US Physical Therapy Inc (USPH) 2008 Q4 法說會逐字稿

Good morning. My name is Lori and I'll be your conference operator. I would like to welcome everyone to the US Physical Therapy fourth quarter and year 2008 earnings release conference call. (Operator Instructions) I will now turn the call over to Chris Reading, Chief Executive Officer. Please go ahead, Sir.

Good morning, everyone. This is Chris Reading, President and CEO. of US Physical Therapy. I would like to welcome you this morning to our fourth quarter and year end earnings release call. With me here in Houston I have Larry McAfee, our Executive Vice President and Chief Financial Officer, Glenn McDowell, Chief Operating Officer, and Jon Bates, our Vice President and Controller. Before we begin today, I'd like to ask Jon to cover our brief disclosure. Jon? We are going to do the disclosure here momentarily. Before I ask Larry to cover the financials in detail I'd like to spend a few minutes talking about where we have come for the year. I'll discuss the most recent quarter and then we will look ahead to what we see for our company in 2009.

First for the year. 2009, despite the difficulties faced in the second half of the year by many companies, 2009 was a very good year for us. In fact, a record year. Let me share with you some of the highlights. Our volume grew by 20% this year. Fueled through most of the year by strong same-store growth. Our revenues grew 23.7%, a little over $36 million. But that revenue growth was assisted by very solid net rate per visit improvement to over $98 a visit.

Another driving factor in our growth came through our development focus. For the year, we added a very nice compliment of facilities completing four acquisitions which have performed very well for us. Additionally and importantly, our De Nova program brought an additional 16 facilities to our growing network of partner-based facilities. Earlier this week in a board meeting, we discussed and reviewed the performance of all of our deals to date. Typical of our selection process where we look to find supremely high quality practices with great strands of care coupled with an ownership group possessing integrity, a passion for our business and continued drive for growth and continued success. Typically, a group who believes not only on what they have built but in the partnership that we are looking to create, enough for them to retain a significant ownership position in the business. Because of these factors, we have done very well with our acquired clinics. While paying competitive market rates our growth in these facilities has produced aggregate and aggregate purchase prices of about 4.7 times. On the De Novo, side of our development program, we have been very focused and deliberate staying away from small markets and going forward with only our strongest of partners. In the past two quarters, the activity generated by our partner recruiting team has surfaced some very high quality partners. And we expect to have a good year with respect to our De Novo openings.

Shifting gears a bit, our companies continue to throw off a great deal of cash. Even after acquiring four very nice-sized acquisitions investing in new equipment technology that has assisted us in achieving our solid net rate improvement in an otherwise flat pricing environment, we closed the year, we finished the year with a net of less than $4 million. We have a very clean balance sheet and we have worked very hard to use our cash and our capital to invest in the company in ways that will increase our cash flow. For the year EBITDA grew 20% at a time when many companies in our sector suffered significant decline.

For the year, we grew same store revenues by almost 5% and that revenue -- that same-store growth occurred through visits as well as net rate per visit expansion. In the fourth quarter, we felt a late quarter tightening in our same-store growth with the first reported quarterly decline in same-store of 1.6%. Part of that came from an early winter storm that affected much of our central region and impacted us by approximately 1,900 visits or a little bit more than a penny in earnings for the quarter. Part of that decline came in the form of a modest blunting of referrals secondary, I think, to the economy, and also to the extent that we were in the midst of the holiday season and people were having to make hard choices in terms of how to spend their money.

As a part of our (inaudible), we made the decision to accelerate the closing of a few more facilities in the quarter which impacted us negatively by more than a penny in EPS. While these are difficult decisions, we felt like we have positioned the company well to not only make it through this difficult time but to take advantage of some of the opportunities that we believe will be created as a result. We feel that in the next year or so, we can continue to grow our network of facilities, our EPS, expand our cash flow, all while maintaining an excellent balance sheet. We have guided this growth in our release this morning in a range of $0.84 to $0.90 in EPS, excluding acquisitions and share repurchase. While this is a reduction from prior consensus estimates, we now feel that the economy will certainly have some impact on our business which has an element of discretionary behavior attached to it. With that said, we think there is an opportunity as well. We have a strong vibrant network of quality partner providers, who with them we have been working closely to move market share from our competition.

Many of these competitors are caught up in the difficulties surrounding the current economic uncertainties and with our strong cash and balance position, we believe that we can focus in and move market share. We continue to invest in new tools, technology and service offerings at a time when many of our competitors are looking to trim their sales and hunker down. We have expanded our sales team by adding more part-time salespeople all of whom are very focused on moving market share. I would add that given the general state of employment in the economy, we are finding some supremely capable salespeople who are hungry to work and join a company with the stability and growth opportunities that we have. We are in the middle of rolling out a direct to consumer marketing and sales focused program around several of our key niche clinical programs. This marketing tool kit which includes all of the resources necessary for any of our partners to advertise for and host these community-based seminars have been very well received by our partners. We began this initiative with our Osteo Arthritis Centers of America program and it has been very successful and we expect to roll it out across the company.

In closing let me, say that we continue to expect good things from our team relative to our overall performance in spite of these very challenging economic times. I think we are well positioned to come through this period in very strong fashion to continue to grow using the strength of our balance sheet, to grow organically as well as through acquisitions at a time when many providers will not make it through this difficult market cycle. Our team is as energized and excite the to move the ball as I have seen them since we arrived now a little more than five years ago. Our team is stronger than we have ever been and we will work to deliver solid performance in this upcoming period. With that I'd like to turn it over to Larry to review in more detail specifics of our financial performance for the year as well as the quarter. Larry?

How about, Jon, before we proceed why don't you go ahead and read the disclaimer?

Sure, Thanks Larry. This presentations contains forward looking statements, which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views an 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.

Thank you, Jon. I will go over our 2008 annual results as well as for the fourth quarter. For the year 2008, net revenue increased 24% to $188 million due to a 20% increase in patient visits and increase in our average net rate per visit of just under 2% to $98.05. Total clinic operating costs from continuing operations were 76.5% of net revenues, compared 75.4% in the year earlier quarter. Clinic salaries and related costs were 53.7% versus 53.5% . Rent, clinic supplies, contract labor and other costs were 21.5% as compared to 21.2%.

Our provision for doubtful counts was slightly higher in the fourth quarter running up 1.8%. In 2008 fourth quarter includes the closure costs of $284,000 related to ten clinics we closed. And I'll talk about that some more in a minute.

Corporate office costs were 10.6% of revenue in the recent quarter. Our net income was $2.2 million as compared to $2,486,000 a year earlier. EPS was 19% versus 21%. Same store revenues decreased 1.6%. The visits to client 1.9% while the revenue increased slightly.

As further described in the press released, during the fourth quarter 2008, in light of the recession and in conjunction with our annual budget process we made the decision to be more aggressive about cutting costs and closing marginal clinics. Ten clinics were closed during the quarter. We do not currently anticipate additional significant clinic closures. I don't think we have closed a clinic year to date? We haven't closed any clinics thus far in 2009. Excluding clinic closure costs, the company's adjusted diluted earnings per share would have been $0.20 in the fourth quarter and $0.85 in the year so within guidance.

The company achieved strong net cash flow not only during the year but particularly in the fourth quarter despite making two acquisitions during the period for cash consideration of $7.6 million. We finished the year with $10.1 million in cash and debt balance of only $13.8 million. So our net indebtedness debt less cash was only $3.7 million. The average age of the company's receivables was reduced by 7% in 2008 decreasing from an average of 55 days as of the end of 2007 to 51 days as of December 31st, 2008.

In the press release today, we issued guidance for the year 2009 in the range of earnings of approximately $10.1 million to $10.9 million or $0.84 to $0.90 per share. I want to note that these figures prefaced on an anticipated patient volumes reimbursement levels and they exclude the possible effect of future acquisitions or share repurchases. I would note that a number of the analysts now include additional acquisitions in their estimates, so that when you compare this number the consensus estimates you have to realize you are looking at apples to oranges. We don't plan on issuing quarterly guidance or updating this annual guidance, unless there is material future developments such as acquisitions,

Thanks, Larry. I think at this point, Operator, we will go ahead and I'm sure there are a number of people with specific questions. So let's open up the line and we'll be happy to handle those questions.

(Operator Instructions) Your first question comes from the line of Larry Solow of CJS Securities.

Hi Larry.

Hi guys, how is it going. First of all, on the Q4 would it be fair to say that visits would have been nearly flat if we exclude the weather impact and I believe those one to two less business days in 2008 versus 2007?

In terms of the business days, let me just check here.

There is no question we had more severe weather in fourth quarter 2008 than 2007. That was certainly an impact. And we tried to quantify that number.

Okay.

And as far as the business days question, Larry, I think, had we not had the early winter storm which hit us in the central part of the country where we have some really big partnerships. we'd have come in at, I think, at consensus.

Right. It is actually nice to see that your revenue per visit actually went up sequentially despite the environment. Just looking out into 2009, and I don't expect an exact answer but do you kind of expect in your guidance, does that kind of imply that visits and revenue per patient visit remain where they are at right now or any more color on that?

Yeah, give you a little bit of color. In terms of visits where they are at, I think visits will continue to grow. I think we will see some potential blunting. Part of the guidance is really related to the uncertainty that we expect just given the progression of the economy.

Right.

We have discussed in the past in past releases that we really hadn't felt any effect. I think we begin to feel some effect late in the fourth quarter. We don't know whether that will be stable or whether there is a potential for that to accelerate. I think that in terms of what we have been working on in preparation for some of these things, I'm pretty sure in -- I might stop short of saying I'm certain, but I'm very sure that we will be able to get some net revenue per visit expansion this year. There have been a number of things that the team has been working on hard where we have gotten traction with those and we have seen some early, good early results. In terms of what the visits will do, what same-store looks like, I'm not sure.

Right. Okay. And then just looking out -- obviously reimbursement is somewhat of an issue. What do you think -- I guess in 2009, you're pretty well locked up on the medicare side. But do you have any comments on the new regime in Washington and stimulus package and some people worried that Obama will become harder on health care reimbursement. Do you have any thoughts on that?

I will give you a few and they are personal views more than anything and I still need to study some of the things that have just recently come out over the last week or so. But I think in general what we are hearing and what I believe is that the statutory adjustment that's in place for 2010 won't happen. I don't think the government can afford to take particularly at the level of family practice and the stability or instability that exists today in the family practice side of things where much of health care is delivered as an entry point. I don't think that sector can take a big hit right now. And I think that would tip things into more of an unstable fashion. It would put more pressure on hospitals and ERs and I don't think -- I think the administration recognizes that. We expect in '10 is more of a flat pricing environment, honestly right now. That could change.

OK. That's fair. Then last question and I will move on. Sounds like you're De Nova development outlook, actually looks very strong. What do you see on the acquisition front. I know you have been talking to a lot of potential partners and have things slowed or have things kind of remained steady? How is that looking?

We have continued to talk to a lot of people. I think that this craziness that we are all going through right now in the world has caused everybody to try to take a little pause and figure out what it means for them short and long-term. So I would tell you that I don't have anything that's imminent to close anytime in the next few months. We are in discussion with a number of people. We are going to be very deliberate about what we do in terms of making sure that if we do anything it is very high quality with predictable growth even in a tough environment so we will just have to see how the year progresses.

We have never had an acquisition pipeline per se because we are always in discussions with a number of groups. When there is an opportunity we pursue it. Certainly multiples being paid for acquisitions have come down. Our acquisitions have actually outperformed in pro forma in cash flow as you can see from our debt balances. It's been excellent.

Okay. Do you have a number for what kind of expectation for for De Novo do you expect it to be higher in 2008 or similar?

I would expect it to be modestly higher.

Okay, great.

We actually have a good start to the year right now in terms of what we have on the books. Potentially not all those are open yet. But we are off to a good running start so far for the year with some really good folks.

Great. Excellent. Thanks a lot.

Thank you.

Your next question comes from the line of Rob hawkins of Stifel Nicolaus.

Hi, Rob. Good morning, folks. On the guidance, I'm still a little fuzzy so maybe you could say it back and you can correct me where I've got it. Based on what you were saying, Larry, is you're saying that you are showing some growth in involves or you're expecting some growth in volumes but to be blunted which maybe I should take it kind of flattish or very low growth and that you kind of expect kind of flat pricing. Am I thinking about that right?

I think we had modest growth in visits, not as much as normal and then --

I think the pricing we could expect to be up a little bit.

But I'll be honest with you didn't put a lot of that in the budget.

Okay.

I'll tell you year-to-date, our net rate is running ahead of what we had budgeted.

You just took my next question. I was going to ask how you are doing-- What metrics do you have to share so far? Are the volumes picking up a little bit so far in 2009?

In January we got hurt by some more storms but February turned out pretty good.

February has been a solid month with progressing week to week through the month of February. And February ended up looking like it was very solid.

That seems to jive with what I'm hearing from other folks. One just kind of administrative question. The ten clinics and how you accounted for that this quarter. It sounds to me like most of the charge was in the bad debt line. I'm just trying to make sure how to normalize some of your expense and margins?

Discharge was in bad debt as well.

A separate line called clinic closure costs and most of it relates to writing off leaseholder improvements and that kind of stuff.

It was in a separate line?

Yes, separate line item.

Yes, I'm sorry. I see it. Okay, but I guess -- I thought that was -- I thought -- I guess I'm confused. I thought there was 435 not 280 --

There is an annual number and quarterly number but they include what's the remaining rent due on the lease for the unadvertised leasehold improvements to write off.

Any severance or separation.

Severance or separation. Certainly sometimes you write off the receivables. Well, we do that every month. Whether it is open or closed clinic, we are constantly evaluating the receivables.

And was there any unusual pieces to it?

No, we just closed more clinics. We looked through the budget and looked at the economy and we said, you know what, we have some clinics. We even closed one that was profitable. We said, some of the clinics are on the margin, their leases were coming up for renewal in 2009. They are small. There's not a lot of upside. They were single -- most of them were single location partnerships. Why are we fooling with them in this kind of economic environment?

Oh, no, I completely understand and I'm not second guessing anything you guys have done here. I'm just trying to understand maybe what a normalized margin run rate is. You have been running a little bit higher. The fourth quarter there was a bit of a dip. I'm suspecting there will be some kind of recovery here coming forward here. I'm thinking about that.

The fourth quarter is a slower quarter for us. So you're going to see on average a lower number of patients per day per clinic in the fourth quarter. That is automatically going to affect your margins because you're going to have less revenue per person. We also did do some cost cutting during the period. Some of that expense is in there.

All right. Then second quarter was probably one of your best quarters because you get back to the weekend warriors in the spring and so forth. Right. Then just kind of shifting gears. Can you give us a little more color on the direct marketing program? I know you've taken some of the stuff from the Osteo Arthritis Centers of America. How is that going? How do you envision that rolling out over the next few quarters?

Let me just touch on that briefly then I will ask Larry to comment. The group that we are working with, our partners in the OA center, the guys at R&G. They have done this around the country for a while. It is new to us. Has been new to us until recently. Our OA center is -- we do the traditional doctor to doctor marketing that we do at all of our other PT related facilities. In addition to that we do a direct consumer marketing, where we advertise for and then subsequently host a seminar related to a particular service offering. In the case of our OA centers, it has to do with typically a specific joint, knee or shoulder. Osteo arthritis. Current treatment updates and new emerging things. And the way we have done this in a very systemic way. We have created a program that looks to track every single aspect of what it is that we do and measure those result. And I will just give you just some rough numbers. A typical ad that will return will turn out anywhere from 50 to 100 people. If we have an off-site venue, a smaller number but more than if we do an on-site venue, 20 to 30 people. And we have a catcher rate of somewhere between 20% and 40% of those people will become patients. We have begun to roll this out to or PT centers. We are on the front end of that. Our partners are excited about it. And we think it is a way to kind of jump ahead a little bit and maybe help offset some of the economic drag that we expect that we may feel. Glenn, any other things you wanted to say about that?

Just add to that. Essentially what we have done is taken what we have learned to do in the osteo credit side. We have modified it for a smaller venue in our patient rehab clinics. We have rolled this out to our partners. And are in the process of implementing a number of these steps with the templates we have created. Will probably take the first and second quarter for us to get it out there, get it implemented and have people start using it to see how we need to tweak it. But we have high expectations for how it will work and there is a lot of enthusiasm for it.

Are the ads in newspapers, doctor's offices, brochures?

Typically most of this will be done through newspaper advertising, which will then create a community-based seminar. Some of this is done through physician offices on a smaller scale. But that's how the majority of it is done from a newspaper standpoint in small communities.

We expect to be able to bring in some key physicians to kind of co-brand and co-market this which we think will market this to strengthen relationships and drive business not only to us but to give them an opportunity as well which we think will have a downstream effect.

As Glen mentioned we are in the early stages of this. We are not saying it will be a big pickup of volume in Q1 or Q2.

Do you have any since of what the IRR is or pay back on the expense outlayed for the ads and people to do the seminars and all that kind of stuff in.

We can tell you what it is for the OA side. I mean, typically on the osteoarthritis side we will get a return from a percentage standpoint of about 30% or 40% because the cost outlay is very minimal when you look at the number of patients we get from that standpoint. So we get a very good return from our investment from advertising an running a seminar. We don't have experience yet on the out-patient rehab side yet to give you any kind of return.

That's helpful. That's good to hear. All right, I will jump back into the queue. Thank you.

The next question comes from Mike Petusky of Noble Research.

Good morning folks. Couple of quick housekeeping questions. Payer mix, sales reps, and coverage, visits per FT--Do you guys have some of that?

Payer mix was as follows. Private pay 25%. Managed care 34%. Workers comp 15%. Medi-Care 22%. And other 4%.

On the sales rep side, we increased the number of sales reps to 57 total for the company covering 230 locations. We have added a number of part-time reps in markets where we have increased density to see whether or not we can impact from that standpoint. Visit per FDE, we actually jumped up in the fourth quarter of 2008 to 11.05%. Which is a nice improvement and we hope to be able to keep it there.

Just in terms of I guess all that's going on and including in that I guess stock price, any change, Larry, in how you guys are thinking about your use of free cash? I know your guidance excludes acquisitions on share repurchase but any change in your thinking there in.

No, as we said we remain opportunistic in terms of looking at acquisitions. We just had board meetings the last two days and we discussed at length of possible share repurchase. Our present credit agreement precludes that. We would have to amend it but it is certainly something we would consider.

So should I take that as there hasn't been a change or -- because --

Hasn't changed yet because we couldn't do it if we want to. The credit agreement precludes share repurchases. So we would have to change the credit agreement first.

I think, what you see Mike, is, we will take an opportunity to invest in the company because we believe that there is plenty of opportunity and we will get back to you when we have specifics of that.

Do you guys, in terms of your guidance have you actually made an assumption as far as unemployment or where that peaks out or do you guys not drill down to that level in terms of providing guidance?

We have some thoughts. I think there has been a lot that has gone into this. I mean --

We don't have an economist on staff. We assumed the economy would be poor this year and would have some impact on us. We kind of looked at what happened in the past. We presented a slower growth rate. We think we are going to have increased earnings this year. Despite what the market is doing this today, we are actually fairly bullish.

Okay. I think that's all I've got.

Thank you.

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

Yes hi, good morning, guys. As you look to cut costs with that sort of flow in also how agressive you are with regards to hiring sales reps?

No, actually the cost cutting of the sales reps, we run counter balance to each other. We think that the sales reps will obviously help to drive referrals and ultimately volume. The cost cutting that we have done has been -- we have done a number of cost cutting programs here at the corporate office with some fairly good cost savings that we expect through the year. We continue to do a quarter-to-quarter review of our facility performance, our staffing particularly in the area of non-licensed and other costs. We have gone to our vendors. We are reviewing leases and we have been aggressive about lease renegotiation so we have a number of different areas. We don't expect to cut sales reps.

When we look at sales reps you have to keep in minds again in our model and with sales reps we have a very low base. They make most of their money in commission. So for us to add additional sales reps is not a huge salary impact. Basically they eat what they kill so if they do well they can make money if they don't, it doesn't cost us a lot.

Okay. And coming back to the guidance. It seems like you expect something from the OA venture the second half of the year or is it more of a 2010 story?

We projected them for the year that it would be profitable. It's still riding in the red those volumes picked up nicely recently. So we expect sometime in the second or third quarter, the first clinic will pass over to a break even level. But the OA group as a whole will be reporting a loss as we build additional clinics, just like our PT clinics. They tend to lose money the first 10 to 12 months.

Would you be report that as a separate line item?

It is a fraction of our business. It is very, very small. Still in the experimental stage. It is not a separate business.

Okay. With regards to the ten clinics that were closed I, don't know if you could give us a sense of the average age of those clinics or if they are around back. Say when you had the big closure in late 2006.

I think it is a range. I don't have the average age with us right now. I think we had some -- I would guess probably in the 5 to 6-year range. Almost all of the clinics that we closed leases were coming up for renewal which means they would have been in the five-year range or greater probably.

We have a few clinics who are partners and had made the decision because of the challenges that they were having and the lack of additional profitability that was coming to do other things. It was like most of our closures. It was varied but I think it was the right decision.

Okay. And with regards to the share repurchases what's the current authorization in terms of buy backs.

It doesn't matter because we can't do any under our credit agreement. We had roughly 50,000 under a program we had several years ago. But we would have to go back to the board, get authorization for a new share prepurchase program. If we were to do it, we would have to amend the credit agreement if we could do it. And then we would make and announcement as to how much we were authorized to repurchase. So it would be -- when and if we do a share repurchase program, it will be something that we will put out there to the whole world.

Okay thanks. Finally coming back with the recession. And as it relates to the workers' comp area, are you seeing any particular softness there or it's just been holding up?

Obviously on the employment side there is some concern but we haven't seen any particular change in our payer mix. Our payer mix has been very steady.

It was -- well, maybe declined 1%. It went from 16% in Q1 and Q2 to 15% in Q3 and Q4 but not really a major shift in terms of visits or charges.

I would agree with that. Whether it would continue to soften based on the layoffs that are going on, that possibly could happen but right now we are not seeing any significant change in our work comp index.

Okay. Thanks again, guys.

Your next question comes from the line of Bonnie Cybulko of Longbow Research.

Good morning. Thank you for taking my question. First I'd like to ask just a little bit more color if you would about some of the same-store metrics for fourth quarter. Are you finding a change in terms of visits per patients? Was that falling for you at the same-store level or was it a mix of finding finding overall patients visiting the clinics or are you seeing patients retraining from coming in for their prescription therapy.

In the fourth quarter, we didn't see any impact in durations our reason for referral as of yet. We do think that may be a potential factor moving forward just based on where the economy is and people looking at discretionary cash. But we are hopeful with the clinical focus that we are putting out there. And trying to bring value to patient car, that that will be a minimum factor moving forward.

Have you seen any pressure from any of your payors. For example, workers comp or Medicaid in some of the states where Medicaid budgets are being pinched? Patients not being able to come in for as many visits as they would prior.

No, no impact at all on either on workers comp or Medicaid. You have to remember that Medicaid is a very, very very small part of our business. I would say less than 1% . So there has been little to no

Okay. Thank you much that's very helpful. Next I wanted to ask about your contract with Ford. Have you seen any changes in terms of your expectations?

No, we continue -- it continues to underperform based upon what our original projections were, but we haven't seen any significant changes in the volume that we have been having in the fourth quarter versus the second and third quarter. So at this point we expect it to continue to run about where it's been running.

That said Michigan has been very strong for us over the last couple of years.

Well, to be honest with you the number of visits we get from Ford as a percentage of our total visits is dominus. It is not a big percentage.

You don't expect that then to change this coming year in terms of providing additional volumes for Michigan, do you?

No, it's not a significant factor to our volumes in Michigan, so, no, I don't expect to see any significant changes with it.

Okay. And finally at the ten clinics you closed was there any sort of regional impact there in terms of where they were located or is that just across the portfolio?

Across the portfolio.

Okay, then just one final question on the guidance. You said that your osteoarthritis clinic, you're not expecting to is any profitability really there as a group until 2010 or beyond. So your guidance, does that include any additional expansion of your osteo arthritis clinics, in terms of cost, opening new centers, anything along those lines?

Yes, All of the above.

All of the above. Okay. Great. Thank you very much.

(Operator Instructions) Your next question comes from the line of Robert Larity of Pit Fire Capital.

Good morning.

Good morning.

Quick clarification on your guidance if you would. I believe you said that you expect total visits to grow in '09 but could you sort of explain what the range of assumptions for same-store visits that you're thinking about are?

We don't really look at it that way to be honest. We looked at same store visits are visits at a clinic that it is a year older and our total visits you're including the new clinics we opened in 2008. We look at it as total business whether it's same-store or a clinic that was ramping up because it was opened the previous year. I will be honest with you we measure it on an historical basis but we don't project it. We look at total visits.

Okay. Thanks.

At this time there are no further questions. Mr. Reading, are there any final remarks?

Yes, thank you, Operator. Listen, thank you for tuning in this morning. Larry and I are available today and for the remainder of the week to answer any additional questions that you may have. We appreciate your support and have a great rest of the week. Thank you.

Thank you. That does conclude US Physical Therapy fourth quarter and year 2008 earnings release conference call. You may now disconnect.