U.S. Physical Therapy Reports Strong Earnings Amid Challenges

U.s. Physical Therapy ((USPH)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for U.S. Physical Therapy painted a picture of strong operational performance, with the company achieving record visits, increased revenue, and effective cost management. Despite challenges such as Medicare headwinds and staffing issues in certain markets, the company’s ability to increase guidance and maintain high patient satisfaction underscores a positive trajectory.

Record Visits Per Clinic

U.S. Physical Therapy achieved a significant milestone with an average of 32.7 visits per clinic per day, marking the highest in the company’s history. This is an increase from the previous year’s second-quarter record of 30.6 visits, showcasing the company’s growth in patient engagement and service delivery.

Net Promoter Score

The company reported an impressive Net Promoter Score of 93.5, with 95% of patients being active promoters. This high level of patient satisfaction is a testament to the quality of care and service provided by U.S. Physical Therapy, with only 1% of patients identified as detractors.

Strong Revenue Growth

Revenues in the physical therapy segment increased by 17.3%, while injury prevention revenues grew by 22.6% compared to the prior year quarter. This robust growth reflects the company’s successful strategies in expanding its market presence and enhancing service offerings.

Expansion and Acquisitions

The company added over 50 net clinics compared to the prior year period, surpassing 3 million visits year-to-date. This expansion is indicative of U.S. Physical Therapy’s commitment to broadening its reach and increasing accessibility to its services.

Guidance Increase

U.S. Physical Therapy raised its full-year 2025 adjusted EBITDA guidance from a range of $88 million to $93 million to a new range of $93 million to $97 million. This upward revision reflects the company’s confidence in its continued growth and operational efficiency.

Successful Cost Management

The company managed to decrease total operating costs per visit year-over-year, with salaries and related costs increasing only slightly by 0.7%. This effective cost management has contributed to improved margins and overall financial health.

Medicare Headwinds

The impact of Medicare cuts, approximately $25 million, significantly affected the company’s profitability. Despite this challenge, U.S. Physical Therapy has managed to maintain a positive outlook and continues to pursue growth opportunities.

Slight Decline in Net Rate

The net rate per patient visit saw a slight decline, influenced by a 2.9% Medicare rate reduction and a policy change by the largest payer in Michigan. This has been a minor setback in the company’s otherwise strong financial performance.

Challenges with Staffing

Certain markets faced staffing challenges, impacting same-store growth in mature facilities, which was over 1% but not within the normal range. Addressing these staffing issues remains a priority for the company to ensure sustained growth.

Forward-Looking Guidance

Looking ahead, U.S. Physical Therapy has increased its full-year guidance for adjusted EBITDA to between $93 million and $97 million. The company plans to leverage AI for clinical documentation and expand services in the industrial injury prevention segment as key drivers for future growth. Despite Medicare rate reductions affecting profits, the company has managed to slightly increase its net rate and improve margins, with the physical therapy gross profit margin rising to 21.1%.

In conclusion, the earnings call for U.S. Physical Therapy highlighted a strong operational performance with record visits and revenue growth, despite facing challenges such as Medicare cuts and staffing issues. The company’s positive trajectory is evident in its increased guidance and strategic initiatives aimed at future growth. Investors and stakeholders can remain optimistic about U.S. Physical Therapy’s ability to navigate challenges and capitalize on opportunities in the healthcare sector.