ADDISON, Texas--(BUSINESS WIRE)--Concentra Group Holdings Parent, Inc. (“Concentra,” “we,” “us,” or “our”) (NYSE: CON) today announced results for its third quarter ended September 30, 2024, and the declaration of a cash dividend.
“We had a successful quarter and made significant progress on key strategic initiatives and our separation from Select Medical. I am proud of our results, solid execution, and our colleagues’ continued dedication to delivering quality patient-centric care,” said Keith Newton, Chief Executive Officer of Concentra.
Matt DiCanio, President & Chief Financial Officer, added “We expanded our footprint in new and existing areas and achieved some of our highest patient satisfaction scores. With our robust development pipeline and proven operating model, we are confident in our ability to meet our strategic business objectives and are well positioned for continued growth through the rest of the year and into 2025.”
Third Quarter 2024 Highlights
For the third quarter ended September 30, 2024 and 2023
- Revenue of $489.6 million, an increase of 3.3% from $474.0 million in Q3 2023
- Net Income of $45.8 million, and Earnings per Share of $0.37 in Q3 2024
- Adjusted EBITDA of $101.6 million, an increase of 2.7% from $98.9 million in Q3 2023
- Cash balance of $136.8 million and net leverage of 3.7x
- Patient Visits of 3,258,605, or 50,916 Visits per Day in the quarter, a decrease in Visits per Day of 2.2% from Q3 2023
- Revenue per Visit of $141.42, an increase of 3.9% from $136.11 in Q3 2023
- Total occupational health centers of 549, compared to 539 at end of Q3 2023
- Total onsite health clinics of 156, compared to 145 at end of Q3 2023
Third Quarter 2024 Financial Overview
For the third quarter ended September 30, 2024, revenue increased 3.3% to $489.6 million, compared to $474.0 million for the same quarter, prior year. Income from operations increased 6.5% to $86.2 million for the third quarter ended September 30, 2024, compared to $80.9 million for the same quarter, prior year. Net income was $45.8 million and earnings per common share was $0.37 for the third quarter ended September 30, 2024. Adjusted EBITDA increased 2.7% to $101.6 million for the third quarter ended September 30, 2024, compared to $98.9 million for the same quarter, prior year. The Adjusted EBITDA margin was 20.7% for the third quarter ended September 30, 2024, compared to 20.9% for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table X of this release.
Year to Date September 30, 2024 Financial Overview
For the nine months ended September 30, 2024, revenue increased 2.7% to $1,435.2 million, compared to $1,397.3 million for the same period, prior year. Income from operations increased 3.1% to $245.7 million for the nine months ended September 30, 2024, compared to $238.3 million for the same period, prior year. Net income was $149.1 million and earnings per common share was $1.32 for the nine months ended September 30, 2024. Adjusted EBITDA increased 2.1% to $299.3 million for the nine months ended September 30, 2024, compared to $293.0 million for the same period, prior year. The Adjusted EBITDA margin was 20.9% for the nine months ended September 30, 2024, compared to 21.0% for the same period, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table X of this release.
Balance Sheet
As of September 30, 2024, Concentra’s balance sheet reflected cash of $136.8 million, total debt of $1,482.3 million and total assets of $2,481.0 million.
Cash Flow
Cash flows provided by operating activities in the third quarter ended September 30, 2024 totaled $65.9 million compared to $58.6 million for the same quarter, prior year. During the third quarter ended September 30, 2024, capital expenditures totaled $15.1 million, excluding acquisitions.
Dividend
On October 28, 2024, Concentra’s Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable November 22, 2024, to stockholders of record as of the close of business on November 13, 2024.
There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Concentra’s Board of Directors after taking into account various factors, including, but not limited to, Concentra’s financial condition, operating results, available cash and current and anticipated cash needs, the terms of Concentra’s indebtedness, and other factors Concentra’s Board of Directors may deem to be relevant.
Business Outlook
Concentra is issuing its 2024 business outlook. Concentra expects revenue to be approximately $1.9 billion, Adjusted EBITDA to be in the range of $370.0 million to $375.0 million, capital expenditures to be in the range of $65.0 million to $70.0 million and our net leverage ratio to be in the range of 3.5 to 3.6x. A reconciliation of full year 2024 Adjusted EBITDA expectations to net income is presented in table XII of this release.
Initial Public Offering and Debt Transactions
On July 26, 2024, Concentra completed an initial public offering (“IPO”) of 22,500,000 shares of its common stock, par value $0.01 per share, at an initial public offering price of $23.50 per share for net proceeds of $499.7 million after deducting underwriting discounts and commission of $29.1 million. In addition, the underwriters exercised the option to purchase an additional 750,000 shares of the Company’s common stock for net proceeds of $16.7 million after deducting underwriting discounts and commission of $1.0 million. Concentra shares began trading on the New York Stock Exchange under the symbol “CON” on July 25, 2024. In connection with the offering, Concentra Health Services, Inc. (“CHSI”), a wholly-owned subsidiary of Concentra, entered into certain financing arrangements which include Credit Facilities and $650.0 million aggregate principal amount of 6.875% Senior Notes due 2032 (the “Notes”). The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Concentra and certain of its wholly-owned subsidiaries. The Credit Facilities consist of an $850.0 million Term Loan and a $400.0 million Revolving Credit Facility. The Revolving Credit Facility was undrawn at the time of closing. The Term Loan matures on July 26, 2031 and has an interest rate of Term SOFR plus 2.25%, subject to a leverage-based pricing grid. The Revolving Credit Facility matures on July 26, 2029 and has an interest rate of Term SOFR plus 2.50%, subject to a leverage-based pricing grid.
The net proceeds of the IPO and the debt financing transactions, except for $34.7 million, were paid to Select Medical Corporation through the issuance of a dividend and the repayment of promissory notes.
Company Overview
Concentra is the largest provider of occupational health services in the United States by number of locations, with the mission of improving the health of America’s workforce, one patient at a time. Our 11,000 colleagues and affiliated physicians and clinicians support the delivery of an extensive suite of services, including occupational and consumer health services and other direct-to-employer care, to more than 50,000 patients each day on average across 45 states at our 549 occupational health centers, 156 onsite health clinics at employer worksites, and Concentra Telemed as of September 30, 2024.
Conference Call
Concentra will host a conference call regarding its third quarter results and its business outlook on Friday, November 1, 2024, at 10:30 am ET. The conference call will be a live webcast and can be accessed at Concentra Group Holdings Parent, Inc.’s website at www.concentra.com and a replay of the webcast will be available shortly after the call through the same link.
For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Concentra Earnings Call Registration to obtain your dial-in number and unique passcode.
* * * * *
Certain statements contained herein that are not descriptions of historical facts are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), including statements related to Concentra’s 2024 and long-term business outlook. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements due to factors including the following:
- The frequency of work-related injuries and illnesses;
- The adverse changes to our relationships with employer customers, third-party payors, workers’ compensation provider networks or employer services networks;
- Changes to regulations, new interpretations of existing regulations, or violations of regulations;
- State fee schedule changes undertaken by state workers’ compensation boards or commissions and other third-party payors;
- Our ability to realize reimbursement increases at rates sufficient to keep pace with the inflation of our costs;
- Labor shortages, increased employee turnover or costs, and union activity could significantly increase our operating costs;
- Our ability to compete effectively with other occupational health centers, onsite health clinics at employer worksites, and healthcare providers;
- A security breach of our, or our third-party vendors’, information technology systems which may cause a violation of HIPAA and subject us to potential legal and reputational harm;
- Negative publicity which can result in increased governmental and regulatory scrutiny and possibly adverse regulatory changes;
- Litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements and the effects of claims asserted against us could subject us to substantial uninsured liabilities;
- Acquisitions may use significant resources, may be unsuccessful, and could expose us to unforeseen liabilities;
- Our exposure to additional risk due to our reliance on third parties in many aspects of our business;
- Compliance with applicable laws regarding the corporate practice of medicine and therapy and fee-splitting;
- Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information;
- Compliance with applicable data interoperability and information blocking rule;
- Facility licensure requirements in some states are costly and time-consuming, limiting or delaying our operations;
- Our ability to adequately protect and enforce our intellectual property and other proprietary rights;
- Adverse economic conditions in the U.S. or globally;
- Any negative impact on the global economy and capital markets resulting from other geopolitical tensions;
- Our ability to maintain satisfactory credit ratings;
- The inability to execute on the separation from Select Medical;
- The risk of disruption or unanticipated costs in connection with the separation;
- Our ability to succeed as a standalone publicly traded entity;
- Restrictions on our business, potential tax and indemnification liabilities and substantial charges in connection with the separation, the distribution and related transactions;
- The negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic;
- The loss of key members of our management team and our ability to attract and retain talented, highly skilled employees and a diverse workforce, and on the succession of our senior management; and,
- Changes in tax laws or exposures to additional tax liabilities.
Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance.
I. Condensed Consolidated Statements of Operations |
|||||||||||
For the Third Quarter Ended September 30, 2024 and 2023 |
|||||||||||
(In thousands, except per share amounts, unaudited) |
|||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Revenue |
|
$ |
489,638 |
|
|
$ |
473,964 |
|
|
3.3 |
% |
Costs and expenses: |
|
|
|
|
|
|
|||||
Cost of services, exclusive of depreciation and amortization |
|
|
351,103 |
|
|
|
336,812 |
|
|
4.2 |
|
General and administrative, exclusive of depreciation and amortization (1) |
|
|
37,088 |
|
|
|
38,245 |
|
|
(3.0 |
) |
Depreciation and amortization |
|
|
15,213 |
|
|
|
17,959 |
|
|
(15.3 |
) |
Total costs and expenses |
|
|
403,404 |
|
|
|
393,016 |
|
|
2.6 |
|
Income from operations |
|
|
86,234 |
|
|
|
80,948 |
|
|
6.5 |
|
Other income and expense: |
|
|
|
|
|
|
|||||
Interest expense on related party debt |
|
|
(2,691 |
) |
|
|
(11,255 |
) |
|
N/M |
|
Interest expense |
|
|
(21,369 |
) |
|
|
(64 |
) |
|
N/M |
|
Income before income taxes |
|
|
62,174 |
|
|
|
69,629 |
|
|
(10.7 |
) |
Income tax expense |
|
|
16,415 |
|
|
|
15,205 |
|
|
8.0 |
|
Net income |
|
|
45,759 |
|
|
|
54,424 |
|
|
(15.9 |
) |
Less: Net income attributable to non-controlling interests |
|
|
1,421 |
|
|
|
1,318 |
|
|
7.8 |
|
Net income attributable to Concentra |
|
$ |
44,338 |
|
|
$ |
53,106 |
|
|
(16.5 |
)% |
Basic and diluted earnings per common share:(2) |
|
$ |
0.37 |
|
|
$ |
0.51 |
|
|
|
|
_______________________________________________________________________________
(1) |
Includes the shared service fee from related party of $3.8 million and $3.6 million for the third quarter ended September 30, 2024 and 2023, respectively. |
|
(2) |
Refer to table III for calculation of earnings per common share. |
|
N/M |
Not meaningful |
II. Condensed Consolidated Statements of Operations |
|||||||||||
For the Nine Months Ended September 30, 2024 and 2023 |
|||||||||||
(In thousands, except per share amounts, unaudited) |
|||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Revenue |
|
$ |
1,435,151 |
|
|
$ |
1,397,341 |
|
|
2.7 |
% |
Costs and expenses: |
|
|
|
|
|
|
|||||
Cost of services, exclusive of depreciation and amortization |
|
|
1,027,366 |
|
|
|
994,726 |
|
|
3.3 |
|
General and administrative, exclusive of depreciation and amortization (1) |
|
|
110,825 |
|
|
|
109,898 |
|
|
0.8 |
|
Depreciation and amortization |
|
|
51,568 |
|
|
|
54,552 |
|
|
(5.5 |
) |
Total costs and expenses |
|
|
1,189,759 |
|
|
|
1,159,176 |
|
|
2.6 |
|
Other operating income |
|
|
284 |
|
|
|
151 |
|
|
88.1 |
|
Income from operations |
|
|
245,676 |
|
|
|
238,316 |
|
|
3.1 |
|
Other income and expense: |
|
|
|
|
|
|
|||||
Equity in losses of unconsolidated subsidiaries |
|
|
(3,676 |
) |
|
|
(526 |
) |
|
598.9 |
|
Interest expense on related party debt |
|
|
(21,980 |
) |
|
|
(33,831 |
) |
|
N/M |
|
Interest expense |
|
|
(21,275 |
) |
|
|
(108 |
) |
|
N/M |
|
Income before income taxes |
|
|
198,745 |
|
|
|
203,851 |
|
|
(2.5 |
) |
Income tax expense |
|
|
49,648 |
|
|
|
47,964 |
|
|
3.5 |
|
Net income |
|
|
149,097 |
|
|
|
155,887 |
|
|
(4.4 |
) |
Less: Net income attributable to non-controlling interests |
|
|
4,066 |
|
|
|
3,775 |
|
|
7.7 |
|
Net income attributable to Concentra |
|
$ |
145,031 |
|
|
$ |
152,112 |
|
|
(4.7 |
)% |
Basic and diluted earnings per common share:(2) |
|
$ |
1.32 |
|
|
$ |
1.46 |
|
|
|
|
_______________________________________________________________________________
(1) |
Includes the shared service fee from related party of $11.5 million and $11.0 million for the nine months ended September 30, 2024 and 2023, respectively. |
|
(2) |
Refer to table III for calculation of earnings per common share. |
|
N/M |
Not meaningful |
III. Earnings per Share
For the Three and Nine Months Ended September 30, 2024 and 2023
(In thousands, except per share amounts, unaudited)
At September 30, 2024, the Company’s capital structure consists of common stock. There were no participating shares or securities outstanding during the three and nine months ended September 30, 2024.
The following table sets forth the computation of earnings per share (“EPS”) in 2024:
|
|
Three Months Ended September 30, 2024 |
|
Nine Months Ended September 30, 2024 |
||||||||||||
|
|
Net Income
|
|
Shares(1) |
|
Basic and
|
|
Net Income
|
|
Shares(1) |
|
Basic and
|
||||
|
|
(in thousands, except for per share amounts) |
||||||||||||||
Common shares |
|
$ |
44,338 |
|
120,765 |
|
$ |
0.37 |
|
$ |
145,031 |
|
109,691 |
|
$ |
1.32 |
At September 30, 2023, the Company’s capital structure included Class A, B and C units outstanding and unvested restricted interests and outstanding options. To calculate EPS for the three and nine months ended September 30, 2023, Concentra applied the two-class method because its unvested restricted interests and outstanding options are participating securities.
The following table sets forth the net income attributable to the Company, its units outstanding, and its participating units outstanding:
|
|
Three Months
September 30,
|
|
Nine Months
|
||
|
|
(in thousands) |
||||
Net income |
|
$ |
54,424 |
|
$ |
155,887 |
Less: Net income attributable to non-controlling interests |
|
|
1,318 |
|
|
3,775 |
Net income attributable to Concentra |
|
|
53,106 |
|
|
152,112 |
Less: Distributed and undistributed income attributable to participating shares |
|
|
66 |
|
|
356 |
Distributed and undistributed income attributable to outstanding shares |
|
$ |
53,040 |
|
$ |
151,756 |
The following table sets forth the computation of EPS in 2023, under the two-class method:
|
|
Three Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2023 |
||||||||||||
|
|
Net Income
|
|
Shares (1)(2) |
|
Basic and
|
|
Net Income
|
|
Shares (1)(2) |
|
Basic and
|
||||
|
|
(in thousands, except for per share amounts) |
||||||||||||||
Outstanding Class A, Class B, and Class C shares |
|
$ |
53,040 |
|
104,035 |
|
$ |
0.51 |
|
$ |
151,756 |
|
103,980 |
|
$ |
1.46 |
Participating shares |
|
|
66 |
|
130 |
|
$ |
0.51 |
|
|
356 |
|
244 |
|
$ |
1.46 |
Total Company |
|
$ |
53,106 |
|
|
|
|
|
$ |
152,112 |
|
|
|
|
||
_______________________________________________________________________________
(1) |
The recapitalization of the members units into common shares has been treated as such for earnings per share purposes and has been reflected retrospectively for all periods, along with the one for 4.295 reverse stock split. |
|
(2) |
Represents the weighted average units outstanding during the period. |
IV. Condensed Consolidated Balance Sheets |
||||||
(In thousands, unaudited) |
||||||
|
|
September 30, 2024 |
|
December 31, 2023 |
||
Assets |
|
|
|
|
||
Current Assets: |
|
|
|
|
||
Cash |
|
$ |
136,822 |
|
$ |
31,374 |
Accounts receivable |
|
|
232,202 |
|
|
216,194 |
Other current assets |
|
|
40,933 |
|
|
46,850 |
Total Current Assets |
|
|
409,957 |
|
|
294,418 |
Operating lease right-of-use assets |
|
|
430,133 |
|
|
397,852 |
Property and equipment, net |
|
|
191,099 |
|
|
178,370 |
Goodwill |
|
|
1,234,707 |
|
|
1,229,745 |
Identifiable intangible assets, net |
|
|
209,171 |
|
|
224,769 |
Other assets |
|
|
5,975 |
|
|
8,406 |
Total Assets |
|
$ |
2,481,042 |
|
$ |
2,333,560 |
Liabilities and Equity |
|
|
|
|
||
Current Liabilities: |
|
|
|
|
||
Payables and accruals |
|
$ |
177,620 |
|
$ |
196,879 |
Due to related party |
|
|
7,753 |
|
|
3,354 |
Current operating lease liabilities |
|
|
74,411 |
|
|
72,946 |
Current portion of long-term debt and notes payable |
|
|
9,737 |
|
|
1,455 |
Total Current Liabilities |
|
|
269,521 |
|
|
274,634 |
Non-current operating lease liabilities |
|
|
391,037 |
|
|
357,310 |
Long-term debt, net of current portion |
|
|
1,472,610 |
|
|
3,291 |
Long-term debt with related party |
|
|
— |
|
|
470,000 |
Non-current deferred tax liability |
|
|
22,454 |
|
|
23,364 |
Other non-current liabilities |
|
|
24,188 |
|
|
27,522 |
Total Liabilities |
|
|
2,179,810 |
|
|
1,156,121 |
Redeemable non-controlling interests |
|
|
18,122 |
|
|
16,477 |
Total Equity |
|
|
283,110 |
|
|
1,160,962 |
Total Liabilities and Equity |
|
$ |
2,481,042 |
|
$ |
2,333,560 |
V. Condensed Consolidated Statements of Cash Flows |
||||||||
For the Three Months Ended September 30, 2024 and 2023 |
||||||||
(In thousands, unaudited) |
||||||||
|
|
|
2024 |
|
|
|
2023 |
|
Operating activities |
|
|
|
|
||||
Net income |
|
$ |
45,759 |
|
|
$ |
54,424 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
15,213 |
|
|
|
17,959 |
|
Provision for expected credit losses |
|
|
11 |
|
|
|
91 |
|
(Gain) loss on sale or disposal of assets |
|
|
(1 |
) |
|
|
17 |
|
Stock compensation expense |
|
|
168 |
|
|
|
— |
|
Amortization of debt discount and issuance costs |
|
|
750 |
|
|
|
— |
|
Deferred income taxes |
|
|
459 |
|
|
|
(3,314 |
) |
Changes in operating assets and liabilities, net of effects of business combinations: |
|
|
|
|
||||
Accounts receivable |
|
|
(3,250 |
) |
|
|
(8,641 |
) |
Other current assets |
|
|
11,276 |
|
|
|
1,408 |
|
Other assets |
|
|
7,366 |
|
|
|
640 |
|
Accounts payable and accrued liabilities |
|
|
(11,843 |
) |
|
|
(3,987 |
) |
Net cash provided by operating activities |
|
|
65,908 |
|
|
|
58,597 |
|
Investing activities |
|
|
|
|
||||
Business combinations, net of cash acquired |
|
|
(1,821 |
) |
|
|
— |
|
Purchases of property and equipment |
|
|
(15,145 |
) |
|
|
(15,456 |
) |
Proceeds from sale of assets |
|
|
2 |
|
|
|
3 |
|
Net cash used in investing activities |
|
|
(16,964 |
) |
|
|
(15,453 |
) |
Financing activities |
|
|
|
|
||||
Payments on related party revolving promissory note |
|
|
(420,000 |
) |
|
|
(50,000 |
) |
Proceeds from term loans, net of issuance costs |
|
|
836,697 |
|
|
|
— |
|
Proceeds from 6.875% senior notes, net of issuance costs |
|
|
637,337 |
|
|
|
— |
|
Borrowings of other debt |
|
|
1,604 |
|
|
|
— |
|
Principal payments on other debt |
|
|
(3,510 |
) |
|
|
(1,708 |
) |
Exercise of stock options |
|
|
— |
|
|
|
3,340 |
|
Repurchase of common shares |
|
|
— |
|
|
|
(5,322 |
) |
Distributions to and purchases of non-controlling interests |
|
|
(1,583 |
) |
|
|
(1,392 |
) |
Proceeds from Initial Public Offering |
|
|
511,198 |
|
|
|
— |
|
Dividend to Select |
|
|
(1,535,683 |
) |
|
|
— |
|
Contributions from Parent |
|
|
11,149 |
|
|
|
2,380 |
|
Net cash provided by (used in) financing activities |
|
|
37,209 |
|
|
|
(52,702 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
86,153 |
|
|
|
(9,558 |
) |
Cash and cash equivalents at beginning of period |
|
|
50,669 |
|
|
|
33,238 |
|
Cash and cash equivalents at end of period |
|
$ |
136,822 |
|
|
$ |
23,680 |
|
Supplemental information |
|
|
|
|
||||
Cash paid for interest |
|
$ |
14,709 |
|
|
$ |
11,204 |
|
Cash paid for taxes |
|
|
15,328 |
|
|
|
17,599 |
|
VI. Condensed Consolidated Statements of Cash Flows |
||||||||
For the Nine Months Ended September 30, 2024 and 2023 |
||||||||
(In thousands, unaudited) |
||||||||
|
|
|
2024 |
|
|
|
2023 |
|
Operating activities |
|
|
|
|
||||
Net income |
|
$ |
149,097 |
|
|
$ |
155,887 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
51,568 |
|
|
|
54,552 |
|
Provision for expected credit losses |
|
|
70 |
|
|
|
276 |
|
Equity in losses of unconsolidated subsidiaries |
|
|
3,676 |
|
|
|
526 |
|
Loss on sale or disposal of assets |
|
|
41 |
|
|
|
3 |
|
Stock compensation expense |
|
|
500 |
|
|
|
178 |
|
Amortization of debt discount and issuance costs |
|
|
750 |
|
|
|
— |
|
Deferred income taxes |
|
|
(1,159 |
) |
|
|
(6,579 |
) |
Changes in operating assets and liabilities, net of effects of business combinations: |
|
|
|
|
||||
Accounts receivable |
|
|
(16,079 |
) |
|
|
(35,652 |
) |
Other current assets |
|
|
12,500 |
|
|
|
(8,536 |
) |
Other assets |
|
|
3,149 |
|
|
|
2,436 |
|
Accounts payable and accrued liabilities |
|
|
(23,150 |
) |
|
|
(4,953 |
) |
Net cash provided by operating activities |
|
|
180,963 |
|
|
|
158,138 |
|
Investing activities |
|
|
|
|
||||
Business combinations, net of cash acquired |
|
|
(6,965 |
) |
|
|
(1,446 |
) |
Purchase of customer relationships |
|
|
— |
|
|
|
(4,382 |
) |
Purchases of property and equipment |
|
|
(47,639 |
) |
|
|
(41,320 |
) |
Proceeds from sale of assets |
|
|
25 |
|
|
|
23 |
|
Net cash used in investing activities |
|
|
(54,579 |
) |
|
|
(47,125 |
) |
Financing activities |
|
|
|
|
||||
Borrowings from related party revolving promissory note |
|
|
10,000 |
|
|
|
— |
|
Payments on related party revolving promissory note |
|
|
(480,000 |
) |
|
|
(120,000 |
) |
Proceeds from term loans, net of issuance costs |
|
|
836,697 |
|
|
|
— |
|
Proceeds from 6.875% senior notes, net of issuance costs |
|
|
637,337 |
|
|
|
— |
|
Borrowings of other debt |
|
|
8,222 |
|
|
|
5,471 |
|
Principal payments on other debt |
|
|
(7,888 |
) |
|
|
(5,782 |
) |
Exercise of stock options |
|
|
— |
|
|
|
3,340 |
|
Repurchase of common shares |
|
|
— |
|
|
|
(5,322 |
) |
Distributions to and purchases of non-controlling interests |
|
|
(4,226 |
) |
|
|
(4,522 |
) |
Proceeds from Initial Public Offering |
|
|
511,198 |
|
|
|
— |
|
Dividend to Select |
|
|
(1,535,683 |
) |
|
|
— |
|
Contributions from Parent |
|
|
3,407 |
|
|
|
1,825 |
|
Net cash used in financing activities |
|
|
(20,936 |
) |
|
|
(124,990 |
) |
Net increase (decrease) in cash and cash equivalents |
|
|
105,448 |
|
|
|
(13,977 |
) |
Cash and cash equivalents at beginning of period |
|
|
31,374 |
|
|
|
37,657 |
|
Cash and cash equivalents at end of period |
|
$ |
136,822 |
|
|
$ |
23,680 |
|
Supplemental information |
|
|
|
|
||||
Cash paid for interest |
|
$ |
34,221 |
|
|
$ |
33,988 |
|
Cash paid for taxes |
|
|
49,337 |
|
|
|
50,044 |
|
VII. Key Statistics |
|||||||||||
For the Third Quarter Ended September 30, 2024 and 2023 |
|||||||||||
(unaudited) |
|||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Facility Count |
|
|
|
|
|
|
|||||
Number of occupational health centers—start of period |
|
|
547 |
|
|
|
540 |
|
|
|
|
Number of occupational health centers acquired |
|
|
1 |
|
|
|
— |
|
|
|
|
Number of occupational health centers de novos |
|
|
1 |
|
|
|
— |
|
|
|
|
Number of occupational health centers closed/sold |
|
|
— |
|
|
|
(1 |
) |
|
|
|
Number of occupational health centers—end of period |
|
|
549 |
|
|
|
539 |
|
|
|
|
Number of onsite health clinics operated—end of period |
|
|
156 |
|
|
|
145 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Number of patient visits (1)(2) |
|
|
|
|
|
|
|||||
Workers’ Compensation |
|
|
1,476,486 |
|
|
|
1,451,115 |
|
|
1.7 |
% |
Employer Services |
|
|
1,728,720 |
|
|
|
1,775,181 |
|
|
(2.6 |
)% |
Consumer Health |
|
|
53,399 |
|
|
|
54,746 |
|
|
(2.5 |
)% |
Total |
|
|
3,258,605 |
|
|
|
3,281,042 |
|
|
(0.7 |
)% |
|
|
|
|
|
|
|
|||||
Visits per day volume |
|
|
|
|
|
|
|||||
Workers’ Compensation |
|
|
23,070 |
|
|
|
23,034 |
|
|
0.2 |
% |
Employer Services |
|
|
27,011 |
|
|
|
28,177 |
|
|
(4.1 |
)% |
Consumer Health |
|
|
834 |
|
|
|
869 |
|
|
(4.0 |
)% |
Total |
|
|
50,916 |
|
(5) |
|
52,080 |
|
|
(2.2 |
)% |
|
|
|
|
|
|
|
|||||
Revenue per visit (1)(3) |
|
|
|
|
|
|
|||||
Workers’ Compensation |
|
$ |
202.29 |
|
|
$ |
197.05 |
|
|
2.7 |
% |
Employer Services |
|
|
89.55 |
|
|
|
86.45 |
|
|
3.6 |
% |
Consumer Health |
|
|
137.30 |
|
|
|
130.82 |
|
|
5.0 |
% |
Total |
|
$ |
141.42 |
|
|
$ |
136.11 |
|
|
3.9 |
% |
|
|
|
|
|
|
|
|||||
Business Days (4) |
|
|
64 |
|
|
63 |
|
|
|
||
_______________________________________________________________________________
(1) |
Excludes onsite clinics. |
|
(2) |
Represents the number of visits in which patients were treated at Occupational Health Centers during the periods presented. |
|
(3) |
Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated as total patient revenue divided by total patient visits. Revenue per visit as reported includes only the revenue and patient visits in our Occupational Health Centers segment and does not include our Onsite Health Clinics or Other Businesses segments. |
|
(4) |
Represents the number of days in which normal business operations were conducted during the periods presented. |
|
(5) |
Does not total due to rounding. |
VIII. Key Statistics |
||||||||||||
For the Nine Months Ended September 30, 2024 and 2023 |
||||||||||||
(unaudited) |
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
||
Facility Count |
|
|
|
|
|
|
||||||
Number of occupational health centers—start of period |
|
|
544 |
|
|
|
540 |
|
|
|
||
Number of occupational health centers acquired |
|
|
3 |
|
|
|
1 |
|
|
|
||
Number of occupational health centers de novos |
|
|
3 |
|
|
|
— |
|
|
|
||
Number of occupational health centers closed/sold |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
||
Number of occupational health centers—end of period |
|
|
549 |
|
|
|
539 |
|
|
|
||
Number of onsite health clinics operated—end of period |
|
|
156 |
|
|
|
145 |
|
|
|
||
|
|
|
|
|
|
|
||||||
Number of patient visits (1)(2) |
|
|
|
|
|
|
||||||
Workers’ Compensation |
|
|
4,364,824 |
|
|
|
4,276,717 |
|
|
2.1 |
% |
|
Employer Services |
|
|
5,090,410 |
|
|
|
5,316,724 |
|
|
(4.3 |
)% |
|
Consumer Health |
|
|
173,281 |
|
|
|
173,440 |
|
|
(0.1 |
)% |
|
Total |
|
|
9,628,515 |
|
|
|
9,766,881 |
|
|
(1.4 |
)% |
|
|
|
|
|
|
|
|
||||||
Visits per day volume |
|
|
|
|
|
|
||||||
Workers’ Compensation |
|
|
22,733 |
|
|
|
22,391 |
|
|
1.5 |
% |
|
Employer Services |
|
|
26,513 |
|
|
|
27,836 |
|
|
(4.8 |
)% |
|
Consumer Health |
|
|
903 |
|
|
|
908 |
|
|
(0.6 |
)% |
|
Total |
|
|
50,149 |
|
|
|
51,136 |
|
(5 |
) |
(1.9 |
)% |
|
|
|
|
|
|
|
||||||
Revenue per visit (1)(3) |
|
|
|
|
|
|
||||||
Workers’ Compensation |
|
$ |
198.62 |
|
|
$ |
194.74 |
|
|
2.0 |
% |
|
Employer Services |
|
|
90.14 |
|
|
|
86.30 |
|
|
4.4 |
% |
|
Consumer Health |
|
|
134.62 |
|
|
|
133.47 |
|
|
0.9 |
% |
|
Total |
|
$ |
140.12 |
|
|
$ |
134.62 |
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
||||||
Business Days (4) |
|
|
192 |
|
|
|
191 |
|
|
|
||
_______________________________________________________________________________
(1) |
Excludes onsite clinics. |
|
(2) |
Represents the number of visits in which patients were treated at Occupational Health Centers during the periods presented. |
|
(3) |
Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated as total patient revenue divided by total patient visits. Revenue per visit as reported includes only the revenue and patient visits in our Occupational Health Centers segment and does not include our Onsite Health Clinics or Other Businesses segments. |
|
(4) |
Represents the number of days in which normal business operations were conducted during the periods presented. |
|
(5) |
Does not total due to rounding. |
IX. Disaggregated Revenue
For the Three and Nine Months Ended September 30, 2024 and 2023
(In thousands, unaudited)
The following table disaggregates the Company’s revenue for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(in thousands) |
||||||||||||||
Occupational health centers: |
|
|
|
|
|
|
|
||||||||
Workers' compensation |
$ |
298,681 |
|
|
$ |
285,939 |
|
|
$ |
866,952 |
|
|
$ |
832,833 |
|
Employer services |
|
154,809 |
|
|
|
153,473 |
|
|
|
458,849 |
|
|
|
458,810 |
|
Consumer health |
|
7,332 |
|
|
|
7,162 |
|
|
|
23,327 |
|
|
|
23,150 |
|
Other occupational health center revenue |
|
2,239 |
|
|
|
1,866 |
|
|
|
6,245 |
|
|
|
6,538 |
|
Total occupational health center revenue |
|
463,061 |
|
|
|
448,440 |
|
|
|
1,355,373 |
|
|
|
1,321,331 |
|
Onsite clinics |
|
15,593 |
|
|
|
15,005 |
|
|
|
46,989 |
|
|
|
44,255 |
|
Other |
|
10,984 |
|
|
|
10,519 |
|
|
|
32,789 |
|
|
|
31,755 |
|
Total revenue |
$ |
489,638 |
|
$ |
473,964 |
|
$ |
1,435,151 |
|
$ |
1,397,341 |
||||
X. Net Income to Adjusted EBITDA Reconciliation
For the Three and Nine Months Ended September 30, 2024 and 2023
(In thousands, unaudited)
The presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of our segments. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.
The following table reconciles net income to Adjusted EBITDA for Concentra. Adjusted EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, separation transaction costs, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.
|
Three Months Ended
|
|
|
Nine Months Ended
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
$ |
45,759 |
|
|
$ |
54,424 |
|
|
|
$ |
149,097 |
|
|
$ |
155,887 |
|
Income tax expense |
|
16,415 |
|
|
|
15,205 |
|
|
|
|
49,648 |
|
|
|
47,964 |
|
Interest expense |
|
21,369 |
|
|
|
64 |
|
|
|
|
21,275 |
|
|
|
108 |
|
Interest expense on related party debt |
|
2,691 |
|
|
|
11,255 |
|
|
|
|
21,980 |
|
|
|
33,831 |
|
Equity in losses of unconsolidated subsidiaries |
|
— |
|
|
|
— |
|
|
|
|
3,676 |
|
|
|
526 |
|
Stock compensation expense |
|
168 |
|
|
|
— |
|
|
|
|
500 |
|
|
|
178 |
|
Depreciation and amortization |
|
15,213 |
|
|
|
17,959 |
|
|
|
|
51,568 |
|
|
|
54,552 |
|
Separation transaction costs (1) |
|
(44 |
) |
|
|
— |
|
|
|
|
1,569 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
101,571 |
|
|
$ |
98,907 |
|
|
|
$ |
299,313 |
|
|
$ |
293,046 |
|
Adjusted EBITDA margin |
|
20.7 |
% |
|
|
20.9 |
% |
|
|
|
20.9 |
% |
|
|
21.0 |
% |
______________________________________________________________________________
(1) |
Separation transaction costs represent incremental consulting, legal, and audit-related fees incurred in connection with the Company’s planned separation into a new, publicly traded company and are included within general and administrative expenses on the Condensed Consolidated Statements of Operations. |
XI. Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share
For the Three and Nine Months Ended September 30, 2024 and 2023
(In thousands, except per share amounts, unaudited)
Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP. Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Concentra believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share are important to investors because they are reflective of the financial performance of Concentra’s ongoing operations and provide better comparability of its results of operations between periods. Adjusted net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because adjusted net income attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.
The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.
|
Three Months Ended September 30, |
|||||||||||||||
|
|
2024 |
|
Per Share(1) |
|
2023 |
|
Per Share(1) |
||||||||
Net income attributable to common shares(1) |
$ |
44,338 |
|
$ |
0.37 |
|
$ |
53,040 |
|
$ |
0.51 |
|
||||
Adjustments:(2) |
|
|
|
|
||||||||||||
Separation transaction costs, net of tax |
|
(30 |
) |
|
(0.00 |
) |
|
— |
|
|
— |
|
||||
Adjusted net income attributable to common shares |
$ |
44,308 |
|
$ |
0.37 |
|
$ |
53,040 |
|
$ |
0.51 |
|
||||
|
Nine Months Ended September 30, |
|||||||||||||||
|
|
2024 |
|
Per Share(1) |
|
2023 |
|
Per Share(1) |
||||||||
Net income attributable to common shares(1) |
$ |
145,031 |
|
$ |
1.32 |
|
$ |
151,756 |
|
$ |
1.46 |
|
||||
Adjustments:(2) |
|
|
|
|
||||||||||||
Separation transaction costs, net of tax |
|
1,181 |
|
|
0.01 |
|
|
— |
|
|
— |
|
||||
Adjusted net income attributable to common shares |
$ |
146,212 |
|
$ |
1.33 |
|
$ |
151,756 |
|
$ |
1.46 |
|||||
______________________________________________________________________________
(1) |
Net income attributable to common shares and earnings per common share are calculated based on the weighted average common shares outstanding, as presented in table III. |
|
(2) |
Adjustments to net income attributable to common shares include estimated income tax and non-controlling interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact, which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes both current and deferred income tax expense or benefit. |
XII. Net Income to Adjusted EBITDA Reconciliation
Business Outlook for the Year Ending December 31, 2024
(In millions, unaudited)
The following is a reconciliation of full year 2024 Adjusted EBITDA expectations as computed at the low and high points of the range to the closest comparable GAAP financial measure. Refer to tables X for discussion of Concentra's use of Adjusted EBITDA in evaluating financial performance and for the definition of Adjusted EBITDA. Each item presented in the below table is an estimation of full year 2024 expectations.
|
Range |
||||
Non-GAAP Measure Reconciliation |
Low |
|
High |
||
Net income |
|
169 |
|
|
173 |
Income tax expense |
|
57 |
|
|
58 |
Interest expense on related party debt |
|
22 |
|
|
22 |
Interest expense |
|
48 |
|
|
48 |
Equity in losses of unconsolidated subsidiaries |
|
4 |
|
|
4 |
Stock compensation expense |
|
1 |
|
|
1 |
Depreciation and amortization |
|
67 |
|
|
67 |
Separation transaction costs (1) |
|
2 |
|
|
2 |
Adjusted EBITDA |
$ |
370 |
|
$ |
375 |