Select Medical(US:SEM)2025-10-30 20:32Revenue 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].