Phase Space AI

Financial Model Notes

U.S. Physical Therapy [USPH]

U.S. Physical Therapy [USPH] — Financial Model Notes

The governing convention for this file: consolidated figures are valued against an NCI-inclusive EV; per-share figures use attributable income against USPH-only shares. Mixing the two is the defect this memo exists to correct.

Period conventions

FY ends 31 December. TTM = the four quarters ended 2026-03-31, rebuilt from EDGAR because AV's quarterly series is materially wrong on this name (below).

Revenue — the AV/EDGAR reconciliation, and why AV cannot be used

AV's annualReports FY2025 revenue of $781.0m is correct. Only the quarterly series is broken, and it is broken on exactly the three quarters that make up most of the TTM window. Any internal consistency check on AV's data passes, because the annual and the OVERVIEW agree with each other — this is the "a vendor that is wrong consistently defeats every consistency test" failure mode, and it is only detectable against EDGAR.

TTM revenue, EDGAR-rebuilt: $197.344 + $197.132 + $202.726 + $198.286 = $795.488m. The screen's revenue_ttm of $795,488,000 matches to the dollar — the screen did not use AV's quarterlies.

Income statement — EDGAR

Two tax rates, and the distinction matters: - 25.5% = $19.808m ÷ consolidated pretax $77.813m. This is the rate to apply to consolidated EBIT, and it is the one used in the warranted-multiple identity. - 33.4% = the rate USPH discloses, computed on income after NCI ($59.391m) because the clinic partnerships are pass-throughs. Applying the disclosed 33.4% to consolidated EBIT double-charges tax.

AV's quarterly netIncome is negative on the last two quarters — −$4.3m (Q1'26) and −$10.5m (Q4'25) — against filed consolidated net income of +$8.156m and +$9.175m. A sign flip. AV's TTM net income of $1.2m is meaningless against a true attributable $34.7m.

Balance sheet at 2026-03-31 (EDGAR)

The EV build, stated line by line

market cap                    1,212.56
+ net debt                      176.40
+ non-controlling interest      313.90     <-- OMITTED BY THE SCREEN
= EV (lease-exclusive)        1,702.86     <-- screen said 1,378.16 (-23.6%)
+ operating lease liabilities   157.99
= EV (lease-inclusive)        1,860.85

Lease-exclusive is the primary basis, because under ASC 842 rent sits inside operating cost and therefore inside EBIT; adding the liability to EV while leaving rent in EBIT double-counts. Stated explicitly per the CRWV precedent (6.6x quoted, really 7.95x, which invalidated a seven-name ladder in this project).

Redeemable NCI sits in temporary equity — the mezzanine. It is in neither a Liabilities roll-up nor StockholdersEquity, which is exactly why an automated EV build misses it. It has grown $260.0m → $263.3m → $277.7m → $293.3m → $313.4m across five quarters, +20.5%.

Cash flow — TTM, and a consolidation subtlety

CFO $83.7m; capex $16.9m; FCF $66.9m → consolidated FCF margin 8.41%.

Roughly 34% of that free cash flow belongs to the NCI partners and leaves the company as distributions, which run through financing, not operating. On an attributable basis the FCF margin is nearer 5.5%. The reverse DCF here is run on consolidated EV against consolidated revenue and margin, so the consolidated 8.41% is the internally consistent input — but a model that mixed an attributable FCF margin into a consolidated EV would understate required CAGR again, in the same direction as the original NCI error.

Sign is positive, so omitting --fcf-margin would overstate required CAGR by ~1.8pp. The flag was supplied.

Receivables and DSO — same-quarter basis

Use EDGAR AccountsReceivableNetCurrent. AV's currentNetReceivables is $96.724m against EDGAR's $69.082m — 40.0% higher, and would report a 44.5-day DSO instead of 31.8.

Receivables sales / factoring: ZERO hits for factoring, securitiz, sold … receivable across the FY2025 10-K. No cash-flow line. The improvement is real.

Supporting evidence on estimate quality: the provision for credit losses was $7.6m (FY2025) and $6.9m (FY2024) — 1.2% of net patient revenues in both years. The auditor designated "Measurement of Patient Revenue Net of Contractual Adjustments" a critical audit matter, which is the largest estimation risk in the statements; a stable provision ratio plus a falling DSO says the estimate is not being stretched.

Corporate actions

SPLITS queried explicitly: two splits, 2001-06-29 (1.5:1) and 2001-01-08 (2:1). None since. Single share class. Diluted weighted-average Q1 2026 15,167k against 15,218,789 outstanding. entity_public_float is null in the screen record; not used.

Operating metrics — the model's real drivers (all EDGAR-disclosed)

What is NOT modelled

No forward three-statement model. No de novo/acquired split of clinic additions — it is not disclosed and I will not estimate it (recorded INDETERMINATE). No NCI redemption schedule — the company discloses the right but not the obligation to purchase, with no timetable.