U S PHYSICAL THERAPY INC /NV 10-Q

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; 35 Table of Contents • 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, and 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 services 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. 36 Table of Contents During the six months ended June 30, 2025, and for the year ended December 31, 2024, we completed the acquisitions of clinic practices and IIP businesses detailed below: Acquisition Date % Interest Acquired Number of Clinics 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 12 - 12 Q3 closed or sold (32 ) (2 ) (34 ) Number of clinics, end of period 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 total additions 20 - 20 96 - 96 Year-to-date total closed or sold (10 ) (3 ) (13 ) (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, develop outpatient physical therapy clinics as satellites in existing partnerships, and continue acquiring companies that provide or serve our IIP sector. Our Board of Directors declared a quarterly dividend of $0.45 per share payable on September 12, 2025, to shareholders of record on August 22, 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 ownership interest of 40% and the practice’s preacquisition owners have a 20% ownership interest. Regulatory Changes The 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 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. 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. 37 Table of Contents 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. 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. • 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 Second Quarter refers to the three months ended June 30, 2025. • 2024 Second Quarter refers to the three months ended June 30, 2024. • 2025 Six Months refers to the six months ended June 30, 2025. • 2024 Six Months refers to the six months ended June 30, 2024. Our Net Income was $12.4 million for the 2025 Second Quarter compared to $7.5 million in the 2024 Second Quarter. In accordance with Generally Accepted Accounting Principles (“GAAP”), the revaluation of noncontrolling interest, net of taxes, is not included in 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 $0.58 for the 2025 Second Quarter compared to $0.47 for the 2024 Second Quarter 38 Table of Contents Our Net Income was $22.3 million for the 2025 Six Months as compared to $15.6 million for the 2024 Six Months while earnings per share was $1.38 for the 2025 Six Months compared to $0.93 for the 2024 Six Months. The following table provides a calculation of earnings per share. Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 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 $ 12,393 $ 7,506 $ 22,292 $ 15,552 Charges to retained earnings: Revaluation of redeemable non-controlling interest (4,806 ) (622 ) (1,903 ) (2,061 ) Tax effect at statutory rate (federal and state) 1,228 159 486 527 $ 8,815 $ 7,043 $ 20,875 $ 14,018 Earnings per share (basic and diluted) $ 0.58 $ 0.47 $ 1.38 $ 0.93 Shares used in computation: Basic and diluted earnings per share - weighted-average shares 15,197 15,072 15,165 15,044 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 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. 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. 39 Table of Contents Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (In thousands, except per share data) Adjusted EBITDA (a non-GAAP measure) Net income attributable to USPH shareholders $ 12,393 $ 7,506 $ 22,292 $ 15,552 Adjustments: Provision for income taxes 4,933 3,083 8,793 6,222 Depreciation and amortization 6,057 4,514 11,924 8,609 Interest expense, debt and other, net 2,422 1,980 4,701 3,948 Equity-based awards compensation expense 2,117 1,919 3,888 3,916 Interest income from investments (28 ) (1,074 ) (52 ) (2,617 ) Change in revaluation of put-right liability 339 223 743 303 (Gain) loss on change in fair value of contingent earn-out consideration (790 ) 4,046 (5,612 ) 3,434 Clinic Closure costs (1) 69 551 311 677 Business acquisition related costs (2) 320 - 800 - ERP implementation costs (3) 159 - 221 - Loss on sale of a partnership - - 123 - Other income (47 ) (109 ) (122 ) (171 ) Allocation to non-controlling interests (1,081 ) (515 ) (1,608 ) (978 ) $ 26,863 $ 22,124 $ 46,402 $ 38,895 Operating Results (a non-GAAP measure) Net income attributable to USPH shareholders $ 12,393 $ 7,506 $ 22,292 $ 15,552 Adjustments: Gain (loss) on change in fair value of contingent earn-out consideration (790 ) 4,046 (5,612 ) 3,434 Change in revaluation of put-right liability 339 223 743 303 Clinic closure costs (1) 69 551 311 677 Business acquisition related costs (2) 320 - 800 - ERP implementation costs (3) 159 - 221 - Loss on sale of a partnership - - 123 - Allocation to non-controlling interests (156 ) (68 ) (118 ) (84 ) Tax effect at statutory rate (federal and state) 16 (1,214 ) 903 (1,106 ) $ 12,350 $ 11,044 $ 19,663 $ 18,776 Operating Results per share (a non-GAAP measure) 0.81 $ 0.73 1.30 $ 1.25 1) Costs associated with the closure of three clinics in the 2025 Second Quarter, 10 clinics during the 2025 Six Months, five clinics in the 2024 Second Quarter and 11 clinics in the 2024 Six Months. 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. A reconciliation of additional non-GAAP measures to the most comparable GAAP measures are presented in the tables below. Three Months Ended Six Months Ended June 30, 2025 June 30, 2025 As Reported (GAAP) Adjustments (1) As Adjusted (Non-GAAP) As Reported (GAAP) Adjustments (1) As Adjusted (Non-GAAP) (in thousands, except percentages) (in thousands, except percentages) Segment information - Physical Therapy Operations Salaries and related costs (2) $ 93,877 $ (229 ) $ 93,648 $ 185,676 $ (294 ) $ 185,382 Operating costs (2) $ 131,093 $ (229 ) $ 130,864 $ 260,064 $ (294 ) $ 259,770 Gross profit $ 35,233 $ 229 $ 35,462 $ 60,701 $ 294 $ 60,995 Gross margin 20.9 % * 21.1 % 18.7 % * 18.8 % Number of visits 1,558,756 1,558,756 3,002,561 3,002,561 Salaries and related costs per visit $ 60.23 $ (0.15 ) $ 60.08 $ 61.84 $ (0.10 ) $ 61.74 Operating costs per visit $ 84.10 $ (0.15 ) $ 83.95 $ 86.62 $ (0.10 ) $ 86.52 1) Certain incentive costs related to the Metro acquisition. We believe that presenting this information will allow investors to evaluate the performance our business more objectively. 2) Excludes costs related to management contracts. * Not meaningful 40 Table of Contents Supplemental Financial and Performance Metrics Number of Clinics (2) Net Rate Per Patient Visit (1) Patient Visits (1) Average Visits Per Clinic Per Day (3) 2025 2024 2025 2024 2025 2024 2025 2024 First quarter 729 679 $ 105.66 $ 103.37 1,443,805 1,268,002 31.2 29.5 Second quarter 732 681 $ 105.33 $ 105.05 1,558,756 1,335,335 32.7 30.6 Third quarter - 661 $ - $ 105.65 - 1,317,051 - 30.1 Fourth quarter - 722 $ - $ 104.73 - 1,432,801 - 31.6 Year - 722 $ - $ 104.71 3,002,561 5,353,189 - 30.4 (1) See definition of the metrics above in the Glossary of Terms – Revenue Metrics on page 38. (2) We also manage clinics owned by third parties through management contracts. In addition to the clinic count shown above, (excluding the home-care business unit count), as of June 30, 2025, we managed 36 clinics bringing the total owned/managed clinics to 768. As of June 30, 2024, we managed 41 clinics bringing the total owned/managed clinics to 722. (3) Excludes home-care visits. 41 Table of Contents 2025 Second Quarter versus 2024 Second Quarter Three Months Ended June 30, 2025 June 30, 2024 Variance Amount As a % of Net Revenue Amount As a % of Net Revenue Amount % (In thousands, except percentages) Net patient revenue $ 164,183 83.2 % $ 140,271 83.9 % $ 23,912 17.0 % Other revenue 33,161 16.8 % 26,919 16.1 % 6,242 23.2 % Net revenue 197,344 100.0 % 167,190 100.0 % 30,154 18.0 % Operating Cost: Salaries and related costs 113,788 57.7 % 96,334 57.6 % 17,454 18.1 % Rent, supplies, contract labor and other 34,127 17.3 % 30,335 18.1 % 3,792 12.5 % Depreciation and amortization 5,741 2.9 % 4,299 2.6 % 1,442 33.5 % Provision for credit losses 1,995 1.0 % 1,717 1.0 % 278 16.2 % Clinic closure costs - lease and other 69 0.0 % 643 0.4 % (574 ) (89.3 )% Total operating cost 155,720 78.9 % 133,328 79.7 % 22,392 16.8 % Gross Profit 41,624 21.1 % 33,862 20.3 % 7,762 22.9 % Corporate office costs 17,476 8.9 % 14,249 8.5 % 3,227 22.6 % (Gain) loss on change in fair value of contingent earn-out consideration (790 ) (0.4 )% 4,046 2.4 % (4,836 ) (119.5 )% Operating Income 24,938 12.6 % 15,567 9.3 % 9,371 60.2 % Other (expense) income: Interest expense, debt and other (2,422 ) (1.2 )% (1,980 ) (1.2 )% (442 ) 22.3 % Interest income from investments 28 0.0 % 1,074 0.6 % (1,046 ) (97.4 )% Change in revaluation of put-right liability (339 ) (0.2 )% (223 ) (0.1 )% (116 ) 52.0 % Equity in earnings of unconsolidated affiliate 401 0.2 % 248 0.1 % 153 61.7 % Other 47 0.0 % 109 0.1 % (62 ) (56.9 )% Total other (expense) income (2,285 ) (1.2 )% (772 ) (0.5 )% (1,513 ) 196.0 % Income before taxes 22,653 11.5 % 14,795 8.8 % 7,858 53.1 % Provision for income taxes 4,933 2.5 % 3,083 1.8 % 1,850 60.0 % Net income 17,720 9.0 % 11,712 7.0 % 6,008 51.3 % Less: Net income attributable to non-controlling interest: Redeemable non-controlling interest - temporary equity (3,914 ) (2.0 )% (3,314 ) (2.0 )% (600 ) 18.1 % Non-controlling interest - permanent equity (1,413 ) (0.7 )% (892 ) (0.5 )% (521 ) 58.4 % (5,327 ) (2.7 )% (4,206 ) (2.5 )% (1,121 ) 26.7 % Net income attributable to USPH shareholders $ 12,393 6.3 % $ 7,506 4.5 % $ 4,887 65.1 % * Not meaningful Total net revenue for the 2025 Second Quarter increased $30.2 million, or 18.0%, to $197.3 million from $167.2 million for the 2024 Second Quarter while operating costs increased $22.4 million, or 16.8%, to $155.7 million from $133.3 million over the same periods, respectively. This increase was due to the increase in visits from the 51 net clinics added since the comparable prior year period and an increase in net rate per patient visit. Gross profit, which included less than $0.1 million of costs associated with four clinic closures, in the 2025 Second Quarter was $41.6 million, or 21.1% of net revenue, during the 2025 Second Quarter compared to $33.9 million, or 20.3% of net revenue, for the 2024 Second Quarter. Adjusted EBITDA, a non- GAAP measure, was $26.9 million for the 2025 Second Quarter, an increase of $4.7 million, or 21.4%, from $22.1 million for the 2024 Second Quarter primarily driven by higher patient visits. Operating Results, a non-GAAP measure, was $12.4 million for the 2025 Second Quarter compared to $11.0 million for the 2024 Second Quarter, an increase of 11.8% over the same period. On a per share basis, Operating Results was $0.81 for the 2025 Second Quarter compared to $0.73 for the 2024 Second Quarter. 42 Table of Contents Physical Therapy Operations Three Months Ended Variance June 30, 2025 June 30, 2024 $ % (In thousands, except percentages) Revenue related to: Mature Clinics (1) $ 133,650 $ 133,366 $ 284 0.2 % Clinic additions (2) 30,533 3,586 26,947 * (7) Clinics sold or closed (3) - 3,319 (3,319 ) * (7) Net Patient Revenue 164,183 140,271 23,912 17.0 % Other (4) 4,109 3,215 894 27.8 % Total 168,292 143,486 24,806 17.3 % Operating costs (5) 133,059 114,703 18,356 16.0 % Gross profit $ 35,233 $ 28,783 $ 6,450 22.4 % Financial and operating metrics (not in thousands): Net rate per patient visit (1) $ 105.33 $ 105.05 $ 0.28 0.3 % Patient visits (1) 1,558,756 1,335,335 223,421 16.7 % Average daily visits per clinic (1) 32.7 30.6 2.1 6.9 % Adjusted gross profit margin (5)(6) 21.1 % 20.1 % Salaries and related costs per visit (6) $ 60.08 $ 59.66 $ 0.42 0.7 % Operating costs per visit (6) $ 83.95 $ 84.46 $ (0.51 ) (0.6 )% (1) See Glossary of Terms - Revenue Metrics for definitions. (2) Includes six clinics added during the 2025 Second Quarter, 14 clinics added during the 2025 First Quarter and 96 clinics added during the year ended December 31, 2024. (Owned) (3) Includes three clinics closed during the 2025 Second Quarter, seven clincs closed in the 2025 First Quarter and 45 clinics closed during the year ended December 31, 2024. (Owned) (4) Includes revenues from management contracts. (5) Includes costs from management contracts. (6) Excludes $0.2 million of certain incentive costs related to the Metro acquisition. Please refer to the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40. (7) Not meaningful. Revenues Net revenue from physical therapy operations increased $24.8 million, or 17.3%, to $168.3 million for the 2025 Second Quarter from $143.5 million for the 2024 Second Quarter. This growth was due to the increase in visits from the 51 net clinics added since the comparable prior year period and an increase in net rate per patient visit, which reflects the Company’s strategic priority of increasing reimbursement rates through contract negotiations with commercial and other payors, and the addition of acquisitions with accretive net rate per patient visit. Net rate per patient visit for the 2025 Second Quarter was $105.33 up from $105.05 for the 2024 Second Quarter, despite the approximate 2.9% Medicare rate reduction which went into effect on January 1, 2025. Total patient visits were 1,558,756 for the 2025 Second Quarter, a 16.7% increase from the 2024 Second Quarter. Total patient visits includes 28,493 home-care visits, which we will break out separately each period going forward. For the six months ended June 30, 2025, we had 3,002,561 total patient visits, which includes 51,436 home-care visits. There were no home-care visits in the first six months of 2024. Other revenues increased approximately $0.9 million, or 27.8%, to $4.1 million for the 2025 Second Quarter from $3.2 million for the 2024 Second Quarter. 43 Table of Contents Operating costs Operating costs from physical therapy operations increased by $18.4 million, or 16.0%, to $133.1 million for the 2025 Second Quarter from $114.7 million for the 2024 Second Quarter primarily driven by the 51 net clinics added since the comparable prior year period. Operating costs were 79.1% of net revenue for the 2025 Second Quarter compared to 79.9% of net revenue for the 2024 Second Quarter. Total operating costs per visit (excluding management contracts and certain incentive costs related to Metro) was $83.95 compared to $84.46 in the 2024 Second Quarter, as higher visit volume did not result in a proportional increase in fixed costs. Salaries and related costs, clinics (excluding management contracts) increased to $93.9 million in the 2025 Second Quarter from $79.7 million in the 2024 Second Quarter, an increase of $14.3 million, or 17.9% mostly due to the net clinics added since the comparable prior year period. Salaries and related costs per visit (excluding management contracts and certain incentive costs related to Metro) increased to $60.08 for the 2025 Second Quarter from $59.66 for the 2024 Second Quarter. Rent, supplies, contract labor and other costs, related to clinics (excluding management contracts) increased to $29.7 million in the 2025 Second Quarter from $27.3 million in the 2024 Second Quarter, an increase of $2.4 million, or 8.7% mostly due to clinic additions. Depreciation and amortization related to physical therapy operations increased to $5.5 million in the 2025 Second Quarter from $4.1 million in the 2024 Second Quarter, an increase of $1.5 million, or 35.7%, primarily due to the larger number of clinics in the 2025 Second Quarter compared to the 2024 Second Quarter. The provision for credit losses was $2.0 million for the 2025 Second Quarter and $1.7 million for the 2024 Second Quarter. 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 for the 2025 Second Quarter was $35.2 million with a gross profit margin of 20.9% compared to $28.8 million with a gross profit margin of 20.1% for the 2024 Second Quarter. Excluding certain incentive costs related to the Metro acquisition of $0.2 million, the adjusted gross profit margin was 21.1% for the 2025 Second Quarter (See reconciliation of non-GAAP measures to the most comparable GAAP measure on page 40). Industrial Injury Prevention Services Three Months Ended Variance June 30, 2025 June 30, 2024 $ % (In thousands, except percentages) Net revenue $ 29,052 $ 23,704 $ 5,348 22.6 % Operating costs 22,661 18,625 4,036 21.7 % Gross profit $ 6,391 $ 5,079 $ 1,312 25.8 % Gross margin 22.0 % 21.4 % IIP revenue increased $5.3 million, or 22.6%, to $29.1 million for the 2025 Second Quarter as compared to $23.7 million for the 2024 Second Quarter. Gross profit from IIP operations for the 2025 Second Quarter increased $1.3 million, or 25.8%, to $6.4 million from $5.1 million for the 2024 Second Quarter. Gross profit margin from IIP operations was 22.0% for the 2025 Second Quarter compared to 21.4% for the 2024 Second Quarter. Excluding the IIP acquisition made in April 2024, IIP revenue increased by $4.0 million or 18.4% in the 2025 Second Quarter and gross profit margin increased $1.0 million or 21.8% in the 2025 Second Quarter over the comparable prior year period. Corporate Office Costs Corporate office costs increased to $17.5 million for the 2025 Second Quarter from $14.2 million for the 2024 Second Quarter, primarily to support of the larger number of clinics, as well as, acquisition integration costs and costs associated with 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 ratio to net revenue, corporate office costs was 8.9% for the 2025 Second Quarter compared to 8.5% for the 2024 Second Quarter. Excluding the acquisition integration costs and the costs associated with the implementation of the new financial and human resources system of $0.3 million, corporate office costs was 8.7% of net revenue for the 2025 Second Quarter. 44 Table of Contents 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 $0.8 million for the 2025 Second Quarter compared to a net loss (an increase in the related liabilities) of $4.0 million for the 2024 Second Quarter. Operating Income Operating income was $24.9 million for the 2025 Second Quarter compared to $15.6 million for the 2024 Second Quarter. Excluding the impact of change in value of contingent consideration in the 2025 Second Quarter of $0.8 million, and the 2024 Second Quarter of $4.0 million, operating income increased to $24.1 million for the 2025 Second Quarter from $19.6 million in the 2024 Fourth Quarter. Other (Expenses) Income Interest Expense, Debt and Other Interest expense increased by $0.4 million to $2.4 million for the 2025 Second Quarter compared to $2.0 million for the 2024 Second Quarter due to a higher average outstanding balance on our revolving credit facility for the 2025 Second Quarter. The interest rate associated with borrowings on our credit facilities was 5.1% for the 2025 Second Quarter and 4.7% for the 2024 Second Quarter, 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 Second Quarter compared to $1.1 million for the 2024 Second Quarter as the cash on the balance sheet at the end of the 2024 Second 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 $0.3 million for the 2025 Second Quarter compared to $0.2 million for the 2024 Second Quarter (an increase in the related liability). 45 Table of Contents Provision for Income Taxes The provision for income taxes was $4.9 million for the 2025 Second Quarter compared to $3.1 million during the 2024 Second Quarter while the effective tax rate was 28.5% and 29.1% over the same periods, respectively. Three Months Ended June 30, 2025 June 30, 2024 (In thousands, except percentages) Income before taxes $ 22,653 $ 14,795 Less: Net income attributable to non-controlling interest: Redeemable non-controlling interest - temporary equity (3,914 ) (3,314 ) Non-controlling interest - permanent equity (1,413 ) (892 ) $ (5,327 ) $ (4,206 ) Income before taxes less net income attributable to non-controlling interest $ 17,326 $ 10,589 Provision for income taxes $ 4,933 $ 3,083 Effective income tax rate 28.5 % 29.1 % Net Income Attributable to Non-controlling Interest Net income attributable to non-controlling interest (temporary and permanent) was $5.3 million for the 2025 Second Quarter compared to $4.2 million for the 2024 Second Quarter. 2025 Six Months versus 2024 Six Months Six Months Ended June 30, 2025 June 30, 2024 Variance Amount As a % of Net Revenue Amount As a % of Net Revenue Amount % (In thousands, except percentages) Net patient revenue $ 316,730 83.1 % $ 271,346 84.0 % $ 45,384 16.7 % Other revenue 64,402 16.9 % 51,519 16.0 % 12,883 25.0 % Net revenue 381,132 100.0 % 322,865 100.0 % 58,267 18.0 % Operating Cost: Salaries and related costs 225,037 59.0 % 190,065 58.9 % 34,972 18.4 % Rent, supplies, contract labor and other 67,971 17.8 % 58,319 18.1 % 9,652 16.6 % Depreciation and amortization 11,281 3.0 % 8,197 2.5 % 3,084 37.6 % Provision for credit losses 3,843 1.0 % 3,344 1.0 % 499 14.9 % Clinic closure costs - lease and other 311 0.1 % 677 0.2 % (366 ) (54.1 )% Total operating cost 308,443 80.9 % 260,602 80.7 % 47,841 18.4 % Gross Profit 72,689 19.1 % 62,263 19.3 % 10,426 16.7 % Corporate office costs 33,721 8.8 % 28,334 8.8 % 5,387 19.0 % (Gain) loss on change in fair value of contingent earn-out consideration (5,612 ) (1.5 )% 3,434 1.1 % (9,046 ) (263.4 )% Operating Income 44,580 11.7 % 30,495 9.4 % 14,085 46.2 % Other (expense) income: Interest expense, debt and other (4,701 ) (1.2 )% (3,948 ) (1.2 )% (753 ) 19.1 % Interest income from investments 52 0.0 % 2,617 0.8 % (2,565 ) (98.0 )% Change in revaluation of put-right liability (743 ) (0.2 )% (303 ) (0.1 )% (440 ) 145.2 % Equity in earnings of unconsolidated affiliate 794 0.2 % 519 0.2 % 275 53.0 % Loss on sale of a partnership (123 ) 0.0 % - 0.0 % (123 ) * Other 122 0.0 % 171 0.1 % (49 ) (28.7 )% Total other (expense) income (4,599 ) (1.2 )% (944 ) (0.3 )% (3,655 ) 387.2 % Income before taxes 39,981 10.5 % 29,551 9.2 % 10,430 35.3 % Provision for income taxes 8,793 2.3 % 6,222 1.9 % 2,571 41.3 % Net income 31,188 8.2 % 23,329 7.2 % 7,859 33.7 % Less: Net income attributable to non-controlling interest: Redeemable non-controlling interest - temporary equity (5,926 ) (1.6 )% (5,541 ) (1.7 )% (385 ) 6.9 % Non-controlling interest - permanent equity (2,970 ) (0.8 )% (2,236 ) (0.7 )% (734 ) 32.8 % (8,896 ) (2.3 )% (7,777 ) (2.4 )% (1,119 ) 14.4 % Net income attributable to USPH shareholders $ 22,292 5.8 % $ 15,552 4.8 % $ 6,740 43.3 % * Not meaningful Total net revenue for the 2025 Six Months increased $58.3 million, or 18.0%, to $381.1 million from $322.9 million for the 2024 Six Months while operating costs increased $47.8 million, or 18.4%, to $308.4 million from $260.6 million over the same periods, respectively. Gross profit for the 2025 Six Months was $72.7 million, or 19.1% of net revenue, compared to $62.3 million for the 2024 Six Months, or 19.3%, of net revenue. 46 Table of Contents Physical Therapy Operations Six Months Ended Variance June 30, 2025 June 30, 2024 $ % (In thousands, except percentages) Revenue related to: Mature Clinics (1) $ 259,374 $ 260,577 $ (1,203 ) (0.5 )% Clinic additions (2) 57,011 3,646 53,365 * (7) Clinics sold or closed (3) 345 7,123 (6,778 ) * (7) Net Patient Revenue 316,730 271,346 45,384 16.7 % Other (4) 7,970 6,565 1,405 21.4 % Total 324,700 277,911 46,789 16.8 % Operating costs (5) 263,999 225,064 38,935 17.3 % Gross profit $ 60,701 $ 52,847 $ 7,854 14.9 % Financial and operating metrics (not in thousands): Net rate per patient visit (1) $ 105.49 $ 104.23 $ 1.26 1.2 % Patient visits (1) 3,002,561 2,603,337 399,224 15.3 % Average daily visits per clinic (1) 31.9 30.0 1.9 6.3 % Adjusted gross profit margin (5)(6) 18.8 % 19.0 % Salaries and related costs per visit (6) $ 61.74 $ 60.52 $ 1.22 2.0 % Operating costs per visit (6) $ 86.52 $ 84.97 $ 1.55 1.8 % (1) See Glossary of Terms - Revenue Metrics for definitions. (2) Includes 20 clinics added during the 2025 Six Months and 96 clinics added during the year ended December 31, 2024. (Owned) (3) Includes 10 clinics closed during the 2025 Six Months and 45 clinics closed during the year ended December 31, 2024. (Owned) (4) Includes revenues from management contracts. (5) Includes costs from management contracts. (6) Excludes $0.3 million of certain incentive costs related to the Metro acquisition. Please refer to the reconciliation of non-GAAP measures to the most directly comparable GAAP measure on page 40. (7) Not meaningful. Revenues Revenues from physical therapy operations increased $46.8 million, or 16.8% in the 2025 Six Months versus the comparable prior year period due to increased volume from the 51 net new clinics added since the comparable prior year period as well as an increase in net rate per patient visit to $105.49 for the 2025 Six Months from $104.23 for the 2024 Six Months. Gross profit from physical therapy operations increased $7.9 million, or 14.9%, to $60.7 million for the 2025 Six Months. Excluding certain incentive costs related to the Metro acquisition of $0.3 million, the adjusted gross profit margin was 18.8% for the 2025 Six Months (See reconciliation of non-GAAP measures to the most comparable GAAP measure on page 40). Other revenues increased approximately $1.4 million, or 21.4% , to $7.8 million for the 2025 Six Months from $6.6 million for the 2024 Six Months. Operating costs Operating costs from physical therapy operations increased by $38.9 million, or 17.3%, to $264.0 million for the 2025 Six Months from $225.1 million for the 2024 Six Months, primarily driven by the 51 net clinics added since the comparable prior year period. Operating costs were 81.3% of net revenue for the 2025 Six Months compared to 81.0% of net revenue for the 2024 Six Months. Total operating costs per visit (excluding management contracts and certain incentive costs related to Metro) was $86.52 compared to $84.97 in the prior year quarter, as higher visit volume did not result in a proportional increase in fixed costs. 47 Table of Contents Salaries and related costs, clinics (excluding management contracts) increased to $185.7 million in the 2025 Six Months from $157.6 million in the 2024 Six Months, an increase of $28.1 million, or 17.9% mostly due to the net clinics added since the comparable prior year period. Salaries and related costs per visit (excluding management contracts and certain incentive costs related to Metro) increased to $61.74 for the 2025 Six Months from $60.52 for the 2024 Six Months. Rent, supplies, contract labor and other costs, related to clinics (excluding management contracts) increased to $59.9 million in the 2025 Six Months from $52.5 million in the 2024 Six Months, an increase of $7.4 million, or 14.1% mostly due to clinic additions. Depreciation and amortization related to physical therapy operations increased to $10.7 million in 2025 Six Months from $7.8 million in the 2024 Six Months, an increase of $2.9 million, or 36.5%, primarily due to the larger number of clinics in the 2025 Six Months compared to the 2024 Six Months. The provision for credit losses was $3.8 million for the 2025 Six Months and $3.3 million for the 2024 Six 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 for the 2025 Six Months was $60.7 million with a gross profit margin of 18.7% compared to $52.8 million with a gross profit margin of 19.0% for the 2024 Six Months. Excluding certain incentive costs related to the Metro acquisition of $0.3 million, the adjusted gross profit margin was 18.8% for the 2025 Six Months (See reconciliation of non-GAAP measures to the most comparable GAAP measure on page 40). Industrial Injury Prevention Services Six Months Ended Variance June 30, 2025 June 30, 2024 $ % (In thousands, except percentages) Net revenue $ 56,432 $ 44,954 $ 11,478 25.5 % Operating costs 44,444 35,538 8,906 25.1 % Gross profit $ 11,988 $ 9,416 $ 2,572 27.3 % Gross margin 21.2 % 20.9 % Revenues from IIP increased $11.5 million, or 25.5%, to $56.4 million for the 2025 Six Months versus the comparable prior year period. Gross profit from IIP operations increased $2.6 million, or 27.3%, to $12.0 million for the 2025 Six Months and the gross profit margin from IIP operations was 21.2% for the 2025 Six Months. Excluding the IIP acquisition made in April 2024, IIP revenue increased by $7.2 million or 16.7% in the 2025 Six Months and gross profit margin increased $1.9 million or 21.01% in the 2025 Six Months over the comparable prior year period. Corporate Office Costs Corporate office costs were $33.7 million for the 2025 Six Months, compared to $28.3 million for the 2024 Six Months. As a percent of net revenue, corporate office costs were 8.8% for both periods. 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 8.7% of net revenue for the 2025 Six 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 $5.6 million for the 2025 Six Months compared to a net non-cash loss of $3.4 million for the 2024 Six Months (an increase in the related liabilities). 48 Table of Contents Operating Income Operating income was $44.6 million for the 2025 Six Months compared to $30.5 million for the 2024 Six Months. Excluding the impact of change in value of contingent consideration of $5.6 million for the 2025 Six Months and $3.4 million for the 2024 Six Months, operating income increased to $39.0 million for the 2025 Six Months from $33.9 million for the 2024 Six Months, an increase of 14.9%. Other (Expenses) Income Interest Expense, Debt and Other Interest expense increased by $0.8 million to $4.7 million for the 2025 Six Months compared to $3.9 million for the 2024 Six 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 Six 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 Six Months and 4.7% for the 2024 Six Months, with an all-in-effective interest rate (including all associated costs), of 5.5% and 5.4% over the same periods, respectively. Interest income from investment Interest income was less than $0.1 million during the 2025 Second Quarter compared to $2.6 million for the 2024 Second Quarter as the cash on the balance sheet at the end of the 2024 Second 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 Six Months compared to $0.3 million for the 2024 Six Months (an increase in the related liability). Provision for Income Taxes The provision for income tax was $8.8 million for the 2025 Six Months and $6.2 million for the 2024 Six Months. The effective tax rate was 28.3% and 28.6% over the same periods, respectively. Six Months Ended June 30, 2025 June 30, 2024 (In thousands, except percentages) Income before taxes $ 39,981 $ 29,551 Less: Net income attributable to non-controlling interest: Redeemable non-controlling interest - temporary equity (5,926 ) (5,541 ) Non-controlling interest - permanent equity (2,970 ) (2,236 ) $ (8,896 ) $ (7,777 ) Income before taxes less net income attributable to non-controlling interest $ 31,085 $ 21,774 Provision for income taxes $ 8,793 $ 6,222 Effective income tax rate 28.3 % 28.6 % 49 Table of Contents Net Income Attributable to Non-controlling Interest Net income attributable to non-controlling interest (temporary and permanent) was $8.9 million for the 2025 Six Months compared to $7.7 million for the 2024 Six 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 $34.1 million as of June 30, 2025, compared to $41.4 million as of December 31, 2024, and $112.9 million at June 30, 2024. Additionally, we had $159.5 million of outstanding borrowings and $150.5 million in available credit under our credit facilities as of June 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 June 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 June 30, 2025, we have accrued $7.0 million related to credit balances, a portion of which is due to patients and payors. Cash Flow A summary of our operating, investing and financing activities is discussed below. Six Months Ended June 30, 2025 June 30, 2024 Net cash provided by operating activities $ 30,186 $ 33,411 Net cash (used in) investing activities (19,334 ) (48,755 ) Net cash (used in) financing activities (18,128 ) (24,570 ) Operating Activities Cash provided by operating activities was $30.2 million for the 2025 Six Months as compared to $33.4 million for the 2024 Six 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, as well as payments on accounts payable and accrued expenses, mostly consisting of payroll and related benefits. These decreases were partially offset by higher net income. 50 Table of Contents Investing Activities Cash used in investing activities for the 2025 Six Months totaled $19.3 million and primarily consisted of $15.5 million used in the purchase of interests in businesses and non-controlling interests (temporary and permanent), and $5.8 million of fixed assets purchases. These uses were partially offset by $0.7 million in proceeds from the sale of a partnership, and $0.7 million of distributions received from an unconsolidated affiliate. Cash used in investing activities in the 2024 Six Months was $48.8 million. Financing Activities Cash used in financing activities for the 2025 Six Months totaled $18.1 million and primarily comprised of $13.5 million in proceeds from our Revolving Facility (as defined below), $10.7 million in distributions to non-controlling interests (temporary and permanent), $13.7 in cash dividends paid to shareholders and payments of $7.3 million related to notes payable and the Term Facility. Cash used in financing activities in the 2024 Six Months was $24.6 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”). 2) 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 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. 51 Table of Contents 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 June 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 June 30, 2025, $134.2 million (net of unamortized debt issuance costs of $0.8 million) was outstanding on the Term Facility while $24.5 million was outstanding under the Revolving Facility resulting in $150.5 million of credit availability on the Revolving Facility. The interest rate on the Senior Credit Facilities was 5.1% for the 2025 Second Quarter and 4.7% for the 2024 Second Quarter, 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. As of June 30, 2025, the fair value of the interest rate swap was $1.6 million, a decrease of $1.6 million, net of a $0.5 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 $1.0 million in interest savings for the 2025 Six Months. The average interest rate for our Senior Credit Facilities, net of the savings from the swap, was 5.1% in the 2025 Second Quarter and 5.0% in the 2025 Six Months, compared to 4.7% in both the 2024 Second Quarter and the 2024 Six 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 June 30, 2025, our remaining outstanding balance on these notes aggregated $1.4 million, of which $0.3 million is payable in 2025, $0.9 million is payable in 2026 and $0.2 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 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. 52 Table of Contents On February 28, 2025, we acquired 65% interest in a physical 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 is valued at $0.6 million as of June 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 June 30, 2025, was $8.7 million. 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 $0.7 million on June 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 accrues interest at 5.0% per annum and the principal and the interest are payable in May 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. The contingent consideration was valued at $1.8 million as of June 30, 2025. 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 $1.2 million on June 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 June 30, 2025, was $263.3 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. 53 Table of Contents