U.S. Physical Therapy’s Earnings Call: Growth Amid Challenges

U.s. Physical Therapy ((USPH)) has held its Q1 earnings call. Read on for the main highlights of the call.

U.S. Physical Therapy’s recent earnings call revealed a balanced sentiment, highlighting significant achievements alongside ongoing challenges. The company reported robust growth in key areas such as injury prevention and workers’ compensation revenue. Notably, the successful integration of the Metro acquisition and improvements in rates were achieved despite adverse conditions. However, the company also faced challenges, including weather-related impacts on mature clinic volumes and decreased margins due to acquisitions and Medicare rate cuts. While the positive highlights were substantial, they were somewhat offset by these pressing issues.

Record First Quarter Visits Per Clinic Per Day

The company achieved a milestone with the highest first quarter visits per clinic per day in its history, ending March with 33.2 visits per clinic per day. This achievement came despite facing weather challenges, showcasing the company’s resilience and operational efficiency.

Increase in Adjusted EBITDA

U.S. Physical Therapy reported a 16.5% increase in adjusted EBITDA, with a significant performance boost in March. This increase underscores the company’s ability to enhance profitability even amidst challenging conditions.

Strong Growth in Injury Prevention Segment

The Injury Prevention segment experienced a remarkable 29% year-over-year increase in revenue and profit. This growth was driven by organic expansion and new contracts, highlighting the segment’s strategic importance to the company’s overall performance.

Metro Acquisition Performance

The Metro acquisition, completed in November, demonstrated impressive performance with an increase in visits per clinic per day from 44 in January to 50 in March. This acquisition is proving to be a valuable addition to the company’s portfolio.

Workers’ Compensation Revenue Growth

Workers’ compensation revenue increased to 10.9% of total revenue, the highest since 2020. This growth significantly contributed to the improvement in the company’s revenue mix, reflecting a strategic focus on this area.

Successful Contract Negotiations

The company successfully negotiated increased net rates, achieving a notable $2.29 per visit increase over the previous year. This success came despite a 2.9% Medicare rate cut, demonstrating effective contract management.

Impact of Weather on Mature Clinics

Severe weather conditions in key markets like Nashville and Texas resulted in significant visit losses, particularly affecting mature clinics. This impact highlights the vulnerability of operations to environmental factors.

Decreased Physical Therapy Margins

Physical therapy margins decreased from 17.9% in the first quarter of 2024 to 16.3% in the first quarter of 2025. This decline was influenced by acquisitions with initially lower margins, indicating a need for strategic margin management.

Challenges with Medicare Rate Cuts

The company faced a cumulative $20 million profit impact due to ongoing Medicare rate cuts since 2021. Despite efforts to mitigate these effects, the cuts continue to pose a significant challenge to profitability.

Forward-Looking Guidance

During the earnings call, CEO Christopher Reading expressed optimism about continued growth and potential updates to guidance after further evaluation in the upcoming months. The company highlighted a record high for visits per clinic per day and a 16.5% increase in adjusted EBITDA. The Metro acquisition and industrial injury prevention business also showed promising results, contributing to the company’s positive outlook.

In summary, U.S. Physical Therapy’s earnings call reflected a mix of significant achievements and ongoing challenges. The company demonstrated strong growth in key areas, such as injury prevention and workers’ compensation revenue, while successfully integrating the Metro acquisition. However, challenges like weather-related impacts and Medicare rate cuts continue to affect performance. Overall, the company remains optimistic about future growth and potential guidance updates.