Concentra Group Holdings Parent - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue rose 5.5% year over year to $465.0M; Adjusted EBITDA grew 13.6% to $77.5M, with margin expansion to 16.7% (from 15.5%); net income was $22.8M ($0.17 EPS).
• 2025 outlook: revenue ~$2.1B, Adjusted EBITDA $410–$425M, capex $80–$90M, year-end net leverage ~3.5x; commentary notes Florida workers’ comp fee schedule uplift, modest improvement expected in Employer Services volumes, and 10 months of Nova contribution with phased synergies.
• Closed Nova Medical Centers (67 centers) on March 1; funded via ~$102M incremental term loan, $50M revolver draw, and cash; repriced Term Loan B to SOFR + 200 bps and upsized revolver to $450M at SOFR + 200 bps; pro forma net leverage ~3.9x, targeting ~3.0x within 18–24 months.
• Capital return and liquidity: quarterly dividend of $0.0625 declared Feb 28; year-end cash $183.3M and DSO improved to 43 days.

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EBITDA margin expanded 118 bps to 16.7% driven by improved cost of services and mix; revenue per visit increased 5.8% (Workers’ Comp +4.4%, Employer Services +4.8%), supporting pricing power and rate tailwinds.
  • “We are well positioned for continued growth in 2025,” with early 2025 Employer Services trends “a decent bit better” than the recent −4% to −5% YoY range; guidance embeds improvement to flat-to-positive later in the year.
  • Financing reset and capacity: repriced term loan/revolver lower, upsized revolver, and closed Nova—“very happy with these outcomes and the economic benefits in 2025 and beyond”.

• What Went Wrong

  • Visits per day declined 2.1% YoY with Employer Services VPD −4.8% (macro hiring/churn softness), partially offset by Workers’ Comp VPD +1.1%.
  • Net income margin compressed YoY (4.9% vs 6.5%) and sequential EBITDA declined vs Q3 (seasonality); management cited IPO recapitalization and seasonality as primary drivers.
  • Nova integration will carry transition costs in 2025; management guided Nova’s 2025 EBITDA contribution to “$15-plus million” (not the 10/12ths of $28.3M pro forma), with synergies phasing through year one.

Transcript

Joanna Gajuk (Analyst)

Good morning, and thank you for joining us today for Concentra Group Holdings Parent Inc. earnings conference call to discuss the fourth quarter and full year 2024 results, as well as some important company updates. Speaking today are the company's Chief Executive Officer, Keith Newton, and the company's President and Chief Financial Officer, Matt DiCanio. Management will give you an overview and then open the call for questions. Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including without limitation, statements regarding operating results, growth opportunities, and other statements that refer to Concentra's plans, expectations, strategies, intentions, and beliefs. These forward-looking statements are based on the information available to management of Concentra today, and the company assumes no obligation to update these statements as circumstances change.

At this time, I would like to turn the conference call over to Mr. Keith Newton.

Keith Newton (CEO)

Thanks, Operator. Good morning, everyone. Welcome to Concentra's fourth quarter 2024 earnings call. If you recall from our conference call in January, we touched on three key developments: the preliminary release of our Q4 and full year 2024 financial results, the signing of the Nova Medical Centers' acquisition, and our financial outlook for 2025. Today, we'll provide updates and more color on each of those topics and set the stage for the year ahead. Before we do that, I'd like to express my sincere gratitude to all of Concentra's colleagues, patients, employer customers, ecosystem partners, and investors. 2024 was a transformative year with our successful IPO, a spinoff from Select Medical, solid growth in financial performance, and continued execution on our strategic initiatives.

As the largest provider of occupational health services in the United States by number of locations, we are relentless in our mission to improve the health of America's workforce one patient at a time. That is the key driving force behind our success and continued pursuit of excellence. Switching to our fourth quarter 2024 performance, Concentra ended the quarter with 552 Occupational Health Centers and 157 on-site health clinics at employer work sites for a total of 709 locations, which is 15 more than Q4 2023. In the quarter, revenue was $465 million compared to $440.7 million in the prior year, representing a 5.5% growth year over year. Adjusted EBITDA was $77.5 million in the quarter versus $68.3 million in the same quarter prior year, or a 13.6% increase.

Adjusted EBITDA margin increased from 15.5% in Q4 2023 to 16.7% in Q4 2024, a result of revenue growth and improved cost of services. All of this is consistent with our pre-release announcement back in January. Net income was $22.8 million, and earnings per common share were $0.17 for the fourth quarter 2024. Net income was slightly better than the range we provided in our preliminary flash in January due to the timing of the finalization of our tax expense entries. Net income was lower than the same quarter prior year, primarily due to the IPO recapitalization. From a patient visit standpoint, year-over-year trends in Q4 2024 were very similar to recent quarters. Total visits per day were 46.8 thousand, a 2.1% decline compared to the same quarter prior year.

This was driven by a 4.8% decline in our Employer Services visits, which was expected and consistent with the variance we had been seeing in earlier quarters. The decline in employer service visits was partially offset by a 1.1% increase in our Workers' Compensation volume. As we've discussed before, the foundation for our Employer Services and Workers' Compensation visit volumes in the United States is driven by the U.S. labor market and its underlying trends. Total employment continues to gradually grow, which supports our Workers' Compensation visits. Employer service visits are more correlated to job creation and churn within the workforce, as hiring events are the key driver of these type visits. Hiring rates and quit rates in the United States are starting to show signs of stabilization and bottoming out.

While we continue to manage these employer service trends to still drive revenue, profit growth, and stable margins, we are optimistic and expect that a more stable growing economy and labor market will help boost our Employer Services volumes from current levels. So far, we are seeing some better trends in these type of visits early in 2025. From a rate standpoint, we had a strong quarter with a 5.8% increase in revenue per visit in Q4 2024 compared to the same quarter prior year. The growth was driven by increases in both Workers' Compensation and Employer Services revenue per visit, as well as a slight shift in mix between these categories. Beyond the financial metrics, we continue to execute on the strategic initiatives and growth objectives we established for ourselves. For example, the spinoff from Select Medical was completed. We made further progress on our separation.

We continue to advance our various clinical, operational, and technology initiatives in our development pipeline, all while achieving strong satisfaction scores from our patients and customers and improving our colleague retention. This concludes my overall company remarks. I'll now turn the call over to Matt to provide more color on our operating segments, key operating metrics, cost and expenses, cash flow, and balance sheet. We'll then wrap the call with further insight into the Nova transaction and the previously provided guidance for 2025.

Matthew DiCanio (President & CFO)

Thanks, Keith, and good morning, everyone. I'll begin with some additional commentary on our operating segments in our major expense categories, as well as other key performance indicators. In our Occupational Health Center operating segment, revenue of $437 million in Q4 2024 was 5.4% higher than the same quarter prior year. Keith outlined our visit decline year over year, driven by the continued and expected lower Employer Services volume, which are lower revenue and lower margin visits, and the 5.8% increase in revenue per visit from $137 in Q4 2023 to $145 in Q4 2024. Within the center operating segment, Workers' Compensation revenue of $289.1 million was 7% higher than prior year. Q4 2024 work comp visits per day increased 1.1% from prior year. Q4 2024 work comp revenue per visit increased 4.4% versus prior year.

Workers' Compensation revenue represented 66% of our total center operating segment revenue in Q4 2024 versus 65% in Q4 2023. Employer Services revenue in the center operating segment of $137.2 million increased 1.3% from prior year. Employer Services visits per day decreased 4.8% from prior year, in line with expectations and continued trends from recent quarters. The Q4 2024 Employer Services revenue per visit increased 4.8% versus prior year. On-site revenue of $17.1 million in Q4 increased 7% from the same quarter prior year. We had a solid business development quarter in this operating segment, winning 10 new on-sites that will open in the coming months, and we continue to build out an exciting growth pipeline. Other business revenue of $10.9 million increased 8% against the same quarter prior year.

Our cost of services expense, excluding depreciation and amortization, a major component of which is personnel costs, includes all direct and indirect support costs related to providing services to our customers. Cost of services was $344.9 million, or 74.2% of revenue in Q4 2024, down from 75.1% of revenue for the same quarter prior year. General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, corporate offices, and other administrative areas. Our general and administrative expenses were $45.5 million, or 9.8% of revenue in Q4 2024, compared to 9.6% of revenue in the same quarter prior year. For the fourth quarter, we had strong cash flow generation, with operating activities providing $93.7 million in cash flow, and our Days Sales Outstanding, or DSO, was 43 days at December 31, 2024, which was two days better than prior year.

Our cash flow metrics continue to improve over historical levels. Investing activities used $16.7 million of cash in the fourth quarter, almost entirely from purchases of property and equipment, as our teams continue to successfully manage to healthy levels of capital expenditure for maintenance and growth each quarter. Financing activities used $30.6 million of cash for the fourth quarter, and we ended the quarter with a cash balance of $183.3 million. Our net leverage ratio at the end of 2024 was 3.46 times, down from approximately 3.9 times at the time of our IPO last July. This is a good proof point of our ability to generate strong cash flow and de-lever. With the strong financial performance, we are pleased to announce that on February 28, 2025, Concentra's Board of Directors declared a quarterly cash dividend of $0.0625 per share.

The dividend will be payable on or about April 1, 2025, to stockholders of record as of the close of business on March 18, 2025. We continue to recognize the importance of our dividend as a means to return value to shareholders, but our two highest priorities for capital allocation in the near future remain our growth efforts and de-levering. Switching to our corporate development efforts, we continued our successful de novo strategy with three new Occupational Health Centers in the fourth quarter. We opened our fourth center in the greater Orlando area, an especially exciting development with the increase in the Florida work comp fee schedule that went into effect on January 1, 2025. We opened a center in DeSoto, Texas, a highly industrial section of the Dallas-Fort Worth area, bringing our total count to 19 centers in greater DFW.

And we opened our first center in Knoxville, Tennessee, an exciting growth area for Concentra. Our de novo efforts will continue in 2025, as we have already opened an additional center in the Dallas-Fort Worth area in January, and we have five additional leases signed for centers expected to open this year. Our acquisition pipeline remains robust as well, as we continue to execute on our core M&A strategy of highly accretive occupational health practices and on-site additions across the U.S. We will talk more about the Nova acquisition here shortly. And now I'll comment on our separation process from Select Medical, highlighted by the completion of Select's spinoff of Concentra in November. We have continued to make solid progress on these efforts as we execute on key leadership hires, building out specific teams in certain functional areas, and separating certain support functions and vendor contracts from Select.

There is much work remaining, but the takeaway is that we will remain on track with the process of operating completely independently from Select Medical by the time our TSA with Select ends in late 2026. With that, I'll turn it back to Keith to provide an update on the Nova transaction.

Keith Newton (CEO)

Thanks, Matt. Our acquisition of Nova Medical Centers for $265 million was officially closed on March 1. To give a brief recap of the business, Nova is a leading provider of occupational health services that is aligned with Concentra's clinical philosophy, service offering, growth strategy, and mission. Nova operates 67 Occupational Health Centers across five states that are very similar to Concentra's. 46 centers are in Texas, with the remaining centers located in Georgia, Wisconsin, Tennessee, and Indiana. Nova's locations are in attractive areas with a footprint that is complementary to our own. Nova sees over 3,500 patients per day and generates approximately $130 million in annual revenue and $28.3 million of pro forma adjusted EBITDA. The EBITDA figure is comprised of $21.3 million, a trailing 12-month adjusted EBITDA, plus an additional $7 million in projected and annualized synergies that we expect to capture by Q1 2026.

For clarity, we do not expect to generate the full $28.3 million over the next 12 months, as synergies will be phased in over time, and there will be one-time integration costs associated with capturing those synergies over the remainder of 2025. We expect to continue capturing incremental synergies past year one and ultimately achieve an effective multiple on the transaction of less than 7.5 times by year three. We expect the transaction to be immediately accretive in the first year of operation. We have a proven history of successfully executing on acquisitions of all sizes, and we are already progressing well on our transition plans to integrate the Nova practices and colleagues into Concentra. We would like to once again extend our gratitude to Nova's leaders and entire team, as we are extremely excited to have them join the Concentra family.

I'd now like to touch on the funding for the Nova transaction, our broader company financing, and our current leverage. The Nova transaction was funded with an approximate $102 million incremental term loan, a $50 million draw on our revolver, and the remaining with cash on hand. We repriced our Term Loan B of $950 million, inclusive of the approximate $102 million incremental at SOFR plus 200, down from SOFR plus 225, with a 25 basis point step down at net leverage of less than 3.25 times. In addition, we upsized our revolver capacity from $400 million to $450 million and repriced at SOFR plus 200, down from SOFR plus 250. We're very happy with these outcomes and the economic benefits in 2025 and beyond. Inclusive of the Nova transaction, our pro forma net leverage ratio is 3.9 times, the same level as the time of our IPO.

We have a target goal of approximately 3.0 times net leverage within the next 18-24 months. I'll now turn it back to Matt to add some additional comments as it relates to our previously provided company outlook for 2025.

Matthew DiCanio (President & CFO)

Okay, thanks, Keith. Regarding Nova, all I would add is that our team is very excited about the integration efforts and the opportunities that exist. It will take time, but we have a proven playbook, and we are looking forward to adding the Nova centers to our network of locations across the country. When the integration is complete, we expect a consistent delivery of care and a consistent approach to doing business with our customers. We've talked a lot about our value proposition and the investments we are making in the occupational health services industry, and now we will be able to drive an even greater impact with more medical centers.

To round out our call in advance of questions, we want to share additional commentary on the 2025 guidance we outlined back in January, including some of the underlying assumptions and the contribution from our core business versus the Nova acquisition. In total, we expect to deliver approximately $2.1 billion in revenue in 2025, an approximate 10.5% increase over 2024. The core business revenue projection includes the impact of all known fee schedule changes, including Florida. It also assumes relative improvement in the recent Employer Services volume trends over the course of the year, as well as maintaining the recent growth trends of our work comp visit volumes. For Adjusted EBITDA, we expect to deliver a total of $410 million-$425 million in 2025, an increase of approximately 11% over 2024 at the midpoint of the range.

The projected Adjusted EBITDA for the core business includes the estimated separation costs from Select Medical. As it relates to Nova and its contribution in 2025, first, we assume 10 months of Nova within our Adjusted EBITDA outlook. Second, as Keith noted, the integration efforts will take time with synergies phasing in over time. Third, there will be a fair amount of transition-related expenses, both at the center level and within G&A. For these reasons, calculating Nova's contribution to Concentra's 2025 guided Adjusted EBITDA is not as simple as taking 10 twelfths of $28.3 million, which is a figure that annualizes synergies that we expect to realize by the end of year one. We expect Nova's actual contribution to Concentra's 2025 Adjusted EBITDA to be $15+ million.

We feel that it is important to clarify this as we want to ensure that we're clearly communicating the strength we see in our core pre-Nova business in 2025. For capital expenditures, our outlook of $80 million-$90 million includes a material amount of one-time spend for the Nova centers. CapEx for the core business is fairly close to our spend in 2024. And finally, for our net leverage ratio, we expect to end the year at approximately 3.5 times. In summary, we feel good about our core business outlook in 2025, and layering on Nova will bring many opportunities with time needed to execute, but overall, we are very excited. Back to you, Keith, to close out the call.

Keith Newton (CEO)

Thanks, Matt. It's an exciting time for Concentra, and we believe we are very well positioned to further our success. This concludes our prepared remarks, and we thank everybody for the time today. We'd like to turn it back over to the operator to open the call for questions.

Operator (participant)

Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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, please, while we poll for questions. Your first question for today is from Benjamin Rossi with J.P. Morgan.

Benjamin Rossi (Analyst)

Hey, good morning. Thanks for the question. So regarding the Nova integration, you mentioned some traits about Nova that make for an easier integration here, including overlap in services offered, their facility sizes, and then their favorable margin profile. Just regarding integration, how do you approach larger transactions like Nova? And then what are you baking into your 2025 expectations regarding integration costs here? I think you mentioned CapEx, including some one-time spend.

Keith Newton (CEO)

I'd say for expectations for the larger transactions, we've had several of these over the years and learned how to do them very well. The size and the footprint that we're at these days allows these things to be very accretive to us. Once we get through the process of integrating, deploying our systems, our people, we've got a footprint with Nova that is very overlapping. So the infrastructure that will support those centers in those five states is already there. Our people are on the ground today. We're not having to deploy them from other states. So it should go fairly well for us based on our history of integration of these type entities. This is probably the second to third largest we've done. U.S. HealthWorks, by far, the largest.

We integrated a similar-sized company called OH&R based in the Northeast back in the early 2000s, and Nova will be about the similar type size of that.

Matthew DiCanio (President & CFO)

Ben, I would just add, hey, good morning. It's Matt. We've been planning for this integration for six-plus months. We've got a good playbook. We'll do similar to what we do on all the small fold-ins and add-ons. We'll follow that, but just obviously larger scale here. But we did this in 2018 with U.S. HealthWorks, and we're going to basically repeat our process there.

Benjamin Rossi (Analyst)

Got it. Thanks for the commentary there. And then just as a follow-up, just on your deleveraging pathway, following the Nova close, you mentioned 3.9 times pro forma net leverage. You're expecting to take that down about effectively a half-turn decrease in 2025 and then another half-turn in 2026. Can you just kind of walk us through your pathway here and how you're kind of contemplating pure earnings growth and debt paydown with maybe some of your incremental M&A and your de novo activity along the way?

Matthew DiCanio (President & CFO)

Sure. Yeah, I think the story is very similar to the story at the time of the IPO. We were 3.9 times levered back in July. We delevered to 3.46 times at the end of 2024. Now, with this Nova transaction, we're back up at 3.9, and our guidance is that we'll get to 3.5 times by the end of the year, and then we're still targeting roughly three times net leverage or below within the first 18 to 24 months, so it'll be a combination of cash flow generation, but also some EBITDA growth as well.

Keith Newton (CEO)

I might add this, Keith, that based on the nature and the seasonality of our business, the slower months are typically fourth quarter and first quarter. So our cash flow coming off those months is a little less than what happens as we get through the summer months, which are our busy months. So the cash flow in the second half of the year accelerates. So there's a little bit of seasonality in the cash flow. So we would anticipate an acceleration as we kind of get to the summer and start building some of those revenue months.

Benjamin Rossi (Analyst)

Got it. Thanks for the commentary here. Appreciate it.

Operator (participant)

Your next question is from Ben Hendricks with RBC.

Michael Murray (Analyst)

Hi, this is Michael Morrien for Ben. With 67 centers, Nova was one of your largest competitors. You've noted before that any one of your largest peers could be an acquisition target. Are there any particular regions that you're targeting for your next major acquisition where you would say you're under-penetrated in favorable reimbursement markets?

Keith Newton (CEO)

No, I'd say that we really cast the net far and wide at this point in time, wherever the opportunities are. We're interested in it. So there isn't any real specific region, so to speak, from that perspective.

Matthew DiCanio (President & CFO)

Yeah, and I would just add we're looking to continue to grow our footprint with our Occupational Health Centers in pretty much every state across the country, but we're also looking to expand our on-site portfolio as well. So there's opportunities there in the future.

Benjamin Rossi (Analyst)

Okay, thank you. And just switching gears, just with all the tariff talk, how do you assess the exposure of your employer clients to tariffs, and do you see any meaningful impacts to volumes or employment overall given these headwinds? Thanks.

Keith Newton (CEO)

No, at this point, we don't. I think there's a lot of uncertainty around them, really, for all businesses to see how this plays out. But at this point, based on the nature of our business and what we're doing, I don't really see much of a headwind from it.

Benjamin Rossi (Analyst)

All right, thank you.

Operator (participant)

Your next question for today is from Jamie Perse with Goldman Sachs.

Jamie Perse (Analyst)

Hey, thank you. Good morning. Keith, you talked a little bit about just the economic drivers of the business and that being tied to employment growth. I'd love to get a better sense of how you got to the comments on guidance for 2025, which I think included improved Employer Services growth and maybe more sustainable growth trends in the workers' comp business. Is that being underpinned by just a broad view on the economy or a more micro approach based on hiring plans at your customers, new customer wins, new openings, etc.? We'd just love a little more color on how you're thinking about the volume trends progressing from here.

Keith Newton (CEO)

Yeah, it's a combination of several things. I think as we went through 2024, a lot of uncertainty. I think with the election results, that was holding employers back to some extent relative to their growth or hiring plans. We've seen some better trends, as I mentioned earlier here in 2025, on the Employer Services. I think there's still some uncertainty out there as we read every day, and we continue to watch that and play it out, but we're happy early what we've seen in 2025 relative to some of the year-over-year comps that we've seen with some of the Employer Services visits at this point in time versus what we've seen in the past.

Jamie Perse (Analyst)

Okay. And then maybe for Matt, can you talk about P&L considerations for 2025? And I guess three pieces I'd like to hear a little bit more about. One is gross margins just given the strong performance in the fourth quarter. The second is G&A, also given the $8.4 million step-up sequentially that you saw in the fourth quarter. It looks like there has historically been some seasonality there, but anything you can tease out and whether that's a good indicator for G&A in 2025. And then lastly, just the timing and how we think about the Select Medical TSAs rolling off versus the standalone costs, which I think you've previously sized at about $13 million. So any help on the line items of the P&L for 2025 would be great.

Matthew DiCanio (President & CFO)

Yeah, sure. Jamie, so I think three parts to your question: cost of services, G&A, and then the TSA costs. So in our guidance, we assumed very consistent levels of cost of service and G&A. If you look at our full year 2024 over full year 2023, both of those were very stable. There was some seasonality in Q4, particularly on the G&A side, and that's pretty typical Q4 when we're closing out the year. This year, we had some transaction costs in the G&A number. We also accelerated some long-term cash compensation plans as we replaced that with public company stock grants, and I think we've talked about that in the past. So that was a little bit of the driver here in Q4. Other than that, we see stable costs for both cost of services and G&A through 2025.

On your question on Select TSA, the total estimate by the end of the TSA hasn't changed, and it's in line with the numbers you just quoted. We're going to obviously have less than that in 2025, maybe two-thirds of that number or so, roughly. And then we'll finish out the TSA costs. The incremental costs will be in 2026.

Jamie Perse (Analyst)

Okay, great. Thank you for the color.

Operator (participant)

Your next question is from Stephen Baxter with Wells Fargo.

Stephen Baxter (Analyst)

Hi, thanks. Just to follow up on an earlier question about the Employer Services business, trying to understand when you say improvement, any kind of context you could give us on how much improvement you're expecting. I'm trying to understand whether the exit rate embedded in your guidance for Employer Services is closer to what you'd view as maybe normalized growth for Employer Services or whether it's still something a little bit more modest than that. And then I have a follow-up or two. Thank you.

Matthew DiCanio (President & CFO)

Yeah, sure. Steve, it's Matt. Here's what I would say. We don't want to comment too much on the 2025 numbers that we haven't reported yet, but we felt it was important to note that we are seeing improving trends in Employer Services as we get a lot of questions about that visit category. The last three quarters have been in the -4% to -5% range, and we're seeing something that's a decent bit better here in January and February. What's implied in our guidance and our assumptions for 2025 is those trends will continue, and then they would get to flat year-over-year and then slightly positive growth later in the year. Hopefully, that helps.

Stephen Baxter (Analyst)

Yeah, that helps a lot. Thank you. And then just in terms of the rate side of the business, I know obviously you had a large update in the workers' comp business in Florida, but maybe if we think about rate updates that you're seeing sort of on a normalized basis or maybe excluding Florida, we'd love just to hear a little bit of color about how those look versus what you've seen the past couple of years. And then the same type of question for Employer Services, any kind of change in trend on the rate side we should be thinking about. Thank you.

Matthew DiCanio (President & CFO)

I would say both of those are slightly elevated over long-term periods of time. Obviously, as inflation continues to be higher than longer periods of time, a lot of our work comp rate increases are tied to that, either CPI or MEI adjustments. And our Employer Services pricing follows that same approach. So even if you were to exclude the outsized Florida rate increase, we're still expecting a very good year for both work comp and Employer Services rate in 2025.

Keith Newton (CEO)

Yeah, and this is Keith. I would say that we would anticipate something a little bit stronger than what we've been seeing on the core from the last year or so.

Stephen Baxter (Analyst)

Got it. Thank you.

Operator (participant)

Your next question is from Justin Bowers with Deutsche Bank.

Justin Bowers (Analyst)

Hi, good morning, everyone. So a lot of milestones and activity over the last six months. Can you just refresh us on the long-term growth algo of the business in terms of volume, price, same store for those new to the story?

Matthew DiCanio (President & CFO)

Sure. Good morning, Justin. We included a page in our investor deck too if anyone wants to reference, but the story is very consistent to what we've talked about historically from a revenue growth standpoint, mid- to high-single-digit growth, broken down by low-single-digit visit growth at our centers, plus or minus 3% rate growth across both main visit categories. And then we'll continue to do M&A. In that number, the mid- to high-single-digit growth rate is just our core de novo and M&A strategies. It does not include anything more sizable. So those are really the three components that drive our long-term revenue outlook.

Justin Bowers (Analyst)

Okay. And then in terms of development activities, so in the prepared remarks, you mentioned one Occupational Health Center that's come online in January and then five leases, and then also 10 on-site health centers coming online. Is there additional development activity in the guide ex de novo deal, or is that sort of the jump-off point for the year?

Matthew DiCanio (President & CFO)

No. Included in the guide is only the one center we launched, the five centers we have signed leases that we plan to open this year, and then just normal growth for our on-site business. There's no additional M&A in that guide.

Justin Bowers (Analyst)

Okay. And then last, just a quick follow-up. In terms of payer mix, how much government pay exposure do you have, Medicare, Medicaid, etc.?

Keith Newton (CEO)

It's roughly 1%, less than 1% from a Medicare/Medicaid perspective. Next to nothing. We just have some sprinklings of it out there that we've picked up through transactions over the years, but we don't do any active marketing or solicitation of those visits.

Justin Bowers (Analyst)

Okay. Got it. Thank you.

Operator (participant)

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

Joanna Gajuk (Analyst)

Hey, good morning. Thanks for taking the question. So a couple of follow-ups. First, on the Florida rate update, I don't recall you actually helping us quantify. So how much, I guess, is that left from these rates in Florida in the guidance?

Matthew DiCanio (President & CFO)

Hey, Joanna. Yeah, Florida, I think, as we've mentioned on previous calls, it went into place 1/1/2025. We're already seeing that early this year, obviously. We are not going to quantify the rate increases on a state-by-state basis, but all of that and all other states are all included in our total guidance for 2025.

Joanna Gajuk (Analyst)

All right. Is there any other states of Florida that has not updated the fee schedule for several years, or that was the only one, really?

Keith Newton (CEO)

That was the only one that we would anticipate this year. The majority of all the others have been on somewhat of a regular basis, and as we've mentioned in the past, the majority of our states are on a regular basis of either automatic fee escalators that go into play every year, typically January 1, or they'll review it and make some adjustments to it periodically, but Florida was probably the largest at this point in time. There's several others we're working on that we would be hopeful in the future. We might get something, but I wouldn't anticipate it being on the magnitude of a Florida.

Joanna Gajuk (Analyst)

All right. And the last one on that topic related, I guess, with that rate update in Florida, is the schedule update being, I guess, bringing these rates to a point where the margins are kind of comparable to other markets? Does that mean that you have some active plans to add more locations in the state?

Keith Newton (CEO)

Yeah, absolutely. Some of the de novo projects that Matt just mentioned earlier have been in Florida, a couple in Orlando, Miami, Fort Myers just over the last several months. In addition, definitely M&A activity evaluating that in Florida. So it's made it a much more attractive state for us to deploy capital in at this point in time.

Joanna Gajuk (Analyst)

Thank you so much for taking the question.

Operator (participant)

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

Keith Newton (CEO)

Appreciate everybody joining us today, and that concludes our remarks. Thank you.

Operator (participant)

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