Select Medical Holdings Corporation Announces Results For Its Fourth Quarter and Year Ended December 31, 2024, Its 2025 Business Outlook, and Cash Dividend

Rhea-AI Summary

Select Medical Holdings (NYSE: SEM) announced its Q4 and full-year 2024 results, along with its 2025 outlook and dividend declaration. Key highlights include:

The company completed a tax-free distribution of Concentra shares on November 25, 2024. Q4 2024 revenue increased 7.8% to $1,312.6 million, though the company reported a loss from continuing operations of $10.5 million, impacted by a one-time $45.9 million stock compensation expense and $17.9 million debt refinancing loss.

For full-year 2024, revenue grew 7.5% to $5,187.1 million, with income from continuing operations increasing 17.7% to $130.0 million. The board declared a cash dividend of $0.0625 per share, payable March 13, 2025. The company also maintains a $1.0 billion stock repurchase program through December 31, 2025.

The 2025 business outlook projects revenue between $5.4-5.6 billion and Adjusted EBITDA of $520.0-540.0 million.

Positive

• Revenue increased 7.8% to $1,312.6M in Q4 2024
• Full-year 2024 revenue grew 7.5% to $5,187.1M
• Annual income from continuing operations up 17.7% to $130.0M
• Adjusted EBITDA increased 14.4% to $510.4M for 2024
• Board authorized $1.0B stock repurchase program

Negative

• Q4 2024 loss from continuing operations of $10.5M
• One-time acceleration of $45.9M stock compensation expense
• $17.9M loss on early retirement of debt in Q4 2024
• Outpatient rehabilitation segment Adjusted EBITDA margin declined to 8.7% from 9.4% YoY

News Market Reaction

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On the day this news was published, SEM declined 7.24%, reflecting a notable negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

MECHANICSBURG, Pa., Feb. 20, 2025 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its fourth quarter and year ended December 31, 2024, its 2025 business outlook, and the declaration of a cash dividend.

On November 25, 2024, we completed a tax-free distribution of 104,093,503 shares of common stock of Concentra Group Holdings Parent, Inc. ("Concentra") to our stockholders. Holders of our common stock received 0.806971 shares of Concentra common stock for each outstanding share of our common stock owned as of November 18, 2024. Following the completion of the distribution, we no longer own any shares of Concentra's common stock. The results of Concentra, and related transaction costs, have been reflected as discontinued operations in the consolidated statements of operations, and prior periods have been recast to reflect this presentation.

For the fourth quarter ended December 31, 2024, revenue increased 7.8% to $1,312.6 million, compared to $1,218.1 million for the same quarter, prior year. Income from continuing operations before other income and expense was $21.1 million for the fourth quarter ended December 31, 2024, compared to $64.9 million for the same quarter, prior year. Loss from continuing operations, net of tax, was $10.5 million for the fourth quarter ended December 31, 2024, compared to income from continuing operations, net of tax, of $30.3 million for the same quarter, prior year. In connection with the distribution of Concentra, there was a one-time acceleration of $45.9 million of stock compensation expense, which reduced income (loss) from continuing operations for the quarter ended December 31, 2024. Additionally, during the quarter ended December 31, 2024, we recognized a loss on early retirement of debt of $17.9 million as a result of the debt refinancing transactions described below. Adjusted EBITDA increased 3.8% to $116.0 million for the fourth quarter ended December 31, 2024, compared to $111.8 million for the same quarter, prior year. Diluted loss per common share from continuing operations was $0.19 for the fourth quarter ended December 31, 2024, compared to earnings per common share from continuing operations of $0.12 for the same quarter, prior year. Adjusted earnings per common share from continuing operations, net of tax, which excludes the one-time acceleration of stock compensation expense, the loss on early retirement of debt, and certain reclassified transaction costs associated with the Concentra transaction, increased 50.0% to $0.18 for the fourth quarter ended December 31, 2024, compared to $0.12 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of income from continuing operations, net of tax, to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share from continuing operations, net of tax, to adjusted earnings per common share from continuing operations, net of tax, is presented in table X of this release.

For the year ended December 31, 2024, revenue increased 7.5% to $5,187.1 million, compared to $4,826.0 million for the prior year. Income from continuing operations before other income and expense increased 0.4% to $268.3 million for the year ended December 31, 2024, compared to $267.2 million for the prior year. Income from continuing operations, net of tax, increased 17.7% to $130.0 million for the year ended December 31, 2024, compared to $110.5 million for the prior year. In connection with the distribution of Concentra, there was a one-time acceleration of $45.9 million of stock compensation expense, which reduced income from continuing operations for the year ended December 31, 2024. Additionally, during the year ended December 31, 2024, we recognized a loss on early retirement of debt of $28.8 million. Adjusted EBITDA increased 14.4% to $510.4 million for the year ended December 31, 2024, compared to $446.1 million for the prior year. Earnings per common share from continuing operations, net of tax, increased 10.9% to $0.51 for the year ended December 31, 2024, compared to $0.46 for the prior year. Adjusted earnings per common share from continuing operations, net of tax, which excludes the one-time acceleration of stock compensation expense and the loss on early retirement of debt, increased 74.1% to $0.94 for the year ended December 31, 2024, compared to $0.54 for the prior year. The definition of Adjusted EBITDA and a reconciliation of income from continuing operations, net of tax, to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share from continuing operations, net of tax, to adjusted earnings per common share from continuing operations, net of tax, is presented in table X of this release.

Company Overview

Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics in the United States based on number of facilities. Select Medical's reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, and the outpatient rehabilitation segment. As of December 31, 2024, Select Medical operated 104 critical illness recovery hospitals in 29 states, 35 rehabilitation hospitals in 14 states, and 1,914 outpatient rehabilitation clinics in 39 states and the District of Columbia. At December 31, 2024, Select Medical had operations in 40 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

Critical Illness Recovery Hospital Segment

For the fourth quarter ended December 31, 2024, revenue for the critical illness recovery hospital segment increased 5.9% to $600.4 million, compared to $567.1 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 10.0% to $63.1 million for the fourth quarter ended December 31, 2024, compared to $57.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.5% for the fourth quarter ended December 31, 2024, compared to 10.1% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for the fourth quarters ended December 31, 2024 and 2023.

For the year ended December 31, 2024, revenue for the critical illness recovery hospital segment increased 6.3% to $2,444.2 million, compared to $2,299.8 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 22.6% to $301.6 million for the year ended December 31, 2024, compared to $246.0 million for the prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 12.3% for the year ended December 31, 2024, compared to 10.7% for the prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for the years ended December 31, 2024 and 2023.

Rehabilitation Hospital Segment

For the fourth quarter ended December 31, 2024, revenue for the rehabilitation hospital segment increased 13.1% to $294.4 million, compared to $260.2 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $62.3 million for the fourth quarter ended December 31, 2024, compared to $66.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.2% for the fourth quarter ended December 31, 2024, compared to 25.5% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2024 and 2023.

For the year ended December 31, 2024, revenue for the rehabilitation hospital segment increased 13.4% to $1,110.6 million, compared to $979.6 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 10.8% to $245.7 million for the year ended December 31, 2024, compared to $221.9 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 22.1% for the year ended December 31, 2024, compared to 22.6% for the prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for the years ended December 31, 2024 and 2023.

Outpatient Rehabilitation Segment

For the fourth quarter ended December 31, 2024, revenue for the outpatient rehabilitation segment increased 7.2% to $319.6 million, compared to $298.2 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 18.2% to $26.6 million for the fourth quarter ended December 31, 2024, compared to $22.5 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 8.3% for the fourth quarter ended December 31, 2024, compared to 7.5% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for the fourth quarters ended December 31, 2024 and 2023.

For the year ended December 31, 2024, revenue for the outpatient rehabilitation segment increased 5.2% to $1,250.3 million, compared to $1,188.9 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $108.6 million for the year ended December 31, 2024, compared to $111.9 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 8.7% for the year ended December 31, 2024, compared to 9.4% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for the years ended December 31, 2024 and 2023.

Dividend

On February 13, 2025, Select Medical's board of directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about March 13, 2025 to stockholders of record as of the close of business on March 3, 2025.

There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical's board of directors after taking into account various factors, including, but not limited to, Select Medical's financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical's indebtedness, and other factors Select Medical's board of directors may deem to be relevant.

Stock Repurchase Program

The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2025, unless further extended or earlier terminated by the board of directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Select Medical deems appropriate. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility.

Select Medical did not repurchase shares under its authorized stock repurchase program during the year ended December 31, 2024. Since the inception of the common stock repurchase program through December 31, 2024, Select Medical has repurchased 48,234,823 shares at a cost of approximately $600.3 million, or $12.45 per share, which includes transaction costs.

Financing Transactions

On December 3, 2024, we entered into Amendment No. 11 to our credit agreement. Amendment No. 11 established a new incremental term loan in the aggregate amount of $1,050.0 million. The maturity date of the term loan is December 3, 2031. In addition, Amendment No. 11 extended the maturity date of the revolving credit facility to December 3, 2029 and increased the revolving credit facility commitments from $550.0 million to $600.0 million. The interest rate on the term loan is equal to Term SOFR plus 2.00%, or the Alternative Base Rate (as defined in the credit agreement) plus 1.00%. The interest rate on the revolving facility is equal to Adjusted Term SOFR plus a percentage ranging from 2.25% to 2.50%, or the Alternative Base Rate (as defined in the credit agreement) plus a percentage ranging from 1.25% to 1.50%, in each case subject to a specified leverage ratio.

On December 3, 2024, Select issued and sold $550.0 million aggregate principal amount of 6.250% senior notes due December 1, 2032. Select used the net proceeds of the 6.250% senior notes due 2032, together with the proceeds from the incremental term loan borrowings (as described above) and cash on hand, to redeem in full the $1,225.0 million senior notes due 2026, repay the existing term loans, and pay related fees and expenses associated with the financing. Interest on the 2032 senior notes accrues at the rate of 6.250% per annum and is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2025.

Business Outlook

Select Medical is issuing its business outlook for 2025. Select Medical expects revenue to be in the range of $5.4 billion to $5.6 billion, Adjusted EBITDA to be in the range of $520.0 million to $540.0 million, and fully diluted earnings per share to be in the range of $1.09 to $1.19. A reconciliation of full year 2025 Adjusted EBITDA expectations to income from continuing operations, net of tax, is presented in table XI of this release.

Conference Call

Select Medical will host a conference call regarding its results for the fourth quarter and full year ended December 31, 2024, and its business outlook on Friday, February 21, 2025, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holdings Corporation's website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the same link.

For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode.

*   *   *   *   *

Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), including statements related to Select Medical's 2025 long-term business outlook. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements due to factors including the following:

• changes in government reimbursement for our services and/or new payment policies may result in a reduction in revenue, an increase in costs, and a reduction in profitability;
• adverse economic conditions including an inflationary environment could cause us to continue to experience increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results, cash flows, and financial condition;
• shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability to attract or retain qualified healthcare professionals could limit our ability to staff our facilities;
• shortages in qualified health professionals could cause us to increase our dependence on contract labor, increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase our operating costs significantly;
• the negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic;
• the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline;
• the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our revenue and profitability to decline;
• a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
• acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources, or expose us to unforeseen liabilities;
• our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;
• failure to complete or achieve some or all the expected benefits of the potential separation of Concentra;
• private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;
• the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability;
• competition may limit our ability to grow and result in a decrease in our revenue and profitability;
• the loss of key members of our management team could significantly disrupt our operations;
• the effect of claims asserted against us could subject us to substantial uninsured liabilities;
• a security breach of our or our third-party vendors' information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and
• other factors discussed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including factors discussed under the heading "Risk Factors" of the annual report on Form 10-K for the year ended December 31, 2024.

Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance.

Investor inquiries:

Joel T. Veit
Senior Vice President and Treasurer
717-972-1100
ir@selectmedical.com

I.  Condensed Consolidated Statements of Operations For the Three Months Ended December 31, 2023 and 2024 (In thousands, except per share amounts, unaudited)
		2023		2024		% Change
Revenue		$             1,218,116		$             1,312,564		7.8 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization		1,074,062		1,175,099		9.4
General and administrative		44,090		80,197		81.9
Depreciation and amortization		35,485		36,283		2.2
Total costs and expenses		1,153,637		1,291,579		12.0
Other operating income		458		106		(76.9)
Income from continuing operations before other income and expense		64,937		21,091		(67.5)
Other income and expense:
Loss on early retirement of debt		—		(17,906)		N/M
Equity in earnings of unconsolidated subsidiaries		10,195		10,423		2.2
Interest expense		(40,263)		(28,551)		(29.1)
Income (loss) from continuing operations before income taxes		34,869		(14,943)		N/M
Income tax expense (benefit) from continuing operations		4,618		(4,487)		N/M
Income (loss) from continuing operations, net of tax		30,251		(10,456)		N/M
Discontinued operations:
Income from discontinued business		38,779		24,669		(36.4)
Income tax expense from discontinued business		7,232		10,457		44.6
Income from discontinued operations, net of tax		31,547		14,212		(54.9)
Net income		61,798		3,756		(93.9)
Less: Net income attributable to non-controlling interests		15,529		19,806		27.5
Net income (loss) attributable to Select Medical		$                  46,269		$                (16,050)		N/M
Net income (loss) attributable to Select Medical's common stockholders:
Income (loss) from continuing operations, net of tax		$                  15,743		$                (23,664)
Income from discontinued operations, net of tax		30,526		7,614
Net income (loss) attributable to Select Medical's common stockholders		$                  46,269		$                (16,050)
Basic earnings (loss) per common share:
Continuing operations		$                       0.12		$                     (0.18)
Discontinued operations		0.24		0.06
Total basic earnings (loss) per common share		$                       0.36		$                     (0.12)
Diluted earnings (loss) per common share:
Continuing operations		$                       0.12		$                     (0.19)
Discontinued operations		0.24		0.06
Total diluted earnings (loss) per common share		$                       0.36		$                     (0.13)

_______________________________________________________________________________

(1)           Refer to table III for calculation of earnings per common share.

N/M        Not meaningful.

 

II.  Condensed Consolidated Statements of Operations For the Years Ended December 31, 2023 and 2024 (In thousands, except per share amounts, unaudited)
		2023		2024		% Change
Revenue		$            4,825,977		$            5,187,105		7.5 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization		4,254,369		4,553,461		7.0
General and administrative		170,193		225,869		32.7
Depreciation and amortization		135,691		142,866		5.3
Total costs and expenses		4,560,253		4,922,196		7.9
Other operating income		1,518		3,406		124.4
Income from continuing operations before other income and expense		267,242		268,315		0.4
Other income and expense:
Loss on early retirement of debt		(14,692)		(28,845)		96.3
Equity in earnings of unconsolidated subsidiaries		41,339		63,904		54.6
Interest expense		(154,165)		(128,605)		(16.6)
Income from continuing operations before income taxes		139,724		174,769		25.1
Income tax expense from continuing operations		29,253		44,782		53.1
Income from continuing operations, net of tax		110,471		129,987		17.7
Discontinued operations:
Income from discontinued business		242,632		223,414		(7.9)
Income tax expense from discontinued business		53,372		56,697		6.2
Income from discontinued operations, net of tax		189,260		166,717		(11.9)
Net income		299,731		296,704		(1.0)
Less: Net income attributable to non-controlling interests		56,240		82,666		47.0
Net income attributable to Select Medical		$               243,491		$               214,038		(12.1) %
Net income attributable to Select Medical's common stockholders:
Income from continuing operations, net of tax		$                 59,027		$                 65,473
Income from discontinued operations, net of tax		184,464		148,565
Net income attributable to Select Medical's common stockholders:		$               243,491		$               214,038
Earnings per common share:
Continuing operations - basic and diluted		$                      0.46		$                      0.51
Discontinued operations - basic and diluted		1.44		1.15
Basic and diluted earnings per common share:(1)		$                      1.91	(2)	$                      1.66

_______________________________________________________________________________

(1)           Refer to table III for calculation of earnings per common share.

(2)           Does not total due to rounding.

N/M        Not meaningful.

 

III.  Earnings per Share For the Three Months and Years Ended December 31, 2023 and 2024 (In thousands, except per share amounts, unaudited)

Select Medical's capital structure includes common stock and unvested restricted stock awards. To compute earnings per share ("EPS"), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings. Select Medical applies the treasury stock method when computing diluted EPS.

The following table sets forth the income from continuing operations, net of tax, attributable to Select Medical's common stockholders, its common shares outstanding, and its participating securities outstanding for the three months and years ended December 31, 2023 and 2024:

		Basic EPS
		Three Months Ended December 31,				Years Ended December 31,
		2023		2024		2023		2024
Income (loss) from continuing operations, net of tax		$          30,251		$        (10,456)		$        110,471		$        129,987
Less: Net income attributable to non-controlling interests		14,508		13,208		51,444		64,514
Income (loss) from continuing operations, net of tax, attributable to Select Medical's common stockholders		15,743		(23,664)		59,027		65,473
Less: distributed and undistributed net income (loss) attributable to participating securities(1)		556		(597)		2,127		2,319
Income (loss) from continuing operations, net of tax,  attributable to common shares		$          15,187		$        (23,067)		$          56,900		$          63,154

The following tables set forth the computation of EPS for the three months and years ended December 31, 2023 and 2024:

		Three Months Ended December 31,
		2023
		Income from Continuing Operations, Net of Tax, Allocation		Shares(1)		Basic and Diluted EPS
		(in thousands, except for per share amounts)
Common shares		$                      15,187		123,817		$                          0.12
Participating securities		556		4,530		$                          0.12
Total		$                      15,743

 

		Three Months Ended December 31,
		2024
		Loss from Continuing Operations, Net of Tax, Allocation - Basic		Basic Shares(1)		Basic EPS			Loss from Continuing Operations, Net of Tax, Allocation - Diluted		Diluted Shares(1)		Diluted EPS
		(in thousands, except for per share amounts)
Common shares		$        (23,067)		125,923		$           (0.18)			$        (23,664)		127,535		$           (0.19)
Participating securities		(597)		3,261		$           (0.18)
Total		$        (23,664)

 

		Year Ended December 31,
		2023							2024
		Income from Continuing Operations, Net of Tax, Allocation		Shares(1)		Basic and Diluted EPS			Income from Continuing Operations, Net of Tax, Allocation		Shares(1)		Basic and Diluted EPS
		(in thousands, except for per share amounts)
Common shares		$          56,900		123,105		$             0.46			$          63,154		124,614		$             0.51
Participating securities		2,127		4,601		$             0.46			2,319		4,576		$             0.51
Total		$          59,027							$          65,473

_______________________________________________________________________________

(1)           Represents the weighted average share count outstanding during the period.

 

IV.  Condensed Consolidated Balance Sheets (In thousands, unaudited)
		December 31,
		2023		2024
Assets
Current Assets:
Cash and cash equivalents		$                       52,632		$                       59,694
Accounts receivable		724,141		821,385
Current assets of discontinued operations		291,064		—
Other current assets		189,809		138,698
Total Current Assets		1,257,646		1,019,777
Operating lease right-of-use assets		790,764		908,095
Property and equipment, net		845,191		872,185
Goodwill		2,283,425		2,331,898
Identifiable intangible assets, net		105,147		103,183
Non-current assets of discontinued operations		2,039,142		—
Other assets		368,316		372,813
Total Assets		$                  7,689,631		$                  5,607,951
Liabilities and Equity
Current Liabilities:
Payables and accruals		$                     735,857		$                     777,781
Current operating lease liabilities		172,454		179,601
Current portion of long-term debt and notes payable		68,874		20,269
Current liabilities of discontinued operations		271,280		—
Total Current Liabilities		1,248,465		977,651
Non-current operating lease liabilities		668,557		787,124
Long-term debt, net of current portion		3,584,384		1,691,546
Non-current deferred tax liability		119,942		81,497
Non-current liabilities of discontinued operations		411,487		—
Other non-current liabilities		82,781		73,038
Total Liabilities		6,115,616		3,610,856
Redeemable non-controlling interests		26,297		10,167
Total Equity		1,547,718		1,986,928
Total Liabilities and Equity		$                  7,689,631		$                  5,607,951

 

V.  Condensed Consolidated Statements of Cash Flows For the Three Months Ended December 31, 2023 and 2024 (In thousands, unaudited)
		2023		2024
Operating activities
Net income		$                       61,798		$                         3,756
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries		13,521		8,742
Depreciation and amortization		53,984		45,743
Provision for expected credit losses		(71)		2,620
Equity in earnings of unconsolidated subsidiaries		(10,195)		(10,423)
Loss on extinguishment of debt		—		8,099
(Gain) loss on sale of assets and businesses		(50)		48
Stock compensation expense		11,818		61,271
Amortization of debt discount, premium and issuance costs		748		684
Deferred income taxes		930		2,507
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		4,170		20,916
Other current assets		(12,098)		10,216
Other assets		3,003		(1,009)
Accounts payable and accrued expenses		51,884		(27,738)
Net cash provided by operating activities		179,442		125,432
Investing activities
Business combinations, net of cash acquired		(9,085)		(10,786)
Purchases of property and equipment		(60,603)		(63,429)
Proceeds from sale of assets and businesses		104		22
Net cash used in investing activities		(69,584)		(74,193)
Financing activities
Borrowings on revolving facilities		270,000		290,000
Payments on revolving facilities		(330,000)		(195,000)
Proceeds from term loans, net of issuance costs		—		1,043,355
Payments on term loans		(5,258)		(372,982)
Payment on senior notes, including call premium		—		(1,237,764)
Proceeds from senior notes, net of issuance costs		—		539,261
Borrowings of other debt		550		4,086
Principal payments on other debt		(8,648)		(29,498)
Dividends paid to common stockholders		(16,048)		(16,124)
Repurchase of common stock		(1,709)		(19,981)
Increase in overdrafts		280		11,630
Proceeds from issuance of non-controlling interests		2,472		6,300
Distributions to and purchases of non-controlling interests		(14,931)		(24,201)
Cash transferred to Concentra at separation		—		(182,095)
Net cash used in financing activities		(103,292)		(183,013)
Net increase (decrease) in cash and cash equivalents		6,566		(131,774)
Cash and cash equivalents at beginning of period		77,440		191,468
Cash and cash equivalents at end of period(1)		$                       84,006		$                       59,694
Supplemental information:
Cash paid for interest, excluding amounts received of $22,465 under the interest rate cap contract in 2023		$                       50,564		$                       39,472
Cash paid for taxes		10,008		30,491

__________________________________________

(1) Discontinued operations at December 31, 2023, includes $31.4 million of cash and cash equivalents.

 

VI.  Condensed Consolidated Statements of Cash Flows For the Years Ended December 31, 2023 and 2024 (In thousands, unaudited)
		2023		2024
Operating activities
Net income		$                     299,731		$                     296,704
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries		23,417		39,178
Depreciation and amortization		208,742		203,894
Provision for expected credit losses		1,030		4,279
Equity in earnings of unconsolidated subsidiaries		(40,813)		(60,228)
Loss on extinguishment of debt		175		19,038
Gain on sale of assets and businesses		(57)		(1,063)
Stock compensation expense		43,809		100,670
Amortization of debt discount, premium and issuance costs		2,647		2,963
Deferred income taxes		(16,119)		(32,434)
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		1,156		(95,845)
Other current assets		(29,374)		18,072
Other assets		10,031		12,933
Accounts payable and accrued expenses		77,683		9,703
Net cash provided by operating activities		582,058		517,864
Investing activities
Business combinations, net of cash acquired		(29,567)		(13,097)
Purchases of property, equipment, and other assets		(229,200)		(222,177)
Investment in businesses		(9,873)		—
Proceeds from sale of assets and businesses		163		4,263
Net cash used in investing activities		(268,477)		(231,011)
Financing activities
Borrowings on revolving facilities		905,000		1,240,000
Payments on revolving facilities		(1,070,000)		(1,415,000)
Proceeds from term loans, net of issuance costs		2,092,232		1,880,052
Payments on term loans		(2,113,952)		(2,092,485)
Payment on senior notes		—		(1,237,764)
Proceeds from senior notes, net of issuance costs		—		1,176,598
Borrowings of other debt		31,399		24,892
Principal payments on other debt		(46,946)		(65,280)
Dividends paid to common stockholders		(63,904)		(64,617)
Repurchase of common stock		(12,759)		(37,905)
Decrease in overdrafts		(1,687)		(4,471)
Proceeds from issuance of non-controlling interests		22,935		15,713
Distributions to and purchases of non-controlling interests		(63,531)		(60,001)
Purchase of membership interests of Concentra Group Holdings Parent		(6,268)		—
Proceeds from Concentra initial public offering		—		511,198
Cash transferred to Concentra at separation		—		(182,095)
Net cash used in financing activities		(327,481)		(311,165)
Net decrease in cash and cash equivalents		(13,900)		(24,312)
Cash and cash equivalents at beginning of period		97,906		84,006
Cash and cash equivalents at end of period(1)		$                       84,006		$                       59,694
Supplemental information:
Cash paid for interest, excluding amounts received of $82,818 and $68,069 under the interest rate cap contract in 2023 and 2024, respectively		$                     272,261		$                     256,229
Cash paid for taxes		88,510		133,187

______________________________________________________________

(1) Discontinued operations at December 31, 2023, includes $31.4 million of cash and cash equivalents.

 

VII.  Key Statistics For the Three Months Ended December 31, 2023 and 2024 (unaudited)
		2023		2024		% Change
Critical Illness Recovery Hospital
Number of hospitals operated – end of period(a)		107		104
Revenue (,000)		$          567,128		$          600,445		5.9 %
Number of patient days(b)(c)		277,470		274,134		(1.2) %
Number of admissions(b)(d)		9,126		8,691		(4.8) %
Revenue per patient day(b)(e)		$              2,037		$              2,183		7.2 %
Occupancy rate(b)(f)		66 %		67 %		1.5 %
Adjusted EBITDA (,000)		$            57,384		$            63,098		10.0 %
Adjusted EBITDA margin		10.1 %		10.5 %
Rehabilitation Hospital
Number of hospitals operated – end of period(a)		33		35
Revenue (,000)		$          260,166		$          294,352		13.1 %
Number of patient days(b)(c)		116,003		119,870		3.3 %
Number of admissions(b)(d)		8,264		8,626		4.4 %
Revenue per patient day(b)(e)		$              2,063		$              2,177		5.5 %
Occupancy rate(b)(f)		85 %		81 %		(4.7) %
Adjusted EBITDA (,000)		$            66,344		$            62,277		(6.1) %
Adjusted EBITDA margin		25.5 %		21.2 %
Outpatient Rehabilitation
Number of clinics operated – end of period(a)		1,933		1,914
Working days(g)		63		64
Revenue (,000)		$          298,235		$          319,598		7.2 %
Number of visits(b)(h)		2,672,936		2,811,704		5.2 %
Revenue per visit(b)(i)		$                  100		$                  102		2.0 %
Adjusted EBITDA (,000)		$            22,473		$            26,561		18.2 %
Adjusted EBITDA margin		7.5 %		8.3 %

_______________________________________________________________________________
(a)	Includes managed locations.
(b)	Excludes managed locations.
(c)	Each patient day represents one patient occupying one bed for one day during the periods presented.
(d)	Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e)	Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f)	Represents the portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.
(g)	Represents the number of days in which normal business operations were conducted during the periods presented.
(h)	Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics during the periods presented.
(i)	Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits.

 

VIII.  Key Statistics For the Years Ended December 31, 2023 and 2024 (unaudited)
		2023		2024		% Change
Critical Illness Recovery Hospital
Number of hospitals operated – end of period(a)		107		104
Revenue (,000)		$       2,299,773		$       2,444,196		6.3 %
Number of patient days(b)(c)		1,108,492		1,118,757		0.9 %
Number of admissions(b)(d)		36,225		35,784		(1.2) %
Revenue per patient day(b)(e)		$              2,067		$              2,177		5.3 %
Occupancy rate(b)(f)		68 %		68 %		0.0 %
Adjusted EBITDA (,000)		$          246,015		$          301,634		22.6 %
Adjusted EBITDA margin		10.7 %		12.3 %
Rehabilitation Hospital
Number of hospitals operated – end of period(a)		33		35
Revenue (,000)		$          979,585		$       1,110,592		13.4 %
Number of patient days(b)(c)		446,145		470,594		5.5 %
Number of admissions(b)(d)		31,627		33,665		6.4 %
Revenue per patient day(b)(e)		$              2,017		$              2,134		5.8 %
Occupancy rate(b)(f)		85 %		84 %		(1.2) %
Adjusted EBITDA (,000)		$          221,875		$          245,748		10.8 %
Adjusted EBITDA margin		22.6 %		22.1 %
Outpatient Rehabilitation
Number of clinics operated – end of period(a)		1,933		1,914
Working days(g)		254		256
Revenue (,000)		$       1,188,914		$       1,250,294		5.2 %
Number of visits(b)(h)		10,657,558		11,147,920		4.6 %
Revenue per visit(b)(i)		$                  100		$                  101		1.0 %
Adjusted EBITDA (,000)		$          111,868		$          108,577		(2.9) %
Adjusted EBITDA margin		9.4 %		8.7 %

_______________________________________________________________________________
(a)	Includes managed locations.
(b)	Excludes managed locations.
(c)	Each patient day represents one patient occupying one bed for one day during the periods presented.
(d)	Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e)	Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f)	Represents the portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.
(g)	Represents the number of days in which normal business operations were conducted during the periods presented.
(h)	Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics during the periods presented.
(i)	Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits.

 

IX.  Income from Continuing Operations, Net of Tax, to Adjusted EBITDA Reconciliation For the Three Months and Years Ended December 31, 2023 and 2024 (In thousands, unaudited)

The presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of Select Medical's segments. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America ("GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, income from continuing operations, income from continuing operations before other income and expense, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

The following table reconciles income from continuing operations, net of tax, to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as earnings from continuing operations excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, transaction costs associated with the Concentra separation, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.

	Three Months Ended December 31,					Years Ended December 31,
	2023		2024			2023		2024
Income (loss) from continuing operations, net of tax	$          30,251		$        (10,456)			$        110,471		$       129,987
Income tax expense (benefit)	4,618		(4,487)			29,253		44,782
Interest expense	40,263		28,551			154,165		128,605
Equity in earnings of unconsolidated subsidiaries	(10,195)		(10,423)			(41,339)		(63,904)
Loss on early retirement of debt	—		17,906			14,692		28,845
Income from continuing operations before other income   and expense	$          64,937		$          21,091			$        267,242		$       268,315
Stock compensation expense:
Included in general and administrative	9,658		47,414			36,041		79,931
Included in cost of services	1,688		12,902			7,117		19,283
Depreciation and amortization	35,485		36,283			135,691		142,866
Concentra separation transaction costs(b)	—		(1,698)			—		—
Adjusted EBITDA	$        111,768		$        115,992			$        446,091		$       510,395
Critical illness recovery hospital	$          57,384		$          63,098			$        246,015		$       301,634
Rehabilitation hospital	66,344		62,277			221,875		245,748
Outpatient rehabilitation	22,473		26,561			111,868		108,577
Other(a)	(34,433)		(35,944)			(133,667)		(145,564)
Adjusted EBITDA	$        111,768		$        115,992			$        446,091		$       510,395

_______________________________________________________________________________
(a)	Other primarily includes general and administrative costs and other operating income, as discussed further above.
(b)	During the three months ended December 31, 2024, transaction costs of $1.7 million recognized in previous periods were reclassified from income from continuing operations to income from discontinued operations. Total Concentra separation transaction costs of $16.3 million were recognized during the year ended December 31, 2024 and included in income from discontinued business.

 

X.  Reconciliation of Earnings per Common Share from Continuing Operations, Net of Tax, to Adjusted Earnings per Common Share from Continuing Operations, Net of Tax For the Years Ended December 31, 2023 and 2024 (In thousands, except per share amounts, unaudited)

Adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations are not measures of financial performance under GAAP. Items excluded from adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations are important to investors because they are reflective of the financial performance of Select Medical's ongoing operations and provide better comparability of its results of operations between periods. Adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations should not be considered in isolation or as alternatives to, or substitutes for, income from continuing operations, net of tax, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations as presented may not be comparable to other similarly titled measures of other companies.

The following tables reconcile income from continuing operations, net of tax, attributable to common shares and earnings per common share from continuing operations on a fully diluted basis to adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations on a fully diluted basis.

	Three Months Ended December 31,
	2023		Per Share(a)		2024		Per Share(a)
Income from continuing operations, net of tax, attributable to common shares(a)	$             15,187		$                 0.12		$           (23,664)		(0.19)
Adjustments:(b)
Loss on early retirement of debt, net of tax	—		—		12,885		0.10
Concentra separation transaction costs, net of tax	—		—		(1,241)		(0.01)
Stock compensation expense due to accelerated vesting, net of tax	—		—		34,645		0.28
Adjusted income from continuing operations, net of tax, attributable to common shares	$             15,187		$             0.12		$             22,625		$             0.18

 

	Years Ended December 31,
	2023		Per Share(a)		2024		Per Share(a)
Income from continuing operations, net of tax, attributable to common shares(a)	$             56,900		$                 0.46		$            63,154		$                 0.51
Adjustments:(b)
Loss on early retirement of debt, net of tax	10,019		0.08		20,311		0.16
Stock compensation expense due to accelerated vesting, net of tax	—		—		33,846		0.27
Adjusted income from continuing operations, net of tax, attributable to common shares	$66,919		$                  0.54		$             117,311		$                 0.94

_______________________________________________________________________________
(a)	Income from continuing operations, net of tax, attributable to common shares and earnings per common share from continuing operations are calculated based on the diluted weighted average common shares outstanding, as presented in table III.
(b)	Adjustments to income from continuing operations, net of tax, attributable to common shares include estimated income tax and non-controlling interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact, which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes both current and deferred income tax expense or benefit.

 

XI.  Income from Continuing Operations, Net of Tax, to Adjusted EBITDA Reconciliation Business Outlook for the Year Ending December 31, 2025 (In millions, unaudited)

The following is a reconciliation of full year 2025 Adjusted EBITDA expectations as computed at the low and high points of the range to the closest comparable GAAP financial measure. Refer to table IX for the definition of Adjusted EBITDA and a discussion of Select Medical's use of Adjusted EBITDA in evaluating financial performance. Each item presented in the below table is an estimation of full year 2025 expectations.

	Range
Non-GAAP Measure Reconciliation	Low		High
Income from continuing operations, net of tax, attributable to Select Medical	$                            142		$                            155
Net income attributable to non-controlling interests	75		78
Income from continuing operations, net of tax	217		233
Income tax expense	79		84
Interest expense	107		107
Equity in earnings of unconsolidated subsidiaries	(47)		(48)
Income from continuing operations before other income and expense	356		376
Stock compensation expense	18		18
Depreciation and amortization	146		146
Adjusted EBITDA	$                            520		$                            540

 

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SOURCE Select Medical Holdings Corporation

FAQ

What is Select Medical's dividend payment for Q4 2024?

Select Medical declared a cash dividend of $0.0625 per share, payable on March 13, 2025, to stockholders of record as of March 3, 2025.

How much revenue did SEM generate in Q4 2024?

Select Medical generated revenue of $1,312.6 million in Q4 2024, representing a 7.8% increase from the same quarter in the previous year.

What is Select Medical's 2025 revenue outlook?

Select Medical expects 2025 revenue to be in the range of $5.4 billion to $5.6 billion.

How many shares has SEM repurchased under its current program?

Since the inception of the program through December 31, 2024, Select Medical has repurchased 48,234,823 shares at a cost of approximately $600.3 million, or $12.45 per share.

What was the impact of the Concentra distribution on SEM in Q4 2024?

The Concentra distribution resulted in a one-time acceleration of $45.9 million in stock compensation expense, which reduced income from continuing operations for Q4 2024.