U.S. Physical Therapy's Q1 2025: Navigating Contradictions in Staffing, Medicare Rates, and Growth Strategies

Staffing challenges and their impact on volume growth, Medicare rate reduction and rate increases, revenue growth and economic impact, home care service expansion, and impact of Medicare rates on financial performance and strategic focus are the key contradictions discussed in U.S. Physical Therapy, Inc.'s latest 2025Q1 earnings call.



Revenue and Margin Improvement:
- U.S. Physical Therapy reported physical therapy revenues of $156.4 million in Q1 2025, up 16.4% year-over-year, driven by acquisitions and higher net rates.
- The margin progression, particularly in March, reached over 20%, with the company focusing on rate-enhancing initiatives and cost management.

Strong Volume Demand and Recovery:
- The company's average visits per day reached a record high for any first quarter at 31.4%, despite weather-related impacts, which were more significant in mature clinics.
- This growth was supported by demand from existing clients and new organic and acquired locations, showing resilience and recovery from earlier weather disruptions.

Injury Prevention Segment Strength:
- Injury prevention revenues increased by 28.8% in revenue and 29.1% in operating income, excluding acquisitions.
- Growth was driven by organic client expansion and new contracts, with the team demonstrating strong performance despite initial setbacks from an auto manufacturing contract loss.

IIP Acquisitions and Strategic Growth:
- U.S. Physical Therapy completed additional 14 center openings in Q1 2025, contributing to its outpatient deal successes and expansion plans.
- The company's focus on strategic acquisitions and partnerships, such as the recent Metro deal, reflects its ambition for future growth and development.