Concentra Group Holdings Parent In Stock

Good morning and thank you for joining us today for Concentra Group Holdings Parent, Inc. Earnings Conference Call to discuss the second quarter 2026 results. Speaking today are the company's Chief Executive Officer, Keith Newton; and the company's President and Chief Financial Officer, Matt DeCanio. Management will give you an overview 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.

You are hereby cautioned that these forward-looking statements may be affected by the important factors, among others, set forth in Concentra's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on the information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change. At this time, I will turn the conference call over to Mr. Keith Newton.

Good morning, and thank you for joining us today. Before we comment on our second quarter results, I would like to share my perspective on the announcement that was made yesterday afternoon in our press release. After more than a decade as Concentra's Chief Executive Officer and a relationship with a company that has spanned over 30 years, I have decided effective November 1 of this year to transition from the CEO role into a new role at Concentra as its Executive Chairman of the Board. At that time, Matt Dicanio, our President and Chief Financial Officer, will become Concentra's President and Chief Executive Officer. Bob Ortenzio, our current Chairman, will continue to serve on our Board as a Director. Many thanks to Bob for his leadership and guidance over the last 11 years, especially over the last couple of years as a public company.

Leading this organization and its more than 13,000 colleagues has been the privilege of my career. I cannot be prouder of what we have accomplished together at Concentra. Today, we stand as the clear leader in occupational health, powered by a best-in-class team that remains focused every day on our mission of improving the health of America's workforce. The company has experienced tremendous growth, particularly over the last decade, driven by the dedication and execution of our teams. Together, we have reached significant milestones throughout our journey, including the successful completion of our IPO in 2024.

This transition is the result of a multi-year succession plan that we have worked on with our Board of Directors, and there is no better time to turn the role over to Matt. The business is performing exceptionally well. Our strategy is delivering, and Matt has been central to both. Over more than a decade working side by side, he has shaped nearly every dimension of Concentra, leading our de novo and acquisition growth engine and integration efforts, developing and executing strategies that support our operating model, running the IPO process and leading our public company efforts since the IPO. He knows this business, he knows our customers and he knows our people as well as anyone.

Importantly, Matt will assume this role supported by one of the most experienced leadership teams in our industry. The members of our executive and senior leadership team across the country have an average tenure with Concentra of approximately 20 years, reflecting a deep understanding of our business, a strong commitment to our culture and a proven ability to execute through changing market environments. As Executive Chairman, I plan to remain actively engaged with the Board, Matt and his executive leadership team, and I have complete confidence that Concentra will continue to prosper in its next chapter in his hands. So with that, I will turn it over to Matt to talk about the quarter where you will see we continue to have great momentum with the business. Matt?

Thank you, Keith. Before turning to the quarter, I would like to say what an honor it is to be selected by the Board of Directors as Concentra's next President and Chief Executive Officer. Keith, on behalf of all of our colleagues, thank you for your leadership. Over the 11 years we've worked together, you've taught me what it means to lead this company, making sure the right people are in place, enabling teams to do what they do best and supporting the culture we have built. And I'm grateful that I'll continue to benefit from your partnership and counsel as Executive Chairman. To our shareholders, my message is simple. This transition reflects continuity. The strategy we've articulated since our IPO, delivering on our strong customer value proposition, expanding access through de novo development and disciplined acquisitions and driving operating leverage across the platform is working, and it will not change on November 1.

Just as importantly, I have the privilege of working alongside an exceptional tenured executive and senior leadership team. Their experience, institutional knowledge and commitment to our mission provides tremendous stability and positions us well for our next phase of growth. So with that, let's turn to our second quarter results. Total company revenue was $606 million in Q2 2026 compared to $550.8 million in Q2 of the prior year, representing 10% growth year-over-year. Excluding contributions from the Pivot acquisition in both the current and prior year where applicable, revenue was $589.1 million this quarter, resulting in an 8% increase over the prior year, representing one of our strongest core revenue growth quarters in some time.

Total occupational health center patient visits increased 2.6% to an average of more than 56,000 visits per day in the second quarter. Our work comp visits per day increased 3.7% and our employer services visit volume increased 1.8% relative to prior year. As we expected, work comp visit growth rates were lower relative to the first quarter, but visits remained strong and above long-term growth averages. We believe that this reflects both the resilient blue-collar labor market where we generally operate as well as market share gains. Importantly, the growth in visit volume has been nicely distributed across industries and geographies.

While it's still a little early to definitively point towards reshoring as a key driver of the recent uptick in visit growth, we are seeing indications of improved activity in the manufacturing and construction sectors. and in particular, some encouraging activities in markets proximate to data center development. With respect to market share, as mentioned last quarter, we are continuing to deploy new tactics and technologies to help us target and efficiently communicate with prospective customers, which we think is having a positive impact. Those efforts, combined with customer satisfaction and retention metrics remaining at or near all-time highs are likely contributing to our market share gains. In sum, there are solid secular tailwinds supporting a growing market in the near and long term, and we are actively investing and utilizing all available levers to increase our share.

We'd also like to highlight the acceleration in Employer Services growth this quarter, which we view as an indicator of relatively resilient hiring trends across the economy. On the occupational health center rate front, revenue per visit grew 4.6% during the second quarter relative to prior year. This growth was driven by a 4.9% increase in work comp and a 3.2% increase in Employer Services revenue per visit. We had expected rate bumps in the state of California and Tennessee on March 1 and April 1, respectively, helping drive the increase in the work comp rate. Additionally, we had some mix dynamics at play with higher reimbursement initial injury visits comprising a larger percentage of total work comp visits this quarter.

We expect rate growth over the remainder of the year to fall closer to 3%. Adjusted EBITDA was $140.9 million this quarter versus $115 million in the same quarter of the prior year, an increase of 22.5% -- adjusted EBITDA margin increased nearly 240 basis points from 20.9% in Q2 2025 to 23.3% this quarter, reflecting strong rate and volume growth, coupled with good execution and operational efficiencies across the business. Additionally, Q2 2025 included just under $4 million of estimated Nova acquisition-related costs tied to onetime integration activities or expenses that have since been eliminated through synergies, creating an incremental tailwind for year-over-year earnings growth. Both our Pivot and Nova acquisitions continue to perform very well and are ahead of underwriting.

Adjusted net income attributable to the company was $66.7 million and adjusted earnings per share was $0.52 for the second quarter of 2026, representing approximately 40% growth over prior year adjusted net income of $47.7 million and adjusted earnings per share of $0.37. Next, to provide a little more detail in our Occupational Health operating segment. Total revenue of $553.5 million this quarter was 7.2% higher than the same quarter of prior year. Work comp specific revenue of $361.2 million this quarter was 8.7% higher than prior year and Employer Services specific revenue of $183.2 million increased 5.1% in Q2 2026 versus prior year.

Our Onsite Health clinics operating segment had yet another strong quarter with reported revenue of $38.8 million, a 72.1% increase from the same quarter of the prior year. Excluding the impact from the Pivot acquisition in June of last year, the On-site Health clinics operating segment revenue grew 27.9% year-over-year during this quarter. As mentioned last quarter, we continue to be encouraged by both the realized growth in this business as well as the pipeline of new opportunities that the team is building. While mid- to high 20s organic growth percentage may not be sustainable long term, we see a lot of opportunity here and do expect this segment to continue to grow at a faster clip than the core business.

Finally, other businesses, including telemed, our pharmacy operations and other OcHealth-related service businesses generated revenue of $13.7 million in the quarter, a 13.3% increase compared to the same quarter of prior year. Moving on to expenses. Cost of services was $413.9 million or 68.3% of revenue in Q2 2026, an improvement from 70.7% of revenue for the same quarter of the prior year. We continue to do well with our staffing efficiencies, which has precipitated nice flow-through from our visit and rate growth. Additionally, as previously noted, Q2 2025 included onetime expenses related to Nova integration activities and other costs within cost of services that have since been eliminated through synergy realization.

Our total general and administrative expenses were $56.7 million or 9.4% of revenue in the quarter compared to 9.6% of revenue in the same quarter of the prior year. Excluding items that are added back for the purposes of calculating adjusted EBITDA, including equity comp expense, onetime Select separation costs and M&A transaction costs, G&A expense was $51.1 million for the quarter or 8.4% of revenue compared to 8.5% of revenue in the same quarter of the prior year. As with cost of services, we had Nova expenses in Q2 2025 that have been synergized, offsetting expected year-over-year increases in personnel and systems-related overhead related to our separation from Select Medical. Now to touch on cash flows.

In the quarter, we generated $135.2 million in operating cash flow. This compares to $88.4 million in the second quarter of last year, with the year-over-year increase largely resulting from higher earnings and year-over-year variances and timing associated with payments of current liabilities. Investing activities used $14.2 million of cash in the second quarter and was driven by additional investments in de novo centers, relocations, renovations and maintenance as well as IT investments. On the de novo front, we opened one center near Phoenix in Q2 and subsequent to quarter end, we opened 2 additional centers in Boise and Kansas City. The Boise Center is our first location in Idaho, which represents our 42nd state with an occupational health center, a great milestone for our company.

We are still targeting a total of 8 to 10 de novo centers this year and have a nice development pipeline that we expect to potentially support double-digit new sites in 2027 and beyond. We are also continuing to work our bolt-on M&A pipeline and anticipate additional announcements on that front over the remainder of the year. Free cash flow or cash flow from operations less cash flow from investing activity, excluding business combinations, totaled $121 million, an increase from prior year second quarter free cash flow of $63.2 million. This was driven by a combination of higher cash flow from operations and lower capital spend in Q2 2026 relative to Q2 2025.

Finally, financing activities during the quarter resulted in net cash outflows of $24.7 million as we repurchased approximately 424,000 shares totaling $11 million and paid $8 million in dividends. At the end of the second quarter, we had approximately $54 million remaining under the original $100 million repurchase program authorized by our Board of Directors. We ended the quarter with a total debt balance of $1.57 billion and a cash balance of $158 million. Our net leverage ratio per our credit agreement at the end of June was just under 3x, down from 3.4x at the end of the first quarter.

We made significant headway this quarter on both the numerator with strong free cash flow generation as well as on the denominator given our growth in adjusted EBITDA. We have reached this leverage milestone well ahead of schedule. And absent opportunistic M&A and share repurchases, we'll continue to work towards our long-term leverage target of near 2.5x. One additional note here, we expect the interest rate spread on our Term Loan B to step down 25 basis points to 175 basis points now that we are below 3.25x leverage, meaning that we should see a nice reduction in interest expense going forward.

Finally, we are pleased to announce the continuation of our dividend this quarter with Concentra's Board of Directors declaring a cash dividend of $0.0625 per share on August 5, 2026. The dividend will be payable on or about August 28, 2026, to stockholders of record as of the close of business on August 20, 2026. Now I'll turn it back to Keith to close this out with some comments on separation activity as well as our updated guidance.

Thanks, Matt. I wanted to take a minute to congratulate both the Select Medical and Concentra teams on the great work they have done together to separate the companies for the last 24 months. There are still a few loose ends remaining related to projects that need to be wrapped up, but we are substantially complete with our efforts. We've hired all the new employees that we expect to hire and have largely finalized all process and technology implementations, including the conversion of our ERP system to our own instance in May of this year. Q2 was a big milestone in this regard, and we are pleased to have almost all of this activity behind us, which now allows us to focus our internal resources to work on higher-value projects and initiatives going forward.

Our monthly spend on TSA services Select Medical, which at this point is largely immaterial and limited to knowledge transfer will continue to decrease each month and will be entirely eliminated by November when the agreement officially ends. I commend the teams on how they delivered on our plan. It's been impressive to say the least to watch this execution while also seeing our company continue to grow and expand margins despite such a heavy lift and complex process. With respect to our updated guidance, given the continued strength of the business, we are once again raising our 2026 guidance, including the low end of our target revenue range by $50 million, resulting in a new revenue range of $2.325 billion to $2.375 billion.

The low end of our target adjusted EBITDA range by $25 million and the high end of our target adjusted EBITDA range by $15 million, resulting in a new adjusted EBITDA range of $485 million to $495 million and then both the low and the high end of our targeted free cash flow range by $5 million, resulting in a new free cash flow range of $220 million to $240 million. Our target CapEx range of $70 million to $80 million remains unchanged. Year-to-date performance has exceeded our initial expectations entering the year, driven by strong visit and rate growth, disciplined expense management, successful execution of our growth initiatives, favorable market tailwinds. We're in a great position to continue this as we look to finish strong in the second half of 2026 and position us for another great year in 2027. This concludes our prepared remarks, and we thank everybody for the time today. I'd like to turn it back over to the operator to open the call for questions.

[Operator Instructions] Your first question for today is from Ann Hynes with Mizuho Securities.

Congratulations, Matt, on your appointment. So it looks like, obviously, this is a great quarter. You beat consensus estimates by 13%, and you raised guidance by 4%. Maybe what was your -- what was the beat versus your internal expectations? And if you beat by a similar amount to Street consensus, are you just being conservative? Or is there something you're seeing in the market why you wouldn't raise guidance more? And then my second question is, obviously, workers' comp volumes are very strong. Thank you for the detail on the onshoring AI data information. But can you remind us what -- is it 2% to 3% we should assume like long-term growth in workers' visits? And then if this onshoring and data center actually happens, what do you think it could add to long-term growth over time?

Yes, thanks for the note. Appreciate it in the question. So on your first question on guidance. So yes, we've obviously had a really strong start to the year halfway through the year. Q1 and Q2 exceeded our expectations. And we've raised our guidance by more than our beat. So we continue to talk about the second half of the year similar to how we talk about our long-term algorithm, low single-digit visit growth, 3% rate growth. Cost of services, we expect we'll continue to see some improvement. Obviously, Q2 was our best efficiency quarter in quite some time.

And G&A, we expect to be roughly flat quarter-over-quarter. So I think there's -- could potentially be a little conservatism in the outlook for the rest of the year. So it's definitely not something we're seeing. We continue to see strong visit growth and obviously had a great rate quarter as well. And with the cost side of the equation working, it's all kind of clicking together. So nothing that we're seeing and obviously raised the EBITDA guide by about $20 million to the midpoint.

Yes, I was going to add... Relative to the conservatism. We -- as Matt mentioned, so far, we continue to stay pretty consistent with what we have seen and -- but still several months left in the year, a lot of things going on out there and just wanted to make sure that we stuck a stake in the ground that we felt really good about.

Yes. And on your second question, Ann, I think it was around the long-term growth rate expectations for work comp. So we still point to the low single-digit visit growth rate as our expectation over a long period of time. Obviously, the last 3 quarters of last year were in the 3% to 4% range. We had an outsized Q1 at 6.2%, and we're back in the 3% to 4% range this quarter. So it's above our long-term algorithm. And as we noted in the prepared remarks, we are seeing some early signs of the manufacturing and construction reshoring efforts and the data center trend. So if those continue, and we're playing close attention to it, and I think we're positioned well with our geographic footprint to capture any gains there.

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

So actually, in terms of the conservatism in a way for this year and the strength in this quarter, so I understand that the year-over-year comparison, but even when you just look on its own, the Q2 margins were very strong and now your guidance implies EBITDA margins of, call it, 20.9%, right, 20.8% to 9%, so fairly close to 21%. So the question is, how should we think about EBITDA margins going forward? Should we kind of look at this and say, hey, this is the new starting point and you can still grow from there?

Because obviously, you will not have any separation costs, right? So there should be, I guess, sort of more of a tailwind in ' 27 versus '26. So help us understand how to think about margins. I know you're not ready maybe to give specific number, but just like philosophically in terms of the biggest tailwinds and headwinds when we think about margins going forward?

Yes, sure. Thanks for the question, Joanna. So keep in mind, Q2 and Q3 are the highest margin quarters. So you got to factor in seasonality when you look at the overall margin profile. But I think you're correct, when you look at the midpoint of our guide, we're anticipating roughly 21% margins this year. And as we've talked about in the past, we've had 4 or 5 years at about 20% and we've taken on public company costs and separation costs. So we do anticipate the margins to move up as we continue to grow visits, have rate increases, execute on our M&A strategy. And I think this quarter, you can really see the visit and rate strength and how that flows through the margin closer to the combined with the efficiencies that we had in the quarter.

Yes. I would agree. And we had probably the best quarter we've ever had in this company, and it's reflected in this quarter in those numbers. And I think as we look to the future, we feel pretty good about the direction we're heading. And with what Matt said about the margins and where they are right now, we think we can hold the line on those. But again, seasonality will take a little bit of the impact on the second half of the year.

Perfect. And if I may squeeze in a follow-up on something you said -- actually 2 quick ones. So one on the Tennessee increase. I don't -- I couldn't remember whether you told us what it was. I think California was a 5% increase. And then the second one on the pricing, similar driver when you mentioned the mix of injuries visit. So can you tell us what it was and like what drove that?

Yes, sure. So Tennessee went into place on April 1. And I believe that was roughly a 30% increase, depending on the visit type, just that's a blended number. And then your other question on the visit mix. So our work comp rate growth was 4.9%, which was above our expectations. We did have a lighter Q1, if you remember, and we expected California and Tennessee to kick in on March 1 and April 1. And so we did expect a decent increase in the year-over-year rate profile for work comp.

Part of that was also -- part of the 4.9% was also driven by visit mix. We had higher initial injuries, which are higher rate per visit. And we also had some year-over-year comparisons to last year where we had 67 Nova centers where we're putting systems in and preparing for the separation or the integration process. So there's a little bit of noise just year-over-year. That's why we expect the work comp visit growth rate to come down a little bit in the next couple of quarters, although the revenue per visit, we expect to be roughly flat quarter-over-quarter going forward.

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

Matt, congrats on the appointment. And Keith, congratulations on the run. It's been several decades of great architecture here. So I want to talk about the strength in the workers' comp visit, and you are running above trend. But Matt, it doesn't sound like you're talking about a mean reversion anytime soon. It sounds like, if anything, there could be maybe a cyclical upturn with some of the data center activity and maybe you could run above the low single digit over the next year or so contingent upon whether that activity continues. Can you just elaborate or clarify on that? And then I have a follow-up.

Yes. Justin, this is Keith. Yes, from a workers' comp perspective, we really had a strong year, probably one of the best years we've seen in 20 years so far. And we continue to see strength in those visits as we go forward. And a lot of it is what we've seen in the manufacturing and construction area. And that's evidenced with some of the things we're seeing on the employer services side as far as growth in those visits also, which ultimately would yield to the comp visits. So we -- which will actually yield to future comp visits. So we feel pretty good about what we're seeing.

We think a lot of that is just a result of some of the dynamics that are happening and the tailwinds in the industry, combined with the market share gains and the things we've done internally over the last few years with technologies to get better at identifying potential customers and also retaining those customers. We've got much higher retention rates at this point in time from a company perspective than we historically have had from a customer perspective with some of the technologies we put into place to make use of our facilities a much easier process for them. So a lot of different levers we've been pulling that I think we're seeing the fruits of the labor pay off at this point in time.

And just one follow-up on that. It is clear that like you're taking market share out there. And one of the thoughts was how much runway is there even within the Fortune 500? Is there still opportunity to continue to consolidate that market? And then as you look beyond there, how much opportunity is there below that in that SMID cohort?

Well I think there's a lot of white space for us. We've done some analyses recently just looking at pin on the map, where we could be, what's out there. And it's a nice runway for us relative to that. And as far as continuing to penetrate deeper into existing customers. It seems every time we continue to add pins on the map, what that does, it makes it easier for those larger customers to use us more as far as more sites, and we've seen some transition as far as that. The large Fortune 500 companies, they drive visits to us. But as you know, we've got over 200,000 small customers out there, which drive a large majority of visits to us.

So we continue to prospect those, identify them through technologies and continue to penetrate the market. And I think just with the stickiness we've done with technologies within our centers, providing information to the employer decision-makers on a quicker basis than others, upgrading the level of service, the patients you're experiencing, all those levers are what's yielding the results that we're seeing within the bricks and mortar right now.

Your next question is from Stephen Baxter with Wells Fargo.

I wanted to follow up on one of the Q2 drivers that you called out. I think you mentioned that within the workers' comp business, there was some favorability from mix related to higher, I guess, new first injury and assessment visits. Can you maybe help us understand why you think that's occurring? And then as you look back across the company's history, when this tends to occur, does it tend to be more transitory in nature? I guess I'm wondering why this wouldn't be something you think might not be a durable trend as you move into the back half.

Yes, sure, Stephen. So thanks for the question. Yes, initial injuries, we had one of our strongest quarters in quite some time. That number can fluctuate over a period of time. But I'd point back to a lot of what Keith was just going through about market share gains, a lot of the things that we're working on from a sales and marketing standpoint, technologies we put in place to make sure we're in front of customers and also all the great work that our teams are doing at the center level with the operating KPI metrics that we track are at all-time highs.

And so the patient experience, the customer experience, is driving a higher retention percentage right now, which is already at a high level. But I think it's a combination of higher retention and overall market share gains and also some of the macro backdrop that we see. So hard to predict that number going forward into the future. But what we've seen over our history is it does fluctuate, but we like what we're seeing right now.

Got it. Okay. That's great. And then just with the progress that you've made on leverage, I guess, how should we think -- how should we be thinking about the deal pipeline, how do we think about the balance between what might interest you in kind of the core occupational health business or some of your other opportunities? And any thoughts generally kind of on the size of assets and how that might compare to some of the things you've done more recently?

Yes, I'll take that one. We've got a strong deal pipeline at this point in time, both from a bricks and mortar and an on-site perspective, prospecting them all, moving them all along the pathway. As far as anything the size of Nova, that's not going to happen. But several nice midsized ones that we think can get across the goal line in the coming months. And we don't think it will really impact our leverage at all. In fact, based on the cash flow over the next months and what's in the deal pipeline, we think we're going to be able to manage that very well and continue to handle the leverage and continue to bring that down. So we feel good about what's in the pipeline. We feel good about how we're going to handle the leverage simultaneous with that and nothing out there that of Nova type size at this point in time.

Yes. And I would just add a couple of points. Obviously, we did some M&A and de novos to start the year, but the back half of the year looks good, especially from a de novo standpoint. And also, we're incredibly pleased with the leverage getting below 3x. That was a goal of ours by the end of this year. We did it by the second quarter, obviously, because of the strong cash flow and also because of the EBITDA growth. But I think that's a great sign for some investors who target leverage ratios below that number.

Congrats to both of you on the new roles.

Your next question is from Scott Fidel with Goldman Sachs.

Glad I was able to get on the earnings call and time for the transition announcement today. So congratulations to both of you. And I wanted to just ask in that same context, Matt, maybe if you just wanted to take a moment to just talk about any particular areas of the strategy or operations that you expect to lean into a little bit more in terms of where your focus is? I'm assuming it's going to be very consistent in terms of the strategy and the operations and with still as Executive Chairman. But just curious if from the capital deployment perspective or priorities on operations or strategy, if anything that you think you see yourself maybe focusing in on even more or conversely a little bit less?

Sure. Yes. No, Scott, I think the story is going to stay exactly how it is today. We've got a great strategy in place. It's working. As Keith mentioned in some of his remarks, focusing on providing great clinical outcomes and care at the center level, great patient experience, great customer experience. We're going to continue to focus on technologies to make it easier to do business with us, and we've got a great growth strategy from an inorganic standpoint. So no, there's no plans to change anything. We really like where we're at. And -- we just need to continue to execute what we're doing.

I was going to add to that. We've got a -- as we mentioned in the several times that we've got a very tenured executive team. The executive team itself is well over 20 years average experience here at Concentra. And then you take the next 50 to 75 people below that from a senior management team, and it's probably close to 20 years also. So we've got a great foundation built here, a great culture. It's a -- it's a very collaborative decision-making process. It's not just Matt and I making the decisions and pushing them down. It's bought in by all of those individuals that I just spoke of. A lot of smart people weighing in on the decisions and the strategies and executing on them. And so we've got a tremendous recipe here that we've been working on for a long time, and we'll continue to execute on that recipe.

Okay. Great. And for my follow-up, I'm going to ask a 2-parter, I guess, not entirely related, but still do it anyway. First part, just around the free cash flow, which was very strong there, sort of close to doubling year-over-year and did reflect those EBITDA margins getting to sort of higher levels and then the lower CapEx. Can you maybe just talk about the sustainability of the free cash flow or what type of sort of level you think is more sustainable and sort of implied in the back half and sort of how we should be thinking about that?

And then the other part was just on the industrial injuries. Just interested if -- just around the whole theme of sort of the new construction and activity around sort of the AI infrastructure hyper scaling and the opportunities that are there. Are you seeing any evidence yet of the -- I know you talked about sort of seeing some emerging indicators there. But just curious around like the industrial industry injuries themselves. Are you seeing any sort of impact from that? Or is it still too early to really see that in terms of your mix?

Sure. I'll hit the free cash flow first. So approximately $120 million in the quarter, obviously, an incredibly strong quarter. You look at our guide, we bumped it up slightly. There is some timing, as we mentioned, as it relates to the cash flow. So we had some current liabilities that impacted timing from a favorable perspective. And also, our CapEx was slightly lower in the front half of the year. So we'll have -- we have some planned CapEx, especially related to de novos and some of our other IT investments in the back half of the year.

So sometimes from a quarter-to-quarter perspective, there is some timing there. But overall, we expect a very strong free cash flow year, well north of $200-plus million. On the second question on the data centers and the injuries, we are seeing some early positive signs we're seeing really closely, close to a lot of the major construction companies across the country. We're seeing some nice growth in Texas, Oklahoma, things like that. I think the Nova acquisition really helped us expand into markets that we weren't in that those markets have some of the data center build happening. So we'll continue to monitor it closely, but we definitely are seeing early signs of it.

Yes, I was going to add and some of the early signs that we do see, typically, Employer Services is a leading indicator that ultimately yields or comp and definitely in the construction and manufacturing area, we've seen our Employer Services tweaking up at a better rate than potentially some of the other industries out there. So it's anecdotal whether that's a result of the data centers, but we think that because of that, the construction activity and some of the things that may be coming down the pipeline that, that could be happening.

Your next question for today is from Benjamin Rossi with JPMorgan.

Regarding expense trends during 2Q, cost of services improved nicely quarter-over-quarter on a per visit basis despite volumes picking up. What specific operating levers are driving center level efficiency? And then how are you thinking about primary expense trends for the remainder of the year? And what assumptions are embedded in your guidance raise?

I can talk about some of the operating levers within the bricks and mortar. Personnel, labor is by far our largest cost. And in the past, we've been asked quite often how we manage that relative to what some of the other health care entities have been seeing. And our business is a little different than the others. We didn't have the RNs. We didn't feel a lot of the pressures that others felt. And so we've been able to manage the per FTE cost.

In addition to that, as far as the number of FTEs within the centers, we continue to get more efficient with patient visits per FTE within the practices. And a lot of that has to do with the technologies that we put into place to try to eliminate the inefficient work that any of them are doing, and we continue to see that tweak up and leverage that cost as a result. So our individuals, our people, our colleagues within the centers are able to see more patients on a per person basis than what they've done in the past purely because of some of those technologies and the elimination of a lot of nonclinical activities that take place within the practices. So that's how we're really leveraging that cost within the bricks and mortar. I don't know if you want to add any.

Yes. I'll just add a little bit to what Keith said, Ben, to your question. On a rolling TTM basis, our cost of services as a percentage of revenue has come down pretty much every single quarter since the IPO, and it really speaks to what the teams are doing out there across the country, as Keith mentioned. Also, obviously, we had strong revenue growth this quarter, which helps that metric. And we also noted -- when you look at the year-over-year comparison, we noted that last year in 2025, this quarter, we were preparing and beginning our Nova integration efforts. And we also had some costs at the cost of services line that has since been synergized. And those are not -- those are not center level costs, but cost to support the centers. So hopefully, some of those comments help.

Yes. Great. And just thinking about employer services during the second quarter. Volume stepped up there pretty nicely for that segment on a sequential basis. Between your lower dollar drug screens versus some of the higher dollar physicals, what was the service line mix in 2Q for Employer Services? And then what does guidance anticipate for shifts in mix during the back half of the year?

Yes. So we saw 1.8% overall Employer Services growth. We don't really get into the breakdown of drug screens fiscals. But as far as the back half of the year, we're anticipating low single-digit visit growth for the -- implied in our guidance for Employer Services. So -- but as Keith mentioned, we're seeing positive signs there. It is a nice indicator of future economic activity. And so we like what we're seeing there.

Your next question for today is from Jared Haase with William Blair.

I'll echo the congrats to Matt and Keith to you both on the new roles here. Maybe I wanted to ask about the Onsite business. You had another really strong growth quarter on an organic basis. Can you just take a step back and give us an update on sort of the pipeline, deal flow, how you feel like the offering is positioned here with the broader services that you have now with the advanced primary care capability? And I'm also curious, I mean, clearly, it seems like you must be taking market share here. But just are you seeing a little bit of demand acceleration here? I'm just thinking about all the pressures that employers are facing from a cost trend perspective. Is that playing out at all? Or do you feel like this is truly just share gains for your business?

No, we definitely feel there's increasing demand for these services. Our sales pipeline is as robust as it's ever been. The Pivot combination with our core Onsites really helped us leverage a lot of things and relationships. We've been able to expand with existing customers, both on both sides that were common customers. So you do that without having to go out for an RFP. So we continue to grow what our core business has been. The transaction with Pivot has helped us out a lot as far as the visibility and getting bigger and leveraging that platform.

And then you combine that with added traction and momentum that we're starting to gain with our advanced primary care services with the implementation of Epic, it's really put us on the map and the relationships that we're developing with the broker community out there where historically, we did not have those relationships because we didn't need them on the occupational health care side. Those are starting to foster, and we're winning -- starting to win those RFPs. So I don't know if you want to.

Yes. I just want to also give our team a big kudos, obviously, 20-plus percent organic growth, but also the execution on the Pivot transaction was flawless. The 2 leadership teams came together and are working together so well, brought a lot of talent over from the Pivot acquisition. But -- and our core leadership team is strong. The sales and marketing efforts are going really well. Just execution across the board in that segment is going incredibly well.

That's great to hear. And then maybe just for the follow-up. So I just wanted to clarify, when we think about your de novo expectations, and I think your full year target sort of implies a bit of an uptick in the back half of the year. To what extent is there any sort of incremental volume lift associated with those de novos in 2026 guidance? And when I think about how quickly they can ramp, is there any potential upside from the 2026 cohort? And then I guess sticking with the de novo threat, I'd love to hear a little bit about just your pipeline and opportunities that you have earmarked both for 2027 and then maybe starting to think about even 2028 at this point?

Yes. So the way to think about de novos, we're targeting 8 to 10 this year. We're targeting double digit next year. We have a funnel of 30 to 40 different sites that we're looking at and just prioritizing across the country. As far as the contribution, we've been doing them for a long time. They start out at 0, obviously. They do ramp quickly. Really excited about some recent improvements we've made from a sales and marketing standpoint, even though historically, we've done such a great job ramping quickly. Their contribution from a visit standpoint is minimal, so less than 1% overall. So the strategy is working. And again, we -- as Keith mentioned earlier in the call, we have a lot of white space out there to add a decent bit of these over the next 5, 10, 15-plus years.

Yes, I was going to add the first 6 to 12 months from a de novo perspective, it's really not much contribution at all. You're going to start out with some cash flow losses that breakeven and start to go positive. But the net-net of everything, we really don't see much until we get into the 12 to 24 months and start to really ramp up. So the hope would be what we're doing in '26 really benefits us more in '27 and '28. There really no benefit either way or drag per se in 2026.

[Operator Instructions] Your next question for today is from Ben Hendrix with RBC Capital Markets.

Just was hoping you could give us a quick update on the state regulatory and rate horizon now we have California and Tennessee updates. Just what kind of is next in terms of the outlook? Is there anything catalytic on the horizon you're waiting for or anything that we should be aware of from the rate perspective going forward?

No. I think as it relates to 2026, we're -- nothing is really on the horizon for the remainder of the year. It's just kind of digesting what has happened at this time. And it's still really a little too early to know what's going to transpire completely in 2027. We'll know more as we get into the latter part of Q3, early part of Q4. But the indications and the things that we do see for next year, what we can see, it seems it will be a nice year for us as far as we know at this point in time, and there's nothing of concern at all at this point in time. And we should see hopefully something similar to what we've seen in the past years.

Great. And just I apologize if I missed this, but now with leverage down at your target level, I just wanted to see if you guys are setting a new kind of intermediate-term target. Are we taking it down another half a turn? Would that be optimal? Or do you think we'll maintain at 3? Just wanted to get your thoughts on kind of where that target goes now.

Yes. No, our goal is to get it down optimal from our standpoint is, call it, in the range of 2.5x. And we're going to continue to prioritize M&A, de novos. We did the share repurchases in the quarter. We have the dividend in place that the Board approved again this quarter. So we're going to stick with the strategy and the leverage we expect will continue to come down.

We have reached the end of the question-and-answer session and conference call. You may disconnect your lines at this time. Thank you for your participation.

Hello, everyone. Thanks so much for joining. My name is Joanna Gajuk, health care provider at Bank of America. And it's my pleasure now to host this session with Concentra, very interesting company. And we have the entire group here. So we have Matt, President and CFO; Tanner Newton, who's the SVP of Strategy and Finance; and Bill Chapman is here, too. So perfect. Sorry, we don't have your name there. And I guess we'll go right into Q&A, unless...

Great. No, go right into it.

Yes. But I was also actually thinking that since this company is very unique, like the payer is like a unique one. And the business itself kind of is different than most of the companies, people are kind of talking at the conference. So maybe we should start there just like high level, just -- so in case someone is not familiar with the business. And also, what are the biggest drivers and how you're thinking about the long-term kind of growth algo for this entity?

Yes, sure. So, thanks for attending. Appreciate the time. So Concentra is the largest provider of occupational medicine in the country. We are the largest by a good ways. We've been a business that's been around for 45 years, $2.3 billion roughly in revenue, $450 million in EBITDA, 20% EBITDA margin, strong cash flow profile. It's a very unique industry. We have 1,000 locations across the country, about 630 of them are occupational medicine centers in 43, 44 states. About 400-plus of the locations are on-sites. So we have an Occupational Medicine business segment. We have an On-site segment. We have a Telemedicine segment. And basically, we are treating 1 out of every 4 initial injuries that occurs in the workforce in the U.S. today. We have facilities that are about 7,500 square feet of doctors, therapists, specialty care. We see work comp visit volume, so injuries, rechecks, physical therapy, things like that. We also see employer services visits. So if you have a drug screen or a physical for a preemployment or an annual exam needed for your job, there's a very good chance you go to Concentra. I think one of the most unique things about our business is the reimbursement, as you mentioned, Joanna. Work comp reimbursement is set up with each individual state has their own fee schedule. The state acts as the referee and they set the reimbursement levels, but they are not the payer. So there is no government reimbursement in our model, which is a big differentiator versus a lot of the other companies that you'll be talking to. We also -- with our Employer Services segment, we set prices and the employer pays us directly. So it's a very unique model. A lot of the fee schedules have built-in inflationary adjusters. So they're going up roughly 3% on average per year on a combined total portfolio basis. The other interesting fact with our business is we have direct relationships with employer, which I've heard other people that have been in the health care industry for a long time, describe that as the holy grail in health care. So no government reimbursement risk, direct employer relationships, very stable business model and the largest player in our space by far. So hopefully, that's a good setup for our discussion.

This is perfect. And unlike most of the companies, the quarter actually was better and then you raised your guidance. So this was actually a pretty good indication in terms of how unique is this business because they already talk about is, there's reimbursement pressure, payer pressure, all sorts of pressure points in health care. So this was great. But maybe just yes, to level set, can you walk us through the main drivers of the upside in the quarter and for the year? And I guess you also closed a couple of acquisitions. So maybe help us understand what you're changing guidance what's driving that?

Yes. So I'll set up the long-term algorithm for us, and then I'll come back to talk about the quarter and then maybe you guys can talk about some of the deals we did. Our revenue algorithm is mid- to high-single-digit revenue growth. That's made up of low-single-digit visit growth, and we could talk more about that, 3% rate growth, which I mentioned earlier, and then low single digits from our core inorganic de novos and M&A that we've been doing for 45-plus years. So it all adds up to mid to high single-digit revenue growth. When we do something larger like we did last year with Nova acquisition and the Pivot acquisition, we bump up into higher than the mid- to high-single-digit revenue growth. For example, Q1, we grew revenue 14%. Excluding the acquisitions, it was 6.3%. So back to the quarter, we had a very strong quarter, probably our best quarter since we've been a public company, about 2 years. It will be 2 years this July. Our work comp visit numbers were 6.2% visit growth in the quarter, excluding our acquisition. Our Employer Services numbers were in the low-single-digit range, and then we had very close to the 3% work comp or overall rate gains.

So we had a great quarter from a top line perspective. The teams managed the cost very nicely. Our cost of services came down. Our G&A percentage is going up as we finalize our separation from Select. But the combination of the revenue growth, the cost management at the center level and other business level more than offset the slight tweak up in G&A, and we expanded our margins about 70 basis points year-over-year.

So overall, great quarter. And the driver is really a few things, and you guys jump in if I leave anything out. Total employment continues to rise. The blue-collar segment where most of the patients that walk in our centers every day are blue-collar workers, that continues to grow. So it's a very different trend than what you're seeing in white collar. We noted a net positive we estimate from weather in the first quarter, but that's really an estimate. It's hard to tell how much of that had an impact. Just like a lot of the other providers, we had centers closed, we lost visits. We lost revenue when those centers were closed due to weather. But in our business, slips and falls do lead to more visits. So we did estimate or ballpark that it would be a net positive for the quarter. But at the end of the day, we had much higher customer retention. We saw visit growth across all of our regions, pretty consistent work comp visit growth, even in the Pacific region, for example, which had no weather impact. So I think a lot of what we've been working on from a technology standpoint, from a customer experience standpoint is really clicking, and we had a really nice quarter as a result of all that. So would you guys add?

I'd just add on the leg of the growth algorithm that includes de novos and core M&A, which really call semi-organic growth because we're able to do de novos and these core bolt-on M&A deals so accretively. I think our average entry basis over 75 de novos and deals over the last 10 years is sub-3x. We really accelerated de novo activity over the last year. I think we'll -- we've guided to 8 to 10 this year, probably pushing closer to 10. By the time it's all said and done, have a large pipeline geared up for next year to likely get to double digits again. And then from a bolt-on M&A standpoint, we did the California deal in January, where we acquired 3 net centers. We've got a robust pipeline there where we're actively looking at a number of deals expect to have further updates on that in the near future. And so as we kind of think about the long run, between double-digit de novos and the bolt-on deals, you could see us adding, call it, 15 to 20 centers a year just through that strategy. Never mind the larger opportunities out there that Matt talked about, including the de novo type deals.

Yes. And I'll just add that there's a lot of white space for us to continue to grow via de novo and through the bolt-on M&A. There's hundreds of these mom-and-pop clinics out there that do what we do, but not quite to our level. So we're able to get those at really attractive economics, and then we'll grow the top line. There are certainly economies of scale when they join the Concentra organization, so they make a lot of sense for us. And one thing I also wanted to add back to the work comp environment because it is state by state, there's very complex and different rules and regulations from one state to the next. So it's actually one aspect of our industry that makes it really difficult for our competition to expand beyond state line. So the next largest player in the space, which is a fraction of our size are in 2 or 3 states. And we've been seeing some of our competition have to leave the state like that Reliant deal from January in California.

Right, exactly. But on the workers' comp because really that number stood out. Like you mentioned, the growth was 6% in Q1, right? And workers' comp organic volumes grew maybe 3% last year for the whole year. So clearly, this number stood out. But even the 3% it's pretty good. We considering, like you mentioned, employment growth, maybe not that. So is that a sustainable number? Because it sounds like there must have been something on the comp side or something else goes kind of filling that number.

So it was our softest comp of the year. And I think we noted that in our call last week or the week before. But besides the comp versus Q1 of 2025, as I mentioned, our customer retention stats are up at all-time highs since we've been measuring that particular statistic. And our new sales approach is working. So our -- pretty much every KPI that we track is at an all-time high right now. So we do think that the comp was helpful. 6%, we're not projecting 6% for the remainder of the year. As you mentioned, the last 3 quarters of last year, we were in that 3%, 3.5%, 4% range. So that's kind of how we're thinking about it on a go-forward basis.

And so as you think about the growth within workers' comp, you've got the market that's growing, right? As Matt talked about, blue collar is up relative to the broader market. And you've heard -- if you hear the kind of the headline layoffs, that's really concentrated within the knowledge worker base, which is not our bread and butter. And so you're seeing as employment goes up, injuries go up, another dynamic within our industry and within the workforce in general is that there's more comorbidities and the workforce is aging. So when people are getting hurt, it's oftentimes more severe, which means more recheck, more PT. So that also has been a tailwind to visits over time. We've seen that over a number of years. And then -- so you got the market going up and then you've got just the retention metrics, which are driving increases in market share in the markets that we're already in. And then, of course, our de novo and bolt-on strategy, which is kind of the third leg there.

And talking about the workers' comp dynamics and how states differ and such. So the latest was around New York. So I'm going to ask you again, it sounds like it could be something like be like a new state for you guys. And I guess once you know what it is and you feel like, okay, this is the time to make a move, but how quickly you can expand in that market?

Yes. So we mentioned New York maybe a couple of quarters ago because for the first time in a long time, there's a push to increase the fee schedule in the state of New York. And it's really coming from the top down from the governor's desk from what we can tell. We've engaged the lobbyists. They put out some updates that will potentially go into effect at some point soon. They haven't explained when that will be -- we're in the middle of a public comment period. We've commented on the rates. And the big thing, the E&M rates, evaluation and management codes that is pretty much initial injury or a recheck or specialty visit, those rates are proposed to increase pretty significantly, which we like and which was much needed. Their physical therapy reimbursement was left unchanged. And obviously, that's a big part of our overall model and what happens within the 4 walls of our center. So what we push for publicly was for those rates to be adjusted as well. We've done all of our analysis. We can enter the state in a major way. We've looked at acquisitions. We've mapped that out. We've mapped out de novos. So we can make a move pretty quickly. Obviously, it takes time to build some centers and to get some deals done. I think what we're going to do right now is just continue to monitor the situation. We expect to hear soon if there's any additional changes. We might dip our toe in the water and do some centers here or there if it makes sense right now. But we have so many opportunities, as Tanner mentioned, across the country. We've got probably 50 different sites that we're looking at that will narrow that list down to the 10 or so this year, the 10 to 15 next year. And those margins in the other states are going to be higher than they would be in the state of New York. So we called it out a couple of quarters ago because it's the largest state that we're not in. And it could be a really nice growth driver for us in the future, but some things need to happen to make that come true.

And there was also an update -- a favorable update in Florida, right? There was something this year in California. Anything else to call out in terms of some outsized opportunity or something that you already know is going to happen for sure this year or next year?

There's nothing the size of the Florida or California out there right now. We had a nice update on -- that came into effect April 1 in Tennessee, which we should see some good benefit from there. There should be a nice -- Florida, we should see a nice update going into next year again, again, not nearly to the level that it was before, but just the way the mechanism works, there's a catch-up. And so that should be. And then there's a couple of states that are laggards on the bottom end of the -- that we're monitoring actively. Louisiana is one where we've got some centers there, but it's not -- we're not -- we don't have a big presence, but there's been some chatter about that they could potentially do something. So we're monitoring that pretty closely. And then, of course, there's the Alabamas and the Massachusetts of the world that -- where we haven't necessarily heard anything as far as folks marshaling resources to do something there, but there's obviously a high concentration of injury volume that if there was something to come to fruition, we can make a big dent there.

And on Employer Services, you mentioned you negotiate directly with with those entities? Any pushback or kind of how easy or how hard it is and things are changing or kind of stable?

Yes. No, we haven't had pushback. Typically, what we do with our Employer Services portfolio is we'll bump up those prices, call it, 3% on average in line with inflation every year with our cost of providing the services. And obviously, we'll give our sales force and our operational team some leeway. But that's pretty much what we do across the board on every different type of service within Employer Services. And we look at what market pricing is and things like that just to make sure we stay in line.

Are you getting any pushback? Or it just kind of like, okay, they just understand like the costs going up and...

Yes. I mean I think everyone sees the cost of providing goods and services increasing right now. And so what we try to do is make sure we stay in line with what everyone else is reading about and experience in their business or personal life.

And coming back to your growth in your workers' comp business, so it sounds like you're growing faster than the market itself. So the question -- obvious question is like who are you taking market share from? And I guess how much room there is to...

So we do -- that's a great point. We do estimate that we're taking market share. It's hard to precisely calculate. But obviously, with 6% growth and you look at all the other stats out there, it's pretty clear that we are taking market share. Our competitors are urgent cares, family medicine offices, health systems, emergency departments. So all those groups that I just mentioned, do not focus on occupational medicine. They're not investing their cash flow, their capital and technologies, workflow improvements, things like that. So this is what we do day in day out, and we're reinvesting to have the best-in-class outcomes, the best-in-class workflows to make it really easy to do business with us.

Right. Exactly. And I want to touch on that because I guess you guys spend a lot of time talking about how you differentiate from your competitors and the technology stack you have. And I guess now it's very still topical around the use of AI and these new tools. So maybe kind of flesh it out for us a little bit, like how much more there is opportunity and kind of any metrics you can provide in terms of returns on these investments?

Yes. So with respect to some of our sales efforts, we've rolled out some technologies that -- one of the most important things for us in our business, given our breadth of customers at over 200,000 is identifying and maintaining relationships with the key decision-maker at any one of those companies. And so across that many companies, there's obviously a lot of turnover. So recently rolled out some new technologies to help us identify those key decision-makers when there is turnover, which has been, I think, pretty impactful so far. We've also automated some of our outreach and our account management functions. We've got a team of north of 200 sales folks and account managers to touch base with 200,000-plus in customers. So to the extent that we can automate some of that function to increase touch points, that's been helpful. And so we've seen benefit there. On the AI front, we've developed some internal machine learning algorithms that have helped us with predictive analytics around potential missed visits. So basically, a number of variables feed into a model that then spit out whether the likelihood of a potential patient who's scheduled for a visit -- missing said visit. So we can get out in front of that, call the patient, make sure they come in. So that's been impactful. And then also on the AI front, doing some things around rev cycle management that's been really interesting and we think could have an opportunity to make a big dent for us, particularly around chart audits and things like that. So deploying technology across a myriad of different fronts, looking at AI technologies, in particular, across a number of different fronts, including ambient listening and other areas within the back office, front office, et cetera, which we expect to be able to talk more about that over the next, call it, 12 to 18 months.

And the only thing I would add, our approach to AI in general is to have a culture across the entire organization where we have centralized approaches, but we also have some decentralized approaches where every department and every part of our organization should be bringing forward ideas that they can utilize in their department. And it might be a vended solution where we're buying something from somebody who's implementing AI that makes us more efficient, helps us grow our top line or reduce our cost or we could do something organically like we have a couple of the examples Tanner mentioned, we've built out those things organically. So the opportunities are -- at this point, are limitless. And we think they're going to help potentially grow our top line, but also reduce costs over a long period of time, but also make our existing resources a lot more efficient.

And I was also thinking you quoted the study that you did talking about like 25% lower workers' comp claim costs, 65 fewer days claim duration. So can you talk about like how you're able to achieve these results? Like what exactly -- I mean, maybe you don't want to share the secret sauce, but high level sort of how you're able to execute consistently across such a large portfolio on these metrics to kind of come up with that.

No, that's a great question. I should have weaved that into my opening remarks, too, because it's -- that is our value prop. We save employers 25% on their work comp injury costs, and it's a sizable number for almost every employer out there. And our model -- we've talked about this publicly. It's in all our available data. Our model is built on early intervention and return to work model. So we have doctors and clinical staff that are working hand-in-hand with therapists. So if there's a referral needed to therapy, we'll walk the patient over the same day and the doctor will talk with the therapist. If there's a need for specialty care, which is a portion of our visits or injuries need a specialist, we'll bring specialists into the 4 walls of the center, and they'll be able to interact with the therapist and the doctor. So the whole point is to get people back to work. They might have restrictions, but to get them back moving quickly, like we always say like an industrial athlete, when you see somebody get hurt on the football field, you get them in the tent, you start them moving quickly, get them back to what they do. And that's our whole approach. That, combined with technologies and workflows to get information flowing quickly. And that's why we've been able to have that stat where we've measured over 500,000 closed claims versus non-Concentra facilities and we're 25% lower. Case duration is lower. And what we're doing is reducing the back end of the cost -- the case duration where there's a lot of administrative, a lot of legal costs. We get the employee back to work as quickly as possible.

And maybe I still have a couple. On-site, is relatively small, but I guess it's growing quite rapidly. So we should talk about that business still, right, in terms of like what's driving that business and how big this could be, say, in 5 years or 10 years?

Sure, sure. Bill, do you want to take that one?

Yes, absolutely. We're very excited about the on-site space. We've had that operation for decades. But just in the last few years, we feel like it's really taken off. And something we were excited to do was invest in that business further with the acquisition of Pivot Onsite Innovations last year, which really brought in the infrastructure and the team for us to be able to have a nice base for that business to grow organically and inorganically in the future, we think, as well. But the industry as a whole with employers seeing double-digit increases in their medical benefits costs for their workforce is what's really driving employers to want to be more proactive in reining those costs, more proactive medical care. So that's why there's a significant rise in the number of on-site health clinics out there. And we estimate around a $15 billion to $20 billion serviceable addressable market, highly under-vended. And we are right around a second, third, fourth largest player in that space right now. So our legacy business there is focused on occupational health. We also launched advanced primary care about 18 or so months ago specific to our on-site health clinics. We now feel like we have really great solutions in both sides of the house for employers to be one-stop shop as they need on-site services and a lot of cross-selling as well potential between our existing customers that want to go to our centers, need an on-site, want to utilize our telemedicine and tele rehab platform. So we feel like it's a great leg of the stool that will continue to grow fast organically in the future.

Yes. And just to add some stats, I mean, we grew 20%, excluding the acquisition in Q1. We're at about $150 million in run rate revenue. The margin profile of that business is growing nicely. And so we're going to continue investing in it organically. We'll probably look at some acquisitions as well because we were very successful with our Pivot integration. And it's really becoming a lot more meaningful second leg of the stool for Concentra. So it's something to track on a go-forward basis.

So is that 20% the way we should think about the organic growth there? Or there was also something a little bit...

I'd say that's similar to the work comp visit growth numbers in Q1. I mean the last few quarters before this were definitely double digit. And so that's really the expectation for that business segment right now is double digit, but 20% plus was a very strong quarter for us.

So this double digit, sorry, is driven by adding services because you mentioned the primary care?

It's mostly winning new sites. And there is some additional services that we're adding to our existing sites. But as Bill mentioned, it's a large market. Some vended, some not vended. There's a lot of RFPs out there. There's a lot of direct sales. But we're seeing a very significant trend with employers looking to bring their health care services on site, whether it's primary care, advanced primary care, occupational medicine or a combination of those. And we think we're extremely well positioned in both those channels.

Yes. And just an important characteristics of that business segment, long-term contracts, there's really no seasonality relative to kind of our core business, if you will. There are -- the fee model or the fee model is cost plus. So basically, the cost that we have to staff a doctor plus a margin on that, which is, again, really attractive from that standpoint. And then I lost my train of thought.

One more thing that there's no CapEx associated with that.

No CapEx, yes.

Because you essentially come in and use the space.

Yes, it's employer's location. So it's really their facility.

Right. And talking about capital intensity or lack of it, you should talk about free cash flow because that was another highlight of the quarter and the year, you raised it. And I guess now free cash flow is going to grow like 7% or something like year-over-year. I know CapEx is really stable kind of over a long period of time, right? So kind of help us understand what you're going to do with all this free cash flow?

Yes. So I think that's another really great part of the business model that we've built over a long period of time. We're going to have well north of $200 million in free cash flow this year. We had a strong start to the year. Typically, Q1 is our slowest period of time because of the timing of outflows and also coming off of our lowest visit quarter in Q4, but it really picks up steam from here. And so we use the cash flow to delever. We use it for growth. We have a $70 million to $80 million CapEx budget, which covers renovations, relocations, maintenance, IT, de novos, things like that. We have a dividend as well. So I think the beauty of our business is we have enough cash flow to spread across all the different strategies we have. We've publicly said that we are targeting sub-3x by the end of this year, which is right around the corner. And we're going to maintain the dividend as we just announced with our last earnings call. And we're going to continue to do the M&A that we've outlined. So we can do a lot of different strategies and really just take the opportunities that exist and present themselves and what's in the best interest of a shareholder return.

And I guess you also have share repurchase program as well.

Yes, yes, yes.

So would you be able to like prioritize for us? Like what's kind of the #1.

Yes. So the way I think we think about capital allocation right now is we have a priority 1A and 1B, which is delever being 1A and growth being 1B. And so never sacrificing other strategies for growth when they manifest and there's opportunistic opportunities out there for us, because as Matt said, because of the robustness of the cash flow, we're able to do more than that right now, which includes share repurchases. We bought $15 million worth of shares in Q1. And I think towards the end of the year, as we get down below 3x and ultimately land in, call it, the 2.7-ish times on a run rate basis, that will open up the door for us to do, again, continue to do growth, but increase return to shareholder strategies, including more share repurchases, including potentially enhancing the dividend. So all things that we're going to be thinking about over the coming 6 months.

Just one thing worth tying together real quick, too. I think Tanner mentioned this earlier, but we can continue to do the bolt-on M&A and de novos at such attractive rates that those are leverage-accretive. So a great baseline for growth while we hit our leverage goals.

It's a great way to end. Thank you so much, everyone. Thanks...

Thank you.

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. earnings conference call to discuss the first quarter 2026 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 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.

You are hereby cautioned that these forward-looking statements may be affected by the important factors among others, set forth in Concentra's earnings release and in reports that are filed or furnished with the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change. At this time, I would like to hand the conference call over to Mr. Keith Newton.

Thanks, operator. Good morning, everyone. Welcome to Concentra First Quarter 2026 Earnings Call. We have continued our momentum from 2025 and are pleased with the strong start to the year. Total company revenue was $569.6 million in Q1 2026 compared to $50.8 million in Q1 of the prior year representing 13.7% growth year-over-year. Excluding contributions from the Nova and pivot acquisitions in both current and prior year were applicable Revenue was $520.3 million in Q1 2026, resulting in a 6.3% increase over the prior year. Total patient visits increased 6.7% to an average of more than 54,000 visits per day in the first quarter. Our workers' compensation visits per day increased 9.6%, and Employer Services visit volume increased 4.8% relative to prior year.

Excluding the impact from the acquisition of Nova, total visits per day increased 2.9% in the first quarter workers' compensation visits increased 6.2% and employer services increased 0.7%. We believe the stronger performance in our workers' compensation business has been a result of a combination of events. Most importantly, we have seen the continued improvement of our patient satisfaction with the experience they have in our centers, along with the implementation of new technologies to help strengthen the account management and retention of our existing employer customers, along with enhanced prospecting efforts for new employer customers. The service level metrics we track at our centers, including average patient time in the centers, Google ratings to patient Net Promoter Scores are all at or close to historical best.

Additionally, Q1 2025 was the easiest comp of all the quarters in 2026 due to a relatively dry mild winter last year compared to more ice and snow winter events this year that lead to more slips and falls and resulting injuries. On the rate front, revenue per visit grew 3.1% during the first quarter relative to prior year. The growth was driven by a 2.0% increase in workers' compensation and a 2.7% increase in Employer Services revenue per visit. The California workers' compensation rate increase took effect on March 1, so we anticipate upside to the workers' compensation rate growth over the remainder of the year. Adjusted EBITDA was $120.7 million in the quarter versus $102.7 million in the same quarter of the prior year or a 17.6% increase.

Adjusted EBITDA margin increased 69 basis points from 20.5% in Q1 2025 to 21.2% in Q1 2026. With our strong Q1 performance our trailing 12-month adjusted EBITDA is now $450 million, up $85 million or 23% and from our trailing 12-month adjusted EBITDA at the time of our IPO in July of 2024. Adjusted net income attributable to the company was $51.5 million and adjusted earnings per share was $0.40 for the first quarter of 2026. And representing strong growth over prior year of $42.2 million and $0.33, respectively. Quick update on 2025 acquisitions. Regarding our March 2025 acquisition of Nova, we have completed our integration efforts and captured all the synergies that we expect to capture. We are comfortably ahead of where we anticipated we should be approximately 1 year to this deal and we are tracking well towards the original objective of reaching a transaction multiple of below 7.5x adjusted EBITDA.

With our June 2025 acquisition of Pivot, we have a similar story Integration is complete, performance is strong, and we are ahead of our original estimate of transaction multiple of below 9x adjusted EBITDA. Regarding other growth efforts during the quarter, we added 3 centers in California via acquisition and 1 de novo center outside of Atlanta. On the de novo front, we continue to expect to open a total of 8 to 10 centers this year with planned locations in Arizona, Idaho, Missouri, Illinois, Virginia, South Carolina and Florida. With respect to additional small bolt-on M&A, we have several opportunities actively underway and look forward to sharing more detail in the future.

Finally, I'd like to take a moment to recognize and thank Dr. John Anderson, our Chief Medical Officer since 2014, who, as previously disclosed, has announced his well-deserved retirement at the end of the year. known affectionately across Concentra as Dr. A. He has been a foundational part of our organization for nearly 5 decades, including his time with predecessor companies. Over his career, Dr. Anderson has helped shape our mission and vision and values, built a comprehensive clinical orientation and training program that supports long-term success in occupational health embedded a strong patient-first mindset into our daily operations and developed our best-in-class clinical model.

His decades of service, leadership and clinical expertise have been invaluable and we are deeply grateful for the lasting impact he has made on our organization. We are fortunate to have a strong pipeline of both internal and external candidates and will be conducting a thorough evaluation process with the expectation of filling the role in the coming months. to support a smooth transition, we expect to enter into a consulting agreement with Dr. Anderson for a period of time. Now I will turn it over to Matt to provide additional details on our financial results for the quarter and updated outlook for 2026.

Thanks, Keith, and good morning, everyone. In our Occupational Health operating segment, total revenue of $519.9 million in Q1 2026 and was 9.9% higher than the same quarter of the prior year. Total visits per day increased 6.7% over the same quarter of the prior year, and revenue per visit increased 3.1% and from $147 in Q1 2025 to $151 in Q1 2026. Workers' compensation revenue of $337.7 million in Q1 2026 was 11.8% higher than prior year. Workers' compensation visits per day increased 9.6% from prior year during the quarter and workers' compensation revenue per visit increased 2% and from $209 in Q1 2025 to $213 in Q1 2026. Employer Services revenue of $172.4 million increased 7.6% in Q1 2026 from prior year.

Employer Services visits per day increased 4.8% from same quarter prior year. And finally, Employer Services revenue per visit increased 2.7% from $94 in Q1 2025 to $97 in Q1 2026. As with past quarters, here are the same stats for Q1 excluding the impact of Nova helped isolate core business from our Q1 2025 acquisition. This is the last quarter we plan to break out Nova as its contribution will be fully embedded in both Q2 2025 and Q2 2026 P&L. Total revenue within the occupational health center operating segment was $487.8 million in Q1 2026, a 5.7% increase over the prior year. Total business per day increased 2.9% and over the same quarter prior year, and revenue per visit increased 2.7% from $147 in Q1 2025 to $151 in Q1 2020. The Work comp revenue of $37.8 million in Q1 2026 was 7.5% higher than prior year.

Work comp visits per day, excluding Nova were 6.2% higher than prior year during the quarter and work comp revenue per visit was 1.3% higher than prior year during the quarter. Employer Services revenue of $160.7 million in Q1 20 increased 3.2% from prior year. Employer Services visits per day, excluding over were 0.7% higher than prior year during the quarter. and Employer Services revenue per visit was 2.4% higher than prior year during the quarter. I'd like to take a moment to reemphasize an important distinction in our business mix. Our Workers' Compensation segment generates significantly higher revenue per visit and contribution margin than our employer services offering.

Employer Services remains an important part of our service offering, and it often is the initial point of entry with employer customers, but those services are typically completed at much lower contribution margins. As you can see, workers' compensation is the primary engine of our business, accounting for approximately 2/3 of our total center revenue. As a result, in a low higher low fire macroeconomic environment like the 1 we're experiencing today, Employer services can show muted trends while the company continues to perform well overall. While this may be obvious to some, we felt it was important to underscore this dynamic given the significant trust disparity between employer services and workers compensation visits this quarter.

Moving on from our occupational health centers. Our onsite Health Clinics operating segment had another strong quarter with reported revenue of $37.2 million in Q1 2026, a 125% increase from the same quarter of prior year. This was largely driven by the acquisition of Pivot on-site innovations in Q2 2025. Excluding the impact from that acquisition, our onsite Health Clinics operating segment revenue grew 20.9% year-over-year during the quarter. Onsite Health Clinics total revenue is nearing a run rate of $150 million up from $64 million in 2024. We are encouraged by the continued strong organic growth in this business. We have a robust pipeline of opportunities across both occupational medicine and advanced primary care, supported by a highly capable team following last year's Pivot acquisition that is well positioned to execute on our growth strategy.

We remain excited about this segment given the meaningful cross-selling opportunities within our existing customer base and expanding margin profile the direct employer paid revenue model and the growing and sizable market opportunity. We estimate the serviceable addressable market to be between $15 billion and $20 billion with only a small portion currently penetrated. This significant white space, combined with our best-in-class service offering gives us strong conviction in the long-term potential of the business. And finally, other businesses, which include telemedicine, our pharmacy operations, and other occupational health related services businesses generated $12.5 million in the quarter, a 10.4% increase against the same quarter of prior year.

We are impressed by the team's execution in these businesses and the opportunities that exist to continue to grow at attractive growth rates. Moving on to expenses. Cost of services was $399.1 million or 70.1% of revenue in Q1 2026 and an improvement from 71.3% of revenue for the same quarter prior year. We continue to realize incremental improvements in staffing efficiencies within the centers, resulting in nice gains in center level margin. Our total general and administrative expenses were $55.3 million or 9.7% of revenue in Q1 2026 compared to 9.3% of revenue in the same quarter prior year. Excluding items that are added back for the purpose of calculating adjusted EBITDA, including equity comp expense, onetime select separation costs and M&A transaction costs.

G&A expense was million for the quarter or 8.8% of revenue compared to 8.2% of revenue in the same quarter prior year. The increase is predominantly driven by planned additions to our team and IT infrastructure resulting from our separation from Select. As a result, adjusted EBITDA margin increased from 20.5% in Q1 2025 and to 21.2% in Q1 2026. To quickly comment on the separation, we continue to track very well and have now hired more than 95% of the total expected new FTEs. Over the next month or so, we will complete several significant back-office technology separation milestones, resulting in functional separation from select by the end of this summer, well ahead of the November 2026 deadline. Now to touch on cash flows. In Q1, we generated $21 million in operating cash flow. This compares to $11.7 million in the first quarter of 2025 and with a year-over-year increase largely resulting from higher earnings in Q1 2026.

Investing activities used $14.8 million of cash in the first quarter and was driven by the acquisition of net centers in California as well as investments in de novo centers, relocations, renovations and maintenance as well as IT investments. Free cash flow or cash flow from operations less cash flow from investing activity, excluding business combinations, totaled $9.9 million, an increase from prior year first quarter free cash flow of negative $4 million. This was driven by a combination of higher cash flow from operations and lower capital spend in Q1 2026. Finally, financing activities during the quarter resulted in net cash outflows of $24.4 million as we repurchased approximately 661,000 shares totaling $15 million and paid $8 million in dividends.

At the end of the first quarter, we had approximately $65 million remaining under the repurchase program authorized by the Board of Directors. We ended the quarter with a total debt balance of $1.58 billion and a cash balance of $61.7 million. Our net leverage ratio per credit agreement at the end of March was 3.4x and down slightly from year-end. Q1 is typically our lowest free cash flow quarter, so we expect to see an acceleration in the decline in our leverage ratio over the remainder of this year. Finally, we are pleased to announce the continuation of our dividend this quarter with the Concentra's Board of Directors declaring a cash dividend of $0.0625 per share on May 5, 2026. The dividend will be payable on or about June 9, 2026, to stockholders of record as of the close of business on May 19, 2026.

Moving on to 2026 guidance. Given the strong start to the year, we are revising our 2026 guidance, including increasing the low and high end of our revenue target range by $25 million to $2.275 billion to $2.375 billion. The low and high end of our adjusted EBITDA range by $10 million to $460 million to $480 million and the low end of our free cash flow target range by $15 million and the high end by $10 million to $215 million to $235 million. Our CapEx range of $70 million to $80 million remains unchanged. With respect to net leverage, given the increase to both adjusted EBITDA and free cash flow guidance, we expect to end the year comfortably below 3x. Overall, a great start to the year, and our team is excited about initiatives we have in place to continue our trajectory. That concludes our prepared remarks, and we thank everyone for the time today. We'd like to turn it back to the operator to open the call for questions.

[Operator Instructions] Your first question for today is from Ann Hynes with Mizuho.

Great. So depending on who you look at, you consensus adjusted EBITDA estimates by 10% to 11%. And what was your internal be versus what consensus was? And what surprised you the most on the upside beat.

Yes, it's Matt. So I think when you look at our results, what really drove the results in Q1 was the work comp visits and also our cost of services and cost control. So our teams did a great job from a staffing perspective. across the centers and the visit volume was higher than expected. So we're not necessarily going to comment on our internal budget, but those were the 2 main drivers of our performance in Q1.

And I know in your prepared remarks, you talked about weather. So was weather actually a positive impact in the quarter? And if it was, can you quantify how much it was?

Yes, Ann, this is Keith. Weather can be both negative and positive to us. We think that in this quarter, it was a net positive in our business, ICE and snow dependent upon the extent you get it, how long it's around can create lots of slips and falls. The individuals that are coming in their centers typically, a lot of them are having to work during those time frames, either maintenance workers, street workers, whatever. And so we see quite a bit during the winter time, the slips and falls. And when you look at back at 2025, it was a relatively mild dry winter. And our Northeast region, when you look at them geographically, was by far the region that was most up over the prior year, so indicative of weather.

We certainly had center days where we had closures but we've always been extremely aggressive about limiting that as much as possible because we're here to keep America working. So we are very aggressive about getting our centers open there's people out there needing care as a result of those injuries. So we think overall, based on kind of the extent of the weather this year compared to last year, our ability to minimize the number of days our centers are actually closed, that overall, it was a net-net gain.

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

Keith, just on that note of keeping America working, can you give us your perspective on the economic activity based on what you're seeing with your customers and some of the prospects in that you mentioned Concentra is doing and then part 2 of that would just be, how are those trends correlating with the BLS and GOL data? I know those relationships have decoupled from historical patterns before. And just curious if you're seeing any different trends.

Yes. So I think coming out of last year and the early part of this year, it's kind of been, as Matt mentioned earlier, the continued no higher, no fire type situation. So from a hiring perspective, we've kind of seen that early in the year. Now it seems like things are starting to accelerate a little bit. We're optimistic about that. I believe we've had the first 2 months in a row, including this month with net job gains, so that definitely is a positive for the future.

The second half of the question.

Yes, I would just add a couple of comments on the economic data. We saw some positive news today. total employment continues to grow, especially blue collar, which is the patients that walk in our centers every day. There's less layoffs compared to prior year. So we're seeing stability, obviously, with our employer services visit volume is still below historical averages, but good news for us is total employment continues to grow. And clearly, we're gaining market share within the categories that we compete.

Yes. The rates is usually indicative of growth in our employer services that still remain relatively stable or below norms. So we haven't really seen much there. So it seems to be more just a straight new job growth that we're starting to see in the last say, 60 days or so. So I don't know if we would really change our opinion as far as what we've said in the past as far as the disconnect a little bit with what's been out there, but we're optimistic it starts to narrow and again, work comp is typically indicative of what's going on with total employment, and we're seeing blue collar continue to trend up.

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

I may have a bad connection, but I want to try to get this in here. Just any comments on your free cash flow guidance. It seems like the low end came up higher than EBITDA you still continue to have really strong free cash flow conversion. Any thoughts on dynamics through the capital or other durations there.

Yes, sure. So we raised our free cash flow guidance, obviously, raised our EBITDA guide. So from a profit standpoint, we're moving higher. The CapEx was a little lower in Q1, but we still expect it to be between $70 million and $80 million for the full year. So really, we're just pushing up that guide there equivalent to what we saw from an EBITDA standpoint.

Your next question is from Stephen Baxter with Wells Fargo.

This is Mitchell on for Steve. Just on the rate side and workers' comp. I know you mentioned California rate taking effect in March. But just trying to understand what led to the revenue per visit being below your typical rate increase in Q1? And are you still on track for the 3% for the year?

Yes, sure. I'll take that. So overall, revenue per visit was up 3.1%. You'll see in our investor deck, work comp was up 2% and Employer Services was up 2.7%. So there's some differences there because of visit mix. So that's why the overall revenue per visit is higher than the individual components with work comp as it's growing faster than Employer Services Keith mentioned California rate increase went into place on March 1. So we didn't have a couple of months of that outsized rate increase. but that is now in effect and we'll see it for the rest of the year. Also, there was some visit mix within the workers' comp rate growth. So it would have been too higher than 2%. And if the visit mix was consistent with prior periods, so maybe 2.3%, 2.4%. But overall, we are on track and -- we had some more updates in April, and so we expect 3% potentially higher for the full year.

Yes. And the 3% that we've quoted in the past is really what we've seen on average through the year. There's going to be some a little higher, like last year, some a little lower. But again, this year, we feel pretty good about where it's going to end up, just some timing of win. And we're also, as Matt mentioned, seeing a little bit of mix going on with it also.

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

This is Walker got on for Joanna. So I just wanted to ask, any update on the New York rates? And when do you expect to have a final decision if you don't have 1 already? And then once you know the rates, how quickly do you plan to expand in New York?

I'll take that one. Yes, no new update. I'm not sure when we're going to hear something but anticipate it will happen this year. And that January 1, something will go into play. Right now, as we mentioned in the past, it's focused on the E&M codes, the evaluation and management codes that doctors use as far as coding level of service and that was not adjusted at all. So it definitely took a step forward. It's in an area where we could consider doing something now, albeit not -- still not as attractive as what we want and what we see in other states, but we'll continue to work on that. We can move pretty quickly. We've done a lot of analysis in the state. We know where we want to be. We know what we want to do. But we also have a pretty good pipeline already built so we can be selective of when we start and when we pull the trigger there in New York.

So in the meantime, we're going to continue to execute on the de novos that we talked about earlier. -- that are already in the pipeline this year, and we've got a robust pipeline built next year for additional de novos and small organic M&A out there. And then there are certain things we'll look at as we get further out in the year that could be a little bigger than those things, but we've tabled those for now, as we've mentioned in the past, as we get through the final decoupling from select with here in the near future, and we continue to delever a little bit more. And then just touching up again on the economic activity. So you've always highlighted onshoring as a tailwind for your business.

What industries do you mainly address on? And then what portion of your de novos are targeted within the team? Well, as far as onshoring manufacturing naturally is going to be the fit with what we do. These -- so we'll continue to watch what's going to happen there. But as far as onshoring manufacturing. That's going to take some time because typically that requires some sort of capital deployment. So that's not going to necessarily happen overnight. So we hope to see that in the future. as we continue to hear about the trillions of dollars that potentially are going to get invested in the United States over the coming months and years. The second part of the question, I didn't catch that.

Bakken, can you repeat the other part Yes, yes. So it was just what portion of de novos would be targeted at the steam in the future?

Yes. So our de novo strategy is spread pretty much across the country. We track economic activity, industrial pockets of growth. things like that. So it's pretty spread all across the country. We've got a new state of Idaho that we're entering. We're growing in Texas. Florida, a lot of areas where you see continued infrastructure build-out and growth trends. The other thing I'd add to what Keith was saying about onshoring is construction industry. will be important for us as well, especially with all the AI build-out. We're seeing pockets of that across the country that we believe is going to help our business as well.

Your next question is from Benjamin Rossi with JPMorgan.

Just following up on the rate side and workers' comp. You mentioned some of that mix shift in workers' comp and then the California went into effect on March 1. And I know historically, you've said most workers kind of fee schedule adjustments occur in 1Q. So you got 1 month of California in the first quarter, but did this 1 include the bulk of your 2026 fee schedule benefit? Or should we expect any other meaningful step-ups over the course of the year, like in October or later?

There's I believe we have said in the past, approximately 75% to 80% of what we see typically is happening during the first quarter at some point in time, and that's pretty much what we saw this year. We've got Tennessee that's going to be happening in the second quarter that will be meaningful for us. And then there'll be some annual updates that other states do throughout the summer and early fall like in Arizona. And at this point in time, we really don't know what they will be doing, but I wouldn't anticipate anything too material other than potentially inflation adjusted activity around their fee schedule. But that's kind of what we really see happening for the rest of the year.

Understood. I guess just a follow up on the onsite side and talk about the current opportunity set within there in your opening comments when you're assessing opportunities for your on-site health clinics, where do you see the current largest white space opportunities across things like new geographies, new employer relationships? -- deeper wallet share or service line expansion? And how do you think about sequencing here in the coming quarters?

I would say, d, all of the above. we're really gaining some traction is in the area of the advanced primary care, which we've talked about in the past. We deployed Epic as the electronic medical record within the Onsites 1.5 years or so ago. we're really starting to gain some traction there where -- which is a white space, we typically did not play in just because we didn't have the capabilities and the technologies to support that type of delivery of care. We're extremely competitive definitely have the support and awareness of the broker world that support a lot of the employer decisions around this. We definitely have a seat at the table -- and because of our infrastructure and footprint across the United States, it makes us extremely competitive with those that have historically focused on that.

In addition to that, with our size now with the acquisition of Pivot, that combination has gone extremely well. We've had a lot of our employer base that we supported with those traditional more acumed type on sites wanting to shift or wanting to expand in the further sites. So we've got kind of what we call the internal organic growth within existing employers and have been very successful as far as starting to add additional sites there across the United States. So we're really pulling all the levers, prospecting new going after expanding existing and, again, really focused on the advanced primary care type of on-site, which is probably the biggest white space that we historically did not play in.

And Ben, I'll just add a couple of comments just to reiterate in case people missed it in the opening remarks. Our on-site portfolio, excluding the Pivot acquisition, grew 20% in Q1. And total on-site portfolio is now approaching $150 million in revenue, up from $64 million in 2024. So the teams are doing an unbelievable job the leadership from our organization, but also the acquisition of Pivot, which Keith mentioned, is ahead of schedule. We're really excited about the trends there and the upside for the future.

Great. I appreciate all the additional comments.

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

Thank you, operator, and we appreciate everybody joining us today, and we'll talk again next quarter.

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

Hello, and welcome to the Annual Meeting of the Stockholders of Concentra Group Holdings Parent, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Mr. Keith Newton, the company's Chief Executive Officer. Mr. Newton, the floor is yours.

Thank you. Welcome, everyone. Today's virtual-only meeting is a live webcast. We are pleased that you could join us today. Your interest in the company is appreciated. I will serve as Chairman of this meeting. Before we proceed with the meeting itself, however, I would like to introduce you to Matthew DiCanio, who is the President and Chief Financial Officer of Concentra Group Holdings Parent, Inc. Tom Devasia, the company's Executive Vice President and Chief Marketing and Innovation Officer; and Timothy Ryan, Executive Vice President and Chief Legal Counsel of the company. Mr. Ryan will act as the Secretary of this meeting.

I would like to introduce you to the directors of the company who, in addition to me, are in attendance today: Robert A. Ortenzio, Dr. Cheryl B. Pegus, Daniel J. Thomas, Brigid Bonner. Will the meeting please come to order? Tim, would you please review the agenda for us?

Of course, Keith. Good morning, everybody.

Today's meeting will begin with a few brief remarks from our President and Chief Financial Officer, Matthew DiCanio. We will then vote on 3 proposals today, which will be followed by a question-and-answer session in which stockholders may ask questions.

Stockholders who have entered the 16-digit control number from their proxy cards in the designated field on the web portal may submit their questions online at any time prior to the question-and-answer session by clicking on the dialogue icon in the upper right corner of the meeting center screen.

The polls are currently open. If you have not voted or wish to change your vote, you may do so now by clicking on the link provided online. Any stockholder who has sent in proxies or who has already voted via the Internet or telephone and does not want to change his or her vote need not take any further action. The polls will close once the question-and-answer session is finalized.

I'd now like to turn the floor over to Matthew DiCanio.

Thank you, Tim, and thank you all for being here today. On behalf of everyone at Concentra, we appreciate your support, interest and investment in our company. I am pleased to share our business and financial highlights for this past year, our second year as a public company. In 2025, we expanded our leadership position as the nation's largest provider of occupational health services, growing to 628 occupational health centers and 411 on-site health clinics, enabling the delivery of our high-quality workplace health services from over 1,000 locations and telemedicine across 47 states.

We now treat approximately 1 in every 4 workplace injuries in the United States, caring for an average of 54,000 patients each business day while maintaining a consistent clinical experience across our national footprint.

We pursue our mission of improving the health of America's workforce one patient at a time by working directly with approximately 200,000 employers, including all Fortune 100 companies, enabling us to care for millions of employees through our national network of occupational health centers, on-site health clinics and telemedicine.

Our early clinical intervention model is designed to deliver consistent outcomes in a faster, safer return to work. Supported by internal clinical analytics and industry validation based on claim studies from 2020 to 2025, our average total claim costs were 25% lower and average claim duration was 65 fewer days per claim when compared to non-Concentra claims.

Concentra saves employers' money by lowering medical and indemnity claim costs and boosting productivity. Employers nationwide trust us to help keep their workforce healthy and productive.

Shifting gears to our 2025 performance. Our strong operating results were driven by steady growth in workers' compensation and employer services visits, positive rate dynamics and operational discipline. Patient visits to Concentra Medical Centers grew to $13.5 million, an increase of 7.7%.

2025 revenue grew to $2.2 billion, up 13.9% year-over-year. Our solid financial results were accompanied by sustained execution of our strategic initiatives. We continue to invest in meaningful technology improvements as part of our commitment to enhancing the user experience for everyone we serve. Patients, customers, ecosystem partners and colleagues.

Similarly, we continued building Concentra as a fully stand-alone public company and made significant progress towards full separation from Select Medical, which we expect to complete by the second half of 2026.

We completed the integration of Nova Medical Centers and Pivot On-site Innovations into the Concentra family while preserving service quality and financial performance. The addition of Nova Medical further expanded our occupational health centers operating segment.

In our on-site health clinics business, the addition of Pivot more than doubled the operating segment size, while organic revenue growth, excluding Pivot, remained strong. The Nova and Pivot acquisitions accounted for the majority of the $333 million in business combinations completed during the year and were a key part of our capital allocation in 2025, continuing our multipronged capital allocation strategy that leverages Concentra's strong cash flow generation and balances opportunistic growth, deleveraging and return of capital.

This past year, we deployed $82 million in capital expenditures across 7 newly opened de novo sites, strategic center upgrades and relocations and technology enhancements with tangible and measurable returns.

We ended 2025 at 3.4x net leverage with clear visibility to less than 3x by the end of 2026. We returned capital to you, our stockholders, through $32 million in cumulative quarterly dividends and the early execution of our $100 million share repurchase program with approximately 1.1 million shares repurchased in the fourth quarter for approximately $22 million.

We believe our strong momentum from the past year positions us well for 2026. Of paramount importance is our commitment to clinical and operational excellence, ensuring we continue to deliver best-in-class outcomes and experience.

We are confident that our technology transformation initiatives, including AI capabilities to enhance workflows and create efficiencies will make it even easier for customers to do business with us. We will complete our separation from Select Medical with no disruption to service delivery or business performance.

We expect to deliver low single-digit visit growth, approximately 3% rate growth and adjusted EBITDA margins near 20% in 2026. We remain committed to allocating capital strategically by maintaining the deleveraging path, continuing to return capital to stockholders, pursuing de novos and small bolt-on acquisitions where returns are compelling and expanding on sites where employers see clear value.

We are very proud of our clinical and operational outcomes, especially the positive impact they have had on our patients and customers. Across the approximately 13.5 million visits in 2025, our highest annual total, we reduced average visit turnaround times and patients gave us all-time high satisfaction ratings.

These top marks are the direct result of our skilled, dedicated colleagues who work tirelessly to deliver exceptional service and high-quality clinical care. We thank them for the professionalism and care they bring to work every day.

And in closing, we'd like to thank you, our stockholders, for your continued confidence as we build long-term value through customer focus, execution and growth. Thank you.

This meeting has been called pursuant to the notice dated March 17, 2026, that was made available to all stockholders of record as of the close of business on March 5, 2026. Proxies were solicited on behalf of the Board of Directors of the company for this meeting. Mr. Andrew Waford of Computershare, Inc. has been appointed as Inspector of Election of this meeting and any adjournment or postponement thereof to conduct the vote with respect to the proposals set forth in the company's proxy statement and the other questions that will be voted upon by ballot, if any.

Mr. Waford has already delivered to me his oath of office. The bylaws of the company provide that each stockholder of record is entitled to 1 vote for each share of common stock held as of the record date. The Board of Directors set March 5, 2026, as the record date. Computershare, Inc., the transfer agent for the company, reports that there were 128,507,289 shares of Concentra Group Holdings Parent, Inc. common stock outstanding as of the close of business on the record date. The record of this meeting will reflect that the notice of annual meeting, the proxy statement, the proxy card and the company's annual report on Form 10-K were made available to all stockholders entitled to vote at this meeting beginning on March 17, 2026, as evidenced by an affidavit of mailing provided by Computershare, Inc.

A copy of these materials will be made a permanent part of the company's corporate records. More than half of the shares outstanding as of the record date must be represented at this meeting, either by stockholders participating online or by proxy to have a quorum as determined under the bylaws. Mr. Waford?

Thank you. A total of 121,940,251 shares of Concentra Group Holdings Parent, Inc. common stock are represented at today's meeting, which constitutes 94.89% of the total shares outstanding on the record date. Therefore, I certify that a quorum has been achieved.

Will the Secretary present the notice of meeting and proxy statement?

By clicking on a tab entitled Meeting Materials, you can access and review copies of the notice of annual meeting, proxy statement, proxy card and the company's annual report on Form 10-K. The copies of the notice of meeting, proxy statement, proxy card and the company's annual report on Form 10-K, together with the original affidavit of mailing of Computershare Inc. and the certificate with respect to the stockholder list will be filed with the minutes of the meeting.

I now declare this meeting duly convened, properly organized and competent to transact business.

The first order of business on our agenda for a stockholder vote is the election of 3 Class II directors to hold office, subject to the provisions of the bylaws, each for a 3-year term and until their successors have been duly elected and qualified.

As of the record date of March 5, 2026, there were 128,507,289 shares of Concentra Group Holdings parent Inc. common stock outstanding. The 3 nominees for Class II director are Vipin Gopal, William K. Newton and Dr. Marc R. Watkins.

The second order of business on our agenda for a stockholder vote is to hold a nonbinding advisory vote on the compensation of the company's named executive officers. And the third and final order of business on our agenda for a stockholder vote is the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2026.

We will now attempt to answer questions posed through the virtual meeting web portal by our stockholders. As mentioned earlier, stockholders have entered the 16-digit control number from their proxy card in the designated field on the web portal may submit their questions through the portal by clicking on the dialogue icon in the upper right corner of meeting center screen. Thomas Devasia company's Executive Vice President and Chief Marketing and Innovation Officer, will now provide the questions, if any, submitted by stockholders during the meeting.

Thank you, Keith. There are no questions from stockholders.

The online voting will now be closed. Based on the review of the votes cast, will the inspector of election please submit his report on the results of the balloting.

Having conducted the election and vote at the Annual Meeting of Stockholders of Concentra Group Holdings Parent, Inc. held on April 30, 2026, I hereby certify that, one, each of the 3 nominees for Class II director received a majority of the votes of the common stock cast for election as director. Two, the stockholders have approved the compensation of the company's named executive officers; and three, the stockholders have ratified the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2026.

The report of election prepared by Computershare Inc. evidences that: one, all nominees for Class II director were elected by an affirmative vote of 81.73% or more of the shares voted; two, the compensation of the company's named executive officers was approved by an affirmative vote of the holders of 114,180,227 shares or 95.62% of the shares voted; 5,143,479 shares are voted against approval and 89,294 shares abstained.

Three, the appointment of PricewaterhouseCoopers LLP was ratified by an affirmative vote of the holders of 121,568,869 shares or 99.69% of the shares voted. 360,888 shares were voted against ratification and 10,494 shares abstained.

Based on the report of the Inspector of Election, I therefore declare that, one, the nominees have been duly elected as Class II directors of the company; two, the stockholders have approved the compensation of the company's named executive officers; and three, the stockholders have ratified the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2026.

The Inspector of Election will execute a certificate as to the results of the balloting and the certificate will be filed in the minute books of the company along with the minutes of this meeting. The company will file a Form 8-K with the SEC with the final voting results within the next 4 business days.

There being no further business to come before this meeting, I hereby adjourn the meeting. Thank you for your participation.

This concludes the meeting. You may now disconnect.

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. Earnings Conference Call to discuss the fourth quarter and full year 2025 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 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.

You are hereby cautioned that these forward-looking statements may be affected by the important factors, among others, set forth in Concentra's earnings release and in reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on the information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change.

At this time, I'd like to turn the conference over to Mr. Keith Newton.

Thanks, operator. Good morning, everyone. Welcome to Concentra's Fourth Quarter 2025 Earnings Call. Hopefully, everyone had a chance to review our prerelease that we furnished to the SEC on January 28, which included certain operational and financial results for the fourth quarter and 2025 fiscal year, including visits, rate, revenue, adjusted EBITDA, net income and EPS, amongst others. We have no material changes to report to any of our previously released financial or operational metrics.

Q4 earnings pre-release was published at the same time as our fiscal year 2026 guidance in our investor book. The detailed investor book provides a comprehensive primer on our business and industry, we recognize that Concentra is a unique company and therefore, may necessitate additional foundational information for some investors to gain a better understanding of our fundamentals. We touched on everything from the patient journey in our centers, to customer value proposition, to our company performance through various economic cycles, to the workers' comp ecosystem and rate setting mechanisms, to financial highlights, including cash conversion and return on invested capital and much more. We've gotten positive feedback on it thus far and expect that it will continue to resonate with the market.

I'd also like to add that we recently completed additional validation studies on workers' compensation claims that we treated that support and validate our considerable value proposition to our employer customers and ecosystem partners. The additional studies produced strong results consistent with our previous published studies. Adding the results to the previously published data, we now have reviewed and analyzed more than 550,000 claims from 2020 to 2025 in partnership with employers and payers, and we have found that the average total workers' compensation claims cost for those treated by Concentra is 25% lower than non-Concentra providers and that the average claim duration is 65 fewer days when treated by Concentra.

We believe our specialized clinical approach and fully integrated medical model drive these strong outcomes for injured workers and their employers. With our unmatched nationwide access, technological capabilities, data interconnectivity and excellent patient satisfaction metrics, which are at all-time highs, we continue to prove to employers while we are the best solution for creating the most value for all their occupational health needs.

Moving on to our financial results. We had a strong finish to an overall solid year for the company, exceeding the high end of the range of our previously issued full year 2025 guidance for both revenue and adjusted EBITDA, as well as coming in better than our guidance on leverage. Solid growth in both visits and rate within the occupational health centers operating segment, prudent cost management across G&A and cost of services and continued double-digit organic growth in the Onsite business operating segment all contributed to the outperformance during the fourth quarter.

Total company revenue was $539.1 million in Q4 2025 compared to $465 million in Q4 of the prior year representing 15.9% growth year-over-year. Excluding contributions from the Nova and Pivot acquisitions, revenue was $493.8 million in Q4 2025 resulting in a 6.2% increase over the prior year. For the full year 2025, revenue was $2.2 billion compared to $1.9 billion in 2024 representing 13.9% growth year-over-year despite 1 less revenue day.

Excluding contributions from Nova and Pivot, 2025 revenue was $2 billion, resulting in a 6.4% increase over the prior year or a 6.8% increase on a per day basis.

Total patient visits increased 9% to more than 51,000 visits per day in the fourth quarter, which is always our lowest volume quarter of the year due to the seasonal holidays and colder weather. Our workers' compensation visits per day increased 9.1%, and the employer service visit volume increased 9.4% relative to prior year.

Excluding the impact from the acquisition of Nova, total visits per day increased 2.6% in the fourth quarter. Workers' compensation visits increased 3.4% and employer service visits increased 2.3% both continuing the strong momentum from the third quarter of 2025. I would note that we are largely unimpacted by the government shutdown during the quarter given limited exposure to the federal government from an employer customer standpoint.

Full year 2025 visits per day increased 7.7% year-over-year to over 53,000. Workers' compensation visits increased 7.7% and employer services visits increased 8.1%. Excluding the impact from the acquisition of Nova, total 2025 visits per day increased 2.2% with increases in workers' compensation visits of 2.8% and employer services visits of 1.8%.

We sustained relatively strong performance over the course of 2025 despite a lot of debate around the state of the broader labor market. Following the recent BLS jobs revisions to 2025 we now know that across the economy, the U.S. labor market grew at a relatively anemic clip of 0.1% in 2025. However, the blue-collar economy largely encompassing production in nonsupervisory workers which represent about 80% of the private labor market and is more indicative of the labor force we serve in our occupational health centers, added more than 450,000 net jobs over the course of the year according to the BLS and grew at a rate of 0.4% in 2025.

We remain positive on the long-term outlook for the U.S. labor market. According to the most recent employment projections by the BLS published in August 2025, the U.S. is expected to add 5.2 million jobs from 2024 through 2034 with a large subset of these jobs in physically demanding occupation with higher incidence rates. Additionally, we anticipate that there will be upside to those employment projections if the proposed capital commitments made in conjunction with the broader reshoring initiative continue to be converted into large construction projects and more manufacturing jobs are added to the economy.

Overall, growth in employment, combined with a stable injury incidence rate across industry sectors and an aging workforce with increased comorbidities that result in increased severity of injuries should continue to provide strong tailwinds to our business over the long run.

With respect to our rates, revenue per visit grew 3.1% during the fourth quarter relative to the prior year. This growth was driven by a 4.1% increase in workers' compensation and a 1.2% increase in employer services revenue per visit. Compared to early quarters in 2025 year-over-year growth in Employer Services rate in Q4 2025 was down primarily to a shift in mix between the lower dollar drug screens and higher dollar physicals.

For full year 2025, revenue per visit was 4.3% higher than 2024, with workers' compensation revenue per visit increasing 5.3% and Employer Services revenue per visit increasing 2.7%.

Adjusted EBITDA was $95.3 million in the quarter versus $77.5 million in the same quarter prior year or a 22.9% increase. Adjusted EBITDA margin increased 100 basis points from 16.7% in Q4 of 2024 to 17.7% in Q4 2025.

For the full year 2025, adjusted EBITDA was $431.9 million compared to $376.9 million in 2024 representing 14.6% growth year-over-year despite 1 less revenue day. We're really happy with the results that we've seen over the last 18 months. Since our IPO in July of 2024, we have grown adjusted EBITDA by approximately $67 million, constituting an 18% increase.

While the Nova and Pivot acquisition certainly contributed, the majority of this growth has been organically driven, which again is a testament to the continued execution of our entire team.

For full year 2025, adjusted EBITDA margin increased to 20% from 19.8% in 2024. As with previous quarters, we are comparing against prior year margins that were burdened with less public company and separation costs, indicating even greater margin performance, if you were to compare on an apples-to-apples basis.

With respect to the separation with Select, we are tracking very well and have hired more than 80% of the total expected FTEs, including all senior-level positions. We expect to finalize hiring and complete the majority of the remaining separation activities by the summer, well ahead of the November 2026 expiration of the transition services agreement with Select Medical.

Adjusted net income attributable to the company was $36.1 million and adjusted earnings per share were $0.28 for the fourth quarter of 2025 representing significant growth over prior year adjusted net income attributable to the company and adjusted earnings per share of $22.2 million and $0.17, respectively. Adjusted net income attributable to the company was $176 million and adjusted earnings per share was $1.37 for full year 2025. For full year 2024, adjusted net income attributable to the company was $168.5 million, and adjusted earnings per share was $1.48.

During the fourth quarter, we opened 2 additional de novo sites in Southern California and Miami, resulting in 7 total de novos in 2025. We have a strong pipeline heading into 2026, having already opened another new location outside of Atlanta in January, executed leases on another 5 locations across Arizona, Florida, Missouri and Idaho which will be a new state for us and identified several other attractive sites that could push us in the high single-digit de novo openings in 2026.

On the M&A front, we plan to continue with a smaller bolt-on acquisition opportunities. We have often said that these deals are highly accretive for us due to the top line and cost synergies we were able to achieve. The acquisition of the 3 net incremental centers in California in January aligns with this approach.

Now I will turn it over to Matt to provide additional details on our financial results for the quarter and our growth outlook for 2026.

Thanks, Keith, and good morning, everyone. I'll start by going through some more details on our Q4 results in our 3 operating segments. In our occupational health center operating segment, total revenue of $490.6 million in Q4 2025 was 12.2% higher than the same quarter prior year. Total visits per day increased 9% over the same quarter prior year. Revenue per visit increased 3.1% from $145 in Q4 2024 to $150 in Q4 2025.

Workers' compensation revenue of $328.5 million in Q4 2025 was 13.6% higher than prior year. Work comp visits per day increased 9.1% from prior year during the quarter and work comp revenue per visit increased 4.1% versus prior year during the quarter.

Within Employer Services, revenue of $151.9 million increased 10.7% in Q4 2025 from prior year. Employer Services visits per day increased 9.4% from prior year during the quarter and Employer Services revenue per visit increased 1.2% versus prior year during the quarter.

As with past quarters, here are the same stats for Q4, excluding the impact of Nova to help isolate core business from our Q1 2025 acquisition.

Total revenue within the occupational health center operating segment was $461.9 million in Q4 2025, a 5.7% increase over the prior year. Total visits per day increased 2.6% over the same quarter prior year, and revenue per visit increased 3.1% from $145 in Q4 2024 to $150 in Q4 2025.

Workers' compensation revenue of $309 million in Q4 2025 was 7.2% higher than prior year. Work comp visits per day were 3.4% higher than prior year during the quarter and work comp revenue per visit was 3.7% higher than prior year during the quarter.

Within Employer Services, revenue of $142.2 million in Q4 2025 increased 3.7% from prior year. Employer Services visits per day were 2.3% higher than prior year during the quarter and Employer Services revenue per visit was 1.3% higher than prior year during the quarter.

Moving on from our occupational health centers. Our onsite health clinic operating segment reported revenue of $36.2 million in Q4 2025, a 112% increase from the same quarter prior year. This was largely driven by the acquisition of Pivot Onsite Innovations in Q2 2025. Excluding the impact from Pivot, Onsite operating segment revenue grew 14.6% year-over-year during the quarter, the third consecutive quarter with double-digit organic growth.

For the full year 2025, our onsite health clinics Operating segment reported revenue of $110.2 million, a 72% increase over full year 2024, excluding the impact from Pivot, the Onsite operating segment revenue grew 11.6% over full year 2024. We have a robust prospective Onsite customer pipeline and expect to continue to see strong organic sales growth in this operating segment in 2026. In particular, our advanced primary care product offering has gained a lot of traction within the broader market and we expect that to serve as a key growth driver for the business.

And finally, other businesses generated revenue of $12.3 million in Q4 2025, a 12.6% increase against same quarter prior year. For the full year 2025, other businesses grew 8.7% over full year 2024.

Now moving on to expenses. Cost of services was $398.4 million or 73.9% of revenue in Q4 2025, an improvement from 74.2% of revenue for the same quarter of prior year. For the year, cost of services was 71.7% of revenue, a decrease from 72.2% in 2024. The improvement year-over-year is really a testament to our operators and staffing efficiencies they were able to garner within the centers. The year-over-year improvement is also despite headwinds from onetime integration costs we incurred as a result of the Nova transaction, which totaled more than $2 million over the year.

Our total general and administrative expenses were $50.8 million or 9.4% of revenue in Q4 2025 compared to 9.8% of revenue in the same quarter prior year. Excluding items that are added back for the purposes of calculating adjusted EBITDA, including equity compensation expense, onetime Select separation costs and M&A transaction costs, G&A expense was $45.8 million for the quarter or 8.5% of revenue compared to 9.4% of revenue in the same quarter prior year. The year-over-year outperformance in Q4 2025 despite incurring additional separation costs was partially driven by the reduction in certain nonrecurring expenses that we incurred in Q4 2024.

For the full year 2025, G&A expense as a percent of revenue was 9.4% compared to 8.2% for the full year 2024. Excluding items that are added back for the purposes of calculating adjusted EBITDA, including stock comp expense and onetime transaction costs, G&A expense as a percentage of revenue was 8.4% in 2025 compared to 8% in 2024. The year-over-year increase was largely due to incremental costs resulting from our separation from Select and emergence as a stand-alone public company in July of 2024.

Adjusted EBITDA margin increased from 16.7% in Q4 2024 to 17.7% in Q4 2025 and adjusted EBITDA margin increased from 19.8% for the full year 2024 to 20% in full year 2025. We are pleased to have achieved margin improvement year-over-year despite the incremental separation and public company costs. Again, I would highlight the strong efficiency gains within cost of services as well as the smooth execution of our separation hiring plan within G&A as key drivers of the improvement we saw in 2025.

Now to touch on cash flows. In Q4, our seasonally strongest cash flow quarter within any given year, we generated $118.7 million in operating cash flow. This compares to $93.7 million in the fourth quarter of 2024 with the year-over-year increase resulting from materially higher earnings in 2025. For the year, we generated $279.4 million in cash flow from operations which represented a slight improvement over 2024 cash flow from operations of $274.7 million despite significantly more cash interest expense incurred in 2025 due to the IPO recap in July 2024.

Investing activities used $20.1 million of cash in the fourth quarter and was driven by investments in center de novos, relocations, renovations and maintenance as well as IT investments. The year-over-year increase from $16.7 million of spend in Q4 2024 was largely due to an additional $4 million of onetime CapEx related to the Nova integration. We expect to incur minimal incremental capital costs in the Nova integration going forward since most of the work was finalized as of the end of the third quarter.

For the year, we used $414.9 million in cash from investing activities as we executed business combinations totaling $333.3 million and invested $82.3 million in CapEx over the course of the year. This was a significant increase over cash used in investing activities in 2024 of $71.3 million when we didn't have larger acquisitions like Nova and Pivot.

Free cash flow or cash flow from operations less cash flow from investing activity, excluding business combinations and acquired customer relationships, totaled $98.6 million, an increase from prior year fourth quarter free cash flow of $77 million. For the full year, we generated free cash flow of $197.8 million. Free cash flow conversion, which we define as free cash flow divided by net income, remained healthy for the year at 114%, about the same conversion rate we have seen on average over the course of the past 5 years.

Finally, financing activities during the quarter resulted in net cash outflows of $68.6 million as we repaid the entirety of the $35 million outstanding balance under our credit facility, repurchased 1.1 million shares totaling $22.4 million and paid $8 million in dividends in conjunction with our standard dividend program.

Over the course of 2025, we made principal payments on our senior debt totaling $92.1 million, including $7.1 million of mandatory amortization payments and $85 million in payments on our revolving credit facility.

We also executed share repurchases totaling $22.4 million and made dividend payments of $32.1 million. The remainder of the free cash flow was largely used in conjunction with M&A activity. We will continue to be opportunistic executing on our share repurchase program in 2026 while simultaneously working towards our year-end 2026 leverage target of approximately 3x. At the end of the fourth quarter, we had approximately $80 million authorized by the Board of Directors remaining under the repurchase program.

We ended the quarter with a total debt balance of $1.57 billion and a cash balance of $79.9 million. Our net leverage ratio per our credit agreement at the end of December was 3.4x. We expect to continue making meaningful progress towards our 3x target following Q1. I would just note that Q1 is our seasonally slowest free cash flow quarter due to coming off our seasonally lowest visits quarter in Q4, interest payments associated with our bonds in Q1 and typically elevated working capital requirements in Q1.

Next, I'd like to touch more broadly on the forward outlook. With respect to our growth efforts, we are largely through the integration process for both Nova and Pivot acquisitions and have captured the majority of synergies that we expect to capture at this point. In fact, we have come in comfortably ahead of underwriting in terms of total synergies achieved across the 2 deals.

As Keith mentioned, we are going to continue to stay active on the de novo and bolt-on M&A front. We're targeting 7 to 9 de novos in 2026, which would be a record for us and potentially double-digit new sites in 2027. As a reminder, these are very accretive for us with payback typically occurring in under 3 years.

With respect to M&A, we are not anticipating any larger deals over the near term, but are continuing to work our pipeline of small 1 to 5 center deals. We recently finalized the Reliant acquisition from MBI in January, and our goal is to continue developing the pipeline and executing on smaller M&A.

Switching gears to developments out of the State of New York related to their workers' compensation fee schedule. If you recall, we have no centers in the state due to their exceedingly low fee schedule but believe we could add dozens of locations or more across the state if the fee schedule is revised sufficiently higher. The State Board published revised rates in mid-January that increased evaluation and management codes which generally cover primary injury care, excluding physical therapy by approximately 50%. This was a good first step. However, both the proposed E&M and PT workers' comp codes are still below where we feel they should be in order to commit the capital to enter the state in a meaningful way. The public comment period, which we will be actively participating in goes through mid-March, and we expect new rates to be implemented starting around January 1, 2027.

Our onsite health clinic operating segment, we will continue to evaluate inorganic growth opportunities of both occupational health focus onsite groups like Pivot as well as advanced primary care focused groups. Valuations in that space have remained elevated with platforms largely trading based on revenue multiples over recent years. We will continue to patiently monitor the market and look for ways to be opportunistic here in the future at attractive valuation.

Moving on to our full year 2026 guidance, which we released at the end of January. We have set our revenue target at a range of $2.25 billion to $2.35 billion, our adjusted EBITDA target at a range of $450 million to $470 million, our CapEx target at a range of $70 million to $80 million. Our free cash flow target at a range of $200 million to $225 million, and our leverage target remains approximately 3x by the end of 2026.

In our January 2026 investor presentation, we laid out our key assumptions, including approximately 3% rate growth within the occupational health centers operating segment. We have a relatively high degree of confidence around rate guidance since the majority of states, including our largest states like Texas, California, Florida and Pennsylvania have now finalized their 2026 fee schedules.

We also stated we are assuming low single-digit visit growth, excluding Nova. Included in our guidance is the January 3 center acquisition and 6 de novo sites with executed leases as of the guidance date. On the cost side, we are anticipating stickiness with efficiency gains, captures in our centers over the course of 2025 and cost of services as a percentage of revenue to remain relatively consistent with 2025.

With respect to overhead, we will incur incremental separation costs in 2026 relative to 2025 as we hire the remaining colleagues in the first half of 2026 and annualize the impact of colleagues hired in the second half of 2025.

All in, we expect adjusted EBITDA margin in 2026 to remain relatively constant with 2025 at around 20% with potential for additional margin expansion thereafter once the separation is fully complete. We expect an overall decrease in CapEx in 2026 relative to 2025 as approximately $15 million in onetime Nova integration CapEx rolls off. As a reminder, the majority of our typical annual CapEx spend is related to positive ROI projects, including de novos, IT investment, relocations and strategic renovations. A small portion constitutes true maintenance capital.

Finally, we are pleased to announce a continuation of our dividend this quarter with Concentra's Board of Directors declaring a cash dividend of $0.0625 per share on February 25, 2026. The dividend will be payable on or about March 19, 2026 to stockholders of record as of the close of business on March 12, 2026.

Now back to Keith for a few closing comments.

Thanks, Matt. Another strong quarter to cap off a great year. We have good momentum heading into 2026 and are confident in our ability to deliver on our outlook. That concludes our prepared remarks, and we thank everyone for the time today.

I would like to turn it back over to the operator and open the call for questions.

[Operator Instructions]

Your first question today is from Benjamin Rossi with JPMorgan.

So I appreciate the details on your 2026 outlook. You got the steady volume growth in the low single digits, steady rates. So get maybe some lift during 1Q from last year's Nova deal follow through maybe some similar contribution in 2Q from Pivot -- you got the de novos and any additive M&A. Just thinking about your guidance impact, how are you contemplating things like weather or potential elevated respiratory activity to start the year?

I'll take it, Matt. This is Keith Newton. I would say from a weather standpoint, we have weather every year. It has not really impacted us this year. We definitely had some weather last year. So I think it kind of flushes out. So we're not anticipating much of an impact from that perspective. As far as the respiratory, that would typically impact our urgent care visits, which are basically less than 1,000 a day out of the 50,000 visits today we see. So we have -- it's not going to be material either way if it does tweak up or tweak down. So I'm not anticipating really any impact from that either.

Understood. And just as a follow-up, this might be a little bit more philosophical, but -- and I know I might be asking a look under the hood here a bit. But I've noticed your preference to highlight return on invested capital in that low teens range. When you're evaluating new opportunities to deploy either for de novos or M&A, could you just walk us through your thought process here on maybe how you assess projects and things like hurdle rates in consideration of ROICs?

Yes, sure. So we obviously follow that very closely, ROIC metric. We know it's very important to investors. And we look at all sorts of return hurdles and valuation metrics when we're looking at de novos and acquisitions. And I think as we've stated publicly in some of our materials, we've had a long track record of successful M&A and de novo execution. And so typically, all of those types of transactions are accretive and have strong ROICs.

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

Great. Thanks for all the detail on the New York opportunity. Can you just a little bit more detail about what you were looking for and what wasn't in the rule and maybe what you're fighting for? And if it does change, how fast could you get into the market and start developing?

I can take that one. Really, what they focused on so far was just the evaluation of management codes which is really what the physicians actually utilize as far as coding and charging. But there's a lot of other codes that impact the total reimbursement. Physical therapy being a big one and then a lot of others that they didn't necessarily address on this go around. So what we're looking at is more of a full comprehensive look at the fee schedule, not just one component of that.

I said, they did take a good first step. We're in a period of being able to -- a discussion period and hopefully, before they publish the final rule, they may reconsider some of that, if not, then that will be the focus to continue to push on that going forward.

As far as how quickly we can move, I feel we can move very quickly. We spent quite a bit of time evaluating where we want to be. We can initiate discussions, if necessary. But a lot of the workers' comp treatment that's taking place in that state right now is in ERs, hospital-based facilities, things like that. There are some transactions that could take place that we can move pretty quickly on. But I can see us doing a lot of just de novo projects. We've been very successful at that. It allows us to put the center exactly where we want it to maximize the opportunity, build it like we want our Concentra to be built versus trying to retrofit an existing facility but yes, we spent a lot of time.

So I think we're in a position to move pretty quickly once that happens.

Your next question is from Justin Bowers with Deutsche Bank.

So just in terms of the 2026 outlook, can you call out any specific items or seasonality or days dynamics that we should be thinking about? And the cadence for the year? Any divergence from last year? That's number one. And then number 2 would just be how you're thinking about de novo investments for 2026 as well.

Yes, sure, Justin. So from a guidance standpoint, we outlined the visits and the rate assumptions included and also that made some comments about cost of services and G&A. We've got the Reliant transaction that was closed included in the guidance, and we have 6 de novos, there's potential -- pretty good potential that we'll have more than 6 de novos this year. They'll be pretty spread throughout the year. We're working through permitting and construction and things like that, but we'll try to spread them out throughout the year.

In terms of seasonality, pretty similar to prior years. The only real exception is that we have a pickup in Q1 from Nova and Pivot when we didn't have both of those assets in the prior year. So we closed the Nova acquisition on March 1. So January and February, we'll have a pickup and then we close Pivot on June 1. So we'll have a pickup there through most of the first half of the year.

As far as days, it's the same number of days in '26 versus '25. So there's no changes there. Hopefully, that helps?

Yes, it's helpful. I appreciate that and the update in investor book as well.

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

Just to follow up on that last question. Is there any cadence consideration related to the expiration of the Select services agreement. I know you mentioned that you had some pull forward of hiring. Is that additive or anemic to margins in terms of that timing? And then do you expect to get any kind of margin pickup in 4Q as that agreement rolls off?

Yes, sure. Yes, good question, Ben. And I think that's really the only thing I didn't touch on my prior comments with Justin. So yes, we are hiring the remainder of the FTEs that we need to complete the separation process. As of today, we're slightly above 80% of our hires, and we made some hires in Q3 and Q4, obviously, to close out the year. So from now through, call it, May or June, we'll complete the remainder of the hires, and then we'll work with Select and reduce the TSA costs.

So we expect the TSA costs to ramp down close to 0 by, call it, midyear '26. And so the net of both of those will be some incremental costs, early part of the -- or the first half of 2026. But that's all part of our guidance. And we're obviously close to the finish line with the separation process.

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

This is Mitchell on for Steve. What are you seeing on the labor front in your clinics? Like how is retention trending and what type of wage inflation is built into the guide?

As far as our labor, pretty much normal. As we've talked about in the past. We see our labor force from wage inflation trends pretty similar to inflation, 2% to 3%. And we haven't -- we're not a hospital. So we don't feel quite the impacts that have been felt and seen within those industries. So far, it's pretty much in line with what we've experienced historically. So really nothing unusual from that standpoint.

Yes. And Stephen, I'll add just from a openings and hiring and turnover standpoint, we're trending in a favorable direction. Our turnover is coming down fewer open positions. And so we like what we're seeing to have more stability with the workforce.

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

So first one, the workers' comp organic volumes were 3% this year or the '25. The employer services organic growth was also pretty good in 2% in '25. So that -- those growth rates are above where you would think the industry maybe growing. So my question is who are you taking market share from? And is that kind of sustainable growth? And I guess how much of that 2% was from de novo?

Well, as far as the market share component, we did a lot this last year relative to our go-to-market and how we how we're trying to capture additional customers. We developed additional technologies or deployed additional technologies within our sales group, both for identifying potential customers out there and also creating better efficiency and higher output by our sales folks. So we think that's really starting to gain some traction for us.

Feel good about where we're heading with that group. And I think that's really supported the growth. The other part of the question?

On de novos. Yes, it's less -- de novos contribute less than 1% on both of those. And keep in mind, we're only doing single-digit number of de novos per year. And they start at 0 visits. So it takes a little bit of time to ramp.

And Joanna, one of the other things I think of interest is we've developed some tools and we're in the process of continuing to modify those tools relative to retention itself of existing customers and deeper penetration of those, not just necessarily going after incremental new customers, but how do we identify potentially customers that had reduced their usage of us, try to project those type customers.

So trying to deploy some AI initiatives in that area to help us identify, for lack of a better description, early warnings of existing customers that we need to engage with quickly. A lot of our customer base are very small, and it's very tough to touch them consistently from an account management standpoint. So what we're trying to do is identify through technologies, how can we better support those smaller customers that utilize us very sporadically and make sure that we stay engaged with them because we typically don't lose customers as a result of service issues.

Probably one of the biggest reasons we lose a customer is because of turnover at the customer decision-maker where the new decision-maker comes in and isn't really aware of Concentra. And so we have to figure out better ways to make sure that we stay engaged to identify when those trends potentially are going to take place and engage appropriately.

And a follow-up on the topic around New York. So that just brings a question, are there any of your existing states where you would expect some changes to rates or reimbursement or such? I mean I know California has that linked to the physician fee schedule, but kind of give us maybe a little bit color or any outliers or sort of how these states are tracking along with sort of inflation?

Yes, I can take that one, Joanna. So California is definitely going to be a good rate year for us. And for the rest of the country, all of those are tracking in line with our expectations. So there's no real outlier across the rest of the country.

And back to New York, just a couple of comments I want to add on that. It's a step in the right direction. We're going to continue to work with the state and provide our public comments. But we have a full pipeline across the rest of the country, north of 30 different locations that we're looking at to fill out the rest of our pipeline for '26 and for '27. So plenty of growth opportunities, but we are excited about the potential down the road in New York as well.

[Operator Instructions]

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

All right. Thank you all. First and foremost, thank you all for joining us here in person and for those who are joining us via webcast. My name is Ben Rossi, and I'm the health care facilities analyst here at JPMorgan. We are excited to welcome Concentra back to the stage this morning. With us here today, we have a nice contingent headed by CEO, Keith Newton. CFO, Matt DiCanio; and SVP of Finance and Strategy, Tanner Newton. Thank you all for being here.

Thank you, Ben. Thanks for joining us this morning. I wanted to provide an overview of Concentra this morning relative to what we're all about. My name is Keith Newton, CEO of Concentra. I've been with the company for 25 years, originally joined in 1995. We were known as OccuSystems at that time, rebranded into Concentra in the late '90s. I stayed until 2010, and we actually were primarily private equity owned at that point in time. We sold the company to Humana in 2011.

I left to go do something else and came back in 2015 when Humana sold it to Select Medical. And then we fast forward to today, and we've gone through a spin with Select and now publicly traded company since July of 2024. So thanks for being here today. I wanted to talk a little bit about the basic business fundamentals of our company. For those that don't know, we're the largest occupational health services provider in the United States.

We have a very differentiated value proposition relative to how we treat workers' comp injuries, how we engage directly with the employer as it relates to their occupational health care services needs. Today, we treat 1 out of every 4 Americans that gets hurt on the job from a workers' compensation standpoint. Their employer and/or the workers' comp ecosystem directs those patients to our primary care providers and our therapists as far as returning them to full functionality back in the workplace.

So we like to say our job is to keep America working, and that's really the focus with what we do. We're by far the largest in our space. We have for 25, 30, 40 years, been a consolidator of occupational health care clinics, both from an acquisition standpoint and then also developing practices from a de novo standpoint. Today, when you look at Concentra, we have over 1,000 locations 650 of those are bricks and mortar, where we're basically -- it's a 6,000 to 8,000 square foot facility. It seeing about 100 patients a day that are within a 6- to 8-minute drive time of that facility. Those patients are coming to us for a variety of reasons, drug screens, physicals, injury care, follow-up medical visits, PT visits and specialty visits.

So basically, whatever the employer is needing within their workplace, we're providing that to that employer as they send those employees to us. So 650 bricks and mortar branded as Concentra urgent care. We also have over 400 on-sites where employers decided I want the health care delivered at my workplace and not -- I don't want to have to send somebody somewhere. And also, I want some specialized health care. I want to do advanced primary care. I want total health population management, really whatever they choose, we can provide them. That's more of a staffing arrangement. It's a cost-plus arrangement versus our centers, the bricks and mortar are fee-for-service arrangement. Attractive rate dynamics. Basically, we have no stroke of the pen risk, no Medicare, no Medicaid, less than 1% of our reimbursement is federally funded and really no government payer reimbursement at all.

When you look at our fee-for-service, our bricks and mortar and you look at the number of years we've been in the business, on average, we anticipate roughly about a 3% increase in our rates each year. In the workers' comp arena, there are -- each state establishes their own reimbursement for how providers are to be paid by the employers and payers. So the states really just act as a referee that sets the rules for how workers' compensation is going to be administered in their state. There's nothing relative to budgetary concerns from a state.

They're not paying anything. They're just establishing the rules of how the providers, Concentra and the payers and employers that are going to reimburse Concentra for the care that they provide, how they're going to be reimbursed and the rules around that. We have over 200,000 direct employer relationships. As I mentioned earlier, the majority of our centers, the employers are probably within an 8- to 10-minute drive time of that practice. Convenience is very important. So you're going to find us more in the industrial areas of the MSAs out there, typically not going to find us in a suburban neighborhood, so to speak. 98% of those employers have been with us over 10 years.

There's really not -- probably not an employer out there that doesn't utilize Concentra somewhere. Some of them, we have gained a tremendous amount of their pocket share. Other ones, we're continuing to penetrate, but they do use us somewhere, especially if they have a dispersed workforce across the country because it allows them to consolidate and have really one nose to touch as far as what's happening from an occupational health care perspective. That's supported -- that customer base is supported by over 200 sales and account management individuals that are really dedicated to what we're doing.

We have the ground pounders that are selling the individual centers. And typically, each one of those has 5 or 6 centers, and they're knocking on doors, again, within a relatively short drive time of that practice. We have higher-level individuals that are going into the city of San Francisco and trying to penetrate the police department, the fire department, the maintenance department. And then we have those guys at the strategic high levels that are walking into the Amazons and the UPSs and saying we've got 650 bricks and mortar across the country. Let's put together a program where we get as many of your distribution sites matched up and utilizing those. So we really try to hit them from all points.

We've got technologies that allow us to be very efficient with that spend and that investment in our sales and account management. And we also use that same technology relative to how the centers themselves, the bricks and mortar, the Center Medical Director, the Operations Director within that 4 walls, the therapy Director, how they engage with their local employers. So that's really how we account manage, we touch them. And 80% of the employers that are utilizing those practices are pretty small in nature. They don't need us every day. They don't need us every week. So it has to be a constant touch and outreach to make sure that they know we're still there.

They understand the value prop. If there's changes in their leadership, they know where to find us. Strong value proposition. Why do they use us? Convenience is one reason, but that's just not it. The main reason is we've done numerous validation studies, independent validation studies with the payers and the large national employers where they've looked at their claims loss runs and said, what happens when an injured individual walks through a Concentra facility as their entry point versus a hospital ER or an urgent care or a family practice. And on average, the way that Concentra, the medical philosophy of how we treat those claims, how we return people back to full functionality quickly. It's a return-to-work philosophy. It's an industrial athlete treatment philosophy. We're going to get them to see the doctor quickly.

We're going to get them into therapy and get them back into the workplace, albeit typically a lot of time with restrictions, but we're going to progress them quickly in a high-touch mode. What that's created is basically a 25 -- expectation of about a 25% savings in their total claims cost, not just the primary care component where we're getting reimbursed, but the way we process manage that case, we're going to save them where the big dollars are, where if we have taken somebody off work or a provider takes them off work, that employer now probably is incurring additional costs associated with overtime with other employees that have to cover a shift or they're having to pull a locum in. that employee here also starts potentially generating -- they're still getting paid since it's a workers' compensation injury.

So you've got that going on, you potentially have lawsuits, administrative things, things like that, where if we can keep them at work in some sort of functionality and progressing them on, it showed that we can greatly reduce an employer's cost associated with a bigger bucket over there. And we do that with a high level of satisfaction from an employee standpoint. You got to realize the majority of the employees walking through our door didn't have a choice. Their employer dictated, they go there. Every state is a little different, how that works. Some employees can have some choice or limited choice.

But if the employer is having to pay for it, then in the states, in many instances, give them a lot more oversight in being able to direct where they're going to get their care. And so we have to overcome a little bit of that apprehension as that individual walks through the door. And 9 out of 10 -- 80% of the patients score us a 9 out of 10 relative to their patient satisfaction. So that's an extremely strong score. You can look at our Google scores. We see 50,000 patients a day across the United States walking through our doors, outstanding feedback that we're getting. So we've really done a lot from that perspective. And a lot of it is just making sure that they feel like they get the proper care and then they're not in there for 3 hours. They get in and they get out and they get back to work. Diversification, I talked about, we've got over 200,000 customers, but no big concentration.

Our largest customer represents about 3% of our revenues. The top 1,000, about 37%. So we don't really have any risk associated with customer concentration. Same thing from an industry standpoint. There are several industries that kind of fall in that 8% to 10% range relative to how much business they're doing construction, manufacturing, transportation, those types. So we're very diversified from that. It's really a cross-section of what America looks like from a working perspective. That's what's in our centers, if you were to walk into it. And then finally, as far as states, we're in over 40 states. Our largest states are California and Texas, 100 centers in each one of those out of the 650 bricks and mortar, not including the 400-plus onsite. So diversified across all states.

We're not necessarily concentrated on any particular state as far as growth. If the fee schedule is attractive, we know we can do well in that state, then we'll invest and spend money in that state. Growth opportunities. That's probably one of our things that we do well. We execute. We've had over 70 acquisitions since 2016 and de novos. On average, we have basically an effective sub-3x multiple on those transactions. If you think about it, a simple mathematical calculation. We go in and we buy a stand-alone physician practice that's doing occupational medicine. They're doing $1 million in revenue. Doc may be taking out a couple of hundred thousand and they're not making any money other than that, or they may be losing money and cash flowing negative.

We can come in with our systems, potentially put new services in, they're not doing PT or pharmacy or those type things. We can grow it from a sales perspective, get some of our large national customers that may be in that area, not utilizing that practice, get them to start utilizing that practice and really overnight, be at $1.5 million. We have our systems in there, which are going to create efficiencies for the individuals within that practice, rightsize staffing in many instances.

And pretty shortly, we've got $1.5 million revenue center doing $500,000 in EBITDA. And originally, we probably paid approximately 1x revenue for the $1 million. So that's the 2x, sub-3x. So that's really the model that it works. Ample white space. This industry we're in is $176 billion. Now the primary care component that we're focused on is a smaller component of that. But by our treatment philosophy, our process management, our return to work, our communication with employers, that's what we're impacting that bigger piece out there as far as that 25% savings.

As far as just some of the headwinds or headwinds, tailwinds, demographic, economic trends that are -- we're facing from short- and long-term growth. When you look at the workforce these days, it's an aging workforce. We see that every day, more comorbidities. We see that every day. And really, what we've seen over the last 25 years is when we get these patients, it's taken them a little longer to get back to full functionality just by their health and their age and those type of things. So we've seen a little bit of that as far as what's happening where -- as far as getting them back to full functionality.

In addition, with the trillions of dollars that we've heard about that are potentially going to be spent in the United States, we see that as a tailwind to us relative to some of the manufacturing that could be onshore again and what's happening from that perspective. Job growth, construction demand, those type things. And then again, the AI economy, we get a lot of questions about AI, both what are we doing from an AI perspective, -- also how is AI going to impact you? And we really think it could be a job creator relative to our business. Good example, Texas, 2 large data centers in Abilene, Texas and El Paso, Texas are being developed. I mean, mega centers.

We actually have a [indiscernible] Med centers in both those markets, and they're reaping the benefits of the construction and the employers that are building those things right now. And we've seen dramatic ramp-ups in volumes as a result of that. Once it's done, there's jobs have been created. There's going to be landscaping services needing to be at those data centers, UPS drivers dropping packages off every day, pretty much the people that are going to be needing our services should they have an injury care or their employer needs some other occupational needs such as a preemployment drug screen or a Department of Transportation physical so that they can maintain their commercial driver's license, those type of things.

So we really feel it potentially could create a tailwind for us relative to what we're doing. And then finally, from a history of leadership, if you look at our top 14 executives, we have over 300 years of combined experience with Concentra. We -- there's not many things that come down the pipeline that we haven't seen. Even though we've grown to be over a $2 billion company over the years, we're extremely nimble. We pride ourselves on that. We've moved quickly. We understand what challenges are out there. We faced them all, addressed them. We went through a GFC crisis back in '08, '09, '10, survived that, did well. We're able to navigate that.

Again, same thing with COVID, had some very good years through the COVID years as we navigated that. So we're -- I think as an organization, we execute well. There's not many surprises out there that we haven't encountered in the past, and that's allowed us to continue to be nimble and move through this environment at a pretty fast pace. So that's basically some basic business fundamentals about Concentra and a quick overview.

I'll let Matt talk a little bit about some of the financial highlights.

Great. Thank you, Keith, and good morning, everyone. Matt DiCanio, President and Chief Financial Officer, been with Concentra for more than 10 years. What we thought we'd do is just cover one more slide of our presentation, a couple of more minutes, and then we'll turn it over to Ben for some Q&A. But I think Keith provided a great summary on the business fundamentals. This slide is more focused on the financial highlights of the business, just to put it all in perspective for any new listeners and following the Concentra story. From a size and scale, we put on here our revenue and EBITDA ranges from our Q3 earnings call.

We'll have more updates here when I get to the tail end of this slide. But just to put it in perspective, approximately $2.2 billion in revenue, approximately $425 million to $430 million in EBITDA. We've been growing at a 13% year-over-year growth rate in 2025. If you exclude the larger acquisitions, Nova and Pivot, we're still growing in the high single-digit revenue growth range. So our growth algorithm that we always talk about and walk through with investors and people following the story is mid- to high single-digit revenue growth, and there's 3 components.

We have low single-digit visit volume growth. That's same-center organic visit volume growth. We have a long history of 3% rate growth. That's over a 5-, 10-, 15-, 20-year period of time. Our rate is broken down, as Keith mentioned earlier, by work comp fee schedules, which has seen the same rate growth over a long period of time and then also with employer services pricing where we control the pricing, and that follows very closely with the work comp rate growth rates. And then the last piece is we call semi-organic growth.

We've been doing de novos and small M&A for 40-plus years, highly controllable, repeatable process, completed over 200-plus transactions over the course of our history. So that adds another low single digit revenue growth. All that adds up to the mid- to high single digit. We've grown north of 5% CAGR for the last 3 years. And again, in 2025, we're growing slightly higher than that. We talk a lot about our variable cost structure. I think the more discussions we have with investors, the more questions and understanding they have of how variable our cost structure is. Our cost of service is about 71% of revenue. 80% of that roughly is almost entirely variable.

Obviously, there are some core staffing needs that we have at our centers for minimum volumes, but highly controllable from a staffing perspective. Real estate is our second largest expense item. And then our third largest is lab and medical, which is entirely variable in nature. So our business, our teams are really good at staffing to the visit volume and predicting the visit volume. They do that in the normal course of the business. seasonality throughout the year, the warmer it is, the more visits we have. There's seasonality throughout the month. There's seasonality actually through the work week.

Monday is typically our busiest day, et cetera. So our teams have a lot of data, 45-plus years of being able to predict visit trends and staffing to the appropriate levels. From a margin profile, this will be our fifth year in a row at approximately 20% adjusted EBITDA margins. Keep in mind, we came public about 18 months ago, and so we took on some incremental public company costs. We're also in late stage of separating from our parent company, which we've detailed previously that there are incremental costs associated with that separation. But again, we're in late stages of that process. So if we were still part of Select Medical today and comparing apples-to-apples over the prior years, our EBITDA margin would have ticked up.

From a free cash flow standpoint, greater than 100% free cash flow conversion, over -- nearly $1 billion in free cash flow generation since 2021. I think as we have more and more conversations now 18 months post IPO with investors, I think people are really understanding the cash flow generation power of our business. And we'll talk more in the coming weeks about our expectations for 2026. Return on capital, mid-teens ROIC when you compare that to other companies, we believe that's highly attractive. We do have a dividend, 1.3% dividend yield. We'll continue to monitor that as we move forward.

And we also authorized -- our Board of Directors authorized a $100 million share buyback program late last year. And then final point, and then I'll talk on some of the Q4 numbers we put out on Monday. But final point is on leverage. We are targeting 3.5x or less when we release results here shortly for year-end 2025. And we publicly stated multiple times that we are targeting 3x or less by the end of 2026. When we first did our IPO, we were at 3.9x. We delevered quickly within less than 6 months to 3.5x, went back up to 3.9x to do the couple of acquisitions and then brought it back down to 3.5x at the end of this year.

And then lastly, just to wrap up our comments, and then we'll turn it over to Ben. We did put out some early look visit numbers for Q4. Our team was still closing the books on the financials for the year, but we felt it was important having all the discussions that we're having here at the JPMorgan conference to give people an early look into our Q4 results. We had very strong visit volumes, 3.4%, excluding Nova on the work comp side, 2.3% Employer Services, again, excluding Nova and then roughly 9% overall. We also repurchased 1.1 million shares in the fourth quarter.

And then really, our philosophy here was to get an early look made public with our 8-K on Monday, where we published this presentation, give people comfort around where we're headed for fourth quarter financial performance. In a couple of weeks' time, we will have the books closed, and we'll do an early release on the full year results and the fourth quarter results. We're also going to give 2026 guidance. We felt like it was important to give early look at full year so people can compare year-over-year numbers. And then we're also putting out a 50-page investor book. So all 3 of those will be published here in a couple of weeks, and I think it will really round out our story for 2025, and we will still do our regularly scheduled earnings call in late February. We'll have a lot more detail, and we'll have our 10-K available.

So with that, I turn it back to Ben. Thank you.

Great. Thank you for those additional comments in the background on the company. Really appreciate that. I think that tees up my first question here pretty nicely as you're talking about the 4Q '25 numbers. So as you close out your first full year as a public company, can you summarize the key learnings and milestones achieved in 2025? And just walk us through your thoughts on the primary drivers to last year's performance?

Yes. I think this last year, we managed a multitude of things. We were a SpinCo. Even though we were pretty much autonomous under the Select umbrella and the Humana umbrella prior to that, there were certain functions that weren't really a core component of Concentra that were really overarching things, i.e., benefits administration, payroll, AP, those type things. All the core operational type things were core to Concentra and a lot of the functions associated with HR were core to Concentra. So we had to build that out simultaneously as we spun out.

So a lot going on there. We were very successful in delevering and then acquiring 2 large transactions, which we mentioned levered us back up a little bit. So you have the combination of the SpinCo activities and then the integration of 2 large transactions. And I think the point it proved when you look back over the last years, we've always talked about our ability to execute on acquisitions, M&A, really all activities associated with Concentra. And we've done very well as far as the integration of those 2 entities.

We're in the final stages, pretty much all intents and purposes, they're done as far as integration, very successful, pretty much exactly what we thought was going to happen and what we articulated. So when we look back over the last year, I think we accomplished a tremendous amount relative to being a young public company. When you go back to when we did the test the waters and when we went through the IPO process and you looked at all the things we said we were going to do, whether it was earnings or execution on things or whatever it was, we went back and there is basically a checkmark in every single box. There's not 1x on the page relative to what was -- what we committed was going to happen and what did happen.

So we're very proud of that first 18 months of where we're at. very excited about the future and where we're going. We're positioned well. We're really in the ninth inning of the spin from Select. We should be pretty much done with it in April, May when we stand up the ERP. 70% of the people have been hired that needed to be hired and really the remaining individuals are administrative AP clerks or payroll type. So we don't -- we track the cost like we thought -- exactly like we thought we were going to have. So we're in the ninth inning of that. We've integrated the 2 acquisitions, and we've got a great game plan as we move forward.

Okay. Just for workers' comp specifically on the volume side, can you walk us through the volume trends observed to close out the year and just how those compare to your historical norms given some of the current macro backdrop?

Yes, sure. I'll start, and Tanner, you jump in as well. We've had 3 very strong work comp visit rate quarters in a row. And a lot of people ask us questions about economic uncertainty and things like that. And clearly, we've powered through that. So we continue to see nice growth. We always -- as I mentioned in the financial highlights slide, we point to low single-digit organic growth over a long period of time. We're slightly higher than that right now with 3 quarters in a row north of 3%, 3.5%.

And I think when you look at some of the publicly available data out there, there's been a little bit of a diversion and lack of correlation with what we're seeing and maybe some of the headlines that people are reading as well. Part of that is because of the slide we have on the presentation screen right here, these are the individuals that walk in our centers every day, 55,000 plus. And it's not necessarily white collar or tech where maybe they're seeing some more of the layoffs. And so we've continued to have nice trends to round out the year. Tanner, anything you'd add?

Yes. I'd just say that speaking with folks, I think one of the points that we want to try to get across is that we, as a company, are more than just the macro. I think there's a tendency to really look at some of the BLS data or the ADP data out there and make instinctual decisions off of that within the investor community. And as Matt just said, 4 quarters in a row now where the macro data might imply that we're in a softer to stable-ish labor market, and we've continued to put up quarter after quarter that shows pretty strong growth through that. So that would be the biggest takeaway that -- or one of the bigger takeaways that I think we want to leave people with is that, look, we can continue to grow through softer labor markets. And to the extent there's an acceleration in the labor market, that's all the better for us.

Got it. Just turning to the workers' comp rate side then. Just with a sizable set of rates going into effect on January 1, can you just walk us through how your initial thoughts are on state-by-state pricing for this year? I know you've said plus or minus 3% before, but is it generally trending in line with that historical trend? And then multiparter. You previously called out California and those 4 states that use the PFS conversion factor, but are there any other individual states where you're seeing a potentially more favorable re-rate in excess of that trend?

Yes, I'll start on this. So our expectations for rate, it's going to be another good year in 2026. We made some comments on our Q3 earnings call that we had a majority of the states known at that point in time, but we're still waiting on some updates. Typically, a lot of the states come in, in December, maybe even in January. At this point, we still have more than 50% known for sure. A lot of them already went into effect on January 1. We have very good insight or a high degree of certainty on, call it, 80% to 90% of the fee schedule. So there's really about 10% or so to be determined. But all expectations and all analysis we've done that we'll have another strong rate year this year. California, we're still waiting on the final fee schedule.

We expect to hear soon, but they were positively impacted by the 2.5% doc fix, which was just one component of their fee schedule calculation that came out of the big beautiful bill. They also -- another part of their fee schedule calculation has an MEI. So that is our estimate somewhere between 2% to 3% on top of the doc fix. So that will be -- that's our largest state, be a strong foundation for us this year. All the other states are trending pretty much in line with how they have historically. Some states, there might not be a change, some might have 1% increase. Some might have 4% increase. So it all kind of blends out to that 3% over a long period of time. We expect 3% this year, could be potentially higher, but we'll wait to get the remainder of the states here.

Okay. And for your Employer Services to flip into that segment. How have those conversations with employers been shaping up this year? And then what should we be looking for in terms of rate development there?

Shaping up well. So the difference between what Matt just talked about from a workers' compensation state fee schedule is that, again, states dictate the rates that you get reimbursed in those states and many of the states have automatic inflationary escalators. So we just get it every year. Other states just adjust it. So you have that going on over there. What you have from an employer services, which is basically the drug streams and the physicals, that's a direct relationship with the employer we have as far as what that market price is going to be and what that employer is going to pay, and we establish that when they come on board with us and start to use us.

Then every year in November, we, in essence, look back what happened this last year. And usually, what we try to do is track the inflationary [indiscernible] of CPI, whatever it is, that has happened over the last year. And typically, we'll implement a price increase on our drug screens and physicals effective January 1 every year. And so we'll send out a generic letter to our 200,000 employers to talk about all the things that we did this last year, the investment, the capital, what we're doing to make their lives better. And oh, by the way, we're going to have a small increase in your services. So typically, standard letters you guys probably have seen in your own personal experience with things out there. And that's been very successful for us. So we think we should see a 3% to 4% on the Employer Services, again, trying to stay pretty close to inflationary indicators out there so that it doesn't create any issues and things like that.

Yes. Great. So just in the interest of time, we'll jump up a bit to capital allocation. Just how are you prioritizing your capital allocation priorities in 2026 and beyond, particularly with respect to deleveraging, dividends, share repo and other growth investments? And then what do you consider to be some of the trade-offs between reinvesting in organic growth, pursuing M&A and generally just returning capital to shareholders?

Yes, I can start on that, and Tanner, you might want to add as well. But talking -- I'll start with the free cash flow discussion that we spoke about on the financial highlights side, very strong cash flow generation company. And I think what that enables us to do is a lot of different capital allocation strategies. So we talked about our focus on delevering. We also talked about our share repurchase program that we put in place and took action on in Q4. We're also continuing our M&A efforts.

And what we're looking at right now is just doing the smaller M&A and smaller de novos, which are very accretive for us and continuing that until we finish out the Nova and Pivot integration, which is really the ninth inning and also finish out the Select Medical separation, as Keith mentioned, eighth or ninth inning there as well. So we're almost at the finish line on all 3 of those major work streams. In the interim, we'll continue with our smaller M&A, which has been a foundation for our success. And so -- and we also have a dividend in place. So what we'll continue to do is look at all of the opportunities that present themselves and pick what is the best use of capital. But we believe we can accomplish all of those, and we'll flex up or flex down depending on the opportunity that's in front of us.

Yes. Yes, I'd just add that we're sitting at 3.5 right now. As Matt said, working to get down below 3.0 because we've heard a lot, that's a big focal point for folks. I would just say as a management team, we're very comfortable where we're at right now internally, just given our track record of 45 years. So to the extent we get down below 3.0 and the right deal presents itself over time, will we pop back up to 3.5 to get that deal done? Not out of the question. But I do think being below 3.0 gives us a lot more flexibility to really focus on some of the other legs of the capital allocation stool, so to speak, including returning capital to shareholders and continuing to do other growth-oriented investments. And one thing I would say on the de novos and the smaller M&A that we do, we talked about earlier doing those deals at investment basis of sub-3x. So inherently, those are actually leverage accretive. So the more we can do those, the quicker we actually delever.

Yes. I'll add one quick comment. I think the term I used earlier was nimble. And we are nimble with the levers that we have with the 5 or 6 different ways we can deploy capital. And based on the opportunity at any point in time and what's going to optimize the return on that capital, that's what we're going to do at that point in time. So at this point in time, we think it's continue to look at share buybacks, continue to delever, hit the organic de novo small M&A, hold off on the bigger. We did a couple last year, but it doesn't mean they're not out there. We continue to percolate those talks. They'll be out there when we're ready. We're the natural entity for some of these things to ultimately land. And so it's just really the right time to pull that lever. We will pull it.

All right. And then as we wrap up here, we like to always -- our team likes to end with a prospective on your 1-year forward outlook. So what will investors appreciate about Concentra 1 year from now that they don't currently today?

I would say that where investors are probably wrapping their heads around it the most is the macro environment out there, how that impacts Concentra from an economic standpoint. We are the provider that is keeping America working, what's happening with the labor growth and those type things. And I think as investors have better understood us. And I mentioned this earlier, we were really somewhat unknown. Even though we've been around for quite some time, we haven't really been in the public eye from an investment community standpoint.

So there's been a lot of education. And I think as people have started to wrap their heads around the macroeconomic environment, how is Concentra performing at any point in time, they're starting to realize that even in a soft labor market this year and last year, we're performing extremely well. So I would anticipate as some of these tailwinds hopefully kick in over the coming months relative to investment and economic growth and the labor force hopefully growing that we really set sail as far as what's happening from a volume standpoint. We execute well. I mean it's simple. There's not many things in our past where we stubbed our toe. We've got the expertise, and I mentioned earlier, we're nimble. We've got many, many years of experience with our senior executives. So it's a well-oiled machine for lack of a better description.

Excellent. That's all the time we have here today. Thank you, those for listening, and thank you for Concentra and the team here for joining us.

Good morning, and thank you for joining us today for Concentra Group Holdings Parent, Inc. Earnings conference call to discuss the third quarter 2025 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 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. These forward-looking statements are based on the information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change.

At this time, I will turn the conference call over to Mr. Keith Newtman.

Thanks, operator. Good morning, everyone. Welcome to Concentra's Third Quarter 2025 Earnings Call. We are pleased to report on another strong quarter with the business generating solid year-over-year volume and rate growth across both workers' compensation and Employer Services. This resulted in 17% year-over-year revenue growth in the third quarter and 10.6% revenue growth, excluding the impact of the Nova acquisition. During the quarter, we finalized the integration and rebranding of the Nova occupational health centers and opened an additional occupational health center, de novo in Atlanta, Georgia, bringing us to 5 de novo centers opened so far this year with 2 more anticipated by the end of the year.

Also, our onsite health clinics operating segment performed well during the quarter, fueled by strong and accelerating organic growth as well as the now nearly completed integration of the Pivot Onsite Innovations business. As with prior quarters, I'll touch on some of our key financial highlights and provide a lens on selected metrics, both including and excluding the impact of the Nova acquisition so that folks have a good sense of core business performance. Similar to last quarter, I would note here at the outset that we had the same number of revenue days in Q3 2025 as Q3 2024, so there is no need to adjust any prior year comparisons for days. Total company revenue was $572.8 million in Q3 2025 compared to $489.6 million in Q3 of the prior year, representing 17% growth year-over-year. As previously mentioned, excluding contributions from Nova, revenue was $541.5 million, resulting in a 10.6% increase over the prior year.

Total patient visits increased 9.2% in the quarter to more than 55,500 visits per day. Our workers' compensation visits per day increased 9.8% and employer services visit volumes increased 8.9% relative to prior year. Excluding the impact from the acquisition of Nova, total visits per day increased 3.0% Workers' compensation visits increased 4.4%, outpacing the year-over-year growth observed in the first half of the year and Employer Services visits increased 1.9%, which was in line with the Q2 2025 growth. We had a strong quarter in terms of workers' comp visits with 2 things going for us to contribute in part to the outsized year-over-year growth.

First, Hurricane Beryl led to softer than normal volume in early July 2024. Additionally, we continue to see growth from the visit mix within workers' compensation visits driven primarily by follow-up injury visits and physical therapy visits. Our operations and sales and marketing teams have done a nice job driving visits and gaining market share against the macroeconomic backdrop that I would generally describe as uncertain considering interest rates, tariffs and the shutdown. Some recently published jobs data would seemingly indicate that we're in an economic environment that is slowing down, but we aren't necessarily seeing that play out in our business to date.

With respect to macroeconomic data reporting over a long period of time, we have seen correlation between our workers' compensation volume and employment levels reported by the BLS, and there is strong correlation between our employer services volumes and quits and hiring rates within the BLS JOLTS data. However, we have also found that our workers' comp visit data has largely lacked correlation with BLS employment data in the most recent times. I just point that out so that the folks don't rely solely on the publicly reported jobs data as the only proxy for our visit volume.

On the rate front, we had strong growth again with a 4.2% increase in revenue per visit this quarter versus the same quarter prior year. This growth was driven by a 4.7% increase in workers' compensation and a 2.7% increase in Employer Services revenue per visit. Adjusted EBITDA was $118.9 million in the quarter versus $101.6 million in the same quarter prior year or a 17.1% increase. Adjusted EBITDA margin increased slightly from 20.7% in Q3 2024 to 20.8% in Q3 2025. As with prior quarters, we are comparing against prior year margin that was not fully burdened by public company and other separation costs.

Additionally, similar to last quarter, we had a number of onetime Nova integration costs that burdened adjusted EBITDA. This expansion in margin even with these dynamics is another strong indicator of the performance of our business. Adjusted net income attributable to the company's $49.9 million and adjusted earnings per share was $0.39 for the third quarter 2025. These compare favorable to prior year adjusted net income attributable to the company and adjusted earnings per share of $44.3 million and $0.37, respectively.

As a reminder, adjusted EBITDA and adjusted net income reflect the add-back of transaction expenses related to our acquisition activity as well as onetime costs related to our separation from Select Medical. Now I'll turn it over to Matt to provide additional details on our financial results.

Thanks, Keith, and good morning, everyone. I'll start by going through some more details on our results in our 3 operating segments. In our Occupational Health operating segment, total revenue of $526 million in Q3 2025 was 13.6% higher than the same quarter of prior year. Workers' compensation revenue of $343.5 million in Q3 2025 was 15% higher than prior year. Work comp visits per day increased 9.8% from prior year and work comp revenue per visit increased 4.7% versus prior year. Within Employer Services, revenue of $173.2 million increased 11.9% from prior year.

Employer Services visits per day increased 8.9% from prior year and Employer Services revenue per visit increased 2.7% versus prior year. As with the past 2 quarters, here are the same stats excluding the impact of Nova to help isolate our core business from our Q1 acquisition.

Total revenue within the Occupational Health Center operating segment was $494.7 million in Q3 2025, a 6.8% increase over the prior year. Total visits per day increased 3% over the same quarter prior year, and revenue per visit increased 3.9% from $141 in Q3 2024 to $147 in Q3 2025. Workers' compensation revenue of $324 million in Q3 2025 was 8.5% higher than prior year. Workers' compensation visits per day were 4.4% higher than prior year and work comp revenue per visit was 3.9% higher than prior year.

Within employer services, revenue of $161.7 million in Q3 2025 increased 4.4% from prior year. Employer Services visits per day were 1.9% higher than prior year, and Employer Services revenue per visit was 2.5% higher than prior year. Moving on from our occupational health centers. Our Onsite Health Clinics segment reported revenue of $34.9 million in Q3 2025, 123.8% increase from the same quarter prior year. This was largely driven by the acquisition of Pivot Onsite Innovations in Q2 of this year. Excluding the impact from Pivot, the On-site segment revenue grew 17.5% year-over-year.

The growth in the legacy onsite business is indicative of the nice momentum we are seeing with the platform as a solution to employers across the country who are seeing double-digit year-over-year increases in employee health benefit costs. We believe we are naturally positioned to further penetrate this growing market given our national presence in infrastructure and deep relationships across approximately 200,000 existing employer customers. We expect this to continue to be an important part of our organic and inorganic growth strategy over the coming years. And finally, other businesses generated revenue of $11.9 million in the quarter, an 8.1% increase against the same quarter of prior year.

Now switching to expenses. Cost of services was $405.5 million or 70.8% of revenue in Q3 2025, down from 71.7% of revenue for the same quarter prior year. The decrease as a percentage of revenue can generally be attributed to an overall improvement in staffing efficiencies at our centers. As with the last quarter, we had a number of onetime costs related to the Nova transition that are not adjusted out of adjusted EBITDA. We estimate that the net incremental costs totaled more than $500,000 during the quarter and are now substantially complete as of September.

Our total general and administrative expenses were $52.9 million or 9.2% of revenue in Q3 2025 compared to 7.6% of revenue in the same quarter prior year. And just to reiterate, this comparison is not apples-to-apples as we have expenses in Q3 of this year that we did not have in the prior year before we separated from Select and were fully burdened with public company costs. We also have some onetime acquisition-related expenses here related to Pivot and Nova that are adjustments to EBITDA. Excluding items that are added back for the purpose of calculating adjusted EBITDA, including equity compensation expense, onetime select separation costs and M&A transaction costs, G&A expense was $48.5 million for the quarter or 8.5% of revenue compared to 7.5% of revenue in the same quarter prior year. The increase was largely driven by expected increases in personnel costs since becoming a public company and with our ongoing separation from Select Medical.

On the topic of separation, we have onboarded approximately 2/3 of the colleagues needed to fully transition services over from Select, and we have made meaningful progress towards reducing our transition services agreement spend as those folks ramp up and knowledge transfer occurs. We have until November of 2026 to complete the transition. But at this point, we expect to be substantially complete with separation activities by the summer of 2026. As previously communicated, on a run rate basis, we will have net incremental expense as a stand-alone public company, but a significant portion of these costs are already embedded into our 2025 actual results and our guidance.

The overall adjusted EBITDA margin in Q3 2025 was 20.8% compared to 20.7% during the same quarter of prior year. Keith mentioned this, but I think it's important to underscore that we're achieving incremental year-over-year gain in margin despite additional public company and separation costs. In Q3 2025, we generated $60.6 million in operating cash flow. This compares to $65.9 million in the third quarter of 2024, with the year-over-year decrease largely driven by a $25 million increase in cash interest payments, offset by a $12 million decrease in cash taxes paid. Investing activities used $20.5 million of cash in the third quarter and was driven by our spend on center de novos, relocations, renovations and normal maintenance. The year-over-year increase from $17 million of spend in Q3 2024 was due in part to approximately $3 million of onetime CapEx related to the Nova integration.

The substantial majority of Nova capital has been spent as of the end of the third quarter. Free cash flow or cash flow from operations less cash flow from investing activity, excluding business combinations, totaled $40.2 million, a decrease from prior year third quarter free cash flow of $50.8 million. Additional cash interest expense following the recapitalization of the business in July 2024 and Nova integration CapEx were the primary drivers of the decrease.

On an LTM basis, excluding acquisitions, we've generated $176.3 million of free cash flow, which is net of approximately $11 million in onetime Nova integration CapEx. Financing activities during the quarter resulted in net cash outflows of $64.1 million. This was primarily due to repayments of $25 million outstanding on the revolving credit facility in both August and September and an $8 million dividend payment. Subsequent to quarter end, we made another $35 million revolver payment, resulting in 0 outstanding balance on the credit facility. We ended the quarter with total debt balance of $1.61 billion and a cash balance of $50 million. Our net leverage ratio per our credit agreement at the end of September was 3.6x.

We continue to focus on deleveraging towards our targets of 3.5x or below by the end of this year and below 3.0x by the end of 2026. Q4 is typically our strongest cash flow period, so meaningful progress will be made towards these targets during the quarter. Now with respect to our growth efforts. Regarding Nova, we have now -- we now have all centers converted to Concentra systems, processes and signage, and our teams have shifted focus towards growing visits and bringing operating efficiencies in line with the rest of our platform. As it relates to cost synergies through the end of Q3, we estimate we have captured just over 85% of our planned operational and back-office synergies.

So not all of that was fully reflected across the entire quarter, with the remainder to occur through Q1 of 2026. We still have some running room before we hit expected run rate performance from both a top line and cost perspective, but we are pleased with the progress to date. Similarly, integration of our Pivot acquisition continues to go smoothly with most expected synergies having been captured to date. On the de novo front, we opened 1 location in Atlanta, Georgia in the quarter, and we have 2 more locations in California and Florida planned for the fourth quarter.

Shifting to 2026 activity, we currently have 6 sites across Florida, Georgia, Missouri, Idaho and Arizona in advanced stages of development and have a number of other locations that we are actively evaluating. On the M&A front, with the Nova and Pivot integrations largely behind us, we are shifting our focus back towards our core acquisition strategy of practices with around 1 to 5 occupational health centers. We've had a lot of success with these smaller deals over the last decade with an average acquisition multiple of less than 3x EBITDA on a post-synergy basis. We've been building out our deal pipeline, and we have several active targets that we are pursuing that could close over the next 3 to 6 months. From a capital allocation standpoint, we believe we can continue to execute on our growth strategy in parallel with our deleveraging efforts and achieve the leverage targets that we've consistently communicated to the market at or below 3.5x by the end of 2025 and at or below 3x by the end of 2026. In most instances, these smaller M&A deals and de novo sites are actually leverage accretive for us.

And now wrapping up with just some several subsequent events. First, we're pleased to announce a continuation of our dividend this quarter with the Concentra's Board of Directors declaring a cash dividend of $0.0625 per share on November 5, 2025. The dividend will be payable on or about December 9, 2025, to stockholders of record as of the close of business on December 2, 2025.

Also, the Board of Directors has authorized a share repurchase program of up to $100 million of the company's outstanding common stock. The share repurchase authorization will expire on December 31, 2027, unless extended or terminated earlier by the Board of Directors. While our aforementioned leverage targets and growth objectives remain the priority, we believe the company's robust free cash flow generation provides additional flexibility to execute opportunistic buybacks when market conditions and valuation levels suggest that it's appropriate. And finally, with respect to guidance, we are raising the low end of our 2025 revenue guidance range from $2.13 billion to $2.145 billion and the low end of our 2025 adjusted EBITDA guidance range from $420 million to $425 million. The top end of both ranges remain unchanged.

We are also reaffirming our CapEx range of $80 million to $90 million, while noting that we are trending towards the lower end of that range. I also want to remind folks that the CapEx range this year is elevated relative to normal due to the incurrence of approximately $10 million to $15 million in onetime Nova integration-related spend. We are also reiterating our previously stated leverage targets of less than or equal to 3.5x by the end of 2025 and less than 3x by the end of 2026. I'll pass it back to Keith to wrap things up.

Thanks, Matt. As you can see with our results, we put together 3 nice quarters to start the year and have solid momentum heading into the fourth quarter. Team is working hard and is motivated to finish out the year strong.

Looking forward, in addition to the M&A and de novo growth backlog that Matt touched upon, we are evaluating and expect to invest over the coming year in new technological capabilities that should drive improvements in new customer capture, existing customer retention and general operating efficiencies with our internal systems. Historically, this has been an advantage for us from a value proposition standpoint. We believe that it's of a paramount importance to continue to invest in technologies that improve patient, employer ecosystem partner experiences as well as our colleague efficiencies and help further differentiate ourselves from our competition. Technological initiatives include digital bilateral interconnectivity with customers, systems modernization, payment automation, patient scheduling capabilities and AI initiatives, among others, that we anticipate will all have a meaningful impact upon implementation.

With respect to 2026, similar to this year, we expect to provide guidance early next year once we have further visibility into visit trends and updates on state fee schedules. On our last call, we touched on the expected rate tailwinds in California and a few other states. While this gave us some early visibility into 2026 rates for one of our larger states, many states don't finalize fee schedules until late this year or early next year, and we think it's important to have a little more information before issuing formal guidance. Lastly, I'd like to conclude by saying that I'm pleased with the progress we've made as a company since our IPO in July 2024.

We outperformed the organic growth algorithm we originally communicated during the roadshow despite a choppy jobs market. We acquired and fully integrated a large player in the occupational health center space in Nova. We substantially bolstered our on-site platform through the acquisition and integration of Pivot Onsite. We've made substantial progress towards full separation from Select and wind down the transition services agreement, maintaining EBITDA margin even with the incremental G&A cost. We've continued to develop and execute on strong core M&A and de novo strategy.

We've continued to delever on the time line that we've been communicating throughout the year. We implemented a number of new technological initiatives and we continue to deliver best-in-class care for our patients and outstanding outcomes for our customers. We have obviously had a tremendous number of moving pieces over the past 12 months, but the team has remained focused and performed exceptionally throughout. Very proud of the efforts across the board.

This concludes our prepared remarks, and we thank everybody for the time today. We'd like to turn it back over to the operator to open up the call for questions. Thank you.

[Operator Instructions] Your first question for today is from Ann Hynes with Mizuho.

Just heading into 2026. I know that you don't want to give guidance, but would there be any like major headwinds or tailwinds that you would call out while we finalize our models?

Ann, this is Keith. No, I don't think so. Like we -- the environment we've been through has been somewhat choppy, as we mentioned on the call, over the last year, 1.5 years, 2 years, and we've done quite well in that. And so other than just continuing to perform as we have performed in the current environment is what we will continue to do. But other than that, I don't really see any headwinds or anything that's obstacles in our way at this point in time. Really feel bullish about next year and anticipate having a really good year.

Your next question is from Benjamin Rossi with JPMorgan.

I guess just thinking about volume trend across your Employer Services segment this year, another good quarter. You have year-to-date volume growth increasing in that 1.5% to 2% range on like a core basis. Can you just walk us through what's maybe driving some of the improvement this year on core and maybe what you're hearing from your employer clients? And then just looking into next year, how are you thinking about that core trend as we begin to lap some of this year's M&A benefit?

I'll take it initially. This is Keith again. Yes, so we were coming out of some years as a result of COVID that there had to be some resetting, so to speak, and that's happened. And now we are in a little bit more of a comparable year-over-year comparison as far as the core as we continue to grow that. So just taking those dynamics out, what are the things that we're doing to really add fuel to the fire. A lot of things in our sales and marketing from technology, people, how we're going to market, how we're getting better information, how we're identifying new leads, how we're account managing existing customers, how we're trying to get more pocket share out of those existing customers, how we're trying to eliminate leakage relative to any leakage we could be having out there. So pulling a lot of levers and using technology as a key component of that, I believe, is what's helping drive this so far. Matt, I don't know if you want to.

Yes, Ben, you were asking specifically about Employer Services. Is that right?

Yes.

Yes. As Keith mentioned, we had the rightsizing coming out of COVID that took quite a while post COVID. And our Employer Services visits volume flipped positive in Q1 of this year. So this is our third quarter now in a row with positive visit growth there. And what we're seeing right now is stability in that service line. So 1.9% this quarter ex Nova. Last quarter, it was 2%. So almost exactly identical to the prior quarter. It's about half of our visit volume, but it's about 1/3 of our revenue. So obviously, our work comp business is important to the overall trajectory of the business.

Got it. Okay. And just as a follow-up, I guess, just flip into that workers' comp space. I guess, similarly, on a year-to-date basis, you're kind of just north of that 2.5% year-over-year range on a core basis for visits per day. I guess just thinking about that, are you taking market share at this point within that space? Or do you kind of think of growth in that -- as generally in line with the broader market at that level?

Yes. So we've had couple strong quarters work comp visit growth rates. There's a lot of variables in there. There's a lot of different visit types, initial injuries, rechecks, physical therapy, specialty visits. So there's a lot of variables that make up that number. But obviously, we're pleased with the last couple of quarters of growth. And we believe we are taking share, but it's complicated to calculate and estimate. But we also had some prior year dynamics with a soft July of last year that helped us in the quarter. But even without that, we would have had a nice quarter. So we do believe we're taking market share.

Yes. And I would add that when you look at the components of what drives work comp, as Matt as Matt mentioned, it's -- injuries is the initial driver. And after that, you get the follow-up injury visits with the physician, PT, specialty visits. All of those are growing several reasons. Injury severity seems to be a little higher maybe than historically just to aging workforce, comorbidities, things like that. That stretches out the length of the case a little bit as far as instead of 5 visits, it may take 6 visits to get that individual back to full duty. We've implemented, again, several technology-related things to capture follow-up visits. So we've seen appointments and follow-up -- missed appointments and people not skipping out as much. So we're capturing more of that person's injury care as a result of then getting them back to full duty. So it's really several components that kind of drive that. And again, several levers that we're pulling associated with that.

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

So Keith, I just wanted to understand your comments a little more about the decoupling of the historical correlation between workers' comp and your visit -- pardon the BLS data and your visit volume there. Just sort of can you elaborate a bit on what period you're referring to? And any thoughts on what some of the factors are driving that? And then part 2 is just you mentioned investing in IT systems. Just curious, is that more of like an offensive or a defensive measure? I mean a lot of our work that we've done on you guys in the past suggests that the connectivity and interconnectedness with employers is one of your competitive advantages out there.

Yes. I think really probably over the last 2 years is where there's been somewhat of a -- for lack of a better description, decoupling BLS data and what's happening with us. We've scratched our heads at the initial periods of that. Later on, some of the results that we were seeing seem to make more sense after significant revisions in that data. So I don't know what all drives that, what's going on at the levels that that's happening. But we still look at it at this point in time. It's just been all over the place relative to the results that we're showing. So that's really the comment I'm making there. Historically, prior to that, there was a good correlation as far as job growth and kind of what was happening with our employer services. But again, not so much over the last 2 years or so. So that's really the comment there. As far as technology, yes, there's -- we've got the normal type of things that we're doing as far as modernizing things with our legacy systems and those type of things, but really deploying some new technologies within our business to get stickier with employers and payers, but also to accelerate the sales funnel, so to speak, as far as engaging with certain data firms out there that allow us to better identify potential prospects and then handling 250,000 employers nationwide across our footprint and 30% of those employers have decision-makers that are turning over every year. A lot of those are very, very small employers that we don't necessarily touch base with that often from a company perspective. Our local people may be touching base with them, but they don't need us that often. And if they have a decision-maker turnover, new person comes in, they don't know Concentra. Next thing you know, they're using the local urgent care, the next door or further down. So what we're doing is getting that information sooner, using technology to reengage with those employers before those type things happen. And I think that's really going to give us some win in our sales as we move forward relative to that.

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

So good to see the volume acceleration in the quarter. And to your point, it doesn't seem like the macro is necessarily impacting you negatively on the demand side. I know this hasn't been as much of an issue for you as providers with greater reliance on nurse labor, but wondering if some of the softness in the broader economic picture is having potentially a positive impact on your ability to hire and retain your workforce and maybe put some moderate downward pressure on wage inflation that we've seen?

Stephen, it's Matt. I can take this one. I would say, overall, our labor force stats are very stable. We have had some recent success with hiring, but no material changes. Overall, we've seen stability. Our turnover at the total company level has actually come down slightly. And from a cost perspective, very stable throughout the years in that, call it, 3% range. So we have seen some positive movement lately, but I would generalize it as a stable environment.

Got it. And then just a question on the deal pipeline. I appreciate the comments you made there. As we think about what might else be out there on the larger side of the spectrum, I guess, is there any way to kind of use the Nova deal as maybe a benchmark? Like do you think there are other assets out there that are in the ballpark when it comes to size and whether you think that the valuation there was maybe a reasonable way to think about what might be left that you'd be willing to be active on?

I would -- this is Keith. I would say on the bricks-and-mortar side, there's not anything out there of that size and unlikely of that valuation. Anything that we would look at would be less than that from a valuations point from a bricks and mortar. And again, so nothing of that size. Where there are potential transactions of that size would be on the on-site health clinics. And we've talked about that in the past where that's a key strategy for us to grow that business. We acquired Pivot this year and doubled our revenue size from roughly $60 million to $120 million as far as that business. But again, Pivot was very synergistic as far as look and scope of services is what Concentra historically provided, which was primarily [indiscernible]. They weren't really providing much advanced primary care. Where we're gaining traction, of course, as I've said in the past, is with the deployment of Epic as our electronic medical record within our on-sites, it's opened those doors for us to more aggressively organically grow that business. We are having success there even against the biggies. We're probably a top 10, but still relatively small compared to the #1, #2, #3 onsite health companies in this industry who primarily focus on advanced primary care. But we feel very confident and we're showing the results relative to going head-to-head and winning new business from those entities. As I've said in the past, many of those entities are in a potential transaction mode, so to speak, at some point in time, and they're in it right now. Those are potentials at some point in time, but not anything we are currently aggressively contemplating. We're continuing to build our business. And as Matt mentioned, we're continuing to focus on delevering. That's a key strategy or a key focus for us this year as a result of doing the 2 transactions. Now we're back to driving our leverage down, which seems to be a key point out there. And as we've talked about in the past, we have the ability to do that and do that quickly. We talked about where we're going to be at the end of this year and where we're going to be at the end of next year, and we will be there.

Your next question is from Ben Hendrix with RBC.

It's Michael Murray on for Ben. While a weakening economy can impact your volumes, you've shown the ability to weather that in past downturns with a pretty stable EBITDA margin. I wanted to see if you can expand upon the company's ability to flex costs on a potential employment weakness.

Yes. Sure. We've talked about this in the past a lot when we get this question, and our teams are really good at flexing staffing to the visit volumes that we see every single day on a weekly basis, on a monthly basis. There's seasonality in our business, as you guys have hopefully seen over time period since we've been public, but also through Select's ownership when we were filing financials through Select. We have large part-time labor forces, both on the medical and the therapy side, and the teams can predict visit volumes based on historical trends very well. And so we do that in the normal course of our business. And if there is an uptick or a downturn in the economy, the teams can react very quickly. And we've shown that over a long period of time. The last major economic cycle was many, many years ago, but we performed very well through that time period.

That's helpful. And my next question, with the understanding that rates are still being finalized, could you just take a moment to talk about your expectations for 2026 at a high level? How much visibility do you have on rate growth on the workers' comp side? And then the same question on the Employer Services side, how are the rate conversations progressing with employers?

Yes. So on the work comp side of the equation, we do know a number of states, but we estimate that there's still at least 1/3, if not more of the states that we do not know that will come out later this year or early next year. And so for that reason, we'd obviously like to see all those state fee schedule updates come through before we give guidance. But as we mentioned on the last call, our largest state, we do have very good insight into the state of California, which is going to be a strong rate year for us, and it's going to set the foundation for a solid rate year next year in terms of work comp. So we expect a good rate year and potentially some upside as we hear more from the remaining states. From an employer services standpoint, that is a process that we control, and we expect that will be very similar to this year and prior years where we'll set the rates -- the rate increases very much in line with inflation. So we expect that to be a normal year in terms of employer services rate increase. So we have always pointed to 3% -- that's a 5-, 10-, 15-, 20-year average that we see across both service lines, and we expect that will be pretty close to what we see next year.

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Yes, that's exactly what I was going to say. You can probably plan on something similar to historical averages based on what we know at this point in time.

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

I appreciate everybody being here today. Thank you for joining us, and we'll talk with you next quarter.

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