Concentra (CON) Q4 FY25 earnings call: guidance and Q&A

How are potential impacts from weather or elevated respiratory activity contemplated in the 2026 guidance?

Weather impacts tend to flush out annually and are not expected to materially affect results. Respiratory activity primarily impacts urgent care visits, which are a small fraction of total visits, so it's not expected to be material.

“I would say from a weather standpoint, we have weather every year. It has not really impacted us this year. We definitely had some weather last year. So I think it kind of flushes out. So we're not anticipating much of an impact from that perspective.”

asked by Benjamin Rossi · answered by William Newton

Could management elaborate on their thought process for evaluating new opportunities (de novos, M&A) and how ROIC and hurdle rates are assessed?

The company closely monitors ROIC and uses various return hurdles and valuation metrics for de novos and acquisitions. They have a long track record of successful, accretive M&A and de novo execution with strong ROICs.

“So we obviously follow that very closely, ROIC metric. We know it's very important to investors. And we look at all sorts of return hurdles and valuation metrics when we're looking at de novos and acquisitions.”

asked by Benjamin Rossi · answered by Matthew DiCanio

What specific changes are Concentra advocating for in the New York workers' compensation fee schedule, beyond the E&M codes, and how quickly could they enter the market if favorable changes occur?

The company is looking for a comprehensive review of the fee schedule, including physical therapy and other codes, not just E&M codes. They believe they can move very quickly to establish de novo projects or pursue acquisitions once the rates are sufficiently revised.

“Really, what they focused on so far was just the evaluation of management codes which is really what the physicians actually utilize as far as coding and charging. But there's a lot of other codes that impact the total reimbursement. Physical therapy being a big one and then a lot of others that they didn't necessarily address on this go around.”

asked by Ann Hynes · answered by William Newton

Are there any specific items, seasonality, or day dynamics to consider for the 2026 outlook, and how are de novo investments planned for the year?

Seasonality will be similar to prior years, with a pickup in Q1 and H1 due to the Nova and Pivot acquisitions. The guidance includes the January 3-center acquisition and 6 de novos, with potential for more, spread throughout the year. The number of days in 2026 is the same as 2025.

“In terms of seasonality, pretty similar to prior years. The only real exception is that we have a pickup in Q1 from Nova and Pivot when we didn't have both of those assets in the prior year.”

asked by Justin Bowers · answered by Matthew DiCanio

What is the cadence of the Select services agreement expiration, and will it impact margins?

The remaining FTEs for separation will be hired by May/June 2026, and TSA costs will ramp down to near zero by mid-2026. This will result in some incremental costs in H1 2026, but it's factored into guidance, with potential for margin expansion once the separation is fully complete.

“So we expect the TSA costs to ramp down close to 0 by, call it, midyear '26. And so the net of both of those will be some incremental costs, early part of the -- or the first half of 2026. But that's all part of our guidance.”

asked by Ben Hendrix · answered by William Newton

Given organic volume growth above industry trends, who is Concentra taking market share from, and is this growth sustainable? How much is from de novos?

Market share gains are attributed to improved go-to-market strategies, deployment of new sales technologies for identifying customers and improving efficiency, and initiatives to retain and deepen penetration with existing customers, including AI. De novos contributed less than 1% to this growth.

“Well, as far as the market share component, we did a lot this last year relative to our go-to-market and how we how we're trying to capture additional customers. We developed additional technologies or deployed additional technologies within our sales group, both for identifying potential customers out there and also creating better efficiency and higher output by our sales folks.”

asked by Joanna Gajuk · answered by William Newton