Release Date: January 23, 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 strong fourth quarter with revenue of $465 million, representing approximately 6% growth year over year.
• The company achieved a 14% increase in adjusted EBITDA for Q4 2024, reaching $77.5 million compared to $68.2 million in the same quarter of the prior year.
• Concentra successfully completed the spin-off from Select Medical Holdings Corporation in November, marking a significant milestone.
• The acquisition of Nova Medical Centers is expected to be immediately accretive in year one, enhancing Concentra's growth trajectory.
• Concentra's 2025 financial guidance projects revenue growth of approximately 10.5% and EBITDA growth of around 11% year over year, indicating a positive outlook.

Negative Points

• Patient visits per day decreased by 2.1% in Q4 2024, driven by a 4.8% decline in Employer Services visits.
• The company's net leverage ratio is expected to increase from 3.5 times to approximately 3.9 times following the Nova acquisition.
• The transaction for Nova Medical Centers involves a significant purchase price of $265 million, which may impact financial flexibility.
• Revenue growth for the full year 2024 was relatively modest at 3.4%, indicating potential challenges in accelerating growth.
• The company faces ongoing expenses associated with services provided by Select Medical under the TSA agreement, as well as incremental separation costs planned for 2025.

Q & A Highlights

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Q: Can you provide an overview of Concentra's financial performance for Q4 2024? A: Keith Newton, CEO, reported that Concentra had a strong fourth quarter, with revenue reaching $465 million, a 6% year-over-year growth. Adjusted EBITDA was $77.5 million, marking a 14% increase from the previous year. The adjusted EBITDA margin improved to 16.7% from 15.5% the prior year. Net income is estimated between $20.6 million and $22.6 million.

Q: How did Concentra perform for the full year 2024? A: Matthew DiCanio, CFO, stated that for the full year 2024, Concentra achieved revenue of $1.9 billion, a 3.4% increase year-over-year. Adjusted EBITDA was $376.9 million, up 4.3% from the prior year, with an adjusted EBITDA margin of 19.8%. Net income is estimated between $169.7 million and $171.7 million.

Q: What are the details of the Nova Medical Centers acquisition? A: Keith Newton, CEO, announced the acquisition of Nova Medical Centers, which operates 67 centers across Texas, Georgia, Tennessee, Indiana, and Wisconsin. The purchase price is $265 million, and the transaction is expected to close in Q1 2025. This acquisition will expand Concentra's footprint, particularly in Texas, and is expected to be immediately accretive in year one.

Q: How will the Nova acquisition be financed? A: Matthew DiCanio, CFO, explained that the acquisition will be financed through a combination of cash, new debt financing, and the existing revolving credit facility. The pro forma net leverage is expected to increase to approximately 3.9 times at the time of the transaction, with a target to reduce it to 3.5 times by year-end.

Q: What is Concentra's financial guidance for 2025? A: Matthew DiCanio, CFO, provided guidance for 2025, projecting revenue of approximately $2.1 billion and adjusted EBITDA between $410 million and $425 million. Capital expenditures are expected to range from $80 million to $90 million. The guidance reflects a 10.5% revenue growth and approximately 11% EBITDA growth year-over-year.

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