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]

Core Insights - Select Medical (SEM) reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, but down from $0.5 per share a year ago, representing an earnings surprise of +27.78% [1] - The company posted revenues of $1.36 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.87%, but down from $1.76 billion year-over-year [2] - Select Medical shares have declined approximately 24.2% year-to-date, contrasting with the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $1.36 billion, and for the current fiscal year, it is $1.18 on revenues of $5.38 billion [7] - The estimate revisions trend for Select Medical was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical - HMOs industry, to which Select Medical belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Humana (HUM), another company in the same industry, is expected to report quarterly earnings of $2.91 per share, reflecting a year-over-year decline of -30.1%, with revenues anticipated to be $31.98 billion, up 9.1% from the previous year [9][10]

Revenue Performance - Revenue for Q3 2025 increased 7.2% to $1,363.4 million compared to $1,271.6 million in Q3 2024[3] - For the nine months ended September 30, 2025, revenue increased 4.7% to $4,056.2 million compared to $3,874.5 million in the same period of 2024[4] - The rehabilitation hospital segment saw a revenue increase of 16.2% to $328.6 million in Q3 2025 compared to $282.7 million in Q3 2024[9] - The outpatient rehabilitation segment's revenue increased 3.2% to $960.3 million for the nine months ended September 30, 2025, compared to $930.7 million in the same period of 2024[12] - Total revenue for Q3 2025 increased to $609,929, a 4.6% rise from $582,950 in Q3 2024[33] - Total revenue for the nine months ended September 30, 2025 was $1,848,098, a slight increase of 0.2% from $1,843,751 in 2024[34] Income and Earnings - Income from continuing operations before other income and expense rose 32.9% to $73.0 million for Q3 2025, up from $54.9 million in Q3 2024[3] - Net income attributable to Select Medical decreased by 48.2% to $28,793 in Q3 2025 from $55,628 in Q3 2024[24] - Income from continuing operations before income taxes rose by 22.5% to $55,929 in Q3 2025, up from $45,650 in Q3 2024[24] - Earnings per share for continuing operations increased to $0.23 in Q3 2025 from $0.19 in Q3 2024[29] - Net income for Q3 2025 decreased to $44,180, down 45.5% from $81,015 in Q3 2024[31] - Adjusted income from continuing operations, net of tax, attributable to common shares for Q3 2024 was $32,151,000, compared to $28,087,000 in Q3 2025, reflecting a decrease of 12.5%[42] Adjusted EBITDA - Adjusted EBITDA for Q3 2025 increased 7.5% to $111.7 million compared to $103.9 million in Q3 2024[3] - Adjusted EBITDA for Q3 2025 rose to $56,102, reflecting a 10.5% increase compared to $50,763 in Q3 2024[33] - The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.8% for the nine months ended September 30, 2025, down from 12.9% in the same period of 2024[8] - Select Medical's rehabilitation hospital segment generated $60,117,000 in Adjusted EBITDA for Q3 2024, increasing to $67,956,000 in Q3 2025, a growth of 13.0%[38] - Full year 2025 Adjusted EBITDA is projected to range between $510,000,000 and $530,000,000[46] Cash Flow and Expenses - Cash provided by operating activities for the nine months ended September 30, 2025 was $282,142, down 28.2% from $392,432 in the same period of 2024[32] - General and administrative expenses decreased by 25.4% to $108,721 for the nine months ended September 30, 2025, compared to $145,672 in 2024[26] - Cash paid for interest during the nine months ended September 30, 2025 was $84,002, down 61.2% from $216,757 in 2024[32] - Interest expense for Q3 2024 was $31,379,000, slightly decreasing to $30,021,000 in Q3 2025[38] Shareholder Returns and Stock Activity - The Board of Directors declared a cash dividend of $0.0625 per share, payable on or about November 25, 2025[13] - Select Medical repurchased 6,375,512 shares at a cost of approximately $96.5 million during the nine months ended September 30, 2025[16] Balance Sheet - Total assets increased to $5,685,723 as of September 30, 2025, compared to $5,607,951 at the end of 2024[30] - Total liabilities rose to $3,665,867 as of September 30, 2025, up from $3,610,856 at the end of 2024[30] Operational Metrics - Number of hospitals operated at the end of Q3 2025 was 105, a decrease from 106 in Q3 2024[33] - Revenue per patient day for Q3 2025 increased to $2,287, a 6.6% increase from $2,145 in Q3 2024[33] - Number of admissions in Q3 2025 increased to 8,859, a 2.1% rise from 8,676 in Q3 2024[33] - The number of patients admitted to Select Medical's hospitals during the periods presented is a critical metric for assessing operational performance[35] - The occupancy rate of hospitals is calculated using the number of patient days divided by total bed days available, indicating utilization levels[35] - Average revenue per patient day for the periods presented is calculated by dividing patient service revenues by total patient days, highlighting operational efficiency[35] Tax and Debt - Income tax expense from continuing operations increased by 168.6% to $11,749 in Q3 2025 from $4,374 in Q3 2024[24] - The company reported a loss on early retirement of debt amounting to $10,939 in both the three and nine months ended September 30, 2024[26] - The company reported a loss on early retirement of debt amounting to $10,939,000 for the nine months ended September 30, 2024[38]

Revenue Performance - The company reported revenue of $4,056.2 million for the nine months ended September 30, 2025, with approximately 46% from the critical illness recovery hospital segment, 23% from the rehabilitation hospital segment, and 24% from the outpatient rehabilitation segment[78]. - Total revenue for the nine months ended September 30, 2025, was $4,056.2 million, a 4.7% increase compared to $3,874.5 million for the same period in 2024[86]. - Revenue for the three months ended September 30, 2025, was $1,363.4 million, a 7.2% increase from $1,271.6 million in the same period of 2024[121]. - Revenue from the Critical Illness Recovery Hospital segment increased by 0.2%, while the Rehabilitation Hospital segment saw a 16.4% increase[87]. - Critical Illness Recovery Hospital segment revenue increased 4.6% to $609.9 million for the three months ended September 30, 2025, driven by a 6.6% increase in revenue per patient day to $2,287[122]. - Rehabilitation Hospital segment revenue rose 16.2% to $328.6 million, with patient days increasing 11.1% to 129,787 for the three months ended September 30, 2025[123]. - Outpatient Rehabilitation segment revenue increased 4.3% to $325.4 million, with patient visits up 5.5% to 2,924,794 for the three months ended September 30, 2025[124]. - Revenue for the Rehabilitation Hospital Segment increased by 16.4% to $949.8 million for the nine months ended September 30, 2025, compared to $816.2 million for the same period in 2024[139]. - Revenue for the Outpatient Rehabilitation Segment increased by 3.2% to $960.3 million for the nine months ended September 30, 2025, compared to $930.7 million for the same period in 2024[140]. Income and Profitability - For the three months ended September 30, 2025, income from continuing operations, net of tax, was $44.2 million, compared to $41.3 million for the same period in 2024, representing a growth of 7.0%[84]. - Income from continuing operations, net of tax, was $176.8 million for the nine months ended September 30, 2025, compared to $140.4 million for the same period in 2024[86]. - The company experienced a 10.1% increase in total income from continuing operations before other income and expenses[87]. - Net income for the three months ended September 30, 2025, was $43.6 million, down from $80.0 million in the same period of 2024[121]. Adjusted EBITDA - Adjusted EBITDA for the three months ended September 30, 2025, was $111.7 million, an increase of 7.5% compared to $103.9 million for the same period in 2024[84]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $388.5 million, with an adjusted EBITDA margin of 9.6%[86]. - Adjusted EBITDA for the Critical Illness Recovery Hospital Segment increased by 10.5% to $56.1 million for the three months ended September 30, 2025, compared to $50.8 million for the same period in 2024[127]. - Adjusted EBITDA for the Rehabilitation Hospital Segment increased by 13.0% to $68.0 million for the three months ended September 30, 2025, compared to $60.1 million for the same period in 2024[128]. - Adjusted EBITDA for the Outpatient Rehabilitation Segment decreased to $24.2 million for the three months ended September 30, 2025, down from $28.3 million for the same period in 2024[129]. - The Adjusted EBITDA margin for the total operations was 8.2% for the three months ended September 30, 2025[84]. - Adjusted EBITDA margin for the Critical Illness Recovery Hospital Segment was 9.2% for the three months ended September 30, 2025, compared to 8.7% for the same period in 2024[127]. Operating Expenses - Total operating expenses for the three months ended September 30, 2025, were $1,256.0 million, or 92.1% of revenue, down from 93.0% in the same period of 2024[125]. - Cost of services for the three months ended September 30, 2025, was $1,216.0 million, or 89.2% of revenue, compared to 89.3% in the prior year[125]. - General and administrative expenses decreased to $40.1 million, or 2.9% of revenue, from $47.3 million, or 3.7% of revenue, in the same period of 2024[125]. - Operating expenses were $3,681.5 million, or 90.8% of revenue, for the nine months ended September 30, 2025, compared to $3,524.0 million, or 91.0% of revenue, for the same period in 2024[141]. Cash Flow and Financing - Cash flows from operating activities provided $282.1 million for the nine months ended September 30, 2025, compared to $392.4 million for the same period in 2024[154]. - Investing activities used $149.6 million of cash flows for the nine months ended September 30, 2025, primarily for the purchase of property and equipment[156]. - Financing activities used $132.2 million of cash flows for the nine months ended September 30, 2025, with principal uses including $99.5 million for stock repurchases and $23.7 million in dividend payments[157]. - Cash and cash equivalents were $60.1 million as of September 30, 2025, with $419.1 million available under revolving facilities[162]. - The Board of Directors authorized a stock repurchase program of up to $1.0 billion, with 6,375,512 shares repurchased at a cost of approximately $96.5 million during the nine months ended September 30, 2025[160]. Market and Regulatory Environment - The company anticipates potential risks including changes in government reimbursement policies and economic conditions that could impact revenue and profitability[73]. - Medicare program revenue represented approximately 29% of total revenue for both the nine months ended September 30, 2025, and the year ended December 31, 2024[89]. - The standard federal rate for fiscal year 2026 is set at $50,825, an increase from $49,383 in fiscal year 2025[98]. - The fixed-loss amount for high-cost outlier cases under LTCH-PPS for fiscal year 2026 is $78,936, up from $77,048 in fiscal year 2025[98]. - The One Big Beautiful Bill Act is projected to reduce federal funding for Medicaid and CHIP by approximately $1 trillion over the next 10 years, impacting healthcare providers[93]. Future Plans and Initiatives - The company intends to pursue new joint venture relationships and open new outpatient rehabilitation clinics to drive incremental growth[161]. - An interest rate cap was entered into effective March 31, 2025, limiting the Term SOFR rate to 4.5% on $1.0 billion of principal outstanding under the term loan[170]. - A 0.25% increase in market interest rates will impact annual interest expense on variable rate debt by $3.0 million for the first increase, with subsequent increases being partially mitigated by the interest rate cap[171].

Group 1: Select Medical Holdings Corporation (SEM) - Select Medical Holdings Corporation is considered one of the most undervalued small-cap stocks currently available for investment, with a Buy rating and a price target of $21 from Benchmark Co. analyst Bill Sutherland [1] - Bank of America Securities analyst Joanna Gajuk also issued a Buy rating on SEM with a price target of $15, citing the recent delay of the 20% Rule by CMS as a factor that could improve the company's financial outlook for fiscal Q3 2025 [3] - The company operates in medical rehabilitation services, divided into three segments: Critical Illness Recovery Hospital, Rehabilitation Hospital, and Outpatient Rehabilitation [4] Group 2: Market Context and Analyst Insights - RBC Capital raised its price target for QUALCOMM to $20 from $16, maintaining an Outperform rating, indicating that the current stock dislocation presents an attractive entry point for investors [2]

Core Viewpoint - Select Medical (SEM) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which are a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - For Select Medical, the Zacks Consensus Estimate has increased by 4.1% over the past three months, with expected earnings of $1.19 per share for the fiscal year ending December 2025, showing no year-over-year change [8]. Investment Implications - The upgrade reflects an improvement in Select Medical's underlying business, suggesting that investor sentiment may drive the stock price higher [5][10]. - The Zacks Rank system classifies stocks into five groups, with only the top 20% receiving a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10].