US Physical Therapy Inc (USPH) 2014 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the US Physical Therapy fourth-quarter and year 2014 earnings conference call.

(Operator Instructions)

I will now turn the call over to Chris Reading, Chief Executive Officer. Please go ahead, sir.

Thank you, good morning, everyone, and welcome to US Physical Therapy's fourth-quarter and year ending 2014 earnings call. Looking forward to talking to you about the progress that we have made this past year, and looking into the future.

Before we do that, I would like to introduce everybody that is 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 Jon Bates, our Vice President and Controller. So, before we begin, I would like Jon to cover a brief financial disclosure. Jon?

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'm going to do this a little differently than I have done in the past. I think I have done this one other time. Rather than to talk on script, I am going to try to paint just a picture of where we have been over these past couple of years, focusing on 2014, certainly, but trying to cover the entire picture, and then looking at 2015.

So, I would 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 work very hard to put together a great year. The year that we had in 2014, which I am just very pleased with, an exceptional year, really started in 2013, with putting together a group of acquisitions 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 have 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 up 27.5% for the quarter, and over 19% for the year. Referrals stayed really stayed strong this year, as well. Glenn and the sales team and sales leaders and the trainers, along with our partners, continued to focus throughout the year on our five-point sale's plan. That paid significant dividends, and continues to pay dividends as we enter into the early part of 2015.

Again, looking back at 2013, if you look on paper, that was -- 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 a very strong development year, along with our long tenured partners, that prepared as well for 2014. Same-store growth in 2014 has been very strong all year, in fact, the strongest it has been in some time. Again, tribute to our partners and our Directors and our sales staff around the country being very, very focused.

The deals that we did in 2013 propelled us forward in 2014. One of those, in particular, I 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 they came onto the family in December of 2013, outstanding trajectory, lots of good things in the works there. And not just them, but all of our 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 open yet, but we have approved, as many as we did all last year. We started the year with a bang, with a great deal in our home state of Texas with a great group, who was named 2014 Private Practice of the Year across the entire country. We are very excited about them. And we have 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 at 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. I was familiar with Luke, I have been for a long time. He and his team have done some great work, along with their outreach work in Haiti. I became 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 an 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 who are very, very dedicated and very capable, who are working together to make a difference 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] 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, and creating vehicles to achieve great things for our industry and for industry around the country.

The Alliance, another group of great people, who have become very, very cohesive to work together to do some great things. We have groups within our Alliance now representing over 10,000 physical therapists, representing thousands of physical therapy facilities, including the Physical Therapy Business Alliance, which represents alone, themselves, near 1,000 outpatient facilities. We have amassed a group of large and rapidly-growing regional private practices around the country who are 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 a common and often talked about theme within health care in general. There will be other things that we work on that we will 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 have got a good year planned for 2015. This is going to be a strong development year for us. We started the year with a great acquisition, a lot of others to come. We have good organic development planned.

We expect the rate environment this year to be, again, benign. Larry can talk to that in a little more detail with some numbers. When I say benign, I don't mean it is easy, it is not easy by any stretch, but we have a great group of people and a great platform around the country. We are able to do some things that sometimes are more difficult for other smaller, less well-resourced groups. We continue to attract very, very bright, capable and talented people. We have got an excellent balance sheet that we expect to continue to lever, to forward our growth in 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 more detail before we open it up for your questions.

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, that's compared to 76.5% in the 2013 period. The gross margin 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 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, where we reduced our 2014 tax rate to 40% in the fourth quarter from the 41% rate we had been previously accruing in the preceding nine months, and we recorded 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 an increase in patient visits of 15.5%, $2.819 million, and an increase in average net revenue per visit to $106.08, that's 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 cost included $10.2 million of operating costs as new clinics opened or acquired in 2014. Additionally, the remaining increase, $18.5 million of that, was from clinics added throughout 2013.

Clinic salaries related cost were 53.6% of revenue in 2014 versus 53.7% in the preceding year. We have 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 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 [count] 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%, as the average net rate per visit decreased by $0.79. Note worthy is that in 2014, the Company's adjusted EBITDA grew by 20.1% to $46.3 million, as compared to $38.564 million 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. The 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 have been good, the severe winter weather has hurt us, and we can speak more about that. In January and February, we lost an estimated 16,000 patient visits due to the weather, and that cost us probably $0.05 to $0.07 per share. After factoring that in, Management currently expects the Company's earnings from continuing operations in the year 2015 to be in the range of $22.3 million to $22.9 million of net income, and $1.80 to $1.86 diluted earnings per share. Please note that this guidance range represents projected earnings from existing operations only and excludes future acquisitions.

Thanks, Larry. I will make one more comment, before we open it up for questions. One of the things I failed to mention was we had such a great development year in 2013, which really set us up well in 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 a much better real-time look at our variable payroll costs, particularly as it related to our part-time employees, and so we were able to get that dialed in 2014. It made a very, very strong difference for us.

We do have some seasonal elements, as Larry mentioned. Us and the rest of the country getting hurt so far this year, by significant and prolonged winter weather, particularly in some of our really big markets, but uniformly across the country. 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 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)

Larry Solow, CJS Securities.

Congratulations; great volume numbers. Chris, I don't know if you can share any more detail -- I know we've talked about the five-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 have seen, and maybe how Fit to Work is also contributing to that?

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

Absolutely, a competitive --

-- process that we are going to continue to deploy. So, I will just say that we do have a great group of partners. We also have built, over the year, great sales, and a great sales training team that have worked very effectively with our partners. The new acquisitions have adopted, and increased for the most part, their sales efforts and initiatives, above and beyond what they had when we acquired them.

The work and our focus on the industrial side of the Business continues to pay dividends there, and we are continuing to dial that in, as we work around the country. We are able to see groups like our ARC Group in Kansas City approach the market maybe a little bit differently, and be very, very effective with that. So, as we have with prior acquisitions, we learn from all the good people that come into the Company, and we adjust and adapt accordingly.

I will just tell you there is a big focus on continuing that progress. We have closed the book on 2014. We are focused forward, and we are hungry, and we are going to continue to work at all the things that have helped us be successful thus far.

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

Yes. I do expect the closures to continue. When we got here -- when Larry and I and Glenn got here, I don't think we had ever closed a facility in the Company. We kept things open that made no sense to keep open.

The closures that we have right now, when you say underperforming, for the most part they have lost money now for a period of time, and despite significant efforts. And they're usually single sites that just don't make sense. And so, in many respects, closing those facilities provides 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 is a paring and culling process in a market that isn't an easy market. And so, our resources get devoted to our partnerships, which are highly capable. And in some cases, it is just a paring of the branches in order to allow us to continue to be strong.

Yes. And I get this question a lot, where people will throw out, how many clinics we open versus how many we closed, as if they are apples to apples. They are not. A number of the clinics we close are from acquisitions. It is not unusual for us to do a deal, and you will look and you'll see six out of eight clinics are generating all the profits. 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 -- ball park, I assume you are not incorporating quite the same robust same-store volume growth as you had this year. Are you assuming a little bit of a slowdown in that?

If it wasn't for the weather, our guidance range would have overlapped with the consensus estimate. 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, that is a pretty good growth rate, when you exclude additional acquisitions.

Right.

Bad weather continues into March -- we updated this through last Friday, which was the end of February. Normally, you would think: Okay, it is March, and the bad weather is over, but Tennessee is getting hammered today; we have 70 clinics there. Texas was bad yesterday, and there are some markets still feeling the brunt of the weather.

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

Great, thanks. I appreciate it. Congratulations again.

Brian Tanquilut, Jefferies.

Congratulations. Chris, I 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. 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.

It was up 50 basis points for the year.

Listen, we move around a little bit quarter to quarter. We had some of our volume growth, quite honestly, and this is no attempt to hide this, but a big part of our volume growth has come through acquired clinics. Some of these acquired clinics have different staffing overlays than we might in other places, and sometimes those change, and sometimes that happens slowly. So, that number moves around a little bit, but I am pretty confident that our margins are steady, at minimum. At the same time, we expect a neutral to maybe slightly positive net rate year.

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 have incorporated that into how we price these deals. So, it's going to move around a little bit, but I think over time it has been pretty good.

I appreciate that.

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 would look at it over the period. I expect we are in kind of, again, a neutral rate environment.

CMS has increased our pricing about 1% this year. We are continuing to focus on our work-related initiatives, which have a little bit better reimbursement. I can't tell you exactly, but I expect that we will have just a steady year this year.

Okay. 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?

There is two things. One, we increased our corporate staff, and created another region, and Glenn can speak to that. Honestly, we had a really good year, and incentive comp was higher.

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? Is there going to be more competition for the kinds of deals that you used to source yourselves?

I understand. 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.

So, there has been private equity-backed groups in our space for quite some time. They have been successful, certainly, and there has been competition on deals for some time, and yet we still source a lot of the deals ourselves. At the same time, we find ourselves engaged in discussions where there are multiple people at the table.

So, I think we have done pretty well in those roles. We are different -- our doctors differ, our models a little bit differ. And so, what is a fit for us won't necessarily be a fit for everyone, and vice versa. We are going to continue to be selective, and we expect to continue to have success.

Got it. Congratulations again, and good luck.

Brooks O'Neil, Dougherty & Company.

Congratulations on another great year. I was hoping, Chris -- I know you don't like to talk about this, but you specifically 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? How are you looking at it right now?

The same as I have for a while.

Come on.

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

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

Yes. We have been really blessed. We have some great people. We did five deals in 2013, and they range in size.

I think the smallest in that year was about $0.75 million in EBITDA, and the largest was close to $5 million. The $5-million deal being an exception in our industry, so I think you 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 is an environment where literally just about everybody that has 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 it is the right time. 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.

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 will 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 -- 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 steady-state. So, we do expect it to grow forward.

We add resources, like marketing resources. We look at adding clinical programs. We provide resources to do those things.

We invest in those partners and those partnerships, so that they can continue to do the good work that they have already started. We open new clinics, with them, in markets that they think will be beneficial. We have done all those things with the partners that we have added.

We tuck in deals now. Rick is 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. We don't talk about because they are really done very, very cheaply and efficiently, and tuck up under an existing brand, and serve as another way to further grow the base and the brand. We expect to do all those things when we do a deal.

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

Yes. So, the comp environment is mixed. It is not uniform. So, the areas where we focus, 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 as strong. It's states like Colorado -- it's just 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 that we sometimes participate in, and we sometimes elect not to participate in. We are having to look at that, and be creative and strategic in how we deal with that. So, it is an area where we continue to see opportunity. It's an area where we think we can make a difference for companies. And it is an area where we expect to continue to invest resources, and to further grow.

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. Typically, clinics will try and expand hours, or open up on Saturday, or open up later than they normally would, to try and recapture as many of those patient visits as they can. Some we'll be able to capture; some we will permanently lose. It really just depends. 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 to.

It depends on where people are in the course of their care. If they are in the last couple of visits, and they get disrupted for a week or so, and they miss work, sometimes, again, we get those back, but sometimes we don't. Certainly it creates delay, at minimum. And sometimes it is permanent, and 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. You hope to recapture some of them; but like the state of Tennessee, it was basically closed down for a week.

If somebody was scheduled to come in three times, you are not going to get them to come and replace all those three visits. You might capture one or two of them.

So, we factored that in when we talked about lost visits, and how much this costs us in EPS. We have had almost 300 clinics across the country affected by weather.

Did you mention the number of visits?

Yes, 16,000 visits. We ain't going to get those 16,000 visits back.

Yes, and not back.

Okay, last question for me, and I appreciate all the color. Have you got any comment about 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. What are you thinking about, maybe for 2015, in terms of overall leverage ratio you would be comfortable with?

We said before that we would be comfortable having debt-to-EBITDA ratio over 2. Right now, we are well less than 1. That is one of the reasons we increased the dividend by the amount we did. Our intent last year was not to reduce debt; it just turns out our cash flow -- this is a high-quality problem -- was better than we expected.

But we think we will do more deals this year, obviously, as Chris has alluded to. The leverage should go up this year. I don't think it will get anywhere near 2 to 1, but our Business is not capital-intensive, so we are a unique business that can grow internally, 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.

Mitra Ramgopal, Sidoti & Company.

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/medicaid business coming back a little, or pretty much holding where it is at?

Medicare now -- I'm looking at the individual quarters -- runs about 21% or a little over every quarter. And medicaid, in the few states we take it, runs about 2%.

Okay. Thanks. Then, I 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, is slightly looser than it has been. We have done a very good job in filling positions where we have needed to, in most areas. There are certain parts of the country where it is still very competitive, or a little more difficult to fill positions. But last year, we had a very good year in filling spots that we needed to. Our recruiters continue to do a very good job.

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

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

You're going to have regional differences, because obviously same-store is a subgroup.

I think some of it goes to acquired facilities, and how that impacts our overall rate, and some are long-lived facilities, which, as Larry mentioned, may be in different parts of the country. Obviously, it mixes all together to give us an aggregate. At the end of the day, we think we are in a pretty neutral period right now for this year.

I mean, Mitra, depending on the timing of acquisitions, we have 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 them, had an average net rate less than our average. It flips back and forth.

Okay, that is very helpful. Thanks again.

(Operator Instructions)

Dana Hambly, Stephens.

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?

I am not hearing anything on pay-fors. Don't expect them to come up with a pay-for, and don't expect them to do anything but kick the can down the road a little bit longer. I don't think that we are in some kind of a bad position.

I think our lawmakers, as sometimes frustratingly ineffective as they seem to be, understand that they can't gut the primary care industry. They can't gut 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 a long, long period of time. I don't expect it to be addressed this year either.

Okay. 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. I wonder if that is -- there were a couple of acquisitions mid-year, if that is contributing to it, or it's nothing to pinpoint there?

It is a seasonally slower quarter.

Yes.

Just like you would expect the first quarter, salaries and related costs to be higher than they would be normally in the second and third.

But acquisitions do move that number around a little bit from time to time. So, again, I think we are in -- from a margin standpoint, I think we're in probably a good place, and a pretty steady place.

That said, we are up a little bit last year, and we will see how this year goes. We are certainly focused on controlling our costs, and doing what we need to do to further expand the Business, including covering our corporate overhead and those other things. But all in all, a pretty steady period, I think, for us.

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

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

Again, if you look at our 8-K today, which I think actually is a better measure of cash flow, 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. You didn't see an impact from bringing 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. We averaged, in each of the months, over 23 visits per day per clinic, which, again, when you think about December, where you have really two very slow weeks, that was exceptional. We have never had average visits per day that high, or anywhere near that high, in the month of December before.

For the year, I think we averaged 22.9. This is off the top of my head, but I'm pretty sure that is correct. And in the fourth quarter, it was actually higher than that.

So, every single month was over 23 in the quarter?

Yes.

Okay. Great. Thanks very much.

(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 will talk to you soon. Thanks. Thank you. Bye, now.

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