Revenue and EBITDA growth

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Concentra Group Holdings Parent, Inc.(CON) - 2025 Q2 - Earnings Call Transcript
2025-08-08 14:00
Financial Data and Key Metrics Changes - Total company revenue for Q2 2025 was $550.8 million, a 15.2% increase year over year from $477.9 million in Q2 2024. Excluding contributions from Nova, revenue was $519.4 million, resulting in an 8.7% increase over the prior year [6][10] - Adjusted EBITDA was $115 million in Q2 2025, compared to $101.6 million in the same quarter prior year, reflecting a 13.2% increase. Adjusted EBITDA margin decreased from 21.3% in Q2 2024 to 20.9% in Q2 2025 [9][20] - Adjusted net income attributable to the company was $47.7 million, with adjusted earnings per share at $0.37 for Q2 2025 [10] Business Line Data and Key Metrics Changes - In the occupational health center segment, total revenue was $516.1 million in Q2 2025, a 14.4% increase year over year. Workers' compensation revenue was $332.2 million, up 15.2% from the prior year [11][12] - Employer services revenue increased to $174.3 million, a 13.7% rise from the prior year, with visits per day increasing by 10.3% [12] - Excluding the impact of Nova, total revenue in the occupational health center segment was $484.8 million, a 7.4% increase year over year [13] Market Data and Key Metrics Changes - Total patient visits increased by 9.5% in Q2 2025, averaging approximately 55,000 visits per day. Workers' compensation visits per day increased by 9.3%, while employer services visits increased by 10.3% [7][8] - Excluding the impact from the acquisition of Nova, total visits per day increased by 2.4% [7] Company Strategy and Development Direction - The company is focused on integrating the Nova and Pivot acquisitions while continuing to expand its de novo site openings, with plans for two to three additional sites by the end of the year [4][25] - The company aims to capture remaining operational and back office synergies from the Nova acquisition, estimating over 70% of planned synergies captured by the end of Q2 [24] - The company is pursuing a strategy of both de novo openings and small bolt-on M&A deals, with a focus on maintaining a leverage ratio below three times by 2026 [26][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of visit trends and the broader economy, noting no significant slowdown in hiring trends [30][31] - The company anticipates a strong rate year in 2026, benefiting from state-specific fee schedule adjustments tied to recent legislation [34][36] - Management highlighted the ongoing separation from Select Medical, with significant progress made towards complete separation by November 2026 [36] Other Important Information - The company declared a cash dividend of $6.25 per share, payable on or about August 28, 2025 [28] - The company ended Q2 2025 with a total debt balance of $1.67 billion and a cash balance of $74 million, with a net leverage ratio of 3.8 times [21] Q&A Session Summary Question: Can you walk through the changes to revenue and adjusted EBITDA guidance? - Management indicated that the guidance was raised due to strong performance in revenue and EBITDA, factoring in contributions from recent acquisitions [42][44] Question: What is the updated count of on-site health clinics following the Pivot acquisition? - The updated count is approximately 240 on-site clinics, with no change to the revenue figure previously stated [47][48] Question: What explains the softer trend in Q1 for workers' compensation? - Management noted that various dynamics influenced Q1 performance, but overall, they expect to see low single-digit growth rates over time [51][53] Question: How does the company view the long-term organic growth for employer services? - Management anticipates long-term organic growth in the low single-digit range, around 1% to 2% per year from M&A and de novo efforts [82] Question: How does the company manage labor dynamics? - The company has historically not faced significant labor pressures due to its staffing model, which relies on medical assistants rather than more scarce nursing roles [98]