Company: USPH
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0001140361-25-006750
Chunk: 26

Company: U S PHYSICAL THERAPY INC /NV
Filing Date: 2025-03-03
Form: 10-K
Item: Item 1
Chunk 26
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 to extend to management agreements between
              physicians or therapists and business entities under some circumstances.

We believe that our current and planned activities do not constitute fee-splitting or the unlawful corporate practice of medicine as contemplated by these state laws. However, there can be no
              assurance that future interpretations of such laws will not require structural and organizational modification of our existing relationships with the practices. If a court or regulatory body determines that we have violated these laws or if
              new laws are introduced that would render our arrangements illegal, we could be subject to fines or  penalties, our contracts could be found legally invalid and unenforceable (in whole or in part), or we could be required to restructure our
              contractual arrangements with physicians, hospitals and/or physical therapist-owned providers.

Some of our acquisition agreements contain contingent consideration, the value of which may impact future financial results.

Some of our acquisition agreements include contingent earn-out consideration, the fair value of which is estimated as of the acquisition date based on the present value of the expected
              contingent payments as determined using weighted probabilities of possible future payments. These fair value estimates contain unobservable inputs and estimates that could materially differ from the actual future results and we cannot predict
              the ultimate result. The fair value of the contingent earn-out consideration could increase or decrease, as applicable. Changes in the fair value of contingent earn-outs will be reflected in our results of operations in the period in which
              they are recognized, the amount of which may be material and could cause volatility in our operating results.

Our contractual arrangements may not be as effective in providing control over our variable interest entities as direct ownership.

Through contractual arrangements, we control the management and non-clinical operating activities but have less than majority ownership interests in certain variable interest entities. If
              our variable interest entities or their equity holders fail to perform their respective obligations under the contractual arrangements, we may incur substantial costs and expend additional resources to enforce such arrangements. Accordingly,
              these contractual arrangements may not be as effective as majority ownership in providing us with control over our variable interest entities.

The variable interest entity equity holders may have conflicts of interest with us and they may not act in our best interests or may not perform their obligations under these contracts. For
              example, our variable interest entities and their respective equity holders could breach their contractual arrangements with us by, among other things, failing to conduct their operations or taking other actions that are detrimental to our
              interests. If any equity holder is uncooperative and any dispute relating to these contracts