MECHANICSBURG, Pa., April 8, 2025 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical") (NYSE: SEM), will release the financial results for its first quarter ended March 31, 2025 on Thursday, May 1, 2025 after the market closes. Select Medical will host a conference call regarding its first quarter results, as well as its business outlook, on Friday, May 2, 2025, at 9:00am ET. The conference call will be a live webcast and can be accessed at via this Earnings Call Webcast Link or via link a ...

Core Insights - Select Medical Holdings Corporation (SEM) experienced a 7.2% decline in stock price following the release of its fourth-quarter 2024 results, primarily due to reduced occupancy rates and lower admissions in key segments, alongside increased costs [1] Financial Performance - SEM reported adjusted earnings per share (EPS) of 18 cents, missing the Zacks Consensus Estimate by 5.3%, but showing a 50% increase year over year [2] - Net operating revenues reached $1.31 billion, reflecting a 7.8% year-over-year growth and surpassing the consensus estimate by 1.2% [2] - Total costs and expenses rose 12% year over year to $1.29 billion, lower than the estimated $1.62 billion, driven by increased service costs and administrative expenses [3] - Adjusted EBITDA was $116 million, a 3.8% increase year over year, but fell short of the estimate of $187 million [3] Segment Performance - **Critical Illness Recovery Hospital**: Revenues were $600.4 million, up 5.9% year over year, but below the consensus estimate of $612.5 million. Revenue per patient day increased by 7.2%, while patient days and admissions declined by 1.2% and 4.8%, respectively [4] - Adjusted EBITDA for this segment was $63.1 million, a 10% year-over-year increase, but missed the consensus estimate of $64.7 million [5] - **Rehabilitation Hospital**: Revenues grew 13.1% year over year to $294.4 million, exceeding the consensus mark of $286 million. Admissions and patient days increased by 4.4% and 3.3%, respectively [6] - Adjusted EBITDA declined 6.1% year over year to $62.3 million, although it surpassed the Zacks Consensus Estimate of $51.8 million [6] - **Outpatient Rehabilitation**: Revenues reached $319.6 million, a 7.2% year-over-year increase, beating the consensus estimate of $308.4 million. Patient visits rose by 5.2% [7] - Adjusted EBITDA improved 18.2% year over year to $26.6 million, exceeding estimates [7] Financial Position - As of December 31, 2024, SEM had cash and cash equivalents of $59.7 million, up from $52.6 million at the end of 2023. Total assets decreased to $5.6 billion from $7.7 billion [9] - Long-term debt was $1.7 billion, down from the previous year, while total equity increased to $2 billion from $1.5 billion [9] Cash Flow and Full-Year Highlights - Cash flow from operations was $125.4 million, a decline of 30.1% year over year [10] - For the full year 2024, EPS was 94 cents compared to 54 cents in 2023, with total revenue rising to $5.2 billion from $4.8 billion [11] Future Outlook - Management projects revenues for 2025 to be between $5.4 billion and $5.6 billion, indicating a potential growth of 5.8% from 2024 [13] - Expected adjusted EBITDA for 2025 is between $520 million and $540 million, suggesting a 3.8% increase from 2024 [13] - EPS is anticipated to range from $1.09 to $1.19 [13]

Financial Data and Key Metrics Changes - The company reported a combined revenue increase of 8% in Q4 2024, with adjusted EBITDA growing by 4% from $111.8 million to $116 million [14][15] - For the full year, revenue from continuing operations grew by 7%, and adjusted EBITDA increased by 14%, reaching $510.4 million with a 9.8% adjusted EBITDA margin compared to 9.2% in 2023 [15][24] - The diluted loss per common share from continuing operations was $0.19 for Q4, compared to earnings of $0.12 in the same quarter last year [23] Business Line Data and Key Metrics Changes - The critical illness recovery hospital division saw a 6% increase in revenue and a 10% increase in adjusted EBITDA, with an adjusted EBITDA margin of 10.5% for Q4 [15][16] - The inpatient rehab hospital division experienced a 13% revenue increase, but adjusted EBITDA declined by 6%, with a margin of 21.2% [18] - The outpatient rehab division reported a 7% revenue increase, 4% increase in patient volume, and 18% increase in adjusted EBITDA, with net revenue per visit rising from $100 to $102 [20][21] Market Data and Key Metrics Changes - The company added 94 inpatient rehabilitation beds in Q4 and plans to add 481 additional beds in 2025 and 2026 [8][12] - The occupancy rate for the critical illness recovery hospital division increased from 66% to 67% year-over-year [16] - The average daily census for the entire rehab division increased by 3%, while the occupancy rate was 81%, down from 85% the previous year [19] Company Strategy and Development Direction - The company completed the spin-off of Concentra, which is now reflected as discontinued operations [5] - The company plans to continue expanding its inpatient rehab division with multiple new facilities scheduled to open through 2026 [12] - The company is focusing on optimizing resources by closing or consolidating underperforming outpatient clinics [13] Management's Comments on Operating Environment and Future Outlook - Management noted that nursing agency rates have stabilized and utilization has returned to pre-COVID levels, with a 15% reduction in nursing sign-on incentive bonus dollars [17][27] - The company expects revenue for 2025 to be in the range of $5.4 billion to $5.6 billion, with adjusted EBITDA projected between $520 million and $540 million [36] - Management acknowledged confusion in the market regarding the impact of the Concentra spin-off on consensus estimates [41] Other Important Information - The company did not repurchase shares in the last quarter but continues to evaluate stock repurchases and debt reduction opportunities [25][35] - A cash dividend of $0.0625 per share has been declared, payable on March 13, 2025 [24] Q&A Session Summary Question: Clarification on 2025 metrics - Management confirmed that there is confusion in the market regarding consensus estimates and emphasized the importance of excluding Concentra's numbers [40][41] Question: Development activity and startup costs - Management indicated that the increase in inpatient rehab beds will dampen margins in 2025 but expects significant EBITDA growth in 2026 and 2027 [47] Question: Post-separation leverage targets - Management expects to maintain leverage around 3 to 3.1 times for 2025, with a reduction anticipated in 2026 and beyond [57] Question: Inpatient rehab margins - Management attributed lower margins to startup losses and a referral source impacted by Hurricane Helene, which has since returned to normal [59] Question: Outpatient rehab growth drivers - Management highlighted increased net revenue per visit and improved clinical productivity as key drivers for expected growth in outpatient rehab EBITDA [78]

Company Performance - Select Medical reported quarterly earnings of $0.18 per share, missing the Zacks Consensus Estimate of $0.19 per share, and down from $0.36 per share a year ago, representing an earnings surprise of -5.26% [1] - The company posted revenues of $1.31 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.18%, but down from $1.66 billion year-over-year [2] - Over the last four quarters, Select Medical has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Select Medical shares have increased by approximately 2.1% since the beginning of the year, compared to the S&P 500's gain of 4.5% [3] - The current Zacks Rank for Select Medical is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.41 on revenues of $1.37 billion, and for the current fiscal year, it is $1.17 on revenues of $5.37 billion [7] - The outlook for the Medical - HMOs industry, to which Select Medical belongs, is currently in the bottom 20% of over 250 Zacks industries, which may impact stock performance [8]

Hospital Operations - As of December 31, 2024, the company operated 104 critical illness recovery hospitals, with 38%, 37%, and 33% of revenue from Medicare reimbursement for the years ended December 31, 2022, 2023, and 2024, respectively[26]. - The rehabilitation hospital segment operated 35 hospitals as of December 31, 2024, with 46%, 47%, and 45% of revenue from Medicare reimbursement for the years ended December 31, 2022, 2023, and 2024, respectively[43]. - As of December 31, 2024, the company operated 1,914 outpatient rehabilitation clinics across 39 states and the District of Columbia, employing approximately 11,300 people[58]. - The company operates 35 rehabilitation hospitals in 14 states and 104 critical illness recovery hospitals in 29 states as of December 31, 2024[71]. - As of December 31, 2024, all critical illness recovery hospitals operated by the company were certified by Medicare as LTCHs, and 22 rehabilitation hospitals were certified as IRFs[110]. Patient Care Metrics - The average length of stay for patients in critical illness recovery hospitals was 31 days for the year ended December 31, 2024[28]. - The average length of stay for patients in rehabilitation hospitals was 14 days for the year ended December 31, 2024[44]. Workforce and Employment - The company employed approximately 16,500 people in its critical illness recovery hospital segment as of December 31, 2024[26]. - As of December 31, 2024, the company employed approximately 44,100 individuals, including 30,000 full-time and 14,100 part-time employees[83]. - The company has developed a cultural framework called "The Select Medical Way" to enhance employee experience and retention[86]. - The company employs various strategies for talent acquisition, including employee referral programs and partnerships with nursing and therapy schools[88]. Financial Performance and Revenue Sources - For the year ended December 31, 2024, approximately 82% of the company's revenue from outpatient rehabilitation came from commercial payors, with the remainder from Medicare and other government programs[60]. - The company's revenue by payor source for 2024 indicated that Medicare accounted for 28.8%, commercial insurance for 51.3%, and Medicaid for 3.0%[79]. - Revenue from workers' compensation programs accounted for approximately 15% of outpatient rehabilitation segment revenue, 2% of rehabilitation hospital segment revenue, and 1% of critical illness recovery hospital segment revenue for the year ended December 31, 2024[112]. - Revenues from Medicare-covered services represented approximately 31%, 31%, and 29% of total revenue for the years ended December 31, 2022, 2023, and 2024, respectively[209]. Strategic Initiatives - The company focuses on increasing admissions by demonstrating quality outcomes and improving relationships with referring physicians and hospitals[29]. - The company aims to control operating costs by centralizing administrative functions and standardizing operations[38]. - The company is pursuing opportunistic acquisitions to grow its network of critical illness recovery hospitals[41]. - The company has a strategy to pursue opportunistic acquisitions to grow its network of rehabilitation hospitals and outpatient facilities[57][67]. Quality Assurance and Compliance - The company maintains quality assurance programs to support and monitor care standards, ensuring compliance with regulatory requirements and Medicare certifications[51]. - The company maintains a Privacy and Security Committee to monitor compliance with HIPAA regulations[174]. - The compliance program includes a written code of conduct and is overseen by a compliance and audit committee that meets quarterly[188][189]. Regulatory and Payment System Challenges - The company faces risks from potential changes in Medicare reimbursement rates, which could adversely affect revenue and profitability[210]. - The company is exposed to risks from legislative and regulatory changes that could affect payment systems under the Medicare program[210]. - LTCHs and IRFs face a 2% reduction in annual payment updates if they fail to submit required quality data[158]. Operational Challenges - The company faced significant operating issues due to a shortage of clinical personnel, which may lead to increased reliance on costly temporary personnel[84]. - Increased labor costs due to shortages and high turnover rates are impacting profitability, with significant increases in operating costs expected[215]. - The company is experiencing challenges in attracting and retaining qualified healthcare personnel, which may limit operational capacity and increase costs[216]. Economic and Market Risks - Economic downturns or inflationary pressures could negatively impact patient volumes and overall financial performance[212]. - Public health threats, such as pandemics, may create uncertainties regarding future operating results and financial conditions[220]. - Global economic conditions, including geopolitical conflicts, may adversely affect the company's business and financial results[221].

Revenue Performance - For Q4 2024, revenue increased by 7.8% to $1,312.6 million compared to $1,218.1 million in Q4 2023[3] - For the year ended December 31, 2024, revenue increased by 7.5% to $5,187.1 million compared to $4,826.0 million in 2023[5] - Revenue for Q4 2024 increased to $1,312,564, representing a 7.8% growth compared to Q4 2023's $1,218,116[30] - Revenue for Critical Illness Recovery Hospitals increased by 5.9% from $567.1 million in 2023 to $600.4 million in 2024[46] - Revenue for Critical Illness Recovery Hospital increased by 6.3% from $2,299,773,000 in 2023 to $2,444,196,000 in 2024[49] - Revenue for Rehabilitation Hospital grew by 13.4% from $979,585,000 in 2023 to $1,110,592,000 in 2024[49] - Total revenue for Outpatient Rehabilitation was $1,188,914,000 in 2023, increasing to $1,250,294,000 in 2024, a growth of 5.2%[49] Income and Earnings - Income from continuing operations, net of tax, was a loss of $10.5 million in Q4 2024, compared to income of $30.3 million in Q4 2023[3] - Net income attributable to Select Medical decreased significantly to $(16,050) in Q4 2024, down from $46,269 in Q4 2023, marking a 93.9% decline[30] - Net income attributable to Select Medical for the year 2024 was $214,038, down 12.1% from $243,491 in 2023[33] - Basic earnings per share from continuing operations for Q4 2024 was $(0.18), compared to $0.12 in Q4 2023[30] - The company experienced a 67.5% decline in income from continuing operations before other income and expense, dropping to $21,091 in Q4 2024 from $64,937 in Q4 2023[30] - Adjusted income from continuing operations, net of tax, attributable to common shares increased from $66,919,000 in 2023 to $117,311,000 in 2024[57] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 increased by 3.8% to $116.0 million, up from $111.8 million in Q4 2023[3] - Adjusted EBITDA for the year ended December 31, 2024 increased by 14.4% to $510.4 million, compared to $446.1 million in 2023[5] - Adjusted EBITDA for Outpatient Rehabilitation grew by 18.2%, from $22.5 million in 2023 to $26.6 million in 2024[46] - Adjusted EBITDA for Critical Illness Recovery Hospital rose by 22.6% from $246,015,000 in 2023 to $301,634,000 in 2024[49] - Adjusted EBITDA for Rehabilitation Hospital increased by 10.8% from $221,875,000 in 2023 to $245,748,000 in 2024[49] - Adjusted EBITDA for Outpatient Rehabilitation decreased by 2.9% from $111,868,000 in 2023 to $108,577,000 in 2024[49] - The company expects Adjusted EBITDA for 2025 to range between $520,000,000 and $540,000,000[60] Costs and Expenses - Total costs and expenses for Q4 2024 rose to $1,291,579, a 12.0% increase from $1,153,637 in Q4 2023[30] - General and administrative expenses surged by 32.7% to $225,869 in 2024 from $170,193 in 2023[33] Future Outlook - Select Medical expects 2025 revenue to be in the range of $5.4 billion to $5.6 billion[21] - Income from continuing operations, net of tax, is projected to be between $142,000,000 and $155,000,000 for 2025[60] Cash and Assets - Total current assets decreased from $1.26 billion in 2023 to $1.02 billion in 2024, a decline of approximately 19%[41] - Cash and cash equivalents at the end of the period dropped from $84.0 million in 2023 to $59.7 million in 2024, representing a decrease of 29%[43] - The company reported a net cash provided by operating activities of $582.1 million in 2023, which decreased to $517.9 million in 2024, a decline of 11%[45] Debt and Liabilities - Total liabilities decreased significantly from $6.12 billion in 2023 to $3.61 billion in 2024, a reduction of approximately 41%[41] - The company’s long-term debt, net of current portion, decreased from $3.58 billion in 2023 to $1.69 billion in 2024, a reduction of approximately 53%[41] Operational Metrics - The number of hospitals operated in the Critical Illness Recovery segment decreased from 107 in 2023 to 104 in 2024, a reduction of 2.8%[46] - The number of admissions in Critical Illness Recovery Hospitals fell by 4.8%, from 9,126 in 2023 to 8,691 in 2024[46] - The number of hospitals operated in Critical Illness Recovery increased from 107 in 2023 to 104 in 2024, while Rehabilitation Hospitals increased from 33 to 35[49] Risks and Challenges - The company highlighted potential risks including government reimbursement changes and shortages of qualified healthcare professionals impacting future profitability[27]

Core Viewpoint - Select Medical Holdings Corporation reported its fourth quarter and full year results for 2024, highlighting revenue growth but a net loss due to one-time expenses related to the distribution of Concentra and debt refinancing [1][3][4]. Financial Performance - For Q4 2024, revenue increased by 7.8% to $1,312.6 million compared to $1,218.1 million in Q4 2023 [3]. - Income from continuing operations before other income and expense was $21.1 million, a decrease of 67.5% from $64.9 million in the same quarter last year [3]. - The net loss from continuing operations was $10.5 million, compared to a profit of $30.3 million in Q4 2023 [3]. - Adjusted EBITDA for Q4 2024 rose by 3.8% to $116.0 million from $111.8 million in Q4 2023 [3]. - For the full year 2024, revenue grew by 7.5% to $5,187.1 million from $4,826.0 million in 2023 [4]. - Income from continuing operations, net of tax, increased by 17.7% to $130.0 million compared to $110.5 million in 2023 [4]. - Adjusted EBITDA for the year increased by 14.4% to $510.4 million from $446.1 million in 2023 [4]. Segment Performance - Critical Illness Recovery Hospital Segment: - Q4 revenue increased by 5.9% to $600.4 million [6]. - Full year revenue rose by 6.3% to $2,444.2 million [8]. - Rehabilitation Hospital Segment: - Q4 revenue increased by 13.1% to $294.4 million [9]. - Full year revenue grew by 13.4% to $1,110.6 million [10]. - Outpatient Rehabilitation Segment: - Q4 revenue increased by 7.2% to $319.6 million [11]. - Full year revenue rose by 5.2% to $1,250.3 million [12]. Dividend and Stock Repurchase - A cash dividend of $0.0625 per share was declared, payable on or about March 13, 2025 [13]. - The board authorized a stock repurchase program of up to $1.0 billion, which will remain in effect until December 31, 2025 [15]. Financing Transactions - A new incremental term loan of $1,050.0 million was established, maturing on December 3, 2031 [18]. - Issued $550.0 million of 6.250% senior notes due December 1, 2032, to refinance existing debt [19]. Business Outlook - For 2025, Select Medical expects revenue between $5.4 billion and $5.6 billion, with Adjusted EBITDA in the range of $520.0 million to $540.0 million [20].

Company Overview - Select Medical Holdings Corporation is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics in the United States based on the number of facilities [4] - As of December 31, 2024, Select Medical operated 104 critical illness recovery hospitals in 29 states, 35 rehabilitation hospitals in 14 states, and 1,914 outpatient rehabilitation clinics in 39 states and the District of Columbia [4] - The company has operations in 41 states and the District of Columbia [4] Financial Results Announcement - Select Medical will release its financial results for the fourth quarter and year ended December 31, 2024, on Thursday, February 20, 2025, after the market closes [1] - A conference call regarding the fourth quarter and full year results, as well as the business outlook, will be hosted on Friday, February 21, 2025, at 9:00 am ET [2] - The conference call will be available as a live webcast and can be accessed through the company's website [2]

Core Viewpoint - Select Medical Holdings Corporation (SEM) has experienced a significant decline in stock performance, dropping 48.2% over the past six months, which is substantially worse than the industry average decline of 1.9% [1][2] Financial Performance - SEM's stock is currently down 14.9% from its 52-week high of $22.08 and is trading below its 50-day moving average, indicating potential downward momentum [2] - The company's profitability has been negatively impacted by rising costs, which increased by 11.5%, 5.8%, and 2.5% in 2021, 2022, and 2023, respectively, with an additional 5.6% rise in the first nine months of 2024 [5] - Overall costs are projected to increase by more than 5% year-over-year for the full year, putting pressure on profit margins [5] Growth Strategy - SEM is pursuing growth through acquisitions to enhance volumes, but its return on invested capital stands at 6.2%, below the industry average of 10.4%, indicating less effective capital utilization [6] - The company faces significant leverage, with a net debt-to-capital ratio of 55.2%, compared to the industry average of 20.6% [7] - As of September 30, 2024, SEM reported $3.1 billion in long-term debt and only $191.5 million in cash and cash equivalents [7] Strategic Initiatives - SEM completed the spin-off of Concentra in November 2024, which aims to streamline operations and focus on core business areas such as critical illness recovery hospitals and rehabilitation clinics [9] Valuation Metrics - The stock is currently trading at 9.57X forward 12-month earnings, below its five-year median of 12.90X and the industry average of 14.34X, suggesting it may be undervalued [10] - Peers like Centene and Cigna are valued at 8.88X and 9.62X forward 12-month earnings, respectively [12] Earnings Outlook - The Zacks Consensus Estimate for SEM's current-quarter adjusted earnings is 15 cents per share, reflecting a 58.3% year-over-year decline, with further declines of 46.8% expected for the next quarter [13] Conclusion - Rising costs and significant leverage are straining SEM's financial health, and despite strategic moves like the Concentra spin-off, downward earnings revisions and underperformance compared to peers indicate ongoing struggles [14]

Core Viewpoint - Select Medical Holdings Corporation has successfully completed a private offering of $550 million in senior notes, which will be used to refinance existing debt and cover related expenses [1][2]. Group 1: Offering Details - Select Medical Corporation, a subsidiary of Select Medical Holdings, issued $550 million in 6.250% senior notes due 2032 [1]. - The notes are senior unsecured obligations and are guaranteed by certain existing and future domestic subsidiaries of Select [1]. Group 2: Use of Proceeds - The net proceeds from the offering, along with funds from a new incremental term loan and cash on hand, will be utilized to fully repay existing term loans under the senior secured credit agreement [2]. - The proceeds will also be used to redeem all outstanding 6.250% senior notes due 2026 and to cover associated fees and expenses [2]. Group 3: Regulatory Information - The notes and related guarantees have not been registered under the Securities Act of 1933 and are offered only to qualified institutional buyers and certain non-U.S. persons [3]. - The offering is conducted in compliance with Rule 144A and Regulation S under the Securities Act [3].