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 Attributable to
Concentra
Shares(1)
Basic and Diluted EPS
Net Income Attributable to
Concentra
Shares(1)
Basic and Diluted EPS
(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 Ended
September 30, 2023
Nine Months Ended
September 30, 2023
(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 Allocation
Shares (1)(2)
Basic and Diluted EPS
Net Income Allocation
Shares (1)(2)
Basic and Diluted EPS
(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 September
30,
Nine Months Ended September
30,
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 September
30,
Nine Months Ended September
30,
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031566579/en/
Investor inquiries: Bill Chapman Vice President, Strategy &
Investor Relations 972-725-6488 ir@concentra.com
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