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Long-Term Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Long-Term Debt Long-Term Debt
As of September 30, 2024, the Company’s long-term debt is as follows:
 Principal OutstandingUnamortized Premium (Discount)Unamortized Issuance CostsCarrying ValueFair Value
(in thousands)
6.875% senior notes
$650,000 $— $(12,316)$637,684 $681,493 
Credit facilities:
Term loan850,000 (1,034)(11,918)837,048 847,875 
Other debt(1)
7,615 — — 7,615 7,615 
Total debt$1,507,615 $(1,034)$(24,234)$1,482,347 $1,536,983 
_______________________________________________________________________________
(1)        Other debt is primarily comprised of insurance financing arrangements, promissory notes executed in connection with business combinations, and finance leases.
As of September 30, 2024, principal maturities of the Company’s long-term debt is as follows:
 20242025202620272028ThereafterTotal
(in thousands)
6.875% senior notes
$— $— $— $— $— $650,000 $650,000 
Credit facilities:
Term loan2,125 8,500 8,500 8,500 8,500 813,875 850,000 
Other debt, including finance leases1,874 1,570 672 718 768 2,013 7,615 
Total debt$3,999 $10,070 $9,172 $9,218 $9,268 $1,465,888 $1,507,615 
As of December 31, 2023, the Company’s long-term debt and notes payable are as follows:
 December 31, 2023
(in thousands)
Long-term revolving promissory note with related party$470,000 
Other debt(1)
4,746 
Total debt$474,746 
_______________________________________________________________________________
(1)        Other debt is primarily comprised of insurance financing arrangements, promissory notes executed in connection with business combinations, and finance leases.
Credit Facilities
On July 26, 2024, Concentra Health Services, Inc. (“CHSI”), a wholly-owned subsidiary of Concentra, entered into a senior secured credit agreement (the “Concentra credit agreement”) that provides for an $850.0 million term loan (the “Concentra 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 “Concentra revolving credit facility” and, together with the Concentra term loan, the “Concentra credit facilities”).
Borrowings under the Concentra credit facilities are guaranteed by the Company and substantially all of the Company’s current domestic subsidiaries and will be guaranteed by CHSI’s future domestic subsidiaries and secured by substantially all of the Company’s existing and future property and assets and by a pledge of the Company’s capital stock, the capital stock of CHSI’s domestic subsidiaries and up to 65% of the capital stock of CHSI’s foreign subsidiaries held directly by CHSI or a domestic subsidiary.
Borrowings under the Concentra credit agreement bear interest at a rate equal to: (i) in the case of the Concentra term loan, Term SOFR plus a percentage ranging from 2.00% to 2.25%, or Alternate Base Rate plus a percentage ranging from 1.00% to 1.25%, in each case based on CHSI’s leverage ratio; and (ii) in the case of the Concentra revolving credit facility, Term SOFR plus a percentage ranging from 2.25% to 2.75%, or Alternate Base Rate plus a percentage ranging from 1.25% to 1.75%, in each case based on CHSI’s leverage ratio, as defined in the Concentra credit agreement. As of September 30, 2024, the term loan borrowings bear interest at 7.10%. The Company did not have any outstanding borrowings under its revolving credit facility. At September 30, 2024, the Company had $386.4 million of availability under its revolving credit facility after giving effect to $13.6 million of outstanding letters of credit.
The Concentra term loan amortizes in equal quarterly installments in amounts equal to 0.25% of the aggregate original principal amount of the Concentra term loan commencing on December 31, 2024. The balance of the Concentra term loan will be payable on July 26, 2031. The Concentra revolving credit facility will mature on July 26, 2029.
The Concentra credit facilities require CHSI to maintain a leverage ratio (as defined in the Concentra credit agreement), which is tested quarterly and currently must not be greater than 6.50 to 1.00. Failure to comply with this covenant would result in an event of default under the revolving credit facility and, absent a waiver or an amendment from the revolving lenders, preclude CHSI from making further borrowings under the Concentra revolving credit facility and permit the revolving lenders to accelerate all outstanding borrowings under the Concentra revolving credit facility. Upon termination of the commitments for the Concentra revolving credit facility and acceleration of all outstanding borrowings thereunder, failure to comply with the covenant also would constitute an event of default with respect to the Concentra term loan.
The Concentra credit facilities also contain a number of other affirmative and restrictive covenants, including limitations on mergers, consolidations and dissolutions; sales of assets; investments and acquisitions; indebtedness; liens; affiliate transactions; and dividends and restricted payments. The Concentra credit facilities contain events of default for non-payment of principal and interest when due, cross-default and cross-acceleration provisions and an event of default that would be triggered by a change of control. As of September 30, 2024, the Company was in compliance with all debt covenants.
Prepayment of borrowings
CHSI will be required to prepay borrowings under the Concentra credit facilities with (i) 100% of the net cash proceeds received from non-ordinary course asset sales or other dispositions, or as a result of a casualty or condemnation, subject to reinvestment provisions and other customary carveouts and, to the extent required, the payment of certain indebtedness secured by liens subject to a first lien intercreditor agreement if CHSI’s total net leverage ratio is greater than 4.50 to 1.00 and 50% of such net cash proceeds if our total net leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, (ii) 100% of the net cash proceeds received from the issuance of debt obligations other than certain permitted debt obligations, and (iii) 50% of excess cash flow (as defined in the Credit Agreement) if CHSI’s leverage ratio is greater than 4.50 to 1.00 and 25% of excess cash flow if CHSI’s leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, in each case, reduced by the aggregate amount of term loans, revolving loans and certain other debt optionally prepaid (and, in the case of revolving loans, accompanied by a reduction in the related commitment) during the applicable fiscal year. CHSI will not be required to prepay borrowings with excess cash flow or the net cash proceeds of asset sales if CHSI’s leverage ratio is less than or equal to 4.00 to 1.00.
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 “Concentra senior notes”). On July 26, 2024, the Escrow Issuer merged with and into CHSI, with CHSI continuing as the surviving entity, and CHSI assumed all of the Escrow Issuer’s obligations under the Concentra senior notes. The Concentra 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 Concentra 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.
Long-term revolving promissory note with related party
A portion of the net proceeds of the IPO, further discussed in Note 1, Organization, was used to repay in full the long-term revolving promissory note with Select.