Select Medical(SEM) - 2025 Q2 - Quarterly Results

Financial Performance Summary Second Quarter 2025 Performance In the second quarter of 2025, Select Medical reported a 4.5% increase in revenue to $1,339.6 million. Income from continuing operations saw substantial growth of 53.8% to $57.9 million, and earnings per share from continuing operations rose by 88.2% to $0.32. Adjusted EBITDA remained relatively flat with a 0.5% increase to $125.4 million Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1,339.6 M | $1,281.7 M | +4.5% | | Income from continuing operations, net of tax | $57.9 M | $37.6 M | +53.8% | | Adjusted EBITDA | $125.4 M | $124.7 M | +0.5% | | EPS from continuing operations | $0.32 | $0.17 | +88.2% | First Half 2025 Performance For the six months ended June 30, 2025, revenue grew by 3.4% to $2,692.8 million. Income from continuing operations increased by 33.7% to $132.6 million, and EPS from continuing operations grew 52.0% to $0.76. However, Adjusted EBITDA for the period declined to $276.9 million from $290.5 million in the prior year H1 2025 Financial Highlights (vs. H1 2024) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $2,692.8 M | $2,603.0 M | +3.4% | | Income from continuing operations, net of tax | $132.6 M | $99.2 M | +33.7% | | Adjusted EBITDA | $276.9 M | $290.5 M | -4.7% | | EPS from continuing operations | $0.76 | $0.50 | +52.0% | - The results of Concentra are presented as discontinued operations following its tax-free distribution in November 2024 and are excluded from continuing operations and segment results for 2024 periods[7] Company and Segment Performance Company Overview Select Medical is a major US operator of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics. As of June 30, 2025, the company operated 104 critical illness recovery hospitals, 36 rehabilitation hospitals, and 1,919 outpatient rehabilitation clinics across 40 states and the District of Columbia Facilities Operated as of June 30, 2025 | Facility Type | Count | States | | :--- | :--- | :--- | | Critical Illness Recovery Hospitals | 104 | 29 | | Rehabilitation Hospitals | 36 | 14 | | Outpatient Rehabilitation Clinics | 1,919 | 39 + DC | Critical Illness Recovery Hospital Segment The Critical Illness Recovery Hospital segment experienced a slight revenue decline and a significant drop in Adjusted EBITDA for both the second quarter and first half of 2025. The Adjusted EBITDA margin contracted to 9.4% in Q2 and 11.5% in H1, compared to 11.9% and 14.9% in the respective prior-year periods Q2 Segment Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $601.1 M | $604.9 M | -0.6% | | Adjusted EBITDA | $56.3 M | $71.8 M | -21.6% | | Adjusted EBITDA Margin | 9.4% | 11.9% | -250 bps | H1 Segment Performance (vs. H1 2024) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $1,238.2 M | $1,260.8 M | -1.8% | | Adjusted EBITDA | $142.9 M | $187.8 M | -23.9% | | Adjusted EBITDA Margin | 11.5% | 14.9% | -340 bps | Rehabilitation Hospital Segment The Rehabilitation Hospital segment demonstrated strong growth in the second quarter and first half of 2025, with double-digit increases in both revenue and Adjusted EBITDA. Revenue growth was 17.2% in Q2 and 16.4% in H1, while Adjusted EBITDA grew 14.7% in both periods. The Adjusted EBITDA margin remained robust but saw a slight decline Q2 Segment Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $313.8 M | $267.8 M | +17.2% | | Adjusted EBITDA | $71.0 M | $62.0 M | +14.7% | | Adjusted EBITDA Margin | 22.6% | 23.1% | -50 bps | H1 Segment Performance (vs. H1 2024) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $621.2 M | $533.5 M | +16.4% | | Adjusted EBITDA | $141.5 M | $123.4 M | +14.7% | | Adjusted EBITDA Margin | 22.8% | 23.1% | -30 bps | Outpatient Rehabilitation Segment The Outpatient Rehabilitation segment posted modest growth in revenue and Adjusted EBITDA for both the second quarter and first half of 2025. Q2 revenue increased by 3.8% and Adjusted EBITDA by 6.1%, leading to a slight margin expansion to 9.3%. First-half results showed similar modest growth trends Q2 Segment Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $327.6 M | $315.5 M | +3.8% | | Adjusted EBITDA | $30.5 M | $28.8 M | +6.1% | | Adjusted EBITDA Margin | 9.3% | 9.1% | +20 bps | H1 Segment Performance (vs. H1 2024) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $634.9 M | $618.7 M | +2.6% | | Adjusted EBITDA | $54.8 M | $53.7 M | +2.0% | | Adjusted EBITDA Margin | 8.6% | 8.7% | -10 bps | Capital Management and Outlook Dividend On July 30, 2025, Select Medical's Board of Directors declared a quarterly cash dividend of $0.0625 per share, payable around August 28, 2025, to stockholders of record as of August 13, 2025. Future dividends are not guaranteed and remain at the discretion of the Board - A cash dividend of $0.0625 per share was declared on July 30, 2025[15] - The dividend is payable on or about August 28, 2025, to stockholders of record on August 13, 2025[15] Stock Repurchase Program The company has a $1.0 billion stock repurchase program authorized through December 31, 2025. During the first six months of 2025, Select Medical repurchased 6.4 million shares for approximately $96.5 million. Since the program's inception, a total of 54.6 million shares have been repurchased for $696.8 million - The Board has authorized a common stock repurchase program of up to $1.0 billion, effective until December 31, 2025[17] Stock Repurchase Activity | Period | Shares Repurchased | Cost | Average Price/Share | | :--- | :--- | :--- | :--- | | H1 2025 | 6,375,512 | ~$96.5 M | $15.13 | | Program Inception to June 30, 2025 | 54,610,335 | ~$696.8 M | $12.76 | Business Outlook Select Medical reaffirmed its full-year 2025 business outlook, expecting revenue between $5.3 billion and $5.5 billion, Adjusted EBITDA between $510.0 million and $530.0 million, and fully diluted earnings per share in the range of $1.09 to $1.19 Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $5.3 B - $5.5 B | | Adjusted EBITDA | $510.0 M - $530.0 M | | Fully Diluted EPS | $1.09 - $1.19 | Financial Statements and Reconciliations Condensed Consolidated Statements of Operations The statements show a 4.5% revenue increase for Q2 2025 and a 3.4% increase for H1 2025. Net income attributable to Select Medical decreased significantly in both periods, primarily due to the absence of income from discontinued operations (Concentra) in 2025, which was present in 2024. Income from continuing operations, however, showed strong growth Q2 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $1,339,579 | $1,281,748 | | Income from continuing operations, net of tax | $57,879 | $37,638 | | Income from discontinued operations, net of tax | $0 | $57,128 | | Net income attributable to Select Medical | $40,571 | $77,563 | H1 Statement of Operations Highlights (in thousands) | Line Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $2,692,751 | $2,602,959 | | Income from continuing operations, net of tax | $132,611 | $99,167 | | Income from discontinued operations, net of tax | $0 | $112,766 | | Net income attributable to Select Medical | $97,252 | $174,460 | Condensed Consolidated Balance Sheets As of June 30, 2025, Select Medical's total assets increased to $5.74 billion from $5.61 billion at year-end 2024. The increase was driven by higher accounts receivable and property and equipment. Total liabilities also rose to $3.74 billion, primarily due to an increase in long-term debt Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,080,890 | $1,019,777 | | Total Assets | $5,742,250 | $5,607,951 | | Total Current Liabilities | $938,990 | $977,651 | | Long-term debt, net of current portion | $1,839,631 | $1,691,546 | | Total Liabilities | $3,742,988 | $3,610,856 | | Total Equity | $1,990,769 | $1,986,928 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $106.8 million, a decrease from $211.5 million in the prior year. Net cash used in investing activities was $117.0 million, mainly for property and equipment purchases. Financing activities provided a net cash inflow of $2.8 million, reflecting significant borrowing on revolving facilities offset by stock repurchases and debt payments Six Months Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $106,835 | $211,463 | | Net cash used in investing activities | ($116,984) | ($111,725) | | Net cash provided by (used in) financing activities | $2,804 | ($72,584) | | Net (decrease) in cash and cash equivalents | ($7,345) | $27,154 | Key Statistics Key operating statistics for Q2 2025 show mixed results across segments. The Critical Illness Recovery segment saw a higher occupancy rate (69%) but lower revenue per patient day. The Rehabilitation Hospital segment experienced strong growth in admissions (+9.3%) and revenue per patient day (+5.8%). The Outpatient Rehabilitation segment's performance was driven by a 3.8% increase in patient visits Q2 2025 Key Segment Metrics (vs. Q2 2024) | Segment / Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Critical Illness Recovery | | | | | Occupancy Rate | 69% | 67% | +3.0% | | Revenue per patient day | $2,148 | $2,159 | -0.5% | | Rehabilitation Hospital | | | | | Admissions | 9,102 | 8,325 | +9.3% | | Revenue per patient day | $2,236 | $2,113 | +5.8% | | Outpatient Rehabilitation | | | | | Number of visits | 2,934,026 | 2,827,625 | +3.8% | | Revenue per visit | $100 | $100 | 0.0% | Adjusted EBITDA Reconciliation The company provides a reconciliation from income from continuing operations to Adjusted EBITDA. For Q2 2025, income from continuing operations of $57.9 million reconciled to an Adjusted EBITDA of $125.4 million. For H1 2025, income from continuing operations of $132.6 million reconciled to an Adjusted EBITDA of $276.9 million. The reconciliation details adjustments for taxes, interest, depreciation, stock compensation, and other items - Adjusted EBITDA is defined as earnings from continuing operations excluding interest, taxes, D&A, stock compensation, and other specific items like transaction costs and equity in earnings of unconsolidated subsidiaries[39][40] Adjusted EBITDA Reconciliation Summary (in thousands) | Period | Income from Continuing Ops, Net of Tax | Adjusted EBITDA | | :--- | :--- | :--- | | Q2 2025 | $57,879 | $125,411 | | Q2 2024 | $37,638 | $124,729 | | H1 2025 | $132,611 | $276,856 | | H1 2024 | $99,167 | $290,504 | 2025 Full Year Outlook Reconciliation (in millions) | Metric | Low Range | High Range | | :--- | :--- | :--- | | Income from continuing operations, net of tax | $214 | $230 | | Adjusted EBITDA | $510 | $530 |