Select Medical(US:SEM)2024-11-01 15:24Financial Data and Key Metrics Changes - The consolidated adjusted EBITDA grew 6% from $193.8 million to $205.5 million, with an adjusted EBITDA margin of 11.7% compared to 11.6% in the prior year Q3 [16][25] - Revenue increased by 6% compared to Q3 of the prior year [16] - EPS was $0.43 per share for the third quarter compared to $0.38 per share in the same quarter prior year [25] Business Line Data and Key Metrics Changes - The inpatient rehab hospital division had a 14% increase in revenue and a 12% increase in adjusted EBITDA compared to Q3 of the prior year [20] - The critical illness recovery hospital division saw a 3% increase in revenue and a 9% increase in adjusted EBITDA compared to the same quarter prior year [17] - The outpatient rehab division experienced a 7% increase in revenue, with patient volumes increasing by 6% [24] Market Data and Key Metrics Changes - Concentra experienced increases of 3% in both net revenue and adjusted EBITDA over the prior year same quarter, driven by a 4% increase in rate [23] - The outpatient division's adjusted EBITDA margin increased from 9% to 9.1% [25] Company Strategy and Development Direction - The company plans to open several new inpatient rehab hospitals and expand its operations, adding 569 additional beds from 2024 through 2026 [13][11] - The development pipeline is described as robust, with opportunities in both inpatient and outpatient rehab [48] - The company aims to maintain a leverage ratio of around 3 times, allowing flexibility in capital deployment [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, noting improvements in labor costs and occupancy rates [29][44] - The company updated its business outlook for 2024, expecting revenue in the range of $6.95 billion to $7.15 billion and adjusted EBITDA between $865 million to $885 million [42] Other Important Information - The company completed Concentra's initial public offering, retaining an 81.74% ownership stake [5][6] - A cash dividend of $0.125 was declared, payable on November 26, 2024 [26] - The company did not repurchase shares during the quarter but continues to evaluate stock repurchases and debt reduction [41] Q&A Session Summary Question: Comments on LTAC occupancy trends - Management noted that the occupancy rate was higher than the prior year and attributed it to seasonal factors rather than staffing issues [44] Question: Thoughts on capital deployment and leverage - Management indicated a preference to maintain leverage around 3 times and emphasized a robust development pipeline [49] Question: Additional progress on SWB as a percent of revenue - Management believes there is room for improvement and expects to end the year in the 57% range [57] Question: Keys for outpatient rehab margin improvement - Management highlighted clinical efficiency and technology improvements as major factors for future margin enhancements [61]