U.S. Physical Therapy signals 200-facility AI-driven front desk rollout by year-end while reaffirming $93M–$97M adjusted EBITDA guidance

Earnings Call Insights: U.S. Physical Therapy, Inc. (USPH) Q3 2025

MANAGEMENT VIEW

* CEO Christopher Reading opened by reflecting on his long tenure and expressed surprise at the market's reaction to the results. He emphasized strong volume growth, stating "For the quarter, we're up 18%. But certainly, a bunch of that is Metro, which you know we completed that acquisition in November." He highlighted the addition of 84 net PT facilities over the year and a new record in visits per clinic per day at 32.2 for Q3.
* Reading noted that gross profit grew 30% in the quarter, and after adjusting for prior-year "noise," still showed mid-teens increases. He pointed to cost controls, mentioning "salary and related cost per visit... actually went down some. We're working on a number of initiatives, including AI-driven documentation, including what I refer to as the semi-virtualization of our front desk operations and that's rolling out. We have a target for that by year-end of 200 facilities, about halfway there, but we're beginning to see some impact from both of those things."
* Reading outlined regulatory developments, explaining that "manual therapy will go up slightly" after CMS corrections, and remote therapeutic monitoring will be a renewed opportunity in 2026 due to rule changes that make reimbursement more accessible.
* The CEO described injury prevention as a "strong focus," with mid-teens revenue growth and ongoing pipeline opportunities, asserting the company will "continue to love this business."
* In closing, Reading stated, "We still have a great capital structure and we have a very, very strong resolve to take this company forward and do the things that we've said we're going to do."
* CFO Carey Hendrickson stated, "Our average visits per clinic per day was 32.2 and that's the highest third quarter volume per clinic per day in our company's history." He reported 1,524,070 clinic visits, $168.1 million in physical therapy revenues (up $25.4 million), and 15% IIP revenue growth. He added, "salaries and related costs per visit decreased this quarter... That's the first time we've seen a decline in our salaries and related costs since the fourth quarter of 2023." Adjusted EBITDA rose $2.8 million to $23.9 million.

OUTLOOK

* The company reaffirmed its adjusted EBITDA guidance for 2025 at $93 million to $97 million.
* Reading commented, "for the first time in a while, we're going to see some blue sky in 2026 in terms of -- particularly in terms of Medicare reimbursement. We see additional opportunity around remote therapeutic monitoring."
* Hendrickson described the effect of the new Medicare rule as "really more of a floor of 1.5% now, whereas we thought that may be kind of right where we ended up, I think that's kind of a floor of 1.5% and there could be -- it could be greater than that."
* Management noted further internal cost-saving initiatives and hinted at additional positive developments to be shared with year-end guidance.

FINANCIAL RESULTS

* Hendrickson reported 1,524,070 clinic visits and 30,137 home-care visits for the quarter. The net rate per patient visit was $105.54, with September exceeding $106 per visit.
* Physical therapy revenues were $168.1 million, with Metro and PT in New York contributing $19.5 million.
* PT operating costs totaled $136.9 million. Salaries and related costs per visit decreased from $62.47 in Q3 '24 to $60.07 in Q3 '25. Total operating cost per visit increased 1% to $86.88.
* Physical therapy operating margin was 18.6%. IIP margin was 19.6% for the quarter.
* Operating results were $10.1 million versus $10.4 million a year ago, with EPS at $0.66 compared to $0.69. The company ended the quarter with $31.1 million in working capital cash.

Q&A

* Brian Tanquilut (Jefferies) asked about demand and clinician recruitment. Reading replied, "Demand has, for us, pretty much all year continued to be strong... Our time to fill down. Our turnover has been really good, really across all parts of the company."
* Tanquilut asked about capital allocation. Hendrickson responded, "It's just a much better use of our capital at this point or acquisitions because that's their -- the acquisitions we're looking at, to your point, are IIP acquisitions for the most part."
* Benjamin Rossi (JPMorgan) inquired about competitive dynamics. Reading explained, "We typically compete with small practices, mom-and-pops... since the latter part of 2022, some of the larger PE-backed companies have been balance sheet-constrained."
* Joanna Gajuk (BofA) questioned the Medicare rate impact. Hendrickson replied, "I would say the increase we expect to be, I think, really more of a floor of 1.5% now... and there could be -- it could be greater than that."
* Lawrence Solow (CJS) probed mature clinic volumes. Reading stated, "Any time you're focused on trying to wring out cost, you probably wring out a little bit of volume."
* Constantine Davides (Citizens) asked about home-care expansion. Eric Williams reported, "It's primarily Metro... we've expanded into the New Jersey market."
* Michael Petusky (Barrington) sought clarification on IIP margin. Hendrickson explained, "We had some amortization that was -- that had been being allocated to the PT segment that really should have been allocated to the IIP segment."

SENTIMENT ANALYSIS

* Analysts showed a neutral to slightly positive tone, focusing on sustainability of growth, competitive pressures, and details on Medicare reimbursement and cost controls. Questions were probing but not confrontational.
* Management maintained a confident and constructive tone throughout the call. During prepared remarks, Reading was particularly upbeat about the future, while in Q&A, he provided candid context on competitive pressures and operational headwinds. Hendrickson's responses reflected confidence in cost management and capital allocation strategies.
* Compared to the previous quarter, both management and analysts' tone remained stable, with management slightly more optimistic about headwinds easing in 2026.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was reaffirmed, unchanged from the previous quarter ($93 million to $97 million in adjusted EBITDA).
* Strategic focus shifted to accelerating technological initiatives (AI documentation, semi-virtualized front desk) and expanding IIP through acquisitions.
* Management continued to highlight growth in visits per clinic per day and cost control, but noted a decrease in salaries and related costs per visit this quarter—a change from the modest increase seen in Q2.
* Analysts' focus remained on demand sustainability, cost containment, and the evolving impact of Medicare reimbursement.
* Management's confidence appeared slightly higher on the outlook for Medicare rates and internal efficiency gains.

RISKS AND CONCERNS

* Medicare reimbursement remains a key risk, though the final rule for 2026 is expected to be at least a 1.5% increase.
* Management cited the challenge of balancing efficiency and volume growth, noting that "any time you're focused on trying to wring out cost, you probably wring out a little bit of volume."
* Home-care expansion is currently regionally concentrated, and margins may vary outside the Northeast.
* Amortization reallocation is impacting segment margins, though management views this as an accounting adjustment.

FINAL TAKEAWAY

Management emphasized that U.S. Physical Therapy delivered record clinic volume and achieved notable cost reductions, with continued strength in both PT and injury prevention segments. The company is rolling out AI and tech-driven efficiency measures targeting 200 facilities by year-end and expects easing Medicare headwinds in 2026, while reaffirming full-year adjusted EBITDA guidance of $93 million to $97 million and maintaining a focus on acquisitions, especially in injury prevention. The outlook for next year includes further operational enhancements and positive reimbursement trends, with additional strategic updates anticipated at year-end.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/usph/earnings/transcripts]

MORE ON U.S. PHYSICAL THERAPY

* U.S. Physical Therapy, Inc. (USPH) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4839569-u-s-physical-therapy-inc-usph-q3-2025-earnings-call-transcript]
* U.S. Physical Therapy: The Bear Case Is On The Stretcher [https://seekingalpha.com/article/4812820-us-physical-therapy-the-bear-case-is-on-the-stretcher]
* U.S. Physical Therapy, Inc. (USPH) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4811606-u-s-physical-therapy-inc-usph-q2-2025-earnings-call-transcript]
* Seeking Alpha’s Quant Rating on U.S. Physical Therapy [https://seekingalpha.com/symbol/USPH/ratings/quant-ratings]
* Historical earnings data for U.S. Physical Therapy [https://seekingalpha.com/symbol/USPH/earnings]