UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _____TO _____

COMMISSION FILE NUMBER 1-11151

U.S. PHYSICAL THERAPY, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA		76-0364866
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)		(I.R.S. EMPLOYER IDENTIFICATION NO.)

1300 WEST SAM HOUSTON PARKWAY SOUTH, SUITE 300, HOUSTON, TEXAS		77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)		(ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 297-7000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	USPH	New York Stock Exchange
Common Stock, $.01 par value	USPH	NYSE Texas, Inc.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of November 7, 2025, the number of shares outstanding (issued less treasury stock) of the registrant’s common stock, par value $.01 per share, was: 15,204,119.

TABLE OF CONTENTS

Item 1.	Financial Statements.	3

	Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024	3

	Unaudited Consolidated Statements of Net Income for the Three and Nine Months Ended September 30, 2025, and 2024	4

	Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025, and 2024	5

	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025, and 2024	6

	Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2025, and 2024	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	54

Item 4.	Controls and Procedures	54

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	55

Item 5.	Other Information	55

Item 6.	Exhibits	55

	Signatures	56

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	September 30, 2025			December 31, 2024
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	31,102		$	41,362
Patient accounts receivable, less provision for credit losses of $4,263 and $3,506, respectively		67,629			59,040
Accounts receivable - other		23,672			26,626
Other current assets		16,032			10,555
Total current assets		138,435			137,583
Fixed assets:
Furniture and equipment		67,522			68,128
Leasehold improvements		58,015			51,105
Fixed assets, gross		125,537			119,233
Less accumulated depreciation and amortization		(91,315	)		(87,093	)
Fixed assets, net		34,222			32,140
Operating lease right-of-use assets		139,926			133,936
Investment in unconsolidated affiliate		12,289			12,190
Goodwill		690,412			667,152
Other identifiable intangible assets, net		176,429			179,311
Other assets		4,557			5,155
Total assets	$	1,196,270		$	1,167,467

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, USPH SHAREHOLDERS’ EQUITY AND NON-CONTROLLING INTEREST
Current liabilities:
Accounts payable - trade	$	7,417		$	5,936
Accrued expenses		56,901			59,513
Current portion of operating lease liabilities		41,960			39,835
Current portion of term loan and notes payable		8,802			10,999
Total current liabilities		115,080			116,283
Notes payable, net of current portion		576			903
Revolving facility		26,500			11,000
Term loan, net of current portion and deferred financing costs		124,384			130,627
Deferred taxes		35,695			29,465
Operating lease liabilities, net of current portion		106,178			101,868
Other long-term liabilities		5,414			18,275
Total liabilities		413,827			408,421

Redeemable non-controlling interest - temporary equity		277,661			269,025

Commitments and Contingencies

U.S. Physical Therapy, Inc. (“USPH”) shareholders’ equity:
Preferred stock, $0.01 par value, 500,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.01 par value, 20,000,000 shares authorized, 17,418,856 and 17,309,120 shares issued, respectively		172			172
Additional paid-in capital		296,806			290,321
Accumulated other comprehensive gain		945			2,799
Retained earnings		237,272			227,265
Treasury stock at cost, 2,214,737 shares		(31,628	)		(31,628	)
Total USPH shareholders’ equity		503,567			488,929
Non-controlling interest - permanent equity		1,215			1,092
Total USPH shareholders’ equity and non-controlling interest - permanent equity		504,782			490,021
Total liabilities, redeemable non-controlling interest, USPH shareholders’ equity and non-controlling interest - permanent equity	$	1,196,270		$	1,167,467

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

Table of Contents

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF NET INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30,2025			September 30, 2024

Net patient revenue	$	164,024		$	139,146		$	480,754		$	410,492
Other revenue		33,108			28,887			97,510			80,406
Net revenue		197,132			168,033			578,264			490,898
Operating cost:
Salaries and related costs		116,619			99,835			341,656			289,900
Rent, supplies, contract labor and other		36,115			29,756			104,086			88,104
Depreciation and amortization		5,495			4,158			16,776			12,326
Provision for credit losses		2,073			1,721			5,916			5,065
(Gain) loss on clinic closures - lease and other		(42	)		3,432			269			4,109
Total operating cost		160,260			138,902			468,703			399,504

Gross profit		36,872			29,131			109,561			91,394

Corporate office costs		17,414			14,385			51,135			42,719
(Gain) loss on change in fair value of contingent earn-out consideration		(5,872	)		1,899			(11,484	)		5,332
Operating income		25,330			12,847			69,910			43,343

Other income (expense):
Interest expense, debt and other		(2,408	)		(2,018	)		(7,109	)		(5,966	)
Interest income from investments		33			1,018			85			3,635
Change in revaluation of put-right liability		(663	)		168			(1,406	)		(136	)
Equity in earnings of unconsolidated affiliate		361			231			1,155			750
Loss on sale of a partnership		-			-			(123	)		-
Other		222			90			344			261
Total other expense		(2,455	)		(511	)		(7,054	)		(1,456	)

Income before taxes		22,875			12,336			62,856			41,887

Provision for income taxes		5,233			2,559			14,026			8,781
Net income		17,642			9,777			48,830			33,106

Less: Net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity		(3,790	)		(1,998	)		(9,716	)		(7,539	)
Non-controlling interest - permanent equity		(714	)		(1,151	)		(3,684	)		(3,387	)
		(4,504	)		(3,149	)		(13,400	)		(10,926	)

Net income attributable to USPH shareholders	$	13,138		$	6,628		$	35,430		$	22,180

Basic and diluted earnings per share attributable to USPH shareholders	$	0.48		$	0.39		$	1.85		$	1.32

Shares used in computation - basic and diluted		15,204			15,077			15,178			15,055

Dividends declared per common share	$	0.45		$	0.44		$	1.35		$	1.32

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

Table of Contents

U. S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024

Net income	$	17,642		$	9,777		$	48,830		$	33,106
Other comprehensive income:
Unrealized (loss) on cash flow hedge		(360	)		(3,687	)		(2,489	)		(1,937	)
Tax effect at statutory rate (federal and state)		92			942			636			495
Comprehensive income	$	17,374		$	7,032		$	46,977		$	31,664

Comprehensive income attributable to non-controlling interest		(4,504	)		(3,149	)		(13,400	)		(10,926	)
Comprehensive income attributable to USPH shareholders	$	12,870		$	3,883		$	33,577		$	20,738

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

Table of Contents

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

	Nine Months Ended
	September 30, 2025			September 30, 2024
OPERATING ACTIVITIES
Net income including non-controlling interest	$	48,830		$	33,106
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation and amortization		17,756			12,996
Provision for credit losses		5,916			5,065
Equity-based awards compensation expense		6,151			5,837
Amortization of debt issue costs		315			317
Change in deferred income taxes		11,163			605
Change in revaluation of put-right liability		1,406			136
Change in fair value of contingent earn-out consideration		(11,484	)		5,332
Equity of earnings in unconsolidated affiliate		(1,155	)		(750	)
Loss on sale of fixed assets		420			280
Loss on sale of a partnership		123			-
Other		-			(169	)
Changes in operating assets and liabilities:
Patient accounts receivable, net		(13,604	)		(8,870	)
Accounts receivable - other		3,559			(960	)
Other current and long term assets		(8,155	)		(1,808	)
Accounts payable and accrued expenses		(10,908	)		5,003
Other long-term liabilities		(207	)		(589	)
Net cash provided by operating activities		50,126			55,531

INVESTING ACTIVITIES
Purchase of fixed assets		(10,145	)		(6,697	)
Purchase of interest in businesses, net of cash acquired		(15,214	)		(41,196	)
Purchase of redeemable non-controlling interest, temporary equity		(8,579	)		(6,957	)
Purchase of non controlling interest, permanent equity		(196	)		(756	)
Proceeds from the sale of non-controlling interest, permanent equity		9			26
Proceeds from the sale of partnership interest - redeemable non-controlling interest, temporary equity		149			229
Repayment of notes receivable related to sales of redeemable non-controlling interest		387			451
Proceeds from the sale of partnership		700			-
Distributions from unconsolidated affiliate		1,089			838
Other		531			(535	)
Net cash (used in) investing activities		(31,269	)		(54,597	)

FINANCING ACTIVITIES
Proceeds from revolving facility		146,500			-
Payments on revolving facility		(131,000	)		-
Distributions to non-controlling interest, permanent and temporary equity		(14,610	)		(11,399	)
Cash dividends paid to shareholders		(20,520	)		(19,898	)
Payments on term loan		(7,500	)		(3,750	)
Principal payments on notes payable		(1,994	)		(1,726	)
Other		7			(27	)
Net cash (used in) financing activities		(29,117	)		(36,800	)

Net (decrease) in cash and cash equivalents		(10,260	)		(35,866	)
Cash and cash equivalents - beginning of period		41,362			152,825
Cash and cash equivalents - end of period	$	31,102		$	116,959

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes	$	11,809		$	5,759
Interest paid		7,305			5,630
Non-cash investing and financing transactions during the period:
Purchase of businesses - seller financing portion		300			955
Fair market value of initial contingent consideration related to purchase of businesses		5,731			6,440
Offset of notes receivable associated with purchase of redeemable non-controlling interest		254			627
Notes payable related to purchase of redeemable non-controlling interest, temporary equity		135			66
Notes receivable related to sale of redeemable non-controlling interest, temporary equity		2,017			2,075
Notes receivable related to the sale of non-controlling interest, permanent equity		29			282

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

Table of Contents

	Common Stock				Additional			Accumulated Other			Retained			Treasury Stock						Total Shareholders’			Non-Controlling
For the nine months ended September 30, 2025	Shares		Amount		Paid-In Capital			Comprehensive Loss			Earnings			Shares			Amount			Equity			Interests			Total

Balance December 31, 2024		17,309	$	172	$	290,321		$	2,799		$	227,265			(2,215	)	$	(31,628	)		488,929		$	1,092		$	490,021
Net income attributable to USPH shareholders		-		-		-			-			35,430			-			-			35,430			-			35,430
Net income attributable to non-controlling interest - permanent equity		-		-		-			-			-			-			-			-			3,684			3,684
Issuance of restricted stock, net of cancellations		110		-		-			-			-			-			-			-			-			-
Revaluation of redeemable non-controlling interest, net of tax		-		-		-			-			(9,821	)		-			-			(9,821	)		-			(9,821	)
Compensation expense - equity-based awards		-		-		5,876			-			-			-			-			5,876			-			5,876
Sale of non-controlling interest		-		-		(9	)		-			-			-			-			(9	)		-			(9	)
Dividends paid to USPH shareholders		-		-		-			-			(20,520	)		-			-			(20,520	)		-			(20,520	)
Distributions to non-controlling interest partners - permanent equity		-		-		-			-			-			-			-			-			(3,630	)		(3,630	)
Deferred taxes related to redeemable non-controlling interest - temporary		-		-		-			-			4,911			-			-			4,911			-			4,911
Other comprehensive gain		-		-		-			(1,853	)		-			-			-			(1,853	)		-			(1,853	)
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans		-		-		721			-			-			-			-			721			-			721
Other		-		-		(103	)		(1	)		7			-			-			(97	)		69			(28	)
Balance September 30, 2025		17,419		172		296,806			945			237,272			(2,215	)		(31,628	)		503,567			1,215			504,782

	Common Stock				Additional			Accumulated Other			Retained			Treasury Stock						Total Shareholders’			Non-Controlling
For the three months ended September 30, 2024	Shares		Amount		Paid-In Capital			Comprehensive Gain			Earnings			Shares			Amount			Equity			Interests			Total

Balance June 30, 2024		17,291	$	172	$	285,462		$	4,084		$	226,482			(2,215	)	$	(31,628	)	$	484,572		$	1,043		$	485,615
Net income attributable to USPH shareholders		-		-		-			-			6,628			-			-			6,628			-			6,628
Net income attributable to non-controlling interest - permanent equity		-		-		-			-			-			-			-			-			1,151			1,151
Revaluation of redeemable non-controlling interest		-		-		-			-			(1,097	)		-			-			(1,097	)		-			(1,097	)
Compensation expense - equity-based awards		-		-		1,921			-			-			-			-			1,921			-			1,921
Sale of non-controlling interest		-		-		29			-			-			-			-			29			-			29
Purchase of partnership interests - non-controlling interest		-		-		(410	)		-			-			-			-			(410	)		(68	)		(478	)
Dividends paid to USPH shareholders		-		-		-			-			(6,634	)		-			-			(6,634	)		-			(6,634	)
Distributions to non-controlling interest partners - permanent equity		-		-		-			-			-			-			-			-			(941	)		(941	)
Deferred taxes related to non-controlling interest (temporary and permanent equity)		-		-		-			-			521			-			-			521			-			521
Other comprehensive gain		-		-		-			(2,745	)		-			-			-			(2,745	)		-			(2,745	)
Other		-		-		-			-			(27	)		-			-			(27	)		173			146
Balance September 30, 2024		17,291		172		287,002			1,339			225,873			(2,215	)		(31,628	)		482,758			1,358			484,116

	Common Stock				Additional			Accumulated Other			Retained			Treasury Stock						Total Shareholders’			Non-Controlling
For the nine months ended September 30, 2024	Shares		Amount		Paid-In Capital			Comprehensive Loss			Earnings			Shares			Amount			Equity			Interests			Total

Balance December 31, 2023		17,202	$	172	$	281,096		$	2,782		$	223,772			(2,215	)	$	(31,628	)	$	476,194		$	1,216		$	477,410
Net income attributable to USPH shareholders		-		-		-			-			22,180			-			-			22,180			-			22,180
Net income attributable to non-controlling interest - permanent equity		-		-		-			-			-			-			-			-			3,387			3,387
Revaluation of redeemable non-controlling interest, net of tax		-		-		-			-			(3,158	)		-			-			(3,158	)		-			(3,158	)
Compensation expense - equity-based awards		-		-		5,837			-			-			-			-			5,837			-			5,837
Sale of non-controlling interest		-		-		229			-			-			-						229			-			229
Purchase of partnership interests - non-controlling interest		-		-		(760	)		-			-			-			-			(760	)		(124	)		(884	)
Dividends paid to USPH shareholders		-		-		-			-			(19,898	)		-			-			(19,898	)		-			(19,898	)
Distributions to non-controlling interest partners - permanent equity		-		-		-			-			-			-			-			-			(3,292	)		(3,292	)
Deferred taxes related to non-controlling interest (temporary and permanent equity)		-		-		-			-			(29	)		-			-			(29	)		-			(29	)
Other comprehensive gain		-		-		-			(1,442	)		-			-			-			(1,442	)		-			(1,442	)
Transfer of compensation liability for certain stock issued pursuant to long-term incentive plans		-		-		600			-			-									600			-			600
Transfer of RNCI due to separation agreement		-		-		-			-			3,033									3,033			-			3,033
Other		-		-		-			(1	)		(27	)		-			-			(28	)		171			143
Balance September 30, 2024		17,291		172		287,002			1,339			225,873			(2,215	)		(31,628	)		482,758			1,358			484,116

The accompanying notes are an integral part of these unaudited Consolidated Financial Statements.

Table of Contents

U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation and Significant Accounting Policies

Nature of Business

U.S. Physical Therapy, Inc. and its subsidiaries (the “Company”) operates its business through two reportable business segments. Our physical therapy operations consist of physical therapy, speech therapy and occupational therapy clinics and home-care physical and speech therapy practices that provide pre- and post-operative care and treatment for a variety of orthopedic-related disorders, sports-related injuries, and rehabilitation of injured workers. Services provided by the industrial injury prevention services (“IIP”) segment include onsite services for clients’ employees including injury prevention and rehabilitation, performance optimization, post-offer employment testing, functional capacity evaluations and ergonomic assessments. The majority of IIP is contracted with and paid for directly by employers, including a number of Fortune 500 companies. IIP is performed through Industrial Sports Medicine Professionals with specialized training related to the musculoskeletal system.

The Company added 18 clinics and closed seven clinics in the 2025 Third Quarter bringing its total owned and/or managed clinics to 779 as of September 30, 2025, compared to 700 as of September 30, 2024.

During the nine months ended September 30, 2025, and for the year ended December 31, 2024, the Company completed the acquisitions of the following clinic practices and IIP businesses:

		% Interest		Number of
Acquisition	Date	Acquired		Clinics
July 2025 Acquisition	July 31, 2025		60%		3
April 2025 Acquisition	April 30, 2025		40%^*		**
February 2025 Acquisition	February 28, 2025		65%		3
November 2024 Acquisition	November 30, 2024		75%		8
October 2024 Acquisition	October 31, 2024		50%		50
August 2024 Acquisition	August 31, 2024		70%		8
April 2024 Acquisition	April 30, 2024		***		****
March 2024 Acquisition	March 29, 2024		50%		9

On April 30, 2025, the Company acquired an outpatient home care practice that provides speech and occupational therapy through its 50% owned subsidiary MSO Metro LLC. (“Metro”). After the transaction, the Company’s ownership interest is 40%, the local partners have an ownership interest of 40% and the practice’s preacquisition owners have a 20% ownership interest.

**	Home-care business

***	On April 30, 2024, one of our primary IIP businesses, Briotix Health Limited Partnership, acquired 100% of an IIP business.

****	IIP business

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions for Form 10-Q. However, the statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Management believes this report contains all necessary adjustments (consisting only of normal recurring adjustments) to present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the interim periods presented. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on March 3, 2025. Interim results are not necessarily indicative of the results the Company expects for the entire year. All significant intercompany transactions have been eliminated in consolidation.

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by chief operating decision makers in determining the allocation of resources and in assessing performance. The Company currently operates through two segments: physical therapy operations and IIP.

Use of Estimates

In preparing the Company’s consolidated financial statements, management makes certain estimates and assumptions, especially in relation to, but not limited to, goodwill impairment, tradenames and other intangible assets, allocations of purchase price, allowance for receivables, tax provision and contractual allowances, that affect the amounts reported in the consolidated financial statements and related disclosures. Actual results may differ from these estimates.

Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill represents the excess of the amount paid and fair value of the non-controlling interests over the fair value of the acquired business assets, which include certain identifiable intangible assets. Historically, goodwill has been derived from acquisitions and, prior to 2009, from the purchase of some or all of a particular local management’s equity interest in an existing clinic. Effective January 1, 2009, if the purchase price of a non-controlling interest, permanent equity by the Company exceeds or is less than the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital.

Goodwill and other indefinite-lived intangible assets are not amortized but are instead subject to periodic impairment evaluations. The fair value of goodwill and other identifiable intangible assets with indefinite lives are evaluated for impairment at least annually and upon the occurrence of certain triggering events or conditions and are written down to fair value, if considered impaired. These events or conditions include but are not limited to a significant adverse change in the business environment, regulatory environment, or legal factors; a current period operating, or cash flow, combined with a history of such losses or a projection of continuing losses; or a sale or disposition of a significant portion of a reporting unit. The occurrence of one of these triggering events or conditions could result in an impairment assessment, necessitating an impairment charge. The Company evaluates indefinite-lived tradenames in conjunction with its annual goodwill impairment test.

The reporting units within the Company’s physical therapy business are comprised of six regions primarily based on each clinic’s location. The IIP business consists of two reporting units.

As part of the impairment analysis, the Company is first required to assess qualitatively if it can conclude whether goodwill is more likely than not impaired. If goodwill is more likely than not impaired, it is then required to complete a quantitative analysis of whether a reporting unit’s fair value is less than its carrying amount. In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company considers relevant events or circumstances that affect the fair value or carrying amount of a reporting unit. The Company considers both the income and market approach in determining the fair value of its reporting units when performing a quantitative analysis. An impairment loss generally would be recognized when the carrying amount of the net assets of a reporting unit, inclusive of goodwill and other identifiable intangible assets, exceeds the estimated fair value of the reporting unit.

For the three and nine months ended September 30, 2025, no triggering events or indicators were identified that would require impairments of assets for such period. During the three and twelve months ended December 31, 2024, the Company recorded a non-cash impairment charge of $2.4 million related to assets held for sale (described in Note 5, Assets Held for Sale), of which $1.6 million was attributed to referral relationships, $0.5 million was attributed to tradenames and $0.3 million was attributed to other assets.

The Company will continue to monitor for any triggering events or other indicators of impairment.

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Variable interest entities

A variable interest entity (“VIE”) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support, or is structured such that its equity holders do not have power over the activities of the entity; have voting rights, as a group, that are not proportionate to their economic interests; or are not exposed to the residual losses or benefits of the entity.

At the inception of a contractual agreement, the Company determines whether it holds a variable interest in a legal entity that is a VIE and whether it is the primary beneficiary of the VIE. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. If the Company concludes it is the primary beneficiary of a VIE, the Company consolidates the accounts of that VIE. The Company regularly reviews and reconsiders previous conclusions regarding whether the Company holds a variable interest in a potential VIE, the status of an entity as a VIE, and whether it is the primary beneficiary of a VIE.

Investment in unconsolidated affiliate

Investments in unconsolidated affiliates, in which the Company has less than a controlling interest, are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions, distributions and the Company’s equity in net earnings or loss of the respective joint venture.

Redeemable Non-Controlling Interest

The non-controlling interest that is reflected as redeemable non-controlling interest in the consolidated financial statements consists of those in which the owners and the Company have certain redemption rights, whether currently exercisable or not, and which currently, or in the future, require that the Company purchase or the owner sell the non-controlling interest held by the owner, if certain conditions are met. The purchase price is derived via a predetermined formula based on a multiple of earnings performance as defined in the respective limited partnership agreements. Most of these redemption rights can be triggered by the owner or the Company at such time as both of the following events have occurred: 1) termination of the owner’s employment, regardless of the reason for such termination, and 2) the passage of specified number of years after the closing of the transaction, typically three to six years, as defined in the limited partnership agreement or limited liability company agreement, as applicable. Other redemption rights can be triggered by the owner after the passage of a certain period of time. The redemption rights are not automatic or mandatory (even upon death) and require either the owner or the Company to exercise its rights when the conditions triggering the redemption rights have been satisfied.

On the date the Company acquires a controlling interest in a partnership, and the limited partnership agreement for such partnership contains redemption rights not under the control of the Company, the fair value of the non-controlling interest is recorded in the consolidated balance sheet under the caption—Redeemable non-controlling interest – temporary equity. Then, in each reporting period thereafter until it is purchased by the Company, the redeemable non-controlling interest is adjusted to the greater of its then current redemption value or initial carrying value, based on the predetermined formula defined in the respective limited partnership agreement. As a result, the value of the non-controlling interest is not adjusted below its initial carrying value. The Company records any adjustment in the redemption value, net of tax, directly to retained earnings and these adjustments are not reflected in the consolidated statements of net income. Although the adjustments are not reflected in the consolidated statements of net income, current accounting rules require that the Company reflects the adjustments, net of tax, in the earnings per share calculation. The amount of net income attributable to redeemable non-controlling interest owners is included in consolidated net income on the face of the consolidated statements of net income. Management believes the redemption value (i.e. the carrying amount) and fair value are the same.

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Non-Controlling Interest

The Company recognizes non-controlling interest, in which the Company has no obligation but the right to purchase the non-controlling interest, as permanent equity in the unaudited consolidated financial statements separate from the parent entity’s equity. The amount of net income attributable to non-controlling interest is included in the consolidated net income on the face of the unaudited consolidated statements of net income. Changes in a parent entity’s ownership interest in a subsidiary that do not result in deconsolidation are treated as equity transactions if the parent entity retains its controlling financial interest. The Company recognizes a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss is measured using the fair value of the non-controlling equity investment on the deconsolidation date.

When the purchase price of a non-controlling interest by the Company exceeds the book value at the time of purchase, any excess or shortfall is recognized as an adjustment to additional paid-in capital. Additionally, operating losses are allocated to non-controlling interests even when such allocation creates a deficit balance for the non-controlling interest partner.

During the nine months ended, September 30, 2025, the Company acquired additional interests in two partnerships which are included in non-controlling interests - permanent equity. The additional interests purchased in each of the partnerships ranged from 15% to 35.0% and the aggregated purchase price for acquired non-controlling interests – permanent equity was $0.2 million. During the year ended December 31, 2024, the Company acquired additional interests in partnerships which are included in non-controlling interests - permanent equity. The additional interests purchased in each of the partnerships ranged from 1.5% to 35.0% and the aggregated purchase price for acquired non-controlling interests – permanent equity was $0.8 million.

During the nine months ended September 30, 2025, the Company sold interests in a partnership which is included in non-controlling interests – permanent equity, for an aggregate price less than of $0.1 million. During the year ended December 31, 2024, the Company sold interests in three partnerships for an aggregate price of $0.3 million.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606. For ASC 606, there is an implied contract between the Company and the patient upon each patient visit. Separate contractual arrangements exist between the Company and third-party payors (e.g. insurers, managed care programs, government programs, workers’ compensation) which establish the amounts the third parties pay on behalf of the patients for covered services rendered. While these agreements are not considered contracts with the customer, they are used for determining the transaction price for services provided to the patients covered by the third-party payors. The payor contracts do not indicate performance obligations for the Company but indicate reimbursement rates for patients who are covered by those payors when the services are provided. At that time, the Company is obligated to provide services for the reimbursement rates stipulated in the payor contracts. The execution of the contract alone does not indicate a performance obligation. For self-paying customers, the performance obligation exists when the Company provides the services at established rates. The difference between the Company’s established rate and the anticipated reimbursement rate is accounted for as an offset to revenue—contractual allowance. Payments for services rendered are typically due 30 to 120 days after receipt of the invoice.

Patient Revenue

Net patient revenue consists of revenues for physical therapy and occupational therapy clinics, and home-care physical and speech therapy practices, that provide pre- and post-operative care and treatment for orthopedic related disorders, sports-related injuries, preventative care, rehabilitation of injured workers and neurological-related injuries. Net patient revenue (patient revenue less estimated contractual adjustments – as described below) is recognized at the estimated net realizable amounts from third-party payors, patients and others in exchange for services rendered when obligations under the terms of the contract are satisfied. There is an implied contract between us and the patient upon each patient visit. Generally, this occurs as the Company provides physical and occupational therapy services, as each service provided is distinct and future services rendered are not dependent on previously rendered services. The Company has agreements with third-party payors that provide payments to the Company at amounts different from its established rates.

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Other Revenue

Revenue from the IIP business, which is included in other revenue in the consolidated statements of net income, is derived from onsite services the Company provides to clients’ employees including injury prevention, rehabilitation, ergonomic assessments, post-offer employment testing and performance optimization. Revenue from the Company’s IIP business is recognized when obligations under the terms of the contract are satisfied. Revenues are recognized at an amount equal to the consideration the company expects to receive in exchange for providing injury prevention services to its clients. The revenue is determined and recognized based on the number of hours and respective rate for services provided in a given period.

Management contract revenue, which is also included in other revenue, is derived from contractual arrangements whereby the Company manages a clinic for unrelated physician groups and hospitals. Typically, revenue is determined based on the number of visits conducted at the clinic and recognized at a point in time when services are performed. Costs, typically consisting of salaries, are recorded when incurred. Management contract revenue was $2.5 million for both the three months ended September 30, 2025, and the three months ended September 30, 2024, and was $7.3 million for both the nine months ended September 30, 2025, and the nine months ended September 30, 2024.

Additionally, other revenue from physical therapy operations includes services the Company provides on-site at locations such as schools and industrial worksites for physical or occupational therapy services, athletic trainers for schools and gym membership fees. Contract terms and rates are agreed to in advance between the Company and the third parties. Services are typically performed over the contract period and revenue is recorded at the point of service. If the services are paid in advance, revenue is recorded as a contract liability over the period of the agreement and recognized at the point in time when the services are performed.

Contractual Allowances

The allowance for estimated contractual adjustments is based on terms of payor contracts and historical collection and write-off experience. Contractual allowances result from the differences between the rates charged for services performed and expected reimbursements by both insurance companies and government-sponsored healthcare programs for such services. Medicare regulations and the various third-party payors and managed care contracts are often complex and may include multiple reimbursement mechanisms payable for the services provided in Company clinics. The Company estimates contractual allowances based on its interpretation of the applicable regulations, payor contracts and historical calculations. Each month the Company estimates its contractual allowance for each clinic based on payor contracts and the historical collection experience of the clinic and applies an appropriate contractual allowance reserve percentage to the gross accounts receivable balances for each payor of the clinic. Based on the Company’s historical experience, calculating the contractual allowance reserve percentage at the payor level is sufficient to allow the Company to provide the necessary detail and accuracy with its collectability estimates. However, the services authorized, provided and related reimbursement are subject to interpretation that could result in payments that differ from the Company’s estimates. Payor terms are periodically revised necessitating continual review and assessment of the estimates made by management. The Company’s billing system does not capture the exact change in its contractual allowance reserve estimate from period to period. In order to assess the accuracy of its revenues, management regularly compares its cash collections to corresponding net revenues measured both in the aggregate and on a clinic-by-clinic basis. In the aggregate, historically the difference between net revenues and corresponding cash collections for any fiscal year has generally reflected a difference between approximately 1.0% to 1.5% of net revenues. As a result, the Company believes that a change in the contractual allowance reserve estimate would not likely be more than 1.0% to 1.5% on any balance sheet date.

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Provision for Credit Losses

The Company determines provisions for credit losses based on the specific agings at each clinic. The provision for credit losses is included in operating costs in the consolidated statements of net income. Patient accounts receivable, which are stated at the historical carrying amount net of contractual allowances, write-offs, and allowance for credit losses, includes only those amounts the Company estimates to be collectible.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount to be recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits nor was any interest expense recognized during either the three and nine months ended September 30, 2025, or September 30, 2024. The Company records any interest or penalties, if required, in interest and other expense, as appropriate.

On July 4, 2025, the President signed H.R. 1, the One Big Beautiful Bill Act, into law. Among other changes, the Act reinstates 100% bonus depreciation and provides more favorable deductibility for certain business expenses beginning in 2025. As required by ASC 740, the Company recognized the effects of the Act in the quarter ended September 30, 2025. The enactment primarily affected the timing of deductions and the mix of current and deferred income tax expense but did not have a material impact on the Company’s consolidated financial statements for the quarter. The Company will continue to evaluate interpretive guidance and any incremental impacts in subsequent periods.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date.

The three levels of the fair value hierarchy are as follows:

●	Level 1 – Quoted prices in active markets for identical assets or liabilities.

●	Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

●	Level 3 – Unobservable inputs based on the Company’s own assumptions.

The carrying amounts reported in the balance sheets for cash and cash equivalents, certain contingent earn-out payments, accounts receivable, accounts payable and notes payable approximate their fair values due to the short-term maturity of these financial instruments. The carrying amount of the debt under the Third Amended and Restated Credit Agreement (defined as “Credit Agreement” in Note 9) approximates the fair value due to the proximity of the debt issue date and the balance sheet date and the variable component of interest on debt. The interest rate on the Credit Agreement is tied to the Secured Overnight Financing Rate (“SOFR”) or the rate of interest in effect as publicly announced from time to time by Bank of America as its prime rate.

The put right expiring in 2027 is associated with the potential future purchase of a separate company within the Company’s IIP business. It is marked to fair value on a recurring basis using Level 3 inputs. In determining the value of the put right as of September 30, 2025, the Company used a Monte Carlo simulation model utilizing unobservable inputs including asset volatility of 20.0% and a discount rate of 10.99%. The value of this put right increased $1.4 million for the nine months ended September 30, 2025. The put right was valued at approximately $2.4 million on September 30, 2025, and approximately $1.0 million on December 31, 2024.

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The consideration for some of the Company’s acquisitions includes future payments that are contingent upon the occurrence of future operational or financial objectives being met. The Company estimates the fair value of contingent consideration obligations through valuation models designed to estimate the probability of such contingent payments based on various assumptions and incorporating estimated success rates. These fair value measurements are based on significant inputs not observable in the market. Substantial judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions could have a material impact on the amount of contingent consideration expense the Company records in any given period. The Company determined the fair value of its contingent consideration obligations to be $9.6 million on September 30, 2025, and $17.6 million on December 31, 2024.

The valuation of the Company’s interest rate derivative is measured as the present value of all expected future cash flows based on SOFR-based yield curves. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparty, which is a Level 2 fair value measurement. See Note 10 for more information on the Company’s interest rate derivative.

The redemption value of redeemable non-controlling interests approximates the fair value. See Note 4 for the changes in the fair value of Redeemable non-controlling interest during the three and nine months ended September 30, 2025.

Restricted Stock

Restricted stock issued to employees and directors is subject to continued employment or continued service on the board, respectively. Generally, restrictions on the stock granted to employees lapse in equal annual installments on the following four anniversaries of the date of grant. For those shares granted to directors, the restrictions will lapse in equal quarterly installments during the first year after the date of grant. For those granted to officers and certain other key employees, the restriction will lapse in equal quarterly installments during the four years following the date of grant. Compensation expense for grants of restricted stock is recognized based on the fair value per share on the date of grant amortized over the vesting period. The Company recognizes any forfeitures as they occur. The restricted stock issued is included in basic and diluted shares for the earnings per share computation during both the three and nine months ended September 30, 2025.

Recently Adopted Accounting Guidance

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure on an annual basis, a tabular reconciliation, including both amount and percentage of specific categories of the effective tax rate reconciliation, including state and local income taxes (net of Federal taxes), foreign taxes, effects of changes in tax laws and regulations, effects of cross-border tax laws, tax credits, changes in valuation allowances, nontaxable and nondeductible items and changes in unrecognized tax benefits. Additional disclosures are required for certain items exceeding five percent of income from continuing operations multiplied by the statutory income tax rate. The standard also requires disclosure of income taxes paid between Federal, state and foreign jurisdictions, including further disaggregation of those payments exceeding five percent of the total income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company has adopted this standard as of January 1, 2025, and there was no significant impact on the Company’s consolidated financial statements. The new quantitative disclosures are required on an annual basis and therefore are not required for this interim period; the Company will include the required enhanced disclosures in its Annual Report on Form 10‑K for the year ending December 31, 2025.

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Recent Accounting Guidance Not Yet Adopted

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions. The ASU requires entities to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption; as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The amendment also requires disclosure of the total amount of selling expense and, in annual reporting periods, an entity’s definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027; however early adoption is permitted. The ASU can be applied either prospectively or retrospectively. The Company is currently reviewing the impact that ASU 2024-03 will have on the disclosures in our consolidated financial statements.

2. Earnings Per Share

Basic and diluted earnings per share is computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares and participating securities. The restricted stock the Company grants are participating securities containing non-forfeitable rights to receive dividends. Accordingly, any unvested shares of restricted stock is included in the basic and diluted earnings per share computation. Additionally, in accordance with current accounting guidance, the revaluation of redeemable non-controlling interest (see Note 4, Redeemable Non-Controlling Interest), net of tax, is charged directly to retained earnings and is included in the earnings per basic and diluted share calculation.

The computation of basic and diluted earnings per share are as follows.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
Earnings per Share	(In thousands, except per share data)						(In thousands, except per share data)
Computation of earnings per share - USPH shareholders:
Net income attributable to USPH shareholders	$	13,138		$	6,628		$	35,430		$	22,180
Charges to retained earnings:
Revaluation of redeemable non-controlling interest		(7,918	)		(1,097	)		(9,821	)		(3,158	)
Tax effect at statutory rate (federal and state)		2,023			280			2,509			807
	$	7,243		$	5,811		$	28,118		$	19,829

Earnings per share (basic and diluted)	$	0.48		$	0.39		$	1.85		$	1.32

Shares used in computation:
Basic and diluted earnings per share - weighted-average shares		15,204			15,077			15,178			15,055

3. Acquisitions of Businesses

The Company’s strategy is to continue acquiring multi-clinic outpatient physical therapy practices and home-care physical and speech therapy practices, to develop outpatient physical therapy clinics as satellites in existing partnerships, and to continue acquiring companies that provide industrial injury prevention services. The consideration paid for each acquisition is derived through arm’s length negotiations and funded through working capital or borrowings under the Company’s revolving facility.

The results of operations of the acquisitions below have been included in the Company’s unaudited consolidated financial statements from their respective date of acquisition. Unaudited proforma consolidated financial information for the acquisitions has not been included, as the results, individually and in the aggregate, were not material to current operations.

During the nine months ended September 30, 2025, the Company acquired a majority interest in the following businesses:

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2025 Acquisitions

		% Interest	Number of
Acquisition	Date	Acquired	Clinics
July 2025 Acquisition	July 31, 2025	60%	3
April 2025 Acquisition	April 30, 2025	40%	*
February 2025 Acquisition	February 28, 2025	65%	3

*	Home-care business

The purchase price plus the fair value of the non-controlling interest for the acquisitions after September 30, 2024 was allocated to the fair value of the assets acquired, inclusive of identifiable intangible assets (i.e. tradenames, referral relationships, customer relationships and non-compete agreements) and liabilities assumed based on the estimated fair values at the acquisition date, with the amount in excess of fair values being recorded as goodwill. The Company is in the process of completing its formal valuation analysis of the above-mentioned acquisitions in order to identify and determine the fair value of tangible and identifiable intangible assets acquired and the liabilities assumed. Thus, the final allocation of the purchase price may differ from the preliminary estimates used on September 30, 2025, based on additional information obtained and completion of the valuation of the identifiable intangible assets. Changes in the estimated valuation of the tangible assets acquired, the completion of the valuation of identifiable intangible assets and the completion by the Company of the identification of any unrecorded pre-acquisition contingencies, where the liability is probable and the amount can be reasonably estimated, will likely result in adjustments to goodwill. The Company does not expect the adjustments to be material. The Company continues to evaluate the components for the purchase price allocations for acquisitions after September 30, 2024.

On July 31, 2025, the Company acquired a 60% equity interest in a three-clinic practice with the practice owners retaining a 40% equity interest. The purchase price for the 60% equity interest was approximately $7.9 million, of which $7.6 million was paid in cash and $0.3 million is in the form of a note payable. The note accrues interest at 5.0% per annum and the principal and interest is payable on July 31, 2027. As part of this transaction, the Company agreed to additional consideration if future operational objectives are met. The contingent consideration was valued at $2.6 million as of September 30, 2025.

On April 30, 2025, the Company acquired an outpatient home-care physical and speech therapy practice through its 50%-owned subsidiary, Metro. After the transaction, the Company’s ownership interest is 40%, the local partners have an ownership interest of 40% and the practice’s preacquisition owners have a 20% ownership interest. The purchase price for the 80% equity interest was approximately $2.3 million which was paid in cash. As part of this transaction, the Company agreed to additional consideration if future operational objectives are met. The maximum amount of additional contingent consideration due under this agreement is $1.8 million. The contingent consideration was valued at $1.0 million as of September 30, 2025.

On February 28, 2025, the Company acquired a 65% interest in a physical therapy practice with three clinic locations. The prior owner retained a 35% ownership interest. The purchase price for the 65% interest was approximately $3.8 million, which was paid in cash. As part of this transaction, the Company agreed to additional consideration if future operational objectives are met by the business. The maximum amount of additional contingent consideration due under this agreement is $1.3 million. The contingent consideration was valued at $0.3 million as of September 30, 2025.

Besides the multi-clinic acquisitions referenced above, the Company purchased the assets and business of 14 physical therapy clinics during 2025, which were tucked into larger partnerships in separate transactions.

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The following table provides details on the preliminary purchase price allocation for the acquisitions described above.

	Physical Therapy
	Operations
	(In thousands)
Cash paid, net of cash acquired	$	15,214
Seller note		300
Deferred payments		-
Contingent payments		5,731
Total consideration	$	21,245

Estimated fair value of net tangible assets acquired:
Total current assets	$	918
Total non-current assets		240
Total liabilities		(495	)
Net tangible assets acquired		663
Customer and referral relationships		5,981
Non-compete agreement		310
Tradenames		1,442
Goodwill		20,903
Fair value of non-controlling interest (classified as redeemable non-controlling interest)		(8,054	)
	$	21,245

Total current assets primarily represent accounts receivable while total non-current assets consist of fixed assets and equipment.

For the acquisitions completed in the nine months ended September 30, 2025, the values assigned to the customer and referral relationships and non-compete agreement are being amortized on a straight-line basis over their respective estimated lives. For customer and referral relationships, the weighted-average amortization period is 12.0 years. For the non-compete agreements, the weighted-average amortization period is 6.0 years. The values assigned to tradenames are tested annually for impairment.

2024 Acquisitions

		% Interest	Number of
Acquisition	Date	Acquired	Clinics
November 2024 Acquisition	November 30, 2024	75%	8
October 2024 Acquisition	October 31, 2024	50%	50
August 2024 Acquisition	August 31, 2024	70%	8
April 2024 Acquisition	April 30, 2024	**	*
March 2024 Acquisition	March 29, 2024	50%	9

*	IIP business.

**	On April 30, 2024, one of the Company’s primary IIP businesses, Briotix Health Limited Partnership, acquired 100% of an IIP business.

On November 30, 2024, the Company acquired a 75% equity interest in an eight-clinic physical therapy practice. The owner of the practice retained 25% of the equity interests. The purchase price for the 75% equity interest was approximately $15.9 million, of which $15.7 million was paid in cash, and $0.2 million was in the form of a note payable. The note accrues interest at 5.0% per annum and the principal and interest is payable on December 1, 2026.

On October 31, 2024, the Company acquired a 50% interest in Metro pursuant to an Equity Interest Purchase Agreement (the “Purchase Agreement”) dated October 7, 2024 among U.S. Physical Therapy, Ltd. (a subsidiary of the Company), Metro, the members of Metro, and Michael G. Mayrsohn, as Sellers’ Representative. The Company also became the managing member of Metro.

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The Company paid a purchase price of approximately $76.5 million, $75.0 million of which was funded by our cash on hand and the remaining $1.5 million through the issuance of 18,358 shares of the Company’s common stock based on a trailing five-day average as of the day immediately prior to closing. The shares of the Company’s common stock were issued in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act. The Purchase Agreement also included an earnout where the sellers can earn up to $20.0 million of additional consideration if certain performance criteria relating to the Metro business are achieved. The contingent consideration was valued at $2.5 million on September 30, 2025.

On August 31, 2024, the Company acquired a 70% equity interest in an eight-clinic practice physical therapy and the original practice owners retained a 30% equity interest (“August 2024 Acquisition”). The purchase price for the 70% equity interest was approximately $2.0 million. As part of the transaction, the Company agreed to additional contingent consideration if future operational and financial objectives are met. The maximum amount of additional contingent consideration due under this agreement is $3.6 million. The contingent consideration was valued at $0.5 million on September 30, 2025.

On April 30, 2024 the Company acquired 100% of an IIP business (“April 2024 Acquisition”), through one of its primary IIP businesses, Briotix Health Limited Partnership, for a purchase price of approximately $24.0 million, of which $0.5 million was in the form of a note payable. The principal and the interest has been paid as of September 30, 2025. As part of the transaction, the Company agreed to additional contingent consideration if future operational objectives are met by the business. The maximum amount of additional contingent consideration due under this agreement is $10.0 million. In August 2025, the Company paid $1.9 million in full settlement of the contingent consideration. As of September 30, 2025, no further amounts are payable related to the April 2024 Acquisition.

On March 29, 2024, the Company acquired a 50% equity interest in a nine-clinic physical therapy and hand therapy practice (“March 2024 Acquisition”). The original owners of the practice retained the remaining 50%. The purchase price for the 50% equity interest was approximately $16.4 million, of which $0.5 million was in the form of a note payable. The note accrues interest at 4.5% per annum and the principal and the interest are payable on March 29, 2026. As part of the transaction, the Company agreed to additional contingent consideration if future operational and financial objectives are met. There is no maximum payout. The contingent consideration was valued at $2.5 million on September 30, 2025.

For the year ended December 31, 2024, besides the multi-clinic acquisitions referenced above, the Company purchased the assets and business of eight physical therapy clinics, which were tucked into larger partnerships in separate transactions.

The following table provides details on the purchase price allocations for the March 2024 Acquisition, the April 2024 Acquisition, the August 2024 Acquisition and preliminary purchase price allocations for the other acquisitions described above.

	Physical Therapy
	IIP			Operations			Total
	(In thousands)
Cash paid, net of cash acquired	$	23,106		$	109,983		$	133,089
Seller note		455			1,220			1,675
Deferred payments		-			1,500			1,500
Contingent payments		2,100			15,571			17,671
Total consideration	$	25,661		$	128,274		$	153,935

Estimated fair value of net tangible assets acquired:
Total current assets	$	1,132		$	9,447		$	10,579
Total non-current assets		563			30,360			30,923
Total liabilities		(463	)		(29,402	)		(29,865	)
Net tangible assets acquired		1,232			10,405			11,637
Customer and referral relationships		6,500			52,630			59,130
Non-compete agreement		210			3,590			3,800
Tradenames		1,400			12,477			13,877
Goodwill		16,319			149,315			165,634
Fair value of non-controlling interest (classified as redeemable non-controlling interest)		-			(100,143	)		(100,143	)
	$	25,661		$	128,274		$	153,935

Total current assets primarily represent accounts receivable while total non-current assets consist of fixed assets and equipment used in the practice.

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For the acquisitions in 2024, the values assigned to the customer and referral relationships and non-compete agreements are being amortized on a straight-line basis over their respective estimated lives. For customer and referral relationships, the weighted-average amortization period is 12.7 years. For the non-compete agreements, the weighted-average amortization period is 5.9 years. The values assigned to tradenames are tested annually for impairment.

Variable Interest Entities

Certain states prohibit the “corporate practice of medicine,” which restricts the Company from owning physical therapy practices which directly employ therapists and from exercising control over medical decisions by therapists. In these states, the Company enters into long-term management agreements with medical practices that are owned by licensed therapists, which, in turn, employ or contract with therapists who provide professional services.

Based on the provisions of the management agreements, the Company determined that these entities are variable interest entities. The Company’s ownership percentages in these entities is 50% as of September 30, 2025. The Company consolidates the VIEs since it controls the management and operating activities that are most significant to the VIEs’ economic performance and its ownership interests expose the Company to the risks and benefits that could potentially be significant to each VIE.

The assets of the VIEs recognized in consolidation may only be used to settle obligations of each respective VIE and may not be used to satisfy claims of the Company, and the creditors of each VIE do not have recourse to the Company’s general credit. As of September 30, 2025, and December 31, 2024, the total assets of the Company’s variable interest entities were $245.3 million and $231.3 million, respectively. As of September 30, 2025, and December 31, 2024, the total liabilities of the Company’s VIEs were $38.5 million and $31.9 million respectively.

The table below presents the operating results of the VIEs.

	Three Months Ended			Nine Months Ended
	September 30, 2025			September 30, 2025
	(In thousands)
Net revenue	$	22,848		$	65,771
Operating cost:
Salaries and related costs		13,436			39,516
Rent, supplies, contract labor and other		5,277			13,855
Depreciation and amortization		1,116			4,030
Provision for credit losses		228			655
Total operating cost		20,057			58,056

Gross profit		2,791			7,715

Gain on fair value adjustments		(764	)		(764	)
Other expense		3			9
Provision for income taxes		11			193

Net income	$	3,541		$	8,277

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4. Redeemable Non-Controlling Interest

In most of the Company’s acquired partnerships, the former practice owner retains an equity interest in our subsidiary which the Company is required to purchase upon the exercise of either the put right or the call right. The applicable purchase price is calculated per the terms of the respective agreements and classified as redeemable non-controlling interest (temporary equity) in our consolidated balance sheets. The terms and conditions regarding repurchase rights and obligations for most of the redeemable non-controlling interests, are summarized below under “Physical Therapy Practice Acquisitions”. However, the Company has an agreement that provides for different rights and obligations regarding the particular redeemable non-controlling interests involved in that agreement – described below under “ProgressiveHealth Acquisition”.

Physical Therapy Practice Acquisitions

When the Company acquires a majority interest (the “Acquisition”) in a physical therapy clinic (referred to as “Therapy Practice”), these Therapy Practice transactions typically occur in a series of steps which are described below.

Prior to the Acquisition, the Therapy Practice exists as a separate legal entity (the “Seller Entity”). The Seller Entity is owned by one or more individuals (the “Selling Shareholders”) most of whom are physical therapists that work in the Acquired Therapy Practice and provide physical therapy services to patients.

In conjunction with the Acquisition, the Seller Entity contributes the acquired Therapy Practice into a newly-formed limited partnership (“NewCo”), in exchange for one hundred percent (100%) of the limited and general partnership interests in NewCo. Therefore, in this step, NewCo becomes a wholly-owned subsidiary of the Seller Entity.

The Company enters into an agreement (the “Purchase Agreement”) to acquire from the Seller Entity a majority (ranges from 50% to 90%) of the limited partnership interest and in all cases 100% of the general partnership interest in NewCo. The Company does not purchase 100% of the limited partnership interest because the Selling Shareholders, through the Seller Entity, want to maintain an ownership percentage. The consideration for the Acquisition is primarily payable in the form of cash at closing and a two-year note in lieu of an escrow (the “Purchase Price”). In some of the acquired therapy practice transactions, the Purchase Agreement contains an earn-out or other contingent consideration that is payable to the Seller Entity or the Selling Shareholders.

The Company and the Seller Entity also execute a partnership agreement (the “Partnership Agreement”) for NewCo that sets forth the rights and obligations of the limited and general partners of NewCo. After the Acquisition, the Company is the general partner of NewCo.

As noted above, the Company does not purchase 100% of the limited partnership interests in NewCo and the Seller Entity retains a portion of the limited partnership interest in NewCo (“Seller Entity Interest”).

In most cases, some or all of the Selling Shareholders enter into an employment agreement (the “Employment Agreement”) with NewCo with an initial term that ranges from three to six years (the “Employment Term”), with automatic one-year renewals, unless employment is terminated prior to the end of the Employment Term. As a result, a Selling Shareholder becomes an employee (“Employed Selling Shareholder”) of NewCo. The employment of an Employed Selling Shareholder can be terminated by the Employed Selling Shareholder or NewCo, with or without cause, at any time. In a few situations, a Selling Shareholder does not become employed by NewCo and is not involved with NewCo following the closing; in those situations, such Selling Shareholders sell their entire ownership interest in the Seller Entity as of the closing of the Acquisition.

The compensation of each Employed Selling Shareholder is specified in the Employment Agreement and is customary and commensurate with his or her responsibilities based on other employees in similar capacities within NewCo, the Company and the industry.

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The Company and the Selling Shareholder (including both Employed Selling Shareholders and Selling Shareholders not employed by NewCo) execute a non-compete agreement (the “Non-Compete Agreement”) which restricts the Selling Shareholder from engaging in competing Therapy Practice activities for a specified period of time (the “Non-Compete Term”). A Non-Compete Agreement is executed with the Selling Shareholders in all cases. That is, even if the Selling Shareholder does not become an Employed Selling Shareholder, the Selling Shareholder is restricted from engaging in a competing Therapy Practice during the Non-Compete Term.

The Non-Compete Term commences as of the date of the Acquisition and typically expires on the later of:

Two years after the date an Employed Selling Shareholder’s employment is terminated (if the Selling Shareholder becomes an Employed Selling Shareholder) or

Five to six years from the date of the Acquisition, as defined in the Non-Compete Agreement, regardless of whether the Selling Shareholder is employed by NewCo.

10.

The Non-Compete Agreement applies to a restricted region which is defined as a mileage radius from the Acquired Therapy Practice. That is, an Employed Selling Shareholder is permitted to engage in competing Therapy Practices or activities outside the designated geography (after such Employed Selling Shareholder is no longer employed by NewCo) and a Selling Shareholder who is not employed by NewCo immediately is permitted to engage in the competing Therapy Practice or activities outside the designated geography.

The Partnership Agreement contains provisions for the redemption of the Seller Entity Interest, either at the option of the Company (the “Call Right”) or at the option of the Seller Entity (the “Put Right”) as follows:

Put Right

In the event that any Selling Shareholder’s employment is terminated under certain circumstances prior to a specified number of years following the Closing Date, the Seller Entity thereafter may have an irrevocable right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below.

In the event that any Selling Shareholder is not employed by NewCo as of the specified date and the Company has not exercised its Call Right with respect to the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, Seller Entity thereafter has the Put Right to cause the Company to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest at the purchase price described in “3” below.

In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the specified date, the Seller Entity has the Put Right, and upon the exercise of the Put Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below.

Call Right

If any Selling Shareholder’s employment by NewCo is terminated prior to the specified date after the Closing Date, the Company thereafter has an irrevocable right to purchase from Seller Entity the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest, in each case at the purchase price described in “3” below.

In the event that any Selling Shareholder’s employment with NewCo is terminated for any reason on or after the specified date, the Company has the Call Right, and upon the exercise of the Call Right, the Terminated Selling Shareholder’s Allocable Percentage of Seller Entity’s Interest shall be redeemed by the Company at the purchase price described in “3” below.

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For the Put Right and the Call Right, the purchase price is derived from a formula based on a specified multiple of NewCo’s trailing earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of NewCo (the “Redemption Amount”). NewCo’s earnings are distributed monthly based on available cash within NewCo; therefore, the undistributed earnings amount is small, if any.

The Purchase Price for the initial equity interest purchased by the Company typically is also based on the same specified multiple of the trailing twelve-month earnings that is used in the Put Right and the Call Right noted above.

The Put Right and the Call Right do not have an expiration date.

The Put Right and the Call Right never apply to Selling Shareholders who do not become employed by NewCo, since the Company requires that such Selling Shareholders sell their entire ownership interest in the Seller Entity at the closing of the Acquisition.

ProgressiveHealth Acquisition

On November 30, 2021, the Company acquired a majority interest in ProgressiveHealth Companies, LLC (“Progressive”), which owns a majority interest in certain subsidiaries (“Progressive Subsidiaries”) that operate in the IIP business. The Progressive transaction was completed in a series of steps which are described below.

Prior to the acquisition, the Progressive Subsidiaries were owned by a legal entity (“Progressive Parent”) controlled by its individual owners (the “Progressive Selling Shareholders”), who work in and manage the Progressive business.

In conjunction with the acquisition, the Progressive Selling Shareholders caused the Progressive Parent to transfer its ownership of the Progressive Subsidiaries into a newly-formed limited liability company (“Progressive NewCo”), in exchange for one hundred percent (100%) of the membership interests in Progressive NewCo. Therefore, in this step, Progressive NewCo became wholly-owned by the Progressive Selling Shareholders.

The Company entered into an agreement (the “Progressive Purchase Agreement”) to acquire from the Progressive Selling Shareholders a majority of the membership interest in Progressive NewCo. The consideration for the acquisition is primarily payable in the form of cash at closing, a relatively small portion paid in cash after the closing contingent on certain performance criteria, and a small note in lieu of an escrow (the “Progressive Purchase Price”).

The Company and the Progressive Selling Shareholders also executed an operating agreement (the “Progressive Operating Agreement”) for Progressive NewCo that sets forth the rights and obligations of the members of Progressive NewCo.

As noted above, the Company did not purchase 100% of the membership interests in Progressive NewCo and the Progressive Selling Shareholders retained a portion of the membership interest in Progressive NewCo (“Progressive Selling Shareholders’ Interest”).

The Company and the Progressive Selling Shareholders executed a non-compete agreement (the “Progressive Non-Compete Agreement”) which restricts the Progressive Selling Shareholders from competing for a specified period of time (the “Progressive Non-Compete Term”).

The Progressive Non-Compete Term commences as of the date of the Progressive acquisition and expires on the later of:

Two years after the date a Progressive Selling Shareholder no longer is involved in the management of Progressive NewCo or

Seven years from the date of the acquisition.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

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The Progressive Non-Compete Agreement applies to the entire United States.

The Progressive Put Right (as defined below) and the Progressive Call Right (as defined below) do not have an expiration date. The Progressive Operating Agreement contains provisions for the redemption of the Progressive Selling Shareholder’s Interest, either at the option of the Company (the “Progressive Call Right”) or at the option of the Progressive Selling Shareholder (the “Progressive Put Right”) as follows:

Progressive Put Right

Each of the Progressive Selling Shareholders has the right to sell 30% of their respective residual interests on each of the 4th and 5th anniversaries of the acquisition closing, and then 10% on each of the 6th and 7th anniversaries.

In the event that any Progressive Selling Shareholder terminates his management relationship with Progressive NewCo for any reason on or after the seventh anniversary of the Closing Date, the Progressive Selling Shareholder has the Progressive Put Right, and upon the exercise of the Progressive Put Right, the Progressive Selling Shareholder’s Interest shall be redeemed by the Company at the purchase price described in “3” below.

Progressive Call Rights

If any Progressive Selling Shareholder’s ceases to perform management services on behalf of Progressive NewCo, the Company thereafter shall have an irrevocable right to purchase from such Progressive Selling Shareholder his Interest, in each case at the purchase price described in “3” below.

For the Progressive Put Right and the Progressive Call Right, the purchase price is derived from a formula based on a specified multiple of Progressive NewCo’s trailing twelve months of earnings before interest, taxes, depreciation, amortization, and the Company’s internal management fee, plus an Allocable Percentage of any undistributed earnings of Progressive NewCo. Progressive NewCo’s earnings are distributed monthly based on available cash within Progressive NewCo; therefore, the undistributed earnings amount is small, if any.

The Progressive Purchase Price for the initial equity interest purchased by the Company is also based on the same specified multiple of the trailing twelve-month earnings that is used in the Progressive Put Right and the Progressive Call Right noted above.

The Progressive Put Right and the Progressive Call Right do not have an expiration date.

Neither the Progressive Operating Agreement nor the Progressive Non-Compete Agreement contain any provision to escrow or “claw back” the equity interest in Progressive NewCo held by the Progressive Selling Shareholders, in the event of a breach of the operating agreement or non-compete terms, or the management services agreement pursuant to which the Progressive Selling Shareholders perform services on behalf of Progressive NewCo. The Company’s only recourse against the Progressive Selling Shareholder for breach of any of these agreements is to seek damages and other legal remedies under such agreements. There are no conditions in any of the arrangements with a Progressive Selling Shareholder that would result in a forfeiture of the equity interest in Progressive NewCo held by a Progressive Selling Shareholder.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For both scenarios described above, an Employed Selling Shareholder’s ownership of his or her equity interest in the Seller Entity predates the Acquisition and the Company’s purchase of its partnership interest in NewCo. The Employment Agreement and the Non-Compete Agreement do not contain any provision to escrow or “claw back” the equity interest in the Seller Entity held by such Employed Selling Shareholder, nor the Seller Entity Interest in NewCo, in the event of a breach of the employment or non-compete terms. More specifically, even if the Employed Selling Shareholder is terminated for “cause” by NewCo, such Employed Selling Shareholder does not forfeit his or her right to his or her full equity interest in the Seller Entity and the Seller Entity does not forfeit its right to any portion of the Seller Entity Interest. The Company’s only recourse against the Employed Selling Shareholder for breach of either the Employment Agreement or the Non-Compete Agreement is to seek damages and other legal remedies under such agreements. There are no conditions in any of the arrangements with an Employed Selling Shareholder that would result in a forfeiture of the equity interest held in the Seller Entity or of the Seller Entity Interest.

Carrying Amounts of Redeemable Non-Controlling Interests

The following table details the changes in the carrying amount (fair value) of the Company’s redeemable non-controlling interests:

	Nine Months Ended			Year Ended
	September 30, 2025			December 31, 2024
	(In thousands)
Beginning balance	$	269,025		$	174,828
Net income allocated to redeemable non-controlling interest partners		9,716			10,044
Distributions to redeemable non-controlling interest partners		(10,980	)		(10,579	)
Changes in the fair value of redeemable non-controlling interest		9,821			4,964
Purchases of redeemable non-controlling interest		(8,967	)		(8,122	)
Capital contribution		90			-
Acquired interest		7,990			100,336
Sales of redeemable non-controlling interest		2,166			1,969
Changes in notes receivable related to redeemable non-controlling interest		(1,200	)		(1,016	)
Reduction due to separation agreement		-			(3,033	)
Adjustments in notes receivables related to the sales of redeemable non-controlling interest		-			(366	)
Ending balance	$	277,661		$	269,025

The following table categorizes the carrying amount (fair value) of the redeemable non-controlling interests:

	Nine Months Ended		Year Ended
	September 30, 2025		December 31, 2024
	(In thousands)
Contractual time period has lapsed but holder’s employment has not terminated	$	76,941	$	74,668
Contractual time period has not lapsed and holder’s employment has not terminated		200,720		194,357
Holder’s employment has terminated and contractual time period has expired		-		-
Holder’s employment has terminated and contractual time period has not expired		-		-
	$	277,661	$	269,025

During the nine months ended, September 30, 2025, the Company acquired additional interests in nine partnerships included in redeemable non-controlling interests - temporary equity. The aggregated purchase price for acquired non-controlling interests – temporary equity was $9.0 million. During the year ended, December 31, 2024, the Company acquired additional interests in fourteen partnerships included in redeemable non-controlling interests - temporary equity. The aggregated purchase price for acquired redeemable non-controlling interests – temporary equity was $8.1 million.

During the nine months ended September 30, 2025, the Company sold interests in eight partnerships included in redeemable non-controlling interests – temporary equity, for an aggregate price of $2.2 million. During the year ended December 31, 2024, the Company sold interests in seven partnerships for an aggregate price of $2.0 million.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

5. Assets Held for Sale

In December 2024, the Company signed a non-binding Letter of Intent to sell an underperforming business unit within the physical therapy operations segment. The decision to divest was based on performance considerations and strategic realignment.

As of December 31, 2024, the business unit met the criteria for classification as held for sale under ASC 360. A $2.4 million impairment charge was recorded to write down the business unit’s carrying value to fair value, less estimated costs to sell. The impairment was included in impairment of assets held for sale on the consolidated statements of net income. The impairment charges primarily related to intangible assets. Assets held for sale were valued at $0.6 million on December 31, 2024, and have been presented within other current assets in the accompanying balance sheets.

The transaction was completed in February 2025 and the related loss on sale of $0.1 million was recognized in the consolidated statements of net income for the nine months ended September 30, 2025.

6. Goodwill

The changes in the carrying amount of goodwill consisted of the following:

	Nine Months Ended			Year Ended
	September 30, 2025			December 31, 2024
	(In thousands)
Beginning balance	$	667,152		$	509,571
Acquisitions		20,903			164,529
Adjustments for purchase price allocation of businesses acquired in prior year		2,665			(6,551	)
Other		(308	)		(397	)
Ending balance	$	690,412		$	667,152

For the three and nine months ended September 30, 2025, and 2024, no indicators were identified that would require impairment assessments as of such periods.

7. Intangible Assets

The Company’s intangible assets, net, consisted of the following:

	September 30, 2025							December 31, 2024
	Gross Amount		Accumulated Amortization			Net Carrying Amount		Gross Amount		Accumulated Amortization			Net Carrying Amount
	(In thousands)
Customer and referral relationships	$	161,132	$	(47,830	)	$	113,302	$	156,747	$	(39,218	)	$	117,529
Tradenames		58,719		-			58,719		57,041		-			57,041
Non-compete agreements		13,622		(9,214	)		4,408		13,077		(8,336	)		4,741
	$	233,473	$	(57,044	)	$	176,429	$	226,865	$	(47,554	)	$	179,311

Tradenames, customer and referral relationships, and non-compete agreements are related to the businesses acquired. The value assigned to tradenames has an indefinite life and is tested at least annually for impairment using the relief from royalty method in conjunction with the Company’s annual goodwill impairment test. The value assigned to customer and referral relationships is being amortized over their respective estimated useful lives which range from 8.0 to 16.0 years. Non-compete agreements are amortized over the respective term of the agreements which range from 5.0 to 6.0 years. During the year ended December 31, 2024, the Company recognized charges of $2.0 million related to the impairment of assets held for sale. This impairment loss is presented in the impairment of assets held for sale in the Consolidated Statements of Income.

The following table details the amount of amortization expense recorded for intangible assets for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
	(In thousands)
Customer and referral relationships	$	2,934	$	1,977	$	8,611	$	5,861
Non-compete agreements		308		183		879		537
	$	3,242	$	2,160	$	9,490	$	6,398

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Based on the balance of referral relationships and non-compete agreements as of September 30, 2025, the expected amount to be amortized in the remainder of 2025 and thereafter by year is as follows:

For the Year Ending December 31,	Customer and Referral Relationships		Non-Compete Agreements
	(In thousands)
2025 (excluding the nine months ended September 30, 2025)	$	2,996	$	286
2026		11,571		1,048
2027		11,408		922
2028		11,139		843
2029		10,761		676
Thereafter		65,427		633

8. Accrued Expenses

Accrued expenses consists of the following for the periods presented.

	September 30, 2025		December 31, 2024
	(In thousands)
Salaries and related costs	$	28,733	$	34,886
Credit balances due to patients and payors		7,777		6,359
Group health insurance claims		3,991		2,462
Contingent consideration payable		6,927		3,043
Closure costs		1,700		2,828
Professional fees		1,453		860
Other property taxes payable		448		371
Interest payable		155		402
Federal income taxes payable		-		4,544
Other		5,717		3,758
Total	$	56,901	$	59,513

9. Borrowings

Amounts outstanding under the Company’s Senior Credit Facilities (as defined below) and notes payable consisted of the following:

	September 30, 2025							December 31, 2024
	Principal Amount		Unamortized discount and debt issuance cost			Net Debt		Principal Amount		Unamortized discount and debt issuance cost			Net Debt
	(In thousands)
Term Facility	$	133,125	$	(726	)	$	132,399	$	140,625	$	(1,049	)	$	139,576
Revolving Facility		26,500		-			26,500		11,000		-			11,000
Other		1,363		-			1,363		2,953		-			2,953
Total debt		160,988		(726	)		160,262		154,578		(1,049	)		153,529
Less: Current portion of long-term debt (1)		9,224		(422	)		8,802		11,422		(423	)		10,999
Long-term debt, net of current portion	$	151,764	$	(304	)	$	151,460	$	143,156	$	(626	)	$	142,530

(1)	The long-term portion is included as part of Other Long-Term Liabilities in the Consolidated Balance Sheet.

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Effective December 5, 2013, the Company entered into an Amended and Restated Credit Agreement with a commitment for a $125.0 million revolving credit facility. This agreement was amended and/or restated in August 2015, January 2016, March 2017, November 2017, and January 2021. On June 17, 2022, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”) among Bank of America, N.A., as administrative agent (“Administrative Agent”) and the lenders from time-to-time party thereto.

The Credit Agreement, which matures on June 17, 2027, provides for loans in an aggregate principal amount of $325 million. Such loans were made available through the following facilities (collectively, the “Senior Credit Facilities”):

Revolving Facility: $175 million, five-year, revolving credit facility (“Revolving Facility”), which includes a $12 million sublimit for the issuance of standby letters of credit and a $15 million sublimit for swingline loans (each, a “Swingline Loan”).

Term Facility: $150 million term loan facility (the “Term Facility”). The Term Facility amortizes in quarterly installments of: (a) 0.625% in each of the first two years, (b) 1.250% in the third and fourth year, and (c) 1.875% in the fifth year of the Credit Agreement. The remaining outstanding principal balance of all term loans is due on the maturity date.

The proceeds of the Revolving Facility shall be used by the Company for working capital and other general corporate purposes of the Company and its subsidiaries, including to fund future acquisitions and invest in growth opportunities. The proceeds of the Term Facility were used by the Company to refinance the indebtedness outstanding under the Amended Credit Agreement, to pay fees and expenses incurred in connection with the transactions involving the loan facilities, for working capital and other general corporate purposes of the Company and its subsidiaries.

The Company is permitted to increase the Revolving Facility and/or add one or more tranches of term loans in an aggregate amount not to exceed the sum of (i) $100 million plus (ii) an unlimited additional amount, provided that (in the case of clause (ii)), after giving effect to such increases, the pro forma Consolidated Leverage Ratio (as defined in the Credit Agreement) would not exceed 2.0:1.0, and the aggregate amount of all incremental increases under the Revolving Facility does not exceed $50,000,000.

The interest rates per annum applicable to the Senior Credit Facilities (other than in respect of Swingline Loans) will be Term SOFR (as defined in the Credit Agreement) plus an applicable margin or, at the option of the Company, an alternate base rate plus an applicable margin. Each Swingline Loan shall bear interest at the base rate plus the applicable margin. The applicable margin for Term SOFR borrowings ranges from 1.50% to 2.25%, and the applicable margin for alternate base rate borrowings ranges from 0.50% to 1.25%, in each case, based on the Consolidated Leverage Ratio of the Company and its subsidiaries. Interest is payable at the end of the selected interest period but no less frequently than quarterly and on the date of maturity.

The Company is also required to pay to the Administrative Agent, for the account of each lender under the Revolving Facility, a commitment fee equal to the actual daily excess of each lender’s commitment over its outstanding credit exposure under the Revolving Facility (“unused fee”). Such unused fee will range between 0.25% and 0.35% per annum and is also based on the Consolidated Leverage Ratio of the Company and its subsidiaries. The Company may prepay and/or repay the revolving loans and the term loans, in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The Credit Agreement includes certain financial covenants which include the Consolidated Fixed Charge Coverage Ratio and the Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit Agreement also contains customary events of default.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s obligations under the Credit Agreement are guaranteed by its wholly owned material domestic subsidiaries (each, a “Guarantor”), and the obligations of the Company and any Guarantors are secured by a perfected first priority security interest in substantially all of the existing and future personal property of the Company and each Guarantor, subject to certain exceptions.

As of September 30, 2025, $133.1 million was outstanding on the Term Facility while $26.5 million was outstanding under the Revolving Facility resulting in $148.5 million of credit availability. As of September 30, 2025, the Company was in compliance with all of the covenants contained in the Credit Agreement.

The interest rate on the Company’s Senior Credit Facilities was 5.0% for the three months ended September 30, 2025, and 4.7% for the three months ended September 30, 2024, with an all-in effective interest rate, including all associated costs, of 5.7% and 5.4% over the same periods, respectively. The all-in effective interest rate on the Company’s Senior Credit Facilities for the nine months ended September 30, 2025 was 5.6% and 5.4% for the nine months ended September 30, 2024.

The Company generally enters into various notes payable as a means of financing acquisitions. As of September 30, 2025, the Company’s remaining outstanding balance on these notes amounted to $1.4 million, of which less than $0.1 million is due in 2025, $0.9 million is due in 2026, and $0.5 million is due in 2027. Notes are generally payable in equal annual installments of principal over two years plus any accrued and unpaid interest. Interest accrues at various interest rates ranging from 4.5% to 8.5% per annum.

10. Derivative Instruments

The Company is exposed to certain market risks in the ordinary course of business due to adverse changes in interest rates. The exposure to interest rate risk primarily results from the Company’s variable-rate borrowing. The Company may elect to use derivative financial instruments to manage risks from fluctuations in interest rates. The Company does not purchase or hold derivatives for trading or speculative purposes. Fluctuations in interest rates can be volatile and the Company’s risk management activities do not eliminate these risks.

Interest Rate Swap

In May 2022, the Company entered into an interest rate swap agreement, effective on June 30, 2022, with Bank of America, N.A, which had a $150 million notional value, and a maturity date of June 30, 2027. Beginning in July 2022, the Company receives 1-month SOFR, and pays a fixed rate of interest of 2.815% on 1-month SOFR. The total interest rate in any period also includes an applicable margin based on the Company’s consolidated leverage ratio. In connection with the swap, no cash was exchanged between the Company and the counterparty.

The Company designated its interest rate swap as a cash flow hedge and structured it to be highly effective. Consequently, unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other comprehensive income (loss), net of tax.

The impact of the Company’s derivative instruments on the accompanying Consolidated Statements of Comprehensive Income is presented in the table below.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
	(In thousands)
Net income	$	17,642		$	9,777		$	48,830		$	33,106
Other comprehensive (loss) gain:
Unrealized (loss) gain on cash flow hedge		(360	)		(3,687	)		(2,489	)		(1,937	)
Tax effect at statutory rate (federal and state)		92			942			636			495
Comprehensive income		17,374			7,032			46,977			31,664

Comprehensive income attributable to non-controlling interest		(4,504	)		(3,149	)		(13,400	)		(10,926	)
Comprehensive income attributable to USPH shareholders	$	12,870		$	3,883		$	33,577		$	20,738

The valuations of the Company’s interest rate derivatives are measured as the present value of all expected future cash flows based on SOFR-based yield curves. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparty which is a Level 2 fair value measurement.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The carrying and fair value of the Company’s interest rate derivatives (included in other current assets and other assets) were as follows.

	September 30, 2025		December 31, 2024
	(In thousands)
Other current assets	$	1,008	$	1,752
Other assets		261		2,006
	$	1,269	$	3,758

11. Leases

The Company has operating leases for its corporate offices and operating facilities. The Company determines if an arrangement is a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent net present value of the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the net present value of the fixed lease payments over the lease term. The Company’s operating lease terms are generally five years or less. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Operating fixed lease expense is recognized on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage are not included in the right-of-use assets or operating lease liabilities. These are expensed as incurred and recorded as variable lease expense. These variable lease payment amounts include, but are not limited to, taxes, insurance, utilities, common area maintenance, and other operating costs.

The components of lease expense were as follows.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
	(In thousands)
Operating lease cost	$	12,350		$	10,362		$	36,124		$	30,578
Short-term lease cost		277			323			701			851
Variable lease cost		2,544			2,552			7,742			7,732
Sublease income		(109	)		(121	)		(326	)		(369	)
Total lease cost	$	15,062		$	13,116		$	44,241		$	38,792

Lease costs are reflected in the consolidated statement of net income in the line item – rent, supplies, contract labor and other.

The supplemental cash flow information related to leases was as follows.

	Three Months Ended				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
	(In thousands)

Cash paid for amounts included in the measurement of operating lease liabilities	$	12,417	$	10,637	$	36,496	$	31,539

Right-of-use assets obtained in exchange for new operating lease liabilities	$	13,512	$	9,945	$	39,467	$	30,573

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The aggregate future lease payments for operating leases as of September 30, 2025, were as follows.

	Amount
Fiscal Year	(In thousands)
2025 (excluding the nine months ended September 30, 2025)	$	12,552
2026		45,999
2027		36,658
2028		26,229
2029 and thereafter		44,438
Total lease payments	$	165,876
Less: imputed interest		17,738
Total operating lease liabilities	$	148,138

Average lease terms and discount rates were as follows.

The Company leases certain properties from Michael G. Mayrsohn (lessor), who is the President of Metro. Mr. Mayrsohn was also elected to the Board of Directors by the Company’s shareholders as of May 20, 2025. The two leases are classified as operating leases that expire on April 30, 2030, and December 31, 2031. For the nine months ended September 30, 2025, the Company paid a total of $0.4 million of lease payments to Mr. Mayrsohn. Metro has made leasehold improvements valued at $0.3 million as of September 30, 2025. The total of minimum future rental payments under these related party lease agreements is $2.8 million as of September 30, 2025.

12. Segment Information

The Company’s reportable segments include the physical therapy operations segment and the IIP segment. Also included in the physical therapy operations segment are revenues from management contract services and other services, which include services the Company provides on-site, such as athletic trainers for schools.

Physical Therapy Operations

The physical therapy operations segment primarily operates through subsidiary clinic partnerships (“Clinic Partnerships”), in which the Company generally owns a 1% general partnership interest in all the Clinic Partnerships. The Company’s limited partnership interests generally range from 65% to 75% (the range is 25% - 99%) in the Clinic Partnerships. The managing therapist of each clinic owns, directly or indirectly, the remaining limited partnership interest in most of the clinics (hereinafter referred to as “Clinic Partnerships”). Some of the Clinic Partnerships serve as management services organizations which manage and provide staffing and a variety of administrative services to physical therapy provider entities in which the Company does not have an ownership interest. These Clinic Partnerships similarly are owned collectively by the Company and one or more physical therapists who are involved in the management of the operations. To a lesser extent, the Company operates some clinics, through wholly-owned subsidiaries (hereinafter referred to as “Wholly-Owned Facilities).

The Company continues to seek to attract for employment physical therapists who have established relationships with physicians and other referral sources, by offering these therapists a competitive salary and incentives based on the profitability of the clinic that they manage. For multi-site clinic practices in which a controlling interest is acquired by the Company, the prior owners typically continue on as employees to manage the clinic operations, retain a non-controlling ownership interest in the clinics and receive a competitive salary for managing the clinic operations. In addition, the Company has developed satellite clinic facilities as part of existing Clinic Partnerships and Wholly-Owned Facilities, with the result that a substantial number of Clinic Partnerships and Wholly-Owned Facilities operate more than one clinic location.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Clinic Partnerships

For non-acquired Clinic Partnerships, the earnings and liabilities attributable to the non-controlling interests, typically owned by the managing therapist, directly or indirectly, are recorded within the balance sheets and income statements as non-controlling interest—permanent equity. For acquired Clinic Partnerships with redeemable non-controlling interests, the earnings attributable to the redeemable non-controlling interests are recorded within the consolidated balance sheets and income statements as redeemable non-controlling interest—temporary equity.

Wholly-Owned Facilities

For Wholly-Owned Facilities with profit sharing arrangements, an appropriate accrual is recorded for the amount of profit sharing due to the clinic partners/directors. The amount is expensed as compensation and included in clinic operating costs—salaries and related costs. The respective liability is included in current liabilities—accrued expenses on the consolidated balance sheets.

Industrial Injury Prevention Services

Services provided in the IIP segment include onsite injury prevention and rehabilitation, performance optimization, post offer employment testing, functional capacity evaluations, and ergonomic assessments. The majority of these services are contracted with and paid for directly by employers, including a number of Fortune 500 companies. Other clients include large insurers and their contractors. IIP services are performed through Industrial Sports Medicine Professionals with specialized training related to the musculoskeletal system.

Segment Financials

The Company, including its chief operating decision maker, the Chief Executive Officer, uses gross profit in its budget-to-actual, forecasting, and other analytical processes to assess segment performance and allocate resources.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company has provided additional information regarding its reportable segments which contributes to the understanding of the Company and provides useful information.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
	(In thousands)						(In thousands)
Net revenue:
Physical therapy operations	$	168,110		$	142,714		$	492,810		$	420,625
Industrial injury prevention services		29,022			25,319			85,454			70,273
Total Company	$	197,132		$	168,033		$	578,264		$	490,898

Operating Costs:
Salaries and related costs:
Physical therapy operations	$	98,237		$	84,160		$	287,489		$	245,387
Industrial injury prevention services		18,382			15,675			54,167			44,513
Total salaries and related costs	$	116,619		$	99,835		$	341,656		$	289,900
Rent supplies, contract labor and other:
Physical therapy operations	$	32,026		$	26,047		$	91,939		$	78,022
Industrial injury prevention services		4,089			3,709			12,147			10,082
Total rent, supplies, contract labor and other	$	36,115		$	29,756		$	104,086		$	88,104
Depreciation and amortization:
Physical therapy operations	$	4,665		$	3,355		$	14,383		$	10,213
Industrial injury prevention services		830			803			2,393			2,113
Total depreciation and amortization	$	5,495		$	4,158		$	16,776		$	12,326
Provision for credit losses:
Physical therapy operations	$	2,031		$	1,721		$	5,853		$	5,065
Industrial injury prevention services		42			-			63			-
Total provision for credit losses	$	2,073		$	1,721		$	5,916		$	5,065
(Gain) loss on clinic closures - lease and other:
Physical therapy operations	$	(42	)	$	3,432		$	269		$	4,109
Industrial injury prevention services		-			-			-			-
Total clinic closure costs	$	(42	)	$	3,432		$	269		$	4,109
Total Company	$	160,260		$	138,902		$	468,703		$	399,504

Gross profit:
Physical therapy operations	$	31,193		$	23,999		$	92,877		$	77,829
Industrial injury prevention services		5,679			5,132			16,684			13,565
Total Company	$	36,872		$	29,131		$	109,561		$	91,394

Unallocated amounts
Corporate office costs	$	17,414		$	14,385		$	51,135		$	42,719
Interest expense, debt and other		2,408			2,018			7,109			5,966
Interest income from investments		(33	)		(1,018	)		(85	)		(3,635	)
(Gain) loss on change in fair value of contingent earn-out consideration		(5,872	)		1,899			(11,484	)		5,332
Change in revaluation of put-right liability		663			(168	)		1,406			136
Equity in earnings of unconsolidated affiliate		(361	)		(231	)		(1,155	)		(750	)
Loss on sale of a partnership		-			-			123			-
Other		(222	)		(90	)		(344	)		(261	)
Total unallocated amounts	$	13,997		$	16,795		$	46,705		$	49,507
Income before taxes	$	22,875		$	12,336		$	62,856		$	41,887

	September 30, 2025		December 31, 2024
Assets:
Goodwill:
Physical therapy operations	$	602,460	$	579,046
Industrial injury prevention services		87,952		88,106
Total goodwill	$	690,412	$	667,152
All other assets:
Physical therapy operations		427,491	$	415,039
Industrial injury prevention services		78,367		85,276
Total all other assets		505,858		500,315
Total Assets	$	1,196,270	$	1,167,467

Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current year presentation.

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U.S. PHYSICAL THERAPY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. Investment in Unconsolidated Affiliate

Through one of its subsidiaries, the Company has a 49% joint venture interest in a company which provides physical therapy services for patients at hospitals. Since the Company is deemed to not have a controlling interest in the company, the Company’s investment is accounted for using the equity method of accounting. The investment balance of this joint venture as of September 30, 2025, is $12.3 million and the earnings amounted to approximately $0.4 million and $1.2 million for the three and nine months ended September 30, 2025, respectively. Earnings were $0.2 million and $0.8 million for the three and nine months ended September 30, 2024, respectively.

14. Subsequent Events

The Company’s Board of Directors declared a quarterly dividend of $0.45 per share payable on December 12, 2025, to shareholders of record on November 17, 2025.

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of U.S. Physical Therapy, Inc. and its subsidiaries (herein referred to as “we,” “us,” “our” or the “Company”) should be read in conjunction with (i) our historical consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q; and (ii) our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2025 (“2024 Annual Report”).

This discussion includes forward-looking statements that are subject to risk and uncertainties. Actual results may differ substantially from the statements we make in this section due to a number of factors that are discussed below.

FORWARD-LOOKING STATEMENTS

We make statements in this report that are considered forward-looking statements within the meaning given such term under Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements contain forward-looking information relating to the financial condition, results of operations, plans, objectives, future performance and business of our Company. These statements (often using words such as “believes”, “expects”, “intends”, “plans”, “appear”, “should” and similar words) involve risks and uncertainties that could cause actual results to differ materially from those we expect. Included among such statements may be those relating to new clinics, availability of personnel and the reimbursement environment. The forward-looking statements are based on our current views and assumptions, and actual results could differ materially from those anticipated in such forward-looking statements as a result of certain risks, uncertainties, and factors, which include, but are not limited to:

•	changes in Medicare rules and guidelines and reimbursement or failure of our clinics to maintain their Medicare certification and/or enrollment status;

•	revenue we receive from Medicare and Medicaid being subject to potential retroactive reduction;

•	changes in reimbursement rates or payment methods from third party payors including government agencies, and changes in the deductibles and co-pays owed by patients;

•	private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;

•	compliance with federal and state laws and regulations relating to the privacy of individually identifiable patient information, and associated fines and penalties for failure to comply;

•	compliance with state laws and regulations relating to the corporate practice of medicine and fee splitting, and associated fines and penalties for failure to comply ;

•	competitive, economic or reimbursement conditions in our markets which may require us to reorganize or close certain clinics and thereby incur losses and/or closure costs including the possible write-down or write-off of goodwill and other intangible assets;

•	the impact of future public health crises and epidemics/pandemics, such as was the case with the novel strain of COVID-19 and its variants;

•	certain of our acquisition agreements contain put-rights related to a future purchase of significant equity interests in our subsidiaries or in a separate company;

•	the impact of future vaccinations and/or testing mandates at the federal, state and/or local level, which could have an adverse impact on staffing, revenue, costs and the results of operations;

•	our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing and our ability to operate our business;

•	changes as the result of government enacted national healthcare reform;

•	the ability to control variable interest entities for which we do not have a direct ownership;

•	business and regulatory conditions, including federal and state regulations;

•	governmental and other third party payor inspections, reviews, investigations and audits, which may result in sanctions or reputational harm and increased costs;

•	revenue and earnings expectations;

•	contingent consideration provisions in certain our acquisition agreements, the value of which may impact future financial results;

•	legal actions, which could subject us to increased operating costs and uninsured liabilities;

•	general economic conditions, including but not limited to inflationary and recessionary periods;

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•

actual or perceived events involving banking volatility or limited liability, defaults or other adverse developments that affect the U.S or the international financial systems, may result in market wide liquidity problems which could have a material and adverse impact on our available cash and results of operations;

•	our business depends on hiring, training, and retaining qualified employees;

•	availability and cost of qualified physical therapists;

•	competitive environment in the industrial injury prevention services business, which could result in the termination or non-renewal of contractual service arrangements and other adverse financial consequences for that service line;

•	our ability to identify and complete acquisitions, and the successful integration of the operations of the acquired businesses;

•	impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interest (minority interests);

•	maintaining our information technology systems with adequate safeguards to protect against cyber-attacks;

•

a security breach of our or our third party vendors’ information technology systems may subject us to potential legal action and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 of the Health Information Technology for Economic and Clinical Health Act;

•	maintaining clients for which we perform management, industrial injury prevention related services, and other services, as a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected;

•	maintaining adequate internal controls;

•	maintaining necessary insurance coverage;

•	availability, terms, and use of capital; and

•	weather and other seasonal factors.

Many factors are beyond our control. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Please see the other sections of this report and our other periodic reports filed with the Securities and Exchange Commission (the “SEC”) for more information on these factors. Our forward-looking statements represent our estimates and assumptions only as of the date of this report. Except as required by law, we are under no obligation to update any forward-looking statement, regardless of the reason the statement may no longer be accurate.

EXECUTIVE SUMMARY

We operate our business through two reportable business segments. Our physical therapy operations consist of physical therapy and occupational therapy clinics, and home-care physical and speech therapy practices that provide speech therapy, pre- and post-operative care and treatment for a variety of orthopedic-related disorders, sports-related injuries, and rehabilitation of injured workers. Services provided by the industrial injury prevention services (“IIP”) segment include onsite services for clients’ employees including injury prevention and rehabilitation, performance optimization, post-offer employment testing, functional capacity evaluations and ergonomic assessments. The majority of IIP is contracted with and paid for directly by employers, including a number of Fortune 500 companies. IIP is performed through Industrial Sports Medicine Professionals with specialized training related to the musculoskeletal system.

During the nine months ended September 30, 2025, and for the year ended December 31, 2024, we completed the acquisitions of clinic practices and IIP businesses detailed below:

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Acquisition	Date	% Interest Acquired	Number of Clinics
July 2025 Acquisition	July 31, 2025	60%	3
April 2025 Acquisition	April 30, 2025	40%*	**
February 2025 Acquisition	February 28, 2025	65%	3
November 2024 Acquisition	November 30, 2024	75%	8
October 2024 Acquisition	October 31, 2024	50%	50
August 2024 Acquisition	August 31, 2024	70%	8
April 2024 Acquisition	April 30, 2024	***	****
March 2024 Acquisition	March 29, 2024	50%	9

* On April 30, 2025, the Company acquired an outpatient home care practice that provides speech and occupational therapy through its 50% owned subsidiary MSO Metro LLC. ("Metro"). After the transaction, the Company's ownership interest is 40%, the local partners have an ownership interest of 40% and the practice's preacquisition owners have a 20% ownership interest.

** Home-care business

*** On April 30, 2024, one of our primary IIP businesses, Briotix Health Limited Partnership, acquired 100% of an IIP business.

**** IIP business

The following table provides a roll forward of our clinic count for the periods presented.

Clinic Count Roll Forward ⁽¹⁾

	2025									2024
	Owned			Managed			Total			Owned			Managed			Total
Number of clinics, beginning of period		722			39			761			671			43			714
Q1 additions		14			-			14			14			-			14
Q1 closed or sold		(7	)		(2	)		(9	)		(6	)		(2	)		(8	)
Number of clinics, end of period		729			37			766			679			41			720
Q2 additions		6			-			6			7			-			7
Q2 closed or sold		(3	)		(1	)		(4	)		(5	)		-			(5	)
Number of clinics, end of period		732			36			768			681			41			722
Q3 additions		16			2			18			12			-			12
Q3 closed or sold		(3	)		(4	)		(7	)		(32	)		(2	)		(34	)
Number of clinics, end of period		745			34			779			661			39			700
Q4 additions											63			-			63
Q4 closed or sold											(2	)		-			(2	)
Number of clinics, end of period											722			39			761

Year-to-date 2025 and full-year 2024 additions		36			2			38			96			-			96
Year-to-date 2025 and full-year 2024 sold or closed		(13	)		(7	)		(20	)		(45	)		(4	)		(49	)

(1) Excludes the home care business

Our strategy is to continue acquiring multi-clinic outpatient physical therapy practices and home-care physical and speech therapy practices, to develop outpatient physical therapy clinics as satellites in existing partnerships, and to continue acquiring companies that provide industrial injury prevention services.

On July 31, 2025, we acquired a 60% equity interest in a three-clinic practice with the original practice owners retaining a 40% equity interest.

Our Board of Directors declared a quarterly dividend of $0.45 per share payable on December 12, 2025, to shareholders of record on November 17, 2025.

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Our Company’s Board of Directors approved a share repurchase program effective August 5, 2025. The program authorizes the repurchase by the Company of up to $25.0 million of its outstanding shares of common stock over the period ending on December 31, 2026. Under the share repurchase program, shares may be repurchased from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. The timing and amount of share repurchases under the share repurchase program, if any, will depend on several factors, including the Company's stock price performance, ongoing capital allocation priorities and general market conditions. During the three and nine months ended September 30, 2025, no shares were repurchased as part of this program.

Regulatory Changes

The following is a discussion of some of the significant healthcare regulatory changes that have affected our financial performance in the periods covered by this report or are likely to affect our financial performance and financial condition in the future. The information below should be read in conjunction with the more detailed discussion of regulations contained in our 2024 Annual Report.

Medicare Reimbursement

The Medicare program reimburses outpatient rehabilitation providers based on the Medicare Physician Fee Schedule (“MPFS”). Outpatient rehabilitation providers may enroll in Medicare as institutional outpatient rehabilitation facilities (i.e., rehab agencies) or individual physical or occupational therapists in private practice. The majority of our clinicians are enrolled as individual physical or occupational therapists in private practice while the remaining balance of providers are reimbursed through enrolled rehab agencies.

For calendar years 2021, 2022 and 2023, Centers for Medicare and Medicaid Services (“CMS”) expected decreases in Medicare reimbursement were partially offset by one-time increases in payments as a result of other legislation passed by Congress, resulting in decreases of approximately 3.5%, 0.75% and 2.0% in each of these years, respectively. For January 1 through March 8 of 2024, CMS’s final rule resulted in an approximate 3.5% decrease in Medicare payments for the therapy specialty. However, effective as of March 9, 2024, pursuant to the Consolidated Appropriations Act, 2024, Congress minimized the reduction in Medicare payments for therapy services for the balance of 2024, resulting in an approximate 1.8% reduction in Medicare payments for therapy services (rather than the 3.5% decrease). The MPFS for 2025 decreased Medicare reimbursement for therapy services by approximately 2.9% as compared to the reimbursement rates in effect for most of 2024. For 2026, the proposed MPFS is expected to increase Medicare reimbursement for therapy services by approximately 1.5% as compared to the reimbursement rates for 2025.

In the final 2020 MPFS rule, CMS clarified that when the physical therapist is involved for the entire duration of the service and the physical therapist assistant (“PTA”) provides skilled therapy alongside the physical therapist, an identification of the PTA’s participation (as denoted by a “CQ modifier”) is not required. Also, when the same service (code) is furnished separately by the physical therapist and PTA, CMS applies the de minimis standard to each 15-minute unit of codes, not on the total physical therapist and PTA time of the service. For dates of service since January 1, 2022, CMS pays for physical therapy and occupational therapy services provided by PTAs and occupational therapist assistants (“OTAs”) at 85% of the otherwise applicable Part B payment amount. CMS allows a timed service to be billed without a CQ (for PTA’s) or CO (for OTA’s) modifier when a PTA or OTA participates in providing care, but the physical therapist or occupational therapist meets the Medicare billing requirements without including the PTA’s or OTA’s minutes. This occurs when the physical therapist or occupational therapist provides more minutes than the 15-minute midpoint.

RESULTS OF OPERATIONS

Glossary of terms

The defined terms, with their respective descriptions, used in the following discussions are listed below.

•	Mature clinics are clinics (physical clinic locations and home-care business units) opened or acquired prior to January 1, 2024, and are still operating as of the balance sheet date.

•	Net rate per patient visit is net patient revenue related to our physical therapy operations divided by total number of patient visits (defined below) during the periods presented.

•	Patient visits is the number of unique patient visits during the periods presented for both physical clinic locations and home-care.

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•	Average daily visits per clinic per day is patient visits (excluding home-care visits) divided by the number of days in which normal business operations were conducted during the periods presented and further divided by the average number of clinics in operation during the periods presented.

•	2025 Third Quarter refers to the three months ended September 30, 2025.

•	2024 Third Quarter refers to the three months ended September 30, 2024.

•	2025 Nine Months refers to the nine months ended September 30, 2025.

•	2024 Nine Months refers to the nine months ended September 30, 2024.

Our net income attributable to our shareholders (“USPH Net Income”) was $13.1 million for the 2025 Third Quarter compared to $6.6 million in the 2024 Third Quarter. In accordance with Generally Accepted Accounting Principles (“GAAP”), the revaluation of redeemable noncontrolling interest, net of taxes, is not included in USPH Net Income but is charged directly to retained earnings. However, this change is included in the computation of earnings per share. Earnings per share was $0.48 and $0.39 in 2025 Third Quarter and 2024 Third Quarter, respectively.

USPH Net Income was $35.4 million for the 2025 Nine Months as compared to $22.2 million for the 2024 Nine Months while earnings per share was $1.85 for the 2025 Nine Months compared to $1.32 for the 2024 Nine Months.

The following table provides a calculation of earnings per share.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
Earnings per Share	(In thousands, except per share data)						(In thousands, except per share data)
Computation of earnings per share - USPH shareholders:
Net income attributable to USPH shareholders	$	13,138		$	6,628		$	35,430		$	22,180
Charges to retained earnings:
Revaluation of redeemable non-controlling interest		(7,918	)		(1,097	)		(9,821	)		(3,158	)
Tax effect at statutory rate (federal and state)		2,023			280			2,509			807
	$	7,243		$	5,811		$	28,118		$	19,829

Earnings per share (basic and diluted)	$	0.48		$	0.39		$	1.85		$	1.32

Shares used in computation:
Basic and diluted earnings per share - weighted-average shares		15,204			15,077			15,178			15,055

Non-GAAP Measures

The following tables provide details of the basic and diluted earnings per share computation and reconcile net income attributable to our shareholders calculated in accordance with GAAP to Adjusted EBITDA and Operating Results. The tables also provide a reconciliation of additional non-GAAP measures to the most comparable GAAP measure. We believe providing Adjusted EBITDA and Operating Results to investors is useful for comparing our period-to-period results as well as for comparing them with other similar businesses since most do not have redeemable instruments and therefore have different equity structures. We use Adjusted EBITDA and Operating Results, which eliminate certain items described above that can be subject to volatility and unusual costs, as the principal measures to evaluate and monitor financial performance period over period.

Adjusted EBITDA, a non-GAAP measure, is defined as net income attributable to our shareholders before interest income, interest expense, taxes, depreciation, amortization, change in fair value of contingent earn-out consideration, changes in revaluation of put-right liability, equity-based awards compensation expense, clinic closure costs, business acquisition related costs, costs related to a one-time financial systems upgrade, loss on sale of a partnership and other income and related portions for non-controlling interests.

Operating Results, a non-GAAP measure, equals net income attributable to our shareholders less, changes in revaluation of a put-right liability, clinic closure costs, loss on sale of a partnership, changes in fair value of contingent earn-out consideration, business acquisition related costs, costs related to a one-time financial systems upgrade and any allocations to non-controlling interests, all net of taxes. Operating Results per share also excludes the impact of the revaluation of redeemable non-controlling interest and the associated tax impact.

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Adjusted EBITDA and Operating Results are not measures of financial performance under GAAP. Adjusted EBITDA, Operating Results and other non-GAAP measures should not be considered in isolation or as an alternative to, or substitute for, net income attributable to our shareholders presented in the consolidated financial statements.

	Three Months Ended						Nine Months Ended
	September 30, 2025			September 30, 2024			September 30, 2025			September 30, 2024
	(In thousands, except per share data)
Adjusted EBITDA (a non-GAAP measure)
Net income attributable to USPH shareholders	$	13,138		$	6,628		$	35,430		$	22,180
Adjustments:
Provision for income taxes		5,233			2,559			14,026			8,781
Depreciation and amortization		5,832			4,387			17,756			12,996
Interest expense, debt and other, net		2,408			2,018			7,109			5,966
Equity-based awards compensation expense		2,263			1,921			6,151			5,837
Interest income from investments		(33	)		(1,018	)		(85	)		(3,635	)
Change in revaluation of put-right liability		663			(168	)		1,406			136
(Gain) loss on change in fair value of contingent earn-out consideration		(5,872	)		1,899			(11,484	)		5,332
Clinic closure costs ⁽¹⁾		(42	)		3,432			269			4,109
Business acquisition related costs ⁽²⁾		70			314			870			314
ERP implementation costs ⁽³⁾		664			-			885			-
Loss on sale of a partnership		-			-			123			-
Other income		(222	)		(90	)		(344	)		(261	)
Allocation to non-controlling interests		(247	)		(811	)		(1,856	)		(1,789	)
	$	23,855		$	21,071		$	70,256		$	59,966

Operating Results (a non-GAAP measure)
Net income attributable to USPH shareholders	$	13,138		$	6,628		$	35,430		$	22,180
Adjustments:
(Gain) loss on change in fair value of contingent earn-out consideration		(5,872	)		1,899			(11,484	)		5,332
Change in revaluation of put-right liability		663			(168	)		1,406			136
Clinic closure costs ⁽¹⁾		(42	)		3,432			269			4,109
Business acquisition related costs ⁽²⁾		70			314			870			314
ERP implementation costs ⁽³⁾		664			-			885			-
Loss on sale of a partnership		-			-			123			-
Allocation to non-controlling interests		397			(429	)		279			(513	)
Tax effect at statutory rate (federal and state)		1,053			(1,290	)		1,955			(2,396	)
	$	10,071		$	10,386		$	29,733		$	29,162

Operating Results per share (a non-GAAP measure)	$	0.66		$	0.69		$	1.96		$	1.94

1)	Costs associated with the closure of 13 owned clinics during the 2025 Nine Months and 43 owned clinics in the 2024 Nine Months. See Clinic Count Roll Forward on page 36 for additional information.

2)	Primarily consists of retention bonuses and legal and consulting expenses related to the acquisition of equity interests in certain partnerships.

3)	Consists of costs related to a one-time financial and human resources systems upgrade.

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A reconciliation of additional non-GAAP measures to the most comparable GAAP measures are presented in the tables below.

	Three Months Ended									Three Months Ended
	September 30, 2025									September 30, 2024
	Reported (GAAP)			Adjustments ⁽¹⁾			Adjusted (Non-GAAP)			Reported (GAAP)			Adjustments ⁽¹⁾			Adjusted (Non-GAAP)
	(in thousands, except percentages)
Segment information - Physical Therapy Operations

Salaries and related costs⁽²⁾	$	96,470		$	8		$	96,478		$	82,281		$	-		$	82,281
Operating costs ⁽²⁾⁽³⁾	$	134,979		$	50		$	135,029		$	116,698		$	(3,432	)	$	113,266
Gross profit	$	31,193		$	(50	)	$	31,143		$	23,999		$	3,432		$	27,431
Gross profit margin		18.6	%		*			18.6	%		16.8	%		*			19.2	%
Number of visits		1,554,207						1,554,207			1,317,051						1,317,051
Salaries and related costs per visit ⁽²⁾	$	62.07			*		$	62.07		$	62.47		$	-		$	62.47
Operating costs per visit ⁽²⁾⁽³⁾	$	86.85		$	0.03		$	86.88		$	88.61		$	(2.61	)	$	86.00

	Nine Months Ended									Nine Months Ended
	September 30, 2025									September 30, 2024
	Reported (GAAP)			Adjustments ⁽¹⁾			Adjusted (Non-GAAP)			Reported (GAAP)			Adjustments ⁽¹⁾			Adjusted (Non-GAAP)
	(in thousands, except percentages)
Segment information - Physical Therapy Operations

Salaries and related costs ⁽²⁾	$	282,146		$	(286	)	$	281,860		$	239,829		$	-		$	239,829
Operating costs ⁽²⁾⁽³⁾	$	394,060		$	(555	)	$	393,505		$	336,917		$	(4,109	)	$	332,808
Gross profit	$	92,877		$	555		$	93,432		$	77,830		$	4,109		$	81,939
Gross profit margin		18.8	%		*			19.0	%		18.5	%		*			19.5	%
Number of visits		4,556,768						4,556,768			3,920,388						3,920,388
Salaries and related costs per visit ⁽²⁾	$	61.92		$	(0.06	)	$	61.86		$	61.17		$	-		$	61.17
Operating costs per visit ⁽²⁾⁽³⁾	$	86.48		$	(0.12	)	$	86.36		$	85.94		$	(1.05	)	$	84.89

(1) Certain incentive costs related to the Metro acquisition and gains or losses related to clinic closures, as applicable.

(2) Excludes costs related to management contracts.

(3) Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current presentation.

* Not meaningful

Supplemental Financial and Performance Metrics

	Net Rate Per Patient Visit ⁽¹⁾				Patient Visits ⁽¹⁾				Average Visits Per Clinic Per Day⁽²⁾
	2025		2024		2025		2024		2025		2024

First quarter	$	105.66	$	103.37		1,443,805		1,268,002		31.2		29.5
Second quarter	$	105.33	$	105.05		1,558,756		1,335,335		32.7		30.6
Third quarter	$	105.54	$	105.65		1,554,207		1,317,051		32.2		30.1
Fourth quarter			$	104.73				1,432,801				31.6
Year			$	104.71		4,556,768		5,353,189				30.4

(1)	See definition of the metrics above in the Glossary of Terms – Revenue Metrics on pages 37 and 38.

(2)	Excludes home-care visits.

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2025 Third Quarter versus 2024 Third Quarter

	Three Months Ended
	September 30, 2025						September 30, 2024						Variance
	Amount			As a % of Net Revenue			Amount			As a % of Net Revenue			Amount			%
	(In thousands, except percentages)

Net patient revenue	$	164,024			83.2	%	$	139,146			82.8	%	$	24,878			17.9	%
Other revenue		33,108			16.8	%		28,887			17.2	%		4,221			14.6	%
Net revenue		197,132			100.0	%		168,033			100.0	%		29,099			17.3	%

Operating Cost:
Salaries and related costs		116,619			59.2	%		99,835			59.4	%		16,784			16.8	%
Rent, supplies, contract labor and other		36,115			18.3	%		29,756			17.7	%		6,359			21.4	%
Depreciation and amortization		5,495			2.8	%		4,158			2.5	%		1,337			32.2	%
Provision for credit losses		2,073			1.1	%		1,721			1.0	%		352			20.5	%
(Gain) loss on clinic closures - lease and other		(42	)		0.0	%		3,432			2.0	%		(3,474	)		*
Total operating cost		160,260			81.3	%		138,902			82.7	%		21,358			15.4	%

Gross Profit		36,872			18.7	%		29,131			17.3	%		7,741			26.6	%

Corporate office costs		17,414			8.8	%		14,385			8.6	%		3,029			21.1	%
(Gain) loss on change in fair value of contingent earn-out consideration		(5,872	)		(3.0	)%		1,899			1.1	%		(7,771	)		(409.2	)%
Operating Income		25,330			12.8	%		12,847			7.6	%		12,483			97.2	%

Other (expense) income:
Interest expense, debt and other		(2,408	)		(1.2	)%		(2,018	)		(1.2	)%		(390	)		19.3	%
Interest income from investments		33			0.0	%		1,018			0.6	%		(985	)		(96.8	)%
Change in revaluation of put-right liability		(663	)		(0.3	)%		168			0.1	%		(831	)		(494.6	)%
Equity in earnings of unconsolidated affiliate		361			0.2	%		231			0.1	%		130			56.3	%
Other		222			0.1	%		90			0.1	%		132			146.7	%
Total other (expense)		(2,455	)		(1.2	)%		(511	)		(0.3	)%		(1,944	)		380.4	%

Income before taxes		22,875			11.6	%		12,336			7.3	%		10,539			85.4	%

Provision for income taxes		5,233			2.7	%		2,559			1.5	%		2,674			104.5	%
Net income		17,642			8.9	%		9,777			5.8	%		7,865			80.4	%

Less: Net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity		(3,790	)		(1.9	)%		(1,998	)		(1.2	)%		(1,792	)		89.7	%
Non-controlling interest - permanent equity		(714	)		(0.4	)%		(1,151	)		(0.7	)%		437			(38.0	)%
		(4,504	)		(2.3	)%		(3,149	)		(1.9	)%		(1,355	)		43.0	%

Net income attributable to USPH shareholders	$	13,138			6.7	%	$	6,628			3.9	%	$	6,510			98.2	%

* Not meaningful

Total net revenue for the 2025 Third Quarter increased $29.1 million, or 17.3%, to $197.1 million from $168.0 million for the 2024 Third Quarter while operating costs increased $21.4 million, or 15.4%, to $160.3 million from $138.9 million over the same periods, respectively. This increase was due to the increase in visits from the 84 net owned clinics added since the comparable prior year period.

Gross profit increased $7.7 million or 26.6%, to $36.9 million in the 2025 Third Quarter, compared to $29.1 million, for the 2024 Third Quarter.

Adjusted EBITDA, a non- GAAP measure, was $23.9 million for the 2025 Third Quarter, an increase of $2.8 million, or 13.2%, from $21.1 million for the 2024 Third Quarter primarily driven by clinic additions.

Operating Results, a non-GAAP measure, was $10.1 million for the 2025 Third Quarter compared to $10.4 million for the 2024 Third Quarter. On a per share basis, Operating Results was $0.66 for the 2025 Third Quarter compared to $0.69 for the 2024 Third Quarter.

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Physical Therapy Operations

	Three Months Ended						Variance
	September 30, 2025			September 30, 2024			$			%
	(In thousands, except percentages)
Revenue related to:
Mature Clinics ⁽¹⁾	$	131,831		$	131,532		$	299		0.2	%
Clinic additions ⁽²⁾		32,051			4,535			27,516		*		⁽⁹⁾
Clinics sold or closed ⁽³⁾		142			3,079			(2,937	)	*		⁽⁹⁾
Net Patient Revenue		164,024			139,146			24,878		17.9	%
Other ⁽⁴⁾		4,086			3,568			518		14.5	%
Total		168,110			142,714			25,396		17.8	%
Operating costs ⁽⁵⁾⁽⁷⁾		136,917			118,715			18,202		15.3	%
Gross profit	$	31,193		$	23,999		$	7,194		30.0	%

Financial and operating metrics (not in thousands):
Net rate per patient visit ⁽¹⁾	$	105.54		$	105.65		$	(0.11	)	(0.1	)%
Patient visits ⁽¹⁾		1,554,207			1,317,051			237,156		18.0	%
Average daily visits per clinic ⁽¹⁾		32.2			30.1			2.1		7.0	%
Adjusted gross profit margin ^(4)(5)(6)		18.6	%		19.2	%
Salaries and related costs per visit ⁽⁶⁾⁽⁸⁾	$	62.07		$	62.47		$	(0.40	)	(0.6	)%
Operating costs per visit ^(6)(7)(8)	$	86.88		$	86.00		$	0.88		1.0	%

(1) See Glossary of Terms - Revenue Metrics for definitions.

(2) Includes 36 owned clinics added during the nine months ended September 30, 2025, and 96 owned clinics added during the year ended December 31, 2024. See Clinic Count Roll Forward on page 36 for additional information.

(3) Includes 13 owned clinics closed during the nine months ended September 30, 2025 and 45 owned clinics closed during the year ended December 31, 2024. See Clinic Count Roll Forward on page 36 for additional information.

(4) Includes revenues from management contracts.

(5) Includes costs from management contracts.

(6) Excludes $0.1 million of certain incentive costs related to the Metro acquisition and gains or losses related to clinic closures, as applicable. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

(7) Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current presentation.

(8) Per visit costs exclude management contract costs.

(9) Not meaningful.

Revenues

Net revenue from physical therapy operations increased $25.4 million, or 17.8%, to $168.1 million for the 2025 Third Quarter from $142.7 million for the 2024 Second Quarter. This growth was due to the increase in visits from the 84 net owned clinics added since the comparable prior year period. Net rate per patient visit for the 2025 Third Quarter was $105.54 compared to $105.65 for the 2024 Third Quarter.

Total patient visits were 1,554,207, which includes 30,137 home-care visits, for the 2025 Third Quarter, an 18.0% increase from the 2024 Third Quarter. Average daily patient visits per clinic, which does not include home-care visits, was 32.2 for the 2025 Third Quarter, a record-high volume per clinic for a third quarter, compared to 30.1 for the 2024 Third Quarter.

Other revenues increased approximately $0.5 million, or 14.5%, to $4.1 million for the 2025 Third Quarter from $3.6 million for the 2024 Third Quarter.

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Operating costs

Operating costs from physical therapy operations increased $18.2 million, or 15.3%, to $136.9 million for the 2025 Third Quarter from $118.7 million for the 2024 Third Quarter primarily driven by the 84 net owned clinics added since the comparable prior year period. Excluding certain incentive costs related to the Metro acquisition and gains and losses related to clinic closures for both periods, total operating costs per visit was $86.88 in the 2025 Third Quarter compared to $86.00 in the comparable prior year period. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

Salaries and related costs, clinics (excluding management contracts) increased to $96.5 million in the 2025 Third Quarter from $82.3 million in the 2024 Third Quarter, an increase of $14.2 million, or 17.2% mostly due to the net clinics added since the comparable prior year period. Excluding certain incentive costs related to the Metro acquisition salaries and related costs per visit decreased to $62.07 for the 2025 Third Quarter from $62.47 for the 2024 Third Quarter. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

Rent, supplies, contract labor and other costs, related to clinics (excluding management contracts) increased to $31.8 million in the 2025 Third Quarter from $29.3 million in the 2024 Third Quarter, an increase of $2.5 million, or 8.4% mostly due to clinic additions.

Depreciation and amortization related to physical therapy operations increased to $4.6 million in the 2025 Third Quarter from $3.4 million in the 2024 Third Quarter, an increase of $1.3 million, or 39.0%, primarily due to the larger number of clinics in the 2025 Third Quarter compared to the 2024 Third Quarter.

The provision for credit losses was $2.0 million for the 2025 Third Quarter and $1.7 million for the 2024 Third Quarter. As a percentage of net revenues, the provision for credit losses was 1.2% over the same periods.

Gross Profit

Gross profit from physical therapy operations increased $7.2 million or 30.0% to $31.2 million, or 18.6% as a percent of net revenues, for the 2025 Third Quarter as compared to $24.0 million, or 16.8% as a percent of net revenues, for the 2024 Third Quarter. Excluding certain incentive costs related to the Metro acquisition and gains and losses related to clinic closures for both periods, the adjusted gross profit margin (a non-GAAP measure) increased $3.7 million or 13.5% to $31.1 million, or 18.6% as a percent of net revenues, for the 2025 Third Quarter compared to $27.4 million, or 19.2% as a percent of net revenues, for the 2024 third Quarter. See the reconciliation of non-GAAP measures to the more directly comparable GAAP measure provided on page 40 for more information.

Industrial Injury Prevention Services

	Three Months Ended						Variance
	September 30, 2025			September 30, 2024			$		%
	(In thousands, except percentages)
Net revenue	$	29,022		$	25,319		$	3,703	14.6	%
Operating costs ⁽¹⁾		23,343			20,187			3,156	15.6	%
Gross profit	$	5,679		$	5,132		$	547	10.7	%

Gross profit margin		19.6	%		20.3	%

(1) Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current presentation.

IIP revenue increased $3.7 million, or 14.6%, to $29.0 million for the 2025 Third Quarter as compared to $25.3 million for the 2024 Third Quarter. Gross profit from IIP operations for the 2025 Third Quarter increased $0.5 million, or 10.7%, to $5.7 million from $5.1 million for the 2024 Third Quarter. Gross profit margin from IIP operations was 19.6% for the 2025 Third Quarter compared to 20.3% for the 2024 Third Quarter.

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Corporate Office Costs

Corporate office costs increased to $17.4 million for the 2025 Third Quarter from $14.4 million for the 2024 Third Quarter, primarily to support the larger number of clinics, as well as costs associated with acquisition integration and the implementation of a new financial and human resources system. Implementation costs associated with the new financial and human resources system are expected to continue through the end of 2026. As a percentage of net revenue, corporate office costs was 8.8% for the 2025 Third Quarter compared to 8.6% for the 2024 Third Quarter. Excluding the acquisition integration costs and the costs associated with the implementation of the new financial and human resources system of $0.7 million, corporate office costs was 8.5% of net revenue for the 2025 Third Quarter.

Change in fair value of contingent earn-out consideration

We revalued contingent consideration related to certain acquisitions and recognized a net gain (a decrease in the related liabilities) of $5.9 million for the 2025 Third Quarter compared to a net loss (an increase in the related liabilities) of $1.9 million for the 2024 Third Quarter.

Operating Income

Operating income was $25.3 million for the 2025 Third Quarter compared to $12.8 million for the 2024 Third Quarter. Excluding the impact of change in value of contingent consideration as discussed above, operating income increased to $19.5 million for the 2025 Third Quarter from $14.7 million in the 2024 Third Quarter.

Other (Expenses) Income

Interest Expense, Debt and Other

Interest expense increased by $0.4 million to $2.4 million for the 2025 Third Quarter compared to $2.0 million for the 2024 Third Quarter due to a higher average outstanding balance on our revolving credit facility for the 2025 Third Quarter. The interest rate associated with borrowings on our credit facilities was 5.0% for the 2025 Third Quarter and 4.7% for the 2024 Third Quarter, with an all-in-effective interest rate (including all associated costs), of 5.7% and 5.4% over the same periods, respectively.

Interest income from investment

Interest income was less than $0.1 million during the 2025 Third Quarter compared to $1.0 million for the 2024 Third Quarter as the excess cash on the balance sheet at the end of the 2024 Third Quarter has since been deployed to fund acquisitions.

Change in revaluation of put-right liability

We revalued a put-right liability related to the future purchase of an IIP business and recognized a net non-cash expense (an increase in the related liability) of $0.7 million for the 2025 Third Quarter compared to net non-cash gain (a decrease in the related liability) of $0.2 million for the 2024 Third Quarter.

Provision for Income Taxes

The provision for income taxes was $5.2 million for the 2025 Third Quarter compared to $2.6 million during the 2024 Third Quarter while the effective tax rate was 28.5% and 27.9% over the same periods, respectively.

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	Three Months Ended
	September 30, 2025			September 30, 2024
	(In thousands, except percentages)
Income before taxes	$	22,875		$	12,336

Less: Net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity		(3,790	)		(1,998	)
Non-controlling interest - permanent equity		(714	)		(1,151	)
	$	(4,504	)	$	(3,149	)

Income before taxes less net income attributable to non-controlling interest	$	18,371		$	9,187

Provision for income taxes	$	5,233		$	2,559

Effective income tax rate		28.5	%		27.9	%

Net Income Attributable to Non-controlling Interest

Net income attributable to non-controlling interest (temporary and permanent) was $4.5 million for the 2025 Third Quarter compared to $3.1 million for the 2024 Third Quarter.

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2025 Nine Months versus 2024 Nine Months

	Nine Months Ended
	September 30, 2025						September 30, 2024						Variance
	Amount			As a % of Net Revenue			Amount			As a % of Net Revenue			Amount			%
	(In thousands, except percentages)
Net patient revenue	$	480,754			83.1	%	$	410,492			83.6	%	$	70,262			17.1	%
Other revenue		97,510			16.9	%		80,406			16.4	%		17,104			21.3	%
Net revenue		578,264			100.0	%		490,898			100.0	%		87,366			17.8	%

Operating Cost:
Salaries and related costs		341,656			59.1	%		289,900			59.1	%		51,756			17.9	%
Rent, supplies, contract labor and other		104,086			18.0	%		88,104			17.9	%		15,982			18.1	%
Depreciation and amortization		16,776			2.9	%		12,326			2.5	%		4,450			36.1	%
Provision for credit losses		5,916			1.0	%		5,065			1.0	%		851			16.8	%
Loss on clinic closures - lease and other		269			0.0	%		4,109			0.8	%		(3,840	)		(93.5	)%
Total operating cost		468,703			81.1	%		399,504			81.4	%		69,199			17.3	%

Gross Profit		109,561			18.9	%		91,394			18.6	%		18,167			19.9	%

Corporate office costs		51,135			8.8	%		42,719			8.7	%		8,416			19.7	%
(Gain) loss on change in fair value of contingent earn-out consideration		(11,484	)		(2.0	)%		5,332			1.1	%		(16,816	)		(315.4	)%
Operating Income		69,910			12.1	%		43,343			8.8	%		26,567			61.3	%

Other (expense) income:
Interest expense, debt and other		(7,109	)		(1.2	)%		(5,966	)		(1.2	)%		(1,143	)		19.2	%
Interest income from investments		85			0.0	%		3,635			0.7	%		(3,550	)		(97.7	)%
Change in revaluation of put-right liability		(1,406	)		(0.2	)%		(136	)		(0.0	)%		(1,270	)		933.8	%
Equity in earnings of unconsolidated affiliate		1,155			0.2	%		750			0.2	%		405			54.0	%
Loss on sale of a partnership		(123	)		0.0	%		-			0.0	%		(123	)		*
Other		344			0.1	%		261			0.1	%		83			31.8	%
Total other (expense)		(7,054	)		(1.2	)%		(1,456	)		(0.3	)%		(5,598	)		384.5	%

Income before taxes		62,856			10.9	%		41,887			8.5	%		20,969			50.1	%

Provision for income taxes		14,026			2.4	%		8,781			1.8	%		5,245			59.7	%
Net income		48,830			8.4	%		33,106			6.7	%		15,724			47.5	%

Less: Net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity		(9,716	)		(1.7	)%		(7,539	)		(1.5	)%		(2,177	)		28.9	%
Non-controlling interest - permanent equity		(3,684	)		(0.6	)%		(3,387	)		(0.7	)%		(297	)		8.8	%
		(13,400	)		(2.3	)%		(10,926	)		(2.2	)%		(2,474	)		22.6	%

Net income attributable to USPH shareholders	$	35,430			6.1	%	$	22,180			4.5	%	$	13,250			59.7	%

* Not meaningful

Non-GAAP Adjusted EBITDA increased $10.3 million to $70.3 million for the 2025 Nine Months from $60.0 million for the 2024 Nine Months while non-GAAP Operating Results increased $0.6 million to $29.7 million, or $1.96 per share, for the 2025 Nine Months from $29.2 million, or $1.94 per share, for the 2024 Nine Months.

Total net revenue for the 2025 Nine Months increased $87.4 million, or 17.8%, to $578.3 million from $490.9 million for the 2024 Nine Months while operating costs increased $69.2 million, or 17.3%, to $468.7 million from $399.5 million over the same periods, respectively. Gross profit for the 2025 Nine Months was $109.6 million, or 18.9% of net revenue, compared to $91.4 million for the 2024 Nine Months, or 18.6%, of net revenue.

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Physical Therapy Operations

	Nine Months Ended						Variance
	September 30, 2025			September 30, 2024			$			%
	(In thousands, except percentages)
Revenue related to:
Mature Clinics ⁽¹⁾	$	391,690		$	391,614		$	76		0.0	%
Clinic additions ⁽²⁾		88,092			8,182			79,910		*		⁽⁹⁾
Clinics sold or closed ⁽³⁾		972			10,696			(9,724	)	*		⁽⁹⁾
Net Patient Revenue		480,754			410,492			70,262		17.1	%
Other ⁽⁴⁾		12,056			10,133			1,923		19.0	%
Total		492,810			420,625			72,185		17.2	%
Operating costs ⁽⁵⁾⁽⁷⁾		399,933			342,796			57,137		16.7	%
Gross profit	$	92,877		$	77,829		$	15,048		19.3	%

Financial and operating metrics (not in thousands):
Net rate per patient visit ⁽¹⁾	$	105.50		$	104.71		$	0.79		0.8	%
Patient visits ⁽¹⁾		4,556,768			3,920,388			636,380		16.2	%
Average daily visits per clinic ⁽¹⁾		32.0			30.1			1.9		6.3	%
Adjusted gross profit margin ^(4)(5)(6)		19.0	%		19.5	%
Salaries and related costs per visit⁽⁶⁾⁽⁸⁾	$	61.86		$	61.17		$	0.69		1.1	%
Operating costs per visit ^(6)(7)(8)	$	86.36		$	84.89		$	1.47		1.7	%

(1) See Glossary of Terms - Revenue Metrics for definitions.

(2) Includes 36 owned clinics added during the 2025 Nine Months and 96 owned clinics added during the year ended December 31, 2024. See Clinic Count Roll Forward on page 36 for additional information.

(3) Includes 13 owned clinics closed during the 2025 Nine Months and 45 owned clinics closed during the year ended December 31, 2024. See Clinic Count Roll Forward on page 36 for additional information.

(4) Includes revenues from management contracts.

(5) Includes costs from management contracts.

(6) Excludes $0.6 million of certain incentive costs related to Metro acquisition and gains or losses related to clinic closures, as applicable. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

(7) Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current presentation.

(8) Per visit costs exclude management contract costs.

(9) Not meaningful.

Revenues

Revenues from physical therapy operations increased $72.2 million, or 17.2%, in the 2025 Nine Months versus the comparable prior year period due to increased volume from the 84 net owned clinics added since the comparable prior year period as well as an increase in net rate per patient visit to $105.50 for the 2025 Nine Months from $104.71 for the 2024 Nine Months.

For the 2025 Nine Months, we had 4,556,768 total patient visits, which includes 81,573 home-care visits, compared to 3,920,388 for the 2024 Nine Months. There were no home-care visits in the 2024 Nine Months.

Other revenues increased approximately $1.9 million, or 19.0%, to $12.1 million for the 2025 Nine Months from $10.1 million for the 2024 Nine Months.

Operating costs

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Operating costs from physical therapy operations increased by $57.1 million, or 16.7%, to $399.9 million for the 2025 Nine Months from $342.8 million for the 2024 Nine Months, primarily driven by the 84 net owned clinics added since the comparable prior year period. Operating costs were 81.2% of net revenue for the 2025 Nine Months compared to 81.5% of net revenue for the 2024 Nine Months. Excluding certain incentive costs related to the Metro acquisition and gains and losses related to clinic closures for both periods, total operating costs per visit (excluding management contract) was $86.36 in the 2025 Nine Months compared to $84.89 in the comparable prior year period. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

Salaries and related costs, clinics (excluding management contracts) increased to $282.1 million in the 2025 Nine Months from $239.8 million in the 2024 Nine Months, an increase of $42.3 million, or 17.6% mostly due to the net clinics added since the comparable prior year period. Excluding certain incentive costs related to the Metro acquisition salaries and related costs per visit decreased to $61.86 for the 2025 Nine Months from $61.17 for the 2024 Nine Months. See the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40.

Rent, supplies, contract labor and other costs, related to clinics (excluding management contracts) increased to $91.7 million in the 2025 Nine Months from $81.8 million in the 2024 Nine Months, an increase of $9.9 million, or 12.1% mostly due to clinic additions.

Depreciation and amortization related to physical therapy operations increased to $14.3 million in 2025 Nine Months from $10.2 million in the 2024 Nine Months, an increase of $4.1 million, or 40.8%, primarily due to the larger number of clinics in the 2025 Nine Months compared to the 2024 Nine Months.

The provision for credit losses was $5.9 million for the 2025 Nine Months and $5.1 million for the 2024 Nine Months. As a percentage of net revenues, the provision for credit losses was 1.2% for both periods.

Gross Profit

Gross profit from physical therapy operations increased $15.0 million or 19.3% to $92.9 million, or 18.8% as a percent of net revenues, for the 2025 Third Quarter as compared to $77.8 million, or 18.5% as a percent of net revenues, for the 2024 Third Quarter. Excluding certain incentive costs related to the Metro acquisition and gains and losses related to clinic closures for both periods, the adjusted gross profit margin (a non-GAAP measure) increased $11.5 million or 14.0% to $93.4 million, or 19.0% as a percent of net revenues for the 2025 Third Quarter compared to $81.9 million, or 19.5% as a percent of net revenues, for the 2024 Third Quarter. See the reconciliation of non-GAAP measures to the more directly comparable GAAP measure provided on page 40 for information.

Industrial Injury Prevention Services

	Nine Months Ended						Variance
	September 30, 2025			September 30, 2024			$		%
	(In thousands, except percentages)
Net revenue	$	85,454		$	70,273		$	15,181	21.6	%
Operating costs ⁽¹⁾		68,770			56,708			12,062	21.3	%
Gross profit	$	16,684		$	13,565		$	3,119	23.0	%

Gross profit margin		19.5	%		19.3	%

(1) Amortization of certain intangible assets was reallocated between the physical therapy operations and IIP segments. Prior year amounts were reallocated to conform with current presentation.

Revenues from IIP increased $15.2 million, or 21.6%, from $70.3 million for the 2024 Nine Months to $85.5 million for the 2025 Nine Months. Gross profit from IIP operations increased $3.1 million, or 23.0%, from $13.6 million to $16.7 million for the 2025 Nine Months. The gross profit margin from IIP operations was 19.5% for the 2025 Nine Months compared to 19.3% for the 2024 Nine Months. Excluding the IIP acquisition made in April 2024, IIP revenue increased by $10.5 million or 16.0% in the 2025 Nine Months and gross profit margin increased $2.0 million or 16.1% in the 2025 Nine Months over the comparable prior year period.

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Corporate Office Costs

Corporate office costs were $51.1 million for the 2025 Nine Months, compared to $42.7 million for the 2024 Nine Months. As a percentage of net revenue, corporate office costs were 8.8% and 8.7% over the same periods, respectively. Excluding the acquisition integration costs and the costs associated with the implementation of the new financial and human resources system of $1.8 million, corporate office costs was 8.5% of net revenue for the 2025 Nine Months.

Change in fair value of contingent earn-out consideration

We revalued contingent consideration related to certain acquisitions and recognized a net gain (a decrease in the related liabilities) of $11.5 million for the 2025 Nine Months compared to a net loss of $5.3 million for the 2024 Nine Months (an increase in the related liabilities).

Operating Income

Operating income was $69.9 million for the 2025 Nine Months compared to $43.3 million for the 2024 Nine Months. Excluding the impact of change in value of contingent consideration discussed above, operating income increased to $58.4 million for the 2025 Nine Months from $48.7 million for the 2024 Nine Months, an increase of 20.0%.

Other (Expenses) Income

Interest Expense, Debt and Other

Interest expense increased by $1.1 million to $7.1 million for the 2025 Nine Months compared to $6.0 million for the 2024 Nine Months, primarily due to higher interest expense as a result of increased borrowings and lower interest income as the cash on the balance sheet during the 2024 Nine Months has been deployed to fund acquisitions since that time.

The interest rate associated with borrowings on our credit facilities was 5.0% for the 2025 Nine Months and 4.7% for the 2024 Nine Months, with an all-in-effective interest rate (including all associated costs), of 5.6% and 5.4% over the same periods, respectively.

Interest income from investment

Interest income was less than $0.1 million during the 2025 Nine Months compared to $3.6 million for the 2024 Nine Months as the excess cash on the balance sheet at the end of the 2024 Nine Months has since been deployed to fund acquisitions.

Change in revaluation of put-right liability

We revalued a put-right liability related to the future purchase of an IIP business and recognized a net non-cash expense (an increase in the related liability) of $1.4 million for the 2025 Nine Months compared to $0.1 million for the 2024 Nine Months (an increase in the related liability).

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Provision for Income Taxes

The provision for income tax was $14.0 million for the 2025 Nine Months and $8.8 million for the 2024 Nine Months. The effective tax rate was 28.4% over the same periods.

	Nine Months Ended
	September 30, 2025			September 30, 2024
	(In thousands, except percentages)
Income before taxes	$	62,856		$	41,887

Less: Net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity		(9,716	)		(7,539	)
Non-controlling interest - permanent equity		(3,684	)		(3,387	)
	$	(13,400	)	$	(10,926	)

Income before taxes less net income attributable to non-controlling interest	$	49,456		$	30,961

Provision for income taxes	$	14,026		$	8,781

Effective income tax rate		28.4	%		28.4	%

Net Income Attributable to Non-controlling Interest

Net income attributable to non-controlling interest (temporary and permanent) was $13.4 million for the 2025 Nine Months compared to $10.9 million for the 2024 Nine Months.

LIQUIDITY AND CAPITAL RESOURCES

We believe that our business has sufficient cash to allow us to meet our short-term cash requirements. Total cash and cash equivalents were $31.1 million as of September 30, 2025, compared to $41.4 million as of December 31, 2024. Additionally, we had $159.6 million of outstanding borrowings and $148.5 million in available credit under our credit facilities as of September 30, 2025, compared to $151.6 million of outstanding borrowings and $164.0 million in available credit under our credit facilities as of December 31, 2024.

We believe that our cash and cash equivalents and availability under our Senior Credit Facilities are sufficient to fund the working capital needs of our operating subsidiaries through at least September 30, 2026.

Historically, we have generated sufficient cash from operations to fund our development activities and to cover operational needs. We plan to continue developing new clinics and making acquisitions. We have, from time to time, purchased the non-controlling interests of limited partners in our existing partnerships. We may purchase additional non-controlling interests in the future. Generally, any acquisition or purchase of non-controlling interests is expected to be accomplished using our cash, financing, or a combination of the two.

We make reasonable and appropriate efforts to collect accounts receivable, including applicable deductible and co-payment amounts. Claims are submitted to payors daily, weekly or monthly in accordance with our policy or payor’s requirements. When possible, we submit our claims electronically. The collection process is time-consuming and typically involves the submission of claims to multiple payors whose payment of claims may be dependent upon the payment of another payor. Claims under litigation and vehicular incidents can take a year or longer to collect. Medicare and other payor claims relating to new clinics awaiting CMS approval initially may not be submitted for six months or more. When all reasonable internal collection efforts have been exhausted, accounts are written off prior to sending them to outside collection firms. With managed care, commercial health plans and self-pay payor type receivables, the write-off generally occurs after the account receivable has been outstanding for 120 days or longer. As of September 30, 2025, we have accrued $7.8 million related to credit balances, a portion of which is due to patients and payors.

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Cash Flow

A summary of our operating, investing and financing activities is discussed below.

	Nine Months Ended
	September 30, 2025			September 30, 2024
	(In thousands)
Net cash provided by operating activities	$	50,126		$	55,531
Net cash (used in) investing activities		(31,269	)		(54,597	)
Net cash (used in) financing activities		(29,117	)		(36,800	)

Operating Activities

Cash provided by operating activities was $50.1 million for the 2025 Nine Months as compared to $55.5 million for the 2024 Nine Months. The decrease in cash provided by operating activities is related to the increase in accounts receivable as a result of higher net revenue and timing of receivable collections, a decrease in accounts payable and accrued expenses as well as an increase in other assets mostly related to an income tax receivable. These decreases were partially offset by higher net income.

Investing Activities

Cash used in investing activities for the 2025 Nine Months totaled $31.3 million and primarily consisted of $24.0 million used in the purchase of interests in businesses and non-controlling interests (temporary and permanent), and $10.1 million of fixed assets purchases. These uses were partially offset by $0.7 million in proceeds from the sale of a partnership, and $1.1 million of distributions received from an unconsolidated affiliate. Cash used in investing activities in the 2024 Nine Months was $54.6 million.

Financing Activities

Cash used in financing activities for the 2025 Nine Months totaled $29.1 million and primarily comprised of $146.5 million in proceeds from our Revolving Facility (as defined below), $14.6 million in distributions to non-controlling interests (temporary and permanent), $20.5 million in cash dividends paid to shareholders and payments of $9.5 million related to notes payable and the Term Facility. Cash used in financing activities in the 2024 Nine Months was $36.8 million.

Senior Credit Facilities

On December 5, 2013, we entered into an Amended and Restated Credit Agreement with a commitment for a $125.0 million revolving credit facility. This agreement was amended and/or restated in August 2015, January 2016, March 2017, November 2017, and January 2021. On June 17, 2022, we entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”) among Bank of America, N.A., as administrative agent (“Administrative Agent”) and the lenders from time-to-time party thereto.

The Credit Agreement, which matures on June 17, 2027, provides for loans in an aggregate principal amount of $325 million. Such loans will be available through the following facilities (collectively, the “Senior Credit Facilities”):

1)	Revolving Facility: $175 million, five-year, revolving credit facility (“Revolving Facility”), which includes a $12 million sublimit for the issuance of standby letters of credit and a $15 million sublimit for swingline loans (each, a “Swingline Loan”).

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The proceeds of the Revolving Facility have been and shall continue to be used by us for working capital and other general corporate purposes of our Company and its subsidiaries, including to fund future acquisitions and invest in growth opportunities. The proceeds of the Term Facility were used by us to refinance the indebtedness outstanding under the Second Amended and Restated Credit Agreement, to pay fees and expenses incurred in connection with the loan facilities transactions, for working capital and other general corporate purposes.

We are permitted to increase the Revolving Facility and/or add one or more tranches of term loans in an aggregate amount not to exceed the sum of (i) $100 million plus (ii) an unlimited additional amount, provided that (in the case of clause (ii)), after giving effect to such increases, the pro forma Consolidated Leverage Ratio (as defined in the Credit Agreement) would not exceed 2.0:1.0, and the aggregate amount of all incremental increases under the Revolving Facility does not exceed $50,000,000.

The interest rates per annum applicable to the Senior Credit Facilities (other than in respect of Swingline Loans) will be Term SOFR as defined in the agreement plus an applicable margin or, at our option, an alternate base rate plus an applicable margin. Interest is payable at the end of the selected interest period but no less frequently than quarterly and on the date of maturity.

We will also pay to the Administrative Agent, for the account of each lender under the Revolving Facility, a commitment fee equal to the actual daily excess of each lender’s commitment over its outstanding credit exposure under the Revolving Facility (“unused fee”). We may prepay and/or repay the revolving loans and the term loans, , in whole or in part, at any time without premium or penalty, subject to certain conditions.

The Credit Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends, and other payments in respect of equity interests, acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The Credit Agreement includes certain financial covenants which include the Consolidated Fixed Charge Coverage Ratio and the Consolidated Leverage Ratio, as defined in the Credit Agreement. The Credit Agreement also contains customary events of default.

As of September 30, 2025, we were in compliance with all of the covenants contained in the Credit Agreement.

Our obligations under the Credit Agreement are guaranteed by our wholly owned material domestic subsidiaries (each, a “Guarantor”), and our obligations and any Guarantors are secured by a perfected first priority security interest in substantially all of our existing and future personal property and each Guarantor, subject to certain exceptions.

As of September 30, 2025, $132.4 million (net of unamortized debt issuance costs of $0.7 million) was outstanding on the Term Facility while $26.5 million was outstanding under the Revolving Facility resulting in $148.5 million of credit availability on the Revolving Facility. The interest rate on the Senior Credit Facilities was 5.0% for the 2025 Third Quarter and 4.7% for the 2024 Third Quarter, with an all-in effective interest rate (including all associated costs), of 5.7% and 5.4% over the same periods, respectively. The interest rate on our Senior Credit Facilities was 5.0% for the 2025 Nine Months and 4.7% for the 2024 Nine Months, with an all-in effective interest rate, including all associated costs, of 5.6% and 5.4% over the same periods, respectively.

Interest Rate Swap

In May 2022, we entered into an interest rate swap agreement, effective on June 30, 2022, with Bank of America, N.A. It has a $150 million notional value adjusted concurrently with scheduled principal payments made on the term loan and has a maturity date of June 30, 2027. Beginning in July 2022, we receive 1-month SOFR, and pay a fixed rate of interest of 2.815% on 1-month SOFR or Bank of America’s prime rate on a quarterly basis. The total interest rate in any period also includes an applicable margin based on our consolidated leverage ratio. In connection with the swap, no cash was exchanged between us and the counterparty.

We designated our interest rate swap as a cash flow hedge and structured it to be highly effective. Consequently, unrealized gains and losses related to the fair value of the interest rate swap are recorded to accumulated other comprehensive income (loss), net of tax.

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As of September 30, 2025, the fair value of the interest rate swap was $1.3 million, a decrease of $1.9 million, net of a $0.6 million income tax effect, as compared to December 31, 2024. The fair value of the interest rate swap is included in Other assets (current and long term) in our consolidated balance sheet while the changes in fair value are presented as an unrealized loss or gain in our unaudited consolidated statements of comprehensive income. The interest rate swap arrangement has generated $1.6 million in interest savings for the 2025 Nine Months.

The average interest rate for our Senior Credit Facilities, net of the savings from the swap, was 5.0% in both the 2025 Third Quarter and the 2025 Nine Months, compared to 4.7% in both the 2024 Third Quarter and the 2024 Nine Months.

Notes Payable and Deferred Payments Related to Acquisitions

We generally enter into various notes payable as a means of financing our acquisitions. Our present outstanding notes payable primarily relate to the acquisitions of a business or acquisitions of majority interests in such businesses. At September 30, 2025, our remaining outstanding balance on these notes aggregated $1.4 million, of which less than $0.1 million is payable in 2025, $0.9 million is payable in 2026 and $0.5 is payable in 2027. Notes are generally payable in equal annual installments of principal over two years plus any accrued and unpaid interest. Interest accrues at various interest rates ranging from 4.5% to 8.5% per annum.

On September 30, 2025, together with a local partner, we acquired a 100% equity interest in a two-clinic practice for a purchase price of $0.4 million, which was paid in cash. As part of this transaction, we agreed to additional consideration if future objectives are met. The contingent consideration was valued at less than $0.1 million as of September 30, 2025.

On July 31, 2025, we acquired a 60% equity interest in a three-clinic practice with the practice owners retaining a 40% equity interest. The purchase price for the 60% equity interest was approximately $7.6 million, of which $7.3 million was paid in cash and $0.3 million in the form of a note payable. The note accrues interest at 5.0% per annum and the principal and interest is payable on July 31, 2027. As part of this transaction, we agreed to additional consideration if future operational objectives are met. The contingent consideration was valued at $2.6 million as of September 30, 2025.

On April 30, 2025, we acquired an outpatient home-care physical and speech therapy practice through our 50%-owned subsidiary, Metro. After the transaction, our ownership interest is 40%, our local partners have an partnership interest of 40% and the practice’s pre-acquisition owners have a 20% ownership interest. The purchase price for the 80% equity interest was approximately $2.3 million which was paid in cash. As part of this transaction, we agreed to additional consideration if future operational objectives are met. The maximum amount of additional contingent consideration due under this agreement is $1.8 million. The contingent consideration was valued at $1.0 million as of September 30, 2025.

On February 28, 2025, we acquired 65% interest in a physical therapy practice with three clinic locations. The prior owners retained a 35% ownership interest. The purchase price for the 65% interest was approximately $3.8 million which was paid in cash. As part of this transaction, we agreed to additional consideration if future operational objectives are met. The maximum amount of additional contingent consideration due under this agreement is $1.3 million. The contingent consideration was valued at $0.3 million as of September 30, 2025.

On November 30, 2024, we acquired a 75% equity interest in an eight-clinic physical therapy practice. The owner of the practice retained 25% of the equity interests. The purchase price for the 75% equity interest was approximately $15.9 million, of which $15.7 million was paid in cash, and $0.2 million was in the form of a note payable. The note accrues interest at 5.0% per annum and the principal and interest is payable in one installment which is due on December 1, 2026.

On October 31, 2024, we acquired a 50% interest in Metro pursuant to an Equity Interest Purchase Agreement (the “Purchase Agreement”) dated October 7, 2024 among U.S. Physical Therapy, Ltd. (a subsidiary of the Company), Metro, the members of Metro, and Michael G. Mayrsohn, as Sellers’ Representative. We also became the managing member of Metro. We paid a purchase price of approximately $76.5 million, $75.0 million of which was funded by our cash on hand and the remaining $1.5 million through the issuance of 18,358 shares of the Company’s common stock based on a trailing five-day average as of the day immediately prior to closing. The shares of the Company’s common stock were issued in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act. The Purchase Agreement also included an earnout where the sellers can earn up to $20.0 million of additional consideration if certain performance criteria relating to the Metro business are achieved. The value of the contingent consideration at September 30, 2025, was $2.5 million.

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On August 31, 2024, we acquired a 70% equity interest in an eight-clinic practice physical therapy and the original practice owners retained a 30% equity interest. The purchase price for the 70% equity interest was approximately $2.0 million. As part of the transaction, we agreed to additional contingent consideration if future operational and financial objectives are met. The maximum amount of additional contingent consideration due under this agreement is $3.6 million. The contingent consideration was valued at $0.5 million on September 30, 2025.

On April 30, 2024, we acquired 100% of an IIP business through one of its primary IIP businesses, Briotix Health Limited Partnership, for a purchase price of approximately $24.0 million, of which $0.5 million was in the form of a note payable. The note accrued interest at 5.0% per annum and the principal and the interest was paid as of the Third Quarter 2025. As part of the transaction, we agreed to additional contingent consideration if future operational objectives are met by the business. The maximum amount of additional contingent consideration due under this agreement is $10.0 million. In August 2025, we paid $1.9 million in full settlement of the contingent consideration. As of September 30, 2025, no further amounts are payable related to the April 2024 Acquisition.

On March 29, 2024, we acquired a 50% equity interest in a nine-clinic physical therapy and hand therapy practice. The original owners of the practice retained the remaining 50%. The purchase price for the 50% equity interest was approximately $16.4 million, of which $0.5 million was in the form of a note payable. The note accrues interest at 4.5% per annum and the principal and the interest are payable on March 29, 2026. As part of the transaction, we agreed to additional contingent consideration if future operational and financial objectives are met. There is no maximum payout. The contingent consideration was valued at $2.5 million on September 30, 2025.

Redeemable Non-Controlling Interest

Certain limited partnership agreements and limited liability company agreements, as amended, provide that, upon the triggering events, we have a call right, and the selling entity or individual has a put right for the purchase and sale of the limited partnership interest held by the partner. Once triggered, the put right and the call right do not expire, even upon an individual partner’s death, and contain no mandatory redemption feature. The purchase price of the partner’s limited partnership interest upon the exercise of either the put right or the call right is calculated per the terms of the respective agreements and classified as redeemable non-controlling interest (temporary equity) in our consolidated balance sheets. The fair value of the redeemable non-controlling interests on September 30, 2025, was $277.7 million.

In the event that a limited non-controlling partner’s employment ceases at any time after a specified date that is typically between three and six years from the acquisition date, we have agreed to certain contractual provisions which enable such minority partners to exercise their right to trigger our repurchase of that partner’s non-controlling interest at a predetermined multiple of earnings before interest and taxes.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We maintain an interest rate swap arrangement which is considered a derivative instrument. Our indebtedness as of September 30, 2025, was the outstanding balance of seller notes from our acquisitions of $1.4 million, and an outstanding balance on our term note related to the Credit Agreement of $159.6 million. The Revolving Facility within our Senior Credit Facilities has a balance of $26.5 million as of September 30, 2025, and is subject to fluctuating interest rates. A 1% change in the interest rate would yield $0.3 million in interest expense on the Senior Credit Facilities because of the interest rate swap described above. See Note 9 to our consolidated financial statements included in Item 1.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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As of the end of the period covered by this report, the Company’s management completed an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded (i) that our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure and (ii) that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the nine months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

We are a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of our business. We cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject us to sanctions, damages, recoupments, fines, and other penalties. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to our businesses in the future that may, either individually or in the aggregate, have a material adverse effect on our business, financial position, results of operations, and liquidity.

Healthcare providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act. Qui tam lawsuits typically remain under seal for some time while the government decides whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation. These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who successfully bring the suits. We have been a defendant in these cases in the past and may be named as a defendant in similar cases from time to time in the future.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

Exhibit Number	Description

31.1*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
32*	Certification Pursuant to 18 U.S.C 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*	Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

	U.S. PHYSICAL THERAPY, INC.

Date: November 7, 2025	By:	/s/ Carey Hendrickson
		Carey Hendrickson
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

September 30, 2025

September 30, 2024

Weighted-average remaining lease term - Operating leases

Weighted-average discount rate - Operating leases