Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 6, 2024

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended September 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from              to              
Commission file numbers: 001-42188
 
CONCENTRA GROUP HOLDINGS PARENT, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 30-1006613
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification Number)
 
4714 Gettysburg Road, P.O. Box 2034
Mechanicsburg, PA 17055
(Address of Principal Executive Offices and Zip code)
(717972-1100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share CON New York Stock Exchange
(NYSE)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as such Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒  No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).   Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
  Emerging Growth Company
 If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No ☒
As of October 31, 2024, Concentra Group Holdings Parent, Inc. had outstanding 127,343,503 shares of common stock.
Unless the context indicates otherwise, any reference in this report to “Concentra” refers to Concentra Group Holdings Parent, Inc. and its subsidiaries. References to the “Company,” “we,” “us,” and “our” refer collectively to Concentra and its subsidiaries.



Table of Contents
TABLE OF CONTENTS
 
     
 
     
 
     
 
 
     
 
     
 
     
     
     
     
     
     
     
     
     
     
     
     
 



Table of Contents


Concentra Group Holdings Parent, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except per share amounts)
September 30, 2024 December 31, 2023
ASSETS  
Current Assets:  
Cash $ 136,822  $ 31,374 
Accounts receivable 232,202  216,194 
Prepaid income taxes 10,139  7,979 
Other current assets 30,794  38,871 
Total Current Assets 409,957  294,418 
Operating lease right-of-use assets 430,133  397,852 
Property and equipment, net 191,099  178,370 
Goodwill 1,234,707  1,229,745 
Customer relationships 101,812  117,259 
Other identifiable intangible assets, net 107,359  107,510 
Other assets 5,975  8,406 
Total Assets $ 2,481,042  $ 2,333,560 
LIABILITIES AND EQUITY  
Current Liabilities:  
Current operating lease liabilities $ 74,411  $ 72,946 
Current portion of long-term debt and notes payable 9,737  1,455 
Accounts payable 21,030  20,413 
Due to related party 7,753  3,354 
Accrued and other liabilities 156,590  176,466 
Total Current Liabilities 269,521  274,634 
Non-current operating lease liabilities 391,037  357,310 
Long-term debt, net of current portion 1,472,610  3,291 
Long-term debt with related party   470,000 
Non-current deferred tax liability 22,454  23,364 
Other non-current liabilities 24,188  27,522 
Total Liabilities 2,179,810  1,156,121 
Commitments and contingencies (Note 12)
Redeemable non-controlling interests 18,122  16,477 
Members’ contributed capital   470,303 
Common stock, $0.01 par value, 700,000,000 shares authorized, 127,343,503 shares issued and outstanding at September 30, 2024
1,273   
Capital in excess of par 276,507   
Retained earnings   685,293 
Total Stockholders’ Equity (Members’ Equity at December 31, 2023) 277,780  1,155,596 
Non-controlling interests 5,330  5,366 
Total Equity 283,110  1,160,962 
Total Liabilities and Equity $ 2,481,042  $ 2,333,560 
 The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Table of Contents
Concentra Group Holdings Parent, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)

  For the Three Months Ended September 30, For the Nine Months Ended September 30,
  2024 2023 2024 2023
Revenue $ 489,638  $ 473,964  $ 1,435,151  $ 1,397,341 
Costs and expenses:    
Cost of services, exclusive of depreciation and amortization 351,103  336,812  1,027,366  994,726 
General and administrative, exclusive of depreciation and amortization (1)
37,088  38,245  110,825  109,898 
Depreciation and amortization 15,213  17,959  51,568  54,552 
Total costs and expenses 403,404  393,016  1,189,759  1,159,176 
Other operating income     284  151 
Income from operations 86,234  80,948  245,676  238,316 
Other income and expense:    
Equity in losses of unconsolidated subsidiaries     (3,676) (526)
Interest expense on related party debt (2,691) (11,255) (21,980) (33,831)
Interest expense (21,369) (64) (21,275) (108)
Income before income taxes 62,174  69,629  198,745  203,851 
Income tax expense 16,415  15,205  49,648  47,964 
Net income 45,759  54,424  149,097  155,887 
Less: Net income attributable to non-controlling interests 1,421  1,318  4,066  3,775 
Net income attributable to the Company $ 44,338  $ 53,106  $ 145,031  $ 152,112 
Earnings per common share (Note 10):
   
Basic and diluted $ 0.37  $ 0.51  $ 1.32  $ 1.46 
_______________________________________________________________________________
(1)        Includes the shared service fee from related party of $3.8 million and $3.6 million for the three months ended September 30, 2024 and 2023, respectively, and $11.5 million and $11.0 million for the nine months ended September 30, 2024 and 2023, respectively. See Note 11, Related Party Transactions, for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Table of Contents
Concentra Group Holdings Parent, Inc.
Condensed Consolidated Statements of Changes in Stockholders’/Members’ Equity
(unaudited)
(in thousands)

For the Nine Months Ended September 30, 2024
  Total Members’ Units Members’ Contributed Capital Common Stock Issued Common Stock Par Value Capital in excess of par Retained
Earnings
Total Stockholders’ Equity Non-controlling
Interests
Total
Equity
Balance at December 31, 2023 447,081  $ 470,303    $   $   $ 685,293  $ 1,155,596  $ 5,366  $ 1,160,962 
Net income attributable to the Company 48,956  48,956  48,956 
Net income attributable to non-controlling interests   270  270 
Distribution to Parent (6,891) (6,891) (6,891)
Distributions to and purchases of non-controlling interests   (369) (369)
Redemption value adjustment on non-controlling interests (1,901) (1,901) (1,901)
Conversion of LLC to Corporation and Impact of Reverse Stock Split (447,081) (463,412) 104,094  1,041  462,371     
Balance at March 31, 2024
  $   104,094  $ 1,041  $ 462,371  $ 732,348  $ 1,195,760  $ 5,267  $ 1,201,027 
Net income attributable to the Company 51,737  51,737  51,737 
Net income attributable to non-controlling interests   244  244 
Distribution to Parent (851) (851) (851)
Distributions to and purchases of non-controlling interests   (307) (307)
Redemption value adjustment on non-controlling interests 132  132  132 
Balance at June 30, 2024
  $   104,094  $ 1,041  $ 461,520  $ 784,217  $ 1,246,778  $ 5,204  $ 1,251,982 
Net income attributable to the Company 44,338  44,338  44,338 
Net income attributable to non-controlling interests   312  312 
Contribution from Parent 11,149  11,149  11,149 
Distributions to and purchases of non-controlling interests   (186) (186)
Initial Public Offering 23,250  232  510,966  511,198  511,198 
Dividend to Parent (707,128) (828,555) (1,535,683) (1,535,683)
Balance at September 30, 2024   $   127,344  $ 1,273  $ 276,507  $   $ 277,780  $ 5,330  $ 283,110 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Table of Contents
For the Nine Months Ended September 30, 2023
Members’ Units
  Class A Units
Voting
Class B Units
Non-Voting
Class C Units
Non-Voting
Members’ Contributed Capital Retained
Earnings
Total Members’ Equity Non-controlling
Interests
Total
Equity
Balance at December 31, 2022 435,000  8,498  2,770  $ 464,725  $ 508,592  $ 973,317  $ 6,026  $ 979,343 
Net income attributable to the Company 46,264  46,264  46,264 
Net income attributable to non-controlling interests   253  253 
Contribution from Parent 2,797  2,797  2,797 
Vesting of restricted interests 248  178  178  178 
Distributions to and purchases of non-controlling interests   (221) (221)
Redemption value adjustment on non-controlling interests (435) (435) (435)
Balance at March 31, 2023
435,000  8,498  3,018  $ 467,700  $ 554,421  $ 1,022,121  $ 6,058  $ 1,028,179 
Net income attributable to the Company 52,742  52,742  52,742 
Net income attributable to non-controlling interests   297  297 
Distribution to Parent (3,352) (3,352) (3,352)
Repurchase of common shares 195  195  (495) (300)
Distributions to and purchases of non-controlling interests   (343) (343)
Redemption value adjustment on non-controlling interests (3) (3) (3)
Balance at June 30, 2023
435,000  8,498  3,018  $ 464,543  $ 607,160  $ 1,071,703  $ 5,517  $ 1,077,220 
Net income attributable to the Company   53,106  53,106  53,106 
Net income attributable to non-controlling interests       298  298 
Contribution from Parent 2,380  2,380  2,380 
Exercise of stock options 1,256  3,340  3,340  3,340 
Repurchase of common shares (691) (2,650) (2,672) (5,322) (5,322)
Distributions to and purchases of non-controlling interests   (319) (319)
Redemption value adjustment on non-controlling interests   (189) (189) (189)
Balance at September 30, 2023
435,000  8,498  3,583  $ 467,613  $ 657,405  $ 1,125,018  $ 5,496  $ 1,130,514 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Concentra Group Holdings Parent, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
  For the Nine Months Ended September 30,
  2024 2023
Operating activities    
Net income $ 149,097  $ 155,887 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 51,568  54,552 
Provision for expected credit losses 70  276 
Equity in losses of unconsolidated subsidiaries 3,676  526 
Loss on sale or disposal of assets 41  3 
Stock compensation expense 500  178 
Amortization of debt discount and issuance costs 750   
Deferred income taxes (1,159) (6,579)
Changes in operating assets and liabilities, net of effects of business combinations:    
Accounts receivable (16,079) (35,652)
Other current assets 12,500  (8,536)
Other assets 3,149  2,436 
Accounts payable and accrued liabilities (23,150) (4,953)
Net cash provided by operating activities 180,963  158,138 
Investing activities    
Business combinations, net of cash acquired (6,965) (1,446)
Purchase of customer relationships   (4,382)
Purchases of property and equipment (47,639) (41,320)
Proceeds from sale of assets 25  23 
Net cash used in investing activities (54,579) (47,125)
Financing activities    
Borrowings from related party revolving promissory note 10,000   
Payments on related party revolving promissory note (480,000) (120,000)
Proceeds from term loans, net of issuance costs 836,697   
Proceeds from 6.875% senior notes, net of issuance costs
637,337   
Borrowings of other debt 8,222  5,471 
Principal payments on other debt (7,888) (5,782)
Exercise of stock options   3,340 
Repurchase of common shares   (5,322)
Distributions to and purchases of non-controlling interests (4,226) (4,522)
Proceeds from Initial Public Offering 511,198   
Dividend to Parent (1,535,683)  
Contributions from Parent 3,407  1,825 
Net cash used in financing activities (20,936) (124,990)
Net increase (decrease) in cash 105,448  (13,977)
Cash at beginning of period 31,374  37,657 
Cash at end of period $ 136,822  $ 23,680 
Supplemental information    
Cash paid for interest $ 34,221  $ 33,988 
Cash paid for taxes $ 49,337  $ 50,044 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Concentra Group Holdings Parent, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    Organization
Concentra Group Holdings Parent, LLC (“Concentra Group Holdings Parent” or “Concentra”) was formed in October 2017 and converted to a Delaware corporation, Concentra Group Holdings Parent, Inc., on March 4, 2024. At the time of formation, Concentra Group Holdings Parent elected to be taxed as a corporation. The Company conducts substantially all of its business through Concentra Inc. and its subsidiaries. Concentra Group Holdings Parent and its subsidiaries are collectively referred to as the “Company.”
The Company is the largest provider of occupational health services in the United States based on number of facilities. As of September 30, 2024, the Company operated 549 occupational health centers and 156 onsite health clinics at employer worksites in 42 states. The Company provides a diverse and comprehensive array of occupational health services, including workers’ compensation and employers services, and consumer health services.
The Company currently operates as an operating segment of Select Medical Corporation (“Select” or the “Parent”). As of September 30, 2024, Select owns 81.74% of the outstanding common shares of the Company on a fully diluted basis.
On January 3, 2024, Select announced its intention to separate the Company into a new, publicly traded company through a spin-off distribution in 2024. On February 27, 2024, Select received a private letter ruling from the U.S. Internal Revenue Service to the effect that the distribution of the Company’s common stock to Select and its stockholders will be tax-free for U.S. federal income tax purposes. On March 4, 2024, the member interests of the Company converted to common shares on a one-for-one basis. On June 24, 2024, the Company’s Board of Directors approved a reverse stock split at a ratio of one share of common stock for every 4.295 shares of common stock, which was effectuated on June 25, 2024. In accordance with ASC 260, Earnings Per Share, the recapitalization of the Company into a stock corporation and the reverse stock split have been retrospectively reflected in the Company’s earnings per unit calculation for all periods presented, see Note 10, Earning per Share.
On July 26, 2024, the Company completed an initial public offering (“IPO”) of 22,500,000 shares of its common stock, par value $0.01 per share, at an initial public offering price of $23.50 per share for the net proceeds of $499.7 million after deducting underwriting discounts and commission of $29.1 million. In addition, the underwriters exercised the option to purchase an additional 750,000 shares of the Company’s common stock for net proceeds of $16.7 million after deducting underwriting discounts and commission of $1.0 million. See Note 6, Long-Term Debt and Notes Payable for information on the related debt transactions. The net proceeds of the IPO and the debt financing transactions, except for $34.7 million, were paid to Select through the issuance of a dividend, the repayment in full of the $420.0 million revolving promissory note outstanding, and the repayment in full of a new promissory note issued.
2.    Accounting Policies
Basis of Presentation and Consolidation
The Company has historically operated as part of Select. The unaudited condensed consolidated financial statements of the Company have been prepared from Select’s historical accounting records and are derived from the condensed consolidated financial statements of Select to present the Company as if it had been operating on a standalone basis. The unaudited condensed consolidated financial statements of the Company as of September 30, 2024, and for the three and nine month periods ended September 30, 2024 and 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting and the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Accordingly, certain information and disclosures required by GAAP, which are normally included in the notes to the consolidated financial statements, have been condensed or omitted pursuant to those rules and regulations, although the Company believes the disclosure is adequate to make the information presented not misleading. In the opinion of management, such information contains all adjustments, which are normal and recurring in nature, necessary for a fair statement of the financial position, results of operations and cash flow for such periods.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year ended December 31, 2024. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes as contained in the Company’s registration statement on Form S-1, as amended (File No. 333-280242) (the “Registration Statement”).

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The condensed consolidated financial statements include the assets, liabilities, revenue, and expenses based on our legal entity structure as well as direct and indirect costs that are attributable to our operations. Indirect costs are the costs of support functions that are partially provided on a centralized basis by Select and its affiliates, which include finance, human resources, benefits administration, procurement support, information technology, legal, corporate governance and other professional services. Indirect costs have been allocated to us for the purposes of preparing the condensed consolidated financial statements based on a specific identification basis or, when specific identification is not practicable, a proportional cost allocation method, primarily based on headcount or other allocation methodologies that are considered to be a reasonable reflection of the utilization of services provided or the benefit received by us during the periods presented, depending on the nature of the services received.

The income tax amounts in these condensed consolidated financial statements have been calculated based on a separate return methodology and are presented as if our income gave rise to separate federal and state consolidated income tax return filing obligations in the respective jurisdictions in which we operate. Adjustments to income tax expense resulting from the application of the separate return methodology, as compared to tax obligations determined by the Company’s inclusion in the Parent’s consolidated income tax provision, were assumed to be immediately settled with the Parent through Contributed Capital/Capital in Excess of Par as reflected on the Condensed Consolidated Balance Sheets, and reflected as a (Distribution)/Contribution to Parent on the Condensed Consolidated Statements of Changes in Stockholders’/Members’ Equity and the Condensed Consolidated Statements of Cash Flows within financing activities.
The condensed consolidated financial statements include the accounts of the Company and the subsidiaries and variable interest entities in which the Company has a controlling financial interest. All intercompany balances and transactions within the Company are eliminated in consolidation. Transactions between the Company and Select have been included in these consolidated financial statements. The transfers with Select are expected to be settled in cash, other than the assumed income tax settlement noted above, and are reflected within the consolidated statement of cash flows as an operating or financing activity determined by the nature of the transaction. Select’s third-party debt and related interest expense have not been attributed to the Company because the Company is not the primary legal obligor of the debt and the borrowings are not specifically identifiable to the Company. However, the Company was a guarantor for Select’s senior notes and credit facilities until the guarantee was released at the closing of the IPO. The Company maintains its own cash management system and does not participate in a centralized cash management arrangement with Select.
Recent Accounting Guidance Not Yet Adopted
Segment Reporting
In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve disclosure of segment information so that investors can better understand an entity’s overall performance. The ASU requires entities to quantitatively disclose significant segment expenses that are regularly provided to the chief operating decision maker for each reportable segment, as well as the amount of other segment items for each reportable segment and a description of what the other segment items are comprised. Disclosure of multiple measures of profit or loss will be permitted by the ASU.
The Company will adopt ASU 2023-07 beginning with our annual reporting period ending December 31, 2024. The ASU is required to be applied retrospectively to all periods presented in the financial statements. The Company is currently reviewing ASU 2023-07, but does not expect it to have a significant impact on the disclosures in our consolidated financial statements.
Income Taxes
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency and decision usefulness of income tax disclosures. The ASU includes enhanced requirements on the rate reconciliation, including specific categories that must be disclosed, and provides a threshold over which reconciling items must be disclosed. The amendments in the update also require annual disclosure of income taxes paid, disaggregated by federal, state, and foreign taxes, as well as any individual jurisdictions in which income taxes paid is greater than 5% of total income taxes paid.
The ASU is effective for annual periods beginning after December 15, 2024; however early adoption is permitted. The ASU can be applied either prospectively or retrospectively. The Company is currently reviewing the impact that ASU 2023-09 will have on the disclosures in our consolidated financial statements.


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Expense Disaggregation
In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions. The ASU requires entities to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption; as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The amendment also requires disclosure of the total amount of selling expense and, in annual reporting periods, an entity’s definition of selling expenses.
The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027; however early adoption is permitted. The ASU can be applied either prospectively or retrospectively. The Company is currently reviewing the impact that ASU 2024-03 will have on the disclosures in our consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates.
3.    Redeemable Non-Controlling Interests
The Company’s redeemable non-controlling interests are comprised of membership interests held by equity holders other than the Company in five less than wholly-owned subsidiaries. These interests are subject to redemption rights. The changes in redeemable non-controlling interests are as follows:
2024 2023
(in thousands)
Balance as of January 1 $ 16,477  $ 16,772 
Net income attributable to redeemable non-controlling interests 1,053  914 
Distributions to and purchases of redeemable non-controlling interests (1,174) (1,656)
Redemption value adjustment on redeemable non-controlling interests 1,901  436 
Balance as of March 31 $ 18,257  $ 16,466 
Net income attributable to redeemable non-controlling interests 1,078  993 
Distributions to and purchases of redeemable non-controlling interests (793) (610)
Redemption value adjustment on redeemable non-controlling interests (132) 3 
Balance as of June 30 $ 18,410  $ 16,852 
Net income attributable to redeemable non-controlling interests 1,109  1,020 
Distributions to and purchases of redeemable non-controlling interests (1,397) (1,073)
Redemption value adjustment on redeemable non-controlling interests   188 
Balance as of September 30 $ 18,122  $ 16,987 
4.    Variable Interest Entities
Certain states prohibit the “corporate practice of medicine,” which restricts the Company from owning medical practices that directly employ physicians and from exercising control over medical decisions by physicians. In these states, the Company enters into long-term management agreements with affiliated professional medical groups (referred to as “Managed PCs”) that are owned by licensed physicians which, in turn, employ or contract with physicians who provide professional medical services in its occupational health centers. The Company also enters into a stock transfer restriction agreement with the respective equity holders, which provide for the Company to direct the transfer of ownership of the Managed PCs to other licensed physicians at any time. The long-term management agreements provide for various administrative and management services to be provided by the Company to the Managed PCs, including, but not limited to, billing and collections, accounting, non-physician personnel, supplies, security and maintenance, and insurance. The Company has the right to receive income as an ongoing management fee, and effectively absorbs all of the residual interests of the Managed PCs. Based on the provisions of the management and stock transfer agreements, the Managed PCs are variable interest entities for which the Company is the primary beneficiary and consolidates the Managed PCs under the variable interest entity model. There are no restrictions on the use of the assets of the Managed PCs or on the settlement of its liabilities. Additionally, the Company fully indemnifies the licensed physician owners from all claims, demands, costs, damages, losses, liabilities, and other amounts arising from the ownership and operation of the medical practices, excluding gross negligence.
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As of September 30, 2024, and December 31, 2023, the total assets of the Company’s variable interest entities were $228.2 million and $212.3 million, respectively, and are principally comprised of accounts receivable. As of September 30, 2024, and December 31, 2023, the total liabilities of the Company’s variable interest entities were $49.3 million and $56.4 million, respectively, and are principally comprised of accounts payable and accrued expenses. These variable interest entities have obligations payable for services received under their management agreements with the Company of $179.6 million and $156.2 million as of September 30, 2024, and December 31, 2023, respectively. These intercompany balances are eliminated in consolidation.
5.    Leases
The Company’s total lease cost is as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(in thousands)
Operating lease cost
$ 25,585  $ 24,545  $ 75,452  $ 72,969 
Finance lease cost:
Amortization of right-of-use assets
90  244  410  756 
Interest on lease liabilities
54  96  186  299 
Variable lease cost 5,167  5,005  15,716  15,039 
Total lease cost $ 30,896  $ 29,890  $ 91,764  $ 89,063 
6.     Long-Term Debt
As of September 30, 2024, the Company’s long-term debt is as follows:
  Principal Outstanding Unamortized Premium (Discount) Unamortized Issuance Costs Carrying Value Fair Value
(in thousands)
6.875% senior notes
$ 650,000  $   $ (12,316) $ 637,684  $ 681,493 
Credit facilities:
Term loan 850,000  (1,034) (11,918) 837,048  847,875 
Other debt(1)
7,615      7,615  7,615 
Total debt $ 1,507,615  $ (1,034) $ (24,234) $ 1,482,347  $ 1,536,983 
_______________________________________________________________________________
(1)        Other debt is primarily comprised of insurance financing arrangements, promissory notes executed in connection with business combinations, and finance leases.
As of September 30, 2024, principal maturities of the Company’s long-term debt is as follows:
  2024 2025 2026 2027 2028 Thereafter Total
(in thousands)
6.875% senior notes
$   $   $   $   $   $ 650,000  $ 650,000 
Credit facilities:
Term loan 2,125  8,500  8,500  8,500  8,500  813,875  850,000 
Other debt, including finance leases 1,874  1,570  672  718  768  2,013  7,615 
Total debt $ 3,999  $ 10,070  $ 9,172  $ 9,218  $ 9,268  $ 1,465,888  $ 1,507,615 
As of December 31, 2023, the Company’s long-term debt and notes payable are as follows:
  December 31, 2023
(in thousands)
Long-term revolving promissory note with related party $ 470,000 
Other debt(1)
4,746 
Total debt $ 474,746 
_______________________________________________________________________________
(1)        Other debt is primarily comprised of insurance financing arrangements, promissory notes executed in connection with business combinations, and finance leases.
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Credit Facilities
On July 26, 2024, Concentra Health Services, Inc. (“CHSI”), a wholly-owned subsidiary of Concentra, entered into a senior secured credit agreement (the “Concentra credit agreement”) that provides for an $850.0 million term loan (the “Concentra term loan”), and a $400.0 million revolving credit facility, including a $75.0 million sublimit for the issuance of standby letters of credit (the “Concentra revolving credit facility” and, together with the Concentra term loan, the “Concentra credit facilities”).
Borrowings under the Concentra credit facilities are guaranteed by the Company and substantially all of the Company’s current domestic subsidiaries and will be guaranteed by CHSI’s future domestic subsidiaries and secured by substantially all of the Company’s existing and future property and assets and by a pledge of the Company’s capital stock, the capital stock of CHSI’s domestic subsidiaries and up to 65% of the capital stock of CHSI’s foreign subsidiaries held directly by CHSI or a domestic subsidiary.
Borrowings under the Concentra credit agreement bear interest at a rate equal to: (i) in the case of the Concentra term loan, Term SOFR plus a percentage ranging from 2.00% to 2.25%, or Alternate Base Rate plus a percentage ranging from 1.00% to 1.25%, in each case based on CHSI’s leverage ratio; and (ii) in the case of the Concentra revolving credit facility, Term SOFR plus a percentage ranging from 2.25% to 2.75%, or Alternate Base Rate plus a percentage ranging from 1.25% to 1.75%, in each case based on CHSI’s leverage ratio, as defined in the Concentra credit agreement. As of September 30, 2024, the term loan borrowings bear interest at 7.10%. The Company did not have any outstanding borrowings under its revolving credit facility. At September 30, 2024, the Company had $386.4 million of availability under its revolving credit facility after giving effect to $13.6 million of outstanding letters of credit.
The Concentra term loan amortizes in equal quarterly installments in amounts equal to 0.25% of the aggregate original principal amount of the Concentra term loan commencing on December 31, 2024. The balance of the Concentra term loan will be payable on July 26, 2031. The Concentra revolving credit facility will mature on July 26, 2029.
The Concentra credit facilities require CHSI to maintain a leverage ratio (as defined in the Concentra credit agreement), which is tested quarterly and currently must not be greater than 6.50 to 1.00. Failure to comply with this covenant would result in an event of default under the revolving credit facility and, absent a waiver or an amendment from the revolving lenders, preclude CHSI from making further borrowings under the Concentra revolving credit facility and permit the revolving lenders to accelerate all outstanding borrowings under the Concentra revolving credit facility. Upon termination of the commitments for the Concentra revolving credit facility and acceleration of all outstanding borrowings thereunder, failure to comply with the covenant also would constitute an event of default with respect to the Concentra term loan.
The Concentra credit facilities also contain a number of other affirmative and restrictive covenants, including limitations on mergers, consolidations and dissolutions; sales of assets; investments and acquisitions; indebtedness; liens; affiliate transactions; and dividends and restricted payments. The Concentra credit facilities contain events of default for non-payment of principal and interest when due, cross-default and cross-acceleration provisions and an event of default that would be triggered by a change of control. As of September 30, 2024, the Company was in compliance with all debt covenants.
Prepayment of borrowings
CHSI will be required to prepay borrowings under the Concentra credit facilities with (i) 100% of the net cash proceeds received from non-ordinary course asset sales or other dispositions, or as a result of a casualty or condemnation, subject to reinvestment provisions and other customary carveouts and, to the extent required, the payment of certain indebtedness secured by liens subject to a first lien intercreditor agreement if CHSI’s total net leverage ratio is greater than 4.50 to 1.00 and 50% of such net cash proceeds if our total net leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, (ii) 100% of the net cash proceeds received from the issuance of debt obligations other than certain permitted debt obligations, and (iii) 50% of excess cash flow (as defined in the Credit Agreement) if CHSI’s leverage ratio is greater than 4.50 to 1.00 and 25% of excess cash flow if CHSI’s leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, in each case, reduced by the aggregate amount of term loans, revolving loans and certain other debt optionally prepaid (and, in the case of revolving loans, accompanied by a reduction in the related commitment) during the applicable fiscal year. CHSI will not be required to prepay borrowings with excess cash flow or the net cash proceeds of asset sales if CHSI’s leverage ratio is less than or equal to 4.00 to 1.00.



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6.875% Senior Notes
On July 11, 2024, the Company completed a private offering by its wholly-owned subsidiary, Concentra Escrow Issuer Corporation (the “Escrow Issuer”), of $650.0 million aggregate principal amount of 6.875% senior notes due July 15, 2032 (the “Concentra senior notes”). On July 26, 2024, the Escrow Issuer merged with and into CHSI, with CHSI continuing as the surviving entity, and CHSI assumed all of the Escrow Issuer’s obligations under the Concentra senior notes. The Concentra senior notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and certain of its wholly-owned subsidiaries. Interest on the Concentra senior notes accrues at a rate of 6.875% per annum and is payable semi-annually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2025.
Long-term revolving promissory note with related party
A portion of the net proceeds of the IPO, further discussed in Note 1, Organization, was used to repay in full the long-term revolving promissory note with Select.
7.    Accrued and Other Liabilities
The following table sets forth the components of accrued and other liabilities:
September 30, 2024 December 31, 2023
(in thousands)
Accrued payroll $ 47,558  $ 62,824 
Accrued vacation 42,949  41,488 
Accrued other 65,461  71,755 
Income taxes payable 622  399 
Accrued and other liabilities $ 156,590  $ 176,466 
8.    Fair Value of Financial Instruments
Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as outlined below, on the basis of the observability of the inputs used in the fair value measurement:
Level 1 – inputs are based upon quoted prices for identical instruments in active markets.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the instrument.
The Company does not measure its indebtedness at fair value in its condensed consolidated balance sheets. The fair value of the Concentra credit facilities is based on quoted market prices for this debt in the syndicated loan market. The fair value of the Concentra senior notes is based on quoted market prices. The carrying value of the Company’s other debt, as disclosed in Note 6 – Long-Term Debt, approximates fair value. There are no quoted market prices for the Company’s related party debt, and it is not practicable to estimate its fair value.
September 30, 2024
Financial Instrument Level Carrying Value Fair Value
(in thousands)
6.875% senior notes
Level 2 $ 637,684  $ 681,493 
Credit facilities:
Term loan Level 2 $ 837,048  $ 847,875 
The Company’s other financial instruments, which primarily consist of cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value because of the short-term maturities of these instruments.


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9.    Revenue
The following table disaggregates the Company’s revenue for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
(in thousands)
Occupational health centers:
Workers’ compensation $ 298,681  $ 285,939  $ 866,952  $ 832,833 
Employer services 154,809  153,473  458,849  458,810 
Consumer health 7,332  7,162  23,327  23,150 
Other occupational health center revenue 2,239  1,866  6,245  6,538 
Total occupational health center revenue 463,061  448,440  1,355,373  1,321,331 
Onsite health clinics 15,593  15,005  46,989  44,255 
Other 10,984  10,519  32,789  31,755 
Total revenue $ 489,638  $ 473,964  $ 1,435,151  $ 1,397,341 
10.    Earnings per Share
At September 30, 2024, the Company’s capital structure consists of common stock. There were no participating shares or securities outstanding during the three and nine months ended September 30, 2024.
The following table sets forth the computation of earnings per share (“EPS”) in 2024:
Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024
Net Income Attributable to the Company
Shares(1)
Basic and Diluted EPS Net Income Attributable to the Company
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)
Common shares $ 44,338  120,765  $ 0.37  $ 145,031  109,691  $ 1.32 
At September 30, 2023, the Company’s capital structure included Class A, B, and C units outstanding and unvested restricted interests and outstanding options. To calculate EPS for the three and nine months ended September 30, 2023, the Company applied the two-class method because its unvested restricted interests and outstanding options were participating securities.
The following table sets forth the net income attributable to the Company, its units outstanding, and its participating units outstanding:
Three Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
(in thousands)
Net income $ 54,424  $ 155,887 
Less: Net income attributable to non-controlling interests 1,318  3,775 
Net income attributable to the Company 53,106  152,112 
Less: Distributed and undistributed income attributable to participating shares 66  356 
Distributed and undistributed income attributable to outstanding shares $ 53,040  $ 151,756 






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The following table sets forth the computation of EPS in 2023, under the two-class method:
Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023
Net Income Allocation
Shares(1)(2)
Basic and Diluted EPS Net Income Allocation
Shares(1)(2)
Basic and Diluted EPS
(in thousands, except for per share amounts)
Outstanding Class A, Class B, and Class C shares $ 53,040  104,035  $ 0.51  $ 151,756  103,980  $ 1.46 
Participating shares 66  130  $ 0.51  356  244  $ 1.46 
Total Company $ 53,106  $ 152,112 
_______________________________________________________________________________
(1)    The recapitalization of the members units into common shares has been treated as such for earnings per share purposes and has been reflected retrospectively for all periods, along with the one for 4.295 reverse stock split, as described in Note 1, Organization.
(2)    Represents the weighted average units outstanding during the period.
11.    Related Party Transactions
Separation Agreements
In connection with the IPO, and described in the Registration Statement, Select and Concentra entered into a separation agreement, a transition services agreement, a tax matters agreement, and an employee matters agreement on July 26, 2024, which effects the separation of the Company’s business from Select and provides a framework for the Company’s relationship with Select after the separation.
Shared Services Agreement - cost allocations from Select
The Company pays Select a fee for the shared support functions provided on a centralized basis by Select and its affiliates. Prior to the IPO, the shared services fee was reassessed and adjusted annually. The transition services agreement, which became effective concurrently with the IPO, provides the framework for the services provided and the fee incurred. For the three months ended September 30, 2024 and 2023, the shared service fees were $3.8 million and $3.6 million, respectively. For the nine months ended September 30, 2024 and 2023, the shared service fees were $11.5 million and $11.0 million, respectively. These cost allocations reasonably reflect the services and the benefits derived for the periods presented. These allocations may not be indicative of the actual expenses that would have been incurred as a stand-alone entity.
12.    Commitments and Contingencies
Litigation
The Company is a party to various legal actions, proceedings, and claims, and regulatory and other governmental audits and investigations in the ordinary course of its business, including, but not limited to, legal actions and claims alleging professional malpractice, general liability for property damage, personal and bodily injury, violations of federal and state employment laws, often in the form of wage and hour class action lawsuits, and liability for data breaches. Many of these actions involve large claims and significant defense costs and sometimes, as in the case of wage and hour class actions, are not covered by insurance. The Company cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject the Company to sanctions, damages, recoupments, fines, and other penalties.
To address claims arising out of the Company’s operations, the Company maintains professional malpractice liability insurance and general liability insurance coverages through a number of different programs that are dependent upon such factors as the state where the Company is operating. The Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $29.0 million for professional malpractice liability insurance and $29.0 million for general liability insurance. The Company’s insurance for the professional liability coverage is written on a “claims-made” basis, and its commercial general liability coverage is maintained on an “occurrence” basis. These coverages apply after a self-insured retention limit is exceeded. Each of these programs has either a deductible or self-insured retention limit. The Company also maintains additional types of liability insurance covering claims which, due to their nature or amount, are not covered by or not fully covered by the applicable professional malpractice and general liability insurance policies, including workers compensation, property and casualty, directors and officers, cyber liability, and employment practices liability insurance coverages. Our insurance policies generally are silent with respect to punitive damages so coverage is available to the extent insurable under the law of any applicable jurisdiction, and are subject to various deductibles and policy limits. The Company reviews its insurance program annually and may make adjustments to the amount of insurance coverage and self-insured retentions in future years. Significant legal actions, as well as the cost and possible lack of available insurance, could subject the Company to substantial uninsured liabilities.
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Physical Therapy Billing. On October 7, 2021, Select received a letter from a Trial Attorney at the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Fraud Section (“DOJ”) stating that the DOJ, in conjunction with the U.S. Department of Health and Human Services (“HHS”), is investigating Select in connection with potential violations of the False Claims Act, 31 U.S.C. § 3729, et seq. The letter specified that the investigation relates to Select’s billing for physical therapy services, and indicated that the DOJ would be requesting certain records from Select. In October and December 2021, the DOJ requested, and Select furnished, records relating to six of Select’s outpatient therapy clinics in Florida. In 2022 and 2023, the DOJ requested certain data relating to all of Select’s outpatient therapy clinics nationwide, and sought information about the Company’s ability to produce additional data relating to the physical therapy services furnished by Select’s outpatient therapy clinics and the Company. The Company has produced data and other documents requested by the DOJ and is fully cooperating on this investigation. In May 2024, by order of the U.S. District Court for the Middle District of Florida, a qui tam lawsuit that is related to the DOJ’s investigation was unsealed after the U.S. filed a notice declining to intervene in the case, but stating that its investigation is continuing and reserving its right to intervene at a later date. The lawsuit, filed in May 2021 and amended in October 2021 and July 2024, was brought by Kathleen Kane, a physical therapist formerly employed in Select’s outpatient division, against Select Medical Corporation, Select Physical Therapy Holdings, Inc. and Select Employment Services, Inc. The amended complaint alleges that the defendants billed federally funded health programs for one-on-one therapy services when group therapy was performed or overbilled for one-on-one therapy services, and billed for unreimbursable unskilled physical therapy services. In September 2024, the Company filed a motion to dismiss the amended complaint on multiple grounds. At this time, the Company is unable to predict the timing and outcome of this matter.
California Department of Insurance Investigation. On February 5, 2024, the Company received a subpoena from the California Department of Insurance relating to an investigation under the California Insurance Frauds Prevention Act, Cal. Ins. Code § 1871.7 et seq., which allows a whistleblower to file a false claims lawsuit based on the submission of false or fraudulent claims to insurance companies. The subpoena seeks documentation relating mainly to the Company’s billing and coding for physical therapy claims submitted to commercial insurers and workers’ compensation carriers located or doing business in California. The Company has produced data and other documents requested by the California Department of Insurance and intends to fully cooperate with this investigation. At this time, the Company is unable to predict the timing and outcome of this matter.
Perry Johnson & Associates, Inc. Data Breach. On November 10, 2023, Perry Johnson & Associates, Inc., a third-party vendor of health information technology solutions that provides medical transcription services (“PJ&A”), notified Concentra Health Services, Inc. (“Concentra”) that certain information related to particular Concentra patients was potentially affected by a cybersecurity event. In February 2024, Concentra sent notices to almost four million patients who may have been impacted by the data breach. During the first quarter of 2024, Concentra became aware of six putative class action lawsuits filed against PJ&A and Concentra related to the data breach. Five of the putative class action lawsuits have been transferred to the U.S. District Court for the Eastern District of New York and consolidated with the one class action lawsuit pending there. Plaintiffs filed a Consolidated Class Action Complaint on August 19, 2024 against PJ&A, Concentra, Select Medical Holdings Corporation and other unrelated defendants under the caption In re Perry Johnson & Associates Medical Transcription Data Security Breach Litigation (“Consolidated Complaint”). The Consolidated Complaint alleges that the plaintiffs have suffered injuries and damages under theories of negligence, breach of contract, and failure to comply with statutory duties, including duties under HIPAA, FTC guidelines and industry standards, and various state consumer protection and deceptive trade practice laws. The Company is working with its cybersecurity risk insurance policy carrier and does not believe that the data breach or the lawsuits will have a material impact on its operations or financial performance. However, at this time, the Company is unable to predict the timing and outcome of these matters.
13.    Subsequent Events
On October 28, 2024, the Company’s Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable November 22, 2024, to stockholders of record as of the close of business on November 13, 2024.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read this discussion together with our unaudited condensed consolidated financial statements and accompanying notes.
Forward-Looking Statements
This report on Form 10-Q contains forward-looking statements, which do not relate strictly to historical or current facts and which reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; our strategy for growth; product development activities; regulatory approvals; market position; market size and opportunity; expenditures; and the effects of the separation and the distribution, if pursued, on our business.
Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to risks, uncertainties and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. You are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include:
The frequency of work-related injuries and illnesses;
The adverse changes to our relationships with employer customers, third-party payors, workers’ compensation provider networks or employer services networks;
Changes to regulations, new interpretations of existing regulations, or violations of regulations;
State fee schedule changes undertaken by state workers’ compensation boards or commissions and other third-party payors;
Our ability to realize reimbursement increases at rates sufficient to keep pace with the inflation of our costs;
Labor shortages, increased employee turnover or costs, and union activity could significantly increase our operating costs;
Our ability to compete effectively with other occupational health centers, onsite health clinics at employer worksites, and healthcare providers;
A security breach of our, or our third-party vendors’, information technology systems which may cause a violation of HIPAA and subject us to potential legal and reputational harm;
Negative publicity which can result in increased governmental and regulatory scrutiny and possibly adverse regulatory changes;
Litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements and the effects of claims asserted against us could subject us to substantial uninsured liabilities;
Acquisitions may use significant resources, may be unsuccessful, and could expose us to unforeseen liabilities;
Our exposure to additional risk due to our reliance on third parties in many aspects of our business;
Compliance with applicable laws regarding the corporate practice of medicine and therapy and fee-splitting;
Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information;
Compliance with applicable data interoperability and information blocking rule;
Facility licensure requirements in some states are costly and time-consuming, limiting or delaying our operations;
Our ability to adequately protect and enforce our intellectual property and other proprietary rights;
Adverse economic conditions in the U.S. or globally;
Any negative impact on the global economy and capital markets resulting from other geopolitical tensions;
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Our ability to maintain satisfactory credit ratings;
The inability to execute on the separation from Select Medical;
The risk of disruption or unanticipated costs in connection with the separation;
Our ability to succeed as a standalone publicly traded entity;
Restrictions on our business, potential tax and indemnification liabilities and substantial charges in connection with the separation, the distribution and related transactions;
The negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic;
The loss of key members of our management team and our ability to attract and retain talented, highly skilled employees and a diverse workforce, and on the succession of our senior management; and
Changes in tax laws or exposures to additional tax liabilities.
You should also carefully read the risk factors and assumptions underlying forward-looking statements described in sections of our Registration Statement, entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” for a description of certain risks that could, among other things, cause our actual results to differ materially from those expressed or implied in our forward-looking statements. You should understand that it is not possible to predict or identify all such factors and you should not consider the risks described above to be a complete statement of all potential risks and uncertainties. We do not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments, except as required by law.
Overview
We were founded in 1979 and have grown to be the largest provider of occupational health services in the United States by number of locations. Our national presence enables us to provide access to high-quality care that supports our mission to improve the health of America’s workforce. As of September 30, 2024, we operated 549 stand-alone occupational health centers in 41 states and 156 onsite health clinics at employer worksites in 36 states. We also have expanded our reach via our telemedicine program serving 43 states and the District of Columbia. In total, we deliver services across 45 states and the District of Columbia. Our patients are generally employed by our main customers — employers across the United States.
Our business is organized into three operating segments based primarily on the type or location of occupational health services provided:
Occupational Health Centers: Our Occupational Health Centers operating segment encompasses the occupational health services we deliver at our 549 health center facilities across the United States. In this operating segment, we serve all types of employers, from Fortune 500 to small businesses. The occupational health services provided in this operating segment include Workers’ Compensation and Employer Services and we also provide Consumer Health services.
Onsite Health Clinics: Our Onsite Health Clinics operating segment delivers occupational health services and/or employer-sponsored primary care services at an employer’s workplace, including mobile health services and episodic specialty testing services. We deliver our services at 156 on-site locations. In this operating segment, we serve medium to large-sized employers.
Other Businesses: Our Other Businesses operating segment is comprised of several complementary services to our core occupational health services offering and includes Concentra Telemed, Concentra Pharmacy, and Concentra Medical Compliance Administration. In this operating segment, we serve all types of employers.





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All three operating segments are aggregated into a single reportable segment in our condensed consolidated financial statements based on similar services provided, service delivery process involved, target customers, and similar economic characteristics. The percentage of revenue for each of the three and nine months ended September 30, 2024 and 2023, of our Occupational Health Centers, Onsite Health Clinics and Other Businesses segments are represented as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Occupational Health Centers 95  % 95  % 95  % 95  %
Onsite Health Clinics % % % %
Other Businesses % % % %
Across our operating segments, we offer a diverse and comprehensive array of occupational health services, including workers’ compensation and employer services, and consumer health services:
Workers’ compensation services include the support of workers’ compensation injury, physical rehabilitation, and specialist care.
Employer services consist of drug and alcohol screenings, physical examinations and evaluations, clinical testing, and preventive care, as well as direct-to-employer services that include the services described above and advanced primary care at our onsite health clinics.
Consumer health services consist of the support of patient-directed urgent care treatment of injuries and illnesses.
The following table sets forth the percentage of our overall visits per day (“VPD”) volume in our Occupational Health Center operating segment by service offering, for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Workers’ compensation services 45  % 44  % 45  % 44  %
Employer services 53  % 54  % 53  % 54  %
Consumer health services % % % %
The following table sets forth the percentage of visit-related revenue in our Occupational Health Center operating segment by service offering, for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Workers’ compensation services 65  % 64  % 64  % 63  %
Employer services 33  % 34  % 34  % 35  %
Consumer health services % % % %
Initial Public Offering and Debt Transactions
On July 26, 2024, the Company completed an IPO of 22,500,000 shares of its common stock, par value $0.01 per share, at an initial public offering price of $23.50 per share for net proceeds of $499.7 million after deducting underwriting discounts and commission of $29.1 million. In addition, the underwriters exercised the option to purchase an additional 750,000 shares of the Company’s common stock for net proceeds of $16.7 million after deducting underwriting discounts and commission of $1.0 million. The Company’s shares began trading on the New York Stock Exchange under the symbol “CON” on July 25, 2024. In connection with the IPO, Concentra Health Services, Inc. (“CHSI”), entered into certain financing arrangements which include the Concentra credit facilities of $1,250.0 million and a private offering of $650.0 million aggregate principal amount of 6.875% Senior Notes due 2032. The Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Concentra and certain of its wholly-owned subsidiaries. The Concentra credit facilities consist of the Concentra term loan of $850.0 million and the Concentra revolving credit facility of $400.0 million. The Concentra revolving credit facility was undrawn at the closing of the IPO. The Concentra term loan matures on July 26, 2031, and has an interest rate of Term SOFR plus 2.25%, subject to a leverage-based pricing grid. The Concentra revolving credit facility matures on July 26, 2029, and has an interest rate of Term SOFR plus 2.50%, subject to a leverage-based pricing grid.
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The net proceeds of the IPO and the debt financing transactions, except for $34.7 million, were paid to Select Medical Corporation (“Select”) through the issuance of a dividend, the repayment in full of the $420.0 million revolving promissory note outstanding, and the repayment in full of a new promissory note issued subsequent in contemplation of the IPO.
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Regulatory Changes
Our Registration Statement contains a detailed discussion of the regulations that affect our business in the “Government Regulations” section.
Operating Metrics
Management utilizes specific key operating metrics to monitor trends and performance in our business and therefore may be important to investors because management may assess our performance based in part on such metrics. Other healthcare providers may present similar measures; however, these measures are susceptible to varying definitions and our key metrics may not be comparable to other similarly titled measures of other companies.
Patient Visits and Visits Per Day Volume
We monitor the number of patient visits per day (“VPD”) volume for each of our major service lines in our Occupational Health Center operating segment — workers’ compensation services, employer services, and consumer health. Management believes that the number of patient visits is a critical indicator of the volume of services being provided in our centers. VPD volume, which is calculated as total patient visits in a given period divided by total business days for such period, allows for comparability between time periods with different number of business days. Patient visits and VPD volume include only the patients seen in our Occupational Health Centers operating segment and does not include our Onsite Health Clinics or Other Businesses operating segments.
Revenue Per Visit
Management also measures reimbursement rates utilizing patient revenue per visit which is calculated as total patient revenue divided by total patient visits. Revenue per visit as reported includes only the revenue and patient visits in our Occupational Health Centers operating segment and does not include our Onsite Health Clinics or Other Businesses operating segments.
The following table sets forth operating statistics for our Occupational Health Centers operating segment for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 % Change 2024 2023 % Change
Number of patient visits
Workers’ Compensation 1,476,486  1,451,115  1.7% 4,364,824  4,276,717  2.1%
Employer Services 1,728,720  1,775,181  (2.6)% 5,090,410  5,316,724  (4.3)%
Consumer Health 53,399  54,746  (2.5)% 173,281  173,440  (0.1)%
Total 3,258,605  3,281,042  (0.7)% 9,628,515  9,766,881  (1.4)%
VPD Volume
Workers’ Compensation 23,070  23,034  0.2% 22,733  22,391  1.5%
Employer Services 27,011  28,177  (4.1)% 26,513  27,836  (4.8)%
Consumer Health 834  869  (4.0)% 903  908  (0.6)%
Total 50,916  (a) 52,080  (2.2)% 50,149  51,136  (a) (1.9)%
Revenue per visit
Workers’ Compensation $ 202.29  $ 197.05  2.7% $ 198.62  $ 194.74  2.0%
Employer Services 89.55  86.45  3.6% 90.14  86.30  4.4%
Consumer Health 137.30  130.82  5.0% 134.62  133.47  0.9%
Total $ 141.42  $ 136.11  3.9% $ 140.12  $ 134.62  4.1%
Business Days 64  63  192  191 
______________________________________________________________________________
(a)    Does not total due to rounding.




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Facility Counts
The following table sets forth facility counts for our Occupational Health Centers and Onsite Health Clinics operating segments for the periods presented:
  Three Months Ended September 30, Nine Months Ended September 30,
  2024 2023 2024 2023
Number of occupational health centers—start of period 547  540  544  540 
Number of occupational health centers acquired — 
Number of occupational health centers de novos —  — 
Number of occupational health centers closed/sold —  (1) (1) (2)
Number of occupational health centers—end of period 549  539  549  539 
Number of onsite health clinics operated—end of period 156  145  156  145 
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Results of Operations
The following table sets forth our consolidated results of operations, including as a percentage of revenue, for the periods indicated (in thousands):
  Three Months Ended September 30,
  2024 2023
Amount Percent Amount Percent
Revenue $ 489,638  100.0  % $ 473,964  100.0  %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization 351,103  71.7  336,812  71.1 
General and administrative, exclusive of depreciation and amortization 37,088  7.6  38,245  8.1 
Depreciation and amortization 15,213  3.1  17,959  3.7 
Total costs and expenses 403,404  82.4  393,016  82.9 
Income from operations 86,234  17.6  80,948  17.1 
Other income and expense:
Interest expense on related party debt (2,691) (0.5) (11,255) (2.4)
Interest expense (21,369) (4.4) (64) (0.0)
Income before income taxes 62,174  12.7  69,629  14.7 
Income tax expense 16,415  3.4  15,205  3.2 
Net income 45,759  9.3  54,424  11.5 
Less: Net income attributable to non-controlling interests 1,421  0.3  1,318  0.3 
Net income attributable to the Company 44,338  9.1  % 53,106  11.2  %

  Nine Months Ended September 30,
  2024 2023
Amount Percent Amount Percent
Revenue $ 1,435,151  100.0  % $ 1,397,341  100.0  %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization 1,027,366  71.6  994,726  71.2 
General and administrative, exclusive of depreciation and amortization 110,825  7.7  109,898  7.9 
Depreciation and amortization 51,568  3.6  54,552  3.8 
Total costs and expenses 1,189,759  82.9  1,159,176  82.9 
Other operating income 284  0.0  151  0.0 
Income from operations 245,676  17.1  238,316  17.1 
Other income and expense:
Equity in losses of unconsolidated subsidiaries (3,676) (0.3) (526) (0.0)
Interest expense on related party debt (21,980) (1.5) (33,831) (2.5)
Interest expense (21,275) (1.5) (108) (0.0)
Income before income taxes 198,745  13.8  203,851  14.6 
Income tax expense 49,648  3.4  47,964  3.4 
Net income 149,097  10.4  155,887  11.2 
Less: Net income attributable to non-controlling interests 4,066  0.3  3,775  0.3 
Net income attributable to the Company 145,031  10.1  % 152,112  10.9  %


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Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023
Revenue
Revenue increased 3.3% to $489.6 million for the three months ended September 30, 2024, compared to $474.0 million for the three months ended September 30, 2023, driven primarily by the increase in revenue per visit, as described below.
Our patient visits were 3,258,605 for the three months ended September 30, 2024, compared to 3,281,042 visits for the three months ended September 30, 2023. Total VPD volume was 50,916 for the three months ended September 30, 2024, compared to 52,080 for the three months ended September 30, 2023. Workers’ compensation VPD volume increased 0.2% to 23,070 from 23,034, employer services VPD volume decreased 4.1% to 27,011 from 28,177, and consumer health VPD volume decreased 4.0% to 834 from 869, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Revenue per visit increased 3.9% to $141.42 for the three months ended September 30, 2024, compared to $136.11 for the three months ended September 30, 2023. We experienced a higher revenue per visit principally due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers’ compensation visits, increases in our employer services rates, and a favorable mix of visit types by service line for the three months ended September 30, 2024. Revenue per visit for workers’ compensation visits increased 2.7% to $202.29 from $197.05, revenue per visit for employer services visits increased 3.6% to $89.55 from $86.45 and revenue per visit for consumer health visits increased by 5.0% to $137.30 from $130.82, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Cost of Services, Exclusive of Depreciation and Amortization
Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $351.1 million, or 71.7% of revenue, for the three months ended September 30, 2024, compared to $336.8 million, or 71.1% of revenue, for the three months ended September 30, 2023.
General and Administrative, Exclusive of Depreciation and Amortization
General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, facilities, and other administrative areas as well as executive compensation. Our general and administrative expenses were $37.1 million, or 7.6% of revenue, for the three months ended September 30, 2024, compared to $38.2 million, or 8.1% of revenue, for the three months ended September 30, 2023.
Depreciation and Amortization
Depreciation and amortization expense was $15.2 million for the three months ended September 30, 2024, compared to $18.0 million for the three months ended September 30, 2023.
Interest Expense on Related Party Debt
For the three months ended September 30, 2024, we had interest expense on our related party debt with Select of $2.7 million, compared to $11.3 million for the three months ended September 30, 2023. The decrease in interest expense is due to the payoff of the revolving promissory note with Select during the three months ended September 30, 2024, as discussed further in Note 1, Organization.
Interest Expense
For the three months ended September 30, 2024, we had interest expense of $21.4 million, compared to $0.1 million for the three months ended September 30, 2023. The increase in interest expense was due to the issuance of an $850.0 million term loan and $650.0 million senior notes in July 2024, as described in Note 6, Long-Term Debt.
Income Taxes
We recorded income tax expense of $16.4 million for the three months ended September 30, 2024, which represented an effective tax rate of 26.4%. We recorded income tax expense of $15.2 million for the three months ended September 30, 2023, which represented an effective tax rate of 21.8%. Our income tax expense is computed based on annual estimates which we allocate throughout the year based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year as estimates of our annual income and the components of our income tax expense change throughout the year.
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Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023
Revenue
Revenue increased 2.7% to $1,435.2 million for the nine months ended September 30, 2024, compared to $1,397.3 million for the nine months ended September 30, 2023, driven primarily by the increase in revenue per visit, as described below.
Our patient visits were 9,628,515 for the nine months ended September 30, 2024, compared to 9,766,881 visits for the nine months ended September 30, 2023. Total VPD volume was 50,149 for the nine months ended September 30, 2024, compared to 51,136 for the nine months ended September 30, 2023. Workers’ compensation VPD volume increased 1.5% to 22,733 from 22,391, employer services VPD volume decreased 4.8% to 26,513 from 27,836, and consumer health VPD volume decreased 0.6% to 903 from 908, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Revenue per visit increased 4.1% to $140.12 for the nine months ended September 30, 2024, compared to $134.62 for the nine months ended September 30, 2023. We experienced a higher revenue per visit principally due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers’ compensation visits, increases in our employer services rates, and a favorable mix of visit types by service line for the nine months ended September 30, 2024. Revenue per visit for workers’ compensation visits increased 2.0% to $198.62 from $194.74, revenue per visit for employer services visits increased 4.4% to $90.14 from $86.30 and revenue per visit for consumer health visits increased by 0.9% to $134.62 from $133.47, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Cost of Services, Exclusive of Depreciation and Amortization
Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $1,027.4 million, or 71.6% of revenue, for the nine months ended September 30, 2024, compared to $994.7 million, or 71.2% of revenue, for the nine months ended September 30, 2023.
General and Administrative, Exclusive of Depreciation and Amortization
General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, facilities, and other administrative areas as well as executive compensation. Our general and administrative expenses were $110.8 million, or 7.7% of revenue, for the nine months ended September 30, 2024, compared to $109.9 million, or 7.9% of revenue, for the nine months ended September 30, 2023.
Depreciation and Amortization
Depreciation and amortization expense was $51.6 million for the nine months ended September 30, 2024, compared to $54.6 million for the nine months ended September 30, 2023.
Other Operating Income
For the nine months ended September 30, 2024, we had other operating income of $0.3 million, compared to $0.2 million for the nine months ended September 30, 2023.
Equity in Losses of Unconsolidated Subsidiaries
For the nine months ended September 30, 2024, we had equity in losses of unconsolidated subsidiaries of $3.7 million, compared to $0.5 million for the nine months ended September 30, 2023. The increase in equity in losses is attributable to the impairment of an investment during the nine months ended September 30, 2024.
Interest Expense on Related Party Debt
For the nine months ended September 30, 2024, we had interest expense on our related party debt with Select of $22.0 million, compared to $33.8 million for the nine months ended September 30, 2023. The decrease in interest expense is due to the payoff of the revolving promissory note with Select during the nine months ended September 30, 2024, as discussed further in Note 1, Organization.


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Interest Expense
For the nine months ended September 30, 2024, we had interest expense of $21.3 million, compared to $0.1 million for the nine months ended September 30, 2023. The increase in interest expense was due to the issuance of an $850.0 million term loan and $650.0 million senior notes in July 2024, as described in Note 6, Long-Term Debt.
Income Taxes
We recorded income tax expense of $49.6 million for the nine months ended September 30, 2024, which represented an effective tax rate of 25.0%. We recorded income tax expense of $48.0 million for the nine months ended September 30, 2023, which represented an effective tax rate of 23.5%.
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Non-GAAP Information
We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA margin, as defined below, are important to investors because Adjusted EBITDA and Adjusted EBITDA margin are commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA and Adjusted EBITDA margin are used by management to evaluate financial performance of, and determine resource allocation for, each of our operating segments. However, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under U.S. GAAP. Items excluded from Adjusted EBITDA and Adjusted EBITDA margin are significant components in understanding and assessing financial performance. Adjusted EBITDA and Adjusted EBITDA margin should not be considered in isolation, or as an alternative to, or substitute for, net income, net income margin, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA and Adjusted EBITDA margin are not measurements determined in accordance with U.S. GAAP and are thus susceptible to varying definitions, Adjusted EBITDA and Adjusted EBITDA margin as presented may not be comparable to other similarly titled measures of other companies.
We define Adjusted EBITDA as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, separation transaction costs, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We will refer to Adjusted EBITDA and Adjusted EBITDA margin throughout the remainder of Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following table reconciles net income to Adjusted EBITDA and net income margin to Adjusted EBITDA margin and should be referenced when we discuss Adjusted EBITDA and Adjusted EBITDA margin.