Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-39439

ATI Physical Therapy, Inc.

(Exact name of registrant as specified in its charter)


Delaware						85-1408039
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

790 Remington Boulevard

Bolingbrook, IL 60440

(630) 296-2223

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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, $0.0001 par value

ATIP

New York Stock Exchange

Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share

ATIP WS

OTC Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of August 2, 2023, there were approximately 4,205,872 shares of the registrant's common stock legally outstanding.

Table of Contents


			Page
PART I - FINANCIAL INFORMATION - UNAUDITED
Item 1. Financial Statements			7
Condensed Consolidated Balance Sheets			8
Condensed Consolidated Statements of Operations			9
Condensed Consolidated Statements of Comprehensive Loss			10
Condensed Consolidated Statements of Changes in Stockholders' Equity			11
Condensed Consolidated Statements of Cash Flows			13
Notes to Condensed Consolidated Financial Statements			15
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			48
Item 3. Quantitative and Qualitative Disclosures About Market Risk			77
Item 4. Controls and Procedures			78
PART II - OTHER INFORMATION


Item 1. Legal Proceedings			80
Item 1A. Risk Factors			80
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			84
Item 3. Defaults Upon Senior Securities			84
Item 4. Mine Safety Disclosures			84



Item 5. Other Information			84








Item 6. Exhibits			85

Signatures			86

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this Form 10-Q that are not historical facts 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 Form 10-Q, 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 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;

Table of Contents

•risks associated with public health crises, including COVID-19 (and any existing and future variants) and its 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, size and expected growth of our addressable markets, 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 and other business initiatives, which may use significant resources, may be unsuccessful and could expose us to unforeseen liabilities;

•failure of third-party vendors, including customer service, technical and 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-parties 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 payor contracts that could have adverse findings that may negatively affect our business, including our results of operations, liquidity, financial condition and reputation;

Table of Contents

•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;

•maintaining 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;

•changes in political environment and events involving financial volatility, defaults or other adverse developments that affect the U.S. or global markets, resulting in liquidity problems which may have a material adverse effect on our results of operations;

•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 remediate the material weaknesses in internal control over financial reporting related to income taxes and 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.

Table of Contents

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Form 10-Q are more fully described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 16, 2023 and in this Form 10-Q. The risks described under the heading “Item 1A. Risk Factors” are not exhaustive. Other sections of this Form 10-Q describe additional factors that could adversely affect the business, financial condition or results of operations of the Company. 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 Form 10-Q, 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.

Table of Contents

PART I - FINANCIAL INFORMATION - UNAUDITED

Item 1. Financial Statements

Table of Contents

ATI Physical Therapy, Inc.

Condensed Consolidated Balance Sheets

($ in thousands, except share and per share data)

(unaudited)


	June 30, 2023		December 31, 2022
Assets:
Current assets:
Cash and cash equivalents	$	37,679	$	83,139
Accounts receivable (net of allowance for doubtful accounts of $52,162 and $47,620 at June 30, 2023 and December 31, 2022, respectively)	80,779		80,673
Prepaid expenses	14,303		13,526
Other current assets	6,225		10,040
Assets held for sale	—		6,755
Total current assets	138,986		194,133

Property and equipment, net	114,787		123,690
Operating lease right-of-use assets	218,775		226,092
Goodwill, net	289,650		286,458
Trade name and other intangible assets, net	246,213		246,582
Other non-current assets	1,862		2,030
Total assets	$	1,010,273	$	1,078,985

Liabilities, Mezzanine Equity and Stockholders' Equity:
Current liabilities:
Accounts payable	$	12,535	$	12,559
Accrued expenses and other liabilities	61,727		53,672
Current portion of operating lease liabilities	52,194		47,676

Liabilities held for sale	—		2,614
Total current liabilities	126,456		116,521

Long-term debt, net(1)	415,068		531,600
2L Notes due to related parties, at fair value	96,933		—
Warrant liability	98		98
Contingent common shares liability	1,334		2,835
Deferred income tax liabilities	19,037		18,886
Operating lease liabilities	209,024		218,424
Other non-current liabilities	1,644		1,834
Total liabilities	869,594		890,198
Commitments and contingencies (Note 16)
Mezzanine equity:
Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; 0.2 million shares issued and outstanding; $1,175.08 stated value per share at June 30, 2023; $1,108.34 stated value per share at December 31, 2022	213,924		140,340
Stockholders' equity:
Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.2 million shares issued, 4.0 million shares outstanding at June 30, 2023; 4.1 million shares issued, 4.0 million shares outstanding at December 31, 2022	—		—
Treasury stock, at cost, 0.006 million shares and 0.002 million shares at June 30, 2023 and December 31, 2022, respectively	(212)		(146)
Additional paid-in capital	1,310,030		1,378,716
Accumulated other comprehensive income	593		4,899
Accumulated deficit	(1,388,486)		(1,339,511)
Total ATI Physical Therapy, Inc. equity	(78,075)		43,958
Non-controlling interests	4,830		4,489
Total stockholders' equity	(73,245)		48,447
Total liabilities, mezzanine equity and stockholders' equity	$	1,010,273	$	1,078,985

(1)Includes $16.3 million of principal amount of debt due to related party as of June 30, 2023.

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

ATI Physical Therapy, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Net patient revenue	$	156,938	$	148,506	$	307,692	$	287,431
Other revenue	15,399		14,787		31,577		29,684
Net revenue	172,337		163,293		339,269		317,115

Cost of services:
Salaries and related costs	95,327		89,606		186,030		177,021
Rent, clinic supplies, contract labor and other	50,437		50,405		103,315		102,020
Provision for doubtful accounts	2,360		3,506		6,485		8,611
Total cost of services	148,124		143,517		295,830		287,652
Selling, general and administrative expenses	36,573		31,808		67,168		61,832
Goodwill, intangible and other asset impairment charges	—		127,820		—		283,561
Operating loss	(12,360)		(139,852)		(23,729)		(315,930)
Change in fair value of 2L Notes	(7,010)		—		(7,010)		—
Change in fair value of warrant liability	(198)		(1,184)		—		(2,861)
Change in fair value of contingent common shares liability	(792)		(1,496)		(1,501)		(25,830)

Interest expense, net	16,682		11,379		30,618		20,035

Other expense, net	618		205		972		2,986
Loss before taxes	(21,660)		(148,756)		(46,808)		(310,260)
Income tax expense (benefit)	89		(13,033)		151		(36,314)
Net loss	(21,749)		(135,723)		(46,959)		(273,946)
Net income (loss) attributable to non-controlling interests	956		(177)		2,016		(650)
Net loss attributable to ATI Physical Therapy, Inc.	(22,705)		(135,546)		(48,975)		(273,296)
Less: Series A Senior Preferred Stock redemption value adjustments	44,696		—		44,696		—
Less: Series A Senior Preferred Stock cumulative dividend	5,709		5,063		11,012		6,988
Net loss available to common stockholders	$	(73,110)	$	(140,609)	$	(104,683)	$	(280,284)

Loss per share of Class A common stock:
Basic	$	(17.74)	$	(34.49)	$	(25.47)	$	(69.41)
Diluted	$	(17.74)	$	(34.49)	$	(25.47)	$	(69.41)
Weighted average shares outstanding:
Basic and diluted	4,122		4,077		4,110		4,038

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

ATI Physical Therapy, Inc.

Condensed Consolidated Statements of Comprehensive Loss

($ in thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Net loss	$	(21,749)	$	(135,723)	$	(46,959)	$	(273,946)
Other comprehensive (loss) income:
Cash flow hedges	(850)		2,708		(4,306)		6,460
Comprehensive loss	(22,599)		(133,015)		(51,265)		(267,486)
Net income (loss) attributable to non-controlling interests	956		(177)		2,016		(650)
Comprehensive loss attributable to ATI Physical Therapy, Inc.	$	(23,555)	$	(132,838)	$	(53,281)	$	(266,836)

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

ATI Physical Therapy, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

($ in thousands, except share data)

(unaudited)


	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Non-Controlling Interests		Total Stockholders' Equity
	Shares	Amount		Shares	Amount


























Balance at January 1, 2023	3,967,146	$	—	1,540	$	(146)	$	1,378,716	$	4,899	$	(1,339,511)	$	4,489	$	48,447

Vesting of restricted shares distributed to holders of ICUs	751	—		—	—		—		—		—		—		—
Issuance of common stock upon vesting of restricted stock units and awards	25,387	—		—	—		—		—		—		—		—
Tax withholdings related to net share settlement of restricted stock units and awards	(3,163)	—		3,163	(51)		—		—		—		—		(51)
Non-cash share-based compensation	—	—		—	—		1,454		—		—		—		1,454
Other comprehensive loss	—	—		—	—		—		(3,456)		—		—		(3,456)
Distribution to non-controlling interest holders	—	—		—	—		—		—		—		(710)		(710)
Net income attributable to non-controlling interests	—	—		—	—		—		—		—		1,060		1,060
Net loss attributable to ATI Physical Therapy, Inc.	—	—		—	—		—		—		(26,270)		—		(26,270)
Balance at March 31, 2023	3,990,121	$	—	4,703	$	(197)	$	1,380,170	$	1,443	$	(1,365,781)	$	4,839	$	20,474
Series A Senior Preferred Stock dividends and redemption value adjustments	—	—		—	—		(73,584)		—		—		—		(73,584)
Capital contribution from recognition of delayed draw right asset	—	—		—	—		690		—		—		—		690
Vesting of restricted shares distributed to holders of ICUs	737	—		—	—		—		—		—		—		—
Issuance of common stock upon vesting of restricted stock units and awards	10,824	—		—	—		—		—		—		—		—
Tax withholdings related to net share settlement of restricted stock units and awards	(1,206)	—		1,206	(15)		—		—		—		—		(15)
Issuance of common stock for fractional adjustments related to Reverse Stock Split	26,346	—		—	—		—		—		—		—		—
Non-cash share-based compensation	—	—		—	—		2,754		—		—		—		2,754
Other comprehensive loss	—	—		—	—		—		(850)		—		—		(850)
Distribution to non-controlling interest holders	—	—		—	—		—		—		—		(965)		(965)
Net income attributable to non-controlling interests	—	—		—	—		—		—		—		956		956
Net loss attributable to ATI Physical Therapy, Inc.	—	—		—	—		—		—		(22,705)		—		(22,705)
Balance at June 30, 2023	4,026,822	$	—	5,909	$	(212)	$	1,310,030	$	593	$	(1,388,486)	$	4,830	$	(73,245)

Table of Contents


	Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-Controlling Interests		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2022	3,948,199	$	—	596	$	(95)	$	1,351,617	$	28	$	(847,132)	$	7,089	$	511,507
Issuance of 2022 Warrants	—	—		—	—		19,725		—		—		—		19,725
Vesting of restricted shares distributed to holders of ICUs	1,510	—		—	—		—		—		—		—		—
Issuance of common stock upon vesting of restricted stock awards	812	—		—	—		—		—		—		—		—
Tax withholdings related to net share settlement of restricted stock awards	(256)	—		256	(22)		—		—		—		—		(22)
Non-cash share-based compensation	—	—		—	—		1,960		—		—		—		1,960
Other comprehensive income	—	—		—	—		—		3,752		—		—		3,752
Distribution to non-controlling interest holders	—	—		—	—		—		—		—		(473)		(473)
Net loss attributable to non-controlling interests	—	—		—	—		—		—		—		(473)		(473)
Net loss attributable to ATI Physical Therapy, Inc.	—	—		—	—		—		—		(137,750)		—		(137,750)
Balance at March 31, 2022	3,950,265	$	—	852	$	(117)	$	1,373,302	$	3,780	$	(984,882)	$	6,143	$	398,226





Vesting of restricted shares distributed to holders of ICUs	2,377	—		—	—		—		—		—		—		—
Issuance of common stock upon vesting of restricted stock units and awards	6,608	—		—	—		—		—		—		—		—
Tax withholdings related to net share settlement of restricted stock units and awards	(132)	—		132	(12)		—		—		—		—		(12)
Non-cash share-based compensation	—	—		—	—		1,959		—		—		—		1,959
Other comprehensive income	—	—		—	—		—		2,708		—		—		2,708
Distribution to non-controlling interest holders	—	—		—	—		—		—		—		(139)		(139)
Net loss attributable to non-controlling interests	—	—		—	—		—		—		—		(177)		(177)
Net loss attributable to ATI Physical Therapy, Inc.	—	—		—	—		—		—		(135,546)		—		(135,546)
Balance at June 30, 2022	3,959,118	$	—	984	$	(129)	$	1,375,261	$	6,488	$	(1,120,428)	$	5,827	$	267,019

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

ATI Physical Therapy, Inc.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)


	Six Months Ended
	June 30, 2023		June 30, 2022
Operating activities:
Net loss	$	(46,959)	$	(273,946)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill, intangible and other asset impairment charges	—		283,561
Depreciation and amortization	19,041		20,369
Provision for doubtful accounts	6,485		8,611
Deferred income tax provision	151		(36,314)
Non-cash lease expense related to right-of-use assets	23,836		24,071
Non-cash share-based compensation	4,208		3,919
Amortization of debt issuance costs and original issue discount	1,554		1,407
Non-cash interest expense	4,318		—

Loss on extinguishment of debt	444		2,809

Loss (gain) on disposal and sale of assets	793		(163)

Change in fair value of 2L Notes	(7,010)		—
Change in fair value of warrant liability	—		(2,861)
Change in fair value of contingent common shares liability	(1,501)		(25,830)
Changes in:
Accounts receivable, net	(6,105)		(9,349)
Prepaid expenses and other current assets	1,834		(7,555)
Other non-current assets	89		22
Accounts payable	119		1,850
Accrued expenses and other liabilities	15,158		10,803
Operating lease liabilities	(21,830)		(23,427)
Other non-current liabilities	56		45
Medicare Accelerated and Advance Payment Program Funds	—		(10,759)


Net cash used in operating activities	(5,319)		(32,737)

Investing activities:
Purchases of property and equipment	(9,990)		(17,841)

Proceeds from sale of property and equipment	—		146
Proceeds from sale of clinics	355		77


Payment of holdback liabilities related to acquisitions	(490)		—
Net cash used in investing activities	(10,125)		(17,618)

Table of Contents


Financing activities:
Proceeds from long-term debt	—		500,000
Proceeds from 2L Notes from related parties	3,243		—
Financing transaction costs	(6,287)		—
Deferred financing costs	(84)		(12,952)
Original issue discount	—		(10,000)
Principal payments on long-term debt	—		(555,048)
Proceeds from issuance of Series A Senior Preferred Stock	—		144,667
Proceeds from issuance of 2022 Warrants	—		20,333

Payments on revolving line of credit	(24,750)		—



Equity issuance costs and original issue discount	—		(4,935)

Payment of contingent consideration liabilities	(397)		—
Taxes paid on behalf of employees for shares withheld	(66)		(34)
Distribution to non-controlling interest holders	(1,675)		(612)
Net cash (used in) provided by financing activities	(30,016)		81,419

Changes in cash and cash equivalents:
Net (decrease) increase in cash and cash equivalents	(45,460)		31,064
Cash and cash equivalents at beginning of period	83,139		48,616
Cash and cash equivalents at end of period	$	37,679	$	79,680

Supplemental noncash disclosures:
Derivative changes in fair value (1)	$	4,306	$	(6,460)
Purchases of property and equipment in accounts payable	$	1,495	$	1,550
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	$	73,584	$	—





Other supplemental disclosures:
Cash paid for interest	$	24,698	$	17,822
Cash received from hedging activities	$	5,135	$	—
Cash paid for taxes	$	3	$	55

(1) Derivative changes in fair value related to unrealized loss (gain) on cash flow hedges, including the impact of reclassifications.

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

Note 1. Overview of the Company

ATI Physical Therapy, Inc., together with its subsidiaries (herein referred to as “we,” "our," “the Company,” “ATI Physical Therapy” and “ATI”), is a nationally recognized healthcare company, specializing in outpatient rehabilitation and adjacent healthcare services. The Company provides outpatient physical therapy services under the name ATI Physical Therapy and, as of June 30, 2023, had 911 clinics located in 24 states (as well as 18 clinics under management service agreements). The Company offers a variety of services within its clinics, including physical therapy to treat spine, shoulder, knee and neck injuries or pain; work injury rehabilitation services, including work conditioning and work hardening; hand therapy; and other specialized treatment services. The Company’s direct and indirect wholly-owned subsidiaries include, but are not limited to, Wilco Holdco, Inc., ATI Holdings Acquisition, Inc. and ATI Holdings, LLC.

Impact of COVID-19 and CARES Act

The coronavirus ("COVID-19") pandemic in the United States resulted in changes to our operating environment. Although the direct impact on our business has decreased since the peak impact in 2020, we continue to closely monitor the remaining impacts from the pandemic including its direct or indirect effects on macroeconomic factors, the labor markets in which we operate, and the physical therapy and broader healthcare landscape. Throughout the duration of the pandemic and declared public health emergency, and continuing hereafter, our priorities have been protecting the health and safety of employees and patients, maximizing the availability of services to satisfy patient needs and improving the operational and financial stability of our business. While we expect the disruption caused by COVID-19 and resulting impacts to diminish over time, we cannot predict the length of such impacts, and if such impacts continue for an extended period, it could have a continued effect on the Company’s results of operations, financial condition and cash flows, which could be material.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law providing reimbursement, grants, waivers and other funds to assist health care providers during the COVID-19 pandemic. The Company realized benefits under the CARES Act including, but not limited to, the receipt of Medicare Accelerated and Advance Payment Program ("MAAPP") funds and deferral of depositing the employer portion of Social Security taxes, interest-free and penalty-free. During the year ended December 31, 2022, the remaining obligations related to these benefits were applied and repaid. During the six months ended June 30, 2022, the Company applied $10.7 million in MAAPP funds against the outstanding liability at that time.

Note 2. Basis of Presentation and Recent Accounting Standards

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature.

Table of Contents

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years.

For further information regarding the Company's accounting policies and other information, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023.

Reverse Stock Split

On June 14, 2023, the Company effected a one-for-fifty (1-for-50) reverse stock split of its Class A common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on June 13, 2023, and the final reverse split ratio was subsequently approved by the Company’s board of directors on June 14, 2023. The Company's common stock commenced trading on a reverse split-adjusted basis on June 15, 2023.

As a result of the Reverse Stock Split, every fifty (50) shares of common stock either issued and outstanding or held as treasury stock were combined into one new share of common stock. Any fractional shares of common stock resulting from the Reverse Stock Split were rounded up to the nearest whole share. All outstanding securities entitling their holders to purchase or acquire shares of common stock, including stock options, warrants, Earnout Shares, Vesting Shares and shares of common stock subject to vesting were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. The Reverse Stock Split did not change the par value of the common stock or the number of shares authorized for issuance.

All information included in these condensed consolidated financial statements and related notes has been adjusted, on a retrospective basis, to reflect the Reverse Stock Split, unless otherwise stated.

Liquidity and going concern

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these condensed consolidated financial statements are issued.

The Company has negative operating cash flows, operating losses and net losses. For the six months ended June 30, 2023, the Company had cash flows used in operating activities of $5.3 million, operating loss of $23.7 million and net loss of $47.0 million. These results are, in part, due to trends experienced by the Company in recent years including a tight labor market for available physical therapy and other healthcare providers in the workforce, visit volume softness, decreases in rate per visit and increases in interest costs.

As previously disclosed, these conditions and events raise substantial doubt about the Company's ability to continue as a going concern. In response to these conditions, management plans included refinancing the Company's debt under its 2022 Credit Agreement and improving operating results and cash flows.

Table of Contents

On June 15, 2023, the Company completed a debt restructuring transaction under its 2022 Credit Agreement (as defined in Note 8) including: (i) a delayed draw new money financing in an aggregate principal amount of $25.0 million, comprised of (A) second lien PIK convertible notes (the “2L Notes”) and (B) shares of Series B Preferred Stock (as defined in Note 8), which will provide the holder thereof with voting rights such that the holders thereof will have the right to vote on an as-converted basis, (ii) the exchange of $100.0 million of the aggregate principal amount of the term loans under the 2022 Credit Agreement held by certain of the holders of its Series A Senior Preferred Stock (the "Preferred Equityholders") for 2L Notes and Series B Preferred Stock and (iii) certain other changes to the terms of the 2022 Credit Agreement, including modifications of the financial covenants thereunder and relief from the requirements related to the delivery of independent audit reports without a going concern explanatory paragraph. Holders of the 2L Notes will also receive additional 2L Notes upon the in-kind payment of interest on any outstanding 2L Notes. The 2L Notes are convertible into shares of Class A common stock at a fixed conversion price.

Additionally, the Company experienced improvements in operations that resulted in reduced levels of cash outflows during the six months ended June 30, 2023 relative to the same period in the prior year. A continued improvement in business results is necessary as there remains a risk that the Company may fail to meet its minimum liquidity covenant or be unable to fund anticipated cash requirements and obligations as they become due in the future.

The Company's plan is to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects.

If the Company's plan does not result in improvement in these aspects in future periods that results in sufficient cash flow from operations, the Company will need to consider other alternatives, such as raising additional financing, obtaining funds from other sources, disposal of assets, or pursuing other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency.

Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Use of estimates

The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change.

Table of Contents

Segment reporting

The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment.

Cash, cash equivalents and restricted cash

Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, and our condensed consolidated statements of cash flows for the six months ended June 30, 2023 was $0.8 million. There was no change in restricted cash for the six months ended June 30, 2022.

2L Notes

The guidance in Accounting Standards Codification ("ASC") Topic 825, Financial Instruments, provides a fair value option that allows companies to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the Company's condensed consolidated balance sheets from those instruments using another accounting method.

The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the line item change in fair value of 2L Notes in the Company’s condensed consolidated statements of operations. Any changes in fair value related to changes in the Company's credit risk is recognized as a component of accumulated other comprehensive income (loss).

Recently adopted accounting guidance

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company adopted this new accounting standard effective January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Table of Contents

Note 3. Divestitures

Clinics held for sale

During the fourth quarter of 2022, the Company classified the assets and liabilities of certain clinics as held for sale as a result of the Company's decision to sell the clinics. The divestiture transactions were anticipated to be completed within twelve months. The clinics did not meet the criteria to be classified as discontinued operations. During the first quarter of 2023, the Company completed a portion of its anticipated divestiture transactions, which were immaterial. During the second quarter of 2023, the Company concluded the remaining anticipated divestiture transactions were no longer probable due to the Company's decision to retain the clinics. As a result, the assets and liabilities previously classified as held for sale were reclassified as held and used into the respective line items within the condensed consolidated balance sheet.

There were no assets or liabilities classified as held for sale as of June 30, 2023. Major classes of assets and liabilities classified as held for sale as of December 31, 2022 were as follows (in thousands):


	December 31, 2022
Accounts receivable, net	$	486
Prepaid expenses	23
Property and equipment, net	1,113
Operating lease right-of-use assets	1,929
Goodwill, net	3,192
Other non-current assets	12
Total assets held for sale	$	6,755

Accounts payable	$	22
Accrued expenses and other liabilities	201
Current portion of operating lease liabilities	685
Operating lease liabilities	1,706
Total liabilities held for sale	$	2,614

Note 4. Revenue from Contracts with Customers

The following table disaggregates net revenue by major service line for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net patient revenue	$	156,938	$	148,506	$	307,692	$	287,431
ATI Worksite Solutions (1)	9,384		8,725		18,585		17,376
Management Service Agreements (1)	3,770		3,265		7,495		6,420
Other revenue (1)	2,245		2,797		5,497		5,888
	$	172,337	$	163,293	$	339,269	$	317,115

(1)ATI Worksite Solutions, Management Service Agreements and Other revenue are included within other revenue on the face of the condensed consolidated statements of operations.

Table of Contents

The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Commercial	58.5	%	57.2	%	58.3	%	57.0	%
Government	23.6	%	24.5	%	23.6	%	24.1	%
Workers’ compensation	11.6	%	12.8	%	11.8	%	13.0	%
Other (1)	6.3	%	5.5	%	6.3	%	5.9	%
	100.0	%	100.0	%	100.0	%	100.0	%

(1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement.

Note 5. Goodwill, Trade Name and Other Intangible Assets

Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands):


Goodwill at December 31, 2022 (1)	$	286,458
Impairment charges (2)	—


Reclassifications to held and used	3,192
Goodwill at June 30, 2023	$	289,650

(1) Net of accumulated impairment losses of $1,045.7 million.

(2) The Company did not note any triggering events during the six months ended June 30, 2023 that resulted in the recording of an impairment loss.

The table below summarizes the Company’s carrying amount of trade name and other intangible assets at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Gross intangible assets:
ATI trade name (1)	$	245,000	$	245,000
Non-compete agreements	2,395		2,395
Other intangible assets	640		640
Accumulated amortization:
Accumulated amortization – non-compete agreements	(1,473)		(1,126)
Accumulated amortization – other intangible assets	(349)		(327)
Total trade name and other intangible assets, net	$	246,213	$	246,582

(1) Not subject to amortization.

Amortization expense for the three and six months ended June 30, 2023 and 2022 was immaterial. The Company estimates that amortization expense related to intangible assets will be immaterial over the next five fiscal years and thereafter.

Table of Contents

Interim impairment testing during 2022

During the quarters ended March 31, 2022 and June 30, 2022, the Company identified interim triggering events as a result of factors including potential changes in discount rates and decreases in share price. The Company determined that the combination of these factors constituted an interim triggering event that required further analysis with respect to potential impairment to goodwill, trade name indefinite-lived intangible and other assets.

As it was determined that it was more likely than not that the fair value of our trade name indefinite-lived intangible asset was below its carrying value, the Company performed an interim quantitative impairment test as of the March 31, 2022 and June 30, 2022 balance sheet dates. The Company utilized the relief from royalty method to estimate the fair value of the trade name indefinite-lived intangible asset. The key assumptions associated with determining the estimated fair value included projected revenue growth rates, the royalty rate, the discount rate and the terminal growth rate. As a result of the analyses, during the six months ended June 30, 2022, the Company recognized $79.4 million in non-cash interim impairments in goodwill, intangible and other asset impairment charges in its condensed consolidated statements of operations, which represented the difference between the estimated fair value of the Company’s trade name indefinite-lived intangible asset and its carrying value.

The Company evaluated its long-lived asset groups, including operating lease right-of-use assets that were evaluated based on clinic-specific cash flows and clinic-specific market factors, noting no material impairment.

As it was determined that it was more likely than not that the fair value of our single reporting unit was below its carrying value, the Company performed an interim quantitative impairment test with respect to goodwill. In order to determine the fair value of our single reporting unit, the Company utilized an average of a discounted cash flow analysis and comparable public company analysis. The key assumptions associated with determining the estimated fair value included projected revenue growth rates, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, the terminal growth rate, the discount rate and relevant market multiples. As a result of the analyses, during the six months ended June 30, 2022, the Company recognized $204.2 million in non-cash interim impairments in goodwill, intangible and other asset impairment charges in its condensed consolidated statements of operations, which represented the difference between the estimated fair value of the Company’s single reporting unit and its carrying value.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of the Company’s reporting unit and the indefinite-lived intangible asset requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include projected revenue growth rates, EBITDA margins, terminal growth rates, discount rates, relevant market multiples, royalty rates and other market factors. If current expectations of future growth rates, margins and cash flows are not met, or if market factors outside of our control change significantly, including discount rates, relevant market multiples, company share price and other market factors, then our reporting unit or the indefinite-lived intangible asset might become impaired in the future, negatively impacting our operating results and financial position. As the carrying amounts of goodwill and the Company’s trade name indefinite-lived intangible asset were impaired as of December 31, 2022 and written down to fair value, those amounts are more susceptible to an impairment risk if there are unfavorable changes in assumptions and estimates.

Table of Contents

Note 6. Property and Equipment

Property and equipment consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Equipment	$	38,957	$	38,102
Furniture and fixtures	17,804		17,215
Leasehold improvements	194,650		191,182
Automobiles	19		19
Computer equipment and software	105,447		102,651
Construction-in-progress	4,084		3,727
	360,961		352,896
Accumulated depreciation and amortization	(246,174)		(229,206)
Property and equipment, net (1)	$	114,787	$	123,690

(1) Excludes $1.1 million reclassified as held for sale as of December 31, 2022. Refer to Note 3 - Divestitures for additional information.

The following table presents the amount of depreciation and amortization expense related to property and equipment recorded in rent, clinic supplies, contract labor and other and selling, general and administrative expenses in the Company’s condensed consolidated statements of operations for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Rent, clinic supplies, contract labor and other	$	6,351	$	6,823	$	12,809	$	13,909
Selling, general and administrative expenses	2,814		3,250		5,863		6,085
Total depreciation expense	$	9,165	$	10,073	$	18,672	$	19,994

Note 7. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Salaries and related costs	$	28,715	$	28,949
Credit balances due to patients and payors	7,255		6,117
Accrued professional fees	6,162		5,551
Accrued interest	6,116		762
Accrued insurance premiums	4,716		—
Accrued occupancy costs	1,985		2,410
Accrued contract labor	1,921		4,483





Other payables and accrued expenses	4,857		5,400
Total	$	61,727	$	53,672

Table of Contents

Note 8. Borrowings

Long-term debt, net consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Senior Secured Term Loan (1, 2) (due February 24, 2028)	$	407,799	$	503,481
Revolving Loans (3) (due February 24, 2027)	23,450		48,200
Less: unamortized debt issuance costs	(8,021)		(11,137)
Less: unamortized original issue discount	(8,160)		(8,944)
Total debt, net	415,068		531,600
Less: current portion of long-term debt	—		—
Long-term debt, net	$	415,068	$	531,600

(1) Interest rate of 13.5% and 12.1% at June 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 13.6% and 13.1% at June 30, 2023 and December 31, 2022, respectively.

(2) The Company has paid a portion of its interest in-kind on its Senior Secured Term Loan by capitalizing and adding such interest to the principal amount of the debt. As of June 30, 2023 and December 31, 2022, the Company has recognized total paid in-kind interest in the amount of $7.8 million and $3.5 million, respectively.

(3) Interest rate of 10.1% and 8.3% at June 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate.

2L Notes due to related parties, at fair value consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
2L Notes due to related parties, at fair value	$	96,933	$	—

2023 Debt Restructuring Transaction

On June 15, 2023 (the "Closing Date"), the Company completed a debt restructuring transaction to improve the Company's liquidity (the "2023 Debt Restructuring"). On the Closing Date, certain previously executed agreements became effective, including (i) Amendment No. 2 to Credit Agreement, (ii) a Second Lien Note Purchase Agreement and (iii) certain other definitive agreements relating to the 2023 Debt Restructuring (such documents referred to collectively as the "Signing Date Definitive Documents").

As part of the 2023 Debt Restructuring, the Company exchanged a principal amount of $100.0 million of the $507.8 million then outstanding Senior Secured Term Loans for an equal amount of second lien paid in-kind ("PIK") convertible notes (the "2L Notes"), which are convertible into shares of the Company's common stock, stapled with a number of shares of Series B Preferred Stock (the "Series B Preferred Stock"), which represent voting interests only. The exchange was consummated through the Intercreditor and Subordination Agreement and Second Lien Note Purchase Agreement dated April 17, 2023 (the "Signing Date").

The Company accounted for the exchange as a debt extinguishment and recognized $0.4 million in loss on debt extinguishment during the three and six months ended June 30, 2023. The loss on debt extinguishment consisted of various offsetting components, including the derecognition of $4.3 million of unamortized deferred financing costs and original issue discount on the Senior Secured Term Loans and the recognition of $0.7 million of fair value premium at issuance on the 2L Notes, offset by the recognition of $2.8 million in delayed draw right assets related to the commitment provided by certain lenders and the recognition of $1.8 million of incremental original issue discount on the Senior Secured Term Loan. The loss on debt extinguishment associated with the 2023 Debt Restructuring has been reflected in other expense, net in the condensed consolidated statements of operations.

Table of Contents

Amendment No. 2 to Credit Agreement

Pursuant to Amendment No. 2 to the Credit Agreement, the terms of the remaining unexchanged $407.8 million principal amount of the Senior Secured Term Loans were revised to: (i) increase the interest rate in the form of paid in-kind interest by 1.0% per annum until the achievement of certain financial metrics, (ii) reset the prepayment premiums with respect to any repayment of the Senior Secured Term Loans, and (iii) amended certain covenants. At the completion of the 2023 Debt Restructuring, $391.0 million principal of amended Senior Secured Term Loans is outstanding with HPS Investment Partners, LLC (“HPS”), $16.3 million principal is outstanding with Onex Credit Partners, LLC (“Onex”), $0.3 million principal is outstanding with Knighthead Capital Management, LLC (“Knighthead”), and the remaining $0.2 million principal is outstanding with Marathon Asset Management LP (“Marathon”). Additionally, the terms of the Company's Revolving Loans were revised to increase the cash interest rate by 1.0% until the achievement of certain financial metrics.

Amendment No. 2 to the Credit Agreement also provides, among other terms, (i) a reduction of the thresholds applicable to the minimum liquidity financial covenant under the 2022 Credit Agreement for certain periods, (ii) a waiver of the requirement to comply with the Secured Net Leverage Ratio financial covenant under the 2022 Credit Agreement for the fiscal quarters ending June 30, 2024, September 30, 2024 and December 31, 2024 and a modification of the levels and certain component definitions applicable thereto in the fiscal quarters ending after December 31, 2024, (iii) an extension of the minimum liquidity financial covenant for the fiscal quarters in which the Secured Net Leverage Ratio financial covenant was waived, (iv) a waiver of the requirement for the Company to deliver audited financial statements without a going concern explanatory paragraph for the years ended December 31, 2022, December 31, 2023, and December 31, 2024, and (v) board representation and observer rights and other changes to the governance of the Company.

Based on the results of the cash flow tests and requirements pursuant to ASC Topic 470, Debt, the Company accounted for the impacts of Amendment No. 2 to the Credit Agreement related to the amount held by HPS as a modification, and the impacts related to the amounts held by Onex, Knighthead, and Marathon as an extinguishment. As part of the 2023 Debt Restructuring, the Company recognized $1.8 million of incremental original issue discount on the Senior Secured Term Loan related to lenders treated under extinguishment accounting.

Second Lien Note Purchase Agreement and Designation of Series B Preferred Stock

Knighthead, Marathon, and Onex collectively exchanged a principal amount of $100.0 million of Senior Secured Term Loans for $100.0 million of 2L Notes stapled with a number of shares of Series B Preferred Stock. Of the $100.0 million of 2L Notes issued, approximately $50.8 million were issued to Knighthead, $40.4 million were issued to Marathon, and $8.8 million were issued to Onex. The 2L Notes are subordinated in right of payment and lien priority to the 2022 Credit Facility and mature on August 24, 2028, unless earlier converted, accrue interest at an annual rate of 8.0% payable in-kind on a quarterly basis in the form of additional 2L Notes, and are convertible into shares of Common Stock, at the holder’s option, at a fixed conversion price of $12.50, subject to certain adjustments in the agreement (the "Conversion Price"). Upon conversion of the 2L Notes, the Company shall deliver to the holder a number of shares of Common Stock equal to (i) the principal amount of such 2L Note plus any accrued and unpaid interest divided by (ii) the Conversion Price.

Table of Contents

The 2L Notes are effectively stapled with one share of the Company’s Series B Preferred Stock for every $1,000 principal amount of the 2L Notes (the "Series B Preferred Stock"). The Series B Preferred Stock represent voting rights only, with the number of votes being equal to the number of shares of Common Stock each share of Series B Preferred Stock is assumed convertible for at a conversion price of $12.87 per share (the "Voting Rights Conversion Price"). Additional voting rights accrue to the lenders through the deemed issuance of the annual 8.0% paid in-kind 2L Notes with stapled shares of Series B Preferred Stock. The Series B Preferred Stock does not have any dividend or redemption rights. Upon conversion of 2L Notes to Common Stock, the stapled shares of Series B Preferred Stock would be canceled in an amount commensurate with the portion of 2L Notes converted. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes as well as other terms to the 2023 Debt Restructuring, the Company determined that Knighthead, Marathon, and Onex became related parties on the Closing Date.

The following table presents approximate changes in outstanding shares of Series B Preferred Stock during the period and associated equivalent common stock voting rights at the end of the period (in thousands):


									June 30, 2023
Series B Preferred Stock, shares at Closing Date									103
Increase (decrease) in shares during period									—
Series B Preferred Stock, shares at end of period									103

Common Stock voting rights, as converted basis(1)									8,022

(1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share.

On or after the second anniversary of the Closing Date and subject to certain conditions, the Company may, at its option, elect to convert (a “Forced Conversion”) a portion of the outstanding 2L Notes into the number of shares of Common Stock based on the Conversion Price then in effect.

On the Closing Date, an additional $3.2 million of 2L Notes with stapled Series B Preferred Stock were issued as part of the First Amendment to the Second Lien Note Purchase Agreement. The terms of the issued 2L Notes and Series B Preferred Stock are the same as those that were subject to the exchange.

The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. As a result of applying the fair value option, direct costs and fees related to the 2L Notes were expensed as incurred. As of June 30, 2023, the principal amount and estimated fair value of the 2L Notes were approximately $103.2 million and $96.9 million, respectively. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. Additionally, as of June 30, 2023, the effective interest rate on the 2L Notes was 8.0%.

As of June 30, 2023, of the 2L Notes principal outstanding and due to related parties, approximately $52.4 million, $41.7 million and $9.1 million were outstanding with Knighthead, Marathon, and Onex, respectively.

Table of Contents

Delayed Draw Right

The Company also has the right to cause to be issued to Knighthead, Marathon and Caspian Capital L.P. ("Caspian") (collectively the "Delayed Draw Purchasers") an additional $25.0 million of aggregate principal in the form of 2L Notes under its delayed draw right ("Delayed Draw Right”), which is governed by the Second Lien Note Purchase Agreement. If drawn, the notes under the Delayed Draw Right will be subject to the same terms as the convertible 2L Notes with associated shares of Series B Preferred Stock allowing for voting rights on an as-converted basis prior to conversion. The right to draw will terminate approximately 18 months after the Closing Date. The Company may request two draws in an amount of $12.5 million each, separately or together, subject to, for each draw, (a) projected liquidity at any time during the 6-month period following the date of the relevant draw being below certain thresholds, and (b) the consent of the board of directors.

Upon issuance, the Company accounted the Delayed Draw Right as an asset at fair value, which represents the Company's option to draw funds subject to certain conditions. For Knighthead and Marathon's portion of the Delayed Draw Right, the asset was recognized as part of the calculation of loss on debt extinguishment. For Caspian, the Delayed Draw Right was recognized as a capital contribution as there was no previous lender relationship with the Company with respect to the Senior Secured Term Loan. At the Closing Date, the Company recognized approximately $3.5 million in Delayed Draw Right assets, which is included in other current assets on the Company's condensed consolidated balance sheets. Subsequently, the asset will be monitored for impairment.

2022 Credit Agreement

On February 24, 2022 (the "Refinancing Date"), the Company entered into various financing arrangements to refinance its previous long-term debt (the "2022 Debt Refinancing"). As part of the 2022 Debt Refinancing, ATI Holdings Acquisition, Inc. (the "Borrower"), an indirect subsidiary of ATI Physical Therapy, Inc., entered into a credit agreement among the Borrower, Wilco Intermediate Holdings, Inc. ("Holdings"), as loan guarantor, Barclays Bank PLC, as administrative agent and issuing bank, and a syndicate of lenders (the "2022 Credit Agreement"). The 2022 Credit Agreement provides a $550.0 million credit facility (the "2022 Credit Facility") that is comprised of a $500.0 million senior secured term loan (the "Senior Secured Term Loan") which was fully funded at closing and a $50.0 million "super priority" senior secured revolver (the "Revolving Loans") with a $10.0 million letter of credit sublimit.

The 2022 Credit Facility refinanced and replaced the Company's prior credit facility for which Barclays Bank PLC served as administrative agent for a syndicate of lenders. The Company paid $555.0 million to settle its previous term loan (the "2016 First Lien Term Loan"). The Company accounted for the transaction as a debt extinguishment and recognized $2.8 million in loss on debt extinguishment during the six months ended June 30, 2022 related to the derecognition of the remaining unamortized deferred financing costs and unamortized original issue discount in conjunction with the debt repayment. The loss on debt extinguishment associated with the repayment of the 2016 First Lien Term Loan has been reflected in other expense, net in the condensed consolidated statements of operations.

In connection with the 2022 Debt Refinancing, the Company also entered into a preferred stock purchase agreement, consisting of senior preferred stock with detachable warrants to purchase common stock for an aggregate stated value of $165.0 million (collectively, the “Preferred Stock Financing”). See Note 10 - Mezzanine and Stockholders' Equity for further information regarding the Preferred Stock Financing.

The Company capitalized debt issuance costs totaling $12.5 million related to the 2022 Credit Facility as well as an original issue discount of $10.0 million, which are amortized over the terms of the respective financing arrangements.

Table of Contents

Senior Secured Term Loan

The Senior Secured Term Loan matures on February 24, 2028 and bears interest, at the Company's election, at a base interest rate of the Alternate Base Rate ("ABR"), as defined in the agreement, plus an applicable credit spread, or the Adjusted Term Secured Overnight Financing Rate ("SOFR"), as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. The Company was able to elect to pay 2.0% interest in-kind at a 0.5% premium during the first year under the agreement. The Company elected to pay a portion of its interest in-kind beginning in the third quarter of 2022 through the completion of the first year under the agreement. As of June 30, 2023, borrowings on the Senior Secured Term Loan bear interest at 13.5%, consisting of 3-month SOFR, subject to a 1.0% floor, plus a credit spread of 7.25% plus an incremental 1.0% paid-in-kind interest added under the terms of the 2023 Debt Restructuring. As of June 30, 2023, the effective interest rate on the Senior Secured Term Loan was 13.6% and the outstanding principal amount was $407.8 million.

Revolving Loans

The Revolving Loans are subject to a maximum borrowing capacity of $50.0 million and mature on February 24, 2027. Borrowings on the Revolving Loans bear interest, at the Company's election, at a base interest rate of the ABR, as defined in the agreement, plus an applicable credit spread, or the Adjusted Term SOFR Rate, as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. In December 2022, the Company drew $48.2 million in Revolving Loans. During the second quarter of 2023, the Company repaid approximately $24.8 million in Revolving Loans. As of June 30, 2023, $23.5 million in Revolving Loans were outstanding and bearing interest at 10.1%, consisting of 3-month SOFR plus a credit spread of 5.1%, which includes the incremental 1.0% added under the terms of the 2023 Debt Restructuring.

Commitment fees on the Revolving Loans are payable quarterly at 0.5% per annum on the daily average undrawn portion for the quarter and are expensed as incurred. The balances of unamortized issuance costs related to the Revolving Loans were $0.5 million as of June 30, 2023, and $0.6 million as of December 31, 2022.

The 2022 Credit Facility and 2L Notes are guaranteed by certain of the Company’s subsidiaries and are secured by substantially all of the assets of Holdings, the Borrower and the Borrower’s wholly owned subsidiaries, including a pledge of the stock of the Borrower, in each case, subject to customary exceptions. Pursuant to the terms of the Intercreditor and Subordination Agreement, the 2L Notes (and the guarantees thereof) will rank junior in right of payment to the obligations under the 2022 Credit Agreement, and the liens on the collateral securing the 2L Notes will rank junior to the liens on such collateral securing the obligations under the 2022 Credit Agreement.

The 2022 Credit Agreement contains customary covenants and restrictions, including financial and non-financial covenants. In accordance with Amendment No. 2 to the Credit Agreement, the financial covenants require the Company to maintain $30.0 million of minimum liquidity, as defined in the agreement, at each test date through the first quarter of 2023, $25.0 million of minimum liquidity for the second quarter of 2023, $15.0 million of minimum liquidity through the fourth quarter of 2023 and $10.0 million of minimum liquidity through the fourth quarter of 2024. Additionally, beginning in the first quarter of 2025, the Company must maintain a Secured Net Leverage Ratio, as defined in the agreement, not to exceed 11.00:1.00. The net leverage ratio covenant decreases each subsequent quarter through the second quarter of 2026 to 7.00:1.00, which remains applicable through maturity. The financial covenants are tested as of each fiscal quarter end for the respective periods. As of June 30, 2023, the Company is in compliance with its minimum liquidity financial covenant.

Table of Contents

The 2022 Credit Facility contains customary representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including requirements related to the delivery of independent audit reports without a going concern explanatory paragraph beginning with the report covering fiscal year 2025, limitations on indebtedness, liens, investments, negative pledges, dividends, junior debt payments, fundamental changes and asset sales and affiliate transactions. The Second Lien Note Purchase Agreement includes affirmative and negative covenants (other than financial covenants) that are substantially consistent with the 2022 Credit Agreement, as well as customary events of default. Failure to comply with the 2022 Credit Facility and Second Lien Note Purchase Agreement covenants and restrictions could result in an event of default under the respective borrowing agreements, subject to customary cure periods. In such an event, all amounts outstanding under the 2022 Credit Facility and Second Lien Note Purchase Agreement, together with any accrued interest, could then be declared immediately due and payable.

Under the 2022 Credit Facility, the Company may be required to make certain mandatory prepayments upon the occurrence of certain events, including: an event of default, a prepayment asset sale or receipt of net insurance proceeds in excess of $10.0 million, or excess cash flows exceeding certain thresholds. A prepayment asset sale includes dispositions at fair market value, and net insurance proceeds is generally defined as insurance proceeds received on a covered loss or as a result of assets taken under the power of eminent domain, net of costs related to the matter.

The Company had letters of credit totaling $6.5 million and $1.8 million under the letter of credit sub-facility on the revolving credit facility as of June 30, 2023 and December 31, 2022, respectively. The letters of credit auto-renew on an annual basis and are pledged to insurance carriers as collateral.

Aggregate maturities of the Company's borrowings at June 30, 2023 are as follows (in thousands):


2023 (remainder of year)	$	—
2024	—
2025	—
2026	—
2027	23,450
2028	511,042

Total future maturities(1)	534,492
Unamortized original issue discount and debt issuance costs	(16,181)
2L Notes due to related parties, principal amount(1, 2)	(103,243)
Long-term debt, net(1)	$	415,068

(1) Excludes any contractual paid in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates.

(2) The principal amount of the 2L Notes differs from the estimated fair value presented on the condensed consolidated balance sheet. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes.

Note 9. Share-Based Compensation

The Company recognizes compensation expense for all share-based compensation awarded to employees, net of forfeitures, using a fair value-based method. The grant-date fair value of each award is amortized to expense on a straight-line basis over the award’s vesting period. Compensation expense associated with share-based awards is included in salaries and related costs and selling, general and administrative expenses in the accompanying condensed consolidated statements of operations, depending on whether the award recipient is a clinic-level or corporate employee, respectively. Share-based compensation expense is adjusted for forfeitures as incurred.

Table of Contents

ATI 2021 Equity Incentive Plan

2023 grants

During the six months ended June 30, 2023, the Company granted restricted stock units ("RSUs") to certain employees and independent directors of the Company. For the six months ended June 30, 2023, approximately 0.7 million RSUs were granted under the 2021 Plan. The weighted-average grant-date fair values related to the RSUs granted were $17.00.

As of June 30, 2023, the unrecognized compensation expense related to outstanding RSUs was $14.6 million, to be recognized over a weighted-average period of 2.4 years.

Total non-cash share-based compensation expense recognized in the three and six months ended June 30, 2023 was approximately $2.8 million and $4.2 million, respectively.

Note 10. Mezzanine and Stockholders' Equity

ATI Physical Therapy, Inc. Series A Senior Preferred Stock

In connection with the 2022 Debt Refinancing, the Company issued 165,000 shares of non-convertible preferred stock (the "Series A Senior Preferred Stock") plus warrants to purchase 0.1 million shares of the Company's common stock at an exercise price of $150.00 per share (the "Series I Warrants") and warrants to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share (the "Series II Warrants"). The shares of the Series A Senior Preferred Stock have a par value of $0.0001 per share and an initial stated value of $1,000 per share, for an aggregate initial stated value of $165.0 million. The Company is authorized to issue 1.0 million shares of preferred stock per the Certificate of Designation. As of June 30, 2023, there was 0.2 million shares of Series A Senior Preferred Stock issued and outstanding.

The gross proceeds received from the issuance of the Series A Senior Preferred Stock and the Series I and Series II Warrants were $165.0 million, which was allocated among the instruments based on the relative fair values of each instrument. Of the gross proceeds, $144.7 million was allocated to the Series A Senior Preferred Stock, $5.1 million to the Series I Warrants and $15.2 million to the Series II Warrants. The resulting discount on the Series A Senior Preferred Stock will be recognized as a deemed dividend when those shares are subsequently remeasured upon becoming redeemable or probable of becoming redeemable. The Company recognized $2.9 million in issuance costs and $1.4 million of original issue discount related to the Series A Senior Preferred Stock.

The following table reflects the components of proceeds related to the Series A Senior Preferred Stock (in thousands):


Gross proceeds allocated to Series A Senior Preferred Stock	$	144,667
Less: original issue discount	(1,447)
Less: issuance costs	(2,880)
Net proceeds received from issuance of Series A Senior Preferred Stock	$	140,340

Table of Contents

The Series A Senior Preferred Stock has priority over the Company's Class A common stock and all other junior equity securities of the Company, and is junior to the Company's existing or future indebtedness and other liabilities (including trade payables), with respect to payment of dividends, distribution of assets, and all other liquidation, winding up, dissolution, dividend and redemption rights.

The Series A Senior Preferred Stock carries an initial dividend rate of 12.0% per annum (the "Base Dividend Rate"), payable quarterly in arrears. Dividends will be paid in-kind and added to the stated value of the Series A Senior Preferred Stock. The Company may elect to pay dividends on the Series A Senior Preferred Stock in cash beginning on the third anniversary of the Refinancing Date and, with respect to any such dividends paid in cash, the dividend rate then in effect will be decreased by 1.0%.

The Base Dividend Rate is subject to certain adjustments, including an increase of 1.0% per annum on the first day following the fifth anniversary of the Refinancing Date and on each one-year anniversary thereafter, and 2.0% per annum upon the occurrence of either an Event of Noncompliance (as defined in the Certificate of Designation) or a failure by the Company to redeem in full all Series A Senior Preferred Stock upon a Mandatory Redemption Event, which includes a change of control, liquidation, bankruptcy or certain restructurings. The paid in-kind dividends related to the Series A Preferred Stock were $11.0 million and $7.0 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the accumulated paid in-kind dividends related to the Series A Preferred Stock were $28.9 million and the aggregate stated value was $193.9 million.

Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following (in thousands, except per share data):


	June 30, 2023		December 31, 2022
Aggregate stated value, beginning of period	$	182,876	$	165,000
Paid in-kind dividends(1)	11,012		17,876
Aggregate stated value, end of period	$	193,888	$	182,876

Preferred shares issued and outstanding, end of period	165		165

Stated value per share, end of period	$	1,175.08	$	1,108.34

(1) Changes in the stated value for the year ended December 31, 2022 represent changes since the Refinancing Date, which is when the Series A Senior Preferred Stock was issued and established.

The Company has the right to redeem the Series A Senior Preferred Stock, in whole or in part, at any time (subject to certain limitations on partial redemptions). The Redemption Price for each share of Series A Senior Preferred Stock is equal to the stated value subject to certain price adjustments depending on when such optional redemption takes place, if at all.

The Series A Senior Preferred Stock is perpetual and is not mandatorily redeemable at the option of the holders, except upon the occurrence of a Mandatory Redemption Event. Upon the occurrence of a Mandatory Redemption Event, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price. Because the Series A Senior Preferred Stock is mandatorily redeemable contingent on certain events outside the Company’s control, such as a change in control, and since such events are not currently deemed certain to occur, the Series A Senior Preferred Stock is classified as mezzanine equity in the Company's condensed consolidated balance sheets.

Table of Contents

If an Event of Noncompliance occurs, then the holders of a majority of the then outstanding shares of Series A Senior Preferred Stock (the “Majority Holders”) have the right to demand that the Company engage in a sale/refinancing process to consummate a Forced Transaction. A Forced Transaction includes a refinancing of the Series A Senior Preferred Stock or a sale of the Company. Upon consummation of any Forced Transaction, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price.

Holders of shares of Series A Senior Preferred Stock have no voting rights with respect to the Series A Senior Preferred Stock except as set forth in the Certificate of Designation, other documents entered into in connection with the Purchase Agreement and the transactions contemplated thereby, or as otherwise required by law. For so long as any Series A Senior Preferred Stock is outstanding, the Company is prohibited from taking certain actions without the prior consent of the Majority Holders as set forth in the Certificate of Designation which include: issuing equity securities ranking senior to or pari passu with the Series A Senior Preferred Stock, incurring indebtedness or liens, engaging in affiliate transactions, making restricted payments, consummating certain investments or asset dispositions, consummating a change of control transaction unless the Series A Senior Preferred Stock is redeemed in full, altering the Company’s organizational documents, and making material changes to the nature of the Company’s business.

As part of the 2022 Debt Refinancing, the Preferred Equityholders, voting as a separate class, had the right to designate and elect one director to serve on the Company’s board of directors until such time after the Refinancing Date that (i) as of any applicable fiscal quarter end, the Company’s trailing 12-month Consolidated Adjusted EBITDA (as defined in the Certificate of Designation) exceeds $100 million, or (ii) the Lead Purchaser ceases to hold at least 50.1% of the Series A Senior Preferred Stock held by it as of the Refinancing Date. As part of the 2023 Debt Restructuring, (1) the Preferred Equityholders’ preexisting rights as holders of the Company’s Series A Senior Preferred Stock to designate and elect one director to the Company’s board of directors (the “Board”) was revised to provide that (a) the Preferred Equityholders have the right to appoint three additional directors to the Board (resulting in the right of the Preferred Equityholders to appoint a total of four directors to the Board) until such time after the Closing Date that the Lead Purchaser (as defined in certain of the transaction agreements entered into in connection with the original issuance of the Series A Preferred Stock) ceases to hold at least 50.1% of the Series A Preferred Stock held by it as of the Closing Date, one of whom must be unaffiliated with (and independent of) the Preferred Equityholders and who must meet the definition of “independent” under the listing standards of the New York Stock Exchange, and by the SEC; and (b) all such designee directors of the Preferred Equityholders will be subject to consideration by the Board (acting in good faith and consistent with their review of other Board candidates) and (2) the provision in the Certificate of Designation of the Company’s Series A Senior Preferred Stock that eliminated the Preferred Equityholders’ director designation rights upon the Company’s achievement of certain amounts of EBITDA was deleted.

Prior to the closing of the 2023 Debt Restructuring, because the Series A Senior Preferred Stock is classified as mezzanine equity and was not considered redeemable or probable of becoming redeemable, the paid in-kind dividends that were added to the stated value did not impact the carrying value of the Series A Senior Preferred Stock in the Company’s condensed consolidated balance sheets. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes issued as part of the 2023 Debt Restructuring, the Company determined that redemption of the Series A Preferred Stock is no longer solely within the control of the Company. As a result, the Company determined that the Series A Preferred Stock is probable of becoming redeemable based on the accounting guidance. Following the 2023 Debt Restructuring, since the Series A Senior Preferred Stock is probable of becoming redeemable, the Company will recognize changes in the redemption value of the Series A Senior Preferred Stock immediately as they occur and adjust the carrying amount as if redemption were to occur at the end of the reporting period. As of June 30, 2023, the redemption value of the Series A Senior Preferred Stock was $213.9 million, which includes the aggregate stated value at June 30, 2023, inclusive of paid in-kind dividends, and an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period.

Table of Contents

Changes in the carrying value of the Series A Preferred Stock consisted of the following for the six months ended June 30, 2023 (in thousands). There were no changes in carrying value in 2022.


	June 30, 2023
Carrying value, beginning of period	$	140,340
Write off original issue discount	1,447
Write off issuance costs	2,880
Deemed dividend from discount on initial gross proceeds allocation	20,333
Paid in-kind dividends recognized to carrying value	28,888
Redemption value adjustment	20,036
Carrying value, end of period	$	213,924

2022 Warrants

In connection with the Preferred Stock Financing, the Company agreed to issue to the preferred stockholders the Series I Warrants entitling the holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $150.00 per share, exercisable for 5 years from the Refinancing Date; and the Series II Warrants entitling holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share, exercisable for 5 years from the Refinancing Date (collectively, the "2022 Warrants"). Such number of shares of common stock purchasable pursuant to the 2022 Warrant Agreement and related exercise prices may be adjusted from time to time under certain scenarios as set forth in the 2022 Warrant Agreement, which relate to potential changes in the Company's capital structure.

The 2022 Warrants are classified as equity instruments and were initially recorded at an amount equal to the proceeds received from the Preferred Stock Financing allocated among the Series A Senior Preferred Stock, the Series I Warrants, and the Series II Warrants based upon their relative fair values. Of the gross proceeds, $5.1 million was allocated to the Series I Warrants and $15.2 million was allocated to the Series II Warrants. The Company recognized total issuance costs and original issue discount of approximately $0.2 million and $0.5 million related to the Series I Warrants and Series II Warrants, respectively.

The following table reflects the components of proceeds related to the 2022 Warrants (in thousands):


	Series I Warrants		Series II Warrants		Total
Gross proceeds allocated to 2022 Warrants	$	5,101	$	15,232	$	20,333
Less: original issue discount	(51)		(152)		(203)
Less: issuance costs	(102)		(303)		(405)
Net proceeds received from issuance of 2022 Warrants	$	4,948	$	14,777	$	19,725

Class A common stock

The Company is authorized to issue 470.0 million shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At June 30, 2023, there were 4.2 million shares of Class A common stock issued and 4.0 million shares outstanding.

Table of Contents

As of June 30, 2023, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands):


			June 30, 2023
2L Notes(1)			8,259
Shares available for grant under the 2021 Plan			242
2021 Plan share-based awards outstanding			872
Earnout Shares reserved			300
2022 Warrant shares reserved			230
IPO Warrant shares reserved			197
Vesting Shares reserved(2)			173
Restricted shares(2)			7
Total shares of common stock reserved			10,280

(1) Calculated based on the principal amount of 2L Notes and Conversion Price of $12.50 per share. This figure differs from the contractual Voting Rights Conversion Price of $12.87 as outlined in Note 8 - Borrowings.

(2) Represents shares of Class A common stock legally issued, but not outstanding, as of June 30, 2023.

Treasury stock

During the six months ended June 30, 2023, the Company net settled 4,369 shares of its Class A common stock related to employee tax withholding obligations associated with the Company's share-based compensation program. These shares are reflected at cost as treasury stock in the condensed consolidated financial statements. As of June 30, 2023, there were 5,909 shares of treasury stock totaling $0.2 million recognized in the condensed consolidated balance sheets.

Note 11. IPO Warrant Liability

The Company has outstanding public warrants to purchase an aggregate of approximately 0.1 million shares of the Company’s Class A common stock at an exercise price of $575.00 per share ("Public Warrants") and outstanding private placement warrants to purchase an aggregate of approximately 0.1 million shares of the Company's Class A common stock at an exercise price of $575.00 per share ("Private Placement Warrants") (collectively, the "IPO Warrants"). As of June 30, 2023, the Public Warrants were delisted from the New York Stock Exchange ("NYSE") and are traded in the over-the-counter market. There were no IPO Warrants exercised during the six months ended June 30, 2023.

The Company accounts for its outstanding IPO Warrants in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging - Contracts on an Entity’s Own Equity, and determined that the IPO Warrants do not meet the criteria for equity treatment thereunder. As such, each IPO Warrant must be recorded as a liability and is subject to re-measurement at each balance sheet date. Refer to Note 13 - Fair Value Measurements for further details. Changes in fair value are recognized in change in fair value of warrant liability in the Company’s condensed consolidated statements of operations.

Table of Contents

The following table presents the change in the fair value of Private Placement Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	89	$	801	$	29	$	1,305
Decrease in fair value	(60)		(356)		—		(860)
Fair value, end of period	$	29	$	445	$	29	$	445

The following table presents the changes in the fair value of the Public Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	207	$	1,863	$	69	$	3,036
Decrease in fair value	(138)		(828)		—		(2,001)
Fair value, end of period	$	69	$	1,035	$	69	$	1,035

Note 12. Contingent Common Shares Liability

Earnout Shares

Subject to the terms and conditions of the merger agreement between Wilco Holdco, Inc. and Fortress Value Acquisition Corp. II (herein referred to as "FAII" and "FVAC"), certain stockholders of Wilco Holdco, Inc. were provided the contingent right to receive, in the aggregate, up to 0.3 million shares of Class A common stock if, from the closing of the Company's business combination with FAII until the 10th anniversary thereof, the dollar volume-weighted average price (“VWAP”) of Class A common stock exceeds certain thresholds (the "Earnout Shares"). The Earnout Shares vest in three equal tranches of 0.1 million shares each if the VWAP of Class A common stock exceeds $600.00, $700.00 and $800.00 per share, respectively, over the designated period of time.

The Earnout Shares are subject to acceleration in the event of a sale or other change in control if the holders of Class A common stock would receive a per share price in excess of the applicable Earnout Shares price target. The Company accounts for the potential Earnout Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in the Company’s condensed consolidated statements of operations. As of June 30, 2023, no Earnout Shares have been issued as none of the corresponding share price thresholds have been met.

Table of Contents

The following table presents the changes in the fair value of the Earnout Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	1,350	$	13,350	$	1,800	$	28,800
Decrease in fair value	(503)		(950)		(953)		(16,400)
Fair value, end of period	$	847	$	12,400	$	847	$	12,400

Refer to Note 13 - Fair Value Measurements for further details.

Vesting Shares

Subject to the terms and conditions of the sponsor letter agreement that was executed in connection with the merger agreement between Wilco Holdco, Inc. and FAII, approximately 0.2 million shares of Class F common stock of FAII outstanding immediately prior to the Company's business combination with FAII converted to potential Class A common shares and became subject to vesting and forfeiture provisions (the "Vesting Shares"). The Vesting Shares vest in three equal tranches of approximately 0.1 million shares each if the VWAP of Class A common stock exceeds $600.00, $700.00 and $800.00 per share, respectively, over the designated period of time. The Vesting Shares are subject to acceleration in the event of a sale or other change in control if the holders of Class A common stock would receive a per share price in excess of the applicable Vesting Shares price target.

The Company accounts for the Vesting Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in the Company’s condensed consolidated statements of operations. As of June 30, 2023, no Vesting Shares are outstanding as none of the corresponding share price thresholds have been met.

The following table presents the changes in the fair value of the Vesting Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	776	$	7,676	$	1,035	$	16,560
Decrease in fair value	(289)		(546)		(548)		(9,430)
Fair value, end of period	$	487	$	7,130	$	487	$	7,130

Refer to Note 13 - Fair Value Measurements for further details.

Table of Contents

Note 13. Fair Value Measurements

The Company determines fair value measurements used in its condensed consolidated financial statements based upon the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, with Level 1 having the highest priority and Level 3 having the lowest.

•Level 1: Observable inputs, which include unadjusted quoted prices in active markets for identical instruments.

•Level 2: Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instruments.

•Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

As of June 30, 2023 and December 31, 2022, respectively, the recorded values of cash, cash equivalents and restricted cash, accounts receivable, other current assets, accounts payable, accrued expenses and deferred revenue approximate their fair values due to the short-term nature of these items. Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices. As of June 30, 2023 and December 31, 2022, respectively, the fair value of money market fund investments included in cash and cash equivalents was zero and $30.0 million.

Fair value measurement of debt

The Company's Revolving Loans are Level 2 fair value measures which have a variable interest rate structure that resets on a frequent short-term basis and, as of June 30, 2023, the recorded amounts approximate fair value. Prior to the 2023 Debt Restructuring, the Company's Senior Secured Term Loan was a Level 2 fair value measure. The Company utilizes market approach valuation techniques based on interest rates and credit data that are currently available to the Company for issuance of debt with similar terms or maturities.

In connection with the 2023 Debt Restructuring, the Company estimated the fair value of a portion of its Senior Secured Term Loan using a Black-Derman-Toy Lattice Bond Pricing Model. The valuation model utilizes observable and unobservable Level 3 inputs, such as SOFR forward rates and an estimated yield. As of June 30, 2023, the carrying amount and estimated fair value of the Senior Secured Term Loan was approximately $391.6 million and $364.2 million, respectively.

As discussed in Note 8 - Borrowings, the Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations.

The Company determined the fair value of the 2L Notes using Level 3 inputs. The fair value of the 2L Notes was estimated using a Goldman Sachs convertible bond valuation model to consider the impacts of the conversion feature. Changes in the assumptions of the unobservable inputs may materially affect the estimated fair value of the 2L Notes.

Table of Contents

The key inputs into the convertible bond valuation model were as follows as of the Closing Date. As of June 30, 2023, the most significant change in the below inputs that impacted the valuation was share price, which was $9.15:


																								2L Notes
																								June 15, 2023
Risk-free interest rate																								3.90%
Volatility																								50.00%
Selected yield																								20.00%
Expected term (years)																								5.3
Share price																								$10.21

The following table presents the changes in the fair value of the 2L Notes that is recognized in change in fair value of 2L Notes in the condensed consolidated statements of operations for the periods indicated below (in thousands). None of the change in fair value is attributable to instrument-specific credit risk:


	Three Months Ended		Six Months Ended
	June 30, 2023			June 30, 2023
Fair value, beginning of period(1)	$	103,943		$	103,943
Decrease in fair value(1)	(7,010)			(7,010)
Fair value, end of period	$	96,933		$	96,933

(1) Represents changes in fair value from the Closing Date, which is when the 2L Notes were issued.

Fair value measurement of share-based financial liabilities

Prior to June 30, 2023, the Company determined the fair value of the Public Warrant liability using Level 1 inputs, and determined the fair value of the Private Placement Warrant liability using the price of the Public Warrants as a Level 2 input. As of June 30, 2023, the Company determined the fair value of the IPO Warrant liability using Level 3 inputs as its Public Warrants were delisted from the NYSE.

As of June 30, 2023, the Company determined the fair value of the IPO Warrant liability, Earnout Shares liability and Vesting Shares liability using Level 3 inputs. The warrants would be deemed exercisable or redeemable if the Company's common stock price over a specified measurement period was trading at certain thresholds. The contingent common shares contain specific market conditions to determine whether the shares vest based on the Company’s common stock price over a specified measurement period. Given the path-dependent nature of the requirement in which the warrants are exercised or redeemed, and the shares are earned, a Monte-Carlo simulation was used to estimate the fair value of the liabilities. The Company’s common stock price was simulated to each measurement period based on the above methodology. In each iteration, the simulated stock price was compared to the conditions under which the warrants are exercised or redeemed, or the shares vest. In iterations where the stock price corresponded to warrants being exercised or redeemed, or shares vesting, the future value of the warrants or contingent common shares were discounted back to present value. The fair value of the liabilities were estimated based on the average of all iterations of the simulation.

Table of Contents

Inherent in a Monte-Carlo valuation model are assumptions related to expected stock-price volatility, expected term, risk-free interest rate and dividend yield. The Company estimates the volatility based on the historical volatility of certain guideline companies, as well as the Company's historical volatility over the available look-back period as of the valuation date. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the valuation date for a maturity similar to the expected term of the IPO Warrants, Earnout Shares and Vesting Shares. The dividend yield percentage is zero based on the Company's current expectations related to the payment of dividends during the expected term of the IPO Warrants, Earnout Shares or Vesting Shares.

The key inputs into the Monte-Carlo option pricing model were as follows as of June 30, 2023 and December 31, 2022 for the respective Level 3 instruments:


	IPO Warrants		Earnout Shares and Vesting Shares
	June 30, 2023	December 31, 2022	June 30, 2023	December 31, 2022
Risk-free interest rate	4.45%	N/A	3.88%	3.88%
Volatility	91.30%	N/A	77.80%	74.60%
Dividend yield	—%	N/A	—%	—%
Expected term (years)	3.0	N/A	8.0	8.5
Share price	$9.15	N/A	$9.15	$15.50

Refer to Note 11 - IPO Warrant Liability and Note 12 - Contingent Common Shares Liability for further details on the change in fair value of the IPO Warrants and change in fair value of the Earnout Shares and Vesting Shares, respectively.

Fair value measurement of interest rate derivative instruments

The Company is exposed to interest rate variability with regard to its existing variable-rate debt instrument, which exposure primarily relates to movements in various interest rates, such as SOFR. The Company utilizes interest rate cap derivative instruments for purposes of hedging exposures related to such variable-rate cash payments. The Company's interest rate caps are designated as cash flow hedging instruments.

The Company records derivatives on the balance sheet at fair value, which represents the estimated amounts it would receive or pay upon termination of the derivative prior to the scheduled expiration date. The fair value is derived from model-driven information based on observable Level 2 inputs, such as SOFR forward rates. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

Table of Contents

The following table presents the activity of cash flow hedges included in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022, respectively (in thousands):


	Cash Flow Hedges
Balance as of December 31, 2022	$	4,899
Unrealized loss recognized in other comprehensive income before reclassifications	(99)
Reclassification to interest expense, net	(3,357)
Balance as of March 31, 2023	1,443
Unrealized gain recognized in other comprehensive income before reclassifications	798
Reclassification to interest expense, net	(1,648)
Balance as of June 30, 2023	$	593

Balance as of December 31, 2021	$	28
Unrealized gain recognized in other comprehensive income before reclassifications	3,681
Reclassification to interest expense, net	71
Balance as of March 31, 2022	3,780
Unrealized gain recognized in other comprehensive income before reclassifications	2,642
Reclassification to interest expense, net	66
Balance as of June 30, 2022	$	6,488

The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
	Assets		Liabilities	Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Other current assets	$	511	—	$	5,028	—
Other non-current assets	$	83	—	—		—
Accrued expenses and other liabilities	—		—	—		—
Other non-current liabilities	—		—	—		$	73

Note 14. Income Taxes

The effective tax rate and income tax expense for the three months ended June 30, 2023 were (0.4)% and $0.1 million, compared to an effective tax rate and income tax benefit of 8.8% and $13.0 million for the three months ended June 30, 2022. The effective tax rate and income tax expense for the six months ended June 30, 2023 were (0.3)% and $0.2 million, compared to an effective tax rate and income tax benefit of 11.7% and $36.3 million for the six months ended June 30, 2022.

Table of Contents

The effective tax rate for the three and six months ended June 30, 2023 was estimated based on full-year 2023 forecast. The estimated effective tax rate was different than the statutory rate primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax expense of $0.1 million for the three months ended June 30, 2023, and a tax expense of $0.2 million for the six months ended June 30, 2023.

The effective tax rate for the three and six months ended June 30, 2022 was estimated based on full-year 2022 forecast. The estimated effective tax rate was different than the statutory rate primarily due to attributes in federal and state jurisdictions for which no benefit can be recognized and book impairment of goodwill. There was no tax basis established in a significant component of the goodwill impaired. As a result, the impairment had a substantial permanent impact on the effective tax rate. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items resulted in a tax benefit of $13.0 million for the three months ended June 30, 2022, and a tax benefit of $36.3 million for the six months ended June 30, 2022.

In evaluating the Company's ability to recover deferred income tax assets, all available positive and negative evidence is considered, including scheduled reversal of deferred tax liabilities, operating results and forecasts of future taxable income in each of the jurisdictions in which the Company operates. As of June 30, 2023, the Company determined that a significant portion of its federal and state net operating loss carryforwards with definite and certain indefinite carryforward periods and certain deferred tax assets are not more likely than not to be realized based on the weight of available evidence. As a result, the Company recorded valuation allowances against tax benefits related to its current year losses.

Note 15. Leases

The Company leases various facilities and office equipment for its physical therapy operations and administrative support functions under operating leases. The Company’s initial operating lease terms are generally between 7 and 10 years, and typically contain options to renew for varying terms. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease. If the ROU asset has been impaired, lease expense is no longer recognized on a straight-line basis. The lease liability continues to amortize using the effective interest method, while the ROU asset is subsequently amortized on a straight-line basis.

Table of Contents

Lease costs are included as components of cost of services and selling, general and administrative expenses on the condensed consolidated statements of operations. Lease charges related to ROU asset impairments are included in goodwill, intangible and other asset impairment charges on the condensed consolidated statements of operations. The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Lease cost
Operating lease cost	$	16,674	$	16,784	$	33,363	$	33,487
Variable lease cost (1)	5,468		5,331		10,830		10,536
Total lease cost (2)	$	22,142	$	22,115	$	44,193	$	44,023

(1) Includes short term lease costs, which are immaterial.

(2) Sublease income was immaterial.

During the six months ended June 30, 2023 and 2022, the Company modified the lease terms for a significant number of its real estate leases, primarily related to lease term extensions and renewals in the normal course of business. Modifications during the six months ended June 30, 2023 and 2022 resulted in an increase to the Company’s operating lease ROU assets and operating lease liabilities of approximately $8.8 million and $7.5 million, respectively.

Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands):


	Six Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31,110	$	32,893

Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,831	$	6,900

Average lease terms and discount rates as of June 30, 2023 and December 31, 2022 were as follows:


	June 30, 2023	December 31, 2022
Weighted-average remaining lease term:
Operating leases	5.7 years	5.9 years
Weighted-average discount rate:
Operating leases	7.2%	6.9%

Table of Contents

Estimated undiscounted future lease payments under non-cancellable operating leases, along with a reconciliation of the undiscounted cash flows to operating lease liabilities, respectively, at June 30, 2023 were as follows (in thousands):


Year	Amount
2023 (remainder of year)	$	34,311
2024	66,189
2025	56,311
2026	49,463
2027	38,178

Thereafter	77,069
Total undiscounted future cash flows	321,521
Less: Imputed Interest	(60,303)
Present value of future cash flows	$	261,218
Presentation on Balance Sheet:
Current	$	52,194
Non-current	$	209,024

Note 16. Commitments and Contingencies

The Company has contractual commitments that are not required to be recognized in the condensed consolidated financial statements related to cloud computing and telecommunication services agreements. As of June 30, 2023, minimum amounts due under these agreements are approximately $13.8 million through January of 2026 subject to customary business terms and conditions.

From time to time, the Company is a party to legal proceedings, governmental audits and investigations that arise in the ordinary course of business. Management is not aware of any legal proceedings, governmental audits and investigations of which the outcome is probable to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. The outcome of any litigation and claims against the Company cannot be predicted with certainty, and the resolution of current or future claims could materially affect our future results of operations, cash flows or financial condition.

During 2022, the Company engaged in discussions with a payor regarding a billing dispute related to certain historical claims. Management believed, based on discussions with its legal counsel, that the Company had meritorious defenses against such unasserted claim. However, based on the progress of settlement discussions to avoid the cost of potential litigation, the Company recorded a charge for a net settlement liability related to the billing dispute of $3.0 million, which is included in selling, general and administrative expenses in its condensed consolidated statements of operations for the three and six months ended June 30, 2022. As of December 31, 2022, the liability has been fully settled.

Stockholder class action complaints

On August 16, 2021, two purported ATI stockholders, Kevin Burbige and Ziyang Nie, filed a putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, Labeed Diab, Joe Jordan, and Drew McKnight (collectively, the “ATI Individual Defendants”), and Joshua Pack, Marc Furstein, Leslee Cowen, Aaron Hood, Carmen Policy, Rakefet Russak-Aminoach, and Sunil Gulati (collectively, the “FVAC Defendants”).

Table of Contents

On October 7, 2021, another purported ATI stockholder, City of Melbourne Firefighters' Retirement System ("City of Melbourne"), filed a nearly identical putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, the ATI Individual Defendants, and the FVAC Defendants. On November 18, 2021, the court consolidated the cases and appointed The Phoenix Insurance Company Ltd. and The Phoenix Pension & Provident Funds as lead plaintiffs (together, “Lead Plaintiffs”).

On February 8, 2022, Lead Plaintiffs filed a consolidated amended complaint against ATI, the ATI Individual Defendants, and the FVAC Defendants, which asserts claims against (i) ATI and the ATI Individual Defendants under Section 10(b) of the Exchange Act; (ii) the ATI Individual Defendants under Section 20(a) of the Exchange Act (in connection with the Section 10(b) claim); (iii) all defendants under Section 14(a) of the Exchange Act; and (iv) the ATI Individual Defendants and the FVAC Defendants under Section 20(a) of the Exchange Act (in connection with the Section 14(a) claim). Lead Plaintiffs purport to assert these claims on behalf of those ATI stockholders who purchased or otherwise acquired their ATI shares between February 22, 2021 and October 19, 2021, inclusive, and/or held FVAC Class A common shares as of May 24, 2021 and were eligible to vote at FVAC’s June 15, 2021 special meeting. The consolidated amended complaint generally alleges that the proxy materials for the FVAC/ATI merger, as well as other ATI disclosures (including the press release announcing ATI’s financial results for the first quarter of 2021), were false and misleading (and, thus, in violation of Sections 10(b) and 14(a) of the Exchange Act) because they failed to disclose that: (i) ATI was experiencing attrition among its physical therapists; (ii) ATI faced increasing competition for clinicians in the labor market; (iii) as a result, ATI faced difficulty retaining therapists and incurred increased labor costs; (iv) also as a result, ATI would open fewer new clinics; and (v) also as a result, the defendants’ positive statements about ATI’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Lead Plaintiffs, on behalf of themselves and the putative class, seek money damages in an unspecified amount and costs and expenses, including attorneys’ and experts’ fees. On April 11, 2022, defendants filed motions to dismiss the consolidated amended complaint, which were fully briefed as of July 25, 2022 and remain pending. The Company has determined that potential liabilities related to the consolidated amended complaint are not considered probable or reasonably estimable at this time.

On February 7, 2023, another purported ATI stockholder, Wendell Robinson, filed a putative class action complaint in the Court of Chancery of the State of Delaware against Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rakefet Russak-Aminoach, Sunil Gulati, Daniel N. Bass, Micah B. Kaplan and Labeed Diab (the "Robinson Action"). The complaint asserts claims against: (i) Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rafeket Russak-Aminoach, Sunil Gulati, Daniel N. Bass and Micah B. Kaplan for breach of fiduciary duty; and (ii) Labeed Diab for aiding and abetting breach of fiduciary duty. Plaintiff's allegations generally mirror those asserted in the federal stockholder class action described above, and Plaintiff further alleges that the alleged misrepresentations and omissions in the proxy materials for the FVAC/ATI merger prevented stockholders from making a fully informed decision on whether to approve the merger or have their shares redeemed. Defendants filed motions to dismiss on April 28, 2023, which were fully briefed as of June 23, 2023 and remain pending. A hearing on the motions has been scheduled for December 1, 2023. The Company has determined that potential liabilities related to this complaint are not considered probable or reasonably estimable at this time.

Table of Contents

On June 1, 2023, another purported ATI stockholder, Phillip Goldstein, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John L. Larsen, John Maldonado, Carmine Petrone, Joanne M. Burns, Christopher Krubert, James E. Parisi, Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach. The complaint asserts direct and/or derivative claims against: (i) Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John Larsen, John Maldonado, Carmine Petrone, Joanne Burns, Christopher Krubert, and James Parisi for tortious interference with redemption rights, aiding and abetting breach of fiduciary duty, and fraud; and (ii) Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach for breach of fiduciary duty. Plaintiff’s allegations generally mirror those asserted in the Robinson Action referenced above. Defendants have not yet responded to the complaint. The Company has determined that potential liabilities related to this complaint are not considered probable or reasonably estimable at this time.

Stockholder derivative complaint

Between December 1, 2021 and September 22, 2022, five purported ATI stockholders filed four derivative actions, purportedly on behalf of ATI, in the U.S. District Court for the Northern District of Illinois. On November 21, 2022, four of these stockholder plaintiffs, Vinay Kumar, Brendan Reginbald, Ziyang Nie and Julia Chang, filed a consolidated amended complaint against Labeed Diab, Joe Jordan, John Larsen, John Maldonado, Carmine Petrone, Christopher Krubert, Joanne Burns and James Parisi (collectively, the “Legacy ATI Defendants”), Drew McKnight, Joshua Pack, Aaron Hood, Carmen Policy, Marc Furstein, Leslee Cowen, Rafeket Russak-Aminoach, and Sunil Gulati (collectively, the “FVACII Individual Defendants”), and Fortress Acquisition Sponsor II, LLC and Fortress Investment Group LLC (together, the "Fortress Entity Defendants," and together with the FVACII Individual Defendants, the “FVACII Defendants”). The consolidated amended complaint asserts claims on behalf of ATI against: (i) the FVACII Defendants for breach of fiduciary duty; (ii) Fortress Acquisition Sponsor II, LLC and the Legacy ATI Defendants for aiding and abetting breach of fiduciary duty; (iii) Labeed Diab, Joe Jordan, and Drew McKnight for contribution under Section 21D of the Exchange Act; (iv) the FVACII Defendants under Section 14(a) of the Exchange Act; (v) the Legacy ATI Defendants for unjust enrichment; and (vi) all defendants for contribution and indemnification under Delaware law. Plaintiffs' allegations generally mirror those asserted in the stockholder class action described above. On January 20, 2023, defendants filed motions to dismiss the consolidated amended complaint, which remain pending. On March 3, 2023, in lieu of filing a response to defendants' motions to dismiss, Plaintiffs filed a motion for leave to file an amended complaint, which was fully briefed as of April 7, 2023 and remains pending. The Company has determined that potential liabilities related to the consolidated amended complaint are not considered probable or reasonably estimable at this time.

Insurance coverage complaint

On March 8, 2023, the Company filed a complaint against Federal Insurance Company, U.S. Specialty Insurance Company and other insurers titled ATI Physical Therapy, Inc. v. Federal Insurance Company et. al., Case No. N23C-03-074, in the Superior Court of the State of Delaware related to a coverage dispute and those certain insurers’ denial of coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests discussed in this section. The complaint asserts claims against Federal Insurance Company for breach of contract and bad faith, and claims for declaratory judgment as to Federal Insurance Company, U.S. Specialty Insurance Company, XL Specialty Insurance Company and the Company’s excess insurance carriers, seeking coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests. On June 26, 2023, the Company filed an amended complaint asserting the same claims and seeking the same relief. On July 18, 2023, the defendants filed their answers to the amended complaint.

Table of Contents

Regulatory matters

On November 5, 2021, the Company received from the SEC a voluntary request for the production of documents relating to the earnings forecast and financial information referenced in the Company's July 26, 2021 Form 8-K and related matters. The Company has subsequently received from the SEC additional requests for documents and information related to the same matters, and is cooperating with the SEC's review and investigation of those matters.

Indemnifications

The Company has agreed to indemnify its current and former directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by them in any action or proceeding to which any of them are, or are threatened to be, made a party by reason of their service as a director or officer. The Company maintains director and officer insurance coverage that would generally enable it to recover a portion of any amounts paid. The ultimate cost of current or potential future litigation may exceed the Company’s current insurance coverages and may have a material adverse impact on our results of operations, cash flows and financial condition. The Company also may be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

Note 17. Loss per Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the impact of securities that would have a dilutive effect on basic loss per share, if any. For the three and six months ended June 30, 2023 and 2022, shares of Series A Senior Preferred Stock are treated as participating securities and therefore are included in computing earnings per common share using the two-class method. The two-class method is an earnings allocation formula that calculates basic and diluted net earnings per common share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings as if the earnings for the year had been distributed. For the three and six months ended June 30, 2023 and 2022, the income (loss) available to common stockholders is reduced (increased) by the amount of the cumulative dividend and any redemption value adjustments for the Series A Senior Preferred Stock that was issued as part of the 2022 Debt Refinancing. As discussed in Note 8 - Borrowings, the Series B Preferred Stock are non-economic and represent voting rights only and, therefore, are not considered in the calculation of basic or diluted loss per share.

Table of Contents

The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Basic and diluted loss per share:
Net loss	$	(21,749)	$	(135,723)	$	(46,959)	$	(273,946)
Less: Net income (loss) attributable to non-controlling interests	956		(177)		2,016		(650)
Less: Series A Senior Preferred redemption value adjustments(1)	44,696		—		44,696		—
Less: Series A Senior Preferred cumulative dividend	5,709		5,063		11,012		6,988
Loss available to common stockholders	$	(73,110)	$	(140,609)	$	(104,683)	$	(280,284)

Weighted average shares outstanding(2)	4,122		4,077		4,110		4,038

Basic and diluted loss per share	$	(17.74)	$	(34.49)	$	(25.47)	$	(69.41)

(1) For the three and six months ended June 30, 2023, the Series A Senior Preferred Stock was remeasured to its redemption value. This adjustment consisted of the recognition of a deemed dividend primarily from the original issue discount and an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period. Refer to Note 10 - Mezzanine and Stockholders' Equity for additional information.

(2) Included within weighted average shares outstanding following the 2022 Debt Refinancing are common shares issuable upon the exercise of the Series II Warrants, as the Series II Warrants are exercisable at any time for nominal consideration. As such, the shares are considered to be outstanding for the purpose of calculating basic and diluted loss per share.

For the periods presented, basic and diluted loss per share were equal. The following number of shares issuable related to outstanding securities could potentially dilute earnings per share in the future (in thousands):


	Three Months Ended		Six Months Ended
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
2L Notes(1)	8,259	—	8,259	—
Series I Warrants	105	105	105	105
IPO Warrants	197	197	197	197
Restricted shares(2)	7	11	7	11
Stock options	103	129	103	129
RSUs	767	97	767	97
RSAs	2	6	2	6
Total	9,440	545	9,440	545

(1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes and conversion price of $12.50 per share.

(2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods.

Table of Contents

As the vesting thresholds have not yet been met as of the end of the reporting period, 0.3 million Earnout Shares and approximately 0.2 million Vesting Shares were excluded from the basic and diluted shares outstanding calculations.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of ATI Physical Therapy, Inc. and its subsidiaries (herein referred to as “we,” ”us,” “the Company,” “our Company,” "ATI," or "ATIP") should be read in conjunction with the Company’s condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report.

We make statements in this discussion that are forward-looking and involve risks and uncertainties. These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of the Company. The forward-looking statements are based on our current views and assumptions, and actual results could differ materially from those anticipated in such forward-looking statements due to factors including, but not limited to, those discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors.”

Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Our forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement may no longer be accurate.

Certain amounts in this Management's Discussion and Analysis may not add due to rounding. All percentages have been calculated using unrounded amounts for the three and six months ended June 30, 2023 and 2022.

All dollar amounts are presented in thousands, unless indicated otherwise.

Company Overview

We are a nationally recognized outpatient physical therapy provider in the United States specializing in outpatient rehabilitation and adjacent healthcare services, with 911 clinics located in 24 states (as well as 18 clinics under management service agreements) as of June 30, 2023. We operate with a commitment to providing our patients, medical provider partners, payors and employers with evidence-based, patient-centric care.

We offer a variety of services within our clinics, including physical therapy to treat spine, shoulder, knee and neck injuries or pain; work injury rehabilitation services, including work conditioning and work hardening; hand therapy; and other specialized treatment services. Our Company’s team of professionals is dedicated to helping return patients to optimal physical health.

Physical therapy patients receive team-based care, standardized techniques and individualized treatment plans in an encouraging environment. To achieve optimal results, we use an extensive array of techniques including therapeutic exercise, manual therapy and strength training, among others. Our physical therapy model aims to deliver optimized outcomes and time to recovery for patients, insights and service satisfaction for referring providers and predictable costs and measurable value for payors.

Table of Contents

In addition to providing services to physical therapy patients at outpatient rehabilitation clinics, we provide services through our ATI Worksite Solutions (“AWS”) program, Management Service Agreements (“MSA”) and Sports Medicine arrangements. AWS provides an on-site team of healthcare professionals at employer worksites to promote work-related injury prevention, facilitate expedient and appropriate return-to-work follow-up and maintain the health and well-being of the workforce. Our MSA arrangements typically include the Company providing management and physical therapy-related services to physician-owned physical therapy clinics. Sports Medicine arrangements provide certified healthcare professionals to various schools, universities and other institutions to perform on-site physical therapy and rehabilitation services.

2023 Debt Restructuring Transaction

On June 15, 2023 (the "Closing Date"), the Company completed a transaction to improve the Company's liquidity (the "2023 Debt Restructuring"). On the Closing Date, certain previously executed agreements became effective, including (i) Amendment No. 2 to Credit Agreement, (ii) a Second Lien Note Purchase Agreement and (iii) certain other definitive agreements relating to the 2023 Debt Restructuring (such documents referred to collectively as the "Signing Date Definitive Documents"). Refer to Note 8 - Borrowings in the condensed consolidated financial statements for further details.

Reverse Stock Split

2022 Debt Refinancing and Preferred Stock Financing

On February 24, 2022, the Company entered into various financing arrangements to refinance its existing long-term debt (the "2022 Debt Refinancing"). The Company entered into the 2022 Credit Agreement which is comprised of a senior secured term loan which matures on February 24, 2028, and a "super priority" senior secured revolver, which matures on February 24, 2027. Refer to Note 8 - Borrowings in the condensed consolidated financial statements for further details.

In connection with the 2022 Debt Refinancing, the Company issued shares of non-convertible preferred stock and warrants to purchase shares of the Company's common stock (the "Preferred Stock Financing"). Refer to Note 10 - Mezzanine and Stockholders' Equity in the condensed consolidated financial statements for further details.

Table of Contents

Trends and Factors Affecting the Company’s Future Performance and Comparability of Results

Through the second quarter of 2023, we observed the following trends in our operations:

•Improved patient visit volumes relative to 2022, primarily driven by higher clinician productivity.

•A continued tight labor market for available physical therapy and other healthcare providers in the workforce, contributing to competition in hiring, attrition, clinical staffing level challenges, continued use of contract labor and wage inflation in the physical therapy industry and at ATI.

•Stabilization in rate per visit relative to the comparative year-to-date period in 2022 primarily driven by favorable service mix shifts, partially offset by rate headwinds including unfavorable payor and state mix shifts and Medicare rate cuts that became effective on January 1, 2023.

Our ability to achieve our business plan depends upon a number of factors, including, but not limited to, the success of a number of continued steps being taken in an effort to increase clinical staffing levels, improve and sustain higher clinician productivity, control costs and capital expenditures, increase visit volumes and referrals and stabilize and improve rate per visit.

COVID-19 pandemic and volume impacts

As a result of the COVID-19 pandemic, visits per day ("VPD") decreased to a low point of 12,643 during the quarter ended June 30, 2020. The Company has experienced relative increases in quarterly VPD following the low point, as local restrictions in certain markets, referral levels and individual routines evolved compared to prior periods. During the beginning of 2022, we observed volume softness caused, in part, by an increase in COVID-19 cases due to the outbreak of additional variants. Through the remainder of the first half of 2022, we experienced increases in visit volumes relative to the beginning of 2022. Additionally, while we observed volume softness during the third quarter of 2022 due, in part, to seasonality, we experienced increases in quarterly VPD through the fourth quarter of 2022 which has continued into 2023.

Table of Contents

The chart below reflects the quarterly trend in VPD:

As demand for physical therapy services has increased in the market since its low point during the quarter ended June 30, 2020, the Company has focused on attempting to increase its clinical staffing levels by hiring clinicians, optimizing clinician hours based on available workforce and attempting to reduce levels of clinician attrition that have been elevated relative to historical levels. The elevated levels of attrition were initially caused, in part, by changes made during the COVID-19 pandemic related to compensation, staffing levels and support for clinicians. We have implemented a range of actions related to compensation, staffing levels, clinical and professional development and other initiatives in an effort to retain and attract therapists across our platform, which has increased our expectations for labor costs. While the Company has observed improvement in hiring and attrition levels in certain periods since implementing these actions, hiring trends remain below targeted levels due to a continued tight labor market for available physical therapy and other healthcare providers in the workforce which may impede our progress toward increasing visit volumes. In an effort to drive more volume and visits per day, in addition to focusing on clinical staffing levels and clinician productivity, we are working to establish relationships with new referral sources and strengthen relationships with our partner providers and existing referral sources across our geographic footprint.

Despite the World Health Organization declaring an end to the global health emergency associated with the COVID-19 pandemic in May 2023, the full extent of its future impact remains unknown and difficult to predict. The future impact of the COVID-19 pandemic and any direct or indirect resulting impacts on our performance will depend on certain developments, including the duration and spread of the virus and its newly identified strains, effectiveness and adoption rates of vaccines and other therapeutic remedies, the potential for continued or reinstated restrictive policies enforced by federal, state and local governments, and the impact of the virus on our workforce, all of which create uncertainty and cannot be predicted. While we expect the disruption caused by COVID-19 and resulting impacts to diminish over time, we cannot predict the length of such impacts, and if such impacts continue for an extended period, it could have a continued effect on the Company’s results of operations, financial condition and cash flows, which could be material.

Table of Contents

CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act") was signed into law providing reimbursement, grants, waivers and other funds to assist health care providers during the COVID-19 pandemic. The Company has realized benefits under the CARES Act including, but not limited to, the receipt of Medicare Accelerated and Advance Payment Program ("MAAPP") funds and deferral of depositing the employer portion of Social Security taxes, interest-free and penalty-free. During the year ended December 31, 2022, the remaining obligations related to these benefits were applied and repaid. During the six months ended June 30, 2022, the Company applied $10.7 million in MAAPP funds against the outstanding liability at that time.

Market and industry trends and factors

•Outpatient physical therapy services growth. Outpatient physical therapy continues to play a key role in treating musculoskeletal conditions for patients. According to the Centers for Medicare & Medicaid Services ("CMS"), musculoskeletal conditions impact individuals of all ages and include some of the most common health issues in the U.S. As healthcare trends in the U.S. continue to evolve, with a growing focus on value-based care emphasizing up-front, conservative care to deliver better outcomes, quality healthcare services addressing such conditions in lower cost outpatient settings may continue increasing in prevalence.

•U.S. population demographics. The population of adults aged 65 and older in the U.S. is expected to continue to grow and thus expand the Company’s market opportunity. According to the U.S. Census Bureau, the population of adults over the age of 65 is expected to grow 30% from 2020 through 2030. As a significant portion of our net patient revenue is derived from governmental third-party payors, including Medicare, our patient base of adults aged 65 and older may increase in the coming years.

•Federal funding for Medicare and Medicaid. Federal and state funding of Medicare and Medicaid and the terms of access to these reimbursement programs affect demand for physical therapy services. In recent years, through legislative and regulatory actions, the federal government has made substantial changes to various payment systems under the Medicare program. In July 2022, the CMS released its proposed 2023 Medicare Physician Fee Schedule which called for an approximate 4.5% reduction in the calendar year 2023 conversion factor. In December 2022, the Consolidated Appropriations Act (2023) was signed into law. The Consolidated Appropriations Act (2023) provides partial relief related to Medicare cuts including 2.5% relief in 2023 and 1.25% relief in 2024. As a result, the reimbursement rate reduction beginning in January 2023 was approximately 2.0%. In July 2023, the CMS released its proposed 2024 Medicare Physician Fee Schedule. The proposed fee schedule calls for an approximate 3.34% reduction in the calendar year 2024 conversion factor which would lead to further reductions in reimbursement rates unless acted upon through a Congressional measure.

•Workers’ compensation funding. Payments received under certain workers’ compensation arrangements may be based on predetermined state fee schedules, which may be impacted by changes in state funding.

•Number of people with private health insurance. Physical therapy services are often covered by private health insurance. Individuals covered by private health insurance may be more likely to use healthcare services because it helps offset the cost of such services. As health insurance coverage rises, demand for physical therapy services tends to also increase.

Table of Contents

Key Components of Operating Results

Net patient revenue. Net patient revenues are recorded for physical therapy services that the Company provides to patients including physical therapy, work conditioning, hand therapy, aquatic therapy and functional capacity assessment. Net patient revenue is recognized based on contracted amounts with payors or other established rates, adjusted for the estimated effects of any variable consideration, such as contractual allowances and implicit price concessions. Visit volume is primarily driven by conversion of physician referrals and marketing efforts.

Other revenue. Other revenue consists of revenue generated by our AWS, MSA and Sports Medicine service lines.

Salaries and related costs. Salaries and related costs consist primarily of wages and benefits for our healthcare professionals engaged directly and indirectly in providing services to patients.

Rent, clinic supplies, contract labor and other. Comprised of non-salary, clinic related expenses consisting of rent, clinic supplies, contract labor and other costs including travel expenses and depreciation at our clinics.

Provision for doubtful accounts. Provision for doubtful accounts represents the Company’s estimate of accounts receivable recorded during the period that may ultimately prove uncollectible based upon several factors, including the age of outstanding receivables, the historical experience of collections, the impact of economic conditions and, in some cases, the specific customer account's ability to pay.

Selling, general and administrative expenses. Selling, general and administrative expenses consist primarily of wages and benefits for corporate personnel, corporate outside services, marketing costs, depreciation of corporate fixed assets, amortization of intangible assets and certain corporate level professional fees, including those related to legal, accounting and payroll.

Goodwill, intangible and other asset impairment charges. Goodwill, intangible and other asset impairment charges represent non-cash charges associated with the write-down of goodwill, trade name indefinite-lived intangible and other assets.

Change in fair value of 2L Notes. Represents non-cash amounts related to the change in the estimated fair value of the 2L Notes.

Change in fair value of warrant liability. Represents non-cash amounts related to the change in the estimated fair value of the IPO Warrants.

Change in fair value of contingent common shares liability. Represents non-cash amounts related to the change in the estimated fair value of Earnout Shares and Vesting Shares.

Interest expense, net. Interest expense includes the cost of borrowing under the Company’s 2022 Credit Facility and amortization of deferred financing costs and original issue discount.

Other expense, net. Other expense, net is comprised of income statement activity not related to the core operations of the Company.

Table of Contents

Key Business Metrics

When evaluating the results of operations, management has identified a number of metrics that allow for specific evaluation of performance on a more detailed basis. See “Results of Operations” for further discussion on financial statement metrics such as net revenue, net income (loss), EBITDA and Adjusted EBITDA.

Patient visits

As the main operations of the Company are driven by physical therapy services provided to patients, management considers total patient visits to be a key volume measure of such services. In addition to total patient visits, management analyzes (1) average VPD calculated as total patient visits divided by business days for the period, as this allows for comparability between time periods with an unequal number of business days, and (2) average VPD per clinic, calculated as average VPD divided by the average number of clinics open during the period (excluding clinics under management service agreements).

Net patient revenue ("NPR") per visit

The Company calculates net patient revenue per visit, its most significant reimbursement metric, by dividing net patient revenue in a period by total patient visits in the same period.

Clinics

To better understand geographical and location-based trends, the Company evaluates metrics based on the 911 clinics (excluding clinics under management service agreements) and 18 managed clinic locations as of June 30, 2023. De novo clinics represent organic new clinics opened during the current period based on sophisticated site selection analytics. Acqui-novo clinics represent new clinics opened during the current period, that were existing clinic operations not previously owned by the Company, in a target geography that provides the Company with an immediate presence, available staff and referral relationships of the former owner within the surrounding areas. Acquired clinics represent new clinics from purchases of physical therapy practices. Same clinic revenue growth rate identifies revenue growth year over year on clinics that have been owned and operating for over one year. This metric is determined by isolating the population of clinics that have been open for at least 12 months and calculating the percentage change in revenue of this population between the current and prior comparable periods.

The following table presents selected operating and financial data that we believe are key indicators of our operating performance:


	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Number of clinics (end of period)	911			926			911			926
Number of clinics managed (end of period)	18			20			18			20
New clinics during the period	6			10			10			22
Business days	64			64			128			128
Average visits per day	23,412			22,403			23,056			21,733
Average visits per day per clinic	25.7			24.2			25.5			23.8
Total patient visits	1,498,369			1,433,815			2,951,217			2,781,793
Net patient revenue per visit	$	104.74		$	103.57		$	104.26		$	103.33
Same clinic revenue growth rate	6.4		%	—		%	7.5		%	2.1		%

Table of Contents

The following table provides a rollforward of activity related to the number of clinics during the corresponding periods:


	Three Months Ended		Six Months Ended
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Number of clinics (beginning of period)	909	922	923	910
Add: New clinics opened during the period	6	10	10	22

Less: Clinics closed/sold during the period	4	6	22	6
Number of clinics (end of period)	911	926	911	926

Table of Contents

Results of Operations

Three months ended June 30, 2023 compared to three months ended June 30, 2022

The following table summarizes the Company’s consolidated results of operations for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,
	2023				2022				Increase/(Decrease)
($ in thousands, except percentages)	$		% of Revenue		$		% of Revenue		$		%
Net patient revenue	$	156,938	91.1	%	$	148,506	90.9	%	$	8,432	5.7	%
Other revenue	15,399		8.9	%	14,787		9.1	%	612		4.1	%
Net revenue	172,337		100.0	%	163,293		100.0	%	9,044		5.5	%
Cost of services:
Salaries and related costs	95,327		55.3	%	89,606		54.9	%	5,721		6.4	%
Rent, clinic supplies, contract labor and other	50,437		29.3	%	50,405		30.9	%	32		0.1	%
Provision for doubtful accounts	2,360		1.4	%	3,506		2.1	%	(1,146)		(32.7)	%
Total cost of services	148,124		86.0	%	143,517		87.9	%	4,607		3.2	%
Selling, general and administrative expenses	36,573		21.2	%	31,808		19.5	%	4,765		15.0	%
Goodwill, intangible and other asset impairment charges	—		—	%	127,820		78.3	%	(127,820)		n/m
Operating loss	(12,360)		(7.2)	%	(139,852)		(85.6)	%	127,492		n/m
Change in fair value of 2L Notes	(7,010)		(4.1)	%	—		—	%	(7,010)		n/m
Change in fair value of warrant liability	(198)		(0.1)	%	(1,184)		(0.7)	%	986		(83.3)	%
Change in fair value of contingent common shares liability	(792)		(0.5)	%	(1,496)		(0.9)	%	704		(47.1)	%

Interest expense, net	16,682		9.7	%	11,379		7.0	%	5,303		46.6	%

Other expense, net	618		0.4	%	205		0.1	%	413		201.5	%
Loss before taxes	(21,660)		(12.6)	%	(148,756)		(91.1)	%	127,096		(85.4)	%
Income tax expense (benefit)	89		0.1	%	(13,033)		(8.0)	%	13,122		(100.7)	%
Net loss	$	(21,749)	(12.6)	%	$	(135,723)	(83.1)	%	$	113,974	(84.0)	%

Table of Contents

Net patient revenue. Net patient revenue for the three months ended June 30, 2023 was $156.9 million compared to $148.5 million for the three months ended June 30, 2022, an increase of approximately $8.4 million or 5.7%.

The increase in net patient revenue was primarily driven by increased visit volumes as a result of higher clinician productivity in the current period, as well as favorable net patient revenue per visit in the current period. Total patient visits increased by approximately 65 thousand visits, or 4.5%, driving an increase in average visits per day of 1,009, or 4.5%. Net patient revenue per visit increased $1.17, or 1.1%, to $104.74 for the three months ended June 30, 2023 compared to $103.57 for the three months ended June 30, 2022. The increase in net patient revenue per visit during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily driven by favorable service mix shift and lower denials experience, partially offset by unfavorable mix shifts related to payor classes and states.

The following chart reflects additional detail with respect to drivers of the change in quarter-to-date net patient revenue (in millions):

Other revenue. Other revenue for the three months ended June 30, 2023 was $15.4 million compared to $14.8 million for the three months ended June 30, 2022, an increase of $0.6 million or 4.1%. The increase in other revenue was primarily driven by higher AWS and MSA revenues.

Salaries and related costs. Salaries and related costs for the three months ended June 30, 2023 were $95.3 million compared to $89.6 million for the three months ended June 30, 2022, an increase of $5.7 million or 6.4%. Salaries and related costs as a percentage of net revenue was 55.3% and 54.9% for the three months ended June 30, 2023 and 2022, respectively. The increase of $5.7 million was primarily driven by higher compensation due to higher support staffing and wage inflation for clinic labor and support staff. The increase as a percentage of net revenue was primarily driven by higher compensation, partially offset by higher clinician productivity and higher net patient revenue per visit during the three months ended June 30, 2023.

Table of Contents

Rent, clinic supplies, contract labor and other. Rent, clinic supplies, contract labor and other costs for the three months ended June 30, 2023 were $50.4 million compared to $50.4 million for the three months ended June 30, 2022, which was relatively consistent year over year. Rent, clinic supplies, contract labor and other costs as a percentage of net revenue was 29.3% and 30.9% for the three months ended June 30, 2023 and 2022, respectively. The decrease as a percentage of net revenue was primarily driven by higher net revenue and a lower clinic count, partially offset by higher contract labor costs for the three months ended June 30, 2023.

Provision for doubtful accounts. Provision for doubtful accounts for the three months ended June 30, 2023 was $2.4 million compared to $3.5 million for the three months ended June 30, 2022, a decrease of $1.1 million or 32.7%. Provision for doubtful accounts as a percentage of net revenue was 1.4% and 2.1% for the three months ended June 30, 2023 and 2022, respectively. The decrease of $1.1 million and decrease as a percentage of net revenue was primarily driven by favorable cash collections during the three months ended June 30, 2023.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended June 30, 2023 were $36.6 million compared to $31.8 million for the three months ended June 30, 2022, an increase of $4.8 million or 15.0%. Selling, general and administrative expenses as a percentage of net revenue was 21.2% and 19.5% for the three months ended June 30, 2023 and 2022, respectively. The increase of $4.8 million was primarily driven by higher transaction costs and employee incentive awards, partially offset by lower legal settlement and severance costs during the three months ended June 30, 2023 relative to the three months ended June 30, 2022. The increase as a percentage of net revenue was primarily due to higher transaction costs and employee incentive awards, partially offset by lower legal settlement and severance costs as well as the impact of higher net revenue during the three months ended June 30, 2023.

Goodwill, intangible and other asset impairment charges. Goodwill, intangible and other asset impairment charges for the three months ended June 30, 2022 was $127.8 million. The amount primarily relates to the non-cash write-down of goodwill and the trade name indefinite-lived intangible asset as a result of factors including an increase in discount rates during the three months ended June 30, 2022. There were no goodwill, intangible and other asset impairment charges during the three months ended June 30, 2023.

Change in fair value of 2L Notes. Change in fair value of 2L Notes for the three months ended June 30, 2023 was a gain of $7.0 million. The gain relates to the decrease in the estimated fair value of the Company's 2L Notes, primarily driven by decreases in the Company's share price between June 15, 2023, the date that the 2L Notes were issued, and June 30, 2023.

Change in fair value of warrant liability. Change in fair value of warrant liability for the three months ended June 30, 2023 was a gain of $0.2 million compared to a gain of $1.2 million for the three months ended June 30, 2022. The gain in each period relates to the decrease in the estimated fair value of the Company’s IPO Warrants, primarily driven by decreases in the Company's share price during the three months ended June 30, 2023 and by decreases in price of the Company's Public Warrants during the three months ended June 30, 2022, respectively.

Change in fair value of contingent common shares liability. Change in fair value of contingent common shares liability for the three months ended June 30, 2023 was a gain of $0.8 million compared to a gain of $1.5 million for the three months ended June 30, 2022. The gain in each period relates to the decrease in the estimated fair value of the Company’s Earnout Shares and Vesting Shares, primarily driven by decreases in the Company's share price during the three months ended June 30, 2023 and 2022, respectively.

Table of Contents

Interest expense, net. Interest expense, net for the three months ended June 30, 2023 was $16.7 million compared to $11.4 million for the three months ended June 30, 2022, an increase of approximately $5.3 million or 46.6%. The increase in interest expense was primarily driven by higher interest rates under the Company’s 2022 Credit Agreement and interest on outstanding Revolving Loans balances, partially offset by higher cash flow hedge benefits recognized during the three months ended June 30, 2023.

Other expense, net. Other expense, net for the three months ended June 30, 2023 was $0.6 million compared to $0.2 million for the three months ended June 30, 2022, an increase of $0.4 million. The increase was driven by $0.4 million in loss on debt extinguishment related to the 2023 Debt Restructuring during the three months ended June 30, 2023.

Income tax expense (benefit). Income tax expense for the three months ended June 30, 2023 was $0.1 million compared to a benefit of $13.0 million for the three months ended June 30, 2022, a decrease in benefit of approximately $13.1 million. The decrease was primarily driven by the difference in the effective tax rate for the respective periods. The effective tax rate was different between the respective periods primarily due to the recognition of valuation allowances against the federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain during the three months ended June 30, 2023.

Net loss. Net loss for the three months ended June 30, 2023 was $21.7 million compared to $135.7 million for the three months ended June 30, 2022, a decrease in loss of $114.0 million. The comparatively lower loss was primarily driven by margin on higher revenues and the absence of goodwill, intangible and other asset impairment charges, partially offset by lower net gains related to changes in fair value of 2L Notes, warrant liability and contingent common shares liability, higher interest expense and lower income tax benefit during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Table of Contents

Six months ended June 30, 2023 compared to six months ended June 30, 2022

The following table summarizes the Company’s consolidated results of operations for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
	2023				2022				Increase/(Decrease)
($ in thousands, except percentages)	$		% of Revenue		$		% of Revenue		$		%
Net patient revenue	$	307,692	90.7	%	$	287,431	90.6	%	$	20,261	7.0	%
Other revenue	31,577		9.3	%	29,684		9.4	%	1,893		6.4	%
Net revenue	339,269		100.0	%	317,115		100.0	%	22,154		7.0	%
Cost of services:
Salaries and related costs	186,030		54.8	%	177,021		55.8	%	9,009		5.1	%
Rent, clinic supplies, contract labor and other	103,315		30.5	%	102,020		32.2	%	1,295		1.3	%
Provision for doubtful accounts	6,485		1.9	%	8,611		2.7	%	(2,126)		(24.7)	%
Total cost of services	295,830		87.2	%	287,652		90.7	%	8,178		2.8	%
Selling, general and administrative expenses	67,168		19.8	%	61,832		19.5	%	5,336		8.6	%
Goodwill, intangible and other asset impairment charges	—		—	%	283,561		89.4	%	(283,561)		n/m
Operating loss	(23,729)		(7.0)	%	(315,930)		(99.6)	%	292,201		n/m
Change in fair value of 2L Notes	(7,010)		(2.1)	%	—		—	%	(7,010)		n/m
Change in fair value of warrant liability	—		—	%	(2,861)		(0.9)	%	2,861		(100.0)	%
Change in fair value of contingent common shares liability	(1,501)		(0.4)	%	(25,830)		(8.1)	%	24,329		(94.2)	%

Interest expense, net	30,618		9.0	%	20,035		6.3	%	10,583		52.8	%

Other expense, net	972		0.3	%	2,986		0.9	%	(2,014)		(67.4)	%
Loss before taxes	(46,808)		(13.8)	%	(310,260)		(97.8)	%	263,452		(84.9)	%
Income tax expense (benefit)	151		—	%	(36,314)		(11.5)	%	36,465		(100.4)	%
Net loss	$	(46,959)	(13.8)	%	$	(273,946)	(86.4)	%	$	226,987	(82.9)	%

Table of Contents

Net patient revenue. Net patient revenue for the six months ended June 30, 2023 was $307.7 million compared to $287.4 million for the six months ended June 30, 2022, an increase of approximately $20.3 million or 7.0%.

The increase in net patient revenue was primarily driven by increased visit volumes as a result of higher clinician productivity in the current period, as well as favorable net patient revenue per visit in the current period. In addition, visit volumes during the six months ended June 30, 2022 were negatively impacted by an increase in COVID-19 cases due to the outbreak of additional variants in the beginning of 2022. Total patient visits increased by approximately 169 thousand visits, or 6.1%, driving an increase in average visits per day of 1,323, or 6.1%. Net patient revenue per visit increased $0.93, or 0.9%, to $104.26 for the six months ended June 30, 2023 compared to $103.33 for the six months ended June 30, 2022. The increase in net patient revenue per visit during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily driven by favorable service mix shift and lower denials experience, partially offset by unfavorable mix shifts related to payor classes and states.

The following chart reflects additional detail with respect to drivers of the change in year-to-date net patient revenue (in millions):

Other revenue. Other revenue for the six months ended June 30, 2023 was $31.6 million compared to $29.7 million for the six months ended June 30, 2022, an increase of $1.9 million or 6.4%. The increase in other revenue was primarily driven by higher AWS and MSA revenues.

Salaries and related costs. Salaries and related costs for the six months ended June 30, 2023 were $186.0 million compared to $177.0 million for the six months ended June 30, 2022, an increase of approximately $9.0 million or 5.1%. Salaries and related costs as a percentage of net revenue was 54.8% and 55.8% for the six months ended June 30, 2023 and 2022, respectively. The increase of $9.0 million was primarily driven by higher compensation due to higher support staffing and wage inflation for clinic labor and support staff. The decrease as a percentage of net revenue was primarily driven by lower cost per visit due to higher clinician productivity and higher net patient revenue per visit, partially offset by higher compensation during the six months ended June 30, 2023.

Table of Contents

Rent, clinic supplies, contract labor and other. Rent, clinic supplies, contract labor and other costs for the six months ended June 30, 2023 were $103.3 million compared to $102.0 million for the six months ended June 30, 2022, an increase of approximately $1.3 million or 1.3%. Rent, clinic supplies, contract labor and other costs as a percentage of net revenue was 30.5% and 32.2% for the six months ended June 30, 2023 and 2022, respectively. The increase of $1.3 million was primarily driven by higher employee relations costs related to ATI's National Leadership Event held during the six months ended June 30, 2023, and the decrease as a percentage of net revenue was primarily driven by higher net revenue and a lower clinic count during the six months ended June 30, 2023.

Provision for doubtful accounts. Provision for doubtful accounts for the six months ended June 30, 2023 was $6.5 million compared to $8.6 million for the six months ended June 30, 2022, a decrease of $2.1 million or 24.7%. Provision for doubtful accounts as a percentage of net revenue was 1.9% and 2.7% for the six months ended June 30, 2023 and 2022, respectively. The decrease of $2.1 million and decrease as a percentage of net revenue was primarily driven by favorable cash collections during the six months ended June 30, 2023.

Selling, general and administrative expenses. Selling, general and administrative expenses for the six months ended June 30, 2023 were $67.2 million compared to $61.8 million for the six months ended June 30, 2022, an increase of $5.3 million or 8.6%. Selling, general and administrative expenses as a percentage of net revenue was 19.8% and 19.5% for the six months ended June 30, 2023 and 2022, respectively. The increase of $5.3 million was primarily due to higher transaction costs and employee incentive awards, partially offset by lower legal settlement and severance costs, lower non-ordinary legal and regulatory costs and lower professional fees during the six months ended June 30, 2023. The increase as a percentage of net revenue was primarily driven by higher transaction costs and employee incentive awards, partially offset by lower legal settlement and severance costs, lower non-ordinary legal and regulatory costs and lower professional fees as well as the impact of higher net revenue during the six months ended June 30, 2023.

Goodwill, intangible and other asset impairment charges. Goodwill, intangible and other asset impairment charges for the six months ended June 30, 2022 was $283.6 million. The amount primarily relates to the non-cash write-down of goodwill and the trade name indefinite-lived intangible asset as a result of factors including increases in discount rates and lower public company comparative multiples during the six months ended June 30, 2022. There were no goodwill, intangible and other asset impairment charges during the six months ended June 30, 2023.

Change in fair value of 2L Notes. Change in fair value of 2L Notes for the six months ended June 30, 2023 was a gain of $7.0 million. The gain relates to the decrease in the estimated fair value of the Company's 2L Notes, primarily driven by decreases in the Company's share price between June 15, 2023, the date that the 2L Notes were issued, and June 30, 2023.

Change in fair value of warrant liability. Change in fair value of warrant liability for the six months ended June 30, 2023 was zero compared to a gain of $2.9 million for the six months ended June 30, 2022. The gain relates to the decrease in the estimated fair value of the Company's IPO Warrants, primarily driven by decreases in price of the Company's Public Warrants during the six months ended June 30, 2022. There was no net change in fair value of warrant liability when considering movements in the price of the Company's Public Warrants and the Company's share price during the six months ended June 30, 2023.

Change in fair value of contingent common shares liability. Change in fair value of contingent common shares liability for the six months ended June 30, 2023 was a gain of $1.5 million compared to a gain of $25.8 million for the six months ended June 30, 2022. The gain in each period relates to the decrease in the estimated fair value of the Company’s Earnout Shares and Vesting Shares, primarily driven by decreases in the Company's share price during the six months ended June 30, 2023 and 2022, respectively.

Table of Contents

Interest expense, net. Interest expense, net for the six months ended June 30, 2023 was $30.6 million compared to $20.0 million for the six months ended June 30, 2022, an increase of approximately $10.6 million or 52.8%. The increase in interest expense was primarily driven by higher interest rates under the Company's 2022 Credit Agreement and interest on outstanding Revolving Loans balances, partially offset by higher cash flow hedge benefits recognized during the six months ended June 30, 2023.

Other expense, net. Other expense, net for the six months ended June 30, 2023 was $1.0 million compared to $3.0 million for the six months ended June 30, 2022, a decrease of approximately $2.0 million. The decrease was driven by $2.8 million in loss on debt extinguishment 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 during the six months ended June 30, 2022, partially offset by $0.4 million in loss on debt extinguishment related to the 2023 Debt Restructuring during the six months ended June 30, 2023.

Income tax expense (benefit). Income tax expense for the six months ended June 30, 2023 was approximately $0.2 million compared to income tax benefit of $36.3 million for the six months ended June 30, 2022, a decrease in benefit of approximately $36.5 million. The decrease was primarily driven by the difference in the effective tax rate for the respective periods. The effective tax rate was different between the respective periods primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain during the six months ended June 30, 2023.

Net loss. Net loss for the six months ended June 30, 2023 was $47.0 million compared to $273.9 million for the six months ended June 30, 2022, a decrease in loss of approximately $227.0 million. The comparatively lower loss was primarily driven by margin on higher revenues and the absence of goodwill, intangible and other asset impairment charges, partially offset by lower net gains related to changes in fair value of 2L Notes, warrant liability and contingent common shares liability, higher interest expense and lower income tax benefit during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Table of Contents

Non-GAAP Financial Measures

The following table reconciles the supplemental non-GAAP financial measures, as defined under the rules of the U.S. Securities and Exchange Commission ("SEC"), presented herein to the most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company has provided the non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. EBITDA and Adjusted EBITDA are defined as net income (loss) from continuing operations calculated in accordance with GAAP, less net income attributable to non-controlling interests, plus the sum of income tax expense, interest expense, net, depreciation and amortization (“EBITDA”) and further adjusted to exclude certain items of a significant or unusual nature, including but not limited to, goodwill, intangible and other asset impairment charges, change in fair value of 2L Notes, changes in fair value of warrant liability and contingent common shares liability, transaction and integration costs, share-based compensation, non-ordinary legal and regulatory matters, loss on debt extinguishment, pre-opening de novo costs, loss on legal settlement, business optimization costs, reorganization and severance costs, and gain on sale of Home Health service line (“Adjusted EBITDA”).

We present EBITDA and Adjusted EBITDA because they are key measures used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions. The Company believes EBITDA and Adjusted EBITDA are useful to investors for the purposes of comparing our results period-to-period and alongside peers and understanding and evaluating our operating results in the same manner as our management team and board of directors.

These supplemental measures should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented. In addition, since these non-GAAP measures are not determined in accordance with GAAP, they are susceptible to varying calculations and may not be comparable to other similarly titled non-GAAP measures of other companies.

Table of Contents

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The following is a reconciliation of net loss, the most directly comparable GAAP financial measure, to EBITDA and Adjusted EBITDA (each of which is a non-GAAP financial measure) for each of the periods indicated. For additional information on these non-GAAP financial measures, see “Non-GAAP Financial Measures” above.


	Three Months Ended				Six Months Ended
($ in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net loss	$	(21,749)	$	(135,723)	$	(46,959)	$	(273,946)
Plus (minus):
Net (income) loss attributable to non-controlling interests	(956)		177		(2,016)		650
Interest expense, net	16,682		11,379		30,618		20,035

Income tax expense (benefit)	89		(13,033)		151		(36,314)
Depreciation and amortization expense	9,211		10,055		18,775		19,955
EBITDA	$	3,277	$	(127,145)	$	569	$	(269,620)
Goodwill, intangible and other asset impairment charges(1)	—		127,820		—		283,561
Goodwill, intangible and other asset impairment charges attributable to non-controlling interests(1)	—		(654)		—		(1,594)
Change in fair value of 2L Notes(2)	(7,010)		—		(7,010)		—
Changes in fair value of warrant liability and contingent common shares liability(3)	(990)		(2,680)		(1,501)		(28,691)
Transaction and integration costs(4)	8,714		603		14,122		2,141
Share-based compensation	2,755		2,004		4,233		3,968
Non-ordinary legal and regulatory matters(5)	2,001		2,202		3,524		4,699
Loss on debt extinguishment(6)	444		—		444		2,809
Pre-opening de novo costs(7)	147		286		319		667
Loss on legal settlement(8)	—		3,000		—		3,000
Business optimization costs(9)	—		—		(702)		—
Reorganization and severance costs(10)	—		—		130		—
Gain on sale of Home Health service line, net	—		—		—		(199)


Adjusted EBITDA	$	9,338	$	5,436	$	14,128	$	741

(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 the 2L Notes. Refer to Notes 8 and 13 of the accompanying condensed consolidated financial statements for further details.

(3)Represents non-cash amounts related to the change in the estimated fair value of IPO Warrants, Earnout Shares and Vesting Shares. Refer to Notes 11 and 12 of the accompanying condensed consolidated financial statements for further details.

(4)Represents non-capitalizable debt and capital transaction costs.

(5)Represents non-ordinary course legal costs related to the previously disclosed ATIP stockholder class action complaints, derivative complaint and SEC matter. Refer to Note 16 of the accompanying condensed consolidated financial statements for further details.

(6)Represents charges related to the loss on debt extinguishment recognized as part of the 2023 Debt Restructuring, and the derecognition of the unamortized deferred financing costs and original issuance discount associated with the full repayment of the 2016 First Lien Term Loan in 2022. Refer to Note 8 of the accompanying condensed consolidated financial statements for further details.

Table of Contents

(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 charge for net settlement liability related to billing dispute. Refer to Note 16 of the accompanying condensed consolidated financial statements for further details.

(9)Represents realized benefit of labor related CARES Act 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.

Liquidity and Capital Resources

Our principal sources of liquidity are borrowings under our 2022 Credit Agreement and Second Lien Note Purchase Agreement, and proceeds from equity issuances. We have used these funds for our short-term and long-term capital needs, which include salaries, benefits and other employee-related expenses, rent, clinical supplies, outside services, capital expenditures, acquisitions, de novos, acqui-novos and debt service. Our capital expenditure, acquisition, de novo and acqui-novo spend will depend on many factors, including, but not limited to, the targeted number of new clinic openings, patient volumes, clinician labor market, revenue growth rates, level of operating cash flows and overall liquidity position.

As of June 30, 2023 and December 31, 2022, we had $37.7 million and $83.1 million in cash and cash equivalents, respectively. As of June 30, 2023, we had $20.0 million available capacity under our revolving credit facility.

The Company also has the right to cause to be issued an additional $25.0 million of aggregate principal in the form of 2L Notes under its delayed draw right ("Delayed Draw Right”), which is governed by the Second Lien Note Purchase Agreement. If drawn, the notes under the Delayed Draw Right will be subject to the same terms as the convertible 2L Notes with associated shares of Series B Preferred Stock allowing for voting rights on an as-converted basis prior to conversion. The right to draw will terminate approximately 18 months after the Closing Date. The Company may request two draws in an amount of $12.5 million each, separately or together, subject to, for each draw, (a) projected liquidity at any time during the 6-month period following the date of the relevant draw being below certain thresholds, and (b) the consent of the board of directors.

For the six months ended June 30, 2023, we had operating cash outflows of $5.3 million driven by items including net losses and payments related to interest expense, operating lease liabilities, accounts payable, accrued expenses and other liabilities. Our ability to generate future operating cash flows depends on many factors, including clinical staffing levels and productivity, costs and capital expenditures, patient volumes, referrals and revenue growth rates.

We make reasonable and appropriate efforts to collect accounts receivable, including payor amounts and applicable patient deductibles, co-payments and co-insurance, in a consistent manner for all payor types. Claims are submitted to payors daily, weekly or monthly in accordance with our policy or payor’s requirements. When possible, we submit our claims electronically. The collection process is time consuming and typically involves the submission of claims to multiple payors whose payment of claims may be dependent upon the payment of another payor. Claims under litigation and vehicular incidents can take a year or longer to collect.

Liquidity and going concern

Table of Contents

As of June 30, 2023, the Company had $37.7 million in cash and cash equivalents and $20.0 million available capacity under its revolving credit facility. The Company was in compliance with its minimum liquidity covenant under the 2022 Credit Agreement as of June 30, 2023.

On June 15, 2023, the Company completed a debt restructuring transaction under its 2022 Credit Agreement (as defined in Note 8) including: (i) a delayed draw new money financing in an aggregate principal amount of $25.0 million, comprised of (A) second lien PIK convertible notes (the “2L Notes”) and (B) shares of Series B Preferred Stock (as defined in Note 8), which will provide the holder thereof with voting rights such that the holders thereof will have the right to vote on an as-converted basis, (ii) the exchange of $100.0 million of the aggregate principal amount of the term loans under the 2022 Credit Agreement held by certain of the holders of its Series A Senior Preferred Stock (the "Preferred Equityholders") for 2L Notes and Series B preferred Stock and (iii) certain other changes to the terms of the 2022 Credit Agreement, including modifications of the financial covenants thereunder and relief from the requirements related to the delivery of independent audit reports without a going concern explanatory paragraph. Holders of the 2L Notes will also receive additional 2L Notes upon the in-kind payment of interest on any outstanding 2L Notes. The 2L Notes are convertible into shares of Class A common stock at a fixed conversion price.

Table of Contents

2023 Debt Restructuring Transaction

Table of Contents

Amendment No. 2 to Credit Agreement

Second Lien Note Purchase Agreement and Designation of Series B Preferred Stock

Table of Contents


									June 30, 2023
Series B Preferred Stock, shares at Closing Date									103
Increase (decrease) in shares during period									—
Series B Preferred Stock, shares at end of period									103

Common Stock voting rights, as converted basis(1)									8,022

(1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share.

The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. As a result of applying the fair value option, direct costs and fees related to the 2L Notes were expensed as incurred. As of June 30, 2023, the principal amount and estimated fair value of the 2L Notes were approximately $103.2 million and $96.9 million, respectively. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. Additionally, as of June 30, 2023, the effective interest rate on the 2L Notes was 8.0%.

Table of Contents

Delayed Draw Right

2022 Credit Agreement

Table of Contents

Senior Secured Term Loan

Revolving Loans

Table of Contents

Preferred Stock Financing

In connection with the 2022 Debt Refinancing, the Company issued 165,000 shares of non-convertible preferred stock (the "Series A Senior Preferred Stock") plus warrants to purchase 0.1 million shares of the Company's common stock at an exercise price of $150.00 per share (the "Series I Warrants") and warrants to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share (the "Series II Warrants"). The shares of the Series A Senior Preferred Stock have a par value of $0.0001 per share and an initial stated value of $1,000 per share, for an aggregate initial stated value of $165.0 million. The Series I and Series II Warrants are exercisable for 5 years from the Refinancing Date.

As a result of the 2022 Debt Refinancing and the Preferred Stock Financing, the Company added approximately $77.3 million of cash to its balance sheet.

Table of Contents

Changes in the carrying value of the Series A Preferred Stock consisted of the following for the six months ended June 30, 2023 (in thousands). There were no changes in carrying value in 2022.


	June 30, 2023
Carrying value, beginning of period	$	140,340
Write off original issue discount	1,447
Write off issuance costs	2,880
Deemed dividend from discount on initial gross proceeds allocation	20,333
Paid in-kind dividends recognized to carrying value	28,888
Redemption value adjustment	20,036
Carrying value, end of period	$	213,924

Table of Contents

Consolidated Cash Flows

The following table presents selected data from our condensed consolidated statements of cash flows:


	Six Months Ended
($ in thousands)	June 30, 2023		June 30, 2022

Net cash used in operating activities	$	(5,319)	$	(32,737)
Net cash used in investing activities	(10,125)		(17,618)
Net cash (used in) provided by financing activities	(30,016)		81,419
Net (decrease) increase in cash and cash equivalents	(45,460)		31,064
Cash and cash equivalents at beginning of period	83,139		48,616
Cash and cash equivalents at end of period	$	37,679	$	79,680

Six months ended June 30, 2023 compared to six months ended June 30, 2022

Net cash used in operating activities for the six months ended June 30, 2023 was $5.3 million compared to $32.7 million for the six months ended June 30, 2022, a decrease in cash used of $27.4 million. The decrease was primarily the result of margin on higher revenue with approximately $6.7 million lower net losses as adjusted for non-cash items such as goodwill, intangible and other asset impairment charges and changes in fair value of 2L Notes, warrant liability and contingent common shares liability during the six months ended June 30, 2023, $1.8 million lower cash outflows from operating leases during the six months ended June 30, 2023, $9.4 million lower cash outflows related to prepaid expenses and other current assets during the six months ended June 30, 2023 and $10.8 million of partial application of MAAPP funds during the six months ended June 30, 2022 not recurring in 2023.

Net cash used in investing activities for the six months ended June 30, 2023 was $10.1 million compared to $17.6 million for the six months ended June 30, 2022, a decrease of approximately $7.5 million. The decrease was driven by lower capital expenditures during the six months ended June 30, 2023 primarily due to fewer clinic openings.

Net cash used in financing activities for the six months ended June 30, 2023 was $30.0 million compared to $81.4 million of cash provided by financing activities for the six months ended June 30, 2022, a decrease in cash provided of approximately $111.4 million. The change was primarily driven by payments made on Revolving Loans during the six months ended June 30, 2023 and net cash inflows related to the 2022 Debt Refinancing and Preferred Stock Financing (refer to Note 8 - Borrowings for further details) during the six months ended June 30, 2022.

Commitments and Contingencies

The Company may be subject to loss contingencies, such as legal proceedings and claims arising out of its business. The Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. As of June 30, 2023, the Company did not record any accruals related to the outcomes of the legal matters described in Note 16 - Commitments and Contingencies. Refer to Note 16 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for further information.

We enter into contractual obligations and commitments from time to time in the normal course of business, primarily related to our debt financing and operating leases. Refer to Notes 8 and 15 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for further information. Additionally, the Company has contractual commitments related to cloud computing and telecommunication service agreements. Refer to Note 16 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for further information.

Table of Contents

Off-Balance Sheet Arrangements

As of June 30, 2023 and December 31, 2022, the Company did not have any off-balance sheet arrangements.

Critical Accounting Estimates

The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of the Company’s condensed consolidated financial statements requires its management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures. The Company’s management bases its estimates, assumptions and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Different assumptions and judgments would change the estimates used in the preparation of the Company’s condensed consolidated financial statements which, in turn, could change the results from those reported. In addition, actual results may differ from these estimates and such differences could be material to the Company’s financial position and results of operations.

Critical accounting estimates are those that the Company’s management considers the most important to the portrayal of the Company’s financial condition and results of operations because they require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s critical accounting estimates in relation to its condensed consolidated financial statements include those related to:

•Patient revenue recognition and allowance for doubtful accounts

•Realization of deferred tax assets

•Goodwill and intangible assets

Additional information related to our critical accounting estimates can be found in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies of our audited consolidated financial statements and Part II, Item 7 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, refer to Note 2 - Basis of Presentation and Recent Accounting Standards in the accompanying condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of June 30, 2023, the Company is exposed to interest rate variability with regard to its existing variable-rate debt instrument, which exposure primarily relates to movements in various interest rates, such as SOFR. The Company utilizes interest rate cap derivative instruments for purposes of hedging exposures related to such variable-rate cash payments. Based on our current hedging instruments as of June 30, 2023, a hypothetical increase of interest rates by 100 basis points would increase our annual cash interest expense by approximately $2.4 million and a hypothetical decrease of interest rates by 100 basis points would decrease our annual cash interest expense by approximately $2.4 million. As of June 30, 2023, the fair value of the Company’s derivative instruments consisted of assets of $0.6 million. As of December 31, 2022, the fair value of the Company’s derivative instruments consisted of assets of $5.0 million and liabilities of $0.1 million.

Table of Contents

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Principal Executive Officer and our Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon their evaluation, our Principal Executive Officer and our Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of June 30, 2023 due to the previously reported material weaknesses in internal control over financial reporting described below.

Management concluded that notwithstanding the existence of the material weaknesses, the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company's financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Remediation Efforts with Respect to the Material Weaknesses

The Company's management, under the oversight of the Audit Committee, has continued the process of executing its remediation plan. Management has executed on the following measures in its remediation plan:

•revised the Company's tax staffing model, and implemented technology to assist in the income tax provision processes, in order to better position the capabilities and capacity of the Company's in-house tax department based on tax reporting requirements;

•refined the scope of the Company's external tax advisors to provide advice related to complex or unusual items, as well as advise on end-to-end corporate tax accounting matters;

•enhanced the design and precision of the Company's controls related to the income tax provision calculations and documentation, including controls related to the valuation allowance assessment.

Table of Contents

We believe the measures described above will contribute to remediating the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over the income tax provision, we may take additional measures to address control deficiencies, or we may modify, or in appropriate circumstances not complete, certain of the remediation measures described above. These material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Other than the changes related to the material weaknesses above, there have been no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II

Item 1. Legal Proceedings

From time to time, the Company may be involved in legal proceedings or subject to claims arising in the ordinary course of business. The outcome of any litigation and claims against the Company cannot be predicted with certainty, and the resolution of these matters could materially affect our future results of operations, cash flows, or financial condition. Refer to Note 16 - Commitments and Contingencies in the condensed consolidated financial statements included in Part I, Item 1, of this Form 10-Q for further details.

Item 1A. Risk Factors

Other than as described below, there have been no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on March 16, 2023.

The 2L Notes are accounted for as liabilities at fair value and the changes in value could have a material effect on our financial results.

As a result of the recurring fair value measurement, our financial statements and results of operations may materially fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement, we expect to recognize non-cash gains or losses each reporting period and the amount of such gains or losses could be material and variable.

The 2L Notes are convertible into Common Stock, and the conversion of our 2L Notes into Common Stock would dilute the ownership interest of our existing stockholders and may adversely affect our stock price.

Pursuant to the terms of the Second Lien Note Purchase Agreement, holders of the 2L Notes may convert their 2L Notes into Common Stock at their option. Additionally, on or after June 15, 2025 and subject to certain conditions, the Company may, at its option, elect to convert (a “Forced Conversion”) a portion of the outstanding 2L Notes into the number of shares of Common Stock based on the Conversion Price then in effect. Any issuance by us of our Common Stock upon conversion of our 2L Notes will dilute the ownership interest of our existing stockholders and could have a dilutive effect on our earnings per share. Furthermore, any sales in the public market of our Common Stock issuable upon conversion of the 2L Notes could adversely affect prevailing market prices of our Common Stock.

The Series B Preferred Stock stapled to the 2L Notes provide voting rights which will dilute the voting interests of our existing stockholders.

Pursuant to the terms of the Second Lien Note Purchase Agreement, the Series B Preferred Stock represent voting rights only, with the number of votes being equal to the number of shares of Common Stock each share of Series B Preferred Stock is assumed convertible for at a conversion price of $12.87 per share (the "Voting Rights Conversion Price"). As a result, the voting rights associated with the Series B Preferred Stock will dilute the voting interests of our existing stockholders, for as long as such shares of Series B Preferred Stock remain outstanding.

Table of Contents

The Preferred Equityholders as a group have significant influence over us.

When considering the voting rights associated with the Series B Preferred Stock attached to the 2L Notes issued as part of the 2023 Debt Restructuring, the Preferred Equityholders as a group own more than 50.0% of our Common Stock votes. The Preferred Equityholders also have the ability to convert their 2L Notes into Common Stock, which could lead to the group owning greater than 50.0% of our Common Stock. Furthermore, the Company's Board of Directors will be declassified commencing with the 2024 annual meeting of the stockholders and all directors will be elected annually going forward.

As long as the Preferred Equityholders own or control a significant percentage of our outstanding voting power, they will have the ability to significantly influence all corporate actions requiring stockholder approval, including the election and removal of directors and the size of our Board, any amendment to our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets, subject to any applicable restrictions set forth in the Company's 2022 Credit Agreement. The Preferred Equityholders influence over our management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our Common Stock to decline or prevent stockholders from realizing a premium over the market price for our Common Stock.

The Preferred Equityholders’ interests may not align with our interests as a company or the interests of our other stockholders. Accordingly, the Preferred Equityholders could cause us to enter into transactions or agreements of which other stockholders would not approve or make decisions with which other stockholders would disagree. These potential conflicts of interest could have a material adverse effect on our business, financial condition and results of operations if, among other things, attractive corporate opportunities are allocated by the Preferred Equityholders to themselves or their other affiliates.

If the Series A Senior Preferred Stock were to be redeemed, it may not be economically favorable to the Company may lead to material adverse consequences for the Company and its other stakeholders.

The Company has the right to redeem the Series A Senior Preferred Stock, in whole or in part, at any time (subject to certain limitations on partial redemptions). Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes issued as part of the 2023 Debt Restructuring, the Company determined that redemption of the Series A Preferred Stock is no longer solely within the control of the Company. If the Series A Senior Preferred Stock were to be redeemed prior to certain dates, the Company would have to pay certain redemption price premiums related to early redemption, which could be greater than the stated value, may not be economically favorable to the Company and may lead to material adverse consequences for the Company or its other stakeholders.

Table of Contents

Our share-based compensation incentives may not be effective in attracting, retaining and motivating key personnel and employees.

The Company adopted the ATI Physical Therapy 2021 Equity Incentive Plan (the "2021 Plan") under which it may grant equity interests of ATI Physical Therapy, Inc., in the form of stock options, stock appreciation rights, restricted stock awards and restricted stock units, to members of management, key employees and independent directors of the Company and its subsidiaries. We believe the granting of non-cash share-based compensation is important to our ability to attract and retain key personnel and employees. Additionally, the employment agreements for members of our senior leadership team include compensation terms in the form of share-based awards at specified amounts. The maximum number of shares reserved for issuance under the 2021 Plan is approximately 1.2 million. As of June 30, 2023, approximately 0.2 million shares were available for future grant. With the current number of shares available for future grant, the Company would need to amend, subject to stockholder approval, the 2021 Plan to increase the share reserve in order to fulfill the upcoming share-based compensation terms of its senior leadership employment agreements and provide share-based awards to other key personnel and employees. There can be no assurance that such stockholder approval would be obtained and, if we are unable to obtain such approval, we may be unable to retain our existing employees and attract additional qualified candidates, which could adversely impact our business and results of operations.

Furthermore, in light of our recent low market capitalization and decreases in share price, our non-cash share-based compensation incentives may not be effective in attracting, retaining and motivating our senior management team, key personnel and employees. If our share-based compensation incentives under the 2021 Plan are not effective, the Company may need to explore alternative cash or non-cash compensation to retain senior management, key personnel and employees, which may lead to incurring higher compensation costs or may otherwise prove less effective. The inability to appropriately compensate and motivate the necessary personnel could cause increased employee turnover and harm to our business, results of operations, cash flow and financial condition.

If we are unable to maintain compliance with New York Stock Exchange ("NYSE") listing standards, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

In order to maintain our listing on the NYSE, we are required to comply with certain rules and listing standards of the NYSE, including those regarding minimum stockholders' equity, minimum share price, minimum market value of publicly held shares and various additional requirements. The NYSE previously notified the Company that, due to the average closing price of the Company's Common Stock, it was below the trading price criteria of the exchange. The notice had no immediate impact on the listing of the Company's Common Stock on the NYSE, subject to the Company's compliance with the NYSE's other continued listing requirements. The Company submitted a plan of compliance to the NYSE addressing how we intended to regain compliance.

Table of Contents

In connection with regaining compliance, on June 14, 2023, the Company effected a one-for-fifty (1-for-50) reverse stock split of its Class A common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on June 13, 2023, and the final reverse split ratio was subsequently approved by the Company’s board of directors on June 14, 2023. The Company's common stock commenced trading on a reverse split-adjusted basis on June 15, 2023. On August 1, 2023, we were notified by the NYSE that the calculation of the Company's average stock price for the 30 trading days ended July 31, 2023, indicated that the Company's average stock price was above the NYSE's minimum requirement of $1. The Company is no longer considered below the minimum share price continued listing criterion. The Reverse Stock Split may adversely affect the liquidity of the shares of our common stock given the reduced number of shares outstanding following the reverse split, especially if the reverse split-adjusted market price of our common stock does not generate greater investor interest. Furthermore, there can be no assurance that such reverse split will continue to be sufficient to satisfy the minimum share price requirement.

On June 28, 2023, the NYSE notified the Company that, due to the Company's average market capitalization, it was below the minimum market capitalization criteria of the exchange. The notice has no immediate impact on the listing of the Company's Common Stock on the NYSE, subject to the Company's compliance with the NYSE's other continued listing requirements. In accordance with applicable NYSE procedures, the Company has 45 days from receipt of the notice to submit a business plan advising the NYSE of the definitive action(s) the Company has taken, or is taking, that would bring it into compliance with continued listing standards within 18 months of receipt of the notice. The NYSE will review the plan and, within 45 days of its receipt, determine whether the Company has made a reasonable demonstration of an ability to conform to the relevant standards in the 18-month period. If the NYSE accepts the plan, the Company’s common stock will continue to be listed and traded on the NYSE during the 18-month period, subject to the Company’s compliance with the other continued listing standards of the NYSE and continued periodic review by the NYSE of the Company’s progress with respect to its plan. The Company intends to submit its business plan to regain compliance to the NYSE. There can be no assurance that the Company's business plan will be accepted by the NYSE, or that the Company will be able to meet its business plan, if accepted by the NYSE.

If we are unable to satisfy the NYSE rules and listing standards, or are unable to make progress on our plans of compliance, our securities could be subject to delisting.

If the NYSE were to delist our securities from trading, we could face significant consequences, including:

•a limited availability for market quotations for our securities;

•further reduced liquidity with respect to our securities;

•a determination that our Common Stock is a "penny stock," which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Common Stock;

•limited amount of news and analyst coverage; and

•a decreased ability to issue additional securities or obtain additional financing in the future.

Changes in the political landscape may lead to volatile economic conditions.

Changes in political landscape may affect economic conditions within the U.S., which could also trigger global economic conditions, including volatile equity capital markets, which may adversely affect the Company's business, revenues and earnings. Such conditions could impact the Company's access to capital markets to raise funds, if needed.

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

During the quarter ended June 30, 2023, the Company did not have any sales of equity securities in transactions that were not registered under the Securities Act, except as previously disclosed in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on June 15, 2023.

Issuer Purchases of Equity Securities

During the three months ended June 30, 2023, the Company withheld shares of our common stock in connection with employee minimum statutory tax withholding obligations payable upon the vesting of restricted stock, as follows:


	Total Number of Shares Purchased(1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans of Programs
April 1 - April 30, 2023	—	$	—	—	—
May 1 - May 31, 2023	1,110	$	11.95	—	—
June 1 - June 30, 2023	96	$	10.46	—	—
Total	1,206	$	11.83	—	—

(1) Represents shares delivered to or withheld by us in connection with employee minimum tax withholding obligations upon exercise or vesting of stock awards. No shares were purchased in the open market pursuant to a repurchase program.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the second quarter of 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 plan or non-Rule 10b5-1 trading arrangements.

Table of Contents

Item 6. Exhibits


Exhibit Number						Description
3.1						Third Amended and Restated Certificate of Incorporation (filed as exhibit 3.1 to the Current Report on Form 8-K of the Company on June 13, 2023 and incorporated herein by reference)
3.2						Certificate of Amendment to Third Amended and Restated Certificate of Incorporation (filed as exhibit 3.1 to the Current Report on Form 8-K of the Company on June 14, 2023 and incorporated herein by reference)
3.3						First Amended and Restated Certificate of Designation of Series A Senior Preferred Stock of ATI Physical Therapy, Inc. (filed as exhibit 3.1 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)
3 .4						Certificate of Designation of Series B Preferred Stock of ATI Physical Therapy, Inc. (filed as exhibit 3.2 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)
3.5						Amended and Restated Bylaws of ATI Physical Therapy, Inc. (filed as Exhibit 3.2 to the Current Report on Form 8-K of the Company on June 23, 2021 and incorporated herein by reference)
10.1†						Second Amendment to 2021 Equity Incentive Plan (filed as exhibit 10.3 to the Current Report on Form 8-K of the Company on June 13, 2023 and incorporated herein by reference)
10.2						Amended and Restated Transaction Support Agreement, dated April 17, 2023, by and among ATI Physical Therapy, Inc., ATI Holdings Acquisition, Inc., Wilco Intermediate Holdings, and other parties thereto (filed as exhibit 10.1 to the Current Report on Form 8-K of the Company on April 21, 2023 and incorporated herein by reference)
10.3						Amendment No. 2 to Credit Agreement, dated April 17, 2023, by and among ATI Holdings Acquisition, Inc., Wilco Intermediate Holdings, Inc., HPS Investment Partners, LLC, as Lender Representative and Barclays Bank PLC, as Administrative Agent (filed as exhibit 10.2 to the Current Report on Form 8-K of the Company on April 21, 2023 and incorporated herein by reference)
10.4						Consent to Amendment No. 2 to Credit Agreement, dated June 15, 2023, by and among ATI Holdings Acquisition, Inc., Wilco Intermediate Holdings, Inc., HPS Investment Partners, LLC, as Lender Representative and Barclays Bank PLC as Administrative Agent (filed as exhibit 10.3 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)
10.5						Second Lien Note Purchase Agreement, dated April 17, 2023, by and among ATI Physical Therapy, Inc., Wilco Holdco, Inc., Wilco Intermediate Holdings, Inc., ATI Holdings Acquisition, Inc., the Purchasers party thereto and Wilmington Savings Fund Society, FSB (filed as exhibit 10.3 to the Current Report on Form 8-K of the Company on April 21, 2023 and incorporated herein by reference)
10.6						First Amendment to the Investors’ Rights Agreement, dated February 24, 2022, by and among the Company and the Preferred Equityholders party thereto (filed as exhibit 10.5 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)
10.7						Registration Rights Agreement, dated June 15, 2023, by and among the Company and certain Preferred Equityholders (filed as exhibit 10.6 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)

Table of Contents


10.8						First Amendment to Note Purchase Agreement, dated June 15, 2023, by and among ATI Physical Therapy, Inc., Wilco Holdco, Inc., Wilco Intermediate Holdings, Inc., ATI Holdings Acquisition, Inc., the Subsidiary Guarantors party thereto, the other Purchasers party thereto and Wilmington Savings Fund Society, FSB (filed as exhibit 10.7 to the Current Report on Form 8-K of the Company on June 15, 2023 and incorporated herein by reference)
31.1*						Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*						Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						XBRL Instance Document
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document

* Filed or furnished herewith

† Management contract or compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

ATI PHYSICAL THERAPY, INC.

Date: August 8, 2023


/s/ JOSEPH JORDAN
Joseph Jordan
Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)

EXHIBIT 31.1

CERTIFICATION

I, Sharon Vitti, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ATI Physical Therapy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ SHARON VITTI
Sharon Vitti
Chief Executive Officer (Principal Executive Officer)

Date: August 8, 2023

EXHIBIT 31.2

CERTIFICATION

I, Joseph Jordan, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of ATI Physical Therapy, Inc.;

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ JOSEPH JORDAN
Joseph Jordan
Chief Financial Officer (Principal Financial Officer)

Date: August 8, 2023

EXHIBIT 32

CERTIFICATION OF PERIODIC REPORT

In connection with the Quarterly Report on Form 10-Q of ATI Physical Therapy, Inc. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sharon Vitti, Chief Executive Officer of the Company, and Joseph Jordan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ SHARON VITTI
Sharon Vitti
Chief Executive Officer (Principal Executive Officer)


/s/ JOSEPH JORDAN
Joseph Jordan
Chief Financial Officer (Principal Financial Officer)

August 8, 2023

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 02, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-39439
Entity Registrant Name	ATI Physical Therapy, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-1408039
Entity Address, Address Line One	790 Remington Boulevard
Entity Address, City or Town	Bolingbrook
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60440
City Area Code	630
Local Phone Number	296-2223
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,205,872
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001815849
Current Fiscal Year End Date	--12-31
Common Class A
Document Information [Line Items]
Title of 12(b) Security	Class A common stock, $0.0001 par value
Trading Symbol	ATIP
Security Exchange Name	NYSE
Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share
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	ATIP WS

Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands

Jun. 30, 2023

Dec. 31, 2022

Current assets:

Cash and cash equivalents

$ 37,679

$ 83,139

Accounts receivable (net of allowance for doubtful accounts of $52,162 and $47,620 at June 30, 2023 and December 31, 2022, respectively)

80,779

80,673

Prepaid expenses

14,303

13,526

Other current assets

6,225

10,040

Assets held for sale

6,755

Total current assets

138,986

194,133

Property and equipment, net

114,787

123,690

Operating lease right-of-use assets

218,775

226,092

Goodwill, net

289,650

286,458

Trade name and other intangible assets, net

246,213

246,582

Other non-current assets

1,862

2,030

Total assets

1,010,273

1,078,985

Current liabilities:

Accounts payable

12,535

12,559

Accrued expenses and other liabilities

61,727

53,672

Current portion of operating lease liabilities

52,194

47,676

Liabilities held for sale

2,614

Total current liabilities

126,456

116,521

Long-term debt, net

^[1]

415,068

531,600

2L Notes due to related parties, at fair value

96,933

Warrant liability

Contingent common shares liability

1,334

2,835

Deferred income tax liabilities

19,037

18,886

Operating lease liabilities

209,024

218,424

Other non-current liabilities

1,644

1,834

Total liabilities

869,594

890,198

Commitments and contingencies (Note 16)

Mezzanine equity:

Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; 0.2 million shares issued and outstanding; $1,175.08 stated value per share at June 30, 2023; $1,108.34 stated value per share at December 31, 2022

213,924

140,340

Stockholders' equity:

Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.2 million shares issued, 4.0 million shares outstanding at June 30, 2023; 4.1 million shares issued, 4.0 million shares outstanding at December 31, 2022

Treasury stock, at cost, 0.006 million shares and 0.002 million shares at June 30, 2023 and December 31, 2022, respectively

(212)

(146)

Additional paid-in capital

1,310,030

1,378,716

Accumulated other comprehensive income

593

4,899

Accumulated deficit

(1,388,486)

(1,339,511)

Total ATI Physical Therapy, Inc. equity

(78,075)

43,958

Non-controlling interests

4,830

4,489

Total stockholders' equity

(73,245)

48,447

Total liabilities, mezzanine equity and stockholders' equity

$ 1,010,273

$ 1,078,985

[1]	Includes $16.3 million of principal amount of debt due to related party as of June 30, 2023.

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands

Jun. 30, 2023

Dec. 31, 2022

Statement of Financial Position [Abstract]

Allowance for doubtful accounts

$ 52,162

$ 47,620

Temporary Equity, Preferred stock, par value (dollars per share)

$ 0.0001

Temporary Equity, Preferred stock, shares authorized (in shares)

1,000,000

Temporary Equity, Preferred stock, shares issued (in shares)

200,000

Temporary Equity, Preferred stock, shares outstanding (in shares)

200,000

Temporary Equity, Preferred stock, stated value (dollars per share)

$ 1,175.08

$ 1,108.34

Common stock, par value (in dollars per share)

$ 0.0001

Common stock, shares authorized (in shares)

470,000,000

Common stock, shares Issued (in shares)

4,200,000

4,100,000

Common stock, shares outstanding (in shares)

4,000,000

Treasury stock (in shares)

5,909

2,000.000

Long-term debt, net

^[1]

$ 415,068

$ 531,600

Related Party

Long-term debt, net

$ 16,300

[1]	Includes $16.3 million of principal amount of debt due to related party as of June 30, 2023.

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net revenue	$ 172,337	$ 163,293	$ 339,269	$ 317,115
Cost of services:
Salaries and related costs	95,327	89,606	186,030	177,021
Rent, clinic supplies, contract labor and other	50,437	50,405	103,315	102,020
Provision for doubtful accounts	2,360	3,506	6,485	8,611
Total cost of services	148,124	143,517	295,830	287,652
Selling, general and administrative expenses	36,573	31,808	67,168	61,832
Goodwill, intangible and other asset impairment charges	0	127,820	0	283,561
Operating loss	(12,360)	(139,852)	(23,729)	(315,930)
Change in fair value of 2L Notes	(7,010)	0	(7,010)	0
Change in fair value of warrant liability	(198)	(1,184)	0	(2,861)
Change in fair value of contingent common shares liability	(792)	(1,496)	(1,501)	(25,830)
Interest expense, net	16,682	11,379	30,618	20,035
Other expense, net	618	205	972	2,986
Loss before taxes	(21,660)	(148,756)	(46,808)	(310,260)
Income tax expense (benefit)	89	(13,033)	151	(36,314)
Net loss	(21,749)	(135,723)	(46,959)	(273,946)
Net income (loss) attributable to non-controlling interests	956	(177)	2,016	(650)
Net loss attributable to ATI Physical Therapy, Inc.	(22,705)	(135,546)	(48,975)	(273,296)
Less: Series A Senior Preferred Stock redemption value adjustments	44,696	0	44,696	0
Less: Series A Senior Preferred Stock cumulative dividend	5,709	5,063	11,012	6,988
Loss available to common stockholders, diluted	(73,110)	(140,609)	(104,683)	(280,284)
Loss available to common stockholders, basic	$ (73,110)	$ (140,609)	$ (104,683)	$ (280,284)
Loss per share of Class A common stock:
Basic (in dollars per share)	$ (17.74)	$ (34.49)	$ (25.47)	$ (69.41)
Diluted (in dollars per share)	$ (17.74)	$ (34.49)	$ (25.47)	$ (69.41)
Weighted average shares outstanding:
Basic (in shares)	4,122	4,077	4,110	4,038
Diluted (in shares)	4,122	4,077	4,110	4,038
Net patient revenue
Net revenue	$ 156,938	$ 148,506	$ 307,692	$ 287,431
Other revenue
Net revenue	$ 15,399	$ 14,787	$ 31,577	$ 29,684

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (21,749)	$ (135,723)	$ (46,959)	$ (273,946)
Other comprehensive (loss) income:
Cash flow hedges	(850)	2,708	(4,306)	6,460
Comprehensive loss	(22,599)	(133,015)	(51,265)	(267,486)
Net income (loss) attributable to non-controlling interests	956	(177)	2,016	(650)
Comprehensive loss attributable to ATI Physical Therapy, Inc.	$ (23,555)	$ (132,838)	$ (53,281)	$ (266,836)

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Non-Controlling Interests
Beginning balance (in shares) at Dec. 31, 2021		3,948,199
Beginning balance at Dec. 31, 2021	$ 511,507	$ 0	$ (95)	$ 1,351,617	$ 28	$ (847,132)	$ 7,089
Beginning balance (in shares) at Dec. 31, 2021			596
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of 2022 Warrants	19,725			19,725
Vesting of restricted shares distributed to holders of ICUs (in shares)		1,510
Issuance of common stock upon vesting of restricted stock units and awards (in shares)		812
Tax withholdings related to net share settlement of restricted stock awards (in shares)		(256)	256
Tax withholdings related to net share settlement of restricted stock units and awards	(22)		$ (22)
Non-cash share-based compensation	1,960			1,960
Other comprehensive income (loss)	3,752				3,752
Distribution to non-controlling interest holders	(473)						(473)
Net income (loss) attributable to non-controlling interests	(473)						(473)
Net loss attributable to ATI Physical Therapy, Inc.	(137,750)					(137,750)
Ending balance (in shares) at Mar. 31, 2022		3,950,265
Ending balance at Mar. 31, 2022	398,226	$ 0	$ (117)	1,373,302	3,780	(984,882)	6,143
Ending balance (in shares) at Mar. 31, 2022			852
Beginning balance (in shares) at Dec. 31, 2021		3,948,199
Beginning balance at Dec. 31, 2021	511,507	$ 0	$ (95)	1,351,617	28	(847,132)	7,089
Beginning balance (in shares) at Dec. 31, 2021			596
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income (loss)	6,460
Net income (loss) attributable to non-controlling interests	(650)
Net loss attributable to ATI Physical Therapy, Inc.	(273,296)
Ending balance (in shares) at Jun. 30, 2022		3,959,118
Ending balance at Jun. 30, 2022	267,019	$ 0	$ (129)	1,375,261	6,488	(1,120,428)	5,827
Ending balance (in shares) at Jun. 30, 2022			984
Beginning balance (in shares) at Mar. 31, 2022		3,950,265
Beginning balance at Mar. 31, 2022	398,226	$ 0	$ (117)	1,373,302	3,780	(984,882)	6,143
Beginning balance (in shares) at Mar. 31, 2022			852
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted shares distributed to holders of ICUs (in shares)		2,377
Issuance of common stock upon vesting of restricted stock units and awards (in shares)		6,608
Tax withholdings related to net share settlement of restricted stock awards (in shares)		(132)	132
Tax withholdings related to net share settlement of restricted stock units and awards	(12)		$ (12)
Non-cash share-based compensation	1,959			1,959
Other comprehensive income (loss)	2,708				2,708
Distribution to non-controlling interest holders	(139)						(139)
Net income (loss) attributable to non-controlling interests	(177)						(177)
Net loss attributable to ATI Physical Therapy, Inc.	(135,546)					(135,546)
Ending balance (in shares) at Jun. 30, 2022		3,959,118
Ending balance at Jun. 30, 2022	$ 267,019	$ 0	$ (129)	1,375,261	6,488	(1,120,428)	5,827
Ending balance (in shares) at Jun. 30, 2022			984
Beginning balance (in shares) at Dec. 31, 2022	4,000,000	3,967,146
Beginning balance at Dec. 31, 2022	$ 48,447	$ 0	$ (146)	1,378,716	4,899	(1,339,511)	4,489
Beginning balance (in shares) at Dec. 31, 2022	2,000.000		1,540
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Vesting of restricted shares distributed to holders of ICUs (in shares)		751
Issuance of common stock upon vesting of restricted stock units and awards (in shares)		25,387
Tax withholdings related to net share settlement of restricted stock awards (in shares)		(3,163)	3,163
Tax withholdings related to net share settlement of restricted stock units and awards	$ (51)		$ (51)
Non-cash share-based compensation	1,454			1,454
Other comprehensive income (loss)	(3,456)				(3,456)
Distribution to non-controlling interest holders	(710)						(710)
Net income (loss) attributable to non-controlling interests	1,060						1,060
Net loss attributable to ATI Physical Therapy, Inc.	(26,270)					(26,270)
Ending balance (in shares) at Mar. 31, 2023		3,990,121
Ending balance at Mar. 31, 2023	$ 20,474	$ 0	$ (197)	1,380,170	1,443	(1,365,781)	4,839
Ending balance (in shares) at Mar. 31, 2023			4,703
Beginning balance (in shares) at Dec. 31, 2022	4,000,000	3,967,146
Beginning balance at Dec. 31, 2022	$ 48,447	$ 0	$ (146)	1,378,716	4,899	(1,339,511)	4,489
Beginning balance (in shares) at Dec. 31, 2022	2,000.000		1,540
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Tax withholdings related to net share settlement of restricted stock awards (in shares)	4,369
Other comprehensive income (loss)	$ (4,306)
Net income (loss) attributable to non-controlling interests	2,016
Net loss attributable to ATI Physical Therapy, Inc.	$ (48,975)
Ending balance (in shares) at Jun. 30, 2023	4,000,000	4,026,822
Ending balance at Jun. 30, 2023	$ (73,245)	$ 0	$ (212)	1,310,030	593	(1,388,486)	4,830
Ending balance (in shares) at Jun. 30, 2023	5,909		5,909
Beginning balance (in shares) at Mar. 31, 2023		3,990,121
Beginning balance at Mar. 31, 2023	$ 20,474	$ 0	$ (197)	1,380,170	1,443	(1,365,781)	4,839
Beginning balance (in shares) at Mar. 31, 2023			4,703
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Series A Senior Preferred Stock dividends and redemption value adjustments	(73,584)			(73,584)
Capital contribution from recognition of delayed draw right asset	690			690
Vesting of restricted shares distributed to holders of ICUs (in shares)		737
Issuance of common stock upon vesting of restricted stock units and awards (in shares)		10,824
Tax withholdings related to net share settlement of restricted stock awards (in shares)		(1,206)	1,206
Tax withholdings related to net share settlement of restricted stock units and awards	(15)		$ (15)
Issuance of common stock for fractional adjustments related to Reverse Stock Split (in shares)		26,346
Non-cash share-based compensation	2,754			2,754
Other comprehensive income (loss)	(850)				(850)
Distribution to non-controlling interest holders	(965)						(965)
Net income (loss) attributable to non-controlling interests	956						956
Net loss attributable to ATI Physical Therapy, Inc.	$ (22,705)					(22,705)
Ending balance (in shares) at Jun. 30, 2023	4,000,000	4,026,822
Ending balance at Jun. 30, 2023	$ (73,245)	$ 0	$ (212)	$ 1,310,030	$ 593	$ (1,388,486)	$ 4,830
Ending balance (in shares) at Jun. 30, 2023	5,909		5,909

Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2023

Jun. 30, 2022

Operating activities:

Net loss

$ (46,959)

$ (273,946)

Adjustments to reconcile net loss to net cash used in operating activities:

Goodwill, intangible and other asset impairment charges

283,561

Depreciation and amortization

19,041

20,369

Provision for doubtful accounts

6,485

8,611

Deferred income tax provision

151

(36,314)

Non-cash lease expense related to right-of-use assets

23,836

24,071

Non-cash share-based compensation

4,208

3,919

Amortization of debt issuance costs and original issue discount

1,554

1,407

Non-cash interest expense

4,318

Loss on extinguishment of debt

444

2,809

Loss (gain) on disposal and sale of assets

793

(163)

Change in fair value of 2L Notes

(7,010)

Change in fair value of warrant liability

(2,861)

Changes in:

Accounts receivable, net

(6,105)

(9,349)

Prepaid expenses and other current assets

1,834

(7,555)

Other non-current assets

Accounts payable

119

1,850

Accrued expenses and other liabilities

15,158

10,803

Operating lease liabilities

(21,830)

(23,427)

Other non-current liabilities

Medicare Accelerated and Advance Payment Program Funds

(10,759)

Net cash used in operating activities

(5,319)

(32,737)

Investing activities:

Purchases of property and equipment

(9,990)

(17,841)

Proceeds from sale of property and equipment

146

Proceeds from sale of clinics

355

Payment of holdback liabilities related to acquisitions

(490)

Net cash used in investing activities

(10,125)

(17,618)

Financing activities:

Proceeds from long-term debt

500,000

Proceeds from 2L Notes from related parties

3,243

Financing transaction costs

(6,287)

Financing transaction costs

(84)

(12,952)

Original issue discount

(10,000)

Principal payments on long-term debt

(555,048)

Proceeds from issuance of Series A Senior Preferred Stock

144,667

Proceeds from issuance of 2022 Warrants

20,333

Payments on revolving line of credit

(24,750)

Equity issuance costs and original issue discount

(4,935)

Payment of contingent consideration liabilities

(397)

Taxes paid on behalf of employees for shares withheld

(66)

(34)

Distribution to non-controlling interest holders

(1,675)

(612)

Net cash (used in) provided by financing activities

(30,016)

81,419

Changes in cash and cash equivalents:

Net (decrease) increase in cash and cash equivalents

(45,460)

31,064

Cash and cash equivalents at beginning of period

83,139

48,616

Cash and cash equivalents at end of period

37,679

79,680

Supplemental noncash disclosures:

Derivative changes in fair value

^[1]

4,306

(6,460)

Purchases of property and equipment in accounts payable

1,495

1,550

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

73,584

Other supplemental disclosures:

Cash paid for interest

24,698

17,822

Cash received from hedging activities

5,135

Cash paid for taxes

Change in fair value of contingent common shares liability

$ (1,501)

$ (25,830)

[1]	Derivative changes in fair value related to unrealized loss (gain) on cash flow hedges, including the impact of reclassifications.

Overview of the Company	6 Months Ended
Overview of the Company	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Overview of the Company	Overview of the Company ATI Physical Therapy, Inc., together with its subsidiaries (herein referred to as “we,” "our," “the Company,” “ATI Physical Therapy” and “ATI”), is a nationally recognized healthcare company, specializing in outpatient rehabilitation and adjacent healthcare services. The Company provides outpatient physical therapy services under the name ATI Physical Therapy and, as of June 30, 2023, had 911 clinics located in 24 states (as well as 18 clinics under management service agreements). The Company offers a variety of services within its clinics, including physical therapy to treat spine, shoulder, knee and neck injuries or pain; work injury rehabilitation services, including work conditioning and work hardening; hand therapy; and other specialized treatment services. The Company’s direct and indirect wholly-owned subsidiaries include, but are not limited to, Wilco Holdco, Inc., ATI Holdings Acquisition, Inc. and ATI Holdings, LLC. Impact of COVID-19 and CARES Act The coronavirus ("COVID-19") pandemic in the United States resulted in changes to our operating environment. Although the direct impact on our business has decreased since the peak impact in 2020, we continue to closely monitor the remaining impacts from the pandemic including its direct or indirect effects on macroeconomic factors, the labor markets in which we operate, and the physical therapy and broader healthcare landscape. Throughout the duration of the pandemic and declared public health emergency, and continuing hereafter, our priorities have been protecting the health and safety of employees and patients, maximizing the availability of services to satisfy patient needs and improving the operational and financial stability of our business. While we expect the disruption caused by COVID-19 and resulting impacts to diminish over time, we cannot predict the length of such impacts, and if such impacts continue for an extended period, it could have a continued effect on the Company’s results of operations, financial condition and cash flows, which could be material. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law providing reimbursement, grants, waivers and other funds to assist health care providers during the COVID-19 pandemic. The Company realized benefits under the CARES Act including, but not limited to, the receipt of Medicare Accelerated and Advance Payment Program ("MAAPP") funds and deferral of depositing the employer portion of Social Security taxes, interest-free and penalty-free. During the year ended December 31, 2022, the remaining obligations related to these benefits were applied and repaid. During the six months ended June 30, 2022, the Company applied $10.7 million in MAAPP funds against the outstanding liability at that time.

Basis of Presentation and Recent Accounting Standards	6 Months Ended
Basis of Presentation and Recent Accounting Standards	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Recent Accounting Standards	Basis of Presentation and Recent Accounting Standards Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years. For further information regarding the Company's accounting policies and other information, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023. Reverse Stock Split On June 14, 2023, the Company effected a one-for-fifty (1-for-50) reverse stock split of its Class A common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on June 13, 2023, and the final reverse split ratio was subsequently approved by the Company’s board of directors on June 14, 2023. The Company's common stock commenced trading on a reverse split-adjusted basis on June 15, 2023. As a result of the Reverse Stock Split, every fifty (50) shares of common stock either issued and outstanding or held as treasury stock were combined into one new share of common stock. Any fractional shares of common stock resulting from the Reverse Stock Split were rounded up to the nearest whole share. All outstanding securities entitling their holders to purchase or acquire shares of common stock, including stock options, warrants, Earnout Shares, Vesting Shares and shares of common stock subject to vesting were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. The Reverse Stock Split did not change the par value of the common stock or the number of shares authorized for issuance. All information included in these condensed consolidated financial statements and related notes has been adjusted, on a retrospective basis, to reflect the Reverse Stock Split, unless otherwise stated. Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these condensed consolidated financial statements are issued. The Company has negative operating cash flows, operating losses and net losses. For the six months ended June 30, 2023, the Company had cash flows used in operating activities of $5.3 million, operating loss of $23.7 million and net loss of $47.0 million. These results are, in part, due to trends experienced by the Company in recent years including a tight labor market for available physical therapy and other healthcare providers in the workforce, visit volume softness, decreases in rate per visit and increases in interest costs. As previously disclosed, these conditions and events raise substantial doubt about the Company's ability to continue as a going concern. In response to these conditions, management plans included refinancing the Company's debt under its 2022 Credit Agreement and improving operating results and cash flows. On June 15, 2023, the Company completed a debt restructuring transaction under its 2022 Credit Agreement (as defined in Note 8) including: (i) a delayed draw new money financing in an aggregate principal amount of $25.0 million, comprised of (A) second lien PIK convertible notes (the “2L Notes”) and (B) shares of Series B Preferred Stock (as defined in Note 8), which will provide the holder thereof with voting rights such that the holders thereof will have the right to vote on an as-converted basis, (ii) the exchange of $100.0 million of the aggregate principal amount of the term loans under the 2022 Credit Agreement held by certain of the holders of its Series A Senior Preferred Stock (the "Preferred Equityholders") for 2L Notes and Series B Preferred Stock and (iii) certain other changes to the terms of the 2022 Credit Agreement, including modifications of the financial covenants thereunder and relief from the requirements related to the delivery of independent audit reports without a going concern explanatory paragraph. Holders of the 2L Notes will also receive additional 2L Notes upon the in-kind payment of interest on any outstanding 2L Notes. The 2L Notes are convertible into shares of Class A common stock at a fixed conversion price. Additionally, the Company experienced improvements in operations that resulted in reduced levels of cash outflows during the six months ended June 30, 2023 relative to the same period in the prior year. A continued improvement in business results is necessary as there remains a risk that the Company may fail to meet its minimum liquidity covenant or be unable to fund anticipated cash requirements and obligations as they become due in the future. The Company's plan is to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. If the Company's plan does not result in improvement in these aspects in future periods that results in sufficient cash flow from operations, the Company will need to consider other alternatives, such as raising additional financing, obtaining funds from other sources, disposal of assets, or pursuing other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Use of estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change. Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment. Cash, cash equivalents and restricted cash Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, and our condensed consolidated statements of cash flows for the six months ended June 30, 2023 was $0.8 million. There was no change in restricted cash for the six months ended June 30, 2022. 2L Notes The guidance in Accounting Standards Codification ("ASC") Topic 825, Financial Instruments, provides a fair value option that allows companies to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the Company's condensed consolidated balance sheets from those instruments using another accounting method. The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the line item change in fair value of 2L Notes in the Company’s condensed consolidated statements of operations. Any changes in fair value related to changes in the Company's credit risk is recognized as a component of accumulated other comprehensive income (loss). Recently adopted accounting guidance In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company adopted this new accounting standard effective January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Divestitures

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Clinics held for sale


	December 31, 2022
Accounts receivable, net	$	486
Prepaid expenses	23
Property and equipment, net	1,113
Operating lease right-of-use assets	1,929
Goodwill, net	3,192
Other non-current assets	12
Total assets held for sale	$	6,755

Accounts payable	$	22
Accrued expenses and other liabilities	201
Current portion of operating lease liabilities	685
Operating lease liabilities	1,706
Total liabilities held for sale	$	2,614

Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

The following table disaggregates net revenue by major service line for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net patient revenue	$	156,938	$	148,506	$	307,692	$	287,431
ATI Worksite Solutions (1)	9,384		8,725		18,585		17,376
Management Service Agreements (1)	3,770		3,265		7,495		6,420
Other revenue (1)	2,245		2,797		5,497		5,888
	$	172,337	$	163,293	$	339,269	$	317,115

(1)ATI Worksite Solutions, Management Service Agreements and Other revenue are included within other revenue on the face of the condensed consolidated statements of operations.

The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Commercial	58.5	%	57.2	%	58.3	%	57.0	%
Government	23.6	%	24.5	%	23.6	%	24.1	%
Workers’ compensation	11.6	%	12.8	%	11.8	%	13.0	%
Other (1)	6.3	%	5.5	%	6.3	%	5.9	%
	100.0	%	100.0	%	100.0	%	100.0	%

(1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement.

Goodwill, Trade Name and Other Intangible Assets

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Trade Name and Other Intangible Assets

Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands):


Goodwill at December 31, 2022 (1)	$	286,458
Impairment charges (2)	—


Reclassifications to held and used	3,192
Goodwill at June 30, 2023	$	289,650

(1) Net of accumulated impairment losses of $1,045.7 million.

(2) The Company did not note any triggering events during the six months ended June 30, 2023 that resulted in the recording of an impairment loss.

The table below summarizes the Company’s carrying amount of trade name and other intangible assets at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Gross intangible assets:
ATI trade name (1)	$	245,000	$	245,000
Non-compete agreements	2,395		2,395
Other intangible assets	640		640
Accumulated amortization:
Accumulated amortization – non-compete agreements	(1,473)		(1,126)
Accumulated amortization – other intangible assets	(349)		(327)
Total trade name and other intangible assets, net	$	246,213	$	246,582

(1) Not subject to amortization.

Interim impairment testing during 2022

Property and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Equipment	$	38,957	$	38,102
Furniture and fixtures	17,804		17,215
Leasehold improvements	194,650		191,182
Automobiles	19		19
Computer equipment and software	105,447		102,651
Construction-in-progress	4,084		3,727
	360,961		352,896
Accumulated depreciation and amortization	(246,174)		(229,206)
Property and equipment, net (1)	$	114,787	$	123,690

(1) Excludes $1.1 million reclassified as held for sale as of December 31, 2022. Refer to Note 3 - Divestitures for additional information.


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Rent, clinic supplies, contract labor and other	$	6,351	$	6,823	$	12,809	$	13,909
Selling, general and administrative expenses	2,814		3,250		5,863		6,085
Total depreciation expense	$	9,165	$	10,073	$	18,672	$	19,994

Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Salaries and related costs	$	28,715	$	28,949
Credit balances due to patients and payors	7,255		6,117
Accrued professional fees	6,162		5,551
Accrued interest	6,116		762
Accrued insurance premiums	4,716		—
Accrued occupancy costs	1,985		2,410
Accrued contract labor	1,921		4,483





Other payables and accrued expenses	4,857		5,400
Total	$	61,727	$	53,672

Borrowings

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Borrowings

Long-term debt, net consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Senior Secured Term Loan (1, 2) (due February 24, 2028)	$	407,799	$	503,481
Revolving Loans (3) (due February 24, 2027)	23,450		48,200
Less: unamortized debt issuance costs	(8,021)		(11,137)
Less: unamortized original issue discount	(8,160)		(8,944)
Total debt, net	415,068		531,600
Less: current portion of long-term debt	—		—
Long-term debt, net	$	415,068	$	531,600

(3) Interest rate of 10.1% and 8.3% at June 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate.

2L Notes due to related parties, at fair value consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
2L Notes due to related parties, at fair value	$	96,933	$	—

2023 Debt Restructuring Transaction

Amendment No. 2 to Credit Agreement

Second Lien Note Purchase Agreement and Designation of Series B Preferred Stock


									June 30, 2023
Series B Preferred Stock, shares at Closing Date									103
Increase (decrease) in shares during period									—
Series B Preferred Stock, shares at end of period									103

Common Stock voting rights, as converted basis(1)									8,022

(1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share.

The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. As a result of applying the fair value option, direct costs and fees related to the 2L Notes were expensed as incurred. As of June 30, 2023, the principal amount and estimated fair value of the 2L Notes were approximately $103.2 million and $96.9 million, respectively. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. Additionally, as of June 30, 2023, the effective interest rate on the 2L Notes was 8.0%.

Delayed Draw Right

2022 Credit Agreement

Senior Secured Term Loan

Revolving Loans

Aggregate maturities of the Company's borrowings at June 30, 2023 are as follows (in thousands):


2023 (remainder of year)	$	—
2024	—
2025	—
2026	—
2027	23,450
2028	511,042

Total future maturities(1)	534,492
Unamortized original issue discount and debt issuance costs	(16,181)
2L Notes due to related parties, principal amount(1, 2)	(103,243)
Long-term debt, net(1)	$	415,068

(1) Excludes any contractual paid in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates.

Share-Based Compensation	6 Months Ended
Share-Based Compensation	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Share-Based Compensation	Share-Based CompensationThe Company recognizes compensation expense for all share-based compensation awarded to employees, net of forfeitures, using a fair value-based method. The grant-date fair value of each award is amortized to expense on a straight-line basis over the award’s vesting period. Compensation expense associated with share-based awards is included in salaries and related costs and selling, general and administrative expenses in the accompanying condensed consolidated statements of operations, depending on whether the award recipient is a clinic-level or corporate employee, respectively. Share-based compensation expense is adjusted for forfeitures as incurred. ATI 2021 Equity Incentive Plan The Company adopted the ATI Physical Therapy 2021 Equity Incentive Plan (the "2021 Plan") under which it may grant equity interests of ATI Physical Therapy, Inc., in the form of stock options, stock appreciation rights, restricted stock awards and restricted stock units, to members of management, key employees and independent directors of the Company and its subsidiaries. The Compensation Committee is authorized to make grants and to make various other decisions under the 2021 Plan. The maximum number of shares reserved for issuance under the 2021 Plan is approximately 1.2 million. As of June 30, 2023, approximately 0.2 million shares were available for future grant. 2023 grants During the six months ended June 30, 2023, the Company granted restricted stock units ("RSUs") to certain employees and independent directors of the Company. For the six months ended June 30, 2023, approximately 0.7 million RSUs were granted under the 2021 Plan. The weighted-average grant-date fair values related to the RSUs granted were $17.00. As of June 30, 2023, the unrecognized compensation expense related to outstanding RSUs was $14.6 million, to be recognized over a weighted-average period of 2.4 years. Total non-cash share-based compensation expense recognized in the three and six months ended June 30, 2023 was approximately $2.8 million and $4.2 million, respectively.

Mezzanine and Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Mezzanine and Stockholders' Equity

ATI Physical Therapy, Inc. Series A Senior Preferred Stock

The following table reflects the components of proceeds related to the Series A Senior Preferred Stock (in thousands):


Gross proceeds allocated to Series A Senior Preferred Stock	$	144,667
Less: original issue discount	(1,447)
Less: issuance costs	(2,880)
Net proceeds received from issuance of Series A Senior Preferred Stock	$	140,340

Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following (in thousands, except per share data):


	June 30, 2023		December 31, 2022
Aggregate stated value, beginning of period	$	182,876	$	165,000
Paid in-kind dividends(1)	11,012		17,876
Aggregate stated value, end of period	$	193,888	$	182,876

Preferred shares issued and outstanding, end of period	165		165

Stated value per share, end of period	$	1,175.08	$	1,108.34

(1) Changes in the stated value for the year ended December 31, 2022 represent changes since the Refinancing Date, which is when the Series A Senior Preferred Stock was issued and established.

Changes in the carrying value of the Series A Preferred Stock consisted of the following for the six months ended June 30, 2023 (in thousands). There were no changes in carrying value in 2022.


	June 30, 2023
Carrying value, beginning of period	$	140,340
Write off original issue discount	1,447
Write off issuance costs	2,880
Deemed dividend from discount on initial gross proceeds allocation	20,333
Paid in-kind dividends recognized to carrying value	28,888
Redemption value adjustment	20,036
Carrying value, end of period	$	213,924

2022 Warrants

The following table reflects the components of proceeds related to the 2022 Warrants (in thousands):


	Series I Warrants		Series II Warrants		Total
Gross proceeds allocated to 2022 Warrants	$	5,101	$	15,232	$	20,333
Less: original issue discount	(51)		(152)		(203)
Less: issuance costs	(102)		(303)		(405)
Net proceeds received from issuance of 2022 Warrants	$	4,948	$	14,777	$	19,725

Class A common stock

As of June 30, 2023, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands):


			June 30, 2023
2L Notes(1)			8,259
Shares available for grant under the 2021 Plan			242
2021 Plan share-based awards outstanding			872
Earnout Shares reserved			300
2022 Warrant shares reserved			230
IPO Warrant shares reserved			197
Vesting Shares reserved(2)			173
Restricted shares(2)			7
Total shares of common stock reserved			10,280

(2) Represents shares of Class A common stock legally issued, but not outstanding, as of June 30, 2023.

Treasury stock

IPO Warrant Liability

6 Months Ended

Jun. 30, 2023

Other Liabilities Disclosure [Abstract]

IPO Warrant Liability


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	89	$	801	$	29	$	1,305
Decrease in fair value	(60)		(356)		—		(860)
Fair value, end of period	$	29	$	445	$	29	$	445


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	207	$	1,863	$	69	$	3,036
Decrease in fair value	(138)		(828)		—		(2,001)
Fair value, end of period	$	69	$	1,035	$	69	$	1,035

Contingent Common Shares Liability

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Contingent Common Shares Liability

Earnout Shares


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	1,350	$	13,350	$	1,800	$	28,800
Decrease in fair value	(503)		(950)		(953)		(16,400)
Fair value, end of period	$	847	$	12,400	$	847	$	12,400

Refer to Note 13 - Fair Value Measurements for further details.

Vesting Shares


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	776	$	7,676	$	1,035	$	16,560
Decrease in fair value	(289)		(546)		(548)		(9,430)
Fair value, end of period	$	487	$	7,130	$	487	$	7,130

Refer to Note 13 - Fair Value Measurements for further details.

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

•Level 1: Observable inputs, which include unadjusted quoted prices in active markets for identical instruments.

Fair value measurement of debt


																								2L Notes
																								June 15, 2023
Risk-free interest rate																								3.90%
Volatility																								50.00%
Selected yield																								20.00%
Expected term (years)																								5.3
Share price																								$10.21


	Three Months Ended		Six Months Ended
	June 30, 2023			June 30, 2023
Fair value, beginning of period(1)	$	103,943		$	103,943
Decrease in fair value(1)	(7,010)			(7,010)
Fair value, end of period	$	96,933		$	96,933

(1) Represents changes in fair value from the Closing Date, which is when the 2L Notes were issued.

Fair value measurement of share-based financial liabilities

The key inputs into the Monte-Carlo option pricing model were as follows as of June 30, 2023 and December 31, 2022 for the respective Level 3 instruments:


	IPO Warrants		Earnout Shares and Vesting Shares
	June 30, 2023	December 31, 2022	June 30, 2023	December 31, 2022
Risk-free interest rate	4.45%	N/A	3.88%	3.88%
Volatility	91.30%	N/A	77.80%	74.60%
Dividend yield	—%	N/A	—%	—%
Expected term (years)	3.0	N/A	8.0	8.5
Share price	$9.15	N/A	$9.15	$15.50

Fair value measurement of interest rate derivative instruments


	Cash Flow Hedges
Balance as of December 31, 2022	$	4,899
Unrealized loss recognized in other comprehensive income before reclassifications	(99)
Reclassification to interest expense, net	(3,357)
Balance as of March 31, 2023	1,443
Unrealized gain recognized in other comprehensive income before reclassifications	798
Reclassification to interest expense, net	(1,648)
Balance as of June 30, 2023	$	593

Balance as of December 31, 2021	$	28
Unrealized gain recognized in other comprehensive income before reclassifications	3,681
Reclassification to interest expense, net	71
Balance as of March 31, 2022	3,780
Unrealized gain recognized in other comprehensive income before reclassifications	2,642
Reclassification to interest expense, net	66
Balance as of June 30, 2022	$	6,488

The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
	Assets		Liabilities	Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Other current assets	$	511	—	$	5,028	—
Other non-current assets	$	83	—	—		—
Accrued expenses and other liabilities	—		—	—		—
Other non-current liabilities	—		—	—		$	73

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesThe effective tax rate and income tax expense for the three months ended June 30, 2023 were (0.4)% and $0.1 million, compared to an effective tax rate and income tax benefit of 8.8% and $13.0 million for the three months ended June 30, 2022. The effective tax rate and income tax expense for the six months ended June 30, 2023 were (0.3)% and $0.2 million, compared to an effective tax rate and income tax benefit of 11.7% and $36.3 million for the six months ended June 30, 2022. The effective tax rate for the three and six months ended June 30, 2023 was estimated based on full-year 2023 forecast. The estimated effective tax rate was different than the statutory rate primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax expense of $0.1 million for the three months ended June 30, 2023, and a tax expense of $0.2 million for the six months ended June 30, 2023. The effective tax rate for the three and six months ended June 30, 2022 was estimated based on full-year 2022 forecast. The estimated effective tax rate was different than the statutory rate primarily due to attributes in federal and state jurisdictions for which no benefit can be recognized and book impairment of goodwill. There was no tax basis established in a significant component of the goodwill impaired. As a result, the impairment had a substantial permanent impact on the effective tax rate. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items resulted in a tax benefit of $13.0 million for the three months ended June 30, 2022, and a tax benefit of $36.3 million for the six months ended June 30, 2022. In evaluating the Company's ability to recover deferred income tax assets, all available positive and negative evidence is considered, including scheduled reversal of deferred tax liabilities, operating results and forecasts of future taxable income in each of the jurisdictions in which the Company operates. As of June 30, 2023, the Company determined that a significant portion of its federal and state net operating loss carryforwards with definite and certain indefinite carryforward periods and certain deferred tax assets are not more likely than not to be realized based on the weight of available evidence. As a result, the Company recorded valuation allowances against tax benefits related to its current year losses.

Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

LeasesThe Company leases various facilities and office equipment for its physical therapy operations and administrative support functions under operating leases. The Company’s initial operating lease terms are generally between 7 and 10 years, and typically contain options to renew for varying terms. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease. If the ROU asset has been impaired, lease expense is no longer recognized on a straight-line basis. The lease liability continues to amortize using the effective interest method, while the ROU asset is subsequently amortized on a straight-line basis.


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Lease cost
Operating lease cost	$	16,674	$	16,784	$	33,363	$	33,487
Variable lease cost (1)	5,468		5,331		10,830		10,536
Total lease cost (2)	$	22,142	$	22,115	$	44,193	$	44,023

(1) Includes short term lease costs, which are immaterial.

(2) Sublease income was immaterial.

Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands):


	Six Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31,110	$	32,893

Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,831	$	6,900

Average lease terms and discount rates as of June 30, 2023 and December 31, 2022 were as follows:


	June 30, 2023	December 31, 2022
Weighted-average remaining lease term:
Operating leases	5.7 years	5.9 years
Weighted-average discount rate:
Operating leases	7.2%	6.9%


Year	Amount
2023 (remainder of year)	$	34,311
2024	66,189
2025	56,311
2026	49,463
2027	38,178

Thereafter	77,069
Total undiscounted future cash flows	321,521
Less: Imputed Interest	(60,303)
Present value of future cash flows	$	261,218
Presentation on Balance Sheet:
Current	$	52,194
Non-current	$	209,024

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company has contractual commitments that are not required to be recognized in the condensed consolidated financial statements related to cloud computing and telecommunication services agreements. As of June 30, 2023, minimum amounts due under these agreements are approximately $13.8 million through January of 2026 subject to customary business terms and conditions. From time to time, the Company is a party to legal proceedings, governmental audits and investigations that arise in the ordinary course of business. Management is not aware of any legal proceedings, governmental audits and investigations of which the outcome is probable to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. The outcome of any litigation and claims against the Company cannot be predicted with certainty, and the resolution of current or future claims could materially affect our future results of operations, cash flows or financial condition. During 2022, the Company engaged in discussions with a payor regarding a billing dispute related to certain historical claims. Management believed, based on discussions with its legal counsel, that the Company had meritorious defenses against such unasserted claim. However, based on the progress of settlement discussions to avoid the cost of potential litigation, the Company recorded a charge for a net settlement liability related to the billing dispute of $3.0 million, which is included in selling, general and administrative expenses in its condensed consolidated statements of operations for the three and six months ended June 30, 2022. As of December 31, 2022, the liability has been fully settled. Stockholder class action complaints On August 16, 2021, two purported ATI stockholders, Kevin Burbige and Ziyang Nie, filed a putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, Labeed Diab, Joe Jordan, and Drew McKnight (collectively, the “ATI Individual Defendants”), and Joshua Pack, Marc Furstein, Leslee Cowen, Aaron Hood, Carmen Policy, Rakefet Russak-Aminoach, and Sunil Gulati (collectively, the “FVAC Defendants”). On October 7, 2021, another purported ATI stockholder, City of Melbourne Firefighters' Retirement System ("City of Melbourne"), filed a nearly identical putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, the ATI Individual Defendants, and the FVAC Defendants. On November 18, 2021, the court consolidated the cases and appointed The Phoenix Insurance Company Ltd. and The Phoenix Pension & Provident Funds as lead plaintiffs (together, “Lead Plaintiffs”). On February 8, 2022, Lead Plaintiffs filed a consolidated amended complaint against ATI, the ATI Individual Defendants, and the FVAC Defendants, which asserts claims against (i) ATI and the ATI Individual Defendants under Section 10(b) of the Exchange Act; (ii) the ATI Individual Defendants under Section 20(a) of the Exchange Act (in connection with the Section 10(b) claim); (iii) all defendants under Section 14(a) of the Exchange Act; and (iv) the ATI Individual Defendants and the FVAC Defendants under Section 20(a) of the Exchange Act (in connection with the Section 14(a) claim). Lead Plaintiffs purport to assert these claims on behalf of those ATI stockholders who purchased or otherwise acquired their ATI shares between February 22, 2021 and October 19, 2021, inclusive, and/or held FVAC Class A common shares as of May 24, 2021 and were eligible to vote at FVAC’s June 15, 2021 special meeting. The consolidated amended complaint generally alleges that the proxy materials for the FVAC/ATI merger, as well as other ATI disclosures (including the press release announcing ATI’s financial results for the first quarter of 2021), were false and misleading (and, thus, in violation of Sections 10(b) and 14(a) of the Exchange Act) because they failed to disclose that: (i) ATI was experiencing attrition among its physical therapists; (ii) ATI faced increasing competition for clinicians in the labor market; (iii) as a result, ATI faced difficulty retaining therapists and incurred increased labor costs; (iv) also as a result, ATI would open fewer new clinics; and (v) also as a result, the defendants’ positive statements about ATI’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Lead Plaintiffs, on behalf of themselves and the putative class, seek money damages in an unspecified amount and costs and expenses, including attorneys’ and experts’ fees. On April 11, 2022, defendants filed motions to dismiss the consolidated amended complaint, which were fully briefed as of July 25, 2022 and remain pending. The Company has determined that potential liabilities related to the consolidated amended complaint are not considered probable or reasonably estimable at this time. On February 7, 2023, another purported ATI stockholder, Wendell Robinson, filed a putative class action complaint in the Court of Chancery of the State of Delaware against Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rakefet Russak-Aminoach, Sunil Gulati, Daniel N. Bass, Micah B. Kaplan and Labeed Diab (the "Robinson Action"). The complaint asserts claims against: (i) Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rafeket Russak-Aminoach, Sunil Gulati, Daniel N. Bass and Micah B. Kaplan for breach of fiduciary duty; and (ii) Labeed Diab for aiding and abetting breach of fiduciary duty. Plaintiff's allegations generally mirror those asserted in the federal stockholder class action described above, and Plaintiff further alleges that the alleged misrepresentations and omissions in the proxy materials for the FVAC/ATI merger prevented stockholders from making a fully informed decision on whether to approve the merger or have their shares redeemed. Defendants filed motions to dismiss on April 28, 2023, which were fully briefed as of June 23, 2023 and remain pending. A hearing on the motions has been scheduled for December 1, 2023. The Company has determined that potential liabilities related to this complaint are not considered probable or reasonably estimable at this time. On June 1, 2023, another purported ATI stockholder, Phillip Goldstein, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John L. Larsen, John Maldonado, Carmine Petrone, Joanne M. Burns, Christopher Krubert, James E. Parisi, Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach. The complaint asserts direct and/or derivative claims against: (i) Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John Larsen, John Maldonado, Carmine Petrone, Joanne Burns, Christopher Krubert, and James Parisi for tortious interference with redemption rights, aiding and abetting breach of fiduciary duty, and fraud; and (ii) Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach for breach of fiduciary duty. Plaintiff’s allegations generally mirror those asserted in the Robinson Action referenced above. Defendants have not yet responded to the complaint. The Company has determined that potential liabilities related to this complaint are not considered probable or reasonably estimable at this time. Stockholder derivative complaint Between December 1, 2021 and September 22, 2022, five purported ATI stockholders filed four derivative actions, purportedly on behalf of ATI, in the U.S. District Court for the Northern District of Illinois. On November 21, 2022, four of these stockholder plaintiffs, Vinay Kumar, Brendan Reginbald, Ziyang Nie and Julia Chang, filed a consolidated amended complaint against Labeed Diab, Joe Jordan, John Larsen, John Maldonado, Carmine Petrone, Christopher Krubert, Joanne Burns and James Parisi (collectively, the “Legacy ATI Defendants”), Drew McKnight, Joshua Pack, Aaron Hood, Carmen Policy, Marc Furstein, Leslee Cowen, Rafeket Russak-Aminoach, and Sunil Gulati (collectively, the “FVACII Individual Defendants”), and Fortress Acquisition Sponsor II, LLC and Fortress Investment Group LLC (together, the "Fortress Entity Defendants," and together with the FVACII Individual Defendants, the “FVACII Defendants”). The consolidated amended complaint asserts claims on behalf of ATI against: (i) the FVACII Defendants for breach of fiduciary duty; (ii) Fortress Acquisition Sponsor II, LLC and the Legacy ATI Defendants for aiding and abetting breach of fiduciary duty; (iii) Labeed Diab, Joe Jordan, and Drew McKnight for contribution under Section 21D of the Exchange Act; (iv) the FVACII Defendants under Section 14(a) of the Exchange Act; (v) the Legacy ATI Defendants for unjust enrichment; and (vi) all defendants for contribution and indemnification under Delaware law. Plaintiffs' allegations generally mirror those asserted in the stockholder class action described above. On January 20, 2023, defendants filed motions to dismiss the consolidated amended complaint, which remain pending. On March 3, 2023, in lieu of filing a response to defendants' motions to dismiss, Plaintiffs filed a motion for leave to file an amended complaint, which was fully briefed as of April 7, 2023 and remains pending. The Company has determined that potential liabilities related to the consolidated amended complaint are not considered probable or reasonably estimable at this time. Insurance coverage complaint On March 8, 2023, the Company filed a complaint against Federal Insurance Company, U.S. Specialty Insurance Company and other insurers titled ATI Physical Therapy, Inc. v. Federal Insurance Company et. al., Case No. N23C-03-074, in the Superior Court of the State of Delaware related to a coverage dispute and those certain insurers’ denial of coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests discussed in this section. The complaint asserts claims against Federal Insurance Company for breach of contract and bad faith, and claims for declaratory judgment as to Federal Insurance Company, U.S. Specialty Insurance Company, XL Specialty Insurance Company and the Company’s excess insurance carriers, seeking coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests. On June 26, 2023, the Company filed an amended complaint asserting the same claims and seeking the same relief. On July 18, 2023, the defendants filed their answers to the amended complaint. Regulatory matters On November 5, 2021, the Company received from the SEC a voluntary request for the production of documents relating to the earnings forecast and financial information referenced in the Company's July 26, 2021 Form 8-K and related matters. The Company has subsequently received from the SEC additional requests for documents and information related to the same matters, and is cooperating with the SEC's review and investigation of those matters. Indemnifications The Company has agreed to indemnify its current and former directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by them in any action or proceeding to which any of them are, or are threatened to be, made a party by reason of their service as a director or officer. The Company maintains director and officer insurance coverage that would generally enable it to recover a portion of any amounts paid. The ultimate cost of current or potential future litigation may exceed the Company’s current insurance coverages and may have a material adverse impact on our results of operations, cash flows and financial condition. The Company also may be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.

Loss per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Loss per Share

Loss per ShareBasic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the impact of securities that would have a dilutive effect on basic loss per share, if any. For the three and six months ended June 30, 2023 and 2022, shares of Series A Senior Preferred Stock are treated as participating securities and therefore are included in computing earnings per common share using the two-class method. The two-class method is an earnings allocation formula that calculates basic and diluted net earnings per common share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings as if the earnings for the year had been distributed. For the three and six months ended June 30, 2023 and 2022, the income (loss) available to common stockholders is reduced (increased) by the amount of the cumulative dividend and any redemption value adjustments for the Series A Senior Preferred Stock that was issued as part of the 2022 Debt Refinancing. As discussed in Note 8 - Borrowings, the Series B Preferred Stock are non-economic and represent voting rights only and, therefore, are not considered in the calculation of basic or diluted loss per share.

The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Basic and diluted loss per share:
Net loss	$	(21,749)	$	(135,723)	$	(46,959)	$	(273,946)
Less: Net income (loss) attributable to non-controlling interests	956		(177)		2,016		(650)
Less: Series A Senior Preferred redemption value adjustments(1)	44,696		—		44,696		—
Less: Series A Senior Preferred cumulative dividend	5,709		5,063		11,012		6,988
Loss available to common stockholders	$	(73,110)	$	(140,609)	$	(104,683)	$	(280,284)

Weighted average shares outstanding(2)	4,122		4,077		4,110		4,038

Basic and diluted loss per share	$	(17.74)	$	(34.49)	$	(25.47)	$	(69.41)


	Three Months Ended		Six Months Ended
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
2L Notes(1)	8,259	—	8,259	—
Series I Warrants	105	105	105	105
IPO Warrants	197	197	197	197
Restricted shares(2)	7	11	7	11
Stock options	103	129	103	129
RSUs	767	97	767	97
RSAs	2	6	2	6
Total	9,440	545	9,440	545

(1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes and conversion price of $12.50 per share.

(2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net loss attributable to ATI Physical Therapy, Inc.	$ (22,705)	$ (26,270)	$ (135,546)	$ (137,750)	$ (48,975)	$ (273,296)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation and Recent Accounting Standards (Policies)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation	Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years. For further information regarding the Company's accounting policies and other information, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023.
Liquidity and going concern	Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these condensed consolidated financial statements are issued. As previously disclosed, these conditions and events raise substantial doubt about the Company's ability to continue as a going concern. In response to these conditions, management plans included refinancing the Company's debt under its 2022 Credit Agreement and improving operating results and cash flows. Additionally, the Company experienced improvements in operations that resulted in reduced levels of cash outflows during the six months ended June 30, 2023 relative to the same period in the prior year. A continued improvement in business results is necessary as there remains a risk that the Company may fail to meet its minimum liquidity covenant or be unable to fund anticipated cash requirements and obligations as they become due in the future. The Company's plan is to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. If the Company's plan does not result in improvement in these aspects in future periods that results in sufficient cash flow from operations, the Company will need to consider other alternatives, such as raising additional financing, obtaining funds from other sources, disposal of assets, or pursuing other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
Use of estimates	Use of estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change.
Segment reporting	Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment.
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022, and our condensed consolidated statements of cash flows for the six months ended June 30, 2023 was $0.8 million. There was no change in restricted cash for the six months ended June 30, 2022.
2L Notes	2L Notes The guidance in Accounting Standards Codification ("ASC") Topic 825, Financial Instruments, provides a fair value option that allows companies to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the Company's condensed consolidated balance sheets from those instruments using another accounting method. The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments, in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the line item change in fair value of 2L Notes in the Company’s condensed consolidated statements of operations. Any changes in fair value related to changes in the Company's credit risk is recognized as a component of accumulated other comprehensive income (loss).
Recently adopted accounting guidance	Recently adopted accounting guidance In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers, which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company adopted this new accounting standard effective January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

Divestitures (Tables)

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations

Major classes of assets and liabilities classified as held for sale as of December 31, 2022 were as follows (in thousands):


	December 31, 2022
Accounts receivable, net	$	486
Prepaid expenses	23
Property and equipment, net	1,113
Operating lease right-of-use assets	1,929
Goodwill, net	3,192
Other non-current assets	12
Total assets held for sale	$	6,755

Accounts payable	$	22
Accrued expenses and other liabilities	201
Current portion of operating lease liabilities	685
Operating lease liabilities	1,706
Total liabilities held for sale	$	2,614

Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Net Operating Revenue By Major Service Line and Associated Payor Class

The following table disaggregates net revenue by major service line for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net patient revenue	$	156,938	$	148,506	$	307,692	$	287,431
ATI Worksite Solutions (1)	9,384		8,725		18,585		17,376
Management Service Agreements (1)	3,770		3,265		7,495		6,420
Other revenue (1)	2,245		2,797		5,497		5,888
	$	172,337	$	163,293	$	339,269	$	317,115

(1)ATI Worksite Solutions, Management Service Agreements and Other revenue are included within other revenue on the face of the condensed consolidated statements of operations.

The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below:


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Commercial	58.5	%	57.2	%	58.3	%	57.0	%
Government	23.6	%	24.5	%	23.6	%	24.1	%
Workers’ compensation	11.6	%	12.8	%	11.8	%	13.0	%
Other (1)	6.3	%	5.5	%	6.3	%	5.9	%
	100.0	%	100.0	%	100.0	%	100.0	%

(1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement.

Goodwill, Trade Name and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in The Carrying Amount of Goodwill

Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands):


Goodwill at December 31, 2022 (1)	$	286,458
Impairment charges (2)	—


Reclassifications to held and used	3,192
Goodwill at June 30, 2023	$	289,650

(1) Net of accumulated impairment losses of $1,045.7 million.

(2) The Company did not note any triggering events during the six months ended June 30, 2023 that resulted in the recording of an impairment loss.

Schedule of Carrying Amounts of Indefinite-Lived Intangible Assets

The table below summarizes the Company’s carrying amount of trade name and other intangible assets at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Gross intangible assets:
ATI trade name (1)	$	245,000	$	245,000
Non-compete agreements	2,395		2,395
Other intangible assets	640		640
Accumulated amortization:
Accumulated amortization – non-compete agreements	(1,473)		(1,126)
Accumulated amortization – other intangible assets	(349)		(327)
Total trade name and other intangible assets, net	$	246,213	$	246,582

(1) Not subject to amortization.

Schedule of Carrying Amounts of Finite-Lived Intangible Assets

The table below summarizes the Company’s carrying amount of trade name and other intangible assets at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Gross intangible assets:
ATI trade name (1)	$	245,000	$	245,000
Non-compete agreements	2,395		2,395
Other intangible assets	640		640
Accumulated amortization:
Accumulated amortization – non-compete agreements	(1,473)		(1,126)
Accumulated amortization – other intangible assets	(349)		(327)
Total trade name and other intangible assets, net	$	246,213	$	246,582

(1) Not subject to amortization.

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment and Depreciation Expense

Property and equipment consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Equipment	$	38,957	$	38,102
Furniture and fixtures	17,804		17,215
Leasehold improvements	194,650		191,182
Automobiles	19		19
Computer equipment and software	105,447		102,651
Construction-in-progress	4,084		3,727
	360,961		352,896
Accumulated depreciation and amortization	(246,174)		(229,206)
Property and equipment, net (1)	$	114,787	$	123,690

(1) Excludes $1.1 million reclassified as held for sale as of December 31, 2022. Refer to Note 3 - Divestitures for additional information.


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Rent, clinic supplies, contract labor and other	$	6,351	$	6,823	$	12,809	$	13,909
Selling, general and administrative expenses	2,814		3,250		5,863		6,085
Total depreciation expense	$	9,165	$	10,073	$	18,672	$	19,994

Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Summary of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Salaries and related costs	$	28,715	$	28,949
Credit balances due to patients and payors	7,255		6,117
Accrued professional fees	6,162		5,551
Accrued interest	6,116		762
Accrued insurance premiums	4,716		—
Accrued occupancy costs	1,985		2,410
Accrued contract labor	1,921		4,483





Other payables and accrued expenses	4,857		5,400
Total	$	61,727	$	53,672

Borrowings (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Summary of Long-Term Debt

Long-term debt, net consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Senior Secured Term Loan (1, 2) (due February 24, 2028)	$	407,799	$	503,481
Revolving Loans (3) (due February 24, 2027)	23,450		48,200
Less: unamortized debt issuance costs	(8,021)		(11,137)
Less: unamortized original issue discount	(8,160)		(8,944)
Total debt, net	415,068		531,600
Less: current portion of long-term debt	—		—
Long-term debt, net	$	415,068	$	531,600

(3) Interest rate of 10.1% and 8.3% at June 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate.

2L Notes due to related parties, at fair value consisted of the following at June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
2L Notes due to related parties, at fair value	$	96,933	$	—

Schedule of Debt Conversions For Voting Rights


									June 30, 2023
Series B Preferred Stock, shares at Closing Date									103
Increase (decrease) in shares during period									—
Series B Preferred Stock, shares at end of period									103

Common Stock voting rights, as converted basis(1)									8,022

(1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share.

Schedule of Aggregate Maturities of Long-Term Debt

Aggregate maturities of the Company's borrowings at June 30, 2023 are as follows (in thousands):


2023 (remainder of year)	$	—
2024	—
2025	—
2026	—
2027	23,450
2028	511,042

Total future maturities(1)	534,492
Unamortized original issue discount and debt issuance costs	(16,181)
2L Notes due to related parties, principal amount(1, 2)	(103,243)
Long-term debt, net(1)	$	415,068

(1) Excludes any contractual paid in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates.

Mezzanine and Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Temporary Equity

The following table reflects the components of proceeds related to the Series A Senior Preferred Stock (in thousands):


Gross proceeds allocated to Series A Senior Preferred Stock	$	144,667
Less: original issue discount	(1,447)
Less: issuance costs	(2,880)
Net proceeds received from issuance of Series A Senior Preferred Stock	$	140,340

Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following (in thousands, except per share data):


	June 30, 2023		December 31, 2022
Aggregate stated value, beginning of period	$	182,876	$	165,000
Paid in-kind dividends(1)	11,012		17,876
Aggregate stated value, end of period	$	193,888	$	182,876

Preferred shares issued and outstanding, end of period	165		165

Stated value per share, end of period	$	1,175.08	$	1,108.34

(1) Changes in the stated value for the year ended December 31, 2022 represent changes since the Refinancing Date, which is when the Series A Senior Preferred Stock was issued and established.

Changes in the carrying value of the Series A Preferred Stock consisted of the following for the six months ended June 30, 2023 (in thousands). There were no changes in carrying value in 2022.


	June 30, 2023
Carrying value, beginning of period	$	140,340
Write off original issue discount	1,447
Write off issuance costs	2,880
Deemed dividend from discount on initial gross proceeds allocation	20,333
Paid in-kind dividends recognized to carrying value	28,888
Redemption value adjustment	20,036
Carrying value, end of period	$	213,924

Schedule of Components Of Proceeds Related to Warrants

The following table reflects the components of proceeds related to the 2022 Warrants (in thousands):


	Series I Warrants		Series II Warrants		Total
Gross proceeds allocated to 2022 Warrants	$	5,101	$	15,232	$	20,333
Less: original issue discount	(51)		(152)		(203)
Less: issuance costs	(102)		(303)		(405)
Net proceeds received from issuance of 2022 Warrants	$	4,948	$	14,777	$	19,725

Schedule of Shares of Class A Common Stock Reserved for Potential Future Issuance

As of June 30, 2023, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands):


			June 30, 2023
2L Notes(1)			8,259
Shares available for grant under the 2021 Plan			242
2021 Plan share-based awards outstanding			872
Earnout Shares reserved			300
2022 Warrant shares reserved			230
IPO Warrant shares reserved			197
Vesting Shares reserved(2)			173
Restricted shares(2)			7
Total shares of common stock reserved			10,280

(2) Represents shares of Class A common stock legally issued, but not outstanding, as of June 30, 2023.

IPO Warrant Liability (Tables)

6 Months Ended

Jun. 30, 2023

Other Liabilities Disclosure [Abstract]

Summary of Warrant Liability


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	89	$	801	$	29	$	1,305
Decrease in fair value	(60)		(356)		—		(860)
Fair value, end of period	$	29	$	445	$	29	$	445


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	207	$	1,863	$	69	$	3,036
Decrease in fair value	(138)		(828)		—		(2,001)
Fair value, end of period	$	69	$	1,035	$	69	$	1,035

Contingent Common Shares Liability (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Change in Fair Value of Earn Out Shares


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	1,350	$	13,350	$	1,800	$	28,800
Decrease in fair value	(503)		(950)		(953)		(16,400)
Fair value, end of period	$	847	$	12,400	$	847	$	12,400


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Fair value, beginning of period	$	776	$	7,676	$	1,035	$	16,560
Decrease in fair value	(289)		(546)		(548)		(9,430)
Fair value, end of period	$	487	$	7,130	$	487	$	7,130

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Key Fair Value Measurement Inputs


																								2L Notes
																								June 15, 2023
Risk-free interest rate																								3.90%
Volatility																								50.00%
Selected yield																								20.00%
Expected term (years)																								5.3
Share price																								$10.21

The key inputs into the Monte-Carlo option pricing model were as follows as of June 30, 2023 and December 31, 2022 for the respective Level 3 instruments:


	IPO Warrants		Earnout Shares and Vesting Shares
	June 30, 2023	December 31, 2022	June 30, 2023	December 31, 2022
Risk-free interest rate	4.45%	N/A	3.88%	3.88%
Volatility	91.30%	N/A	77.80%	74.60%
Dividend yield	—%	N/A	—%	—%
Expected term (years)	3.0	N/A	8.0	8.5
Share price	$9.15	N/A	$9.15	$15.50

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation


	Three Months Ended		Six Months Ended
	June 30, 2023			June 30, 2023
Fair value, beginning of period(1)	$	103,943		$	103,943
Decrease in fair value(1)	(7,010)			(7,010)
Fair value, end of period	$	96,933		$	96,933

(1) Represents changes in fair value from the Closing Date, which is when the 2L Notes were issued.

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)


	Cash Flow Hedges
Balance as of December 31, 2022	$	4,899
Unrealized loss recognized in other comprehensive income before reclassifications	(99)
Reclassification to interest expense, net	(3,357)
Balance as of March 31, 2023	1,443
Unrealized gain recognized in other comprehensive income before reclassifications	798
Reclassification to interest expense, net	(1,648)
Balance as of June 30, 2023	$	593

Balance as of December 31, 2021	$	28
Unrealized gain recognized in other comprehensive income before reclassifications	3,681
Reclassification to interest expense, net	71
Balance as of March 31, 2022	3,780
Unrealized gain recognized in other comprehensive income before reclassifications	2,642
Reclassification to interest expense, net	66
Balance as of June 30, 2022	$	6,488

Schedule of Fair Value of Derivative Assets and Liabilities

The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023			December 31, 2022
	Assets		Liabilities	Assets		Liabilities
Derivatives designated as cash flow hedging instruments:
Other current assets	$	511	—	$	5,028	—
Other non-current assets	$	83	—	—		—
Accrued expenses and other liabilities	—		—	—		—
Other non-current liabilities	—		—	—		$	73

Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Lease Cost, Supplemental Cash Flow, and Other Information Related to Leases

The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Lease cost
Operating lease cost	$	16,674	$	16,784	$	33,363	$	33,487
Variable lease cost (1)	5,468		5,331		10,830		10,536
Total lease cost (2)	$	22,142	$	22,115	$	44,193	$	44,023

(1) Includes short term lease costs, which are immaterial.

(2) Sublease income was immaterial.

Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands):


	Six Months Ended
	June 30, 2023		June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	31,110	$	32,893

Right-of-use assets obtained in exchange for new operating lease liabilities	$	6,831	$	6,900

Average lease terms and discount rates as of June 30, 2023 and December 31, 2022 were as follows:


	June 30, 2023	December 31, 2022
Weighted-average remaining lease term:
Operating leases	5.7 years	5.9 years
Weighted-average discount rate:
Operating leases	7.2%	6.9%

Schedule of Estimated Undiscounted Future Lease Payments


Year	Amount
2023 (remainder of year)	$	34,311
2024	66,189
2025	56,311
2026	49,463
2027	38,178

Thereafter	77,069
Total undiscounted future cash flows	321,521
Less: Imputed Interest	(60,303)
Present value of future cash flows	$	261,218
Presentation on Balance Sheet:
Current	$	52,194
Non-current	$	209,024

Loss per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Calculation of Both Basic and Diluted Loss Per Share

The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Basic and diluted loss per share:
Net loss	$	(21,749)	$	(135,723)	$	(46,959)	$	(273,946)
Less: Net income (loss) attributable to non-controlling interests	956		(177)		2,016		(650)
Less: Series A Senior Preferred redemption value adjustments(1)	44,696		—		44,696		—
Less: Series A Senior Preferred cumulative dividend	5,709		5,063		11,012		6,988
Loss available to common stockholders	$	(73,110)	$	(140,609)	$	(104,683)	$	(280,284)

Weighted average shares outstanding(2)	4,122		4,077		4,110		4,038

Basic and diluted loss per share	$	(17.74)	$	(34.49)	$	(25.47)	$	(69.41)

Schedule of Antidilutive Securities Excluded From Computation of Diluted Shares Outstanding


	Three Months Ended		Six Months Ended
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
2L Notes(1)	8,259	—	8,259	—
Series I Warrants	105	105	105	105
IPO Warrants	197	197	197	197
Restricted shares(2)	7	11	7	11
Stock options	103	129	103	129
RSUs	767	97	767	97
RSAs	2	6	2	6
Total	9,440	545	9,440	545

(1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes and conversion price of $12.50 per share.

(2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods.

Overview of the Company (Details) $ in Millions	6 Months Ended
Overview of the Company (Details) $ in Millions	Jun. 30, 2022 USD ($)	Jun. 30, 2023 clinic state
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of stores		911
Number of states in which entity operates \| state		24
Number of stores under management service agreements		18
CARES Act, MAAPP Funds
Unusual or Infrequent Item, or Both [Line Items]
Proceeds from sale of Home Health service line \| $	$ 10.7

Basis of Presentation and Recent Accounting Standards - Narrative (Details)			3 Months Ended		6 Months Ended
	Jun. 15, 2023 USD ($)	Jun. 14, 2023	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)	Feb. 24, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
Reverse stock split, conversion ratio		0.02
Net cash used in operating activities					$ (5,319,000)	$ (32,737,000)
Operating loss			$ (12,360,000)	$ (139,852,000)	(23,729,000)	(315,930,000)
Net loss			(21,749,000)	$ (135,723,000)	(46,959,000)	(273,946,000)
Principal payments on long-term debt					$ 0	$ 555,048,000
Number of operating segments \| segment					1
Number of reportable segments \| segment					1
Restricted cash included within cash and cash equivalents			$ 800,000		$ 800,000
2022 Credit Agreement
Finite-Lived Intangible Assets [Line Items]
Debt amount							$ 550,000,000
2022 Credit Agreement \| Secured Debt
Finite-Lived Intangible Assets [Line Items]
Debt amount							$ 500,000,000
Delayed Draw Right \| Convertible Debt
Finite-Lived Intangible Assets [Line Items]
Debt amount	$ 25,000,000
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt
Finite-Lived Intangible Assets [Line Items]
Principal payments on long-term debt	100,000,000
2L Notes \| Convertible Debt
Finite-Lived Intangible Assets [Line Items]
Proceeds from long-term debt	$ 100,000,000

Divestitures - Assets and Liabilities Classified as Held For Sale (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - 2022 Clinics Held for Sale $ in Thousands	Dec. 31, 2022 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net	$ 486
Prepaid expenses	23
Property and equipment, net	1,113
Operating lease right-of-use assets	1,929
Goodwill, net	3,192
Other non-current assets	12
Total assets held for sale	6,755
Accounts payable	22
Accrued expenses and other liabilities	201
Current portion of operating lease liabilities	685
Operating lease liabilities	1,706
Total liabilities held for sale	$ 2,614

Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Net revenue	$ 172,337	$ 163,293	$ 339,269	$ 317,115
Net patient revenue
Disaggregation of Revenue [Line Items]
Net revenue	$ 156,938	$ 148,506	$ 307,692	$ 287,431
Net operating revenue (as percent)	100.00%	100.00%	100.00%	100.00%
Net patient revenue \| Commercial
Disaggregation of Revenue [Line Items]
Net operating revenue (as percent)	58.50%	57.20%	58.30%	57.00%
Net patient revenue \| Government
Disaggregation of Revenue [Line Items]
Net operating revenue (as percent)	23.60%	24.50%	23.60%	24.10%
Net patient revenue \| Workers’ compensation
Disaggregation of Revenue [Line Items]
Net operating revenue (as percent)	11.60%	12.80%	11.80%	13.00%
Net patient revenue \| Other
Disaggregation of Revenue [Line Items]
Net operating revenue (as percent)	6.30%	5.50%	6.30%	5.90%
ATI Worksite Solutions
Disaggregation of Revenue [Line Items]
Net revenue	$ 9,384	$ 8,725	$ 18,585	$ 17,376
Management Service Agreements
Disaggregation of Revenue [Line Items]
Net revenue	3,770	3,265	7,495	6,420
Other revenue
Disaggregation of Revenue [Line Items]
Net revenue	$ 2,245	$ 2,797	$ 5,497	$ 5,888

Goodwill, Trade Name and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Goodwill [Roll Forward]
Goodwill, Beginning Balance	$ 286,458
Impairment charges	0	$ (204,200)
Reclassifications to held and used	3,192
Goodwill, Ending Balance	$ 289,650
Accumulated goodwill impairment loss			$ 1,045,700

Goodwill, Trade Name and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Total trade name and other intangible assets, net	$ 246,213	$ 246,582
ATI trade name
Indefinite-lived Intangible Assets [Line Items]
Gross intangible assets	245,000	245,000
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Gross intangible assets:	2,395	2,395
Accumulated amortization:	(1,473)	(1,126)
Other intangible assets
Finite-Lived Intangible Assets [Line Items]
Gross intangible assets:	640	640
Accumulated amortization:	$ (349)	$ (327)

Goodwill, Trade Name and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Indefinite-lived Intangible Assets [Line Items]
Goodwill impairment loss	$ 0	$ 204,200
ATI trade name
Indefinite-lived Intangible Assets [Line Items]
Impairment of indefinite lived intangible assets		$ 79,400

Property and Equipment - Carrying Amount (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 360,961	$ 352,896
Accumulated depreciation and amortization	(246,174)	(229,206)
Property and equipment, net	114,787	123,690
Disposal Group, Held-for-sale, Not Discontinued Operations \| 2022 Clinics Held for Sale
Property, Plant and Equipment [Line Items]
Disposal group, including discontinued operation, property, plant and equipment		1,113
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	38,957	38,102
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	17,804	17,215
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	194,650	191,182
Automobiles
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19	19
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	105,447	102,651
Construction-in-progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 4,084	$ 3,727

Property and Equipment - Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Line Items]
Total depreciation expense	$ 9,165	$ 10,073	$ 18,672	$ 19,994
Rent, clinic supplies, contract labor and other
Property, Plant and Equipment [Line Items]
Total depreciation expense	6,351	6,823	12,809	13,909
Selling, general and administrative expenses
Property, Plant and Equipment [Line Items]
Total depreciation expense	$ 2,814	$ 3,250	$ 5,863	$ 6,085

Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Salaries and related costs	$ 28,715	$ 28,949
Credit balances due to patients and payors	7,255	6,117
Accrued professional fees	6,162	5,551
Accrued interest	6,116	762
Accrued insurance premiums	4,716	0
Accrued occupancy costs	1,985	2,410
Accrued contract labor	1,921	4,483
Other payables and accrued expenses	4,857	5,400
Accrued expenses and other liabilities	$ 61,727	$ 53,672

Borrowings - Long-Term Debt (Details) - USD ($) $ in Thousands			6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 15, 2023	Jun. 14, 2023
Debt Instrument [Line Items]
Debt, gross	$ 534,492		$ 534,492
Paid in-kind interest amount			4,318	$ 0
Senior Secured Term Loan And 2022 Credit Agreement \| Secured Debt And Line Of Credit
Debt Instrument [Line Items]
Less: unamortized debt issuance costs	(8,021)	$ (11,137)	(8,021)
Less: unamortized original issue discount	(8,160)	(8,944)	(8,160)
Total debt, net	415,068	531,600	415,068
Less: current portion of long-term debt	0	0	0
Long-term debt, net	$ 415,068	$ 531,600	$ 415,068
Senior Secured Term Loan (due February 24, 2028)
Debt Instrument [Line Items]
State interest rate (in percent)	13.50%	12.10%	13.50%
Effective interest rate (in percent)	13.60%	13.10%	13.60%
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt
Debt Instrument [Line Items]
Debt, gross	$ 407,799	$ 503,481	$ 407,799		$ 407,800	$ 507,800
Paid in-kind interest amount	7,800	3,500
2022 Credit Agreement \| Secured Debt And Line Of Credit
Debt Instrument [Line Items]
Total debt, net	415,068		415,068
2022 Credit Agreement \| Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Debt, gross	23,450	48,200	23,450
Less: unamortized debt issuance costs	$ (500)	$ (600)	$ (500)
State interest rate (in percent)	10.10%	8.30%	10.10%

Borrowings - Schedule of Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Convertible Debt \| 2L Notes
Debt Instrument [Line Items]
Fair value	$ 96,933	$ 0

Borrowings - Narrative (Details)				3 Months Ended	6 Months Ended		12 Months Ended
Borrowings - Narrative (Details)	Jun. 30, 2023 USD ($)	Jun. 15, 2023 USD ($) draw $ / shares	Feb. 24, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jun. 14, 2023 USD ($)
Debt Instrument [Line Items]
Principal payments on long-term debt					$ 0	$ 555,048,000
Debt, gross	$ 534,492,000			$ 534,492,000	534,492,000
Loss on extinguishment of debt					444,000	2,809,000
Delayed draw right assets		$ 3,500,000
Warrants purchase common stock aggregate stated value			$ 165,000,000
Payments on revolving line of credit					24,750,000	0
Series B Preferred Stock, Voting Rights
Debt Instrument [Line Items]
Preferred stock, convertible, conversion price (in dollars per share) \| $ / shares		$ 12.87
2L Notes \| Convertible Debt
Debt Instrument [Line Items]
Proceeds from long-term debt		$ 100,000,000
Debt, gross	103,243,000			103,243,000	103,243,000
Original issuance discount (premium)		(700,000)
Delayed draw right assets		$ 2,800,000
State interest rate (in percent)		8.00%
Debt instrument, convertible, conversion price ( in usd per share) \| $ / shares		$ 12.50
Proceeds from issuance of additional long term debt		$ 3,200,000
Fair value	$ 96,933,000			$ 96,933,000	$ 96,933,000		$ 0
Effective interest rate (in percent)	8.00%			8.00%	8.00%
2L Notes \| Convertible Debt \| Knighthead Capital Management, LLC
Debt Instrument [Line Items]
Proceeds from long-term debt		50,800,000
Debt, gross	$ 52,400,000			$ 52,400,000	$ 52,400,000
2L Notes \| Convertible Debt \| Marathon Asset Management LP
Debt Instrument [Line Items]
Proceeds from long-term debt		40,400,000
Debt, gross	41,700,000			41,700,000	41,700,000
2L Notes \| Convertible Debt \| Onex Credit Partners, LLC
Debt Instrument [Line Items]
Proceeds from long-term debt		8,800,000
Debt, gross	$ 9,100,000			$ 9,100,000	$ 9,100,000
Senior Secured Term Loan (due February 24, 2028)
Debt Instrument [Line Items]
State interest rate (in percent)	13.50%			13.50%	13.50%		12.10%
Effective interest rate (in percent)	13.60%			13.60%	13.60%		13.10%
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt
Debt Instrument [Line Items]
Principal payments on long-term debt		100,000,000
Debt, gross	$ 407,799,000	407,800,000		$ 407,799,000	$ 407,799,000		$ 503,481,000	$ 507,800,000
Loss on extinguishment of debt				$ 400,000	$ 400,000
Derecognition of the proportionate amount of remaining unamortized deferred financing costs and unamortized original issue discount		4,300,000
Original issuance discount (premium)		$ 1,800,000
Interest rate period increase		1.00%
Interest in-kind interest to pay			2.00%
Premium rate	0.50%		0.50%	0.50%	0.50%
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt \| Knighthead Capital Management, LLC
Debt Instrument [Line Items]
Debt, gross		$ 300,000
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt \| Marathon Asset Management LP
Debt Instrument [Line Items]
Debt, gross		200,000
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt \| Onex Credit Partners, LLC
Debt Instrument [Line Items]
Debt, gross		16,300,000
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt \| HPS Investment Partners, LLC
Debt Instrument [Line Items]
Debt, gross		391,000,000
Senior Secured Term Loan (due February 24, 2028) \| Secured Debt \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Floor rate (as a percent)	1.00%
Basis spread on variable rate (as a percent)	7.25%
Delayed Draw Right \| Convertible Debt
Debt Instrument [Line Items]
Debt amount		$ 25,000,000
Debt instrument, time to draw		18 months
Number of draws \| draw		2
Liquidity period		6 months
Delayed Draw Right, Draw One \| Convertible Debt
Debt Instrument [Line Items]
Debt amount		$ 12,500,000
Delayed Draw Right, Draw Two \| Convertible Debt
Debt Instrument [Line Items]
Debt amount		12,500,000
2022 Credit Agreement
Debt Instrument [Line Items]
Original issuance discount (premium)			$ 10,000,000
Debt amount			550,000,000
Debt issuance costs, gross			12,500,000
Prepayment upon insurance proceeds in excess of		10,000,000
2022 Credit Agreement \| Through first quarter of 2023
Debt Instrument [Line Items]
Minimum liquidity amount		30,000,000
2022 Credit Agreement \| Through second quarter 2023
Debt Instrument [Line Items]
Minimum liquidity amount		25,000,000
2022 Credit Agreement \| Through fourth quarter of 2023
Debt Instrument [Line Items]
Minimum liquidity amount		15,000,000
2022 Credit Agreement \| Through the fourth quarter of 2024
Debt Instrument [Line Items]
Minimum liquidity amount		$ 10,000,000
2022 Credit Agreement \| Beginning in the second quarter of 2024
Debt Instrument [Line Items]
Maximum debt to EBITDA ratio allowed		11.00
2022 Credit Agreement \| First quarter of 2025
Debt Instrument [Line Items]
Maximum debt to EBITDA ratio allowed		7.00
2022 Credit Agreement \| Secured Debt
Debt Instrument [Line Items]
Debt amount			$ 500,000,000
2022 Credit Agreement \| Line of Credit
Debt Instrument [Line Items]
Line of credit facility, commitment fee percentage			0.50%
2022 Credit Agreement \| Line of Credit \| Revolving Credit Facility
Debt Instrument [Line Items]
Debt, gross	$ 23,450,000			$ 23,450,000	$ 23,450,000		$ 48,200,000
Interest rate period increase		1.00%
State interest rate (in percent)	10.10%			10.10%	10.10%		8.30%
Maximum borrowing capacity			$ 50,000,000
Proceeds from revolving line of credit							$ 48,200,000
Payments on revolving line of credit				$ 24,800,000
Borrowings outstanding	$ 23,500,000			23,500,000	$ 23,500,000
Balance of unamortized issuance costs	$ 500,000			500,000	500,000		600,000
2022 Credit Agreement \| Line of Credit \| Revolving Credit Facility \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	5.10%
2022 Credit Agreement \| Line of Credit \| Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity			10,000,000
Letters of credit outstanding	$ 6,500,000			$ 6,500,000	$ 6,500,000		$ 1,800,000
2016 first lien term loan
Debt Instrument [Line Items]
Principal payments on long-term debt			$ 555,000,000
Loss on extinguishment of debt						$ 2,800,000

Borrowings - Schedule of Stock Conversion (Details) - Series B Preferred Stock, Voting Rights - $ / shares	1 Months Ended
	Jun. 30, 2023	Jun. 15, 2023
Increase (Decrease) in Temporary Equity [Roll Forward]
Series B Preferred Stock, shares at Closing Date (in shares)	103,000
Increase (decrease) in shares during period (in shares)	0
Series B Preferred Stock, shares at end of period (in shares)	103,000
Common Stock voting rights, as converted basis (in shares)	8,022,000
Preferred stock, convertible, conversion price (in dollars per share)		$ 12.87

Borrowings - Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
2023 (remainder of year)	$ 0
2024	0
2025	0
2026	0
2027	23,450
2028	511,042
Total future maturities	534,492
Unamortized original issue discount and debt issuance costs	(16,181)
2L Notes \| Convertible Debt
Debt Instrument [Line Items]
Total future maturities	103,243
Senior Secured Term Loan And 2022 Credit Agreement \| Secured Debt And Line Of Credit
Debt Instrument [Line Items]
Total debt, net	$ 415,068	$ 531,600

Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	10,280	10,280
Non-cash share-based compensation	$ 2,800	$ 4,208	$ 3,919
2021 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for issuance ( in shares)	1,200	1,200
Common stock, capital shares reserved for future issuance (in shares)	200	200
2021 Plan \| RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted in period (in shares)		700
Granted (in usd per share)		$ 17.00
Non-vested awards, cost not yet recognized	$ 14,600	$ 14,600
Period of recognition		2 years 4 months 24 days

Mezzanine and Stockholders' Equity - Narrative (Details)			6 Months Ended		10 Months Ended
	Jun. 30, 2023 USD ($) vote $ / shares shares	Feb. 24, 2022 USD ($) segment $ / shares shares	Jun. 30, 2023 USD ($) vote $ / shares shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares shares	Jun. 15, 2023 director
Class of Stock [Line Items]
Preferred stock, shares issued (in shares) \| shares	200,000		200,000		200,000
Exercise price of warrant (in dollars per share) \| $ / shares	$ 575.00		$ 575.00
Temporary Equity, Preferred stock, par value (dollars per share) \| $ / shares	0.0001		0.0001		$ 0.0001
Temporary Equity, Preferred stock, stated value (dollars per share) \| $ / shares	$ 1,175.08		$ 1,175.08		$ 1,108.34
Warrants purchase common stock aggregate stated value		$ 165,000,000
Preferred stock, shares authorized (in shares) \| shares	1,000,000		1,000,000		1,000,000
Preferred stock, shares outstanding (in shares) \| shares	200,000		200,000		200,000
Proceeds from issuance of Series A Senior Preferred Stock			$ 0	$ 144,667,000
Proceeds from issuance of warrants		$ 20,333,000	0	20,333,000
Carrying value	$ 213,924,000		$ 213,924,000		$ 140,340,000
Common stock, shares authorized (in shares) \| shares	470,000,000		470,000,000		470,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001		$ 0.0001		$ 0.0001
Common stock, shares Issued (in shares) \| shares	4,200,000		4,200,000		4,100,000
Common stock, shares outstanding (in shares) \| shares	4,000,000		4,000,000		4,000,000
Tax withholdings related to net share settlement of restricted stock awards (in shares) \| shares			4,369
Treasury stock (in shares) \| shares	5,909		5,909		2,000.000
Treasury stock, common, value	$ 212,000		$ 212,000		$ 146,000
Series I Warrants
Class of Stock [Line Items]
Number of shares issuable by each warrant \| shares		100,000
Exercise price of warrant (in dollars per share) \| $ / shares		$ 150.00
Proceeds from issuance of warrants		$ 5,101,000
Issuance discount		$ 200,000
Series II Warrants
Class of Stock [Line Items]
Number of shares issuable by each warrant \| shares		100,000
Exercise price of warrant (in dollars per share) \| $ / shares		$ 0.50
Proceeds from issuance of warrants		$ 15,232,000
Issuance discount		$ 500,000
Series A Preferred
Class of Stock [Line Items]
Preferred stock, shares issued (in shares) \| shares	165,000	165,000	165,000		165,000
Temporary Equity, Preferred stock, par value (dollars per share) \| $ / shares		$ 0.0001
Temporary Equity, Preferred stock, stated value (dollars per share) \| $ / shares		$ 1,000
Preferred stock, shares authorized (in shares) \| shares		1,000,000
Preferred stock, shares outstanding (in shares) \| shares	165,000		165,000		165,000
Proceeds from issuance of Series A Senior Preferred Stock		$ 144,667,000
Issuance costs		2,880,000
Issuance discount		$ 1,447,000
Annual dividend rate		12.00%
Discount on dividends		1.00%
In-kind increasing percentage		1.00%
Dividend rate, occurrence, increase percent		2.00%
Dividends, preferred stock, paid-in-kind			$ 11,012,000	$ 7,000,000	$ 17,876,000
Accumulated paid in-kind dividends	$ 28,900,000
Aggregate stated value	193,888,000	$ 165,000,000	193,888,000		$ 182,876,000
Number of directors equity holders can elect \| segment		1
Change in voting rights, ADBITDA threshold		$ 100,000,000
Change in voting rights, change in ownership percent		50.10%
Carrying value	$ 213,900,000		$ 213,900,000
Class A Common Stock
Class of Stock [Line Items]
Common stock, shares authorized (in shares) \| shares	470,000,000		470,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001		$ 0.0001
Common stock voting rights \| vote	1		1
Common stock, shares Issued (in shares) \| shares	4,200,000		4,200,000
Common stock, shares outstanding (in shares) \| shares	4,000,000		4,000,000
Class A Common Stock \| Series I Warrants
Class of Stock [Line Items]
Exercise period		5 years
Class A Common Stock \| Series II Warrants
Class of Stock [Line Items]
Exercise period		5 years
Series A Senior Preferred Stock
Class of Stock [Line Items]
Number of additional directors electable by holders \| director						3
Number of total directors electable by holders \| director						4
Number of unaffiliated directors \| director						1

Mezzanine and Stockholders' Equity - Components of Proceeds Related to the Series A Senior Preferred Stock (Details) - USD ($) $ in Thousands		6 Months Ended
	Feb. 24, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Gross proceeds allocated to Series A Senior Preferred Stock		$ 0	$ 144,667
Series A Preferred
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Gross proceeds allocated to Series A Senior Preferred Stock	$ 144,667
Less: original issue discount	(1,447)
Less: issuance costs	(2,880)
Net proceeds received from issuance of Series A Senior Preferred Stock	$ 140,340

Mezzanine and Stockholders' Equity - Aggregate Stated Value Of Series A Senior Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended		10 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Feb. 24, 2022
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Preferred stock, shares issued (in shares)	200,000		200,000
Preferred stock, shares outstanding (in shares)	200,000		200,000
Stated value (dollars per share)	$ 1,175.08		$ 1,108.34
Series A Preferred
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Aggregate stated value, beginning	$ 182,876		$ 165,000
Paid in-kind dividends	11,012	$ 7,000	17,876
Aggregate stated value, ending	$ 193,888		$ 182,876
Preferred stock, shares issued (in shares)	165,000		165,000	165,000
Preferred stock, shares outstanding (in shares)	165,000		165,000
Stated value (dollars per share)				$ 1,000

Mezzanine and Stockholders' Equity Schedule Of Temporary Equity (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Increase (Decrease) in Temporary Equity [Roll Forward]
Carrying value, beginning of period	$ 140,340
Write off original issue discount	1,447
Write off issuance costs	2,880
Deemed dividend from discount on initial gross proceeds allocation	20,333
Paid in-kind dividends recognized to carrying value	28,888
Redemption value adjustment	20,036
Carrying value, end of period	$ 213,924

Mezzanine and Stockholders' Equity - Components of Proceeds Related to the Warrants (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Feb. 24, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Gross proceeds allocated to 2022 Warrants	$ 20,333		$ 0	$ 20,333
Less: original issue discount	(203)
Less: issuance costs	(405)
Net proceeds received from issuance of 2022 Warrants	19,725	$ 19,725
Series I Warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Gross proceeds allocated to 2022 Warrants	5,101
Less: original issue discount	(51)
Less: issuance costs	(102)
Net proceeds received from issuance of 2022 Warrants	4,948
Series II Warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Gross proceeds allocated to 2022 Warrants	15,232
Less: original issue discount	(152)
Less: issuance costs	(303)
Net proceeds received from issuance of 2022 Warrants	$ 14,777

Mezzanine and Stockholders' Equity - Reserved Shares (Details) shares in Thousands	Jun. 30, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	10,280
2L Notes
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	8,259
Shares available for grant under the 2021 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	242
Earnout Shares reserved
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	300
2022 Warrant shares reserved
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	230
IPO Warrant shares reserved
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	197
Vesting Shares reserved
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	173
Restricted shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	7
2021 Plan \| Shares available for grant under the 2021 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, capital shares reserved for future issuance (in shares)	872

IPO Warrant Liability - Narrative (Details) shares in Millions	Jun. 30, 2023 $ / shares shares
Class of Warrant or Right [Line Items]
Exercise price of warrant (in dollars per share) \| $ / shares	$ 575.00
Public Warrant
Class of Warrant or Right [Line Items]
Number of shares called by each warrant	0.1
Private Placement Warrant
Class of Warrant or Right [Line Items]
Number of shares called by each warrant	0.1

IPO Warrant Liability - Warrant Liability (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period			$ 98
Decrease in fair value	$ (198)	$ (1,184)	0	$ (2,861)
Fair value, end of period	98		98
Private Placement Warrant
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period	89	801	29	1,305
Decrease in fair value	(60)	(356)	0	(860)
Fair value, end of period	29	445	29	445
Public Warrant
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period	207	1,863	69	3,036
Decrease in fair value	(138)	(828)	0	(2,001)
Fair value, end of period	$ 69	$ 1,035	$ 69	$ 1,035

Contingent Common Shares Liability - Narrative (Details)	Jun. 16, 2021 tranche $ / shares shares
Earnout Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	300,000
Number of tranches \| tranche	3
First Issuance, Earnout Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
First Issuance, Earnout Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 600.00
Second Issuance, Earnout Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
Second Issuance, Earnout Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 700.00
Third Issuance, Earnout Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
Third Issuance, Earnout Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 800.00
Vesting Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	200,000
Number of tranches \| tranche	3
First Issuance, Vesting Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
First Issuance, Vesting Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 600.00
Second Issuance, Vesting Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
Second Issuance, Vesting Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 700.00
Third Issuance, Vesting Shares
Derivative [Line Items]
Contingent consideration liability (in shares)	100,000
Third Issuance, Vesting Shares \| Weighted Average
Derivative [Line Items]
Stock price trigger (in dollars per share) \| $ / shares	$ 800.00

Contingent Common Shares Liability - Derivatives and Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Schedule of Changes in Fair Value
Fair value, beginning of period			$ 2,835
Fair value, end of period	$ 1,334		1,334
Earnout Shares
Schedule of Changes in Fair Value
Fair value, beginning of period	1,350	$ 13,350	1,800	$ 28,800
Decrease in fair value	(503)	(950)	(953)	(16,400)
Fair value, end of period	847	12,400	847	12,400
Vesting Shares
Schedule of Changes in Fair Value
Fair value, beginning of period	776	7,676	1,035	16,560
Decrease in fair value	(289)	(546)	(548)	(9,430)
Fair value, end of period	$ 487	$ 7,130	$ 487	$ 7,130

Fair Value Measurements - Narrative (Details) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Senior Secured Term Loan (due February 24, 2028) \| Reported Value Measurement
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total debt, net	$ 391,600
Senior Secured Term Loan (due February 24, 2028) \| Estimate of Fair Value Measurement
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Total debt, net	$ 364,200
Fair Value, Inputs, Level 3 \| Dividend yield
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Earnout shares and vesting shares	0	0
Fair Value, Inputs, Level 3 \| Dividend yield \| IPO
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
IPO Warrants	0
Money Market Funds \| Fair Value, Inputs, Level 1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash and cash equivalent, fair value disclosure	$ 0	$ 30,000

Fair Value Measurements - Convertible Bond Valuation Model (Details) - 2L Notes - Convertible Debt	Jun. 30, 2023	Jun. 15, 2023 yr $ / shares
Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Instrument, Measurement Input		0.0390
Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Instrument, Measurement Input		0.5000
Expected term (years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Instrument, Measurement Input		5.3
Share price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Instrument, Measurement Input	9.15	10.21
Measurement Input, Selected Yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt Instrument, Measurement Input		0.2000

Fair Value Measurements - Measurement Inputs (Details) - Fair Value, Inputs, Level 3	Jun. 30, 2023 $ / shares	Dec. 31, 2022 $ / shares
Risk-free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Earnout Shares and Vesting Shares	0.0388	0.0388
Risk-free interest rate \| IPO
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
IPO Warrants	0.0445
Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Earnout Shares and Vesting Shares	0.7780	0.7460
Volatility \| IPO
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
IPO Warrants	0.9130
Dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Earnout Shares and Vesting Shares	0	0
Dividend yield \| IPO
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
IPO Warrants	0
Expected term (years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Earnout Shares and Vesting Shares, Term	8 years	8 years 6 months
Expected term (years) \| IPO
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
IPO Warrants, Term	3 years
Share price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Earnout Shares and Vesting Shares	9.15	15.50
Share price \| IPO
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
IPO Warrants	9.15

Fair Value Measurements - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Cash Flow Hedges
Beginning balance	$ 20,474	$ 48,447	$ 398,226	$ 511,507
Unrealized (loss) gain recognized in other comprehensive income before reclassifications	798	(99)	2,642	3,681
Reclassification to interest expense, net	(1,648)	(3,357)	66	71
Ending balance	(73,245)	20,474	267,019	398,226
Cash Flow Hedges
Cash Flow Hedges
Beginning balance	1,443	4,899	3,780	28
Ending balance	$ 593	$ 1,443	$ 6,488	$ 3,780

Fair Value Measurements - Schedule of Fair Value Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
2L Notes \| Convertible Debt
Derivatives designated as cash flow hedging instruments:
Fair value of contingent common shares liability	$ 96,933	$ 96,933	$ 103,943	$ 103,943
Decrease in fair value	7,010	7,010
Other current assets
Derivatives designated as cash flow hedging instruments:
Assets	511	511		5,028
Other non-current assets
Derivatives designated as cash flow hedging instruments:
Assets	83	83		0
Accrued expenses and other liabilities
Derivatives designated as cash flow hedging instruments:
Liabilities	0	0		0
Other non-current liabilities
Derivatives designated as cash flow hedging instruments:
Liabilities	$ 0	$ 0		$ 73

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effect income tax rate (in percent)	(0.40%)	8.80%	(0.30%)	11.70%
Income tax expense (benefit)	$ 89	$ (13,033)	$ 151	$ (36,314)

Leases - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Jun. 30, 2022
Lessee, Lease, Description [Line Items]
Operating lease assets additions	$ 8.8	$ 7.5
Operating lease liabilities, additions	$ 8.8	$ 7.5
Minimum
Lessee, Lease, Description [Line Items]
Initial operating lease term	7 years
Maximum
Lessee, Lease, Description [Line Items]
Initial operating lease term	10 years

Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases - Lease Cost (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating lease cost	$ 16,674	$ 16,784	$ 33,363	$ 33,487
Variable lease cost	5,468	5,331	10,830	10,536
Total lease cost	$ 22,142	$ 22,115	$ 44,193	$ 44,023

Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 31,110	$ 32,893
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 6,831	$ 6,900

Leases - Other Information (Details)	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term: Operating leases	5 years 8 months 12 days	5 years 10 months 24 days
Weighted-average discount rate: Operating leases	720.00%	690.00%

Leases - Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
2023 (remainder of year)	$ 34,311
2024	66,189
2025	56,311
2026	49,463
2027	38,178
Thereafter	77,069
Total undiscounted future cash flows	321,521
Less: Imputed Interest	(60,303)
Present value of future cash flows	261,218
Presentation on Balance Sheet:
Current	52,194	$ 47,676
Non-current	$ 209,024	$ 218,424

Commitments and Contingencies (Details) $ in Millions		6 Months Ended	10 Months Ended
Commitments and Contingencies (Details) $ in Millions	Aug. 16, 2021 plaintiff	Jun. 30, 2022 USD ($)	Sep. 22, 2022 plaintiff	Jun. 30, 2023 USD ($)	Nov. 21, 2022 segment
Loss Contingencies [Line Items]
Contractual obligation \| $				$ 13.8
Number of plaintiffs who filed consolidated amended complaint \| segment					4
Payor Dispute
Loss Contingencies [Line Items]
Loss on litigation settlement \| $		$ 3.0
ATI Shareholders vs ATI Individual Defendants
Loss Contingencies [Line Items]
Number of plaintiffs	2
Derivative Action
Loss Contingencies [Line Items]
Number of plaintiffs			5
Claims filed			4

Loss per Share - Loss per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Basic and diluted loss per share:
Net loss	$ (21,749)		$ (135,723)		$ (46,959)	$ (273,946)
Less: Net income (loss) attributable to non-controlling interests	956	$ 1,060	(177)	$ (473)	2,016	(650)
Less: Series A Senior Preferred Stock redemption value adjustments	44,696		0		44,696	0
Less: Series A Senior Preferred Stock cumulative dividend	5,709		5,063		11,012	6,988
Loss available to common stockholders, basic	(73,110)		(140,609)		(104,683)	(280,284)
Loss available to common stockholders, diluted	$ (73,110)		$ (140,609)		$ (104,683)	$ (280,284)
Weighted average shares outstanding, basic (in shares)	4,122		4,077		4,110	4,038
Weighted average shares outstanding, diluted (in shares)	4,122		4,077		4,110	4,038
Basic loss per share (in dollars per share)	$ (17.74)		$ (34.49)		$ (25.47)	$ (69.41)
Diluted loss per share (in dollars per share)	$ (17.74)		$ (34.49)		$ (25.47)	$ (69.41)

Loss per Share - Antidilutive Securities (Details) - $ / shares		3 Months Ended		6 Months Ended
	Jun. 16, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 15, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		9,440,000	545,000	9,440,000	545,000
2L Notes \| Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Debt instrument, convertible, conversion price ( in usd per share)						$ 12.50
Earnout Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Contingent consideration liability (in shares)	300,000
Vesting Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Contingent consideration liability (in shares)	200,000
2L Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		8,259,000	0	8,259,000	0
Series I Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		105,000	105,000	105,000	105,000
IPO Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		197,000	197,000	197,000	197,000
Restricted shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		2,000	6,000	2,000	6,000
Restricted shares \| Wilco Holdco, Inc.
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		7,000	11,000	7,000	11,000
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		103,000	129,000	103,000	129,000
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total antidilutive securities (in shares)		767,000	97,000	767,000	97,000