US Physical Therapy (USPH) Q2 2024 earnings summary

Executive summary

• Achieved record-high average visits per clinic per day in Q2 2024, with April reaching 31.2, and all-time high quarterly patient volume.

• Operates through two segments: physical therapy operations and industrial injury prevention services (IIP), with 681 clinics in 42 states as of June 30, 2024.

• Completed several acquisitions in 2023 and 2024, including a 100% IIP business and a 50% equity interest in a nine-clinic practice.

• Strong demand and successful contract negotiations drove net rate per visit to $105.05, up 3% year-over-year despite a 1.8% Medicare cut.

• Labor costs, especially for therapists and front office, increased due to inflation and scarcity, impacting margins.

Financial highlights

• Q2 2024 net revenue increased 10.4% year-over-year to $167.2 million; physical therapy revenues grew 8.5% to $143.5 million.

• IIP segment Q2 revenue increased 23.2% to $23.7 million, with gross profit up 27.5%.

• Adjusted EBITDA for Q2 2024 was $22.1 million, up from $21.7 million in Q2 2023.

• Net income attributable to shareholders was $7.5 million for Q2 2024, with EPS of $0.47, down from $0.64 in Q2 2023 due to increased share count.

• Gross margin for Q2 2024 was 20.3% (down from 21.3% prior year); physical therapy gross margin was 20.1%.

Outlook and guidance

• 2024 Adjusted EBITDA guidance reaffirmed at $80–$85 million, reflecting higher labor costs and contract labor usage.

• Management expects continued growth through acquisitions and new clinic development.

• Patient volumes expected to remain strong, with further net rate progress anticipated.

• Anticipates further Medicare reimbursement reductions in 2025, with a proposed 2.8% decrease.

• Cash and credit facilities are expected to be sufficient to fund operations and growth through at least June 2025.