U.S. Physical Therapy, Inc.

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Good day and thank you for standing by. Welcome to the U.S. Physical Therapy Fourth Quarter 2025 and Full-Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone. Please be advised that today's call is being recorded. If you require any further assistance, please press star then zero. I'd now like to turn the call over to Chris Redding, Chairman and CEO. Please go ahead, sir.

Thank you. Good morning and welcome, everyone, to our U.S. Physical Therapy earnings call this morning, where we will discuss a performance for Q4 and year-ending 2025, as well as to look forward as we discuss our excitement for the new year to come. With me on the call this morning are the usual cast, Carrie Hendrickson, our Chief Financial Officer, Eric Williams, our President and Chief Operating Officer, Graham Reeve, our Chief Operating Officer West, with Ben Steen, our Executive Vice President and General Counsel, and Jason Curtis, our Senior Vice President, Finance and Accounting. Before we begin our call today, I'll ask Jason to cover a brief disclosure.

Thank you, Chris. The 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 filing with the Securities and Exchange Commission for more information. This presentation also contains 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 presentations on our website.

Thanks, Jason. So this morning I'll begin with some highlights for the year. then review briefly our fourth quarter, which provided us with a strong finish to 2025, and then discuss our plan for 2026. For the year ending 2025, adjusted EBITDA increased $13.2 million, which translates to a 16.2% improvement over the prior year period. That revenue increased similarly, up 16.3%. That increased the portion 16% in our physical therapy and 18% for our injury prevention businesses. Gross profit in our PT operations increased approximately 21%. The gross profit was up over 20% in our injury prevention business. And across both business lines, we saw modest margin improvement year over year. Operating income improved 18.4%. And I want to remind everyone that these results, which our team feels very good about, were delivered in an environment in 2025 with continued Medicare rate reductions. And in spite of that, across every measure, we delivered progress in a very good year overall. And as you might imagine, as we look ahead into this next year, we are excited to close the book on that Medicare chapter while having some significant opportunities coming together, which we will further discuss here shortly. Fourth quarter highlights. Again, strong revenue and visit growth in our physical therapy business. Demand continues unabated and for the fourth quarter, and I believe every quarter in 2025, new records for visits per clinic per day. Demand coupled with rate improvement and cost discipline drove a gross profit increase for the final quarter of 2025, up over 25% compared to Q4 of 2024. Also notable, since our last quarterly report, we made several acquisitions. One great one in the Pacific Northwest with a very capable team. One home care addition. A really great, very talented and capable injury prevention team, which adds service offering capabilities to our growing injury prevention segment. Also notable is that it further strengthens our New York City presence with a lot of excitement going on. for that market. So on that note, very recently we announced two significant hospital arrangements. These are very long-term arrangements which will further improve our patient reach in these important markets and will positively impact volume, margins, growth opportunities, along with care access as well. These strategic relationships will begin a phase-in for our 16 metro clinics and our 10 second market facilities sometime around mid-year with an expectation that all 70-plus, 70 clinics, plus what we have scheduled to open, will be under these strategic affiliations by year-end. And as discussed in our release, those original clinics will provide an enterprise lift for these two partnerships of at least 14 million EBITDA in 2027 and a USPH portion at the minority interest of over $7 million. And I will let you know that we have added to our senior team to further strengthen this area of growth for us in the future where there is a lot of excitement and growth potential. Second, for 2026, we have some very clear initiatives which will continue to build on our success in 2025. Among them, continued rollout across our facility network of ambient listening documentation support, semi-virtualization of our front desk and intake operations, further cash-based program expansion, which gained good initial traction in 2025, a return to pressing forward with remote therapeutic monitoring after some needed and very impactful changes implemented by CMS beginning in 2026, and the continued pursuit of large market strategic hospital alliances, which is gaining steam and traction with the two very important recent wins in discussions in multiple markets around the country. And, of course, ongoing de novo and acquisition-related development in both PT and injury prevention segments for 2026. In closing, before turning things over to Kerry, we'd like to thank for his work with us over these past five years. I also want to thank the tireless work of our clinicians who deliver world-class care in nearly 800 clinics around the country, as well as in the homes of those who can't get out to see us. Every day they're delivering exceptional care that results in a world-class net promoter score, at least from our patients who are able to return to things that they love to do. Our therapists and all therapists should be recognized as the musculoskeletal experts, the primary care musculoskeletal treatment, who every day deliver complex restorative care for an unbelievable and unmatched value. That care allows people of all ages to move again pain-free, to return to the activities that they love to do, to return to more complete social engagement, which is also very important to mental health, as well as overall well-being, to deliver for themselves and their families an income through work and a purpose that they can again fulfill. When we think about the many, many challenges in the world today, We are blessed to have work and a purpose where we get to make the world a little better every day across the hundreds of communities we serve and the hundreds of thousands of patients who cross our thresholds each year. That feels really, really good, and I just want our partners and all of our caregivers to know how very grateful all of us are for your care and service. In closing, let me say how very excited we are for the year ahead. We've worked tirelessly these past few years with a lot of headwinds in our face. Despite that, we found a way to grow as well as to make significant additions and improvements that will strengthen us for our future. These established as well as newly announced initiatives will begin to bear fruit for us in the year to come and accelerate greatly, especially in the hospital focus area for 2027. Thank you for your belief in our team and our vision. We appreciate your support greatly. Terry, go ahead and give us a deeper dive on our financial performance before we open it up for questions and comments. And again, thank you.

Will do. Thank you, Chris. And good morning, everyone. As Chris noted, 2025 is an excellent year for USPH from really every standpoint, and particularly from a financial standpoint. And importantly, the efforts we made on key initiatives in 2025 that Chris noted in his remarks that set USPH up for even greater growth and financial results in 2026 and beyond. Let me highlight a few performance metrics that drove our strong results in the fourth quarter and full year 2025. Our average visits per clinic per day in the fourth quarter was 32.7. That's the highest fourth quarter volume per clinic per day in our company's history. And Chris noted the consecutive numbers of record level quarterly visit numbers. It's actually seven consecutive quarters that we've had a record number of visits on a per day basis. For the full year of 2025, our average visits per clinic per day was 32.2, which was a record annual volume number. Our total patient visits increased 11.2% year over year, with a full year of the Metro acquisition in New York that we made in late 2024 and other additions made in 2026, along with 2025, excuse me, along with a 1.5% increase in visits at our mature clinic. Despite the 2.9% Medicare rate reduction affected throughout 2025, our net rate per patient visit increased 1% from $104.71 in full year 2024 to $105.76 in full year 2025, with our net rate accelerating through the year and ending at $106.49 for the fourth quarter, which was an increase of 1.7% from the previous year's fourth quarter. We maintained good control with our total physical therapy operating costs down 50 cents per visit in the fourth quarter and up only 1.1% for the full year. Our IIP income grew by double digits again this quarter, up 11.5% and up 20.2% for the full year of 2025. That 11.5% is pure organic growth, and the 20.2% has some acquisition in it from the first part of the year. And finally, our adjusted EBITDA increased $3 million from $21.8 million in the fourth quarter of 2024 to $24.8 million in the fourth quarter of 2025, while our full-year adjusted EBITDA increased 16.1% from 2024 to 2025 from $81.8 million to $95 million. Turning to patient volumes, we recorded 1,560,603 clinic visits in the fourth quarter, along with 32,733 home care visits. Our average visits per clinic per day was 32.8 in October. It was 33.5 in November and then 31.7 in December. Our home care visits continued to build nicely through the year, moving from 22,943 in the first quarter of 2025 to the almost 33,000 home care visits that we had in the fourth quarter. As I noted, our net rate for patient visit for the fourth quarter was $106.49 compared to $104.73 in the fourth quarter of 2024, and all three months in the fourth quarter of 2025 were above the $106 mark. Our physical therapy revenues were $173.8 million in the fourth quarter of 2025, which is an increase of $20 million or 13% from the previous year. Physical therapy operating costs totaled $138.6 million in the fourth quarter, an increase of 12.9 million, or 15.3%, compared to the same quarter last year. Importantly, as I noted, we managed cost effectively. Our salaries and related costs per visit decreased by 1.1% in the fourth quarter, from $62.85 per visit in the fourth quarter of 2024 down to $62.15 in the fourth quarter of 2025. And our total operating costs per visit decreased 0.6% in the fourth quarter, moving from just above $86 last year to $85.56 this year, which we view as a particularly strong result given the inflationary environment. Our physical therapy adjusted gross margin was 20.5% in the fourth quarter, which was up almost 200 basis points from 18.6% in the fourth quarter of 2024. Our IIP team delivered another strong performance in the fourth quarter. IIP net revenues increased $2.3 million or 8.7% compared to the same quarter last year, while IIP income rose $510,000 or 11.5%. Importantly, this fourth quarter growth is all organic. We didn't make any acquisitions between the fourth quarter of 24 and the fourth quarter of 25. Our IIP margin for the fourth quarter increased from 16.7% in the fourth quarter of 24 to 17.1% in 4Q25. Our corporate costs remained in line with expectations. Corporate expenses were 8.5% of net revenue in the fourth quarter, and they were 8.6% of net revenue for the full year. As I mentioned on the third quarter earnings call, we're in the process of implementing a new enterprise-wide financial and human resources system We started the implementation process in September of 2025 with a go-live on the new system targeted for January 1, 2027. During the fourth quarter, we incurred about $600,000 in implementation costs related to this project. Consistent with our practice for similar non-recurring items, we add those costs back to our adjusted EBITDA calculation. One note on GAAP EPS. GAAP EPS includes the change in the revaluation of our non-controlling interest. And this revaluation is not included in our net income, but it is included in the calculation of GAAP EPS. It's counterintuitive. Counterintuitively, when our partnerships perform well, our redeemable non-controlling interest increases, and that change resulting from improved performance reduces our GAAP EPS. The short summary is that the better we do, the worse our EPS looks. GAAP EPS is the only metric that includes that revaluation of our non-controlling interest. As I noted earlier, our adjusted EBITDA increased by $3 million in the fourth quarter of 2025 over the previous year quarter, and our full-year adjusted EBITDA increased $13.2 million, or 16.1 percent, in 2025 over 2024. Operating results for the fourth quarter were $10.2 million, an increase of $2.5 million from $7.8 million from previous year, and on a per share basis, our operating results were 67 cents compared with 51 cents in the same quarter last year. Our balance sheet remains in excellent shape. We currently have $131 million on our term loan with a swap agreement in place that fixes the interest rate at 4.77% through mid-2027. In addition, we have a $175 million revolving credit facility with $30.5 million drawn at the end of the year, and we ended the quarter with $35.6 million in cash. Looking to 2026, we currently expect adjusted EBITDA to be in the range of $102 million to $106 million for 2026. That includes $2.5 million in incremental revenue related to the Medicare rate increase that went into effect on January 1 of 2026. We've included a modest amount in our guidance related to the hospital affiliations that Chris talked about in his remarks, given that the affiliations will begin mid-year of 2026, and then they'll phase in over the second half of the year. We're very positive about the contribution these agreements will make to our revenue, our EBITDA, and our margins when they're fully implemented. When fully implemented, which we expect to happen by year-end 2026, these two hospital affiliation agreements are expected to contribute at least $14 million on a combined basis to our PT revenue and income, with the corresponding impact to USPH's adjusted EBITDA of at least $7.3 million, reflecting our ownership interest in these two partnerships. With that, I'll turn the call back over to you, Chris.

Yeah, thanks, Kerry. Great job. Okay, operator, we want to go ahead and open it up for questions and comments.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. And we'll go first to Larry Solvo with CJS Securities. Your line is now open.

Great. Good morning, Chris. Good morning, Karen. The first question, I guess, just on the strategic alliances. So is the move for outsourcing of physical therapy services, you know, or just the general move across medicals, in hospital services to outsource to out-service facilities. Is that what's helping drive the motivation from the hospital side of these? And then a second question on that is it sounds like lots of opportunities. Just curious, when you build this number, this $14 million number, kind of does that just assume current Volumes that you expect or, you know, how do you kind of get to that? And are there other opportunities? I imagine lots across the country.

Yeah. So second part of that question, the numbers that we provided do assume current volumes and not additional facilities. And there will be additional facilities planned in these relationships. There are additional facilities planned. And so that will be additive. And the motivation on the hospital is, is multi-part one. It gives them a much broader reach for, for the Metro facilities. You know, it's between, and this is just on a historic basis between five and 600,000 visits in a year across the 60 facility network, which gives them a lot of patient reach. As I mentioned earlier, patient interaction and, The efficacy and how the patients feel about the care at the end of it is outstanding. And so that accrues to the hospital's benefit as well. And then it just helps them in their musculoskeletal product line in general further cement that important product line. And so it's kind of a multi-part reason. And we're excited about it. And we're going to do more of these for sure. Okay.

And then I guess just a question for Cara, just in terms of, you know, I've been seeing some concern in the market that there's some inflation, wage inflationary pressures and stuff, and maybe a slowdown in PT volumes. Again, your wage inflation, your numbers are, you know, pretty strong there. So just curious of any thoughts as we look at the 26th. And just on the volume side, you know, I noticed mature clinics continue to be a little bit slower. Any thoughts on that and just overall? volume outlook as we look out to 26? Thanks.

Sure. I'm looking at thinking about those. The first question, the salaries, I mean, we've got, you know, a normal kind of inflationary number in our budget for 2026 related to salaries. We don't see any particularly high pressure on wages. You know, there's there's always It's always, you know, we're always trying to do what we can to attract the best physical therapies to our operations, but we feel like we can control that number again in 2026, just like we did in 2025, have a controlled number. Still good about that. And remind me what the other question was, Larry. I'm sorry.

Just on the, you know, mature clinics a little slower. Oh, yeah. Yeah, actually. And that overall volume outlook. Yeah, yeah, yeah.

Yeah, but the volumes actually picked up in the fourth quarter on our mature clinics. And so we were really pleased to see that. We had a 1.5% increase in visits in our mature clinics in the fourth quarter. And, you know, that's beginning to build some momentum. And I feel like, you know, we feel good about that as we head into 2026. So, yeah. Yeah, it was stronger in the fourth quarter than it has been in the other quarters this year.

Larry, I would tell you that the initiatives around the virtualization at the front desk will make us more efficient, and that efficiency will translate through to cost. The AI documentation, as that gets fully rolled out, will impact both revenue production as well as cost. on an incremental basis. And so those things alone, as we scale, along with remote therapeutic monitoring, which will have a revenue impact, again, on an equivalent basis, those things will help us to balance the cost and revenue side of things. With the hospital relationships, again, which will phase in in time, we do expect margin expansion there.

So I think we're okay. Great. Okay, great. I appreciate that call. Thanks, guys.

Thank you. And we'll go next to Mike Potowski with Barrington Research. Your line is now open.

Good morning, Mike. Hey, good morning. Hey, good morning, Terry. So I guess just in terms of pricing, obviously the price tailwind in the quarter is great considering the Medicare bump didn't start within that quarter. And I'm just curious, as you sort of look out at the non-Medicare pricing, I mean, is sort of 1.5% to 2% positive a reasonable guesstimate for what that part of your business could be in addition to the 175 from Medicare? I mean, is that the right way to think about it?

Mike, yes, I think that's right. I think we can achieve something in that range, the one and a half to two on everything that's not Medicare. And then the 1.75% is the increase in Medicare rates. Just one note on that, that applies at 1.75% increase to all of our traditional Medicare visits and then a portion of our Medicare Advantage visits. Not all of those are necessarily tied to the current schedule by CMS. So all in all for us, it's probably overall about a 1.1% increase if you take all of those Medicare visits. But the increase is approximately 1.75% on the ones that it applies to.

Okay, great. That's actually helpful. And then just in terms of workers' comp, I know that can sort of be helpful in terms of pricing as well. Can you just sort of, I guess, give the payer mix and then any comments around workers' comp and progress or lack thereof? Thanks.

Sure. Yeah. You know, pretty consistent, actually very consistent with the third quarter, our payer mix was our commercial was just above 48%. Medicare about just a little above 33%. Workers' comp was 9.7%, and then there's the rest. Those are the three biggest categories. And the volume, the number of visits for workers' comp was really right in line with the third quarter, so a very similar mix of visits and then of revenue in the fourth quarter to the third quarter. And, um, you know, each of our categories in the fourth quarter, 2025 increased by double digit amounts from the fourth quarter, 2024. So there wasn't any, like they all increased in, in pretty good units and somewhere between, um, all of them increased between 10 and 15%. So, um, you know, that was, that was good. And there's no, no, um, rate shift mix that impacted our, our rate really in the, in the, uh, in the fourth quarter.

Okay, great. Last one, if I could just sneak one quick one in. In terms of the gross margin in the injury prevention, you showed a year-over-year increase, but sequentially it was down quite a bit. I'm just curious. I know you've signed some larger deals that are lower lower margin, but is there a new normal there that we should be thinking about in terms of gross margin, or is there some kind of seasonality at play here? Can you guys just talk about what's going on inside of the gross margin piece of injury prevention?

Yeah, I'll go ahead and take that. So we have a couple of things which make y'all's job a little bit harder, and it's you know, it's generally it's forward good news, but we did sign a couple of big contracts, really big contracts that probably were, that definitely will provide us with more profitability, but maybe a little margin diluted. One of those contracts started really in the fourth quarter where we had to staff up for that, Mike, and add significant number of staff ahead of the revenue generating part of you know when each of these contracts actually go live so there's got to be you know enough staffing and training and so that squeezed us a little bit and then just in general i'll remind everybody that from a seasonal perspective fourth quarter is usually a little bit light because in some of these big manufacturing facilities these manufacturers go dark for a week or several weeks in some cases right at year end and so that combination Maybe, you know, it gives the appearance of a little pressure, but we feel good about where we're headed. And I will say that the acquisition that we did in New York on the injury prevention side, again, different business, different segment, gives us a wider ability to serve a broader group of patients. Really, really strong margin profile there.

All right, excellent. Hey, thanks. Great quarter, and particularly congrats on those hospital deals. They sound very exciting. Thanks.

Yeah, thanks, Mike.

Thanks, Mike.

Thank you. And we'll go next to Joanna Gajuk with Bank of America. Your line is now open.

Morning, Joanna. Hey, this is Joaquin on for Joanna. So I wanted to ask about the 2026 Guide. What do you guys assume for, like, same-store revenues

Financial revenues, well, we typically don't break that up in our guidance, but I would say we expect our visits and our rates combined to be somewhere around a 3% increase in same store is kind of what we're looking at for both because we've got a little more rate momentum this year in 2026 given the Medicare rate increase. So we're hopeful we can get somewhere between that 2.5% to 3% kind of level.

Okay, thanks. And then we just lost one. How much is deal contribution in the guide, if you guys can provide any color on that? Thank you.

Yeah, you know, we don't specifically break that out. We have two acquisitions that we include in there, the ones we've made this year already, and that's the only acquisitions we have in there. That is one PT group and then the IIP group. And so, you know, what I would do for that is look at the revenue that we provided in our releases related to those two items and, you know, assume a margin on that, and that's about what the impact would be in our 2026 guide. As Chris noted, the margin on that IIP business is a bit higher than our normal margins on that business.

Thank you.

Thank you. And as a reminder, it is star and one if you'd like to ask a question. We'll go next to Constantine Davides with Citizens. Your line is now open.

Hi, Constantine. Hey, Perry. On the hospital alliances, just a few questions. First on rate, are these kind of outpatient rates, how we should be thinking about those? Second, is there kind of a profit headwind in the first part of the year as you work to sort of stand those up by midyear? And if so, can you kind of quantify that for us? And then lastly, are these exclusive relationships? Like are you the only independent outpatient provider that's going to be in their networks?

So let me walk through. profit headwind as we stand them up we continue to have strong operations in these markets um they'll they'll obviously be a lot of work involved on both you know with a hospital partner and and and us but no no profit when um in terms of the rate you should think about it as kind of a hospital outpatient rate not a traditional outpatient rate And I'm trying to remember the last part of that question, the one I didn't get.

Yeah, are they exclusive?

Oh, exclusive, yes. We'll be the partner for these hospitals with respect to the outpatient business as it will kick off and then grow and expand forward.

And how should we think about that?

I don't know that we're prepared to speak to it with a lot of granularity because the rate is going to vary by market pretty considerably, just like it does within our own PT portfolio, but meaningfully better. What we've done instead is really directed you, as Karen and I both mentioned, to the EBITDA contribution on a very base-case basis in 2027. But while we don't speak to rate directly, which is going to bounce market-to-market, we do have a very good insight in terms of what the contribution will be in terms of lift.

Michael Heaney. Got it. With respect to IIP, In your prepared remarks, you mentioned new service offering capabilities with that recent acquisition. I'm just wondering if you can expand a bit on that.

Yeah. So just broadly speaking, over the years, you know, we started this IP business in early 2017. We did a couple things primarily. We did some ergonomic work, which is a small but important part of our business, engineering and retooling and those kind of things. And then we did what we call industrial sports medicine or the prevention part of our business, largely with an athletic training and PT staff embedded not to provide treatment, but to prevent injuries. Over the years, with a variety of different acquisitions, really every year, we've been able to broaden our service offering to include full-service medical clinics and testing around the country on a post-offer basis. This most recent acquisition provides us different kind of testing capability. And so in New York, particularly in many of our largest cities around the country, there are a massive number, tens and hundreds of billions of dollars worth of infrastructure projects. Those infrastructure projects are everything from Sandblasting, you know, some of our nation's most important and oldest steel bridge structures. That sandblasting creates lead exposures and a variety of different things. And so tunneling underground for subway expansion and a whole host of things. And so we have in this business a mobile network of facilities that serves these infrastructure themes and projects in a variety of testing, OSHA testing, DOT testing, various exposures, drug and alcohol testing, to ensure that the workplaces are safe and the environment overall is safe. We do physicals and physical demand and other things. That general capability, that blood work and related testing, we haven't done before. And we're in the process of knitting together and overlaying our injury prevention relationships to see where and how we might be able to cross pollinate those a bit more. And so we're excited. It's a great team, and it's a great business. It's got, like I said, great margins, new for us in terms of this particular aspect of testing that we're excited about. But it just builds on what we've been doing over the last, you know, seven, eight, nine years.

Do you have a – that's an interesting color on the medical front – Do you have a preference at this point for M&A between the two segments? I mean, obviously you have a lot going on rolling out the hospital partnerships, but I'm just kind of wondering if you could talk about your M&A pipeline preference between the two segments. And then I guess within PT, is there anything kind of chunkier out there along the lines of a metro, or should we be thinking about those opportunities as maybe, you know, single-digit clinic-type opportunities? Sure.

Thanks. Yeah. So preference, I'm a little bit agnostic, but I'll tell you, and I'm going to qualify this a little bit, injury prevention naturally by virtue of the fact that injury prevention has a little bit better embedded organic growth. We start with an employer or a location or maybe a few locations, and these employers sometimes are national employers. And so you start with the worst problem and you grow with them over time. The organic part of that is really good. The challenge in injury prevention is there aren't that many companies to go by, and we're trying to meet everybody that we can meet and be aware of all of these some of which occur quietly in niches in the market. And so we love injury prevention. There aren't as many deals there as there are in PT. And, of course, you know, historically and forever we're a PT company, and so we're still finding great opportunities there. In terms of the size, I'm pointing two different directions that will be our company's focus. We're going to continue to look for opportunities. opportunities like a metro and in particular in markets where we may be able to bend as we've done with metro uh loop in a hospital partner and further strengthen that that marketplace um there'll be this year at some point and i don't know what our participation will be necessarily, but we know that there are going to be a number of deals that come forward in this year. We continue to be active in both areas. And then around the hospital side in general, think about it this way. So we'll take New York, for instance. Without the hospital affiliation and prior to the hospital affiliation, compared to smaller private practices in and around the area that we operate in New York, New York City, we typically enjoyed anywhere from a $20 to $30 higher net rate per visit than our smaller competitors. And so we are able at, you know, a very efficient level to buy smaller clinics but have them be immediately creative and impactful. And that will even be greater opportunity as we layer in these hospital relationships. And so you're going to see pieces, parts of all of that show up in our financials.

Thank you. And we'll move next to Jack Slevin with Jefferies. Your line is now open.

Hey, good morning, guys, and thanks for taking the questions. A lot of them have been asked so far, I guess, maybe to just take a step back, right, that margins are up year over year in the quarter for the whole business. They've been in a bit of a decline, and obviously the Medicare rate has been part of that, as well as labor inflation. I guess looking forward, and a lot of exciting opportunities you have in front of you at the clinic level on efficiencies and other things, I guess I'd love to just get your perspective on what we should be looking for if we're to think that margins could possibly impact going forward or sort of how you wrap your head around that equation. Thanks.

Yeah, so this year, and I don't know that I can, I'm not necessarily prepared to quantify exactly. We've factored some margin improvement in our guidance. This year we'll see, I think, some modest improvement. Next year, as these hospital agreements kick in, we'll see that accelerate. And the goal is to get, particularly with more hospital arrangements, to get margins back up where they were a number of years ago before we had the Medicare headwinds and some of the other challenges. So, you know, we have work to do to get there, but... we're going to see forward movement that will begin to accelerate in 2027.

Got it. I'll leave it at that. I appreciate the answer, Chris.

Thanks, John.

Thank you. And at this time, there are no further questions in queue. I will now turn the meeting back to our presenters for any additional or closing remarks.

Okay. Thanks, operator. And listen, thank you, everyone, for your time this morning. As always, Carrie and I will be available over the next couple of days. I know we got the next. I'm beginning to speak. Probably both are. We have some conferences coming up, but you can get us on the phone. Appreciate your time today. And, again, thank you for your support. Have a great day.

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