Concentra Group Holdings Parent Inc

Previous wording

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 June 30, 2024, we operated 547 stand-alone occupational health centers in 41 states and 154 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.

Current wording

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.

Previous wording

•Occupational Health Centers: Our Occupational Health Centers operating segment encompasses the occupational health services we deliver at our 547 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. We also provide Consumer Health services.

Current wording

•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.

Previous wording

•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 154 on-site locations. In this operating segment, we serve medium to large-sized employers.

Current wording

•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.

Previous wording

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 andsix months ended June 30, 2024 and 2023, of our Occupational Health Centers, Onsite Health Clinics and Other Businesses segments are represented as follows:

Current wording

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:

Previous wording

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, CHSI entered into certain financing arrangements which include senior secured credit facilities of $1,250.0 million (the “Credit Facilities”) 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 Credit Facilities consist of an $850.0 million Term Loan and a $400.0 million Revolving Credit Facility. The Revolving Credit Facility was undrawn at the closing of the IPO. The Term Loan matures on July 26, 2031, and has an interest rate of Term SOFR plus 2.25%, subject to a leverage-based pricing grid. The Revolving Credit Facility matures on July 26, 2029, and has an interest rate of Term SOFR plus 2.50%, subject to a leverage-based pricing grid.

Current wording

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.

Previous wording

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 of the $420.0 million revolving promissory note outstanding, and the repayment of a new promissory note issued subsequent to June 30, 2024 in contemplation of the IPO.

Current wording

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.

Previous wording

Revenue increased 2.4% to $945.5 million for the six months ended June 30, 2024, compared to $923.4 million for the six months ended June 30, 2023, driven primarily by the increase in revenue per visit, as described below.

Current wording

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.

Previous wording

Our patient visits were 6,369,910 for the six months ended June 30, 2024, compared to 6,485,839 visits for the six months ended June 30, 2023. Total VPD volume was 49,765 for the six months ended June 30, 2024, compared to 50,671 for the six months ended June 30, 2023. Workers’ compensation VPD volume increased 2.2% to 22,565 from 22,075, employer services VPD volume decreased 5.1% to 26,263 from 27,668, and consumer health VPD volume increased 1.0% to 937 from 928, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Current wording

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.

Previous wording

Revenue per visit increased 4.2% to $139.45 for the six months ended June 30, 2024, compared to $133.86 for the six months ended June 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 six months ended June 30, 2024. Revenue per visit for workers’ compensation visits increased 1.7% to $196.75 from $193.55, revenue per visit for employer services visits increased 4.9% to $90.44 from $86.22 and revenue per visit for consumer health visits decreased by 1.0% to $133.42 from $134.70, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Current wording

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.

Previous wording

Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $676.3 million, or 71.5% of revenue, for the six months ended June 30, 2024, compared to $657.9 million, or 71.3% of revenue, for the six months ended June 30, 2023.

Current wording

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.

Previous wording

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 $73.7 million, or 7.8% of revenue, for the six months ended June 30, 2024, compared to $71.7 million, or 7.8% of revenue, for the six months ended June 30, 2023. General and administrative expenses include $1.6 million of separation transaction costs for the six months ended June 30, 2024.

Current wording

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.

Previous wording

Depreciation and amortization expense was $36.4 million for the six months ended June 30, 2024, compared to $36.6 million for the six months ended June 30, 2023.

Current wording

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.

Previous wording

For the six months ended June 30, 2024, we had interest expense on our related party debt with Select of $19.3 million, compared to $22.6 million for the six months ended June 30, 2023. The decrease in interest expense is principally due to lower average outstanding borrowings during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current wording

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.

Previous wording

Revenue increased 2.3% to $477.9 million for thethree months ended June 30, 2024, compared to $467.1 million for thethree months ended June 30, 2023, driven primarily by the increase in revenue per visit, as described below.

Current wording

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.

Previous wording

Our patient visits were 3,214,255 for thethree months ended June 30, 2024, compared to 3,267,894 visits for thethree months ended June 30, 2023. Total VPD volume was 50,223 for thethree months ended June 30, 2024, compared to 51,061 for thethree months ended June 30, 2023. Workers’ compensation VPD volume increased 1.8% to 22,739 from 22,329, employer services VPD volume decreased 4.4% to 26,600 from 27,828, and consumer health VPD volume decreased 2.2% to 884 from 904, for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023.

Current wording

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.

Previous wording

Revenue per visit increased 3.9% to $139.81 for thethree months ended June 30, 2024, compared to $134.50 for thethree months ended June 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 thethree months ended June 30, 2024. Revenue per visit for workers’ compensation visits increased 1.7% to $198.18 from $194.92, revenue per visit for employer services visits increased 4.7% to $90.05 from $86.00 and revenue per visit for consumer health visits increased by 0.5% to $135.49 from $134.88, for thethree months ended June 30, 2024, compared to thethree months ended June 30, 2023.

Current wording

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.

Previous wording

Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services was $339.3 million, or 71.0% of revenue, for thethree months ended June 30, 2024, compared to $329.8 million, or 70.6% of revenue, for thethree months ended June 30, 2023.

Current wording

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.

Previous wording

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 $36.8 million, or 7.7% of revenue, for thethree months ended June 30, 2024, compared to $37.0 million, or 7.9% of revenue, for thethree months ended June 30, 2023.

Current wording

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.

Previous wording

Depreciation and amortization expense was $17.9 million for thethree months ended June 30, 2024, compared to $18.3 million for thethree months ended June 30, 2023.

Current wording

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.

Previous wording

For the six months ended June 30, 2024, we had other operating income of $0.3 million, compared to $0.2 million for the six months ended June 30, 2023.

Current wording

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.

Previous wording

For the six months ended June 30, 2024, we had equity in losses of unconsolidated subsidiaries of $3.7 million, compared to $0.5 million for the six months ended June 30, 2023. The increase in equity in losses is attributable to the impairment of an investment during the six months ended June 30, 2024.

Current wording

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.

Previous wording

For thethree months ended June 30, 2024, we had interest expense on our related party debt with Select of $9.3 million, compared to $11.5 million for thethree months ended June 30, 2023. The decrease in interest expense is principally due to lower average outstanding borrowings during thethree months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

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.

Previous wording

We recorded income tax expense of $33.2 million for the six months ended June 30, 2024, which represented an effective tax rate of 24.3%. We recorded income tax expense of $32.8 million for the six months ended June 30, 2023, which represented an effective tax rate of 24.4%.

Current wording

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%.

Previous wording

(a) Separation transaction costs represent incremental consulting, legal, and audit-related fees incurred in connection with the Company’s planned separation into a new, publicly traded company and are included within general and administrative expenses on the Condensed Consolidated Statements of Operations. During the three months ended June 30, 2024, an adjustment was made to capitalize certain separation transaction costs recognized during the first quarter of 2024.

Current wording

(a) Separation transaction costs represent incremental consulting, legal, and audit-related fees incurred in connection with the Company’s planned separation into a new, publicly traded company and are included within general and administrative expenses on the Condensed Consolidated Statements of Operations.

Previous wording

Operating activities provided $115.1 million and $99.5 million of cash flows during the six months ended June 30, 2024 and 2023, respectively. The increase in cash flows from operating activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, resulted from improvements in earnings and positive working capital contributions to cash.

Current wording

Operating activities provided $181.0 million and $158.1 million of cash flows during the nine months ended September 30, 2024 and 2023, respectively. The increase in cash flows from operating activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, resulted from increased collections on our accounts receivable.

Previous wording

Investing activities used $37.6 million and $31.7 million of cash flows for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the principal uses of cash were $32.5 million for purchases of property and equipment and $5.1 million for acquisitions of businesses. For the six months ended June 30, 2023, the principal uses of cash were $25.9 million for purchases of property and equipment and $4.4 million for purchases of customer relationships.

Current wording

Investing activities used $54.6 million and $47.1 million of cash flows for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, the principal uses of cash were $47.6 million for purchases of property and equipment and $7.0 million for acquisitions of businesses. For the nine months ended September 30, 2023, the principal uses of cash were $41.3 million for purchases of property and equipment and $4.4 million for purchases of customer relationships.

Previous wording

Financing activities used $58.1 million and $72.3 million of cash flows for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, the principal uses of cash were $50.0 million of net repayments on our related party revolving promissory note, distributions to Select of $7.7 million for income tax adjustments relating to the application of the separate return methodology, and principal payments on other debt of $4.4 million, partially offset by $6.6 million in borrowings of other debt. For the six months ended June 30, 2023, the principal uses of cash were $70.0 million in payments on the related party revolving promissory note, principal payments on other debt of $4.1 million, and distributions to and purchases of non-controlling interests of $3.1 million, partially offset by $5.5 million in borrowings of other debt.

Current wording

Financing activities used $20.9 million and $125.0 million of cash flows for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, the principal uses of cash were a $1,535.7 million dividend payment to Select and $470.0 million of net repayments on our related party revolving promissory note. The principal sources of cash were net proceeds from our term loans of $836.7 million, net proceeds from the issuance of our 6.875% senior notes of $637.3 million, and net proceeds from our initial public offering of $511.2 million. For the nine months ended September 30, 2023, the principal uses of cash were $120.0 million in payments on the related party revolving promissory note, principal payments on other debt of $5.8 million, and distributions to and purchases of non-controlling interests of $4.5 million, partially offset by $5.5 million in borrowings of other debt.

Previous wording

We had net working capital of $55.2 million at June 30, 2024, compared to net working capital of $19.8 million at December 31, 2023. The increase in the net working capital surplus was principally due to increases in our cash and accounts receivable.

Current wording

We had net working capital of $140.4 million at September 30, 2024, compared to net working capital of $19.8 million at December 31, 2023. The increase in the net working capital surplus was principally due to increases in our cash and accounts receivable.

Previous wording

In July of 2024 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 and the repayment of promissory notes.

Current wording

During the third quarter of 2024, 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 and the repayment of promissory notes.