US Physical Therapy Inc (USPH) 2010 Q4 法說會逐字稿

Good morning. My name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter 2010 year-end 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 Mr. Reading, you may begin your conference.

Thank you, operator. Good morning everyone and welcome to the US Physical Therapy's fourth quarter 2010 earning call. With me here in Houston, Larry McAfee, Executive Vice President, CFO, Glenn McDowell, our Chief Operating Officer, Jon Bates, Vice President and Controller. Before we begin, I would like to ask Jon to cover a brief disclosure statement.

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, Jon. I am going to speak for a few minutes, off-script here a little bit; talk about some of the things that we've done this year, some of the things we are looking to do in the coming year and then I will ask Larry to cover our results in a little bit more detail. Looking back over the year, I am that we have accomplished a great deal of what we set out to do. I think looking forward, our opportunities now are greater than ever. Some of the highlights of 2010, our net rate increased 3% to $105.92 for the year. Over the past two years, we've positively affected our net rate, approximately $7.87 a visit from combination of [pair] contracting, clinical service enhancements, [settlement pair] exchanges which were targeted as part of our focus.

Total revenue for year grew 4.9%, while the fourth quarter was up 5.8% despite one less working day for the quarter compared to 2009. Gross margins improved 80 basis points in 2010. In the past two years gross margins have improved 300 basis points. This year alone, our operating margins increased by 170 basis points to 15.7%, up from 14% at the year ending 2009. On a normalized basis, EPS grew 25% to $1.25 before the beneficial affect of tax adjustments, which Larry will cover in more detail later.

For the year, we completed three nice acquisitions encompassing a total of 25 locations. We added another 19 to our de novo process, further expanding our national network of partner-owned facilities. We significantly revamped our [RMGOA] revenue model which has resulted so far a very nice progression in terms of deal flow, and overall ramp up in our physician services division. The value of these training and licensing agreements signed late in 2010 is over $10 million spread over initial service period of five years. Under the physician services banner, we have found that our new and improved service and revenue models are highly attractive to medical practices and other investment companies specializing in muscular skeletal medicine. Further, the branding that has occurred through the creation of the OsteoArthritis Centers of America website, along with our clinical algorithms, coupled with the general success of these programs within a growing customer base around the Company has helped to generate positive momentum and growth in this area.

In addition to working on new programs and services within this model, we found that many of these practices need some support services, similar in nature to what we do everyday for our partner practices around the country, things like purchasing support, facility design, recruiting, and other related business services. As a result of evaluating those demands, we've started a revenue generating arm of our corporate support departments, specifically tailored to market to physicians and medical practices. This will further allow us to expand our service offerings within our physician services Company, allow us to use our capabilities and expertise here in Houston with our team to create additional revenue opportunities for the Company.

Earlier this year, we started a program called Fit2WRK. I am very, very pleased with the progression of that program with the team. Fit2WRK is picking up steam and we have signed numerous agreements and have a number more at the finish line. Our training program in the house, in-service modules, [case] managers and others in the industry are not complete. We've created a lot of tools, knowledge, branding and volume as a result of this initiative and I feel like we are still scratching the surface. And I'll say again, the team's done an excellent job here. We have a lot of opportunity ahead of us.

On the reimbursement front, we will touch briefly. Some of the things that happened -- I think most of you will be familiar with late in the fourth quarter of this past year, with respect to Medicare pricing, CMS rolled out the MPPR Payment, Multi-Procedure Payment Reduction Process.Initially, the reduction was proposed to be 50% on the second and subsequent codes. However, where we ended up in 2010, beginning this year, we will have a 20% reduction for certain of our Medicare facilities and a 25% reduction on second and subsequent codes for Part B facilities. We've estimated the reduction to be in effect of 5% to 7% drop in our net reimbursement isolated to Medicare, which as you recall, makes up between 20% and 21% of our overall case mix. In order to offset this reduction, we have previously enacted a numbering of initiatives in order to beneficially shift our pair mix, drive additional revenue, and improve our clinical and operating efficiencies so we will continue to be focused on those things.

We look very forward to continuing our progress this year amidst the challenges of an ever-changing economy. We have a great team in place here in Houston, which has grown stronger over the years. We have an outstanding partner base made up of talented and committed clinician partners who are helping us every day touch more lives, [and] expand the Company organically a predictable and cost-effective way. We continue to be blessed with great cash flow which we've used over these past years to further enhance our growth through acquisitions of partner-driven practices which have made our Company better and stronger as we integrate these facilities into our growing network. This year, we closed on three such deals. Even though two of those came right at the end of the year, we finished 2010 in a positive net cash position.

With our strong cash flow and clean balance sheet, we've decided to initiate a quarterly cash dividend which Larry will describe in more detail. Our focus will be to continue to grow our Company, both organically to de novo openings, enhancement of our operations in our existing facility base, along with a strong focus to continue to add excellent partner-driven acquisitions as we have done over the past few years.We expect to drive and improve shareholder value with our continued focus on growth, maturation of several of these new initiatives like Fit2WRK, as well as our physician services initiatives, and the strategic deployment of capital in a way that we believe will enhance shareholder value over time. With that, I would like to ask Larry to cover the financials in more detail.

Thank you, Chris. I'm going to do a quick highlight of the quarter and the year and then I will go through each of them in more detail. Net income for the fourth quarter increased 81% to $4.1 million. Earnings per share rose to $0.35 from $0.19 a year ago. Included in the quarterly results was a positive adjustment in income tax provision of $800,000, or about $0.07 per share. If you exclude that tax adjustment, look at it on a normalized basis, earnings per share would have been $0.28 as compared to analyst consensus estimate of $0.25. For the year, net income increased 33% to $15.6 million. Earnings per share was $1.32 versus $1 in 2009. Again, excluding the tax adjustment, EPS would have been a $1.25.Analyst consensus estimate was $1.20.

I'll go through the fourth quarter in some detail. The net revenue during the quarter increased 5.8% to $53.3 million due to an increase in our average net patient revenue per visit of $3.44 to $107.36, and an increase of 1.7% patient visits from 469,000 to 478,000. Our gross margin during the quarter improved 40 basis points to 25.3%. Corporate costs came in at 10.7% of revenue in the fourth quarter of '10 versus 12.8% in the 2009 fourth quarter.

Operating income increased in the fourth quarter by 27.6%, to $7.8 million, and our operating income margin percentage included 250 basis points from the prior year at 14.6%. After the tax provision in the fourth quarter, we have positive tax adjustment of 18 -- $814,000. We went back and did a multi-year -- let me go back to 2002. Again, 2002, reconciling what we had recorded for -- on the book basis for taxes versus what we actually had to pay, we also discovered that we could do some (technical difficulty) and get some additional monies back. So the book gain was about $800,000 and cash gain was a couple of $100,000. Net income in the fourth quarter of 2010 rose to $4.147 million. Our same-store revenues for de novo and acquired clinics open a year or more increased 1.2%.

Now I'll go through some of the items for the year. Our net revenue increased 4.9%, to just over $211 million, due to an increase in our average net patient revenue per visit of just over $3, and an increase in patient visits from 1.89 million to 1.927 million. Our gross margin improved 80 basis points for the year to 26.5%. Corporate costs were 10.8% of revenue in 2010 versus 11.7% in 2009. Our operating income increased by 17.5% to $33.2 million, and our operating income margin percentage improved 170 basis points. We discussed the per tax adjustment for the quarter in the year are the same, $800,000 or $0.07. The net income in 2010 rose 33% to $15.6 million. Same-store revenues for de novo and acquired clinic open a year or more increased slightly 1.3%. The average net rate per visit increased by 2.7% while same-store visits declined by 1.3%.

We ended 2010 with 392 clinics. During the year, the Company acquired 25 clinics. As Chris mentioned, we opened 19 de novos and closed 15 locations and we sold a five clinic joint venture group early in the year. As Chris also mentioned, despite those two acquisitions, we ended the year in a net cash position with cash on the balance sheet of $9.2 million and outstanding borrowings of almost $6 million. Our receivables remain in excellent shape. The average [age] of the Company's receivable at year-end was 45 days.

The Company announced that it's initiating a quarterly dividend. I know a number of the investors have asked us over the years about this as well as the analysts. I hope it will be -- being received as welcome news to the investment community. USPH shareholders of record, as of March 15, 2011, will be paid an initial quarterly dividend of $0.08 per share on March 30. The Company's really in a unique position in that we're able to grow internally through continued development of start-up clinics, continue to do acquisitions and pay a dividend.

Thanks, Larry. With that, operator, I would like to go ahead and open it up for questions.

(Operator Instructions) Your first question comes from the line of Brian Tanquilut with Jefferies.

Hello Brian.

Hello guys. Good morning. Congratulations.

Thank you.

So, Chris, you talked about how you did a couple of acquisitions in December. Just wanted to hear your thoughts on the acquisition strategy for this year. I know you guys are still looking for deals, but what does the pipeline look like, are -- and evaluations into space and just deal sizes that you are looking at -- or you are looking to do this year?

Yes. The groups that we're talking to right now are varied in size. Nobody is what I would consider huge, so, they continue to be in the range that we have looked at before, $1 million to $5 million in EBITDA deals. I hesitate to call historically or currently anything that we have a pipeline. Some of these take a while. They continue to be relationship driven. I think pricing hasn't changed a whole lot over what we've seen in the past. The bigger the EBITDA, the pricing tends to be a little more. In general, historically, we've paid about 5.5 times, a little bit more for bigger deals, a little bit less for smaller. We continue to work, I think, effectively with our partners. We have not lost a partner in any of our deals.

We continue to see growth in the majority of our acquisitions -- the organic growth, and development of products and services and typically, although not in every case, expansion of our net revenue per visit in our revenue base. So our appetite continues to be very strong. We will continue to do deals. I do not want anybody to read into this dividend as a shift in our strategy to grow the Company. We think there's still a lot of opportunity out there. We're just -- as Larry mentioned, we feel like we are in an excellent position with our cash flow to be able to return some of that to the shareholders and continue to press forward with organic, as well as acquisitive growth.

Okay. And then just on the de novo plan, this year you opened 19 locations. And I know in the past you've talked (technical difficulty) the plan for this year, and maybe say 2012 in terms of doe novo growth.

Yes, Brian, we lost you there for a second. (technical difficulty) understand, we did 19 this year. We continue to try -- we don't have a hard number here that the -- the development team is working very hard to get as many good deals in the pipeline, deals being new partner opportunities in the pipeline as we can possibly do. We have the capacity here to do well over 20, but we are not going to sacrifice and bring in people just to add numbers, which is something that, unfortunately, a company did pre-dating our arrival. So we're going to continue to focus on quality, and where we end up at the end of the year, I am not exactly sure, but I think we will have another good solid, development year between organic and acquired development.

Okay. Then, Chris, just thinking about same-store volumes or same-store visits. So we have seen five straight quarters of negative same-store visits. I was just wondering if -- with the economy appearing to -- actually more than five -- but with the economy improving here, are you guys starting to see an uptick or any improvement anecdotally from the ground, just in terms of same-store visits?

Yes, let me speak to that just briefly. And you're correct. The last --

Actually, it's nine -- yes.

Nine [months], we have had and we expected it to a certain extent. We have done some things to offset it. December was the first positive same-store growth month of 2010. In spite of the weather, starting out this year, January was slightly positive, as well. And four of the five regions turned in some positive same-store in January. It wasn't significant, but it was positive. So, we had the first -- the last two months that we've completed, December, January, we were in positive territory for the first time in awhile. So, we have a number of things that we are working on to continue that and to move that forward. I don't know exactly, yet, where that will go, but it's better than it was.

And you mentioned weather. Has that been significant so far, or is it negligible?

No. It's not exactly (inaudible) what I would consider negligible.

Where have you been?

I live in Tennessee, so I've experienced all that weather stuff you guys have been dealing with.

I mean, we had some unique weather even in Texas, north Texas -- got hit with some pretty big snow, some ice. Oklahoma got crushed, the middle part of the country, as well as the East Coast, got back-to-back to back-to-back snowstorms. We've baked all that into our guidance right now, so our guidance reflects where we expect to be for the year. But, yes, it wasn't a fun first couple of months of this year. That said, I think going forward, we will be okay, so -- .

Got it. Well, thank you so much. I will let other guys ask questions. Again, congratulations.

Thanks Brian.

Our next question comes from the line of Larry Solow with CJS Securities.

Good morning, Larry.

Good morning guys.Just to piggyback on that question. With the same-store visits, being that it was actually -- not to really drill into numbers and probably overanalyze a little bit, but the 1.8% drop in the quarter, versus the 1.3% for the year, but the fact it was up in December, it sounds like you had a nice little swing, at least, anecdotally, or whatever would may be trends during the quarter. Is that fair to say?

We finished better than we started.

Right.

And interesting -- and again, I think the weather's -- because the same-store would have been even better in January if it wasn't. Like I sad, referrals were very strong in January, so which was different than a year ago.

Yes, we did have very strong referrals -- we've seen very strong referrals so far this year.

Right. And then since January was up, or I guess or at least flat year-over-year, I guess, I'm living in the northeast -- nothing against Tennessee, but obviously, I know the weather up here was much worse in February. SO I guess your February would be the full impact, what you are calling the impact of severe weather in the quarter, I guess, so is that --

We've -- we had some impact in February due to weather in the first week of February, but the rest of the month has been rolling along --

I meant in generally, you always have pretty bad weather, so seasonal Q1, I guess, is always impacted. Any way to quantify what you think the -- what the impact is this year versus last year? Is it better or worse?

[I can't give you] (inaudible) the total number of visits we lost or EPS effect. But it hurt us a little, but again, like Chris mentioned, we baked it into the guidance --

Right, right. Okay. And outside of obviously, the Medicare reimbursement, doing the math, it is probably 100 bips, 150 bips on your revenue per patient. Do you still see -- obviously, that's going to impact you guys certainly on the short term, but do you still see room for growth outside of that? Maybe not at the rate you have seen the last several years, but do you still see room for growth there?

I think we will see growth in other areas, (technical difficulty) so I think we're seeing great growth in physician services which will help our overall revenue on a per visit basis, really on the PP side. I don't think we will see the growth this year that we've seen in prior years. We're going to have to overcome that CMS nick. We have done a number of things to try to do that -- focusing on payer mix shift with our Fit2Wrk program, some other things. But, we've figured out a way, year in and year out, to grow our rate per visit. This may be the more challenging year that we have had to start out, but, I still feel fairly positive that we will have good revenue growth this year.

Okay. And then, I think, obviously, you are expanding your services and all it's been -- and new contracts or better contracts has been helping your revenue per patient a lot, do you -- but the -- some of the proactivity measures, are those still going up? Are they -- I think over the last few quarters, they seemed to flatten out, like units per visit and (technical difficulty) build and visits [proactivity] -- are you still seeing gains in that -- those areas?

We're seeing small gains. On a unit per visit basis, in the fourth quarter, we did 4.26 units which was up from 4.21 units in the third quarter and up significantly from the fourth quarter a year ago. A visit per FTE basis, we were at 10.71%, which was down slightly from the third quarter, but up from the fourth quarter of 2009. So, we think, again, that there is opportunity for movement on both, visit per FTE, probably not as much movement in the unit per visit, but still some opportunity there.

Got you. And then just lastly, is it fair to think -- assume using historical in terms of closings, ten a year or so, good or take?

I think we put a dozen in the budget or something like that.

Okay.

Yes, most of the facilities that we are closing right now are at the end of the lease term, they haven't been contributing its management time and effort and resource strain. And we have elected to put our efforts in other areas, so, I am not as caught up on the number as the cost in both expense and resource time, probably more than anything.

I think the total closure costs for the year were like, what? $175,000.

Right. Well, well, I imagine the closures actually, inevitably, are beneficial. That's the bottom line.

Yes.

Okay, great. Thanks a lot again.

Thank you.

Our next question comes from the line of Eric Castro with Athena Group.

Hi, guys. Can you hear me?

Good morning. Yes, sir.

Hey, great quarter. I basically have two questions. First one is, in fiscal year '05 and prior, your returns on invested capital were in excess of 20%. In 2010, that has since dropped down to 14%. So, the incremental return on shareholders capital or invested capital is less than 10%. And, obviously, that had to do with the amount of capital you guys are using for your acquisitions. So, basically, I want to know what the end game is. What's the long-term strategy, as far as improving that profitability number?

I will be honest with you, we don't even focus on that. (technical difficulty) [We are self funded.] Obviously, we didn't have any net debt at year end, and our stockholders' equity has doubled over the last five years, so --

But I mean -- so, going forward, I mean, is it more going to be -- so, I know -- So, your existing acquisitions that you completed in the past five years -- I mean, are you guys seeing that as a base to continue with de novo clinic start-ups going forward, or how should I look at that?

Yes, absolutely. If the question is will our acquisitions grow organically, we have seen acquisition growth organically in a couple of different ways. We have seen new facilities added, and we've seen net revenue per visit increases across the majority of these acquisitions, and other clinical efficiencies, which has helped to drive our margin expansion. So, it's going to continue to be a combination of operational efficiencies, organic expansion and deployment of capital to bring in great acquisitions, and you are going to see that continue.

Okay. And, going forward, one of my concerns is that your margins will begin being squeezed by negotiating power decreasing with non-Medicare payers, as well as your physical therapist employees. So, can you comment a little bit on, going forward, how do you see your negotiating power developing with your non-Medicare payers, as well your negotiating power with your existing physical therapist employees?What are the long-term supply and demand trends as far as physical therapists go?

That's -- two, really, two different questions. One statement that you expect our margins to decline. I would just ask you to look back over the last few years, in an otherwise difficult economy, we have seen pretty significant margin expansion in the gross basis and operating level and all levels in the Company.

And the payers aren't any more friendly than they used to be.

I don't see any radical shift down in the payer community. So, I am not sure -- I don't share the same impression. On the therapy side, we continue to be a very good home for our employees. They have more economic upside with us than they typically do other places, particularly at our partner and our director level. Our partners make a significant amount of their total income, which, by the way, is more than they typically make if they were to own their own facility outright in the marketplace. They do that without risk, and we've seen the market improve in terms of hiring, so, again, my impression is a little bit different.

The market for therapists was much tighter three years ago than it is today. And, if you look at our average length of our open positions, which is one of the things we measure, it is about as good as it has ever been. So, we are not having trouble filling positions unless it is an unusual, small market.

Okay. Thanks, guys.

Our next question comes from the line of Mitra Ramgopal with Sidoti.

Hi, Mitra.

Hi. Good morning, guys. First off, just a couple of questions regarding the guidance, in terms of what you are assuming, just as it relates to the economy, et cetera. Are you assuming a pick-up there? And, again, on the revenue per visit, stable rates or the increases you have seen recently?

Well, in the numbers that we have given you, we assumed the economy would remain soft. We didn't assume big pick-ups in employment, for example, which is consistent with what we had baked in last year. The net revenue per visit, we didn't budget much of an increase this year, but that was primarily because of the Medicare cut.

Okay. And, I know at the end of the last quarter, Chris, I know there are some positions, especially on the sales side you were looking to fill, et cetera. Where do we stand in terms of the sales force and further investments for this year?

I'm going to let Glenn answer that.

On the sales rep side, we are running about where we were in the third quarter. We currently have 76 sales reps in the Company, covering about 321 locations. We are continuing to look to expand our sales force by probably one-third. And most of that will be in current markets where we already have existing sales, but we want to increase our footprint on the ground from a sales and marketing standpoint. We will also be looking to bring on several more [comp] industrial sales reps to help us enhance our Fit2Wrk model on a local market basis.

And the expansion by the one-third, is that pretty much a multi-year strategy, or is that most of it going to happen this year?

That will be over time, as we find candidates that fit what we are looking for to facilitate us. So, I would hope that some of it will -- at least, most of it will happen this year, but it's -- the market has been a little bit tougher from a sales rep standpoint than it was a year ago. So, we will see where we end up.

Okay. And then, just a comment on rehab care on that acquisition, if you could comment on potential impact for evaluations as you look at acquisitions? And, also, just from a competitive standpoint, if it provides an opportunity for you?

I don't really have any comment.

Well, rehab care is really in a completely different segment than us. And that's a big deal in -- does it effect when we buy individual PT groups or locations? No, we haven't seen multiples change.

Okay. Thanks, again.

Thanks, Mitra.

Our next question comes from the line of Mike Petusky with Noble Research.

Good morning, guys.

Hi, Mike.

A few questions. I missed the first few minutes of this, so if you commented on a couple of these things, forgive me. But, did you -- the management contract revs were meaningfully higher than I had modeled and meaningfully higher than they have been. Did you guys comment on what happened there?

It is the other revenue --

Yes. The physician services revenue that we talked about. We signed a number of contracts late in the quarter. That will create a revenue stream for us over a five-year period. A lot of that revenue was for the initial training costs associated with those contracts.

Okay. So, is --

Management contracts.

Okay. So, is -- I mean, is $2 million a decent quarterly guesstimate going forward, or will that go back down?

No. I think it's going to be lumpy, quite honestly. This was a big contract that we signed in the fourth quarter. With these contracts, there is a smoother five-year revenue flow, but on the upfront basis, it is driven off the number of facilities that we've licensed. There was a training cost, that training cost hits, really, in over a two-month or three-month period, and so that makes it a little lumpier. So, it's going to be a little tougher to model until we have maybe a few more quarters under our belt, but we have decent demand right now, so --

All right. Great. And, did you guys comment on how your therapists are adjusting to the new rules on concurrent therapy and all that, or do you have a comment?

Yes. Our therapists are fine. In terms of concurrent therapy, our patients are treated individually, and we bill accordingly, as the rules dictate. So, I don't see any big impact from us currently versus the year or two previously.

Okay. So, really, in terms of their day to day and how they work with patients, this really hasn't changed much?

No. Correct.

All right. Great. And then, Larry, did you give payer mix, by any chance?

No, but I can. For the fourth quarter, private and managed care, which is really your insurance of Blue Cross-type payers, was 54.7%; workers' comp was 16.8%; Medicare plus Medicaid was 23.7%; and other was 4.8%.

Okay. I think that is all I have. Great year, guys.

Thank you, Mike.

Your next question comes from Larry Solow with CJS Securities.

Just a couple of follow-ups. That 23.7% in the Q4, is that just an aberration that it went up a little bit?

I don't know. It bounces around quarterly.

Okay. So, sort it's the 20% rate you are not afraid of still using, or 20% proportions.

Medicare and Medicaid.

Got you. Okay. I got you.

Most of our Medicaid is a good --

The Medicaid is what brought it back, was a little higher, I guess.

The Medicaid is in Texas, which actually in Texas is an unbelievable payer, at least for now.

Okay. So, that's the combination of the two. Got you. And, you touched on the labor rates. So, it doesn't sound like you are seeing any real pinch or pressure on those. Anything in terms of your impact from you guys on raw material prices and whatnot? Does that really affect you at all or -- ?

Supplies are less than 2% of our costs.

Okay. So, they would have to really go up to really do something to you guys.

Yes. One of the things that we did last year, was we rolled out a GPO, which we've offered externally to the physical therapy community. And, we've really worked hard to aggregate our pricing leverage. And, that was an initiative a year ago. We've pretty much gotten everybody on board and so, if anything, I think we are in pretty good shape there.

Got you. And the tax credit was obviously just a one-time thing. So, are we still good to use the high 30% tax rate we have seen the last few years?

39.3%, 39.5% is probably what our tax rate will be, including state and local. What we've seen is, states and municipalities are under a lot of budget pressure, so there have been -- we expect increases in local tax rates.

Got you. Okay, great. Thanks, again.

(Operator Instructions)Your next question comes from the line of Jason Stankowski with Clayton Partners.

Hi, guys. I was just curious if -- just you mentioned the GPOs. Is that a -- is that rolled out to the non-USPH community as well?

When you say rolled out -- it is available. We advertise that in some of the physical therapy publications. We -- as we are talking to potential acquisitions, we certainly make it known to them that they have an opportunity to use some of our leverage. It is really a new initiative and, for us, it just enabled us to aggregate all of our partners and shift -- really shift our vendor resources into a more concentrated format.

Is it a profit center outside of our own community?

Quite modestly at this point.

Okay. And then, the other question I had is regarding capital structure. I think it is great that you guys decided to pay a dividend and can still commit to intelligent, measured growth. Is the structure and the stability of your cash flow lend itself to be not 100% equity-financed business, and how do you view that capital structure question going forward?

I mean, we would love to have a little bit of leverage. We would have to find -- our cash flow keeps outgrowing our ability to do deals though. I mean, if we can find some larger acquisitions, we've got a $50 million, multi-year facility that runs through 2015 with Bank of America, so we would certainly use it. I don't see us going to the equity markets, but, yes. I mean, certainly, we would like to have a little bit of leverage.

So, you wouldn't -- you don't think having a couple of turns of debt is, by any means, aggressive in your space?

No, our CapEx is less than $5 million a year. So, if you look at our EBITDA last year, it was close to $32 million. So, if you look at our cash flow characteristics, yes, we could easily -- and again, the only way we are going to use this money is if we are adding EBITDA to that base. But, we could easily carry 2 times -- I don't think we have a deal out there that would require that, but it wouldn't be a problem servicing the debt.

Right. And, as you guys have obviously talked about a steady dividend, would there be any interest in either, I guess, then buying back either your stock, if it looked cheaper than, I guess, what you could do in the acquisition market, and/or paying a special one-time dividend to shareholders?

No. I don't think we would do a special one-time dividend. We actually talked to a number of our large holders, of what they would like to see, and the feedback we got is they'd like to see a regular dividend that grows over time. But, no, I don't see us doing a one-time dividend. We bought back 15% of our shares over the last three years. So, the problem is, if we continue -- and we bought a few shares last year. But, the problem is, if we keep buying shares, we reduce the liquidity.

It has not been a problem for, I guess, (inaudible) over time, but we appreciate the dividend and the good job you guys have been doing. Thanks.

Thank you.

Your next question comes from the line of Mike Petusky with Noble Research.

Thanks. Just a quick couple of follow-ups. The -- did you guys give the therapy -- I'm sorry, the therapist productivity number?

Yes. The visit productivity number for the fourth quarter was 10.71%, which is up slightly from fourth quarter in 2009.

What was it then, like 10.5% or something?

The fourth quarter of 2009 was 10.56%.

It was down a little bit from the third quarter, but remember visits seasonally are slower in the fourth quarter, so that's going to affect the productivity figures.

I took an -- at one point, I took an old note, and I think it was off of something Chris said, where, I think, Chris, you had said that a reasonable multi-year goal there was 12%. Is that still reasonable, or is that maybe just a little aggressive based on how things stand now?

Practically speaking, we should be able to get there. We continue to be challenged in some of our single partner, single facility, smaller markets. But, is it a reality that we should work toward? Yes. And, is it a goal that we expect to continue to have out there for our partners and their staff? Yes. We are not going to lower it, and we need to make some progress towards that.

And then, I don't recall specifically, but Q1 in 2010 -- was that a tough weather period? As I know every winter is tough, but was that a particularly tough weather period? I'm just trying to think about in terms of comparing the two and modeling and all of that.

No. I would say the first quarter of '09 was not a good weather period. I would say the first quarter of '10 was not a good weather period. The first quarter of '09 was all right. The first quarter of '11 was worse than either one of those years though.

Okay, okay.Very good. Thanks, guys.

At this time we have no further questions.

Okay. Listen, thanks, everybody, for tuning in. Larry and I are here if you have any further questions, and we appreciate your time today. Have a great day.

Thank you, this concludes today's conference call. You may now disconnect.