JMP Securities initiated coverage on U.S. Physical Therapy, Inc. (NYSE:USPH), an operator outpatient physical therapy provider with more than 750 owned or managed clinics across 43 states.
JMP is optimistic about the company's unique, partnership-focused outpatient platform. Combined with its pricing strategy, acquisition capabilities, and industrial injury prevention business, it can sustain the company's strong revenue growth, averaging 10% annually from 2021 to 2024.
The analyst has initiated with a Market Outperform rating and a price target of $113.
The analyst views U.S. Physical Therapy as a well-run company and a strong player in the physical therapy sector. Its unique partnership model aligns the company's goals with its clinic partners, helping to drive growth through new clinic openings. Additionally, U.S. Physical Therapy's expanding focus on workplace injury prevention offers a higher-margin, cost-efficient service.
While challenges like rising labor costs and Medicare reimbursement cuts persist, JMP remains optimistic about U.S. Physical Therapy's growth potential in 2025-2026, supported by strategic acquisitions and rate negotiations.
Notably, 2025 marks the end of a five-year Medicare rate reduction plan that began in 2021. Though not factored in, any rate improvements or positive changes to Medicare rates or policies could further boost growth projections.
JMP estimates that the U.S. rehabilitation market is worth nearly $40 billion, with over 300 million physical therapy visits yearly.
The physical therapy market is highly competitive and fragmented. There are over 37,000 clinics nationwide, and no single provider holds more than 5% of the market share.
ATI Physical Therapy (OTC:ATIP) is the only other publicly traded pure-play physical therapy company. Select Medical Holdings Corporation (NYSE:SEM), a diversified healthcare services provider, also competes in this space through its Outpatient Rehabilitation segment, alongside its operations in long-term acute care hospitals and inpatient rehab facilities. Many of the largest physical therapy providers carry significant debt, which may limit their ability to pursue major acquisitions.
Price Action: USPH stock is trading down by 2.40% at $93.27 at last check Tuesday.
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