Debt and Financial Obligations - The company has significant covenants in its credit agreement, including limitations on mergers, asset sales, and indebtedness, which are tested quarterly [229]. - Failure to comply with covenants could lead to an event of default, resulting in immediate repayment of all borrowings and accrued interest [230]. - The company's ability to repay its debt is dependent on cash flow generated by its subsidiaries, which may face legal and contractual restrictions [231]. - The company may incur additional indebtedness despite existing restrictions, potentially increasing financial risks in a rising interest rate environment [232]. - Rising interest rates could lead to increased operating costs, negatively impacting net income [233]. - The company may face challenges in refinancing its debt on favorable terms, which could adversely affect its financial condition [234]. - Credit rating downgrades could increase borrowing costs and reduce access to capital markets [235]. - The company is a holding entity, relying on subsidiaries for cash flow, and any inability of these subsidiaries to pay dividends could impact the company's financial obligations [268]. - The company cannot guarantee future dividends on common stock, as these depend on cash received from subsidiaries and various legal and financial conditions [269]. - The company has not adopted a written dividend policy, and the declaration of dividends is at the discretion of the Board [269]. - As of December 31, 2024, the company had outstanding borrowings under credit facilities consisting of an 2.1 million per year [388]. Operational Challenges - The separation from Select may not yield all expected benefits, potentially affecting the company's financial condition and operations [239]. - The company is subject to significant restrictions on corporate transactions for two years post-separation to maintain tax-free status, limiting strategic flexibility [243]. - The company may face increased costs in its supply chain due to decreased purchasing power following the Separation from Select [247]. - The company is relying on SMC to fulfill its obligations under the Transition Services Agreement, which could impact costs and operational flexibility if not performed adequately [249]. - The company has joint and several liability with Select for consolidated U.S. federal income taxes for periods prior to the Distribution, which could affect financial obligations [254]. - The company may not be able to obtain services at favorable terms compared to those available prior to the Separation, potentially increasing costs and reducing profitability [247]. - The company is in the process of creating its own systems and services to replace those currently provided by SMC, which may be complex and costly [250]. - The company has potential indemnification obligations to SMC that could result in substantial liabilities, adversely affecting financial condition [252]. - The company faces significant demands on management due to obligations under the Securities Exchange Act and Sarbanes-Oxley Act, which could adversely affect business operations [265]. - The company’s operations could be disrupted by the loss of key management personnel, affecting business strategy execution [279]. - The company’s ability to attract and retain skilled employees is critical, and challenges in the labor market could adversely affect operations [280]. Market and Stock Performance - The market price of the company's common stock may be highly volatile, influenced by various external factors beyond its control [258]. - The company cannot assure that an active trading market for its common stock will be sustained, which could impair capital raising efforts [257]. - The company has provisions in its bylaws that may deter hostile takeovers, which could impact stock price and shareholder interests [272]. Regulatory and Compliance Risks - The company may face conflicts of interest due to shared executive officers and directors with Select, impacting decision-making [248]. - The agreements with Select and SMC may not reflect terms that would have resulted from arm's-length negotiations, potentially affecting service costs [256]. - Climate change and related regulations could negatively impact the company’s operations and financial condition [283]. - Increasing scrutiny regarding ESG practices may create new obligations and affect the company’s business performance [284]. Financial Reporting and Estimates - The company has limited history as a standalone public entity, and its financial results may not reflect future performance [236]. - The company’s financial statements are subject to estimates and assumptions, and any changes in these could adversely affect operations and stock price [270].
Concentra Group Holdings Parent, Inc.(CON) - 2024 Q4 - Annual Report