US Physical Therapy (USPH) FY Conference Transcript

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.