U.S. Physical Therapy, Inc. (USPH) Boosts Dividend Amid Robust Growth and Sustainable Financials

The physical therapy sector is proving resilient, and U.S. Physical Therapy, Inc. (USPH) has solidified its position as a dividend stalwart with its latest payout. On May 7, 2025, the company declared a $0.45 per share quarterly dividend, marking a 2.27% increase from the prior quarter’s $0.44 dividend. This move underscores USPH’s confidence in its financial health and growth trajectory, fueled by clinic expansions, rising patient demand, and strategic acquisitions.

Dividend Growth and Sustainability

USPH’s dividend history reflects consistent increases over the past five years. Since 2020, the dividend per share has risen from $0.32 to $0.45, a 40.6% cumulative gain, with an average annual growth rate of ~7% since 2022. The forward dividend yield of 2.54% as of May 2025 exceeds the Healthcare sector’s average yield of 1.74%, making USPH an attractive income investment.

Financial metrics support this dividend policy. As of Q1 2025, the company’s payout ratio—dividends relative to earnings—was 73.28%, comfortably below the 80% threshold often cited as a sustainability benchmark. With earnings per share of $0.48, USPH’s profits comfortably cover the annualized dividend of $1.80 per share, leaving room for future increases.

Strong Financial Health and Operational Momentum

USPH’s first-quarter 2025 results highlighted robust performance across key metrics:
- Revenue: Total physical therapy revenue rose 16.4% year-over-year to $156.4 million, driven by a 13.9% increase in patient visits (1.44 million visits) and higher net revenue per visit ($105.66, up 2.2% despite a 2.9% Medicare rate cut).
- Profitability: Net income surged 23.7% to $9.9 million, while adjusted EBITDA jumped 16.5% to $19.5 million, reflecting operational efficiency gains.
- Balance Sheet: The debt-to-equity ratio of 0.85 (total liabilities of $420.7 million vs. equity of $498.9 million) signals manageable leverage, with ample liquidity ($39.2 million in cash and $147 million available under its credit facility).

The company’s clinic expansion strategy is a key growth driver. In Q1 2025 alone, USPH added 14 clinics (net of 7 closures), bringing its total to 773 locations—a 7.4% increase from a year earlier. Notable acquisitions included a 65% stake in a three-clinic practice and an outpatient home care therapy business, bolstering its revenue and geographic reach.

Industrial Injury Prevention (IIP) Segment Shines

USPH’s IIP division, which provides workplace safety services, delivered standout results:
- Revenue grew 28.8% to $27.4 million, with gross profit rising 29.1% to $5.6 million, reflecting strong demand for industrial injury prevention services.
- Organic growth (excluding 2024 acquisitions) was 15.1%, highlighting the segment’s scalability.

CEO Chris Reading emphasized that strategic payor negotiations and a shift toward higher-margin workers’ compensation cases are driving margin resilience despite Medicare reimbursement headwinds.

Risks and Considerations

While USPH’s fundamentals are compelling, investors should note:
1. Medicare Reimbursement: A potential 2.9% rate cut in 2025 and future policy changes could pressure margins.
2. Operational Costs: Salaries and occupancy expenses rose, trimming gross margins to 16.3% from 17.9% in 2024.
3. Debt Management: Borrowings under credit facilities increased to $164.9 million, though the 5.5% interest rate remains manageable.

Conclusion: A Dividend Champion with Legs

USPH’s $0.45 dividend is underpinned by solid financials, robust revenue growth, and a disciplined expansion strategy. With a payout ratio below 80%, a debt-to-equity ratio under 1.0, and adjusted EBITDA growth of 16.5%, the company is well-positioned to sustain and grow its dividend.

The 2.54% yield offers income investors a compelling entry point, especially in a low-yield healthcare sector. Meanwhile, its IIP segment’s outperformance and clinic expansion pipeline suggest long-term growth opportunities.

While risks like Medicare reimbursement and rising costs warrant monitoring, USPH’s execution to date—evidenced by a 40.6% dividend increase since 2020 and 16.4% YoY revenue growth—supports a bullish outlook. For income-focused investors seeking a healthcare play with both yield and growth, USPH merits serious consideration.