U S PHYSICAL THERAPY INC /NV – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following is a discussion of our historical consolidated financial condition
and results of operations, and should be read in conjunction with (i) our
historical consolidated financial statements and accompanying notes thereto
included elsewhere in this Quarterly Report on Form 10-Q; (ii) our Annual Report
on Form 10-K for the year ended December 31, 2021 filed with the Securities and
Exchange Commission (the "SEC") on March 1, 2022 ("2021 Annual Report"); and
(iii) our management's discussion and analysis of financial condition and
results of operations included in our 2021 Annual Report. This discussion
includes forward-looking statements that are subject to risk and uncertainties.
Actual results may differ substantially from the statements we make in this
section due to a number of factors that are discussed in "Forward-Looking
Statements" herein and in Part II, Item 1A. Risk Factors of this report.

References to "we," "us," "our" and the "Company" shall mean U.S. Physical
Therapy, Inc. and its subsidiaries.

EXECUTIVE SUMMARY

Our Business

We operate outpatient physical therapy clinics that provide pre- and
post-operative care and treatment for a variety of orthopedic-related disorders
and sports-related injuries, neurologically-related injuries and rehabilitation
of injured workers. We also operate an industrial injury prevention services
("IIPS") business which includes onsite injury prevention and rehabilitation,
performance optimization and ergonomic assessments services.

Selected Operating and Financial Data

Our reportable segments include the physical therapy operations segment and the
IIPS segment. Our physical operations consist of physical therapy and
occupational therapy clinics that provide pre-and post-operative care and
treatment for orthopedic-related disorders, sports-related injuries, preventive
care, rehabilitation of injured workers and neurological injuries. Services
provided by the IIPS segment include onsite injury prevention and
rehabilitation, performance optimization and ergonomic assessments.

On September 30, 2022, we operated 614 clinics in 40 states.  In addition to our
ownership and operation of outpatient physical therapy clinics, we also manage
physical therapy facilities for third parties, such as physicians and hospitals,
with 40 such third-party facilities under management as of September 30, 2022.

During the 2021 year and for the nine months ended September 30, 2022, we
completed the acquisitions of six multi-clinic practices and two IIPS businesses
as detailed below.

Acquisition                         Date          Acquired   Clinics

September 2022 Acquisition September 30, 2022 80% 2
August 2022 Acquisition August 31, 2022 70% 6
March 31, 2022

                 March 31, 2022       70%         6

December 2021 Acquisition December 31, 2021 75% 3
November 2021 Acquisition November 30, 2021 70% IIPS
September 2021 Acquisition September 30, 2021 100% IIPS
June 2021 Acquisition June 30, 2021 65% 8
March 2021 Acquisition March 31, 2021 70% 6

During the nine months ended September 30, 2022, we closed five clinics and sold
five clinics.

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Employees

Our strategy is to acquire physical therapy practices, develop outpatient
physical therapy clinics as satellites within existing partnerships, acquire
IIPS businesses, and support the growth of our existing businesses, which
requires a talented workforce. As of September 30, 2022, we employed
approximately 6,046 people nationwide, of which approximately 3,507 were
full-time employees.

It is crucial that we continue to attract and retain top talent. To attract and
retain talented employees, we strive to make our corporate office and all our
practices and businesses a diverse and healthy workplace, with opportunities for
our employees to receive continuing education, skill development, encouragement
to grow and develop their career, all supported by competitive compensation,
incentives, and benefits. Our clinical professionals are all licensed and a vast
majority have advanced degrees. Our operational leadership teams have
long-standing relationships with local and regional universities, professional
affiliations, and other applicable sources that provide our practices with a
talent pipeline.

We provide competitive compensation and benefits programs to help meet our
employees' needs in the practices and communities in which they serve. These
programs (which can vary by practice and employment classification) include
incentive compensation plans, a 401(k) plan, healthcare and insurance benefits,
health savings and flexible spending accounts, paid time off, family leave,
education assistance, mental health, and other employee assistance benefits.

We invest resources to develop the talent needed to support our business
strategy. Resources include a multitude of training and development programs
delivered internally and externally, online and instructor-led, and on-the-job
learning formats.

We expect to continue adding personnel in the future as we focus on potential
acquisition targets and organic growth opportunities.

RESULTS OF OPERATIONS

For the three months ended September 30, 2022 ("2022 Third Quarter"), our net
income attributable to our shareholders was $9.6 million as compared to $10.0
million for the three months ended September 30, 2021 ("2021 Third Quarter").
In accordance with Generally Accepted Accounting Principles ("GAAP"), the
revaluation of redeemable non-controlling interest, net of taxes, is not
included in net income but charged directly to retained earnings; however, the
charge for this change is included in the earnings per basic and diluted share
calculation. Inclusive of the charge for revaluation of non-controlling
interest, net of taxes, the amount is $9.4 million, or $0.72 per diluted share,
for the 2022 Third Quarter, and $8.5 million, or $0.66 per diluted share, for
the 2021 Third Quarter. The 2022 Third Quarter included a change in the fair
value of a contingent earn-out payment which had the effect of increasing net
income by $1.5 million and included a gain on revaluation of a put-right
liability which increased net income by $0.6 million, both net of tax.

For the 2022 Nine Months, our net income attributable to our shareholders was
$29.6 million for the 2022 Nine Months and $30.6 million for 2021 Nine Months.
Inclusive of the charge for revaluation of non-controlling interest, net of
taxes, the amount is $29.4 million, or $2.27 per diluted share, for the 2022
Nine Months, and $21.8 million, or $1.69 per diluted share, for the 2021 Nine
Months. The 2022 Nine Months included a change in the fair value of a contingent
earn-out payment which had the effect of increasing net income by $1.5 million,
net of tax.

For the 2022 Third Quarter, our Operating Results, a non-GAAP measure, was $7.5
million, or $0.58 per diluted share, as compared to $10.0 million, or $0.78 per
diluted share, for the 2021 Third Quarter.

For the 2022 Nine Months, our Operating Results, a non-GAAP measure, was $27.5
million, or $2.12 per diluted share, as compared to $30.6 million, or $2.37 per
diluted share, for the 2021 Nine Months.

Operating Results, equals net income attributable to USPH shareholders per the
consolidated statements of income less the change in the revaluation of the
put-right liability and the change in the fair value of a contingent earn-out
payment.  In accordance with GAAP, the revaluation of redeemable non-controlling
interest, net of tax, is included in the earnings per basic and diluted share
calculation, although it is not included in net income but charged directly to
retained earnings.

We believe providing Operating Results is useful to investors for comparing our
period-to-period results and for comparing with other similar businesses since
most do not have redeemable instruments and therefore have different equity
structures. We use Operating Results, which eliminates certain items described
above that can be subject to volatility and unusual costs, as one of the
principal measures to evaluate and monitor financial performance.

Operating Results is not a measure of financial performance under GAAP and
should not be considered in isolation or as an alternative to, or substitute
for, net income attributable to our shareholders presented in the consolidated
financial statements.

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The following tables provide detail of the diluted earnings per share
computation and reconcile net income attributable to our shareholders calculated
in accordance with GAAP to Operating Results (in thousands, except per share
data):

                                                                 Three Months Ended September 30,
                                                                    2022                  2021

Computation of earnings per share - USPH shareholders:
Net income attributable to USPH shareholders

                   $         9,557       $        10,009
Charges to retained earnings:
Revaluation of redeemable non-controlling interest                        (196 )              (2,070 )
Tax effect at statutory rate (federal and state) of 25.55%                  50                   529
                                                               $         

9,411 $ 8,468

Earnings per share (basic and diluted)                         $          

0.72 $ 0.66

Adjustments:

Change in revaluation of put-right liability                              (785 )                   -
Change in fair value of contingent earn-out consideration               (2,000 )                   -
Revaluation of redeemable non-controlling interest                         196                 2,070
Tax effect at statutory rate (federal and state)                           661                  (529 )
Operating Results (a non-GAAP measure)                         $         

7,483 $ 10,009

Basic and diluted Operating Results per share (a non-GAAP
measure)

                                                       $          

0.58 $ 0.78

Shares used in computation - basic and diluted                          13,001                12,909



                                                                  Nine Months Ended September 30,
                                                                    2022                  2021

Computation of earnings per share - USPH shareholders:
Net income attributable to USPH shareholders

                   $       29,551       $         30,618
Credit (charges) to retained earnings:
Revaluation of redeemable non-controlling interest                       (193 )              (11,889 )
Tax effect at statutory rate (federal and state) of 25.55%                 49                  3,038
                                                               $       

29,407 $ 21,767

Earnings per share (basic and diluted)                         $         2.27       $           1.69

Adjustments:

Change in revaluation of put-right liability                             (771 )                    -
Change in fair value of contingent earn-out consideration              (2,000 )                    -
Revaluation of redeemable non-controlling interest                        193                 11,889
Tax effect at statutory rate (federal and state)                          659                 (3,038 )
Operating Results (a non-GAAP measure)                         $       

27,488 $ 30,618

Basic and diluted Operating Results per share (a non-GAAP
measure)

                                                       $         2.12       $           2.37

Shares used in computation - basic and diluted                         12,979                 12,894



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Index

2022 Third Quarter Compared to the 2021 Third Quarter Results

The following table summarizes financial data by segment for the periods
indicated and reconciles the data to our consolidated financial statements (in
thousands):

                                           Three Months Ended September 30,
                                              2022                   2021

Net operating revenue:
Physical therapy operations             $        119,447       $        115,399
Industrial injury prevention services             20,155                 10,494
Total Company                           $        139,602       $        125,893

Gross profit:
Physical therapy operations             $         22,379       $         27,123
Industrial injury prevention services              4,405                  2,676
Gross profit                            $         26,784       $         29,799

Total Assets:
Physical therapy operations             $        432,683       $        583,785
Industrial injury prevention services            367,025                 46,313
Total Company                           $        799,708       $        630,098



Revenue

Reported total revenue for the 2022 Third Quarter was $139.6 million, an
increase of 10.9% as compared to $125.9 million for the 2021 Third Quarter.

See

table below for a detail of reported total revenue (in thousands):

Three Months Ended

                                                                September 30, 2022       September 30, 2021
Revenue related to Mature Clinics                              $            106,485     $            106,631
Revenue related to 2022 Clinic Additions                                      3,707                        -
Revenue related to 2021 Clinic Additions                                      6,481                    4,869
Revenue from clinics sold or closed in 2022                                      37                      762
Revenue from clinics sold or closed in 2021                                       -                       65
Net patient revenue from physical therapy operations                        116,710                  112,327
Other revenue                                                                   753                      759
Revenue from physical therapy operations                                    117,463                  113,086
Revenue - Management contracts                                                1,984                    2,313
Revenue - Industrial injury prevention services                              20,155                   10,494
Total revenue                                                  $            139,602     $            125,893



Revenue from physical therapy operations increased $4.4 million, or 3.9%, to
$117.5 million for the 2022 Third Quarter from $113.1 million for the 2021 Third
Quarter. Net patient revenue related to clinics opened or acquired prior to 2021
and still in operation on September 30, 2022 ("Mature Clinics") decreased
slightly. Visits for Mature Clinics (same store) for the 2022 Third Quarter
decreased by 1.5% as compared to the 2021 Third Quarter, while the net patient
revenue per visit increased by 1.4%.

The average net patient revenue per visit was $104.01 for the 2022 Third
Quarter, a $1.08 per visit increase from $102.93 for the 2021 Third Quarter.
Total patient visits increased 2.8% to 1,122,070 for the 2022 Third Quarter from
1,091,329 for the 2021 Third Quarter.  Net patient revenue is based on
established billing rates less allowances for patients covered by contractual
programs and workers' compensation. Net patient revenue is determined after
contractual and other adjustments relating to patient discounts from certain
payors. Payments received under contractual programs and workers' compensation
are based on predetermined rates and are generally less than the established
billing rates.

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IIPS revenue was an all-time high and increased 92.1% to $20.2 million for the
2022 Third Quarter as compared to $10.5 million for the 2021 Third Quarter.
Excluding $6.8 million of revenue related to the November 2021 IIPS Acquisition,
IIPS revenue increased 27.1% in the 2022 Third Quarter as compared to the 2021
Third Quarter.

Revenue from management contracts was $2.0 million for the 2022 Third Quarter as
compared to $2.3 million for the 2021 Third Quarter due to the termination of
five management contracts.

Operating Cost

Total operating cost was $112.8 million for the 2022 Third Quarter, or 80.8% of
total revenue, as compared to $96.1 million, or 76.3% of total revenue, for the
2021 Third Quarter. Operating cost related to Mature Clinics increased by $4.3
million, or 5.2%, for the 2022 Third Quarter compared to the 2021 Third
Quarter.  In addition, operating cost related to the IIPS business increased by
$7.9 million of which $5.8 million related to our November 2021 IIPS
Acquisition.  See table below for a detail of operating cost (in thousands):

                                                                                Three Months Ended
                                                                   September 30, 2022        September 30, 2021
Operating cost related to Mature Clinics                          $              86,177     $             81,911
Operating cost related to 2022 Clinic Additions                                   3,267                        -
Operating cost related to 2021 Clinic Additions                                   5,366                    3,748
Operating cost related to clinics sold or closed in 2022                            721                      504
Operating cost related to clinics sold or closed in 2021                              -                       69
Operating cost related to physical therapy operations                            95,531                   86,232
Operating cost related to management contracts                                    1,537                    2,044
Operating cost related to industrial injury prevention services                  15,750                    7,818
Total operating cost                                              $             112,818     $             96,094

Each component of operating cost is discussed below:

Operating Cost-Salaries and Related Costs

Salaries and related costs, including physical therapy operations and the IIPS
business, was 58.6% of net revenue for the 2022 Third Quarter versus 56.1% for
the 2021 Third Quarter. Salaries and related costs for the physical therapy
operations was $68.4 million in the 2022 Third Quarter, or 58.3% of physical
therapy operations revenue, as compared to $62.5 million in the 2021 Third
Quarter, or 55.3% of physical therapy operations revenue. Included in salaries
and related costs for the physical therapy operations for the 2022 Third Quarter
was $5.7 million related to 2022 and 2021 Clinic Additions.  Adjusted for the
salaries and related costs for clinics closed or sold in 2022 and 2021 of $0.1
million in the Third Quarter and $0.4 million in 2021 Third Quarter, salaries
and related costs related to Mature Clinics increased by $2.9 million in the
2022 Third Quarter compared to the 2021 Third Quarter.  Physical therapy total
operating costs were $85.14 per visit in the 2022 Third Quarter as compared to
$79.02 per visit in the 2021 Third Quarter, an increase of 7.7%.  Physical
therapy salaries and related costs were $60.99 per visit in the 2022 Third
Quarter as compared to $56.63 per visit in the Third Quarter 2021, an increase
of 7.7%, The cost increases are primarily due to continuing labor rate pressures
and the inflationary economic environment.

Salaries and related costs for the IIPS business was $12.1 million in the 2022
Third Quarter, or 59.9% of IIPS revenue, as compared to $6.3 million in the 2021
Third Quarter, or 60.8% of IIPS revenue.

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Operating Cost-Rent, Supplies, Contract Labor and Other

Rent, supplies, contract labor and other costs, including physical therapy
operations and the IIPS business, was 21.3% of net revenue in the 2022 Third
Quarter versus 19.3% in the 2021 Third Quarter. Rent, supplies, contract labor
and other costs for the physical therapy operations was $25.7 million in the
2022 Third Quarter, or 21.9% of physical therapy operations revenue, as compared
to $22.4 million in the 2021 Third Quarter, or 19.8% of physical therapy
operations revenue. Included in rent, supplies, contract labor and other costs
related to physical therapy operations for the 2022 Third Quarter was $2.8
million related to 2022 and 2021 Clinic Additions.  Adjusted for the rent,
supplies, contract labor and other costs for clinics related to the clinics
closed or sold in 2022 and 2021 of $0.7 million in the 2022 Third Quarter and
$0.2 million in the 2021 Third Quarter, rent, supplies, contract labor and other
costs for Mature Clinics increased by $1.3 million in the 2022 Third Quarter
compared to the 2021 Third Quarter.  Rent, supplies, contract labor and other
costs, related to management contracts decreased $0.1 million in the 2022 Third
Quarter.

Rent, supplies, contract labor and other costs for the IIPS business was $3.7
million in the 2022 Third Quarter, or 18.6% of IIPS revenue, as compared to $1.4
million in the 2021 Third Quarter, or 13.7% of net IIPS revenue.

Operating Cost-Provision for Credit Losses

The provision for credit losses as a percentage of net revenue was 1.0% in the
2022 Third Quarter and 1.1% for the comparable period in 2021.

Our provision for credit losses for patient accounts receivable as a percentage
of total patient accounts receivable was 5.62% on September 30, 2022, as
compared to 5.64% on December 31, 2021. Our days' sales outstanding were both 32
days on September 30, 2022, and December 31, 2021.

Gross Profit

Gross profit for the 2022 Third Quarter, was $26.8 million, as compared to $29.8
million for the 2021 Third Quarter. The gross profit percentage was 19.2% of
total revenue for the 2022 Third Quarter as compared to 23.7% for the 2021 Third
Quarter. The gross profit percentage for our physical therapy operations was
18.7% for the 2022 Third Quarter as compared to 23.7% for the 2021 Third
Quarter. The gross profit percentage on management contracts was 22.5% for the
2022 Third Quarter as compared to 11.6% for the 2021 Third Quarter.  The gross
profit percentage for IIPS was 21.9% for the 2022 Third Quarter as compared to
25.5% for the 2021 Third Quarter.  The IIPS margin in 2022 has been impacted by
the lower margin profile of our November 2021 IIPS Acquisition.  The table below
details the gross profit (in thousands):

                                                                            

Three Months Ended

                                                                September 

30, 2022 September 30, 2021

Physical therapy operations                                    $              21,932     $             26,854
Management contracts                                                             447                      269
Industrial injury prevention services                                          4,405                    2,676
Gross profit                                                   $              26,784     $             29,799



Corporate Office Cost

Corporate office costs were $11.9 million for the 2022 Third Quarter compared to
$12.9 million for the 2021 Third Quarter. Corporate office costs were 8.5% of
total revenue for the 2022 Third Quarter as compared to 10.2% for the 2021 Third
Quarter.  The decrease was primarily due to lower estimated bonus expense in the
2022 Third Quarter than the 2021 Third Quarter.

Operating Income

Operating income for the 2022 Third Quarter was $14.9 million and $16.9 million
for 2021 Third Quarter. Operating income as a percentage of total revenue was
10.7% for the 2022 Third Quarter as compared to 13.4% for the 2021 Third
Quarter.

Change in fair value of contingent earn-out consideration

During the 2022 Third Quarter, the Company revalued contingent earn-out
consideration related to an acquisition, resulting in the elimination of a
previously booked liability of $2.0 million.

Equity in earnings of unconsolidated affiliate

Through a subsidiary, we have a 49% joint venture interest in a company which
provides physical therapy services for patients at hospitals. Since we are
deemed to not have a controlling interest in the joint venture, our investment
is accounted for using the equity method of accounting. The investment balance
of this joint venture as of September 30, 2022, is $12.0 million. For the 2022
Third Quarter, we recognized income of $0.3 million on this 49% joint venture.

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Change in Revaluation of Put-Right Liability

The gain on revaluation of put-right liability was $0.8 million for the 2022
Third Quarter.  As part of the November 2021 IIPS Acquisition, we agreed to the
potential future purchase of a separate company under the same ownership that
provides physical therapy and rehabilitation services to hospitals and other
ancillary providers in a distinct market area. The owners have the right to put
this transaction to us in approximately five years from November 2021, with such
right having a $2.8 million value on September 30, 2022, as reflected on our
consolidated balance sheet in Other long-term liabilities. The value of this
right will continue to be adjusted in future periods, as appropriate.

Interest expense - debt and other, net

For the 2022 Third Quarter, the interest expense on debt and other, primarily
from our $150 million term loan entered into in June 2022, details of which are
disclosed within LIQUIDITY AND CAPITAL RESOURCES below, amounted to $2.0
million.  See discussion of Other Comprehensive Income below. Interest expense,
primarily from the Company's revolving line of credit, was $0.3 million for the
2021 Third Quarter.

Provision for Income Taxes

The provision for income tax was $3.2 million for the 2022 Third Quarter and
$3.8 million for the 2021 Third Quarter. The provision for income tax as a
percentage of income before taxes less net income attributable to
non-controlling interest (effective tax rate) was 25.2% for the 2022 Third
Quarter and 27.6% for the 2021 Third Quarter. The current quarter included an
adjustment to the tax provision based on revised estimates on certain
non-deductible items (see computation of 2022 Nine Month tax rate in next
section).  See table below detailing calculation of the provision for income
taxes as a percentage of income before taxes less net income attributable to
non-controlling interest ($ in thousands):

                                                                            

Three Months Ended

                                                                September 30, 2022        September 30, 2021
Income before taxes                                            $              16,036     $             17,938

Less: net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity

                        (2,037 )                 (2,605 )
Non-controlling interest - permanent equity                                   (1,227 )                 (1,509 )
                                                               $              (3,264 )   $             (4,114 )

Income before taxes less net income attributable to
non-controlling interest

                                       $              12,772     $             13,824

Provision for income taxes                                     $               3,215     $              3,815

Percentage                                                                      25.2 %                   27.6 %

Net Income Attributable to Non-controlling Interest

Net income attributable to redeemable non-controlling interest (temporary
equity) was $2.0 million for the 2022 Third Quarter and $2.6 million for the
2021 Third Quarter.  Net income attributable to non-controlling interest
(permanent equity) was $1.2 million for the 2022 Third Quarter and $1.5 million
for the 2021 Third Quarter.

Other Comprehensive Gain

We entered into an interest rate swap agreement in May 2022, which has a $150
million notional value, a maturity date of June 30, 2027 and was effective on
June 30, 2022. Beginning in July 2022, we pay a fixed rate of interest of 2.815%
on a quarterly basis. The total interest rate in any period will also include an
applicable margin based on our consolidated leverage ratio. Currently, our
interest rate including the applicable margin is 4.665%.  Unrealized gains and
losses related to the fair value of the interest rate swap are recorded to
accumulated other comprehensive income (loss), net of tax. The fair value of the
interest rate swap on September 30, 2022, was $5.9 million, of which $1.9
million has been included within Other current assets and $4.0 million has been
included in Other assets in the accompanying Consolidated Balance Sheet. The
impact of the interest rate swap on the accompanying Consolidated Statements of
Comprehensive Income was an unrealized gain of $4.8 million, net of tax, for the
2022 Third Quarter.

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2022 Nine Months Compared to 2021 Nine Months Results

The following table summarizes financial data by segment for the periods
indicated and reconciles the data to our consolidated financial statements (in
thousands):

                                            Nine Months Ended September 30,
                                              2022                   2021

Net operating revenue:
Physical therapy operations             $        353,302       $        334,652
Industrial injury prevention services             58,660                 30,537
Total Company                           $        411,962       $        365,189

Gross profit:
Physical therapy operations             $         71,513       $         82,058
Industrial injury prevention services             12,680                  7,941
Gross profit                            $         84,193       $         89,999

Total Assets:
Physical therapy operations             $        432,683       $        583,785
Industrial injury prevention services            367,025                 46,313
Total Company                           $        799,708       $        630,098



Revenue

Reported total revenue for the 2022 Nine Months was $412.0 million, an increase
of 12.8% as compared to $365.2 million for the 2021 Nine Months. See table
below for a detail of reported total revenue (in thousands):

For the Nine Months Ended

                                                                           September 30, 2022         September 30, 2021
Revenue related to Mature Clinics                                         $            317,514       $             314,969
Revenue related to 2022 Clinic Additions                                                 7,019                           -
Revenue related to 2021 Clinic Additions                                                18,827                       7,334
Revenue from clinics sold or closed in 2022                                              1,084                       2,058
Revenue from clinics sold or closed in 2021                                                  -                         458
Net patient revenue from physical therapy operations                                   344,444                     324,819
Other revenue                                                                            2,523                       2,222
Revenue from physical therapy operations                                               346,967                     327,041
Revenue - Management contracts                                                           6,335                       7,611
Revenue - Industrial injury prevention services                                         58,660                      30,537
Total revenue                                                             $            411,962       $             365,189



Revenue from physical therapy operations increased $19.9 million, or 6.1%, to
$347.0 million for the 2022 Nine Months from $327.0 million for the 2021 Nine
Months.

The average net patient revenue per visit was $103.40 for the 2022 Nine Months
as compared to $104.00 for the 2021 Nine Months. Total patient visits increased
6.7% to 3,331,143 for the 2022 Nine Months from 3,123,187 for the 2021 Nine
Months. Net patient revenue is based on established billing rates less
allowances for patients covered by contractual programs and workers'
compensation. Net patient revenue is determined after contractual and other
adjustments relating to patient discounts from certain payors. Payments received
under contractual programs and workers' compensation are based on predetermined
rates and are generally less than the established billing rates.

Net patient revenue related to Mature Clinics increased $2.5 million, or 0.8%,
to $317.5 million for the 2022 Nine Months compared to $315.0 million for the
2021 Nine Months. Visits for Mature Clinics (same store) for the 2022 Nine
Months increased 1.5% as compared to the 2021 Nine Months. The increase in
visits was partially offset by a 0.7% reduction in the net patient revenue per
visit.

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Index

IIPS services revenue increased 92.1% to $58.7 million for the 2022 Nine Months
as compared to $30.5 million for the 2021 Nine Months.  Excluding $20.5 million
of revenue related to the November 2021 IIPS Acquisition, IIPS revenue increased
25.0% in the 2022 Nine Months as compared to the 2021 Nine Months.

Revenue from management contract revenue decreased 16.8% to $6.3 million for the
2022 Nine Months as compared to $7.6 million for the 2021 Nine Months due to the
termination of certain management contracts.

Operating Cost

Total operating cost was $327.8 million for the 2022 Nine Months, or 79.6% of
total revenue, as compared to $275.2 million, or 75.4% of total revenue, for the
2021 Nine Months. Operating cost related to Mature Clinics increased by $15.9
million for the 2022 Nine Months compared to the 2021 Nine Months.  In addition,
operating cost related to the IIPS business increased by $23.4 million of which
$17.0 million related to the November 2021 IIPS Acquisition.  See table below
for a detail of operating cost (in thousands):

                                                                            

Nine Months Ended

                                                                   September 30, 2022       September 30, 2021
Operating cost related to Mature Clinics                          $            253,899     $            237,982
Operating cost related to 2022 Clinic Additions                                  6,271                        -
Operating cost related to 2021 Clinic Additions                                 15,393                    5,877
Operating cost related to clinics sold or closed in 2022                         1,233                    1,733
Operating cost related to clinics sold or closed in 2021                             2                      510
Operating cost related to physical therapy operations                          276,798                  246,102
Operating cost related to management contracts                                   4,991                    6,492
Operating cost related to industrial injury prevention services                 45,980                   22,596
Total operating cost                                              $            327,769     $            275,190

Each component of operating cost is discussed below:

Operating Cost-Salaries and Related Costs

Salaries and related costs, including physical therapy operations and the IIPS
business, was 57.5% of net revenue for the 2022 Nine Months versus 55.6% for the
2021 Nine Months. Salaries and related costs for the physical therapy operations
was $197.7 million in the 2022 Nine Months, or 57.0% of physical therapy
operations revenue, as compared to $178.6 million in the 2021 Nine Months, or
54.6% of physical therapy operations revenue. Included in salaries and related
costs for the physical therapy operations for the 2022 Nine Months was $13.8
million related to 2022 and 2021 Clinic Additions.  Adjusted for the salaries
and related costs for clinics closed or sold in 2022 and 2021 of $0.8 million in
the 2022 Nine Months and $1.4 million in 2021 Nine Months, salaries and related
costs related to Mature Clinics increased by $9.7 million in the 2022 Nine
Months compared to the 2021 Nine Months.  Salaries and related costs related to
management contracts decreased by $1.3 million for the 2022 Nine Months. As
previously mentioned, the Company is experiencing pressure on labor rates and
other costs due to the inflationary economic environment.

Salaries and related costs for the IIPS business was $34.8 million in the 2022
Nine Months, or 59.3% of IIPS revenue, as compared to $18.8 million in the 2021
Nine Months, or 61.8% of IIPS revenue.

Operating Cost-Rent, Supplies, Contract Labor and Other

Rent, supplies, contract labor and other costs, including physical therapy
operations and the IIPS business, was 21.0% of net revenue in the 2022 Nine
Months versus 18.6% in the 2021 Nine Months. Rent, supplies, contract labor and
other costs for the physical therapy operations was $75.0 million in the 2022
Nine Months, or 21.6% of physical therapy operations revenue, as compared to
$63.5 million in the 2021 Nine Months, or 19.4% of physical therapy operations
revenue. Included in rent, supplies, contract labor and other costs related to
physical therapy operations for the 2022 Nine Months was $7.5 million related to
2022 and 2021 Clinic Additions.  Adjusted for the rent, supplies, contract labor
and other costs for clinics related to the clinics closed or sold in 2022 and
2021 of $0.4 million in the 2022 Nine Months and $0.8 million in the 2021 Nine
Months, rent, supplies, contract labor and other costs for Mature Clinics
increased by $6.4 million in the 2022 Nine Months compared to the 2021 Nine
Months.  Rent, supplies, contract labor and other costs, related to management
contracts decreased $0.2 million in the 2022 Nine Months.

Rent, supplies, contract labor and other costs for the IIPS business was $11.1
million in the 2022 Nine Months, or 18.9% of IIPS revenue, as compared to $3.7
million in the 2021 Nine Months, or 12.2% of net IIPS revenue.

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Operating Cost-Provision for Credit Losses

The provision for credit losses as a percentage of net revenue was 1.0% in the
2022 Nine Months and 1.1% for the comparable period in 2021.

Our provision for credit losses for patient accounts receivable as a percentage
of total patient accounts receivable was 5.62% on September 30, 2022, as
compared to 5.64% at December 31, 2021. Our days' sales outstanding were 32 days
at September 30, 2022 and December 31, 2021.

Gross Profit

Gross profit for the 2022 Nine Months was $84.2 million, a decrease of $5.8
million, or 6.5%, as compared to $90.0 million for the 2021 Nine Months. The
gross profit percentage was 20.4% of total revenue for the 2022 Nine Months as
compared to 24.6% for the 2021 Nine Months. The gross profit percentage for our
physical therapy operations was 20.2% for the 2022 Nine Months as compared to
24.7% for the 2021 Nine Months. The gross profit percentage on management
contracts was 21.2% for the 2022 Nine Months as compared to 14.7% for the 2021
Nine Months.  The gross profit percentage for the IIPS business was 21.6% for
the 2022 Nine Months as compared to 26.0% for the 2021 Nine Months. The IIPS
margin in 2022 has been impacted by the lower margin profile of our November
IIPS Acquisition. The table below details the gross profit (in thousands):

                                                                            

Nine Months Ended

                                                                 September 

30, 2022 September 30, 2021

Physical therapy operations                                    $               70,169     $             80,939
Management contracts                                                            1,344                    1,119
Industrial injury prevention services                                          12,680                    7,941
Gross profit                                                   $               84,193     $             89,999



Corporate Office Cost

Corporate office costs were $34.2 million for the 2022 Nine Months compared to
$35.8 million for the 2021 Nine Months. Corporate office costs were 8.3% of
total revenue for the 2022 Nine Months as compared to 9.8% for the 2021 Nine
Months. The decrease was primarily due to lower estimated bonus expense in the
2022 Nine Months than the 2021 Nine Months.

Operating Income

Operating income for the 2022 Nine Months was $50.0 million and $54.2 million
for 2021 Nine Months. Operating income as a percentage of total revenue was
12.1% for the 2022 Nine Months as compared to 14.8% for the 2021 Nine Months.

Equity in earnings of unconsolidated affiliate

Through a subsidiary, we have a 49% joint venture interest in a company which
provides physical therapy services for patients at hospitals. Since we are
deemed to not have a controlling interest in the joint venture, our investment
is accounted for using the equity method of accounting. The investment balance
of this joint venture as of September 30, 2022, is $12.0 million. For the 2022
Nine Months, we recognized income of $1.0 million on this 49% joint venture.

Change in fair value of contingent earn-out consideration

During the 2022 Nine Months, the Company revalued contingent earn-out
consideration related to an acquisition, resulting in the elimination of a
previously booked liability of $2.0 million.

Change in Revaluation of Put-Right Liability

For the 2022 Nine Months, we recorded a gain on the revaluation of the put-right
liability of $0.8 million.  As part of the November 2021 IIPS Acquisition, we
agreed to the potential future purchase of a separate company under the same
ownership that provides physical therapy and rehabilitation services to
hospitals and other ancillary providers in a distinct market area. The owners
have the right to put this transaction to us in approximately five years, with
such right having a $2.8 million value on September 30, 2022, as reflected on
our consolidated balance sheet in Other long-term liabilities. The value of this
right will continue to be adjusted in future periods, as appropriate.

Interest expense - debt and other, net

For the 2022 Nine Months, the interest expense on debt and other, primarily from
our $150 million term loan entered into in June 2022, details of which are
disclosed withing LIQUIDITY AND CAPITAL RESOURCES, amounted to $3.5 million.
See discussion of Other Comprehensive Income below. Interest expense, primarily
from the Company's revolving line of credit was $0.8 million for the 2021 Nine
Months.

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Provision for Income Taxes

The provision for income tax was $11.0 million for the 2022 Nine Months and
$11.3 million for the 2021 Nine Months. The provision for income tax as a
percentage of income before taxes less net income attributable to
non-controlling interest (effective tax rate) was 27.0% for both the 2022 Nine
Months and the 2021 Nine Months. See table below ($ in thousands):

For the Nine Months Ended

                                                                September 30, 2022         September 30, 2021
Income before taxes                                            $             51,011       $              54,807

Less: net income attributable to non-controlling interest:
Redeemable non-controlling interest - temporary equity

                       (7,220 )                    (8,669 )
Non-controlling interest - permanent equity                                  (3,288 )                    (4,194 )
                                                               $            (10,508 )     $             (12,863 )

Income before taxes less net income attributable to non
controlling interest

                                           $             40,503       $              41,944

Provision for income taxes                                     $             10,952       $              11,326

Percentage                                                                     27.0 %                      27.0 %

Net Income Attributable to Non-controlling Interest

Net income attributable to redeemable non-controlling interest (temporary
equity) was $7.2 million for the 2022 Nine Months and $8.7 million for the 2021
Nine Months.  Net income attributable to non-controlling interest (permanent
equity) was $3.3 million for the 2022 Nine Months and $4.2 million for the 2021
Nine Months.

Other Comprehensive Income

The impact of the interest rate swap (described within LIQUIDITY AND CAPITAL
RESOURCES below) on the accompanying Consolidated Statements of Comprehensive
Income was an unrealized gain of $4.4 million, net of tax, for the 2022 Nine
Months.

LIQUIDITY AND CAPITAL RESOURCES

We believe that our business has sufficient cash to allow us to meet our
short-term cash requirements. On September 30, 2022 and December 31, 2021, we
had $37.9 million and $28.6 million, respectively, in cash.  We believe that our
cash and cash equivalents and availability under our Credit Facilities are
sufficient to fund the working capital needs of our operating subsidiaries
through at least September 30, 2023.

Cash and cash equivalents increased by $9.4 million from December 31, 2021 to
September 30, 2022.  During the 2022 Nine Months, $41.2 million was provided by
operations and $36.0 million, net of payments, from proceeds on our Credit
Agreement (described below). The major uses of cash for investing and financing
activities included: distributions to non-controlling interests inclusive of
those classified as redeemable non-controlling interest ($11.8 million),
dividends paid to our shareholders ($16.0 million), purchase of business and
non-controlling interest ($32.9 million), and purchase of fixed assets ($7.3
million).

On June 17, 2022, we entered into the Third Amended and Restated Credit
Agreement (the "Credit Agreement") among Bank of America, N.A., as
administrative agent ("Administrative Agent") and others.

The Credit Agreement, which matures on June 17, 2027, provides for loans in an
aggregate principal amount of $325 million. Such loans will be available through
the following facilities (collectively, the "Senior Credit Facilities"):

1) Revolving Facility: $175 million, five-year, revolving credit facility

("Revolving Facility"), which includes a $12 million sublimit for the issuance

of standby letters of credit and a $15 million sublimit for swingline loans

    (each, a "Swingline Loan").



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2) Term Facility: $150 million term loan facility (the "Term Facility"). The Term

Facility amortizes in quarterly installments of: (a) 0.625% in each of the

first two years, (b) 1.250% in the third and fourth year, and (c) 1.875% in

the fifth year of the Credit Agreement. The remaining outstanding principal

balance of all term loans is due on the maturity date.

The proceeds of the Revolving Facility shall be used by us for working capital
and other general corporate purposes of the Company and its subsidiaries,
including to fund future acquisitions and invest in growth opportunities. The
proceeds of the Term Facility were used by us to refinance the indebtedness
outstanding under the Second Amended and Restated Credit Agreement, to pay fees
and expenses incurred in connection with the loan facilities transactions, for
working capital and other general corporate purposes of our Company and its
subsidiaries.

We will be permitted to increase the Revolving Facility and/or add one or more
tranches of term loans in an aggregate amount not to exceed the sum of (i) $100
million plus (ii) an unlimited additional amount, provided that (in the case of
clause (ii)), after giving effect to such increases, the pro forma Consolidated
Leverage Ratio (as defined in the Credit Agreement) would not exceed 2.0:1.0,
and the aggregate amount of all incremental increases under the Revolving
Facility does not exceed $50,000,000.

The interest rates per annum applicable to the Senior Credit Facilities (other
than in respect of Swingline Loans) will be Term SOFR as defined in the
agreement plus an applicable margin or, at our option, an alternate base rate
plus an applicable margin. Currently, our interest rate including the applicable
margin is 4.665%. Interest is payable at the end of the selected interest period
but no less frequently than quarterly and on the date of maturity.

We will also pay to the Administrative Agent, for the account of each lender
under the Revolving Facility, a commitment fee equal to the actual daily excess
of each lender's commitment over its outstanding credit exposure under the
Revolving Facility ("unused fee"). We may prepay and/or repay the revolving
loans and the term loans, and/or terminate the revolving loan commitments, in
whole or in part, at any time without premium or penalty, subject to certain
conditions.

The Credit Agreement contains customary covenants limiting, among other things,
the incurrence of additional indebtedness, the creation of liens, mergers,
consolidations, liquidations and dissolutions, sales of assets, dividends and
other payments in respect of equity interests, acquisitions, investments, loans
and guarantees, subject, in each case, to customary exceptions, thresholds and
baskets. The Credit Agreement includes certain financial covenants which include
the Consolidated Fixed Charge Coverage Ratio and the Consolidated Leverage
Ratio, as defined in the Credit Agreement. The Credit Agreement also contains
customary events of default.

Our obligations under the Credit Agreement are guaranteed by its wholly owned
material domestic subsidiaries (each, a "Guarantor"), and our obligations and
any Guarantors are secured by a perfected first priority security interest in
substantially all of the existing and future personal property of our Company
and each Guarantor, subject to certain exceptions.

In May 2022, we entered into an interest rate swap agreement, effective on June
30, 2022, with Bank of America, N.A, which has a $150 million notional value,
and a maturity date of June 30, 2027. Beginning in July 2022, we make interest
payments based on the 1-month SOFR rate ("variable rate payment") and receive or
pay the  differential between the variable rate payment and the fixed 2.815%
SOFR rate on a monthly basis. Also included in the total interest payment in any
period is an applicable margin based on our consolidated leverage ratio.

We designated the interest rate swap as a cash flow hedge and structured it to
be highly effective. Consequently, unrealized gains and losses related to the
fair value of the interest rate swap are recorded to accumulated other
comprehensive income (loss), net of tax.

On September 30, 2022, $150.0 million was outstanding on the Term Loan and the
Revolving Facility remains available resulting in $175.0 million of
availability. As of September 30, 2022, we were in compliance with all of the
covenants thereunder. Through the date of this report, we have drawn $5.0
million on the Revolving Facility.

On March 31, 2022, we acquired a 70% interest in a six-clinic physical therapy
practice. The practice's owners retained 30% of the equity interests. The
purchase price for the 70% equity interest was approximately $11.5 million, of
which $11.2 million was paid in cash and $0.3 million is in the form of a note
payable.  The note accrues interest at 3.5% per annum and the principal and
interest are payable on March 31, 2024.

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On August 31, 2022, we acquired a 70% interest in a six-clinic physical therapy
practice. The practice's owners retained 30% of the equity interests. The
purchase price for the 70% equity interest was approximately $3.5 million, of
which $3.3 million was paid in cash and $0.2 million in the form of a note
payable.  The note accrues interest at 5.5% per annum and the principal and
interest are payable on August 31, 2024.

On September 30, 2022, we acquired an 80% interest in a two-clinic physical
therapy practice. The practice's owners retained 20% of the equity interests.
The purchase price for the 80% equity interest was approximately $4.2 million,
of which $3.9 million was paid in cash and $0.3 million in the form of a note
payable.  The note accrues interest at 5.5% per annum and the principal and
interest are payable on September 30, 2024.

On December 31, 2021, we acquired a 75% interest in a three-clinic physical
therapy practice with the practice founder retaining 25%. The purchase price for
the 75% interest was approximately $3.7 million, of which $3.5 million was paid
in cash and $0.2 million in the form of a note payable.  The note accrues
interest at 3.25% per annum and the principal and interest are payable on
December 31, 2023.

On November 30, 2021, we acquired an approximate 70% interest in a leading
provider of industrial injury prevention services. The previous owners retained
the remaining interest. The initial purchase price for the 70% equity interest,
not inclusive of the $2.0 million contingent payment in conjunction with the
acquisition if specified future operational objectives are met, was
approximately $63.2 million, of which $62.2 million was paid in cash, and $1.0
million is in the form of a note payable. The note accrues interest at 3.25% and
the principal and interest is payable on November 30, 2023. The business
generates approximately $27.0 million in annual revenue at a margin of
approximately 20%. As part of the transaction, we also agreed to the future
purchase of a separate company under the same ownership that provides physical
therapy and rehabilitation services to hospitals and other ancillary providers
in a distinct market area.  The current owners have the right to put this
transaction to us in approximately five years, with such put right having an
initial $3.5 million fair value on June 30, 2022, as reflected on our
consolidated balance sheet in Other long-term liabilities.  The value of this
right will be adjusted in future periods, as appropriate, with any change in
fair value reflected in our consolidated statement of income.

On September 30, 2021, we acquired a company that specializes in return-to-work
and ergonomic services, among other offerings. The business generates more than
$2.0 million in annual revenue. We acquired the company's assets at a purchase
price of approximately $3.3 million (which includes the obligation to pay an
amount up to $0.6 million in contingent payment consideration in conjunction
with the acquisition if specified future operational objectives are met) and
contributed those assets to our IIPS subsidiary. The initial purchase price, not
inclusive of the $0.6 million contingent payment, was approximately $2.7
million, of which $2.4 million was paid in cash, and $0.3 million is in the form
of a note payable. The note accrues interest at 3.25% per annum and the
principal and interest are payable on September 30, 2023.

On June 30, 2021, we acquired a 65% interest in an eight-clinic physical therapy
practice with the practice founders retaining 35%. The purchase price was
approximately $10.3 million, of which $9.0 million was paid in cash, $1.0
million was payable based on the achievement of certain business criteria and
$0.3 million is in the form of a note payable. The business criteria were met
and accordingly $1.0 million was paid in July 2022. The note accrues interest at
3.25% per annum and the principal and interest are payable on June 30, 2023.
Additionally, we have an obligation to pay an additional amount up to $0.8
million in contingent payment consideration in conjunction with the acquisition
if specified future operational objectives are met. We recorded acquisition-date
fair value of this contingent liability based on the likelihood of the
contingent earn-out payment. The earn-out payment will subsequently be
remeasured to fair value each reporting date.

On March 31, 2021, the Company acquired a 70% interest in a five-clinic physical
therapy practice with the practice founders retaining 30%.  When acquired, the
practice was developing a sixth clinic which has been completed. The purchase
price for the 70% interest was approximately $12.0 million, of which $11.7
million was paid in cash and $0.3 million is in the form of a note payable. 

The

note accrues interest at 3.25% per annum and the principal and interest are
payable on March 31, 2023.

On March 27, 2020, in response to the COVID-19 pandemic, the federal government
approved the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").
The CARES Act provided waivers, reimbursement, grants and other funds to assist
health care providers during the COVID-19 pandemic, including $100.0 billion in
appropriations for the Public Health and Social Services Emergency Fund, also
referred to as the Provider Relief Fund, to be used for preventing, preparing,
and responding to the coronavirus, and for reimbursing eligible health care
providers for lost revenues and health care related expenses that are
attributable to COVID-19.

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The CARES Act allowed for qualified healthcare providers to receive advanced
payments under the Medicare Accelerated and Advance Payment Program ("MAAPP
Funds") during the COVID-19 pandemic. Under this program, healthcare providers
could choose to receive advanced payments for future Medicare services provided.
We applied for and received approval from Centers for Medicare & Medicaid
Services ("CMS") in April 2020. We recorded the $14.1 million in advance
payments received as a liability. During the 2021 First Quarter, we repaid the
MAAPP Funds of $14.1 million rather than applying them to future services
performed.

Historically, we have generated sufficient cash from operations to fund our
development activities and to cover operational needs. We plan to continue
developing new clinics and making additional acquisitions. We have from time to
time purchased the non-controlling interests of limited partners in our Clinic
Partnerships. We may purchase additional non-controlling interests in the
future. Generally, any acquisition or purchase of non-controlling interests is
expected to be accomplished using a combination of cash and financing. Any large
acquisition would likely require financing.

We make reasonable and appropriate efforts to collect accounts receivable,
including applicable deductible and co-payment amounts, in a consistent manner
for all payor types. Claims are submitted to payors daily, weekly or monthly in
accordance with our policy or payor's requirements. When possible, we submit our
claims electronically. The collection process is time consuming and typically
involves the submission of claims to multiple payors whose payment of claims may
be dependent upon the payment of another payor. Claims under litigation and
vehicular incidents can take a year or longer to collect. Medicare and other
payor claims relating to new clinics awaiting payor credentialing approval
initially may be delayed for a relatively short transition period. When all
reasonable internal collection efforts have been exhausted, accounts are written
off prior to sending them to outside collection firms. With managed care,
commercial health plans and self-pay payor type receivables, the write-off
generally occurs after the accounts receivable has been outstanding for at least
120 days.

We generally enter into various notes payable as a means of financing our
acquisitions. Our outstanding notes payable as of September 30, 2022 relate to
certain of the acquisitions of businesses and purchases of redeemable
non-controlling interest that occurred in 2018 through September 2022.
Typically, the notes are payable over two years plus any accrued and unpaid
interest. Interest accrues at various interest rates ranging from 3.25% to 5.5%
per annum, subject to adjustment. At September 30, 2022, the balance on these
notes payable was $5.5 million.  In addition, we assumed leases with remaining
terms of 1 month to 6 years for the operating facilities.

In conjunction with the above-mentioned acquisitions, in the event that a
limited minority partner's employment ceases at any time after a specified date
that is typically between three and five years from the acquisition date, we
have agreed to certain contractual provisions which enable such minority
partners to exercise their right to trigger our repurchase of that partner's
non-controlling interest at a predetermined multiple of earnings before interest
and taxes.

As of September 30, 2022, we have accrued $7.9 million related to credit
balances due to patients and payors. This amount is expected to be paid in the
next twelve months.

From September 2001 through December 31, 2008, our Board of Directors ("Board")
authorized us to purchase, in the open market or in privately negotiated
transactions, up to 2,250,000 shares of our common stock. In March 2009, the
Board authorized the repurchase of up to 10% or approximately 1,200,000 shares
of our common stock ("March 2009 Authorization"). Our Amended Credit Agreement
permits share repurchases of up to $15,000,000, subject to compliance with
covenants. We are required to retire shares purchased under the March 2009
Authorization.

There is no expiration date for the share repurchase program. As of September
30, 2022, there are currently an additional estimated 197,316 (based on the
closing price of $76.02 on September 30, 2022) that may be purchased from time
to time in the open market or private transactions depending on price,
availability and our cash position. We did not purchase any shares of our common
stock during the nine months ended September 30, 2022.

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FACTORS AFFECTING FUTURE RESULTS

The risks related to our business and operations include:

• the multiple effects of the impact of public health crises and

epidemics/pandemics, such as the novel strain of COVID-19 and its variants, for

which the total financial magnitude cannot be currently estimated;

• changes in Medicare rules and guidelines and reimbursement or failure of our

clinics to maintain their Medicare certification and/or enrollment status;

• revenue we receive from Medicare and Medicaid being subject to potential

retroactive reduction;

• changes in reimbursement rates or payment methods from third party payors

including government agencies, and changes in the deductibles and co-pays owed

by patients;

• compliance with federal and state laws and regulations relating to the privacy

of individually identifiable patient information, and associated fines and

penalties for failure to comply;

• competitive, economic or reimbursement conditions in our markets which may

require us to reorganize or close certain clinics and thereby incur losses

and/or closure costs including the possible write-down or write-off of goodwill

and other intangible assets;

• the impact of COVID-19 related vaccination and/or testing mandates at the

federal, state and/or local level, which could have an adverse impact on

staffing, revenue, costs and the results of operations;

• changes as the result of government enacted national healthcare reform;

• business and regulatory conditions including federal and state regulations;

• governmental and other third party payor inspections, reviews, investigations

and audits, which may result in sanctions or reputational harm and increased

costs;

• revenue and earnings expectations;

• some of our acquisition agreements contain contingent consideration, the value

of which may impact future financial results;

• one of our acquisition agreements includes a Put Right for a potential purchase

of a company and we may or may not have the capital necessary to satisfy this

obligation;

• legal actions, which could subject us to increased operating costs and

uninsured liabilities;

• general economic conditions, including but not limited to inflationary and

recessionary periods;

• availability and cost of qualified physical therapists;

• personnel productivity and hiring, training and retaining key personnel;

• competitive environment in the IIPS business, which could result in the

termination or nonrenewal of contractual service arrangements and other adverse

financial consequences for that service line;

• acquisitions, and the successful integration of the operations of the acquired

businesses;

• impact on the business and cash reserves resulting from retirement or

resignation of key partners and resulting purchase of their non-controlling

interest (minority interests);

• maintaining our information technology systems with adequate safeguards to

protect against cyber-attacks;

• a security breach of our or our third party vendors' information technology

systems may subject us to potential legal action and reputational harm and may

result in a violation of the Health Insurance Portability and Accountability

Act of 1996 of the Health Information Technology for Economic and Clinical

Health Act;

• maintaining clients for which we perform management and other services, as a

breach or termination of those contractual arrangements by such clients could

cause operating results to be less than expected;

• maintaining adequate internal controls;

• our business depends upon hiring, training and retaining qualified personnel;

• maintaining necessary insurance coverage;

• availability, terms, and use of capital; and

• weather and other seasonal factors.

In addition to the above, see Risk Factors in Part I - Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2021 and in Part II - Item
1A of this report.

Forward-Looking Statements

We make statements in this report that are considered to be forward-looking
statements within the meaning given such term under Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
statements contain forward-looking information relating to the financial
condition, results of operations, plans, objectives, future performance and
business of our Company. These statements (often using words such as "believes",
"expects", "intends", "plans", "appear", "should" and similar words) involve
risks and uncertainties that could cause actual results to differ materially
from those we project. Included among such statements are those relating to
opening new clinics, availability of personnel and the reimbursement
environment.  The forward-looking statements are based on our current views and
assumptions and actual results could differ materially from those anticipated in
such forward-looking statements as a result of certain risks, uncertainties, and
factors, which include, but are not limited to the risks listed above.

Many factors are beyond our control. Given these uncertainties, you should not
place undue reliance on our forward-looking statements. Please see the other
sections of this report and our other periodic reports filed with the Securities
and Exchange Commission (the "SEC") for more information on these factors. Our
forward-looking statements represent our estimates and assumptions only as of
the date of this report. Except as required by law, we are under no obligation
to update any forward-looking statement, regardless of the reason the statement
may no longer be accurate.

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