Financial Data and Key Metrics Changes - For the year ending 2025, adjusted EBITDA increased by $13.2 million, representing a 16.2% improvement over the prior year [4] - Net revenue increased by 16.3%, with physical therapy operations growing by 16% and injury prevention businesses by 18% [4] - Operating income improved by 18.4% [4] - Adjusted EBITDA for Q4 2025 rose to $24.8 million, up from $21.8 million in Q4 2024, marking a 16.1% increase for the full year [17][22] - GAAP EPS was impacted by the revaluation of non-controlling interest, which can make performance appear worse than it is [22] Business Line Data and Key Metrics Changes - Average visits per clinic per day reached 32.7 in Q4 2025, the highest in the company's history, with a full-year average of 32.2 [14][15] - Total patient visits increased by 11.2% year-over-year, with mature clinics seeing a 1.5% increase in visits [15][38] - Physical Therapy revenues for Q4 2025 were $173.8 million, an increase of $20 million or 13% from the previous year [18] - IIP income grew by 11.5% in Q4 and 20.2% for the full year, with the fourth quarter growth being entirely organic [16][20] Market Data and Key Metrics Changes - The payer mix for Q4 2025 was approximately 48% commercial, 33% Medicare, and 9.7% workers' compensation, with all categories increasing by double digits from Q4 2024 [48] - The net rate per patient visit increased from $104.71 in 2024 to $105.76 in 2025, with Q4 2025 ending at $106.49 [16][18] Company Strategy and Development Direction - The company is focusing on strategic hospital alliances, with expectations of significant contributions to revenue and EBITDA by 2027 [8][24] - Initiatives for 2026 include expanding cash-based programs, remote therapeutic monitoring, and further development in both PT and injury prevention segments [9][12] - The company aims to improve operational efficiency through technology, including AI documentation and semi-virtualization of front desk operations [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about closing the chapter on Medicare rate reductions and highlighted significant growth opportunities ahead [5][12] - The company anticipates adjusted EBITDA for 2026 to be in the range of $102 million to $106 million, including contributions from new hospital affiliations [24][25] - Management noted that despite inflationary pressures, they have maintained control over operating costs and expect continued improvement in margins [19][34] Other Important Information - The company incurred approximately $600,000 in implementation costs for a new enterprise-wide financial and human resources system, which is expected to go live on January 1, 2027 [21] - The balance sheet remains strong, with $131 million on a term loan and $35.6 million in cash at the end of the quarter [23] Q&A Session Summary Question: On strategic alliances and hospital partnerships - Management indicated that the $14 million EBITDA contribution assumes current volumes and that there are plans for additional facilities [29][30] Question: Concerns about wage inflation and volume outlook - Management noted a 1.5% increase in visits at mature clinics in Q4 and expressed confidence in controlling wage inflation [34][38] Question: Pricing expectations for non-Medicare services - Management confirmed a reasonable expectation of 1.5%-2% positive pricing for non-Medicare services, alongside a 1.75% increase from Medicare [45][46] Question: Comments on workers' compensation and payer mix - Management reported consistent payer mix and volume for workers' compensation, with all categories increasing by 10%-15% [48] Question: Gross margin in injury prevention - Management acknowledged that while some larger contracts may be margin dilutive initially, they expect profitability to improve as operations scale [50][51] Question: M&A preferences between segments - Management expressed a balanced approach to M&A, with a focus on both PT and injury prevention, while noting the organic growth potential in injury prevention [76][78]

Financial Data and Key Metrics Changes - For the year ending 2025, adjusted EBITDA increased by $13.2 million, representing a 16.2% improvement over the prior year [4] - Net revenue increased by 16.3%, with physical therapy business growing by 16% and injury prevention business by 18% [4] - Operating income improved by 18.4% [4] - Adjusted EBITDA for Q4 2025 was $24.8 million, up from $21.8 million in Q4 2024, marking a $3 million increase [16][21] - Full-year adjusted EBITDA increased by 16.1% from $81.8 million in 2024 to $95 million in 2025 [21] Business Line Data and Key Metrics Changes - Gross profit in physical therapy operations increased approximately 21%, while gross profit in injury prevention also rose over 20% [4] - Physical therapy revenues for Q4 2025 were $173.8 million, an increase of $20 million or 13% from the previous year [17] - IIP income grew by 11.5% in Q4 and 20.2% for the full year of 2025 [15] - The average visits per clinic per day reached 32.7 in Q4, the highest in the company's history [12] Market Data and Key Metrics Changes - Total patient visits increased by 11.2% year-over-year, with a 1.5% increase in visits at mature clinics [13] - The net rate per patient visit increased by 1% from $104.71 in 2024 to $105.76 in 2025, with Q4 ending at $106.49 [14] - The payer mix remained stable, with commercial at just above 48%, Medicare at about 33%, and workers' comp at 9.7% [55] Company Strategy and Development Direction - The company is focusing on strategic hospital alliances, which are expected to contribute at least $14 million in EBITDA by 2027 [7][25] - Initiatives for 2026 include continued rollout of ambient listening documentation support, cash-based program expansion, and remote therapeutic monitoring [8] - The company aims to enhance efficiency through virtualization at the front desk and AI documentation [48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about closing the chapter on Medicare rate reductions and highlighted significant opportunities ahead [5] - The company anticipates adjusted EBITDA for 2026 to be in the range of $102 million to $106 million, including a $2.5 million revenue increase from the Medicare rate hike [23] - Management noted that they do not foresee significant wage inflation pressures and expect to maintain control over operating costs [37] Other Important Information - The company incurred about $600,000 in implementation costs related to a new enterprise-wide financial and human resources system [20] - GAAP EPS was affected by the revaluation of non-controlling interest, which does not reflect the company's net income [21] Q&A Session Summary Question: What is driving the motivation from hospitals for strategic alliances? - The motivation includes broader patient reach and improved musculoskeletal product lines [28][31] Question: What is the outlook for physical therapy volumes and wage inflation? - The company expects to control wage inflation and noted a 1.5% increase in visits at mature clinics in Q4 [36][43] Question: What is the expected contribution from hospital alliances? - The contribution is based on current volumes, with additional facilities planned [29] Question: What is the expected pricing increase for non-Medicare services? - A 1.5%-2% increase is reasonable for non-Medicare pricing, alongside a 1.75% increase from Medicare [52] Question: What is the gross margin outlook for injury prevention? - Recent large contracts may be margin dilutive initially, but they are expected to provide profitability in the long run [58] Question: How should we think about same-store revenue growth for 2026? - The company expects a combined increase of around 3% in visits and rates for same-store revenues [67]