USPH · U.S. Physical Therapy, Inc.

U.S. Physical Therapy’s Q1 2026 results reflect strong top-line growth—revenue increased 7.9% to $198.3 million—driven by 7.2% growth in physical therapy services and 11.8% growth in industrial injury prevention (IIP), with same-store IIP up 8.2%. However, GAAP net income fell sharply to $5.0 million ($0.12 loss per share) from $9.9 million ($0.80 EPS) in Q1 2025, primarily due to a $2.0 million loss on the change in fair value of contingent earn-out consideration—a reversal from the $4.8 million gain recorded in the prior-year quarter. This non-cash accounting impact, tied to acquisition-related liabilities, significantly diluted earnings per share despite underlying operational stability: Non-GAAP Operating Results were $7.0 million (vs. $7.3 million), and Adjusted EBITDA rose $0.7 million to $20.2 million. Margin dynamics diverged across segments: physical therapy margin compressed to 15.8% (from 16.6%), while IIP margin expanded to 20.4% (from 18.6%), underscoring the strategic value of the higher-margin service line. Management reaffirmed full-year 2026 adjusted EBITDA guidance of $102.0–$106.0 million, explicitly attributing it to the phased ramp-up of two hospital affiliations beginning in May 2026—expected to deliver at least $7.3 million in incremental annualized EBITDA to USPH. The concurrent closing of a larger, extended $450.0 million credit facility signals enhanced financial flexibility to support continued clinic expansion (net +3 clinics in Q1) and strategic M&A, including recent investments in an eight-clinic practice and a 70%-owned IIP business. These developments collectively reinforce execution against long-term growth levers—including virtual front desk tools, ambient-listening tech, remote therapeutic monitoring, and hospital alliance scaling—while highlighting near-term earnings volatility from non-operational, GAAP-mandated valuation adjustments.