Concentra Operating 8-K Results of Operations and Financial Condition

Exhibit 99.2

Contacts:	Daniel J. Thomas	Thomas E. Kiraly
	Chief Executive Officer	Executive Vice President and
	(972) 364-8111	Chief Financial Officer
		(972) 364-8217

CONCENTRA OPERATING CORPORATION REPORTS SECOND QUARTER RESULTS

ADDISON, Texas, August 8, 2005 – Concentra Operating Corporation (“Concentra” or the “Company”) today announced results for the second quarter ended June 30, 2005. The Company reported consolidated Adjusted Earnings Before Interest Taxes Depreciation and Amortization (“Adjusted EBITDA”) of $44,825,000 for the quarter, which compared to $44,318,000 in EBITDA reported for the same period in 2004. Concentra computes Adjusted EBITDA in the manner prescribed by its bond indentures. A reconciliation of Adjusted EBITDA to net income is provided within this press release.

Revenue for the second quarter of 2005 increased to $286,914,000 from $281,450,000 in the year-earlier period. Operating income grew 11% to $37,335,000 from $33,616,000 in the second quarter of last year. This increase in operating income primarily related to a gain on the sale of certain assets of $1,426,000 during the quarter and the fact that results for the prior year included $2,502,000 in general and administrative expenses incurred in connection with the Company’s refinancing and dividend transactions. During the quarter, in connection with an audit of prior tax years, Concentra also received a tax benefit of $10,217,000 associated with the resolution with the Internal Revenue Services of an issue relating to the deductibility of previously incurred transaction costs. Including this benefit, net income for the quarter was $23,628,000. This compares with net income of $3,590,000 for the same period in 2004. The Company’s prior-year results included a loss on the early retirement of debt of $11,815,000 related to the retirement of the majority of Concentra’s 13% Senior Subordinated Notes during the second quarter of last year.

Concentra’s revenue on a year-to-date basis increased to $561,843,000 from $551,603,000 in the same period of 2004. Including the charges and gains described above, operating income increased 9% to $68,210,000 from $62,431,000 for the first six months of 2004. Net income for the first half of the year was $32,811,000 versus $11,763,000 in the first half of 2004. For the year-to-date period, Adjusted EBITDA was $84,335,000, which compares to $83,322,000 in the comparable period last year.

“During the quarter, our Health Services segment continued to provide us with strong growth in revenue and earnings,” said Daniel Thomas, Concentra’s President and Chief Executive Officer. “Same-center visits increased 4.8% and, after considering increases in our average revenue per visit, we were pleased to achieve a same-center revenue growth rate of 6.6% during

-MORE-

Concentra Announces Second Quarter Results

Page 2

August 8, 2005

the quarter. These organic increases continue to be complemented by exceptional levels of growth in our ancillary services and the beneficial effects of our acquisitions. When considering the value that we believe our recently announced acquisition of Occupational Health + Rehabilitation Inc (“OH+R”) will bring to this segment of our business, we are excited about our growth prospects during coming years.

“Due primarily to the effects of the California Fee Schedule change put into effect in early 2004, the loss of a significant Network Services customer, which we reported last December, and the other factors that we have previously discussed, our positive Health Services results continue to be offset by a year-over-year decrease in the revenue and earnings from our Network Services segment. Despite these current year trends, we are increasingly optimistic about our long-term prospects in this portion of our business. In particular, we feel that our recently announced acquisition of Beech Street Corporation (“Beech Street”) and its preferred provider organization offers us the opportunity to achieve significant new revenue growth in both the group health and workers’ compensation portions of our Network Services segment,” said Thomas.

Concentra recently announced that it had entered into definitive agreements to acquire Beech Street and OH+R. Beech Street is one of the country’s leading preferred provider organizations and has approximately 400,000 physicians, 52,000 ancillary healthcare providers and 3,800 acute-care hospitals within its provider network. OH+R is a publicly held corporation that provides occupational health care services through 35 health centers located predominately in the northeastern United States. The closings of both of these acquisitions, which are expected to occur later this year, are subject to further documentation, the satisfaction of pre-closing conditions, and the receipt of required approvals.

Concentra currently anticipates that it will raise approximately $157,500,000 in additional senior indebtedness during the third quarter, will assume approximately $1,100,000 in capital leases, and will utilize an estimated $59,400,000 of available cash to finance its recently announced acquisitions of OH+R and Beech Street. On a combined basis, and excluding non-recurring items, these companies reported approximately $128,600,000 in revenue and $17,500,000 in EBITDA for the twelve-month period ending June 30, 2005.

At June 30, 2005, Concentra had $58,819,000 in unrestricted cash and investments. At the conclusion of the second quarter, the Company had a Days Sales Outstanding of 57 days, which represented the lowest level achieved in the Company’s history. For the trailing twelve-month period ending June 30, 2005, Concentra had net cash provided by operating activities of $115,122,000.

-MORE-

Concentra Announces Second Quarter Results

Page 3

August 8, 2005

Concentra Operating Corporation, a wholly owned subsidiary of Concentra Inc., is the comprehensive outsource solution for containing healthcare and disability costs. Serving the occupational, auto and group healthcare markets, Concentra provides employers, insurers and payors with a series of integrated services which include employment-related injury and occupational health care, in-network and out-of-network medical claims review and repricing, access to specialized preferred provider organizations, first notice of loss services, case management and other cost containment services. Concentra provides its services to approximately 136,000 employer locations and 3,700 insurance companies, group health plans, third-party administrators and other healthcare payors. Through its health centers, Concentra has approximately 680 affiliated primary-care physicians. The Company also operates the FOCUS network, a national workers’ compensation provider network that includes 544,000 individual providers and over 4,400 acute-care hospitals nationwide.

A public, listen-only simulcast of Concentra’s second quarter conference call will begin at 9:00 a.m. Eastern Daylight Time tomorrow (August 9, 2005) and may be accessed via the Company’s web site, www.concentra.com. Investors are requested to access the call at least 15 minutes before the scheduled start time in order to complete a brief registration. An online replay using the same link will be available shortly after the conclusion of the live broadcast and will continue through September 9, 2005.

This press release contains certain forward-looking statements, which the Company is making in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, and that the Company’s actual results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the potential adverse impact of governmental regulation on the Company’s operations, changes in nationwide employment and injury rate trends, interruption in its data processing capabilities, operational, financing and strategic risks related to the Company’s capital structure, acquisitions and growth strategy, possible fluctuations in quarterly and annual operations, possible legal liability for adverse medical consequences, competitive pressures, adverse changes in market conditions for the Company’s services, and dependence on key management personnel. Additional factors include those described in the Company’s filings with the Securities and Exchange Commission.

-MORE-

Concentra Announces Second Quarter Results

Page 4

August 8, 2005

CONCENTRA OPERATING CORPORATION

a wholly owned subsidiary of

CONCENTRA INC.

Unaudited Consolidated Statements of Operations

(in thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2005			2004		2005			2004
REVENUE:
Health Services	$	167,213		$	144,750	$	321,805		$	279,007
Network Services		68,326			73,764		136,185			146,777
Care Management Services		51,375			62,936		103,853			125,819
Total revenue		286,914			281,450		561,843			551,603
COST OF SERVICES:
Health Services		134,575			115,450		262,758			226,943
Network Services		40,525			42,502		80,970			84,054
Care Management Services		44,598			55,071		88,119			110,476
Total cost of services		219,698			213,023		431,847			421,473
Total gross profit		67,216			68,427		129,996			130,130
General and administrative expenses		30,725			33,938		62,047			65,976
Amortization of intangibles		582			873		1,165			1,723
Gain on sale of assets		(1,426	)		—		(1,426	)		—
Operating income		37,335			33,616		68,210			62,431
Interest expense, net		13,170			14,060		27,115			27,979
Loss on fair value of economic hedges		793			—		793			—
Loss on early retirement of debt		—			11,815		—			11,815
Other, net		615			969		1,497			1,783
Income before income taxes		22,757			6,772		38,805			20,854
Provision (benefit) for income taxes		(878	)		3,154		5,982			9,069
Income from continuing operations		23,635			3,618		32,823			11,785
Loss from discontinued operations		7			28		12			22
Net income	$	23,628		$	3,590	$	32,811		$	11,763

-MORE-

Concentra Announces Second Quarter Results

Page 5

August 8, 2005

CONCENTRA OPERATING CORPORATION

a wholly owned subsidiary of

CONCENTRA INC.

Consolidated Balance Sheets

(in thousands)

	June 30, 2005			December 31, 2004
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	58,819		$	61,319
Restricted cash		2,422			1,250
Restricted short-term investments		702			—
Accounts receivable, net		178,798			175,294
Prepaid expenses and other current assets		36,097			32,011
Total current assets		276,838			269,874
PROPERTY AND EQUIPMENT, NET		110,143			103,058
GOODWILL AND OTHER INTANGIBLE ASSETS, NET		454,842			449,698
OTHER ASSETS		31,971			30,710
	$	873,794		$	853,340
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Revolving credit facility	$	—		$	—
Current portion of long-term debt		4,019			34,092
Accounts payable and accrued expenses		131,085			123,387
Total current liabilities		135,104			157,479
LONG-TERM DEBT, NET		698,560			700,112
DEFERRED INCOME TAXES AND OTHER LIABILITIES		68,179			58,615
FAIR VALUE OF ECONOMIC HEDGES		793			—
STOCKHOLDER’S EQUITY (DEFICIT)		(28,842	)		(62,866	)
	$	873,794		$	853,340

-MORE-

Concentra Announces Second Quarter Results

Page 6

August 8, 2005

CONCENTRA OPERATING CORPORATION

a wholly owned subsidiary of

CONCENTRA INC.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2005			2004
OPERATING ACTIVITIES:
Net income	$	32,811		$	11,763
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		17,546			20,754
Amortization of intangibles		1,165			1,723
Restricted stock amortization		729			595
Loss on change in fair value of economic hedges		793			—
Gain on sale of assets		(1,426	)		—
Write-off of deferred financing costs		—			2,034
Write-off of fixed assets		355			175
Changes in assets and liabilities:
Accounts receivable, net		(3,601	)		(14,422	)
Prepaid expenses and other assets		(6,259	)		8,735
Accounts payable and accrued expenses		16,928			11,435
Net cash provided by operating activities		59,041			42,792
INVESTING ACTIVITIES:
Purchases of property, equipment and other assets		(24,168	)		(12,022	)
Acquisitions, net of cash acquired		(5,677	)		(3,067	)
Proceeds from sale of assets		800			—
Proceeds from the licensing of internally developed software		85			—
Net cash used in investing activities		(28,960	)		(15,089	)
FINANCING ACTIVITIES:
Borrowings (payments) under the revolving credit facility		—			—
Repayments of debt		(32,232	)		(118,330	)
Distributions to minority interests		(342	)		(1,056	)
Payment of deferred financing costs		(28	)		(7,283	)
Proceeds from the issuance of debt		—			222,850
Payment of dividend to parent		—			(96,028	)
Payment of early debt retirement costs		—			(9,781	)
Contribution from the issuance of common stock by parent		21			272
Net cash used in financing activities		(32,581	)		(9,356	)
NET (DECREASE) INCREASE IN CASH		(2,500	)		18,347
CASH, BEGINNING OF PERIOD		61,319			42,621
CASH, END OF PERIOD	$	58,819		$	60,968

-MORE-

Concentra Announces Second Quarter Results

Page 7

August 8, 2005

CONCENTRA OPERATING CORPORATION

a wholly owned subsidiary of

CONCENTRA INC.

Unaudited Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Net income	$	23,628		$	3,590		$	32,811		$	11,763
Provision (benefit) for income taxes		(878	)		3,154			5,982			9,069
Interest expense, net		13,170			14,060			27,115			27,979
Depreciation expense		8,790			10,529			17,546			20,754
Amortization expense		947			1,365			1,894			2,318
EBITDA		45,657			32,698			85,348			71,883
Loss on fair value of economic hedges		793			—			793			—
Loss on early retirement of debt		—			11,815			—			11,815
Gain on sale of assets		(1,426	)		—			(1,426	)		—
Discontinued operations – income tax benefit		(4	)		(15	)		(7	)		(11	)
Minority share of depreciation, amortization and interest		(195	)		(180	)		(373	)		(365	)
Adjusted EBITDA	$	44,825		$	44,318		$	84,335		$	83,322

Computations of Adjusted Earnings Before Interest Taxes Depreciation and Amortization (“Adjusted EBITDA”) have been provided in this press release due to the use of this measure by the holders of the Company’s 9.5% Senior Subordinated Notes and 9.125% Senior Subordinated Notes and other lenders, for purposes of determining the Company’s performance in light of its debt covenant requirements, which are stated in the Company’s debt agreements as measures that relate to Adjusted EBITDA. Adjusted EBITDA is disclosed because compliance with the liquidity covenants included in these agreements is considered material to the Company. The Company’s computations of this measure may differ from that provided by other companies due to differences in the inclusion or exclusion of items in its computations as compared to that of others. The Company’s measure of Adjusted EBITDA has been made in a manner consistent with the requirements of the indenture that relates to its 9.5% Senior Subordinated Notes and 9.125% Senior Subordinated Notes. Adjusted EBITDA is a measure that is not prescribed for under Generally Accepted Accounting Principles (“GAAP”). Adjusted EBITDA specifically excludes changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company’s operating, investing and financing activities, and it also excludes the effects of interest expense, depreciation expense, amortization expense, taxes and other items that are included when determining a company’s net income. As such, the Company would encourage a reader not to use this measure as a substitute for the determination of net income, operating cash flow, or other similar GAAP-related measures, and to use it primarily for the debt covenant compliance purposes above.

-MORE-

Concentra Announces Second Quarter Results

Page 8

August 8, 2005

CONCENTRA OPERATING CORPORATION

a wholly owned subsidiary of

CONCENTRA INC.

Supplemental Information

We use certain operating metrics to measure aspects of our operations. Additionally, from time to time, we provide estimates of our possible future financial performance. Our disclosure to you of this information is conditioned in its entirety by the provisions, risk factors and cautionary statements provided for you in the main text of this press release. It is being provided solely to ensure full and fair disclosure to investors in the Company’s existing debt instruments and for no other purpose.

Operating Metrics and Information:

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Health centers at period end		268			252			268			252
Total visits to health centers		1,671,143			1,500,119			3,207,870			2,871,994
Same-center performance [a]:
Injury-related visits%		45.4	%		47.0	%		46.2	%		47.8	%
Visits per business day growth		4.8	%		10.3	%		5.0	%		9.5	%
Revenue per visit growth		1.7	%		(0.1	) %		1.5	%		(0.8	) %
Revenue per business day growth		6.6	%		10.2	%		6.6	%		8.7	%
Revenue (in thousands) [b]	$	136,764		$	125,845		$	264,627		$	243,475

Current 2005 performance guidance:

(Subject to immediate change and no public update or notice; does not include the effects of the pending acquisitions)

Revenue:	$1.120 billion to $1.150 billion.
Adjusted EBITDA [c]:	$163 million to $168 million.
Operating Cash Flow:	$100 million to $110 million.
Capital Expenditures:	$43 million to $48 million.

Notes:

[a] Our same-center comparisons represent all centers that Health Services has operated for the previous two full years as of the date indicated and includes the effects of any centers acquired and subsequently consolidated into existing centers.

[b] Excludes ancillary services, on-site services and centers acquired within the previous two full years.

[c] Please refer to the discussion on Page 7 of this press release concerning the Company’s computation and use of Adjusted EBITDA.

-END-