Select Medical Lags Q1 Earnings Estimates, Lowers Revenue Outlook

Core Viewpoint - Select Medical Holdings Corporation's shares have declined 17.6% following disappointing first-quarter 2025 results, primarily due to reduced occupancy and admissions in key segments, despite some revenue improvements per patient day [1] Financial Performance - Adjusted earnings per share (EPS) for Q1 2025 were 44 cents, missing the Zacks Consensus Estimate of 45 cents, but up from 33 cents a year ago [2] - Net operating revenues reached $1.35 billion, a 2.4% increase year-over-year, but fell short of the consensus by 0.8% [2] - Total costs and expenses rose 3% year-over-year to $1.2 billion, consistent with estimates, driven by higher service costs [3] Segmental Update Critical Illness Recovery Hospital - Revenues decreased 2.9% year-over-year to $637 million, missing the consensus of $667 million, with a 1.8% decline in revenue per patient day [4] - Patient days fell 1.1% and admissions dropped 1.9% year-over-year, although occupancy improved by 200 basis points [4] - Adjusted EBITDA was $86.6 million, down 25.3% year-over-year, missing estimates [5] Rehabilitation Hospital - Revenues increased 15.7% year-over-year to $307.4 million, surpassing the consensus of $292.1 million, supported by 6.9% growth in admissions [6] - Adjusted EBITDA rose 14.7% year-over-year to $70.4 million, exceeding estimates, though the adjusted EBITDA margin decreased by 20 basis points [6] Outpatient Rehabilitation - Revenues were $307.3 million, a 1.4% year-over-year increase, beating the consensus of $303.8 million [7] - Adjusted EBITDA decreased 2.6% year-over-year to $24.3 million, missing estimates, with a margin decline of 30 basis points [7] Financial Position - As of March 31, 2025, cash and cash equivalents were $53.2 million, down from $59.7 million at the end of 2024 [8] - Total assets increased to $5.7 billion from $5.6 billion at the end of 2024, while long-term debt decreased to $1.8 billion [9] - Total equity rose 2.5% to $2 billion, with net cash used in operations improving to $3.5 million from $66.7 million a year ago [9] Share Repurchase & Dividend Update - In Q1 2025, Select Medical repurchased shares worth $11.4 million, totaling approximately $611.7 million since the program's inception [10] - A cash dividend of 6.25 cents per share was approved, to be paid on May 29 to shareholders of record as of May 15 [10] 2025 Outlook - Management revised revenue expectations to between $5.3 billion and $5.5 billion, down from the previous range of $5.4 billion to $5.6 billion [11] - Adjusted EBITDA is now expected to be between $510 million and $530 million, lower than the earlier estimate of $520 million to $540 million [11] - EPS guidance remains unchanged at between $1.09 and $1.19 [11]