Concentra (CON) Q4 2025 Earnings Call Transcript

DATE

Friday, February 27, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Keith Newton
• Chief Financial Officer — Matt DiCannio

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TAKEAWAYS

• Total Revenue -- $539.1 million, up 15.9% year over year; $493.8 million excluding Nova and Pivot, a 6.2% increase.
• Full-Year Revenue -- $2.2 billion, growing 13.9% over the prior year; $2.0 billion excluding Nova and Pivot, up 6.4% (6.8% per-day basis).
• Total Patient Visits -- Exceeded 51,000 per day in the quarter, up 9%; excluding Nova, increased 2.6%.
• Workers’ Compensation Visits -- Increased 9.1% in the quarter; 3.4% growth excluding Nova.
• Employer Service Visits -- Rose 9.4% in the quarter; excluding Nova, increased 2.3%.
• Revenue per Visit -- Improved 3.1% overall; workers’ compensation up 4.1%, employer services up 1.2%.
• Adjusted EBITDA -- $95.3 million for Q4, a 22.9% increase; margin rose from 16.7% to 17.7% year over year.
• Full-Year Adjusted EBITDA -- $431.9 million, 14.6% year-over-year growth; margin expanded to 20.0% from 19.8%.
• Adjusted Net Income / EPS -- $36.1 million and $0.28 for the quarter, up from $22.2 million and $0.17.
• Operating Cash Flow -- $118.7 million for the quarter, an increase from $93.7 million in the prior-year quarter.
• Free Cash Flow -- $98.6 million for Q4, and $197.8 million for the year; full-year free cash flow conversion was 114%.
• General & Administrative Expense -- $50.8 million (9.4% of revenue); on an adjusted basis, $45.8 million (8.5% of revenue), both ratios declined from the prior year quarter.
• Cash and Debt Position -- Quarter-end cash balance of $79.9 million; total debt at $1.57 billion; net leverage ratio 3.4x.
• De Novo and M&A Activity -- Opened seven new sites in 2025; outlined expectation for 7-9 de novos in 2026; completed three-center bolt-on acquisition in January.
• On-Site Health Clinics Revenue -- $36.2 million in Q4, up 112% year over year; organic growth 14.6% after excluding Pivot acquisition.
• Cost Management -- Cost of services improved to 73.9% of revenue from 74.2%; G&A expense reductions contributed to margin gains despite separation and transaction-related spending.
• 2026 Guidance -- Revenue range of $2.25 billion to $2.35 billion; adjusted EBITDA $450.0 million to $470.0 million; free cash flow $200.0 million to $225.0 million; capex $70.0 million to $80.0 million; leverage target of approximately 3.0x by year-end.
• Workers’ Comp Claims Study -- Analysis of more than 550,000 claims showed average claims cost is 25% lower and duration 65 days shorter than for non-Concentra providers.
• Dividend -- Board declared quarterly cash dividend of $0.0625 per share, payable March 19, 2026.
• Separation Progress -- More than 80% of expected FTE hiring completed as part of stand-alone operations preparation, with most remaining activities guided to finish by summer.

SUMMARY

Management stated that performance during the period surpassed the high end of prior revenue and adjusted EBITDA guidance, resulting from growth across visits, rate, and cost discipline in core and on-site segments. The company indicated completed integration of the Nova and Pivot acquisitions with synergy realization ahead of underwriting, setting the stage for continued active bolt-on M&A and accelerated de novo expansion. The Board authorized continued share repurchases with $80.0 million outstanding authorization, and leadership reaffirmed that the New York fee schedule revision represents a potentially material new market opportunity if reimbursement levels become adequate. Labor stability and declining turnover were reported, supporting the operational outlook, while capital allocation priorities remain focused on efficient, high-ROIC projects and steady dividend payments.

• Keith Newton said, "patient satisfaction metrics, which are at all-time highs," and the company's specialized clinical approach yields lower claim costs and shorter durations.
• Matt DiCannio stated, "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 five years," aligning with historic averages.
• The company expects additional incremental costs early in 2026 from completion of hiring related to the Select Medical separation, with transition services agreement expenses tracking down to near zero by midyear.
• Organic growth in employer services and workers’ compensation visits, excluding Nova, indicates market share gains are driven by targeted customer engagement strategies and enhanced technology in the sales process.
• Rate growth assumptions for 2026 reflect finalized fee schedules in major states including Texas, California, Florida, and Pennsylvania, supporting the revenue outlook.
• The On-Site Health Clinics advanced primary care offering is gaining market traction and is anticipated to contribute to future growth.

INDUSTRY GLOSSARY

• De novo: Refers to newly built occupational health centers not acquired from other operators, typically constructed and operated by the company in targeted locations.
• On-Site Health Clinics: Healthcare facilities operated by Concentra Group Holdings Parent, Inc. located at or near employer worksites, providing services including primary and occupational care directly to employees.
• Transition Services Agreement (TSA): A contractual arrangement where Select Medical Corporation provides certain operational services to Concentra Group Holdings Parent, Inc. during its stand-alone spin-off period; expiration set for November 2026.
• Pivot On-site Innovations: Occupational health-focused on-site clinic operator acquired by Concentra Group Holdings Parent, Inc. in Q2 2025, contributing to both revenue and organic growth figures in this segment.
• Nova: Occupational health center acquisition completed in Q1 2025, referenced for its impact on segment and overall performance metrics.
• Free Cash Flow Conversion: Calculated as free cash flow divided by net income, demonstrating a company's efficiency in generating cash from earnings; above 100% here indicates strong cash realization.

Full Conference Call Transcript

Keith Newton: Thanks, Operator. Good morning, everyone. Welcome to Concentra Group Holdings Parent, Inc.'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 prerelease 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 Group Holdings Parent, Inc. 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 have gotten positive feedback on it thus far and expect that it will continue to resonate with the market.

I would 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 previously 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 Group Holdings Parent, Inc. is 25% lower than non-Concentra providers, and that the average claim duration is 65 fewer days when treated by Concentra Group Holdings Parent, Inc.

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 why 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 On-Site business operating segment all contributed to the outperformance during the fourth quarter. Total company revenue was $539.1 million in Q4 2025 compared to $465.0 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 one less revenue day.

Excluding contributions from Nova and Pivot, 2025 revenue was $2.0 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 2025.

I would note that we were 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 service 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, up 0.1% in 2025. However, the blue-collar economy, which largely encompasses production and 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 occupations 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 earlier quarters in 2025, year-over-year growth in employer services rate in Q4 2025 was down primarily due 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 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 one less revenue day. We are really happy with the results that we have seen over the last eighteen months.

Since our IPO in July 2024, we have grown adjusted EBITDA by approximately $67.0 million, constituting an 18% increase. While the Nova and Pivot acquisitions 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 20.0% 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 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 $176.0 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 two additional de novo sites in Southern California and Miami, resulting in seven 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 five 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 into the high single-digit de novo openings in 2026. On the M&A front, we plan to continue with 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 are able to achieve. The acquisition of the three net incremental centers in California in January aligns with this approach.

I will now turn the call 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 will start by going through some more details on our Q4 results and our three operating segments.

Matt DiCannio: 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 9.0% 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 $309.0 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 On-Site Health Clinics 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 On-site Innovations in Q2 2025.

Excluding the impact from Pivot, organic growth in our On-Site Health Clinics operating segment was 14.6% year-over-year during the quarter, the third consecutive quarter with double-digit organic growth. For the full year 2025, our On-Site Health Clinics operating segment reported revenue of $110.2 million, a 72% increase over full year 2024. Excluding the impact from Pivot, the On-Site operating segment revenue grew 11.6% over full year 2024. We have a robust prospective On-Site 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 the 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 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 one-time integration costs we incurred as a result of the Nova transaction, which totaled more than $2.0 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, one-time 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 one-time transaction costs, G&A expense as a percentage of revenue was 8.4% in 2025 compared to 8.0% 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 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 20.0% 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 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 were 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 $4.0 million of one-time CapEx related to the Nova integration.

We expect to incur minimal incremental capital cost 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 $303.3 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 did not 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 $77.0 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 five years.

Finally, financing activities during the quarter resulted in cash outflows of $68.6 million as we repaid the entirety of the $35.0 million outstanding balance under our credit facility, executed share repurchases totaling $22.4 million, and paid $8.0 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 $85.0 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 3.0x. At the end of the fourth quarter, we had approximately $80.0 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 December was 3.4x. We expect to continue making meaningful progress towards our 3.0x 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 would like to touch more broadly on the forward outlook. With respect to our growth efforts, we are largely through the integration process for both the 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 two deals.

As Keith mentioned, we are going to continue to stay active on the de novo and bolt-on M&A front. We are targeting seven to nine 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 three 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 one to five 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 is 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 01/01/2027. In our On-Site Health Clinic operating segment, we will continue to evaluate inorganic growth opportunities of both occupational health-focused on-site 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 $450.0 million to $470.0 million, our CapEx target at a range of $70.0 million to $80.0 million, our free cash flow target at a range of $200.0 million to $225.0 million, and our leverage target remains approximately 3.0x 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 three-center acquisition and six de novo sites with executed leases as of the guidance date.

On the cost side, we are anticipating stickiness with efficiency gains captured 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 2026 and annualize the impact of colleagues hired in 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 $15.0 million in one-time 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 Group Holdings Parent, Inc.’s Board of Directors declaring a cash dividend of $0.0625 per share on 02/25/2026. The dividend will be payable on or about 03/19/2026, to stockholders of record as of the close of business on 03/12/2026. Now back to Keith for a few closing comments.

Keith Newton: 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. We would like to turn it back over to the Operator and open the call for questions.

Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question for today is from Benjamin Rossi with JPMorgan.

Benjamin Rossi: Hey, all. Good morning. Thanks for taking my questions here. I appreciate the details on your 2026 outlook. You have the steady volume growth in the low single digits, steady rates, maybe some lift during 1Q from last year. It is no big deal. Follow-through, maybe some similar contribution in February from Pivot, you have the de novos and any additive M&A. Just thinking about your guidance impacts, how are you contemplating things like weather or potential elevated respiratory activity to start the year?

Keith Newton: I will 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 are 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 a day we see. So it is not going to be material either way if it does tweak up or tweak down. So I am not anticipating really any impact from that either.

Benjamin Rossi: Understood. This as a follow-up, this might be a little bit more close-up, and I know I might be asking to look under the hood here a bit. But I have noticed your preference to highlight return on invested capital in that low teens range when you are 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 break?

Matt DiCannio: Yeah. Sure. Good morning, Ben. So we obviously follow that very closely, the ROIC metric. We know it is very important to investors. And we look at all sorts of return hurdles and valuation metrics when we are looking at de novos and acquisitions, and I think as we have stated publicly in some of our materials, we have 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.

Benjamin Rossi: Great. Thanks.

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

Ann Hynes: Great. Thank you so much. Thanks for all the detail on the New York opportunity. Can you give us a little bit more detail about what you were looking for and what was not in the rule and maybe what you are fighting for? And if it does change, how fast could you get into the market and start developing? Thanks.

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

That said, they did take a good first step wherein we are in a period of being able to have a discussion period, and before they publish the final rule, they may address 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, we feel we can move very quickly. We have 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 is 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 could see us doing a lot of just de novo projects. We have 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 center to be built, versus trying to retrofit an existing facility. But we have spent a lot of time, so I think we are in a position to move pretty quickly once that happens.

Ann Hynes: Great. Thank you.

Operator: Your next question is from Justin Bowers with Deutsche Bank.

Justin Bowers: Hi, good morning everyone. 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 is number one. And then number two would just be how you are thinking about de novo investments for 2026 as well. Thank you.

Matt DiCannio: Yeah. Sure. Good morning, Justin. So from a guidance standpoint, we outlined the visits and the rate assumptions included, and also made some comments about cost of services and G&A. We have got the Reliant transaction that was closed included in the guidance, and we have six de novos. There is pretty good potential that we will have more than six de novos this year. They will be pretty spread throughout the year. We are working through permitting and construction and things like that, but we will 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 did not have both of those assets in the prior year. So we closed the Nova acquisition on March 1, so January and February we will have a pickup. And then we closed Pivot on June 1, so we will have a pickup there through most of the first half of the year. As far as days, it is the same number of days in 2026 versus 2025. So there are no changes there. Hopefully, that helps.

Justin Bowers: Yeah. It is helpful. Thank you. Appreciate that. And the updated investor book as well.

Operator: Your next question for today is from Benjamin Hendrix with RBC Capital Markets.

Benjamin Hendrix: Thank you very much. Just to follow-up on that last question, is there any gains consideration related to the expiration of the Select Services Agreement? I know you mentioned that you had the 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 the in 4Q as that agreement rolls off?

Matt DiCannio: Thanks. Yeah. Sure. Good question, Ben. And I think that is really the only thing I would touch on from 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 are 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 will complete the remainder of the hires. And then we will work with Select and reduce the TSA cost. So we expect the TSA cost to ramp down close to zero by, call it, mid-year 2026.

And so the net of both of those will be some incremental cost early part of 2026. So that is all part of our guidance. And we are obviously close to the finish line with the separation process.

Benjamin Hendrix: Thank you very much.

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

Stephen Baxter: Hi. This is Mitchell on for Steve. What are you seeing on the labor front in your clinics? How is retention trending and what type of wage inflation is built into the guide? Thank you.

Keith Newton: As far as our labor, pretty much normal as we have talked about in the past. Our labor force from wage inflation trends pretty similarly to inflation, 2% to 3%. We are not a hospital, so we do not feel quite the impacts that have been felt and seen within those industries. So far, it is pretty much in line with what we have experienced historically. So really nothing unusual from that standpoint.

Matt DiCannio: Yeah. And Stephen, I will add just from an openings and hiring and turnover standpoint. We are trending in a favorable direction. Our turnover is coming down, fewer open positions, and so we like what we are seeing to have more stability with the workforce.

Stephen Baxter: Got it. Thank you.

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

Joanna Gajuk: Hi, good morning. Thanks so much for taking the questions. So first one, the workers’ comp organic volumes were at 3% this year, or the 25% rate. Then employment services organic growth was also pretty good in 2% in 2025. So those growth rates are about where you would think the industry may be growing. So my question is, who are you taking market share from, and is that a kind of sustainable growth? And I guess how much of that 3% to 2% was from de novo?

Keith Newton: Well, as far as the market share component, we did a lot this last year relative to our go-to-market and how we are 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 is really starting to gain some traction for us. We feel good about where we are heading with that group, and I think that is really supported the growth.

We have developed some tools and we are 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 and try to project those-type customers. We are 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 is very tough to touch them consistently from an account management standpoint.

So what we are trying to do is identify through technologies how we can better support those smaller customers that utilize us very sporadically and make sure that we stay engaged with them, because we typically do not 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 is not really aware of Concentra Group Holdings Parent, Inc. And so we have to figure out better ways to make sure that we stay engaged, identify when those trends potentially are going to take place, and engage appropriately.

Matt DiCannio: On de novos, they contribute less than 1% on both of those. And keep in mind, we are only doing a single-digit number of de novos per year, and they start at zero visits. So it takes a little bit of time to ramp.

Joanna Gajuk: Thank you. 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 link to the physician fee schedule, but give us maybe a little bit of color if any outliers or if all these states are tracking along with sort of inflation. Thank you.

Matt DiCannio: Yeah. 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 those are tracking in line with our expectations. So there is no real outlier across the rest of the country. And back to New York, just a couple comments I wanted to add on that. It is a step in the right direction. We are 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—30 different locations that we are looking at to fill out the rest of our pipeline for 2026 and for 2027.

So plenty of growth opportunities, but we are excited about the potential down the road in New York as well.

Joanna Gajuk: Thank you.

Operator: Once again, if you would like to ask a question, please press 1. This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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