The Courier-Journal, the largest daily newspaper in Kentucky.