ATI Bodily Remedy, a number one supplier of bodily remedy companies, reported a 9.2% improve in internet income to $188 million for the second quarter of 2024. The corporate additionally noticed a 9% rise in referrals per day and skilled over 1,500 extra affected person visits in comparison with the earlier 12 months.
Adjusted EBITDA for the quarter stood at $17 million, reflecting an 8.8% margin, which is an enchancment from the earlier 12 months’s 5.4% margin. ATI Bodily Remedy is optimistic about its development technique, specializing in increasing entry to care, enhancing income cycle administration, and growing its employees’ compensation choices.
Regardless of a difficult labor market, the corporate efficiently grew its clinician headcount by over 4% year-over-year.
Key Takeaways
- Internet income elevated to $188 million, up 9.2% from the earlier 12 months.
- Referrals per day and affected person visits grew, with 1,500 extra visits famous.
- Adjusted EBITDA reached $17 million, with an 8.8% margin.
- Clinician headcount elevated by over 4%, regardless of labor market challenges.
- Two clinics closed and 4 divested to higher align with affected person wants.
- ATI anticipates Q3 income to be between $180 million and $190 million, with adjusted EBITDA of $9 million to $14 million.
Firm Outlook
- Q3 income anticipated to be within the $180 million to $190 million vary.
- Adjusted EBITDA forecasted to be between $9 million and $14 million for Q3.
- Concentrate on rising clinic quantity and enhancing operations continues.
Bearish Highlights
- The corporate reported a internet lack of $3 million, although that is an enchancment from a $22 million internet loss the earlier 12 months.
- Working money use elevated to $28 million because of larger accounts receivable and incentive payouts.
- A non-cash long-lived asset impairment cost of $0.3 million was recorded because of impairment on sure leases.
Bullish Highlights
- Working earnings for Q2 2024 was $7 million, a major turnaround from a $12 million loss in the identical quarter final 12 months.
- Revenue improve because of a lower in honest worth on sure notes and shares totaling $6 million.
- Curiosity expense decreased by 10.7% to $15 million, primarily because of decrease excellent balances.
Misses
- ATI closed two clinics and divested 4 clinics in an effort to realign with affected person wants.
Q&A Highlights
- Joseph Jordan, an organization government, expects G&A bills to stay flat as the corporate has constructed an infrastructure to help the enterprise.
- ATI plans to cut back administrative work for clinicians, probably enhancing margins.
- The corporate is monitoring the business payer setting for PTAs and stays dedicated to the PTA mannequin as a part of their team-based care method.
ATI Bodily Remedy (ticker: ATI) is positioning itself for continued development by specializing in operational effectivity and strategic alignment with market calls for. With a constant improve in affected person quantity and an emphasis on team-based care, ATI is navigating the challenges of the healthcare sector whereas delivering worth to its stakeholders. The following earnings name is scheduled for November, the place the corporate will talk about its Q3 efficiency.
Full transcript – ATI Bodily Remedy Inc (ATIP) Q2 2024:
Operator: Good afternoon. And welcome to ATI Bodily Remedy’s Second Quarter 2024 Earnings Convention Name and Webcast. All contributors will likely be in a listen-only mode. After as we speak’s presentation, there will likely be a chance to ask questions. [Operator Instructions] Please word that this occasion is being recorded. On the decision as we speak is Sharon Vitti, Chief Government Officer; Joseph Jordan, Chief Monetary Officer; Chris Cox, Chief Working Officer; and Joanne Fong, Senior Vice President, Treasurer and Head of Investor Relations. I’ll now flip the decision over to Ms. Fong. Please go forward.
Joanne Fong: Thanks, Sarah. Good afternoon, everybody, and thanks for becoming a member of us as we speak. Earlier than we start, we would prefer to remind you that sure statements made throughout this name will likely be forward-looking statements which might be topic to numerous dangers and uncertainties and replicate our present expectations based mostly on beliefs, assumptions and knowledge at the moment obtainable to us. Though we imagine these expectations are cheap, we undertake no obligation to revise any statements to replicate adjustments that happen after this name. Descriptions of among the components that might trigger precise outcomes to vary materially from these forward-looking statements may be discovered within the Danger Components part within the Firm’s filings with the Securities and Alternate Fee. As well as, please word that the Firm will likely be discussing sure non-GAAP monetary measures that we imagine are vital in evaluating efficiency. Particulars on the relationships between these non-GAAP measures to probably the most comparable GAAP measures and reconciliation of historic non-GAAP monetary measures may be discovered within the earnings press launch as posted on ATI’s web site and filed with the SEC. And with that, I would like to show the decision over to Sharon.
Sharon Vitti: Thanks, Joanne. Welcome, everybody. As talked about, we have now our Chris Cox, and Joe Jordan, and myself will likely be talking all through the decision after which we even have our ELT members on the decision for the Q&A session. Earlier as we speak, we reported our second quarter 2024 outcomes. Our groups proceed to advance our nationwide follow, pushed by our shared objective of creating each life an energetic life. Our suppliers and help employees embody excellent teamwork throughout our platform to make sure that our sufferers obtain high-quality care. Earlier as we speak we additionally offered Q3 2024 monetary steerage. On this name, we’ll talk about our expectations for future efficiency at our efforts to complete 2024 sturdy. So let’s soar in. Referrals per day elevated by greater than 9% year-over-year. Demand for ATI Care was one of many levers that fuelled our development in Q2 2024. We noticed over 1,500 extra affected person visits every day, in comparison with the prior 12 months. So clearly, our methods are working. The main focus of the 12 months continues to be execution and increasing entry to bodily remedy together with in underserved areas. Within the second quarter, our groups continued to extend the speed per go to year-over-year by taking motion within the following areas: sharing ATI affected person outcomes and high quality indicators with pairs; enhancing entrance finish operations and income cycle administration to effectively accumulate cost for our companies and our continued efforts to develop our employees comp choices like strengthening {our relationships} There are quite a lot of macro degree headwinds that we’re experiencing, however this regardless of the continuing imbalance within the bodily remedy labor market, we efficiently grew our ATI clinician head depend by greater than 4% year-over-year. We’re happy with reaching nice locations to work designation in Could 2024 and acknowledge the change in tradition takes time in vigilance. We’re dedicated to the methods that each the retention and recruitment efforts recognizing the pivotal function our clinicians play in ATI’s continued development and success. We’re additionally happy with our clinician turnover charge for the second quarter at 21%, which is in keeping with the market. With sturdy demand and a extra stabilized workforce, we proceed to construct upon learnings and refined our operations. Our continued – our clinics proceed to be busier year-over-year with visits per day, per clinic rising roughly three visits over Q2 of final 12 months. Nonetheless have some clinics with the surplus capability and we are going to work so as to add suppliers improve entry for sufferers and leverage our actual property and stuck prices. Within the quarter, we made progress to refine our clinic footprint and align with our affected person group – affected person and group wants together with closing two clinics and divesting 4 clinics. Chris will present an in depth dialogue round our operational efficiency and actions shortly. As you possibly can see, the strong demand for ATI’s companies mixed with our enterprise achievements is [Inaudible] in our financials with income and adjusted EBITDA for the quarter’s sturdy year-over-year development. We’re dedicated to executing on our methods and sustaining income and earnings efficiency within the upcoming quarters. Later within the name, Joe will present a complete overview of the Q2 monetary outcomes and talk about steerage for Q3 2024. I am happy with the excellent folks we have now at ATI and have large gratitude for the dedication to enhancing the lives of our sufferers and their households. They clearly are the muse of all of our achievements at ATI. I am privileged to steer a unbelievable care supply group that’s main and having a constructive impression within the muscle skeletal ecosystem. With that, I’ll flip the decision over to Chris to debate operations.
Chris Cox: Thanks, Sharon, and good to speak to you all once more. In the course of the quarter, our operations groups continued to advance refining processes and enhancing the affected person expertise. Impressed by our groups’ dedication to our objective of creating each life an energetic life and excited in regards to the ongoing developments in our working setting. In Q2, we continued to realize year-over-year top-line development pushed by progress in a number of vital areas. This success is a results of the efforts of each our medical suppliers throughout our companies and the a number of help groups, which collaborative efforts drove this development. Within the second quarter, clinician headcount grew greater than 4% year-over-year, proof that we’re doing the correct issues for our suppliers and our sufferers enabling us to realize our objective on an excellent bigger scale. As Sharon talked about, we capitalized on sturdy affected person demand and noticed over 1500 extra visits every day, in comparison with final 12 months with visits per day per clinic growing by 2.7 visits. Moreover, our suppliers noticed 0.1 extra visits per medical FTE per day, in comparison with Q2 of final 12 months. The success in increasing affected person entry, the high-quality bodily remedy stays the cornerstone of our achievements. Within the final name, I shared that Q1 marks the primary full quarter of implementing our new centralized affected person entry administration mannequin throughout all of our clinics. In Q2, we noticed continued enchancment in our seize charge of accomplice supplier referrals. As we achieve extra expertise with this mannequin, we are going to uncover new methods to optimize and higher meet demand. And in reality we have now a number of course of enhancements, that we’ll be launching for this staff within the second half of the 12 months. We stay centered on being an distinctive accomplice supplier making a world-class affected person onboarding expertise and decreasing the executive burden on our clinicians. Within the quarter, our income charge per go to was $108.32, growing 3.4% year-over-year. Persevering with enhancements in our income cycle administration perform have been key contributors to this larger charge. As I’ve emphasised earlier than, we’re dedicated to leveraging expertise and automation to advance this space, growing clear claims submissions on the front-end and collections on the back-end, all at a decrease price. This dynamic work continues to evolve and we imagine there’s ample room for additional developments as we attempt for best-in-class efficiency in our RCM perform. In closing, and I wish to categorical my satisfaction in our efficiency up to now this 12 months. I lengthen my heartfelt due to all our groups for his or her unwavering dedication and excellence. Their efforts empower ATI to make a constructive impression on the lives of our sufferers and communities and every time I am in clinics visiting with our clinicians, our sufferers cease me to inform me what an incredible impacts they’ve had on their lives. As at all times, I’m excited in regards to the alternatives that lie forward and look ahead to sharing extra updates in our later calls this 12 months. Now, I would like to show the decision over to Joe to supply a dialogue of monetary outcomes.
Joseph Jordan: Thanks, Chris, and thanks everybody for becoming a member of the decision as we speak. As Chris talked about, I will speak about our second quarter monetary outcomes and I will additionally talk about third quarter steerage in additional element. Beginning out with monetary outcomes. Our internet income within the second quarter was $188 million, which is a 9.2% improve over the prior 12 months’s income steadiness of $172 million. Breaking that down slightly additional, internet affected person income was $173 million and that is a ten.1% improve year-over-year, whereas different income was $15 million which is basically flat. As Chris talked about, our visits per day in the course of the quarter per clinic elevated by 2.7 as much as 28.4 versus 25.7 within the second quarter of the prior 12 months and it actually displays our continued efforts to enhance clinic capability utilization. Our charge per go to in the course of the quarter as you heard was $108.32, up from $104.74 within the second quarter of the prior 12 months. The first drivers of the upper charge have been larger reimbursement charges with sure key payers, favorable rated changes pushed by among the operational enhancements in RCM that Chris talked about, and favorable service combine adjustments. Salaries and associated price within the second quarter of 2024 have been $103 million, which is a 7.6% improve year-over-year. It is primarily because of extra medical and help employees, in addition to wage inflation. PT salaries and associated price per go to in the course of the quarter, it was $56.22, which elevated 2.6% year-over-year from $54.81. That improve in price per go to was primarily because of wage inflation, however it was partially offset by larger labor productiveness of 9.6 in Q2 of 2024, in comparison with 9.5 in Q2 of the prior 12 months. Lease ,clinic provides, contract labor and different within the second quarter of 2024 was $53 million, which is a 5.4% improve from $50 million in Q2 of the prior 12 months and that is primarily pushed by larger spend in contract labor and outdoors companies, partially offset by having much less clinics in comparison with final 12 months. On a per clinic foundation, these identical prices have been $59,000, which is a rise of 10% year-over-year from 54,000 in Q2 of the prior 12 months. Provision for uncertain accounts in the course of the quarter was $2 million, which is 1.4% of PT income, which compares to 1.5% of PT income in Q2 of final 12 months and displays continued sturdy collections. Transferring right down to SG&A, it was $23 million on the quarter, which is a 36.9% lower year-over-year from $37 million. The prior 12 months included one-time debt in capital transaction price that did not recur in 2024. And along with that, Q2 of 2024 had decrease company insurance coverage price and better authorized reimbursements We recorded a non-cash long-lived asset impairment cost of $0.3 million in the course of the quarter, which was because of impairment on sure leases and our working earnings was $7 million in Q2 of 2024, which elevated year-over-year from a lack of $12 million within the prior 12 months and it is actually pushed by larger earnings based mostly on the upper go to quantity, larger charge that Chris talked about earlier and people earnings flowing by to the bottom-line. Notable beneath the road objects in the course of the quarter included earnings ensuing from a lower in honest worth on our second-lien PIK notes, our contingent frequent shares and our warrants totaling $6 million. These devices are mark-to-market every quarter on the finish of the quarter by analysis evaluation. Curiosity expense in the course of the quarter was $15 million, which decreased 10.7% over the prior 12 months and it is primarily because of decrease excellent principal balances when evaluating to Q2 of final 12 months, partially offset by decrease rate of interest hedge advantages. Revenue tax profit for the quarter was zero, in comparison with earnings tax expense of $0.1 million within the second quarter 2023. And internet loss in the course of the quarter was $3 million, in comparison with a internet lack of $22 million within the second quarter of final 12 months. Adjusted EBITDA throughout Q2 was $17 million, which is an 8.8% margin and that elevated year-over-year from $9 million, which was a 5.4% margin. And as talked about the year-over-year improve in adjusted EBITDA can also be as a result of larger income and the related earnings that come together with it. Our money use year-to-date was roughly $4 million, in comparison with $45 million final 12 months. As I break that down additional inside working money, we used $28 million in comparison with $5 million final 12 months and the year-over-year improve was pushed by larger accounts receivable on larger income, larger payout of incentives and people two objects are partially offset by a decrease internet loss. Money utilized in investing actions was $5 million, in comparison with $10 million final 12 months. The lower is primarily because of fewer clinic openings. After which money generated from financing actions was $29 million in 2024, in comparison with money use of $30 million within the prior 12 months. The rise in money generated from financing actions is primarily because of two issues; $25 million from the delayed draw time period mortgage, which was totally drawn in January and better internet revolver borrowings. As of June thirtieth 2024, liquidity was roughly $33 million, which consisted of money and money equivalents, a portion of which resides in our three way partnership money accounts. And now I would prefer to share Q3 steerage. We anticipate income in Q3 to be within the vary of $180 million to $190 million. The midpoint of that vary equates to about 4% development over the prior 12 months Q3 and we count on adjusted EBITDA to be within the vary of $9 million to $14 million. The midpoint there represents 22% development over the prior 12 months and an approximate 6% margin. Our steerage finally displays the dynamics that we’re seeing available in the market and the methods we’re using to navigate and develop clinic quantity and superior clinic operations. I’ll now flip the decision again over to Sharon for closing remarks.
Sharon Vitti: Thanks, Joe. So it is fairly clear you possibly can see our Q2 outcomes confirmed progress and that our methods are coming to fruition. We’re wanting to trip the momentum and proceed advancing the enterprise to learn our stakeholders. I stay assured within the folks we have now and the great work we’re doing to face out amongst the gang and assist folks dwell more healthy lives. That mentioned, we have now rather a lot to finish to appreciate our full potential and I do know we have now what it takes to get there. I look ahead to sharing our progress subsequent quarter and I will hand it again to the operator to open the decision for Q&A.
Operator: [Operator Instructions] Your first query comes from the road of Brian Tanquilut with Jefferies. Your line is open.
Brian Tanquilut: Hey, good afternoon, guys. Congrats on the quarter. Perhaps, Sharon, as I take into consideration charge development, it seems fairly good. Clearly, it sounds such as you’re getting some traction with payers right here and repair traces. Simply curious, how a lot runway do you suppose there’s left to drive charge development and what are the levers remaining so that you can maintain this actually good trajectory on charges?
Sharon Vitti: Nice query, Brian. Thanks for becoming a member of us. I feel it is A Story of Two Cities. I feel we proceed to work with our payers. We now have a very good story. And positively, among the pairs are responding favorably as they have a look at charges. I feel the second piece is, whereas we have picked the low hanging fruit, because it pertains to income cycle. There are continued – we have now a path to taking a look at different developments that can proceed to refine our income cycle, our price to gather and our total assortment efficiency, our lower in dangerous debt. On the opposite aspect of it, I feel we’re all trying to see what occurs with Medicare. We now have a way of subsequent 12 months, however it actually is the long run years after we get out of this, kind of this five-year plan to rationalize Main Care and I feel CMS units the tone for lots of the business payers. So, I am – I feel that is an important piece. Whereas we are the myths continues to be a constructive for us to offset among the Medicare cuts. I actually suppose on the federal government aspect, Medicare will set the tone.
Brian Tanquilut: That is sensible. After which, possibly simply as I take into consideration margins, proper, clearly charge is an element there, however you’ve got completed a very good job, as properly with the G&A line right here. I do know that recruiting remains to be tight right here and there. So, simply curious, how are you fascinated with the remaining margin alternative right here? And possibly to slim down additional to only on the G&A line, I imply, that was a very good quantity for the quarter. How ought to we be fascinated with G&A going ahead?
Joseph Jordan: I feel, Brian it is Joe. I feel, in the event you have been sticking on the G&A line, I feel we might count on G&A to remain comparatively flat. We now have an infrastructure constructed as much as run the enterprise if we make substantial adjustments to the enterprise. Sooner or later clearly that may change. However I feel for now you’d count on it to be fairly constant. After which, possibly extra holistic margin, if I’m going all the way in which up the P&L to clinic operations, we’re nonetheless centered on ensuring that we’re attempting to make the clinicians lives as straightforward as doable when it pertains to none clinic care kind exercise. So administrative work, in order that they might actually focus their time on sufferers and getting sufferers higher, which is what they do greatest and what they’re attempting to do. However finally, if we try this proper and make their lives simpler, it may result in higher margins, as properly as a result of they’re in a position to see extra sufferers and we’re in a position to take among the burden off of them that they need to actually be doing.
Sharon Vitti: Yeah, and Brian, we proceed to refine on what we’re doing and all ranges. And so, Chris will likely be a part of Chris’ work. Simply operational excellence and the way can we make sure that we’re leveraging our belongings as greatest as doable together with our expense base. So, I feel there’s extra work to do there.
Brian Tanquilut: You bought it. After which possibly yet another query if I’ll? Joe, as I take into consideration the proposed rule, I do know there’s some languages there in PT help. Something we should always know or how are you decoding among the language that’s embedded within the proposed rule?
Joseph Jordan: We now have on PTAs – PTAs we have now proper now reimbursement coming in at 85% of the PTs. A number of the business payers have adopted that, as properly. It is one thing that we have needed to undertake to our methods too. PTAs are nonetheless an vital a part of our care mannequin and they’re going to proceed to be. However we clearly must make some alterations as we transfer alongside.
Sharon Vitti: Chris, do you wish to add something to that?
Chris Cox: No, I feel, Joe actually hit the important thing excessive factors. I imply, we’re monitoring form of the business payer setting to see if that’s one thing that continues to be adopted. After which, as Joe mentioned, we proceed to imagine within the PTA mannequin and count on to proceed to leverage PTAs as an enormous a part of our team-based care. And we wish to be good about like the place we’re deploying PTAs versus PTs versus our clinic administrators and ensuring that every affected person has the correct take care of them in a manner that additionally helps to optimize our enterprise.
Sharon Vitti: Yeah, I feel, Brian, we proceed get extra refined on how we schedule and the way we make the most of the team-based care.
Brian Tanquilut: All proper. Acquired it. Thanks and congrats once more.
Sharon Vitti: Thanks, Brian.
Operator: This concludes the question-and-answer session, I’ll flip the decision to Sharon Vitti for closing remarks.
Sharon Vitti: Thanks. Thanks everybody, to your time as we speak and we’ll look ahead to our subsequent dialogue in November with our Q3 quarterly earnings. Everybody have an important day.
Operator: This concludes as we speak’s convention name. We thanks for becoming a member of. Chances are you’ll now disconnect your traces.
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