U.S. Physical Therapy, Inc.

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Please stand by. Your meeting is about to begin. Good day, and thank you for standing by. Welcome to the U.S. Physical Therapy Second Quarter 2026 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 conference 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 Reding, Chairman and CEO. Please go ahead, sir.

Thank you. Good morning and welcome, everyone, to our U.S. Physical Therapy second quarter 2026 earnings call. With me on the line include Eric Williams, our President and Chief Operating Officer, East, Jason Curtis, our Interim CFO, also serving as our Senior Vice President of Finance and Accounting, Rick Binstein, our Executive Vice President, General Counsel, Graham Reeve, our Chief Operating Officer, West, and Kate Venturin, our Vice President of Accounting and our Controller. Before we make some prepared remarks on the quarter as well as the year, we need to cover a brief disclosure statement. Kate, if you would, please.

Thank you, Chris. This presentation includes forward-looking statements which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information. This presentation also 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's presentations on its website. Back to you, Chris.

Thanks, Kate. So this morning I'm going to spend a little time talking about where we are going with a heavy concentration around these hospital affiliation arrangements and try to dovetail that into our results for the quarter as well as look forward because it's all intertwined. For starters, volumes across the company are and have been very strong. This includes our Metro partnership, now part of our long-term NYU Langone affiliation. For some perspective, visits per clinic per day were at an all-time high this quarter at 33.5 per day. For the past 24 consecutive months and 37 out of the last 42 months, we have set visit per clinic per day record volumes, including those that are hospital-affiliated clinics. They're all very strong. This is important because Part of our cost equation in Q2 is related to upfront hiring with the expectation of referral and volume translation within these partnerships. In short, the transition of our NYU affiliated clinics has gone very well. By the end of this month, we will have transitioned all 60 of our metro clinics and will benefit from approximately 50 clinicians hired in advance, which will drive the opportunity for growth going forward. That was at the expense of some short-term cost absorption. However, once those facilities are transitioned, that creates nothing but upside opportunity with no cost downside based on how these agreements work with our hospital partners. And just another point of perspective, I talked with Michael earlier this morning Our year-over-year growth at Metro from a volume perspective significantly exceeds 100,000 visits, and that was before we had the support of our NYU Langone affiliated partners. So we're looking forward to a great year ahead. We had an opportunity to hire clinicians coming out of school who were available, and we know we're going to be in a position to grow this business, so we jumped on that. Another indicator of building strength was demonstrated in our best-ever net rate this quarter, finishing the quarter at $107.59, up $2.26 from the year-ago quarter and trending solidly within the quarter itself. Once these hospital clinics are fully onboarded, that will provide additional lift as we finish the year and head into 2027. Embedded in that rate list are increases across commercial, Medicare, and workers' comp, in addition to the lift provided by the limited number of clinics transitioned inside of the quarter into our hospital affiliations. That clinic number will grow significantly in quarter three, with approximately half of the busiest metro clinics transitioning in the current period as well as the Gulf Coast Partnership, which is expected to go forward by the end of this month. One of the areas dragging against us a bit so far this year has to do with our self-insured health care costs. Due to a small number of very significant claims across our employee base, we're running well ahead of our usual costs on our claims experience this year and It's against a much better-than-average experience in 2025 when claim volume was lighter than normal. That swing from last year to this year, above the average, is an approximately $3.2 million difference between years so far, and that we have factored into our decision to guide as we have for the remainder of the year. PT revenue growth supported by visit strength and record net rate grew by 8.4%, with industrial injury prevention revenue growing by over 9% year-over-year. Same-store revenue growth for PT was north of 3% for the quarter, with a nice progression since early last year, back to a historically strong average. Margins for our IIP business were steady, slightly above 20%, while PT margins were pressured on a combination of our internal benefits-related health care costs, and some front-loading of those hospital implementation costs that I just mentioned. With continued walk-on-wear rollout and expected takeouts there and strong performance from our hospital-affiliated clinics, we expect that we can influence or offset some of these headwinds between now and year end. On the development front, we have just very recently announced a 12-clinic partnership acquisition in a great new state, some young, hungry partners who know how to deliver great care. And that follows several earlier announced acquisitions in the PT as well as IIP areas. We continue to pursue good accretive opportunities where care is superior and the forward trajectory looks good in both the PT and the injury prevention spaces. From the hospital development front, our pipeline of opportunities continues to grow. We expect further relationships like the one with NYU, which will positively impact 2027 or 2027 Outlook in a meaningful way. Finally, we are working on our own digital and hybrid opportunities for 2027 and have recently hired a very accomplished, well-known to us senior leader, to work with our team to identify the right partners around which to make that happen. Our primary focus at this time is to build the foundation that we need in order to accelerate our opportunity later this year and into 2027 and forward. With the help of an increased Medicare rate projected for 2027, in combination with continued commercial rate lifts, and the extraordinary list associated with our hospital affiliations. We expect very good things in the coming year and beyond. So that concludes my prepared comments. I'll ask Jason to cover the financials in a little bit more granular detail before we open things up for questions. Jason, go ahead.

Thanks, Chris, and good morning, everyone. Total revenue for Q2 2026 was $214 million, an 8.5% increase over last year. Physical therapy revenue for Q2 2026 was $182 million, an 8.4% increase over last year, including a nice 3.5% increase in mature clinics. Q2 2026 physical therapy revenue includes $5.6 million from the initial phases of our hospital affiliation rollout. Q2 2026 visits were 1,662,000, a 6.6% increase inclusive of hospital affiliation visits. Average daily visits per clinic was 33.5 in Q2 2026 compared to 32.7 in Q2 2025. Q2 2026 physical therapy revenue per visit inclusive of hospital affiliation revenue visits was $107.59, a $2.26 increase versus last year. Medicare revenue per visit increased 3.7% in Q2 2026. Year-to-date 2026 Medicare revenue per visit compared to full year 2025, which provides for a longer measurement period to smooth quarterly variability, is approximately in line with our expectations. As a reminder, the 2026 guidance includes a 1.75% increase in Medicare, which equates to a 1.1% increase after taking into account the mix of Medicare Advantage plans. The expected revenue list for Medicare increases in full year 2026 is $2.5 million, equating to a $0.35 in revenue per visit list. Commercial payers' and workers' compensation revenue per visit also delivered healthy increases in Q2 2026 of 1.2% and 2.0% respectively. Q2 2026 adjusted salaries and related costs as a percent to revenue was 57.5% compared to 56.4% in Q2 2025. This increase is largely attributable to higher than average medical costs in the current quarter compared to lower than average medical costs in Q2 2025. Reporting salaries and related costs as a percent of revenue replaced the company's previous methodology of reporting salaries and related costs per visit. For clinics operating as hospital affiliation, salaries and related costs of licensed staff are fully reimbursed by the hospital systems, with the reimbursement recognized as revenue for USPH. This structure allows USPH to invest in additional staffing without the risk of negatively impacting bottom line profitability. As a result, utilizing a percentage of revenue is a more meaningful metric. Adjusted Physical Therapy gross profit margin in Q2 2026 was 19.9% compared to 21.4% in Q2 2025. As noted, employee medical costs in Q2 2026 compared to Q2 2025 were a headwind. During Q2 2026, the company integrated 31 existing clinics into hospital affiliations. The remaining 39 existing clinics are expected to integrate during the third quarter. IIP revenue for Q2 2026 was $32 million, a 9.1% increase over last year, including a 3.6% increase in comparable partnerships. IIP margin was 20.4% in Q2 2026 compared to 20.3% in Q2 2025. Adjusted corporate expenses percent of revenue was 8.4% in Q2 2026 compared to 8.7% in Q2 2025. The company is continuing its efforts to upgrade its finance and HR systems with an expected go-live at the beginning of 2027. This upgrade will improve efficiencies throughout the organization and position USPH for future growth. Interest expense was $3.2 million in Q2 2026 compared to $2.4 million in Q2 2025. In Q2 2026, the all-in effective interest rate, including all associated costs, was 5.3%. Income tax rate in Q2 2026 was 29.6%. Year-to-date 2026 income tax rate is 30.5%, approximately in line with full-year 2026 expectations. Adjusted EBITDA for Q2 2026 was $27.0 million compared to $26.9 million in Q2 2025. Adjusted operating results were $11.3 million for Q2 2026 compared to $12.4 million for Q2 2025. Adjusted operating results per share were 75 cents in Q2 2026 compared to 81 cents in Q2 2025. Net income attributable to USPH shareholders was $9.9 million in Q2 2026 compared to $12.4 million in Q2 2025. Included in net income was a loss on change in fair value of contingent earn-out considerations of $992,000 in Q2 2026 compared to a gain of $790,000 in Q2 2025. Improving results in recent acquisitions with contingent earn-outs increases the associated liability resulting in a charge to the P&L. As such, a loss on change in fair value of earn-out consideration reflects improving underlying performance of impacted acquisitions. Earnings per share were $0.25 in Q2 2026 compared to $0.58 in Q2 2025. Under GAAP, changes in the value of redeemable non-controlling interest are excluded from net income but are included in the earnings per share calculation. Improving performance in partnerships with redeemable non-controlling interest has a dilutive impact on earnings per share. Turning to the balance sheet, cash and cash equivalents were $25 million at the end of Q2 2026 compared to $36 million at the end of year 2025. Credit facility borrowings were $221 million at the end of Q2 2026 compared to $162 million at the end of year 2025. Reflecting the impact of the previously announced upsized $450 million credit facility, revolver availability at the end of Q2 2026 was $229 million compared to $145 million prior year. In addition to increasing revolver availability, the new credit facility also contains a $125 million accordion providing sufficient liquidity to fund sizable future acquisitions. During the quarter, the company repurchased 306,000 shares on the open market for a total consideration of $19.2 million at an average share price of $62.80. Including share repurchases made in 2025, the company has materially concluded repurchases under its current $25 million authorization. Year-to-date Q2 2026 operating cash flow was $38 million compared to $30 million for year-to-date Q2 2025. As Chris mentioned, subsequent to the end of the second quarter, the company completed the acquisition of a 12-clinic physical therapy practice for a purchase price of $16.4 million. This practice currently generates $12 million in annual revenue and 112,000 annual visits. Including the two previously announced Q1 2026 acquisitions, the cumulative purchase price of our three announced 2026 acquisitions is $38 million with a combined annualized revenue of $27 million. Taking into account the year-to-date 2026 results and the expected increasing benefit of hospital affiliations in the back half of the year, we are reaffirming our full-year 2026 adjusted EBITDA guidance of $102 million to $106 million. With that, I will turn the call back to Chris.

Thanks, Jason. Great job. Appreciate it. Brady, we're going to go ahead and open it up for questions.

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 will take our first question from Benjamin Rossi with JP Morgan. Please go ahead. Your line is now open.

Hey, Ben. Good morning. Hey, thanks for taking my questions here. So just on the back half ramp implied for the remainder of the year, Sounds like that's going to be more weighted towards 4Q once those remaining facilities have been integrated in 3Q. You also mentioned the additional 50 hires being front-loaded. Can you just walk us through the specific initiatives that you're expecting to deliver margin lift during the back half of the year? And then how should we be thinking about the timing of associated costs and benefits during 3Q and 4Q?

Yeah, so we have a number of things. I mean, the WelcomeWare initiative we've talked about earlier, That involves a semi-virtualization of our front desk and aggregation of certain functions to potentially remote site that we know results in our ability to take out headcount at the front desk. That will continue to ramp. We're more than halfway through our expected ramp in there. And then, you know, the big impact, Ben, is just the impact from getting these hospital facilities fully loaded. Jason mentioned, you know, we have close to 40, 39, I believe, that will flow in this quarter. Some of those are already in the works. Many of them are with a few to remain here this next month. That's going to give us a good solid lift. And then, you know, the other things, like I said, we're working on for next year. But those are the big impact things between now and year end.

Great. Appreciate the color there. Just a couple clarifications on that $5.6 million in revenue you reported from the hospital affiliation during 2Q. Can you just walk through the mechanics of the hospital affiliation revenue recognition outflows through your P&L? And then is there any ballpark for how many visits those clinics are currently seeing? Like, if we're assuming those volumes are coming in at a slight premium to your consolidated revenue per visit, is it fair to think of this group currently representing maybe 50,000 patient visits, or is that overstating volumes? Thanks.

Jason, do you want to take a swing at The revenue recognition part and the pieces parts associated with that. And then, Eric, maybe we can touch base on the number of, you know, the visit number of this remaining group.

Sure. So the $5.6 million comes from two components of the agreement with the hospitals. One is a per visit fee. So for every visit that we see, every patient that we see, we receive a fee, an income from the hospitals. And then additionally, as Chris mentioned, we receive a reimbursement for the licensed clinical staff who are treating those patients. So the sum of those two income streams is the $5.6 million. And that would, just for clarity, replace The net patient revenue that we would have previously seen when they were operating pre-hospital affiliations. So the $5.6 million is the hospital increase. There would be a reduction to net patient revenue, but it would be less than the increase we're seeing from the $5.6 million increase.

Does that make sense? Yeah, appreciate the additional details there.

In terms of the volume going through those Metro clinics, just the outpatient clinics, we're averaging about 45 visits per day per clinic in our New York market. And expect that to continue to increase with our NYU relationship.

Got it. Just to provide a little perspective. Prior to the NYU Langone opportunity, we were able to grow on a year-over-year basis about, these are round numbers, but about 120,000 visits year-over-year. That was 25 to current period 26. That's without the support of that hospital. So those clinicians that we hired, we fully expect to get them very busy and to produce very significant growth. between now and this same time next year, including additional clinics, potential tuck-ins, and other things that we have in the works. Great.

Appreciate the details there.

Thank you. And we'll move next to Larry Solo with CJS Securities. Please go ahead.

Morning, Larry. Good morning, Chris. Just follow up on that one. So the 50 clinicians that you hired in advance, essentially this quarter, and if I do the math, I mean, if they're making $100,000 a year, that would be like $2 million in the quarter or something like that. So maybe it's more than that. But will that be reimbursed under the alliance or, you know, Essentially, it should be, right?

Yeah, it's not going to raise our Q2 expense, but as soon as those clinics are rolled in to the arrangement, that cost gets picked up and effectively supplemented by NYU. It was important for us to make that decision. Michael made a good decision. I think schools produce graduates at certain times of the year, and based on our confidence and our ability to grow, we kind of have to reap those opportunities when they're available. And so that hurt us a bit in Q2.

Right. And is my number, is that right, a couple million dollars, plus or minus? Is that, like, fair ballpark?

Well, I think the $100,000 per person is probably in the ballpark. When you look at benefits and sign on, you know, bonuses and other things, maybe a little bit more than that. But I think it's probably close enough.

Okay. And the year to date, you mentioned a little over $3 million higher. Right. and myself. Higher insurance. Was that mostly felt this quarter or was it already running higher in Q1?

It was running. The bigger impact was Q2. Jason has the quarterly breakdown. We ran light all of 25 and we knew we were running light. We budgeted to a median number where we've averaged for 26 and we've pretty significantly exceeded that number on these and a handful of semi-catastrophic cases that we have.

But 80% of the $3 million that Chris referenced was the second quarter when you think about the spread between the higher than average experience in the second quarter 2026 versus lower than average experience in the second quarter 2025.

Gotcha. So it's like a couple million between that and the pre-hiring or the hiring in advance. That's probably, you know, could all end, you know, Two and a half, $3 million in the quarter or something under operating profit. Okay, I appreciate that clarification. And the volumes were nice, really strong, and it's good to see Medicare pricing finally coming through here. Just on the commercial side, a little bit light, a little over 1% increase. Anything have been running around, too? Anything I don't want to split hairs on one quarter, but anything to call out there?

Now, it's going to move around a little bit, and it's going to depend on, you know, when deals went into effect and quarterly timing. And just like we talked about kind of the catch-up on the Medicare side, which, you know, gets us to a more normal average, we really look at it over the course of the year. So we're kind of where we expect it to be. And we have more to come, but it's a little bit lumpy here and there, depending on the size of the contracts and the timing.

We were up 3.4% in the first quarter on commercials.

So year-to-date, you're still running over 2%. Okay, great. And then just lastly, you mentioned you recently refinanced, increased the size of your credit facility. And then I think you also mentioned the accordion you added. Sounds like you're pretty confident in terms of continuing to to do acquisitions and potentially even increase that activity. Is that fair?

Yeah, it's all fair. I mean, we're going to use the same filter that we've always used. So we're not going to spend differently just because we have money available. We're not going to be imprudent. But it gives us the room to do the things that are available if we feel like it's the right thing to do.

Gotcha.

Great.

Okay. Great. Thanks, Chris. I appreciate it. Thanks, Larry.

Thank you. And we'll move next to Jack Slevin with Jefferies. Please go ahead. Hey, Jack.

Hey, guys. How's it going, Chris? Thanks for taking the question. I guess I want to touch maybe not on the interim. It seems you've covered enough on sort of the moving pieces near term around the hospital partnerships. But on some of the comments you made, Chris, as far as 2027 goes in the pipeline, can you maybe give a little more color on sort of what that looks like and sort of when you think maybe some of the next announcements of partnerships could start to come off? And then secondly, if you think very long term and you look across your whole portfolio, it's obviously a very exciting opportunity. How do you think about, you know, across the whole base of clinics you have, How many of these could potentially be eligible based on the market or potential hospital partners, etc., of sort of how far you could potentially push into hospital partnerships on a longer-term basis? Thanks.

Yeah, so I'll take the second part of that first. On a longer-term basis, I think, you know, slowly and steadily we can push into a pretty good subset of our portfolio. And so when you look at right now the top and many more. These deals take, you know, I wish they could move as fast as we can move because we can move very fast. We have a great team. Our general counsel is fantastic, and he can move quickly with these, and the operations teams can move quickly. We're dealing with hospital systems that when they think they're moving quickly, we think, you know, we're watching paint dry a little bit sometimes. They're going to happen. You're going to get some additional announcements. You can't predict the absolute cadence of these. I would be over my skis and outside my point of control to be able to do that. But we feel confident that 2027 is going to look meaningfully different with the next few of these.

Okay. Really helpful. And then just to follow up maybe on a slightly different side of things, You have this deal coming through in 3Q with the 12 clinics. I know entering the year, you're pretty bullish on sort of potential opportunities on the inorganic side of things via M&A. Can you speak to maybe if there are more to come on this front, other things that you guys have in the pipeline right now? We'd love to hear about sort of the current state of M&A. Thanks.

Yeah, we continue to have good discussions. We're in diligence on some things right now. It's difficult for me to be particularly descriptive and not kind of put us in the corner on these because we're going through our process and we're in discussions with a number of people, both on the injury prevention side and on the PT side. And we know that there are some things that are coming to market that this year, probably late in the year, they're going to be a little bit bigger. And so, you know, we'll see. I think we'll produce a good development year. And we're excited, particularly once we get these hospital partnerships under the tent. It gives us the ability to truly transform what we do because we're able to go out and find, you know, in the case of New York, There's some really high-volume practices that, practically speaking, on their own, don't make a lot of money, wouldn't be acquisition targets right now. Together with the alliance we have with NYU Langone and the rate differential and the additional referral support, we can get those done all day long. And they can have a meaningful impact. As meaningful of an impact as A larger acquisition might have historically where we're paying a lot of money. And these we're not going to have to pay a lot of money for because they don't have a big profit line to begin with. And so I think it opens up a front of ours that potentially accelerates cash flow just based on the opportunity at hand and the way the numbers work. So we're excited about that, too.

Got it. Really helpful color, Chris. One, just touch up on the model for Jason here. I don't know if I missed this, but can you just speak to the, from a same store perspective in PT, the breakdown of visits and rate in that, like, just over 3% number you gave?

Yeah, I mean, I think as we were talking, the math that you were talking about is a pretty reasonable one. So in terms of the total increase, the mature clinic increase is 3.5%, and then the net rate increase is 2.1%. So you're looking at around 1.5% coming out of visits, I think, is a reasonable assumption to make.

Got it. Appreciate that. Thanks, guys.

Thank you. And we will move next to Joanna Goodchuck with Bank of America. Please go ahead.

Hey, this is Joaquin Arrigado-Martinez on for Joanna. Just wanted to ask quickly on the pair mix and how you guys saw self-pay increase throughout the quarter or decrease. Thanks.

Jason, you have that one?

Yeah, I mean, we saw a small decrease in that particular line item. I think it's very important to note that from a total percentage of the payer mix, self-pay is significantly less than 5%, runs in like the 3.5%, 3.5% to 4% range. So, you know, commercial, Medicare, and workers' comp are really where the needle movers occur.

Yeah, understanding the underpinnings to that question, you know, we've gotten some questions related to hospital call-outs on increase for uninsured and things like that. We really don't see big swings to our payer mix, and we've never really ever seen a big swing in our own or underinsured populations. So we've been very steady, and volume's been very good, as we've mentioned, and that part of our business is pretty big. are all pretty steady as well. It's not a big part.

Okay, thanks. And could you talk about your workers' comp mix and what your average workers' comp revenue per visit increase was? And are there more contracts you plan on bringing in or did bring in over the last quarter? Thank you.

Yes, our workers' comp in terms of the penetration is holding steady at about 10%. And as I mentioned, we saw a nice increase of 2% in the second quarter in terms of revenue per visit.

Eric, I don't know. I don't have in front of me or off the top of my head even, you know, any new contracts that would have influenced that one way or the other. I don't know what you do.

Yeah, I'll tell you what's been driving, you know, rate and volume. And this has been a big initiative for us over the last couple of years. And we've seen an increase in visits. We've seen an increase in rate. And if you flashback, you know, three-plus years ago, we really had – and many, many more. Thanks, Eric. Great, thank you.

Thank you. And once again, if you would like to ask a question, please press the star and 1 on your keypad now. And we'll take our next question from Mike Petusky with Barrington Research. Please go ahead.

Hey, Mike. Good morning. I guess, Chris, I don't think I heard you, but if I did, I did forgive. Any comments on the proposed pricing for next year?

Yeah, we didn't touch on that. I called it out at the end. It wasn't specific. So we have the benefit of knowing that CMS intends to give modest price increase for next year, somewhere between we think around 1.5%. And so that increase would, of course, affect our traditional Medicare would necessarily affect our Medicare Advantage. It affects a percentage of those contracts, but not all. While it's not a big increase, it is an increase. The other thing that they've done, which they haven't done in a long time, is through our APTQI Alliance, there was an indicator or an influencer of some of the rate movement around the particular indicator that I hadn't heard about before. It's called an IPSE multiplier. It has to do with the subset of specialists who use the codes that are in your code set, and the relative, call it, Thank you for joining us. We have orthopedic surgeons. We have interventional pain management specialists. We have physical medicine and rehabilitation doctors who make a great deal of money. We discovered this a year or so ago, a year ago. We were the only group in the physician fee schedule who's that ipsy factor that I mentioned who didn't take into account The full width and breadth of everyone who uses that code. So again, said differently, we were being treated differently than all the other groups in the physician pre-schedule. We brought that to CMS's attention a year ago. They seemed surprised by it. They did their own work. They've given us an early indication that in 2028, We'll see the beginning of some what we hope to be not clear yet, and it's not set yet completely, but a resolution of that difference in the form of some more positive momentum going forward into the 2028 year. So stay tuned on that. We've got more work to do. But that's a positive indicator as we look forward. Okay.

Terrific. Thank you. That's helpful. Chris, I'm just curious on the industrial injury prevention business. The organic growth in the quarter seems a little softer than what you guys have been sort of putting up some big numbers. I'm just curious, you know, was there a piece of business lost there or can you just comment on that?

Yeah, a couple of different things. So I think if I remember right, going back last year, Q2, we had an 18% organic growth rate, so pretty high comp, number one, on last year. We had one contract, and it was an automobile manufacturer contract, and we got notice on this more than a year ago. There was a Japanese manufacturer. We had a longstanding good relationship. They changed the hierarchy of who in that company made the decisions about health care. We had a very good local relationship at the plant where we provided service. Those people wanted to continue to keep us. and so on, yet somebody outside the market made the decision to move to a different provider. So that happened in this year. I think we're feeling most of that in Q2. That's been replaced by Nissan Motors contract and the largest grocery store chain in Texas. That contract, which is also expanding, but we don't lose many contracts. That's really the one impact that we've had since we've been in this business is with that particular employer. It created a little bit of a dent, but we filled it in and we're going forward. And we'll say we just hired what sounds like a great new salesperson for one of our partnerships who is embarking on trying to be more aggressive in the market.

and so we're excited about that and you know we'll see where that goes but we are a little lighter than normal but we think it's temporary yeah Chris I'll add a little I'll add a little additional color commentary on there for you know one of our injury prevention businesses and the pipeline continues to be very very strong However, they've had a number of open positions that have been taken longer to fill, so they haven't been able to execute against driving revenue with some of that pipeline. And they've recently filled a number of those positions. So to Chris's point, we believe this is temporary, and we'll pick back up momentum.

Ray, if I could sink one more in, and then I'll turn it over to somebody else. Just on the expectations around adjusted EBITDA contributions from the hospital agreements, I think when these were first announced, you sort of said 7.3 for 27 in terms of adjusted EBITDA contribution. and I honestly don't even recall what you said for this year. I think it was very modest. Can you just sort of update, I guess first if you could help me with 26 potential contribution and then is 7.3 still your view or has that been adjusted? Thanks.

Let me speak to 27 and then I'll have Jason walk you through the mechanics of 26 because frankly off the top of my head I'm not confident I'm going to remember it exactly. We will update the market as we always do at the end of the year with what we expect those opportunities to do in 2027. We're very confident that the early results are going to position us for a greater number in 2027. And let me explain the reason behind that. When we guided... Our board was comfortable giving guidance because this was so new. Our guidance was based on a trailing 12 months visit rate at the time we enacted that contract. So it didn't include a run rate at the time. It also didn't include any takeouts in the business. Takeouts would be As the business transitions and as we work down accounts receivable, we won't have the need for billing and collections inside these partnerships over a long period of time. Now, Metro will continue to keep billing collections for their home care business, but we won't need billing collections for the outpatient business. So that cost goes away. We didn't include that. We were very conservative with how we guided. We'll give a more specific number when we guide for 27, but it's going to be bigger than what we originally said.

I would say for 2026, as we talked about in the second quarter, we did see some revenue that began to flow in from the hospital affiliations, although we did have that offset from some of the pull-forwards of hiring to get ourselves ready for the additional volume that we expect on a go-forward basis. If you take that 7.3 and assume that it's going to be something higher than that divided by 4, you're getting something like $1.5 to $2 million impact in Q4. Q3 is going to be somewhere in between those two numbers as we're continuing to ramp in the remaining clinics.

Okay. Thank you very much, guys. Appreciate it. Thanks, Mike.

Thank you. At this time, this concludes our question and answer session. I will now turn the meeting back to Chris Reading for any additional or closing remarks.

Thank you. Listen, we appreciate your time this morning. We're available over the next days and weeks for any follow-up that you need, and we thank you for your interest and your support. Have a great day. Bye now.

This concludes today's meeting. We appreciate your time and participation.