ATI Physical Therapy Reports Growth and Enhanced Margins in Q2

ATI Physical Therapy, a prominent provider in the field of physical therapy, announced a 9.2% increase in net revenue, totaling $188 million, for the second quarter of 2024. The company also reported a 9% rise in daily referrals, leading to an additional 1,500 patient visits compared to the same period last year.

The adjusted EBITDA for this quarter was $17 million, indicating an 8.8% margin, a notable improvement from the previous year’s margin of 5.4%. ATI Physical Therapy remains optimistic about its growth initiatives, concentrating on improving access to care, enhancing revenue cycle management, and expanding its workers’ compensation services.

Despite facing difficulties in the labor market, the company managed to increase its clinician workforce by over 4% year-over-year.

Key Takeaways:

• Net revenue reached $188 million, marking a 9.2% growth from the prior year.
• Daily referrals and patient visits increased, with over 1,500 more visits reported.
• Adjusted EBITDA was $17 million, reflecting an 8.8% margin.
• The clinician workforce grew by over 4%, despite labor market challenges.
• The company closed two clinics and divested four to better meet patient needs.
• ATI expects third-quarter revenue to range between $180 million and $190 million, with adjusted EBITDA between $9 million and $14 million.

Company Outlook:

• Anticipated Q3 revenue is projected to be between $180 million and $190 million.
• Adjusted EBITDA is expected to fall within the range of $9 million to $14 million for Q3.
• The focus remains on increasing clinic volume and enhancing operations.

Negative Highlights:

• The company reported a net loss of $3 million, an improvement from the $22 million loss in the previous year.
• Operating cash use rose to $28 million due to higher accounts receivable and incentive payouts.
• A non-cash impairment charge of $0.3 million was recognized due to certain lease impairments.

Positive Highlights:

• Operating income for Q2 2024 stood at $7 million, a significant turnaround from a $12 million loss in the same quarter last year.
• Income increased as a result of a $6 million decrease in fair value on specific notes and shares.
• Interest expenses decreased by 10.7% to $15 million, attributed to lower outstanding balances.

Operational Changes:

• ATI’s proactive closure of two clinics and divestiture of four sites was aimed at realigning with patient needs.

Insights from Executives:

• Joseph Jordan, an executive at the company, projected that general and administrative expenses would remain stable, supported by a robust infrastructure.
• ATI is focused on reducing administrative tasks for clinicians, which could potentially enhance profit margins.
• The company is closely monitoring changes in the payer environment and remains committed to the PTA model in their care strategy.

ATI Physical Therapy is positioning itself for sustained growth by prioritizing operational efficiency and alignment with market demands. With ongoing increases in patient volume and a commitment to a team-based care approach, ATI is navigating challenges in the healthcare sector while providing value to stakeholders. The next earnings call is set for November, when the company plans to share updates on its Q3 performance.