Christopher Reading – Chief Executive Officer Lawrance McAfee – Chief Financial Officer Glenn McDowell – Chief Operating Officer Jonathan Bates – Vice President and Controller Richard Binstein – Vice President and General Counsel

Larry Solow – CJS Securities Brooks O'Neil – Dougherty & Company Brian Tanquilut – Jefferies Mitra Ramgopal - Sidoti Peter Van Roden – Spitfire Capital Mike Petusky – Noble Financial Dana Hambly – Stephens Inc.

Thank you. Good morning, everyone.

Welcome to U.S. Physical Therapy's second quarter 2014 earnings call where we will provide current details regarding our Q2 and year-to-date performances as well to discuss a guidance increased for the year.

I am out of the office currently but we have our normal cast in Houston, on the line including Larry McAfee, Executive Vice President and CFO, Glenn McDowell; COO, Jon Bates; Vice President and Controller and Rich Binstein; our Vice President and General Counsel. Before we begin our discussion on results, I will ask Jon to cover a brief disclosure.

Jon?

Thanks, Chris. This presentation contains forward-looking statements which involve certain risks and uncertainties.

And these forward-looking statements are based on the company's current views and assumptions and the company's actual results can vary materially from those anticipated. Please see the Company's filings with the Securities and Exchange Commission for more information.

Thanks Jon. So those who have been on our calls before, you heard me saying number of times, how important of people are to success, our performance thus far this year underscores that theme, our partners are in the clinics every day, day-and-day after taking great care of patient, taking great care of our physicians referral sources, taking great care to be great citizen in the community as where they work, live and raise family, that meant to young therapist, the call-on physicians they work very hard to make the difference.

In fact, we have partners who made a huge difference and we are how are able to get things done. We not only believe in the partner-centric model but we are building it for the past 25 years at USPH.

This year, we after partners to do something difficult to really dig-in and manage part-time staff during the ups and down to the seasonal patterns and the ups and down to their weekly patient volume. This year, with the help of our talented IT group and driven ops team, give the much better tools to use to get the job done and they in conjunction with the ops team have worked together to keep staffing down and at the right level.

On top of that and the most importantly we have grown volume, part of that talent from we hope this ops has and what they have referred to has their five-point sales plan which is working to drive additional referrals resulting in the past quarter we have ever delivered that is measured in visit per clinic per day among other measure. Adding to this in a significant way, have been the contributions made by our prior partnership who come into this family over the past few years.

We are seeing some really nice results from these very capable and talented groups who are adding tuck-in as organic facilities on top of very solid same-store volume numbers. All of which has further helped us thus far this year.

People, outstanding people, I just want to thank everyone across what we assume the 500 facilities in 43 states who are starting to make a different every day to a newest partners who are demonstrated faith in us, to help them further their growth or working hard to maintain a unique market position. And to our team in Houston, who we ask so much from our daily basis, I am hopeful that every one of them understand how appreciative we are for their efforts producing record results for our company in this quarter.

Some highlights include net income increased by 26.6% in Q2, EBITDA increased by more than 30%, revenues and business increased approximately 17% this quarter, fueled in part by very strong same store growth from approximately 4.6% per visit and savings in part by our strong prior partnerships brought in throughout last year and April this year. Across each of those partnerships we have added a variety of organic expansion as well as several tuck-ins one of which we have recently completed and announced earlier this week.

As earlier discussed, the combination of brining some incremental volume and combination with cost control, not STE reductions just good old fashioned weekly cost management primarily with our part-time employee group as a result of the very nice margin expansion for the quarter. Gross margins improved approximately 160 basis points to 27.9% for the second quarter or corporate office cost as a percentage of revenue decline slightly to 9.7% for the current period.

All in all, we had strong execution in our plan this quarter and continued optimism for strong 2014 reflected in our updated guidance numbers. Now I will ask Larry to cover the year and the financial results in more details before we open the call for questions, Larry?

Thanks, Chris. First of I will go with the second quarter results and then talk about the first half.

Revenue increased 16.9 % to $78.2 million, due to an increase in patient’s visits of 17%, and a slight increase in our average net rate for visit. Clinic operating costs were 72.1% of revenue in the second quarter of 2014, as compared to 73.7% in the 2013 period.

Clinic salaries and related costs were 51.3% versus 53.1%. Gross margin for the second quarter of 2014 increased by 24.2% to 21.8 million, as Chris mentioned the gross margin percentage was 27.9 as compared to 26.3 a year earlier.

Corporate office cost were 9.7% of revenue in the quarter as compared to 9.8% a year earlier. Operating income increased by 18.2% to 14.2 million, adjusted EBITDA from continuing operations in the second quarter was $13,526,000, a 28% increase from a year earlier.

Net income for the three month ended June was 6.4 million, earnings per share from continued operations was $0.53 compared to $0.42 a year earlier. The analyst consensus estimate for the quarter was $0.43 so beat the estimate by dime.

Same-store business increased 4.6% and same store revenue increased 4.1 as the average net rate per visit decreased by $0.58. For all clinics, new and old, the average business per day in clinic increased by 7.9% of 21.6 visits per day to 23.3 visits per day.

Now I will go over the first six month’s result. Our net revenues decreased by 14.2% to 148 million due to an increased in patient’s visit at 14.4%, the average net revenue per visit remain relatively the same year-over-year.

Clinic operating cost were 74% of revenue for the six months as compared to 75% a year earlier, clinic and salary related costs were down 100 basis points of 52.7% versus 53.7, the gross margin increased by 18.6% to 38.5 million, the gross margin percentage was 26% again a 100 basis improvement from 25% a year earlier. Corporate office cost for 10% of revenue on both periods operating income is increased by 21.8% to 23.7 million, our net income for the six month in the June was 10.7 million, earnings per share were $0.87 as compared to $0.74 a year earlier, thanks to our business increased 2.7 cent percent revenue increase 1.9 as the average net rate per visit decreased by $0.83.

As noted in the press release, our cash flow remain strong during the second quarter, total debt was reduced despite a 13 clinic acquisition for 11.2 million in April. As Chris mentioned we have raised earnings guidance to a $1.64 to $1.70 for 2014 earlier guidance was $1.53 to $1.60 analyst consensus estimate has been a $1.61.

Also, we declared a quarterly dividend of $0.12 per share which will be paid on September 5 to shareholders of record as of August 18.

Thanks, Larry. Operator, we are set, we would like to go ahead and open it up for question.

Hi, good morning. Pretty phenomenal growth there at the 7.9% visits per day and great sense for sales growth.

Can you may be, Chris, help parcel out what do you think, I realize that there is combination of the factors that you mentioned but sort of and ranking order you have this five-point sales plan, fit-to-work, maybe again it’s still per patient, as rising and may be the environment is getting a little better too I mean you do a sort of parcel out, the bunch of variables that are driving pretty damn good growth I must say.

Thank you. The environment I think is, I mean there hadn’t been a large job growth but the environment has been steady and so the environment will no longer look at certainly as a negative factor.

And I think it really comes down to strong, very focused team with our partners in this five-point sales plan, not just the partners but the partners that are sales group which includes directors that are running this partner-based facilities, our sales team, they are doing a great job, the ops team has stayed very focused on that. Fit-to-work I can’t say enough about that group, they are just hitting it at really hard.

And they are landing new talents each and every week to drive additional volume to our partner, partner-based facilities and they have not held that up and that has been strong. I think those are the two big catalysts, and I think they removed if they have negative win from a macro basis and it has been good.

And does your guidance for the back-half of the year incorporate this similar type of patient growth or do you assume it reverts a little bit back to what it’s mean and hope for the best.

Our business is seasonal. So looking into consideration of seasonal factors, that may second quarters give the strongest quarter of year.

The summer is soft, July and August are going to be lower volumes. We assume some improvement from what we had in our budget but I am not saying that every quarter you are going to see the same kind of, thanks to volume growth, we had in the second quarter.

Got it. Okay, great thank you guys.

Good morning, guys. Terrific quarter, obviously.

Chris, you commented I think on the first quarter call that you saw pick up take and volume mix into March and just curious if you can give us sort of fact that Larry mentioned seasonality which we understand but has volume continue to be strong month to month as you look at it?

We are kind of on a complete monthly basis just to July. So we are following a normal seasonal pattern, although July has been in a pretty good shape I was happy with where July was.

It typically we do as Larry mentioned, recycle off a little bit in the summer as doctors and earn staff myself included take vacations but July has been solid.

Good. Obviously, you were quite active with all kinds of development activities including M&A, I know you don’t like to talk about the pipeline but what do you see out there in the marketplace, has there good opportunities for you still?

Yes, there are still good opportunities, we are at good discussions. We are going to be lumpy like we always are but we are going to continue to do the kind of things we have done in the past with the groups that we think give us the best long-term opportunity for success.

I think we have been very-very blessed with the groups that we have brought in thus far. I think they have been, there has been a lot of attention and focus on the kind of people that we bring in to the company, they have not disappointed we continue to be selective but we continue to get things done.

That's good. I recall, a few months ago I went on your website and sort of posed as a prospect and they quickly rejected me which was probably good choice.

Good morning, guys. Congratulations.

Chris, first question for you, as we look at the landscape and the physical therapy space, in the past we have talked pressures in small providers, if you don’t mind giving us an update on what you are seeing among your competitors?

To the extent I can’t I mean it’s something valuable, wait a few more hours select I think releases, their numbers after the market closes today. I don’t have any particular insight into the large companies other than I have friends there and I think that generally speaking my expectation is that in an up year compared to last year where we had a Medicare and other related noise last year.

But I really don’t know to the extent that that’s occurring on the small provider side, I think we continue, we continue to get calls, daily, weekly multiple calls from the smaller providers. Many cases we are not able to do anything because in market where it doesn’t make sense where the reimbursements are really-really low for it’s single side or somebody wants to lead and tell I think there is going to continued pressure on small providers.

Even when the economy is going okay, the complexity in the regulatory environment continues to evolve, become more difficult and I think still matters. So I think that will create opportunity for the larger groups out there to selectively acquire those groups who are meaningfully different.

Thanks for that color. Larry, you mentioned how the rate was down $0.58 during the quarter, just wondering what the driver of that is?

I don’t know it was for the quarter or the six months, I don’t remember right now. Medicare right reduction went into place in the second quarter of last year.

We are rating it is around $0.58 or $1.00 up or down.

Okay then nothing worth highlighting there that drove the client space.

The main reduction impact was a couple of box. So we have actually mitigated that by our mix of business, more worker’s comp, some of the recent acquisitions and just all sorts of effort to offset that.

And Brian remember as we do these deals, some of those are in areas that have a light in higher net rate, some other areas that have lower average net rate, since in many cases we can get up over time, so that moves a number around the little bit as well.

Okay that makes a lot of sense. And Larry to follow up on that Medicare rate, they published their physician’s fee schedule proposal and assuming that the SGR is fixed, I am sure you guys have done your work I mean what is your expectation on the net rate next year, if the physician fee schedule holds?

It would be neutral to slightly favorable as a whole but nothing seems to hold any more.

I look at it a near to neutral market, I don’t think there is a lot of up and I don’t see a dramatic down. I think there is a little pressure we did that offset with the work from delivery from our fit to work group.

So I think that's a near-term the way it has been before.

Chris to that point of fit-to-work, it has always been a great thought for the company and if you don’t mind just giving us some update on client win there and where fit-to-work it going?

I apologize, I am away with my family this week and I normally call to get an updated list which literally changes every week. I didn’t do that before this call, I am really not prepared to that right now, Brian.

I don’t know if you have anything we can share but they have done a great job, I am in Virginia right now. In earlier this week I talk to Dr.

Riley (ph) and he was telling me, you signed up 7 or 8 new groups and I don’t have the detail on all of those but they are doing a great job.

We are near to our four contract, just this July for another two years. That was fit-to-work group and Riley (ph) continue to bring on client on a local and regional basis.

There is too many to really list but it continues to be a good focus for us and we continue to see opportunity to expand on a regional basis as we are growing.

Got it thanks guys.

Just first following up on the fit-to-work question, if you can give us a sense as to how big is market is and how meaningful it can be for you over the next few years as you continue to grow?

The current market is huge, we are focused on the majority of the states they have a good company reimbursement which is for us is the most of the place is we are with just a few exceptions. It’s multi-faceted in that drives visit on a typical basis.

And it also drives other service elements that we perform and built for on an (inaudible) and sometimes on an hourly basis and that don’t show up and that so that came begin to quantify what the entire market would be, what are reasonable sale would be for us, I just know we are growing as fast as we can and we are having good success with that. And as a focus I would say I could quantify more simply but it’s a big opportunity and we are still scratching the surface.

Okay thanks. And on the same-store growth that we saw in the quarter, certainly the best we have seen for the sometime but I am just wondering if at anything in particular driving at from your end or is it more just a from a macro-front competitive may be followed by the way side as a result of the tougher reimbursement environment for example.

I don’t know how many competitors are involved by the way, so I generally think the environment prefer for smaller one two sides groups. We certainly better resourced the most.

I really think it comes down to a very-very focus that producing on the part of our sales teams and part of our partners and maintain focus on the part of our operations groups right now and a pretty neutral macro environment currently and so I think it’s a good combination.

There is no way to market grew 4.6% which was our same-store growth right in the second quarter. So we had uptake in market share as Chris eluded to fortunately I mean with there is very limited data, while there for the sector, Select will report this afternoon will be or after the market closes it will be interesting to see what their same store volume growth was if any.

We are not seeing less competition at a local level so that's not a factor. As Chris talked about it I think it’s really been a people approach, we have got a number of plans that we put in place to try and tack sales and marketing but it really gets back to, we have get a great operations team that we restructured and expanded at the end of the last year which has allowed us to spend more time our partners in the field and do what we need to do.

And the partner’s directors in the sales reps have really done a fantastic job of implementing the plan that we have come up with and going out and going after market share. So it has been a combination of factors.

Okay thanks and finally Larry I don’t know if you gave this already but I just wondering if you have got payer mix handy?

I have got it. Insurance 52%, worker’s comp was 20%, Medicare and Medicaid combined 23.5% other.

Okay, thanks.

Just a quick question on the guidance. If I look at last year, you guys are pretty flat first half to second half, it seems like first quarter is weak, second quarter strong but then first half second half there is not much change, I mean if I look at time of your run-rate, EPS for the year, you are in the mid-170s range, is there anything that you are seeing in the back-half that is giving you worries?

A part of that being flat last year was timing of the acquisition but normally your first half is stronger than your second half if you were to exclude the acquisition. I don’t think we are being conservative with our guidance range but we are not being aggressive, hopefully we will do as well as we have said or may be little better but July and August were just slower months.

When you get to November and the week around thanksgiving is slow and then you get to the December and its dead as a doornail for the last two weeks of the year.

But specifically to your question, I mean I think Larry is little bit true, we are not seeing anything in the back-half of the year that issues worries but us. We simply pass it with seasonal pattern and I hope that we can do better than we have guided but certainly within the guidance range and we are working to do that.

Okay, and then I think it was suggest earlier in the call, you mentioned that on a calculated basis, your visits per clinic are up 8% and your same-store sales visits are up 4.5%, is that just new clinics that you bought or that much more efficient, what’s driving that (inaudible) of that.

That includes all clinics. So that includes new de novo clinics as well which are normally going to grow faster than a mature clinic.

Okay, that's all guys thanks.

Good morning guys, great quarter. Do you guys have the, I didn’t catch if you mentioned earlier the updated sales force number?

Yes, we currently have 84 total sales rep covering 334 locations.

And do you have, how that compares the last quarter, by any chance is that up?

It’s up a little bit, probably by 5 or 7 sales rep we were. I mean we at any point in time is anywhere between 10 and 15 opening physicians that (inaudible) that we feel and that loose, I don’t expect our sales teams to expand a whole lot more or a shrink a whole lot more it’s depth but we have got a pretty good coverage in most of our major market areas.

On our acquired partnerships, consistently we have added sales and it has been big boost. It continues to help our sales folk within those partnerships and doing great job.

I guess then on the subject of M&A, for several years you guys were fairly conservative may be one, may two deals a year, here in recent quarters you guys have picked up the pace and I guess I am just wondering between the reimbursement environment the regulatory challenges particularly for some of the smaller groups and just the fact that you guys are really executing and have shown an ability to really develop good relationships with new partners. I am just wondering, are we in a new normal in terms of you guys and your ability to go out and may be do more deals and then was the case may 3, 5, 7 years ago?

I would say this Mike, I don’t think our standard north thresholds have changed at all over the years. I think people are ready when they are ready and there was at the group that we acquired when partnered with in April this year but myself and other gentleman on the development team that was some originally 3.5 or 4 years ago and stayed in touch and then we were ready then.

So the people that we identified as our real strong folks, get ready when we are ready I mean we are not necessarily able to accelerate that process some of this family situation or the view of the world aligns or doesn’t but we continue to work though so. I felt that I think will be lumpy from time to time but we have the ability on our balance sheet to get whatever it was done, that we feel are ready and within our parameters and I think we will continue to do that.

I just wanted -- you did announce a small tuck-in acquisition earlier this week. I just want to get the update on the expectations for de novos and tuck-insurance.

And are you seeing, are you empowering your partners to go do more of these tuck-ins? Any change on that front

I don’t think any real change, tuck-in that we just did was a nice little deal that three clinic deal as earlier announced, to tuck-in to one of our recently acquired partnerships, a groups that's been with us just a little more than year and doing a great job. And so we continue to encourage our largest partnerships on top 20 and 30 partnership to look for those opportunities and we continue to be selective on those as well but not always easy to deal but yes we will continue to be active on that front and in terms of our aggregate de novo and tuck-in numbers, I think you can expect what you have expected in the past 20 or so year right now.

We really haven’t guided to that or we haven’t guided to that I think it has been 19 or 20 last year, and I am stuck to do somewhere in neighborhood this year.

That's fair. And Larry when we think about closures of under-performance side is that kind of on the same track?

Yes we are close 10 to 15 clinics a year normally.

Okay and just last one from me I know you guys are already run very lean at the corporate and at the center level but is there any room for improvement on staffing at the center levels or are you guys kind of maxed out on that at this point.

I don’t know that we have maxed out. I mean we do run very lean at the corporate level but I will say that we got on some, we have made some nice hires this year, we have budgeted for a number of additional positions this year in anticipation last year which we have done, the deals that we have done in December and later in the year and earlier this year so I think our staffing in pretty good shape.

We continue to attract very good people, on the center level it’s about keeping things down and it about slowly very slowly marching forward as there are adjustments that we could make, and as we size and scale in some of these market, I don’t think it’s dramatic, I don’t think it will be dramatic but I think there is a little bit over the time, not quarter to quarter necessarily but over period of years.

A good chunk of the increase in the margin came not from, well they were certainly cost control but it was really productivity issue, when you increase your visits per day for therapist to makes a big difference in the contribution.

Hi everyone, thank you so much for your questions and your attention today, your interest. We appreciate it very much.

Larry is available, I think though the rest of the day for questions, I will be back next question and we look forward to continuing to work on our shareholders to have. Thank you again.