Concentra Group Holdings Parent, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties described in the sections titled “Risk Factors” and “Forward-Looking Statements” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026 and in this Quarterly Report on Form 10-Q. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period. Concentra Group Holdings Parent, Inc., a Delaware corporation (“Concentra”), conducts substantially all of its business through Concentra Health Services, Inc. (“CHSI”) and CHSI’s subsidiaries. As the context may require, the “Company,” “we,” “us,” “our” or similar words in this report refer collectively to Concentra and its subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impact of planned acquisitions and dispositions; our strategy for growth; product development activities; regulatory approvals; market position; market size and opportunity; expenditures; and the effects of the Separation and the Distribution on our business.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to risks, uncertainties and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. You are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include:

• The frequency of work-related injuries and illnesses;
• Adverse changes to our relationships with employer customers, third-party payors, workers’ compensation provider networks or employer services networks;
• Changes to regulations, new interpretations of existing regulations, or violations of regulations;
• State fee schedule changes undertaken by state workers’ compensation boards or commissions and other third-party payors;
• Our ability to realize reimbursement increases at rates sufficient to keep pace with the inflation of our costs;
• Labor shortages, increased employee turnover or costs, and union activity could significantly increase our operating costs;
• Our ability to compete effectively with other occupational health centers, onsite health clinics at employer worksites, and healthcare providers;
• The impacts of any security breaches, cyberattacks, loss of data, or cybersecurity threats or incidents involving our, or our third-party vendors’, information technology systems, and any failure to comply with legal requirements related to data privacy, interoperability or data protection, including those governing the privacy and security of health information or other regulated, sensitive or confidential information;
• Negative publicity which can result in increased governmental and regulatory scrutiny and possibly adverse regulatory changes;
• Significant legal actions could subject us to substantial uninsured liabilities;
• Litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements;
• Insurance coverage may not be sufficient to cover losses we may incur;
• Acquisitions may use significant resources, may be unsuccessful, and could expose us to unforeseen liabilities;
• Our exposure to additional risk due to our reliance on third parties in many aspects of our business;
• Our ability to manage relationships with managed affiliated professional medical groups (“Managed PCs”);
• Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information;
• Compliance with applicable data interoperability and information blocking rules;
• Facility licensure requirements in some states are costly and time-consuming, limiting or delaying our operations;
• Our ability to adequately protect and enforce our intellectual property and other proprietary rights;
• Adverse economic conditions in the U.S. or globally;
• Any negative impact on the global economy and capital markets resulting from geopolitical tensions;
• The impact of impairment of our goodwill and other intangible assets;
• Our ability to maintain satisfactory credit ratings;
• The effects of the Separation on our business;
• The negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease;
• The loss of key members of our management team;
• Our ability to attract and retain talented, highly skilled employees and a diverse workforce, and the succession of our senior management;
• Climate change, or legal, regulatory or market measures to address climate change;
• Increasing scrutiny and rapidly evolving expectations from stakeholders regarding ESG matters; and
• Changes in tax laws or exposures to additional tax liabilities.

You should also carefully read the risk factors described in our Annual Report on Form 10-K in Part I, Item 1A. “Risk Factors” for a description of certain risks that could, among other things, cause our actual results to differ materially from those expressed or implied in our forward-looking statements. You should understand that it is not possible to predict or identify all such factors and you should not consider the risks described above to be a complete statement of all potential risks and uncertainties. We do not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments, except as required by law.

Overview

We were founded in 1979 and have grown to be the largest provider of occupational health services in the United States by number of locations. Our national presence enables us to provide access to high-quality care that supports our mission to improve the health of America’s workforce. As of March 31, 2026, we operated 632 stand-alone occupational health centers in 41 states and 411 onsite health clinics at employer worksites in 45 states. We also have expanded our reach via our telemedicine program serving 43 states and the District of Columbia. In total, we deliver services across 47 states and the District of Columbia. Our patients are generally employed by our main customers — employers across the United States.

Our business is organized into three operating segments based primarily on the type or location of occupational health services provided:

• Occupational health centers: Our occupational health centers operating segment encompasses the services we deliver at our 632 occupational health center facilities across the United States. In this operating segment, we serve all types of employers, from Fortune 100 companies to small businesses. The occupational health services provided in this operating segment include workers’ compensation and employer services, and we also provide consumer health services.
• Onsite health clinics: Our onsite health clinics operating segment delivers occupational health services and/or employer-sponsored primary care services at an employer’s workplace, including mobile health services and episodic specialty testing services — we deliver our services at 411 permanent on-site locations and multiple other employer locations through our episodic services. In this operating segment, we serve medium to large-sized employers.
• Other businesses: Our other businesses operating segment is comprised of several complementary services to our core occupational health services offering and includes Concentra Telemed, Concentra Pharmacy, and Concentra Medical Compliance Administration. In this operating segment, we serve all types of employers.

All three operating segments are aggregated into a single reportable segment in our condensed consolidated financial statements based on similar services provided, service delivery process involved, target customers, and similar economic characteristics.

The following table represents the percentage of revenue by our operating segments for the periods indicated:

Across our operating segments, we offer a diverse and comprehensive array of occupational health services, including workers’ compensation and employer services, and consumer health services:

• Workers’ compensation services: include the support of workers’ compensation injuries and illnesses, physical rehabilitation, and specialist care.
• Employer services: consist of drug and alcohol screenings, physical examinations and evaluations, clinical testing, and preventive care, as well as direct-to-employer services that include the services described above and advanced primary care at our onsite health clinics.
• Consumer health services: consist of the support of patient-directed urgent care treatment of injuries and illnesses.

The following table sets forth the percentage of our overall visits per day (“VPD”) volume in our occupational health center operating segment by service offering, for the periods presented:

The following table sets forth the percentage of visit-related revenue in our occupational health center operating segment by service offering, for the periods presented:

Regulatory Matters

Our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, contains a detailed discussion of the regulations that affect our business in Part I, Item I. Business—“Government Regulations”.

Operating Statistics

Management utilizes specific key operating metrics to monitor trends and performance in our business and therefore may be important to investors because management may assess our performance based in part on such metrics. Other healthcare providers may present similar measures; however, these measures are susceptible to varying definitions and our key metrics may not be comparable to other similarly titled measures of other companies.

Patient Visits and VPD Volume

We monitor the number of patient visits and VPD volume for each of our major service lines in our occupational health center operating segment — workers’ compensation services, employer services, and consumer health. Management believes that the number of patient visits is the single most important indicator of the volume of services being provided in our centers. VPD volume, which is calculated as total patient visits in a given period divided by total business days for such period, allows for comparability between time periods with different number of business days. Patient visits and VPD volume include only the patients seen in our occupational health centers operating segment and does not include our onsite health clinics or other businesses operating segments.

Revenue Per Visit

Management also measures reimbursement rates utilizing patient revenue per visit which is calculated as total patient revenue divided by total patient visits for the relevant period. Revenue per visit as reported includes only the revenue and patient visits in our occupational health centers operating segment and does not include our onsite health clinics or other businesses operating segments.

The following table sets forth operating statistics for our occupational health centers operating segment for the periods presented:

(1) Does not foot due to rounding.

Facility Counts

The following table sets forth facility counts for our occupational health centers and onsite health clinics operating segments for the periods presented:

Results of Operations

The following table outlines selected operating data as a percentage of revenue for the periods indicated:

($ in thousands)

(1) Adjusted EBITDA and Adjusted Net Income Attributable to the Company are financial measures not calculated in accordance with U.S. GAAP. For definitions and reconciliations to the U.S. GAAP measures, refer to “—Non-GAAP Measures”.

(2) Totals in this column may not foot due to rounding.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue

Revenue increased 13.7% to $569.6 million for the three months ended March 31, 2026, compared to $500.8 million for the three months ended March 31, 2025, driven by organic increases in both volume of patient visits and revenue per visit and due to the addition of occupational health centers in 2025 and over 240 onsite locations that were acquired in June 2025.

Our total patient visits increased 6.7% to 3,419,091 for the three months ended March 31, 2026, compared to 3,204,368 visits for the three months ended March 31, 2025. Total VPD volume increased 6.7% to 54,271 for the three months ended March 31, 2026, compared to 50,863 for the three months ended March 31, 2025, primarily due to organic growth and the acquisition of Nova Medical Centers (“Nova”). Workers’ compensation VPD volume increased 9.6% to 25,132 from 22,935 and employer services VPD volume increased 4.8% to 28,231 from 26,927, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Revenue per visit increased 3.1% to $151.47 for the three months ended March 31, 2026, compared to $146.94 for the three months ended March 31, 2025. We experienced a higher revenue per visit principally due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers’ compensation visits, as well as increases in our employer services rates, for the three months ended March 31, 2026. Revenue per visit for workers’ compensation visits increased 2.0% to $213.27 from $209.09 and revenue per visit for employer services visits increased 2.7% to $96.91 from $94.40, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Cost of Services

Our cost of services expense includes all direct and indirect support costs related to providing services to our customers. Cost of services expense was $399.1 million, or 70.1% of revenue, for the three months ended March 31, 2026, compared to $357.1 million, or 71.3% of revenue, for the three months ended March 31, 2025. The cost of services expense as a percentage of revenue decreased primarily due to increased staffing efficiencies, relative to a 13.7% increase in revenue during the period.

General and Administrative

Our general and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, corporate offices, and other administrative areas as well as executive compensation. General and administrative expense was $55.3 million, or 9.7% of revenue, for the three months ended March 31, 2026, compared to $46.7 million, or 9.3% of revenue, for the three months ended March 31, 2025. The increase in general and administrative expense as a percentage of revenue is principally due to the planned addition of new full-time employees and other non-personnel costs to support the separation from Select and operate as a standalone public company, stock compensation expense, and one-time costs to separate from Select.

Depreciation and Amortization

Depreciation and amortization expense was $19.6 million for the three months ended March 31, 2026, compared to $16.6 million for the three months ended March 31, 2025. The increase was primarily due to growth investments in 2025.

Interest Expense

For the three months ended March 31, 2026, we had interest expense of $26.0 million, compared to $25.5 million for the three months ended March 31, 2025. The slight increase in interest expense was due to the issuance of the $102.1 million incremental term loan in March 2025, as described in Note 6—“Long-Term Debt”.

Income Taxes

We recorded income tax expense of $17.3 million for the three months ended March 31, 2026, which represented an effective tax rate of 24.9%. We recorded income tax expense of $13.3 million for the three months ended March 31, 2025, which represented an effective tax rate of 24.6%. Our income tax expense is computed based on annual estimates, which we allocate throughout the year based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year, as estimates of our annual income and the components of our income tax expense change throughout the year.

Non-GAAP Measures

Adjusted EBITDA and Adjusted EBITDA Margin

We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA margin, as defined herein, are important to investors because Adjusted EBITDA and Adjusted EBITDA margin are commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA and Adjusted EBITDA margin are used by management to evaluate financial performance of, and determine resource allocation for, each of our operating segments. We believe Adjusted EBITDA margin helps assess the efficiency of our operations on a normalized basis. However, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under U.S. GAAP. Items excluded from Adjusted EBITDA and Adjusted EBITDA margin are significant components in understanding and assessing financial performance. Adjusted EBITDA and Adjusted EBITDA margin should not be considered in isolation, or as an alternative to, or substitute for, net income, net income margin, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the condensed consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA and Adjusted EBITDA margin are not measurements determined in accordance with U.S. GAAP and are thus susceptible to varying definitions, Adjusted EBITDA and Adjusted EBITDA margin as presented may not be comparable to other similarly titled measures of other companies. Other companies, including companies in our industry, may calculate Adjusted EBITDA and Adjusted EBITDA margin differently than we do, limiting the usefulness of those measures for comparative purposes.

We define Adjusted EBITDA as net income before interest, income taxes, depreciation and amortization, stock compensation expense, acquisition-related costs, gains or losses on early retirement of debt, and separation transaction costs. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

The following table reconciles net income to Adjusted EBITDA and net income margin to Adjusted EBITDA margin and should be referenced when we discuss Adjusted EBITDA and Adjusted EBITDA margin.

($ in thousands)

(1) The percentage of revenue values on this row represent the net income margin for the period.

(2) Separation transaction costs represent non-recurring incremental consulting, legal, audit-related fees, system implementation, and software disposal costs incurred in connection with the Company’s separation into a new, publicly traded company and are included within general and administrative expenses on the condensed consolidated statements of operations.

(3) The percentage of revenue values on this row represent the Adjusted EBITDA margin for the period.

(4) Totals in this column may not foot due to rounding.

Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share

Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are used by management to provide useful insight into the underlying performance of our business. Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are not measures of financial performance under U.S. GAAP and are not intended to be substitutes for U.S. GAAP measures such as net income attributable to the Company or earnings per share. These metrics may differ from similarly titled metrics supported by other companies. Other companies, including companies in our industry, may calculate Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share differently than we do, limiting the usefulness of those measures for comparative purposes. We believe that the presentation of Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share are important to investors because they are reflective of the financial performance of Concentra’s ongoing operations and provide better comparability of its results of operations between periods. Investors should consider these measures in addition to, and not as a replacement for, U.S. GAAP results reported in our financial statements.

We define Adjusted Net Income Attributable to the Company as net income attributable to the Company, excluding gain (loss) on early retirement of debt, separation transaction costs, and acquisition costs, all on an after tax basis. We define Adjusted Earnings per Share as the Adjusted Net Income Attributable to the Company divided by the diluted weighted average shares outstanding.

The following table reconciles net income attributable to the Company and earnings per share on a fully diluted basis to Adjusted Net Income Attributable to the Company and Adjusted Earnings per Share on a fully diluted basis.

($ in thousands, except per share amounts)

(1) Beginning in the second quarter of 2025, we updated the schedule for all periods presented to include Net Income Attributable to the Company. Management believes this measure will provide an improved insight into the performance of our business. As a result, the reconciliation for the three months ended March 31, 2025, has been recast to conform to the current period’s presentation.

(2) Separation transaction costs represent non-recurring incremental consulting, legal, audit-related fees, system implementation, and software disposal costs incurred in connection with the Company’s separation into a new, publicly traded company and are included within general and administrative expenses on the condensed consolidated statements of operations.

(3) Tax impact is calculated using the annual effective tax rate, including discrete costs and benefits.

(4) Totals in this column may not foot due to rounding.

Liquidity and Capital Resources

Cash Flows for the Three Months Ended March 31, 2026 and Three Months Ended March 31, 2025

In the following table and analysis, we discuss cash flows from operating activities, investing activities, and financing activities for the periods indicated.

(in thousands)

Operating activities provided $21.0 million and $11.7 million of cash flows during the three months ended March 31, 2026 and 2025, respectively. The increase in cash flows from operating activities for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was primarily due to an increase in net income from organic growth and through acquisitions.

Investing activities used $14.8 million and $294.7 million of cash flows for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, the principal uses of cash were $11.1 million for purchases of property and equipment under our capital program to open de novos, upgrade and maintain existing facilities, and technology investments, and $3.8 million for acquisitions of businesses. For the three months ended March 31, 2025, the principal uses of cash were $279.0 million for acquisitions of businesses, which primarily includes the purchase of Nova, and $15.7 million for purchases of property and equipment under our capital program to open de novos and upgrade and maintain existing facilities.

Financing activities used $24.4 million and provided $151.9 million of cash flows for the three months ended March 31, 2026 and 2025, respectively. For the three months ended March 31, 2026, the principal uses of cash were repurchases of common stock of $15.0 million and dividends paid to common stockholders of $8.0 million. For the three months ended March 31, 2025, the principal sources of cash were due to the updated term loan, net of issuance costs of $948.8 million and from borrowings on our Revolving Credit Facility of $50.0 million. This was partially offset by payment of the original term loan of $847.9 million.

Capital Resources

We had net working capital of $83.3 million at March 31, 2026, compared to net working capital of $45.9 million at December 31, 2025. The increase in the net working capital surplus was principally due to an increase in accounts receivable, partially offset by a decrease in our cash, which resulted from share repurchases.

A significant component of our net working capital is our accounts receivable. Collection of these accounts receivable is our primary source of cash and is critical to our liquidity and capital resources. Because our accounts receivable is primarily paid for by highly-solvent, creditworthy payors, such as workers’ compensation programs, employer programs, third party administrators, commercial insurance companies, and federal and state governmental authorities, our credit losses have historically been infrequent and insignificant in nature, and we believe the possibility of credit default is remote.

Credit Facilities

On July 26, 2024, CHSI entered into a senior secured credit agreement (the “Credit Agreement”) that initially provided for an $850.0 million term loan (the “Term Loan”), and a $400.0 million revolving credit facility, including a $75.0 million sublimit for the issuance of standby letters of credit (the “Revolving Credit Facility” and, together with the Term Loan, the “Credit Facilities”). In March 2025, the Company completed an amendment to the Credit Agreement to increase our Revolving Credit Facility by $50.0 million from $400.0 million to $450.0 million. In addition, the amendment to the Credit Agreement also added new debt through an incremental term loan of $102.1 million, which provides an updated Term Loan of $950.0 million.

At March 31, 2026, the Company had $434.2 million of availability under its Revolving Credit Facility, after giving effect to $15.8 million of outstanding letters of credit. At March 31, 2026, the Company did not have any outstanding borrowings under its Revolving Credit Facility.

The Credit Facilities require CHSI to maintain a leverage ratio (as defined in the Credit Agreement), which is tested quarterly and currently must not be greater than 6.5 to 1.0. As of March 31, 2026, CHSI’s leverage ratio was 3.4x.

6.875% Senior Notes

On July 11, 2024, the Company completed a private offering by its wholly owned subsidiary, Concentra Escrow Issuer Corporation (the “Escrow Issuer”), of $650.0 million aggregate principal amount of 6.875% senior notes due July 15, 2032 (the “Senior Notes”). On July 26, 2024, Escrow Issuer merged with and into CHSI, with CHSI continuing as the surviving entity, and CHSI assumed Escrow Issuer’s obligations under the Senior Notes. The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company and certain of its wholly owned subsidiaries. Interest on the Senior Notes accrues at a rate of 6.875% per annum and is payable semi-annually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2025.

At March 31, 2026, the Company had $650.0 million of the Senior Notes outstanding (excluding unamortized premium and debt issuance costs of $10.0 million).

Hedging

On March 3, 2025 we entered into derivative swap and collar contracts to mitigate our exposure to variable Term Secured Overnight Financing Rate (“Term SOFR”) interest rates, which expire on February 29, 2028. The derivative swap contract limits the Term SOFR rate to a fixed rate of 3.829% on $300.0 million of principal outstanding under our Term Loan. We also entered into a derivative collar contract, which limits the Term SOFR rate to a cap of 4.500% and floor of 3.001% on $300.0 million of principal outstanding under our Term Loan. These derivative contracts limit our Term SOFR variable interest exposure on our $940.5 million Term Loan.

Liquidity

We believe our internally generated cash flows and borrowing capacity under our Revolving Credit Facility will allow us to finance our operations in both the short and long term. As of March 31, 2026, we had cash of $61.7 million and $434.2 million of availability under our Revolving Credit Facility, after giving effect to $15.8 million of outstanding letters of credit.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, may be funded from operating cash flows or other sources and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Use of Capital Resources

We intend to grow through strategic acquisitions of existing occupational health centers and onsite health clinic platforms, as well as building new de novo centers.

Share Repurchase Program

On November 5, 2025, the Board of Directors authorized a share repurchase program to repurchase up to $100 million of the Company’s outstanding common stock. The share repurchase program will expire on December 31, 2027, unless extended or terminated by the Board of Directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as the Board of Directors deems appropriate. The Company will fund the share repurchase program with cash on hand. The authorization of the share repurchase program does not obligate the Company to repurchase any shares.

During the three months ended March 31, 2026, the Company repurchased 0.7 million shares of common stock under the share repurchase program for $15.0 million, excluding commissions paid and excise taxes. All shares repurchased were permanently retired. As of March 31, 2026, the Company’s remaining authorization to repurchase shares under the program was $65.0 million.

Dividend

On February 25, 2026, the Board of Directors declared a cash dividend of $0.0625 per share. On March 19, 2026, a cash dividend of approximately $8.0 million was paid.

On May 5, 2026, the Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about June 9, 2026, to stockholders of record as of the close of business on May 19, 2026.

There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of our Board of Directors after taking into account various factors, including, but not limited to, our financial condition, operating results, available cash and current and anticipated cash needs, the terms of our indebtedness, and other factors our Board of Directors may deem to be relevant. Additionally, certain contractual agreements we are party to, including our credit facilities, will limit our ability to pay dividends to our stockholders.

Recent Accounting Pronouncements

Refer to Note 2—“Accounting Policies” of the notes to our condensed consolidated financial statements included herein for information regarding recent accounting pronouncements.

Critical Accounting Estimates

There have been no material changes in our Critical Accounting Estimates from the information provided in the “Critical Accounting Estimates” section of “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Effects of Inflation

The healthcare industry is labor intensive and our largest expenses are labor related costs. Wage and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. Thus far the impact of inflation on our business has not been material.

Our market exposure risk is primarily related to interest rate risk in connection with our variable rate long-term indebtedness. Our principal interest rate exposure relates to the loans outstanding under our credit facilities, which bear interest rates that are indexed against Term SOFR. Interest rate risk is highly sensitive due to many factors, monetary and tax policy, macroeconomic factors, and other factors beyond our control. We do not hold or use derivative financial instruments for trading purposes.

At March 31, 2026, we had outstanding borrowings under our credit facilities consisting of a $940.5 million Term Loan (excluding unamortized original issue discount and debt issuance costs of $11.1 million) and no borrowings under our Revolving Credit Facility, which bear variable interest rates.

In order to mitigate our exposure to rising interest rates, we entered into a derivative swap contract effective on March 3, 2025, which limits the Term SOFR rate to a fixed rate of 3.829% on $300 million of principal outstanding under our Term Loan. The agreement applies to interest payments through February 29, 2028.

In addition, we entered into a derivative collar contract effective on March 3, 2025, which limits the Term SOFR rate to a cap of 4.500% and floor of 3.001% on $300 million of principal outstanding under our Term Loan. The agreement applies to interest payments through February 29, 2028.

As of March 31, 2026, the Term SOFR rate was 3.66% and we had $640.5 million of our Term Loan borrowings subject to variable interest rates.

At March 31, 2026, a hypothetical 0.25% change in market interest rates would have no material impact on our annual interest expense and financial results.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2026.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the first quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

There have been no material changes in the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.