PART I Condensed Consolidated Financial Statements The company reported $500.8 million revenue, up 7.1%, but net income decreased to $38.9 million due to higher interest and acquisition costs, while total assets grew to $2.73 billion from the Nova acquisition Condensed Consolidated Balance Sheets Total assets increased to $2.73 billion driven by goodwill and intangibles from the Nova acquisition, while liabilities rose due to long-term debt and cash significantly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $52,109 | $183,255 | ($131,146) | | Goodwill | $1,444,563 | $1,234,707 | $209,856 | | Total Assets | $2,729,238 | $2,521,164 | $208,074 | | Long-term debt, net of current portion | $1,618,473 | $1,468,917 | $149,556 | | Total Liabilities | $2,398,177 | $2,222,440 | $175,737 | | Total Equity | $312,452 | $280,711 | $31,741 | Condensed Consolidated Statements of Operations Revenue grew 7.1% to $500.8 million in Q1 2025, but net income attributable to the company fell to $38.9 million primarily due to a significant increase in interest expense and general and administrative costs Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except EPS) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $500,752 | $467,598 | +7.1% | | Income from operations | $80,319 | $75,498 | +6.4% | | Interest expense | ($25,548) | ($111) | N/A | | Net income attributable to the Company | $38,911 | $48,956 | -20.5% | | Basic and diluted EPS | $0.30 | $0.47 | -36.2% | Condensed Consolidated Statements of Cash Flows Operating cash flow decreased to $11.7 million due to higher interest payments, while investing cash outflow surged to $294.7 million driven by the Nova acquisition, and financing activities provided $151.9 million from new debt Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $11,699 | $44,622 | ($32,923) | | Net cash used in investing activities | ($294,749) | ($22,352) | ($272,397) | | Net cash provided by (used in) financing activities | $151,904 | ($4,092) | $155,996 | | Net (decrease) increase in cash | ($131,146) | $18,178 | ($149,324) | Notes to Condensed Consolidated Financial Statements The notes detail the $265 million Nova acquisition, an amended credit agreement increasing term loan to $950 million and revolving facility to $450 million, ongoing legal proceedings, and a subsequent $55 million acquisition of Pivot Onsite Innovations - Effective March 1, 2025, the company acquired Nova Medical Centers for a purchase price of approximately $265 million, adding 67 occupational health centers8081 - In March 2025, the company amended its credit agreement, increasing the Term Loan to $950 million and the Revolving Credit Facility to $450 million, while also reducing the applicable interest rates51 - The company is subject to ongoing legal matters, including a subpoena from the California Department of Insurance regarding billing practices and class action lawsuits related to a data breach at a third-party vendor, PJ&A686970 - Subsequent to the quarter end, on April 18, 2025, the company entered into an agreement to acquire Pivot Onsite Innovations for $55 million, which is expected to close in Q2 2025100 - On May 6, 2025, the Board of Directors declared a quarterly cash dividend of $0.0625 per share103 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 7.1% revenue growth to the Nova acquisition and higher revenue per visit, but net income declined due to increased interest and acquisition costs, while Adjusted EBITDA grew 6.8% to $102.7 million Results of Operations Revenue for Q1 2025 increased 7.1% to $500.8 million due to higher visits per day and revenue per visit, while cost of services decreased as a percentage of revenue, and G&A expenses rose due to acquisition and public company overhead Key Operating Metrics (Occupational Health Centers) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total VPD Volume | 50,863 | 49,307 | 3.2% | | Total Revenue per visit | $146.94 | $139.09 | 5.6% | | Workers' comp. Revenue per visit | $209.09 | $195.29 | 7.1% | - The increase in General and Administrative expense was principally due to a favorable legal expense reversal in Q1 2024, stock compensation expense, Nova acquisition costs, and new employees to support standalone public company operations134 - Interest expense increased significantly to $25.5 million due to the issuance of an $850.0 million term loan and $650.0 million senior notes in July 2024, plus an incremental $102.1 million term loan and $50.0 million in revolver borrowings in March 2025136 Non-GAAP Measures Adjusted EBITDA increased to $102.7 million in Q1 2025 with a stable margin of 20.5%, while Adjusted Net Income Attributable to Common Shares was $41.7 million, or $0.32 per share Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $40,642 | $50,279 | | Adjustments (Taxes, Interest, D&A, etc.) | $58,880 | $44,571 | | Nova acquisition costs | $3,137 | $— | | Adjusted EBITDA | $102,659 | $96,142 | | Adjusted EBITDA Margin | 20.5% | 20.6% | Reconciliation to Adjusted Earnings per Common Share | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to common shares (per share) | $0.30 | $0.47 | | Adjustments (Acquisition costs, etc.), net of tax | $0.02 | $0.02 | | Adjusted Earnings per Common Share | $0.32 | $0.49 | Liquidity and Capital Resources The company maintains solid liquidity with $52.1 million cash and $386.4 million available credit, financing the Nova acquisition with new debt and revolver borrowings, and committing $55 million for the Pivot Onsite Innovations acquisition - As of March 31, 2025, the company had $52.1 million in cash and $386.4 million of availability under its Revolving Credit Facility159 - The company acquired Nova in March 2025 using a combination of $102.1 million of new debt, $50.0 million from its revolver, and cash on hand153 - A new material cash commitment of $55 million exists for the acquisition of Pivot Onsite Innovations, expected to close in Q2 2025 and be financed with cash and revolver borrowings154160 - On May 6, 2025, the Board of Directors declared a cash dividend of $0.0625 per share, payable on May 29, 2025163 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk on its $1.0 billion variable-rate debt, mitigated by derivative contracts fixing or capping rates on $600 million, with a 0.25% rate increase impacting annual interest expense by $1.5 million - The company has $1.0 billion in variable-rate debt outstanding under its credit facilities as of March 31, 2025168 - To mitigate interest rate risk, the company uses derivative contracts, including a swap fixing the rate on $300 million of debt at 3.829% and a collar limiting the rate on another $300 million to between 3.001% and 4.500%169170 - A hypothetical 0.25% increase in market interest rates would increase the company's annual interest expense by $1.5 million171 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the first quarter - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures are effective as of March 31, 2025173 - No material changes to internal control over financial reporting were identified during the first quarter of 2025174 PART II OTHER INFORMATION Legal Proceedings The company refers to Note 12 of the financial statements for details on legal proceedings, including an investigation by the California Department of Insurance and class-action lawsuits related to a third-party data breach - For information on legal proceedings, the report refers to Note 12—"Commitments and Contingencies" in the financial statements178 Risk Factors No material changes to risk factors were disclosed, except for a new risk concerning the potential negative impact of changes in U.S. tariff and import/export regulations and adverse macroeconomic conditions - A new risk factor was added concerning the potential negative effects of changes in U.S. tariffs, trade policies, and macroeconomic conditions on the company's business, financial condition, and results of operations180 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None181 Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable182 Mine Safety Disclosures This item is not applicable to the company - Not applicable183 Other Information During the first quarter ended March 31, 2025, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or any other non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2025184 Exhibits This section lists key exhibits filed with the Form 10-Q, including the Nova Medical Centers equity purchase agreement, an amendment to the credit agreement, executive employment agreement amendments, and required CEO/CFO certifications - Key exhibits filed include the Equity Purchase Agreement for Nova Medical Centers, Amendment No. 1 to the Credit Agreement, and various amendments to executive employment agreements185
Concentra Group Holdings Parent, Inc.(CON) - 2025 Q1 - Quarterly Report