Concentra Group Holdings Parent Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 16:03
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read this discussion together with our unaudited condensed consolidated financial statements and accompanying notes.
Forward-Looking Statements
This report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by the use of words such as "plans," "expects," "will," "anticipates," "estimates" and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; our strategy for growth; product development activities; regulatory approvals; market position; market size and opportunity; expenditures; and the effects of the Separation on our business.
Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to risks, uncertainties and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. You are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include:
•The frequency of work-related injuries and illnesses;
•The adverse changes to our relationships with employer customers, third-party payors, workers' compensation provider networks or employer services networks;
•Changes to regulations, new interpretations of existing regulations, or violations of regulations;
•State fee schedule changes undertaken by state workers' compensation boards or commissions and other third-party payors;
•Our ability to realize reimbursement increases at rates sufficient to keep pace with the inflation of our costs;
•Labor shortages, increased employee turnover or costs, and union activity could significantly increase our operating costs;
•Our ability to compete effectively with other occupational health centers, onsite health clinics at employer worksites, and healthcare providers;
•A security breach of our, or our third-party vendors', information technology systems which may cause a violation of HIPAA and subject us to potential legal and reputational harm;
•Negative publicity which can result in increased governmental and regulatory scrutiny and possibly adverse regulatory changes;
•Significant legal actions could subject us to substantial uninsured liabilities;
•Litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements;
•Insurance coverage may not be sufficient to cover losses we may incur;
•Acquisitions may use significant resources, may be unsuccessful, and could expose us to unforeseen liabilities;
•Our exposure to additional risk due to our reliance on third parties in many aspects of our business;
•Compliance with applicable laws regarding the corporate practice of medicine and therapy and fee-splitting;
•Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information;
•Compliance with applicable data interoperability and information blocking rule;
•Facility licensure requirements in some states are costly and time-consuming, limiting or delaying our operations;
•Our ability to adequately protect and enforce our intellectual property and other proprietary rights;
•Adverse economic conditions in the U.S. or globally;
•Any negative impact on the global economy and capital markets resulting from other geopolitical tensions;
•The impact of impairment of our goodwill and other intangible assets;
•Our ability to maintain satisfactory credit ratings;
•The effects of the Separation on our business;
•Our ability to achieve the expected benefits of and successfully execute the Separation and related transactions;
•Restrictions on our business, potential tax and indemnification liabilities and substantial charges in connection with the Separation and related transactions;
•The negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic;
•The loss of key members of our management team;
•Our ability to attract and retain talented, highly skilled employees and a diverse workforce, and on the succession of our senior management;
•Climate change, or legal, regulatory or market measures to address climate change;
•Increasing scrutiny and rapidly evolving expectations from stakeholders regarding ESG matters;
•Changes in tax laws or exposures to additional tax liabilities; and
•Changes to United States tariff and import/export regulations and the impact on global economic conditions may have a negative effect on our business, financial condition and results of operations.
You should also carefully read the risk factors described in our Annual Report on Form 10-K in Part I, Item 1A. "Risk Factors" for a description of certain risks that could, among other things, cause our actual results to differ materially from those expressed or implied in our forward-looking statements. You should understand that it is not possible to predict or identify all such factors and you should not consider the risks described above to be a complete statement of all potential risks and uncertainties. We do not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments, except as required by law.
Overview
We were founded in 1979 and have grown to be the largest provider of occupational health services in the United States by number of locations. Our national presence enables us to provide access to high-quality care that supports our mission to improve the health of America's workforce. As of September 30, 2025, we operated 628 stand-alone occupational health centers in 41 states and 413 onsite health clinics at employer worksites in 44 states. We also have expanded our reach via our telemedicine program serving 43 states and the District of Columbia. In total, we deliver services across 47 states and the District of Columbia. Our patients are generally employed by our main customers - employers across the United States.
Our business is organized into three operating segments based primarily on the type or location of occupational health services provided:
•Occupational health centers: Our occupational health centers operating segment encompasses the occupational health services we deliver at our 628 occupational health center facilities across the United States. In this operating segment, we serve all types of employers, from Fortune 100 to small businesses. The occupational health services provided in this operating segment include workers' compensation and employer services and we also provide consumer health services.
•Onsite health clinics: Our onsite health clinics operating segment delivers occupational health services and/or employer-sponsored primary care services at an employer's workplace, including mobile health services and episodic specialty testing services - we deliver our services at 413 permanent on-site locations and multiple other employer locations through our episodic services. In this operating segment, we serve medium to large-sized employers.
•Other businesses: Our other businesses operating segment is comprised of several complementary services to our core occupational health services offering and includes Concentra Telemed, Concentra Pharmacy, and Concentra Medical Compliance Administration. In this operating segment, we serve all types of employers.
All three operating segments are aggregated into a single reportable segment in our condensed consolidated financial statements based on similar services provided, service delivery process involved, target customers, and similar economic characteristics.
The following table represents the percentage of revenue by our operating segments for the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
|
Occupational health centers
|
92 | % | 95 | % | 93 | % | 95 | % | |||||||||||||||
|
Onsite health clinics
|
6 | % | 3 | % | 5 | % | 3 | % | |||||||||||||||
|
Other businesses
|
2 | % | 2 | % | 2 | % | 2 | % | |||||||||||||||
Across our operating segments, we offer a diverse and comprehensive array of occupational health services, including workers' compensation and employer services, and consumer health services:
•Workers' compensation services: include the support of workers' compensation injury, physical rehabilitation, and specialist care.
•Employer services: consist of drug and alcohol screenings, physical examinations and evaluations, clinical testing, and preventive care, as well as direct-to-employer services that include the services described above and advanced primary care at our onsite health clinics.
•Consumer health services: consist of the support of patient-directed urgent care treatment of injuries and illnesses.
The following table sets forth the percentage of our overall visits per day ("VPD") volume in our occupational health center operating segment by service offering, for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Workers' compensation services | 45 | % | 45 | % | 45 | % | 45 | % | |||||||||||||||
| Employer services | 53 | % | 53 | % | 53 | % | 53 | % | |||||||||||||||
| Consumer health services | 2 | % | 2 | % | 2 | % | 2 | % | |||||||||||||||
The following table sets forth the percentage of visit-related revenue in our occupational health center operating segment by service offering, for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Workers' compensation services | 65 | % | 65 | % | 65 | % | 64 | % | |||||||||||||||
| Employer services | 33 | % | 33 | % | 33 | % | 34 | % | |||||||||||||||
| Consumer health services | 2 | % | 2 | % | 2 | % | 2 | % | |||||||||||||||
Significant Events
Nova Acquisition
Effective March 1, 2025, the Company acquired Nova Medical Centers ("Nova"). CHSI entered into an equity purchase agreement to acquire all of the outstanding membership interests for a purchase price of $265.0 million, subject to adjustment in accordance with the terms and conditions set forth in the purchase agreement. We financed the transaction using a combination of $102.1 million of new debt financing under the Credit Agreement, $50.0 million of available borrowing capacity under our existing Revolving Credit Facility, and the remaining with cash on hand.
Nova operates 67 occupational health centers in five states, providing workers' compensation injury care services, physical therapy, drug and alcohol screening, and pre-employment physicals as part of their full suite of occupational health services.
Debt Financing
On March 3, 2025, the Company completed an amendment to the Credit Agreement to increase our revolving credit facility by $50.0 million from $400.0 million to $450.0 million. The interest rate for the revolving credit facility has been reduced from Term Secured Overnight Financing Rate ("Term SOFR") plus 2.50% to Term SOFR plus 2.00%, subject to a leverage-based pricing grid including a 25-basis point step down at a net leverage ratio of ≤3.50x. In addition, the amendment to the Credit Agreement also added new debt through an incremental term loan of $102.1 million, which provides an updated Term Loan of $950.0 million. The Term Loan interest rate has been reduced from Term SOFR plus 2.25% down to Term SOFR plus 2.00%, subject to a leverage-based pricing grid including 25-basis point step down at a net leverage ratio of ≤3.25x.
Pivot Onsite Innovations Acquisition
Effective June 1, 2025, the Company acquired Onsite Innovations, LLC ("Pivot Onsite Innovations") from Pivot Occupational Health, LLC. CHSI entered into an equity purchase agreement to acquire all of the outstanding equity interests for a purchase price of $54.4 million, subject to adjustment in accordance with the terms and conditions set forth in the purchase agreement. We financed the transaction using a combination of $35.0 million of available borrowing capacity under our existing Revolving Credit Facility and the remaining with cash on hand.
Pivot Onsite Innovations operates over 240 onsite health clinics at employer locations in over 40 states, providing occupational health, wellness, prevention, and performance services. The acquisition enabled the Company to expand to over 400 onsite health clinics at employer worksites.
Voluntary Repayment of Debt
During the three months ended September 30, 2025, the Company made voluntary repayments on the Revolving Credit Facility of $50 million. These repayments were made using available cash on hand and were not contractually required. Under the terms of the Credit Agreement, repayment was not due until July 26, 2029.
In October 2025, the Company made an additional voluntary repayment on the Revolving Credit Facility using cash on hand of $35 million, resulting in no borrowings outstanding on the Revolving Credit Facility.
Regulatory Changes
Our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025, contains a detailed discussion of the regulations that affect our business in Part I, Item I. Business-Government Regulations.
Operating Metrics
Management utilizes specific key operating metrics to monitor trends and performance in our business and therefore may be important to investors because management may assess our performance based in part on such metrics. Other healthcare providers may present similar measures; however, these measures are susceptible to varying definitions and our key metrics may not be comparable to other similarly titled measures of other companies.
Patient Visits and Visits Per Day Volume
We monitor the number of patient visits per day ("VPD") volume for each of our major service lines in our occupational health center operating segment - workers' compensation services, employer services, and consumer health. Management believes that the number of patient visits is the single most important indicator of the volume of services being provided in our centers. VPD volume, which is calculated as total patient visits in a given period divided by total business days for such period, allows for comparability between time periods with different number of business days. Patient visits and VPD volume include only the patients seen in our occupational health centers operating segment and does not include our onsite health clinics or other businesses operating segments.
Revenue Per Visit
Management also measures reimbursement rates utilizing patient revenue per visit which is calculated as total patient revenue divided by total patient visits. Revenue per visit as reported includes only the revenue and patient visits in our occupational health centers operating segment and does not include our onsite health clinics or other businesses operating segments.
The following table sets forth operating statistics for our occupational health centers operating segment for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| Number of patient visits | ||||||||||||||||||||||||||||||||||||||
|
Workers' compensation
|
1,621,435 | 1,476,486 | 9.8% | 4,656,296 | 4,364,824 | 6.7% | ||||||||||||||||||||||||||||||||
|
Employer services
|
1,882,820 | 1,728,720 | 8.9% | 5,456,615 | 5,090,410 | 7.2% | ||||||||||||||||||||||||||||||||
|
Consumer health
|
53,442 | 53,399 | 0.1% | 169,474 | 173,281 | (2.2)% | ||||||||||||||||||||||||||||||||
| Total | 3,557,697 | 3,258,605 | 9.2% | 10,282,385 | 9,628,515 | 6.8% | ||||||||||||||||||||||||||||||||
| VPD Volume | ||||||||||||||||||||||||||||||||||||||
|
Workers' compensation
|
25,335 | 23,070 | 9.8% | 24,379 | 22,733 | 7.2% | ||||||||||||||||||||||||||||||||
|
Employer services
|
29,419 | 27,011 | 8.9% | 28,569 | 26,513 | 7.8% | ||||||||||||||||||||||||||||||||
|
Consumer health
|
835 | 834 | 0.1% | 887 | 903 | (1.8)% | ||||||||||||||||||||||||||||||||
| Total | 55,589 | 50,916 | (1) | 9.2% | 53,834 | (1) | 50,149 | 7.3% | ||||||||||||||||||||||||||||||
| Revenue per visit | ||||||||||||||||||||||||||||||||||||||
|
Workers' compensation
|
$ | 211.82 | $ | 202.29 | 4.7% | $ | 209.98 | $ | 198.62 | 5.7% | ||||||||||||||||||||||||||||
|
Employer services
|
92.01 | 89.55 | 2.7% | 93.04 | 90.14 | 3.2% | ||||||||||||||||||||||||||||||||
|
Consumer health
|
138.38 | 137.30 | 0.8% | 136.80 | 134.62 | 1.6% | ||||||||||||||||||||||||||||||||
| Total | $ | 147.31 | $ | 141.42 | 4.2% | $ | 146.72 | $ | 140.12 | 4.7% | ||||||||||||||||||||||||||||
|
Business days
|
64 | 64 | 191 | 192 | ||||||||||||||||||||||||||||||||||
____________________________________________
(1) Does not total due to rounding.
Facility Counts
The following table sets forth facility counts for our occupational health centers and onsite health clinics operating segments for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Number of occupational health centers-start of period | 628 | 547 | 552 | 544 | ||||||||||||||||||||||
| Number of occupational health centers acquired | - | 1 | 72 | 3 | ||||||||||||||||||||||
| Number of occupational health centers de novos | 1 | 1 | 5 | 3 | ||||||||||||||||||||||
| Number of occupational health centers closed/sold | (1) | - | (1) | (1) | ||||||||||||||||||||||
| Number of occupational health centers-end of period | 628 | 549 | 628 | 549 | ||||||||||||||||||||||
| Number of onsite health clinics operated-end of period | 413 | 156 | 413 | 156 | ||||||||||||||||||||||
Results of Operations
The following table outlines selected operating data as a percentage of revenue for the periods indicated:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
|
(in thousands)
|
Amount |
Percent(2)
|
Amount |
Percent(2)
|
||||||||||||||||||||||
| Revenue | $ | 572,800 | 100.0 | % | $ | 489,638 | 100.0 | % | ||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Cost of services, exclusive of depreciation and amortization | 405,535 | 70.8 | 351,103 | 71.7 | ||||||||||||||||||||||
| General and administrative, exclusive of depreciation and amortization | 52,884 | 9.2 | 37,088 | 7.6 | ||||||||||||||||||||||
| Depreciation and amortization | 19,909 | 3.5 | 15,213 | 3.1 | ||||||||||||||||||||||
| Total costs and expenses | 478,328 | 83.5 | 403,404 | 82.4 | ||||||||||||||||||||||
| Income from operations | 94,472 | 16.5 | 86,234 | 17.6 | ||||||||||||||||||||||
| Other income and expense: | ||||||||||||||||||||||||||
|
Interest expense
|
(28,683) | (5.0) | (21,369) | (4.4) | ||||||||||||||||||||||
| Interest expense on related party debt | - | - | (2,691) | (0.5) | ||||||||||||||||||||||
| Income before income taxes | 65,789 | 11.5 | 62,174 | 12.7 | ||||||||||||||||||||||
| Income tax expense | 15,967 | 2.8 | 16,415 | 3.4 | ||||||||||||||||||||||
| Net income | 49,822 | 8.7 | 45,759 | 9.3 | ||||||||||||||||||||||
|
Less: net income attributable to non-controlling interests
|
1,563 | 0.3 | 1,421 | 0.3 | ||||||||||||||||||||||
| Net income attributable to the Company | $ | 48,259 | 8.4 | % | $ | 44,338 | 9.1 | % | ||||||||||||||||||
|
Adjusted EBITDA(1)
|
$ | 118,917 | 20.8 | % | $ | 101,571 | 20.7 | % | ||||||||||||||||||
|
Adjusted Net Income Attributable to the Company(1)
|
$ | 49,929 | 8.7 | % | $ | 44,306 | 9.0 | % | ||||||||||||||||||
____________________________________________
(1) Adjusted EBITDA and Adjusted Net Income Attributable to the Company are financial measures not calculated in accordance with U.S. GAAP. For definitions and reconciliations to the U.S. GAAP measures, refer to "-Non-GAAP Measures".
(2) Totals in this column may not foot due to rounding.
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
|
(in thousands)
|
Amount |
Percent(2)
|
Amount |
Percent(2)
|
||||||||||||||||||||||
| Revenue | $ | 1,624,337 | 100.0 | % | $ | 1,435,151 | 100.0 | % | ||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Cost of services, exclusive of depreciation and amortization | 1,151,970 | 70.9 | 1,027,366 | 71.6 | ||||||||||||||||||||||
| General and administrative, exclusive of depreciation and amortization | 152,528 | 9.4 | 110,825 | 7.7 | ||||||||||||||||||||||
| Depreciation and amortization | 55,526 | 3.4 | 51,568 | 3.6 | ||||||||||||||||||||||
| Total costs and expenses | 1,360,024 | 83.7 | 1,189,759 | 82.9 | ||||||||||||||||||||||
| Other operating income | 20 | 0.0 | 284 | 0.0 | ||||||||||||||||||||||
| Income from operations | 264,333 | 16.3 | 245,676 | 17.1 | ||||||||||||||||||||||
| Other income and expense: | ||||||||||||||||||||||||||
|
Loss on early retirement of debt
|
(875) | (0.1) | - | - | ||||||||||||||||||||||
| Equity in losses of unconsolidated subsidiaries | - | - | (3,676) | (0.3) | ||||||||||||||||||||||
|
Interest expense
|
(82,424) | (5.1) | (21,275) | (1.5) | ||||||||||||||||||||||
|
Interest expense on related party debt
|
- | - | (21,980) | (1.5) | ||||||||||||||||||||||
| Income before income taxes | 181,034 | 11.1 | 198,745 | 13.8 | ||||||||||||||||||||||
| Income tax expense | 44,376 | 2.7 | 49,648 | 3.4 | ||||||||||||||||||||||
| Net income | 136,658 | 8.4 | 149,097 | 10.4 | ||||||||||||||||||||||
|
Less: net income attributable to non-controlling interests
|
4,928 | 0.3 | 4,066 | 0.3 | ||||||||||||||||||||||
| Net income attributable to the Company | $ | 131,730 | 8.1 | % | $ | 145,031 | 10.1 | % | ||||||||||||||||||
|
Adjusted EBITDA(1)
|
$ | 336,594 | 20.7 | % | $ | 299,313 | 20.9 | % | ||||||||||||||||||
|
Adjusted Net Income Attributable to the Company(1)
|
$ | 139,828 | 8.6 | % | $ | 146,208 | 10.2 | % | ||||||||||||||||||
____________________________________________
(1) Adjusted EBITDA and Adjusted Net Income Attributable to the Company are financial measures not calculated in accordance with U.S. GAAP. For definitions and reconciliations to the U.S. GAAP measures, refer to "-Non-GAAP Measures
(2) Totals in this column may not foot due to rounding.
Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024
Revenue
Revenue increased 17.0% to $572.8 million for the three months ended September 30, 2025, compared to $489.6 million for the three months ended September 30, 2024, driven primarily by the increase in volume of patient visits and revenue per visit, as described below, and due to the addition of over 240 onsite locations that were acquired through acquisition in June 2025 and 72 occupational health centers that were acquired through acquisitions in March 2025.
Our total patient visits increased 9.2% to 3,557,697 for the three months ended September 30, 2025, compared to 3,258,605 visits for the three months ended September 30, 2024. Total VPD volume increased 9.2% to 55,589 for the three months ended September 30, 2025, compared to 50,916 for the three months ended September 30, 2024, primarily due to an increase in workers' compensation and employer services visits. Workers' compensation VPD volume increased 9.8% to 25,335 from 23,070 and employer services VPD volume increased 8.9% to 29,419 from 27,011, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.
Revenue per visit increased 4.2% to $147.31 for the three months ended September 30, 2025, compared to $141.42 for the three months ended September 30, 2024. We experienced a higher revenue per visit principally due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers' compensation visits, as well as increases in our employer services rates, for the three months ended September 30, 2025. Revenue per visit for workers' compensation visits increased 4.7% to $211.82 from $202.29 and revenue per visit for employer services visits increased 2.7% to $92.01 from $89.55, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.
Cost of Services
Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $405.5 million, or 70.8% of revenue, for the three months ended September 30, 2025, compared to $351.1 million, or 71.7% of revenue, for the three months ended September 30, 2024. The percentage of revenue decreased primarily due to increased staffing efficiencies, relative to a 17.0% increase in revenue during the period.
General and Administrative
General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, corporate offices, and other administrative areas as well as executive compensation. Our general and administrative expenses were $52.9 million, or 9.2% of revenue, for the three months ended September 30, 2025, compared to $37.1 million, or 7.6% of revenue, for the three months ended September 30, 2024. The increase in general and administrative expense as a percentage of revenue is principally due to Nova and Pivot Onsite Innovations acquisition and transition costs, one-time costs to separate from Select, stock compensation expense, and the planned addition of new full-time employees and other personnel costs to support the separation from Select and operate as a standalone public company.
Excluding items that are added back for purposes of calculating Adjusted EBITDA, including stock compensation expense, acquisitions costs, and one-time separation transaction costs, general and administrative expenses were $48.5 million for the three months ended September 30, 2025, or 8.5% of revenue, compared to 7.5% of revenue in the three months ended September 30, 2024. The year-over-year increase in general and administrative expense burdening Adjusted EBITDA was primarily the result of the planned addition of new full-time employees and non-personnel costs to support the separation from Select and operate as a standalone public company. Adjusted EBITDA is a financial measure not calculated in accordance with U.S. GAAP. For a definition and a reconciliation to net income, please see "Non-GAAP Measures".
Depreciation and Amortization
Depreciation and amortization expense was $19.9 million for the three months ended September 30, 2025, or 3.5% of revenue compared to $15.2 million for the three months ended September 30, 2024, or 3.1% of revenue. The increase was due to recent growth investments.
Interest Expense
For the three months ended September 30, 2025, we had interest expense of $28.7 million, compared to $21.4 million for the three months ended September 30, 2024. The increase in interest expense was due to the issuance of an $850.0 million term loan, $650.0 million senior notes in late July 2024, $102.1 million incremental term loan in March 2025 and the $35.0 million in borrowings on the revolving credit facility as of September 2025, as described in Note 6-"Long-Term Debt."
Interest Expense on Related Party Debt
For the three months ended September 30, 2025, we had no interest expense on related party debt with Select, compared to $2.7 million for the three months ended September 30, 2024. The decrease in interest expense on related party debt is due to the payoff of the revolving promissory note with Select during the three months ended September 30, 2024.
Income Taxes
We recorded income tax expense of $16.0 million for the three months ended September 30, 2025, which represented an effective tax rate of 24.3%. We recorded income tax expense of $16.4 million for the three months ended September 30, 2024, which represented an effective tax rate of 26.4%. Our income tax expense is computed based on annual estimates which we allocate throughout the year based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year as estimates of our annual income and the components of our income tax expense change throughout the year.
Nine Months Ended September 30, 2025, Compared to Nine Months Ended September 30, 2024
Revenue
Revenue increased 13.2% to $1,624.3 million for the nine months ended September 30, 2025, compared to $1,435.2 million for the nine months ended September 30, 2024, driven primarily by the increase in volume of patient visits and revenue per visit, as described below, and due to the addition of over 240 onsite locations that were acquired through acquisition in June 2025 and 72 occupational health centers that were acquired through acquisitions in March 2025.
Our total patient visits increased 6.8% to 10,282,385 for the nine months ended September 30, 2025, compared to 9,628,515 visits for the nine months ended September 30, 2024. Total VPD volume increased 7.3% to 53,834 for the nine months ended September 30, 2025, compared to 50,149 for the nine months ended September 30, 2024, primarily due to an increase in workers' compensation and employer services visits. Workers' compensation VPD volume increased 7.2% to 24,379 from 22,733 and employer services VPD volume increased 7.8% to 28,569 from 26,513, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.
Revenue per visit increased 4.7% to $146.72 for the nine months ended September 30, 2025, compared to $140.12 for the nine months ended September 30, 2024. We experienced a higher revenue per visit principally due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers' compensation visits, as well as increases in our employer services rates, for the nine months ended September 30, 2025. Revenue per visit for workers' compensation visits increased 5.7% to $209.98 from $198.62 and revenue per visit for employer services visits increased 3.2% to $93.04 from $90.14, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.
Cost of Services
Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $1,152.0 million, or 70.9% of revenue, for the nine months ended September 30, 2025, compared to $1,027.4 million, or 71.6% of revenue, for the nine months ended September 30, 2024. The percentage of revenue decreased primarily due to increased staffing efficiencies, relative to a 13.2% increase in revenue during the period.
General and Administrative
General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, corporate offices, and other administrative areas as well as executive compensation. Our general and administrative expenses were $152.5 million, or 9.4% of revenue, for the nine months ended September 30, 2025, compared to $110.8 million, or 7.7% of revenue, for the nine months ended September 30, 2024. The increase in general and administrative expense as a percentage of revenue is principally due to Nova and Pivot Onsite Innovations acquisition and transition costs, one-time costs to separate from Select, stock compensation expense, and the planned addition of new full-time employees and other personnel costs to support the separation from Select and operate as a standalone public company.
Excluding items that are added back for purposes of calculating Adjusted EBITDA, including stock compensation expense, acquisitions costs, and one-time separation transaction costs, general and administrative expenses was $136.4 million for the nine months ended September 30, 2025, or 8.4% of revenue, compared to 7.6% of revenue in the nine months ended September 30, 2024. The year-over-year increase in general and administrative expense burdening Adjusted EBITDA was primarily the result of the planned addition of new full-time employees and non-personnel costs to support the separation from Select and operate as a standalone public company. Adjusted EBITDA is a financial measure not calculated in accordance with U.S. GAAP. For a definition and a reconciliation to net income, please see "Non-GAAP Measures".
Depreciation and Amortization
Depreciation and amortization expense was $55.5 million for the nine months ended September 30, 2025, compared to $51.6 million for the nine months ended September 30, 2024. The increase was due to recent growth investments.
Equity in Losses of Unconsolidated Subsidiaries
For the nine months ended September 30, 2025, we had no equity in losses of unconsolidated subsidiaries, compared to $3.7 million for the nine months ended September 30, 2024. The decrease in equity in losses is attributable to the impairment of an investment during the nine months ended September 30, 2024.
Interest Expense
For the nine months ended September 30, 2025, we had interest expense of $82.4 million, compared to $21.3 million for the nine months ended September 30, 2024. The increase in interest expense was due to the issuance of an $850.0 million term loan, $650.0 million senior notes in late July 2024, $102.1 million of incremental term loan in March 2025, and $35.0 million in borrowings on the revolving credit facility as of September 2025, as described in Note 6, Long-Term Debt.
Interest Expense on Related Party Debt
For the nine months ended September 30, 2025, we had no interest expense on our related party debt with Select, compared to $22.0 million for the nine months ended September 30, 2024. The decrease in interest expense on related party debt is due to the payoff of the revolving promissory note with Select during the three months ended September 30, 2024.
Income Taxes
We recorded income tax expense of $44.4 million for the nine months ended September 30, 2025, which represented an effective tax rate of 24.5%. We recorded income tax expense of $49.6 million for the nine months ended September 30, 2024, which represented an effective tax rate of 25.0%. Our income tax expense is computed based on annual estimates which we allocate throughout the year based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year as estimates of our annual income and the components of our income tax expense change throughout the year.
Non-GAAP Measures
Adjusted EBITDA and Adjusted EBITDA Margin
We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA margin, as defined herein, are important to investors because Adjusted EBITDA and Adjusted EBITDA margin are commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA and Adjusted EBITDA margin are used by management to evaluate financial performance of, and determine resource allocation for, each of our operating segments. However, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under U.S. GAAP. Items excluded from Adjusted EBITDA and Adjusted EBITDA margin are significant components in understanding and assessing financial performance. Adjusted EBITDA and Adjusted EBITDA margin should not be considered in isolation, or as an alternative to, or substitute for, net income, net income margin, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the condensed consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA and Adjusted EBITDA margin are not measurements determined in accordance with U.S. GAAP and are thus susceptible to varying definitions, Adjusted EBITDA and Adjusted EBITDA margin as presented may not be comparable to other similarly titled measures of other companies.
We define Adjusted EBITDA as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, separation transaction costs, acquisition costs, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.
The following table reconciles net income to Adjusted EBITDA and net income margin to Adjusted EBITDA margin and should be referenced when we discuss Adjusted EBITDA and Adjusted EBITDA margin.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) |
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
|||||||||||||||||||||||||||||||||||||||
| Reconciliation of Adjusted EBITDA: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 49,822 | 8.7 | % | $ | 45,759 | 9.3 | % | $ | 136,658 | 8.4 | % | $ | 149,097 | 10.4 | % | |||||||||||||||||||||||||||||||
| Add (Subtract): | |||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 15,967 | 2.8 | 16,415 | 3.4 | 44,376 | 2.7 | 49,648 | 3.5 | |||||||||||||||||||||||||||||||||||||||
|
Interest expense
|
28,683 | 5.0 | 21,369 | 4.4 | 82,424 | 5.1 | 21,275 | 1.5 | |||||||||||||||||||||||||||||||||||||||
| Interest expense on related party debt | - | - | 2,691 | 0.5 | - | - | 21,980 | 1.5 | |||||||||||||||||||||||||||||||||||||||
| Equity in losses of unconsolidated subsidiaries | - | - | - | - | - | - | 3,676 | 0.3 | |||||||||||||||||||||||||||||||||||||||
|
Loss on early retirement of debt
|
- | - | - | - | 875 | 0.1 | - | - | |||||||||||||||||||||||||||||||||||||||
|
Stock compensation expense
|
2,330 | 0.4 | 168 | 0.0 | 6,884 | 0.4 | 500 | 0.0 | |||||||||||||||||||||||||||||||||||||||
|
Depreciation and amortization
|
19,909 | 3.5 | 15,213 | 3.1 | 55,526 | 3.4 | 51,568 | 3.6 | |||||||||||||||||||||||||||||||||||||||
|
Separation transaction costs(1)
|
1,025 | 0.2 | (44) | 0.0 | 2,700 | 0.2 | 1,569 | 0.1 | |||||||||||||||||||||||||||||||||||||||
|
Nova and Pivot Onsite Innovations acquisition costs
|
1,181 | 0.2 | - | - | 7,151 | 0.4 | - | - | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 118,917 | 20.8 | % | $ | 101,571 | 20.7 | % | $ | 336,594 | 20.7 | % | $ | 299,313 | 20.9 | % | |||||||||||||||||||||||||||||||
_____________________________________
(1) Separation transaction costs represent non-recurring incremental consulting, legal, audit-related fees, system implementation, and software disposal costs incurred in connection with the Company's separation into a new, publicly traded company and are included within general and administrative expenses on the condensed consolidated statements of operations.
Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share
Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are used by management to provide useful insight into the underlying performance of our business. Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are not measures of financial performance under U.S. GAAP and are not intended to be substitutes for U.S. GAAP measures such as net income or earnings per share. These metrics may differ from similarly titled metrics supported by other companies. Concentra believes that the presentation of Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are important to investors because they are reflective of the financial performance of Concentra's ongoing operations and provide better comparability of its results of operations between periods. Investors should consider these measures in addition to, and not as a replacement for, U.S. GAAP results reported in our financial statements.
We define Adjusted Net Income Attributable to the Company as net income attributable to the Company, excluding gain (loss) on early retirement of debt, separation transaction costs, acquisition costs, gain (loss) on sale of businesses, and other non-recurring costs not directly tied to operating performance, all on an after tax basis. We define Adjusted Earnings per Share as the Adjusted Net Income Attributable to the Company divided by the diluted weighted average shares outstanding.
The following table reconciles net income attributable to the Company and earnings per share on a fully diluted basis to Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share on a fully diluted basis.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
|
($ in thousands, except per share amounts)
|
2025 |
Per Share(4)
|
2024 |
Per Share
|
2025 |
Per Share(4)
|
2024 |
Per Share
|
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|
Reconciliation of Adjusted Net Income Attributable to the Company:(1)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Net income attributable to the Company
|
$ | 48,259 | $ | 0.38 | $ | 44,338 | $ | 0.37 | $ | 131,730 | $ | 1.03 | $ | 145,031 | $ | 1.32 | |||||||||||||||||||||||||||||||
|
Adjustments:
|
|||||||||||||||||||||||||||||||||||||||||||||||
| Loss on early retirement of debt | - | - | - | - | 875 | 0.01 | - | - | |||||||||||||||||||||||||||||||||||||||
|
Separation transaction costs(2)
|
1,025 | 0.01 | (44) | 0.00 | 2,700 | 0.02 | 1,569 | 0.01 | |||||||||||||||||||||||||||||||||||||||
|
Nova and Pivot Onsite Innovations acquisition costs
|
1,181 | 0.01 | - | - | 7,151 | 0.06 | - | - | |||||||||||||||||||||||||||||||||||||||
|
Total additions (subtractions), net
|
$ | 2,206 | $ | 0.02 | $ | (44) | $ | 0.00 | $ | 10,726 | $ | 0.08 | $ | 1,569 | $ | 0.01 | |||||||||||||||||||||||||||||||
|
Less: tax effect of adjustments(3)
|
(536) | 0.00 | 12 | 0.00 | (2,628) | (0.02) | (392) | 0.00 | |||||||||||||||||||||||||||||||||||||||
|
Adjusted Net Income Attributable to the Company
|
$ | 49,929 | $ | 0.39 | $ | 44,306 | $ | 0.37 | $ | 139,828 | $ | 1.09 | $ | 146,208 | $ | 1.33 | |||||||||||||||||||||||||||||||
|
Weighted average shares outstanding - diluted
|
128,170 | 120,765 | 128,163 | 109,691 | |||||||||||||||||||||||||||||||||||||||||||
_____________________________________
(1) Beginning in the second quarter of 2025, we updated the schedule for all periods presented to include Net Income Attributable to the Company. Management believes this measure will provide an improved insight into the performance of our business.
(2) Separation transaction costs represent non-recurring incremental consulting, legal, audit-related fees, system implementation, and software disposal costs incurred in connection with the Company's separation into a new, publicly traded company and are included within general and administrative expenses on the condensed consolidated statements of operations.
(3) Tax impact is calculated using the annual effective tax rate, excluding discrete costs and benefits.
(4) Does not total due to rounding.
Liquidity and Capital Resources
Cash Flows for the Nine Months Ended September 30, 2025 and Nine Months Ended September 30, 2024
In the following table and analysis, we discuss cash flows from operating activities, investing activities, and financing activities for the periods indicated:
| Nine Months Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (in thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 160,705 | $ | 180,963 | ||||||||||
| Net cash used in investing activities | (394,725) | (54,579) | ||||||||||||
|
Net cash provided by (used in) financing activities
|
100,706 | (20,936) | ||||||||||||
|
Net (decrease) increase in cash
|
(133,314) | 105,448 | ||||||||||||
| Cash at beginning of period | 183,255 | 31,374 | ||||||||||||
| Cash at end of period | $ | 49,941 | $ | 136,822 | ||||||||||
Operating activities provided $160.7 million and $181.0 million of cash flows during the nine months ended September 30, 2025 and 2024, respectively. The decrease in cash flows from operating activities for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, was primarily due to an increase in interest payments following the recapitalization of debt in July 2024.
Investing activities used $394.7 million and $54.6 million of cash flows for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the principal uses of cash were $62.2 million for purchases of property and equipment under our capital program to open de novos, upgrade and maintain existing facilities, Nova start-up capital, and technology investments, and $333.3 million for acquisitions of businesses, which primarily includes the purchase of Nova and Pivot Onsite Innovations. For the nine months ended September 30, 2024, the principal uses of cash were $47.6 million for purchases of property and equipment and $7.0 million for acquisitions of businesses.
Financing activities provided $100.7 million and used $20.9 million of cash flows for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the principal sources of cash were due to the updated term loan net proceeds of $948.8 million, and from borrowings on our Revolving Credit Facility of $85.0 million. This was partially offset by payment of the original term loan of $852.6 million, voluntary revolver repayments of $50.0 million, dividend payments of $24.0 million to shareholders, and distributions to non-controlling interest of $4.5 million. For the nine months ended September 30, 2024, the principal uses of cash were a $1,535.7 million dividend payment to Select and $470.0 million of net repayments on our related party revolving promissory note. The principle sources of cash were net proceeds from our term loans of $836.7 million, net proceeds from the issuance of our 6.875% senior notes of $637.3 million, and net proceeds from our initial public offering of $511.2 million.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The most significant impacts of the OBBBA on the Company are the immediate expensing of domestic research and development expenditures and the permanent reinstatement of bonus depreciation for qualifying properties. The Company had a $12.6 million positive impact on our cash flows and cash tax position due to these provisions during the three months ended September 30, 2025.
Capital Resources
We had net working capital of $62.8 million at September 30, 2025, compared to net working capital of $130.0 million at December 31, 2024. The decrease in the net working capital surplus was principally due to a decrease in our cash, which resulted from the Nova acquisition in March 2025, Pivot Onsite Innovations acquisition in June 2025, and voluntary revolver repayments. On March 1, 2025, we acquired Nova and financed the transaction using a combination of $102.1 million of new debt financing under the Credit Agreement, $50.0 million of available borrowing capacity under our existing Revolving Credit Facility, and the remaining with cash on hand. On June 1, 2025, we acquired Pivot Onsite Innovations and financed the transaction using a combination of $35.0 million of available borrowing capacity under our existing Revolving Credit Facility and the remaining with cash on hand.
During the three months ended September 30, 2025, we made voluntary repayments on the Revolving Credit Facility using cash on hand of $50 million.
In October 2025, the Company made an additional voluntary repayment on the Revolving Credit Facility using cash on hand of $35 million, resulting in no borrowings outstanding on the Revolving Credit Facility.
A significant component of our net working capital is our accounts receivable. Collection of these accounts receivable is our primary source of cash and is critical to our liquidity and capital resources. Because our accounts receivable is primarily paid for by highly-solvent, creditworthy payors, such as workers' compensation programs, employer programs, third party administrators, commercial insurance companies, and federal and state governmental authorities, our credit losses have historically been infrequent and insignificant in nature, and we believe the possibility of credit default is remote.
Credit Facilities
On July 26, 2024, CHSI, a wholly-owned subsidiary of Concentra, entered into a senior secured credit agreement (the "Credit Agreement") that provided for an $850.0 million term loan (the "Term Loan"), and a $400.0 million revolving credit facility, including a $75.0 million sublimit for the issuance of standby letters of credit (the "Revolving Credit Facility" and, together with the Term Loan, the "Credit Facilities"). In March 2025, the Company completed an amendment to the Credit Agreement to increase our Revolving Credit Facility by $50.0 million from $400.0 million to $450.0 million. The interest rate for the Revolving Credit Facility has been reduced from the Term SOFR plus 2.50% to Term SOFR plus 2.00%, subject to a leverage-based pricing grid including 25-basis point step down at a net leverage ratio of ≤3.50x. In addition, the amendment to the Credit Agreement also added new debt through an incremental term loan of $102.1 million, which provides an updated Term Loan of $950.0 million. The Term Loan interest rate has been reduced from Term SOFR plus 2.25% down to Term SOFR plus 2.00%, subject to a leverage-based pricing grid including 25-basis point step down at a net leverage ratio of ≤3.25x.
At September 30, 2025, the Company had $393.0 million of availability under its Revolving Credit Facility after giving effect to $35.0 million of borrowings under the Revolving Credit Facility and $22.0 million of outstanding letters of credit.
The Credit Facilities require CHSI to maintain a leverage ratio (as defined in the Credit Agreement), which is tested quarterly and currently must not be greater than 6.5 to 1.0. As of September 30, 2025, our leverage ratio was 3.6x.
At October 31, 2025, the Company had $428.0 million of availability under its Revolving Credit Facility after giving effect to $22.0 million of outstanding letters of credit and no borrowings outstanding.
Hedging
On March 3, 2025 we entered into derivative swap and collar contracts to mitigate our exposure to variable Term SOFR interest rates, which expire on February 29, 2028. The derivative swap contract limits the Term SOFR rate to a fixed rate of 3.829% on $300.0 million of principal outstanding under our term loan. We also entered into a derivative collar contract, which limits the Term SOFR rate to a cap of 4.500% and floor of 3.001% on $300.0 million of principal outstanding under our term loan. These derivative contracts limit our Term SOFR variable interest exposure on our $945.3 million term loan.
Liquidity
We believe our internally generated cash flows and borrowing capacity under our Revolving Credit Facility will allow us to finance our operations in both the short and long term. As of September 30, 2025, we had cash of $49.9 million and $393.0 million of availability under the Revolving Credit Facility, after giving effect to $35.0 million of borrowings under the Revolving Credit Facility and $22.0 million of outstanding letters of credit.
We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, may be funded from operating cash flows or other sources and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Use of Capital Resources
We intend to grow through strategic acquisitions of existing occupational health centers and onsite health clinic platforms, as well as building new de novo centers.
Restricted Stock Awards
On November 4, 2025, the Human Capital and Compensation Committee approved granting directors and certain of its employees 1.6 million restricted stock awards, which generally vest annually over four years. The fair value of these awards was $30.7 million.
Share Repurchase Program
On November 5, 2025, the Board of Directors authorized a share repurchase program to repurchase up to $100 million of the Company's outstanding common stock. The share repurchase authorization will expire on December 31, 2027, unless extended or terminated by the Board of Directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as the Board of Directors deems appropriate. Concentra will fund this program with cash on hand.
Dividend
On February 28, 2025, May 6, 2025, and August 6, 2025, our Board of Directors declared a cash dividend of $0.0625 per share. On April 1, 2025, May 29, 2025, and August 28, 2025, cash dividends of $8.0 million were paid for each payment date, for a total of $24.0 million paid in 2025.
On November 5, 2025, our Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about December 9, 2025, to stockholders of record as of the close of business on December 2, 2025.
There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of our Board of Directors after taking into account various factors, including, but not limited to, our financial condition, operating results, available cash and current and anticipated cash needs, the terms of our indebtedness, and other factors our Board of Directors may deem to be relevant. Additionally, certain contractual agreements we are party to, including our credit facilities, will limit our ability to pay dividends to our stockholders.
Recent Accounting Pronouncements
Refer to Note 2- "Accounting Policies" of the notes to our condensed consolidated financial statements included herein for information regarding recent accounting pronouncements.
Critical Accounting Estimates
There have been no material changes in our Critical Accounting Estimates from the information provided in the "Critical Accounting Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Effects of Inflation
The healthcare industry is labor intensive and our largest expenses are labor related costs. Wage and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. There has been minimal inflationary impact on our businesses thus far.
Concentra Group Holdings Parent Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 22:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]