Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ATI Physical Therapy Inc (ATIP, Financial) reported a year-over-year increase in net revenue for Q1 2024, highlighting strong financial performance.
- The company saw a significant increase in patient visits, with approximately 1,100 more visits each day compared to the previous year, demonstrating growth in service demand.
- ATI Physical Therapy Inc (ATIP) achieved a higher rate per visit in Q1 2024, which was up by 4.5% year-over-year, indicating effective pricing strategies and operational improvements.
- Employee retention has improved, with a notable decrease in clinician turnover rate to 16%, reflecting successful people strategies and a positive work environment.
- The company provided positive Q2 2024 financial guidance, expecting continued revenue growth and an increase in adjusted EBITDA, which suggests confidence in ongoing business performance.
Negative Points
- ATI Physical Therapy Inc (ATIP) faces ongoing challenges with Medicare fee schedule cuts, which could impact profitability and operational funding.
- Despite overall revenue growth, the company experienced increased labor costs, which rose by 9.5% year-over-year, potentially squeezing profit margins if not managed effectively.
- The company reported an operating loss of $4 million in Q1 2024, although this was an improvement from the previous year, it still indicates challenges in achieving operational profitability.
- ATI Physical Therapy Inc (ATIP) noted a productivity rate below expectations due to one-time factors, suggesting potential inefficiencies that could affect future performance if not addressed.
- The company is still navigating a tight labor market, which could impact its ability to scale operations and meet growing demand efficiently.
Q & A Highlights
Q: Hey, good afternoon. Any share and yes, just curious on your thoughts on the sustainability or your ability to squeeze more rate growth because obviously pretty strong performance in the quarter and a big driver of the revenue growth for Q1. So just curious how you're viewing that as we think about that?
A: Sharon Vitti, CEO of ATI Physical Therapy, responded that while they have made good progress on rate growth year over year, the predictability of future rate increases is less certain. They will continue to pursue revenue growth with payers, but the outcomes are harder to predict. Chris Cox, COO, added that they are assuming relatively consistent rates internally but expect improvements in bad debt throughout the year, which is related to revenue.
Q: And then maybe my second question, you called this out in your prepared remarks, right? The productivity rate was probably a tad below where it was then it seems some pressure on labor rates there, just a little bit. Just curious how you're thinking about or how we should be thinking about labor costs and productivity.
A: Sharon Vitti explained that some one-time factors reduced productivity, which they have addressed, and she anticipates improvements in productivity moving forward. Regarding labor rates, she noted the market is tight with many headwinds, and they are exploring various levers to manage recruiting successfully. Chris Cox mentioned that inflation impacts are around 5%, and productivity improvements could alleviate some pressure on labor rates per visit.
Q: Got it. And Sharon, congrats on the two year mark, by the way. Thank you.
A: Sharon Vitti, CEO, thanked the participant.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
