Select Medical(US:SEM)2025-05-01 20:32Financial Performance - For the three months ended March 31, 2025, the company reported total revenue of $1,353.2 million, a 2.4% increase compared to $1,321.2 million for the same period in 2024[78]. - Income from continuing operations, net of tax, was $74.7 million for the three months ended March 31, 2025, compared to $61.5 million for the same period in 2024, representing a 21% increase[78]. - Adjusted EBITDA for the three months ended March 31, 2025, was $151.4 million, down 8.6% from $165.8 million in the same period in 2024[78]. - Revenue for the three months ended March 31, 2025, was $1,353.2 million, a 2.4% increase from $1,321.2 million in the same period of 2024[108]. - Income from continuing operations before other income and expense decreased to $112.7 million in Q1 2025, down from $118.5 million in Q1 2024[108]. - Adjusted EBITDA for Q1 2025 was $151.4 million, with an Adjusted EBITDA margin of 11.2%, compared to $165.8 million and 12.5% in Q1 2024[108]. - Total operating expenses for Q1 2025 were $1,205.6 million, or 89.1% of revenue, compared to $1,169.2 million, or 88.5% of revenue in Q1 2024[112]. - Cost of services for Q1 2025 was $1,172.6 million, representing 86.7% of revenue, up from 84.8% in Q1 2024[112]. - General and administrative expenses decreased to $33.0 million, or 2.4% of revenue, from $48.4 million, or 3.7% of revenue in Q1 2024[112]. - Net income attributable to Select Medical Holdings Corporation was 4.2% in Q1 2025, down from 7.3% in Q1 2024[103]. Segment Performance - The critical illness recovery hospital segment generated revenue of $637.0 million, accounting for approximately 47% of total revenue, while the rehabilitation hospital and outpatient rehabilitation segments each contributed approximately 23%[73]. - The company experienced a 29.1% decrease in income from continuing operations before other income and expense in the critical illness recovery hospital segment compared to the previous year[79]. - The rehabilitation hospital segment saw a 15.7% increase in revenue, while the outpatient rehabilitation segment experienced a 1.4% increase[79]. - Critical illness recovery hospital revenue decreased by 2.9% to $637.0 million in Q1 2025, primarily due to a decrease in revenue per patient day from $2,219 to $2,179[109]. - Rehabilitation hospital revenue increased by 15.7% to $307.4 million in Q1 2025, with revenue per patient day rising 6.6% to $2,234[110]. - Outpatient rehabilitation revenue increased by 1.4% to $307.3 million in Q1 2025, driven by a 3.0% increase in revenue per visit to $102[111]. - Adjusted EBITDA for the Critical Illness Recovery Hospital Segment decreased to $86.6 million for the three months ended March 31, 2025, down from $115.9 million for the same period in 2024, resulting in a margin drop from 17.7% to 13.6%[114]. - Adjusted EBITDA for the Rehabilitation Hospital Segment increased by 14.7% to $70.4 million for the three months ended March 31, 2025, with a margin of 22.9%, slightly down from 23.1% in 2024[115]. - Adjusted EBITDA for the Outpatient Rehabilitation Segment was $24.3 million for the three months ended March 31, 2025, compared to $24.9 million in 2024, with a margin decrease from 8.2% to 7.9%[116]. Cash Flow and Capital Management - Net cash used in operating activities significantly improved to $(3.5) million for the three months ended March 31, 2025, compared to $(66.7) million in 2024, driven by a normalization of accounts receivable[125]. - Net working capital increased to $147.5 million at March 31, 2025, compared to $42.1 million at December 31, 2024, mainly due to higher accounts receivable[130]. - The company authorized a common stock repurchase program of up to $1.0 billion, with 649,804 shares repurchased at a cost of approximately $11.4 million during the three months ended March 31, 2025[132]. - As of March 31, 2025, the company had cash and cash equivalents of $53.2 million and $377.5 million of availability under its revolving facilities[134]. Market and Regulatory Environment - The company faces various risks, including changes in government reimbursement policies and shortages of qualified healthcare professionals, which could negatively impact revenue and profitability[68]. - Revenue from the Medicare program accounted for approximately 29% of the company's total revenue for both Q1 2025 and the year 2024[81]. - The standard federal rate for LTCH-PPS for fiscal year 2024 increased to $48,117 from $46,433 in fiscal year 2023, reflecting a market basket increase of 3.5%[86]. - The fixed-loss amount for high cost outlier cases under LTCH-PPS for fiscal year 2024 rose to $59,873, up from $38,518 in fiscal year 2023[86]. - The standard payment conversion factor for IRF-PPS for fiscal year 2024 was set at $18,541, an increase from $17,878 in fiscal year 2023[94]. - The outlier threshold amount for IRF-PPS decreased to $10,423 for fiscal year 2024 from $12,526 in fiscal year 2023[94]. - The proposed standard federal rate for LTCH-PPS for fiscal year 2026 is $50,729, an increase from $49,383 in fiscal year 2025[88]. - The proposed fixed-loss amount for high cost outlier cases under LTCH-PPS for fiscal year 2026 is $91,247, up from $77,048 in fiscal year 2025[88]. - The standard payment conversion factor for IRF-PPS for fiscal year 2026 is proposed to be $19,364, an increase from $18,907 in fiscal year 2025[96]. - CMS expects a 3% decrease in Medicare payments for physical and occupational therapy services in 2025[98]. - The criteria for outlier payment reconciliation were modified to a change in the LTCH's CCR of 20% or more, effective for cost reporting periods beginning on or after October 1, 2024[91]. Future Growth Strategies - The company plans to pursue new joint venture relationships and open new outpatient rehabilitation clinics to drive incremental growth[133].