U.S. Physical Therapy (USPH) Delivers Strong FY 2025 Results, Announces Major Hospital Partnerships and Outlines Growth Initiatives for 2026

Key Highlights

• Adjusted EBITDA for 2025: Increased by \$13.2 million, up 16.2% year-over-year to \$95 million.
• Net Revenue Growth: Up 16.3%, with physical therapy revenues up 16% and injury prevention revenues up 18%.
• Gross Profit: Physical therapy operations gross profit increased 21%; injury prevention business gross profit up over 20%.
• Operating Income: Improved 18.4% year-over-year.
• Record Patient Visits: Seven consecutive quarters of record visits per clinic per day. Q4 average visits per clinic per day hit 32.7, highest in company history.
• Cost Discipline: Salaries and related costs per visit decreased 1.1% in Q4; total operating costs per visit decreased 0.6% despite inflation.
• Acquisitions: Multiple acquisitions, including a major PT team in the Pacific Northwest, a home care addition, and a talented injury prevention team in New York City.
• Hospital Partnerships: Two long-term hospital arrangements announced, expected to contribute at least \$14 million in EBITDA in 2027 (USPH share: \$7.3 million).
• Balance Sheet Strength: \$131 million term loan with fixed rate, \$175 million revolving credit facility, \$35.6 million in cash at year-end.

Results Overview

USPH delivered robust financial results in 2025 despite Medicare rate reductions. Net rate per patient visit rose 1% for the year and 1.7% in Q4, ending at \$106.49. Operating income per share was \$0.67 in Q4, up from \$0.51. Total patient visits increased 11.2%, with mature clinics showing renewed momentum (2.6% growth in Q4). Home care visits surged from 22,943 in Q1 to almost 33,000 in Q4.

Physical therapy revenues for Q4 were \$173.8 million (up 13% YoY), and operating costs were managed effectively. Injury prevention income grew by 11.5% organically in Q4 and 20.2% for the year, reflecting strong performance and no acquisitions between comparable quarters.

Strategic Initiatives and Growth Outlook for 2026

• Tech-Enabled Efficiency: Continued rollout of ambient listening documentation support and semi-virtualization of front desk/intake operations.
• Cash-Based Program Expansion: Building on 2025 traction, further expansion planned.
• Remote Therapeutic Monitoring: Resuming focus following impactful CMS changes for 2026.
• Hospital Alliances: Ongoing pursuit; two major wins in New York expected to phase in mid-2026, covering 70 clinics.
• De Novo and Acquisition Growth: Active pipeline in PT and injury prevention; additional facilities planned in hospital partnerships.
• Enterprise-Wide System Implementation: New financial and HR system underway, go-live targeted for Jan 2027, with \$600,000 implementation costs added back to adjusted EBITDA.

Guidance for 2026

• Adjusted EBITDA: Projected \$102 million to \$106 million.
• Medicare Rate Increase: Expected to add \$2.5 million in incremental revenue.
• Hospital Affiliation Contribution: Modest impact in 2026, ramping up to full \$14 million EBITDA in 2027 (\$7.3 million USPH share).
• Same Store Revenue Growth: Expected 2.5% to 3% increase, driven by combined volume and rate improvements.
• Acquisition Impact: Guidance includes two acquisitions (one PT group and one injury prevention group), with higher margins anticipated in the IIP segment.

Price Sensitive and Shareholder-Relevant Issues

• Hospital Partnerships: Long-term alliances with major hospitals are expected to significantly boost EBITDA and margins, especially by 2027. These arrangements are exclusive and provide access to higher hospital outpatient rates, meaningfully better than current blended rates.
• Margin Expansion: Efficiency initiatives and hospital partnerships are set to drive margin improvement, reversing the recent trend of margin compression due to Medicare headwinds and labor inflation.
• Acquisition Pipeline: Ongoing M&A activity in both segments, with injury prevention showing better organic growth, though fewer acquisition targets are available compared to PT. PT acquisitions, especially in large markets like New York, can be immediately accretive.
• Technological Investments: AI documentation and virtualization initiatives are expected to improve efficiency and profitability at the clinic level.
• Sector Tailwinds: No significant wage pressure anticipated for 2026. Workers’ comp, commercial, and Medicare payer mix remains stable, with all categories showing double-digit visit growth.
• Injury Prevention Segment: Margin volatility in Q4 due to staffing ahead of large contract launches and seasonal effects, but overall positive outlook as new service offerings (including specialized testing for infrastructure projects) expand the business and margin potential.
• Balance Sheet Strength: Ample liquidity and fixed-rate debt provide flexibility for further growth and acquisitions.

Management Commentary and Outlook

CEO Chris Reading and CFO Carey Hendrickson emphasized USPH’s resilience and ability to grow amid headwinds in recent years. Hospital partnerships, technology investments, and new service capabilities are expected to accelerate growth and margin expansion, particularly in 2027. The company remains committed to delivering world-class care and maintaining its industry leadership in musculoskeletal treatment.

Potential Share Price Drivers

• Major hospital partnerships (exclusive, high-margin, long-term) could significantly lift profitability and market share.
• Record visit volumes and cost discipline signal operational strength even in challenging environments.
• Technology-enabled efficiency and expanded service offerings point to sustained margin improvement.
• Acquisition activity and organic growth in both PT and injury prevention segments may further enhance earnings.
• Guidance for 2026 suggests continued strong growth, with further upside from new initiatives and partnerships.

Investor Takeaway

USPH’s 2025 performance and 2026 guidance signal robust growth, operational excellence, and strategic expansion through new hospital alliances and technology investments. These developments are likely to be viewed favorably by investors and could have a material impact on share value, particularly as hospital partnerships ramp up in 2027 and efficiency initiatives take hold.

Disclaimer: This article is based on the company’s earnings call and public disclosures. It is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult a financial advisor before making investment decisions.

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