U S PHYSICAL THERAPY INC /NV Q4 FY2024 earnings call

• Thanked clinicians, partners, and teams for impacting patients' lives, with net promoter score 93 and Google Care ratings 4.9. • Q4 visits per clinic per day reached 31.7, up from 29.9 in the prior year's quarter, and total patient volume grew 13% y/y. • Net rate was $104.73, up from prior year despite Medicare rate reduction, with progress expected in 2025. • Addressed cost to deliver care by adjusting in partnerships, piloting AI note system to reduce EMR time and improve clinician efficiency, and testing virtual staffing tech to reduce overhead. • Completed 7 acquisitions in 2024, adding approximately 70 clinics in Q4, including entry into new states like Wyoming and Pennsylvania, and expansion in New York with Metro PT deal.

Physical therapy revenues in the fourth quarter of 2024 were $153.8 million, an increase of $19.2 million or 14.2% from the prior year's fourth quarter. The increase was driven by higher net rate, 3.1% increase in visits at mature clinics, and addition of Metro. The IIP team had excellent results with net revenues up 32.1% over the fourth quarter of 2023, and full year IIP revenues up 23.8% with a margin of 20.6%. For the full year, physical therapy revenue grew nearly 24% to approximately $97 million, with gross profit increasing 21.5%. The IIP segment contributed significantly, with net revenues up 23.8% for the full year.

• 2025 EBITDA guidance ranges from $88 million to $93 million, with the midpoint around $90.5 million. • First quarter expected to be the lowest EBITDA quarter of the year due to seasonal factors. • Expect continued growth in IIP business and rate enhancements from commercial plan negotiations, despite a 2.9% Medicare rate reduction in 2025. • Anticipate volume growth at mature clinics in the 2-3% range in 2025.

• Competitive hiring environment impacting cost per visit. • Uncertainty regarding wage inflation and market dynamics affecting staffing and costs. • Risks associated with Medicare rate cuts and potential legislative changes that could impact revenue and margins.

Q: Brian Tanquilut asked about growth assumptions, volume, and rate trajectory.

A: Carey Hendrickson noted clinic closures had a positive $1.5 million impact on 2025 EBITDA, expects rate increases in 2025 despite Medicare cut, and anticipates continued volume growth at mature clinics in the 2-3% range.

Q: Larry Solow inquired about cost savings and inflation.

A: Chris Reading discussed ongoing efforts to reduce costs, piloting AI note systems and virtual staffing tech, and challenges with staffing and inflation being a moving target.

Q: Jared Haase asked about IIP segment growth and competitive wins.

A: Chris Reading mentioned strong cross-selling and service differentiation as drivers for IIP growth and the large auto client win, noting challenges with margin compression from quick staffing needs.

Q: Ryan Quinn questioned EBITDA budget for 2025.

A: Carey Hendrickson explained breakdown of contributions from acquisitions, IIP growth, Medicare reduction, and corporate cost changes, noting the budget midpoint accounts for various puts and takes.

Q: Constantine Debites asked about Metro and New York market.

A: Eric Williams discussed opportunities in New York, de novo pipeline, and expansion into adjacent areas, and Carey Hendrickson provided details on workers' comp mix and growth efforts.

Q: Mike Petusky asked about Metro rate and technology initiatives.

A: Eric Williams noted opportunities to increase Metro rates through payer contracting, and Chris Reading discussed pilots for AI notes and virtual staffing with TBD impact on costs.

Q: Joanna Gajuk asked about non-Medicare rate and cash flow.

A: Carey Hendrickson expected non-Medicare rate increases in 2025, and discussed cash flow outlook with expected growth in 2025 despite dividend considerations.