Business Segments and Operations - The company operates through two reportable business segments: physical therapy and industrial injury prevention services, with a focus on orthopedic-related disorders and sports injuries [158]. - As of March 31, 2025, the company owned or managed a total of 736 clinics, an increase from 679 clinics as of March 31, 2024, reflecting a net addition of 57 clinics [164]. - The company managed 37 clinics owned by third parties as of March 31, 2025, bringing the total owned/managed clinics to 773 [164]. - The company plans to continue acquiring outpatient physical therapy practices and expand its industrial injury prevention services [165]. - The company completed several acquisitions, including a 65% interest in 3 clinics in February 2025 and a 75% interest in 8 clinics in November 2024 [161]. - The company acquired an outpatient home care therapy practice through its 50% owned subsidiary, generating approximately $2.1 million in annual revenue [166]. Financial Performance - Net revenue for the 2025 First Quarter increased by $28.1 million, or 18.1%, to $183.8 million compared to $155.7 million in the 2024 First Quarter [176]. - Net patient revenue rose to $152.5 million, representing an increase of 16.4% from $131.1 million in the prior year [175]. - Operating income was $19.6 million for the 2025 First Quarter, an increase from $14.9 million in the 2024 First Quarter [211]. - Net income attributable to USPH shareholders was $9.9 million, a 23.0% increase from $8.0 million in the 2024 First Quarter [179]. - Earnings per share for the 2025 First Quarter was $0.80, compared to $0.46 in the 2024 First Quarter [181]. - Adjusted EBITDA for the 2025 First Quarter was $19.5 million, an increase of 16.5% from $16.8 million in the prior year [193]. Revenue and Cost Analysis - Operating costs increased by $25.4 million, or 20.0%, to $152.7 million, driven by the addition of 53 net clinics and an increase in patient visits [176]. - Gross profit for the 2025 First Quarter was $31.1 million, or 16.9% of net revenue, down from 18.2% in the previous year [178]. - The net rate per patient visit increased to $105.66, up $2.29 from $103.37 in the 2024 First Quarter, despite a 2.9% Medicare rate reduction [177]. - Industrial Injury Prevention (IIP) revenue increased by $6.1 million, or 28.8%, to $27.4 million for the 2025 First Quarter compared to $21.3 million for the 2024 First Quarter [208]. - Operating costs increased by $20.6 million, or 18.6%, to $130.9 million in the 2025 First Quarter, primarily due to the addition of 53 net new clinics [202]. - Gross profit from physical therapy operations was $25.5 million with a gross profit margin of 16.3% in the 2025 First Quarter, compared to $24.1 million and a margin of 17.9% in the 2024 First Quarter [207]. Cash Flow and Financing - Total cash and cash equivalents were $39.2 million as of March 31, 2025, down from $132.3 million at March 31, 2024 [220]. - Cash used by operating activities was $4.7 million for the 2025 First Quarter, compared to $4.4 million provided by operating activities for the 2024 First Quarter [226]. - Cash used in investing activities for Q1 2025 totaled $6.6 million, primarily for business interests and fixed asset purchases [227]. - Cash provided by financing activities for Q1 2025 was $9.1 million, mainly from $17.0 million in proceeds from the Revolving Facility [228]. - As of March 31, 2025, $135.9 million was outstanding on the Term Facility, with an interest rate of 4.9% for Q1 2025 [237]. Interest Rates and Debt - The company has a $150 million Term Facility with quarterly amortization and a maturity date of June 17, 2027 [234]. - The interest rate swap agreement has a notional value of $150 million, with a fixed rate of 2.815% [238]. - A 1% change in interest rates would yield an additional $0.1 million in interest expense on seller notes and $0.3 million on Credit Facilities due to the interest rate swap [252]. - The company was in compliance with all covenants in the Credit Agreement as of March 31, 2025 [235]. Employee and Operational Considerations - The company emphasizes the importance of hiring and retaining qualified employees, which is critical for its operations [160]. Dividends - The company declared a quarterly dividend of $0.45 per share, payable on June 13, 2025, to shareholders of record on May 23, 2025 [165]. Medicare Reimbursement - The Medicare reimbursement for therapy services decreased by approximately 2.9% for 2025 compared to the rates in effect for most of 2024, following a 1.8% reduction for the balance of 2024 [169]. - The company faced a 3.5% decrease in Medicare payments for therapy services from January 1 to March 8, 2024, which was later minimized to a 1.8% reduction [169].

Core Viewpoint - U.S. Physical Therapy (USPH) reported quarterly earnings of $0.48 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, but down from $0.51 per share a year ago, indicating a mixed performance in earnings [1] Financial Performance - The company achieved revenues of $183.79 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.60% and showing an increase from $155.68 million year-over-year [2] - Over the last four quarters, U.S. Physical Therapy has exceeded consensus EPS estimates two times and topped consensus revenue estimates four times [2] Stock Performance - U.S. Physical Therapy shares have declined approximately 19.3% since the beginning of the year, contrasting with the S&P 500's decline of 4.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $189.46 million, and for the current fiscal year, it is $2.63 on revenues of $752.89 million [7] - The estimate revisions trend for U.S. Physical Therapy is mixed, which may change following the recent earnings report [6] Industry Context - The Medical - Outpatient and Home Healthcare industry, to which U.S. Physical Therapy belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - The company reported a record high average visits per day for the first quarter at 31.4, with a strong finish in March at 33.2 visits per clinic per day [7][32] - Adjusted EBITDA increased by 16.5% despite headwinds, with a notable performance in March [16] - The net rate for the first quarter was $105.66, an increase of $2.29 per visit compared to the previous year, despite a 2.9% Medicare rate cut [33][34] - Physical therapy revenues reached $156.4 million, up 16.4% year-over-year, driven by higher net rates and acquisitions [36] - The physical therapy margin was 16.3%, down from 17.9% in the previous year, but exceeded 20% in March [38] Business Line Data and Key Metrics Changes - The injury prevention (IIP) segment saw revenue growth of 28.8% year-over-year, with gross profit up 13.1% [39] - The workers' compensation revenue mix increased from 9.3% in Q1 2023 to 10.9% in Q1 2025, the highest since 2020 [35] - The company added 14 centers in the quarter, contributing to growth in both organic and acquisition-driven revenue [23] Market Data and Key Metrics Changes - The company faced significant weather-related disruptions, losing approximately 26,000 visits in the first quarter, primarily in January and February [32][46] - The impact of weather was particularly pronounced in major markets like Nashville and Texas, affecting overall performance [46] Company Strategy and Development Direction - The company is focused on increasing reimbursement rates through contract negotiations and expanding its workers' compensation business [34] - There is an emphasis on acquisitions as a primary focus for capital allocation, with ongoing diligence on several potential deals [41] - The company is exploring home care capabilities, leveraging the Metro acquisition to enhance service offerings [107][110] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand recovery following weather disruptions, with expectations for strong performance moving forward [47][48] - The company is preparing for potential economic downturns, citing past experiences and a solid demand outlook [52][54] - Management is hopeful about updating guidance in the coming months, indicating that current performance exceeds internal projections [27][28] Other Important Information - The company has a favorable debt position with $129.4 million in term loans at a 4.7% interest rate and a $175 million revolving credit facility with only $28 million drawn [40][41] - Corporate office costs were 8.8% of net revenue, down from 9% in the previous year, indicating improved cost management [39] Q&A Session Summary Question: What was the guiding volume inside the negative number for mature clinic revenue? - Management indicated that weather had a significant impact, particularly in established markets, leading to a decline in visits [46][49] Question: How has the business performed during past economic downturns? - Management noted that during the 2008-2009 recession, the company continued to grow and acquire facilities despite some negative impacts on same-store volume [52][54] Question: What are the drivers behind the IIP outperformance? - Management highlighted the effectiveness of injury prevention programs and the organic growth from existing clients as key drivers [60][62] Question: Can you provide more color on the commercial side and workers' compensation rates? - Management confirmed that commercial rates increased by over 3%, with workers' compensation rates also showing strong growth [86] Question: What are the biggest learnings from the Metro leadership meetings? - Management emphasized the strong leadership and growth plans at Metro, which could be beneficial for other partnerships [106][108]

Financial Data and Key Metrics Changes - The company reported a 16.5% increase in adjusted EBITDA despite headwinds, with the first quarter typically being the lightest volume quarter of the year [16][30] - Average visits per clinic per day reached a record high of 31.4, with a strong finish in March at 33.2 visits per clinic per day [6][31] - The net rate for the first quarter was $105.66, an increase of $2.29 per visit compared to the previous year, despite a 2.9% Medicare rate cut [32][34] Business Line Data and Key Metrics Changes - Physical therapy revenues increased by 16.4% year-over-year to $156.4 million, driven by higher net rates and acquisitions [35] - The injury prevention (IIP) segment saw a revenue increase of 28.8% year-over-year, with gross profit up 13.1% [38] - The physical therapy margin was reported at 16.3%, down from 17.9% in the previous year, but above 20% in March [37] Market Data and Key Metrics Changes - Workers' compensation as a percentage of revenue increased from 10% in the first quarter of last year to 10.9% this year, the highest since 2020 [34] - The company lost approximately 26,000 visits due to weather impacts in the first quarter, with significant losses in January and February [31][48] Company Strategy and Development Direction - The company is focused on increasing reimbursement rates through contract negotiations and expanding its workers' compensation business [33] - There is an emphasis on acquisitions, with the Metro acquisition contributing significantly to revenue growth [35][21] - The company is exploring home care capabilities, which are seen as a growth opportunity due to patient demand and flexibility for clinicians [110][116] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand and the potential for recovery following weather-related disruptions [48] - The company is preparing for potential economic downturns, citing past experiences and a strong demand outlook [52][54] - Management is hopeful about updating guidance in the coming months as performance improves [27] Other Important Information - The company has a favorable debt position with $129.4 million in term loan debt at a rate of 4.7% and a $175 million revolving credit facility with only $28 million drawn [40] - The corporate office costs were 8.8% of net revenue, down from 9% in the previous year [38] Q&A Session Summary Question: What was the guiding volume inside the negative mature clinic revenue? - Management indicated that weather had a significant impact on mature clinic revenue, particularly in established markets like Nashville and Texas [47][50] Question: How has the business performed during past economic downturns? - Management noted that during the 2008-2009 recession, the company continued to grow and acquire facilities despite some negative impacts on same-store volume [52][54] Question: What are the drivers of IIP outperformance? - The IIP segment's growth is attributed to effective injury prevention strategies that reduce reported injuries and improve employee satisfaction [62][66] Question: What is the outlook for staffing during a potential recession? - Management stated that staffing availability could improve during a recession, but it is difficult to predict [56][57] Question: Can you provide more details on the commercial rate increases? - Commercial rates increased by over 3%, with workers' compensation rates also showing strong growth [88] Question: What are the expectations for same-store volume growth? - Management expects to see growth in same-store volume for the year, particularly after overcoming weather-related challenges [92] Question: What initiatives are in place to trim excess costs? - The company is actively reviewing its top partnerships to identify areas for improvement and cost control [101]

Core Viewpoint - U.S. Physical Therapy (USPH) reported quarterly earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.46 per share, and showing a decline from $0.51 per share a year ago, indicating a -10.87% earnings surprise [1] Financial Performance - The company posted revenues of $183.79 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.60%, compared to $155.68 million in the same quarter last year [2] - Over the last four quarters, U.S. Physical Therapy has exceeded consensus revenue estimates four times [2] Stock Performance - U.S. Physical Therapy shares have declined approximately 19.3% since the beginning of the year, while the S&P 500 has decreased by -4.7% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $189.46 million, and for the current fiscal year, it is $2.63 on revenues of $752.89 million [7] - The estimate revisions trend for U.S. Physical Therapy is mixed, which may change following the recent earnings report [6] Industry Context - The Medical - Outpatient and Home Healthcare industry is currently in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Adjusted EBITDA for Q1 2025 was $19.5 million, a 16.5% increase from $16.8 million in Q1 2024[19] - Net income attributable to USPH's shareholders for Q1 2025 was $9.9 million, compared to $8.0 million in Q1 2024, with earnings per share rising to $0.80 from $0.46[18] - Operating income for Q1 2025 was $19.6 million, a 31.6% increase from $14.9 million in Q1 2024[13] - The company reported a net income of $13.5 million for the first quarter of 2025, compared to $11.6 million in the same quarter of 2024, representing a 15.9% increase[33] - Comprehensive income attributable to USPH shareholders for the first quarter of 2025 was $8.9 million, down from $9.4 million in the same quarter of 2024[34] - Net income including non-controlling interest for the three months ended March 31, 2025, was $13,468 thousand, compared to $11,617 thousand for the same period in 2024, reflecting a year-over-year increase of 15.9%[38] - Adjusted EBITDA for the first quarter of 2025 was $19,539 thousand, up from $16,771 thousand in the first quarter of 2024, indicating a growth of 10.5%[45] - Basic and diluted earnings per share attributable to USPH shareholders increased to $0.80 for the first quarter of 2025, compared to $0.46 in the same quarter of 2024[33] - Earnings per share (basic and diluted) for the first quarter of 2025 were $0.80, compared to $0.46 in the first quarter of 2024, reflecting a significant increase of 73.9%[45] Revenue and Patient Metrics - Total revenue from physical therapy operations increased by $22.0 million, or 16.4%, to $156.4 million in Q1 2025[8] - Net patient revenue for the three months ended March 31, 2025, was $152.5 million, up 16.4% from $131.1 million for the same period in 2024[33] - Average daily patient visits per clinic reached an all-time high of 31.4 in Q1 2025, up from 29.5 in Q1 2024, with total patient visits increasing by 13.9%[2] - The number of clinic visits increased to 1,443,805 in Q1 2025, compared to 1,268,002 in Q1 2024, representing a growth of approximately 13.8%[51] - The average net rate per visit rose to $105.66 in Q1 2025, up from $103.37 in Q1 2024, indicating an increase of 2.2%[51] Clinic Operations - The company added 14 clinics and closed 7 clinics, bringing the total clinic count to 773 as of March 31, 2025[2] - The company operated 736 clinics as of March 31, 2025, an increase from 679 clinics a year earlier, reflecting a growth of 8.4%[52] - The company managed a total of 773 clinics (owned and managed) as of March 31, 2025, compared to 720 clinics a year prior, marking a 7.4% increase[53] - The company added 14 new clinics in Q1 2025, maintaining a steady growth trajectory[52] - The company closed or sold 7 clinics in Q1 2025, compared to 6 in Q1 2024, indicating ongoing adjustments in its clinic portfolio[52] Costs and Expenses - Corporate office costs increased to $16.2 million in Q1 2025 from $14.1 million in Q1 2024, but improved as a ratio to net revenue to 8.8%[12] - Total operating costs for the first quarter of 2025 were $152.7 million, an increase from $127.3 million in the same quarter of 2024[33] - Salaries and related costs per visit decreased slightly to $63.58 in Q1 2025 from $63.53 in Q1 2024[48] - Operating costs per visit also saw a minor reduction, from $89.33 in Q1 2024 to $89.28 in Q1 2025[48] - The company incurred clinic closure costs of $242 thousand in Q1 2025, associated with the closure of 7 clinics, compared to $126 thousand for 6 clinics in Q1 2024[45] Cash and Assets - Total cash and cash equivalents decreased to $39.2 million as of March 31, 2025, from $41.4 million as of December 31, 2024, and $132.3 million as of March 31, 2024[20] - Cash and cash equivalents decreased to $39,183 thousand at the end of March 2025, down from $41,362 thousand at the beginning of the period, a decline of 5.3%[38] - Total assets increased to $1,179,687 thousand as of March 31, 2025, up from $1,167,467 thousand at December 31, 2024, representing a growth of 1.9%[36] - The total current liabilities increased to $123,795 thousand as of March 31, 2025, from $116,283 thousand at December 31, 2024, marking a rise of 6.3%[36] - The company’s total liabilities reached $420,679 thousand as of March 31, 2025, an increase from $408,421 thousand at December 31, 2024, representing a growth of 3.2%[36] Dividends and Acquisitions - The company declared a quarterly dividend of $0.45 per share, payable on June 13, 2025[3] - The company declared a quarterly dividend of $0.45 per share, an increase from $0.44 per share in the previous year[24] - The company acquired a 65% equity interest in a three-clinic practice generating $4.3 million in annual revenue[21] - An outpatient home care physical and speech therapy practice was acquired, generating approximately $2.1 million in annual revenue[22] Future Outlook - The company aims to continue acquiring multi-clinic outpatient physical therapy practices and develop outpatient clinics as satellites in existing partnerships[23] - Future outlook includes continued expansion and management of clinics, with a focus on enhancing operational efficiency and profitability[48]

Core Insights - The U.S. outpatient physical and occupational therapy centers industry is valued at $53 billion and is characterized by high fragmentation, with the top 50 competitors accounting for only 29% of total revenues, indicating potential for consolidation [2][3] - Moderate growth is anticipated, driven by factors such as a stable reimbursement environment, outpatient efficiencies, an alternative to opioid therapy, and increasing demand due to an aging population [2][4] Industry Overview - The industry primarily consists of small to medium regional providers, with an average annual revenue of $871,000 [3] - There is a notable increase in mergers and acquisitions (M&A) activity from both strategic buyers and private equity investors [3] - Physical therapists operate in various settings, including hospitals, private practices, outpatient clinics, homes, schools, sports facilities, workplaces, and nursing homes [3] Market Characteristics - The report includes an analysis of industry characteristics, national receipts, growth forecasts from 2007 to 2030, and the impact of the COVID-19 pandemic on operations and revenues [4] - Key industry trends include diversification, technological advancements, consolidation potential, and increased patient engagement tools [8] Financial Metrics - The report provides extensive operating ratios, including metrics such as the number of facilities, receipts, annual payroll, and average receipts per facility from 2002 to 2022 [8] - A sample profit and loss statement for an average physical therapy center in 2024 is included, along with gross profit margins for U.S. Physical Therapy from 2007 to 2023 [8] Growth Forecasts - The analysis projects industry size and growth from 2007 to 2030, with specific forecasts for 2025 and 2030 [13] - Factors influencing demand include the aging population, obesity rates, and the supply of therapists [13] Competitor Analysis - In-depth profiles of key competitors such as U.S. Physical Therapy, ATI Physical Therapy, Select Medical, and others are provided, detailing their operations and financial performance [4][18]

Revenue and Growth - Medicare net patient revenues for 2024 were approximately $183.4 million, up from $170.7 million in 2023, representing a growth of about 7.9%[112] - In 2024, approximately 64.0% of the company's revenues were derived from private payors, while 36.0% came from Medicare and Medicaid[118] - Total net revenue for the year ended December 31, 2024, increased by $66.5 million, or 11.0%, to $671.3 million compared to $604.8 million for the year ended December 31, 2023[229] - Net patient revenue for 2024 was $560.6 million, representing 83.5% of total revenue, while other revenue was $110.8 million, or 16.5% of total revenue[228] - Operating income for 2024 was $63.2 million, a 21.4% increase from $52.1 million in 2023, with a net income of $45.6 million, up 22.5% from $37.2 million in the previous year[228] - The company added 103 clinics in 2024, bringing the total number of clinics owned or managed to 729 by the end of the year, compared to 671 at the end of 2023[210] - The average daily visits per clinic increased due to the addition of new clinics, contributing to the overall revenue growth[229] - Total revenues from physical therapy operations rose by $47.9 million, or 9.1%, to $574.4 million in 2024, driven by the addition of 58 net clinics and a 1.5% increase in volume at mature clinics[253] - Net patient revenue increased by 8.9% to $560.6 million in 2024, compared to $514.6 million in 2023[251] - The number of clinics at the end of 2024 was 729, an increase of 8.6% from 671 clinics in 2023[251] - The net rate per patient visit increased to $104.71 in 2024 from $102.80 in 2023, reflecting a 1.9% growth[251] Financial Performance - Basic and diluted earnings per share increased to $1.84 in 2024 from $1.28 in 2023, reflecting a growth of 43.8%[236] - Adjusted EBITDA for 2024 was $81.8 million, up $3.9 million or 5% from $77.9 million in 2023[245] - Operating Results for 2024 were $36.9 million, a slight increase of $0.5 million from $36.4 million in 2023, with Operating Results per share at $2.45 compared to $2.57 in 2023[247] - Operating costs for 2024 were $547.4 million, an increase of 13.1% from $483.3 million in 2023[249] - Salaries and related costs for clinics increased to $330.1 million in 2024, up $33.8 million or 11.4% from $296.3 million in 2023, driven by new clinic additions[256] - Gross profit from physical therapy operations was $103.9 million, or 18.1% of net revenue, for the 2024 Year, down from $105.1 million, or 20.0% of net revenue, in 2023[262] - Revenues from Industrial Injury Prevention Services increased by $18.7 million, or 23.8%, to $96.9 million for the 2024 Year from $78.3 million in 2023[263] Debt and Financing - The company has outstanding debt obligations that may limit its ability to implement business strategies and obtain future financing[132] - The company has a $325 million Senior Credit Facilities, consisting of a $175 million revolving facility and a $150 million term loan facility[295] - As of December 31, 2024, the outstanding balance on the Term Facility was $140.6 million, and $11.0 million was outstanding under the Revolving Facility, resulting in $164.0 million of credit availability[302] - The interest rate for the Senior Credit Facilities in 2024 was 4.7%, with an all-in interest rate of 5.5%[302] - The company entered into an interest rate swap agreement with a notional value of $150 million, which generated $3.4 million in interest savings for the 2024 year[303][306] - The company has outstanding notes payable related to acquisitions totaling $3.0 million, with varying payment schedules[307] - The interest rates on the notes payable range from 4.0% to 8.5% per annum[307] Regulatory and Compliance Risks - The company anticipates continued efforts from federal and state governments to contain Medicaid expenditures, which could adversely affect revenue and profitability[125] - Increased post-payment reviews of claims submitted to Medicare may lead to additional costs and potential repayments of overpaid amounts[126] - Compliance with extensive federal and state laws regarding patient privacy is critical, with potential penalties for violations[120] - The company may face significant fines and penalties if found in violation of laws related to fee-splitting and the corporate practice of medicine[139] - The company is subject to extensive regulations and compliance requirements, and failure to comply could result in significant penalties and operational changes[146] Operational Challenges - The company is subject to risks associated with public health crises, which could disrupt operations and impact patient appointments[124] - The company faces challenges in hiring and retaining qualified employees, which could lead to increased labor costs and reduced revenues[156] - The company incurred $4.4 million in costs associated with the closure of 45 underperforming clinics during 2024[230] - The company may incur closure costs and losses if it needs to reorganize or close clinics due to competitive or economic conditions[164] Shareholder and Market Impact - Issuance of shares for financing or stock incentive plans may dilute existing stockholders, impacting their ownership[169] - As of December 31, 2024, the company reserved approximately 424,722 shares for future equity grants, which may adversely affect the market price of its common stock[170] - The company declared dividends of $0.44 per share on four occasions during the year ended December 31, 2024, totaling an aggregate amount of $26,540,000[195] - The quarterly dividend was raised from $0.44 to $0.45 per share, with the first quarter dividend payable on April 11, 2025[214] - The company is restricted from paying dividends on its common stock in excess of $50,000,000 in any fiscal year under its Credit Agreement[195] Cybersecurity - The company has not encountered cybersecurity challenges that materially impaired its operations or financial standing, although it has experienced isolated incidents[179] - The Compliance Committee of the Board of Directors oversees cybersecurity risks, composed of members with diverse expertise in risk management, technology, healthcare operations, and finance[181] - The Chief Information Systems Officer (CISO) is responsible for assessing and managing cybersecurity risks, providing regular briefings to the Compliance Committee[182] - The company has engaged third-party cybersecurity consultants to enhance its understanding and management of cybersecurity risks[176]

Financial Data and Key Metrics Changes - In Q4 2024, adjusted EBITDA was $21.8 million, up from $19 million in the prior year, with an adjusted EBITDA margin of 15.2% for both Q4 2024 and Q4 2023 [24][26] - Total revenue for Q4 2024 grew over 32%, with full-year revenue increasing nearly 24% to approximately $97 million [18][29] - The net rate per visit in Q4 2024 was $104.73, a $1.05 increase from the previous year, despite a 1.8% Medicare rate reduction [26][27] Business Line Data and Key Metrics Changes - Physical therapy revenues in Q4 2024 were $153.8 million, a 14.2% increase from the previous year, driven by higher net rates and a 3.1% increase in visits at mature clinics [29][30] - The injury prevention (IIP) segment saw net revenues up 32.1% in Q4 2024, with IIP income up 15.6% year-over-year [31] - The physical therapy margin was 17.9% in Q4 2024, down from 19.5% in Q4 2023, while the IIP margin was 18.5% [30][31] Market Data and Key Metrics Changes - The average daily visits per clinic reached a record high of 31.7% in Q4 2024, benefiting from the closure of underperforming clinics [25] - Workers' compensation mix was at 10% in Q4 2024, slightly down from the previous quarter, but overall revenue from workers' comp increased 19.5% quarter-over-quarter [132] Company Strategy and Development Direction - The company completed seven acquisitions in 2024 and added approximately seventy clinics in Q4 alone, indicating a strong focus on growth through acquisitions [15][16] - The company is piloting AI-driven note systems and virtual staffing technology to improve clinician efficiency and reduce overhead costs [14][30] - The entry into the New York market through the Metro PT acquisition is expected to provide significant growth opportunities [120] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in hiring sufficient therapists due to a competitive environment but noted improvements in recruitment efforts [13][55] - The company expects continued growth in EBITDA for 2025, despite a 2.9% Medicare rate reduction impacting revenue [37] - Management expressed optimism about emerging from a challenging period in the industry stronger than before, with a focus on enhancing reimbursement rates and cash collections [19][28] Other Important Information - The company has a strong balance sheet with $140.6 million in debt and a $175 million revolving credit facility, with only $11 million drawn [35] - The board increased the quarterly dividend rate from $0.45 per share, effective with the first quarter dividend [36] Q&A Session Summary Question: Growth assumptions in guidance considering Medicare rate cut - Management indicated that the closure of underperforming clinics would positively impact 2025, and they expect to continue growing rates despite the Medicare reduction [47][48] Question: Dynamics of recruiting and retention - Management noted improvements in recruitment and retention, with more applicants than in previous years, but acknowledged the competitive nature of the market [53][55] Question: Volume outlook for 2025 - Management expects volume growth in mature clinics to be in the 2-3% range, with ongoing efforts to address staffing challenges [60][61] Question: Impact of technology initiatives on costs - Management anticipates that virtualization and AI-driven note systems will help reduce costs and improve efficiency, though specific impacts are still to be determined [144][146] Question: Experience with Metro and New York market opportunities - Management expressed optimism about growth opportunities in New York and the potential for expanding services, including home-based therapy [120][122] Question: Workers' compensation growth drivers - Management highlighted increased relationships and training as key factors driving growth in the workers' compensation segment, with a focus on expanding agreements [128][131]

Core Viewpoint - U.S. Physical Therapy (USPH) reported quarterly earnings of $0.65 per share, missing the Zacks Consensus Estimate of $0.74 per share, representing an earnings surprise of -12.16% [1][2] Financial Performance - The company posted revenues of $180.45 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 4.33%, compared to $154.8 million in the same quarter last year [2] - Over the last four quarters, U.S. Physical Therapy has surpassed consensus revenue estimates four times, but has only exceeded EPS estimates once [2] Stock Performance - U.S. Physical Therapy shares have declined approximately 0.7% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.66 on revenues of $171.75 million, and for the current fiscal year, it is $2.93 on revenues of $730.44 million [7] - The estimate revisions trend for U.S. Physical Therapy is mixed, and future changes in estimates will be closely monitored following the recent earnings report [6][7] Industry Context - The Medical - Outpatient and Home Healthcare industry, to which U.S. Physical Therapy belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]