• Total Locations: 709 locations, up by 15 from Q4 2023.
• Revenue: $465 million, a 5.5% increase year-over-year.
• Adjusted EBITDA: $77.5 million, a 13.6% increase from the prior year.
• Adjusted EBITDA Margin: Increased from 15.5% in Q4 2023 to 16.7% in Q4 2024.
• Net Income: $22.8 million for Q4 2024.
• Earnings Per Share: $0.17 for Q4 2024.
• Patient Visits: 46,800 visits per day, a 2.1% decline year-over-year.
• Revenue Per Visit: Increased by 5.8% in Q4 2024 compared to the prior year.
• Workers' Compensation Revenue: $289.1 million, a 7% increase year-over-year.
• Employer Services Revenue: $137.2 million, a 1.3% increase year-over-year.
• Onsite Revenue: $17.1 million, a 7% increase year-over-year.
• Cash Flow from Operating Activities: $93.7 million in Q4 2024.
• Cash Balance: $183.3 million at the end of Q4 2024.
• Net Leverage Ratio: 3.46 times at the end of 2024.
• Dividend: $0.0625 per share declared on February 28, 2025.
• Nova Medical Centers Acquisition: Closed for $265 million, adding 67 centers.
• Pro Forma Adjusted EBITDA from Nova: $28.3 million expected with synergies by Q1 2026.
• 2025 Revenue Guidance: Approximately $2.1 billion, a 10.5% increase over 2024.
• 2025 Adjusted EBITDA Guidance: $410 million to $425 million, an 11% increase over 2024.

• Warning! GuruFocus has detected 5 Warning Signs with TGT.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Concentra Group Holdings Parent Inc (NYSE:CON) reported a 5.5% year-over-year revenue growth in Q4 2024, reaching $465 million.
• Adjusted EBITDA increased by 13.6% to $77.5 million, with an improved margin of 16.7% compared to 15.5% in Q4 2023.
• The acquisition of Nova Medical Centers, which operates 67 centers, is expected to be immediately accretive and aligns with Concentra's growth strategy.
• Concentra successfully completed its spin-off from Select Medical, enhancing its operational independence.
• The company declared a quarterly cash dividend of $0.0625 per share, reflecting strong financial performance and commitment to shareholder returns.

Negative Points

• Net income for Q4 2024 was lower than the same quarter prior year, primarily due to IPO recapitalization.
• Total visits per day declined by 2.1% year-over-year, driven by a 4.8% decrease in employer services visits.
• General and administrative expenses increased to 9.8% of revenue in Q4 2024 from 9.6% in the prior year.
• The integration of Nova Medical Centers will incur one-time costs and synergies will be phased in over time.
• The company's net leverage ratio increased to 3.9 times following the Nova acquisition, matching the level at the time of the IPO.

Q & A Highlights

Q: Regarding the Nova integration, how do you approach larger transactions like Nova, and what are your 2025 expectations regarding integration costs? A: Keith Newton, CEO: We've had several large transactions over the years and have learned to integrate them well. The infrastructure to support Nova's centers is already in place, which should facilitate a smooth integration. Matthew DiCanio, CFO: We've been planning this integration for over six months and will follow a proven playbook similar to past integrations like US HealthWorks.

Q: Can you elaborate on your deleveraging pathway following the Nova acquisition? A: Matthew DiCanio, CFO: We were at 3.9 times leverage at the IPO and reduced it to 3.46 times by the end of 2024. Post-Nova, we're back at 3.9 times and aim to reach 3.5 times by year-end 2025, targeting roughly 3 times within 18 to 24 months through cash flow generation and EBITDA growth. Keith Newton, CEO: Cash flow typically accelerates in the second half of the year due to business seasonality.

Q: Are there any particular regions you're targeting for your next major acquisition? A: Keith Newton, CEO: We cast a wide net and are interested in opportunities across various regions. Matthew DiCanio, CFO: We're looking to grow our occupational health centers nationwide and expand our onsite portfolio.

Q: How do you assess the exposure of your employer clients to tariffs, and do you see any impacts on volumes or employment? A: Keith Newton, CEO: Currently, we don't see tariffs as a significant headwind for our business, although there's general uncertainty around them.

Q: Can you provide more color on the economic drivers of your business and how they relate to your 2025 guidance? A: Keith Newton, CEO: Our guidance is based on a combination of factors, including improved employer services trends and a more stable economic environment. Early 2025 trends in employer services have been positive compared to previous years.

Q: What are your expectations for cost of services, G&A, and TSA costs in 2025? A: Matthew DiCanio, CFO: We expect stable costs for both cost of services and G&A. The TSA costs with Select Medical will be less in 2025, with the remainder in 2026.

Q: How much improvement are you expecting in the employer services business, and what is the exit rate embedded in your guidance? A: Matthew DiCanio, CFO: We expect improving trends in employer services, moving from negative growth to flat and then slightly positive growth later in the year.

Q: Can you discuss rate updates for workers' comp and employer services, excluding Florida? A: Matthew DiCanio, CFO: Rate increases are slightly elevated due to inflation, with both workers' comp and employer services expected to have a strong year in 2025, even excluding Florida's outsized rate increase.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.