The Growth of U.S. Physical Therapy Explained by an Integrative Operational Machine
U.S. Physical Therapy (USPH) closed the year 2025 with a narrative that appeals to the market: double-digit growth, improving margins, and an upward outlook for 2026. However, the crucial detail for leadership is not that they operate 780 clinics across 44 states. Rather, it's that in a business where volume can degrade quality and acquisition-driven growth often inflates complexity, they are managing to execute three strategies simultaneously: more visits, better net pricing per visit, and rising margins.
For the full year, they reported $781.0 million in net income, a +16.3% increase compared to 2024, with $650.4 million from physical therapy operations and $114.4 million from industrial injury prevention (IIP) services, both growing at similar rates (+16.0% and +18.0%). The gross margin rose to 19.2% (up from 18.5%), while Adjusted EBITDA reached $95.0 million (+16.2%). In the fourth quarter, the company recorded $202.7 million in revenue (+12.3% year-over-year) and a record operational rate of 32.7 average visits per clinic each day, supported by 1,593,336 quarterly visits (+11.2%).
A surface-level interpretation might suggest, “they did well.” However, a more insightful takeaway for C-level executives is that USPH is demonstrating signs of an organization capable of exploiting its core business with discipline while incorporating controlled explorations (IIP and hospital partnerships) without demanding the same financial pattern from each initiative from day one.
The Economics Per Visit as a Real Thermometer of Operational Leadership
In outpatient healthcare services, a common trap is to grow in locations and celebrate revenue while unit economics deteriorate: more volume with less yield, increased operational friction, and higher coordination costs. USPH reports indicators that allow us to audit whether the growth is "expensive" or "cheap." In Q4, the net rate per visit was $106.49 (+1.7%), while for the full year, the average net rate was $105.76. This data, combined with +11.2% more visits, explains why the gross margin for physical therapy in the quarter grew +25.3% to $35.2 million.
This combination reveals a less glamorous yet highly effective type of leadership: a fine management of clinical capacity, productivity, and service mix, without compromising net pricing. Simultaneously, the IIP segment also increased margins: $5.0 million in gross profit in Q4 (+11.5%) with a 17.1% margin. It may not be explosive growth, but it is consistent with an expansion that isn't being subsidized by the core business.
The organizational consequence is direct. If a network of clinics increases visits per clinic and maintains net pricing, it’s doing something right in its “system”: from scheduling and utilization to protocols and clinical supervision. This does not mean the absence of tension; it indicates that the company can absorb demand without each new patient becoming an operational exception. In healthcare, that stability signals leadership.
Still, there's a signal that shouldn’t be ignored: corporate costs increased to $18.1 million in Q4 (+16.2%) due to system implementations and integrations, representing 8.9% of quarterly revenue. This is the typical tax of growth via consolidation. The difference between a scaling company and one that becomes bureaucratic is whether that transitional cost turns into a platform (useful standardization) or a permanent layer (ineffective coordination). The fact that gross margins are rising even as these costs grow suggests that, for now, USPH is investing in integration capabilities rather than structural inefficiency.
Growing Through Acquisitions and Partnerships Without Losing Portfolio Control
USPH is not betting on a single pathway. In 2025, the clinic count reached 780, with a net addition of 19 (adding 11 and closing 10), and the report attributes part of the growth to the incorporation of clinics, including 47 new owned clinics during the year. At the start of 2026, they acquired a 50% stake in a practice of eight clinics (approximately $8.0 million in revenue and 66,000 visits) and purchased 70% of an IIP business with $7.0 million in revenue. This isn't a massive all-in bet on large purchases; it’s a pattern of incremental addition.
However, the most strategic piece isn’t these acquisitions. It’s the 10-year hospital partnerships announced in February 2026: an agreement with MSO Metro LLC, which integrates 60 clinics in New York and is estimated to contribute $6 million to USPH’s EBITDA, along with a second agreement involving 10 clinics with an impact of $1.3 million on EBITDA. In total, approximately $7.3 million annually, which is material against the Adjusted EBITDA for 2025 of $95.0 million.
These partnerships change the nature of growth. An acquisition gives you control but also operational liabilities: culture, systems, clinical variation. A hospital partnership can provide stable volume and referrals but requires executing in shared governance. If leadership does not have a clear decision-making architecture, long-term agreements become contracts that immobilize.
The positive signal is that USPH already incorporates these partnerships into its 2026 guidance: Adjusted EBITDA between $102.0 and $106.0 million, and explicitly mentions increases in Medicare rates (estimated impact of $2.5 million) and hospital partnerships. This suggests that the company is treating these partnerships as an operational lever with an integration plan, not merely a photo op.
That said, an inevitable tension arises: integrating 60 clinics as a phased rollout by mid-2026 while maintaining record visit rates per clinic in the existing base is a test of bimodal management capacity. The company must avoid the classic error of demanding immediate performance from a new integration project comparable to a mature clinic, and under short-term pressure, halt the operational learning that the partnership requires.
Governance and Continuity: The Real Cost of Changing CFO Amid Integration
The company announced that its CFO, Carey Hendrickson, will resign on April 24, 2026, and that Jason Curtis will step in as interim CFO. In organizations implementing systems, integrating operations, and closing 10-year agreements, financial continuity is not just about accounting. It’s about cadence control: how capital is allocated, how integrations are prioritized, and how discipline is maintained in corporate costs.
There’s no dramatic element to the change; on the contrary, it was announced well in advance and with an interim leader who is already the SVP of Finance and Accounting, suggesting operational continuity. However, it does shift the internal “center of gravity” at a delicate moment. Systems and integration projects often inflate costs and create noise in indicators, and during those phases, the CFO acts as the regulator who prevents the organization from self-justifying with narratives.
At the results level, the report shows a distinction that is worth understanding well: the GAAP net income was $39.6 million ($1.42 per share), down from the previous year in EPS ($1.84), affected by a $18.0 million increase in the value of redeemable non-controlling interests, net of taxes. Meanwhile, non-GAAP results appear more favorable: Non-GAAP Operating Results of $40.0 million ($2.63 per share) and adjusted EBITDA growth.
The leadership insight here is about model design: USPH operates with a schema of partnerships and participations wherein clinicians maintain non-controlling interests. This can align clinical incentives and retain entrepreneurial talent, but it also introduces accounting volatility and sensitivity to valuations. It's not a moral or integrity issue; it’s incentive engineering with financial consequences.
As a sign of financial confidence, the company raised its quarterly dividend to $0.46 per share (payable on April 10, 2026) and repurchased 81,322 shares for $5.6 million in Q4. Additionally, it closed the year with $35.6 million in cash and $161.8 million in debt, with $144.5 million available in credit. It’s a balance sheet that preserves options: to continue acquiring assets, finance integrations, and sustain returns to shareholders.
Anti-Bureaucratic Discipline Measured by Integration, Not Presentations
CEO Chris Reading attributed their performance to advances in initiatives that drove more than 16% revenue growth, over 20% gross profit, and improvements in margin and net rate. The hard data validating that discourse isn’t in the wording; it’s in the consistency between volume, net rate, and margin while the corporate side absorbs the cost of systems.
The 2026 test will be surgical. On one hand, the company already has an Adjusted EBITDA guidance of $102-$106 million, which implies continued growth despite integrations and corporate costs. On the other hand, the deployment of 10-year hospital partnerships introduces a new layer of coordination that often tempts organizations to create committees, reports, and control structures that do not address the problem but rather obscure it.
In a network of 780 clinics, bureaucracy does not arrive as a “big event.” It trickles in: operational exceptions that become policy, integrations that turn into meetings, systems that become excuses. The only defense is a clear portfolio architecture: the mature business must sustain productivity and pricing; integrations must have their own dashboard and realistic timelines; and exploratory initiatives like IIP must grow with operational metrics that don’t stifle their expansion.
USPH has already shown that its current engine generates cash and that its expansion hasn’t destroyed economics per visit. If it maintains that discipline while integrating hospital partnerships and managing the transition of the CFO, its organizational design looks viable for sustaining current profitability and scaling new growth sources with operational control.
