Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2022 was reported at $17 million with operating results per share of $0.58 [24] - Physical therapy revenues reached $117.5 million, an increase of $4.4 million or 3.9% from Q3 2021 [31] - Total salaries and related costs were 58.6% of revenues compared to 56% in the same quarter last year [18] - Interest expense increased from $268,000 in Q3 2021 to $2 million in Q3 2022 due to higher debt and interest rates [36] Business Line Data and Key Metrics Changes - Patient visits per clinic per day averaged 28.8% in Q3 2022, with a 2.8% increase from the prior year quarter [13][26] - Injury prevention revenue reached an all-time high of $20.2 million, a 92.1% increase compared to Q3 2021 [33] - Gross profit for the injury prevention business increased 64.6% year-over-year [17] Market Data and Key Metrics Changes - The payer mix for the quarter included 45.7% commercial insurance, 34.4% Medicare, 4.1% Medicaid, and 9.5% workers' compensation [81] - The average rate for physical therapy operations was $104.1, up from $102.93 in Q3 2021 [29] Company Strategy and Development Direction - The company is focused on reducing administrative burdens and ensuring an adequate supply of therapists to meet the needs of an aging population [5] - There is an ongoing effort to negotiate better payer contracts, with early signs of progress noted [49][50] - The company is actively pursuing acquisitions and has announced a recent acquisition of 14 clinics, indicating a strategy for growth [85] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to inflation and labor costs but expressed confidence in strong volumes and rates [25][44] - The company expects full-year results to be within previous guidance ranges despite elevated costs [44] - Management is optimistic about the potential for improved reimbursement rates and is actively working on legislative efforts to support this [76][79] Other Important Information - The company has a strong balance sheet with $150 million in term loans and a $175 million revolving credit facility, providing flexibility for growth opportunities [39][41] - Corporate office costs decreased to $11.9 million, down from $12.9 million in Q3 2021 [34] Q&A Session Summary Question: Is the recent rate growth a sign of progress in negotiating better rates with payers? - Management indicated that it is early progress and that there is still much work to be done on this front [49][50] Question: How are discussions with acquisition targets evolving in the current environment? - Management noted that conversations have not changed significantly, but the environment has shifted, and multiples may need to adjust [52][53] Question: What is the current situation regarding clinician turnover and recruitment? - Management reported improvements in recruitment efforts and noted that while it is not easy, the situation is feeling better than a few months ago [56][57] Question: Can you quantify the impact of cost control efforts and the outlook for contract labor costs? - Management acknowledged that contract labor will continue to be a factor and that cost control efforts are ongoing but will take time to fully implement [62][63] Question: What is the leverage ratio the company aims to maintain regarding acquisitions? - Management stated that they aim to stay below a leverage ratio of 3x, currently operating around 6x [67][68] Question: What is the current view on reimbursement rates for 2023? - Management expressed hope for rational reimbursement approaches and indicated ongoing efforts to advocate for better rates [74][76]

Financial Performance - For the second quarter of 2022, the company reported a net income of $11.2 million, a decrease of 9.0% from $12.4 million in the same period of 2021[183]. - Total revenue for the second quarter of 2022 was $140.7 million, representing a 10.8% increase compared to $126.9 million in the second quarter of 2021[192]. - Revenue from physical therapy operations increased by $4.9 million, or 4.3%, to $119.1 million for the second quarter of 2022 from $114.2 million for the same period in 2021[192]. - Revenue from the industrial injury prevention services business surged 93.7% to $19.4 million in the second quarter of 2022 compared to $10.0 million in the second quarter of 2021[195]. - The company's Operating Results for the second quarter of 2022 was $11.7 million, or $0.90 per diluted share, compared to $12.4 million, or $0.96 per diluted share, in the second quarter of 2021[184]. - Net operating revenue for the first six months of 2022 was $272.4 million, an increase of 13.8% from $239.3 million in the same period of 2021[213]. - Revenue from industrial injury prevention services surged 92.1% to $38.5 million in the first six months of 2022 compared to $20.0 million in 2021[216]. - Operating income for Q2 2022 was $20.1 million, representing 14.3% of total revenue, down from $22.2 million or 17.5% in Q2 2021[206]. - Operating income for the 2022 Six Months was $35.1 million, which is 12.9% of total revenue, down from $37.3 million or 15.6% in the 2021 Six Months[228]. Patient Metrics - The average net patient revenue per visit decreased to $103.18 in the second quarter of 2022 from $104.46 in the second quarter of 2021[193]. - Total patient visits increased by 5.7% to 1,145,554 in the second quarter of 2022 compared to 1,084,070 in the same period of 2021[193]. - Total patient visits increased by 8.7% to 2,209,073 in the first six months of 2022 from 2,031,858 in the same period of 2021[214]. - Average net patient revenue per visit was $103.09 for the first six months of 2022, down from $104.58 in the same period of 2021[214]. Operating Costs - Total operating cost for Q2 2022 was $109.8 million, representing 78.1% of total revenue, up from $92.6 million or 73.0% in Q2 2021[197]. - Total operating cost for the 2022 Six Months was $215.0 million, representing 78.9% of total revenue, compared to $179.1 million or 74.8% for the 2021 Six Months[219]. - Salaries and related costs for physical therapy operations increased to $66.7 million in Q2 2022, accounting for 56.1% of physical therapy operations revenue, compared to 53.1% in Q2 2021[198]. - Salaries and related costs were 56.9% of net revenue for the 2022 Six Months, up from 55.4% in the 2021 Six Months, with physical therapy operations salaries at $129.2 million[220]. - Corporate office costs decreased to $10.7 million in Q2 2022, representing 7.6% of total revenue, down from 9.5% in Q2 2021[205]. Profitability - Gross profit for Q2 2022 decreased to $30.8 million, a decline of 10.2% from $34.3 million in Q2 2021, with a gross profit percentage of 21.9% compared to 27.0%[204]. - Gross profit for the 2022 Six Months was $57.4 million, a decrease of $2.8 million or approximately 4.6% from $60.2 million in the 2021 Six Months, with a gross profit percentage of 21.1%[226]. Tax and Legal Matters - The provision for income tax was $4.2 million in Q2 2022, with an effective tax rate of 27.5%, slightly up from 26.9% in Q2 2021[209]. - Provision for income tax was $7.7 million for the 2022 Six Months, with an effective tax rate of 27.9%, compared to $7.5 million and 26.7% for the 2021 Six Months[231]. - The company is involved in various legal actions and regulatory audits that could potentially have a material adverse effect on its business and financial position[278]. - The company may face qui tam lawsuits under the federal False Claims Act, which can involve significant monetary damages and penalties[279]. Acquisitions and Growth Strategy - The company expects to continue adding personnel to support growth and potential acquisitions[182]. - The company completed acquisitions of four multi-clinic practices and two industrial injury services businesses during the 2021 year and the first half of 2022[175]. - The company plans to continue developing new clinics and making additional acquisitions, funded through a combination of cash and financing[254]. - The company acquired a 70% interest in a six-clinic physical therapy practice for approximately $11.5 million, with $11.2 million paid in cash and $0.3 million as a note payable[245]. - A 75% interest in a three-clinic physical therapy practice was acquired for about $3.7 million, with $3.5 million in cash and $0.2 million as a note payable[246]. - The company secured a $150 million term loan facility, amortizing at rates of 0.625% for the first two years, 1.250% for the third and fourth years, and 1.875% in the fifth year[247]. - An acquisition of a leading provider of industrial injury prevention services was made for approximately $63.2 million, generating annual revenue of about $27.0 million at a 20% margin[248]. - The company acquired a company specializing in return-to-work services for approximately $3.3 million, with an annual revenue exceeding $2.0 million[249]. - A 65% interest in an eight-clinic physical therapy practice was purchased for about $10.3 million, with an additional contingent payment of up to $0.8 million based on future operational objectives[250]. Financial Position and Credit Facilities - Cash and cash equivalents increased by $20.4 million from December 31, 2021, to June 30, 2022, totaling $48.6 million[235]. - The company entered into a Third Amended and Restated Credit Agreement providing for loans of $325 million, maturing on June 17, 2027[236]. - The interest rate for the Senior Credit Facilities is currently 4.665%[240]. - The provision for credit losses as a percentage of net revenue was 1.0% in the 2022 Second Quarter, down from 1.1% in the comparable period in 2021[224]. - As of June 30, 2022, the balance on outstanding notes payable was $5.7 million, with interest rates ranging from 3.25% to 5.5% per annum[257]. - The company has accrued $7.9 million related to credit balances due to patients and payors, expected to be paid in the next twelve months[259]. Risk Management and Internal Controls - The company entered into an interest rate swap agreement with a notional value of $150 million, effective June 30, 2022, maturing on June 30, 2027, receiving 1-month SOFR and paying a fixed interest rate of 2.815% plus an additional margin[273]. - The interest rate swap is designated as a cash flow hedge, with unrealized gains and losses recorded in accumulated other comprehensive income (loss), net of tax[274]. - The company's management evaluated the effectiveness of disclosure controls and procedures, concluding they are designed to ensure timely and accurate reporting as required by the SEC[276]. - There have been no changes in internal control over financial reporting that materially affected the company's financial reporting during the covered period[277].

Financial Data and Key Metrics Changes - The company reported operating results per share of $0.90, marking the second highest quarterly amount in its history [16] - Adjusted EBITDA for Q2 was $21.3 million, slightly down from $24 million in Q2 2021 [17] - Physical therapy revenues reached $119.1 million, an increase of $5 million or 4.3% from the previous year [20] - Gross profit was $30.8 million, down from $34.3 million in Q2 2021, with a gross profit margin of 21.9% [22] - Interest expense increased from $237,000 in Q2 2021 to $987,000 in Q2 2022 due to higher debt and interest rates [23] Business Line Data and Key Metrics Changes - Industrial injury prevention revenue reached an all-time high of $19.4 million, a 93.7% increase year-over-year [21] - Physical therapy patient volumes per day per clinic were 29.5, up from 27.9 in Q1 but slightly below the 30.0 in Q2 2021 [18] - Total visits increased by 5.7% from 1,084,070 in Q2 2021 to 1,145,554 in Q2 2022 [19] Market Data and Key Metrics Changes - The company experienced rising labor and ancillary costs due to the tight labor market and inflationary pressures [10] - The net rate for physical therapy operations was $103.18, down from $104.46 in Q2 2021, attributed to Medicare rate changes [19] Company Strategy and Development Direction - The company secured a new $325 million credit facility to enhance its borrowing capacity for long-term growth plans [9][25] - Investments were made in rate negotiations with payers and in the work comp area to improve recruitment and identify acquisition targets [11] - The company is focused on streamlining operations and improving efficiency, particularly in front desk operations [14][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising interest rates and inflation but expressed confidence in the company's resilience and ability to navigate these issues [5][10] - The company anticipates a return to normal seasonal patterns in patient volumes as schools reopen and vacations conclude [13][38] - Guidance for adjusted EBITDA for the full year is set between $73.5 million to $75.4 million, considering inflationary impacts [28] Other Important Information - The company is actively pursuing M&A opportunities, expecting to capitalize on the current market environment to acquire smaller providers facing financial pressures [61][69] - The company has a strong balance sheet, with cash on hand of $48.6 million and no amounts drawn on its revolver as of June 30 [25] Q&A Session Summary Question: Guidance and Volume Trends - Management discussed the impact of seasonal patterns on volumes, noting a decline in June but expecting a rebound as schools reopen [34][36] Question: Rate Negotiations - Management confirmed ongoing efforts to negotiate better rates with payers, with some recent successes expected to impact 2023 more than 2022 [41][42] Question: M&A Strategy - Management expressed confidence in pursuing M&A opportunities, highlighting the potential for consolidation in the industry due to economic pressures on smaller providers [60][69] Question: Labor and Wage Pressures - Management detailed the mix of labor availability and wage pressures, indicating that vacation-related absences are transitory while wage pressures are more persistent [51][52] Question: Economic Downturn Impact - Management reflected on past performance during economic downturns, indicating a strong position to navigate potential challenges ahead [72]

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements.) The financial statements detail the company's Q1 2022 financial position and performance, showing total assets of **$763.9 million**, net revenue of **$131.7 million**, and net income of **$8.8 million** [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$763.9 million** by March 31, 2022, driven by acquisitions, while total liabilities also rose to **$303.6 million** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $24,229 | $28,567 | | Goodwill | $443,692 | $434,679 | | Total assets | $763,863 | $749,426 | | Revolving line of credit | $118,000 | $114,000 | | Total liabilities | $303,639 | $296,983 | | Total USPH shareholders' equity | $300,971 | $295,606 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net revenue increased **17.2%** to **$131.7 million** in Q1 2022, with net income attributable to shareholders rising to **$8.8 million** Q1 2022 vs. Q1 2021 Income Statement (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net revenue | $131,704 | $112,368 | | Gross profit | $26,588 | $25,896 | | Operating income | $15,032 | $15,022 | | Net income attributable to USPH shareholders | $8,799 | $8,173 | | Basic and diluted EPS | $0.67 | $0.21 | | Dividends declared per common share | $0.41 | $0.35 | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$11.6 million** in Q1 2022, with **$15.9 million** used in investing activities, ending the quarter with **$24.2 million** cash Q1 2022 vs. Q1 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,649 | $17,674 | | Net cash used in investing activities | ($15,944) | ($13,203) | | Net cash used in financing activities | ($43) | ($19,452) | | Net decrease in cash and cash equivalents | ($4,338) | ($14,981) | | Cash and cash equivalents - end of period | $24,229 | $17,937 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, acquisitions, and financial instruments, highlighting **601 clinics**, a new **6-clinic acquisition**, and **Medicare rate changes** - The company operates through two reportable segments: physical therapy operations and industrial injury prevention services. As of March 31, 2022, the company operated **601 clinics** in 39 states and managed 38 third-party facilities[20](index=20&type=chunk)[23](index=23&type=chunk) - On March 31, 2022, the company acquired a **70% interest** in Madden and Gilbert Physical Therapy, a **six-clinic practice**, for approximately **$11.5 million**[73](index=73&type=chunk) - The company estimates the Medicare rate reduction for the full year of 2022 will be approximately **0.75%**, with a **15% reduction** for services by physical or occupational therapist assistants effective January 1, 2022[100](index=100&type=chunk) - Goodwill increased from **$434.7 million** at year-end 2021 to **$443.7 million** at March 31, 2022, primarily due to **$11.5 million** in goodwill from a new acquisition[128](index=128&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 revenue growth of **17.2%** to **$131.7 million**, driven by acquisitions, with gross profit margin declining to **20.2%** due to higher costs [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenue grew **17.2%** to **$131.7 million** in Q1 2022, driven by acquisitions, but operating costs increased, leading to a gross profit margin decline to **20.2%** Q1 2022 Revenue Breakdown (in thousands) | Revenue Source | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Physical therapy operations | $110,410 | $99,800 | | Industrial injury prevention services | $19,068 | $10,009 | | **Total Revenue** | **$131,704** | **$112,368** | - The average net patient revenue per visit decreased slightly to **$103.00** in Q1 2022 from **$104.72** in Q1 2021, while total patient visits increased **12.2%** to **1,063,519**[174](index=174&type=chunk) - Total operating costs rose to **79.8%** of total revenue in Q1 2022, compared to **77.0%** in Q1 2021, driven by higher salaries and acquisition-related costs[179](index=179&type=chunk) - The gross profit margin declined to **20.2%** in Q1 2022 from **23.0%** in Q1 2021, with physical therapy operations at **20.0%** and industrial injury prevention services at **21.8%**[186](index=186&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q1 2022 with **$24.2 million** cash and **$32.0 million** available under its **$150 million** credit facility, with cash primarily used for acquisitions - As of March 31, 2022, the company had **$24.2 million** in cash and **$32.0 million** available under its revolving credit facility[193](index=193&type=chunk)[198](index=198&type=chunk) - The credit facility was increased to **$150.0 million** in November 2021, with an accordion feature for an additional **$25.0 million**[195](index=195&type=chunk) - During Q1 2021, the company repaid **$14.1 million** in MAAPP Funds received under the CARES Act[207](index=207&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its **$118.0 million** variable-rate credit agreement, with a **1%** change impacting annual interest expense by **$1.18 million** - The company is exposed to interest rate risk from its variable-rate Amended Credit Agreement, which had **$118.0 million** outstanding as of March 31, 2022[220](index=220&type=chunk) - A hypothetical **1%** change in the interest rate would impact annual interest expense by **$1.18 million**[220](index=220&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective[222](index=222&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[223](index=223&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company settled a *qui tam* lawsuit in January 2022 for **$2.75 million** related to billing practices, admitting no liability to avoid litigation costs - In January 2022, the company settled a *qui tam* lawsuit concerning alleged 'upcoding' of billings for Medicare patients at a Florida partnership[227](index=227&type=chunk) - The settlement amount was **$2.75 million**, with the company admitting no liability; the expense was primarily recorded in 2021[228](index=228&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including employment agreements and CEO/CFO certifications - Exhibits filed include CEO and CFO certifications as required by the Sarbanes-Oxley Act of 2002[230](index=230&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report was duly authorized and signed on May 9, 2022, by Carey Hendrickson, Chief Financial Officer - The Form 10-Q was signed on May 9, 2022, by Carey Hendrickson, Chief Financial Officer[234](index=234&type=chunk)

Financial Data and Key Metrics Changes - The company reported operating results per share of $0.65 for Q1 2022, compared to $0.64 in Q1 2021 [17] - Adjusted EBITDA reached an all-time high of $17.9 million, a 14.2% increase from the previous year [17][22] - Total company revenue grew by 17.2% for the quarter, with Physical Therapy revenue increasing by 10.6% to $110.4 million [12][22] Business Line Data and Key Metrics Changes - Physical Therapy patient volumes per day per clinic reached 27.9, a record high for Q1, up 3% from 27.1 in the previous year [18] - Injury Prevention (IP) revenues increased by 90% to $19.1 million, with a 22.4% increase excluding the recent acquisition [11][22] - Same-store visit growth was reported at 5.9% for the quarter [9][21] Market Data and Key Metrics Changes - The net rate for Physical Therapy operations was $103, down from $104.72 in Q1 2021, reflecting Medicare rate cuts [20] - Total visits increased by almost 116,000 to 1,063,519, a 12.2% increase from the previous year [21] Company Strategy and Development Direction - The company is focused on growth through acquisitions and has opened 12 de novo facilities so far this year [14][30] - Management emphasized the importance of partnerships and the ability to withstand challenges in the healthcare environment [14][32] - The company is actively pursuing negotiations with private insurance providers to improve reimbursement rates [44] Management's Comments on Operating Environment and Future Outlook - Management noted a strong recovery in March following a slow start to the year due to the Omicron variant and winter weather [8] - The company expects to continue growing volumes and is optimistic about future performance despite ongoing challenges [38] - Management highlighted the competitive landscape, indicating potential market share gains from struggling competitors [91] Other Important Information - Operating costs were $105.1 million, representing 79.8% of net revenues, with salaries and related costs slightly up year-over-year [23][24] - The company ended the quarter with $118 million drawn on its revolving credit facility, maintaining a strong balance sheet [30] Q&A Session Summary Question: Volume growth expectations for Q2 and beyond - Management believes they can continue to grow volumes but avoids specific quarter-to-quarter guidance [38] Question: Impact of Medicare rate cuts - Management confirmed that further Medicare rate cuts are expected in Q2 and Q3 [40] Question: Negotiations with private insurance providers - Management is actively working on negotiations with private insurers for better rates, acknowledging the challenges [44] Question: Margin impacts from labor and rent costs - The increase in contract labor costs was attributed to early-year challenges, with expectations for margins to improve in subsequent quarters [47] Question: Growth in the Injury Prevention business - Management indicated that while growth was strong, it was slightly below internal expectations due to industry-specific challenges [76] Question: Competitive environment and market share - Management noted that they have likely gained market share from hospitals and smaller practices during the pandemic [91] Question: Future acquisition strategy - Management is optimistic about ongoing acquisition discussions, seeing both larger and smaller opportunities in the market [75]

Financial Performance - Net patient revenue for the year ended December 31, 2021, was $438.3 million, an increase from $373.3 million in 2020, reflecting a growth of approximately 17.4%[193] - Total revenue for the year ended December 31, 2021, was $495.0 million, up from $423.0 million in 2020, indicating a growth of approximately 16.9%[193] - The company’s physical therapy operations generated $441.3 million in revenue for the year ended December 31, 2021, compared to $375.4 million in 2020, reflecting a growth of approximately 17.5%[193] - Net income attributable to shareholders rose to $40.8 million in 2021, compared to $35.2 million in 2020, marking an increase of approximately 15.1%[209] - Operating Results, including Relief Funds, were $43.8 million in 2021, a 13.8% increase from $38.4 million in 2020[209] - Total revenue for 2021 increased by $72.1 million, or 17.0%, to $495.0 million compared to $423.0 million in 2020[212] - Net patient revenue from physical therapy operations rose by $65.0 million, or 17.4%, to $438.3 million in 2021 from $373.3 million in 2020[214] - Operating income for 2021 was $70.6 million, an increase of $18.2 million, or 34.8% compared to 2020, with an operating income margin of 14.3%[229] - Net income for the year ended December 31, 2021, was $57.9 million, an increase of 10.3% from $52.5 million in 2020[297] Dividends and Shareholder Returns - The company declared a dividend of $0.41 per share on February 22, 2022, with total cash payments of dividends in 2021 amounting to approximately $18.8 million[170] - The company declared dividends of $1.46 per common share in 2021, significantly higher than $0.32 per share in 2020[290] - Dividends paid to USPT shareholders in 2021 amounted to $18,765,000, compared to $4,110,000 in 2020, showing a significant increase[294] - The company has a share repurchase program authorized for up to $15 million, with no expiration date[258] - The company did not purchase any shares of its common stock during the years ended December 31, 2021, and 2020[259] Acquisitions and Growth Strategy - The company completed seven acquisitions in the last three years, including three industrial injury prevention services businesses, enhancing its market presence[177] - The company intends to pursue additional acquisition opportunities and develop new clinics to expand its operations[181] - The company acquired a 75% interest in a three-clinic physical therapy practice for approximately $3.7 million in 2021[240] - The company acquired a 70% interest in a leading provider of industrial injury prevention services for approximately $63.2 million, generating annual revenue of $27.0 million[241] - The company completed acquisitions of seven multi-clinic practices and three industrial injury prevention businesses over the last three years[301] Revenue Streams and Operations - Revenue from industrial injury prevention services increased to $43.9 million in 2021 from $39.2 million in 2020, representing a growth of approximately 6.9%[193] - Total patient visits increased to 4,219,576 in 2021, up from 3,533,371 in 2020, representing a growth of about 19.5%[208] - The number of clinics increased to 591 by the end of 2021, compared to 554 at the end of 2020, indicating a growth of 6.7%[208] - Other revenue from physical therapy operations was $2.9 million in 2021, up from $2.0 million in 2020, while management contract revenue increased to $9.9 million from $8.4 million[217] - The company’s physical therapy operations segment includes clinics providing orthopedic-related care, sports-related injuries treatment, and rehabilitation services[300] Financial Position and Liabilities - Total assets increased to $749,426,000 as of December 31, 2021, up from $594,361,000 in 2020, representing a growth of 26.1%[288] - Total liabilities increased to $296,983,000 in 2021, up from $184,391,000 in 2020, marking a rise of 61.0%[288] - The company has total future obligations of $316.98 million, including $114.0 million under the Amended Credit Agreement and $4.4 million in notes payable[253] - As of December 31, 2021, $114.0 million was outstanding under the Amended Credit Agreement, with $61.0 million of availability remaining[238] - The company has outstanding notes payable of $4.4 million, primarily related to business acquisitions, payable in equal annual installments over two years[254] Credit Losses and Allowances - The allowance for credit losses increased to $2.768 million in 2021 from $2.008 million in 2020, reflecting a rise of approximately 38%[195] - The provision for credit losses for net patient receivables was $5.3 million for 2021, compared to $4.6 million for 2020, maintaining a percentage of 1.1% of net patient revenues[224] - The provision for credit losses was $5,305,000 in 2021, compared to $4,623,000 in 2020, reflecting a rise of 14.8%[290] - The allowance for estimated contractual adjustments is based on historical collection experience, with differences between net revenues and cash collections generally reflecting a difference within approximately 1% to 1.5%[355] Cash Flow and Investments - Cash provided by operations was $76.4 million, with net proceeds from the Amended Credit Agreement amounting to $98.0 million[239] - Net cash provided by operating activities for 2021 was $76.4 million, compared to $100.0 million in 2020, reflecting a decrease of 23.6%[297] - The company invested $124.1 million in net cash for investing activities in 2021, significantly higher than $51.2 million in 2020[297] - The company’s financing activities generated a net cash inflow of $43.4 million in 2021, compared to a net cash outflow of $39.4 million in 2020[297] Regulatory and Market Conditions - The company expects a reduction of approximately 0.75% in Medicare payment rates for physical/occupational therapy services for the full year of 2022[342] - The company anticipates a 3% reduction in Medicare payment rates for the years 2023 and 2024, unless changes are made by regulatory or Congressional actions[343] - Medicare claims for outpatient therapy services furnished by therapist assistants will be paid at 85% of the payment amount otherwise applicable for the service starting January 1, 2022[349] Goodwill and Impairment - The company’s goodwill increased to $434,679,000 in 2021, up from $345,646,000 in 2020, indicating a growth of 25.7%[288] - The evaluation of goodwill in 2021 did not result in any impairment, with the company determining that goodwill and tradenames were not impaired as of December 31, 2021[326][327] Revenue Recognition - The company has implemented new revenue recognition standards effective January 1, 2018, which did not materially change reported revenues[334] - The company recognizes revenues when services are rendered, with net patient revenues reflecting amounts realizable from third-party payors and patients[339] - The company has agreements with third-party payors that establish payment amounts different from its established rates, impacting revenue recognition[335]

Financial Data and Key Metrics Changes - Operating income increased by $18.2 million or 34.8% compared to 2020, with reported revenue rising 17% to $495 million [5][12] - Physical therapy net revenue increased by 17.4%, while the net rate dropped from $105.66 in 2020 to $103.88 in 2021 due to reduced Medicare pricing [6][23] - Gross profit reached $117.2 million in 2021, a 19.1% increase, with a gross margin of 23.7% [11][26] - Adjusted EBITDA for the full year was $74.3 million, a 31.5% increase from 2020 [21] Business Line Data and Key Metrics Changes - Physical therapy revenues were $441.3 million for the full year, a 17.6% increase over 2020, and $114.2 million for Q4 2021, an 8.6% increase [24] - Injury prevention services revenue increased by 12% for the year and 38.5% in Q4 2021, reaching all-time highs of $43.9 million for the full year [24][26] Market Data and Key Metrics Changes - The company experienced strong visit volumes, with visits per clinic per day averaging 29.1 for the full year and peaking at 29.8 in Q4 2021 [22] - The net rate for physical therapy operations was $103.88 for the full year, reflecting a 3.5% Medicare rate cut [23] Company Strategy and Development Direction - The company plans to focus on managing through Medicare rate reductions in 2022, with guidance for operating results per share set between $3.25 and $3.35 [32][34] - Significant acquisition-related capital was deployed in 2021, with a focus on growth opportunities in the physical therapy and injury prevention sectors [13][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2022 prospects despite challenges from COVID-19 and inflation, noting a strong performance in 2021 [32][19] - The labor market remains challenging, but turnover rates for licensed clinicians have decreased compared to pre-pandemic levels [17][18] Other Important Information - The Board of Directors approved an increase in the first quarter dividend from $0.38 to $0.41 per share, reflecting confidence in the company's growth [14] - The company ended 2021 with a strong balance sheet, including $114 million in revolving credit facilities and a net debt of $94 million [30][31] Q&A Session Summary Question: Guidance on same-store sales volumes and margin expectations - Management indicated a 2% to 3% increase in volume for Mature Clinics, with net rates expected to decline slightly [40] Question: Impact of COVID-19 on first quarter performance - Management acknowledged that the first quarter would likely be lighter due to COVID and weather impacts, but noted improvements in COVID cases [39] Question: Turnover rates and staffing challenges - Management confirmed that turnover is higher for back-office staff, while clinical turnover rates have improved compared to pre-pandemic levels [44][55] Question: Industrial Injury Prevention segment and trade shows - Management expressed hope for the return of trade shows and noted ongoing conversations for new client acquisitions in the segment [61] Question: M&A activity and market conditions - Management reported increased inbound interest for M&A, indicating a busy environment for potential acquisitions [64]

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 September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____TO _____ COMMISSION FILE NUMBER 1-11151 U.S. PHYSICAL THERAPY, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (STATE OR OTHER JURISDICTI ...

U.S. Physical Therapy, Inc. (NYSE:USPH) Q3 2021 Earnings Conference Call November 4, 2021 10:30 AM ET Company Participants Chris Reading - President and Chief Executive Officer Carey Hendrickson - Chief Financial Officer Jon Bates - Controller Conference Call Participants Larry Solow - CJS Securities Mike Petusky - Barrington Research Operator Good day and thank you for standing by. Welcome to the U.S. Physical Therapy Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I’d now like to turn ...

CONTACT: U.S. Physical Therapy, Inc. Carey Hendrickson, Chief Financial Officer email: chendrickson@usph.com Chris Reading, Chief Executive Officer (713) 297-7000 Three Part Advisors Joe Noyons (817) 778-8424 U.S. Physical Therapy Reports Second Quarter 2021 Results Management Raises Earnings Guidance Company Increases Quarterly Dividend Houston, TX, August 5, 2021 – U.S. Physical Therapy, Inc. ("USPH" or the "Company") (NYSE: USPH), a national operator of outpatient physical therapy clinics and provider of ...