Concentra Group Holdings Parent, Inc.

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. Earnings Conference Call to discuss the first quarter 2026 results. Speaking today are the company's Chief Executive Officer, Keith Newton, and the company's President and Chief Financial Officer, Matt Nicanio. 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 concentric plans, expectations, strategies, intentions, and beliefs. You are hereby cautioned that these forward-looking statements may be affected by the important factors, among others, set forth in Concentra's earnings release and in reports that are filed or furnished with the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change. At this time, I would like to hand the conference call over to Mr. Keith Newton.

Thanks, operator. Good morning, everyone. Welcome to Concentra's first quarter 2026 earnings call. We have continued our momentum from 2025 and are pleased with a strong start to the year. Total company revenue was $569.6 million in Q1 2026 compared to $500.8 million in Q1 of the prior year, representing 13.7% growth year-over-year. Excluding contributions from the NOVA and PIVOT acquisitions in both current and prior year where applicable, revenue was $520.3 million in Q1 2026 resulting in a 6.3% increase over the prior year. Total patient visits increased 6.7% to an average of more than 54,000 visits per day in the first quarter. Our workers' compensation visits per day increased 9.6%, and employer services visit volume increased 4.8% relative to prior year. Excluding the impact from the acquisition of NOVA, total visits per day increased 2.9% in the first quarter, workers' compensation visits increased 6.2%, and employer services increased 0.7%. We believe the stronger performance in our workers' compensation business has been a result of a combination of events. Most importantly, we have seen the continued improvement of our patients' satisfaction with the experience they have in our centers along with the implementation of new technologies to help strengthen the account management and retention of our existing employer customers, along with enhanced prospecting efforts for new employer customers. The service level metrics we track at our centers, including average patient time in the centers, Google ratings, and patient net promoter scores, are all at or close to historical bests. Additionally, Q1 2025 was the easiest comp of all the quarters in 2026 due to a relatively dry, mild winter last year compared to more ice and snow winter events this year that lead to more slips and falls and resulting injuries. On the rate front, revenue per visit grew 3.1% during the first quarter relative to prior year. The growth was driven by a 2.5% zero percent increase in workers compensation and a 2.7 increase in employer services revenue per visit the california workers compensation rate increase took effect on march 1st so we anticipate upside to the workers compensation rate growth over the remainder of the year adjusted eba was 120.7 million in the quarter versus 102.7 million in the same quarter of the prior year or a 17.6% increase. Adjusted EBITDA margin increased 69 basis points from 20.5% in Q1 2025 to 21.2% in Q1 2026. With our strong Q1 performance, our trailing 12-month adjusted EBITDA is now 450 million, up 85 million, or 23% from our trailing 12-month month adjusted EBITDA at the time of our IPO in July of 2024. Adjusted net income attributable to the company was $51.5 million and adjusted earnings per share was $0.40 for the first quarter of 2026, representing strong growth over prior year of $42.2 million and $0.33 respectively. Quick update on 2025 acquisitions. Regarding our March 2025 acquisition of Nova, we have completed our integration efforts and captured all the synergies that we expect to capture. We are comfortably ahead of where we anticipated we should be, approximately one year into this deal, and we are tracking well towards the original objective of reaching a transaction multiple below seven and a half times adjusted EBITDA. With our June 2025 acquisition of Pivot, we have a similar story. Integration is complete, performance is strong, and we are ahead of our original estimate of transaction multiple of below nine times adjusted EBITDA. Regarding other growth efforts during the quarter, we added three centers in California via acquisition and one de novo center outside of Atlanta. On the de novo front, we continue to expect to open a total of eight to ten centers this year, with planned locations in Arizona, Idaho, Missouri, Illinois, Virginia, South Carolina, and Florida. With respect to additional small bolt-on M&A, we have several opportunities actively underway and look forward to sharing more detail in the future. Finally, I'd like to take a moment to recognize and thank Dr. John Anderson, our Chief Medical Officer since 2014, who, as previously disclosed, has announced his well-deserved retirement at the end of the year. Known affectionately across Concentra as Dr. A, he has been a foundational part of our organization for nearly five decades, including his time with predecessor companies. Over his career, Dr. Anderson has helped shape their mission and vision and values, built a comprehensive clinical orientation and training program that supports long-term success in occupational health, embedded a strong patient-first mindset into our daily operations, and developed our best-in-class clinical model. His decades of service, leadership, and clinical expertise have been invaluable, and we are deeply grateful for the lasting impact he has made on our organization. We're fortunate to have a strong pipeline of both internal and external candidates, and we'll be conducting a thorough evaluation process with the expectation of filling the role in the coming months. To support a smooth transition, we expect to enter into a consulting agreement with Dr. Anderson for a period of time. Now, I will turn it over to Matt to provide additional details on our financial results for the quarter and updated outlook for 2026.

Thanks, Keith, and good morning, everyone. In our occupational health operating segment, total revenue of $519.9 million in Q1 2026 was 9.9% higher than the same quarter of the prior year. Total visits per day increased 6.7% over the same quarter of the prior year, and revenue per visit increased 3.1%, from $147 in Q1 2025 to $151 in Q1 2026. Workers' compensation revenue of $337.7 million in Q1 2026 was 11.8% higher than prior year. Workers' compensation visits per day increased 9.6% from prior year during the quarter, and workers' compensation revenue per visit increased 2%, from $209 in Q1 2025 to $213 in Q1 2026. Employer services revenue of $172.4 million increased 7.6% in Q1 2026 from prior year. Employer services visits per day increased 4.8% from same quarter prior year. And finally, employer services revenue per visit increased 2.7% from $94 in Q1 2025 to $97 in Q1 2026. As with past quarters, here are the same stats for Q1, excluding the impact of NOVA help isolate core business from our Q1 2025 acquisition. This is the last quarter we plan to break out NOVA as its contribution will be fully embedded in both Q2 2025 and Q2 2026 P&L. Total revenue within the occupational health center operating segment was $487.8 million in Q1 2026, a $5.7 percent increase over the prior year. Total visits per day increased 2.9 percent over the same quarter prior year, and revenue per visit increased 2.7 percent from $147 in Q1 2025 to $151 in Q1 2026. Work comp revenue of $317.8 million in Q1 2026 was 7.5 percent higher than prior year, Work comp visits per day, excluding NOVA, were 6.2% higher than prior year during the quarter. And work comp revenue per visit was 1.3% higher than prior year during the quarter. Employer services revenue of $160.7 million in Q1 2026 increased 3.2% from prior year. Employer services visits per day, excluding NOVA, were 0.7% higher than prior year during the quarter. and employer services revenue per visit was 2.4% higher than prior year during the quarter. I'd like to take a moment to reemphasize an important distinction in our business mix. Our workers' compensation segment generates significantly higher revenue per visit and contribution margin than our employer services offering. Employer services remains an important part of our service offering, and it often is the initial point of entry with employer customers but those services are typically completed at much lower contribution margins. As you can see, workers' compensation is the primary engine of our business, accounting for approximately two-thirds of our total center revenue. As a result, in a low-hire, low-fire macroeconomic environment like the one we're experiencing today, employer services can show muted trends while the company continues to perform well overall. While this may be obvious to some, we felt it was important to underscore this dynamic given the significant growth disparity between employer services and workers' compensation visits this quarter. Moving on from our occupational health centers, our on-site health clinics operating segment had another strong quarter with reported revenue of $37.2 million in Q1 2026, a 125% increase from the same quarter prior year. This was largely driven by the acquisition of Pivot on-site innovations in Q2 2025. Excluding the impact from that acquisition, our on-site health clinics operating segment revenue grew 20.9% year-over-year during the quarter. On-site health clinics total revenue is nearing a run rate of $150 million, up from $64 million in 2024. We are encouraged by the continued strong organic growth in this business. We have a robust pipeline of opportunities across both occupational medicine and advanced primary care supported by a highly capable team following last year's pivot acquisition that is well positioned to execute on our growth strategy. We remain excited about this segment given the meaningful cross-selling opportunities within our existing customer base and expanding margin profile the direct employer-paid revenue model, and the growing and sizable market opportunity. We estimate the serviceable addressable market to be between $15 and $20 billion, with only a small portion currently penetrated. This significant white space, combined with our best-in-class service offering, gives us strong conviction in the long-term potential of the business. And finally, other businesses, which include telemedicine, our pharmacy operations, and other occupational health-related services businesses generated $12.5 million in the quarter, a 10.4% increase against the same quarter of prior year. We are impressed by the team's execution in these businesses and the opportunities that exist to continue to grow at attractive growth rates. Moving on to expenses, cost of services was $399.1 million, or 70.1% of revenue, in Q1 2026. an improvement from 71.3% of revenue for the same quarter prior year. We continue to realize incremental improvements in staffing efficiencies within the centers, resulting in nice gains in center-level margins. Our total general and administrative expenses were $55.3 million, or 9.7% of revenue in Q1 2026, compared to 9.3% of revenue in the same quarter prior year. Excluding items that are added back for the purpose of calculating adjusted EBITDA, including equity comp expense, one-time select separation costs, and M&A transaction costs, G&A expense was $50.2 million for the quarter, or 8.8% of revenue, compared to 8.2% of revenue in the same quarter prior year. The increase is predominantly driven by planned additions to our team and IT infrastructure, resulting from our separation from Select. As a result, adjusted EBITDA margin increased from 20.5% in Q1 2025 to 21.2% in Q1 2026. To quickly comment on the separation, we continue to track very well and have now hired more than 95% of the total expected new FTEs. Over the next month or so, we will complete several significant back office technology separation milestones, resulting in functional separation from Select by the end of this summer, well ahead of the November 2026 deadline. Now to touch on cash flows. In Q1, we generated $21 million in operating cash flow. This compares to $11.7 million in the first quarter of 2025, with a year-over-year increase largely resulting from higher earnings in Q1 2026. Investing activities used $14.8 million of cash in the first quarter and was driven by the acquisition of three net centers in California, as well as investments in de novo centers, relocations, renovations, and maintenance, as well as IT investments. Free cash flow or cash flow investments from operations less cash flow from investing activity, excluding business combinations, totaled $9.9 million, an increase from prior year first quarter free cash flow of negative $4 million. This was driven by a combination of higher cash flow from operations and lower capital spend in Q1 2026. Finally, financing activities during the quarter resulted in net cash outflows of $24.4 million as we repurchased approximately 661,000 shares totaling $15 million and paid $8 million in dividends. At the end of the first quarter, we had approximately $65 million remaining under the repurchase program authorized by the Board of Directors. We ended the quarter with a total debt balance of $1.58 billion and a cash balance of $61.7 million. Our net leverage ratio per credit agreement at the end of March was 3.4 times down slightly from year end. 2.1 is typically our lowest free cash flow quarter, so we expect to see an acceleration in the decline in our leverage ratio over the remainder of this year. Finally, we are pleased to announce the continuation of our dividend this quarter with the Concentra's Board of Directors declaring a cash dividend of 6.25 cents per share on May 5, 2026. The dividend will be payable on or about June 9, 2026 to stockholders of record as of the close of business on May 19, 2026. Moving on to 2026 guidance. Given the strong start to the year, we are revising our 2026 guidance, including increasing the low and high end of our revenue target range by $25 million to 2.275 billion to 2.375 billion. The low and high end of our adjusted EBITDA range by 10 million to 460 million to $480 million. And the low end of our free cash flow target range by 15 million and the high end by 10 million to 215 to 235 million. Our CapEx range of $70 to $80 million remains unchanged. With respect to net leverage, given the increase to both adjusted EBITDA and free cash flow guidance, we expect to end the year comfortably below three times. Overall, a great start to the year, and our team is excited about initiatives we have in place to continue our trajectory. That concludes our prepared remarks, and we thank everyone for their time today. We'd like to turn it back to the operator to open the call for questions.