Concentra Group Holdings Parent, Inc. Q3 FY2024 earnings call

• Business overview: Concentra is the largest provider of occupational health services in the US with over 700 locations, serving ~50,000 patients daily and 200,000 employer customers. Mission is to improve workforce health. - Third quarter performance: Revenue $489.6 million, up 3.3% y-o-y; adjusted EBITDA $101.6 million, up 2.7% y-o-y. Visit trends: Total visits down 0.7% y-o-y, with employer services visits down 2.6% offset by workers' compensation visits up 1.7%. Revenue per visit up 3.9% due to higher reimbursement rates. - Cash flow: Operating activities provided $65.9 million cash flow; DSO 44 days, 3 days better than prior year. - Dividend: Board declared $0.0625 per share dividend payable in November. - Corporate development: Acquired a practice in Illinois, opened new centers in Tennessee and Florida; building acquisition and de novo pipeline. - Separation from Select Medical: Made progress, hired key leaders to support transition towards independent operation by end-2026. - Technology initiatives: Advancing key technology initiatives.

In the third quarter, the occupational health center operating segment, which represents 94% of total revenue, had revenue of $463.1 million. Workers' compensation revenue was $298.7 million, 64.5% of center operating segment revenue, up 4.5% year-over-year. Employer services revenue in the center operating segment was $154.8 million, up 0.9% year-over-year. Onsite revenue was $15.6 million, up 3.9% year-over-year. Other business revenue was $11 million, up 4.4% year-over-year.

Full year 2024 guidance: Revenue expected to be approximately $1.9 billion, adjusted EBITDA in the range of $370 million to $375 million, capital expenditures in the range of $65 million to $70 million, and net leverage ratio in the range of 3.5x to 3.6x. Guidance for 2025 to be provided early in the new year.

• Weather impacts: Hurricanes like Beryl, Helene, and Milton impacted visits and revenue. - Cyber outage: CrowdStrike-related IT outage in July affected visits. - Economic uncertainties: Sensitivity to hiring and labor market conditions, impact of election process and interest rate changes on volume growth.

Q: Strong revenue per visit in workers' comp. How are rates progressing and visibility?

A: Keith mentioned continued strong workers' comp reimbursement, stable rates, and good visibility into 2025. Matt added Florida rate update on track, to be in place February 2025, with more guidance early 2025 on state reimbursements.

Q: Weather impacts on business. Size of impact from hurricanes and cyber outage?

A: Matthew DiCanio stated total impact from Beryl, Helene, and cyber outage was ~$1.7 million in revenue and ~$600,000 in EBITDA.

Q: Workers' comp visits per day. Comparison to expectations and trends?

A: Matthew DiCanio said positive work comp visit growth in the quarter, muted by events, but tied to employment increase, expecting visits in line with Q1-Q3 on average.

Q: Sensitivity to hiring and labor environment. Connection to volume growth estimates?

A: William Newton said need improvement in hiring and labor environment, but mitigated in other ways, expecting improvement post-election and interest rate settling.

Q: Impact of Hurricane Milton on Florida and expansion strategy?

A: Matthew DiCanio said Hurricane Milton had impact, but not material, not slowing expansion in Florida.

Q: Seasonality and 4Q guidance. Impact of hurricanes and spillover of onsites?

A: William Newton said 4Q is typically lowest, in line with history; Matthew DiCanio added 2 centers and 10 onsites in Q4, with onsites spread over time.

Q: Major headwinds/tailwinds for 2025 guidance. Key factors?

A: Matthew DiCanio mentioned consistent visit trends, election and interest rate impact, growth pipeline, and Florida rate increase. William Newton added progress on separation from Select Medical.

Q: Florida rate increase and other states' potential. Any other states with positive rate increases?

A: William Newton said depends on states' MEIs and CPIs, some visibility but still early, with surprises possible.

Q: Working with employers and economic sensitivity. How to penetrate further?

A: William Newton said prospecting multiple pathways in workers' comp and employer services ecosystem, not just employers, via third-party administrators and aggregators.

Q: Workers' comp rate increases and industry exposure. Exposure to industries and difference between workers' comp and employer services?

A: William Newton said employer services affected by hiring/labor market headwinds earlier than workers' comp; Matthew DiCanio mentioned highly diversified industry mix, similar for both workers' comp and employer services.

Q: Onsite growth and advanced primary care offering. Tracking and target?

A: Matthew DiCanio said advanced primary care offering launched, 10 additional onsites won, early innings of growth, expecting it to be a contributor with potential for larger size over time.