U.S. Physical Therapy, Inc.

Q2 2026 total revenue was $214 million, up 8.5% year over year. Physical therapy revenue was $182 million, up 8.4%, including $5.6 million from the initial phases of the hospital affiliation rollout. Visits were 1,662,000, up 6.6%, and average daily visits per clinic were 33.5 versus 32.7 last year. PT revenue per visit was $107.59, up $2.26 year over year. Adjusted salaries and related costs as a percent of revenue were 57.5% versus 56.4% last year, and adjusted PT gross profit margin was 19.9% versus 21.4%. IIP revenue was $32 million, up 9.1%, with IIP margin at 20.4% versus 20.3%. Adjusted EBITDA was $27.0 million versus $26.9 million last year. Net income attributable to USPH shareholders was $9.9 million versus $12.4 million, and EPS was $0.25 versus $0.58. Cash and cash equivalents were $25 million, credit facility borrowings were $221 million, and year-to-date operating cash flow was $38 million versus $30 million. The company reaffirmed full-year 2026 adjusted EBITDA guidance of $102 million to $106 million. Management also said Medicare revenue per visit is expected to benefit from a 1.75% increase in 2026 guidance, equating to a $2.5 million full-year lift and about $0.35 per visit, and said CMS is expected to deliver a modest 1.5% increase next year.

Chris Reading emphasized that volume trends are exceptionally strong and that the hospital-affiliation strategy is the key longer-term growth lever. He said the company’s NYU Langone-related metro transition is going well, with 60 metro clinics expected to be fully transitioned by month-end and roughly 50 clinicians hired ahead of demand to support growth. His tone was confident and forward-looking, stressing that near-term cost pressure should create upside later as the affiliated clinics fully ramp and as the company builds toward 2027.

Jason Curtis highlighted that the quarter’s revenue growth was supported by both core PT and hospital affiliation revenue, with $5.6 million from the initial affiliation rollout. He pointed to margin pressure from higher medical costs, with adjusted PT gross margin at 19.9% versus 21.4%, and noted adjusted salaries and related costs rose to 57.5% of revenue from 56.4%. He also detailed liquidity and capital allocation: cash was $25 million, borrowings were $221 million, revolver availability rose to $229 million under the upsized $450 million credit facility plus a $125 million accordion, and the company repurchased 306,000 shares for $19.2 million at an average price of $62.80. He reaffirmed full-year 2026 adjusted EBITDA guidance of $102 million to $106 million.

Analysts focused on how the back-half margin lift will arrive, and management said the main drivers are continued WelcomeWare rollout, full integration of the remaining hospital-affiliated clinics in Q3, and the benefit from newly hired clinicians being absorbed into the system. On revenue recognition, management explained that the $5.6 million hospital-affiliation figure combines per-visit fees and reimbursement for licensed clinical staff, replacing prior net patient revenue. Questions also touched on claims expense, payer mix, workers’ comp, and commercial pricing; management said self-pay is still only about 3.5% to 4% of payer mix, workers’ comp penetration is about 10% with a $155.32 rate in Q2, and commercial pricing remains lumpy but was up 3.4% in Q1 and 1.2% in Q2. Management said higher self-insured health costs were driven by a handful of significant claims, with about 80% of the $3.2 million year-to-date difference hitting in Q2.