ATI Bodily Remedy, a number one supplier of bodily remedy companies, reported a 9.2% improve in web 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 further affected person visits in comparison with the earlier yr.
Adjusted EBITDA for the quarter stood at $17 million, reflecting an 8.8% margin, which is an enchancment from the earlier yr’s 5.4% margin. ATI Bodily Remedy is optimistic about its progress 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 yr.
- 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 bettering operations continues.
Bearish Highlights
- The corporate reported a web lack of $3 million, although that is an enchancment from a $22 million web loss the earlier yr.
- Working money use elevated to $28 million resulting from greater accounts receivable and incentive payouts.
- A non-cash long-lived asset impairment cost of $0.3 million was recorded resulting from impairment on sure leases.
Bullish Highlights
- Working revenue for Q2 2024 was $7 million, a big turnaround from a $12 million loss in the identical quarter final yr.
- Earnings improve resulting from a lower in honest worth on sure notes and shares totaling $6 million.
- Curiosity expense decreased by 10.7% to $15 million, primarily resulting from 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 assist the enterprise.
- ATI plans to cut back administrative work for clinicians, probably bettering margins.
- The corporate is monitoring the business payer surroundings for PTAs and stays dedicated to the PTA mannequin as a part of their team-based care strategy.
ATI Bodily Remedy (ticker: ATI) is positioning itself for continued progress 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 focus on 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 individuals might be in a listen-only mode. After at the moment’s presentation, there might be a chance to ask questions. [Operator Instructions] Please word that this occasion is being recorded. On the decision at the moment 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 at the moment. Earlier than we start, we might prefer to remind you that sure statements made throughout this name might be forward-looking statements which are topic to numerous dangers and uncertainties and mirror our present expectations primarily based on beliefs, assumptions and data at present obtainable to us. Though we imagine these expectations are affordable, we undertake no obligation to revise any statements to mirror adjustments that happen after this name. Descriptions of among the elements that would trigger precise outcomes to vary materially from these forward-looking statements could be discovered within the Threat Elements part within the Firm’s filings with the Securities and Trade Fee. As well as, please word that the Firm might 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 could be discovered within the earnings press launch as posted on ATI’s web site and filed with the SEC. And with that, I might like to show the decision over to Sharon.
Sharon Vitti: Thanks, Joanne. Welcome, everybody. As talked about, we’ve our Chris Cox, and Joe Jordan, and myself might be talking all through the decision after which we even have our ELT members on the decision for the Q&A session. Earlier at the moment, we reported our second quarter 2024 outcomes. Our groups proceed to advance our nationwide follow, pushed by our shared goal of creating each life an energetic life. Our suppliers and assist workers embody excellent teamwork throughout our platform to make sure that our sufferers obtain high-quality care. Earlier at the moment we additionally offered Q3 2024 monetary steerage. On this name, we’ll focus on our expectations for future efficiency at our efforts to complete 2024 robust. So let’s leap in. Referrals per day elevated by greater than 9% year-over-year. Demand for ATI Care was one of many levers that fuelled our progress in Q2 2024. We noticed over 1,500 extra affected person visits every day, in comparison with the prior yr. So clearly, our methods are working. The main target of the yr 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; bettering entrance finish operations and income cycle administration to effectively gather cost for our companies and our continued efforts to develop our employees comp choices like strengthening {our relationships} There are numerous macro degree headwinds that we’re experiencing, however this regardless of the continued imbalance within the bodily remedy labor market, we efficiently grew our ATI clinician head rely by greater than 4% year-over-year. We’re pleased with attaining nice locations to work designation in Might 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 progress and success. We’re additionally pleased with our clinician turnover charge for the second quarter at 21%, which is in step with the market. With robust 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 yr. Nonetheless have some clinics with the surplus capability and we’ll 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 neighborhood – affected person and neighborhood 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’ll be able to 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 robust year-over-year progress. 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 focus on steerage for Q3 2024. I am pleased with the excellent individuals we’ve at ATI and have great gratitude for the dedication to enhancing the lives of our sufferers and their households. They clearly are the inspiration of all of our achievements at ATI. I am privileged to steer a unbelievable care supply group that’s main and having a constructive affect 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. Throughout the quarter, our operations groups continued to advance refining processes and enhancing the affected person expertise. Impressed by our groups’ dedication to our goal of creating each life an energetic life and excited concerning the ongoing developments in our working surroundings. In Q2, we continued to realize year-over-year top-line progress 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 assist groups, which collaborative efforts drove this progress. Within the second quarter, clinician headcount grew greater than 4% year-over-year, proof that we’re doing the fitting issues for our suppliers and our sufferers enabling us to realize our goal on a good bigger scale. As Sharon talked about, we capitalized on robust affected person demand and noticed over 1500 further visits every day, in comparison with final yr 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 yr. 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 companion supplier referrals. As we achieve extra expertise with this mannequin, we’ll uncover new methods to optimize and higher meet demand. And actually we’ve a number of course of enhancements, that we’ll be launching for this staff within the second half of the yr. We stay targeted on being an distinctive companion supplier making a world-class affected person onboarding expertise and lowering 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 operate had been key contributors to this greater charge. As I’ve emphasised earlier than, we’re dedicated to leveraging know-how and automation to advance this space, growing clear claims submissions on the front-end and collections on the back-end, all at a decrease value. This dynamic work continues to evolve and we imagine there’s ample room for additional developments as we try for best-in-class efficiency in our RCM operate. In closing, and I wish to categorical my satisfaction in our efficiency thus far this yr. I prolong my heartfelt because of all our groups for his or her unwavering dedication and excellence. Their efforts empower ATI to make a constructive affect 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 concerning the alternatives that lie forward and look ahead to sharing extra updates in our later calls this yr. Now, I might like to show the decision over to Joe to offer a dialogue of economic outcomes.
Joseph Jordan: Thanks, Chris, and thanks everybody for becoming a member of the decision at the moment. As Chris talked about, I am going to discuss our second quarter monetary outcomes and I am going to additionally focus on third quarter steerage in additional element. Beginning out with monetary outcomes. Our web income within the second quarter was $188 million, which is a 9.2% improve over the prior yr’s income stability of $172 million. Breaking that down slightly additional, web affected person income was $173 million and that is a ten.1% improve year-over-year, whereas different income was $15 million which is actually flat. As Chris talked about, our visits per day through the quarter per clinic elevated by 2.7 as much as 28.4 versus 25.7 within the second quarter of the prior yr and it actually displays our continued efforts to enhance clinic capability utilization. Our charge per go to through the quarter as you heard was $108.32, up from $104.74 within the second quarter of the prior yr. The first drivers of the upper charge had been greater 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 value within the second quarter of 2024 had been $103 million, which is a 7.6% improve year-over-year. It is primarily resulting from extra medical and assist workers, in addition to wage inflation. Taking a look at PT salaries and associated value per go to through the quarter, it was $56.22, which elevated 2.6% year-over-year from $54.81. That improve in value per go to was primarily resulting from wage inflation, but it surely was partially offset by greater labor productiveness of 9.6 in Q2 of 2024, in comparison with 9.5 in Q2 of the prior yr. 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 yr and that is primarily pushed by greater spend in contract labor and outdoors companies, partially offset by having much less clinics in comparison with final yr. On a per clinic foundation, these identical prices had been $59,000, which is a rise of 10% year-over-year from 54,000 in Q2 of the prior yr. Provision for uncertain accounts through the quarter was $2 million, which is 1.4% of PT income, which compares to 1.5% of PT income in Q2 of final yr and displays continued robust collections. Shifting all the way 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 yr included one-time debt in capital transaction value that did not recur in 2024. And along with that, Q2 of 2024 had decrease company insurance coverage value and better authorized reimbursements We recorded a non-cash long-lived asset impairment cost of $0.3 million through the quarter, which was resulting from impairment on sure leases and our working revenue was $7 million in Q2 of 2024, which elevated year-over-year from a lack of $12 million within the prior yr and it is actually pushed by greater earnings primarily based on the upper go to quantity, greater charge that Chris talked about earlier and people earnings flowing by means of to the bottom-line. Notable under the road gadgets through the quarter included revenue 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 means of analysis evaluation. Curiosity expense through the quarter was $15 million, which decreased 10.7% over the prior yr and it is primarily resulting from decrease excellent principal balances when evaluating to Q2 of final yr, partially offset by decrease rate of interest hedge advantages. Earnings tax profit for the quarter was zero, in comparison with revenue tax expense of $0.1 million within the second quarter 2023. And web loss through the quarter was $3 million, in comparison with a web lack of $22 million within the second quarter of final yr. 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 greater 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 yr. As I break that down additional inside working money, we used $28 million in comparison with $5 million final yr and the year-over-year improve was pushed by greater accounts receivable on greater income, greater payout of incentives and people two gadgets are partially offset by a decrease web loss. Money utilized in investing actions was $5 million, in comparison with $10 million final yr. The lower is primarily resulting from 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 yr. The rise in money generated from financing actions is primarily resulting from two issues; $25 million from the delayed draw time period mortgage, which was absolutely drawn in January and better web 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 might 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% progress over the prior yr Q3 and we anticipate adjusted EBITDA to be within the vary of $9 million to $14 million. The midpoint there represents 22% progress over the prior yr and an approximate 6% margin. Our steerage finally displays the dynamics that we’re seeing out there 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’ll be able to see our Q2 outcomes confirmed progress and that our methods are coming to fruition. We’re desirous to trip the momentum and proceed advancing the enterprise to learn our stakeholders. I stay assured within the individuals we’ve and the great work we’re doing to face out amongst the gang and assist individuals reside more healthy lives. That stated, we’ve lots to finish to appreciate our full potential and I do know we’ve what it takes to get there. I look ahead to sharing our progress subsequent quarter and I am going to 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 progress, it appears fairly good. Clearly, it sounds such as you’re getting some traction with payers right here and repair strains. Simply curious, how a lot runway do you assume there’s left to drive charge progress 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. Now we have a great story. And definitely, 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’ve a path to taking a look at different developments that may proceed to refine our income cycle, our value to gather and our total assortment efficiency, our lower in unhealthy debt. On the opposite aspect of it, I feel we’re all trying to see what occurs with Medicare. Now we have a way of subsequent yr, but it surely actually is the long run years after we get out of this, form 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 assume on the federal government aspect, Medicare will set the tone.
Brian Tanquilut: That is sensible. After which, perhaps simply as I take into consideration margins, proper, clearly charge is an element there, however you have finished a great job, as properly with the G&A line right here. I do know that recruiting continues to be tight right here and there. So, simply curious, how are you excited about the remaining margin alternative right here? And perhaps to slender down additional to simply on the G&A line, I imply, that was a extremely good quantity for the quarter. How ought to we be excited about G&A going ahead?
Joseph Jordan: I feel, Brian it is Joe. I feel, in the event you had been sticking on the G&A line, I feel we might anticipate G&A to remain comparatively flat. Now we 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 anticipate it to be fairly constant. After which, perhaps extra holistic margin, if I’m going all the best way up the P&L to clinic operations, we’re nonetheless targeted on ensuring that we’re attempting to make the clinicians lives as straightforward as doable when it pertains to none clinic care sort exercise. So administrative work, in order that they may 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 do 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 might be a part of Chris’ work. Simply operational excellence and the way can we make certain 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 perhaps 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: Now we have on PTAs – PTAs we’ve proper now reimbursement coming in at 85% of the PTs. A few 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 have to 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 surroundings to see if that’s one thing that continues to be adopted. After which, as Joe stated, we proceed to imagine within the PTA mannequin and anticipate to proceed to leverage PTAs as a giant 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 fitting 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 at the moment and we’ll look ahead to our subsequent dialogue in November with our Q3 quarterly earnings. Everybody have an amazing day.
Operator: This concludes at the moment’s convention name. We thanks for becoming a member of. It’s possible you’ll now disconnect your strains.
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