U.S. Physical Therapy, Inc. Q1 FY2026 earnings call

• Key objectives include semi-virtualization of front desk for savings in labor and efficiency, AI-assisted ambient listening documentation technology to improve productivity, reengagement with remote therapeutic monitoring after CMS rule changes, expansion of cash-based programs across top partnerships, and investment in partnerships with large hospitals like NYU and Gulf Coast region. - Q1 highlights: Revenue increase in physical therapy of 7.2% with 2.5% same-store increase driven by 6.9% patient volume bump; injury prevention revenue up 11.8% with margin increase; completed renegotiation of five-year credit facility; repurchased equity in two strong partnerships with total spend over $14 million.

Physical therapy: First quarter 2026 physical therapy revenue was $168 million, a 7.2% increase versus prior year first quarter. Mature clinic revenue increased 2.5% in Q1 2026. Patient volume increased 6.9%, with visits per clinic per day reaching 31.8. Lost over 31,000 visits to weather, which impacted revenue and margins. Net rate for the quarter rose to $106.49. Commercial rates increased 3.4% year-over-year, with a small Medicare pricing increase and a slight drop in Medicaid rate. Injury prevention: IIP revenue was $31 million in Q1 2026, an 11.8% increase versus the prior year. Excluding the Q1 2026 IIP acquisition, IIP revenue increased 8.2%. Same-store revenue increased 8.2% while margin increased to 20.4% compared to 18.6% in Q1 2025. Added a therapy partnership in the Pacific Northwest and opened seven de novo clinics in the quarter.

Reaffirmed full-year 2026 adjusted EBITDA guidance of $102 million to $106 million. Q1 results were in line with expectations, and the impact of 2026 objectives will ramp up throughout the year.

• Weather impacted visits, leading to revenue loss and margin drag. - Slight drop in Medicaid rate which needs to be monitored throughout the year.

Q: On Q1, the guidance build, weather impact on EBITDA headwind, quarter vs expectations, ramp-up of rest of year, hospital alliances and acquisitions' contribution.

A: Quarter came in almost where budgeted, weather impact about $3.3 million, acquisitions in January and February included in guidance, hospital ramp-up for 2027 with partial year impact, more activity to come not included in initial guidance.

Q: Rent, supplies, other expense lines running hot, what's driving growth?

A: Worse weather impact, a bit lighter revenue than expected, more contract labor in some partnerships, upfront investments in 2026 initiatives.

Q: Cadence and confidence in more hospital partnerships and M&A?

A: Cadence not predictable, but confident in more hospital side and active in acquisitions as hospital opportunities are chunky but take time due to dealing with big institutions.

Q: Hospital alliances potential over 3 - 5 years, volume growth and pricing?

A: Potential significant increase if current trends continue, pricing: blended rate less than expected, Medicare lagging but expecting full 1.75% build, Medicaid down a few percent not a big part.

Q: PT operating costs per visit, weather-lost visits by month and volumes exiting quarter into April?

A: Operating cost per visit expected to come down, no weather in Q2, turnover sub-18% now, visits rebounded nicely in April.

Q: Hospital pipeline, cash-based program initiative?

A: There are bigger opportunities than NYU, cash-based programs include laser, shockwave, dry needling with traction, partners successful in driving cash-based services.