Concentra (CON) Q3 2026 Earnings Call Transcript

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DATE

Nov. 6, 2026

CALL PARTICIPANTS

• Executive Chairman - William Keith Newton
• President and Chief Executive Officer - Matthew T. DiCanio
• Executive Vice President and Chief Financial Officer - Tanner Newton

TAKEAWAYS

• Revenue -- $622.1 million, growing 8.6% year over year driven by a 4.9% increase in patient visit volume and a 3.3% increase in revenue per visit.
• Net Income -- $67.8 million, up 36% from $49.8 million in the prior year period.
• Adjusted EBITDA -- $140.2 million, an increase of 17.9% year over year reflecting strong flow-through from volume and rate growth.
• Adjusted EBITDA Margin -- 22.5%, representing 178 basis points of expansion compared to 20.7% in the prior year.
• Adjusted Earnings Per Share -- $0.52, increasing 33.3% from $0.39 in the third quarter of 2025.
• Occupational Health Center Patient Visits -- 58,312 per day on average, a 4.9% increase supported by labor market conditions and market share gains.
• Workers' Compensation Visits -- 26,407 per day, growing 4.2% year over year due to healthy workforce demand in blue-collar sectors.
• Employer Services Visits -- 31,126 per day, up 5.8% year over year driven by hiring-related services like drug screens and physicals.
• Revenue Per Visit -- $152.14, growing 3.3% year over year, with workers' compensation rates up 3.5% and employer services rates up 4.0%.
• Occupational Health Center Revenue -- $569.7 million, an 8.3% increase year over year, with workers' compensation contributing $370.5 million.
• Employer Services Segment Revenue -- $190.5 million, up 10% year over year, partially aided by a mix shift toward higher revenue physicals.
• On-site Health Clinic Revenue -- $38.4 million, growing 10% year over year, though organic growth moderated as the Pivot acquisition entered the organic calculation.
• Other Business Revenue -- $14.1 million, representing 18.4% growth year over year across telemedicine and pharmacy operations.
• Full-Year 2026 Revenue Guidance -- $2.36 billion to $2.38 billion, raised from the previous range of $2.325 billion to $2.375 billion.
• Full-Year 2026 Adjusted EBITDA Guidance -- $505 million to $510 million, increased from the previous outlook of $485 million to $495 million.
• Free Cash Flow -- $32.2 million, a decrease from $40.2 million in the prior year due to working capital timing and higher tax payments.
• Total Debt -- $1.52 billion as of Sept. 30, 2026, with a net leverage ratio of 2.9x.
• Term Loan B Repayment -- $52.4 million, including a $50 million discretionary prepayment during the quarter.
• Share Repurchases -- 1 million shares for $34.65 million, with $19 million remaining under the original authorization.
• New Share Repurchase Authorization -- $250 million, authorized by the board with no expiration date to provide additional capital return flexibility.
• Facility Expansion -- Seven new centers opened year to date, including three de novos in Kansas City, Boise, and Daytona Beach during the third quarter.
• G&A Expenses -- $60.9 million or 9.8% of revenue, compared to 9.2% in the prior year, primarily due to non-GAAP separation and transaction costs.
• Cash and Cash Equivalents -- $85.8 million at quarter end, with corporate ratings upgraded to BB by S&P Global in August.

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RISKS

• Tanner Newton stated, "Pivot's relatively modest year over year growth diluting stronger growth in the core business," noting a moderation in organic growth for the on-site segment.
• Tanner Newton reported that operating cash flow decreased to $51.9 million from $60.6 million, "driven primarily by working capital timing and higher cash tax payments following the roll off of certain tax benefits."
• Matthew T. DiCanio noted that "it is too early to provide a definitive outlook for workers' compensation rates" for 2027 as many states have not yet released their updated fee schedules.

SUMMARY

Concentra Group Holdings Parent, Inc. (NYSE:CON) reported a leadership transition effective Nov. 1, 2026, with Matthew T. DiCanio assuming the role of president and chief executive officer and Tanner Newton becoming executive vice president and chief financial officer. Management stated that third quarter results were driven by broad-based strength in visit volumes across all six regions and most end markets, leading the company to raise its full-year revenue and Adjusted EBITDA guidance. The company completed several center expansions and maintained a disciplined focus on cost management and staffing efficiencies, which contributed to margin expansion. Furthermore, the company reached a milestone in its multiyear separation from Select Medical, with the transition services agreement set to conclude at the end of Nov. 2026.

• CEO Matthew T. DiCanio stated, "separation activities are substantially complete and will conclude with the expiration of the TSA with Select Medical at the end of this month."
• The company is exploring expansion into New York, with CFO Tanner Newton noting, "we do think that the level that they have increased the E&M codes within the state have made it attractive enough for us to at least explore entry."
• Management reported that customer retention remains at multiyear highs, while year-to-date new business activity is tracking ahead of 2025 levels.
• CFO Tanner Newton stated that the company's "first priority is always gonna be good accretive growth opportunities," followed by reaching a long-term debt leverage target of 2.5x.
• Matthew T. DiCanio indicated that historical data suggests a pickup in employer services often serves as an early indicator of subsequent increases in workers' compensation volume.
• The company expects to open 15 total centers in 2026 through a combination of acquisitions and de novo development, with low double-digit openings planned for 2027.

INDUSTRY GLOSSARY

• De Novo: A new facility opened and built from the ground up rather than acquired.
• E&M Codes: Evaluation and Management codes used by medical professionals to bill for patient office visits.
• Fee Schedule: A complete list of fees used by government and private insurance programs to reimburse healthcare providers.
• TSA: Transition Services Agreement, a contract governing the temporary provision of services from a former parent company to a spun-off entity.
• Workers' Compensation: A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment.

Full Conference Call Transcript

Operator: Good morning, and thank you for joining us today for the Concentra Group Holdings Parent Inc. Earnings Conference Call to discuss the Third Quarter 26 Results. Speaking today are the company's Executive Chairman, Keith Newton the company's president and chief executive officer, Matthew T. DiCanio, the company's executive vice president and chief financial officer, Tanner Newton. 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 future financial performance of the company, including without limitation, statements regarding operating results, growth opportunities, and other statements that refer to Concentra's current plans, expectations, strategies, intentions, and beliefs. You are hereby cautioned that these forward looking statements may be affected by the important factors among others set forth in Concentra's earnings release and that reports that are filed or furnished to the SEC. Consequently, actual operations and results may differ materially from those discussed in the forward looking statements.

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. Additionally, during today's call, we may reference measures such as adjusted EBITDA, adjusted EBITDA margin, and free cash flow which are non GAAP financial measures. The definitions of adjusted EBITDA, adjusted EBITDA margin, and free cash flow the tables reconciling those metrics to the corresponding GAAP measures are provided in the earnings release. At this time, I will turn the conference over to Mr. Keith Newton, Mr. Matthew T. DiCanio and Mr. Tanner Newton.

William Keith Newton: Thank you, and good morning. This is our first earnings call following our leadership transition. And I would like to begin by congratulating Matthew on his assumption of the chief executive officer role and Tanner on his assumption of the chief financial officer role effective as of November 1st. These appointments reflect a thoughtful succession process and the strength of the leadership team we have built over many years. Concentra enters in this next chapter from a position of considerable strength. We have a differentiated market position, a proven strategy, strong operational execution, and a talented, very experienced team, serving our patients, employer customers, and partners every day.

I am confident that Matthew Tanner, and the broader leadership team were exceptionally well positioned to build on the momentum we have established and continued to create long term value for our stakeholders. While my role has changed, commitment to Concentra remains the same. As executive chairman, I will continue to partner very closely with Matthew the board, and the leadership team to support our strategic priorities and a seamless and successful transition. I am very excited about the opportunities ahead, and the future of the company. With that, I will turn the call over to Matthew.

Matthew T. DiCanio: Thank you, Keith, and good morning. I appreciate your leadership and look forward to continuing our partnership in your role as executive chairman. I also want to welcome Tanner to his first earnings call as chief financial officer. We had a great third quarter with strong visit volume, higher revenue per visit, and disciplined cost management driving significant earnings growth. Let's jump into some of the highlights. Total revenue increased 8.6% year over year to $622.1 million Net income was $67.8 million up 36% from a year ago. And adjusted EBITDA was $140.2 million. Up 17.9% from a year ago.

Tanner will walk through the financial details, but I wanna spend a few minutes on what we saw across the business and where we are focused. Total occupational health center patient visits increased 4.9% to an average of more than 58 thousand visits per day in the third quarter. Our workers' compensation visits per day increased 4.2% and employer services visits per day increased 5.8% relative to the prior year. We believe this performance reflects a combination of favorable labor market conditions in many of the blue collar sectors we serve, and continued market share gains. Growth was broad based across all 6 of our regions and most end markets.

Recent activity in our employer services business remains particularly encouraging with strong increases in hiring related services such as drug screens and physicals, across transportation and logistics, manufacturing, construction oriented customers, and other industries as well. The activity we are seeing among customers in these sectors continues to indicate healthy workforce demand. We believe our ongoing investments in sales execution, account management, and technology continue to strengthen our competitive position and support market share gains. Customer retention remains at multiyear highs. While year to date new business activity is tracking ahead of 2025 Levels. Turning to our occupational health center rate, revenue per visit increased 3.3% year over year in the third quarter.

This growth was driven by a 3.5% increase in workers' compensation and a 4.0% increase in employer services revenue per visit. Employer services revenue per visit was slightly elevated this quarter in part due to a shift in the mix with services comprising a larger percentage of higher revenue per visit physicals relative to drug screens. During the third quarter, we acquired 4 medical centers in Minnesota. We also opened 3 De Novo Centers In Kansas City, Missouri, Boise, Idaho, and Daytona Beach, Florida, with the latter 2 representing new markets for Concentra. Following quarter end, we opened 2 additional centers near Pensacola, Florida and Washington, DC. We expect to open 1 more center before the end of this year.

In total, completed acquisitions in de novo development are expected to add 15 new centers during 2026 We are currently anticipating low double digit de novo openings in 2027. Our M&A pipeline remains strong, with multiple bolt on transactions progressing well. We see attractive opportunities to continue expanding the business through both acquisitions and de novo development, we will remain disciplined in evaluating returns and executing on those opportunities. Within the on-site business, fundamentals remain strong, supported by employers' continued focus on managing their rising health care costs, a growing sales pipeline, and strong operational execution. As we capture the benefits of the Pivot integration.

I will now turn the call over to Tanner to review our financial results in more detail.

Tanner Newton: Thank you, Matthew, and good morning. I am pleased to join you in my new role and look forward to continuing to work with our leadership team and the investment community. I will begin with our consolidated results, then review operating segment performance, expenses, cash flow, and the balance sheet. Total company revenue was $622.1 million in Q3 26 compared to $572.8 million in the prior year. Representing 8.6% growth year over year. We saw a slight acceleration in year over year organic revenue growth compared to Q2 which grew at 8%. Net income attributable to the company in Q3 26 was $65.9 million or $0.52 per share compared to $48.3 million or $0.38 per share, in Q3 25.

Adjusted net income attributable to the company in Q3 26 was $66.1 million and adjusted earnings per share was $0.52 compared with $49.9 million and $0.39 per share respectively in Q3 25. Reflecting growth of 33.3% in adjusted earnings per share year over year. Adjusted EBITDA increased 17.9% to $140.2 million and adjusted EBITDA margin expanded 178 basis points to 22.5%. Sequentially, relative to Q2, margin was affected by 1 additional expense day in Q3 compared with the second quarter. More broadly, the year over year improvement reflects strong volume and rate growth. Disciplined execution, and operating efficiencies across the business. Next, breaking down revenue by segment.

Total occupational health center revenue increased 8.3% year over year $569.7 million Workers' compensation revenue increased 7.9 percent to $370.5 million. While employer services revenue increased 10% to $190.5 million. On-site revenue increased 10% year over year to $38.4 million. Organic growth moderated versus Q2 as Pivot entered the organic calculation following the acquisition anniversary. But Pivot's relatively modest year over year growth diluting stronger growth in the core business. Finally, other businesses, which include telemedicine, pharmacy operations, and other occupational health related services, generated revenue of $14.1 million an increase of 18.4% year over year. Moving on to expenses.

Cost of services was $426.7 million or 68.6% of revenue in Q3 26, an improvement from 70.8% of revenue for the same quarter of the prior year. The drivers were consistent with the first half of the year with strong flow through from visit and rate growth together with favorable staffing efficiencies across our centers. Our total general and administrative expenses were $60.9 million or 9.8% of revenue. In Q3 26. Compared to 9.2% of revenue in the same quarter of the prior year.

Excluding items that are added back for the purposes of calculating adjusted EBITDA, including equity compensation expense, onetime select separation costs, and M&A transaction costs, G&A expense was $56.4 million for the quarter, or 9.1% of revenue compared to 8.5% of revenue in the same quarter of the prior year. Turning to cash flow. In Q3, we generated $51.9 million of operating cash flow compared to $60.6 million in the third quarter of 2025. The year over year decrease was driven primarily by working capital timing and higher cash tax payments following the roll off of certain tax benefits associated with the OBBBA that we received in the prior year period.

Excluding these factors, the underlying cash generating capacity of the business remains strong and consistent with our expectations. Investing activities use the net $25.9 million of cash in the third quarter, which includes both acquisition capital related to our Minnesota deal, that closed in the quarter and net inflows from the sale of previously owned building. Free cash flow or cash flow from operations less cash flow used in investing activity, excluding business combinations, totaled $32.2 million. A decrease from prior year third quarter free cash flow of $40.2 million The year over year decrease was primarily due to the aforementioned lower cash flow from operations in Q3 26.

Finally, financing activities used $98.2 million of cash during the quarter, We repurchased 1 million shares for $34.65 million and returned an additional $8 million to shareholders through dividends. At September 30, 2026, approximately $19 million remained under the board's original $100 million Repurchase authorization. Su to quarter end, the board authorized a new $250 million share repurchase program, with no expiration date. The authorization provides additional flexibility to return capital while continuing to invest in organic growth, acquisitions and de novos, and debt reduction. The board also declared a quarterly cash dividend of $0.0625 per share payable on or about December 4, 2026 to shareholders of record as of November 1st9, 2026.

During the quarter, we repaid $52.4 million on our Term Loan B, comprised of both mandatory amortization and a $50 million discretionary prepayment. We ended the quarter with a total debt balance of $1.52 billion and a cash balance of $85.8 million Our net leverage ratio per our credit agreement at the end of September was 2.9x. We were also pleased to receive a ratings upgrade from S&P Global in August with our corporate rating improving from BB- to BB. In mid October, Moody's also revised its outlook from stable to positive. Now I will turn it back over to Matthew to close this out with some comments on separation activity as well as our updated guidance.

Matthew T. DiCanio: Thanks, Tanner. As discussed last quarter, separation activities are substantially complete and will conclude with the expiration of the TSA with Select Medical at the end of this month. This marks the successful completion of a multiyear separation I would like to recognize and thank both our Concentra team and the Select Medical team for their tremendous efforts and partnership throughout this entire process. Their work has been instrumental in achieving a smooth and successful transition, and we are pleased to have this milestone behind us. Now with respect to our updated guidance, we are raising our 2026 outlook as follows.

We are increasing the low end of our revenue range by $35 million and the high end of our revenue range by $5 million. Resulting in a revised range of $2.36 billion to $2.38 billion. We are increasing the low end of our adjusted EBITDA range by $20 million and the high end of our adjusted EBITDA range by $15 million resulting in a revised range of $505 million to $510 million Our free cash flow range of $220 million to $240 million and our capital expenditure range of $70 million to $80 million remains unchanged. The business continues to perform well, and we expect to close out the year on strong footing.

As in prior years, we expect to provide formal 2027 guidance early next year when we have greater visibility into the economic and reimbursement environment. At this stage, we expect employer services rate growth to remain generally consistent with our long term expectation of approximately 3%. It is too early to provide a definitive outlook for workers' compensation rates because most states have not yet announced changes to their fee schedules. Based on the information currently available, however, we have no reason to expect aggregate workers' compensation rate growth to differ materially from our long term expectations. That concludes our prepared remarks. We thank everyone for the time today.

We will turn it back to the operator to open the call for questions.

Operator: Certainly. Everyone at this time, we will be conducting a question and answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Ann Hynes from Mizuho. Your line is live.

Ann Hynes: Great. Thank you so much. So I just wanna break down the strength just in the visits. So I know you give visits per day. What is the trend with visits per patient? What does that typically average? And is that growing per patient, or are you seeing absolutely new patients? Thanks.

Matthew T. DiCanio: Hey, good morning, Ann. it is Matthew T. DiCanio. Thanks for the question. So we do not really break down our visits beyond what we disclosed publicly, but I will add some comments on your question. We have talked about, complexity of cases, severity, things like that, that have been trending higher over recent years. We saw a little bit of that in Q3, but Q3 visits were really driven primarily by stronger initial injury visit volumes, which is the start of the patient cycle within Concentra.

Ann Hynes: Okay. Great. Oh, and I meant to say congratulations to everyone before my question. Thank you. On your new positions. And then when I head into 2027, can you remind us how much M&A EBITDA contribution that was in 2026? When we do our model, should we put kind of some unannounced M and A in our models, or would you prefer just, like, organic models?

Tanner Newton: Yeah. Hey, Ann. This is Tanner. I would say the way we think about it is until we have got deals definitively done, we do not bake that into our internal projection. So I would expect our analyst community to follow along or follow in suit from that standpoint.

Ann Hynes: Alright. Great. Thank you.

Operator: Thank you. Your next question is coming from Justin Bowers from Deutsche Bank. Your line is live.

Justin Bowers: Hey, good morning, everyone. Matthew, we have continued to get constructive feedback from your customers and talked about new business development trending very well this year as well. So longer term, how should we think about market share gains relative to the historical algo of volume plus price? And then part 2 would be, again, for Matthew, and or Tanner. Any updates on New York and some of the developments there?

Matthew T. DiCanio: Yes, sure. I will take the first 1, Tanner. You can hit the second 1 on New York. As far as market share gains, similar to what we have said in prior quarters, our teams out there managing the centers and the visit volumes are doing a tremendous job. Retention is up across the board. Our KPIs are at or near all time highs, and anything we measure, whether it is turnaround times, patient satisfaction scores, things like that.

So our job on a go forward basis will be to continue that And we have got some technology enhancements that will look to continue to roll out to help support the center colleagues so we can continue to drive that great experience. And you know, as we continue to add dots on the map, and do what we are doing at our existing centers, that is our goal to continue our market share gains across the board.

Tanner Newton: Yeah. And hey, Justin. With respect to New York, there is not a substantive update at this time. We got through the public comment period. The regulator basically said, hey. Take your comments. Understand them, but we are going to stick with our existing proposal for now. We are not exactly sure when that is gonna go into effect. They have not provided guidance around that. We are still thinking sometime early 2027, hopefully. That being said, you know, we do think that the level that they have increased the E&M codes within the state have made it attractive enough for us to at least explore entry. either via de novo or, you know, small bolt on acquisitions.

So we are gonna be looking at that in pretty heavy detail.

Justin Bowers: Got it. Thanks so much.

Operator: Thank you. Your next question is coming from Benjamin Rossi from JPMorgan. Your line is live.

Benjamin Rossi: Hey, good morning. Appreciate you taking my questions. I guess across segments, rates held up pretty steadily from 2Q despite the sequential step up in volume growth. To what extent did rates reflect this underlying fee schedule contract pricing versus some of the service line visit mix and market share gains? Looking ahead to 2027, you mentioned consistency with rate trends. In your 3% long term guide. Are there any specific states to call out regarding fee schedule refreshes for next year?

Matthew T. DiCanio: Sure. Good morning, Benjamin. Thanks for the question. So from a rate standpoint, 3.5% work comp rate year over year in the quarter 4% from Employer Services. We did call out there was some visit mix that drove the employer services rate. Slightly higher than our long term average of, 3%. So a little bit of visit mix. But from a work comp standpoint, most of that is just straight fee schedule gains year over year.

Operator: As far as 27 rates, I think that was the second half of your question.

Tanner Newton: We have. We are about to find out a number of states. I think in the next 45 to 60 days, there is about 20 to 25 states that release their fee schedules for next year. So we will have we will have a lot more information Most of those states release in December. Most are effective January 1. We have some pretty good insight, but, obviously, we would like to wait, you know, the next 30, 45 days and get the full dataset.

William Keith Newton: Great. Hey, Matthew. This is Keith. I would say the only thing to add to what Matthew just said, so specific more to employer services, work comp is that pretty much in the finalization stages of sticking a stake in the ground on that, communicating it to the employers to our January 1 price increases that we typically do every year As we have talked to you guys in the past, we will evaluate that typically October, November time frame. Communicate to the employers what we are doing, in a generic letter. And put that into play on January 1 for everybody, and that is historically gone very well for us.

And we anticipate that to do the same and be basically in line with what we have been seeing Great.

Benjamin Rossi: Appreciate the added details there. As a follow-up, on some of the initial contributions you described from things like onshoring and the data center build out, Can you just refresh us on how these trends are showing across your footprint and maybe some of the specific indicators from either your customers or screening data that help us get a feel for whether this is a sustained demand driver? Thanks.

Tanner Newton: Yeah. Hey, Benjamin. Tanner here. Yeah, that is a great question, and it is something that we are spending a lot of time trying to dive into our internal data on and parse out some derive some responses from. So what I would say there is with respect to with respect to data centers, it is a really small. it is a growing part of our business, but it is still relatively small and immaterial part of the overall book of business. We are tracking all 300 plus projects across our sales team, both on-site and our core brick and mortar sales teams.

I think there is going to be more opportunity going forward on the on sites just given the nature of the construction projects there that are that are the size of those construction projects that we are gonna be tracking. But I would not say that it is a huge contributor right now. On the overall reshoring trend, just given the data that we are seeing with respect to things like manufacturing and construction growth and particularly within the employer services book of business, which is we always talk about as kind of a leading indicator We are optimistic and hopeful that is a sign of a growing reshoring trend.

But, again, I think we have talked about this in the past. it is still a little bit too early to definitively say that 1 way or the other.

Benjamin Rossi: Thanks again for the details, and congrats again on the new roles to Matthew and Tanner.

Matthew T. DiCanio: Thanks, Benjamin.

Operator: Thank you. Your next question is coming from Benjamin Hendrix from RBC. Your line is live.

Michael Murray: Hey. This is Michael Murray on for Benjamin. Thanks for taking my questions. Just kind of building on the last question. Just wanted to hear your initial results on the election results. Or your initial thoughts on the election results and if that has changed your long term perspective on the tailwinds from the data center build outs and the manufacturing reshoring.

Matthew T. DiCanio: Yeah. it is Matthew. Hey, Michael. Thanks for the question. Here's what I would say, just to add on to Tanner's comments too. About reshoring and the data center build out. If you look at our results and what is driving the visit volumes, it is very broad based. And we are very diversified across the country, across industries, across geographies, across employer sizes. And what we have been seeing is strength across pretty much every single geography. So, you know, we do not really have a view on the election results and the potential impact on our business.

We are continuing to monitor the day to day visit volumes and it is not 1 industry that is driving what we are seeing right now. So that is really my main point.

Michael Murray: Okay. that is helpful. And then just a quick follow-up. Looks like adjusted G&A ratio was up a bit year over year even with the strong revenue growth. So is this the right run rate moving forward? Thank you.

Tanner Newton: Yeah. I would say in Q3, we had a few additional expenses I would characterize as more onetime in nature. And so we had a slight uptick relative to Q2 G&A. I think the run rate is probably somewhere in between Q2 and Q3 G&A. Is how I would look at it on a go forward basis.

Michael Murray: Alright. Thank you.

Operator: Thank you. Your next question is coming from Jack Slevin from Jefferies. Your line is live.

Brett: Hey, good morning, guys. This is Brett on for Jack. Just wanted to touch on the margin progress you guys have made and kind of get a look into once you lap these separation costs moving forward into 2027, how we should be thinking about the margin expansion and maybe the levers you can pull upon?

Tanner Newton: Yeah. So we have had really strong margin expansion in 2026. I think that we feel pretty confident that we are going to be able to sustain that level of margin going forward. Staffing efficiencies in our centers have been great. We are getting. Starting to get more leverage off of our G&A as we start to run rate the separation costs. So I think that, you know, over a long period of time, or a medium period of time, there is still opportunity for margin expansion. Particularly as we continue to invest in centers and efficiencies within the centers.

But would I expect to see the same level of margin expansion year over year that we saw in 2026 relative to 2025. Probably not. But I do think that we can sustain the current level of margin going forward.

Matthew T. DiCanio: Yeah. I would just I would just add to that. it is really a combination of strong rate strong visits, We have done a nice job with cost control. And we have obviously been very active from a growth standpoint. So you know, that is our strategy. We are gonna continue that into 2027, and you know, what you are seeing now with the from a margin expansion standpoint is very much in line with how we have talked about the business for the last 2, 3 years since the IPO.

As soon as we get through the separation cost, digest some of the m and a, we expected margin expansion, and that is pretty much exactly what we are seeing right now.

Brett: Great. that is super helpful. Just for a quick follow-up on the capital allocation front. I know you have the new buyback authorization and obviously, with leverage coming down, below 3x now, how should we be thinking about moving forward capital allocation at appetite for further M&A and de novo growth as well?

Tanner Newton: So, the new authorization is really a product of the fact that we are almost through the original authorization that we got put in place and the latter part of 2025. So we size this appropriately relative to our market cap. And really think it just provides a tremendous amount of flexibility as we go forward from an overall capital allocation standpoint. Our first priority is always gonna be good accretive growth opportunities, both organic capital being spent and inorganic capital being spent. We think that is our highest returning use of capital.

Beyond that, we have a long term debt target leverage target of 2.5x, which we think we are going to continue to work down towards over the course of the next 12 months. And that has historically been priority call at 1 b. I think now that we are below 3x leverage and working down towards 2.5x, we are able to elevate share repurchases into the category of 1b, 1c alongside debt pay down. So I think given the nature of our free cash flow and the strength of that, we are able to do all 3 of those things simultaneously.

Brett: Thanks.

Operator: Thank you. Your next question is coming from Scott Fidel from Goldman Sachs. Your line is live.

Sarah Conrad: Hey. Good morning. You have got Sarah Conrad on for Scott. Keith, last quarter, you described employer services as a leading indicator that ultimately yields future workers' comp visits. With the acceleration in employer services visit growth in the third quarter, does that give you greater confidence into continued workers' comp strength into 2027? Can you also help us think about the typical lag between the strength in employer services and then the workers' comp volumes?

Matthew T. DiCanio: Yeah. Hey, Sarah. it is Matthew. I can take that, and Keith or Tanner jump in as well. Yes. We have historically seen when there is a pickup in employer services, there is a subsequent pickup in work comp. What I would say here is it is 1 quarter of data. We have gotta continue to monitor employer services. We have been trending in the 1% to 2% growth rate range for employer services. Obviously, saw a nice pickup to 5.8% here. But, you know, when you look at our 40, 45-year history of visit data, it is an early indicator of economic activity, but, obviously, we need to see more than 1 quarter worth of that activity.

William Keith Newton: Yeah, I would say it is definitely positive. When we are seeing this. And, again, as Matthew said, it is early, but historically, that is what it tended to reflect is that workers' comp follows. So that is really what really what I would add to it.

Sarah Conrad: Great. Thank you. And then can you give us an update on wage inflation turnover, and clinician availability? Just given all of the volume strength you have been seeing, how are you thinking about the incremental hiring needs and labor unit costs as you move into 2027?

Matthew T. DiCanio: Sure. Yeah, what we are seeing right now is pretty consistent with what we have seen over a long period of time. Right around 3% wage inflation, Turnover is stable, and in certain areas is improving slightly. So obviously, the visit volumes are strong. Our efficiencies at the center level are in improving, but we have been able to do a nice job from a recruiting standpoint and retention standpoint. But something we are focused on heavily, and we are reinvesting in our colleagues, and, we will continue to monitor that as we go forward.

Operator: Thank you. Your next question is coming from Jared Haase from William Blair. Your line is live.

Jared Haase: Hey. Good morning. Thanks for taking the questions. You have had a little bit of favorability on mix supporting your revenue per visit, both in workers' comp and then this quarter in employer services, it sounds like. I am wondering, is that something that you would say is becoming more in your control structurally such that mix could be a little bit of a rate tailwind a more durable basis going forward? You know, above and beyond what you get from a fee schedule perspective, or do you still feel like that sort of more just the reality of what is going on in the market?

Matthew T. DiCanio: Jared, what I would say on that is the visit mix that bounces around a decent bit. there is been no real consistent theme. So some quarters will have physical slightly higher than import. Than drug screens. Some quarters will be slightly the reverse of that. So there really has been no consistent theme in employer services or work comp.

Jared Haase: Okay. that is helpful. And then, you mentioned a couple of the de novos that you opened up recently, a couple of them in new markets. Could you just kind of remind us what the motion looks like for opening a center in a new market, some of the you know, start up or ramp up activities involved with that. And then, really, do you go about building relationships in the community, building brand awareness for Concentra with employers and ultimately with employees.

Tanner Newton: Sure. Yeah, so just as we think about opening and developing de novos in a center, it starts with looking at injury density in any given market. It involves looking at the fee schedules in any given market, and it involves looking at real estate in any given market. You really need all 3 of those things, those factors, playing together to have a successful de novo. And when we go into a market, particularly a new market, we lead with our sales and marketing team months and months in advance. We are doing open houses. we are visiting different workplace sites. We are doing marketing blitzes in the community. Such that they are getting familiarity with Concentra.

And so by the time that de novo actually opens, we are driving solid visits day 1. So in some cases, that is-- It could be 25 visits a day in the first week. In some cases, that is upwards of 50 visits a day just depending on the market. But in terms of the overall economics of a de novo, we still look at that and think. And view the payback and the overall payback inclusive of capital spend in the 2 to 3 year range.

William Keith Newton: Yeah. I am just going to add to that. You know, we have got a large footprint now We have gotten so much more sophisticated and better at these de novos. Our Salesforce is typically segregated for certain sized employers out there. So when we open up in Jacksonville, our first center, we have got a national sales force that is handling the UPS and the Amazons and the large national employers that use us elsewhere. So the first thing they are doing is communicating to their corporate contacts about this new center.

And the local UPS or Amazon or FedEx terminals, wherever they may be, finding out who they are using and, making them aware that we are opening up and pretty quickly, we gotten really good at making those switches. So those anchor accounts pretty quickly go in there.

And then we have got the ground level folks that are knocking on the doors within a 5 to 10 minute drive time of those particular clinics and meeting with a local municipalities, which again, those local municipalities, the cities, the schools, and all that are in a short area, time frame from those centers. there is been a real need in a lot of these smaller municipalities that we have opened up is. And just communicating way ahead of time, doing this Tanner had mentioned, the open houses and inviting them in for tours. And, it is really, I think the recipe book has, really progressed dramatically over the last few years.

We are very successful at ramping them up very quickly.

Matthew T. DiCanio: Jared, the only thing just quickly that I would add to that, definitely, sales and marketing, but just a shout out to our medical therapy and team that obviously play a big role in those center openings as well. And it is it is truly a team effort. That all those teams come together to help drive the success.

Operator: Thank you. Your next question is coming from Steven Baxter from Wells Fargo. Your line is live.

Stephen Baxter: Hi, thanks. I was curious if you have a perspective on what industry level workers' comp volumes are doing. I am trying to put your volume outperformance this year into that context, maybe how much you think is driven by maybe the better industry overall, maybe has to do with your market selection, or maybe it is better than expected share gains. I guess, are you thinking about that at this point based on what you know?

Matthew T. DiCanio: Thanks for the question, Steve. So there is some data through the BLS on injuries, but it is typically almost a year in arrears. So we do not have that data yet. But we do monthly financial calls with all the regions. We know that our retention is higher than previous years. We have got a decent bit of anecdotes. Of us picking up market share. So it. it is hard to know exactly, the split between market share gains and new customers and how that compares to the overall growth in the marketplace.

But we definitely think there is macro trends that are helping but everything I talked about earlier on the call is helping us drive market share gains as well.

Tanner Newton: Yeah. And, total blue collar, which is a big driver of the injuries employment, has continued to increase.

Stephen Baxter: Got it. And then I think when we went back to, you know, some of the education process, I think, historically, you guys have spoken about something like 60 percent of injuries in the workplace, you know, are dealt with in places like ER, urgent care, primary care, and then more like 40 percent ultimately land in the workers' comp arena.

I guess I am curious if you think there is been any change to that or if you potentially look back to periods where you have seen some economic pressure, whether there tends to be maybe more migration out of settings where people are going to have, you know, exposure to cost sharing and things like that from their health benefits and into the workers' comp. Wondering if that is something you have seen in the past or something that you feel like you might be seeing. Now.

Matthew T. DiCanio: No. I do not think we are seeing any shifts there. Obviously, you have Concentra, the With our market share, you have hundreds of smaller occupational medicine practices. That make up, the number you talked about. And then you have a wide range of urgent cares, health systems, family medicine offices. So we have not seen a shift in where the occupational health visits are going. there is a lot of players that see occupational health across the entire country.

Operator: Thank you. And once again, everyone, if you have any questions or comments, please press *1 on your phone. Your next question is coming from Joanna Gajuk from Bank of America. Your line is live.

Joanna Gajuk: Hi, good morning. Thanks so much for taking the question. Maybe I missed it, but did you talk about the acceleration going to the context of, you know, variation by maybe geography or industry to end industry, or is it kind of broad-based? Yeah.

Matthew T. DiCanio: Hey, Joanna. We did comment on that and basically said that the acceleration is pretty broad based. The across all of our regions, across most of our industries. And so that is what gives us comfort that we are really seeing solid we are on solid footing really across the country, and I think we can hopefully sustain that for a deep period of time.

Joanna Gajuk: And I guess that was my actual question in terms of yeah, when I look at these volume growth numbers, you know, workers' comp up 4 and employer service almost 6%. And historically, you kinda talk about the, you know, like, the long term framework more in, you know, low-single-digits. So does that going to change how we should think about, you know, the growth going forward, especially, you know, you might not be prepared to talk about 2027, but just, you know, as an exit year, sounds like you are having a higher level of growth, versus where you started the year.

Matthew T. DiCanio: Yeah, I will add some comments to that. We always point over a long period of time back to our long term growth algorithm, which is low single digit visit growth volumes. 3% rate, and then low single digits on core, semi organic growth rate. We have obviously had 5, 6 quarters here where our visits are above that long term algorithm. And looking back over 45 years, there are periods of time where we will see growth rates in excess of that, long term average. We are right in the middle of that right now.

So we cannot really predict how long the cycle will last, but it is a contribution or a combination of all the things we have talked about are operating metrics, our retention stats, our sales technologies. We acquired a competitor We have got a growing blue collar labor force. We have got the reshoring trends we have talked about. So there is a combination of things that we believe are all adding up to these growth rates that are above long term averages.

Joanna Gajuk: And if I may, on the outlook into next year in terms pricing. So I think last quarter, you said you should know more about the fee schedules. For 2027. Anything to call out that you know right now and that we should think about when it comes to 2027 workers' comp pricing environment?

Matthew T. DiCanio: The only thing I would add there, we will give formal guidance in the first couple months of, next year. As I mentioned earlier, we are going to wait the next 30, 45 days and get the full dataset on work comp fee schedules. As Keith mentioned, our employer services price increase will be in the same range as it historically been. So more information to come. But, no, we do not expect any material differences from our long term algorithm.

Joanna Gajuk: Great. Thank you so much.

Operator: Alright. Thank you, Joanna. Thank you. Your next question is coming from Raj Kumar from Stephens. Your line is live.

Raj Kumar: Hi, good morning. Maybe just on the On-site clinic business. I know overall smaller portion of the business, but just kind of given the expansion there, Just wanna know if you guys have been seeing any maybe incremental referrals to your occupational health centers for some of the more higher severity cases from the on-site clinic business and whether there is a meaningful opportunity on that front longer term.

William Keith Newton: I can. yeah, this is Keith. You know, historically, it all depends on where the on-site clinics are. Relative to the bricks and mortar clinic. And in many instances, they are not really convenient for that a lot of our on-site clinics. But where they are, certainly, there is a collaboration between the 2. I would not say we have seen more relative to what we have seen in the past when we do have the opportunity to do that. But I think as we continue to expand our footprint from across the United States with our on-site group. And as we have more on sites that are closer in proximity to allow that, certainly, I think we will.

Our bricks and mortar will benefit from it at some point in time. But at this point in time, no real fluctuation.

Raj Kumar: Great. Thank you.

Operator: Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

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