Core Insights - U.S. Physical Therapy, Inc. reported strong financial results for the fourth quarter and full year ended December 31, 2025, with significant revenue and profit growth compared to the previous year [1][4]. Financial Highlights - Adjusted EBITDA for the year ended December 31, 2025, was $95.0 million, an increase of $13.2 million or 16.2% from $81.8 million in 2024 [3][31]. - Net income attributable to USPH shareholders for 2025 was $39.6 million, compared to $31.4 million in 2024, while earnings per share decreased to $1.42 from $1.84 due to changes in fair value of redeemable noncontrolling interests [3][31][21]. - Operating Results for 2025 was $40.0 million, up from $36.9 million in 2024, translating to $2.63 per share compared to $2.45 per share in the prior year [3][31]. Quarterly Performance - For the fourth quarter of 2025, Adjusted EBITDA was $24.8 million, a 13.5% increase from $21.8 million in the fourth quarter of 2024 [3][22]. - Net income for the fourth quarter of 2025 was $4.2 million, down from $9.2 million in the same quarter of 2024, primarily due to a net loss related to contingent earnout consideration [3][21]. - Net revenue from physical therapy operations in the fourth quarter increased by $20.0 million, or 13.0%, to $173.8 million from $153.8 million in the fourth quarter of 2024 [3][8]. Operational Metrics - Total patient visits for the fourth quarter of 2025 were 1,593,336, an 11.2% increase from 1,432,801 in the fourth quarter of 2024 [3][8]. - The average daily patient visits per clinic reached a record high of 32.7 in the fourth quarter of 2025, compared to 31.6 in the fourth quarter of 2024 [3][8]. - Industrial injury prevention services revenue for the fourth quarter was $28.9 million, an increase of 8.7% compared to $26.6 million in the fourth quarter of 2024 [3][12]. Strategic Developments - The company added 11 clinics and closed 10 in the fourth quarter of 2025, bringing the total to 780 clinics as of December 31, 2025 [3][36]. - Recent acquisitions include an eight-clinic practice and an industrial injury prevention business, expected to generate approximately $8.0 million and $7.0 million in annual revenue, respectively [3][37]. - The company announced strategic alliances with hospital systems to integrate outpatient physical therapy clinics into their clinical services networks, expected to enhance revenue and EBITDA contributions [3][39][41]. Dividend and Guidance - The Board of Directors raised the quarterly dividend rate from $0.45 to $0.46 per share, effective immediately [3][44]. - Management expects Adjusted EBITDA for 2026 to be in the range of $102.0 million to $106.0 million, including contributions from new strategic alliances and a Medicare rate increase [3][42].

Financial Data and Key Metrics Changes - The company achieved a record average of 32.7 visits per clinic per day in Q2 2025, up from 30.6 in Q2 2024, marking a 7% increase [10][21] - Adjusted EBITDA increased to $26.9 million, up $4.7 million from the same quarter last year, with an adjusted EBITDA margin expanding to 17.5% from 16.4% [24][34] - Physical therapy revenues reached $168.3 million, representing a 17.3% increase compared to the prior year [27][28] - Gross profit margin improved to 21.1%, up from 20.1% in Q2 2024 [22][28] Business Line Data and Key Metrics Changes - Injury prevention (IIP) revenues increased by 22.6%, with gross profit rising by 25.8% compared to the prior year [13][29] - The company added over 50 net clinics compared to the prior year period, contributing to the growth in physical therapy visits [14] - Home care visits totaled 28,493 in Q2 2025, marking the first time these visits were reported separately [25] Market Data and Key Metrics Changes - Workers' compensation represented 10.4% of net patient revenues, with visits increasing by 8.4% year over year [27] - The net rate per patient visit was $105.33, slightly up from $105.05 in Q2 2024, despite a 2.9% Medicare rate reduction [26] Company Strategy and Development Direction - The company plans to focus on expanding its injury prevention business and has identified several large contracts in the auto industry [14][18] - The company has initiated a staged rollout of cash-based programs, generating approximately $900,000 in additional revenue [37] - A share repurchase program was authorized, allowing for the repurchase of up to $25 million of shares through December 31, 2026, while acquisitions remain the primary capital allocation priority [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for services, noting solid demand across most markets despite some staffing challenges [41] - The company raised its full-year 2025 adjusted EBITDA guidance to a range of $93 million to $97 million, reflecting strong performance in the first half of the year [34] - Management acknowledged the impact of Medicare cuts, estimating a $25 million hit to profit lines, but remains positive about future reimbursement rate increases [15][72] Other Important Information - The company is implementing a new enterprise-wide financial and human resources system, with associated costs expected to continue through 2026 [30] - The balance sheet remains strong, with $135 million in term loans and a $175 million revolving credit facility [32] Q&A Session Summary Question: How would you characterize demand for your services? - Demand is solid across most markets, but there are challenges in managing costs while meeting demand [41] Question: How do you view capital deployment for de novo builds? - This year is expected to be one of the strongest for de novo builds, with adjustments made to recruiting efforts [43] Question: Can you provide an update on labor management strategies? - A 25% increase in student clinical rotations has been observed, contributing to lower turnover rates [59][61] Question: What is the expected impact of Medicare rate increases? - The company anticipates a 1% to 1.75% increase in Medicare rates, translating to a potential $2 million to $3 million positive impact on revenue [71][72] Question: How is the IIP segment performing? - The IIP segment is performing ahead of expectations, with strong organic growth and continued capital deployment planned [82] Question: What are the dynamics of the home PT business? - The home PT business is new and will be reported separately, with initial results showing promise [25][52]

Summary of US Physical Therapy Conference Call Company Overview - **Company Name**: US Physical Therapy (USPH) - **Stock Exchange**: NYSE - **Number of Locations**: Nearly 800 clinics across 44 states in the US - **Business Segments**: 85% revenue from physical therapy, 15% from industrial injury prevention [2][7] Core Business Insights - **Market Size**: The rehabilitation market is valued at over $40 billion, with favorable demographic trends due to an aging population [7][8] - **Growth Strategy**: The company focuses on both organic growth and acquisitions, with a proven business model that includes de novo clinic openings and partnerships with experienced therapists [10][29] - **Financial Performance**: - TTM revenue of approximately $700 million - Adjusted EBITDA of $85 million - Year-over-year revenue growth of 18% [11][12] Industry Dynamics - **Market Fragmentation**: No single company owns more than 10% of the market, indicating opportunities for consolidation [9] - **Demographic Trends**: An aging and increasingly obese population is expected to drive demand for physical therapy services [8][70] Financial Metrics - **Revenue Breakdown**: - Commercial insurance: 47-48% - Medicare: 33% - Workers' compensation: 10.9% (increased from 9.5% in 2023) [19][28] - **Pricing Strategy**: - Average visit rates: - Commercial: ~$103-104 - Medicare: ~$93-94 - Workers' comp: >$150 [26] - **Dividend**: Annual dividend of $1.80, yielding about 2% [57] Regulatory Environment - **Medicare Rates**: Anticipated increases in Medicare rates starting in 2026, following years of reductions [20][24] Acquisition Strategy - **Acquisition History**: Over 50 acquisitions since 2005, with an average acquisition multiple of 7.5 to 8 times EBITDA [29][30] - **Recent Acquisitions**: Notable acquisition of Metro Physical Therapy, adding over 50 clinics [16][29] Operational Efficiency - **Partnership Model**: The company retains 70% ownership in acquired clinics, allowing founders to maintain a vested interest [32][34] - **Staff Retention**: The company has a lower attrition rate (17%) compared to the industry average (30%) [64][66] Growth Projections - **Organic Growth**: Expected growth of 4-6% annually, with additional growth from acquisitions [72] - **Industrial Injury Prevention**: This segment has grown significantly, projected to reach $120-$125 million in revenue with a 15% organic growth rate [51][52] Challenges and Opportunities - **Staffing Needs**: The company is enhancing recruitment efforts to meet increasing demand, particularly from an aging population [64][70] - **Technological Integration**: Exploring remote monitoring and AI solutions to complement in-person therapy [73][74] Conclusion US Physical Therapy is positioned for continued growth through strategic acquisitions, a strong partnership model, and favorable demographic trends. The company is actively addressing staffing challenges and leveraging technology to enhance service delivery while maintaining a focus on financial performance and shareholder returns.