false000181584900018158492024-08-052024-08-050001815849us-gaap:CommonClassAMember2024-08-052024-08-050001815849us-gaap:WarrantMember2024-08-052024-08-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): August 5, 2024
___________________________________
ATI Physical Therapy, Inc.
(Exact name of registrant as specified in its charter)
___________________________________
Delaware
(State or other jurisdiction of
incorporation or organization)
001-39439
(Commission File Number)
85-1408039
(I.R.S. Employer Identification Number)
790 Remington Boulevard
Bolingbrook, IL 60440
(Address of principal executive offices and zip code)
(630) 296-2223
(Registrant's telephone number, including area code)
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A common stock, par value $0.0001ATIPNew York Stock Exchange
Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per shareATIPWOTC Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company    ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02 - Results of Operations and Financial Condition.
On August 5, 2024, ATI Physical Therapy, Inc. issued a press release (the “Press Release”) announcing financial results for the second quarter of 2024. A copy of the Press Release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information under Item 2.02 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 - Financial Statements and Exhibits.
(d) Exhibits

EXHIBIT INDEX
Exhibit No.Description
Press Release issued by ATI Physical Therapy, Inc. on August 5, 2024.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 5th day of August, 2024.


ATI PHYSICAL THERAPY, INC.
By:
/s/ Joseph Jordan
Name:
Joseph Jordan
Title:
Chief Financial Officer




image_0.jpg


ATI Physical Therapy Reports Second Quarter 2024 Results
Drove Continued Growth in Visits, Rate per Visit, Revenue and Adjusted EBITDA
Advanced Company's Capacity to Expand Patient Access to High-Quality Care
BOLINGBROOK, IL – August 5, 2024 – ATI Physical Therapy, Inc. (NYSE: ATIP) (“ATI” or the “Company”), a nationally recognized outpatient physical therapy provider in the United States, today reported financial results for the second quarter ended June 30, 2024.
"We again experienced notable growth in the second quarter, with over 1,500 more patient visits each day compared to the same period last year," said Sharon Vitti, Chief Executive Officer of ATI. "Demand for our services remains strong, and our growing clinical base continues to execute on providing access and quality outcomes for our patients. Because of their hard work, we saw year-over-year growth in the business."
Ms. Vitti added, "We also saw higher rates per visit compared to the prior year due to the dedication of our payor and revenue cycle management teams. Equally exciting, we were recently notified by CMS that we have received an exceptional MIPS rating for the 5th consecutive year, a distinction recognizing the high-quality care we deliver every day. The ATI family is proud of this honor.”
Joe Jordan, Chief Financial Officer of ATI, commented, "Our financial progress is a direct result of our strategic focus on people and operations. For the third quarter, we are guiding revenue to be between $180 million and $190 million and Adjusted EBITDA1 to be between $9 to $14 million.”
Second Quarter 2024 Results
Supplemental tables of key performance metrics for the first quarter of 2022 through the second quarter of 2024 are presented after the financial statements at the end of this press release. Commentary on performance results in the second quarter of 2024 is as follows:
•Net revenue was $188.1 million compared to $172.3 million in the second quarter of 2023, an increase of 9.2%.
▪Net patient revenue was $172.8 million compared to $156.9 million in the second quarter of 2023, an increase of 10.1%. See below for discussion of drivers to net patient revenue (i.e., patient visits and Rate per Visit).
▪Other revenue was $15.4 million in both the second quarter of 2024 and 2023.
•Visits per Day (“VPD”) were 24,921 compared to 23,412 in the second quarter of 2023, an increase of 6.4%, driven by the Company’s increased capacity to see patients through a higher number of clinical FTE and higher productivity per clinical FTE.
1 Refer to "Non-GAAP Financial Measures" below.


▪VPD per Clinic was 28.4 compared to 25.7 in the second quarter of 2023, an increase of 2.7 visits, primarily driven by the Company’s continued focus on clinic operational excellence and footprint optimization.
•Rate per Visit (“RPV”) was $108.32 compared to $104.74 in the second quarter of 2023, an increase of 3.4%, driven primarily by improved rates with certain key payors, operational improvements in revenue cycle management, and service mix.
•Salaries and related costs were $102.5 million compared to $95.3 million in the second quarter of 2023, an increase of 7.6%, primarily due to added clinicians and support staff and wage inflation.
▪PT salaries and related costs per visit were $56.22 compared to $54.81 in the second quarter of 2023, an increase of 2.6%, mainly due to higher compensation per FTE, partially offset by a higher labor productivity of 9.6 VPD per clinical FTE compared to 9.5 in the second quarter of 2023.
•Rent, clinic supplies, contract labor and other was $53.2 million compared to $50.4 million in the second quarter of 2023, an increase of 5.4%, primarily driven by higher spending on contract labor and third-party services, partially offset by a lower number of clinics.
▪PT rent and other per clinic was $59,232 compared to $53,866 in the second quarter of 2023, an increase of 10.0%, primarily due to higher contract labor usage and higher spend on third-party services.
•Provision for doubtful accounts was $2.4 million in both the second quarter of 2024 and 2023. PT provision as a percentage of net patient revenue was 1.4% in the second quarter of 2024 compared to 1.5% in the second quarter of 2023.
•Selling, general and administrative expenses were $23.1 million compared to $36.6 million in the second quarter of 2023, a decrease of 36.9%, primarily driven by lower transaction costs, higher legal cost insurance reimbursements and lower corporate insurance costs.
•Non-cash long-lived asset impairment charges totaled $0.3 million compared to no impairment charges in the second quarter of 2023.
•Fair value remeasurement gains related to the 2L notes, warrant liability, and contingent common shares liability totaled $5.8 million compared to $8.0 million in the second quarter of 2023. The fair value remeasurement gains in the second quarter of 2024 were primarily driven by decreases in the Company’s share price during the period.
•Interest expense during the quarter was $14.9 million compared to $16.7 million in the second quarter of 2023, a decrease of 10.7%, primarily due to lower principal balance outstanding partially offset by lower interest rate hedge benefits recognized.
•Income tax (benefit) expense was $(0.0) million, compared to $0.1 million in the second quarter of 2023.
•Net loss was $2.6 million compared to $21.7 million in the second quarter of 2023.


•Net loss available to common stockholders was $10.6 million compared to $73.1 million in the second quarter of 2023 primarily due to lower net loss and a lower Series A Senior Preferred Stock redemption value adjustment.
▪Fully diluted Class A common stock loss per share was $2.43 compared to $17.74 in the second quarter of 2023.
•Adjusted EBITDA2 was $16.6 million compared to $9.3 million in the second quarter of 2023, an increase of 77.5%, primarily due to higher revenue net cost of services.
Adjusted EBITDA3 margin was 8.8% compared to 5.4% in the second quarter of 2023.
•Net cash used was $3.8 million year-to-date compared to $45.5 million in the first six months of 2023.
Operating cash used was $27.9 million year-to-date compared to $5.3 million in the first six months of 2023, with the increase driven primarily by changes in current assets and current liabilities related to timing of collections and payments, as well as by higher incentive compensation paid to employees, partially offset by lower net loss.
Investing cash use was $5.2 million year-to-date compared to $10.1 million in the first six months of 2023, with the decrease primarily due to fewer new clinic openings. No clinics were opened year-to-date compared to 10 clinics in the first six months of 2023.
Financing cash generated was $29.2 million year-to-date, which included a $25.0 million 2L note draw and revolver net proceeds of $6.2 million. Financing cash used was $30.0 million in the first six months of 2023, which included revolver net repayments of $24.8 million and financing transaction costs of $6.3 million.
•As of June 30, 2024, total liquidity was $33.0 million comprised of cash and cash equivalents.
Additionally, ATI closed 2 clinics and divested 4 clinics during the quarter in connection with the Company’s ongoing footprint optimization initiative, resulting in 878 clinics at the end of the quarter.
Q3-2024 Guidance
For the third quarter of 2024, ATI expects net revenue to be in the range of $180 million to $190 million, which represents approximately 1% to 7% year-over-year growth. The Company anticipates it will continue growing patient visits through 2024 as it executes on its commercial, people, and operations strategies. ATI expects Adjusted EBITDA4 in the third quarter of 2024 to be in the range of $9 million to $14 million.
2 Ibid.
3 Ibid.
4 Ibid.


Second Quarter 2024 Earnings Conference Call
Management will host a conference call at 5 p.m. Eastern Time on August 5, 2024, to review second quarter 2024 financial results. The conference call can be accessed via a live audio webcast. To join, please access the following web link, ATI Physical Therapy, Inc. Q2 2024 Earnings Conference Call, on the Company’s Investor Relations website at https://investors.atipt.com at least 15 minutes early to register, and download and install any necessary audio software. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.
About ATI Physical Therapy
At ATI Physical Therapy, we are committed to making every life an active life. We provide convenient access to high-quality care to prevent and treat musculoskeletal (MSK) pain. Our approximately 900 locations in 24 states and virtual practice operate under the largest single-branded platform built to support standardized clinical guidelines and operating processes. With outcomes from more than 3 million unique patient cases, ATI strives to utilize quality standards designed to deliver proven, predictable, and impactful patient outcomes. From preventative services in the workplace and athletic training support to outpatient clinical services and online physical therapy via our online platform, CONNECT™, a complete list of our service offerings can be found at ATIpt.com. ATI is based in Bolingbrook, Illinois.
Forward-Looking Statements
All statements other than statements of historical facts contained in this communication are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of the words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “project,” “forecast,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” “target” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the impact of physical therapist attrition and ability to achieve and maintain clinical staffing levels and clinician productivity, anticipated visit and referral volumes and other factors on the Company's overall profitability, and estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this communication, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company.
These forward-looking statements are subject to a number of risks and uncertainties, including:
•our liquidity position raises substantial doubt about our ability to continue as a going concern;
•risks associated with liquidity and capital markets, including the Company's ability to generate sufficient cash flows, together with cash on hand, to run its business, cover liquidity and capital requirements and resolve substantial doubt about the Company's ability to continue as a going concern;
•our ability to meet financial covenants as required by our 2022 Credit Agreement, as amended;


•risks related to outstanding indebtedness and preferred stock, rising interest rates and potential increases in borrowing costs, compliance with associated covenants and provisions and the potential need to seek additional or alternative debt or capital financing in the future;
•risks related to the Company's ability to access additional financing or alternative options when needed;
•our dependence upon governmental and third-party private payors for reimbursement and that decreases in reimbursement rates, renegotiation or termination of payor contracts, billing disputes with third-party payors or unfavorable changes in payor, state and service mix may adversely affect our financial results;
•federal and state governments’ continued efforts to contain growth in Medicaid expenditures, which could adversely affect the Company’s revenue and profitability;
•payments that we receive from Medicare and Medicaid being subject to potential retroactive reduction;
•changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;
•compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;
•risks associated with public health crises, epidemics and pandemics, as was the case with the novel strain of COVID-19, and their direct and indirect impacts or lingering effects on the business, which could lead to a decline in visit volumes and referrals;
•our inability to compete effectively in a competitive industry, subject to rapid technological change and cost inflation, including competition that could impact the effectiveness of our strategies to improve patient referrals and our ability to identify, recruit, hire and retain skilled physical therapists;
•our inability to maintain high levels of service and patient satisfaction;
•risks associated with the locations of our clinics, including the economies in which we operate and the potential need to close clinics and incur closure costs;
•our dependence upon the cultivation and maintenance of relationships with customers, suppliers, physicians and other referral sources;
•the severity of climate change or the weather and natural disasters that can occur in the regions of the U.S. in which we operate, which could cause disruption to our business;
•risks associated with future acquisitions, divestitures and other business initiatives, which may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;
•risks associated with our ability to secure renewals of current suppliers and other material agreements that the Company currently depends upon for business operations;
•failure of third-party vendors, including customer service, technical and information technology (“IT”) support providers and other outsourced professional service providers to adequately address customers’ requests and meet Company requirements;


•risks associated with our reliance on IT infrastructure in critical areas of our operations including, but not limited to, cyber and other security threats;
•a security breach of our IT systems or our third-party vendors’ IT systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act;
•maintaining clients for which we perform management and other services, as a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected;
•our failure to maintain financial controls and processes over billing and collections or disputes with third-party private payors could have a significant negative impact on our financial condition and results of operations;
•our operations are subject to extensive regulation and macroeconomic uncertainty;
•our ability to meet revenue and earnings expectations;
•risks associated with applicable state laws regarding fee-splitting and professional corporation laws;
•inspections, reviews, audits and investigations under federal and state government programs and third-party private payor contracts that could have adverse findings that may negatively affect our business, including our results of operations, liquidity, financial condition and reputation;
•changes in or our failure to comply with existing federal and state laws or regulations or the inability to comply with new government regulations on a timely basis;
•our ability to maintain necessary insurance coverage at competitive rates;
•the outcome of any legal and regulatory matters, proceedings or investigations instituted against us or any of our directors or officers, and whether insurance coverage will be available and/or adequate to cover such matters or proceedings;
•general economic conditions, including but not limited to inflationary and recessionary periods;
•our facilities face competition for experienced physical therapists and other clinical providers that may increase labor costs, result in elevated levels of contract labor and reduce profitability;
•risks associated with our ability to attract and retain talented executives and employees amidst the impact of unfavorable labor market dynamics, wage inflation and recent reduction in value of our share-based compensation incentives, including potential failure of steps being taken to reduce attrition of physical therapists and increase hiring of physical therapists;
•risks resulting from the 2L Notes, IPO Warrants, Earnout Shares and Vesting Shares being accounted for as liabilities at fair value and the changes in fair value affecting our financial results;
•further impairments of goodwill and other intangible assets, which represent a significant portion of our total assets, especially in view of the Company’s recent market valuation;


•our inability to maintain effective internal control over financial reporting;
•risks related to dilution of Common Stock ownership interests and voting interests as a result of the issuance of 2L Notes and Series B Preferred Stock;
•costs related to operating as a public company; and
•risks associated with our efforts and ability to regain and sustain compliance with the listing requirements of our securities on the New York Stock Exchange (“NYSE”).
If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements.
Investors should also review those factors discussed in the Company’ Form 10-K and Form 10-Q for the fiscal year ended December 31, 2023, and quarter ended June 30, 2024, respectively, under the heading "Risk Factors," and other documents filed, or to be filed, by ATI with the SEC. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on the business of the Company or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. Readers should not place undue reliance on forward-looking statements. The Company undertakes no obligations to publicly update or revise any forward-looking statements after the date they are made or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or otherwise, except as required by law.
In addition, statements of belief and similar statements reflect the beliefs and opinions of the Company on the relevant subject. These statements are based upon information available to the Company, as applicable, as of the date of this communication, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
Non-GAAP Financial Measures
To supplement the Company’s financial information presented in accordance with GAAP and aid understanding of the Company’s business performance, the Company uses certain non-GAAP financial measures, namely “Adjusted EBITDA” and “Adjusted EBITDA margin.” ATI believes Adjusted EBITDA and Adjusted EBITDA margin (i.e., Adjusted EBITDA divided by Net Revenue) assist investors and analysts in comparing the Company’s operating performance across reporting periods on a consistent basis by excluding items that it does not believe are indicative of ATI’s core operating performance.
Management believes these non-GAAP financial measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which ATI operates and capital investments. Management uses these non-GAAP financial measures to supplement GAAP measures of performance in the evaluation of the effectiveness of the Company’s business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare ATI’s performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.


Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) or the ratio of net income (loss) to net revenue as a measure of financial performance, cash flows provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of cash available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.
Please see “Reconciliation of GAAP to Non-GAAP Financial Measures” below for reconciliations of non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures. We are unable to provide a reconciliation between forward-looking Adjusted EBITDA to its comparable GAAP financial measure without unreasonable effort, due to the high difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy by the date of this release.
Contacts:
Investor Relations
Joanne Fong
SVP, Treasurer and Head of Investor Relations
ATI Physical Therapy
investors@atipt.com
331-273-4891

Media Inquiries
Genesa Garbarino
Garbo Communications
genesa@garbo.agency
424-499-7025




ATI Physical Therapy
Condensed Consolidated Statements of Operations
($ in thousands)
(unaudited)

Three Months Ended
Six Months Ended
June 30, 2024June 30, 2023June 30, 2024June 30, 2023
Net patient revenue$172,755 $156,938 $338,162 $307,692 
Other revenue15,357 15,399 31,422 31,577 
Net revenue188,112 172,337 369,584 339,269 
Cost of services:
Salaries and related costs102,541 95,327 201,869 186,030 
Rent, clinic supplies, contract labor and other53,168 50,437 108,429 103,315 
Provision for doubtful accounts2,435 2,360 7,416 6,485 
Total cost of services158,144 148,124 317,714 295,830 
Selling, general and administrative expenses23,082 36,573 49,284 67,168 
Long-lived asset impairment charges260 — 738 — 
Operating income (loss)
6,626 (12,360)1,848 (23,729)
Change in fair value of 2L Notes(5,618)(7,010)(11,025)(7,010)
Change in fair value of warrant liability and contingent common shares liability(148)(990)(251)(1,501)
Interest expense, net14,896 16,682 29,379 30,618 
Other expense (income), net
61 618 (33)972 
Loss before taxes(2,565)(21,660)(16,222)(46,808)
Income tax (benefit) expense
(13)89 (147)151 
Net loss(2,552)(21,749)(16,075)(46,959)
Net income attributable to non-controlling interests
1,183 956 2,311 2,016 
Net loss attributable to ATI Physical Therapy, Inc.(3,735)(22,705)(18,386)(48,975)
Less: Series A Senior Preferred Stock redemption value adjustments387 44,696 (1,175)44,696 
Less: Series A Senior Preferred Stock cumulative dividend6,439 5,709 12,622 11,012 
Net loss available to common stockholders$(10,561)$(73,110)$(29,833)$(104,683)
Loss per share of Class A common stock:
Basic$(2.43)$(17.74)$(7.00)$(25.47)
Diluted$(2.43)$(17.74)$(7.00)$(25.47)
Weighted average shares outstanding:
Basic and diluted4,346 4,122 4,263 4,110 









image_2.jpg

ATI Physical Therapy
Condensed Consolidated Balance Sheets
($ in thousands)
(unaudited)

June 30, 2024December 31, 2023
Assets:
Current assets:
Cash and cash equivalents$32,963 $36,802 
Accounts receivable (net of allowance for doubtful accounts of $48,823 and $48,055 at June 30, 2024 and December 31, 2023, respectively)
100,043 88,512 
Prepaid expenses13,039 12,920 
Insurance recovery receivable
29,048 23,981 
Other current assets1,054 4,367 
Assets held for sale731 2,056 
Total current assets176,878 168,638 
Property and equipment, net88,574 100,422 
Operating lease right-of-use assets184,756 194,423 
Goodwill, net289,650 289,650 
Trade name and other intangible assets, net245,615 245,858 
Other non-current assets5,063 4,290 
Total assets$990,536 $1,003,281 
Liabilities, Mezzanine Equity and Stockholders' Equity:
Current liabilities:
Accounts payable$10,933 $14,704 
Accrued expenses and other liabilities89,040 88,435 
Current portion of operating lease liabilities50,520 51,530 
Liabilities held for sale714 1,778 
Total current liabilities151,207 156,447 
Long-term debt, net (1)
441,177 433,578 
2L Notes due to related parties, at fair value89,997 79,472 
Deferred income tax liabilities21,220 21,367 
Operating lease liabilities174,623 185,602 
Other non-current liabilities1,927 2,277 
Total liabilities880,151 878,743 
Commitments and contingencies
Mezzanine equity:
Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; 0.2 million shares issued and outstanding; $1,325.56 stated value per share at June 30, 2024; $1,249.06 stated value per share at December 31, 2023
231,840 220,393 
(1) Includes $17.0 million of principal amount of debt due to related parties as of June 30, 2024 and December 31, 2023, respectively.



Stockholders' equity:
Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.5 million shares issued, 4.2 million shares outstanding at June 30, 2024; 4.2 million shares issued, 4.0 million shares outstanding at December 31, 2023
— — 
Treasury stock, at cost, 0.089 million shares and 0.007 million shares at June 30, 2024 and December 31, 2023, respectively
(713)(219)
Additional paid-in capital1,300,910 1,308,119 
Accumulated other comprehensive income148 406 
Accumulated deficit(1,427,692)(1,409,306)
Total ATI Physical Therapy, Inc. equity(127,347)(101,000)
Non-controlling interests5,892 5,145 
Total stockholders' equity(121,455)(95,855)
Total liabilities, mezzanine equity and stockholders' equity$990,536 $1,003,281 





image_2.jpg

ATI Physical Therapy
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)

Six Months Ended
June 30, 2024June 30, 2023
Operating activities:
Net loss$(16,075)$(46,959)
Adjustments to reconcile net loss to net cash used in operating activities:
Long-lived asset impairment charges738 — 
Depreciation and amortization17,312 19,041 
Provision for doubtful accounts7,416 6,485 
Deferred income tax provision(147)151 
Non-cash lease expense related to right-of-use assets23,740 23,836 
Non-cash share-based compensation4,238 4,208 
Amortization of debt issuance costs and original issue discount1,443 1,554 
Non-cash interest expense— 4,318 
Loss on extinguishment of debt— 444 
(Gain) loss on disposal and sale of assets(181)793 
Change in fair value of 2L Notes(11,025)(7,010)
Change in fair value of warrant liability and contingent common shares liability(251)(1,501)
Change in fair value of non-designated derivative instrument(494)— 
Changes in:
Accounts receivable, net(18,947)(6,105)
Insurance recovery receivable
(5,067)— 
Prepaid expenses and other current assets(168)1,834 
Other non-current assets(773)89 
Accounts payable(3,664)119 
Accrued expenses and other liabilities620 15,158 
Operating lease liabilities(26,530)(21,830)
Other non-current liabilities(37)56 
Net cash used in operating activities(27,852)(5,319)
Investing activities:
Purchases of property and equipment(5,692)(9,990)
Proceeds from sale of property and equipment106 — 
Proceeds from sale of clinics434 355 
Payment of holdback liabilities related to acquisitions— (490)
Net cash used in investing activities(5,152)(10,125)



Financing activities:
Proceeds from 2L Notes from related parties25,000 3,243 
Financing transaction costs— (6,287)
Deferred financing costs— (84)
Proceeds from revolving line of credit31,153 — 
Payments on revolving line of credit(24,923)(24,750)
Payment of contingent consideration liabilities(7)(397)
Taxes paid on behalf of employees for shares withheld(494)(66)
Distribution to non-controlling interest holders(1,564)(1,675)
Net cash provided by (used in) financing activities29,165 (30,016)
Changes in cash and cash equivalents:
Net decrease in cash and cash equivalents(3,839)(45,460)
Cash and cash equivalents at beginning of period36,802 83,139 
Cash and cash equivalents at end of period$32,963 $37,679 
Supplemental noncash disclosures:
Derivative changes in fair value (1)
$258 $4,306 
Purchases of property and equipment in accounts payable$2,538 $1,495 
Exchange of Senior Secured Term Loan for related party 2L Notes$— $100,000 
Debt discount on Senior Secured Term Loan$— $(1,797)
Capital contribution from recognition of delayed draw right asset$— $690 
Series A Senior Preferred Stock dividends and redemption value adjustments$11,447 $73,584 
Exchange of delayed draw right for related party 2L Notes$3,450 $— 
Other supplemental disclosures:
Cash paid for interest$28,556 $24,698 
Cash received from hedging activities$266 $5,135 
Cash paid for taxes, net of refunds$20 $3 
(1) Derivative changes in fair value related to unrealized loss on cash flow hedges, including the impact of reclassifications.


ATI Physical Therapy, Inc.
Supplemental Tables of Key Performance Metrics


Financial Metrics ($ in 000's)
Net Patient Revenue
Other
Revenue
Net RevenueAdjusted EBITDAAdj EBITDA margin
Q1 2022$138,925$14,897$153,822$(4,695)(3.1)%
Q2 2022$148,506$14,787$163,293$5,4363.3%
Q3 2022$142,313$14,479$156,792$(392)(0.3)%
Q4 2022$146,196$15,568$161,764$6,3633.9%
Q1 2023$150,754$16,178$166,932$4,7902.9%
Q2 2023$156,938$15,399$172,337$9,3385.4%
Q3 2023$162,258$15,197$177,455$9,4295.3%
Q4 2023$166,145$16,147$182,292$12,6757.0%
Q1 2024$165,407$16,065$181,472$6,4633.6%
Q2 2024$172,755$15,357$188,112$16,5798.8%

Operational Metrics
Visits
per Day (1)
Clinical
FTE (2)
VPD
per cFTE (3)
ATI Clinician
Headcount (4)
Contractor Headcount (5)
ATI Clinician Headcount
Adds (6)
Turnover (7)
Q1 202221,0622,4668.52,65815825%23%
Q2 202222,4032,4659.12,64715126%28%
Q3 202221,4932,4658.72,69115133%25%
Q4 202222,3162,4769.02,66212319%26%
Q1 202322,7012,4239.42,62916821%27%
Q2 202323,4122,4529.52,68118527%19%
Q3 202323,4352,5249.32,786 214 35%20%
Q4 202324,2382,5849.42,75917915%
21%
Q1 202423,8372,5609.32,78720618%16%
Q2 202424,9212,5899.62,79721520%21%

(1)Equals patient visits divided by operating days.
(2)Represents clinical staff hours divided by 8 hours divided by number of paid days.
(3)Equals patient visits divided by operating days divided by clinical full-time equivalent employees.
(4)Represents ATI employee clinician headcount at end of period.
(5)Represents contractor clinician headcount at end of period.
(6)Represents ATI employee clinician headcount new hire adds divided by average headcount, multiplied by 4 to annualize.
(7)Represents ATI employee clinician headcount separations divided by average headcount, multiplied by 4 to annualize.


Unit Economics: PT Clinics ($ actual)
Ending
Clinic Count
PT Revenue
per Clinic (1)
VPD
per Clinic (2)
PT Rate
per Visit (3)
PT Salaries
per Visit (4)
PT Rent
and Other
per Clinic (5)
PT Provision
as % PT Revenue (6)
Q1 2022922$151,22522.9$103.06$55.47$54,4723.7%
Q2 2022926$160,43124.2$103.57$53.64$53,0172.4%
Q3 2022929$153,41023.2$103.46$56.20$53,9452.0%
Q4 2022923$157,99324.1$103.99$54.92$51,2521.7%
Q1 2023909$165,84625.0$103.76$52.98$56,3382.7%
Q2 2023911$172,20725.7$104.74$54.81$53,8661.5%
Q3 2023900$179,22425.9$109.90$57.47$57,0122.1%
Q4 2023896$184,94827.0$108.81$56.56$57,1090.9%
Q1 2024884$186,40926.9$108.42$56.68$60,8003.0%
Q2 2024878$196,61028.4$108.32$56.22$59,2321.4%

(1)Equals Net Patient Revenue divided by average clinics over the quarter.
(2)Equals patient visits divided by operating days divided by average clinics over the quarter.
(3)Equals Net Patient Revenue divided by patient visits.
(4)Equals estimated patient-related portion of Salaries and Related Costs divided by patient visits.
(5)Equals estimated patient-related portion of Rent, Clinic Supplies, Contract Labor and Other divided by average clinics over the quarter.
(6)Equals estimated patient-related portion of Provision for Doubtful Accounts divided by Net Patient Revenue.


Customer Satisfaction Metrics
Net Promoter Score (1)
Google Star Rating (2)
Q1 2022744.9
Q2 2022754.9
Q3 2022764.8
Q4 2022764.9
Q1 2023764.8
Q2 2023744.8
Q3 2023754.9
Q4 2023
76
4.9
Q1 2024744.8
Q2 2024754.9

(1)NPS measures customer experience from ATI patient survey responses. The score is calculated as the percentage of promoters less the percentage of detractors.
(2)A Google Star rating is a five-star rating scale that ranks businesses based on customer reviews. Customers are given the opportunity to leave a business review after interacting with a business, which involves choosing from one star (poor) to five stars (excellent).


ATI Physical Therapy, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
($ in thousands)
(unaudited)

Three Months Ended
June 30,March 31,
20242024
Net loss$(2,552)$(13,523)
Plus (minus):
Net income attributable to non-controlling interests(1,183)(1,128)
Interest expense, net14,896 14,483 
Income tax benefit(13)(134)
Depreciation and amortization expense8,294 8,732 
EBITDA$19,442 $8,430 
Long-lived asset impairment charges (1)
260 478 
Change in fair value of 2L Notes (2)
(5,618)(5,407)
Changes in fair value of warrant liability and contingent common shares liability (3)
(148)(103)
Share-based compensation (4)
1,972 2,330 
Non-ordinary legal and regulatory matters (5)
1,853 1,178 
Legal cost insurance reimbursements (6)
(1,039)(256)
Change in fair value of non-designated derivative instrument (7)
(143)(351)
Transaction costs (8)
— 164 
Adjusted EBITDA$16,579 $6,463 
Adjusted EBITDA margin8.8%3.6%
(1)Represents non-cash charges related to the write-down of long-lived assets.
(2)Represents non-cash amounts related to the change in the estimated fair value of the 2L Notes.
(3)Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares.
(4)Represents charges related to share-based compensation awards, which vary from period to period based on the timing of awards and vesting conditions.
(5)Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.
(6)Represents insurance reimbursements for legal costs incurred related to the previously disclosed ATIP stockholder class action complaints and derivative complaint.
(7)Represents non-cash amounts related to the change in estimated fair value of derivative not designated in a hedging relationship.
(8)Represents non-capitalizable debt and capital transaction costs.



ATI Physical Therapy, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
($ in thousands)
(unaudited)

Three Months Ended
December 31,
September 30,June 30,March 31,
2023202320232023
Net loss$(4,508)$(14,611)$(21,749)$(25,210)
Plus (minus):
Net income attributable to non-controlling interests(1,115)(586)(956)(1,060)
Interest expense, net14,943 15,478 16,682 13,936 
Income tax expense2,286 131 89 62 
Depreciation and amortization expense8,915 9,154 9,211 9,564 
EBITDA$20,521 $9,566 $3,277 $(2,708)
Goodwill, intangible and other asset impairment charges (1)
5,591 ———
Change in fair value of 2L Notes (2)
(15,976)(1,485)(7,010)— 
Changes in fair value of warrant liability and contingent common shares liability (3)
(457)(394)(990)(511)
Legal cost insurance reimbursements (4)
(3,597)(4,274)— — 
Non-ordinary legal and regulatory matters (5)
3,646 3,559 2,001 1,523 
Share-based compensation2,274 2,286 2,755 1,478 
Transaction costs (6)
131 215 8,714 5,408 
Change in fair value of non-designated derivative instrument542 (67)— — 
Pre-opening de novo costs (7)
— 23 147 172 
Loss on debt extinguishment (8)
— — 444 — 
Non-recurring labor related credits (9)
— — — (702)
Reorganization and severance costs (10)
— — — 130 
Adjusted EBITDA$12,675 $9,429 $9,338 $4,790 
Adjusted EBITDA margin7.0%5.3%5.4%2.9%
(1)Represents non-cash charges related to the write-down of long-lived assets.
(2)Represents non-cash amounts related to the change in the estimated fair value of the 2L Notes.
(3)Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares.
(4)Represents insurance reimbursements for legal costs incurred related to the previously disclosed ATIP stockholder class action complaints and derivative complaint.
(5)Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.
(6)Represents non-capitalizable debt and capital transaction costs.
(7)Represents expenses associated with renovation, equipment and marketing costs relating to the start-up and launch of new locations incurred prior to opening.
(8)Represents charges related to the loss on debt extinguishment recognized as part of the 2023 Debt Restructuring.
(9)Represents realized benefit of labor related credit, that was not previously considered probable and relates to prior years.
(10)Represents severance costs related to discrete initiatives focused on reorganization and delayering of the Company’s labor model, management structure and support functions.


ATI Physical Therapy, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
($ in thousands)
(unaudited)

Three Months Ended
December 31,September 30,June 30,March 31,
2022202220222022
Net loss$(102,407)$(116,694)$(135,723)$(138,223)
Plus (minus):
Net (income) loss attributable to non-controlling interests(358)376 177 473 
Interest expense, net13,463 11,780 11,379 8,656 
Income tax benefit(4,998)(7,218)(13,033)(23,281)
Depreciation and amortization expense9,979 9,907 10,055 9,900 
EBITDA$(84,321)$(101,849)$(127,145)$(142,475)
Goodwill, intangible and other asset impairment charges (1)
96,038 106,663 127,820 155,741 
Goodwill, intangible and other asset impairment charges attributable to non-controlling interests (1)
(364)(457)(654)(940)
Changes in fair value of warrant liability and contingent common shares liability (2)
(10,357)(7,720)(2,680)(26,011)
Loss on debt extinguishment (3)
— — — 2,809 
Loss on legal settlement (4)
— — 3,000 — 
Share-based compensation1,544 1,920 2,004 1,964 
Non-ordinary legal and regulatory matters (5)
937 772 2,202 2,497 
Pre-opening de novo costs (6)
101 224 286 381 
Transaction costs (7)
1,093 55 603 1,538 
Reorganization and severance costs (8)
1,797 — — — 
Non-recurring labor related credits (9)
(105)— — — 
Gain on sale of Home Health service line, net— — — (199)
Adjusted EBITDA$6,363 $(392)$5,436 $(4,695)
Adjusted EBITDA margin3.9 %(0.3)%3.3 %(3.1)%
(1)Represents non-cash charges related to the write-down of goodwill, trade name indefinite-lived intangible and other assets.
(2)Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares.
(3)Represents charges related to the derecognition of the unamortized deferred financing costs and original issuance discount associated with the full repayment of the 2016 first lien term loan.
(4)Represents charge for net settlement liability related to billing dispute.
(5)Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint, and SEC matter.
(6)Represents expenses associated with renovation, equipment and marketing costs relating to the start-up and launch of new locations incurred prior to opening.
(7)Represents costs related to the Business Combination with FVAC II and non-capitalizable debt and capital transaction costs.
(8)Represents severance, consulting and other costs related to discrete initiatives focused on reorganization and delayering of the Company’s labor model, management structure and support functions.
(9)Represents realized benefit of labor related credit, that was not previously considered probable and relates to prior years.

v3.24.2.u1
Cover
Aug. 05, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 05, 2024
Entity Registrant Name ATI Physical Therapy, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39439
Entity Tax Identification Number 85-1408039
Entity Address, Postal Zip Code 60440
Entity Address, State or Province IL
Entity Address, City or Town Bolingbrook
Entity Address, Address Line One 790 Remington Boulevard
Local Phone Number 296-2223
City Area Code 630
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Document Information [Line Items]  
Amendment Flag false
Entity Central Index Key 0001815849
Common Class A  
Document Information [Line Items]  
Title of 12(b) Security Class A common stock, par value $0.0001
Trading Symbol ATIP
Security Exchange Name NYSE
Warrant  
Document Information [Line Items]  
Title of 12(b) Security Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share
Trading Symbol ATIPW
ATI Physical Therapy (NYSE:ATIP)
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