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    Concentra Group Holdings Parent (CON)

    Q3 2024 Earnings Summary

    Reported on Mar 18, 2025 (After Market Close)
    Pre-Earnings Price$20.08Last close (Nov 1, 2024)
    Post-Earnings Price$20.08Last close (Nov 1, 2024)
    Price Change
    $0.00(0.00%)
    • Launch of Advanced Primary Care offering and expansion of onsite clinics: Concentra has officially launched its Advanced Primary Care offering, adding 10 new onsite clinics, including both primary care and occupational health services. This new service line is expected to be a significant contributor to the company's growth, potentially making the portfolio much larger relative to the overall company. Additionally, there are substantial M&A opportunities in the industry that Concentra is well-positioned to pursue, potentially expanding their market presence.
    • Strong workers' compensation reimbursement rates with upcoming Florida increase: The company expects continued strong workers' compensation reimbursement rates, which remain stable and are projected to increase. Notably, the Florida rate increase is expected to take effect on January 1, 2025, which will contribute positively to revenue next year. Management expresses confidence in their projections for 2025, with no significant headwinds anticipated and good visibility into future performance.
    • Diversification across industries enhancing resilience and growth prospects: Concentra is highly diversified across industries, reducing risks associated with downturns in specific sectors. This broad industry mix is a key strength, as it allows the company to maintain stable visit volumes despite fluctuations in individual industries. As employee hiring activity picks up post-election and with potential interest rate changes, the company anticipates increased volumes, particularly in employer services.
    • Declining employer services visits due to reduced hiring events: The company experienced a 2.6% decline in employer services visits in Q3 2024 compared to the prior year, adjusted to a 4.1% decrease on a per business day basis. This trend is attributed to lower hiring events as quit rates and job openings have fallen, and the decline is expected to continue unless there's improvement in the hiring environment.
    • Slowing growth in workers' compensation visits: While workers' compensation visits increased by 1.7% in Q3 2024, this growth is less than in previous quarters and translates to only a 0.2% increase on a per day basis. Executives noted that sustaining growth may require improvement in employment levels, which could be uncertain given current economic conditions.
    • Exposure to macroeconomic and weather-related risks: The company's performance is sensitive to macroeconomic factors such as interest rates and election outcomes, which may impact hiring and labor force dynamics. Additionally, weather events like hurricanes led to an estimated $1.7 million in revenue loss and $600,000 in EBITDA reduction in Q3 2024. Such external factors could continue to pose risks to operational performance.
    1. Workers' Comp Reimbursement Rates
      Q: Outlook on workers' comp rates and Florida update?
      A: Workers' comp reimbursement rates remain strong and stable, with increases already in place and expected to continue. The company feels very good about projections into 2025. Regarding Florida, a rate increase is on track to be implemented in February 2025, which will positively impact revenues, but specific figures are not yet publicly disclosed.

    2. Weather and Cyber Impacts
      Q: How did weather events and outages affect results?
      A: The company faced impacts from Hurricane Beryl in July, Hurricane Helene in late September, and a global cyber outage in July, primarily affecting one day. The total estimated impact from these events was approximately $1.7 million in revenue and about $600,000 in EBITDA.

    3. Workers' Comp Visit Growth
      Q: Expectations for workers' comp visit trends?
      A: Workers' comp visits per day were up 2% in the quarter, not as strong as in Q1 and Q2 due to certain events. Since visits are tied to total employment, and employment continues to increase, the company expects future visits to be in line with the blended average of Q1 through Q3.

    4. Hiring and Labor Environment
      Q: Impact of hiring trends on volume growth?
      A: To achieve the consensus volume growth estimates of around 2%, some improvement in the hiring and labor environment is needed. The company is mitigating current headwinds and expects hiring activity to pick up post-election and as interest rates stabilize.

    5. Hurricane Milton's Impact
      Q: Does Hurricane Milton affect Florida expansion?
      A: Hurricane Milton in October had an impact but was not materially significant and is included in the full-year 2024 guidance. The event has not slowed down expansion efforts in Florida, and rebuilding efforts may positively affect visit volumes.

    6. Q4 Seasonality and Guidance
      Q: Expectations for Q4 performance amid seasonality?
      A: Q4 is historically the lowest quarter due to cooler weather and holidays. This year is consistent, with guidance implying revenues down 5% sequentially. However, the company expects Q4 to be up year-over-year, outperforming the prior year's fourth quarter, which had one-time items.

    7. New Centers and Onsites
      Q: Timing of new centers and onsite openings?
      A: Two new centers are opening in Q4, with 6 to 7 signed leases for next year. Additionally, 10 new onsite clinics have been won, which will come online over Q4 and into 2025. Some of these onsites include advanced primary care offerings.

    8. 2025 Guidance and Outlook
      Q: Any major headwinds or tailwinds for 2025?
      A: No significant changes from prior expectations. Visit trends are consistent, the growth trajectory is strong, and the upcoming Florida rate increase will have a positive impact. The company is confident about 2025 and has good visibility into the separation from Select.

    9. Workers' Comp Rate Increases
      Q: Expectations for workers' comp rate increases?
      A: Year-to-date, rates are up 2%, and 2.7% for the quarter. Long term, the company expects annual increases of around 3%, and anticipates rates to be slightly higher next year due to the Florida increase.

    10. Industry Exposure and Diversification
      Q: Exposure to different industries in services?
      A: The company's exposure is highly diversified across industries for both workers' comp and employer services. This diversification helps mitigate industry-specific risks.

    11. Advanced Primary Care Offering
      Q: Update on advanced primary care growth?
      A: The advanced primary care offering was officially launched during the quarter, with 10 additional onsite clinics won. While in early stages, the company expects this new service line to grow significantly and contribute meaningfully in the future.

    12. Economic Sensitivity and Employer Engagement
      Q: Efforts to support employers amid economic trends?
      A: The company continues to work closely with employers, third-party administrators, and insurance companies to support a greater percentage of their needs. By prospecting multiple channels, they aim to mitigate economic headwinds and drive volume growth.

    13. Guidance Timing
      Q: When will guidance for next year be provided?
      A: The company may provide guidance for 2025 before releasing Q4 results, possibly at major conferences in early January and February, but the exact timing is still to be determined.

    Research analysts covering Concentra Group Holdings Parent.