U S PHYSICAL THERAPY INC /NV

Previous wording

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 project. Included among such statements, but not limited to, are those relating to opening clinics, availability of personnel and the insurance 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:

Current wording

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:

Previous wording

We operate our business through two reportable business segments. Our physical therapy operations consist of physical therapy and occupational therapy clinics that provide 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 the IIP services are contracted with and paid for directly by employers, including a number of Fortune 500 companies. IIP services are performed through Industrial Sports Medicine Professionals with specialized training related to the musculoskeletal system.

Current wording

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.

Previous wording

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

Current wording

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:

Previous wording

Our strategy is to continue acquiring outpatient physical therapy practices, develop outpatient physical therapy clinics as satellites in existing partnerships, and continue acquiring companies that provide or serve our IIP sector.

Current wording

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.

Previous wording

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 on and after 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. The proposed 2025 MPFS final rule does not contain any policy changes concerning the modifiers for services provided by physical therapy and occupational therapist assistants.

Current wording

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.

Previous wording

Our Net Income was $9.9 million for the 2025 First Quarter compared to $8.0 million in the 2024 First Quarter. In accordance with 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 $0.80 for the 2025 First Quarter compared to $0.46 for the 2024 First Quarter

Current wording

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

Previous wording

(1) The Company also manages clinics owned by third parties through management contracts. In addition to the clinic count shown above, as of March 31, 2025, the Company managed 37 clinics bringing the total owned/managed clinics to 773. As of March 31, 2024, the Company managed 41 clinics bringing the total owned/managed clinics to 720.

Current wording

(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.

Previous wording

Total net revenue for the 2025 First Quarter increased $28.1 million, or 18.1%, to $183.8 million from $155.7 million for the 2024 First Quarter while operating costs increased $25.4 million, or 20.0%, to $152.7 million from $127.3 million over the same periods, respectively. This increase was due to the increase in visits from the 53 net clinics added since the comparable prior year period and an increase in net rate per patient visit.

Current wording

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.

Previous wording

Gross profit which included $0.2 million of costs associated with seven clinic closures, in the 2025 First Quarter, was $31.1 million, or 16.9% of net revenue, during the 2025 First Quarter compared to $28.4 million, or 18.2% of net revenue, for the 2024 First Quarter.

Current wording

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.

Previous wording

Adjusted EBITDA, a non- GAAP measure, was $19.5 million for the 2025 First Quarter, an increase of $2.8 million, or 16.5%, from $16.8 million in the 2024 First Quarter primarily driven by acquisitions since the prior year period and an increase in net patient revenue per visit.

Current wording

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.

Previous wording

Operating Results, a non-GAAP measure, was $7.3 million in the 2025 First Quarter compared to $7.7 million in the 2024 First Quarter. On a per share basis, Operating Results was $0.48 in the 2025 First Quarter compared to $0.51 in the 2024 First Quarter.

Current wording

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.

Previous wording

(2) Includes 14 clinics added during the 2025 First Quarter and 103 added during the year ended December 31, 2024.

Current wording

(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)

Previous wording

(6) Excludes costs from management contracts and $0.1 million of certain incentive costs related to the Metro acquisition. Please refer to the reconcilliation of non-GAAP measures to the most comparable GAAP measure on page 40.

Current wording

(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.

Previous wording

Net revenue from physical therapy operations increased $22.0 million, or 16.4%, to $156.4 million for the 2025 First Quarter from $134.4 million for the 2024 First Quarter. This increase was due to the increase in visits from the 53 net clinics added since the comparable prior year period and an increase in net rate per patient visit, which reflects our strategic priority of increasing reimbursement rates through contract negotiations with commercial and other payors as well as growing workers compensation as a percent of our overall mix of business.

Current wording

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.

Previous wording

Salaries and related costs, clinics (excluding management contracts) increased to $91.8 million in the 2025 First Quarter from $77.9 million in the 2024 First Quarter, an increase of $13.9 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 $63.53 for the 2025 First Quarter from $61.42 for the 2024 First Quarter.

Current wording

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.

Previous wording

Rent, supplies, contract labor and other costs, related to clinics (excluding management contracts) increased to $30.1 million in the 2025 First Quarter from $25.1 million in the 2024 First Quarter, an increase of $5.0 million, or 19.9% mostly due to clinic additions. Rent, supplies, contract labor and other per visit (excluding management contracts), related to clinics increased to $24.47 for the 2025 First Quarter from $22.87 for the 2024 First Quarter.

Current wording

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.

Previous wording

Depreciation and amortization related to physical therapy operations increased to $5.2 million in 2025 First Quarter from $3.8 million in the 2024 First Quarter, an increase of $1.4 million, or 33.5%, primarily due to the larger number of clinics in the 2025 First Quarter compared to the 2024 First Quarter.

Current wording

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.

Previous wording

The provision for credit losses was $1.8 million for the 2025 First Quarter and $1.6 million for the 2024 First Quarter. As a percentage of net revenues, the provision for credit losses were 1.0% for the same periods.

Current wording

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.

Previous wording

IIP revenue increased $6.1 million, or 28.8%, to $27.4 million for the 2025 First Quarter as compared to $21.3 million for the 2024 First Quarter. Gross profit from IIP operations in the 2025 First Quarter increased $1.3 million, or 29.1%, to $5.6 million from $4.3 million in the 2024 First Quarter. The gross profit margin from IIP operations was 20.4% in each of the 2025 First Quarter and 2024 First Quarter. Excluding the IIP acquisition made in April 2024, IIP revenue increased by $3.2 million or 15.1% in the 2025 First Quarter and gross profit increased $0.6 million or 13.1% in the 2025 First Quarter over the comparable prior year period.

Current wording

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.

Previous wording

We revalued contingent earn-out consideration related to certain acquisitions resulting in a gain of $4.8 million for the 2025 First Quarter compared to a gain of $0.6 million for the 2024 First Quarter.

Current wording

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.

Previous wording

Interest expense increased by $0.3 million to $2.3 million for the 2025 First Quarter compared to $2.0 million in the 2024 First Quarter due to a higher average outstanding balance on our revolving credit facility in the 2025 First Quarter. The interest rate on our credit facility was 4.9% for the 2025 First Quarter and 4.7% for the 2024 First Quarter, with an all-in effective interest rate, including all associated costs of 5.5% and 5.3% over the same periods, respectively.

Current wording

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. Theinterest 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.

Previous wording

Interest income was less than $0.1 million during the 2025 First Quarter compared to $1.5 million in the 2024 First Quarter as the cash on the balance sheet at the end of the 2024 First Quarter has been deployed into acquisitions since that time.

Current wording

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.

Previous wording

The provision for income taxes was $3.9 million in the 2025 First Quarter compared to $3.1 million during the 2024 First Quarter while the effective tax rate was 28.1% in each of the same periods.

Current wording

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.

Previous wording

Net income attributable to non-controlling interest (temporary and permanent) was $3.6 million in each of the 2025 First Quarter and 2024 First Quarter, respectively.

Current wording

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.

Previous wording

(3) Includes 7 clinics closed during the 2025 First Quarter and 45 clinics closed during the year ended December 31, 2024.

Current wording

(3) Includes 10 clinics closed during the 2025 Six Months and 45 clinics closed during the year ended December 31, 2024. (Owned)

Previous wording

We believe that our business has sufficient cash to allow us to meet our short-term cash requirements. Total cash and cash equivalents were $39.2 million as of March 31, 2025, compared to $41.4 million as of December 31, 2024, and $132.3 million at March 31, 2024. Additionally, we had $164.9 million of outstanding borrowings and $147.0 million in available credit under our credit facilities as of March 31, 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.

Current wording

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.

Previous wording

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 March 31, 2025, we have accrued $6.8 million related to credit balances, a portion of which is due to patients and payors.

Current wording

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.

Previous wording

Cash used in investing activities for the 2025 First Quarter totaled $6.6 million and primarily consisted of $5.1 million used in the purchase of interests in businesses and non-controlling interests (temporary and permanent), and $2.6 million of fixed assets purchases. These uses were partially offset by $0.7 million in proceeds from the sale of non-controlling interests (temporary and permanent), and $0.3 million of distributions received from an unconsolidated affiliate.

Current wording

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.

Previous wording

Cash provided by financing activities for the 2025 First Quarter totaled $9.1 million and primarily comprised of $17.0 million in proceeds from our Revolving Facility (as defined below) offset by $3.7 million in distributions to non-controlling interests (temporary and permanent) and payments of $4.2 million related to notes payable and the Term Facility.

Current wording

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.

Previous wording

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 March 31, 2025, we were in compliance with all of the covenants contained in the Credit Agreement.

Current wording

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.

Previous wording

As of March 31, 2025, $135.9 million (net of unamortized debt issuance costs of $1.0 million) was outstanding on the Term Facility while $28.0 million was outstanding under the Revolving Facility resulting in $147.0 million of credit availability. The interest rate on the Senior Credit Facilities was 4.9% for the 2025 First Quarter and 4.7% for the 2024 First Quarter, with an all-in effective interest rate, including all associated costs, of 5.5% and 5.3% over the same periods, respectively.

Current wording

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.

Previous wording

As of March 31, 2025, the fair value of the interest rate swap was $2.4 million, a decrease of $1.0 million, net of a $0.3 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 decrease in fair value is presented as an unrealized loss in our unaudited consolidated statements of comprehensive income. The interest rate swap arrangement has generated $0.5 million in interest savings for the 2025 First Quarter.

Current wording

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.

Previous wording

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 March 31, 2025, our remaining outstanding balance on these notes aggregated $2.6 million, of which $1.6 million is payable in 2025, $0.9 million is payable in 2026 and $0.1 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 4.0% to 8.5% per annum.

Current wording

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.

Previous wording

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 $1.3 million as of March 31, 2025.

Current wording

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.

Previous wording

On October 31, 2024, we acquired a 50% interest in MSO Metro, LLC (“Metro”) pursuant to a 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 March 31, 2025 was $7.4 million.

Current wording

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.

Previous wording

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 $2.1 million on March 31, 2025.

Current wording

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.

Previous wording

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 $2.0 million as of March 31, 2025.

Current wording

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.

Previous wording

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 $0.8 million on March 31, 2025.

Current wording

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.

Previous wording

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 March 31, 2025, was $260.0 million.

Current wording

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.

Previous wording

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 five 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.

Current wording

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.