Concentra Group Holdings Parent (CON) 1 Nov 242024 Q3 Earnings call transcript

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. Earnings Conference Call to discuss the third quarter 2024 results.

Speaking today are the company's Chief Executive Officer, Keith Newton; and the company's President and Chief Financial Officer, Matt DiCanio. Management will give you an overview of the quarter and then open the call for questions.

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. change. At based and information obligation call the these as are of to to over statements like statements today, I'd Concentra company circumstances to forward-looking Mr. on the available the management update to These turn time, conference this assumes no Keith Newton.

earnings XXXX We our today Thanks, States. brief with provider morning, Quarter refresher to but in previously services would during I call, on Concentra's Welcome Good the Call. we occupational quarter of our like gain business. provided know a second comments followers operator. new United health Third largest company. Concentra our continue everyone. Earnings we to start the is to of

telemedicine our approximately locations workplace. XX our and over on-site concentration. across patients serve transportation, including XX,XXX hospitality XXX clinics health centers, We have We government occupational at customers schools, examples. day some XXX,XXX We employer almost across and are industry no approximately platform. to employers construction, and just industry centers our our of every serve Manufacturing, see health states both little care, the health health clinics retail, per on-site distribution, have and occupational health

patient health are care to as scores. by at is workforce, consistent, patient we a employer-focused high-quality satisfaction in Our mission our patient a experience do. exemplified provide of everything services, America's We improve patient-centric the time. high we X health and We deliver

compensation claim safe operating by in return and activities. cost than quick incurred the centers employer focused consumer patients through quarter, Concentra lines revenue for various and are total in guided workers' and Center normal services compensation tend average which centers. our approximate provide of total fee their XX% or segment, claims schedules, help improvement paid indemnity the better lower workers' X third Health and is health reimbursement supporting occupational cost which for line service by insurance medical our to injured health employers. to an work is have for the treated bodies non-Concentra Within visits We and lower to employees entities a a workers' who health. Reimbursement expedite sustainable is return legislative claims types Workers' by return XX% our represents their intervention directly a proposition compensation workers' Injured safe state on and or services at behalf. early value we compensation, consisting work. of employer's Our timely of and third-party with to employees of set through workers employer on administrator. for market company through typically employers paid The by these employers manage by an rates services compensation recover

such have virtually no Medicare or care Medicaid government as reimbursement We health commercial insurance. from from or programs,

sustained a to potential would in to point stand-alone on environment at and companies services the existing care health Concentra other you a operate, leadership over or industries, which the reimbursement look compared our as cash of diversification investors in As basis our sector, profile, we management unique our and flow and our growth geographies across time. and track period strong our statistics, our teams we margin opportunities, experienced record

following channels. For learning registration of we quarterly filed statement to and in publicly our one you spend or reviewing filings time communication many about those our business, interested welcome our by other company more the through

XXX X.X% In slightly for X our QX XXX is year, total XXXX. million, quarter for EBITDA year. X.X% XXXX a workers' of on-site execute successful health a to XX.X% QX the of This quarter, QX development million compensation than was due we X.X% volumes to on growth same This XX.X% similar visit revenue employer XXXX. for interest our earnings was income $XXX.X company a offset to net day X.X% than continuation to versus separate centers is. the of IPO was a is performance. million in X.X% increase and been quarter third as locations business quarter time made a second the had the expense year-over-year. at ended experiencing volume. After Adjusted to by prior Concentra visits quarter now QX the a versus recapitalization the in of several were the Medical. the representing common year day employer million at the higher from the our compared decreased year, same of standpoint, decline and per in was From versus prior pipeline prior Overall, lower prior initiatives The XXX XXXX, our for to the million by as the adjusting progress occupational have workers' the decrease the the health The a services our visit steps to Select $XX.X QX the $XXX.X year-over-year XX with clinics which XXXX grew revenue employer EBITDA the services the we compensation in in or prior of $XXX.X on to had of additional higher a in quarter continue for in compared themes our year. Net services prior performance, X.X% was quarter respectively. compared year XXXX decline lower year. basis. XXXX and comparisons. end very EPS we quarter income increase. quarter quarter the and were from prior and X.X% more for driven Total to compared and margin on was a where terms to quarters patient third expectations, something and associated year-over-year a in strategic with line share switching $X.XX decreased $XX.X Now quarter in per saw we

something experienced by employer year closely. slowdown of over health visit visits X/X Our occupational job workers' the and but quit events August services have centers, United is volume decline more saw a in openings we events, services rates employment the are hiring all were outage Beryl better are than economic driven been new a have some rise, workers' our driver and openings The our Hurricane visits people our been compensation of experiencing service driven the positive hiring rates and have the and employer States. by July, which events, our contributed volumes. to July negative employer positive the and is fallen. employee across a number September. QX CrowdStrike-related softer Within for has has a now. trended volumes Approximately to and for IT levels last as continued trend softer are and in visit in newsprints, which for we've takeaway visits. The compensation that Concentra year as which following hiring is It receded. job not employed

mission. profit margins. We in in have rates X.X% percentage From our are team's continued fee we rate compensation standpoint, set for a negotiate and to visits visit, customers. with to certain higher per contributed per show of schedules services the our we payable higher our adjusted and revenue dedication directly our visit higher revenue increase per to stable in blended pursuant The we employer which visits reimbursement workers' to the of workers' to rate had visit, employer also to accordingly continued growth and increases mix performance visit. Overall, rates state have with and it proud and the a rates their increases per due principally compensation company's

the for optimistic are XXXX. We in coming quarters

share a Matt more XXXX are will visit with in especially to more details guidance continue some minutes. year as few a our well volume normalized for We positioned profile. growth as well trajectory full

my hand to pipeline. highlight the progress about we've made to all relates technology continued including early advance our as important team our development these and to initiatives. have now of company I from The in over the some coming call. I'm but over cost road to some last and overall important during it and done the accomplishments we I significant XXXX I wanted remarks. work areas excited provide work areas about cash year to some We key strategic map quarter, segments, Matt, the IPO separation on great Before quarter's the flow full X has and our on sheet process operating as detail color further Matt? as operating Select our turn metrics, the to more of continued streams. developments quarters. This well in other balance in these advancement provide guidance and concludes key Matt it in the call Medical expenses, our spoke

X.X% XXXX revenue our visit are everyone. morning, operating year-over-year, as health outlined begin and the additional million services indicators. In in on segments XXXX. and segment, than Good which I'll and commentary revenue was key lower Thanks, as lower expected of well higher major same to by expense per year. $XXX.XX our center Keith $XXX.X quarter XXXX prior employer our X.X% a the decline driven occupational QX visit QX categories performance in some our $XXX.XX QX X.X% in with of other increase in visit revenue volume, from Keith. operating continued

advanced day revenue in revenue trends segment On-site than year same business Within QX increased work the recent was same increased comp per comp of months, QX increased from services in that prior in this year. development year. onsites additional year. than primary prior prior or revenue segment, QX a percentage revenue our on $XXX.X will XX.X% basis. from open operating X.X% increased represents or X.X% visits we day increase. Employer on recently $XXX.X onsites a The in against X.X% segment of versus Employer quarter QX visit revenue compensation Other of versus X.X% from million million the revenue employer million quarter operating Workers' X.X% operating $XX.X We in decreased center expectations services that visits solid year. coming increased workers' XXXX our prior X.X operating XX prior year. had X.X% the higher service of in prior Services X.X% from a a QX visit prior in compensation XXXX work X.X% year X.X% or the winning increased basis, XXXX center per XX.X% per The launched. with per continued X.X% revenue quarter $XX including point with offering new of total segment and revenue million quarters. XXXX line year. business care center prior XXXX QX versus and from more

in includes marketing, resources, human corporate corporate revenue for prior year. of compared XXXX administrative administrative quarter expense, revenue and or depreciation personnel a which support to indirect our of direct major services component $XXX.X Our to was services providing all related costs, million and and costs of finance, overheads, offices QX General cost includes XX.X% areas. legal, and same as amortization, the of XX.X% to expense of is Cost such services excluding customers. other

and general expenses to XXXX the Our or compared prior year. in QX of million X.X% $XX.X revenue administrative quarter revenue were of in X.X% same

FTEs fewer labor total in to was center quarters, health where or XX the prior the helped same health services primarily are the Our segment, we occupational company full-time quarter by due quarter-over-quarter compared centers and more having XX despite employer more cost year-over-year, have prior lower clinics with largely lower quarter in operating to year. The onsite visits. FTEs FTEs consistent the fewer equivalents

For days cash which quarter, million XX, sales better strong generation flow XXXX, at flow our outstanding had year. and was September operating days prior than the DSO or providing in cash at with XX days activities third we X $XX.X

includes in improve property metrics the the the activities center cash Our equipment to for $X.X million over Investing in quarter. $XX.X levels. cash historical purchases This of and and of million X continued in $XX acquisition used third quarter. flow million

We the now Financing nice million of provided XX, Our cash to teams less done down and our quarter. of million. With X.Xx activities million outstanding versus balance levels undrawn million growth have X.Xx came higher from cash And maintenance XXXX. at flow a have of our have XXXX, the is the and net from job our expenditures managing of XX, we capital to now $XX total the transactions cash and in equity for by EBITDA retained $XX.X billion, third company of $XXX cash IPO September at the $XXX revolver our debt still the TTM in quarter. debt quarter, letters our each leverage of $X.XX June consistent a credit. net with quarter, of

focused declared up pleased quarter's Board XXXX. growth to that close of performance a XX, are we Given XXXX, stockholders the comments The Directors a growth this on to dividend outlook November The $X.XXXX and will on or financial following share. capital potential on standpoint, about prospects. XXXX, November as not dividend previous From XX, a does dividend of business record dividend, we XX, on to per October Concentra's announce and be on of in change remain addition our to payable cash of about efforts stockholders. of capital return the deleveraging of and solid

to in the are switching and a in Tennessee, efforts. opened look a new are Tennessee. quarter development new additional In to a July, in as nearby Orlando, we September, gears practice presence in forward we areas Greater expand area. we opened the we close October, acquired in early Knoxville, new Now In Concentra, center nearby to new Post in center well. our Both points center Illinois Florida and providing future. for we to access Bolingbrook, corporate end, opening and our a Chattanooga, further Chicago

our building We de also very good acquisition novo and had a pipeline. in terms of quarter

and take of our and clinics are at to more advantage hope opportunities centers base in health the available existing soon. and of footprint areas. health working new intend to to within and are employer key work strategic on-site sites on information organic our to about acquisitions We centers growth opening occupational We we continue pursue have some to and customers opportunities via excited grow continued of

from separation Medical. process Regarding Select our

operating with As have recruited the and We in of some Medical remarks, Select these support help early senior in successfully Keith process. transition, they steps achieving and key goal before we end though towards XXXX. will hired the is productive from progress taken independently it end his mentioned our opening solid made already that leaders the completely of efforts,

to hires Our Concentra in has Transition care, at Officer Medical experience, and health area Chief has health a Information process. experience accounting a services Select in Vice experience the leaders Chief the XX-plus of replace a care we Security President individual solid pay with help is as many who for. Services well attacks Legal include who us with of Counsel, years years as to been this a currently prior and of new HR an in years start It of

we the to overarching finally, Our from results me need year what not and estimates. And of associated beyond. changed do, materially just quarter the from teams are and well the some on synced and the comments the our have for remainder which for costs previous outlook

back since the quarters. and Looking a how negative a decline, during in we public we the execution economic about IPO we the company. progress the what through showed we have process, shown employer discussed as and on company discussed feel including and services becoming third good that We execution headwinds, navigated we through our second

Our periods. have effectively. reimbursement growth consistent consistent It prior of Cash Cost services remains robust very predictable rate of a from is remains staffing revenue strong. our is managed margins percentage and insulated with levels uncertainty. election-related as teams and as been flow has any

latest Our our and and development our our returning pipeline show Select with efforts. grow. technology We our continues stockholders, a separation dividend capital to to declared we made to good progress commitment have from to

as As are guidance that end year we where company, continue will we providing will To we end, full continue believe XXXX. public a we we our with path transparency. for on the forward

to in X.Xx. billion, the We net to revenue of EBITDA to expenditures to in million million million $XXX $XX range X.Xx to the range adjusted expect range be million, the ratio of our in of $X.X and to to approximately $XX be be leverage $XXX be capital

remain financial and believe and with all have hope excited will becoming through the positioned and continued for We results. the today it We this we'd new turn concludes very for well go update to to the this business we we questions. familiar guidance this myself third remarks. open more At investors the like Thank our into for about and Keith, year. With to early time, for and time back that, Concentra's operator you XXXX from your prepared Concentra. to are quarter information success. remarks With any call

[Operator is from Instructions] John question first Your for JPMorgan. Stansell with today

the business workers' the side comp quarter. per visit in revenue of Strong this

I as now the side, a what into Just on to quarters guess as months you that? rates in And think visibility have about few Florida a update of bit the over could we about what we next are think on get of workers' my is little think contribute you're progress how year? going next you comp sense thinking question wanted the a rate couple to of embedded how

Keith. this John, as coming seeing rate a is Yes, what perspective. so we're far quarter comp continued we into is from this a go workers' reimbursement strong

continues will and good get that going we've into good very we've seeing. a -- is, where anything put projections what see about some than it feel and for what It We've outlined XXXX our are place into don't be we it's and has to also. got continue been Those So any stable. start increase on. to to visibility be been different what

still -- that's number in into have this publicly line place we're Matt, February. we're put in Florida, to you not Regarding be that point. believe We anything... do yet at forecasting

John, add to I'll that. Yes, just

still from So track, on quarter. Florida changes no prior is

more out give that the But early into on shake expect January a where going again, XXXX it's into in guidance place X, XXXX, standpoint. will states We Florida. all reimbursement from

Great. here. squeeze And follow-up if can I in a just

have XQ, been the kind called impacts of of obviously, employer you or XQ, there impacted to workers' Just how anything comp? have a size you the few early could out on do in either some of part weather in the services that and business may

could I Sure. that. Yes, take

approximately and in primarily in cyber $X.X was late EBITDA. Hurricane million $XXX,XXX The X July July. impacted in in So of from revenue day Texas. And global We to those, the us on we X had we total about all in Helene Hurricane also be in impact September. July Beryl estimate then had in That outage.

better and softness of September. the in much So August definitely but saw July, we some things in were contributed to

Goldman Jamie with question is Your Perse from Sachs. next

workers' I side I up in But developing how visits the expectations? to workers' of start day. wanted forward? overall, there does visit of mean headwinds we And going with the these across think that sounds to trends It the were was about comp like quarter. the per your compare X%. comp how some should equation that

for Sure, Jamie, this is question. the Matt. Thanks

saw strong total we about comp increase. the the not to visits that QX in in muted to that QX. took as comp see his visit talked as employment So place growth continue saw visit But we yes, positive as events we total mentioned growth. But some of and quarter, tied had and in Keith work the a are we the remarks, employment, work

So are QX our QX, business pretty much work comp for be line and with a expectations QX will blended average. in on

Okay. guess, a And I then -- follow-up. related and

guess improvement type to estimates You hiring that mentioned year, and you're up macro in what for within labor businesses front the at growth? to estimates just Just in sensitivity back the environment health the growth and and terms in you any to that volume to consensus seeing I of that both that that tying conducive connection I for and X%. need you're labor the as closely. growth? to for I hiring of some look of level Is of roughly volume labor on do segment. the the guess environment level? environment watching about get It's current implications occupational next

weathering as to the the but in other now. that that think statistics say some of improvement would mitigated kind expectation what little as start rate through little right would is, ways, definitely as employers a I right in would as with expectations the bit now, and happens we've that, the seeing. we're Yes. to settle our down out and hiring there, and interest what we And get of and the force and of see and of we're that as that a hiring our process it far labor seeing some we're election hope I from things the we bit there need should question far we that the

for question next from Hendrix RBC Capital with Ben is today Your Markets.

progress, guys. the on Congratulations

looking there continuing in to included Florida you on theme. have more state. is Especially Hurricane and your any or that hurricane that as is further the ahead, What related -- pertains ask disruption there out on it question becoming a Milton? in putting about that's speed Its or then to it's down hurricane is influential there out a wanted hurricane any damage strategy? Florida, implied bumps guidance impact Just expansion what to given

Thanks Ben. the Sure. question, for

Hurricane what storms. just When on prior look an in impact had incredibly and us, saw outlined we it with Florida. impact the we but material. So for had Milton I in at not in was the October Cyber, you for It Beryl line

So that the -- included XXXX. for year guidance full is and we that in outlined

a And now think place that a our the far state at to centers We the M&A not I positive development our Milton the this to right some those down as we're other nice of impact slowed as us impact rebuilding takes as to have areas and has at that. in volume of efforts in time. pipeline far potentially looking that actually as it in still in point And potential that. that is and of visit support relative

with for Deutsche Justin from Bowers Your next today question Bank. is

sequentially. Can XQ and it in about usually seasonally X% This business down It like it X% on you looks quarter. based the Q-over-Q. remind implication the the sequentially looks the that the year, like, down -- is year, last us was just guidance lowest is seasonality

are some pieces what moving there? of So the

drive different and What the that's what holiday Fourth the is the But volume experienced of for more history the and that. in year with historical outdoor typically, an many we've in show that than can see that. quarter here season we and We've quarter give trends hotter the of year is and years. a have quarter seen I'll the year overview, of no Yes, fourth many, the past construction got any Matt after we our we've what by activities this comment weather cooling our specifics. and lowest see. far that landscaping on the lot weather, business,

in much line So it's exactly pretty what seen. with we've always

some but you thoughts be Obviously, have nice that for a Justin. guidance can expect prior up QX we the full apply put year. We add And will versus we year, last to Yes. had but that, out onetime to I'll items QX. our for

So implied, we'll -- year-over-year that the estimating on when quarters. the you we for be do to first have than X do what's you'll better are see calculation we

XQ? Got the from sites new fourth the you of online clarifying questions. coming just centers have Or on release that health And it. into spill in in prepared quarter. well And XQ? is like on going some then to And a you prior as results? X to as are guidance It just in then of the X those going remarks, are couple issue that on looks part is year, on the over earlier you XQ to when coming

take I'll first first. question the Sure.

you So and we the next X have leases into coming additional we wins come that QX. year. to got QX X signed that sites onsite in are ones comments X that XX XXXX. The those had more will onsites about, for We've over referenced,

remind be those me time. second second come they'll to your question, employers over online. to question? So then as spread And are -- those onsites the ready for

said you the early -- into around just year. Yes, guidance new

plan meant releasing XQ that prior I results to if So wasn't sure issue you on or... you when

Sure.

chance we'll conferences and QX February. late early early or some that in of before we'll still that, TBD. Good guidance February be have the major So provide March. results January We'll at but

Yes.

Your from next is Ann with today question for Mizuho. Hynes

to tailwinds headwinds you finalizing not we're that providing are XXXX that there want you're know while I major out and consider we should but models? any call guidance,

during quarters and prior No, said nothing the what road in the process. significant past show from we've in

about our Florida next our and through our and visit there. talked for the interest pretty been coming pipeline, trajectory viewpoint as the election about some well. We year will increase, which and talked down Keith trends in growth getting think we've us I help also expectations have and hit the rates consistent,

good from no anticipating. steps separation are on and pathway think down our I what Select with the that we've than way were we well differences taken And on material

I think about into for shows we've good that. fairly got And excited I think XXXX we're what visibility us. So

rate that Florida I that in that state get to you increases while? a any nice other there pipeline could you're haven't think you bump. done And positive it the know getting Perfect. a Are states for

type I it's see no. we're what's the MEIs comp they place. visibility every we would as always But said, we but those, as come doing with going there's feel to ground and what a those good surprises from from states before still -- I depends the far relative to that say been those what a have -- as as early few they into on CPIs It we standpoint. it's and we're little to like workers' see And stake back of the far already to a starting happen it, we we're put will but and about And do in services. year employer think going have a that pretty sticking what things.

going feel we think on pretty those. of up we're So good about end where to both

from is today for Baxter Wells question next with Stephen Your Fargo.

what's of and in love their maybe greater the we do work in under to employer Or been bit have think potentially services employers with comp backdrop, the how employers about looked greater doing you or in periods a terms understand need. a I what percentage the economic into your past, more sensitivity to I guess what I'm percentage the of Obviously, general, needs? for is, pressure their I'd more hear where workers' are control. closely maybe those sales control to a little focus on the more have wondering about economic in which support employers? obviously cycle to your there you're of adding

First comp as to like employers administrator putting We're we're can for a penetrate or with a the It's pipelines of further on these Mutual some which administrators employer not say Liberty us. us and up Sedgwick or same place economic far basically employer to their side channel. down pretty drug those as ease a consistent good comp trend. those comp their an these getting and where both just individuals whatever like that trying create would every on third-party work services part, or travelers or to It's them physicals third-party the and potentially claims aggregators for most where their business services workers' employers to them pipelines for e-screen or employer that direct I whether driver an We on directing the and the really injuries of patients company, DOT economic choice Yes, services. their in to it's the is similar like Thing and their things screens prospecting try coordinates to really a certified, to aggregators, insurance side. be developing example single a Advantage the needs workers' to workers' are. with

and So just it's workers' prospecting the employer not a services ecosystem, multitude within employers. of comp the pathways

Joanna Your today with is from next Gajuk of America. question for Bank

first guess I making comments rate following on you comp up increases. the were workers' on X

So I on year-over-year. it, are X% this year, call rates guess I up, average guess year-to-date,

assume maybe a So the update? more of Florida is it year, a into cost X% little fair rate because bit number to next but

Yes.

for So Joanna, the thanks question.

yes, work year year-to-date, we've X.X% in increase. mentioned slightly a we quarter we Florida annual still standpoint. an X% term, be minus on for the expect So it higher X% comp basis, will the from the plus past, next Longer or given and as expect

exposure I another, the, on there. Great. economic and follow-up I guess, guess, And a backdrop

versus industries? your different can your your And it comp talk for is employer exposure workers services? about you So to different

comp employee headwinds side, say when less layoff where at layoff on Typically, the I you actually the seen which from look workforce it services side. situation hiring in as the you and certainly, comp was actually workers' not quit when And that side, position and we rates an job there's feel that that on happening. they're kind begins before feel you going the until less to out there. you'll to employer workers' growth lower have much don't there fill of drop, a

years. felt other different anything than any really haven't We

along it as employer that cycle, starting election as the employee the back to pick kind that earlier, historically we starts getting that's changes some activity up volume that hope we to has. And services with we'll the mentioned of continue, pick rate through and would interest up. like plugging up, of we hiring pick So our

is Concentra, At X you on industries industries Page to are see we're a chart here we in is down a X Joanna, could any out And from Slide mix. be new time, takeaway the And but standpoint will up call main on page. as that our there diversified that our there visit on in added highly that an the from point industry at wanted shows we perspective investor and that are here. and that some industry some this deck key, diversification

I charts I player would asking workers' difference was try any the businesses same to whether there's look But look services pie the between guess or they comp you of would kind if split? and the

similar. look they would No, very

right, adding you location, confirm one. you but may then these I that. offering Okay. just announced. care the a last to I if And primary guess more on-site just want that advance also follow-up, mentioned I

guess, So Am you can business time? bit you could any how tracking flavor they're how there give it this I primary be? little more Is us about in mind, I a could offering? big this over be, advanced what and of have asking target

I Yes, sure.

of those Those So those were we our we're Advanced quarter, And care and total additional and continue with the as care, health. we be as with were won primary grow company. line, in the that to -- of larger during relates can offering our of officially we some that think a primary contributor, to sites we early we'll mentioned. occupational nice We but innings some it XX new size launched portfolio be onsites. business, -- service that much

M&A us there's there from an a for also. also, And activity opportunity lot of

are where You as size. an a we're we far probably organization, as XX as look top at

to ability million relative opportunity that there's M&A industry near Some larger to of than future. some But ones and some and I the us. bigger the opportunity in our are think several real here evaluate

have We turn remarks. now I and over the closing Keith for session, will end to of call the the question-and-answer reached

to XXXX. appreciate forward you. operator. with you Thank look We joining everybody today. speaking early us I Thank you,

your today's concludes disconnect at you and conference, Thank you This your may lines this time. participation. for