U.S. Physical Therapy, Inc. Price & Performance (USPH)

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 contains certain non GAAP measures US defined in Regulation G reconciliations can be found in the company's earnings release, and the company's presentations on our website Press Thanks, Jake. Hey, everyone. I want to begin this morning by thanking our clinicians, partners and our leadership and support teams for their tireless work this year on behalf of hundreds of thousands of individual patients whose lives we've helped positively impact We interact in a very personal professional a life improving way with our physical therapy intervention, across more than 5,000,000 patient encounters. I'm particularly proud of all of our facilities for the the way patients feel about them, a net promoter score across our network of 93 which as you know is outstanding. Our Google Care ratings are 4.9, and the demand for our services has never been higher than it has been these past twelve months. In the fourth quarter, we established a new high watermark in visits per clinic per day across our portfolio of partnerships at 31.7 compared to 29.9% in the prior year's quarter. Our total patient volume grew 13% year over year And despite the Medicare rate reduction we absorbed, again in 2024, we move the needle upwards in our overall net rate through our recontracting efforts of our commercial plans combination with some outsized growth of our work comp volume as well.

That combination lifted our rate for the quarter 01/1973 and we expect to continue to make progress from there in the New Year. Our challenge all year, which we continue to work on, surrounds our cost to deliver the outstanding care that we provide due in large part to the very competitive environment we've been in.

Hiring our therapists which you can see from our daily visit numbers that we're doing. But our cost per visit continues to be something that has remained more difficult than we expected to remain. On that front, we have continued to make adjustments where needed across our portfolio of partnerships especially in support and related roles, along with our part time employee base. Additionally, we are piloting an AI driven note system that should help to decrease the time spent generating a note in a patient's EMR while helping to improve our overall clinician efficiency we're also piloting technology that would allow us to staff more clinics for an off or in combination with local and virtual staff reduce our overhead burden that way. Please know this cost promise is a promise we made one we intend to keep. And the entire team is working to deliver on that. 2024 proved to be a very good development year for us. We completed seven acquisitions six and PT across a variety of states, including Wyoming, Pennsylvania, Colorado, which was a new state for us and doing exceptionally well. And over the And of course, our entry into New York with our MetroPT deal announced November of last year.

In fact, during the fourth quarter alone, we added approximately 70 clinics in a combination of acquisitions and de novo locations. Which will provide a great jump start for us in this new year. I'm sorry, excuse me, One of our completed acquisitions last year was in our injury prevention business US. With a longstanding well respected provider in that space. That has gone very well and our entire injury prevention For the fourth quarter, revenue grew more than 32% which was a strong finish to an equally strong year overall. Revenue grew again for the year nearly 24% to approximately $97,000,000 with the gross profit in increasing 21.5% for the year. Much of that in organic growth. Speaking of organic growth, we continue to expand into new industry verticals, In near year end, we landed FTE contract with one of our nation's premier auto manufacturers. That contract impacted our margin a little bit, as we ramp staffing up quickly, after winning that competitive engagement. We have a lot of information to cover, so I'm going to turn things over momentarily.

Let me say this. Our industry has been in a tough wash cycle for a few years. But we are going to come out of this stronger, I believe, than we went in. Foundationally, we have developed significant muscles that maybe things were easier were underused. Muscles US needed to drive exceptional volume. The ones that allow care delivery at exceptionally high rates of patient affirmation for the appreciation of the benefit of that care. The ones that allow us to grind through challenging rate negotiations which have lifted our rate despite cuts from the government And if we have aired, we've aired on the side of people and relationships making sure that we have the resources to do all that was necessary and right for our patients and their care. We're not done we are committed to making progress in this important area. And with all the positive momentum through our development US, the new clinics new partnerships and territories, along with record volume, we have a lot of to be thankful for as we head into this new year. Carrie, we have a lot to cover. So why don't you Take it from there. Great. Thank you, Chris, and good morning, everyone.

We reported adjusted EBITDA for the fourth quarter of $20.24 of $21,800,000 which compared to $19,000,000 in the prior year Our adjusted EBITDA margin using minority adjusted revenues like our adjusted EBITDA was 15.2% for both the fourth quarter 'twenty four and the fourth quarter of 'twenty three.

Our average visits per day, as Chris noted, were a record high for any quarter in our history Our average visits per day benefited from our action to close 32 underperforming clinics in the third quarter, which had a lower average visit per day than the rest of our clinics.

On a month by month basis, October visits per day were at 31.5 November was at 33.1.

And December at 31.5 with each month being a record high volume for that For the full year, our average daily visits per clinic was 30.4, which is the Our net rate of $104.07 $3 in the fourth quarter of twenty twenty four was $1.05 per visit higher than the fourth quarter of last year.

Even with the 1.8% Medicare rate reduction by CMS that went into effect we know at the beginning of twenty twenty four.

Excluding Medicare, our rate was up $1.57 per visit or 1.4% over the fourth quarter of last year.

The fourth quarter rate was a little lower than the second and third quarters in 2024, primarily to the addition of Metro in the fourth quarter and their average rate of $102.54 was lower than our overall Excluding Medicare and Metro, our net rate was up approximately 2.5% in the fourth For the full year, our net rate in 2024 was $104.7.01 dollars and $1.91 increase over the net rate of hundred and $2.8 in the fourth quarter of twenty twenty three. Of course, this includes a 1.8% Medicare rate reduction in 24%. If you exclude that, our full year net rate increased 3.1% in 2024 as compared to 2023. We continue to benefit from our strategic priority of increasing reimbursement rates, through contract negotiations with commercial and other payers and our focus on growing our workers' comp business. We're also focused on maximizing our cash collections through improvements in our revenue management and our rate for each major category of payers other than Medicare increased year over year. And we will remain focused on rate enhancing initiatives in 20 Physical therapy revenues were $153,800,000 in the fourth quarter of twenty twenty four, which was an increase of $19,200,000 or 14.2% from last year's fourth quarter.

The increase was driven by our higher net rate a 3.1% increase in visits at our mature clinics and the addition of Metro in November, which had approximately $10,000,000 of revenue in the month of November and December. Our physical therapy operating costs were $124,300,000 which was an increase of 16.6% approximately half of the dollar increase of $17,700,000 was related to Metro.

Excluding acquisitions, our salaries and related cost per visit was $61.92 in the fourth quarter of twenty twenty four which compares to $59.72 in the fourth quarter of twenty twenty three which is an increase of 3.5%. If you exclude acquisitions, our total operating cost per visit moving from $84.09 in the fourth quarter of 'twenty three to $85.5 in the fourth quarter of this year. Our PT margin was 17.9% in the fourth quarter of twenty twenty four compared to 19.5% in the fourth quarter of last year 'twenty three.

Excluding acquisitions, our PT margin was 18.5% in the fourth quarter of this year. Being 2024.

Our IIP team, as noted, produced excellent growth in the fourth quarter and for the full year of 2024. Our IP net revenues were up 32.1% over the fourth quarter of twenty twenty three with IIP income up 15.6% over the prior year. Excluding the IIP acquisition that we made earlier this year, our IP revenues were still up 16.5% with our gross profit up high single digits.

Our IIP margin was 18.5% in the fourth quarter of twenty twenty four. And as Chris noted, the large new auto client that we added in the fourth quarter muted our margin a little bit in the fourth quarter. For the full year, our IP revenues were up 23.8% with IIP income up 21.5% and a margin of 20.6%.

Our corporate office costs were in line with what the fourth They were 8.6% of our net revenue in the fourth quarter of 'twenty four. And 8.7% of net revenue for the full year of 2024. Our operating results were $7,800,000 that compares to $8,900,000 in the fourth quarter of twenty twenty three. The fourth quarter of twenty twenty four, we did record a $1,000,000 true US, which increased our income tax expense That $1,000,000 should not be factored into our go forward effective tax rate.

Our fourth quarter twenty twenty four operating results were also impacted by lower interest income since we deployed our invested cash and acquisitions in the fourth quarter and higher amortization expense which is non cash, of course, which increased due to the acquisitions. Our balance sheet continues to be in an excellent position. We have $140,600,000 of debt on our term loan with a swap agreement in place that places the rate on that term loan at 4.7% that rate will extend through the middle of twenty twenty seven.

In addition to the term loan, we also have $175,000,000 revolving credit facility had just $11,000,000 drawn on it at 12/31/2024. Our cash balance at the December was $41,400,000 and in 2024, we deployed $133,000,000 of cash into acquisitions and we bought back more than $9,000,000 of interest from our existing partners. Acquisitions will continue to be our primary focus of capital allocation our capital structure is well positioned for it. Also of note, our Board increased our quarterly dividend rate from $0.45 per share to $0.45 per share effective with our first quarter dividend.

Looking to 2025, we expect our full year 2025 EBITDA to be in the range of $88,000,000 to $93,000,000 We have the Medicare rate headwind as we enter the year as we've noted a 2.9% reduction, which [indiscernible] approximately $6,400,000 of revenue and $5,700,000 of EBITDA we still expect good growth in EBITDA in 2025, which with the full year contribution to the acquisitions we completed in 2024 the full year impact of a payer rate increases that we completed in 2024 then a partial year impact complete in 2025, Continued volume increases in our existing clinics, and continued double digit growth in our IIP business. As we noted in the press release, we [indiscernible] US due to normal seasonal factors likely somewhere around 20% of our full year EBITDA in the first quarter. With that, I'll turn the call back to Chris.

And we'll take questions.

Yes. Thanks, Kara. Great job. Operator, let's go ahead and open it up for questions.

We'll take our first question from Brian Tanquil with Jefferies. Please go ahead. Your line is open. Maybe my first question, Carey, as I think about the growth assumptions that are in your guidance, I know there's a Medicare rate cut but curious how you're thinking about volume growth, number one, And then kind of like your rate trajectory knowing that there's a Medicare rate cut coming in and then maybe also the impact of the 32 clinics that you closed Yes. So go ahead. Do you want to say something correct? No, go ahead, Karen.

I'll start with the closure of the clinics. That closure of the clinics they that makes about a positive $1,500,000 impact on our 2025 They had a loss of about $1,500,000 in EBITDA in 2024 in those first nine months prior to closing them. So that will be positive for 2025. As far as rate, we do have the 2.9% Medicare rate reduction but we're going to continue to grow all of our other payers. We are constantly looking to increase those rates based on negotiations we're in the middle of right now. We've got some of the [indiscernible] in 2025. So we still expect our rate even with the 2.9% reduction in Medicaid rate we expect to increase in 2025, maybe not at the rate it did in when you compare 24% to 23% US because we have a larger Medicare rate reduction but we're going to increase the rate in 2025. I'm confident in that. And then as far as volume at our mature clinics, I think We go into the year of 2025 expecting to see continued growth in that. We had 3% visit growth in the fourth quarter and I think we can achieve that certainly in 2025 somewhere in that 2% to 3% range at a minimum.

Chris, any comments from you other than that?

No, I think that's right. And the team continues to work on all these foundational fundamental issues and expect to make continued progress in all those areas.

Understand. And then Chris, maybe as I think about recruiting and retention and wage inflation, obviously still an area of focus and maybe a little bit of a challenge there. So curious, what do you think the dynamics are there? And are we getting close to the end of that trend or just yes, anything you could share with us on your thoughts there?

Yes. Brian, I wish I knew. I mean, it's it's difficult for us to project what demand is going to look like. Certainly, there internal and external factors. A number of people are in physical therapy school, the number of graduates, geographic a little bit difficult for me to project when things change, I will tell you that we've made some investments this year in infrastructure and people We hired a number of individuals We upgraded systems on the recruiting side. We've changed how we're addressing the market on the recruiting side. We're seeing some definite improvement in that area, significant measurable improvement. Anecdotal improvement from our partners They're seeing more applicants and they've seen in a very, very long time. But in terms of the rate, the rate is always determined by the competition and your ability to differentiate yourself compared to others, We certainly have the balance sheet and the stability US comparison to the vast majority of our competitors. So a lot of stability there, but it's it's a competitive market right now. And if we want to continue to grow volume, we have to remain competitive. And we expect to.

Got it. All right. Thanks guys. We'll take our next question from Larry Sella with PJS Securities. Please go ahead. Your line is open.

Good morning. Thanks.

Good morning.

Good morning guys. Good morning. Just piggybacking on Brian's question. So US on the volume outlook, for this year, so the 2% to 3%, because I think it was a little bit less than that, right, in 'twenty four and there was sort of some I think, some staffing constraints and whatnot. So I guess the question is, sounds like inflationary pressures are still there, but and things won't get fixed overnight, but I know you you had several issues underway. Do you think staffing will still be a constraint on that volume or will that be more just on a cost impact in terms of the staffing side? Yes. Look, I mean, we always have puts and takes on the staffing perspective when you have approaching 800 locations, you're going to have many potentially where you're fully staffed and then others where you're intermittently looking for one reason or another, either volume growth is exceeding your current capacity or you have somebody relocate things happen. Generally speaking, we're making progress on the recruiting side. Our retention has been good. And so I expect that we're going to be able to address the volume as we go forward with the investments that we've made in a little better fashion than we did in the last twelve to eighteen months.

Having said that, don't know that I'm prepared to give you a radically different volume number as we start this year. Let's see how it plays out. Everybody is working very hard to deliver on that as we have both delivered and worked on that [indiscernible] we'll see how the year comes through. That's fair.

And I know you spoke about several initiatives and you kind of highlighted that again in your and this is a moving target. It feels like there's a lot of moving parts, maybe inflation Ali Moric resistant than we thought even a few months ago, but I know [indiscernible] [indiscernible] a $10,000,000 ultimate cost savings number without an actual timeline. Again, do you still feel comfortable maybe not that $10,000,000 exact number, but that we're moving in the right direction in there.

There are excess things you can cut out or efficiencies that you can build in, it just takes time.

Is that kind of fair to say?

Yes, I think it's fair. I think it's fair. Look, we're not perfect. We've I think delivered on almost everything we said we were going to do. This is the one area that we we've got to continue to work at and it's challenging. Our partners our partners' tendency is to air on the side of making sure they have enough people probably the right side to air on generally enough people to take care of staff Net with inflation, we've got to figure out a way how not to be moment to moment with Slack resources. And it doesn't take a lot that somewhere between $50 and $75 a day per clinic aggregates up to $10,000,000 to $15,000,000 pretty quickly And so we think [indiscernible] a longer period of time, in addition to the basic things that the operations team is working on daily with our partners, to make sure that ours match very precisely with volume demands We're hopeful that the the front desk to scale back there and be more efficient, particularly across smaller locations. And all number of locations virtually. And then we're hopeful that the AI Scratch that for documentation helps to make our clinicians day a little bit more efficient and therefore potentially a little bit more productive.

So that's going to take a little time, of course. And so those are those are newer more recent changes in addition to the day to day focus that has been [indiscernible] And we have more work to do. So we've got to deliver some [indiscernible] And just lastly, on the CMS US, US, it's been [indiscernible] [indiscernible] never knows that's what's going to happen, but it sounds like we're could be at the end of that four or five years of CUCs Yes, we should be. We definitely should be. And statutorily according to the way that this original law was drafted around neutrality and fee schedule. We should we should be beyond that. We've now absorbed particularly with interest all of the rate cut that was prescribed at the beginning which was an onerous kind of wrong headed cut that wasn't supposed to be directed towards physical therapy, but which we absorbed anyway. We continue to be frequently in Washington and have a lot of discussions with key members We have a bill that is entitled as the SAFE Act which we think can be used now can be used as a saver to offset some of the potential increases in the entire physician fee schedule SafeAct is designed to reduce falls allowing Medicare patients to get a screen without a copay in a physical therapy office And so we have a lot of traction with that.

We're hoping that something that comes to pass this year. So we're making progress It's been a tough series of years, but we're hoping to come out the other side and it'll be nice to have what we hope to be neutral to forward years again in the future.

Great. Thank you, guys. I appreciate all the color. [indiscernible] We'll take our next question from Jared Haas with William Blair. Please go ahead. Your line is open.

Good morning and thanks for taking the questions.

Maybe I'll ask on the IIT segment. Looks like that accelerated on an organic basis to end the year. Just wanted to make sure I understand what drove that acceleration. So is that largely cross sell driven? Any new logos kind of that were material in the period? And then US you mentioned kind of expecting that double digit growth profile to continue. Can you just remind us, I guess, level of visibility do you have in that trend on a forward year basis?

Yes. Visibility is really good. I mean, barring major change which would be unforeseen, I think we've done a pretty good job over the seven years or eight years I guess it's eight years now going into this year that we've had it We had one year that was flat and we had visibility into some anticipated change several years ago. And beyond that, we've been consistently double digits. And so one of the things that our team has gotten particularly good at and I'm really proud of them, CEO for for US largest injury prevention company was in town with us this week. That team has done an exceptional job in cross selling. And the acquisitions that we brought in have added to our industry verticals types of industries that we serve, also broadened our offering over time And over that same period of time, we've gotten much, much better at cross selling. And so those are two significant components In addition to the fact that more and more companies are becoming aware of the injury prevention is a necessary part of preventing massive musculoskeletal spend issues It's a problem for our country across many, many industry segments. And so that combination We did an acquisition earlier in the year.

I think it was probably April. Of 2024, that acquisition has gone well, that integration has gone well. Again, over a period of time, the team we've added to it, teams matured and just doing a really nice job. That's great. That's super helpful color. And then maybe ask a related question on the same segment. US just curious the large competitive win that you cited in the fourth quarter. I was hoping to hear any color in terms of how you frame the key characteristics that I guess differentiated your services allowing you to win that larger client?

Yes. So, one of our injury prevention partnerships has had really, really strong success in the auto US. They serve number of the world's biggest auto manufacturers already And this was a particular auto plant in The U. S. Which was being served longstanding by a large competitor. [indiscernible] And I think these companies that talk Certainly, there are components of price that come into play, although don't think we were particularly aggressive in terms of our pricing necessarily, but the service that we provide and relationships with our staff and the consistency of the teams think, has stood out over time. And look, we win some, we lose some. This one was a great win for US. Caused us to have to staff up quickly, which compressed our margin a little bit, which in the fourth quarter The auto contracts in general little tighter margin than some other US. But I'm proud of that team as well. They're doing a great job. And they have a lot of good things in the works for this coming year.

Perfect. That's great to hear. And I'll hop back in queue. Thanks.

Yes. Thank you. We'll take our next question from Hey, Chris and Carrie. This is Ryan Quinn from CORE.

Can you guys hear me okay?

Yes, you're good.

Good morning. We're just trying to better understand the EBITDA budget for 2025 at the midpoint of ninety point five It seems like full year 2024 has about two months of metro, which you noted that was about $10,000,000 of revenue for November and December. If I kind of imply there EBITDA margin of about 19%, It gets me to about $2,000,000 of EBITDA. So if I back out those two months for 2024, kind of get to an $80,000,000 EBITDA number. And if I just simplistically add on $12,000,000 of Metro to that, to get an apples to apples comparison I'm somewhat getting to a full year $25,000,000 in million dollars implied $91,800,000 of EBITDA, which is a little bit higher than your midpoint guide. So I'm just trying to better understand the the puts and takes as it relates to the growth because it seems like It seems like the The average visits per day is record high and the demand dynamics are extremely high. But we're just trying to better understand some of the cost clicks as it relates to that Yes. Let me just say this and then Kerry has the detail on some of the puts and takes.

Our budget US actually a little bit higher than the midpoint of the range that we provided [indiscernible] aren't perfect and we try to as best we can You got to remember that we've got a Medicare reduction this year, which which takes out a pretty significant chunk actually eliminates a lot of the metro lift which again, we're 50% on. So remember that as well. So, Perry, do you want to walk through Around that Yes, sure. First of all, Ryan, thank you for the question. But your Metro estimate is a little high. So we they have when we bought them, they had about $12,000,000 of EBITDA [indiscernible] we have a fifth we own 50% of that.

So their EBITDA to us is somewhere around $6,000,000 plus or minus a little bit. So that's so and the fourth quarter amount of EBITDA that you quoted was a little high too. So probably about $1,000,000 or so in the in the fourth quarter from their contribution for those two months.

So if you look at our I broke it out into pieces. If you look at our contribution in 2025, versus where we were in 2024 from acquisitions, all our acquisitions probably somewhere around $8,000,000 to $9,000,000 increase in $25,000,000 versus what we from them in 2024. IP is going to go up more than a little more than $3,000,000 I would say. Then we have the Medicare reduction of $5,700,000 in EBITDA Yes, corporate costs are going to increase because we have to support the growth as well as some initiatives from financial systems that we have and 2025 that we need to upgrade. We haven't upgraded our financial systems in a number of years. We've That's probably could be $5,000,000 $6,000,000 $7,000,000 in additional corporate costs, but still a percent of revenue, I think it will go down in 2025 or so as in 2024. Then you're left with the core of that growing at a pretty good rate without the Medicare reduction. In 2025. $6,000,000 to $10,000,000 somewhere around there US are all just broad strokes, but that kind of gets you to where that midpoint range [indiscernible] So hopefully that's helpful. I appreciate that additional color.

And then just one more if I may. It's obviously it's great to see the net rate per patient visit increase year over year to that 104.73.

It did take a little bit of a step down sequentially from Q2 and Q3 as well.

Just trying to understand some of the puts and takes there. Like Can you help us understand that a little bit better?

Yes, Kerry, go ahead. As I mentioned on the on the call, Metro's average rate was lower than our overall average rate, so it's about 102.15 And that's lower than our our rate was for instance in the third quarter of just above 105. So So when you add that in, it brings that rate down a little bit. But it's still a nice increase even with that over the prior year. And that's we've got rate negotiations going on all the time And you have puts and takes in rate, but still were able to increase that at a pretty nice rate in the fourth quarter considering especially the addition of of Metro in there to low right, it was 2.5% increase in the fourth quarter of 'twenty four compared to fourth quarter 'twenty three.

When you exclude the Medicare impact as well as Metro. So looking at kind of apples to apples and everything other than Medicare. So I still consider that maybe not quite as high as it was in the second and third quarters, but still a pretty good increase year over year in the fourth quarter.

That's helpful. Appreciate it. Then US just going back to the budget comment for 2025, are you able to help the folks here and kind of recover the mean like bridge what the implied EBITDA margin would be for 2025? Does it look similar to 2024? Including or excluding Metro, are we going to see a little bit of a step up there, maybe some little bit of a little bit of a decrease, like how should we be thinking about that?

Well, When I look at our EBITDA margin US well as our our let me just talk PT margin first. PT margin, I think it's going to be relatively similar to what it was in 2024. We've got we're going to have increases in in our costs increases in our costs that are normal and we talked about some of the It's just going to depend on how much headway we're able to make I think in our cost side of where that margin ends up for the year. But I think it should be somewhat [indiscernible] to and hopefully growing a little bit from where it was in 2024 is what I'd say. IP margin is going to be relatively similar to what it was. In 2024.

Got you. But you guys don't disclose what the estimated cash flow margin would be? No, we don't we don't talk that specifically. About that.

Okay.

Well, appreciate the time both of you and we can follow-up offline. Thank you very much. Appreciate the time.

Welcome. Thank you.

We'll take our next question from Constantine Davides with Citizens JMP.

Chris, just on maybe you can just talk a little bit about your experience with Metro now that you've sort of owned that for four months and comment on the New York market more broadly since it's your first experience in there? And then US how you're thinking about opportunities to add de novos underneath that logo in 2025?

Yes. I'm going to Constantine, I'm going to kick this over. Metro, let me make a few comments and then I want Eric Williams to take that Eric's question center daily with Michael at Metro. Team is doing a great job New York is going to turn out to be a really good market for US. We have a lot of growth opportunities, not just in New York, but in adjacent areas. But Eric, do you want to touch a little bit metro where we are? Yes. Look, we're excited about having the software opportunity in New York. I mean, that whole Northeast has really been an area that we haven't done a great job of penetrating. And by picking up the metro business, which has a tremendous amount of density on Long Island. We think we have the ability to grow not just in Long Island, but into the other boroughs of New York and Overton, New Jersey. And now that we have a really strong management team, at Metro, it's going to open up some doors for us. They have a very solid de novo pipeline for New York a lot of tuck in opportunities that we're going to be evaluating as well.

So I think it dramatically increases our ability add de novo. I think we did 28 clinics last year, if I remember, from a de novo per and I think Metro is going to add substantially to that moving forward here in twenty twenty One thing I know they do a lot of or these some of it's home based therapy and you guys can just comment broadly on how you think about that at at U. S. Physical and and what kind of opportunity you have to extend service a typical outpatient clinic.

Yes. Let me start and then you pick it up. We definitely see home based therapy as the next opportunity. We've got a partner meeting coming up going to be a big focus, one of Yes, I was going to add to that. I mean, the bunker side was about 20% of their business there and a lot of expertise and again opens up the door with Metro there not just to expand on the outpatient clinic side, but to expand on the home care side as well. So we are excited about looking at that. And looking forward to having Michael share with our other partners how we started and grew that product line. So we also think that creates opportunities for further growth at USPH. Great. Thanks for the color. I guess US one last question. Carrie, I apologize if I missed this, but did you quota workers' comp mix for the quarter? And then you guys just talk about you've been in that market for a long time. Just what's really driving some of the volume benefits with respect to that part of the market and in terms of your ability to sort of reaccelerate growth in workers' comp?

Yes. I'm going to let Eric talk about that because he's really heading up our workers' comp initiative. So Eric, why don't you take that? Sure. Yes, much like the rider initiative, this is something we work hard on over the course of the last two years and 2024 was definitely a US for us. A lot of it goes back to significantly increasing the number of work comp pay relationships that we had and really focusing on pull through of those agreements. So you can take a look at the number of agreements that we had in place three years ago. So go back to the end of twenty twenty two, we tripled the number of those relationship and significantly increased pull through. If you take a look at give you some Q4 numbers and then some year to date numbers. Visits in the fourth quarter grew 11.6% year over year, Rate increased in that quarter 7% and overall revenue increased 19.5% quarter over quarter for work comp. On a year to date basis, very similar. Total revenues have increased 15.7% year over year On an annualized basis, visits increased 11.6%. And overall, for the year, we went up about 3.7% on rate.

So it's been a focused effort. We invested in some additional resources. We spent a lot of time with our partners teaching them what's a little bit different about handling a workers' compensation patient and relationship with case managers, referral sources, employers versus how you do that for a traditional outpatient physical therapy patient. So it's that infrastructure and training that we put in place that are making a big difference for us and we have several more agreements still in process right now. Which we expect to further help grow our business in 2025. And Constantine, to your specific question about mix, It was our the workers' comp mix was right at 10% in the fourth quarter of twenty twenty four. It was down a little bit from the third quarter, but the reason is that Metro doesn't have a significant component of workers' comp as the rest of our business does. If you on an apples to apples basis, our mix was 10.4% and fourth quarter US like it was in the third quarter of 'twenty four. Awesome. Thanks for taking my questions, guys. Thank you. We'll take our next question from Mike US with Barrington Research. Please go ahead.

Your line is open. Hey, good morning. Lots of great information. Thank you. So going back to Metro, the net rate there, I'm just curious, do they have a decent amount of Medicare or are these contracts that you can improve as they are more fully integrated. Can you just speak to that +1 0254? I mean can that be lifted over over time. Yes, it will be lifted. Go ahead, Yes. There's actually a number. One of the areas where we bring a lot of resources that Metro didn't have is on the payer contracting side. And we're neck deep in terms of rate negotiations with a number of payers in the market. And absolutely have the ability to increase rate. And our expectation A lot of their home care business is Medicare. But again, the vast majority of the volume going through their clinics is on the through the US is on the outpatient All right. Terrific. And then I'm not sure I heard this clearly and I may not have, Gary, did you say essentially when you were sort of doing the puts and takes on the EBITDA and sort of the bridge to the guide, did Did you say you were assuming the technology initiatives you guys are putting in place.

Did you say that or did I totally mishear that? No, I didn't say I was a little north of $3,000,000 from our [indiscernible] [indiscernible] in terms then of the technology initiatives, and Chris, what are you I understand that you're you're in the pilot stage, but like what do you think you can pick up? I don't know how, you know, I know different places sort of handle notes differently. Some are very heavy and therapists sort of doing the notes as they're treating the patients. Some are less or less relaxed about that. I mean, how much pick up can you get from the AI notes pilot and then from the the other piece that technology, virtuals [indiscernible] Yes. I still think TBD to be determined. I expect we'll have more cost related in the virtualization part at the front desk US, then we will on a cost perspective. From the AI notes component, do think it will help to reduce some of the stress on our therapists. I think it will help retention think it's going to be a welcome add And I think anytime you reduce stress, and you free up some time, you create the opportunity to to generate a little bit more revenue potentially.

But I think the big I think the bigger part on the cost side is going to be the front desk virtualization. And how we're able to do that in increments and we're not deep enough long enough in Have a real good handle on that yet, Mike, but I feel from talking to others, I feel like we can definitely make some progress from where we are. And then just last last question, and unfortunately, I think know the answer to this, Given all the activities in Washington, I'm assuming that the thought that maybe Congress would go back post December 31 and look at the rate cut that CMS put in for '25, I'm assuming lands in Gaza, Greenland and Canada that [indiscernible] activities. Can you just kind of confirm that that's not something that you guys still have hope for? We don't have that built into our budget and we don't have an expectation that that's going to happen. Is there an outside possibility that remains [indiscernible] I would tell you not to bet on it. If it happens, it will be a surprise. [indiscernible] predicting anything that happens in Washington these days. Think the way they've gone about it in draft form the cost is going to be prohibitive.

Rather than propping up the left subsets in the physician's rescheduled that have been under particular duress. The last few years physical therapy certainly one of those. Kind of the proposal that I don't think will end up getting traction is that the entire physician fee schedule would get a lift And it's just really a cost prohibitive item to do that because some of those physicians have gotten lists the past few years and this would be in addition to that. So when you aggregate all that, it's a really big number And so that's why I don't think it's going to happen. [indiscernible] [indiscernible] We're not expecting it. Very good. Thanks guys. Thanks Mike. Thank you Mike. We'll take our next question from Juliana Gajuk from Bank of America. Please go ahead. Your line is open.

Yes. Hi. Thanks so much for taking. A couple hi, Henry. A couple of follow ups here. I guess on the things for the color on the non Medicare rate excluding retro in Q4. The pricing or the average revenue per case. So what exactly do you assume for 'twenty five, I guess, on that piece of the non Medicare rate, I guess, But then I guess even with the metro coming at the lower rate, do we the average revenue per case for the year for '25, to be flat or up a little bit or down a little bit? Thank you.

So I'm sorry, the last part was whether average rate will be up or down versus 24%, is that correct? Yes, for the full year, yes. And then would you assume for like the kind of non Medicare for the twenty five year.

Yes. I do believe the rate will be up in '25 US '24. I think I noted earlier, it may maybe not at the same rate as it was '24 to '23 because we do have the larger Medicare rate reduction in 'twenty five than we did in 'twenty four, But still, I do expect it to be up in 2025 versus 2024. As far as non Medicare increase, it's hard to predict that exactly because it depends on what rate negotiations we get completed and when and when those actually take effect. But I would still expect an underlying increase of somewhere around the 2% mark, if not [indiscernible] a rate increase in 2025 when you've got that Medicare rate reduction kind of looming there. And as Eric mentioned, I think we'll see some nice lift on metro rates. I think we're we would expect at least as much if not a little more rate increase there than we have on some of our other acquisitions. We've got some real opportunity there, I think.

Okay, great to hear. I guess my last comment. So on another topic, I guess, on I don't think you talk about cash flow. So I guess it was down in the quarter There's some timing issue, but also for US full year, the cash flow was down. Maybe there was a something that related to the coming and such because I guess also '23 cash flow a lot year over year. So I guess maybe talk about the history, but also more importantly, like how we should think about cash flow outlook for 2025?

Yes. I mean, I think [indiscernible] we've had really good cash flow more than enough to to US pay down that term loan a little bit, make acquisitions where some of that came from we already had on our balance sheet. Year to year, there aren't I would necessarily say any big puts or takes, but I expect we will have some cash flow growth in 2025, a little bit more than we had in 2024. US for more our dividend increase is not quite as significant. So it's a penny increase, which is nice. But it doesn't add that much to our cash flow. So I think when we have the cash flow growth Top line, there's not going to be as as much taken away from as much of an increase in the dividend as perhaps the rest of the growth So I think we'll be in a good position for cash flow growth standpoint. I'm not worried about our cash flow growth We have our cash flow period, I think we generate a good amount of cash It may vary a little bit year to year, but we're in a good position from that standpoint. Our capital structure really what I'm focused on.

And I think we're in a good position to be able to allocate capital to the acquisitions going forward, which I do believe will have a good amount of activity in 2025 from an on the acquisition front too. Hope that helps Joanne.

No, this is helpful. Thank you. I appreciate. And I guess on the acquisition front, any incremental color whether there's some many different things you're looking at? I mean, I guess you're talking about this home therapy as a kind of guess, new service line, but is there something where you might need to buy some assets or some capabilities to do it more in expanded away outside of the metro market. Or is it something that you would develop internally? Thank you. Yes. I think on the Home Care side, we're looking at both Excellent discussions right now. In one market, we're as Eric mentioned, we have a partner meeting coming up in March, where that's going to be one of the featured expansion elements that we'll spend some time with Michael's help and introduce to our partners and that's something that we think we can begin to do with select partnerships organically Then there's just the normal stuff in injury prevention and physical therapy that we're always working on. So think we'll have good opportunities this year as we have. As Carrie mentioned, compared to many, many of our competitors, who do a great job, undoubtedly but whose capital structure is considerably [indiscernible] in some cases really difficult Beginning 2022 and forward, We're in a great spot and we have a great home for really good companies and we're going to continue to be active.

And so you may see us across I don't know that I consider home care really to be a different Truly a different segment. It's what we normally do and because just US It's different but you'll see US continue to be active in all those areas.

And there are no further questions on the line at this time. I'll return the program to our speakers for any closing remarks.

Okay, David. Thank you.

Look, thanks everybody for your time today. Thanks for your questions. A lot of great questions. Carrie and I are available as to Dave goes on and tomorrow and feel free to give us a call and have a great rest of your day. Bye now. [indiscernible] This does conclude today's program. You for your participation and you may now disconnect.