Select Medical Q4 Earnings Miss Estimates, Stock Down 7.2%

Core Insights - Select Medical Holdings Corporation (SEM) experienced a 7.2% decline in stock price following the release of its fourth-quarter 2024 results, primarily due to reduced occupancy rates and lower admissions in key segments, alongside increased costs [1] Financial Performance - SEM reported adjusted earnings per share (EPS) of 18 cents, missing the Zacks Consensus Estimate by 5.3%, but showing a 50% increase year over year [2] - Net operating revenues reached $1.31 billion, reflecting a 7.8% year-over-year growth and surpassing the consensus estimate by 1.2% [2] - Total costs and expenses rose 12% year over year to $1.29 billion, lower than the estimated $1.62 billion, driven by increased service costs and administrative expenses [3] - Adjusted EBITDA was $116 million, a 3.8% increase year over year, but fell short of the estimate of $187 million [3] Segment Performance - Critical Illness Recovery Hospital: Revenues were $600.4 million, up 5.9% year over year, but below the consensus estimate of $612.5 million. Revenue per patient day increased by 7.2%, while patient days and admissions declined by 1.2% and 4.8%, respectively [4] - Adjusted EBITDA for this segment was $63.1 million, a 10% year-over-year increase, but missed the consensus estimate of $64.7 million [5] - Rehabilitation Hospital: Revenues grew 13.1% year over year to $294.4 million, exceeding the consensus mark of $286 million. Admissions and patient days increased by 4.4% and 3.3%, respectively [6] - Adjusted EBITDA declined 6.1% year over year to $62.3 million, although it surpassed the Zacks Consensus Estimate of $51.8 million [6] - Outpatient Rehabilitation: Revenues reached $319.6 million, a 7.2% year-over-year increase, beating the consensus estimate of $308.4 million. Patient visits rose by 5.2% [7] - Adjusted EBITDA improved 18.2% year over year to $26.6 million, exceeding estimates [7] Financial Position - As of December 31, 2024, SEM had cash and cash equivalents of $59.7 million, up from $52.6 million at the end of 2023. Total assets decreased to $5.6 billion from $7.7 billion [9] - Long-term debt was $1.7 billion, down from the previous year, while total equity increased to $2 billion from $1.5 billion [9] Cash Flow and Full-Year Highlights - Cash flow from operations was $125.4 million, a decline of 30.1% year over year [10] - For the full year 2024, EPS was 94 cents compared to 54 cents in 2023, with total revenue rising to $5.2 billion from $4.8 billion [11] Future Outlook - Management projects revenues for 2025 to be between $5.4 billion and $5.6 billion, indicating a potential growth of 5.8% from 2024 [13] - Expected adjusted EBITDA for 2025 is between $520 million and $540 million, suggesting a 3.8% increase from 2024 [13] - EPS is anticipated to range from $1.09 to $1.19 [13]