Profit ratio

US PHYSICAL THERAPY INC /NV – 10-Q

The following is a discussion of our historical consolidated financial condition
and results of operations, and should be read in conjunction with (i) our
historical consolidated financial statements and accompanying notes thereto
included elsewhere in this Quarterly Report on Form 10-Q; (ii) our Annual Report
on Form 10-K for the year ended December 31, 2021 filed with the Securities and
Exchange Commission (the "SEC") on March 1, 2022 ("2021 Annual Report"); and
(iii) our management's discussion and analysis of financial condition and
results of operations included in our 2021 Annual Report. This discussion
includes forward-looking statements that are subject to risk and uncertainties.
Actual results may differ substantially from the statements we make in this
section due to a number of factors that are discussed in "Forward-Looking
Statements" herein and in Part II, Item 1A. Risk Factors of this report.

References to “we”, “us”, “our” and the “Company” mean Physics in the United States
Therapy, Inc.
and its subsidiaries.

ABSTRACT

Our business

We operate outpatient physical therapy clinics that provide pre- and
post-operative care and treatment for a variety of orthopedic-related disorders
and sports-related injuries, neurologically-related injuries and rehabilitation
of injured workers. We also operate an industrial injury prevention services
business which includes onsite injury prevention and rehabilitation, performance
optimization and ergonomic assessments services.

Selected operational and financial data

Our reportable segments include the physical therapy operations segment and the
industrial injury prevention services segment. Our physical operations consist
of physical therapy and occupational therapy clinics that provide pre-and
post-operative care and treatment for orthopedic-related disorders,
sports-related injuries, preventive care, rehabilitation of injured workers and
neurological injuries. Services provided by industrial injury prevention
services segment include onsite injury prevention and rehabilitation,
performance optimization and ergonomic assessments.

At March 31, 2022, we operated 601 clinics in 39 states.  In addition to our
ownership and operation of outpatient physical therapy clinics, we also manage
physical therapy facilities for third parties, such as physicians and hospitals,
with 38 such third-party facilities under management as of March 31, 2022.

During the 2021 year and three months ended March 31, 2022, we completed the
acquisitions of four multi-clinic practices and two industrial injury services
businesses as detailed below.

Acquisition                         Date          Acquired   Clinics
March 2022 Acquisition         March 31, 2022       70%         6
December 2021 Acquisition    December 31, 2021      75%         3
November 2021 Acquisition    November 30, 2021      70%       IIPS*
September 2021 Acquisition   September 30, 2021     100%      IIPS*
June 2021 Acquisition          June 30, 2021        65%         8
March 2021 Acquisition         March 31, 2021       70%         6


* Workplace injury prevention services company

During the first quarter of 2022, we closed two clinics.

Employees

Our strategy to acquire physical therapy practices, develop outpatient physical
therapy clinics as satellites within existing partnerships, acquire industrial
injury prevention services businesses, and to continue to support the growth of
our existing businesses requires a talented workforce that can grow with us. As
of March 31, 2022 we employed approximately 5,519 people nationwide, of which
approximately 3,060 were full-time employees.

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It is crucial that we continue to attract and retain top talent. To attract and
retain talented employees, we strive to make our corporate office and all of our
practices and businesses a diverse and healthy workplace, with opportunities for
our employees to receive continuing education, skill development, encouragement
to grow and develop their career, all supported by competitive compensation,
incentives, and benefits. Our clinical professionals are all licensed and a vast
majority have advanced degrees. Our operational leadership teams have
long-standing relationships with local and regional universities, professional
affiliations, and other applicable sources that provide our practices with a
talent pipeline.

We provide competitive compensation and benefits programs to help meet our
employees' needs in the practices and communities in which they serve. These
programs (which can vary by practice and employment classification) include
incentive compensation plans, a 401(k) plan, healthcare and insurance benefits,
health savings and flexible spending accounts, paid time off, family leave,
education assistance, mental health, and other employee assistance benefits.

We invest resources to develop the talent needed to support our business
strategy. Resources include a multitude of training and development programs
delivered internally and externally, online and instructor-led, and on-the-job
learning formats.

We plan to continue adding staff in the future as we focus on potential
acquisition targets and organic growth opportunities.

RESULTS OF OPERATIONS

Summary of first quarter 2022 results compared to first quarter 2021 results

For the three months ended March 31, 2022 ("2022 First Quarter"), our net income
attributable to our shareholders was $8.8 million as compared to $8.2 million
for the three months ended March 31, 2021 ("2021 First Quarter").  In accordance
with current GAAP accounting guidance, the revaluation of redeemable
non-controlling interest, net of taxes, is not included in net income but
charged directly to retained earnings; however, the charge for this change is
included in the earnings per basic and diluted share calculation. Inclusive of
the charge for revaluation of non-controlling interest, net of taxes, the amount
is $8.2 million, or $0.64 per diluted share, for the 2022 First Quarter, and
$2.8 million, or $0.21 per diluted share, for the 2021 First Quarter.

For the 2022 First Quarter, our Operating Results, were $8.7 million, or $0.67
per diluted share, an increase of 2.0%, as compared to $8.2 million, or $0.64
per diluted share, for the 2021 First Quarter. Operating Results, a non-GAAP
measure, equals net income attributable to our shareholders per the consolidated
statements of income, less the gain on the revaluation of the put-right
liability. In accordance with GAAP, the revaluation of redeemable
non-controlling interest, net of tax, is included in the earnings per basic and
diluted share calculation, although it is not included in net income but charged
directly to retained earnings. See table on page 30.

We believe providing Operating Results is useful to investors for comparing the
Company's period-to-period results and for comparing with other similar
businesses since most do not have redeemable instruments and therefore have
different equity structures. We use Operating Results, which eliminates certain
items described above that can be subject to volatility and unusual costs, as
one of the principal measures to evaluate and monitor financial performance.

Operating Results is not a measure of financial performance under GAAP and
should not be considered in isolation or as an alternative to, or substitute
for, net income attributable to our shareholders presented in the consolidated
financial statements.

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The following tables provide detail of the diluted earnings per share
computation and reconcile net income attributable to our shareholders calculated
in accordance with GAAP to Operating Results (in thousands, except per share
data):

                                                                  Three Months Ended March 31,
                                                                    2022                 2021

Calculation of earnings per share – USPH shareholders:
Net income attributable to USPH shareholders

                   $        8,799       $        8,173
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling interest                       (153 )             (7,270 )
Tax effect at statutory rate (federal and state) of 25.55%                 39                1,857
                                                               $        

8,685 $2,760

Earnings per share (basic and diluted)                         $         

$0.67 0.21

Adjustments:

Gain on revaluation of put-right liability                               (603 )                  -
Revaluation of redeemable non-controlling interest                        153                7,270
Tax effect at statutory rate (federal and state)                          115               (1,857 )
Operating Results (a non-GAAP measure)                         $        

8,350 $8,173

Basic and diluted operating earnings per share (a non-GAAP earnings
measure)

                                                       $         

$0.65 0.64

Shares used in computation - basic and diluted                         12,937               12,870



The following table summarizes financial data by segment for the periods
indicated and reconciles the data to our consolidated financial statements (in
thousands):

                                           Three Months Ended March 31,
                                             2022                 2021

Net operating revenue:
Physical therapy operations             $      112,636       $      102,359
Industrial injury prevention services           19,068               10,009
Total Company                           $      131,704       $      112,368

Gross profit:
Physical therapy operations             $       22,436       $       23,174
Industrial injury prevention services            4,152                2,722
Gross profit                            $       26,588       $       25,896

Total Assets:
Physical therapy operations             $      608,240       $      723,530
Industrial injury prevention services          155,623               25,896
Total Company                           $      763,863       $      749,426



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Revenue

Total reported revenue for the first quarter of 2022 was $131.7 milliona
17.2% increase over $112.4 million for the first quarter of 2021.

To see

table below for a breakdown of total reported revenues (in thousands):

                                                                Three 

Months ended

                                                        March 31, 2022       March 31, 2021
Revenue related to Mature Clinics                      $        102,321     $         98,649
Revenue related to 2022 Clinic Additions                            195                    -
Revenue related to 2021 Clinic Additions                          6,823                  149
Revenue from clinics sold or closed in 2022                         199                  190
Revenue from clinics sold or closed in 2021                           -                  266
Net patient revenue from physical therapy operations            109,538     

99 254

Other revenue                                                       872                  546
Revenue from physical therapy operations                        110,410     

99,800

Management contract revenue                                       2,226                2,559
Industrial injury prevention services                            19,068               10,009
Total Revenue                                          $        131,704     $        112,368



Revenue from physical therapy operations increased $10.6 million, or 10.5%, to
$110.4 million for the 2022 First Quarter from $99.8 million for the 2021 First
Quarter. Net patient revenue related to clinics opened or acquired prior to 2021
and still in operation at March 31, 2022 ("Mature Clinics") increased $3.7
million, or 3.7%, to $102.3 million for the 2022 First Quarter compared to $98.6
million for the 2021 First Quarter.

The average net patient revenue per visit was $103.00 for the 2022 First Quarter
as compared to $104.72 for the 2021 First Quarter. Total patient visits
increased 12.2% to 1,063,519 for the 2022 First Quarter from 947,788 for the
2021 First Quarter. Net patient revenue is based on established billing rates
less allowances for patients covered by contractual programs and workers'
compensation. Net patient revenue is determined after contractual and other
adjustments relating to patient discounts from certain payors. Payments received
under contractual programs and workers' compensation are based on predetermined
rates and are generally less than the established billing rates.

Visits for Mature clinics (same store) for the first quarter of 2022 increased by 5.9%
compared to the first quarter of 2021.

Revenue from physical therapy management contracts decreased 13.0% to $2.2
million for the 2022 First Quarter as compared to $2.6 million for the 2021
First Quarter. Other miscellaneous revenue was $0.9 million for the 2022 First
Quarter and $0.5 million for the 2021 First Quarter.  Other miscellaneous
revenue includes a variety of services, including athletic trainers provided for
schools and athletic events.  Other miscellaneous revenue includes a variety of
services, including athletic trainers provided for schools and athletic events.

Revenue from the industrial injury prevention services business increased 90.5%
to $19.1 million for the 2022 First Quarter as compared to $10.0 million for the
2021 First Quarter. Excluding $6.8 million of revenue related to the industrial
injury prevention services acquisition in November 2021, industrial injury
prevention services revenue increased 22.4% in the 2022 First Quarter as
compared to the 2021 First Quarter.


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Operating cost

Total operating cost was $105.1 million for the 2022 First Quarter, or 79.8% of
total revenue, as compared to $86.5 million, or 77.0% of total revenue, for the
2021 First Quarter. Operating cost related to Mature Clinics increased by $4.8
million for the 2022 First Quarter compared to the 2021 First Quarter. On a per
visit basis, operating cost related to Mature Clinics increased 0.4% from $80.78
in the 2021 First Quarter to $81.08 in the 2022 First Quarter.  In addition,
operating cost related to the industrial injury prevention services business
increased by $7.6 million of which $5.6 million related to the recent industrial
injury prevention services acquisition in November 2021.  See table below for a
detail of operating cost (in thousands):

                                                                            

Three months completed

                                                                    March 31, 2022       March 31, 2021
Operating cost related to Mature Clinics                          $           81,034     $        76,221
Operating cost related to 2022 Clinic Additions                                  840                   -
Operating cost related to 2021 Clinic Additions                                6,209                 136
Operating cost related to clinics sold or closed in 2022                         286                 249
Operating cost related to clinics sold or closed in 2021                           -                 334
Operating cost related to physical therapy operations                         88,369              76,940
Operating cost related to management contracts                                 1,831               2,245
Operating cost related to industrial injury prevention services               14,916               7,287
Total operating cost                                              $          105,116     $        86,472


Each component of operating costs is described below:

Operating costs-salaries and related costs

Salaries and related costs, including physical therapy operations and the
industrial injury prevention services business, was 57.1% of net revenue for the
2022 First Quarter versus 56.8% for the 2021 First Quarter. Salaries and related
costs for the physical therapy operations was $62.4 million in the 2022 First
Quarter, or 56.6% of physical therapy operations revenue, as compared to $55.6
million in the 2021 First Quarter, or 55.7% of physical therapy operations
revenue. Included in salaries and related costs for the physical therapy
operations for the 2022 First Quarter was $3.7 million related to 2022 and 2021
Clinic Additions.  Adjusted for the salaries and related costs for clinics
closed or sold in 2022 and 2021, salaries and related costs related to Mature
Clinics increased by $3.4 million in the 2022 First Quarter compared to the 2021
First Quarter.  Salaries and related costs related to management contracts
decreased by $0.3 million for the 2022 First Quarter.

Salaries and costs related to the prevention of accidents at work
business was $11.1 million in the first quarter of 2022, i.e. 58.2% of the
revenue from injury prevention services, compared to $6.3 million in the 2021
first quarter, or 62.5% of the turnover from work accident prevention services.

Operating costs – rent, supplies, contract labor and others

Rent, supplies, contract labor and other costs, including physical therapy
operations and the industrial injury prevention services business, was 21.8% of
net revenue in the 2022 First Quarter versus 19.1% in the 2021 First Quarter.
Rent, supplies, contract labor and other costs for the physical therapy
operations was $24.6 million in the 2022  First Quarter, or 22.3% of physical
therapy operations revenue, as compared to $20.1 million in the 2021 First
Quarter, or 20.1% of physical therapy operations revenue. Included in rent,
supplies, contract labor and other costs related to physical therapy operations
for the 2022 First Quarter was $3.2 million related to 2022 and 2021 Clinic
Additions.  Adjusted for the rent, supplies, contract labor and other costs for
clinics related to the clinics closed or sold in 2022 and 2021 of $0.1 million
in the 2022 First Quarter and $0.3 million in the 2021 First Quarter, rent,
supplies, contract labor and other costs for Mature Clinics increased by $1.4
million in the 2022 First Quarter compared to the 2021 First Quarter.  Rent,
supplies, contract labor and other costs, related to management contracts
increased $0.1 million in the 2022 First Quarter.

Rent, supplies, contract labor and other costs for employment injury
the prevention services activity was $3.8 million in the first quarter of 2022, or
20.1% of revenue from work accident prevention services, compared to $1.0
million
in the first quarter of 2021, i.e. 10.3% of net prevention of workplace accidents
service revenue.

Provision for operating expenses for credit losses

Provision for credit losses as a percentage of net revenue was 1.0% at
first quarter of 2022 and 1.1% for the comparable period in 2021.

Our provision for credit losses for patient accounts receivable as a percentage
of total patient accounts receivable was 5.37% at March 31, 2022, as compared to
5.64% at December 31, 2021. Our days' sales outstanding was 34 days at March 31,
2022 and 32 days at December 31, 2021.

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Gross profit

Gross profit for the 2022 First Quarter, was $26.6 million, an increase of $0.7
million, or approximately 2.7%, as compared to $25.9 million for the 2021 First
Quarter. The gross profit percentage was 20.2% of total revenue for the 2022
First Quarter as compared to 23.0% for the 2021 First Quarter. The gross profit
percentage for physical therapy operations was 20.0% for the 2022 First Quarter
as compared to 22.9% for the 2021 First Quarter. The gross profit percentage on
management contracts was 17.7% for the 2022 First Quarter as compared to 12.3%
for the 2021 First Quarter.  The gross profit percentage for industrial injury
prevention services was 21.8% for the 2022 First Quarter as compared to 27.2%
for the 2021 First Quarter. The table below details the gross profit (in
thousands):

                                                 Three Months Ended
                                         March 31, 2022      March 31, 2021

Physical therapy operations             $         22,041     $        22,860
Management contracts                                 395                 314
Industrial injury prevention services              4,152               2,722
Gross profit                            $         26,588     $        25,896



Corporate Office Costs

Corporate office costs were $11.6 million for the 2022 First Quarter compared to
$10.9 million for the 2021 First Quarter. Corporate office costs were 8.8% of
total revenue for the 2022 First Quarter as compared to 9.7% for the 2021 First
Quarter.

Operating Income

Operating income for the 2022 First Quarter and 2021 First Quarter was $15.0
million. Operating income as a percentage of total revenue was 11.4% for the
2022 First Quarter as compared to 13.4% for the 2021 First Quarter.

Gain on revaluation of put-right liabilities

The gain on revaluation of put-right liability was $603,000.  As part of the
industrial injury prevention services business acquisition on November 30, 2021,
the Company also agreed to the potential future purchase of a separate company
under the same ownership that provides physical therapy and rehabilitation
services to hospitals and other ancillary providers in a distinct market area.
The owners have the right to put this transaction to us in approximately five
years, with such right having a $2.9 million value on March 31, 2022, as
reflected on the Company's consolidated balance sheet in Other long-term
liabilities. The value of this right will continue to be adjusted in future
periods, as appropriate.

Provision for income taxes

The provision for income tax has been $3.5 million for the first quarter of 2022 and
$2.9 million for the first quarter of 2021. The provision for income tax as a
percentage of profit before tax less net profit attributable to
non-controlling interest (effective tax rate) was 28.4% for the first
quarter and 26.5% for the first quarter of 2021.

See the table below detailing the calculation of the tax provision
percentage of profit before tax less net profit attributable to
non-controlling interest (in thousands of dollars):

Three months completed

                                                                March 31, 2022       March 31, 2021
Income before taxes                                            $          

15,480 $14,830

Less: net income attributable to non-controlling interests:
Reimbursable non-controlling interest – temporary equity

                    (2,557 )            (2,453 )
Non-controlling interest - permanent equity                                 (626 )            (1,260 )
                                                               $          

(3,183) ($3,713)

Income before taxes less net income attributable to
non-controlling interest                                       $          12,297     $        11,117

Provision for income taxes                                     $           3,498     $         2,944

Percentage                                                                  28.4 %              26.5 %


Net income attributable to non-controlling interest

Net income attributable to redeemable non-controlling interest (temporary
equity) was $2.6 million for the 2022 First Quarter and $2.5 million for the
2021 First Quarter.  Net income attributable to non-controlling interest
(permanent equity) was $0.6 million for the 2022 First Quarter and $1.3 million
for the 2021 First Quarter.

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CASH AND CAPITAL RESOURCES

We believe that our business has sufficient cash to allow us to meet our
short-term cash requirements. At March 31, 2022 and December 31, 2021, we had
$24.2 million and $28.6 million, respectively, in cash.  We believe that our
cash and cash equivalents and availability under our revolving credit facility
are sufficient to fund the working capital needs of our operating subsidiaries
through at least March 31, 2022.

Cash and cash equivalents decreased by $4.3 million from December 31, 2021 to
March 31, 2022.  During the 2022 Three Months, $11.6 million was provided by
operations and $35.0 million from proceeds on our Amended Credit Agreement
(described below). The major uses of cash for investing and financing activities
included: distributions to non-controlling interests inclusive of those
classified as redeemable non-controlling interest ($2.2 million), purchase of
business and non-controlling interest ($11.3 million), and purchase of fixed
assets ($3.0 million).

Effective December 5, 2013, we entered into an Amended and Restated Credit
Agreement with a commitment for a $125.0 million revolving credit facility. This
agreement was amended and/or restated in August 2015, January 2016, March 2017,
November 2017 and January 2021 (hereafter referred to as "Amended Credit
Agreement"). In November 2021, the Company exercised the accordion feature in
the Amended Credit Agreement to increase the limit on the facility from $125.0
million to $150.0 million, with an updated accordion feature providing for
additional capacity of $25.0 million, therefore increasing the availability up
to $175.0 million.

The Amended Credit Agreement is unsecured and has loan covenants, including
requirements that we comply with a consolidated fixed charge coverage ratio and
consolidated leverage ratio. Proceeds from the Amended Credit Agreement may be
used for working capital, acquisitions, purchases of our common stock, dividend
payments to  our common stockholders, capital expenditures and other corporate
purposes. The pricing grid is based on our consolidated leverage ratio with the
applicable spread over LIBOR ranging from 1.25% to 2.0% or the applicable spread
over the Base Rate ranging from 0.1% to 1%. Fees under the Amended Credit
Agreement include an unused commitment fee of 0.3% of the amount of funds
outstanding under the Amended Credit Agreement.

The 2021 amendment to the Amended Credit Agreement allows for cash and noncash
consideration for acquisitions permitted under the Amended Credit Agreement of
up to $50,000,000 for any fiscal year, and allows for payments in cash dividends
to shareholders in an aggregate amount not to exceed $50,000,000 in any fiscal
year.  The Amended Credit Agreement is unsecured and includes certain financial
covenants which include a consolidated fixed charge coverage ratio and a
consolidated leverage ratio, as defined in the agreement.

On March 31, 2022, $118.0 million was unpaid on the amended credit
Agreement leading to $32.0 million of availability. From March 31, 2022we
complied with all contractual clauses.

On March 31, 2022, we acquired a 70% interest in a six-clinic physical therapy
practice in South Central Pennsylvania - Madden and Gilbert Physical Therapy,
LLC. The practice's owners retained 30% of the equity interests. The purchase
price for the 70% equity interest was approximately $11.5 million. of which
$11.2 million was paid in cash and $0.3 million in the form of a note payable.
The note accrues interest at 3.5% per annum and the principal and interest are
payable on March 31, 2024.

On December 31, 2021, we acquired a 75% interest in a three-clinic physical
therapy practice with the practice founder retaining 25%. The purchase price for
the 75% interest was approximately $3.7 million, of which $3.5 million was paid
in cash and $0.2 million in the form of a note payable.  The note accrues
interest at 3.25% per annum and the principal and interest are payable on
December 31, 2023.

On November 30, 2021, we acquired an approximate 70% interest in a leading
provider of industrial injury prevention services. The previous owners retained
the remaining interest. The initial purchase price for the 70% equity interest,
not inclusive of the $2.0 million contingent payment in conjunction with the
acquisition if specified future operational objectives are met, was
approximately $63.2 million, of which $62.2 million was paid in cash, and $1.0
million is in the form of a note payable. The note accrues interest at 3.25% and
the principal and interest is payable on November 30, 2023. The business
generates approximately $27.0 million in annual revenue at a margin of
approximately 20%. As part of the transaction, we also agreed to the future
purchase of a separate company under the same ownership that provides physical
therapy and rehabilitation services to hospitals and other ancillary providers
in a distinct market area.  The current owners have the right to put this
transaction to us in approximately five years, with such right having an initial
$3.5 million fair value at December 31, 2021, as reflected on the Company's
consolidated balance sheet in Other long-term liabilities.  The value of this
right will be adjusted in future periods, as appropriate, with any change in
fair value reflected in the Company's consolidated statement of income.

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On September 30, 2021, the Company acquired a company that specializes in
return-to-work and ergonomic services, among other offerings. The business
generates more than $2.0 million in annual revenue. We acquired the company's
assets at a purchase price of approximately $3.3 million (which includes the
obligation to pay an amount up to $0.6 million in contingent payment
consideration in conjunction with the acquisition if specified future
operational objectives are met) and contributed those assets to industrial
injury prevention services subsidiary. The initial purchase price, not inclusive
of the $0.6 million contingent payment, was approximately $2.7 million, of which
$2.4 million was paid in cash, and $0.3 million is in the form of a note
payable. The note accrues interest at 3.25% per annum and the principal and
interest are payable on September 30, 2023.

On June 30, 2021, the Company acquired a 65% interest in an eight-clinic
physical therapy practice with the practice founder retaining 35%. The purchase
price was approximately $10.3 million, of which $9.0 million was paid in cash,
$1.0 million is payable based on the achievement of certain business criteria
and $0.3 million is in the form of a note payable. The note accrues interest at
3.25% per annum and the principal and interest are payable on June 30, 2023.
Additionally, the Company has an obligation to pay an additional amount up to
$0.8 million in contingent payment consideration in conjunction with the
acquisition if specified future operational objectives are met. The Company
recorded acquisition-date fair value of this contingent liability based on the
likelihood of the contingent earn-out payment. The earn-out payment will
subsequently be remeasured to fair value each reporting date.

On March 31, 2021, the Company acquired a 70% interest in a five-clinic physical
therapy practice with the practice founder retaining 30%.  When acquired, the
practice was developing a sixth clinic which has been completed. The purchase
price for the 70% interest was approximately $12.0 million, of which $11.7
million was paid in cash and $0.3 million in the form of a note payable.  The
note accrues interest at 3.25% per annum and the principal and interest are
payable on March 31, 2023.

On March 27, 2020, in response to the COVID-19 pandemic, the federal government
approved the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
The CARES Act provided waivers, reimbursement, grants and other funds to assist
health care providers during the COVID-19 pandemic, including $100.0 billion in
appropriations for the Public Health and Social Services Emergency Fund, also
referred to as the Provider Relief Fund, to be used for preventing, preparing,
and responding to the coronavirus, and for reimbursing eligible health care
providers for lost revenues and health care related expenses that are
attributable to COVID-19.

The CARES Act allowed for qualified healthcare providers to receive advanced
payments under the Medicare Accelerated and Advance Payment Program ("MAAPP
Funds") during the COVID-19 pandemic. Under this program, healthcare providers
could choose to receive advanced payments for future Medicare services provided.
The Company applied for and received approval from Centers for Medicare &
Medicaid Services ("CMS") in April 2020. The Company recorded the $14.1 million
in advance payments received as a liability. During the 2021 First Quarter, the
Company repaid the MAAPP Funds of $14.1 million rather than applying them to
future services performed.

Historically, we have generated sufficient cash from operations to fund our
development activities and to cover operational needs. We plan to continue
developing new clinics and making additional acquisitions. We have from time to
time purchased the non-controlling interests of limited partners in our Clinic
Partnerships. We may purchase additional non-controlling interests in the
future. Generally, any acquisition or purchase of non-controlling interests is
expected to be accomplished using a combination of cash and financing. Any large
acquisition would likely require financing.

We make reasonable and appropriate efforts to collect accounts receivable,
including applicable deductible and co-payment amounts, in a consistent manner
for all payor types. Claims are submitted to payors daily, weekly or monthly in
accordance with our policy or payor's requirements. When possible, we submit our
claims electronically. The collection process is time consuming and typically
involves the submission of claims to multiple payors whose payment of claims may
be dependent upon the payment of another payor. Claims under litigation and
vehicular incidents can take a year or longer to collect. Medicare and other
payor claims relating to new clinics awaiting payor credentialing approval
initially may be delayed for a relatively short transition period. When all
reasonable internal collection efforts have been exhausted, accounts are written
off prior to sending them to outside collection firms. With managed care,
commercial health plans and self-pay payor type receivables, the write-off
generally occurs after the accounts receivable has been outstanding for at least
120 days.

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We generally enter into various notes payable as a means of financing our
acquisitions. Our outstanding notes payable as of March 31, 2022 relate to
certain of the acquisitions of businesses and purchases of redeemable
non-controlling interest that occurred in 2018 through March 2022. Typically,
the notes are payable over two years plus any accrued and unpaid interest.
Interest accrues at various interest rates ranging from 3.25% to 5.5% per annum,
subject to adjustment. At March 31, 2022, the balance on these notes payable was
$4.9 million.  In addition, we assumed leases with remaining terms of 1 month to
6 years for the operating facilities.

In conjunction with the above-mentioned acquisitions, in the event that a
limited minority partner's employment ceases at any time after a specified date
that is typically between three and five years from the acquisition date, we
have agreed to certain contractual provisions which enable such minority
partners to exercise their right to trigger our repurchase of that partner's
non-controlling interest at a predetermined multiple of earnings before interest
and taxes.

From March 31, 2022we have accumulated $6.8 million related to credit balances
due to patients and payers. This amount should be paid in the next few
twelve months.

From September 2001 through December 31, 2008, our Board of Directors ("Board")
authorized us to purchase, in the open market or in privately negotiated
transactions, up to 2,250,000 shares of our common stock. In March 2009, the
Board authorized the repurchase of up to 10% or approximately 1,200,000 shares
of our common stock ("March 2009 Authorization"). Our Amended Credit Agreement
permits share repurchases of up to $15,000,000, subject to compliance with
covenants. We are required to retire shares purchased under the March 2009
Authorization.

There is no expiration date for the share repurchase program. As of March 31,
2022, there are currently an additional estimated 150,830 shares (based on the
closing price of $99.45 on March 31, 2022) that may be purchased from time to
time in the open market or private transactions depending on price, availability
and our cash position. We did not purchase any shares of our common stock during
the three months ended March 31, 2022.

FACTORS AFFECTING FUTURE RESULTS

Risks related to our business and operations include:

• the multiple effects of the impact of public health crises and
epidemics/pandemics, such as the novel strain of COVID-19 and its variants, for
which the total financial magnitude cannot be currently estimated;
• changes in Medicare rules and guidelines and reimbursement or failure of our
clinics to maintain their Medicare certification and/or enrollment status;
• revenue we receive from Medicare and Medicaid being subject to potential
retroactive reduction;
• changes in reimbursement rates or payment methods from third party payors
including government agencies, and changes in the deductibles and co-pays owed
by patients;
• compliance with federal and state laws and regulations relating to the privacy
of individually identifiable patient information, and associated fines and
penalties for failure to comply;
• competitive, economic or reimbursement conditions in our markets which may
require us to reorganize or close certain clinics and thereby incur losses
and/or closure costs including the possible write-down or write-off of goodwill
and other intangible assets; • the impact of COVID-19 related vaccination and/or
testing mandates at the federal, state and/or local level, which could have an
adverse impact on staffing, revenue, costs and the results of operations;
• changes as the result of government enacted national healthcare reform; •
business and regulatory conditions including federal and state regulations;
• governmental and other third party payor inspections, reviews, investigations
and audits, which may result in sanctions or reputational harm and increased
costs;
• revenue and earnings expectations;
• legal actions, which could subject us to increased operating costs and
uninsured liabilities;
• general economic conditions;
• availability and cost of qualified physical therapists;
• personnel productivity and retaining key personnel;

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• competitive environment in the industrial injury prevention services business,
which could result in the termination or nonrenewal of contractual service
arrangements and other adverse financial consequences for that service line;
• acquisitions, and the successful integration of the operations of the acquired
businesses; • impact on the business and cash reserves resulting from retirement
or resignation of key partners and resulting purchase of their non-controlling
interest (minority interests);
• maintaining our information technology systems with adequate safeguards to
protect against cyber-attacks;
• a security breach of our or our third party vendors' information technology
systems may subject us to potential legal action and reputational harm and may
result in a violation of the Health Insurance Portability and Accountability Act
of 1996 of the Health Information Technology for Economic and Clinical Health
Act;
• maintaining clients for which we perform management and other services, as a
breach or termination of those contractual arrangements by such clients could
cause operating results to be less than expected;
• maintaining adequate internal controls;
• maintaining necessary insurance coverage;
• availability, terms, and use of capital; and
• weather and other seasonal factors.

See also the risk factors in Item 1A of our Annual Report on Form 10-K for the year
finished December 31, 2021 and our current and subsequent periodic reports.

Forward-looking statements

We make statements in this report that are considered to be forward-looking
statements within the meaning given such term under Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
statements contain forward-looking information relating to the financial
condition, results of operations, plans, objectives, future performance and
business of our Company. These statements (often using words such as "believes",
"expects", "intends", "plans", "appear", "should" and similar words) involve
risks and uncertainties that could cause actual results to differ materially
from those we project. Included among such statements are those relating to
opening new clinics, availability of personnel and the reimbursement
environment.  The forward-looking statements are based on our current views and
assumptions and actual results could differ materially from those anticipated in
such forward-looking statements as a result of certain risks, uncertainties, and
factors, which include, but are not limited to the risks listed above.

Many factors are beyond our control. Given these uncertainties, you should not
place undue reliance on our forward-looking statements. Please see the other
sections of this report and our other periodic reports filed with the Securities
and Exchange Commission (the "SEC") for more information on these factors. Our
forward-looking statements represent our estimates and assumptions only as of
the date of this report. Except as required by law, we are under no obligation
to update any forward-looking statement, regardless of the reason the statement
may no longer be accurate.