Concentra Group Holdings Parent, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Highlights: Total company revenue in Q3 2025 was $572.8 million, a 17% year-over-year increase. Excluding the Nova acquisition, revenue was $541.5 million, up 10.6% YOY. Total patient visits increased 9.2% to over 55,500 visits per day. Adjusted EBITDA was $118.9 million, a 17.1% increase YOY, with a margin of 20.8% (up from 20.7% in Q3 2024). Adjusted net income was $49.9 million, and adjusted earnings per share was $0.39.
• Integration and Expansion: Finalized integration and rebranding of Nova occupational health centers, opened 5 de novo centers in 2025 with 2 more anticipated by year-end. Onsite health clinics segment boosted by Pivot acquisition and organic growth.
• Operational Efficiencies: Cost of services was 70.8% of revenue in Q3 2025, down from 71.7% in the prior year due to staffing efficiencies. General and administrative expenses were 9.2% of revenue, but excluding certain items, it was 8.5% of revenue. Progress on separating from Select Medical, with ~2/3 of needed colleagues onboarded.

Segment Performance

• Occupational Health Centers: Total revenue in Q3 2025 was $526 million, a 13.6% year-over-year increase. Workers' compensation revenue was $343.5 million, up 15% YOY. Excluding the Nova acquisition, total revenue in this segment was $494.7 million, a 6.8% increase YOY. Workers' compensation revenue excluding Nova was $324 million, up 8.5% YOY. Employer services revenue in the segment was $173.2 million, up 11.9% YOY; excluding Nova, it was $161.7 million, up 4.4% YOY.
• Onsite Health Clinics: Revenue was $34.9 million in Q3 2025, a 123.8% increase YOY. Excluding the Pivot acquisition, the segment revenue grew 17.5% YOY.
• Other Businesses: Generated $11.9 million in revenue, an 8.1% increase YOY.

Guidance

• Raised the low end of 2025 revenue guidance from $2.13 billion to $2.145 billion and the low end of adjusted EBITDA guidance from $420 million to $425 million, while keeping the top ends unchanged.
• Reaffirmed CapEx range of $80 million to $90 million, trending towards the lower end.
• Aim to delever to ≤3.5x by the end of 2025 and <3x by the end of 2026.
• Plan to invest in technological capabilities for customer capture, retention, and operational efficiencies.

Risks

• Macro-economic uncertainties such as interest rates, tariffs, and shutdowns could impact business.
• Decoupling of workers' comp visit data from BLS employment data in recent times, which may affect visit volume projections.
• Dependence on successful integration of future acquisitions and de novo center openings.

Question and Answer

• Q: Heading into 2026, any major headwinds or tailwinds?

A: Keith Newton states there are no major headwinds currently, feels bullish about 2026.

• Q: Volume trend in employer services, core growth?

A: Keith and Matt DiCanio discuss post-COVID reset, sales/marketing levers, and technology use driving core growth in employer services.

• Q: Decoupling of workers' comp and BLS data, IT investment offensive/defensive?

A: Keith talks about decoupling in recent years and IT investment to reengage employers and accelerate sales funnel.

• Q: Soft economy impact on hiring/retaining workforce?

A: Matt DiCanio says labor force stats are stable, with turnover slightly down.

• Q: Deal pipeline, larger assets?

A: Keith says no bricks-and-mortar assets like Nova, focus on onsite health clinics, and Pivot acquisition.

• Q: Flexing costs on employment weakness?

A: Matt DiCanio explains teams flex staffing based on visit volumes, reacting quickly to economic changes.

• Q: Expectations for 2026 rates?

A: Matt DiCanio says work comp rates depend on state fee schedules, while employer services rates are in line with inflation.