Concentra Group Holdings Parent, Inc.

Good morning and thank you for joining us today for Concentra Group Holdings Parent Incorporated Earning Conference Call to discuss the second quarter 2025 results. Speaking today are the company's Chief Executive Officer, Keith Newton, and the company's President and Chief Financial Officer, Matt D'Acanio. 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 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.

Thanks, operator. Good morning, everyone. Welcome to Concentra's second quarter 2025 earnings call. We are pleased to report on a strong second quarter, sustaining the momentum we had in the 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 -single-digit -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, we successfully completed the integration and rebranding of our acquired NOVA occupational health centers. We opened an additional occupational health center at the NOVO site in Chattanooga, Tennessee, bringing us to four NOVOs open 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, Brigid Bonner and Vipin Gopal, effective July 1. Brigid 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 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&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 Q2 2025 as Q2 2024, so there's no need to adjust the prior comparisons for days. Total company revenue was $550.8 million compared to $477.9 million in the prior year, representing a .2% growth year over year. Excluding contributions from NOVA, revenue was $519.4 million, resulting in an .7% increase over the prior year. Total patient visits increased .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 .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 Q1 growth, and employer services visits increased 2%, also better than Q1 results. A solid quarter across the board from a volume standpoint, as work comp volumes rebounded from softer Q1, and employer service visits continued the reversal into 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% increase in revenue per visit this quarter versus the same quarter prior year. This growth was driven by a .4% increase in workers' compensation and a .1% increase in employer services revenue per visit. Adjusted EBITDA was $115 million in the quarter versus $101.6 million in the same quarter prior year, or a .2% increase. Adjusted EBITDA margin decreased from .3% in Q2 2024 to .9% in Q2 2025, primarily due to some favorable items impacting cost of services in the prior year, also some one-time NOVA transition costs this quarter, along with incremental NOVA G&A expense that wasn't synergized through the full quarter, and other G&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 $47.7 million, and adjusted earnings per share was $0.37 for the second quarter 2025. 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 the IPO recapitalization. Adjusted EBITDA and adjusted net income reflect the add back of transaction expenses related to our acquisition activity, as well as one-time 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 have made during the second quarter as it relates to our Q1 NOVA occupational health center acquisition and the related integration efforts. The June 1st 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, we'll hand it over 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 three operating segments. In our occupational health center operating segment, total revenue of $516.1 million in Q2 2025 was .4% higher than the same quarter prior year. Workers' compensation revenue of $332.2 million in Q2 2025 was .2% higher than prior year. As Keith mentioned, work comp visits per day increased .3% from prior year and work comp revenue per visit increased .4% versus prior year. Work comp revenue per visit was $209, similar to our work comp rate last quarter. Within employer services, revenue of $174.3 million increased .7% from prior year. Employer services visits per day increased .3% from prior year, and employer services revenue per visit increased .1% versus prior year. To help isolate from our Q1 acquisition of NOVA, here are the same stats excluding the impact of Total revenue within the occupational health center operating segment was $484.8 million, a .4% increase over the prior year. Total visits per day increased .4% over the same quarter prior year. Revenue per visit increased .9% from $140 in Q2 2024 to $147 in Q2 2025. Workers' compensation revenue of $314 million in Q2 2025 was .9% higher than prior year. Workers' compensation visits per day were .2% higher than prior year, and work comp revenue per visit was .5% higher than prior year. Within employer services, revenue of $161.8 million increased .5% from prior year. Employer services visits per day were 2% higher than prior year, and employer services revenue per visit was .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, -over-year visit growth for work comp accelerated from .2% in Q1 to .2% in Q2, and employer services went from .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 digits over time. We will add more commentary later in our remarks, but we think our Q2 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 geographies. Moving on from our occupational health centers, our onsite health clinic segment reported revenue of $22.6 million in Q2 2025, a .2% increase from the same quarter prior year. Excluding the one-month impact from the pivot onsite acquisition that closed on June 1, onsite segment revenue grew .9% -over-year. So overall, a nice quarter as it relates to our core onsite 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 onsite business given the nature of the revenue model. And finally, other businesses generated revenue of $12.1 million, an .5% increase against the same quarter prior year. Now switching to expenses, cost of services was $389.3 million or .7% of revenue in Q2 2025, 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 one-time 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 $52.9 million or .6% of revenue in Q2 2025, compared to .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 separation costs, and M&A transaction costs. G&A expense was $46.6 million for the quarter, or .5% of revenue, compared to .8% of revenue in the same quarter prior year. The increase was largely driven by incremental NOVA G&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 2025 was 20.9%, compared to .3% during the same quarter prior year. To reiterate, the primary drivers of this slightly lower margin are some favorable one-time cost of services items from the prior year, certain one-time NOVA and pivot integration expenses totaling approximately $750,000 that are not adjusted out of adjusted EBITDA, incremental G&A expense from NOVA that was not fully synergized through the entire day of the quarter, and the planned increase in personnel related public company and select separation costs. In Q2 2025, we generated $88.4 million 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 at the end. Investing activities used $79.5 million of cash in the second quarter, predominantly driven by the pivot acquisition closing on June 1. Also included in this number is $25.2 million of CAPEX, with approximately $18 million of that from our normal course capital program for upgrading and maintaining existing facilities, denovos, and technology investments, and approximately $7 million of one-time CAPEX associated with our NOVA center integration and rebranding efforts. Financing activities resulted in net cash inflows of $12.9 million for the second quarter, primarily due to our revolver draw of $35 million 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 $1.67 billion and a cash balance of $74 million. Our net leverage ratio per credit agreement at the end of 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 concentric systems, processes, and signage as of the end of July. We expect this to drive both increased top line growth and operational efficiencies going forward. As we 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 energies, through the end of Q2, we estimate that we have captured just over 70 percent of our planned operational and back office energies, which is right on track with our original underwriting. The remaining 30 percent will be systematically executed through the remainder of 2025 and into Q1 2026. Overall, this acquisition is tracking well, but more work to do before we are fully integrated and closer to run rate performance. On the NOVA front, we open one location in Chattanooga, Tennessee in Q2 2025 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 consensual footprint, so we have a good opportunity to continue to accelerate our NOVA activity. We also have a pipeline of small bolt-on M&A deals that we intend to pursue in parallel with our NOVA strategy. I'd like to reiterate that both the NOVAs and bolt-on M&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 leveraged 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 1st. Integration efforts are underway, but mostly focused on combining the two G&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 Consentra's board of directors declaring a cash dividend of six and a quarter cents per share on August 6, 2025. The dividend will be payable on or about August 28, 2025 to stockholders of record as of the close of business on August 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.