Select Medical(US:SEM)2026-02-20 15:02Financial Data and Key Metrics Changes - Total revenue grew more than 6% year-over-year in Q4 2025, with full-year revenue increasing over 5% [8][10] - Adjusted EBITDA declined 10% to $104.7 million from $116 million in the prior year, with a margin decrease to 9% from 9.8% [9][10] - Earnings per common share from continuing operations was $0.16, compared to a diluted loss per common share of $0.19 in the prior year [9] Business Line Data and Key Metrics Changes - Inpatient Rehab Hospital Division revenue increased over 15% year-over-year to $339.2 million, with adjusted EBITDA rising 11% to $69.2 million [10] - Critical Illness Recovery Hospital Division revenue increased nearly 5% to $629.7 million, with adjusted EBITDA growing 5% to $66.4 million [11] - Outpatient Rehab Division revenue increased to $324.6 million, driven by nearly 5% growth in patient visits, but adjusted EBITDA fell to $11.2 million from $26.6 million [12] Market Data and Key Metrics Changes - The company added 150 beds in Q4 2025, contributing to a total of 212 rehab beds added for the full year [5][6] - The average daily census in the Inpatient Rehab Hospital Division grew nearly 10%, with occupancy improving to 82% from 81% [10] Company Strategy and Development Direction - The company is focused on expanding its inpatient rehabilitation business, with plans to add 399 beds across 2026 and 2027 [6][8] - A cash dividend of $0.0625 per share was approved, reflecting a commitment to returning value to shareholders [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the outpatient division, indicating that recent health insurance expenses were likely one-time impacts [20] - The company expects revenue for 2026 to be in the range of $5.6 billion to $5.8 billion, with adjusted EBITDA projected between $520 million and $540 million [15] Other Important Information - A non-binding proposal to take the company private is under review by a special committee of the board [4] - The company ended the quarter with $1.8 billion of debt and $26.5 million of cash on the balance sheet [13] Q&A Session Summary Question: Can you provide details on the higher health costs and their impact on the outpatient rehab business? - Management indicated that health insurance expenses impacted the outpatient division by approximately $5 million, with variable discounts adding another $6 million, totaling around $11 million [18] Question: What are the expectations for guidance going forward? - Management expressed confidence in the inpatient rehab division and cautiously optimistic outlook for outpatient improvements, indicating that the $11 million impact was likely a one-time event [20] Question: Can you elaborate on the special committee's review process? - Management stated they could not comment further on the process beyond the initial announcement [25] Question: Was there any impact from weather in Q1? - Management confirmed that there was no significant impact on inpatient divisions, but outpatient experienced some effects due to weather conditions [26] Question: Can you provide more detail on the outpatient issues and payer mix? - Management noted that the outpatient division faced challenges due to a deterioration in payer mix, impacting net revenue per visit [40]