Earnings call transcript: Concentra Holdings sees 15.2% revenue growth in Q2 2025

Concentra Group Holdings Parent Inc. reported a robust second quarter for 2025, with revenue reaching $550.8 million, marking a 15.2% year-over-year growth. The company also achieved an adjusted earnings per share (EPS) of $0.37, aligning with market expectations. Following the earnings release, Concentra’s stock experienced a 3.76% increase, closing at $20.20. According to InvestingPro data, the company maintains a "GOOD" overall financial health score of 2.78, with particularly strong marks in profitability (4.22/5).

Key Takeaways

• Concentra’s revenue grew by 15.2% YoY, boosted by acquisitions.
• Adjusted EBITDA rose by 13.2% to $115 million.
• The company completed the integration of Nova Occupational Health Centers.
• Stock price rose 3.76% post-earnings announcement.
• Revenue guidance for 2025 was revised upward.

Company Performance

Concentra Holdings demonstrated strong performance this quarter, primarily driven by strategic acquisitions and increased service demand. The integration of Nova Occupational Health Centers contributed significantly to revenue growth. The company also expanded its on-site health clinic segment through the acquisition of Pivot On-site Health Clinics, doubling its presence in this area. With a gross profit margin of 28% and return on equity of 21%, the company’s operational efficiency remains solid. InvestingPro subscribers have access to detailed financial health metrics and 12+ additional ProTips that provide deeper insights into the company’s performance.

Financial Highlights

• Revenue: $550.8 million, up 15.2% YoY.
• Adjusted EPS: $0.37, consistent with expectations.
• Adjusted EBITDA: $115 million, a 13.2% increase.
• Adjusted EBITDA Margin: 20.9%, slightly down from 21.3% the previous year.
• Total Debt Balance: $1.67 billion.
• Cash Balance: $74 million.

Earnings vs. Forecast

Concentra’s actual EPS of $0.37 matched the market forecast. The revenue of $550.8 million slightly exceeded expectations, reflecting the company’s successful integration of acquisitions and operational efficiencies. This performance aligns with Concentra’s historical trend of consistent growth and strategic expansion.

Market Reaction

Concentra’s stock price increased by 3.76% in response to the earnings announcement, closing at $20.20. This rise reflects positive investor sentiment and confidence in the company’s growth strategy. Trading at a P/E ratio of 15.1x and EV/EBITDA of 12.6x, analysts maintain a strong buy consensus with price targets ranging from $25 to $30. The stock’s movement is notable against its 52-week range of $18.89 to $24.80, with the current price nearing the lower end, indicating potential for further growth. For comprehensive valuation analysis and detailed financial metrics, investors can access the full Pro Research Report available on InvestingPro.

Outlook & Guidance

Concentra has raised its revenue guidance for 2025 to between $2.130 billion and $2.160 billion, reflecting confidence in continued growth. The company anticipates adjusted EBITDA to be in the range of $420 million to $430 million. It also aims to reduce its leverage ratio to 3.5x by year-end and below 3x by the end of 2026.

Executive Commentary

"We view ourselves as a B2B business services provider and a differentiated investment opportunity," stated Matt DiCanyo, CFO, highlighting the company’s unique market positioning. CEO Keith Newton added, "We’re not seeing any indication of slowdown," underscoring the stable demand environment.

Risks and Challenges

• Debt Levels: With a total debt balance of $1.67 billion, managing leverage remains a priority.
• Integration Risks: Continued integration of acquisitions poses operational challenges.
• Economic Conditions: Broader economic shifts could impact service demand.
• Regulatory Changes: Potential changes in healthcare regulations could affect profitability.

Q&A

During the earnings call, analysts focused on the company’s stable workforce trends and the impact of state-by-state workers’ compensation fee schedules. Management addressed questions on potential benefits from legislative changes and elaborated on their M&A strategies, emphasizing the successful integration of recent acquisitions.

Full transcript - Concentra Group Holdings Parent Inc (CON) Q2 2025:

Conference Call Operator: Good morning, and thank you for joining us today for Concentra Group Holdings Parent Incorporated earning conference call to discuss the second quarter twenty twenty five results. Speaking today are the company’s Chief Executive Officer, Keith Newton and the company’s President and Chief Financial Officer, Matt DiCanyo. Management will give you an overview and then open the call for questions. Before we get started, we would like to remind you that this conference call may contain forward looking statements regarding future events or the future financial performance of the company, including, without limitation, statements regarding operating results, growth opportunities and other statements that refer to Concentra’s plans, expectations, strategies, intentions and beliefs. These forward looking statements are based on the information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change.

At this time, I will turn the conference call over to Mr. Keith Newton. Sir, you may begin.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Thanks, operator. Good morning, everyone. Welcome to Concentra’s second quarter twenty twenty five earnings call. We are pleased to report on a strong second quarter, sustaining the momentum we had in the 2025. In Q2, we saw accelerated growth in visits across both workers’ comp and employer services, even after excluding the impact of the visits in the centers acquired in the Nova transaction.

We had another quarter of mid single digit year over year rate increases. With this strong growth on both volume and rate, we had a high single digit revenue growth excluding Nova. In addition, successfully completed the integration and rebranding of our acquired Nova occupational health centers. We opened an additional occupational health center de novo site in Chattanooga, Tennessee, bringing us to four de novos opened so far this year, with two to three additional anticipated by the end of the year. We closed on the Pivot On-site Health Clinic acquisition on June 1, which doubles the size of our On-site Health Clinic segment and brings Concentra to over 1,000 combined occupational health center and on-site health clinic locations across the country.

The integration of Pivot is well underway and on track. Additionally, we expanded our board of directors and added two new directors, Rigid Bonner and Vipin Gopal, effective July 1. Rigid and Vipin bring a wealth of experience across the customer experience, digital transformation, data analytics, and AI spectrums. And we’re thrilled to gain access to their unique skill sets and knowledge base. With their decades of experience at companies like Eli Lilly, Walgreens, UnitedHealth, and IBM, we expect them to contribute meaningfully to our future success.

I’ll touch on some of the key financial highlights from the quarter, and then we will get into more details. As with the last quarter, we will continue to report certain metrics, both including and excluding the impact of our larger m and a so that people have a good sense on how the core business is trending. I would note here at the outset that we had the same number of revenue days in q two twenty twenty five as q two twenty twenty four, so there’s no need to adjust the prior year comparisons for days. Total company revenue was 550,800,000.0 compared to 477,900,000 in the prior year, representing a 15.2% growth year over year. Excluding contributions from Nova, revenue was $519,400,000 resulting in an 8.7% increase over the prior year.

Total patient visits increased 9.5% in the quarter to approximately 55,000 patient visits per day. Our workers’ compensation visits per day increased 9.3%, and employer services visit volume increased 10.3% relative to the prior year. Excluding the impact from the acquisition of Nova, total visits per day increased 2.4%. Workers’ compensation visits increased 3.2%, a notable acceleration over q one growth, and employer services visits increased 2%, also better than q one results. A solid quarter across the board from a volume standpoint as work comp volumes rebounded from a softer Q1 and employer service visits continued the reversal in the positive growth territory we have seen since the beginning of the year as we move to more normalized levels.

We had another strong rate quarter with an approximately 4.4% increase in revenue per visit this quarter versus the same quarter prior year. This growth was driven by a 5.4% increase in workers’ compensation and a 3.1% increase in employer services revenue per visit. Adjusted EBITDA was 115,000,000 in the quarter versus $101,600,000 in the same quarter prior year or a 13.2% increase. Adjusted EBITDA margin decreased from 21.3% in Q2 twenty twenty four to 20.9% in Q2 twenty twenty five, primarily due to some favorable items impacting cost of services in the prior year, also some onetime Nova transition cost this quarter, along with incremental Nova G and A expense that wasn’t synergized through the full quarter and other G and A cost increases in the current year that Matt will touch on shortly. Overall, we are pleased with the company performance and our continued growth.

Adjusted net income attributable to the company was $47,700,000 and adjusted earnings earnings per share was $0.37 for the second quarter twenty twenty five. As with the last few quarters, net income was lower than the same quarter prior year, primarily due to an increase in interest expense resulting from recapitalization. Adjusted EBITDA and adjusted net income reflect the add back of transaction expenses related to our acquisition activity as well as onetime costs related to our separation from Select Medical. Now before I turn it over to Matt for additional information, I’d like to briefly comment on the significant progress we’ve made during the second quarter as it relates to our Q1 Nova Occupational Health Center acquisition and the related integration efforts. The June 1 Pivot On-site Health Clinics acquisition, and our continued Select Medical separation efforts.

We are incredibly proud of our team’s efforts to manage these major initiatives and continue to achieve our goals on the timelines we established. Matt will share more details, but everything is on track, and we are pleased about where we will be when all three are completed. Now I’ll hand it over

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: to Matt to provide additional details on our financial results, capital allocation strategies, and growth efforts. Thanks, Keith, and good morning, everyone. I’ll start by going through some more details on our results in our three operating segments. In our occupational health center operating segment, total revenue of $516,100,000 in Q2 twenty twenty five was 14.4% higher than the same quarter prior year. Workers’ compensation revenue of $332,200,000 in Q2 twenty twenty five was 15.2% higher than prior year.

As Keith mentioned, work comp visits per day increased 9.3% from prior year, and work comp revenue per visit increased 5.4% versus prior year. Work comp revenue per visit was $209, similar to our work comp rate last quarter. Within employer services, revenue of 174,300,000.0 increased 13.7% from prior year. Employer services visits per day increased 10.3% from prior year, and employer services revenue per visit increased 3.1% versus prior year. To help isolate from our Q1 acquisition of Nova, here are the same stats excluding the impact of Nova.

Total revenue within the occupational health center operating segment was $484,800,000 a 7.4% increase over the prior year. Total visits per day increased 2.4% over the same quarter prior year. Revenue per visit increased 4.9% from $140 in Q2 twenty twenty four to $147 in Q2 twenty twenty five. Workers’ compensation revenue of $314,000,000 in Q2 twenty twenty five was 8.9% higher than prior year. Workers’ compensation visits per day were 3.2% higher than prior year, and work comp revenue per visit was 5.5% higher than prior year.

Within employer services, revenue of $161,800,000 increased 5.5% from prior year. Employer services visits per day were 2% higher than prior year, and employer services revenue per visit was 3.4% higher than prior year. The most notable takeaway from the quarter was our solid volume growth, both compared to Q1 and also compared to Q2 of last year. Excluding Nova, year over year visit growth for work comp accelerated from 0.2% in Q1 to 3.2% in Q2, and employer services went from 0.9% in Q1 to 2% in Q2. We had spoken before about the softer work comp volume number in Q1, and we did in fact see a much stronger number in Q2.

We are also pleased to see the continued positive growth trend and slight acceleration for employer services. Work comp and employer services visits can bounce around a little bit, but growth tends to be in the low single digits over time. We’ll add more commentary later in our remarks, but we think our q two visit trends are a pretty good indicator of the broader economy. We are not seeing any slowdown based on the data we look at every day that covers employers of all sizes, industries, and geography. Moving on from our occupational health centers, our on-site health clinic segment reported revenue of $22,600,000 in Q2 twenty twenty five, a 45.2% increase from the same quarter prior year.

Excluding the one month impact from the Pivot On-site acquisition that closed on June 1, On-site segment revenue grew 9.9% year over year. So overall, a nice quarter as it relates to our core On-site performance and obviously a major milestone adding the Pivot Onsites to our portfolio. A quick reminder for everyone, we do not report visit metrics for our on-site business given the nature of the revenue model. And finally, other businesses generated revenue of 12,100,000.0, an 8.5% increase against same quarter prior year. Now switching to expenses.

Cost of services was $389,300,000 or 70.7% of revenue in Q2 twenty twenty five, down from 71% of revenue for the same quarter prior year. We realized a nice decrease here, primarily driven by better staffing efficiencies in conjunction with the strong revenue growth. And this improvement would have been even better if not for approximately $750,000 of onetime costs related to the Nova and Pivot transitions that are not adjusted out of adjusted EBITDA, as well as several favorable adjustments in the prior year. Overall, our labor costs continue to be stable, trending approximately 3% higher than prior year, which is a consistent theme for us over the years. Our teams are doing a great job managing staffing to the visit volumes, and we have made good progress filling open positions.

We want to emphasize this point as labor dynamics have not historically been an issue for this business model. Our total general and administrative expenses were $52,900,000 or 9.6% of revenue in Q2 twenty twenty five compared to 7.7% of revenue in the same quarter prior year. This comparison is not apples to apples though, as we have expenses in Q2 of this year that we did not have in the prior year before we were a public company and separated from Select Medical, and we also have some acquisition related expenses here related to Nova and Pivot. Excluding items that are added back for the purposes of calculating adjusted EBITDA, including equity compensation expense, one time select separation costs and M and A transaction costs, G and A expense was $46,600,000 for the quarter or 8.5% of revenue compared to 7.8% of revenue in the same quarter prior year. The increase was largely driven by incremental Nova G and A expense that wasn’t synergized through the full quarter and planned increases in personnel costs related to becoming a public company in our ongoing separation from Select Medical.

The overall adjusted EBITDA margin in Q2 twenty twenty five was 20.9% compared to 21.3 during the same quarter prior year. To reiterate, the primary drivers of this slightly lower margin are some favorable onetime cost of services items from prior year, certain onetime Nova and Pivot integration expenses totaling approximately 750,000 that are not adjusted out of adjusted EBITDA, incremental G and A expense from Nova that was not fully synergized through the entirety of the quarter, and the planned increase in personnel related public company and select separation costs. In Q2 twenty twenty five, we generated $88,400,000 operating cash flow. It was a nice cash flow quarter for us, driven primarily by our financial performance, but also due to the timing of payroll and other payables quarter end. Investing activities used $79,500,000 of cash in the second quarter, predominantly driven by the Pivot acquisition closing on June 1.

Also included in this number is 25,200,000.0 of CapEx, with approximately $18,000,000 of that from our normal course capital program for upgrading and maintaining existing facilities, de novos, and technology investments, and approximately 7,000,000 of one time CapEx associated with our Nova Center integration and rebranding efforts. Financing activities resulted in net cash inflows of 12,900,000.0 for the second quarter, primarily due to our revolver draw of $35,000,000 as part of the Pivot acquisition, partially offset by two quarterly dividend payments that both fell into Q2. We ended the quarter with a total debt balance of $1,670,000,000 and a cash balance of $74,000,000 Our net leverage ratio per our credit agreement at the June was 3.8 times. We found that some investors are not including the annualized impact from our recent acquisitions in their leverage calculations, especially if doing a quick screen on Bloomberg or other sources. So we felt it was important to call this out.

For the remainder of this year, we will be focused on continuing our delevering path, while we look to fully integrate Nova and Pivot and continue to make progress with our separation from Select Medical. The second half of the year is our strongest cash flow period, especially Q4 with collections coming in from the highest volume months. Now switching to our growth efforts. With respect to the integration of Nova, we are progressing well and now have all centers converted to Concentra systems, processes, and signage as of the July. We expect this to drive both increased top line growth and operational efficiencies going forward.

As we’ve mentioned, we incurred material conversion costs, which occurred in May, June, and into July that impacted our cost of services and were not added back to adjusted EBITDA. We expect to see these costs decline significantly going forward. Our teams are now focused on growing visits and adding additional services. We expect this will take some time like other acquisitions in the past, but we are confident in the team’s ability to do so. As it relates to our cost synergies, through the end of Q2, we estimate that we have captured just over 70% of our planned operational and back office synergies, which is right on track with our original underwriting.

The remaining 30% will be systematically executed through the remainder of 2025 and into Q1 twenty twenty six. Overall, this acquisition is tracking well, but more work to do before we are fully integrated and closer to run rate performance. On the de novo front, we opened one location in Chattanooga, Tennessee in Q2 twenty twenty five and have two or three more locations planned for the second half of this year, depending on some construction variables. With respect to 2026 activity, to date, we have executed or are close to executing five new leases and have a number of other active targets that are candidates for opening in 2026. In general, we continue to identify a lot of white space across the country with high workplace injury density and little to no existing Concentra footprint, so we have a good opportunity to continue to accelerate our de novo activity.

We also have a pipeline of small bolt on M and A deals that we intend to pursue in parallel with our de novo strategy. I’d like to reiterate that both de novos and bolt on M and A are down the fairway for us given our average run rate build and acquisition multiples of less than three times EBITDA over the past decade. We will continue to execute on this corporate development strategy in concert with reaching our leverage targets on our projected timeline. We do not expect any larger acquisitions for the remainder of this year. Lastly, on the growth front, we are excited about the closing of the Pivot on-site acquisition on June 1.

Integration efforts are underway, but mostly focused on combining the two G and A teams. No changes at the on-site location level like we had with the Nova integration efforts. As previously stated, this is a deal that enhances our ability to compete in the broader on-site space where we now view ourselves as a top five player in terms of scale. We’ve onboarded a number of new leaders that are going to be integral towards growing the business going forward, and we have a robust sales pipeline of both occupational health and advanced primary care opportunities that should set us up nicely for continued organic growth into next year. Longer term, we expect additional on-site acquisition opportunities to continue to arise, including advanced primary care focused platforms, as we look to meaningfully grow our on-site segment.

Finally, last note on capital allocation. We are pleased to announce a continuation of our dividend this quarter with Concentra’s Board of Directors declaring a cash dividend of $6.25 per share on 08/06/2025. The dividend will be payable on or about 08/28/2025 to stockholders of record as of the close of business on 08/21/2025. So now back to Keith to comment on a few important topics, most of which are popular topics we are asked by investors and research analysts.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Thanks, Matt. Overall, many positives to the quarter and a solid first half for 2025. We’re pleased about the opportunities ahead in the second half of the year and 2026. As Matt mentioned, I wanna take a few minutes and cover a couple topics and questions that come up periodically. I’ll start first on our visit trends, their correlation to economic indicators, and what we’re seeing as it relates to the job market.

As we’ve discussed before, we track total employment and hiring and quit rates, but many variables are included in driving our visit volumes. Our work comp visit growth rates quarter by quarter will move around a bit for a variety of reasons, but over time, we expect to see low single digit growth rates. It was good to see a stronger quarter in q two. Our employer services visit growth rates have now been positive for two quarters in a row. We believe this is a solid indicator of the health of the labor market and broader economy.

We are not seeing any indication of slowdown for what we have been recently been experiencing as we monitor our visit trends on a daily basis. There are some shifts in industry mix, but no extended trend, either positive or negative in any industry we serve. If anything, we’re seeing more stability now than we have in more recent quarters. We’ve shown in the past that we can navigate well through any ups and downs in the broader economy. A recent example is how we grew EBITDA through many quarters of negative employer service visit declines.

We wanna emphasize this point as employment hiring trends are important to us, but we have many other variables such as reimbursement increases and staffing controls that limit our exposure to economic swings. Secondly, we’re getting some questions about how the recent legislation or the big beautiful bill impacts us as a company. As we’ve mentioned in the past, our industry is very unique, and the workers’ compensation fee schedules are governed by each individual state, and employer service pricing is set by us with market pricing adjustments each year. For workers’ comp, each state has its own fee schedule, and the calculation of that fee schedule varies from one state to the next. Each state sets the fee schedule for their particular state but are not the entities making the payments to providers, so it does not impact or relate to their specific state budgets.

Because of this, most of the time, we are not impacted by federal legislation. With the recent legislation, there is one item of note that will impact us in a favorable way in ’26. It’s primarily tied to the two and a half percent doc fixed provision. There are four states, California, Ohio, North Carolina, and Tennessee, that utilize the conversion factor component of the Medicare physician fee schedule as one component of their calculation each year in adjusting their workers’ comp fee schedules. These four states will see that 2.5% conversion factor increase as part of their fee schedule updates.

We will benefit most from California as is one of our largest states and also because California has an MEI inflationary adjustment as another component of its fee schedule calculation that will be incremental to the doc fix increase. It’s still early, but we’re expecting another strong rate year in 2026. We’ll continue to track other state changes, and we’ll likely have more information later this year on how 2026 is shaping up. Overall, we want to emphasize how unique our reimbursement environment is and how federal changes are unlikely to impact us unlike other health care service companies. Lastly, this legislation has some tax and depreciation regulation changes that, while not impacting our overall effective tax rate, will help us in a material way from a cash flow standpoint by over 15,000,000 in 2025 and about a third of that in 2026.

Last topic I wanted to comment on is our separation for Select Medical and how that is progressing. We’re about eight months into the two year project, and all teams are doing a great job to set us up for complete separation by November 2026. I credit both Concentra and Select colleagues in their collaborative approach. Concentra has hired almost 50% of the staff we project we will need, and we’ve started reducing the amount we pay Select for the services they have historically provided. Much more work to do, but our teams estimate that we’re at approximately the midpoint in this separation process from a people, contract, and project standpoint.

With that, I will hand it back to Matt to wrap up the call with our financial outlook update.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Thanks, Keith. Okay. To round out the call today with the previous comments as a general backdrop, we are raising our 2025 revenue guidance to 2,130,000,000 to $2,160,000,000 from 2,100,000,000.0 to $2,150,000,000 and the lower end of our adjusted EBITDA range to $420,000,000 from $415,000,000 The result is a new 2025 adjusted EBITDA range of $420,000,000 to $430,000,000 And we remain on target for 80,000,000 to $90,000,000 of CapEx, which includes significant onetime Nova spend and a 3.5 times leverage ratio by year end. Furthermore, we are on track for our leverage ratio to be below three times by the 2026. To wrap it up, I’d like to reiterate the takeaways we’d like investors to leave with.

Solid organic visit growth this quarter, another strong rate quarter with a good early outlook on rate for next year, raised guidance, no major reimbursement risk, stable labor trends, positive momentum with strategic M and A integration efforts, tremendous white space available to us across all our service lines, a clear path to continued delevering with very strong cash flow, and continued solid EBITDA margins. With our unique reimbursement model relationships, we view ourselves as a B2B business services provider and a differentiated investment opportunity versus other health care services companies today. That concludes our prepared remarks. Remarks. We thank everyone for the time today.

We’d like to turn it back to the operator to open the call for questions.

Conference Call Operator: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. And you may press 2 if you would like to remove your question from the queue.

Our first question is coming from Benjamin Rossi with JPMorgan. Your line is live.

Benjamin Rossi, Analyst, JPMorgan: Good morning. Thanks for taking my question here. For the 2025 guidance update, could you just walk me through what’s being contemplated in your changes to revenue and adjusted EBITDA from M and A contribution or aggregate improvements to either your core volumes and pricing across segments? And then just on cadence, I know last year you had some weather related drag in 3Q. Are there any other year over year dynamics to consider or incremental M and A spend within this guide for the back half of the year?

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Sure. Hey, good morning, Ben. Thanks for the question. I’ll take the first part and then we can get to the second part after that. As far as the guidance, we thought it was appropriate to raise guidance.

Obviously had a strong quarter on both revenue and EBITDA. We had previously given guidance a few months back that included the M and A. So all of that’s factored in and really the way we’re thinking about guidance is pretty similar performance to what we’ve seen year to date. And obviously, we’ll have the incremental Nova and Pivot performance that we didn’t have before those deals closed earlier this year. So pretty much run rate consistent performance through the remainder of this year.

The second part of your question was around some weather. There was some weather last year and it was primarily July that we had called out previously. So that will be a factor in Q3, but there’s no other material events that we want to point out for the remainder of the year.

Joanna Gajuk, Analyst, Bank of America: Got it.

Benjamin Rossi, Analyst, JPMorgan: Okay. And I guess just as a follow-up, on the on-site total clinic count regarding your on-site health clinics, can you just help me bridge to that four zero six reported centers following the POI acquisition? I just recall when you gave us the initial overview of the acquisition back in April, you described the combined entity being around three sixty centers all in with about $120,000,000 in combined revenue. Is that still is that revenue figure still applicable for 2025 under the combined setup? Yes.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yeah, no change to the revenue. Slight update to the count of Onsites. There are two forty total Onsites. And the update there, I think we had previously said 200 plus, but there’s a slight difference in how we count for them versus how Pivot had counted for them. So post acquisition, we updated that to about two forty Onsites that were acquired.

Benjamin Rossi, Analyst, JPMorgan: Great. Thanks for the clarification.

Joanna Gajuk, Analyst, Bank of America: Thank

Conference Call Operator: you. Our next question is coming from Justin Bowers with Deutsche Bank. Your line is live.

Justin Bowers, Analyst, Deutsche Bank: Hi, good morning, everyone. So one question for each of the main segments. Nice to see the workers’ comp accelerate into 2Q. So now that you’ve had a chance to sort of do the look back, anything to explain, you know, sort of the softer trend in 1Q? And then with respect to the guide, does the guide accommodate sort of like flattish to, you know, 3% same store workers’ comp visits?

Just help us think about the guide on workers’ comp. Then I’ll follow-up with employer services.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Yeah, Justin, this is Keith. Yeah, I think we’ve mentioned it that the quarters can vary a little bit for a lot of reasons. I don’t really think there’s a whole lot to the first quarter as far as the softness. There’s a lot of dynamics going on in the world today that can, I think, impact us here and there? Employers seem to have been in a somewhat stable wait and see at times.

But I think it’s the comps compared to last year, what was happening then versus this year. We’ve just continued to put our heads down, continue to do the things we’re doing. And it’s I think the fruits of our labor starting to bear as a result of that. I don’t know if you have any comments.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yeah, and I’ll just add to that. I think the second part of your question was the remainder of the year, Just to add on to what Keith said, 2024 was the toughest comp for this year. ’24 as a comparison was kind of middle of the road, so versus this quarter. And what we’re projecting in our guidance is really closer to an average of our Q1 and Q2 numbers for the remainder of the year.

Justin Bowers, Analyst, Deutsche Bank: Thank you, Matt. That’s helpful. And then just on employer services, right? I mean, Keith, you talked about this in the prepared remarks. There is some noise around the economy, but you’re seeing it sounds like trends are pretty stable.

Is that do you think the performance there for you guys is more reflective of market or individual initiatives or sort of a mix of both there?

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: I would put it as a mix of both. I mean, there’s a lot of things that we’re doing as far as different levers from account management, sales activities, and those type things as far as penetrating further, reevaluating some of the organizational structure of the sales and how we’re approaching things, both from the account management side and penetrating the employers and also incremental new business. It seems that employers are still somewhat in a wait and see with all the numbers, indicators that come out. That seems to tell us that. We’re hopeful that as we progress further down through the year, as some of the there’s better clarity relative to what’s going to happen in the future, whether it’s tariffs, whether it’s all the other things happening right now, that maybe employers start to become a little more activity wise from a hiring standpoint, and then we start to pick up the benefit of that.

I don’t think we’re really picking up the benefit of anything there other than just a stable workforce right now and just the activities that we’re deploying.

Justin Bowers, Analyst, Deutsche Bank: Appreciate it. I’ll jump back in queue.

Conference Call Operator: Thank you. Our next question is coming from Jamie Perce with Goldman Sachs. Your line is live.

Jamie Perce, Analyst, Goldman Sachs: Thank you. Good morning. So you’ve spoken a lot about the volume acceleration that you saw in the second quarter. As we think about the back half of the year, is the right way to think about volume growth for both of the businesses more like what you saw in the second quarter or more like what you saw on a year to date basis? Just trying

Justin Bowers, Analyst, Deutsche Bank: to put

Jamie Perce, Analyst, Goldman Sachs: a finer point on volume expectations as you move through the back half of the year. And then just to push on this macro topic for a second. Clear you are not seeing anything yet. You said that several times. Are you factoring anything into the guidance or any cushion broadly into the guidance, if there were more of a slowdown in hiring trends?

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yeah, good morning Jamie, it’s Matt. So just to reiterate on the back half of the year, the way we’re thinking about it is closer to the year to date performance. We have a little bit soft Q1, obviously a stronger Q2. So I think it’s better to look at more of the average or the year to date numbers as we move through the rest of this year. We are not factoring in significant changes to our visit volumes on the upside or downside through the remainder of this year.

But we’re coming off a strong Q2 and based on my comments on how we’re thinking about the back half of the year, closer to the year to date averages. I think there’s, you know, hopefully that gives you some thoughts for the rest of the year.

Jamie Perce, Analyst, Goldman Sachs: Yeah, that’s helpful. And then just on the P and L, can you spend a minute talking through some of the one time items that were still included in the adjusted EBITDA you mentioned, some in cost of service, just trying to better understand the margin progression for gross and operating margin in the second quarter, excluding some of these one time items and if that margin progression should continue for the balance of the year?

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yes, sure. I could hit that. So there’s a few things going on. So I’ll walk through one at a time. Cost of services, we were better versus prior year from a percentage of revenue.

And it was primarily staffing efficiencies. We would have been even better if it wasn’t for some prior year favorable reversals that happened ’24. And then also the Nova startup transition costs. There were some costs related to our system integration efforts that were over two, three month period. Some of those were adjusted out, but some of them were more normal kind of front loaded startup costs for the business that were not adjusted out.

So those burdened cost of services. So it would have those we expect those will go away now that we’ve completed the transition efforts at the July. So August moving forward, expenses should go away and that would have made cost of services even better than it was versus prior year. From a G and A standpoint, there’s really two things. It was the Nova and Pivot synergies that had not been fully realized or the full impact of those synergies.

We closed the Nova transaction on March 1. We closed the Pivot transaction on June 1 and there was a period of time before synergies and actions were taken and there’s still more synergies to be had. So we basically acquired that G and A and we’re not able to fully synergize out in the first quarter post transaction, but we expect that to flow through in the coming months and coming quarters. And then obviously, we also had some plan and expected public company and separation costs that are included in G and A were that were not there in the prior year when we were not a public company. So then, when you factor in both of those and look at our EBITDA margin, was 40 basis points lower than last year, our view is factoring those in that we would have been flat or potentially even higher than prior year.

And that’s including the fact that we’re now a public company and separating from Select Medical. Hopefully that helps.

Jamie Perce, Analyst, Goldman Sachs: Yeah, does. Thank you.

Conference Call Operator: Thank you. Our next question is coming from Ben Hendrix with RBC Capital Markets. Your line is live.

Ben Hendrix, Analyst, RBC Capital Markets: Great. Thank you very much. I just wanted to follow-up on a comment Keith made when discussing the employment and jobs macro data. I appreciate that it’s your platform has been very stable amid some changing numbers that we’ve heard. But you also, I think, mentioned that you saw some mix dynamics in your underlying business, perhaps with industries or customers.

I was wondering if you could expand on that and where you’re kind of seeing a shift and if that’s in any way could in the future create headwinds or unanticipated dynamics? Thanks.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Thanks, Actually, I think in our prepared remarks, said we have not seen shifts within the diversification of the industries. There’s no one industry that’s more than 9% or 10% of our business and they’ve all and there are several that fall kind of in that 8% range, whether it’s manufacturing, healthcare, services, distribution, all of those. And we really haven’t seen much of a shift in any of that. So it’s been fairly stable. And I think what we’ve seen really from employment standpoint, as everybody knows, is relatively slow from a hiring perspective out there.

It’s still, I think, a wait and see. Let’s get better clarity on what’s going to happen relative to how employers But fortunately, what they’ve done is kept a stable workforce. We haven’t seen the layoffs that historically would start to drive a recessionary type situation. So that’s why I believe our volumes have stayed relatively stable. The diversification amongst the employers is relatively stable.

So really not seeing much of any changes with the mix of what’s walking into our centers.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yeah, and Ben, I would just add to a lot of discussion around the short term, but we’re also really excited about the long term. Every day you hear additional proposed investment back in The United States with all the reshoring efforts that are going across the country. So every time we see an update like that, it’s exciting for our business, both our center business and our on-site and telemedicine segments.

Ben Hendrix, Analyst, RBC Capital Markets: Great. Thank you very much. And just kind of to wrap up some of the kind of the cost to start discussion, I was just wondering if the when you take into account the full synergies of Nova, the G and A rationalization you mentioned at Pivot and then the full transition from Select, maybe it’s a exit rate for 2026, but how are you thinking about kind of a run rate G and A and cost of service margin going forward?

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yes, sure. So obviously, a lot of things going on as I described before. But what I think we would point to right now is exiting 25%, if you just look at the midpoint of our EBITDA and revenue guidance, that implied margin is pretty similar to what we had last year. And we’re taking on two major acquisitions and separating from our parent company.

Justin Bowers, Analyst, Deutsche Bank: So

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: I think that speaks for itself and we’ll give more thoughts on 26 in subsequent quarters.

Ben Hendrix, Analyst, RBC Capital Markets: Great, thank you.

Conference Call Operator: Thank you. Our next question is coming from Joanna Gajuk with Bank of America. Your line is live.

Joanna Gajuk, Analyst, Bank of America: Hi. Good morning. Thanks for taking the question. So maybe first the On-site segment, it’s relatively small, but excluding Pivot, the revenue grew like 10%. So is that the organic growth we should be looking at for the segment?

Or there’s some de novo in there that driving the fast growth?

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: On the on sites, if I understood what you were saying, excluding pivot Yes. Should you anticipate? Yeah. With the deployment of advanced primary care product that we’ve talked about in the past as an additional service within our Onsites, we’re hoping it’s going to start to ramp our core growth rate on our Onsites at a faster pace than what we’ve historically seen when just focused on occupational health. In the early returns we are seeing, we are starting to win business that historically we really did not go out and bid on just because of the type of service it was.

So we’re very bullish on what we think our on-site is going to be doing from a core standpoint outside the potential for M and A activity. There’s a lot of activity in that sector right now. But as it relates to what we’re doing just from a core deliverance of the services with the addition of advanced primary care, we’re starting to win some business that historically we did not win. So I would anticipate a better growth rate than historically what we’ve seen over the last few years from a core.

Joanna Gajuk, Analyst, Bank of America: Okay. Thanks for that. And follow-up, so if I got it right, when you were talking about the second half, right, so like employer services volumes grew on average, I guess, 1.5% first half and workers’ comp also. So sort of like you’re guiding us to assume similar growth in the second half. But is it sort of like a fair assumption for, I guess, long term organic growth for these businesses when it comes to volumes?

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: Yeah, I reiterate what we said in the past about our growth algorithm and how we think about volumes in the low single digit range, right in the plus or minus 3% approximately over a long period of time and then our smaller core M and A and de novo efforts of 1% to 2% per year. So that’s really how we’re thinking about it. Q1 as just to mention again, a little soft, Q2 obviously better. We’re looking at in between those two numbers.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Yeah, think once we start seeing quit rates start to increase, job openings start to increase, hiring starting to increase, then certainly we’ll start to tweak up from an employment services growth rate.

Joanna Gajuk, Analyst, Bank of America: Great. Thank you. Thanks for the answers. Thank you.

Conference Call Operator: Thank you. Our next question is coming from Steven Baxter with Wells Fargo. Your line is live.

Steven Baxter, Analyst, Wells Fargo: Hi. Thanks for the question. Just wanted to ask about the guidance revision. It is kind of a small difference, but you’re increasing the revenue by more than you’re increasing the EBITDA on a percentage basis. I just wanted to know if there’s anything kind of note there.

Obviously, you called out sort of a lot of discrete cost items in the second quarter, but I wasn’t sure if those cost items were just to kind of aid us in the comparisons or whether they were actually coming in maybe a little bit above what you might have expected. And then I have a quick follow-up too. Thank you.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: No, we saw some of the costs from the transition efforts in maybe the May, but mostly in June. And we expect those same similar numbers in July, because we were converting the same number of centers in July. And then potentially into early August, but then we expect those costs to go away. So just being mindful of what we’ve seen over the last two, three months as we went through a pretty massive effort to put our systems and signage in and change our workflows at all of those 67 centers. We’re really proud of the work the teams have done and excited that that’s behind us and looking forward to the remainder of the year.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Yeah, and I’ll just add, there’s a lot of dynamics in play from the cost perspective right now relative to the synergies being executed on from an over perspective, the synergies being executed on from a pivot perspective, the timing of separation cost and adding people and TSAs going down. So a lot of moving parts to that. So we just wanted to be conservative with our approach to how we gave guidance from an EBITDA standpoint at this point in time. If we get better visibility and clarity as we go through Q3, we’ll continue to sharpen the pencil on that.

Steven Baxter, Analyst, Wells Fargo: Got it. Okay. Thank you. And then I appreciate the color. I guess I didn’t realize that you have some linkages in some of your states to the doc fix.

If the doc fix gets done as part of, you know, closer to like year end sending packages related to 2015, do you expect that you would see a true up in this year’s results? Or I guess how would you expect that to play out of something that ultimately gets done for this year?

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: I would not expect anything. Most of the states don’t necessarily adopt it whenever these things happen. They’re on their own timing. So it’s not like it’s it’s if something like this were to happen, we’re gonna immediately see it. So I would anticipate 2026, and we’ll you know, as we get further into this year, we’ll talk more about it and see it.

But most of the time, are going to implement their fee schedules. The majority of them, if there’s any changes they’re going to make for whatever reason, I’d say the majority of them are probably January ’26 when they do it. Others later in the year also, but they’re all on their own schedules relative to when they do it.

Steven Baxter, Analyst, Wells Fargo: Got it. Okay. And then I guess one thing we’ve kind of observed with, at least with regards to the on-site opportunity, is we’ve had a couple of years now of just really high cost trends within the employer group business, with all the managed care companies to discuss. I guess how much do you feel like that’s starting to influence the conversations that you have? And do you think that’s really been a material driver of maybe increased interest in the model versus what you might have seen going back a couple of years when things are a little bit more stable?

Thank you.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Yeah, I certainly think as we all are reading, it’s anticipated that most companies are facing some pretty big employee benefits costs as we go into 2026. So we’re certainly having those conversations more and more with employers. But I think more so because we now have a product that’s competitive with those on-site companies that kind of focused on the commercial side or the group health side with these employers. Again, historically, our focus from an on-site perspective had been occupational health. So we weren’t necessarily having these type of conversations with employers because we were dealing more with safety and risk versus HR and benefits.

Now we have a seat at the table really with both sides of an employer’s house relative to benefits and safety and risks. Certainly, as I mentioned earlier, we’re winning some deals now relative to this, where we’re basically providing advanced primary care services to that employer and their employee base at the worksite, where historically we were not doing that.

Conference Call Operator: Thank you. Our next question is coming from Anne Hines with Mizuho. Your line is live.

Joanna Gajuk, Analyst, Bank of America: Great, thank you. In your prepared remarks, you made a comment that labor dynamics is not an issue for this business model. Can you remind us why that is? And then secondly, I know you have a leverage target goal of three times by the 2026. How do you balance that with the M and A potential and opportunity?

Thanks.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: Yeah, labor dynamics, when you look at our model, typically we’ve got doctors, physical therapists, and the individuals that are supporting those clinicians are medical assistants. We don’t have RNs, LVNs, where a lot of the labor pressures that health systems faced were with that type of discipline. So historically, there’s more of a base to draw from a medical assistant standpoint, hourly individuals. So historically, we did not feel the same pressures that the health systems faced over the last few years from that perspective. So that’s really our model.

And our model is based on visits per day per FTE within a center, those type metrics. So we’re able to lever up, lever down based on volumes for the most part and adjust accordingly. And so we that’s pretty much kind of how we have managed this business over the years.

Matt DiCanyo, President and Chief Financial Officer, Concentra Group Holdings Parent Incorporated: I can take the second question. And on the leverage question you said, so we’ve stated that we’re targeting 3.5 times by year end and sub three times by the end of next year. And really, we feel good about where we are because we’re still working through the Nova and Pivot integrations, we’re still working through call it the second half of our select separation efforts. Our teams are very focused on executing on those successfully and we’re going to naturally delever, especially in Q4 with the strongest cash flow quarter we have. Then looking at ’26, we’ll have a lot of those three main work streams behind us for the most part.

We’ll continue to look at M and A. Our leverage targets and strategy are not impacted by our core de novos and smaller M and A. We’ll continue doing that as we delever. And I think at some point next year, we’ll continue to look at more sizable M and A efforts. But for right now, we’re very focused on executing on what’s in front of us.

Joanna Gajuk, Analyst, Bank of America: Thanks.

Steven Baxter, Analyst, Wells Fargo: Yep.

Conference Call Operator: Thank you. Ladies and gentlemen, we appear to have reached the end of our question and answer session. So I would like to hand the call back over to Mr. Newton for any closing remarks.

Keith Newton, Chief Executive Officer, Concentra Group Holdings Parent Incorporated: No, I just want to thank everybody for joining us today and appreciate it. Thank you very much.

Conference Call Operator: Thank you, ladies and gentlemen. This does conclude today’s call, and you may disconnect your lines at this time. We hope you have a wonderful day, and we thank you for your participation.

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