Breaking Down U.S. Physical Therapy, Inc. (USPH) Financial Health: Key Insights for Investors

You're looking at U.S. Physical Therapy, Inc. (USPH) right now, and the numbers from the Q3 2025 report tell a story of aggressive growth running right into a major systemic headwind. Honestly, the operational side is humming: the company posted $168.1 million in Q3 revenue, a solid 17.8% jump year-over-year, and hit a record high of 32.2 visits per clinic per day, largely thanks to adding 84 net new clinics. But here's the quick math on the risk: those relentless Medicare reimbursement cuts have already impacted profits by a staggering $25 million this year, and management still only reaffirmed their full-year Adjusted EBITDA guidance to a range of $93 million to $97 million. So, while the growth engine is working-driving GAAP net income to $13.1 million for the quarter-the core challenge is translating that volume into clean, sustainable profit, especially as they roll out efficiency plays like AI-driven documentation. You need to see how they plan to defintely outrun that reimbursement pressure.

Revenue Analysis

You're looking for the clear picture on U.S. Physical Therapy, Inc. (USPH)'s revenue engine, and honestly, the 2025 numbers show a well-executed growth strategy. The core takeaway is that the company is successfully driving volume and integrating acquisitions, pushing their Trailing Twelve Months (TTM) revenue to approximately $759 million as of November 2025.

This revenue growth isn't just a small bump; it represents an impressive year-over-year increase of 18%. That kind of acceleration in a healthcare services environment, especially one facing reimbursement pressures, is defintely a signal that their business model is working. Here's the quick math on where that money comes from and how it's changing.

Breakdown of Primary Revenue Sources

U.S. Physical Therapy, Inc. operates on a two-pronged revenue model, but one segment is clearly the dominant force. The vast majority of their income stems from their network of outpatient physical therapy clinics, which is their bread and butter.

• Physical Therapy Operations: Contributes about 85% of total revenue.
• Industrial Injury Prevention Services (IIP): Accounts for the remaining 15% of revenue.

The company now operates over 779 owned or managed clinics across 44 states, which gives them a significant national footprint. You can see their strategic focus on expansion by reviewing their Mission Statement, Vision, & Core Values of U.S. Physical Therapy, Inc. (USPH).

Year-over-Year Growth and Segment Contribution

Looking at the segment performance in the third quarter of 2025 (Q3 2025) shows both parts of the business are contributing to the overall growth story. The physical therapy segment is growing faster on an absolute dollar basis, but the IIP segment is proving to be a high-growth, high-margin diversifier.

Here's how the Q3 2025 numbers look compared to the prior year, highlighting the momentum:

The Physical Therapy segment's revenue of $168.1 million in Q3 2025 was fueled by a 16.7% increase in total patient visits, which hit a record high. This volume growth is the real driver, plus, the net rate per patient visit actually ticked up to $105.33 in Q2 2025, despite the approximate 2.9% Medicare rate reduction that hit in January 2025. That resilience in pricing is critical.

Significant Changes and Near-Term Actions

The significant change in USPH's revenue profile is the consistent use of acquisitions to augment organic growth. They added 51 net new clinics since the comparable prior year period as of Q2 2025, which directly translates to higher patient visits and revenue.

Also, they are strategically adding home-care physical and speech therapy practices, like the one acquired in Q1 2025 that generates about $2.1 million in annual revenue. This is a smart move to diversify the Physical Therapy segment beyond just outpatient clinics and capture growth in the home-health trend.

What this estimate hides is the ongoing pressure from Medicare reimbursement cuts, but the company has offset this by increasing its net rate per patient visit through better commercial contract negotiations and a higher mix of workers' compensation business. Your clear action here is to monitor their Q4 2025 report for continued success in both organic volume and accretive acquisitions.

Profitability Metrics

You need to know if U.S. Physical Therapy, Inc. (USPH) is actually translating its strong revenue growth into bottom-line cash. The short answer is yes, but its net profit margin is still running a bit lean compared to the broader industry average, mostly due to its partnership model and cost structure.

For the most recent quarter, Q3 2025, U.S. Physical Therapy, Inc. reported a net income attributable to shareholders of $13.1 million. When we look at the core profitability ratios, we see a company that is operationally efficient but faces pressure from its non-controlling interests (minority partners in its clinics) and other costs that hit below the operating line.

Here's the quick math on the Q2 2025 margins: The Gross Profit margin was a solid 21.1%, which is the total gross profit ($41.6 million) divided by total net revenue (approximately $197.4 million). This shows strong control over the direct costs of providing physical therapy and industrial injury prevention (IIP) services. But, the Net Profit Margin, at about 6.3% in Q2 2025 (and 6.6% in Q3 2025), is where the partnership structure shows up.

Trends and Operational Efficiency

U.S. Physical Therapy, Inc. is defintely on an upward trajectory in 2025. You can see this in the Q2 2025 physical therapy gross profit margin improving to 20.9% (or 21.1% adjusted) from 20.1% in the prior year quarter. This margin improvement is a clear sign of operational leverage-higher patient visits (up 16.7% year-over-year in Q2 2025) did not cause a proportional rise in fixed costs.

Still, the overall operating margin (earnings before interest and taxes) has seen a long-term decline of 6.1 percentage points over the last five years. This raises a flag about the company's expense base, even with revenue growth. The good news is that the Q2 2025 operating margin was 12.6%, which is higher than the company's five-year average of 11.1%. That's a nice move forward.

• Salaries and related costs per visit rose only slightly, from $59.66 to $60.08 in Q2 2025.
• Total operating costs per visit actually declined year-over-year.
• The Industrial Injury Prevention (IIP) segment is a margin booster, with a gross profit margin of 22.0% in Q2 2025.

Industry Comparison and Actionable Insight

When you compare U.S. Physical Therapy, Inc.'s profitability to the industry, you see a key difference. The average net profit margin for a U.S. physical therapy clinic typically falls between 14% and 20%. U.S. Physical Therapy, Inc.'s Q2 2025 net margin of 6.3% is significantly lower.

What this estimate hides is the company's unique business model, which involves joint ventures where a portion of the net income is allocated to non-controlling interests (the minority partners). This allocation reduces the net income attributable to USPH shareholders, making the GAAP net margin look lower than a wholly-owned competitor. The company is confident in its strategic direction, as evidenced by its reaffirmed full-year 2025 Adjusted EBITDA guidance, which was raised to a range of $93 million to $97 million. You can read more about their strategy in the Mission Statement, Vision, & Core Values of U.S. Physical Therapy, Inc. (USPH).

Your Action: Focus on the Adjusted EBITDA margin (17.5% in Q2 2025) as a truer measure of operational health, as it strips out the non-cash and non-controlling interest noise. This figure is much closer to the industry's gross profitability and is a better gauge of the company's core service delivery performance.

Debt vs. Equity Structure

U.S. Physical Therapy, Inc. (USPH) maintains a relatively conservative capital structure, leaning more on equity financing than debt, which is a good sign for stability in the current interest rate environment. Your key takeaway here is that the company's financial leverage is below the industry median, offering a cushion for continued growth via acquisitions.

As of the third quarter of 2025, U.S. Physical Therapy, Inc.'s debt-to-equity (D/E) ratio stood at approximately 0.39. This is a very favorable figure when you compare it to the Healthcare Providers & Services industry median of 0.43. This low leverage means the company is funding a larger portion of its assets with shareholder equity rather than borrowed money, which reduces financial risk. Honestly, a D/E ratio below 0.50 for a growth-focused company is defintely a mark of balance.

Overview of Debt Levels

The company's debt is primarily structured through its Senior Credit Facilities, which are used to fund its core strategy of acquiring and developing new physical therapy clinics. The total outstanding debt is manageable, and it's split between short-term and long-term obligations.

Here's the quick math on the debt components as of September 30, 2025 (in millions):

Recent Debt and Capital Allocation

U.S. Physical Therapy, Inc. has been strategic about its debt management, which is crucial for a company focused on growth through mergers and acquisitions (M&A). They utilize their credit facilities effectively, and their capital structure reflects a clear preference for funding growth while maintaining financial flexibility.

• Term Loan: The company has a term loan, a type of long-term debt, of approximately $135 million.
• Interest Rate Hedge: A key move was implementing a swap agreement that fixes the interest rate on this term loan at a favorable 4.7% through mid-2027, insulating them from near-term rate hikes.
• Revolving Credit: The company has a substantial $175 million revolving credit facility, with only $26.5 million drawn as of Q3 2025, leaving $148.5 million in available credit for future acquisitions.

The balance between debt and equity is also evident in their capital allocation plan. While acquisitions remain the primary use of capital, they also authorized a $25 million share repurchase program through December 31, 2026. This dual focus shows they are willing to use debt for accretive M&A growth, but also use equity-friendly actions to return value to shareholders when market conditions are right. For more on who owns the stock, check out Exploring U.S. Physical Therapy, Inc. (USPH) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

U.S. Physical Therapy, Inc. (USPH) maintains a tight but manageable liquidity position, which is typical for a growth-focused service business. The key takeaway is that their current assets, mostly in the form of patient receivables, cover their short-term debts, but not by a huge margin. They are liquid enough, but not cash-rich.

You need to look at the current and quick ratios (liquidity positions) to understand their near-term ability to pay bills. As of September 30, 2025, the company's liquidity ratios show a stable position, though one that relies heavily on the timely collection of patient accounts receivable. Here's the quick math:

• Current Ratio: 1.20
• Quick Ratio: 1.06

A Current Ratio of 1.20 (Current Assets of $138,435 thousand divided by Current Liabilities of $115,080 thousand) means USPH has $1.20 in current assets for every $1.00 in current liabilities. The Quick Ratio of 1.06 is also solid, signaling that even without selling any minor inventory or prepaid assets, they can cover their immediate obligations. This is defintely a healthy range for a service-based healthcare operator where accounts receivable is the primary current asset.

Working Capital and Near-Term Debt Analysis

The working capital (Current Assets minus Current Liabilities) for USPH as of Q3 2025 stood at approximately $23,355 thousand. This positive figure is a strength, but the trend in cash itself is what matters most. The company's cash and cash equivalents decreased from $41,362 thousand at the end of 2024 to $31,102 thousand by September 30, 2025. This cash reduction, while not alarming, shows the company is actively deploying or consuming cash.

The company's debt structure is conservative, which bolsters their solvency (long-term ability to pay debt). As of September 30, 2025, total outstanding borrowings were $159.6 million, which is mostly long-term debt. Crucially, they have significant financial flexibility with $148.5 million in available capacity under their revolving credit facility. That's a huge safety net.

Cash Flow Statement Overview: Investing for Growth

While the specific nine-month cash flow figures for Operating, Investing, and Financing activities are not explicitly detailed in the latest report snippets, the overall cash trend is clear: USPH is a growth-by-acquisition story. The decrease in the cash balance from year-end 2024 to Q3 2025 suggests that cash generated from operations is being immediately deployed into investing and financing activities.

The company consistently reports 'Strong cash flow and balance sheet,' indicating that cash flow from operating activities (OCF) is likely robust enough to fund the core business and service debt. The major cash uses are in the investing cash flow (ICF) section, primarily for acquisitions to grow their clinic count, and in financing cash flow (FCF), for dividend payments and managing their term loan. This cash deployment strategy is a deliberate choice to fuel their expansion, which you can read more about in the full post: Breaking Down U.S. Physical Therapy, Inc. (USPH) Financial Health: Key Insights for Investors.

The liquidity strength isn't sitting in cash; it's in their ability to generate cash from operations and access their revolving credit facility. The key action for you is to monitor the trend in patient accounts receivable, which is the lifeblood of their current assets. If that collection cycle slows, their liquidity ratios will quickly tighten.

Valuation Analysis

You're looking at U.S. Physical Therapy, Inc. (USPH) right now and asking the core question: Is the market giving you a discount, or are you paying a premium for growth? The quick answer is that the stock appears undervalued based on analyst targets, but its valuation multiples suggest the market is pricing in significant future expansion, so it's a high-conviction growth play.

The stock has had a rough ride over the last 12 months leading up to November 2025, with the price dropping nearly 28.86%. This volatility is what creates the current opportunity-or the risk, depending on your view. The 52-week trading range shows a high of $101.20 and a low of $62.77, which means the current price in the high $60s to low $70s is closer to the bottom of that range. This is a classic setup where price momentum is bearish, but underlying fundamentals might be strong.

Here's the quick math on the key valuation metrics as of November 2025:

Honestly, the trailing Price-to-Earnings (P/E) ratio of 30.85x is high. To be fair, this is a growth stock in a stable, demographic-driven sector, so a premium is expected. But it's well above the industry average of 21.4x, which tells you investors are defintely paying up for U.S. Physical Therapy, Inc.'s projected earnings growth. The forward P/E of 25.97x reflects the expectation that earnings per share (EPS) will jump from $2.67 to $2.93 next year, which is a 9.74% increase.

What this estimate hides is the risk of reimbursement rate pressure, a constant headwind in the healthcare sector. Still, the Enterprise Value-to-EBITDA (EV/EBITDA) at 13.98x is a more capital-structure-neutral look at the business, and it's a number you need to benchmark against peers like Select Medical Holdings Corporation.

For income-focused investors, the dividend story is solid. The forward dividend yield sits at about 2.51%, supported by an annual payout of $1.80 per share. The expected future payout ratio is a sustainable 61.4% based on next year's earnings forecast, meaning they aren't stretching to cover the payment. They've consistently raised the dividend for the last six consecutive years, which is a good sign of management confidence and financial stability.

The Wall Street consensus leans bullish, despite the recent stock price slump. The overall analyst recommendation is a 'Moderate Buy,' with a notable majority rating it a Buy or Strong Buy. The average 12-month price target is aggressive at $110.25. This implies a significant upside from the current trading levels, with one analysis suggesting the stock is about 30% undervalued with a fair value estimate of $106.83. You can read more about the company's financial health in the full post: Breaking Down U.S. Physical Therapy, Inc. (USPH) Financial Health: Key Insights for Investors.

• Stock is down 28.86% over the last year.
• Analyst consensus is a 'Moderate Buy.'
• Average price target is $110.25.
• Forward P/E is 25.97x, pricing in growth.

Your action here is to check your own growth assumptions against that $110.25 target. If you believe U.S. Physical Therapy, Inc. can maintain its acquisition pace and manage labor costs, the stock is a buy; if you see major risks to their 9.74% EPS growth forecast, hold off.

Risk Factors

You're looking at U.S. Physical Therapy, Inc. (USPH) because the fundamentals look strong-and they do. For the trailing twelve months ended September 30, 2025, the company pulled in $759 million in revenue with $92 million in Adjusted EBITDA. But a seasoned investor knows you must map the risks, especially in a heavily regulated, fragmented sector like healthcare. The biggest near-term threat isn't competition; it's the reimbursement squeeze.

The primary external risk is regulatory, specifically the ongoing pressure from government payors like Medicare. We saw this play out directly with the approximate 2.9% Medicare rate reduction that took effect on January 1, 2025. While USPH managed to increase its net rate per patient visit to $105.66 in Q1 2025, mitigating the cut, this regulatory headwind is constant. Honestly, predicting the next cut is just part of the game in this industry.

• Reimbursement Pressure: Medicare cuts directly impact the net rate per patient visit.
• Personnel Availability: The availability of qualified physical therapists is a continuous operational challenge.
• Integration Risk: Strategic acquisitions, a key growth driver, carry the risk of integration failure or potential financial obligations from partner put-rights.

Operational and Strategic Headwinds

Operationally, the firm faces two clear challenges: managing costs and securing talent. U.S. Physical Therapy, Inc. (USPH) has a nationwide footprint of 779 clinics as of November 2025, and that scale brings cost pressures, even as they work toward 'improved efficiencies.' The labor market for physical therapists is tight, and that drives up wage costs, which eats into the gross profit margin-a key metric to watch.

Strategically, the company relies heavily on its partnership model, where founders retain significant equity, often 20% to 50%. This model is brilliant for retaining talent and local brand loyalty, but it introduces a financial risk: the possibility of partners exercising 'put-rights' related to a future purchase of their equity. This forces the company to potentially use cash or debt to buy out these interests at a future, possibly higher, valuation, which can be a drag on cash flow. You need to account for this contingent liability.

Here's the quick math on their recent performance against consensus expectations for Q3 2025, which shows they beat on revenue but missed on the bottom line, highlighting the cost pressure:

Mitigation and Clear Actions

The company isn't defintely sitting still. Their primary mitigation strategy against reimbursement risk is a two-pronged focus on volume and diversification. First, they continue to drive organic growth, hitting all-time record patient visits in Q2 2025, which helps offset lower rates per visit. Second, they are expanding their Industrial Injury Prevention (IIP) business, which is less exposed to Medicare cuts, with IIP revenue increasing 28.8% to $27.4 million in Q1 2025.

To mitigate the talent risk, U.S. Physical Therapy, Inc. (USPH) uses its 'OnePartner' model, which allows clinicians to retain ownership and benefit from monthly cash distributions, making them a partner of choice in a highly fragmented market. Plus, the recent authorization for a $25 million share buyback signals management's confidence in the stock's value, which can help support shareholder return despite lingering industry risks. If you want a deeper dive into who is betting on this model, you should be Exploring U.S. Physical Therapy, Inc. (USPH) Investor Profile: Who's Buying and Why?

Growth Opportunities

U.S. Physical Therapy, Inc. (USPH) is defintely positioned for continued growth, driven by its highly effective partnership-based acquisition strategy and the diversification into Industrial Injury Prevention Services (IIP). The company's own updated guidance for 2025 projects full-year Adjusted EBITDA in the range of $93.0 million to $97.0 million, which represents a solid 15% to 19% increase year-over-year. This growth isn't a fluke; it's a direct result of their disciplined, dual-pronged approach to expansion.

The core growth engine is a strategic, partnership-driven acquisition model. Unlike simple roll-ups, USPH buys a majority stake-often leaving founders with a 20% to 50% ownership-which keeps local management highly motivated and aligned with corporate goals. For instance, in the first half of 2025 alone, they added six clinics through deals like acquiring a 60% equity interest in a three-clinic practice that contributes $5.3 million in annual revenue. This M&A activity is augmented by strong organic growth, with total patient visits surging 16.7% year-over-year in the second quarter of 2025, hitting 1.56 million visits.

Beyond simply adding clinics, USPH is investing in operational efficiency and new service lines. They are using technology to manage costs and expand their reach into high-growth areas like home-care therapy.

• Integrate AI and semi-virtualized front desks to lower labor costs.
• Implement a new enterprise-wide financial and HR system to boost long-term transparency.
• Launch cash-based programs, which generated $900,000 in incremental revenue in Q2 2025.
• Expand the Industrial Injury Prevention (IIP) segment, which saw revenue climb 22.6% to $29.1 million in Q2 2025.

Here's the quick math on their recent performance and near-term outlook. The trailing twelve months (TTM) revenue as of September 30, 2025, reached $750.95 million, a 17.51% jump from the prior year. This top-line momentum is translating to the bottom line, with analysts projecting earnings per share (EPS) to grow from $2.67 to $2.93 in the next year, a 9.74% increase.

The company's key competitive advantage is its operational efficiency combined with its market structure. They are one of the largest players in a highly fragmented U.S. outpatient rehab market, where no single company holds more than a 10% share. Plus, their cost discipline is clear: operating costs per visit actually declined to $83.95 in Q2 2025, helping gross profit margins expand to 20.9%. What this estimate hides, though, is the constant pressure from Medicare rate cuts, a structural headwind they must continually offset with volume and diversification, like the high-margin IIP segment. For a deeper dive into the investor base, you can check out Exploring U.S. Physical Therapy, Inc. (USPH) Investor Profile: Who's Buying and Why?

Next Step: Review the Q3 2025 earnings transcript to assess management's commentary on the 2026 Medicare fee schedule proposal and its potential impact on the projected $2.93 EPS.