U.S. Physical Therapy (NYSE: USPH) outlined its growth strategy at the 17th Annual Midwest IDEAS Conference, highlighting a 11% year-over-year revenue increase to $804 million and a market capitalization of $1.17 billion. Shares traded at $78.51, up 1.54% from the prior close of $77.32, within a 52-week range of $58.19 to $93.50.
CEO Chris Reading, who has led the company since 2004, emphasized the company’s operational scale, operating nearly 800 locations across 45 states through 120 partnerships. The company maintains a strong presence in Texas and Virginia but does not operate in California due to regulatory and reimbursement challenges, having entered New York only 13 months prior. U.S. Physical Therapy competes against both small, independent clinics and larger, private equity-backed entities, focusing primarily on orthopedic and musculoskeletal rehabilitation.
The company reported a blended average net reimbursement of $107.59 per visit in the most recent quarter, with revenue split roughly one-third from Medicare, the majority from commercial payers, about 10% from workers’ compensation, and minimal self-pay. Total debt stands at approximately $220 million, with expected EBITDA for the current year projected to exceed $100 million, implying a debt-to-EBITDA ratio of about 2.2x. U.S. Physical Therapy has maintained a quarterly dividend since 2012, currently yielding 2.4%, and completed a $25 million share repurchase program in the first quarter at prices between $62 and $63 per share.
A key growth initiative is the company’s 10-year exclusive partnership with NYU Langone Health, announced earlier in 2024. The arrangement, which began with over 40 locations and has since expanded to about 60 on Long Island and in New York, operates clinics as contracted facilities under NYU Langone’s ambulatory network. NYU Langone pays a flat per-visit rate above Medicare and above U.S. Physical Therapy’s blended commercial rate, with management projecting an additional 700,000 visits annually at profitable rates. Patient satisfaction, as measured by Net Promoter Score, remains in the mid-90s.
U.S. Physical Therapy’s injury prevention business, Briotix, contributes about $120 million in revenue and over $20 million in EBITDA, accounting for roughly 15% of total revenue and operating at margins approximately twice those of the core physical therapy segment. Briotix serves major auto manufacturers, including Toyota, Nissan, Volkswagen, and others, while conducting weekly rounds in over 600 Costco warehouses nationwide, with General Motors noted as an exception.
Addressing Medicare reimbursement, management noted that physical therapy codes were subject to an 11.5% reduction in the Physician Fee Schedule starting in 2020. While small improvements are expected in 2024 and 2025, larger multi-year increases are anticipated beginning in 2028.
A new Chief Financial Officer, previously the global CFO in the healthcare division at Johnson & Johnson, is set to join the company the week following the conference, succeeding the outgoing executive.
