ATI Physical Therapy (ATIP) Stock: Why The Price Surged

By Amit Chowdhry ● Nov 10, 2021
  • The stock price of ATI Physical Therapy Inc (NYSE: ATIP) increased 32.32% today. This is why it happened.

The stock price of ATI Physical Therapy Inc (NYSE: ATIP) – the largest single-branded outpatient physical therapy provider in the United States – increased 32.32% today. Investors are responding positively to the company’s Q3 2021 results.

Q3 2021 Results

— Cash and cash equivalents totaled $66.1 million, and the revolving credit facility was undrawn with available capacity of $68.8 million, net of usage by letters of credit, equaling $134.9 million in available liquidity.

— The revolving credit facility has a springing financial covenant. And when the facility is greater than 30% drawn at quarter-end, the credit agreement leverage ratio may not exceed 6.25x. With cash and cash equivalents of $66.1 million and considering revolver capacity before springing the financial covenant, this equals $87.1 million in minimum liquidity.

— The credit agreement leverage ratio for the third quarter of 2021 was approximately 4.1x.

— Other notable achievements and/or news in the third quarter of 2021 were as follows:

— Opened 18 new clinics in existing states, including Arizona, Georgia, Texas and Oregon; and closed 7 clinics primarily in Illinois. And this brings the total number of new clinics for the year to 38. The company continues to capitalize on growth opportunities in individual markets, while optimizing its footprint and financial return in other local markets. 

— Net Promotor Score (NPS) of 73 and Google Star Rating of 4.9, reflecting continuing high customer satisfaction and brand loyalty.

— Providers in every ATI clinic across our geographic footprint reported data under the Medicare Merit-Based Incentive Payment System (MIPS) for performance year 2020. And in the third quarter of 2021, CMS advised that ATI received a score in the 100th percentile across the board and will be receiving the highest possible bonus adjustment to the 2022 Medicare Physician Fee Schedule for 2022 Medicare reimbursed services. CMS is currently completing its calculations and is expected to report final MIPS 2022 adjustments for each applicable provider later this year.

2021 Earnings Guidance

— As stated in the company’s third quarter 2021 earnings preview announcement on October 19, 2021, ATI is projecting revenue to be in a range of $620 million to $630 million and Adjusted EBITDA to be in a range of $40 million to $44 million. ATI expects to open 55 to 65 new clinics in 2021.

KEY QUOTES:

“In October, we previewed select third quarter results and revised 2021 guidance. During the quarter, we implemented targeted measures to re-engage our clinical team and saw improved existing therapist retention and acceleration of new hire adds with clinical FTE increasing from 2,321 in July 2021 to 2,412 in September 2021. Through it all, our nationwide team remained focused on our mission to deliver high quality care and service to our customers as reflected in our Net Promotor Score of 73 and Google Star Rating of 4.9 for the quarter.”

“As previously reported, volume demand was essentially flat in the third quarter of 2021 compared to the second quarter when considering normal seasonality. Our commercial team is focused on driving visits growth through strengthening relationships with our partner providers and other referral sources in each local market across our geographic footprint. I am excited about the progress made with our clinical staff and the platform that ATI has built, and we believe we are well positioned to capitalize on favorable industry tailwinds and long-term growth opportunities. While we work to restore volume, we are committed to disclosing expanded performance metrics to enable our stakeholders to better understand our value proposition and clearly track our progression.”

— Jack Larsen, Executive Chairman of ATI Physical Therapy

“We remain well capitalized with $135 million of available liquidity as of September 30, 2021 comprised of $66 million in cash on hand and $69 million of availability on our revolver, and we believe this positions us to weather the near-term challenges. The leverage ratio under our credit agreement for the third quarter of 2021 was approximately 4.1x.”

— Joe Jordan, Chief Financial Officer of ATI Physical Therapy

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.