U.S. Physical Therapy, Inc. (USPH) Q4 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the U.S. Physical Therapy Fourth Quarter and Year 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I'll now turn the call over to Chris Reading, Chief Executive Officer. Please go ahead, sir.

Thank you. Good morning everyone and welcome to U.S. Physical Therapy's fourth quarter and year ending 2014 earnings call. Looking forward and talking to you about the progress that we made this past year and looking into the future. Before we do that I would like to introduce everybody that's with me this morning, Larry McAfee, our Executive Vice President and Chief Financial Officer; Glenn McDowell, our Chief Operating Officer; Rick Binstein, Vice President and General Counsel; and John Bates, our Vice President and Controller. So before we begin I’d like John to cover a brief financial disclosure. John?

Thanks, Chris. This presentation contains forward-looking statements which involve certain risks and uncertainties. And these forward-looking statements are based on the company's current views and assumptions and the company's actual results can vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information.

Thanks, John. I'm going to do this a little bit differently than I've done in the past. I think I've done this one other time. Rather than to talk on script, I'm going to try to paint just a picture of where we’ve been over these past of couple of years focusing on 2014 certainly, but trying to cover the entire picture and then looking at 2015. So I like to begin just by giving thanks for our team this year, our partners, our Directors, our staff, our business office team, and a very dedicated group here in Houston, as well as around the country, who worked very hard to put together a great year. That the year that we had in 2014 which I'm just very pleased with exceptional year, really started in 2013, with putting together a group of acquisition that really gave us a significant boost this year. This year, we were able to produce visits per clinic per day that were higher this year than we’ve seen in quite some time that continued throughout the year and even well into the fourth quarter which is usually a seasonally softer part of the year for us. That strength and volume helped to produce a fourth quarter finish for net income attributable to common shareholders of 27.5% for the quarter and over 19% for the year. Referrals stayed really strong this year, as well. Glenn and the sales team and the sales leaders and the trainers, along with our partners, continue to focus throughout the year on our five-point sales plan. And that paid significant dividend and continues to pay dividend as we enter into the early part of 2015. Again looking back at 2013, if you look on paper that was a challenging year for us. We expected a good year and the government came out of the gate by the end of the first quarter and adjusted reimbursement and hit us with a sequester adjustment as well that affected not only 2013, but the beginning of 2014. In spite of that, foundationally, we were able to put together very strong development year, along with a long tenured partners, that prepared us well for 2014. Same store growth in 2014 very strong all year, in fact strongest it has been some time. Again, tribute to our partners and our Directors and our sales staff around the country being very, very focused. Deals that we did in 2013 propelled us forward in 2014. One of those, in particular, just want to mention our Group in Kansas City, our ARC team, an exceptional job for us this year, significant growth, forward growth, from the time that came on to the family in December of 2013 outstanding trajectory, lots of good things in the works there, and not just them, but all of our acquired partnerships. 2015 the development this year started out very strong. In fact we have as many organic projects that we have approved thus far, not that are opened yet, but that we had approved, as many as we did all last year. We started the year with a bang and with a great deal on our home state of Texas with a great group. It was named 2014 Private Practice of the year across the entire country. We were excited about them. And we’ve just -- we brought so many terrific people into the company over these many years now, in addition to our long legacy partners, who are still doing great work, but that gives us a great foundation for continued progress. Looking back again, 2013 briefly, I got a phone call from somebody who has become a great friend of mine, a guy by the name of Luke Drayer, runs another big company in our profession. Now it’s familiar with Luke, I have been for longtime; he and his team have done some great work along with their outreach work in Haiti. I become inspired by some of that work and got involved. We talked in 2013 about bringing together a group of what has become the nation's largest outpatient providers in the country. All of them have joined in Alliance that we refer to as the Alliance for Physical Therapy, Quality, and Innovation, APTQI, it’s a mouthful, but it’s got great people or very, very dedicated and very capable and who are working together to make it different collaboratively and collectively in our profession. I get really inspired by working with these bright, energetic, passionate folks. We have people on our team like that in all corners of the country. People like Matt Condon and Ray Goneau [ph] who want to change the world for the better for companies, industry, and injured workers, while advancing the role and the importance of information, physical therapy, prevention, creating vehicles to achieve great things for our industry, and for industry around the country. The Alliance another group of great people who become very, very cohesive to work together to do some great things. We have groups within our Alliance now representing over 10,000 physical therapist representing thousands of physical therapy facilities, including the physical therapy business Alliance, which represents alone themselves nearly 1,000 outpatient facilities. We have amassed the group of large and rapidly growing regional private practices around the country for members of our Alliance and for the purpose of moving forward on very important initiatives within our profession for the millions of patients we serve. Some of these things as we look forward will include payment reform, which is common and often talked about theme within healthcare in general. There will be other things that we work on and we'll discuss later on as our work continues to evolve. But that will become an important focus and continue to be an important focus for us. Looking at my notes. We’ve got a good year plan for 2015. This is going to be a strong development year for us and we started the year with a great acquisition, a lot of others to come, we have good organic development plan, we expect a rate environment this year to be again benign, Larry can talk to that in a little bit more detail and with some numbers. When I say benign, I don’t mean that it’s easy, it’s not easy by any stretch, but we have great group of people and great platform around the country. We’re able to do some things that sometimes they are more difficult for other smaller less well resource groups. We continue to attract very, very bright, capable, and talented people. We've got an excellent balance sheet that we expect to continue to lever to forward our growth and our internal initiatives and we have great things ahead. So with that, I would ask Larry, to go ahead and cover the financials in a little bit more detail before we open it up for your question.

Thanks, Chris. In the fourth quarter net revenue increased 15.7% to $79.4 million due to an increase in patient visits of 15.6%, and an increase in our average net revenue per visit of $0.32 to $105.79. Our clinic operating costs were 76.1% of revenue in the quarter as compared to 76.5% in the 2013 period. The gross margins for the fourth quarter increased by 17.4% to $18.9 million. The gross margin percentage increased to 23.9% from 23.5%. Corporate office costs as a percentage of revenue were 10.3% for the 2014 period and 9.9% in 2013. Operating income in the recent quarter increased by 14.8% to $10.8 million. After a reconciliation of our 2013 Federal and state tax returns to our book provision, we reduced our 2014 tax rate to 40% in the fourth quarter, and the 41% rate we had been previously accruing in the preceding nine months, and we reported an additional provision of $200,000 for 2013. Net income attributable to common shareholders for the three months ended December 2014, increased by 27.5% to $5 million. Diluted earnings per share were $0.41 versus $0.32. Same store visits increased 2.8% in the, quarter while same store revenues increased 2% as the average net rate per visit decreased by $0.81. Now I will talk about the year 2014. Net revenue increased 15.5% to $305.1 million due to increase in patient visits of 15.5%, $2,819,000 and an increase in average net revenue per visit to $106.08 as compared to $105.83 in 2013. Clinic operating costs for the year were $228.9 million or 75% of revenue as compared to $199.4 million or 75.5% in the preceding year. The dollar increase in costs included $10.2 million in operating costs of new clinics opened or acquired in 2014. Additionally of the remaining increase $18.5 million of that was from clinics added throughout 2013. Clinic salaries and related costs were 53.6% of revenue in 2014 versus 53.7% in the preceding year, with clinic supplies and other costs as a percentage of net revenue were 20.1% as compared to 20%. The provision for doubtful accounts as a percentage of revenue was 1.3% for the year in 2014 versus 1.7% in 2013. The gross margin for 2014 increased by 17.7% to $76.2 million. The gross margin percentage increased to 25% from 24.5%. Corporate office costs were 10% of revenue for 2014 versus 9.8% in 2013. Our operating income increased 18.1% to $45.8 million. Our provision for income taxes for the full-year was 40.6% in 2014 and 40.5% in 2013. Net income attributable to common shareholders for the year 2014 increased 19.2% to $20.9 million. Diluted earnings per share rose to $1.71 in 2014 versus $1.45 for 2013. As Chris mentioned our same store growth for the year was exceptional, same store visits increased 4.6%, and same store revenue increased 3.8% and the average net rate per visit decreased by $0.79. Noteworthy that in 2014 the company's adjusted EBITDA grew by 20.1% to $46.3 million as compared to $38,564,000 in the preceding year. See the company's 8-K filed this morning for details on that. As I noted in the release despite the increase in the company's dividend and opening and acquiring 35 clinics last year, we actually reduced our debt balance by $5.9 million or 14% at year-end. We also announced in today's press release that we are increasing the dividend. This quarterly dividend is being increased by 25% to $0.15 a quarter from $0.12. The first quarterly dividend of 2015 will be paid on April 3 to shareholders of record as of March 20. Although the company's new patient referrals thus far in 2015 has been good. This year’s severe winter weather has hurt us and we can speak more about that. But in January and February, we lost an estimated 16,000 patient visits due to the weather and that cost us probably $0.05 or $0.07 per share. After factoring that in, management currently expects the company's earnings from continuing operations for the year of 2015 to be in the range of $22.3 million to $22.9 million in net income, and $1.80 to $1.86 in diluted earnings per share. Please note that this guidance range represents projected earnings from existing operations only and excludes further acquisitions.

Thanks, Larry. I'm going to make one more comment before we open it up for questions. One of the things that I failed to mention was we had such a great development year in 2013 which really set us up well on 2014. One of the things that we had worked on in 2013 which we didn’t do a great job with but which we corrected in 2014, was just our staffing efficiency. 2014 our payroll group, worked with our IT group, worked with our operations group, we came up with some -- a much better real-time look at a variable payroll cost, particularly as it related to a part time employees, and so we are able to get that down in, in 2014 and it made a very, very strong difference for us. We do have some seasonal elements, as Larry mentioned, where us and the rest of the country getting heard so for this year by significant and prolonged winter weather, particularly in some of our really big markets, but uniformly across the country. And so with these new optics that were deployed in 2014, we were able to much more closely and on a real-time basis, adjust staffing. Our partners have gotten better at that, and much more responsive. They have now tools to use on a real-time basis and I think that will continue to be an important for us, as we look forward. So with that, Operator, I would like to go ahead and open it up for any questions or comments the group might have.

[Operator Instructions]. Your first question comes from the line of Larry Solow of CJS Securities.

Hi, Larry.

Hi, good morning guys. Congratulations, great, great volume numbers. Chris, I don’t know if you can share any more sort to detail you talked about the stock point sales program and some of your new development projects. Anything in particular you can share with us that really drove this growth, I’m sure well above whatever industry stats I’ve seen and maybe how Fit to Work is also contributing to that?

Yes, I don’t know how much think detail I want to go into. This is kind of hopefully --

Absolutely, a competitive.

Earnings process that we’re going to continue to deploy. So I’ll just say that we do have a great group of partners. We also have built over the year great sales and great sales training team that have worked very effectively with our partners and new acquisitions have adopted and an increase for the most part their sales efforts and initiatives, above and beyond what they have when we acquired them. The work and our focus on the industrial side of the business continues to pay dividends there and we’re continuing to dial that in. As we work around the country, we were able to see groups like our ARC Group and in Kansas City approach the market may be a little bit differently and be very, very effective with that. So as we have our prior acquisitions, we learned from other good people that come into the company and we adjusted and adapted accordingly. So I’ll just tell you that the big focus on continuing that progress. We’re closed the book on 2014. We’re focused forward and we’re hungry and we’re going to continue to work at all those things that helped us to be successful thus far.

And if I do the math, it looks like you opened and closed about 20 clinics or so. These closures is that -- do you expect that to continue? And I assume those are mostly smaller or somewhat underperforming-type clinics, just upping your efficiency?

Yes, I do expect the closures to continue. I mean, when we got here when Larry and I and Glenn got here, I don’t think we ever closed the facility in the company, and we kept things open and it made no sense to keep open. The closures that we have right now we say underperforming for the most part, they’ve lost money now for a period of time and despite significant efforts and they’re usually single sites, they just don’t make sense. So in many respects closing of the facility provide us with a little relief, it certainly provides us with the ability to focus on our facilities where we feel like there is opportunity going forward. And it’s a paring and culling process in the markets that isn’t an easy market. And so our resources get devoted to our partnerships which are highly capable and in some cases it's just a pairing of the branches in order to allow us to continue to be strong.

Yes, and I get this question a lot where people throughout how many clinics we opened versus how many we closed as if they are apples-to-apples they’re not. A number of the clinics that we closed are from acquisitions, it’s not unusual for us to do a deal, and you’ll look, you’ll see six out of eight clinics are generating all the profits. So you try to -- you spend some time trying to turn the other two around and if they don’t at some point you close them.

Right. And just lastly, in terms of your guidance -- ballpark, I assume you are not incorporating quite the same robust same store volume growth as you had this year. Is it -- are you assuming a little bit of a slowdown in that?

Well, it wasn’t for the weather; our guidance range would have overlapped with consensus estimates. So I mean -- and again it doesn’t include future acquisitions, which now three of the six analysts include acquisitions we have yet to announce in your earnings numbers. So I mean that's a pretty good growth rate when you exclude additional acquisitions.

Right. Got it. Great.

Bad weather continues into March. We updated this through last Friday which was the end of February but and normally you think okay, so March the bad weather is over, but Tennessee is getting hammered today, we’ve got 70 clinics there, and Texas was bad yesterday and there is some markets still feeling the grunt of the weather.

Having said that we have incorporated that information into our numbers and we feel good about where we are heading.

Great. Thanks. Appreciate it. And congratulations again.

Thanks, Larry.

Your next question comes from the line of Brian Tanquilut of Jefferies.

Hey, Brian.

Hey, good morning guys. Congratulations. Chris, I just want to follow-up on that last comment you made about staffing. As we look at the volume performance you had in Q4, it was very, very strong, and yet we saw the gross margin essentially flatten out to the corporate average. So is that kind of how we should be thinking about margins and how the flow through of volume will be going forward?

I think actually gross margin was up about 50 basis points.

Yes, gross margin was up for the year.

In the fourth quarter and up for the year. So --

It was up 50 basis points for the year.

Yes, less than half. I think we moved round a little bit quarter-to-quarter. We had some of our volume growth quite honestly, and this is a no attempt to hide, a big part of our volume growth has come from acquired clinics. Some of these acquired clinics have different staffing overlays than we might in other places, and sometimes those change, sometimes that happens slowly. And so that number moves around a little bit, but I'm pretty confident that our margins are steady, at minimum. At the same time, we expect kind of a neutral to may be slightly positive net rate year. And so I think in combination of that, we are not steady state. We are bringing in facilities that have different margin levels and different staffing cost levels, we could cooperate it that into and we price these deals and -- so that it's going to move around a little bit. But I think over time it’s been pretty good.

Got it. I appreciate that. And then you mentioned net rate. How should we think about that? In Q4, it was down on a per-business basis slightly. Is there anything different about Q4, and what drives 2015?

I expect -- I wouldn’t just, again focus on Q4. I'd look at it over the period. I expect we are in kind of a, again a neutral rate environment. CMS has increased their pricing about 1% this year. We continue to focus on our work-related initiatives, which have a little bit better reimbursement. So I can't say exactly. But I expect that we'll have just kind of a steady year this year.

Okay. And then, Larry, corporate overhead -- it was up sequentially on a dollar basis. I am guessing that is just acquisition-related expenses, or is there anything that you want to call out on corporate overhead, and how should we think about that going forward?

Well, there is two things. One we increased our corporate staffing and created another region and Glenn can speak to that. And then honestly, we had a really good year in incentive comp was higher.

Got it. Okay. Last question for me, Chris, we saw two of the larger players in the space get together. So as you think about the development pipeline, is competition heating up more from a strategic -- from the strategic acquirers rather than the historical private equity guys trying to beat you on deals here, and going after deals and paying up? I mean, is there going to be more competition for the kinds of deals that you used to source yourselves?

Well, I understand. So the deal that you spoke about, the two groups in Chicago, one of whom was what you would call private, the other was private equity-backed, essentially. And so there has been private equity-backed groups in our space for quite some time, they have been successful certainly. And there’s been competition on deals for some time and we still saw some other deals or so. And at the same time, we find ourselves engaged in discussions where there are multiple people -- multiple people at the table. And so I think we've done pretty well in those roles. We're different, our doctor is different, our model is a little bit different. And so what is the fit for us won't necessarily be a fit for everyone, and vice versa. We’re going to continue to be selective and we expect to continue to have success.

Got it. Congratulations again and good luck.

Thank you.

Your next question comes from the line of Brooks O'Neil of Dougherty & Company.

Well, good morning guys and congratulations on another great year. I was hoping, Chris -- I know you don't like to talk about this, but you specifically kind of mentioned continuing to be quite active in terms of deals. Can you just talk a little bit about what you are seeing out there in the pipeline? Is it kind of more of the same? Are there some bigger deals? Sort of how are you looking at it right now?

The same is I have for a while.

Come on.

You're not going to get me to the pipeline thing. We'll get -- we will have a good year this year. We started out already. We've got a number of things we're working on, but I'm not going to paint myself in a corner on deals. So you just got to be patient and you'll see.

Great. All right. So perhaps you could talk a little bit more about recent deals that you have done, and kind of how they've performed or how they contribute, so we could just kind of get a picture for sort of what you are looking for, and then how they tend to perform after you bring them on?

Yes. We’ve been really blessed. I mean, we’ve got some great people did five deals in 2013. And they range in size, I think the smallest in that year was about three quarters of $1 million in EBITDA and the largest was close to $5 million deal being kind of an exception in our industry. So I think we see a lot more in the $1 million to $2 million range certainly. And so I think those kind of deals will continue. I think it's environment where literally just about everybody that's been in business for a decade or more, which means a lot of successful private practice owners are beginning to think about whether if and when is the right time, and I think there are more and more people that think sooner as opposed to later is probably the right time. And not necessarily the right time to sell out, but the right time to make sure that they have a robust partner to continue to help them execute on their growth strategy, and at the same time, potentially maintain the beneficial aspects of their culture. And so again our profession as a country and as an industry hasn't changed. We are made up of a lot of small regional practices. But I think you'll see -- and it started the consolidation of our business and that will take some time and you will continue to see us active in that process.

So just to follow up a little bit, and I appreciate all that color. When you bring in a $1 million, $2 million EBITDA practice, you would expect to see that EBITDA grow year one, year two, kind of how do you look at it?

Yes, we do. We expect it to grow. I can't think of too many deals we did, where we just expected it to be in steady state. And so we do expect it to grow forward and so we have resources like marketing resources. We look at adding clinical programs. We provide resources to do those things. We invest in those partners, in those partnerships, so that they can continue to do the good work that they've already started. We open new clinics with them in markets they think will be beneficial. And we've done all those things with the partner. So we've added. We tuck-in deals now. Rick, sitting here across from me, and he and the operations team work collaboratively with our partners to bring in small tuck-in practices, which by the way we don't announce and we don't talk about, because they've really done very, very cheaply and efficiently and tuck-up under an existing brand, and serve as another way to further grow the base of the brand. So we expect to do all those things when we do a deal.

Great. Just a couple other quick questions: I’m guessing, and I think Larry may be touched on this a little bit -- the Fit to Work program. But what’s the workers' comp environment like out there in the marketplace right now?

The comp environment is mixed, it's not uniform. So the areas where we're focused, the environment is very strong and then there are other areas on the extremes of the coast, and certain states, where the comp environment isn't that strong. In states like Colorado, which is a beautiful place but reimbursement is not great. California would fit that mold as well. There are also groups in the middle of the comp environment networks, which take a hunk out of the middle. And networks we sometimes participate in and we sometimes select not to participate in and we’re having to look at that and be creative and strategic in how we deal with that. And so -- but it is an area where we continue to see opportunity, it's an area where we think we can make a difference for companies. It's an area where we expect to continue to invest resources into to further growth.

Cool. Larry, I was hoping you might take a second just to describe exactly what happens when the weather is bad in some of your markets. Could we expect to see some of those patient visits show back up when the weather clears up, or are they pretty much gone permanently?

This is Glenn. I mean typically clinics will try and expand hours or open up on Saturday, or open up later. And on normally would, to try and recapture as many of those patient visits as they can. Some will be able be to capture, some will permanently lose. It really just depends. But most of our clinics and partnerships really try and do all they can to try and capture as many of those visits back as they are able.

It depends on where people are in the course of their care. If there is a last couple of visits and they get disrupted for a week or so, and they missed work, sometimes again we get those back but sometimes we don't. Certainly, it creates a delay at minimum and sometimes its permanent, sometimes it isn't. Larry?

Yes. Both investors and analysts have asked me repeatedly well does that create a backlog. And as Chris and Glenn described yes and no, we hopefully capture some of them but like the State of Tennessee was especially closed down for a week, something was scheduled to come in three times. You're not going to get him to come and replace all those three visits. You might capture one or two of them. So we're back to that end when we talked about lost visits and how much this costs on an EPS. We have had almost 300 clinics across the country affected by weather.

Did you mention the number of visits?

Yes, 16,000 visits, but weren't going to get those 16,000 visits back.

Yes, not back.

Okay, last question for me, and I appreciate all the color. Have you got any comment about sort of the leverage ratio you are comfortable with? Obviously, you did fantastically bringing down the debt last year, despite continuing to develop and pay dividends and all that other stuff. But what are you thinking about, maybe for 2015, in terms of overall leverage ratio you would be comfortable with?

Well, we’ve said before that we would be comfortable having debt to EBITDA ratio over two. Right now we are well less than one. So that's one of the reasons we increased the dividend by the amount we did. And our intent last year was not to reduce debt; it just turns on our cash flow, this is a high quality problem its better than we expected. But we think we'll do more deals this year obviously, as Chris as alluded to, the leverage should go up this year and I don’t think it will get anywhere near 2 to 1. But when you look for a business that is not capital-sensitive, so we’re in a unique business that can grow internally or externally, pay dividends, even do share buybacks, and not have to worry about leverage at this point.

Well, you guys are doing a fantastic job. Keep it up.

Thanks, Brooks.

Your next question comes from the line of Mitra Ramgopal of Sidoti.

Yes, hi, good morning. First, Larry, could you remind us what the payer mix was in the fourth quarter? And should we expect any changes as we look out to 2015?

Fourth quarter managed care private pay was 52.5%, workers comp was 18.4%, Medicare and Medicaid combined was 23.2%, and other was 6%.

Okay. And do you see the Medicare and Medicaid business coming back a little, or pretty much holding where it is at?

Medicare now, I'm looking at the individual quarters it runs about 21% or little lower every quarter. And in Medicaid these things we take it runs about 2%.

Okay. Thanks. And then, I just wonder if you could give us a sense, in terms of the overall market, as you look to recruit therapists, in terms of the supply/demand, if you are finding you have to pay out for things, or is this pretty stable?

The therapy market for the most part has, is slightly looser than it has been. We’ve done a very good job in filling positions where we needed to in most areas. There are certain parts of the country where it’s still very competitive or little more difficult to fill positions. But last year we had a very good year in filling spots that we needed to and our recruiters continue to do a very good job.

Our VP and Administration and our recruiters, staff recruiters, measure average days open for different types of positions where there is clinician business office et cetera and our average days -- times last year before the average days open were the lowest they have ever been.

Okay, thanks. And, then finally, just trying to understand a little -- overall, the net revenue per visit was up, but when you look at same store, that’s down a little. What would sort of account for that variance?

You can have regional differences because obviously same store is a subgroup.

Okay.

And I think I think some of it goes to acquired facilities and kind of impacts our overall rate and some are long-lived facilities, which as Rick -- as Larry mentioned, may be in different parts of the country. And so obviously it makes us all together, it give us an aggregate that begin to stay we think we’re in a pretty neutral period right now for this year.

I mean with nature -- we've had -- we've been depending on the timing of acquisitions. We’ve had times where the same store net rate was higher than the average net rate because we did a large acquisition, who, at the time we bought had an average run rate less than our average. If flips back and forth.

Okay. Now that's very helpful. Thanks again.

[Operator Instructions]. Your next question comes from the Dana Hambly of Stephens.

Thanks good morning. Just a question, Chris, I think you have touched on the benign reimbursement environment, but we are coming up on the annual doc fix. I am just curious if you are hearing anything on pay-fors -- if you feel your industry is safe?

Not hearing anything on pay-fors, don't expect to come up with a pay-for, we don’t expect them to do anything but kick the can down the road a little bit longer, I don’t think that we’re in some kind of a bad position. I think our lawmakers at sometimes frustratingly ineffective as they seem to be understand that they can't get the primary care industry, they can’t get the rehabilitation industry, and at the same time I don’t think they know how to fix this piece of legislation which occurred many years ago and which has effectively not been addressed in I don’t know, for long, long period of time and I don’t expect to be addressed this year either.

Okay. All right. Just on the salaries and related costs -- it can bounce around quarter-to-quarter -- but at 54.9% for the quarter was one of the higher ones we have seen in quite some time. So just, I wonder if that is -- there were a couple of acquisitions midyear, if that is contributing to it, or it's nothing to pinpoint there.

It’s a seasonally slower quarter.

Yes.

Like you would expect the first quarter, salaries and related cost to be higher than it would be normally in the second and third.

But acquisitions do move that number around a little bit from time-to-time. And so again I think, we’re in from a margin standpoint; I think we’re probably in a good place and pretty steady place. That said we’re up a little bit of last year and we'll see how this year goes and certainly focused on controlling our cost, and doing what we need to do to further expand the business, including covering our corporate overhead, and those other things. So but all in all pretty steady period I think for us.

And in those salaries are the largest cost, obviously the clinic level there are other costs. And if you look at total, our gross margin increase both in the quarter and for the year.

Yes. Okay. And then, on the cash flow, Larry -- not complaining, cash flow is great. On cash from ops I think about $45 million that was basically flat year-over-year. I’m just curious if there is something that spilled into 2015, or something that was in 2013 that was unusual? I’m just trying to think about the cash flow growth for 2015?

I mean, again, if you look at our 8-K today which I think actually is a better measure of cash flow and it increased by 20%. We did bring down the average age of the receivables in the preceding year. Those have pretty much stabilized at around 40 days. So you didn’t see any impact from brining down receivables.

Okay, fair enough. Did you have -- Larry, do you have the visits per day per clinic for the quarter?

I have it by month, not by quarter, I didn’t run that but we averaged in each of the month over 23 visits per day per clinic, which again, when you think about December, where you have really very slow weeks that was exceptional. Again we’ve never had average visits per day that high, where anyone feel that high in the month of December before. So for the year I think we averaged 22.9 this is off the top of my head but I'm pretty sure that's correct. And in the fourth quarter with actually higher than that.

Okay. So every single month was over 23 in the quarter.

Yes.

Okay. Great. Thanks very much.

Thank you.

[Operator Instructions]. At this time, there are no further questions. Mr. Reading, are there any closing remarks?

Okay everybody listen thank you so much for your time. Larry and I are available if you have any follow-up questions. We appreciate your time and attention. And we'll talk to you soon. Thanks. Thank you. Bye, now.

Thank you for participating in the U.S. Physical Therapy fourth quarter and year 2014 earnings conference call. You may now disconnect.