U.S. Physical Therapy, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Patient Sentiment: Net Promoter Score is 93.5, with 95% active promoters and only 1% detractors, placing the company in excellent standing.
• Volumes: Second quarter saw 32.7 visits per clinic per day, an increase from 30.6 last year, driven by satisfied patients referring others.
• Acquisitions: Added home care business via Metro PT acquisition, with home care visits reported separately starting from the fourth quarter of 2024.
• Cost Management: Salaries and related costs increased slightly, but total operating cost per visit decreased. AI tools deployed for clinical documentation efficiency to speed up tedious tasks.
• Dividend and Buyback: Board authorized a share repurchase program up to $25 million through December 31, 2026, with acquisitions remaining the primary capital allocation priority.

Segment Performance

• Physical Therapy (PT): Second quarter set a record for volumes with 1,530,263 clinic visits and 28,493 home care visits. Revenue increased 17.3% to $168.3 million. Visits per clinic per day were 32.7, up from 30.6 in the prior year's second quarter. Gross profit margin was 21.1%. Over 50 net clinics added. Net rate per patient visit was $105.33.
• Injury Prevention (IIP): Revenues rose 22.6% and gross profit 25.8% year-over-year. Organic revenue grew 18.4% and organic gross profit 21.8%. Margin expanded to 22% from 21.4% in the prior year's second quarter.

Guidance

• Raised full-year 2025 adjusted EBITDA guidance from the prior range of $88 million to $93 million to $93 million to $97 million, with a $4 million increase at the top end.

Risks

• Medicare rate cuts have been a significant headwind, though proposed 2026 rates show potential positive change. Staffing tightness in some markets impacted same-store growth. Michigan payer policy change negatively affected net rate.

Question and Answer

• Q: Brian Tanquilut on same-store outlook, demand, capacity A: Jason Curtis noted demand is solid everywhere, some markets tight on staffing, and cash-based programs are generating additional revenue.
• Q: Joanna Gajuk on labor management, Medicare rates A: Systems and mentorship programs reduced turnover, with 2026 Medicare rates expected to be positive but requiring continued work with CMS.
• Q: Benjamin Rossi on IIP segment performance A: IIP is ahead of budget for the year, with second half having seasonal patterns but strong organic growth.
• Q: Lawrence Solow on Metro acquisition, pricing A: Metro is performing well, with net rate increasing post-acquisition; commercial rates were up in the quarter.
• Q: Jared Haase on IIP backlog, virtual PT A: IIP backlog progress is ongoing, with virtual PT discussions but cautious due to industry challenges.
• Q: Jiten Sanghai on capacity, de novo staffing A: Capacity isn't limited by physical footprint, with investments in recruiting and retention to address staffing needs.
• Q: Michael Petusky on IIP capital allocation, operational dive A: IIP is a top priority for external asset acquisitions, with operational dives with partnerships showing progress