Good day, and thank you for standing by. Welcome to the U.S. Physical Therapy, Inc. First Quarter 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. In order to ask a question during the session, please press star. Please be advised that today's conference is being recorded. I would now like to turn the call over to Christopher J. Reading, Chairman and CEO. Please go ahead, sir.

Thank you. Good morning, and welcome, everyone, to our 2026 first quarter earnings call. With me on the line this morning are Jason Curtis, our Interim CFO and Senior Vice President, Finance and Accounting; Eric Joseph Williams, our President and COO; our Executive Vice President and General Counsel; and our Vice President and Controller. Before we discuss results for the quarter, as usual, we need to cover a brief disclosure statement. So, if you would, please.

Thank you, Chris. Today's presentation includes forward-looking statements, which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information. This presentation also includes certain non-GAAP measures, as defined in Regulation G, and the related reconciliations can be found in the company's earnings release and the company's presentations on our website. Chris? Thank you.

Let me start off by covering some of the key objectives that we are neck-deep in and working on, and that we established as priorities prior to the start of the year. These objectives include semi-virtualization of our front desk, which will produce savings in both labor as well as overall efficiency and improved authorization consistency, the latter of which ultimately has an impact on rate; AI-assisted ambient listening documentation technology, which will help our clinicians spend less head-down time on their computers and more time interfacing with our patients—this obviously has a potential impact on productivity and rate through unit capture, again with direct patient interface; reengagement with remote therapeutic monitoring for our traditional Medicare population after CMS revised the rules in late 2025, beginning January 2026; expansion of our cash-based programs across a great number of our top partnerships. We initially rolled this out last year in the top 30 to 40 partners where a significant part of our growth and income comes from, and surrounding that were growth opportunities—one of those was cash-based program deployment, and that is rolling out as we speak; and finally, a strong investment and effort directionally to create opportunity with large hospitals and systems similar to the two that were previously announced, including NYU and another one in the Gulf Coast region. Those efforts are going very well. In fact, we just started the NYU transition process for our initial set of clinics, and we will be rolling facilities in over the next few months across both opportunities. These initiatives are on track and we believe will produce the results we have discussed as the year progresses. This, in combination with the continuing ramp-up of visits across the company, gives us the confidence to reaffirm our original guidance. In fact, we finished Q1 right on budget. First quarter highlights include revenue increase in physical therapy of 7.2% with a 2.5% same-store increase. This was driven from a 6.9% bump in patient volume, which for the quarter increased our visits per clinic per day to 31.8. Demand was strong this Q1. We lost over 31,000 visits to weather, which impacts not just revenue, but means that many of our highest paid people we have to pay to sit at home during these events, which has a drag on margins. All of that is now in the rearview mirror as we ramp into the busiest period of the year. The net rate for the quarter rose to $106.49, up from $105.66 in the prior year. The biggest positive influencers there include a 3.4% year-over-year increase in the commercial rates coupled with a small Medicare pricing increase we are ramping into as the year begins. Going against that a little bit, on a blended basis, was a small drop in our Medicaid rate. We are going to have to watch that as the year progresses. Injury prevention saw a number of good things for the quarter. Revenue increased 11.8%, which included a partial-quarter contribution from our latest IIP New York-based acquisition earlier announced. Same-store revenue increased 8.2% while margin increased 180 basis points compared to our Q1 2025 numbers. On the development front, in addition to the New York City-based IIP deal, we added a nice therapy partnership in the Pacific Northwest that is going to do very well for us. In addition, we opened seven de novo clinics in the quarter. We have more to come in both the hospital area as well as acquisitions. We completed the renegotiation of our five-year credit facility which, in addition to providing even better pricing and terms compared to what we had before (which was already a very favorable facility), allowed us to expand our capacity so that we can continue to invest in growth opportunities without compromise. Finally, in the quarter, as Jason will later discuss, related to the credit facility and our borrowings, we repurchased equity in two very strong partnerships with a total spend of a little more than $14 million, where we continue to have strong founding partners who are taking some chips off the table due to their extraordinary growth over time; in one case another at a point of planned retirement with a strong owner bench still intact. Our strong capital structure allows us to be flexible and take advantage of these opportunities without compromising our ability to run the company or pursue a variety of growth opportunities. For that reason, we feel confident in our ability to continue to grow through organic as well as acquisition-related partner-centric development. We have a great balance sheet. As we discussed, our improved and expanded credit facility gives us the dry powder to make good decisions about our growth and provides us with the resources and capital that we need to run the company, grow and expand where it makes sense in PT and industrial injury prevention, and invest in new technologies, resources, and people to make our growth plan happen—all of which we are doing in real time. This, along with our continued high demand for our services and our progress across key initiatives, gives us the confidence to reaffirm our guidance for 2026. As I wrap up my prepared comments, as I always do, it is important to say our clinicians and partners are doing a great job around the country every day to make a difference in the lives of our patients and our injury prevention clients and their workers, keeping them safe and healthy. All of that helps us to attract the kinds of new opportunities, including our hospital partners like NYU and others, which will be an accelerant to our growth rate as we finish this year and look forward, especially into 2027. Jason, please go ahead and walk through the financials in a little bit more detail before we open it up for questions. Thank you.

Thanks, Chris, and good morning, everyone. Turning to the details of the first quarter 2026 income statement: Total revenue was $198 million, a 7.9% increase versus 2025. Daily visits per clinic increased to 31.8 in the first quarter 2026 compared to 31.2 in Q1 2025. Total patient visits in the first quarter 2026 were 1.543 million, a 6.9% increase versus last year. Net patient revenue per visit was $106.49 in the first quarter 2026, a slight increase versus the prior year. This growth was driven by a 3.4% increase in commercial revenue per visit. This lift is made even more meaningful by the fact that commercial payers represent nearly 50% of our total payer mix. We also benefited from the early impact of our expected 1.75% Medicare rate increase. As a reminder, the majority of the benefit from the hospital initiatives will impact net revenue per visit, and first quarter results do not yet include any impact from these affiliations. Total first quarter 2026 physical therapy revenue was $168 million, a 7.2% increase versus prior year first quarter. Mature clinic revenue increased 2.5% in Q1 2026, continuing the sequential quarter-over-quarter build from 2025. Adjusted physical therapy payroll cost per visit was $64.20 in the first quarter 2026, compared to $63.53 in the first quarter 2025. Adjusted physical therapy operating costs per visit were $90.31 in 2026, compared to $88.77 in the first quarter 2025. Adjusted Physical Therapy margin decreased to 16.1% in Q1 2026 compared to 16.8% in Q1 2025. IIP revenue was $31 million in Q1 2026, an 11.8% increase versus the prior year. Excluding the Q1 2026 IIP acquisition, IIP revenue increased 8.2%. IIP margin increased to 20.4% in Q1 2026 compared to 18.6% in Q1 2025. Adjusted corporate expense as a rate to revenue was 8.8% in Q1 2026 compared to 8.5% in Q1 2025. We continue to make progress on our Workday ERP implementation that we expect to go live at the end of 2027. We are implementing Workday in both human resources and finance and are looking forward to modernizing our systems, increasing efficiency, and improving the user experience. Interest expense was $2.8 million in the first quarter 2026 compared to $2.3 million in Q1 2025. The increase was driven by cash usage associated with the two first quarter acquisitions, as well as $14 million in purchases of noncontrolling interest, as Chris mentioned. Income tax in Q1 2026 was 32.3% compared to 28.1% in Q1 2025. The Q1 2026 tax rate is elevated due to the negative impact of discrete tax items on comparatively lower pretax income. Adjusted EBITDA in Q1 2026 was $20.2 million, a $700,000 increase compared to Q1 2025. Operating results per share were $0.46 in the first quarter 2026, compared to $0.48 in the first quarter 2025. Net income attributable to U.S. Physical Therapy, Inc. shareholders was $5 million in Q1 2026, compared to $9.9 million for Q1 2025. Included in pretax income for Q1 2026 was a loss on change in fair value for contingent earnout considerations of $2 million versus a gain of $4.8 million in Q1 2025. The Q1 2026 loss was driven by stronger performance in recent acquisitions, which increases our earnout liability. GAAP loss per share was $0.12 in the first quarter 2026 compared to earnings per share of $0.80 in the first quarter 2025. Per-share metrics were negatively impacted by revaluation of redeemable noncontrolling interest compared to a benefit in Q1 2025. Under GAAP, increases or decreases in the value of redeemable noncontrolling interest are not included in net income, but are included in the calculation of per-share metrics. Stronger performance in Q1 2026 increased the value of these ownership interests, negatively impacting per-share metrics. As Chris mentioned, we completed two significant acquisitions in the first quarter. In January, we acquired a 50% interest in an eight-clinic physical therapy practice with $8 million in revenue and 60,000 visits. In January, we also acquired a 70% interest in an industrial injury prevention business with $7 million in revenue. Turning to the balance sheet: Cash and cash equivalents at the end of Q1 2026 were $28 million compared to $36 million at year-end 2025. Borrowings on our credit facility were $204 million in Q1 2026 compared to $162 million at year-end 2025. As noted, the increase in borrowings was driven by our two first quarter acquisitions as well as the $14 million in purchases of noncontrolling interest. On 04/15/2026, we announced a five-year $450 million credit facility with a maturity date of 04/14/2031. Based on strong lender support, the facility was upsized from its initial $400 million launch amount, and we achieved improved pricing compared to our previous facility. Our lender group consists of Bank of America, Regions, JPMorgan Chase, Citizens, U.S. Bank, and BankUnited. This larger facility, compared to our previous $325 million facility, provides us with additional flexibility as we continue to grow our portfolio of partnerships and return capital to shareholders. The June 2027 maturity date for our existing interest rate swap remains unchanged. Our first quarter results were in line with our expectations, and we expect the impact of the 2026 objectives which Chris discussed to ramp up throughout the course of the year. As such, we are reaffirming our full-year 2026 adjusted EBITDA guidance of $102 million to $106 million. With that, I will turn the call back to Chris.

Thanks, Jason. Great job. Operator, let's go ahead and open up the line for questions.

We will now open the call for questions. We can take our first question from Joanna Sylvia Gajuk with Bank of America. Your line is open.

Hey, good morning. Thanks so much for taking the question. So first, on Q1, the guidance build—you said the weather was $3 million to $4 million of revenues, but then you cut your costs. How should we think about the EBITDA headwind? And importantly, was this quarter as you had included in your guidance? Because I think when you gave the guidance, you kind of knew about the January weather situation. Can you explain how this quarter came versus your general expectations, and how should we think about what was the actual headwind to EBITDA from that situation? And then, how do we think about the ramp-up the rest of the year? Q1 EBITDA was about, call it, 19% of the full-year guidance, versus above 20% the last couple of years. If we assume typical seasonality, we get to maybe less than $100 million for the year. Then there are the hospital alliances—you talk about $7 million but that is fully annualized—so how much is in this year? And the acquisitions—were they already in guidance and how much do they add for the rest of the year? Essentially, I am trying to bridge from Q1 to get to your $102 million to $106 million, because I am getting a couple of million dollars short, and I am thinking maybe that is hospitals and acquisitions. Thank you.

Yes. First of all, importantly, the quarter came in almost exactly where we had budgeted it to be. There were a couple of puts and takes, but at the end of the day, from an earnings perspective, we came in right where we expected to be. We lost about 31,000 visits, some of those coming in high net rate markets like New York, which also impacted our injury prevention acquisition right out of the gate a little bit with weather and mobile units there. If you use our blended average rate, it is somewhat north of $3 million—about $3.3 million. We have to pay most of our folks regardless—our salaried people get paid regardless—so there is margin drag. The demand was high for the first quarter. It was a tough weather quarter, but that is behind us. Demand has continued to build, meaning volumes have built, and we are not going to have weather anymore. We also made and continue to make some investments in these initiatives—both people and products—and those are in the cost numbers as well, but we feel confident those are going to bear the fruit we expect as things ramp up. The acquisitions which closed in January and February were included in our guidance numbers. We gave our guidance in late February or early March, and those were included. We have more activity to come that has not been included. On the hospital ramp-up, we gave the 2027 number on the full-year basis. We had to estimate when these would begin. We began to phase in our very first Metro facilities into the NYU deal literally this week. Things are going well, but we have a lot more to do. On the Gulf Coast opportunity, depending upon how things go over the next couple of weeks, that could begin in June or July. There are several million dollars worth of additional hospital contribution, but we are not getting a full year—at most a partial half-year—and we have to layer in facilities over a few months, particularly in Metro’s case. All of that was fully baked into our guidance when we did it originally. We do not guide by quarter, so I cannot give you more granularity there.

Yes. We talked about there being a portion of the annualized $7 million impact. The way I would think about it, Joanna, is we are in the process right now in the second quarter of converting these clinics to the hospital affiliations. We expect to be materially complete by the end of the third quarter. So in the fourth quarter, you will begin to see something like the full quarterly run-rate impact of the $7 million. The benefit will ramp up sequentially quarter over quarter throughout 2026.

All right. Thank you so much.

Good morning, you all. It's Jeff from Jefferies here. Maybe one to needle a little bit on the numbers. The rent, supplies, and other line ran a little hot to what we were expecting, as did corporate expenses. Anything to call out in terms of what is driving year-over-year growth in those expense lines?

Yes. Q1 had a little bit worse weather impact, so a little bit lighter revenue than we expected, although in balance we came out where we thought we would. We did have, in a few partnerships, a little bit more contract labor than we expected to deal with volume in those particular partnerships, and that was part of the expense carry.

We are also making some upfront investments in our 2026 initiatives that are going to pay off as we ramp up the benefit throughout the balance of the year. The weather impact would have a greater impact in terms of deleveraging on the fixed costs you mentioned. That will not continue as we enter into the spring and summer season and do not have these weather headwinds.

Got it. Appreciate that. And maybe one more to follow up—Chris, the messaging sounded very positive on your confidence in potentially more hospital partnerships and on the M&A front. Any way to think about the cadence, or more color on what is driving the level of confidence?

The cadence is not going to be absolutely predictable—good opportunities can take time to bring together. I do feel confident, given the number, depth, and range of conversations we are having, that we are going to have more things done on the hospital side. You will see us continue to be active on acquisitions as well. These hospital opportunities are chunky and make a really nice difference. They take a little while to put together because we are dealing with big institutions, lots of constituents, and big legal teams. As we continue to add more of these, I think you will understand the impact as we go forward.

Got it. Appreciate the color. Thanks, guys.

Thanks.

We will move next to Lawrence Scott Solow with CJS Securities. Your line is open.

Hey, good morning, Chris. Following up on the hospital alliances and timing—which is hard to predict—but ultimately, if you do the math, it is like 10% today for these two initial alliances. What is the potential over a three- to five-year period that you could line up with big hospital organizations? And on the volume growth you can potentially drive as you join up with these hospitals—your EBITDA assumptions are based on current volumes, right? Can you give a little more color on potential volume growth as you line up with these partners?

It is a little bit of a tricky question. If you took what we have done just in the last year—Metro was 550,000 to 600,000 visits in a year, probably significantly more by the end of this year—and the other group is a 10-clinic group. If you could do that level every year over three to five years, it is a pretty good increase. We are looking to do these where it makes sense and where we can generate interest, and so far it has been strong. I think it will get to be a decent chunk of what we do in the foreseeable future.

The pricing also—revenue per patient was up less than 1% and commercial was really strong. Medicare sounds like you got a little bit, not the full benefit, and Medicaid is a much smaller piece. Is that drag continuing for the year, and could the pricing outlook improve?

Blended rate came in a little less than we expected. Medicare was not the full benefit of the 1.75%. Medicare patients pay more slowly at the first of the year as they sort out deductibles; there is a lag as the new fee schedule is uploaded and payments flow, so we expect to see the full 1.75% build as the year progresses, as we saw last year. Medicaid was down a few percent; it is a single-digit move and not a big part of our business. We need to see in Q2 whether it was regional mix or pricing changes in certain states. Commercial remains strong. Overall, we do not think Medicaid will swing our number very much, particularly as Medicare and commercial are fully in there.

Got it. Appreciate the color.

We will now move to Benjamin Michael Rossi with JPMorgan. Your line is open.

Good morning. Thanks for taking my question. Thinking about PT operating costs on a cost-per-visit basis—just north of $90 a visit during 1Q—as we think about the back-half ramp, how should we think about the run rate for operating cost per visit into 2Q and into the back half as volumes normalize and technology and hospital initiatives scale? And can you break down the 31,000 weather-lost visits by month, and how volumes trended exiting the quarter and into April?

I think you will see operating cost per visit come down to a more normal rate. Q1 was a little bit high. We will not have any of the weather we experienced in Q2, and activity picks up beyond that. One thing we worked hard on is recruiting and, importantly, retention. For the first quarter, turnover is now sub-18%, which is as low as we have ever had since we have been measuring it. Hanging on to our people will make a difference during the busiest months, like Q2. We have invested at corporate in some of these initiatives—both people and resources—so while there is a displacement between when revenue begins and when resource allocation has to come in, those will catch up. On monthly breakdown, I do not have it at my fingertips, but visits have rebounded nicely in April and progressed within the month.

Got it. Appreciate the commentary.

We will go next to Constantine Davides with Citizens. Your line is now open.

Hey, good morning. One more follow-up on the hospital and health system side. When you look at the pipeline, are there other NYU-sized opportunities in there, or is the Gulf Coast deal more representative of the scale of partnerships you are exploring right now? And could you also flesh out the cash-based program initiative a bit more—what programs have been deployed and the traction there?

There are bigger opportunities than NYU in terms of enterprise scale. Part of the reason the impact to us from NYU appears smaller is that we only own 50% of that business. In other partnerships where we own 70%, 80%, even 90%, dropping in an NYU-sized opportunity would have a much more significant impact to us. There are markets where we think the opportunity is going to be even greater than the NYU deal, and not necessarily a small lift like the Gulf Coast deal. On cash-based programs, I will kick it to Eric. Eric, you and Graham are front and center on this initiative.

Yes, sure. This is something we have really been pushing with all of our partners. It was a main point for the partner meeting that we held in April, and we had 30 of our top 40 partnerships in Houston for a list of items, including the rollout of welcome wear and AI documentation. The other centerpiece was cash-based programs. The two that people are most excited about and that have the most traction are laser programs and shockwave. Those are cash-based services not reimbursed by insurance. Dry needling is another service we have been doing for a while, and we have more partners being trained on it. Those are the three biggest ones that people are latching on to right now. We have partners who have been enormously successful, driving hundreds of thousands of dollars a year in cash-based services, starting from zero. Partners hear others talking about how they implemented these programs, got clinicians to buy in, and generated patient interest. After the partner meeting, we had a number of partners who had not launched cash programs reach out to learn about lasers, where to get them, and how to launch. We will continue to push this. We are certainly not the only ones in the industry pushing it, but we have a good approach to expand.

Let me just say this—this is important. The reason to do this is because it works for patients. It has great patient response and demand. Patients see others getting treatment and talking about the difference it made, and they want to sign up. Sometimes it takes a while for insurance companies to get the drift; they do not want to pay. There are technologies that are very clinically effective—that is why they are used—and secondarily, we are able to monetize that because it works. The clinical efficacy behind these programs is well supported and documented, and that is the first thing presented to our partners.

Thanks, guys. Appreciate the color.

There are no additional questions at this time. I would like to turn the program back to Christopher J. Reading for any other comments.

Thanks, everybody. Jason and I have follow-up meetings with a number of you over the next several days. We are happy to spend time on the phone—let us know. We thank you for your time and attention today, and we hope you have a great rest of your week.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.