On Thursday, US Physical Therapy (NYSE:USPH) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://event.on24.com/wcc/r/5018206/76192C39393ED3482A92FC803DDCBC7B
Summary
US Physical Therapy reported Q2 2026 revenue of $214 million, an 8.5% increase over the previous year, with physical therapy revenue increasing by 8.4%.
The company has made significant strides in hospital affiliation arrangements, notably with NYU Langone, transitioning 31 clinics in Q2 with more to follow in Q3, expected to positively impact future revenue.
Challenges included increased self-insured healthcare costs, impacting operating profits, though efforts like the WelcomeWare rollout are expected to offset some of these costs by year-end.
Q2 2026 visits grew by 6.6%, with record net rate per visit achieved, and the company anticipates further benefits from ongoing hospital affiliations and increased Medicare rates in 2027.
US Physical Therapy reaffirmed its full-year 2026 adjusted EBITDA guidance of $102 million to $106 million, supported by strong hospital partnerships and potential future acquisitions.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the US 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 Reading, Chairman and CEO. Please go ahead, sir.
Chris Reading, Chairman and CEO
Thank you. Good morning and welcome everyone to our US Physical Therapy second quarter 2026 earnings call. With me on the line include Eric Williams, our President, Chief Operating Officer East; Jason Curtis, our Interim CFO, also serving as our Senior Vice President of Finance and Accounting; Rick Benstein, our Executive Vice President, General Counsel; Graham Reeve, our Chief Operating Officer West; and Kate Venturina, 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.
Kate Venturina, Vice President of Accounting and Corporate Controller
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.
Chris Reading, Chairman and CEO
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. 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 lift 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 healthcare costs due to a small number of very significant claims across our employee base. We're running well ahead of our usual cost 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 healthcare costs and some front loading of those hospital implementation costs that I just mentioned.
With continued WelcomeWare rollout and expected takeout staff 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. On the hospital development front, our pipeline of opportunities continues to grow and we expect further relationships like the one with NYU which will positively impact 2027—our 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 lift and the extraordinary lift 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.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
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 and 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 lift for Medicare increases in full year 2026 is $2.5 million, equating to a $0.35 in revenue per visit lift. 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 replaces the Company's previous methodology of reporting salaries and related costs per visit for clinics operating as hospital affiliations. 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.
IIT margin was 20.4% in Q2 2026 compared to 20.3% in Q2 2025. Adjusted corporate expense as a 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 US Physical Therapy 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 $0.75 in Q2 2026 compared to $0.81 in Q2 2025.
Net income attributable to US Physical Therapy 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 earnout considerations of $992,000 in Q2 2026 compared to a gain of $790,000 in Q2 2025. Improving results in recent acquisitions with contingent earnouts increases the associated liability, resulting in a charge to the P&L. As such, a loss on change in fair value of earnout 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 noncontrolling interest are excluded from net income but are included in the earnings per share calculation. Improving performance in partnerships with redeemable noncontrolling 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 $62.8. 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.
Chris Reading, Chairman and CEO
Thanks, Jason. Great job. Appreciate it. Operator, we're going to go ahead and open it up for questions.
OPERATOR
Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. And we will take our first question from Benjamin Rossi with J.P. Morgan. Please go ahead. Your line is now open.
Chris Reading, Chairman and CEO
Hey Ben, good morning.
Benjamin Rossi, Analyst at J.P. Morgan
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?
Chris Reading, Chairman and CEO
Yeah, so we have a number of things. I mean, the Welcomeware initiative we've talked about earlier that involves the semi-virtualization of a front desk and aggregation of certain functions to potentially a remote site that we know results in our ability to take out headcount at the front desk. That will continue to ramp. We're, you know, 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 now 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 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.
Benjamin Rossi, Analyst at J.P. Morgan
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 for 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?
Chris Reading, Chairman and CEO
Jason, do you want to take a swing at the revenue recognition part and pieces parts associated with that? And then, yeah, Eric, maybe we can touch base on the number of, you know, the visit number of this remaining group. Sure.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
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 and 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?
Benjamin Rossi, Analyst at J.P. Morgan
Yeah. Appreciate the additional details there.
Eric Williams (President, Chief Operating Officer East)
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.
Chris Reading, Chairman and CEO
Just to provide a little perspective, prior to the NYU Langone opportunity, we were able to grow year over year basis about these around numbers, but about 120,000 visits year over year. That was 2025 to current period 2026. 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.
Benjamin Rossi, Analyst at J.P. Morgan
Appreciate the details there.
OPERATOR
Thank you. And we'll move next to Larry Solow with CJS Securities. Please go ahead.
Chris Reading, Chairman and CEO
Morning, Larry.
Larry Solow, Analyst at CJS Securities
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. Maybe it's more than that. But does that, will that be reimbursed under the alliance or, you know, essentially it should be, right?
Chris Reading, Chairman and CEO
Yeah, it doesn't, it's not going to erase our Q2 expense. But as soon as those clinics are rolled into the arrangement, that cost gets picked up and effectively supplemented by NYU. So it was important for us to make the decision. Michael made a good decision. I think schools, you know, schools produce graduates at certain times of the year. And based on our confidence and our ability to grow, we kind of have to, kind of have to reap, you know, those opportunities when they're available.
And so, you know, that hurt us a bit in Q2.
Larry Solow, Analyst at CJS Securities
Right. And is my number, is that right? A couple million dollars plus or minus,
Chris Reading, Chairman and CEO
Is that like fair ballpark? Well, I think the $100,000 per person is probably in the ballpark. 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.
Larry Solow, Analyst at CJS Securities
Okay, and the year to date you mentioned a little over $3 million higher, so higher insurance, was that mostly felt this quarter or was it already running higher in Q1?
Chris Reading, Chairman and CEO
It was running. It was—the bigger impact was Q2. Jason has the quarterly breakdown. We ran light all of 2025, and we knew we were running light. We budgeted to a median number where we've averaged for 2026, and we pretty significantly exceeded that number on these handful of semi-catastrophic cases that we have.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
About 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.
Larry Solow, Analyst at CJS Securities
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 in, you know, two and a half, three million dollars in the quarter or something on your operating profit. Okay, now that, that's, that's—I appreciate that clarification. And the volumes were nice, really strong and good to see Medicare pricing finally coming through here. Just on the commercial side, a little bit light, one—little over 1% increase, and anything had been running around two—anything, I don't want to split hairs on one quarter—anything to call out there.
Chris Reading, Chairman and CEO
No, it's going to move around a little bit. 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, the timing.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
We were up 3.4% in the first quarter on commercial.
Larry Solow, Analyst at CJS Securities
Okay, so, so year to date you're still running over, you know, over 2%? Okay, great. And then just, 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, you know, you're pretty confident in terms of continuing to do acquisitions and potentially even increase that activity.
Chris Reading, Chairman and CEO
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, we're not going to be, not going to be imprudent, but it gives us the room to do some, to do the things that are available if we feel like it's the right thing to do.
Larry Solow, Analyst at CJS Securities
Gotcha. Great. Okay, great. Thanks, Chris.
Chris Reading, Chairman and CEO
I appreciate it. Thanks Larry.
OPERATOR
Thank you. And we'll move next to Jack Slevin with Jefferies. Please, go ahead.
Jack Slevin, Analyst at Jefferies
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, et cetera, of sort of how far you could potentially push into hospital partnerships on a longer term basis.
Chris Reading, Chairman and CEO
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, we can push into a pretty good subset of our portfolio. And so when you look at right now the top 30 or 40 partnerships in our company, they already aggregate 75 or 80% of our earnings. And these are, these are partnerships typically in MSA markets where there's good population support, you know, multiple hospital systems, and where we have good brand recognition and reputation.
And so, you know, we can't, we can't address all the markets all at once. And these deals take, you know, I wish, 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's fantastic and he can move quickly with these. And operations teams can move quickly. We're dealing with hospital systems that when they think they're moving quickly, we think we're watching paint dry a little bit sometimes.
And so 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.
Jack Slevin, Analyst at Jefferies
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 and 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 and A.
Chris Reading, Chairman and CEO
Yeah, we continue to have good discussions. We're in diligence on some things right now. You know, 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 this year, probably late in the year, that are 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 really transform what we do because we're able to, 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.
Because of the alliance we have with NYU Langone and the rate differential and the additional referral support, we can get those done, you know, all day long and they can have a meaningful impact. As meaningful of an impact as, you know, a larger acquisition might have. You know, historically where we're paying a lot of money, these we're not going to have to pay a lot of money for because they don't have 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.
Jack Slevin, Analyst at Jefferies
Got it. Really helpful color. Chris, just to touch up on the model for Jason here. I don't know if I missed this, but could you just speak to, from a same-store perspective in PT, the breakdown of visits and rate in that like just over 3% number you gave?
Jason Curtis, Interim CFO and SVP of Finance and Accounting
Yeah, I mean I think the, you know, as we were talking, the math that you were talking about is, you know, a pretty reasonable one. So in terms of the total increase, the mature clinic increase is three and a half percent 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.
Jack Slevin, Analyst at Jefferies
Got it. Appreciate that. Thanks guys.
OPERATOR
Thank you. And we will move next to Joanna Gajuk with Bank of America. Please go ahead.
Arianna Martinez, Analyst at Bank of America
Hey, this is Joaquin, Arianna Martinez on for Joanna. Just wanted to ask quickly on the payer mix and how you guys saw self-pay increase throughout the course or decrease. Thanks.
Chris Reading, Chairman and CEO
Jason, you have that one?
Jason Curtis, Interim CFO and SVP of Finance and Accounting
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.
Chris Reading, Chairman and CEO
Yeah. Understanding the underpinnings to that question, you know, we've gotten some questions related to, you know, hospital callouts on, you know, 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 steady as well.
It's not a big part.
Arianna Martinez, Analyst at Bank of America
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?
Jason Curtis, Interim CFO and SVP of Finance and Accounting
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.
Chris Reading, Chairman and CEO
And Eric, I don't know, I don't have in front of me or off the top of my head even any new contracts that would have influenced that one way or the other. I don't know if you do.
Eric Williams (President, Chief Operating Officer East)
Yeah. I'll tell you what's been driving 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 flash back three plus years ago, we really had fixed agreements that were driving the bulk of our work comp business. And those were network agreements. And we brought someone on to lead this initiative for us. I think we've had somewhere around 22 or 23 agreements over the course of the last three years.
We have another four to five agreements that are going to come online here over the balance of 2026. And, you know, there is a difference between, you know, what those different contracts pay. The networks pay a little bit lower. The PPO agreements that we have pay a little bit higher. And that's what we're seeing more of is the PPO business in our door and it's having an impact on rate. And to Jason's point, in Q2, you know, we finished with a rate of $155.32 on work comp that is 2% higher than prior year.
So I think we'll continue to see traction here on the rate and volume side as we continue to move forward.
Chris Reading, Chairman and CEO
Thanks, Sarah. Great. Thank you.
OPERATOR
Thank you. And once again, if you would like to ask a question, please press the star and one on your keypad now. And we'll take our next question from Mike Patuski with Barrington Research. Please go ahead.
Chris Reading, Chairman and CEO
Hey, Mike.
Mike Patuski, Analyst at Barrington Research
Good morning. I guess, Chris, I don't think I heard you, but if I did forgive any comments on the proposed pricing for next year. Okay, that's 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, were there some—was there a piece of business lost there or can you
Chris Reading, Chairman and CEO
Yeah, if we didn't touch on that and I appreciate I called it out at the end. We have, but I wasn't specific. So we, we have the benefit of knowing that CMS intends to give modest price increase for next year somewhere between, we think, around one and a half percent. And so that increase would of course affect our traditional Medicare, wouldn't necessarily affect our Medicare Advantage—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 IPSC multiplier—has to do with the subset of specialists who use the codes that are in your code set and the relative, call it, aggregate reimbursement to those physicians. So, said a different way, if in our code set we know we have majority of its physical and occupational therapists who make, you know, on an income basis a pretty low amount when you look across the whole physician fee schedule, but we also 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 whose—that IPSC factor that I mentioned—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 fee 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, you know, 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.
Just comment on that? Yeah, a couple 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. Japanese manufacturer. We had a long-standing 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, 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 there was—we don't lose many contracts we have.
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 you know, 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.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
Chris, I'll add a little additional color commentary on there for, you know, one of our injury prevention businesses. And their pipeline continues to be very, very strong. However, they've had a number of open positions that have been taking 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' point, we believe this is temporary and will pick back up momentum.
Mike Patuski, Analyst at Barrington Research
Great. If I could sneak one more in and then I'll turn it over to somebody else. Just on the expectations around adjusted EBITDA contribution from the hospital agreements. I think, you know, 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?
Chris Reading, Chairman and CEO
Right. 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. But 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. But 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 twelve 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 and collections for their home care business, but we won't need billing and 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.
Jason Curtis, Interim CFO and SVP of Finance and Accounting
Yes. And 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 and divide it by four, you're getting something like $1.5 million 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.
Mike Patuski, Analyst at Barrington Research
Okay, thank you very much, guys.
Chris Reading, Chairman and CEO
Appreciate it. Thanks, Mike.
OPERATOR
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.
Chris Reading, Chairman and CEO
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.
OPERATOR
This concludes today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
Login to comment