CALL DETAILS
Wednesday May 31, 2023 AT 2:00PM ET
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We took advantage of USPH's secondary last week to promote it from the long bench to a Best Idea Long. The company priced a secondary offering of 1.67M shares at $90 on a share count of 13M and a closing price of $110 before the deal, adding $150M in cash to the balance sheet. Our outlook calls for accelerating organic growth, dis-inflating labor costs, and an acquisition environment is increasingly favorable for strategic buyers, like USPH. The incremental cash from the secondary will fuel that deal flow.
During the presentation we'll review key Health Care Macro data and trackers that give us confidence in our outlook. We'll look at the current state of consolidation among physical therapists, the potential for deferred care to continue to accelerate same clinic volumes, trackers such as our Medical Claims Indices pulled by CPT codes and by the physical therapy taxonomy code, and where possible we'll track same clinic staffing trends, along with the trend in wage inflation.
We expect incremental topline and labor cost improvement to push upside to EBITDA in 2023 and 2024 providing support for USPH to trade toward $135, 50% above where the $90 secondary last week, and 30% above the $102 close on Friday. USPH does not carry a high Quad Factor Score for Quad 4 largely due to the below average enterprise value. At $1.5B, its EV is a negative in Quad 4, although, with accelerating estimate momentum driving the price higher, the score improves.
Have a great day.
