Participants

Keith Newton; Chief Executive Officer; Concentra Group Holdings Parent Inc

Matthew DiCanio; President and Chief Financial Officer; Concentra Group Holdings Parent Inc

Presentation

Operator

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. January investor conference call to discuss important company updates. Speaking today are the company's Chief Executive Officer, Keith Newton; and the company's President and Chief Financial Officer, Matt DiCanio. Management will provide commentary to cover the company's announcement from yesterday. There will be no Q&A session today, but additional opportunities will be available in the near future.
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 assumes no obligation to update these statements as circumstances change. In addition, financial results related to Q4 2024 and full year 2024 are preliminary and unaudited.
At this time, I will turn the conference over to Mr. Keith Newton. Please go ahead.

Keith Newton

Thanks, operator. Good morning everyone and thank you for joining the special investor call today, especially on short notice. We're looking forward to sharing some exciting updates as you may have seen, we made some important announcements yesterday. After the close of business, we announced our preliminary and unaudited Q4 and full year 2024 financial results, we announced the signing of a purchase agreement to acquire Nova medical centers and we provided initial financial guidance for 2025 take into account this acquisition Matt and I just returned from the JP Morgan Healthcare Conference in San Francisco where we had productive discussions with existing and potential investors and gave a fireside chat presentation with jpm's equity analyst team which is available on our investor relations website.
We had previously made comments about potentially providing 2025 guidance at this conference or on our Q4 earnings call which is scheduled for early March. Given the announcement of the Nova acquisition, we decided it was most appropriate and helpful to include everything in one announcement. In order to tell a complete story, that is what we would like to go over today, we will touch on financial results and outlook but also want to share additional commentary about the pending acquisition as we are excited about this news and Nova's complementary footprint. With that introduction, I will turn it over to Matt to make some brief remarks about our preliminary and unaudited Q4 and full year 2024 results. And then we'll spend some time discussing Nova and our 2025 guidance.

Matthew DiCanio

Thanks, Keith, and good morning, everyone. As Keith mentioned, we thought it was important to start this call in our announcement with an update on how we finished out 2024. I am happy to report that we had a strong fourth quarter and end to the year, which included the completion of Select Medical Holdings Corporation spin-off of Concentra in November.
I will keep it relatively high level today, but we will have more details to share on our scheduled earnings call in early March. Important to note, these are preliminary and unaudited results and are subject to our normal end of quarter and end of year audit profit. First, I'll talk about the quarter, which slightly exceeded our expectations. We ended the quarter with 552 occupational health centers and 157 on-site health clinics for a total of 709 locations, which is 15 more than the same time prior year. three de novo centers were opened during the fourth quarter in Orlando, Florida; DeSoto, Texas which is in the Dallas-Fort Worth metro area and a center in Knoxville, Tennessee, a new area for Concentra.
In the quarter, revenue was $465 million, representing approximately 6% growth year over year. Adjusted EBITDA was $77.5 million in the quarter versus $68.2 million in the same quarter of prior year or a 14% increase. Adjusted EBITDA margin was 16.7% compared to 15.5% prior year. Net income is estimated at $20.6 million to $22.6 million as we are finalizing our end of year tax provision. Patient visits per day were down 2.1%, driven by a 4.8% decline in Employer Services visits but offset by a 1.1% increase in workers' compensation visit.
Revenue per visit was $145, an increase of 5.8% over the same quarter prior year.
Now switching to the full year 2024 results. Revenue was $1.9 billion, representing 3.4% growth year over year. Adjusted EBITDA was $376.9 million versus $361.3 million in the prior year or a 4.3% increase. Adjusted EBITDA margin was 19.8% compared to 19.7% prior year. Net income is estimated at $169.7 million to $171.7 million.
Patient visits per day were down 2.0% and driven by a 4.8% decline in employer services visits, but offset by a 1.4% increase in workers' compensation volume. Revenue per visit was $141 and an increase of 4.5% over prior year. Capital expenditures for the year were $65.7 million. Finally, we ended the year with a cash balance of approximately $183 million and a net leverage ratio of 3.5 times. Looking back at the guidance we shared in our third quarter earnings call and release, we met or exceeded on all financial metrics.
We have previously guided to $1.9 billion in revenue, $370 million to $375 million in adjusted EBITDA, and $65 million to $70 million in CapEx and 3.5 times to 3.6 times net leverage. Overall, a strong end to the year, and we are proud of what our teams accomplished. We will share more information at our full year 2024 earnings call in March.
And with that, I'll turn it back to Keith to give some more color on the Nova acquisition.

Keith Newton

Thanks, Matt. We are very excited about this announcement. Nova is a pure-play occupational health services provider with 67 centers located in Texas, Georgia, Tennessee, Indiana and Wisconsin. They have been in existence for more than 30 years and share many similarities with Concentra. Nova offers the same services we provide at Concentra occupational health centers, including injury care, physical therapy, drug and alcohol screening and preemployment physicals.
They share a very similar philosophy with a focus on return to work and improving the health of America's workforce. Their occupational health centers are roughly the same size as Concentra's with a similar look and feel and a heavy focus on delivering a great patient experience. Nova has more than 800 colleagues that we're looking forward to welcoming to our family. Overall, this transaction is core to what we do at Concentra and in line with our history of growth investments with a highly complementary footprint, this acquisition will expand our access points for employers, patients, payers and other ecosystem partners and will help accelerate our growth trajectory.
We will do so with the addition of 46 locations in the state of Texas, a state with favorable demographic and industry trends, automatic annual workers' compensation fee schedule updates and one in which we have been targeting additional occupational health center growth. Nova has occupational health centers in South Texas, West Texas, East Texas and in major cities where we are also located such as DFW, Austin, Houston and San Antonio. This will now make Texas, our largest state in terms of occupational health center locations.
In addition, we will be adding seven locations in Georgia, six locations in Wisconsin, and four each in Indiana and Tennessee, all strategically important states and very attractive for our growth strategy. Our team is highly experienced with acquisition integrations and I'm confident we will bring the teams together with best practices from both organizations and be even stronger after the combination. I want to take a minute and acknowledge Nova's founders and entire leadership team for building a great company with dedicated and talented people and a long history of success. The Nova leadership team and all of its colleagues should be incredibly proud of what they've built and accomplished and hopefully excited about this next chapter. Last comment before turning it back to Matt for additional commentary.
This acquisition is another example of our team following through on what we discussed during our IPO process and subsequent earnings calls. We had mentioned our strong growth pipeline and history of successful integration execution and the Nova acquisition will be another great opportunity for our team.

Matthew DiCanio

Thanks, Keith. I'm extremely excited about this opportunity as well. I want to add some additional high-level comments about the transaction, and then we'll wrap it up with our 2025 financial guidance. Here are some important details about the acquisition. The agreed-upon purchase price is $265 million, subject to adjustment in accordance with the terms and conditions in the purchase agreement.
Subject to closing conditions, the transaction is expected to close in the first quarter of 2025. The HSR waiting period has expired, and we have satisfied all other regulatory process requirements. We currently expect to finance the transaction with a combination of cash, new debt financing and our existing revolving credit facility. The transaction is expected to be immediately accretive in year one and -- in our investor presentation, you will see that LTM adjusted EBITDA for Nova, inclusive of year one run rate synergies is approximately $28 million.
Our pro forma net leverage will go from 3.5 times at December 31, 2024 to approximately 3.9 times at the time of the transaction or the same level we were at, at the time of our IPO recapitalization. We expect to delever to 3.5 times by year-end, and we'll continue to target approximately 3.0 times within 18 to 24 months. Our liquidity with cash and revolver capacity is expected to remain at more than $400 million. We will be focused on working with Nova to close the transaction, expect we'll have more information to share on our Q4 and full year 2024 earnings call in March.
Now to round out the conference call today, we wanted to share our initial financial guidance for 2025. With our strong finish to 2024, we are well positioned for continued growth this year.
Inclusive of the Nova acquisition, Concentra expects to deliver revenue of approximately $2.1 billion, adjusted EBITDA in the range of $410 million to $425 million, capital expenditures in the range of $80 million to $90 million, which includes some onetime acquisition transition costs and a net leverage ratio of approximately 3.5 times by year-end. The guidance represents 10.5% revenue growth and approximately 11% EBITDA growth year over year, assuming the midpoint of our range. Guidance includes the impact of all known fee schedule changes, expenses associated with services provided to Concentra by Select Medical under our TSA agreement as well as incremental separation costs we have planned for 2025. 2024 was a transformative year for Concentra with our IPO and the completion of our separation from Select Medical, the Concentra team is excited to continue our growth in 2025, which looks like it will be another year with important company milestones. With that, thank you, everyone, for taking the time to hear our additional commentary today.
We look forward to speaking with everyone again very soon.

Operator

Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time, and have a wonderful day. And we thank you for your participation.