OVERVIEW
Demand for physical therapy has been robust for much of 2021 and we think is part of a much broader medical utilization demand environment that is just beginning to address medical care that was deferred during the pandemic. As the Delta Variant fades, which we expect to be the last significant wave in terms of hospitalizations, in-person care is showing the signs of emerging. After the catastrophic missteps ATIP endured to start its life as a public company, management took the first significant positive steps with the 3Q21 earnings release and conference call toward fulfilling the long-term targets.
MORE DETAIL, MORE CONFIDENCE IN THE RECOVERY
ATIP provided granular detail about headcount, attrition, hiring, and unit economics which made it a fairly simple exercise to run out recent hiring trends into an EBITDA estimate for 2022 and 2023. Heading into 3Q21 we were at $120MM in EBITDA for 2022 and using the additional data, that looks reasonable and maybe even a little low, versus consensus of $55.1MM. If management can hire fast enough and re-establish the referrals, that estimate will likely be too low. The market trends are solid and we think getting stronger, making a recovery even more probable. And if 2021 works out, a reasonable case for 2023 looks like ~$200MM in EBITDA, not the current consensus estimate of $89.9MM. We think our 2022 EBITDA is worth $5.00 $8.00 per share, and if 2023 comes into focus, a price in the low teens is not far off. But we see both ranges as a floor to build from, not targets.
The detail on labor turnover was helpful in 2 critical ways. First, it corroborated what we are seeing with our ATIP Tracker, a tool that identifies registered providers with an NPI number who are practicing at an ATIP location. We saw the inflection in September 2021 which lines up with their disclosures. Second, it gives us a terrific tool to measure ATIP's efforts to hire and retain therapists over the coming quarters.
At this stage, our analysis contemplates modest store openings and no major acquisitions. We just need to see visits per day per clinic recover and expand to previous levels and take operating margins to previous levels. If rates move higher, hiring goes better, referrals accelerate, and ATIP makes more significant acquisitions or expands faster with de novo sites, all of that will all be incremental to our view. We still think those opportunities aren't off the table either as they fix the base business.
In the chart below we added the reported net headcount trend by quarter disclosed in last night's tables, which are listed below.
All data available upon request. Please reach out to with any inquiries.
Thomas Tobin
Managing Director
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