Core Viewpoint - Select Medical (SEM) shares have increased by 7.8% in the past four weeks, closing at $13.19, with a mean price target of $18 indicating a potential upside of 36.5% [1] Price Targets and Analyst Estimates - The mean estimate consists of six short-term price targets with a standard deviation of $2.9, where the lowest estimate is $14.00 (6.1% increase) and the highest is $21.00 (59.2% increase) [2] - A low standard deviation among price targets suggests a high degree of agreement among analysts regarding the stock's price movement [9] Earnings Estimates and Analyst Sentiment - Analysts are optimistic about SEM's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has shown a strong correlation with stock price movements [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 1.1%, with one estimate moving higher and no negative revisions [12] Zacks Rank and Investment Potential - 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 the extent of gains, they can provide a directional guide for potential price movement [14]

Core Insights - Select Medical Holdings experienced a significant stock price increase of approximately 14% during morning trading on Wednesday, marking its best intraday gain in over five years [2] - The trading volume exceeded 1 million shares, indicating heightened investor interest and activity in the stock [2]

Group 1: Dell Technologies Inc. - Dell raised its annual revenue growth and annual adjusted EPS growth guidance [2] - Dell plans to increase its quarterly dividend by at least 10% annually through fiscal 2030 [2] - Dell shares jumped 7.7% to $162.57 on Wednesday [2] - Wells Fargo analyst Aaron Rakers maintained Dell with an Overweight rating and raised the price target from $160 to $180 [1] - Bernstein analyst Mark Newman maintained the stock with an Outperform rating and raised the price target from $175 to $180 [1] Group 2: Market Performance - U.S. stocks were higher, with the Dow Jones index gaining around 100 points on Wednesday [1] - Several other stocks recorded significant gains, including Nanobiotix S.A. which jumped 24.4% to $26.08 [4] - I-Mab gained 22.7% to $5.36, and Diginex Limited rose 19.2% to $28.85 [4] - Critical Metals Corp. gained 18% to $11.82 after signing a 10-year offtake deal [4] - Select Medical Holdings Corporation gained 12.8% to $14.71, with RBC Capital analyst raising the price target from $16 to $20 [4]

Core Points - Select Medical Holdings Corporation will release its financial results for the third quarter ended September 30, 2025, on October 30, 2025, after market close [1] - A conference call to discuss the third quarter results and business outlook is scheduled for October 31, 2025, at 9:00 am ET, which will be available via live webcast [2] - Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics in the United States, with operations in 40 states and the District of Columbia as of June 30, 2025 [4] Company Overview - As of June 30, 2025, Select Medical operated 104 critical illness recovery hospitals in 29 states, 36 rehabilitation hospitals in 14 states, and 1,919 outpatient rehabilitation clinics in 39 states and the District of Columbia [4] - The company’s reportable segments include critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation [4]

Core Viewpoint - Select Medical Holdings Corporation (SEM) has experienced significant underperformance in 2025, with shares down 33.4% year to date, compared to the industry's 29.7% gain and the S&P 500's 14.2% growth. The stock is currently trading at $12.55, which is 69.4% below its 52-week high of $40.98 [1]. Group 1: Challenges Facing SEM - The Critical Illness Recovery Hospital unit has shown weakness, with admissions declining by 1% in 2023, 1.2% in 2024, and 0.5% in the first half of 2025. This has led to lower patient days and revenue per patient day, resulting in a 28% year-over-year decrease in operating income [3]. - Rising costs are a concern, with expenses increasing by 7.9% in 2024 and 3.4% in the first half of 2025, with no signs of slowing down. Additionally, uncertainty regarding future government medical aid adds pressure [4]. - SEM's trailing 12-month return on equity is 8.9%, significantly below the industry average of 21.1%, indicating weak capital efficiency [4]. - The company's net debt-to-capital ratio is high at 47.2%, with long-term debt at $1.8 billion and only $52.3 million in cash as of June 30, 2025 [5]. Group 2: Financial Projections - The Zacks Consensus Estimate projects SEM's 2025 revenues at $5.37 billion, reflecting an 18.9% year-over-year decline, followed by a 4.9% recovery in 2026. EPS is expected to be $1.17 in 2025, up 24.5%, with an additional 14.3% increase in 2026 [6][7]. Group 3: Positive Aspects - The Rehabilitation Hospital segment is performing well, with occupancy at 82% in the first half of 2025. Admissions and patient days increased by 8.1% and 6.4%, respectively, while operating income rose by 12.1% in 2024 and 16.1% in the first half of 2025, maintaining margins above 20% [8]. - Operating cash flow was strong, at $517.9 million in 2024 and $106.8 million in the first half of 2025. The company plans to add 412 more beds between 2025 and mid-2027, which could enhance growth [9]. - SEM's valuation appears attractive, trading at a forward P/E of 9.69X, below its five-year median of 12.75X and the industry average of 13.55X, suggesting potential for a rebound as fundamentals stabilize. The company currently holds a Value Score of A [10]. Group 4: Overall Assessment - SEM is facing significant challenges, including poor performance in its Critical Illness Recovery Hospitals, rising costs, high leverage, and lower returns compared to peers. However, the Rehabilitation Hospital segment shows promise with healthy occupancy and cash generation. The company's undervalued trading multiples indicate potential upside if execution improves. The stock is rated Zacks Rank 3 (Hold), suggesting that investors may consider maintaining their current positions [11].

Financial Data and Key Metrics Changes - EBITDA increased from €11.1 million in Q1 to €19.6 million in Q2, representing a 77% improvement [2] - Overall sales declined by 7%, leading to a 35% decrease in EBITDA and a margin drop from 13.7% to 9.6% year on year [3][4] - Earnings after taxes turned negative at €11.2 million, but the company maintains a solid financial footing with an equity ratio of 45.5% and cash reserves of approximately €113 million [4][12] Business Line Data and Key Metrics Changes - Semperit Industrial Applications saw a 4.7% decline in sales and a 19.2% decrease in EBITDA year on year, with margins at 18.1% [5] - Semperit Engineered Applications experienced a 9% drop in sales and a 46.9% decline in EBITDA compared to the previous year [7][8] - The hoses business showed signs of recovery with improved order intake, while the profiles segment continues to struggle due to a weak construction industry [6][9] Market Data and Key Metrics Changes - The overall order book and order intake for the first six months are higher than last year's comparable figures, indicating a recovery trend [3][24] - The construction industry is expected to turn around in 2026, but short-term benefits are not anticipated [25] Company Strategy and Development Direction - The company is focused on optimizing costs and expanding its profile business in the U.S. market [25][26] - There is an ongoing effort to explore inorganic growth opportunities through potential acquisitions that can leverage existing business [28] - The company aims to maintain a resilient balance sheet while investing in digitalization projects [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a recovery in the second half of the year, driven by improved order intake and market dynamics [24][27] - The company confirmed its guidance for operating EBITDA in the range of €65 million to €85 million for 2025 [4][27] - Management acknowledged uncertainties but emphasized a positive momentum in customer restocking and order processing [24][27] Other Important Information - The company paid a dividend of $0.50 per share, totaling $10.3 million, signaling confidence in its business model [13][22] - Free cash flow was reported at €13.9 million, with capital expenditures halved to €18.5 million year on year [17][22] Q&A Session Summary Question: Order dynamics in Q2 and summer months - Management noted a gradual increase in order intake starting in April, continuing through July, with a stronger order book compared to the previous year [31][32] Question: Revenue generation expectations for Q3 - Management is hopeful for a good Q3 and Q4, but noted potential impacts from weather and shipping activities [33] Question: CapEx reduction from €60 million to €50 million - The reduction is primarily a period shift related to specific growth projects, particularly in the U.S. railway systems [34] Question: Pricing dynamics and revenue increase - Pricing management has been proactive, with approximately €3 million of revenue attributed to price increases, though some businesses experienced price decreases [40][41] Question: Working capital development and operating cash flow - Management is confident in maintaining tight working capital targets and believes operating cash flow will cover the €50 million CapEx [42][44] Question: Impairment in the LSI business - Management provided assurance that the impairment was based on a comprehensive review and that there is remaining headroom for the Ricoh business [51][52] Question: Impact of Continental's spin-off on business - No concrete evidence of impact was reported, but management suggested it could be positive [56] Question: Current situation in the hoses business - The company is building up capacity and hiring to meet increased demand [60][61] Question: Margin quality of belting orders - Margin quality remains volatile, with improvements noted in the second quarter, but still lower than two to three years ago [67][70] Question: Impact of U.S. tariffs on business - The uncertainty from tariffs had a significant impact, but the current situation allows for better planning and has led to an uptick in order activity [76][78]

Financial Performance - Semperit Group's H1 2025 revenue decreased by 72% to EUR 3205 million compared to EUR 3455 million in H1 2024 [23] - EBITDA decreased by 352% to EUR 307 million, with a margin of 96% compared to 137% in H1 2024 [23] - Earnings after tax turned negative to EUR -112 million, compared to a positive EUR 96 million in H1 2024 [6] - Free cash flow decreased by 411% to EUR 139 million [22, 23] - CAPEX decreased by 514% to EUR 185 million [23] Segment Performance - Semperit Industrial Applications (SIA) revenue decreased by 47% to EUR 1336 million [50] - SIA EBITDA decreased by 192% to EUR 242 million, with a margin of 181% [50] - Semperit Engineered Applications (SEA) revenue decreased by 90% to EUR 1869 million [50] - SEA EBITDA decreased by 469% to EUR 147 million, with a margin of 79% [50] Balance Sheet - Cash and cash equivalents stood at EUR 1129 million [6, 22, 38] - Equity ratio was 455% [6, 38] - Net financial debt was EUR 1186 million, with a net financial debt/EBITDA ratio of 17x [22, 38] Outlook - The company confirmed its FY 2025 operational EBITDA guidance of EUR 65 million - EUR 85 million [6, 43] - CAPEX is expected to be around EUR 50 million [43]

Core Insights - Select Medical Holdings Corporation (SEM) shares have decreased by 20.4% since the release of Q2 2025 results on July 31, primarily due to lower occupancy rates in the Rehabilitation Hospital segment and increased costs, although improved revenue per patient day and higher admissions in the Critical Illness Recovery Hospital segment provided some offset [1] Financial Performance - Adjusted earnings per share (EPS) for Q2 2025 were reported at 32 cents, surpassing the Zacks Consensus Estimate of 28 cents, but down from 60 cents year-over-year [2][9] - Net operating revenues reached $1.3 billion, reflecting a 4.5% increase from the previous year and exceeding the consensus estimate by 1.5% [2][9] - Total costs and expenses rose by 3.9% year-over-year to $1.3 billion, driven by increasing service costs, which was above the estimated $1.2 billion [3][9] Segment Performance - **Critical Illness Recovery Hospital**: Revenues were $601.1 million, down 0.6% year-over-year, missing the consensus estimate of $641.4 million. Revenue per patient day decreased by 0.5%, while patient days fell by 0.1%, although admissions increased by 0.9% [4] - Adjusted EBITDA for this segment was $56.3 million, a decline of 21.6% year-over-year, missing estimates [5] - **Rehabilitation Hospital**: Revenues increased by 17.2% year-over-year to $313.8 million, exceeding the consensus estimate of $264.8 million, supported by a 9.3% rise in admissions and a 7.6% increase in patient days, despite a 200 basis point decline in occupancy rate [6] - Adjusted EBITDA rose to $71 million, a 14.7% increase year-over-year, beating the Zacks Consensus Estimate [7] - **Outpatient Rehabilitation**: Revenues were $327.6 million, up 3.8% year-over-year, surpassing the consensus estimate of $318.2 million. Adjusted EBITDA increased by 6.1% year-over-year to $30.5 million, although it missed estimates [8] Financial Position - As of June 30, 2025, cash and cash equivalents stood at $52.3 million, down from $59.7 million at the end of 2024. Total assets increased to $5.7 billion from $5.6 billion, while long-term debt rose to $1.8 billion from $1.7 billion [10] - Total equity increased by 2.4% to $2 billion [10] - Net cash provided by operations was $110.3 million, a decline from $278.2 million a year ago [11] Shareholder Returns - In the first half of 2025, Select Medical repurchased shares worth $96.5 million, totaling approximately $696.8 million since the inception of the repurchase program [12] - A cash dividend of 6.25 cents per share was approved, to be paid on August 28, 2025 [12] Outlook - Management maintains revenue guidance for 2025 between $5.3 billion and $5.5 billion, with adjusted EBITDA expected between $510 million and $530 million, and EPS projected between $1.09 and $1.19 [13]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Select Medical (SEM) as a potentially undervalued stock based on various financial metrics [2][7]. Company Metrics - Select Medical (SEM) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a high-quality value stock [3]. - SEM's PEG ratio is 0.71, which is lower than the industry's average PEG of 0.98, suggesting it may be undervalued [4]. - The P/B ratio for SEM is 0.93, significantly lower than the industry's average P/B of 1.68, indicating attractive valuation [5]. - SEM's P/CF ratio stands at 5.16, compared to the industry's average P/CF of 7.06, further supporting the notion of undervaluation [6]. - Over the past year, SEM's PEG has fluctuated between 0.38 and 2.22, with a median of 0.76, while its P/B has ranged from 0.89 to 3.03, with a median of 1.18 [4][5]. - The P/CF ratio for SEM has varied from 4.63 to 10.57, with a median of 5.52, reinforcing its potential as a value stock [6].

Financial Data and Key Metrics Changes - The company's consolidated revenue grew nearly 5% to $1.3 billion, and adjusted EBITDA increased to $125.4 million from $124.7 million in the prior year [9][10] - Earnings per common share from continuing operations rose 88% to $0.32 from $0.17 per share in the same quarter prior year [9] Business Line Data and Key Metrics Changes - Inpatient rehab hospital division revenue rose 17% year over year to $313.8 million, with adjusted EBITDA increasing nearly 15% to $71 million [10] - Outpatient rehabilitation division revenue increased 3.8%, driven by a corresponding 3.8% increase in patient volume [11] - Critical illness recovery hospital division revenue was $601.1 million, a decline of 1% from the same quarter last year [13][14] Market Data and Key Metrics Changes - The occupancy rate for inpatient rehab hospitals was lower than the prior year at 82%, while the same store occupancy rate remained stable at 86% [10] - The occupancy rate for critical illness recovery hospitals improved to 69% from 67% in the prior year [13] Company Strategy and Development Direction - The company plans to add 382 rehab beds by the end of 2027, with a focus on expanding in key markets [6][8] - Upcoming openings include a 45-bed hospital in Temple, Texas, and a 30-bed critical illness recovery hospital in Memphis, Tennessee [7][8] - The company remains committed to delivering value to shareholders through stock repurchases and dividends [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the inpatient rehab division, particularly in states with favorable regulatory environments [25] - The company is optimistic about the outpatient division's prospects, expecting improvements in EBITDA margins [31] - Management acknowledged ongoing challenges with the reimbursement system but remains hopeful for policy reforms [12][45] Other Important Information - The company repurchased over 5.7 million shares at an average price of $14.86, totaling $85.1 million [9] - A cash dividend of $0.0625 per share was declared, payable on August 28, 2025 [9] Q&A Session Summary Question: How did EBITDA per segment come in line versus internal expectations? - Management indicated that critical illness EBITDA came in slightly lower than expectations, while inpatient rehab exceeded expectations, leading to comfort with reaffirmed guidance [22] Question: What is the strategy in states with favorable environments for inpatient rehab? - The company plans to engage with major systems in states like North Carolina to grow their post-acute network without immediate construction [25] Question: How is the outpatient rehab business expected to evolve? - Management expects continued improvement in outpatient rehab, with initiatives aimed at increasing EBITDA margins approaching 10% [29][31] Question: What is the impact of the outlier threshold? - Management noted that the impact was around $60 million in Q1, with expectations of facing headwinds throughout the year but less significant than in Q1 [34] Question: What is the supply-demand picture in the critical illness recovery hospitals? - Demand remains strong due to demographics and medical technology advances, although challenges with reimbursement persist [50][52] Question: What are the trends in labor costs across business lines? - Employee rate increases have improved from 5% to below 3%, indicating a positive trend in labor costs [53]