Select Medical Holdings Corporation Announces Results For Its Third Quarter Ended September 30, 2021 and Cash Dividend
11/04/2021 - 04:30 PM
MECHANICSBURG, Pa. , Nov. 4, 2021 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its third quarter ended September 30, 2021 and the declaration of a cash dividend.
For the third quarter ended September 30, 2021, revenue increased 7.8% to $1,534.2 million , compared to $1,423.9 million for the same quarter, prior year. Income from operations was $150.3 million for the third quarter ended September 30, 2021, compared to $156 .1 million for the same quarter, prior year. Income from operations included $1 .7 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the third quarter ended September 30, 2021, compared to a reduction of other operating income of $1 .2 million related to payments received under the Provider Relief Fund for the same quarter, prior year. Refer to "CARES Act Provider Relief Fund " for further discussion. Net income was $100.2 million for the third quarter ended September 30, 2021, compared to $104.5 million for the same quarter, prior year. Net income included pre-tax gains on sales of businesses of $5.1 million for the third quarter ended September 30, 2020. Adjusted EBITDA was $208.6 million for the third quarter ended September 30, 2021, compared to $213.2 million for the same quarter, prior year. Earnings per common share was $0.57 for both the third quarters ended September 30, 2021 and 2020. Adjusted earnings per common share was $0.57 for the third quarter ended September 30, 2021, compared to $0.56 for the same quarter, prior year. Adjusted earnings per common share excluded the gains on sales of businesses and related tax effects for the third quarter ended September 30, 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.
For the nine months ended September 30, 2021, revenue increased 14.1% to $4,644.7 million , compared to $4,071.2 million for the same period, prior year. Income from operations increased 57.4% to $636.2 million for the nine months ended September 30, 2021, compared to $404.3 million for the same period, prior year. Income from operations included $115.8 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the nine months ended September 30, 2021, compared to $53.8 million for the same period, prior year. Refer to "CARES Act Provider Relief Fund " for further discussion. Net income increased 78.9% to $433.6 million for the nine months ended September 30, 2021, compared to $242.4 million for the same period, prior year. Net income included pre-tax gains on sales of businesses of $12 .7 million for the nine months ended September 30, 2020. Adjusted EBITDA increased 39.6% to $808.9 million for the nine months ended September 30, 2021, compared to $579.3 million for the same period, prior year. Earnings per common share increased to $2.61 for the nine months ended September 30, 2021, compared to $1.35 for the same period, prior year. Adjusted earnings per common share was $2.61 for the nine months ended September 30, 2021, compared to $1.31 for the same period, prior year. Adjusted earnings per common share excluded the gains on sales of businesses and related tax effects for the nine months ended September 30, 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.
Please refer to "Effects of the COVID-19 Pandemic on Select Medical's Results of Operations " below for further discussion regarding the impact of the coronavirus disease 2019 ("COVID-19") pandemic on Select Medical's operating results.
Company Overview
Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers 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, the outpatient rehabilitation segment, and the Concentra segment. As of September 30, 2021, Select Medical operated 100 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,850 outpatient rehabilitation clinics in 39 states and the District of Columbia . Select Medical's joint venture subsidiary Concentra operated 519 occupational health centers in 41 states. At September 30, 2021, Select Medical had operations in 46 states and the District of Columbia . Information about Select Medical is available at www.selectmedical.com .
CARES Act Provider Relief Fund
On March 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19, and for reimbursing eligible health care providers for health care related expenses and lost revenues that are attributable to COVID-19.
For the three and nine months ended September 30, 2021, Select Medical recognized $1 .7 million and $115.8 million of payments received under the Provider Relief Fund as other operating income, respectively.
For the three months ended September 30, 2020, Select Medical recognized a reduction to other operating income of $1.2 million related to payments received under the Provider Relief Fund. This resulted from changes in the terms and conditions associated with the Provider Relief Fund program. For the nine months ended September 30, 2020, Select Medical recognized $53.8 million of payments received under the Provider Relief Fund as other operating income.
Critical Illness Recovery Hospital Segment
For the third quarter ended September 30, 2021, revenue for the critical illness recovery hospital segment increased 2.2% to $530.6 million , compared to $519.5 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $57.2 million for the third quarter ended September 30, 2021, compared to $88.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.8% for the third quarter ended September 30, 2021, compared to 17.1% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.
For the nine months ended September 30, 2021, revenue for the critical illness recovery hospital segment increased 8.4% to $1,669.6 million , compared to $1,539.6 million for the same period, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $243.4 million for the nine months ended September 30, 2021, compared to $267.1 million for the same period, prior year. For the nine months ended September 30, 2021, Adjusted EBITDA included $17.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 14.6% for the nine months ended September 30, 2021, compared to 17.4% for the same period, prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.
Rehabilitation Hospital Segment
For the third quarter ended September 30, 2021, revenue for the rehabilitation hospital segment increased 13.0% to $212.4 million , compared to $188.1 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $44.1 million for the third quarter ended September 30, 2021, compared to $44.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.7% for the third quarter ended September 30, 2021, compared to 23.7% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.
For the nine months ended September 30, 2021, revenue for the rehabilitation hospital segment increased 17.5% to $632.9 million , compared to $538.8 million for the same period, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 31.2% to $145.4 million for the nine months ended September 30, 2021, compared to $110.8 million for the same period, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 23.0% for the nine months ended September 30, 2021, compared to 20.6% for the same period, prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.
Outpatient Rehabilitation Segment
For the third quarter ended September 30, 2021, revenue for the outpatient rehabilitation segment increased 14.4% to $274.5 million , compared to $240.0 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 26.6% to $38.8 million for the third quarter ended September 30, 2021, compared to $30.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 14.1% for the third quarter ended September 30, 2021, compared to 12.8% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.
For the nine months ended September 30, 2021, revenue for the outpatient rehabilitation segment increased 21.8% to $806.9 million , compared to $662.4 million for the same period, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased to $110.7 million for the nine months ended September 30, 2021, compared to $51.5 million for the same period, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 13.7% for the nine months ended September 30, 2021, compared to 7.8% for the same period, prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.
Concentra Segment
For the third quarter ended September 30, 2021, revenue for the Concentra segment increased 12.8% to $442.2 million , compared to $391.9 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 23.9% to $99.8 million for the third quarter ended September 30, 2021, compared to $80.5 million for the same quarter, prior year. Adjusted EBITDA included other operating income of $1.6 million related to the recognition of payments received under the Provider Relief Fund for the third quarter ended September 30, 2021, compared to $0.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 22.6% for the third quarter ended September 30, 2021, compared to 20.6% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.
For the nine months ended September 30, 2021, revenue for the Concentra segment increased 19.8% to $1,321.4 million , compared to $1,102.7 million for the same period, prior year. Adjusted EBITDA for the Concentra segment increased to $318.9 million for the nine months ended September 30, 2021, compared to $183.5 million for the same period, prior year. Adjusted EBITDA included other operating income of $33 .8 million related to the recognition of payments received under the Provider Relief Fund for the nine months ended September 30, 2021, compared to $1.1 million for the same period, prior year. The Adjusted EBITDA margin for the Concentra segment was 24.1% for the nine months ended September 30, 2021, compared to 16.6% for the same period, prior year. Certain Concentra key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.
Effects of the COVID-19 Pandemic on Select Medical's Results of Operations
Beginning in March 2020 , state governments placed significant restrictions on businesses and mandated closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. State governments also implemented restrictions on travel and individual activities outside of the home, closed schools, and mandated other social distancing measures. At the same time, hospitals and other facilities began suspending elective surgeries. In an effort to ensure hospitals and health systems had the capacity to absorb and effectively manage surges of COVID-19 patients, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children's Health Insurance Program ("CHIP") programs were authorized in March 2020 , including certain regulations under the Medicare program which govern admissions into Select Medical's critical illness recovery hospitals and rehabilitation hospitals. Specifically, Select Medical's critical illness recovery hospitals which are certified as long-term care hospitals ("LTCHs") became exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. Select Medical's rehabilitation hospitals which are certified as inpatient rehabilitation facilities ("IRFs") could exclude patients admitted solely to respond to the emergency from the calculation of the "60 percent rule" thresholds to receive payment as an IRF. The COVID-19 public health emergency period has been extended and is currently in effect through January 15, 2022 .
The adverse effects of the COVID-19 pandemic, along with the actions of governmental authorities and those in the private sector to limit the spread of COVID-19, caused disruptions in each of Select Medical's segments; these disruptions were most significant within the outpatient rehabilitation and Concentra segments. By mid-March 2020 , Select Medical's outpatient rehabilitation clinics began experiencing significantly less patient visit volume due to declines in patient referrals from physicians, a reduction in workers' compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries which would have required outpatient rehabilitation services. Select Medical's Concentra centers experienced similar declines in patient visit volume due to businesses furloughing their workforce and temporarily ceasing or significantly reducing their operations. Since March 2021 , Select Medical's outpatient rehabilitation clinics and Concentra centers have experienced patient visit volumes which approximate or exceed the levels experienced in the months prior to the widespread emergence of COVID-19 in the United States . Although they have experienced temporary disruptions in their core businesses as a result of the COVID-19 pandemic, Select Medical's outpatient rehabilitation and Concentra segments have been able to expand their services to provide COVID-19 screening and testing.
Select Medical's critical illness recovery hospitals have played a critical role in caring for patients during the COVID-19 pandemic, and the relaxation of certain admission restrictions have contributed to volume increases in certain of its hospitals. The revenue of Select Medical's critical illness recovery hospitals and rehabilitation hospitals has also benefited from the temporary suspension of the 2.0% cut to Medicare payments due to sequestration, which began May 1, 2020 following the enactment of the CARES Act, and has been extended through December 31, 2021 . Certain of Select Medical's rehabilitation hospitals experienced temporary declines in patient volume, beginning in March 2020 , in areas more significantly impacted by the spread of COVID-19, and as a result of the suspension of elective surgeries at hospitals and other facilities, which consequently reduced the demand for inpatient rehabilitation services. Additionally, some of Select Medical's rehabilitation hospitals temporarily restricted admissions as a result of the COVID-19 pandemic. Beginning at the onset of the COVID-19 pandemic, both Select Medical's critical illness recovery hospitals and rehabilitation hospitals modified certain of their protocols in order to follow the guidelines and recommendations for patient treatment and for the protection of their patients and staff members. This has resulted in increased labor costs, including increased contracted labor usage, as well as additional costs resulting from the purchase of personal protective equipment.
The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical's operations, creates uncertainties about Select Medical's future operating results and financial condition. Select Medical has provided revenue and certain operating statistics below for each of its segments for each of the periods presented. Please refer to our risk factors previously reported in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion.
Critical Illness Recovery Hospital
Revenue
Patient Days
Occupancy Rate
Number of Hospitals Owned(1)
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
(in thousands)
January
$
149,799
$
163,238
$
199,611
86,238
90,783
100,933
69%
69%
75%
96
100
99
February
145,586
165,375
190,703
80,806
87,844
92,036
71%
72%
75%
96
100
99
March
162,149
171,908
204,558
91,085
91,831
100,149
73%
70%
74%
96
100
99
Three Months Ended March 31
$
457,534
$
500,521
$
594,872
258,129
270,458
293,118
71%
70%
75%
96
100
99
April
$
156,231
$
171,445
$
185,934
88,357
90,710
91,506
70%
71%
70%
99
100
99
May
156,422
178,223
183,471
89,350
95,191
93,708
69%
72%
70%
99
100
99
June
148,490
169,958
174,654
85,153
90,988
87,767
68%
71%
68%
99
100
99
Three Months Ended June 30
$
461,143
$
519,626
$
544,059
262,860
276,889
272,981
69%
72%
69%
99
100
99
Six Months Ended June 30
$
918,677
$
1,020,147
$
1,138,931
520,989
547,347
566,099
70%
71%
72%
99
100
99
July
$
151,416
$
175,253
$
171,483
87,143
94,144
88,119
67%
71%
65%
99
99
100
August
155,485
173,967
178,240
86,553
93,964
91,756
66%
71%
68%
99
99
100
September
155,991
170,234
180,923
84,393
90,955
92,579
67%
71%
71%
99
99
100
Three Months Ended September 30
$
462,892
$
519,454
$
530,646
258,089
279,063
272,454
67%
71%
68%
99
99
100
Nine Months Ended September 30
$
1,381,569
$
1,539,601
$
1,669,577
779,078
826,410
838,553
69%
71%
70%
99
99
100
Rehabilitation Hospital
Revenue
Patient Days
Occupancy Rate
Number of Hospitals Owned(1)
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
(in thousands)
January
$
50,615
$
61,673
$
68,297
27,434
32,111
34,404
74%
79%
82%
17
19
20
February
48,080
60,690
64,202
25,442
31,813
32,178
76%
84%
84%
17
19
20
March
55,863
59,656
75,305
29,940
30,644
35,857
78%
76%
85%
18
19
20
Three Months Ended March 31
$
154,558
$
182,019
$
207,804
82,816
94,568
102,439
76%
79%
84%
18
19
20
April
$
51,991
$
45,878
$
70,295
28,266
23,553
34,861
76%
61%
85%
18
19
20
May
56,019
57,815
71,190
29,730
29,787
35,604
75%
73%
84%
19
19
20
June
52,364
64,974
71,181
28,529
30,741
34,483
73%
78%
84%
19
19
20
Three Months Ended June 30
$
160,374
$
168,667
$
212,666
86,525
84,081
104,948
75%
71%
85%
19
19
20
Six Months Ended June 30
$
314,932
$
350,686
$
420,470
169,341
178,649
207,387
76%
75%
84%
19
19
20
July
$
57,077
$
62,312
$
70,467
30,054
31,986
34,894
75%
81%
83%
19
18
20
August
58,072
63,673
71,682
30,228
32,518
34,835
75%
83%
83%
19
18
20
September
58,220
62,090
70,285
29,172
31,176
33,224
75%
82%
81%
19
18
20
Three Months Ended September 30
$
173,369
$
188,075
$
212,434
89,454
95,680
102,953
75%
82%
82%
19
18
20
Nine Months Ended September 30
$
488,301
$
538,761
$
632,904
258,795
274,329
310,340
75%
77%
84%
19
18
20
Outpatient Rehabilitation
Revenue
Visits
Working Days(2)
2019
2020
2021
2019
2020
2021
2019
2020
2021
(in thousands)
January
$
83,185
$
90,924
$
76,763
687,007
757,171
625,964
22
22
20
February
78,573
88,239
77,063
658,610
739,061
641,942
20
20
20
March
85,147
76,086
98,135
708,866
626,433
832,248
21
22
23
Three Months Ended March 31
$
246,905
$
255,249
$
251,961
2,054,483
2,122,665
2,100,154
63
64
63
April
$
90,230
$
49,084
$
95,251
762,914
386,108
810,314
22
22
22
May
90,272
51,186
89,030
759,829
409,703
758,773
22
20
20
June
81,389
66,868
96,128
680,762
546,456
835,774
20
22
22
Three Months Ended June 30
$
261,891
$
167,138
$
280,409
2,203,505
1,342,267
2,404,861
64
64
64
Six Months Ended June 30
$
508,796
$
422,387
$
532,370
4,257,988
3,464,932
4,505,015
127
128
127
July
$
89,267
$
77,793
$
90,352
754,102
636,826
780,118
22
22
21
August
90,687
79,034
93,056
743,813
651,738
798,459
22
21
22
September
85,376
83,215
91,132
706,413
694,808
768,493
20
21
21
Three Months Ended September 30
$
265,330
$
240,042
$
274,540
2,204,328
1,983,372
2,347,070
64
64
64
Nine Months Ended September 30
$
774,126
$
662,429
$
806,910
6,462,316
5,448,304
6,852,085
191
192
191
Concentra
Revenue
Visits
Working Days(2)
2019
2020
2021
2019
2020
2021
2019
2020
2021
(in thousands)
January
$
133,507
$
141,236
$
127,103
985,598
1,032,069
867,793
22
22
20
February
126,309
133,690
132,349
919,065
965,741
869,910
20
20
20
March
136,505
123,609
163,388
1,006,944
879,585
1,057,871
21
22
23
Three Months Ended March 31
$
396,321
$
398,535
$
422,840
2,911,607
2,877,395
2,795,574
63
64
63
April
$
140,050
$
91,178
$
152,143
1,040,543
610,555
999,622
22
22
22
May
143,183
99,228
142,228
1,073,763
674,629
956,250
22
20
20
June
130,218
121,932
162,001
988,783
865,896
1,074,206
20
22
22
Three Months Ended June 30
$
413,451
$
312,338
$
456,372
3,103,089
2,151,080
3,030,078
64
64
64
Six Months Ended June 30
$
809,772
$
710,873
$
879,212
6,014,696
5,028,475
5,825,652
127
128
127
July
$
142,385
$
132,465
$
146,509
1,057,809
930,427
1,033,266
22
22
21
August
144,452
130,291
150,333
1,087,165
933,555
1,106,356
22
21
22
September
135,063
129,103
145,348
1,005,929
963,065
1,084,009
20
21
21
Three Months Ended September 30
$
421,900
$
391,859
$
442,190
3,150,903
2,827,047
3,223,631
64
64
64
Nine Months Ended September 30
$
1,231,672
$
1,102,732
$
1,321,402
9,165,599
7,855,522
9,049,283
191
192
191
______________________________
(1)
Represents the number of hospitals owned at the end of each period presented.
(2)
Represents the number of days in which normal business operations were conducted during the periods presented.
Stock Repurchase Program
The board of directors of Select Medical previously authorized a common stock repurchase program to repurchase up to $500.0 million worth of shares of its common stock. On November 2, 2021 , the board of directors increased the capacity of the program from $500.0 million to $1.0 billion worth of shares and the program has been extended until December 31, 2023. The common stock repurchase program will remain in effect until then, 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.
During the quarter ended September 30, 2021, Select Medical repurchased 1,383,508 shares at a cost of approximately $47 .5 million, or $34.34 per share, which includes transaction costs. Since the inception of the common stock repurchase program through September 30, 2021, Select Medical has repurchased 39,964,416 shares at a cost of approximately $404.1 million , or $10.11 per share, which includes transaction costs.
Dividend
On November 2, 2021 , Select Medical's board of directors declared a cash dividend of $0.12 5 per share. The dividend will be payable on or about November 29, 2021 to stockholders of record as of the close of business on November 16, 2021 .
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.
Business Outlook
Select Medical is updating its business outlook for 2021 following the reporting of its third quarter 2021 results. Select Medical now expects revenue for the full year of 2021 to be in the range of $6.05 billion to $6.15 billion and Adjusted EBITDA for the full year of 2021 to be in the range of $980.0 million to $1.0 billion . Select Medical now expects fully diluted earnings per common share for the full year of 2021 to be in the range of $2.98 to $3.09 . A reconciliation of net income to Adjusted EBITDA for the full year of 2021 is presented in table XI of this release.
Select Medical reaffirms its target compound annual growth rates, provided most recently in its August 5, 2021 press release, for revenue, Adjusted EBITDA, and earnings per common share. Select Medical continues to expect its compound annual growth for revenue to be in the range of 4% to 6% and compound annual growth for Adjusted EBITDA to be in the range of 7% to 8% from 2021 through 2023. Select Medical continues to expect compound annual growth for earnings per common share to be in the range of 17% to 20% from 2021 through 2023.
Conference Call
Select Medical will host a conference call regarding its third quarter results, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reportable segments, on Friday, November 5, 2021 , at 9:00am ET . The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 2359393. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website www.selectmedicalholdings.com .
For those unable to participate in the conference call, a replay will be available until 12:00pm ET , November 12, 2021 . The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 2359393. The replay can also be accessed at Select Medical Holdings Corporation's website, www.selectmedicalholdings.com .
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 2021 and 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:
developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program; 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; 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; 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; shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities; 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 quarterly reports on Form 10-Q and of the annual report on Form 10-K for the year ended December 31, 2020 . 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 717-972-1100ir@selectmedical.com
I. Condensed Consolidated Statements of Operations
For the Three Months Ended September 30, 2020 and 2021
(In thousands, except per share amounts, unaudited)
2020
2021
% Change
Revenue
$
1,423,869
$
1,534,221
7.8
%
Costs and expenses:
Cost of services, exclusive of depreciation and amortization
1,180,951
1,297,682
9.9
General and administrative
35,516
37,885
6.7
Depreciation and amortization
50,110
50,128
0.0
Total costs and expenses
1,266,577
1,385,695
9.4
Other operating income
(1,160)
1,729
N/M
Income from operations
156,132
150,255
(3.8)
Other income and expense:
Equity in earnings of unconsolidated subsidiaries
8,765
11,452
30.7
Gain on sale of businesses
5,143
—
N/M
Interest expense
(34,026)
(33,825)
(0.6)
Income before income taxes
136,014
127,882
(6.0)
Income tax expense
31,557
27,665
(12.3)
Net income
104,457
100,217
(4.1)
Less: Net income attributable to non-controlling interests
27,511
23,289
(15.3)
Net income attributable to Select Medical
$
76,946
$
76,928
0.0
%
Basic and diluted earnings per common share:(1)
$
0.57
$
0.57
______________________________
(1)
Refer to table III for calculation of earnings per common share.
N/M
Not meaningful.
II. Condensed Consolidated Statements of Operations
For the Nine Months Ended September 30, 2020 and 2021
(In thousands, except per share amounts, unaudited)
2020
2021
% Change
Revenue
$
4,071,219
$
4,644,704
14.1
%
Costs and expenses:
Cost of services, exclusive of depreciation and amortization
3,463,778
3,882,579
12.1
General and administrative
102,808
109,025
6.0
Depreciation and amortization
154,133
150,702
(2.2)
Total costs and expenses
3,720,719
4,142,306
11.3
Other operating income
53,828
133,837
N/M
Income from operations
404,328
636,235
57.4
Other income and expense:
Equity in earnings of unconsolidated subsidiaries
19,677
33,180
68.6
Gain on sale of businesses
12,690
—
N/M
Interest income
—
4,749
N/M
Interest expense
(117,499)
(102,115)
(13.1)
Income before income taxes
319,196
572,049
79.2
Income tax expense
76,805
138,410
80.2
Net income
242,391
433,639
78.9
Less: Net income attributable to non-controlling interests
60,670
81,271
34.0
Net income attributable to Select Medical
$
181,721
$
352,368
93.9
%
Basic and diluted earnings per common share:(1)
$
1.35
$
2.61
______________________________
(1)
Refer to table III for calculation of earnings per common share.
N/M
Not meaningful.
III. Earnings per Share
For the Three and Nine Months Ended September 30, 2020 and 2021
(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.
The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three and nine months ended September 30, 2020 and 2021:
Basic and Diluted EPS
Three Months Ended
September 30,
Nine Months Ended September 30,
2020
2021
2020
2021
(in thousands)
Net income
$
104,457
$
100,217
$
242,391
$
433,639
Less: net income attributable to non-controlling interests
27,511
23,289
60,670
81,271
Net income attributable to Select Medical
76,946
76,928
181,721
352,368
Less: net income attributable to participating securities
2,666
2,550
6,254
11,781
Net income attributable to common shares
$
74,280
$
74,378
$
175,467
$
340,587
The following tables set forth the computation of EPS under the two-class method for the three and nine months ended September 30, 2020 and 2021:
Three Months Ended September 30,
2020
2021
Net Income Allocation
Shares(1)
Basic and Diluted EPS
Net Income Allocation
Shares(1)
Basic and Diluted EPS
Common shares
$
74,280
129,882
$
0.57
$
74,378
130,594
$
0.57
Participating securities
2,666
4,662
$
0.57
2,550
4,477
$
0.57
Total
$
76,946
$
76,928
Nine Months Ended September 30,
2020
2021
Net Income Allocation
Shares(1)
Basic and Diluted EPS
Net Income Allocation
Shares(1)
Basic and Diluted EPS
Common shares
$
175,467
129,616
$
1.35
$
340,587
130,441
$
2.61
Participating securities
6,254
4,620
$
1.35
11,781
4,512
$
2.61
Total
$
181,721
$
352,368
______________________________
(1)
Represents the weighted average share count outstanding during the period.
IV. Condensed Consolidated Balance Sheets
(In thousands, unaudited)
December 31, 2020
September 30, 2021
Assets
Current Assets:
Cash and cash equivalents
$
577,061
$
747,983
Accounts receivable
896,763
898,823
Other current assets
120,176
132,535
Total Current Assets
1,594,000
1,779,341
Operating lease right-of-use assets
1,032,217
1,069,953
Property and equipment, net
943,420
936,695
Goodwill
3,379,014
3,399,794
Identifiable intangible assets, net
387,541
378,433
Other assets
319,207
335,257
Total Assets
$
7,655,399
$
7,899,473
Liabilities and Equity
Current Liabilities:
Payables and accruals
$
800,918
$
919,976
Government advances
321,807
159,505
Unearned government assistance
82,607
2,414
Current operating lease liabilities
220,413
226,419
Current portion of long-term debt and notes payable
12,621
18,059
Total Current Liabilities
1,438,366
1,326,373
Non-current operating lease liabilities
875,367
909,950
Long-term debt, net of current portion
3,389,398
3,384,164
Non-current deferred tax liability
132,421
120,274
Other non-current liabilities
168,703
167,770
Total Liabilities
6,004,255
5,908,531
Redeemable non-controlling interests
398,171
627,330
Total equity
1,252,973
1,363,612
Total Liabilities and Equity
$
7,655,399
$
7,899,473
V. Condensed Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2020 and 2021
(In thousands, unaudited)
2020
2021
Operating activities
Net income
$
104,457
$
100,217
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries
10,497
8,388
Depreciation and amortization
50,110
50,128
Provision for expected credit losses
28
(40)
Equity in earnings of unconsolidated subsidiaries
(8,765)
(11,452)
Gain on sale of assets and businesses
(16,842)
(581)
Stock compensation expense
6,962
8,194
Amortization of debt discount, premium and issuance costs
542
560
Deferred income taxes
(11,140)
(3,642)
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable
(104,592)
32,396
Other current assets
(23,528)
11,034
Other assets
4,831
8,860
Accounts payable and accrued expenses
133,748
17,795
Government advances
1,124
(91,767)
Unearned government assistance
21,433
(1,684)
Income taxes
(34,328)
(29,452)
Net cash provided by operating activities
134,537
98,954
Investing activities
Business combinations, net of cash acquired
(7,115)
(16,749)
Purchases of property and equipment
(34,319)
(48,944)
Investment in businesses
(11,108)
(5,182)
Proceeds from sale of assets and businesses
70,919
1,794
Net cash provided by (used in) investing activities
18,377
(69,081)
Financing activities
Borrowings of other debt
3,599
10,600
Principal payments on other debt
(7,087)
(7,596)
Dividends paid to common stockholders
—
(16,940)
Repurchase of common stock
(4,827)
(64,440)
Proceeds from issuance of non-controlling interests
—
14,238
Distributions to and purchases of non-controlling interests
(14,536)
(21,245)
Net cash used in financing activities
(22,851)
(85,383)
Net increase (decrease) in cash and cash equivalents
130,063
(55,510)
Cash and cash equivalents at beginning of period
509,737
803,493
Cash and cash equivalents at end of period
$
639,800
$
747,983
Supplemental information
Cash paid for interest
$
54,050
$
51,615
Cash paid for taxes
77,025
60,763
VI. Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2020 and 2021
(In thousands, unaudited)
2020
2021
Operating activities
Net income
$
242,391
$
433,639
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries
21,720
27,772
Depreciation and amortization
154,133
150,702
Provision for expected credit losses
281
172
Equity in earnings of unconsolidated subsidiaries
(19,677)
(33,180)
Gain on sale of assets and businesses
(24,723)
(87)
Stock compensation expense
20,828
22,002
Amortization of debt discount, premium and issuance costs
1,635
1,655
Deferred income taxes
(14,556)
(11,965)
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable
(91,413)
645
Other current assets
(22,815)
(1,822)
Other assets
16,335
(3,124)
Accounts payable and accrued expenses
142,027
107,710
Government advances
318,116
(165,470)
Unearned government assistance
66,938
(80,193)
Income taxes
9,415
13,524
Net cash provided by operating activities
820,635
461,980
Investing activities
Business combinations, net of cash acquired
(14,076)
(26,830)
Purchases of property and equipment
(105,572)
(125,386)
Investment in businesses
(25,857)
(16,367)
Proceeds from sale of assets and businesses
83,320
11,257
Net cash used in investing activities
(62,185)
(157,326)
Financing activities
Borrowings on revolving facilities
470,000
—
Payments on revolving facilities
(470,000)
—
Payments on term loans
(39,843)
—
Borrowings of other debt
35,086
19,515
Principal payments on other debt
(42,820)
(22,910)
Dividends paid to common stockholders
—
(33,816)
Repurchase of common stock
(14,242)
(66,050)
Proceeds from issuance of non-controlling interests
1,686
19,926
Distributions to and purchases of non-controlling interests
(28,196)
(50,397)
Purchase of membership interests of Concentra Group Holdings Parent
(366,203)
—
Net cash used in financing activities
(454,532)
(133,732)
Net increase in cash and cash equivalents
303,918
170,922
Cash and cash equivalents at beginning of period
335,882
577,061
Cash and cash equivalents at end of period
$
639,800
$
747,983
Supplemental information
Cash paid for interest
$
140,174
$
118,570
Cash paid for taxes
81,945
136,857
VII. Key Statistics
For the Three Months Ended September 30, 2020 and 2021
(unaudited)
2020
2021
% Change
Critical Illness Recovery Hospital
Number of hospitals – end of period(a)
100
100
Revenue (,000)
$
519,454
$
530,646
2.2
%
Number of patient days(b)(c)
279,063
272,454
(2.4)
%
Number of admissions(b)(d)
9,380
9,250
(1.4)
%
Revenue per patient day(b)(e)
$
1,845
$
1,931
4.7
%
Adjusted EBITDA (,000)
$
88,830
$
57,245
(35.6)
%
Adjusted EBITDA margin
17.1
%
10.8
%
Rehabilitation Hospital
Number of hospitals – end of period(a)
29
30
Revenue (,000)
$
188,075
$
212,434
13.0
%
Number of patient days(b)(c)
95,680
102,953
7.6
%
Number of admissions(b)(d)
6,443
7,243
12.4
%
Revenue per patient day(b)(e)
$
1,775
$
1,881
6.0
%
Adjusted EBITDA (,000)
$
44,637
$
44,076
(1.3)
%
Adjusted EBITDA margin
23.7
%
20.7
%
Outpatient Rehabilitation
Number of clinics – end of period(a)
1,777
1,850
Revenue (,000)
$
240,042
$
274,540
14.4
%
Number of visits(b)(f)
1,983,372
2,347,070
18.3
%
Revenue per visit(b)(g)
$
104
$
102
(1.9)
%
Adjusted EBITDA (,000)
$
30,623
$
38,762
26.6
%
Adjusted EBITDA margin
12.8
%
14.1
%
Concentra
Number of centers – end of period(b)
523
519
Revenue (,000)
$
391,859
$
442,190
12.8
%
Number of visits(b)(f)
2,827,047
3,223,631
14.0
%
Revenue per visit(b)(g)
$
121
$
124
2.5
%
Adjusted EBITDA (,000)
$
80,547
$
99,832
23.9
%
Adjusted EBITDA margin
20.6
%
22.6
%
______________________________
(a)
Includes managed locations.
(b)
Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(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 number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g)
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. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.
VIII. Key Statistics
For the Nine Months Ended September 30, 2020 and 2021
(unaudited)
2020
2021
% Change
Critical Illness Recovery Hospital
Number of hospitals – end of period(a)
100
100
Revenue (,000)
$
1,539,601
$
1,669,577
8.4
%
Number of patient days(b)(c)
826,410
838,553
1.5
%
Number of admissions(b)(d)
28,080
28,135
0.2
%
Revenue per patient day(b)(e)
$
1,850
$
1,982
7.1
%
Adjusted EBITDA (,000)
$
267,143
$
243,421
(8.9)
%
Adjusted EBITDA margin
17.4
%
14.6
%
Rehabilitation Hospital
Number of hospitals – end of period(a)
29
30
Revenue (,000)
$
538,761
$
632,904
17.5
%
Number of patient days(b)(c)
274,329
310,340
13.1
%
Number of admissions(b)(d)
18,489
21,734
17.6
%
Revenue per patient day(b)(e)
$
1,777
$
1,861
4.7
%
Adjusted EBITDA (,000)
$
110,811
$
145,378
31.2
%
Adjusted EBITDA margin
20.6
%
23.0
%
Outpatient Rehabilitation
Number of clinics – end of period(a)
1,777
1,850
Revenue (,000)
$
662,429
$
806,910
21.8
%
Number of visits(b)(f)
5,448,304
6,852,085
25.8
%
Revenue per visit(b)(g)
$
105
$
103
(1.9)
%
Adjusted EBITDA (,000)
$
51,463
$
110,724
115.2
%
Adjusted EBITDA margin
7.8
%
13.7
%
Concentra
Number of centers – end of period(b)
523
519
Revenue (,000)
$
1,102,732
$
1,321,402
19.8
%
Number of visits(b)(f)
7,855,522
9,049,283
15.2
%
Revenue per visit(b)(g)
$
123
$
125
1.6
%
Adjusted EBITDA (,000)
$
183,510
$
318,907
73.8
%
Adjusted EBITDA margin
16.6
%
24.1
%
______________________________
(a)
Includes managed locations.
(b)
Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(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 number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g)
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. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.
IX. Net Income to Adjusted EBITDA Reconciliation
For the Three and Nine Months Ended September 30, 2020 and 2021
(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 to evaluate financial performance and determine resource allocation for each of Select Medical's operating segments. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles ("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, net income, income from operations, 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 net income to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2021
2020
2021
Net income
$
104,457
$
100,217
$
242,391
$
433,639
Income tax expense
31,557
27,665
76,805
138,410
Interest expense
34,026
33,825
117,499
102,115
Interest income
—
—
—
(4,749)
Gain on sale of businesses
(5,143)
—
(12,690)
—
Equity in earnings of unconsolidated subsidiaries
(8,765)
(11,452)
(19,677)
(33,180)
Income from operations
156,132
150,255
404,328
636,235
Stock compensation expense:
Included in general and administrative
5,600
6,457
16,488
17,537
Included in cost of services
1,362
1,737
4,340
4,465
Depreciation and amortization
50,110
50,128
154,133
150,702
Adjusted EBITDA
$
213,204
$
208,577
$
579,289
$
808,939
Critical illness recovery hospital(a)
$
88,830
$
57,245
$
267,143
$
243,421
Rehabilitation hospital
44,637
44,076
110,811
145,378
Outpatient rehabilitation
30,623
38,762
51,463
110,724
Concentra(b)
80,547
99,832
183,510
318,907
Other(c)(d)
(31,433)
(31,338)
(33,638)
(9,491)
Adjusted EBITDA
$
213,204
$
208,577
$
579,289
$
808,939
______________________________
(a)
For the nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $17.9 million . The other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services.
(b)
For the three and nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $1.6 million and $34.0 million , respectively. For the three and nine months ended September 30, 2020, Adjusted EBITDA included other operating income of $0.4 million and $1.1 million , respectively. The other operating income is primarily related to the recognition of payments received under the Provider Relief Fund.
(c)
For the three and nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $0.1 million and $82.0 million , respectively. For the three and nine months ended September 30, 2020, Adjusted EBITDA included a reduction to other operating income of $1.5 million and other operating income of $52.7 million , respectively. The other operating income is related to the recognition of payments received under the Provider Relief Fund.
(d)
Other primarily includes general and administrative costs and other operating income, as discussed further above.
X. Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share
For the Three and Nine Months Ended September 30, 2020 and 2021
(In thousands, except per share amounts, unaudited)
Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP. Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share 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 net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes for, net income, 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 net income 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 net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.
The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.
Three Months Ended September 30,
2020
Per Share(a)
2021
Per Share(a)
Net income attributable to common shares(a)
$
74,280
$
0.57
$
74,378
$
0.57
Adjustments:(b)
Gains on sales of businesses, net of tax effects of $234
(1,189)
(0.01)
—
—
Adjusted net income attributable to common shares
$
73,091
$
0.56
$
74,378
$
0.57
Nine Months Ended September 30,
2020
Per Share(a)
2021
Per Share(a)
Net income attributable to common shares(a)
$
175,467
$
1.35
$
340,587
$
2.61
Adjustments:(b)
Gains on sales of businesses, net of tax effects of $3,272
(5,089)
(0.04)
—
—
Adjusted net income attributable to common shares
$
170,378
$
1.31
$
340,587
$
2.61
______________________________
(a)
Net income attributable to common shares and earnings per common share are calculated based on the weighted average common shares outstanding, as presented in table III.
(b)
Adjustments to net income 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. Net Income to Adjusted EBITDA Reconciliation
Business Outlook for the Year Ending December 31, 2021
(In millions, unaudited)
The following is a reconciliation of full year 2021 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 2021 expectations.
Range
Non-GAAP Measure Reconciliation
Low
High
Net income attributable to Select Medical
$
402
$
417
Net income attributable to non-controlling interests
98
98
Net income
500
515
Income tax expense
162
167
Interest income
(5)
(5)
Interest expense
137
137
Equity in earnings of unconsolidated subsidiaries
(44)
(44)
Income from operations
750
770
Stock compensation expense
29
29
Depreciation and amortization
201
201
Adjusted EBITDA
$
980
$
1,000
View original content:https://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-third-quarter-ended-september-30-2021-and-cash-dividend-301417128.html
SOURCE Select Medical Holdings Corporation