Select Medical Holdings Corporation (NYSE:SEM) is one of the best dividend stocks to buy. As of December 5, the average price target for SEM suggests an upside of 34%, however, the Street high indicates an upside of 41%. Previously, on November 5, analyst Ben Hendrix from RBC Capital kept a Buy call on Select Medical Holdings, along with a $20 price target. Wall Street Sees a 41% Upside to Select Medical Holdings (SEM) Photo by lucas Favre on Unsplash In another business update, dated October 30, the c ...

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Core Insights - Select Medical Holdings Corporation (SEM) has received a take-private proposal from its executive chairman, Robert A. Ortenzio, offering $16 to $16.20 per share, representing a premium of up to 15.6% from the recent closing price of $14.01 [1][8] - The proposal indicates a potential shift to private ownership, suggesting that the executive believes there is untapped value in the business that could be realized outside of the public market [2][3] - The company has experienced a significant decline in stock value, dropping 63.8% over the past year, which is worse than the industry average decline of 42.3% [4][8] Financial Performance - SEM's current valuation stands at 10.43X forward earnings, which is below its five-year median of 12.32X and the industry average of 15X [6] - The rehabilitation hospital segment of SEM is showing positive trends with rising occupancy, admissions, and patient days [6] Market Position - SEM currently holds a Zacks Rank of 2 (Buy), indicating a favorable outlook compared to other stocks in the medical sector [7] - Other promising stocks in the sector include Aveanna Healthcare and The Pennant Group, both also holding a Zacks Rank of 2 [7]

Core Points - Select Medical Holdings Corporation has received a non-binding indication of interest from Robert A. Ortenzio to acquire all outstanding shares for cash consideration between $16.00 and $16.20 per share [1] - The Board of Directors is reviewing the proposal with their advisors and is committed to acting in the best interests of the company and its stockholders [2] Company Overview - Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics in the United States, operating 105 critical illness recovery hospitals, 36 rehabilitation hospitals, and 1,922 outpatient rehabilitation clinics as of September 30, 2025 [3]

Core Insights - Select Medical Holdings Corporation (SEM) shares have decreased by 5.4% following the release of its third-quarter 2025 results, primarily due to high expense levels and a decline in patient days affecting profitability in certain segments [1][9] - Despite these challenges, revenue growth in the Rehabilitation Hospital segment and an increased EPS guidance for 2025 provide some positive outlook [1][14] Financial Performance - Adjusted earnings per share (EPS) for Q3 2025 were reported at 23 cents, exceeding the Zacks Consensus Estimate by 27.8%, although this represents an 11.5% decline year over year [2][9] - Net operating revenues increased by 7.2% year over year to $1.4 billion, surpassing the consensus estimate by 2.9% [2][9] - Total costs and expenses rose to $1.3 billion, a 6% increase year over year, exceeding estimates due to higher service costs [3][9] Segment Performance - **Critical Illness Recovery Hospital**: Revenues reached $609.9 million, a 4.6% year-over-year increase, driven by a 2.1% rise in admissions and a 6.6% increase in revenue per patient day, despite a 1.9% decline in patient days [4][5] - **Rehabilitation Hospital**: Revenues grew by 16.2% year over year to $328.6 million, supported by an 11.2% increase in admissions and an 11.1% rise in patient days [6][7] - **Outpatient Rehabilitation**: Revenues totaled $325.4 million, a 4.3% year-over-year increase, aided by a 5.5% rise in visits, although revenue per visit decreased by 1% [8][9] Adjusted EBITDA - Adjusted EBITDA improved by 7.5% year over year to $111.7 million, exceeding estimates despite cost pressures [3][9] - Adjusted EBITDA for the Critical Illness Recovery Hospital segment was $56.1 million, a 10.5% year-over-year increase, but fell short of consensus estimates [5] - Adjusted EBITDA for the Rehabilitation Hospital segment rose by 13% to $68 million, surpassing estimates, while the adjusted EBITDA margin decreased by 60 basis points [7] Financial Position - As of September 30, 2025, Select Medical had cash and cash equivalents of $60.1 million, a slight increase from the end of 2024 [11] - Total assets amounted to $5.7 billion, up 1.4% from the end of 2024, while long-term debt increased by 3.1% to $1.7 billion [11] Shareholder Returns - The company repurchased shares worth approximately $96.5 million in the first nine months of 2025 [13] - A cash dividend of 6.25 cents per share was approved, to be paid on November 25, 2025 [13] 2025 Outlook - Management maintains revenue guidance of $5.3-$5.5 billion for 2025, reflecting a 4.1% increase from 2024 [14] - Adjusted EBITDA is expected to be between $510 million and $530 million, with EPS guidance raised to $1.14-$1.24 [14]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum when their valuations exceed future growth potential [1] - Identifying the right entry point for momentum stocks is challenging, and investors may end up with overvalued shares [1] Group 2: Bargain Momentum Stocks - Investing in bargain stocks that have recently shown price momentum may be a safer strategy [2] - The Zacks Momentum Style Score is useful for identifying strong momentum stocks, while the 'Fast-Paced Momentum at a Bargain' screen helps find attractively priced fast-moving stocks [2] Group 3: Select Medical (SEM) Analysis - Select Medical (SEM) has a four-week price change of 2.5%, indicating growing investor interest [3] - SEM gained 7.8% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [4] - SEM has a beta of 1.3, suggesting it moves 30% more than the market in either direction [4] Group 4: Valuation and Earnings Estimates - SEM has a Momentum Score of B, indicating a favorable time to invest [5] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [6] - SEM is trading at a Price-to-Sales ratio of 0.31, meaning investors pay 31 cents for each dollar of sales, indicating a reasonable valuation [6] Group 5: Additional Investment Opportunities - Besides SEM, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen [7] - Zacks offers over 45 Premium Screens to help identify potential winning stock picks based on various investing styles [8]

分组1 - Select Medical (SEM) shares have increased by 2.5% over the past four weeks, closing at $13.37, with a mean price target of $18.17 indicating a potential upside of 35.9% [1] - The mean estimate consists of six short-term price targets with a standard deviation of $2.64, where the lowest estimate is $14.00 (4.7% increase) and the highest is $21.00 (57.1% increase) [2] - Analysts show strong agreement in revising SEM's earnings estimates higher, which correlates with potential stock price increases [11][12] 分组2 - The Zacks Consensus Estimate for SEM has risen by 4.5% over the past month, with two estimates increasing and no negative revisions [12] - SEM holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting exact gains, they can indicate the direction of price movement [14]

Core Insights - Select Medical Holdings Corporation (SEM) is a key player in the healthcare sector, focusing on critical illness recovery, inpatient rehabilitation, and outpatient therapy, with a network of hospitals and clinics across the U.S. [1] - SEM has demonstrated resilience with a 30-day gain of 3.15%, although it experienced a slight decline of 2.82% over the last 10 days, which may present a strategic entry point for investors [2] - Analysts estimate a significant upside of 26.68% for SEM, with a target price set at $17, indicating strong growth potential [3] - The company has a robust financial standing, evidenced by a Piotroski Score of 8, highlighting its strong fundamentals in profitability, leverage, liquidity, and operating efficiency [4] - Overall, SEM represents a compelling investment opportunity due to its strong financial metrics and recent stock price dip, making it attractive for long-term growth [5] Performance Analysis - SEM's recent performance includes a 30-day gain of 3.15% and a 10-day decline of 2.82%, suggesting volatility but also potential for recovery [2][6] Growth Potential - The estimated upside for SEM is 26.68%, with a target price of $17, reflecting analysts' confidence in the stock's appreciation potential [3][6] Financial Health - SEM's Piotroski Score of 8 indicates solid financial fundamentals, positioning the company well for sustained growth and stability in the competitive healthcare market [4][6]

Core Insights - The company plans to add 395 inpatient rehabilitation beds by 2027 through new openings and strategic additions, including a 45-bed hospital in Temple, Texas, and a 32-bed unit in Orlando, Florida [1][5] - The delay of the 20% transmittal rule by CMS is seen as beneficial, allowing for a favorable revenue adjustment this quarter, with expectations of a smaller impact in future periods due to stabilized labor costs [2][3][29] - Revenue for the third quarter grew over 7% to $1.36 billion, with adjusted EBITDA also increasing over 7% to $111.7 million, and earnings per share from continuing operations rose over 21% to $0.23 [7][12] Development and Expansion - The company opened a fourth rehab hospital in partnership with the Cleveland Clinic, adding 32 new beds, and plans to open additional facilities in 2026 and 2027, including a 76-bed rehab hospital in Jersey City, New Jersey [1][5] - Future development efforts will focus on the inpatient rehabilitation segment, with plans to add two acute rehab units and two neurotransitional units [5][6] Financial Performance - Inpatient rehab hospital revenue increased 16% year over year to $328.6 million, with adjusted EBITDA up 13% to $68 million [7][9] - The outpatient rehab division saw a revenue increase of 4% to $325.4 million, but adjusted EBITDA decreased over 14% to $24.2 million due to a reduction in Medicare reimbursement and unfavorable payer mix [8][9] - The critical illness recovery hospital division's revenue increased over 4% to $609.9 million, with adjusted EBITDA rising over 10% to $56.1 million [9] Regulatory Environment - The CMS's deferment of the expanded Medicare outlier reconciliation criteria is viewed positively, although further reforms are needed to support treatment for high acuity patients [2][4][19] - The fixed loss threshold for outlier payments has increased significantly over the past four years, impacting the ability to accommodate acutely ill patients [16][20] Capital Management - The company ended the quarter with $1.8 billion in debt and $60.1 million in cash, maintaining a net leverage of 3.4 times [10][11] - A cash dividend of $0.0625 per share was approved, reflecting the company's commitment to enhancing shareholder value [6]

Financial Data and Key Metrics Changes - Revenue grew over 7% to $1.36 billion, compared to $1.27 billion in the prior year [7] - Adjusted EBITDA increased over 7% to $111.7 million, up from $103.9 million [7] - Earnings per common share from continuing operations rose over 21% to $0.23, compared to $0.19 per share in the same quarter last year [7] - Cash flow from operating activities was $175.3 million [10] Business Line Data and Key Metrics Changes - Inpatient rehabilitation hospital division revenue increased 16% year-over-year to $328.6 million, with adjusted EBITDA up 13% to $68 million [7] - Outpatient rehabilitation division revenue increased 4% to $325.4 million, driven by over 5% growth in patient visits, but net revenue per visit decreased to $100 from $101 [8] - Critical illness recovery hospital division revenue increased over 4% to $609.9 million, with adjusted EBITDA rising over 10% to $56.1 million [8] Market Data and Key Metrics Changes - Average daily census rose 11% in the inpatient rehabilitation segment, with occupancy improving to 83% from 82% [8] - Same-store occupancy in inpatient rehabilitation rose to 86% from 85% [8] - Occupancy in the critical illness recovery hospital division remained steady at 65%, with admissions up 2.1% [9] Company Strategy and Development Direction - The company plans to add 395 inpatient rehabilitation beds by 2027 through new openings and strategic bed additions [5] - Future development efforts will focus on the inpatient rehabilitation segment, with several new hospitals planned [6] - The company is committed to enhancing shareholder value through cash dividends and share repurchase [6] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the delay of the 20% transmittal rule, expecting it to have less impact due to stabilized labor costs [4] - The company reaffirmed its business outlook for 2025, expecting revenue between $5.3 billion and $5.5 billion and adjusted EBITDA between $510 million and $530 million [11] - Management noted ongoing challenges with high-cost outlier thresholds affecting admissions and occupancy in the LTAC business [16][20] Other Important Information - The company acquired a 30-bed critical illness recovery hospital in Memphis and opened three new outpatient clinics during the quarter [4] - A cash dividend of $0.0625 per share was approved, payable on November 25, 2025 [6] Q&A Session Summary Question: Impact of the high-cost outlier on admission volume and occupancy - Management noted that the increasing fixed loss threshold negatively impacts the LTAC business, affecting the ability to accommodate acutely ill patients [16][17] Question: Discussions with CMS regarding payment increases - Management indicated that there are many levers in the reimbursement system, and they are advocating for various options to help the industry [24][25] Question: Revenue benefit from the delay of the 20% transmittal rule - The net impact was estimated to be in the $12 million to $15 million range for the quarter [31] Question: Softness in the outpatient segment - Management attributed the softness to a reduction in Medicare reimbursement and a shift in payer mix [37][48] Question: Future headwinds and tailwinds for 2026 - Management expects a modest increase in Medicare rates, which could serve as a tailwind, while the return of the 20% transmittal rule will be a headwind [39] Question: Development pipeline and startup costs - Management projected approximately $15 to $20 million of startup losses per annum, consistent with previous years [59] Question: Labor cost trends - The labor environment is more stable, with agency rates returning to pre-COVID levels and full-time equivalent costs increasing slightly [61] Question: Leverage and capital allocation - Management indicated that a net leverage of 3.4 times is comfortable, with capital allocation focused on development, dividends, and opportunistic debt reduction [63]