Core Insights - U.S. Physical Therapy's shares fell 11.5% following the release of third-quarter results, indicating declining year-over-year profitability despite revenue exceeding expectations [1][2] Financial Performance - The company reported adjusted earnings of $0.66 per share, matching analyst estimates but down from $0.69 per share in the same quarter last year [2] - Revenue increased by 17.3% year-on-year to $197.1 million, surpassing Wall Street forecasts [2] - The decline in per-share earnings and a slight miss on adjusted EBITDA raised concerns among investors, overshadowing strong sales growth [2] Market Reaction - The stock's significant drop is notable as U.S. Physical Therapy's shares are generally not very volatile, with only four moves greater than 5% in the past year [4] - The current stock price of $79.78 represents a 20.1% decline from its 52-week high of $99.91 recorded in December 2024 [6] - Year-to-date, the stock is down 9.2%, and an investment of $1,000 made five years ago would now be worth $871.16 [6]

Financial Data and Key Metrics Changes - The company achieved a record average of 32.7 visits per clinic per day, up from 30.6 in the same quarter last year, marking a 7% year-over-year increase [4][12] - Adjusted EBITDA increased to $26.9 million, up $4.7 million from the previous year, with an adjusted EBITDA margin expanding to 17.5% from 16.4% [13][20] - Physical therapy revenues reached $168.3 million, representing a 17.3% increase compared to the same period last year [16] - The gross profit margin for physical therapy improved to 21.1%, up from 20.1% in the prior year [12][16] Business Line Data and Key Metrics Changes - Injury prevention (IIP) revenues increased by 22.6%, with gross profit up 25.8% compared to the prior year [6][17] - IIP net revenues grew by $5.3 million, reflecting strong organic growth attributed to new contracts [17] - The company added over 50 net clinics compared to the prior year period, contributing to the overall growth in patient visits [6][16] Market Data and Key Metrics Changes - The net rate per patient visit was $105.33, slightly up from $105.05 in the same quarter last year, despite a 2.9% Medicare rate reduction [14][15] - Workers' compensation represented 10.4% of net patient revenues, with visits increasing by 8.4% year-over-year [15] Company Strategy and Development Direction - The company plans to focus on expanding its injury prevention business, which has shown strong organic growth and margin improvement [10][17] - The introduction of cash-based programs has generated approximately $900,000 in additional revenue, indicating a new revenue stream [22] - The company has raised its full-year 2025 adjusted EBITDA guidance from $88-$93 million to $93-$97 million, reflecting confidence in continued growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting strong demand for services despite some staffing challenges [26] - The company is actively working on increasing reimbursement rates through targeted contract negotiations [15] - Management highlighted the positive impact of AI tools on operational efficiency, particularly in clinical documentation [38][39] Other Important Information - The company has authorized a share repurchase program of up to $25 million, providing flexibility for capital allocation [19] - Implementation costs for a new enterprise-wide financial and human resources system will continue through 2026, with $221,000 incurred year-to-date [18] Q&A Session Summary Question: How would you characterize demand for your services? - Management indicated that demand is solid across most markets, although some areas face staffing challenges [26] Question: How do you view capital deployment for de novo builds? - Management expects this to be one of the strongest years for de novo openings, with adjustments made to recruiting efforts [29] Question: Can you provide an update on labor management strategies? - The company has seen a 25% increase in student clinical rotations and is implementing mentorship programs to reduce turnover [45][46] Question: What is the outlook for Medicare rates in 2026? - Management anticipates a positive increase in Medicare rates, estimating a 1% to 1.75% increase, translating to $2 million to $3 million in additional revenue [58][59] Question: How is the injury prevention segment performing? - The injury prevention segment is ahead of budget, with strong organic growth and continued capital deployment expected [68]

Core Viewpoint - U.S. Physical Therapy (USPH) reported quarterly earnings of $0.66 per share, missing the Zacks Consensus Estimate of $0.67 per share, and showing a decline from $0.69 per share a year ago, indicating an earnings surprise of -1.49% [1] Financial Performance - The company posted revenues of $197.13 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.36%, and showing an increase from $168.03 million year-over-year [2] - Over the last four quarters, U.S. Physical Therapy has exceeded consensus revenue estimates four times [2] Stock Performance - U.S. Physical Therapy shares have declined approximately 1.9% since the beginning of the year, contrasting with the S&P 500's gain of 15.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.69 on revenues of $198.26 million, and for the current fiscal year, it is $2.61 on revenues of $773.83 million [7] - The estimate revisions trend for U.S. Physical Therapy was mixed ahead of the earnings release, which may change following the recent report [6] Industry Context - The Medical - Outpatient and Home Healthcare industry, to which U.S. Physical Therapy belongs, is currently ranked in the top 18% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Core Insights - The article highlights two healthcare facility stocks, Concentra Group Holdings and US Physical Therapy, as strong investment opportunities due to favorable market conditions and demographic trends [1][13]. Concentra Group Holdings - Concentra is the largest outpatient provider of occupational health services in the U.S., with a market cap of $2.65 billion and a network of 11,000 health professionals [1]. - The company serves over 50,000 patients daily and operates more than 540 medical centers, treating 1 in 5 workplace injuries [9]. - Concentra's revenue for 2Q25 was $550.8 million, a 15% year-over-year increase, exceeding forecasts by $13.44 million [10]. - The company focuses on occupational health and workplace injury management, partnering with over 239,000 employers [7][8]. - J.P. Morgan analyst Benjamin Rossi rates Concentra as Overweight with a price target of $31, indicating a potential upside of 50% [12]. US Physical Therapy - US Physical Therapy operates outpatient clinics for physical and occupational therapy, with a market cap of $1.2 billion and over 765 clinics across 44 states [13]. - The company reported revenue of $197.3 million in 2Q25, an 18% year-over-year increase, beating forecasts by $7.45 million [16]. - US Physical Therapy is well-positioned to benefit from demographic trends such as an aging population and increasing obesity rates, driving demand for physical therapy services [17]. - Rossi rates US Physical Therapy as Overweight with a price target of $110, suggesting a potential gain of 34% [17].

Core Viewpoint - Investors are evaluating Astrana Health, Inc. (ASTH) and U.S. Physical Therapy (USPH) to determine which stock offers better value opportunities in the Medical - Outpatient and Home Healthcare sector [1] Valuation Metrics - ASTH has a Zacks Rank of 1 (Strong Buy), while USPH has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for ASTH compared to USPH [3] - ASTH's forward P/E ratio is 23.09, significantly lower than USPH's forward P/E of 31.71, suggesting that ASTH may be undervalued [5] - The PEG ratio for ASTH is 0.78, while USPH's PEG ratio is 4.15, indicating that ASTH has a more favorable earnings growth outlook relative to its price [5] - ASTH's P/B ratio is 2.28, compared to USPH's P/B of 2.5, further supporting the argument that ASTH is a better value option [6] - ASTH has a Value grade of B, while USPH has a Value grade of C, reinforcing the conclusion that ASTH is the preferred choice for value investors [6]

Summary of US Physical Therapy (USPH) FY Conference Call - August 26, 2025 Company Overview - **Company Name**: US Physical Therapy (USPH) - **Industry**: Outpatient orthopedic physical therapy - **Market Presence**: Operates nearly 800 facilities across the United States, with a partner model where the company generally owns about 70% of each partnership [2][4][10] Core Business Model - **Partnership Model**: USPH partners with local brands, allowing owners to retain a meaningful interest while benefiting from USPH's resources for growth [4][5][16] - **Market Fragmentation**: The physical therapy market is highly fragmented, estimated at $40 billion, with no single provider holding more than 10% market share [10][14] - **Reimbursement Strategy**: Focus on states with favorable reimbursement rates to ensure reasonable margins [8][9] Financial Performance - **Growth Despite Challenges**: Despite facing Medicare reimbursement headwinds, USPH has maintained significant growth, reporting an 18% increase in the last quarter [6][38] - **EBITDA Impact**: The company has faced a cumulative EBITDA reduction of $50 million due to reimbursement cuts, with $25 million impacting this year alone [35][37] - **Current EBITDA Guidance**: Updated guidance for EBITDA is between $93 million and $97 million for the year [38] Operational Highlights - **Visit Metrics**: Average visits per clinic per day reached 32.7, indicating strong demand [40] - **Technological Investments**: Implementation of AI-assisted documentation and partial virtualization of front desk operations to enhance efficiency [41] - **Margin Recovery**: Recent quarterly margins were around 21%, with expectations to improve further [42] Growth Opportunities - **Industrial Injury Prevention Business**: Launched in 2017, this segment has grown to over $100 million in revenue and $20 million in EBITDA, with a growth rate of 20-30% [44][48] - **Strategic Acquisitions**: Focus on acquiring larger practices with at least $1 million in EBITDA, enhancing profitability through better reimbursement rates [26][16] Market Dynamics - **Regulatory Challenges**: The company has navigated significant regulatory changes and reimbursement cuts, particularly from Medicare, which have historically impacted physical therapy providers [35][36] - **Competitive Landscape**: USPH differentiates itself from competitors by maintaining a strong balance sheet and avoiding excessive leverage, unlike many private equity-backed firms [31][14] Additional Insights - **Dividend Policy**: USPH has consistently paid dividends since 2012, currently at approximately $0.45 per quarter [51] - **Share Repurchase Plan**: Recently authorized a share repurchase plan due to stock price fluctuations, although this is not the primary focus for capital deployment [53] Conclusion US Physical Therapy is positioned for continued growth in a fragmented market, leveraging its partnership model and operational efficiencies to navigate regulatory challenges and capitalize on emerging opportunities in the physical therapy and industrial injury prevention sectors.

Core Viewpoint - Astrana Health, Inc. (ASTH) is currently positioned as a more attractive investment option compared to U.S. Physical Therapy (USPH) based on various valuation metrics and earnings outlook [1][7]. Valuation Metrics - ASTH has a forward P/E ratio of 20.02, significantly lower than USPH's forward P/E of 33.65 [5]. - The PEG ratio for ASTH is 0.67, indicating a better valuation relative to its expected earnings growth compared to USPH's PEG ratio of 4.40 [5]. - ASTH's P/B ratio stands at 2.11, while USPH has a P/B ratio of 2.65, further suggesting that ASTH is undervalued [6]. Earnings Outlook - ASTH is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model, indicating a stronger potential for future earnings growth compared to USPH [3][7]. Investment Ratings - ASTH holds a Zacks Rank of 1 (Strong Buy), while USPH has a Zacks Rank of 2 (Buy), reflecting a more favorable investment sentiment towards ASTH [3]. Value Grades - ASTH has received a Value grade of A, whereas USPH has a Value grade of C, indicating that ASTH is perceived as a better value investment [6].

Core Viewpoint - U.S. Physical Therapy (USPH) has shown a significant price increase of 17.5% over the past four weeks, with analysts projecting a mean price target of $109.67, indicating a potential upside of 26.5% from the current price of $86.71 [1] Price Targets and Analyst Consensus - The average price target from six analysts ranges from a low of $98.00 to a high of $124.00, with a standard deviation of $8.91, suggesting a relatively tight clustering of estimates [2] - The lowest estimate indicates a 13% increase, while the highest suggests a 43% upside, highlighting the variability in analyst predictions [2][9] - Analysts' price targets are often viewed with skepticism due to historical inaccuracies in predicting actual stock movements [7][10] Earnings Estimates and Market Sentiment - Analysts are optimistic about USPH's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which have shown a strong correlation with stock price movements [11] - Over the last 30 days, two earnings estimates for USPH have been revised upward, leading to a 4.6% increase in the Zacks Consensus Estimate [12] - USPH holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, further supporting its potential upside [13] Conclusion on Price Movement - While the consensus price target may not be a reliable predictor of the magnitude of USPH's gains, the direction indicated by these targets appears to be a useful guide for potential price movement [14]

Financial Performance - Net Income for Q2 2025 was $12.4 million, up from $7.5 million in Q2 2024, with earnings per share increasing to $0.58 from $0.47[206] - For the first six months of 2025, Net Income reached $22.3 million compared to $15.6 million in the same period of 2024, with earnings per share rising to $1.38 from $0.93[208] - Net income attributable to USPH shareholders for Q2 2025 was $12,393,000, a 65.5% increase from $7,506,000 in Q2 2024[210] - Basic and diluted earnings per share increased to $0.58 in Q2 2025 from $0.47 in Q2 2024, representing a 23.4% growth[210] - Total revenue for the first half of 2025 was $46,402,000, compared to $38,895,000 in the first half of 2024, reflecting a 19.4% increase[216] - Total net revenue for the 2025 Second Quarter increased by $30.2 million, or 18.0%, to $197.3 million from $167.2 million for the 2024 Second Quarter[225] - Net patient revenue rose by $23.9 million, or 17.0%, to $164.2 million, while other revenue increased by $6.2 million, or 23.2%, to $33.2 million[225] - Gross profit for the 2025 Second Quarter was $41.6 million, representing 21.1% of net revenue, compared to $33.9 million, or 20.3% of net revenue, for the 2024 Second Quarter[226] - Gross profit from physical therapy operations for the 2025 Six Months was $60.7 million with a gross profit margin of 18.7%, compared to $52.8 million with a gross profit margin of 19.0% for the 2024 Six Months[263] Operational Metrics - The total number of clinics increased to 768 by the end of Q2 2025, up from 720 at the end of 2024, reflecting a net addition of 48 clinics year-to-date[197] - The number of clinics increased to 732 in Q2 2025 from 681 in Q2 2024, indicating a growth of 7.5%[222] - Patient visits in Q2 2025 totaled 1,558,756, a 16.7% increase from 1,335,335 visits in Q2 2024[222] - Average daily visits per clinic per day are calculated based on patient visits, excluding home-care visits, divided by operational days and average clinics[207] - Total patient visits reached 1,558,756 for the 2025 Second Quarter, a 16.7% increase from the 2024 Second Quarter[232] Acquisitions and Expansion - The company completed several acquisitions, including a 65% interest in three clinics in February 2025 and a 75% interest in eight clinics in November 2024[195] - The company aims to continue acquiring multi-clinic outpatient practices and expand its industrial injury prevention services[197] - On April 30, 2025, the company acquired an outpatient home-care practice for approximately $2.3 million, with potential additional contingent consideration of up to $1.8 million[300] - The company acquired a 65% interest in a physical practice for approximately $3.8 million, with a maximum contingent consideration of $1.3 million[302] - The company acquired a 75% equity interest in an eight-clinic practice for approximately $15.9 million, with a note payable of $0.2 million due on December 1, 2026[303] Dividends and Shareholder Returns - The company declared a quarterly dividend of $0.45 per share, payable on September 12, 2025[198] - The share repurchase program authorized the buyback of up to $25 million of common stock, effective August 5, 2025[199] Cost and Revenue Management - Operating income increased by $9.4 million, or 60.2%, to $24.9 million for the 2025 Second Quarter compared to $15.6 million for the 2024 Second Quarter[225] - Operating costs increased by $18.4 million, or 16.0%, to $133.1 million for the 2025 Second Quarter, with operating costs as a percentage of net revenue decreasing to 79.1% from 79.9%[235] - Corporate office costs increased to $17.5 million for the 2025 Second Quarter from $14.2 million for the 2024 Second Quarter, representing an increase of 23.2%[242] - Rent, supplies, contract labor, and other costs related to clinics increased to $59.9 million in the 2025 Six Months from $52.5 million in the 2024 Six Months, an increase of $7.4 million, or 14.1%[261] Tax and Interest Expenses - The provision for income taxes was $4.9 million for the 2025 Second Quarter, up from $3.1 million during the 2024 Second Quarter, with effective tax rates of 28.5% and 29.1%, respectively[248] - Interest expense increased by $0.4 million to $2.4 million for the 2025 Second Quarter compared to $2.0 million for the 2024 Second Quarter, reflecting a higher average outstanding balance[245] - Interest expense increased by $0.8 million to $4.7 million for the 2025 Six Months compared to $3.9 million for the 2024 Six Months[268] Cash Flow and Financial Position - Net cash provided by operating activities was $30.2 million for the 2025 Six Months compared to $33.4 million for the 2024 Six Months[282] - Cash used in investing activities for the 2025 Six Months totaled $19.3 million, primarily for the purchase of interests in businesses and non-controlling interests[284] - As of June 30, 2025, total cash and cash equivalents were $34.1 million, down from $112.9 million at June 30, 2024[276] Debt and Interest Rate Management - The company has outstanding notes payable of $1.4 million related to acquisitions, with varying interest rates from 4.5% to 8.5% per annum[299] - The average interest rate for Senior Credit Facilities was 5.1% in Q2 2025, up from 4.7% in Q2 2024[298] - The company entered into an interest rate swap agreement with a notional value of $150 million, effective June 30, 2022, with a maturity date of June 30, 2027, paying a fixed rate of 2.815%[295] - As of June 30, 2025, the fair value of the interest rate swap was $1.6 million, reflecting a decrease of $1.6 million from December 31, 2024, and generated $1.0 million in interest savings for the first half of 2025[297] - A 1% change in interest rates would result in a $0.2 million change in interest expense on the Senior Credit Facilities due to the interest rate swap[310]

Financial Data and Key Metrics Changes - The company achieved a record average of 32.7 visits per clinic per day in Q2 2025, up from 30.6 in Q2 2024, marking a 7% increase [10][21] - Adjusted EBITDA increased to $26.9 million, up $4.7 million from the same quarter last year, with an adjusted EBITDA margin expanding to 17.5% from 16.4% [24][34] - Physical therapy revenues reached $168.3 million, representing a 17.3% increase compared to the prior year [27][28] - Gross profit margin improved to 21.1%, up from 20.1% in Q2 2024 [22][28] Business Line Data and Key Metrics Changes - Injury prevention (IIP) revenues increased by 22.6%, with gross profit rising by 25.8% compared to the prior year [13][29] - The company added over 50 net clinics compared to the prior year period, contributing to the growth in physical therapy visits [14] - Home care visits totaled 28,493 in Q2 2025, marking the first time these visits were reported separately [25] Market Data and Key Metrics Changes - Workers' compensation represented 10.4% of net patient revenues, with visits increasing by 8.4% year over year [27] - The net rate per patient visit was $105.33, slightly up from $105.05 in Q2 2024, despite a 2.9% Medicare rate reduction [26] Company Strategy and Development Direction - The company plans to focus on expanding its injury prevention business and has identified several large contracts in the auto industry [14][18] - The company has initiated a staged rollout of cash-based programs, generating approximately $900,000 in additional revenue [37] - A share repurchase program was authorized, allowing for the repurchase of up to $25 million of shares through December 31, 2026, while acquisitions remain the primary capital allocation priority [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for services, noting solid demand across most markets despite some staffing challenges [41] - The company raised its full-year 2025 adjusted EBITDA guidance to a range of $93 million to $97 million, reflecting strong performance in the first half of the year [34] - Management acknowledged the impact of Medicare cuts, estimating a $25 million hit to profit lines, but remains positive about future reimbursement rate increases [15][72] Other Important Information - The company is implementing a new enterprise-wide financial and human resources system, with associated costs expected to continue through 2026 [30] - The balance sheet remains strong, with $135 million in term loans and a $175 million revolving credit facility [32] Q&A Session Summary Question: How would you characterize demand for your services? - Demand is solid across most markets, but there are challenges in managing costs while meeting demand [41] Question: How do you view capital deployment for de novo builds? - This year is expected to be one of the strongest for de novo builds, with adjustments made to recruiting efforts [43] Question: Can you provide an update on labor management strategies? - A 25% increase in student clinical rotations has been observed, contributing to lower turnover rates [59][61] Question: What is the expected impact of Medicare rate increases? - The company anticipates a 1% to 1.75% increase in Medicare rates, translating to a potential $2 million to $3 million positive impact on revenue [71][72] Question: How is the IIP segment performing? - The IIP segment is performing ahead of expectations, with strong organic growth and continued capital deployment planned [82] Question: What are the dynamics of the home PT business? - The home PT business is new and will be reported separately, with initial results showing promise [25][52]