Okay, we're only going to get started with the next presentation. First off, thank you, everyone, for being here today. My name's Joe Noyans, I'm Three Part Advisors . Up next, we have one of our investor relations clients, U.S. Physical Therapy. U.S. Physical Therapy is traded on the New York Stock Exchange under the symbol USPh. They're operating in 44 states across the U.S. with nearly 800 locations. Also, they're a leader in PT, and they're also a leader in industrial injury prevention, where they're on site at over 600 client locations. Excuse me. Presenting on behalf of the company today is the company's CFO, Carey Hendrickson. Carey?
Thank you, Joe. I will reiterate Joe's comment that I appreciate you guys being in our presentation today. It's always great to talk about U.S. Physical Therapy, and glad to be here with you guys today. There's the disclaimer thing, you know, all the forward-looking statements, etc., etc., etc., right? We can go on. USPh, we have been in business since 1990 and have been growing pretty substantially since that time. We were a much, much smaller company when we first got started. We now have 773 clinics that we own and/or manage. Most of those are owned, about 750 of those are owned, and then the rest are managed. We're in 44 states. I can show you briefly where that is. We're in 44 states across the United States. Most of the states you see, except Alaska and Hawaii, we are also in Alaska and Hawaii.
Just five states that we're not in. That's not necessarily by design. It's just because we haven't had the right opportunity to get into those states just quite yet. California is the one that we've been a little hesitant to get into just because it's a little bit higher from a regulatory standpoint, a little higher standard there for regulatory. Also, it's a corporate practice. They have a Corporate Practice of Medicine Act there where companies like ours can't be the majority owner in a medical practice in the state of California. You have to kind of go through some hoops to get into California, and we just haven't found the right opportunity to do that yet. We're across most of the United States. About 85% of our business, of our revenue, comes from the physical therapy space and about 15% from the industrial injury prevention space.
I'll talk a little bit about what that industrial injury prevention space is a little later in the presentation. Very attractive market dynamics, greater than a $40 billion rehab market that we're in, very favorable demographic trends, especially with the aging population. We have an aging population, and they're just aging into the time in their life when they need a lot of physical therapy. This is going to continue for quite some time. We've had strong demand for a number of years. Our demand has been increasing rapidly over the past several years, and it will continue to increase for the foreseeable future. An aging and obese population, excuse me, an active and obese population also lends itself to needing physical therapy care. Really attractive demographics, very fragmented also. There's no company that owns more than 10%.
As a matter of fact, the three largest owners in the space are Select Medical, which has 1,900 clinics, ATI, which has 850, and then we have this 773. Even on a combined basis together, the three largest do not have 10% of the overall market. It is very fragmented, ripe for continued consolidation, and we will continue to consolidate in this space. A proven business model. We are the partner of choice for experienced therapists to be actually an employee of ours as well as to join our company if they are looking for a way to monetize something that they have created inside there with 6 or 10 clinics. We are glad to acquire them. It is driven by growth through acquisitions as well as organic growth. I will talk a little bit more about all of these different metrics.
About half of our clinics were actually de novo startups that were either under the existing umbrella of partnerships that we've bought. We have a very strong financial position. This is a TTM number of about $700 million of revenue, $85 million in Adjusted EBITDA. That's after corporate cost, etc. That's after the minority interest comes out related to the minority interest portions that are still owned by the founders themselves of those partnerships. Year-over-year revenue growth was 18%, and we do pay an annual dividend of $1.80. It's 45 cents through de novo PT/OT clinic openings and then utilize a true partnership model. What we do is we open about, we've been opening about 30 de novos a year. These are, like I said, under the existing umbrella of a partnership.
This isn't something I'm not up at corporate saying, "Hey, there's some white space here. We should open a clinic and put an employee in charge of a place there to start that clinic." This is under the existing umbrella of a partnership. Someone who's already in that market knows the market well but sees an opportunity to expand. They've developed someone within their partnership, within their clinic group that they believe would be able to run this new clinic well. The watchful eye of this existing partner who already knows the market, has referral relationships, etc., starts this de novo clinic, and that's why they do so well. Our de novos typically will reach break-even in about six months. They'll be on a month-to-month basis at break-even, somewhere between six and nine months.
Typically by 18 to 24 months, they have returned whatever investment was necessary to start the de novo as well as any original startup losses. From that point forward, they are in a net positive position. It is a really good quick turnaround on these de novos. They have done really well for us. We also want to maximize the profits of our existing facilities by growing our patient volume, improving pricing, increasing efficiencies, adding programs and services. Each acquisition that we make, a lot of them are doing something that is just a little unique. For instance, we just bought Metro Physical Therapy, which is in Long Island. They have about 50 practices in Long Island. We did that in November. They do in-home therapy, some in-home therapy. They have a lot of outpatient clinics, 50 of them, but they do some in-home therapy.
We're looking at their model and potentially expanding that into many of our other markets. With each one, you get something that they're doing a little bit different, and they may be doing it really well, and we kind of use that as learnings for the rest of our clinic group. Patient volumes. I talked about how there's a growing demand for physical therapy. We've continued to grow our average visits per clinic per day, which is a metric that we follow closely. That's just because there's been tremendous demand, and we do a good job of taking care of our patients. They come back to us when they have another injury. Improving pricing. Talking about pricing, we have a contracting team, and that's a really important part of our business, obviously what we get paid by.
We're paid by the Blue Cross Blue Shield, Cigna, Humana, United, Aetna. We have a sophisticated team of negotiators who work on those contracts for us. They've had a lot of success over the last couple of years on the commercial business. That's the biggest piece. Commercial represents about 47-48% of our business. Medicare is second. That's 33% of our business. That Medicare piece, the rates there are dictated by CMS. That's the area where we've had decreases by Medicare over the past five years. The good news is we are now going to be on the other side of that going in 2026 and forward. Just to give you some background on why that occurred, in 2021, it was the first year of a decrease.
CMS felt like they needed to pay primary care physicians more because primary care physicians were no longer taking Medicare patients or they were limiting the number of Medicare patients. That is the funnel through which all Medicare, all the different care things go through primary care physicians. They need them. They had to increase the amount of pay to the primary care physicians. The primary care physicians are on the same fee schedule as us. There is the physician fee schedule. Any physician that you see in an office setting, if you go into an office, they are on this physician fee schedule. Primary care and us and every other kind of physician that you see in an office. There was net neutrality that was placed on that by Congress several years ago on that bucket of that physician fee schedule.
If they increase primary care physicians, then they had to decrease everybody else in the bucket to make up for that. We got decreased as well as everyone else on this physician's fee schedule. They've been ferreting this out over the past five years, and now it's at an end. We're at the end of that cycle. Now going forward, we're going to have increases. Even if they're nominal, I'll take it. Just any kind of increase year-to-year in Medicare rates, if it's half a percentage point, that's fine with me. I just want an increase as opposed to being in a negative position as I start each year.
The big beautiful bill, as it currently stands, and that if it passes in its current form, there's a provision in there that would say that next year for physical therapy, we would receive an increase, actually, in Medicare. That would be at 75% of the Medicare Economic Index. And the Medicare Economic Index last year was 3.5%. Even if, let's say, it's 3% for this year, 75% of that would be something like a 2.2% increase. That'd be a really good position to be in as opposed to what we've been in the past several years. Like this year, for instance, we went in with a 2.9% reduction in Medicare rates. To have a lift like that would be tremendous.
I think it's going to be an inflection point for the company and for our stock going forward because we're going to be on the other side of this Medicare rate reduction, which has been the thing that has really been the area that investors haven't had visibility into over the past few years. They don't know how much the cut's going to be or when the cuts are going to stop. Now we know. This is the last year, 2026 and forward, there's going to be increases. Really pleased about that. In the meantime, what we've been doing is we haven't just said, "Hey, that's it." We've been out renegotiating commercial rates and have had a significant increase in our commercial rates over the past few years. We've also been adding workers' comp volume to our business.
We have been consciously out there trying to get additional workers' comp business. The reason for that is because workers' comp visits are paid at a much higher pay rate, visit per rate, than the rest of our business combined. Just as an example, our first quarter rates were just north of $105 per visit. Within that, commercial, which is 47% of our business, is at about $103, $103, $104 per visit. Medicare is about $93-$94. Medicaid, which we do not have much of, it is about 3-4%, but that is very similar. It is about $92, $93 a visit. Workers' comp was north of $150 per visit. We want as much of that workers' comp business as we can get.
What we've been doing is out there, we've been out there adding to the number of workers' comp networks that we are in. How that workers' comp business comes in is the employers have relationships with these workers' comp networks, and they send all of their workers' comp claims to these workers' comp networks, and then they allocate the business to the physical therapy clinics. We've been increasing the number of these workers' comp networks that we're a part of so that we can get additional business. That's what we've been doing. We've had some success with that over the last couple of years. Our workers' comp as a percent of our mix of business was 9.5% in 2023. It increased to 10.1% in 2024. In the first quarter of 2025, it was 10.9% of our overall mix of revenue.
We're really happy to see that increase in that workers' comp mix of the overall piece because that's increasing our net rates, increasing our revenue. That's kind of what's happening on the rate front. That's something that we get asked about a lot, so I just thought I would address it there. The other piece is we also augment our organic growth through strategic acquisitions. We typically will acquire 40 or plus clinics a year. In some years, it's more if there's a larger opportunity. This last year in November, we acquired Metro in Long Island. As I mentioned, they had 50 clinics at Metro. We probably added about 90 clinics or so. Actually, it was 100 plus clinics in 2024. We're continuing to acquire. Acquisition multiples are relatively the same.
We, on average, over time, have paid about 7.5-8 times for our acquisitions. If they have more clinics, you usually pay a little bit more. If they have less, you pay less. They have averaged out between 7.5-8 times EBITDA over time for us. That is pretty consistent with where we are today. There are plenty of acquisitions still in our pipeline. We feel good about what is available there for us in 2025 and 2026. We have a highly retentive partnership model. We are partnering with experienced physical therapists. They help us drive volume with referrals. We also augment their sales with marketing reps. One of the things that we bring to the table when we make an acquisition is a more concentrated effort on referral sources.
We have these marketing sales reps that are constantly sending additional referral sources to our clinics so that they can reach out to those new referral sources in their markets and making sure that all of that is being followed up on consistently across the board. It really helps with our referrals. I wanted to talk about the partnership model and how we're so significantly aligned. That has really been the key to success for our business, the partnership model that we have in place. What we typically do is when we acquire a partnership, a group of clinics, we will buy 70%, and the original founders will keep 30% of that business. That keeps us having both vested interest in both the short term and the long term because what we will do is we will buy that, say at an eight times multiple on the front end.
The other 30%, we say it has to be at least seven years past the initial date, but we will buy out the rest of the business at that point or whenever they want to sell out the rest of the business. Grow your business in all the intervening years, de novos, open de novos, do tuck-in acquisitions, find acquisitions in your market. You can tuck into your existing operations. You grow that EBITDA over time so your back-end payment will be as large as it can be. In every intervening month from the month after you have been acquired by us, we start to then pay you distributions every month. We look at how much cash is in the bank account at the end of the month, and we will take 70% of it, and we will give you 30%.
They are incented for both the short term and the long term with the model the way we have it set up. It has really been the key to our success because these partners are vested in what is going to happen with that business both for the near term and the short term. It has worked out really well for us. These are some of the partnership advantages. We take over a lot of the back office things, HR, real estate, contracting, and credentialing. Contracting and credentialing is one of the areas where we really make the most impact on the contracting side. Basically, what they are getting paid for the visits that they have. We have a sophisticated team of people who negotiate those contracts with the big payers that I mentioned earlier.
Typically, these smaller groups, if they have 6 or 10 clinics, they're basically having to just take whatever the payer tells them they're going to get, right? We have a lot more experience in those negotiations, and typically, we'll get increases in those rates. That adds to the profitability of those partnerships day one when we get those on. As an example, Metro with their 50 clinics in November, when we acquired them, their net rate was about $101. We've already increased at this point to about $107 per visit. Across that number of visits, that's a meaningful number. We're already getting synergy from that additional contracting. We have more resources that we can apply to them. We provide them with capital and resources to enhance their development.
We will fund, if you will, upfront some of these tuck-in acquisitions I talked about and the cost for de novos. They just pay us back through distributions over time. That is how that works. We have better benefits packages, and they have typically a lot of collaborative guidance that we can provide them on how to operate their businesses better going forward. Acquisition strategy. I mentioned that we have a strong pipeline. We have completed more than 50 acquisitions since 2005, ranging in size from 1-52 clinics. We have also acquired five different industrial injury prevention services over the past several years. We are always seeking and evaluating M&A transactions. It is just part of what we do. It is just our DNA. We are doing it all the time, constantly incorporating new acquisitions.
The acquisition criteria for us, the owner-therapists want to continue to operate the clinics, and they retain that significant equity interest. It has immediately created earnings for us. We do not buy distressed properties. We buy properties that are already running well. We have further de novo growth opportunities within these partnerships. They are high-quality clinics with a history of profitability. One of the important things is making sure upfront that our values are aligned, that they are the kind of people that we want to do business with. They are obviously ethical, but they are also people that know how to grow their business and are well-respected in the industry. That is the kind of people that we want to do business with. That is just an example of new clinics that we have opened since April of last year. This is through March 31 of 2025.
We added 103 clinics since April 1 of 2024 through March 31 of 2025. Those are some of the listing of some of those that we did. Obviously, we've talked about some of this, but there are a lot of skill advantages for consolidation, a lot of efficiency, payer networks, and the fact that we're able to increase higher rates, centralization of some of the infrastructure and the overall operating cost. We definitely enhance their compliance capabilities for them. It's a struggle for them to stay compliant sometimes. We are able to frame a framework that helps them a lot. The referrals also because of some of the marketing things that we can do and help them with the referral standpoint. I talked a little bit about this, but 85% of our business is PT.
Within that 85% of the business, this is how it's spread out. Private insurance managed care, which I call commercial business, is 48%. The next biggest piece is Medicare, which is 32%. The 11% is workers' comp. 6% is just really everything else. It's self-pay. We have some clients who are self-pay who don't have insurance and come in. Some of it will be automobile injuries that we get paid for through the insurance, like the property and liability insurance, the casualty, excuse me, insurance that patients have. That's how that business kind of fares out. We've had significant growth. Here are our main drivers. We're increasing the number of clinics that we own through de novos and acquisitions, right? Our daily patient visits per clinic has continued to increase over time. The only blip in that was in 2020 with COVID.
You can see it really didn't, honestly, in the scheme of things, did not drop that much. In April of 2020, we dropped to 45% of our normal volume. By September of 2020, we were back to normal volumes. That speaks to the resiliency of this business. The world was definitely not back to normal in September 2020. Vaccines, as you remember, didn't even come in place until the first quarter of the next year. Yet, our business was resilient. We bounced right back. There was a little continual increase in our number of visits. All those things are favorable for us. We continue to grow the physical therapy business. The industrial injury prevention, let me talk about what this is first.
Industrial injury prevention is where we have someone on site at manufacturing clients and/or warehouses where they're making sure that people are doing their job in a manner in which they won't get injured. They're safe. They're doing it in a safe manner. It's a safe environment, as well as if it's a repetitive motion job and they notice they're trained in musculoskeletal issues. They advise them on the way to do that kind of repetitive motion jobs that they won't get injured. We can just kind of monitor all of that on a day-to-day basis. It saves those companies significantly in workers' comp claims, which saves them a lot of money in workers' comp insurance and their expense-related workers' comp. It's about a three-to-one return for them. Their savings in workers' comp related to the dollars they pay us for the service.
This business has grown significantly. We got into this through an acquisition in 2017, and they had about $5 million of revenue and a million dollars of EBITDA. Today, it represents 15% of our overall revenue. That is despite the fact that the physical therapy business continued to grow and grow and grow too. This has grown at a greater pace. Now, instead of $5 million in revenue this year, we'll probably have $120-$125 million in revenue. Our EBITDA in this group for this group will be about $25 million. It has really grown significantly and is a great, great business for us. It is going to continue to grow. It grows each year. The organic growth rates in this business have been about 15% a year.
When you take the inorganic on top of it, it's usually another 10-15% also. In the first quarter of this year, our revenues were up 29%, and our operating income in this business were up 29%. It's a fast-growing business and has great margins. Their margins are about 20.6%. You can see there in 2024. Just looking at we were growing those margins. They were up in the mid-20s in 2020. In 2021, it started coming down a little bit. That's because of an acquisition we made. You see the jump in our revenue from 43.9% in 2021 to 77.1% in 2022. We made an acquisition in October of that year that was a significant business. The margins were a little bit lower. They were in the mid-teens because they had a lot of auto manufacturing business.
That was a little bit lower rate, lower margin business. The combination of those lowered the margins. It is still a 20%+ margin business and is continuing at that this year as well. It is a great business for us. We are really pleased to have that industrial injury prevention business. We have a strong balance sheet and capital allocation strategy. Most of our free cash flow is going to acquisitions. We do have a dividend payment. I mentioned earlier, it is $1.80 per year, $0.45 per quarter that we pay in dividends. It is about a 2% yield. We maintain a strategic flexibility on our balance sheet. It is conservative. Our leverage right now is about 1.4 times EBITDA, which is obviously very low. That is despite all the acquisitions that we have done through the years.
We're typically able to pay for those acquisitions through the free cash flow generated by our operations as we go along. We're developing de novo physical therapy clinics and increasing the number of industrial injury locations we have also in that business. A lot of growth, liquidity. Like I said, we have $147 million in debt. Excuse me, that's $147 million in our revolver capacity. We have about $147 million in debt, though. That's the right number. That's why I was looking at that and thinking that because that's what that is. We have a term loan A note that we put in place. It was $150 million originally. It's now about $139 million, now it's down to about $139 million based on the payments we've made across the principal there, the required principal payments. That is still an outstanding rate.
We have had that in place since 2022. We put that in place because I saw the escalating interest rates to come and got that in place and have really saved millions of dollars in interest expense over that period of time due to the swap. That debt will expire in June of 2027. We will probably be renegotiating that at some point next year, probably in the early part of next year before it turns current. We keep cash on hand of about $35-$40 million that we just need for working capital on a go-forward basis. We have an executive management team. Our team has been in place for a number of years. I'm the newbie. I've been in place about four and a half years now. I'm the new guy by far.
Everyone else has worked together for years in this business, either here at U.S. Physical Therapy now for a while. Even before that, they worked together at other companies before joining physical therapy. Chris Reading has been the CEO since November of 2004. He's been in place for a long time and has overseen all the growth of this company. It's a stable and effective management team. That's it. I mean, that's what I wanted to tell you about our company today. I have five, six minutes left for questions. If you all have any questions, I'm happy to answer them, but appreciate your time today. What questions can I help you with? Yes, sir.
That's a great question. That's a great question. He's asking about the demographics of our patients and what's happening with that and do we have enough staffing to meet the coming demand. One of the areas that we really are working on enhancing right now is our recruiting and retention. We have great retention of our staff. The attrition rate for our industry is about 30%. So about 30% of the people in physical therapy move someplace within a year. Our attrition rate in the first quarter of this year was 17%. So we're much better than the industry overall. We've been around 20 or in the low 20s for quite some time, always better than the industry because we're an employer of choice. I mean, that's where people want to be.
They know the company, the stability of the company, the strength of it. It's great, but we've really been enhancing our recruiting efforts and our on-campus recruiting efforts to get more new grads into our business. We, for many years, have really relied on our local partnerships to recruit at the physical therapy schools that are in their area. They've done a great job of that. What we feel like we've missed on was telling that overall U.S. Physical Therapy story about how you may, because a lot of these programs these days, there's one that is near us at Baylor University, for instance. They have 250 physical therapists that they graduate each year. It's a hybrid program, so it's part remote and part on campus. Those people are all across the country.
If we're just recruiting at Baylor, which is in Texas, with our Texas partnerships, we're missing the boat. I mean, these people are in Washington and in Florida and whatever. We need to tell this U.S. Physical Therapy story about how you can go anywhere you want with us. We're in 44 states. If you want to go to Hawaii, you want to go to Alaska, you want to go to Colorado, you want to go to the Southeast, wherever you want to be, we pretty much have a physical therapy presence. A lot of young people may not necessarily want to stay where they have lived forever. They may want to go do something different and be someplace different in a sunnier part of the nation or where some other family are. We provide that flexibility and opportunity for them.
We're also developing a travel program because some of that that's really appealing to some students as they come out is to be able to travel to different markets. We're creating programs where they could stay three to six months in one market and then move to another market and be there three to six months. We pay them at a higher rate because of this traveling. There's like if you traveling nurses and those kinds of things. There are travel PT programs as well. We're trying to keep people from going to those travel PT programs and coming to us instead. They can rotate and then find out where they want to be permanently. They can stay with us in that permanent location. We're how many physical therapists we can have to staff those.
We have to have the staffing to be able to meet additional demand. As for the demographics, I think the demographics are continuing. The age of our population and our clinics is continuing to grow. We see people of all ages, for sure. As the baby boomers have been aging into this time where they have more chronic pain management that has to take place, I know my mother-in-law, she's constantly on a physical therapy regimen. It's great for her. She's in her mid-80s and she needs it. She's on a physical therapy regimen all the time. That is what's going to happen. That is what's happening. That's what's going to continue to happen for people as they age. These baby boomers are going to have a real impact on our demographics, for sure.
Are you targeting a certain growth rate in patient visits based on people getting older and moving more? Yeah. Growth, 7% growth. Yeah. When we look organically at our growth, which I would include our de novos and tuck-ins in that, what we are looking at is an overall growth of somewhere between 4-6%, may even be 5-7% growth going forward. Now, we've not quite achieved that. Volume increases, that would be an additional 2-3%. They come up to 4-6% organic growth. Then add the acquisitions on top of that. Yep. Yes, sir.
Most of the true physical therapy needs, some can be more of the remote can be, I do not think we will ever be to where remote is primary. We are doing something through a group called Limber, which, where you come into the physical therapy space. This software that we can monetize, we get paid for. As people do their exercises, they have their phone, I guess, which is really watching them. It is using AI to track their movements. If they do their exercises in between visits, then we get paid for that. It is not using our physical therapy, our physical therapists. It is using physical therapists that are monitoring their activity that are part of this Limber group.
It's not decreasing our productivity or our physical therapists in our clinics, which is important because we need them to continue to meet the demand that's coming in the door. There are ways that we can continue to use that going forward. I don't think it's ever going to replace the physical therapy actually in person. Even Hinge, which is something that's out there right now, they recently went public. They're primarily remote, but they are not taking care of the more—theirs is more about movement. They're not taking care of the more serious, kind of the real true physical therapy needs. I think to do that, they're even searching for their solution for people that really then need to go into a clinic, like how they're going to make that happen.
They've actually had some conversations with us about that and probably are with others as well about building out networks where they can send their patients who are remote, who really need to be in a clinic space. There are opportunities there. I don't think it'll ever take over for the actual physical therapy coming into the clinics, though. I'm sorry, I'm past my time. It's been great to speak with you today and happy to answer whatever questions you may have afterwards. I do have a full slate of meetings today, but glad to meet with you after today in a call or something if you'd like more follow-up. Thank you very much. Appreciate it.