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US Physical Therapy Inc  (NYSE:USPH)
Q4 2018 Earnings Conference Call
March 07, 2019, 10:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Hillary and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q4 2018 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.

I would now like to turn the conference over to Chris Reading, Chief Executive Officer. Please go ahead.

Christopher J. Reading -- Chief Executive Officer

Thanks, Hillary. Good morning, everyone and welcome to U.S. Physical Therapy's fourth quarter and year end 2018 earnings call. With me on the call include Larry McAfee, our Executive Vice President and Chief Financial Officer; Glenn McDowell and Graham Reeve, our Chief Operating Officers, West and East; Rick Binstein, our General Counsel; Jon Bates, our Controller.

Before we begin to discussing our results, we need to cover a brief disclosure statement. Jon, if you would, please?

Jon Bates -- Controller

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.

Christopher J. Reading -- Chief Executive Officer

Thanks, Jon. I'm going to start my comments today focused first on the year, so I think it will make it a little bit easier to understand the final quarter. For starters, our operating results grew this year by 28.1%, which for us is a really good number. Underpinning that result with some very good underlying operating metrics as well as progress in some key areas. Revenues for the year increased 9.6%, PT revenues grew 7.3% and what was a very strong same-store volume growth of 4.6% on the year, which for me at least is the best same-store volume that I can recall. Aiding that were smaller but important segments which also demonstrated healthy improvement.

PT management contracts revenue grew more than 12% and we delivered excellent growth and progress in our industrial injury prevention business with Briotix up approximately 71% revenue for the year. Embedded in that Briotix growth was a strong combination of internal organic growth combined with an acquisition completed in May of last year.

The integration of that deal into our Briotix platform has gone very well, albeit through a lot of hard work and great people pulling together to form a strong team. We are now better positioned in the marketplace to further scale and expand our business and service offerings to an even greater collection of large national, as well as regional employers. In order to get where we are now, we spent some additional money on our team -- on getting our team integrated and added -- and we'll continue to add some needed additional resources in order to allow us to take advantage of the opportunity at hand. In spite of those costs and additional resource allocations, we saw big improvement in operating margins up 7 basis points for the year. We are now serving employers in over 600 locations in more than 40 states.

Shifting gears, as I mentioned earlier, our same-store numbers for the year and the quarter were notable and helped us finish the year in a good place. Special thanks goes out to our partners, directors, and our sales team in conjunction with our home office operations and sales support for another great year. Last year, we invested considerably in people and resources and those investments have been paying off and should continue to bear good fruit into the future.

On that note, we remain committed and excited about our physical therapy business, especially our continued ability to attract excellent partners and leaders who have helped to deliver strong visit per clinic per day growth over a many year period. In 2018, our visits per clinic per day is the highest levels we have seen on average today and despite slight Medicare reimbursement decline, we were able to increase our operating margin slightly overall while making continued progress in balancing out some of our acquired partnerships related to costs. Pretax operating income for the year increased more than 10%.

I want to briefly mention some of our industry focus work as I think it colors the environment a little bit and I think it's important to discuss. So we -- about five years ago, we put together an alliance that we refer to as APTQI, the alliance for Physical Therapy Quality and Innovation. Over the past five plus years, we made a lot of progress and I'm happy to say we've seen a cohesion progress increased over that period as well. We've added a number of important member companies to APTQI. In doing so and focusing our time, money and considerable talent within that group, we produced some meaningful results starting several years ago with heading off the coding reform initiative, which would have produced less-measured consistency and reliability and more regulatory headache for no net gain.

Last year, we commissioned this study, which ultimately produced a paper using (inaudible) identified CMS data to determine the efficacy of early intervention physical therapy in low back pain patients, as compared to other entry points in the healthcare systems. We are pleased to have an independent Beltway analytics group corroborate what we thought we knew that early intervention PT for low back pain not only resulted in efficient and effective results, but actually lowered those patients' entire healthcare spend for the year, including medicines, other NP visits and diagnostic testing by significantly -- by statistically significant margin. Most recently, we have set our sights on working to reduce administrative burden, especially in our federal payer group. Also recently, our own Nick Patel who serves as Executive Director for APTQI as well as splits his time with us here on clinical services. Nick had an op-ed published in The Wall Street Journal couple of weeks ago relating to physical therapy as a primary alternative to opioids.

So, in closing, for me, seeing the good that we do as a profession is extremely rewarding. Several of us on the exec team are starting our 16th year here together and for me finishing my 34th year in the profession I sincerely love. I remain enthusiastic and excited and particularly thankful that I get to wake up every day and work with tremendous people here and around the country, through their fine work make a lot healthier life for our patients, families and employers so that they can realize their individual goals and aspirations. In doing so, I do believe that we make the world and the healthcare system a little better, a little friendlier and a little more efficient and as we have done now over a pretty long period of time and we hope and we'll work to continue to do into the future, ultimately benefiting our shareholders as well.

That concludes my prepared comments. Larry will cover the financials for the quarter as well as the year in more detail. Thank you. Larry?

Lawrance W. McAfee -- Chief Financial Officer

Thanks, Chris. I'm going to start with the quarter and then move to the year. For the -- in the fourth quarter, revenue increased $8.1 million or 7.5% to $117 million. Patient revenues from physical therapy operations increased 6.1%, revenue from our industrial injury prevention business increased almost 52%. Total operating costs were 78.5% for the quarter as compared to 77.9% a year earlier. The gross profit in the fourth quarter of '18 grew by $1.1 million to $25.2 million. Our corporate office costs were 8.9% of revenue for the quarter versus 9.3% a year earlier. Operating income for the recent quarter increased by 6% to $14.8 million. As Chris alluded to, we had good same-store growth in 2018 and such was the case in the fourth quarter. Same-store revenue for de novo and acquired clinics open for a year or more increased 3.9%, while visits increased 3.2%. And bottom line, our operating results in the quarter increased 45.5% to $9 million or $0.71 per diluted share as compared to $0.49 in the fourth quarter of 2017.

I'll now talk about some of the highlights for the full year. For the year, our revenue increased 9.6% to $454 million. Revenue from physical therapy operations increased 7.3% to $417.7 million. Of the increase, noteworthy is $23.8 million came from Mature Clinics, while $4.7 million came from New Clinics. Revenue from physical therapy management contracts as Chris said earlier increased 12.1% to $8.3 million. Revenue from our industrial injury prevention business for the full year increased almost 71% to $25.5 million. Our total operating costs for the Company were 77.6% of revenues compared to 78.1$in 2017. That's a reduction of 50 basis points for the full year. The gross profit in 2018 increased by 12.2% or $11.1 million. The gross profit percentage grew to 22% as compared to 21.9% in the previous year. That's an increase of 50 basis points. Gross profit for the physical therapy operations was 22.7% in '18 as compared to 22.5% in '17. The gross profit percentage for the industrial prevention business, it grew to 20.4% as compared to 13.3%. Corporate costs for the full year ran at 9.1% of revenue versus 8.7% a year earlier. Our operating income for the full year 2018 increased 10.2% to $60.3 million. Chris mentioned the same-store growth, which I agree, I think the highest I can ever remember. Our same-store revenue growth was 4.6%, visits increased 4.6%, while the rate was flat. For the full year 2018, operating results increased by 28.1% to $33.5 million or $2.65 per share as compared to $2.08 a year earlier.

In terms of other financial measures for the fourth quarter, the Company's adjusted EBITDA grew by 3.1% to $15.5 million. For the full-year, EBITDA -- adjusted EBITDA increased by 7.1% to $62.1 million.

In the release, we gave earnings guidance for 2019. Keep in mind this guidance is only for our existing operations and excludes any potential future acquisitions. Management currently expects the Company's operating results for this year to be in the range of $35.1 million to $36.4 million or $2.76 to $2.85 per share. As I noted in the press release, our cash flow in 2018 was actually pretty amazing. Cash flow from operations ran at record level, which fully funded both our de novo clinic development and acquisitions, while at the same time, net debt, that is debt less cash, was reduced by $22.4 million or 58%.

We are increasing our dividend. We announced we are raising it in 2019 by 17.4%. The first quarterly dividend of the year of $0.27 per share will be paid in April.

Christopher J. Reading -- Chief Executive Officer

Great, thanks, Larry. That concludes our prepared comments. And so, we'd like to go ahead and open the lines up for questions.

Questions and Answers:

Operator

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

Christopher J. Reading -- Chief Executive Officer

Hey, Brian.

Brian Tanquilut -- Jefferies & Co. -- Analyst

Hey guys, good morning. Larry, I got the first question for you. As I think about guidance for 2019, the implied organic growth that I'm seeing (inaudible) it excludes the acquisition, so I'm seeing 5% organic EBITDA -- earnings growth. How are you thinking about volume and rate assumptions for 2019 as I consider Medicare I think is putting in a 1% rate hike for this year?

Lawrance W. McAfee -- Chief Financial Officer

No, it's a fraction of a percent. We actually assumed our net rate would remain flat. And then we put the tax rate in the quarter (ph) 26.5% and what was the other question? I'm sorry.

Christopher J. Reading -- Chief Executive Officer

Volumes.

Brian Tanquilut -- Jefferies & Co. -- Analyst

Just the drivers of the guidance. (inaudible) volume and then kind of like what margin expansion opportunities are expected?

Lawrance W. McAfee -- Chief Financial Officer

We had some volume, but we didn't assume the same level of same-store growth that we experienced in '18.

Brian Tanquilut -- Jefferies & Co. -- Analyst

Got it, OK. And then in the quarter as we saw the uptick in the bad debt expense, even excluding the PG&E bankruptcy. So, is there anything to call out of that or is that sort of a new normal that we should be modeling on bad debt?

Lawrance W. McAfee -- Chief Financial Officer

Well, that's not a bad debt. I think for the PT operations ran at 0.9%. Yes, just about 1%. It was really the difference in bad debt was attributable to PG&E, which we may actually eventually recapture that but considering how long everybody thinks this bankruptcy is going to last, we went out and just wrote it off.

Brian Tanquilut -- Jefferies & Co. -- Analyst

Got it. And then last question from me. Also during the quarter we saw sort of an uptick in the salaries and wages line. I mean, are you seeing any incremental wage pressure to call out right now or is it a planned increase that you put through? Anything to just give us some color on the uptick in salaries for the quarter.

Christopher J. Reading -- Chief Executive Officer

Yes, I think we're seeing a lot of wage pressure. We had a good early quarter and we had a little bit of a -- little bit of a soft end of December with some weather and some other things. But in general, I'll tell you, Brian, one of the things we did this last year -- for a good chunk of the year, particularly in a few of the regions, we got some really good cost reduction. We have though some areas where we made some changes. We have some big legacy partnerships that actually had record year for us this year and we actually loosened cost a little bit and went out and brought in some key people we thought would move some market share and that had the desired effect.

And so I think we traded a little cost for a pretty good pickup in volume. But we did that kind of surgically in key areas where we needed some legacy support and where we thought we could take advantage of it and I think it worked out OK. I expect that we'll see a little wage pressure. Kids are coming out of school with much more debt than ever before just with these DPT programs and I think we'll offset that reasonably well, but that's our continued challenge.

Lawrance W. McAfee -- Chief Financial Officer

Yes. If you look at the numbers for the -- the bullet points for the year versus the quarter in terms of PT clinic costs, I'm talking about salaries here, for the year, our new clinics added $5.3 million in salary-related costs. $2.7 million of that was in the fourth quarter, because we had a lot of openings.

Christopher J. Reading -- Chief Executive Officer

Yes, we did have a lot of openings late in the year.

Lawrance W. McAfee -- Chief Financial Officer

So that skewed the number. We actually made good progress for the year. The fourth quarter is little bit of an anomaly because of the timing of the New Clinic.

Brian Tanquilut -- Jefferies & Co. -- Analyst

Yes, sure. All right. Thanks, guys. Appreciate it.

Christopher J. Reading -- Chief Executive Officer

Thanks, Brian.

Operator

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

Lawrence Solow -- CJS Securities -- Analyst

So, I guess, just a quick follow-up to Brian's question and I think you probably kind of answered, but yes, it was also the uptick sort of in just non-salaries, but I think that was probably driven by salaries, but just the overall rise at Mature Clinics and you mentioned, I guess, you're investing a little bit more on the legacy side. So should we expect that? Independent of a little bit higher wages, but overall, should that sort of ease as we look out for '19?

Christopher J. Reading -- Chief Executive Officer

Yes, I think we'll be pretty steady in '19. I don't expect big changes up or down.

Lawrance W. McAfee -- Chief Financial Officer

Yes, I mean, again, if you look at year versus quarter for the year, that increase in operating costs of the Mature Clinics was $15.1 million, but it was only $2.7 million in the fourth quarter. So it definitely leveled out.

Lawrence Solow -- CJS Securities -- Analyst

Okay. How about just the outlook for a couple of things on the -- looks like net you opened nine more clinics than you closed, which actually is a little bit of a higher number than it's -- maybe it's been running on average the last few years. Less closures, more openings and then also just on the acquisition front, little bit of a slowdown in sort of -- at least on the PT side, you only acquired three or four clinics. So, any thoughts on those two?

Christopher J. Reading -- Chief Executive Officer

Yes. We had one deal that we got done. We had another one that went away pretty much at the end, due to a bad unfortunate prior experience that one of the key staff had an unrelated deal that just caused the owners to take a pause. And so, we had more activity last year, we got the one deal done. It was a little bit smaller. We're seeing good activity right now. We're going to continue invest in the PT business. We did close a few more centers last year. Some of our early, early Company legacy centers that are single -- in a symbol locations have been winding down over a period of time, but even with that, we were able to produce some really strong earnings growth.

And so I think that'll balance out as we go forward. We're currently talking about some ways to kind of pick up organic growth. I know that Glenn and Graham are focused on that. We had a good start to the year in that regard. And so we'll see how the year plays out. All the stuff's factored into our guidance right now, but we expect to have another good year.

Lawrence Solow -- CJS Securities -- Analyst

And did you open up about 20 clinics under the de novo? Is that about plus or minus in the ballpark?

Lawrance W. McAfee -- Chief Financial Officer

We opened 23.

Christopher J. Reading -- Chief Executive Officer

But I think with 20, we had a few tuck-ins. And then we had -- we had our deal, so it was somewhere in the upper 20s I think when you looked at all the -- everything rolled together.

Lawrence Solow -- CJS Securities -- Analyst

Okay, great. And then just lastly, Chris, you mentioned I think 2018 on an annual basis, visits per day hit a record. You happened to have either the Q4-versus-Q4 or the year-versus-year for the visits and units per visit?

Christopher J. Reading -- Chief Executive Officer

I don't have it in front of me right now.

Lawrance W. McAfee -- Chief Financial Officer

Units per visit for the year -- well, for the fourth quarter, it was 4.46 unit per visit days. Units per day, I don't remember.

Christopher J. Reading -- Chief Executive Officer

Honestly, I can get it after the call.

Lawrence Solow -- CJS Securities -- Analyst

Yes. That's fine. We can get it after the call. I can -- I can speak to Larry too. That's fine. No problem. Great. Thanks, guys. Appreciate it.

Christopher J. Reading -- Chief Executive Officer

Thank you.

Operator

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

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Yes. Hi, good morning. If you could remind us or give us what the payer mix was either for the quarter, for the year. And then I know you talked about a slight decline in the Medicare reimbursement. How do you see the other payers right now, any potential pressures there?

Lawrance W. McAfee -- Chief Financial Officer

Medicare has a modest increase through this year, but it's like a fraction of a percent.

Christopher J. Reading -- Chief Executive Officer

'18 was a half a percent decline. I don't remember exactly what the increases this year but it's up slightly.

Lawrance W. McAfee -- Chief Financial Officer

But in terms of reimbursement, our mix in the fourth quarter insurance was just under 50%, workers' comp was 14.4%, Medicare and Medicaid combined with 28% and other was around (ph) 8%.

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Okay, that's great. And if you look at the industrial side of the business, the gross margin improved pretty significantly in '18 versus the year ago. And I was just curious as you look out the '19, if you see pretty meaningful upside there or is it likely to be flatten out from what you have seen this past year?

Christopher J. Reading -- Chief Executive Officer

Yes, it's going to flatten out for the time being. We did make really, really significant progress this last year. We also needed to make some investments in people, particularly with the merger, in some infrastructure investments. But over a long period of time, we expect margins to be really solid, but I wouldn't model anything on a trajectory that's forward of where we've been.

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Okay, thanks. And then on the acquisition pipeline, I know you're always looking at potential opportunities. I was just curious in terms of the industrial prevention side of things if you're also seeing a good pipeline there.

Christopher J. Reading -- Chief Executive Officer

Yes. You know I don't like to use the pipeline word, because I think people get the wrong -- people get the wrong connotation, but you will see us continue to work to be active. I'm not going to make any promises. But I think we'll have a good M&A year and where we have opportunity, we'll add to our industrial injury prevention business and where we have opportunity and we will add to our PT business with the right people in the right fit.

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Okay. No, that's great. And then finally, Chris, on the sales force. I don't know where you stand today and do you need to make any significant investments on that front?

Christopher J. Reading -- Chief Executive Officer

No, I think we'll continue to add people where we feel like we can take advantage of additional volume and take advantage of those resources. We'll gradually add people over time with our industrial injury prevention business. I got to just give those guys a shout out. They're doing a great job with the pipeline right now. That pipeline refers to the number of leads that we have with companies who are interested in our services right now. And that pipeline is very, very strong and they've done a great job, but will add to that business over time in order to continue the forward progress that we started last year.

Unidentified Speaker --

And overall, from a Company standpoint, the total number of sales reps stayed the same as it was last quarter. We're still at 87 reps, but we're covering about 487 locations.

Lawrance W. McAfee -- Chief Financial Officer

For the PT business.

Unidentified Speaker --

For the PT business.

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Okay. And again, just on the sales force, do you need two separate sales force or can you cross sell?

Christopher J. Reading -- Chief Executive Officer

For the most part, we have two separate sales forces. The product specificity, particularly in the industrial injury prevention business and there are some technical elements around that that are important to understand. And so they're separate. I will say that there's -- we introduced effectively the two parts of the Company last summer and there's been some good back and forth between PT partners and our Briotix partners in taking advantage of local opportunities. Those really come from our partners in the local market but then the Briotix sales people, our team there picks those up. So, that's how we've done it thus far and I think that's how we'll continue to do it.

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Okay, that's great. Thanks for taking the questions.

Christopher J. Reading -- Chief Executive Officer

Thanks, Mitra.

Operator

Your next question comes from the line of Mike Petusky, Barrington Research.

Christopher J. Reading -- Chief Executive Officer

Hey, Mike.

Michael Petusky -- Barrington Research -- Analyst

Hi, good morning guys. Just out of curiosity, do you have the number of reps that are covering the industrial injury side?

Unidentified Speaker --

We have about -- I think just about seven from a business development standpoint that we have in total.

Michael Petusky -- Barrington Research -- Analyst

Got it, but that figure stay about the same or are you looking to add?

Unidentified Speaker --

Yes, it's a long-term training program, so I don't expect that to change significantly this year.

Michael Petusky -- Barrington Research -- Analyst

Okay. All right. And then, Larry, I guess going to just assumptions undergirding guidance. I mean is it fair to say -- I know you said that your volume estimate is below last year, which certainly makes sense given how successful you guys were last year, but, I mean are you kind of in the 2% to 2.5% range, somewhere in that ballpark. Is that fair to say?

Lawrance W. McAfee -- Chief Financial Officer

Jon's nodding, so, I guess it was. I don't have it in front of me, but we assume volume growth, we just didn't assume the saying 4.5% plus-same store volume growth. But I mean, as you know, we are -- it's not unusual for us to raise guidance. So, early in the year and the weather has been kind of bad if you have noted. So we feel little conservative, but we still don't know what -- what volumes will be in March because the weather continues to be bad.

Michael Petusky -- Barrington Research -- Analyst

Okay. And then just on the effective tax rate, I've had a devil of a time getting my arms around this for not just you guys, but others. You think if there is any bias in your guidance there that's down given that this year was lower than I think you had initially anticipated. And again, it's not just you guys, it's a bunch of companies that are still getting their arms around all the implications of the changes there.

Lawrance W. McAfee -- Chief Financial Officer

Yes, part of that was because of the deductions we get for ours shares and that's just part of our compensation system at the share price (inaudible). The price has settled and the dates are granted and we had significant appreciation and the stock price for the amount we were able to deduct was higher than we had expected. For this year, we assume -- we didn't assume the stock was going to increase by each percentage again. So again, depending on what the stock does, the deductions maybe bigger and the tax rate maybe lower.

Michael Petusky -- Barrington Research -- Analyst

Okay. So if there is any bias -- it sounds like you're saying it's probably down, but you're certainly not making any promises around them?

Lawrance W. McAfee -- Chief Financial Officer

Well, I mean, I don't think -- so the guidance range we gave, our budget is in that range. Now, can we do better than budget, yes we frequently do better than budget.

Christopher J. Reading -- Chief Executive Officer

But we just don't -- we don't control the tax rate. That's going to be what it is based on where the business is and based on to a certain extent where our share prices are.

Michael Petusky -- Barrington Research -- Analyst

Okay. All right. And then just last question. If you said this, I didn't catch it, did you give any sense of CapEx for '19?

Lawrance W. McAfee -- Chief Financial Officer

Yes, normally, yes. I think we had $6 million in the budget. Normally, it's $5 million to $6 million. It's normally pretty close to this same amount as depreciation and amortization.

Michael Petusky -- Barrington Research -- Analyst

Okay. All right. Very good. Thank you, guys. Appreciate it.

Christopher J. Reading -- Chief Executive Officer

Thanks, Mike.

Operator

And your next question comes from the line of Dana Hambly with Stephens.

Christopher J. Reading -- Chief Executive Officer

Good morning, Dan.

Dana Hambly -- Stephens -- Analyst

Hey, good morning. Couple of questions on the injury prevention business. I think you said you're in 600 different facilities. But just curious, is there any significant customer concentration in that business?

Christopher J. Reading -- Chief Executive Officer

Yes, there is. I mean, we're big in utilities, we're big in distributing side of the business. PG&E is, was, is the big customer. You understand what -- we had the bankruptcy in the fourth quarter. Although they've affirmed based upon some analysis that they've done in the savings in the ROI that they've gotten, they definitely want to continue that program as they go forward. So we're watching that closely. Obviously, Costco has been a long-standing big customer. Obviously, a big company and we continue to grow with them by the way. But we're also -- we've gotten much better diversified over the last two years. And so while we have a couple of concentrated position, it's definitely improved.

Dana Hambly -- Stephens -- Analyst

Okay. Generally speaking, you consider that a real sticky business? Is that right?

Christopher J. Reading -- Chief Executive Officer

It's been an amazingly sticky business.

Dana Hambly -- Stephens -- Analyst

Okay, all right. And just -- I know it's still a small piece of your overall business, but just thinking about the organic growth in that injury prevention business. Is that -- would you characterize it as similar to the PT business, much different? And just curious too, with the organic growth, is it high margin on that organic growth that comes in? Or is it comparable to -- kind of just as you grow the business?

Christopher J. Reading -- Chief Executive Officer

Yes, it's comparable margin. I think the embedded organic elements are better on a percentage basis and partly because it's so much smaller too. We're just not able to grow the core PT business at the level that this business is going to grow organically I think for a good while. But the margins are about the same. So you don't have a lot of fixed cost. We do have some corporate costs, but your gross pricing and you have some on the ground people costs and that's about it.

Dana Hambly -- Stephens -- Analyst

Okay. Chris, appreciate the comments on -- the prepared comments on the Alliance. Curious -- I don't believe you've really talked about the Alliance much before in your prepared comments. So just the question here, why did you take this opportunity today to talk about that? And then just on the innovation in the industry, if there are any real new innovations that has the industry really excited about the PT business?

Christopher J. Reading -- Chief Executive Officer

Yes, so on the Alliance, I have talked about it a few times, maybe a little bit more time spent here, because we've had some good wins recently. A few I didn't mention with some regional payers just around some regulatory issues, coding, changes and things like that we are able to work with them on. But the group's doing great work and we want to represent the profession, while we think we do. We've gotten bigger. We just hired a really strong marketing group, who is helping us to get the word out not only about the physical therapy and the efficacy of it, but some solutions in the marketplace like the opioid thing, helping us to move our initiatives forward. We're going to get more focused in having -- we've always been focused and we met with CMS every year and we're going to continue to do that. We think there's some regulatory burden opportunity to try to facilitate there.

So I think it's important that you guys hear about those things just in order to understand kind of the broader macro environment. I mean, one of our challenges is efficiency. We could be a lot more efficient if we could get rid of some of the regulatory burden. And so as healthcare moves in a certain direction, we want to take the APTQI and be a strong voice for the profession, particularly for our part of it on the outpatient side and we've done a good job. We've grown it, we've added a number of member companies, and again whether it's important to you or not, it's important to us and we're going to continue to work at it.

Dana Hambly -- Stephens -- Analyst

I think if it's important to you, it should to be important to us. Appreciate it, Chris. Thanks.

Christopher J. Reading -- Chief Executive Officer

Thank you.

Operator

There are no other questions at this time.

Christopher J. Reading -- Chief Executive Officer

All right, guys. Thank you. Thanks, everyone for your interest. Thank you for your questions. We're available if you have some offline questions as well and have a great day.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 35 minutes

Call participants:

Christopher J. Reading -- Chief Executive Officer

Jon Bates -- Controller

Lawrance W. McAfee -- Chief Financial Officer

Brian Tanquilut -- Jefferies & Co. -- Analyst

Lawrence Solow -- CJS Securities -- Analyst

Mitra Ramgopal -- Sidoti & Company LLC -- Analyst

Unidentified Speaker --

Michael Petusky -- Barrington Research -- Analyst

Dana Hambly -- Stephens -- Analyst

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