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Wall Street JournalATI Physical Therapy, Inc. Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2024
ATI Physical Therapy, Inc. Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2024
ATI Physical Therapy, Inc. has reported a strong financial performance for the quarter ending March 31, 2024. The company’s condensed consolidated balance sheet, statement of operations, and cash flow statement all show significant growth compared to the previous quarter. The company’s management remains optimistic about the future, citing increased demand for their services and a strong pipeline of new business opportunities. However, they also acknowledge potential risks, such as economic uncertainty and changes in healthcare regulations, which could impact their financial performance.
Table of Contents
Company Overview
ATI Physical Therapy is a leading provider of outpatient physical therapy services. The company operates hundreds of clinics across the United States.
Recent Events
Debt Restructuring
In June 2023, ATI completed a debt restructuring transaction to improve liquidity. Key components:
- Exchanged $100 million of senior secured term loan for second lien convertible notes
- Obtained rights to issue additional $25 million in second lien notes
- Amended terms of remaining senior secured term loan
Leadership Changes
In March 2024, Brent Rhodes resigned as Chief Accounting Officer. Joseph Jordan became Principal Accounting Officer in addition to his CFO role.
Financial Performance
First Quarter 2024
- Patient visits increased 5% year-over-year due to higher clinician staffing
- Net revenue was $181 million, up 9%
- Net loss narrowed to $14 million from $25 million last year
Industry Trends
- Aging population expected to expand market for outpatient physical therapy
- Changes in Medicare and Medicaid funding impacts demand and reimbursements
- Tight labor market for therapists leads to staffing and wage inflation challenges
Liquidity and Going Concern
ATI continues to generate losses and negative cash flow. The company faces risks of insufficient funding and noncompliance with debt covenants. ATI completed a debt restructuring in 2023 to improve liquidity but still faces uncertainty in its ability to continue operations long-term.
Financial Statements
Income Statement Highlights
($ in millions)
| Q1 2024 | Q1 2023 | |
|---|---|---|
| Net Patient Revenue | $165 | $151 |
| Operating Loss | $(5) | $(11) |
| Net Loss | $(14) | $(25) |
- Net patient revenue increased 10% on 5% higher visits and improved rate per visit
- Lower operating and net losses year-over-year
Cash Flow Highlights
($ in millions)
| Q1 2024 | Q1 2023 | |
|---|---|---|
| Operating Cash Used | $(39) | $(14) |
| Investing Cash Used | $(2) | $(5) |
| Financing Cash Provided | $28 | $(1) |
- Higher operating cash used due to timing of working capital and interest payments
- Financing cash provided by $25 million draw on second lien notes
Debt Position
($ in millions)
| 3/31/2024 | 12/31/2023 | |
|---|---|---|
| Senior Secured Term Loan | $410 | $407 |
| Revolving Credit Facility | $44 | $39 |
| Second Lien Notes | $96 | $80 |
Outlook
ATI faces uncertainty in its ability to return to profitability and positive cash flow. Additional liquidity sources will likely be needed to continue operations long-term.