Financial Data and Key Metrics Changes - Revenue in Q3 increased by 9.4%, and adjusted EBITDA grew by 11.4%, contributing to year-to-date revenue growth of 10.6% and adjusted EBITDA growth of 14.5% [7][11] - Q3 adjusted free cash flow decreased by 8.2% to $174.2 million, primarily due to a $55.8 million increase in working capital [15] - Free cash flow increased by 16.5% to $582.5 million, with an increased full-year adjusted free cash flow estimate of $730 to $810 million [15][16] Business Line Data and Key Metrics Changes - Q3 community discharge rate was 84.6%, discharge to acute rate was 8.6%, and discharge to SNF rate was 6%, all exceeding industry averages [7] - Total discharges increased by 5%, with a 3.3% increase in net revenue per discharge [11] - Q3 2025 adjusted EBITDA included $10.8 million of net provider tax revenue, an increase of $7.7 million from Q3 2024 [13] Market Data and Key Metrics Changes - The demand for inpatient rehabilitation services remains significantly underserved, with the Medicare beneficiary population being the fastest-growing segment in the U.S. [9] - The population aged 65 or older is expected to grow to more than 70 million by 2030, with a CAGR of approximately 3% [9] - The average age of Medicare beneficiary patients is 77 years old, with the 75+ population growing at approximately 4% [9] Company Strategy and Development Direction - The company continues to open new hospitals and add beds to existing hospitals, with an expected addition of approximately 127 beds in 2025 and 150 to 200 in both 2026 and 2027 [9][10] - The company has a pipeline of 14 announced new hospitals with 690 beds and more than 40 active projects [10] - The company aims to maintain a balance between de novo programs and increased bed expansions for future growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity for inpatient rehabilitation services, citing a steady rise in occupancy rates [22] - The company has not seen any negative impact on referral patterns despite external challenges, maintaining proactive communication with partners [112] - Management noted that there were no surprises in the quarter, with performance aligning with expectations [38] Other Important Information - The company successfully converted its ERP system to Oracle Fusion without significant operational disruptions [10][100] - The company repurchased approximately 221,000 shares for about $25 million during Q3, totaling approximately $82 million year-to-date [15] Q&A Session Summary Question: How should we think about the accelerated bed addition plan impacting volume growth going forward? - Management indicated that the increase in bed expansions validates their business model and strategy, reflecting the unmet need for IRF services across the country [20] Question: What level of capex as a percent of revenue should we model to maintain discharge growth in the 6% to 8% range? - Management stated that growth capex this year is about $580 million, with an average cost of approximately $800,000 per bed addition [27] Question: What is the target occupancy before expanding a facility? - Management noted that hospitals typically consider bed expansion after reaching 80% sustained occupancy, with private room hospitals able to operate efficiently at mid-90% occupancy [30] Question: Did anything surprise you in the quarter versus initial expectations? - Management reported no surprises, aside from retro payments and property assessments, with overall performance in line with expectations [38] Question: How did payer mix evolve in Q3 compared to the first half? - Management indicated that growth rates for Medicare and Medicare Advantage were comparable, with managed care seeing a 9.2% increase [48] Question: What are the potential impacts from negative headlines that came out earlier in Q3? - Management confirmed no impact on referral patterns, maintaining strong communication with partners [112]

Financial Data and Key Metrics Changes - Revenue in Q3 increased by 9.4%, and adjusted EBITDA grew by 11.4%, contributing to year-to-date revenue growth of 10.6% and adjusted EBITDA growth of 14.5% [7][13] - Q3 adjusted free cash flow decreased by 8.2% to $174.2 million, primarily due to a $55.8 million increase in working capital [15] - Free cash flow increased by 16.5% to $582.5 million, with an increased full-year adjusted free cash flow estimate of $730 million to $810 million [15] Business Line Data and Key Metrics Changes - Q3 community discharge rate was 84.6%, discharge to acute rate was 8.6%, and discharge to SNF rate was 6%, all exceeding industry averages [7] - Q3 total discharges increased by 5%, with a 3.3% increase in net revenue per discharge [11] - Annualized RN turnover was 20.2%, and annualized therapist turnover was 7.8%, consistent with favorable trends from the previous year [7] Market Data and Key Metrics Changes - The demand for inpatient rehabilitation services remains underserved, with the Medicare beneficiary population being the fastest-growing segment in the U.S. [9] - The population aged 65 or older is projected to grow at a CAGR of approximately 3%, with the average age of Medicare beneficiary patients being 77 years old [9] - The company expects to add approximately 127 beds to existing hospitals in 2025 and 150-200 beds in both 2026 and 2027 [9][13] Company Strategy and Development Direction - The company continues to invest in clinical staff and has opened three new hospitals in Q3, with plans for additional openings in Q4 [8][9] - The company has increased its expected bed addition growth, responding to the unmet need for inpatient rehabilitation services [9][13] - The company has a pipeline of 14 announced new hospitals with 690 beds and more than 40 active projects [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market for inpatient rehabilitation services, citing a steady rise in occupancy rates and the need for additional capacity [21] - Management noted no surprises in Q3 results, with strong labor management and low bad debt levels [40] - The company remains active in Washington despite regulatory challenges and anticipates no significant concerns in the near term [42] Other Important Information - The company completed an ERP system conversion to Oracle Fusion without significant operational disruptions [10][101] - The company repurchased approximately 221,000 shares for about $25 million in Q3, bringing the year-to-date total to approximately $82 million [15] Q&A Session Summary Question: How should we think about the accelerated bed addition plan impacting volume growth going forward? - Management indicated that the increase in bed expansions validates the business model and reflects the unmet need for IRF services [20] Question: What level of capex as a percent of revenue should be modeled to maintain discharge growth? - Management stated that growth CapEx this year is about $580 million, with an average cost of $800,000 per bed addition [29] Question: What is the target occupancy before expanding a facility? - Management noted that hospitals typically consider bed expansion after reaching 80% sustained occupancy [33] Question: Did anything surprise you in the quarter versus initial expectations? - Management reported no surprises, aside from retroactive payments and property assessments, with overall performance in line with expectations [40] Question: How has the payer mix evolved in Q3 compared to the first half? - Management reported balanced growth across payers, with Medicare and Medicare Advantage both showing increases [50] Question: What are the implications of changes in the Medicare landscape? - Management indicated that a slowdown in Medicare Advantage growth could present opportunities within fee-for-service Medicare, which pays at a higher rate [75]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance in the first half of 2025 is in line with market expectations, with significant improvements in quality and efficiency [8] - The company has achieved robust growth in its power distribution business, particularly in overseas markets, which is becoming a key growth driver [8] - The rehabilitation hospital business faces some pressure, but long-term demand remains strong [8] - The company has effectively controlled costs, leading to a notable reduction in expenses [8] - The long-term outlook for the overseas power distribution market is positive, with strong competitive advantages [8] Financial Summary - Total revenue for 2023 is projected at 11,463 million, with a year-on-year growth of 25.99% [1] - Net profit attributable to shareholders for 2023 is expected to be 1,904 million, reflecting a year-on-year increase of 100.79% [1] - The earnings per share (EPS) for 2023 is estimated at 1.35 yuan, with a price-to-earnings (P/E) ratio of 18.20 [1] - The company anticipates total revenue of 18,034 million in 2025, with a year-on-year growth of 23.51% [1] - The net profit attributable to shareholders for 2025 is projected at 2,511 million, with a year-on-year growth of 11.14% [1] - The EPS for 2025 is expected to be 1.79 yuan, with a P/E ratio of 13.80 [1]

Financial Data and Key Metrics Changes - The company's consolidated revenue grew nearly 5% to $1.3 billion, and adjusted EBITDA increased to $125.4 million from $124.7 million in the prior year [9] - Earnings per common share from continuing operations rose 88% to $0.32 from $0.17 per share in the same quarter prior year [9] Business Line Data and Key Metrics Changes - Inpatient rehab hospital division revenue rose 17% year over year to $313.8 million, with adjusted EBITDA increasing nearly 15% to $71 million [10] - Outpatient rehabilitation division revenue increased 3.8%, driven by a corresponding 3.8% increase in patient volume [11] - Critical illness recovery hospital division revenue was $601.1 million, a decline of 1% from the same quarter last year [13] Market Data and Key Metrics Changes - The occupancy rate for inpatient rehab hospitals was lower than the prior year at 82%, while the same store occupancy rate remained stable at 86% [10] - The critical illness recovery hospital division's occupancy rate improved to 69% from 67% in the prior year [13] Company Strategy and Development Direction - The company plans to add 382 rehab beds by the end of 2027, with a focus on markets with strong volume and occupancy rates [6] - Upcoming openings include a 45-bed hospital in Temple, Texas, and a 30-bed critical illness recovery hospital in Memphis, Tennessee [6][7] - The company remains committed to delivering value to shareholders through stock repurchases and dividends [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the development pipeline and growing demand for inpatient rehab services [6] - The company is optimistic about the outpatient division's prospects, expecting improvements in EBITDA margins [29] - Management noted ongoing challenges with the LTACH reimbursement system but is hopeful for positive changes through dialogue with regulators [12][39] Other Important Information - The company repurchased over 5.7 million shares at an average price of $14.86, totaling $85.1 million [9] - A cash dividend of $0.0625 per share was declared, payable on August 28, 2025 [9] Q&A Session Summary Question: How did EBITDA per segment come in line versus internal expectations? - Management indicated that critical illness came in slightly lower than expectations, while inpatient rehab exceeded expectations, and they are comfortable with the reaffirmed guidance [22] Question: What is the strategy in states with favorable environments for inpatient rehab? - The company plans to engage with major systems in states like North Carolina to grow their post-acute network without immediate construction [24][26] Question: How is outpatient rehab expected to evolve throughout the year? - Management expects outpatient rehab to improve, with initiatives in scheduling expected to enhance EBITDA margins towards 10% [28][29] Question: What is the impact of the outlier threshold? - Management noted that the final rule for LTACHs included a slight improvement in the rate, but challenges remain with the reimbursement system [30][40] Question: What is the supply-demand picture in the critical illness recovery hospitals? - Management stated that demand for services remains strong, driven by demographics and medical technology, despite challenges with reimbursement [44] Question: What are the trends in labor costs across business lines? - Management reported improvements in employee rate increases, with a decrease in pressures from agency costs compared to previous years [48]

Investment Rating - The report initiates coverage on Samsung Medical with a "Buy" rating and a target price of RMB 30.00 [1][4][5]. Core Insights - The company is a leading domestic manufacturer of medium and low voltage electrical equipment, primarily producing distribution transformers and smart meters. Despite a 25% decline in stock price year-to-date, the report anticipates a recovery in smart meter demand starting in 2026 due to a new replacement cycle. Additionally, strong overseas demand for distribution transformers may mitigate cyclical risks [1][12][45]. - The report projects a 27% CAGR for EPS from 2025 to 2027, with a 16% growth rate expected in 2025. The current stock price corresponds to a 9x PE for 2026E, below the historical average of 13.4x. The company maintains a stable dividend payout ratio of 55%, with expected dividend yields of 5-6% for 2025-2026 [1][4][12]. Summary by Sections Smart Meter Concerns - The report acknowledges concerns regarding smart meter demand in 2024 due to high base effects but expects a rebound in 2026. Historical data indicates that new standards typically lead to a drop in demand in the year of implementation, followed by growth in subsequent years. The company is also positioned to benefit from increasing market share in overseas smart meter and distribution transformer markets [2][13][16]. Medical Services Profitability - Approximately 20% of the company's revenue comes from rehabilitation hospitals. The average length of hospital stays in tertiary hospitals has decreased significantly, indicating a rising demand for rehabilitation services. The company’s bed occupancy rate is below the national average, suggesting potential for improvement in profitability [3][31]. Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, arriving at a 12-month target price of RMB 30.00. The power equipment segment is valued at 11.5x forward PE, while the healthcare services segment is valued at 18x, aligning with industry averages. The target price implies a 12.4x PE for 2026E, with an expected EPS CAGR of 23% from 2024 to 2027 [4][46]. Revenue Growth Projections - The report forecasts a 26% CAGR for power equipment revenue from 2024 to 2027, driven by strong growth in distribution equipment (38% CAGR) and smart meters (8% CAGR). The overall revenue growth for the power equipment segment is expected to be supported by a 26% increase in orders [8][23][24]. Dividend and Cash Position - The company is in a net cash position, which supports its ability to pay dividends. The report anticipates a stable dividend payout ratio of at least 45% from 2025 to 2027, with an average payout ratio of 54% from 2020 to 2024 [38][41].