Concentra Group Holdings Parent, Inc.(CON) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Highlights Concentra's second quarter saw robust financial and operational growth, with revenue increasing 15.2% and Adjusted EBITDA up 13.2%. Patient visits per day rose by 9.5%, and the company expanded its facility count through acquisitions, notably closing on Pivot Onsite Innovations | Metric | Q2 2025 | Q2 2024 | % Change | | :----------------------- | :---------- | :---------- | :--------- | | Revenue | $550.8 million | $477.9 million | 15.2% | | Net income | $46.2 million | $53.1 million | (12.9)% | | Adjusted EBITDA | $115.0 million | $101.6 million | 13.2% | | Patient Visits per Day | 55,005 | - | 9.5% | | Revenue per Visit | $145.92 | $139.81 | 4.4% | | Occupational Health Centers | 628 | 547 | 14.8% | | Onsite Health Clinics | 406 | 154 | 163.6% | - Closed on the acquisition of Pivot Onsite Innovations on June 1st, contributing to the expansion of total locations to over 1,000[5][10] - Announced the appointment of Brigid Bonner and Vipin Gopal to the board of directors[5] CEO and CFO Commentary CEO Keith Newton highlighted strong Q2 results driven by growth in patient visits, rate, revenue, and Adjusted EBITDA, attributing success to disciplined strategy execution. CFO Matt DiCanio emphasized the successful integration of recent acquisitions (Nova Medical Centers and Pivot Onsite Innovations) for top-line growth and operational efficiencies, expanding the combined network to over 1,000 locations - CEO Keith Newton noted strong Q2 results across key measures, including growth in patient visits, rate, revenue, and Adjusted EBITDA, positioning the company for continued momentum[2] - CFO Matt DiCanio reported good progress on the integration of Nova Medical Centers and Pivot Onsite Innovations, which will contribute to increased top-line growth and operational efficiencies[2] - Acquisitions and development efforts have expanded Concentra's high-quality workplace health services to over 1,000 combined occupational health center and onsite health clinic locations[2] Financial Performance Summary Second Quarter 2025 Financial Overview For Q2 2025, Concentra reported a 15.2% increase in revenue to $550.8 million and a 6.7% rise in income from operations to $89.5 million. Net income, however, decreased by 12.9% to $46.2 million, primarily due to higher interest expense from the IPO recapitalization. Adjusted EBITDA increased by 13.2% to $115.0 million | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :----------------------- | :-------------------- | :-------------------- | :--------- | | Revenue | $550.8 | $477.9 | 15.2% | | Income from operations | $89.5 | $83.9 | 6.7% | | Net income | $46.2 | $53.1 | (12.9)% | | Earnings per share | $0.35 | $0.50 | - | | Adjusted Earnings per Share | $0.37 | $0.49 | - | | Adjusted EBITDA | $115.0 | $101.6 | 13.2% | - The decrease in net income was primarily attributed to higher interest expense resulting from the IPO recapitalization[4] Year to Date June 30, 2025 Financial Overview For the first six months of 2025, Concentra's revenue grew 11.2% to $1,051.5 million, and income from operations increased 6.5% to $169.9 million. Net income for the period was $86.8 million, a 16.0% decrease from the prior year, while Adjusted EBITDA rose 10.1% to $217.7 million | Metric | YTD Q2 2025 (in millions) | YTD Q2 2024 (in millions) | % Change | | :----------------------- | :------------------------ | :------------------------ | :--------- | | Revenue | $1,051.5 | $945.5 | 11.2% | | Income from operations | $169.9 | $159.4 | 6.5% | | Net income | $86.8 | $103.3 | (16.0)% | | Earnings per share | $0.65 | $0.97 | - | | Adjusted Earnings per Share | $0.70 | $0.98 | - | | Adjusted EBITDA | $217.7 | $197.7 | 10.1% | Balance Sheet As of June 30, 2025, Concentra reported a cash balance of $73.9 million, total debt of $1,665.9 million, and total assets of $2,841.6 million. The net leverage ratio stood at 3.8x, in compliance with credit agreement covenants, with targets to reduce it to approximately 3.5x by year-end 2025 and less than 3.0x by year-end 2026 | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------- | :-------------------------- | :---------------------------- | | Cash | $73.9 | $183.3 | | Total debt | $1,665.9 | - | | Total assets | $2,841.6 | $2,521.2 | | Net leverage ratio | 3.8x | - | - The company is targeting a net leverage ratio of approximately 3.5x by the end of 2025 and less than 3.0x by the end of 2026[8] Cash Flow Concentra's operating cash flow for Q2 2025 increased to $88.4 million from $70.4 million in the prior year, driven by higher income from operations and timing of payables. Investing activities used $79.5 million, primarily for acquisitions and capital expenditures, while financing activities generated $12.9 million | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | | :-------------------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | $88.4 | $70.4 | | Net cash used in investing activities | $79.5 | $15.3 | | Net cash provided by financing activities | $12.9 | ($54.1) | | Net increase in cash | $21.8 | $1.1 | - The increase in operating cash flow was primarily due to higher income from operations and the timing of payroll and other payables[9] - Investing activities included $54.3 million for acquisition-related spend and $25.2 million for capital expenditures, with $7.4 million for Nova integration and rebranding[9] Operational Highlights & Corporate Actions Pivot Onsite Innovations Acquisition Closing Effective June 1, 2025, Concentra acquired Pivot Onsite Innovations for $54.4 million, expanding its network by over 240 onsite health clinics across more than 40 states. This acquisition increased Concentra's total onsite health clinics to over 400, financed by a combination of its revolving credit facility and cash on hand - Concentra acquired Pivot Onsite Innovations for $54.4 million, effective June 1, 2025[10] - The acquisition added over 240 onsite health clinics, expanding Concentra's total to over 400 onsite health clinics in over 40 states[11] - The transaction was financed using $35.0 million from the existing Revolving Credit Facility and the remainder with cash on hand[11] Dividend Declaration On August 6, 2025, Concentra's Board of Directors declared a cash dividend of $0.0625 per share, payable on August 28, 2025, to stockholders of record as of August 21, 2025. The company noted that future dividend declarations are at the discretion of the Board, considering various financial and operational factors - A cash dividend of $0.0625 per share was declared on August 6, 2025[12] - The dividend is payable on August 28, 2025, to stockholders of record as of August 21, 2025[12] - Future dividend declarations are subject to Board discretion, considering financial condition, operating results, cash needs, and debt terms[13] Company Overview Concentra is the largest occupational health services provider in the U.S., operating 628 occupational health centers and 406 onsite health clinics across 47 states, serving approximately 215,000 employer customers. The company's mission is to improve workforce health, supported by 13,000 colleagues and affiliated medical professionals, providing occupational, consumer, and direct-to-employer health services - Concentra is the largest provider of occupational health services in the United States by number of locations[15] - As of June 30, 2025, the company operates 628 occupational health centers and 406 onsite health clinics across 47 states, serving approximately 215,000 employer customers[5][15] - The company's mission is to improve the health of America's workforce, supporting over 50,000 patients daily with a suite of occupational and consumer health services[15] 2025 Business Outlook 2025 Business Outlook Details Concentra raised its financial guidance for FY 2025, now expecting revenue between $2.13 billion and $2.16 billion and Adjusted EBITDA between $420 million and $430 million. Capital expenditures and net leverage ratio targets remain unchanged - Concentra raised its financial guidance for the full year 2025[14] | Metric | FY 2025 Guidance (Low) | FY 2025 Guidance (High) | | :-------------------- | :----------------------- | :------------------------ | | Revenue | $2.13 billion | $2.16 billion | | Adjusted EBITDA | $420 million | $430 million | | Capital expenditures | $80 million | $90 million | | Net leverage ratio | ~3.5x | ~3.5x | Forward-Looking Statements Forward-Looking Statements Disclaimer The report includes forward-looking statements regarding Concentra's 2025 and long-term business outlook, which are subject to various risks and uncertainties. These factors, including changes in regulations, labor costs, competition, security breaches, and economic conditions, could cause actual results to differ materially from projections. The company is not obligated to update these statements - Statements regarding Concentra's 2025 and long-term business outlook are forward-looking and subject to risks and uncertainties[19] - Actual results may differ materially due to factors such as frequency of work-related injuries, changes in relationships with customers/payors, regulatory changes, labor shortages, and competition[19] - The company is under no obligation to publicly update or revise any forward-looking statements, and investors should not place undue reliance on them[20] Conference Call Information Conference Call Details Concentra will host a conference call on August 8, 2025, at 9 a.m. Eastern Time to discuss its second-quarter financial results and business outlook. The call will be accessible via a live webcast on the company's investor relations website, with a replay available afterward. Participants can also join via audio-only dial-in - Concentra will host a conference call on Friday, August 8, 2025, at 9 a.m. Eastern Time to discuss Q2 financial results and business outlook[16] - The conference call will be available as a live webcast via the Earnings Call Webcast Link or Concentra's investor relations website[16] - Audio-only participation and Q&A access are available via toll-free and international dial-in numbers[17] Financial Statements and Reconciliations Condensed Consolidated Statements of Operations This section presents the unaudited condensed consolidated statements of operations for Concentra, detailing revenue, costs and expenses, income from operations, and net income for the three and six months ended June 30, 2025 and 2024. It highlights changes in key income statement items over these periods - The statements provide a detailed breakdown of revenue, cost of services, general and administrative expenses, and depreciation and amortization[23][26] - Income from operations increased for both the three and six months ended June 30, 2025, while net income decreased due to higher interest expenses[23][26] Three Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :--------- | | Revenue | $550,785 | $477,915 | 15.2% | | Income from operations | $89,542 | $83,944 | 6.7% | | Net income | $46,194 | $53,059 | (12.9)% | | Net income attributable to the Company | $44,560 | $51,737 | (13.9)% | | Interest (expense) income | ($28,193) | $205 | N/M | - General and administrative expenses, exclusive of depreciation and amortization, increased significantly by 43.7% in Q2 2025[23] Six Months Ended June 30, 2025 and 2024 | Metric | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | % Change | | :------------------------------------ | :------------------------- | :------------------------- | :--------- | | Revenue | $1,051,537 | $945,513 | 11.2% | | Income from operations | $169,861 | $159,442 | 6.5% | | Net income | $86,836 | $103,338 | (16.0)% | | Net income attributable to the Company | $83,471 | $100,693 | (17.1)% | | Interest (expense) income | ($53,741) | $94 | N/M | - General and administrative expenses, exclusive of depreciation and amortization, increased by 35.1% for the six months ended June 30, 2025[26] Earnings per Share This section details the computation of basic and diluted earnings per share (EPS) for the three and six months ended June 30, 2025 and 2024. For 2025, the company applied the two-class method due to unvested restricted shares being participating securities, which was not applicable in 2024 - For the three and six months ended June 30, 2025, the Company applied the two-class method for EPS calculation due to unvested restricted shares being participating securities[28] - In 2024, there were no participating shares or securities outstanding, simplifying the EPS calculation[29] Three and Six Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Basic and Diluted EPS (Common shares) | $0.35 | $0.50 | $0.65 | $0.97 | | Net income attributable to the Company | $44,560 | $51,737 | $83,471 | $100,693 | | Weighted average shares outstanding | 128,171 | 104,094 | 128,159 | 104,094 | Condensed Consolidated Balance Sheets Concentra's balance sheet as of June 30, 2025, shows total assets of $2,841.6 million, an increase from $2,521.2 million at December 31, 2024. This growth was primarily driven by increases in goodwill and other identifiable intangible assets, reflecting recent acquisitions. Total liabilities also increased to $2,474.2 million, with long-term debt rising to $1,652.0 million | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :----------------------------- | | Total assets | $2,841,584 | $2,521,164 | | Cash | $73,872 | $183,255 | | Goodwill | $1,480,653 | $1,234,707 | | Other Identifiable intangible assets, net | $257,261 | $204,725 | | Total liabilities | $2,474,204 | $2,222,440 | | Long-term debt, net of current portion | $1,652,003 | $1,468,917 | | Total stockholders' equity | $342,636 | $275,671 | - Goodwill increased significantly from $1,234.7 million to $1,480.7 million, and other identifiable intangible assets also rose, reflecting acquisition activities[32] Condensed Consolidated Statements of Cash Flows This section provides the unaudited condensed consolidated statements of cash flows, detailing cash generated from operating, investing, and financing activities for the three and six months ended June 30, 2025 and 2024. It highlights the impact of acquisitions and debt-related activities on the company's cash position - Operating activities consistently provided positive cash flow in both periods, driven by net income and non-cash adjustments[33][34] - Investing activities were a significant use of cash, primarily due to business combinations and capital expenditures[33][34] - Financing activities showed a net cash inflow for Q2 2025 and YTD 2025, largely influenced by borrowings on revolving facilities and term loans, offset by dividend payments and debt repayments[33][34] Three Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | $88,379 | $70,433 | | Net cash used in investing activities | ($79,508) | ($15,262) | | Business combinations, net of cash acquired | ($54,282) | — | | Net cash provided by (used in) financing activities | $12,892 | ($54,054) | | Net increase in cash and cash equivalents | $21,763 | $1,117 | Six Months Ended June 30, 2025 and 2024 | Metric | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | | :-------------------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $100,078 | $115,055 | | Net cash used in investing activities | ($374,257) | ($37,615) | | Business combinations, net of cash acquired | ($333,300) | ($5,144) | | Proceeds from term loans, net of issuance costs | $948,848 | — | | Payments on term loans | ($850,250) | — | | Net (decrease) increase in cash | ($109,383) | $19,295 | Disaggregated Revenue This section disaggregates Concentra's revenue by service type for the three and six months ended June 30, 2025 and 2024. Occupational health centers, particularly workers' compensation and employer services, remain the primary revenue drivers, with significant growth also observed in onsite health clinics - Occupational health centers are the primary revenue source, with workers' compensation and employer services being the largest contributors[35] - Onsite health clinics revenue showed strong growth for both the quarter and year-to-date periods[35] Three and Six Months Ended June 30, 2025 and 2024 | Revenue Category | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change (Q2) | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | % Change (YTD) | | :----------------------------- | :--------------------- | :--------------------- | :------------ | :------------------------- | :------------------------- | :------------- | | Workers' compensation | $332,191 | $288,405 | 15.2% | $634,298 | $568,271 | 11.6% | | Employer services | $174,318 | $153,305 | 13.7% | $334,458 | $304,040 | 10.0% | | Onsite health clinics | $22,569 | $15,539 | 45.2% | $39,119 | $31,396 | 24.6% | | Total revenue | $550,785 | $477,915 | 15.2% | $1,051,537 | $945,513 | 11.2% | Key Operational Statistics This section provides key operational statistics for Concentra's occupational health centers, including facility counts, patient visits, and revenue per visit, for the three and six months ended June 30, 2025 and 2024. It highlights growth in patient volumes and revenue efficiency - The number of occupational health centers and onsite health clinics increased significantly year-over-year, reflecting expansion efforts[36][38] - Total patient visits and visits per day volume showed healthy growth across workers' compensation and employer services segments[36][38] - Revenue per visit increased across all service categories, indicating improved pricing or service mix[36][38] Three Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :-------------------------------- | :---------- | :---------- | :--------- | | Number of occupational health centers—end of period | 628 | 547 | 14.8% | | Number of onsite health clinics operated—end of period | 406 | 154 | 163.6% | | Total patient visits | 3,520,320 | 3,214,255 | 9.5% | | Visits per day volume (Total) | 55,005 | 50,223 | 9.5% | | Revenue per visit (Total) | $145.92 | $139.81 | 4.4% | - Workers' compensation patient visits increased by 9.3%, and employer services visits by 10.3%[36] Six Months Ended June 30, 2025 and 2024 | Metric | YTD Q2 2025 | YTD Q2 2024 | % Change | | :-------------------------------- | :---------- | :---------- | :--------- | | Number of occupational health centers—end of period | 628 | 547 | 14.8% | | Number of occupational health centers acquired | 72 | 2 | 3500.0% | | Number of onsite health clinics operated—end of period | 406 | 154 | 163.6% | | Total patient visits | 6,724,688 | 6,369,910 | 5.6% | | Visits per day volume (Total) | 52,950 | 49,765 | 6.4% | | Revenue per visit (Total) | $146.41 | $139.45 | 5.0% | - The company acquired 72 occupational health centers during the six-month period, significantly contributing to facility count growth[38] Net Income to Adjusted EBITDA Reconciliation This section provides the reconciliation of net income to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024. Adjusted EBITDA is presented as a non-GAAP measure to offer insight into core operating performance by excluding items like interest, taxes, depreciation, amortization, stock-based compensation, and acquisition-related costs - Adjusted EBITDA is a non-GAAP measure used to provide useful insight into the underlying performance of the business by excluding items that may obscure trends in core operating results[41][42] - Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, stock-based compensation, acquisition-related costs, and other specific non-recurring items[42] Three and Six Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :------------------------- | :------------------------- | | Net income | $46,194 | $53,059 | $86,836 | $103,338 | | Adjusted EBITDA | $115,018 | $101,600 | $217,677 | $197,742 | | Adjusted EBITDA Margin | 20.9% | 21.3% | 20.7% | 20.9% | | Interest expense (income) | $28,193 | ($205) | $53,741 | ($94) | | Nova and Pivot Onsite Innovations acquisition costs | $2,833 | — | $5,970 | — | Reconciliation of EPS to Adjusted EPS This section provides a reconciliation of GAAP earnings per share (EPS) to Adjusted Earnings per Share, a non-GAAP measure. Adjusted EPS is used by management to offer a clearer view of ongoing operational performance by excluding non-recurring costs such as acquisition costs and separation transaction costs, all on an after-tax basis - Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are non-GAAP measures used to provide useful insight into the underlying performance of the business[47] - Adjusted Net Income Attributable to the Company excludes gain (loss) on early retirement of debt, separation transaction costs, acquisition costs, and other non-recurring costs, all on an after-tax basis[48] Three and Six Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Net income attributable to the Company | $44,560 | $51,737 | $83,471 | $100,693 | | Adjusted Net Income Attributable to the Company | $47,717 | $51,454 | $89,891 | $101,914 | | Adjusted Earnings per Share | $0.37 | $0.49 | $0.70 | $0.98 | | Nova and Pivot Onsite Innovations acquisition costs | $2,833 | — | $5,970 | — | 2025 Net Income to Adjusted EBITDA Reconciliation (Business Outlook) This section provides a reconciliation of the full year 2025 Adjusted EBITDA expectations to net income, as part of the raised business outlook. The reconciliation details estimated adjustments for items such as income tax expense, interest expense, depreciation and amortization, and acquisition costs to arrive at the projected Adjusted EBITDA range of $420 million to $430 million - The reconciliation provides estimated full year 2025 expectations for Adjusted EBITDA, ranging from $420 million to $430 million[54][55] | Metric | Low (in millions) | High (in millions) | | :------------------------------------ | :---------------- | :----------------- | | Net income attributable to the Company | $157 | $164 | | Net income | $163 | $171 | | Adjusted EBITDA | $420 | $430 | | Adjusted Net Income Attributable to the Company | $165 | $172 | - Key adjustments in the reconciliation include estimated income tax expense of $54-56 million, interest expense of $109 million, and Nova and Pivot Onsite Innovations acquisition costs of $6 million[55]