Concentra Group Holdings Parent Q2 FY26 earnings call CON

The company announced a planned CEO transition, with Keith Newton moving to Executive Chairman and Matt DiCanio, current President and CFO, becoming President and CEO effective November 1, 2026. This transition is the result of a multi-year succession plan and emphasizes continuity in strategy and leadership, supported by a highly tenured executive team with an average tenure of approximately 20 years. DiCanio highlighted that the company's strategy of customer value proposition, access expansion, and operating leverage will remain unchanged.

Concentra reported one of its strongest core revenue growth quarters, with total revenue up 10% year-over-year to $606 million, and core revenue (excluding Pivot) up 8%. This was driven by a 2.6% increase in total occupational health center patient visits, averaging over 56,000 visits per day. Work comp visits increased 3.7%, and employer services visit volume increased 1.8%, reflecting a resilient blue-collar labor market and market share gains.

Adjusted EBITDA surged 22.5% to $140.9 million, leading to a 240 basis point expansion in adjusted EBITDA margin to 23.3%. This improvement was attributed to strong rate and volume growth, coupled with effective operational efficiencies and the elimination of prior-year Nova acquisition-related integration costs. Cost of services improved to 68.3% of revenue from 70.7% in the prior year, driven by staffing efficiencies and technology-enabled productivity gains.

The company achieved its net leverage ratio goal of under 3x (specifically, just under 3x) well ahead of schedule, down from 3.4x at the end of Q1. This was due to strong free cash flow generation of $121 million and EBITDA growth. Management reiterated a long-term leverage target of near 2.5x. Capital allocation included $11 million in share repurchases (424,000 shares) and $8 million in dividends, with $54 million remaining on the $100 million repurchase program.

Concentra continues to expand its footprint through de novo centers and bolt-on M&A. One new center was opened in Q2, and two more post-quarter, including its first in Idaho (42nd state). The company targets 8-10 de novo centers for FY26 and expects double-digit new sites in 2027 and beyond. The Onsite Health clinics segment demonstrated robust growth, with reported revenue up 72.1% and organic growth (excluding Pivot) of 27.9%, driven by increased demand and successful integration of acquisitions.

The complex separation from Select Medical is substantially complete, with most process and technology implementations finalized, including the ERP system conversion in May. Remaining TSA services spend is immaterial and will be entirely eliminated by November 2026, allowing internal resources to focus on higher-value projects.