Select Medical Holdings Corporation Announces Results For Its Fourth Quarter and Year Ended December 31, 2023 and Cash Dividend

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MECHANICSBURG, Pa., Feb. 22, 2024 /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, 2023 and the declaration of a cash dividend.

For the fourth quarter ended December 31, 2023, revenue increased 4.9% to $1,658.9 million, compared to $1,581.5 million for the same quarter, prior year. Income from operations increased 31.5% to $114.3 million for the fourth quarter ended December 31, 2023, compared to $86.9 million for the same quarter, prior year. Net income increased 63.9% to $61.8 million for the fourth quarter ended December 31, 2023, compared to $37.7 million for the same quarter, prior year. Adjusted EBITDA increased 20.9% to $180.1 million for the fourth quarter ended December 31, 2023, compared to $148.9 million for the same quarter, prior year. Earnings per common share increased 63.6% to $0.36 for the fourth quarter ended December 31, 2023, compared to $0.22 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release.

For the year ended December 31, 2023, revenue increased 5.2% to $6,664.1 million, compared to $6,333.5 million for the prior year. Income from operations increased 37.6% to $554.9 million for the year ended December 31, 2023, compared to $403.3 million for the prior year. For the year ended December 31, 2023, income from operations included $1.8 million of other operating income, compared to $28.8 million for the prior year. The other operating income for the year ended December 31, 2022, was principally related to the recognition of payments received under the Coronavirus Aid, Relief, and Economic Security Act Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund. Net income increased 51.4% to $299.7 million for the year ended December 31, 2023, compared to $198.0 million for the prior year. Adjusted EBITDA increased 24.8% to $807.4 million for the year ended December 31, 2023, compared to $646.9 million for the prior year. Earnings per common share increased 54.9% to $1.91 for the year ended December 31, 2023, compared to $1.23 for the prior year. Adjusted earnings per common share increased 61.8% to $1.99 for the year ended December 31, 2023, compared to $1.23 for the prior year. Adjusted earnings per common share excludes the loss on early retirement of debt and related costs, and their related tax effects for the year ended December 31, 2023. 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.

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 December 31, 2023, Select Medical operated 107 critical illness recovery hospitals in 28 states, 33 rehabilitation hospitals in 13 states, 1,933 outpatient rehabilitation clinics in 39 states and the District of Columbia, and 544 occupational health centers in 41 states. At December 31, 2023, Select Medical had operations in 46 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, 2023, revenue for the critical illness recovery hospital segment increased 0.9% to $567.1 million, compared to $561.9 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 29.4% to $57.4 million for the fourth quarter ended December 31, 2023, compared to $44.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.1% for the fourth quarter ended December 31, 2023, compared to 7.9% 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, 2023 and 2022.

For the year ended December 31, 2023, revenue for the critical illness recovery hospital segment increased 2.9% to $2,299.8 million, compared to $2,234.1 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 121.0% to $246.0 million for the year ended December 31, 2023, compared to $111.3 million for the prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.7% for the year ended December 31, 2023, compared to 5.0% 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, 2023 and 2022.

Rehabilitation Hospital Segment

For the fourth quarter ended December 31, 2023, revenue for the rehabilitation hospital segment increased 9.4% to $260.2 million, compared to $237.9 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 18.4% to $66.3 million for the fourth quarter ended December 31, 2023, compared to $56.0 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 25.5% for the fourth quarter ended December 31, 2023, compared to 23.6% 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, 2023 and 2022.

For the year ended December 31, 2023, revenue for the rehabilitation hospital segment increased 6.9% to $979.6 million, compared to $916.8 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 12.0% to $221.9 million for the year ended December 31, 2023, compared to $198.0 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 22.6% for the year ended December 31, 2023, compared to 21.6% for the prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for the years ended December 31, 2023 and 2022.

Outpatient Rehabilitation Segment

For the fourth quarter ended December 31, 2023, revenue for the outpatient rehabilitation segment increased 6.1% to $298.2 million, compared to $281.1 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 40.9% to $22.5 million for the fourth quarter ended December 31, 2023, compared to $15.9 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 7.5% for the fourth quarter ended December 31, 2023, compared to 5.7% 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, 2023 and 2022.

For the year ended December 31, 2023, revenue for the outpatient rehabilitation segment increased 5.7% to $1,188.9 million, compared to $1,125.3 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 9.8% to $111.9 million for the year ended December 31, 2023, compared to $101.9 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.4% for the year ended December 31, 2023, compared to 9.1% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for the years ended December 31, 2023 and 2022.

Concentra Segment

For the fourth quarter ended December 31, 2023, revenue for the Concentra segment increased 6.2% to $440.7 million, compared to $415.0 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 9.7% to $68.3 million for the fourth quarter ended December 31, 2023, compared to $62.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 15.5% for the fourth quarter ended December 31, 2023, compared to 15.0% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for the fourth quarters ended December 31, 2023 and 2022.

For the year ended December 31, 2023, revenue for the Concentra segment increased 6.6% to $1,838.1 million, compared to $1,724.4 million for the prior year. Adjusted EBITDA for the Concentra segment increased 8.1% to $361.3 million for the year ended December 31, 2023, compared to $334.3 million for the prior year. The Adjusted EBITDA margin for the Concentra segment was 19.7% for the year ended December 31, 2023, compared to 19.4% for the prior year. Certain Concentra key statistics are presented in table VIII of this release for the years ended December 31, 2023 and 2022.

Dividend

On February 13, 2024, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about March 13, 2024 to stockholders of record as of the close of business on March 1, 2024.

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, 2023. Since the inception of the common stock repurchase program through December 31, 2023, 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.

Business Outlook

Select Medical is issuing its business outlook for 2024. Select Medical expects revenue to be in the range of $6.9 billion to $7.1 billion, Adjusted EBITDA to be in the range of $830 million to $880 million, and fully diluted earnings per share to be in the range of $1.88 to $2.18. A reconciliation of full year 2024 Adjusted EBITDA expectations to net income 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, 2023, and its business outlook on Friday, February 23, 2024, 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 2024 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:

  • 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;

  • public threats such as a global pandemic, or widespread outbreak of an infectious disease, similar to the COVID-19 pandemic, could negatively impact patient volumes and revenues, increase labor and other operating costs, disrupt global financial markets, and/or further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;

  • 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, 2023.

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, 2022 and 2023

(In thousands, except per share amounts, unaudited)




2022


2023


% Change

Revenue


$              1,581,456


$              1,658,856


4.9 %

Costs and expenses:







Cost of services, exclusive of depreciation and amortization


1,408,784


1,447,086


2.7

General and administrative


38,763


44,090


13.7

Depreciation and amortization


52,246


53,984


3.3

Total costs and expenses


1,499,793


1,545,160


3.0

Other operating income


5,201


557


N/M

Income from operations


86,864


114,253


31.5

Other income and expense:







Equity in earnings of unconsolidated subsidiaries


6,759


10,195


50.8

Interest expense


(47,341)


(50,800)


7.3

Income before income taxes


46,282


73,648


59.1

Income tax expense


8,570


11,850


38.3

Net income


37,712


61,798


63.9

Less: Net income attributable to non-controlling interests


10,208


15,529


52.1

Net income attributable to Select Medical


$                   27,504


$                   46,269


68.2 %

Basic and diluted earnings per common share:(1)


$                       0.22


$                       0.36




(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, 2022 and 2023

(In thousands, except per share amounts, unaudited)




2022


2023


% Change

Revenue


$             6,333,538


$             6,664,058


5.2 %

Costs and expenses:







Cost of services, exclusive of depreciation and amortization


5,600,161


5,732,017


2.4

General and administrative


153,035


170,193


11.2

Depreciation and amortization


205,825


208,742


1.4

Total costs and expenses


5,959,021


6,110,952


2.5

Other operating income


28,766


1,768


N/M

Income from operations


403,283


554,874


37.6

Other income and expense:







Loss on early retirement of debt


—


(14,692)


N/M

Equity in earnings of unconsolidated subsidiaries


26,407


40,813


54.6

Interest expense


(169,111)


(198,639)


17.5

Income before income taxes


260,579


382,356


46.7

Income tax expense


62,553


82,625


32.1

Net income


198,026


299,731


51.4

Less: Net income attributable to non-controlling interests


39,032


56,240


44.1

Net income attributable to Select Medical


$                158,994


$                243,491


53.1 %

Basic and diluted earnings per common share:(1)


$                      1.23


$                      1.91




(1)

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

N/M

Not meaningful.

 

III.  Earnings per Share

For the Three Months and Years Ended December 31, 2022 and 2023

(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 months and years ended December 31, 2022 and 2023:



Basic and Diluted EPS




Three Months Ended
December 31,


Years Ended

December 31,




2022


2023


2022


2023


Net income


$          37,712


$          61,798


$        198,026


$        299,731


Less: net income attributable to non-controlling interests


10,208


15,529


39,032


56,240


Net income attributable to Select Medical


27,504


46,269


158,994


243,491


Less: net income attributable to participating securities


1,002


1,633


5,609


8,773


Net income attributable to common shares


$          26,502


$          44,636


$        153,385


$        234,718


 

The following tables set forth the computation of EPS under the two-class method for the three months and years ended December 31, 2022 and 2023:



Three Months Ended December 31,



2022



2023



Net Income
Allocation


Shares(1)


Basic and
Diluted EPS



Net Income
Allocation


Shares(1)


Basic and
Diluted EPS



(in thousands, except for per share amounts)

Common shares


$         26,502


122,511


$             0.22



$         44,636


123,817


$             0.36

Participating securities


1,002


4,630


$             0.22



1,633


4,530


$             0.36

Total


$         27,504







$         46,269





 



Years Ended December 31,



2022



2023



Net Income
Allocation


Shares(1)


Basic and
Diluted EPS



Net Income
Allocation


Shares(1)


Basic and
Diluted EPS



(in thousands, except for per share amounts)

Common shares


$       153,385


124,628


$             1.23



$       234,718


123,105


$             1.91

Participating securities


5,609


4,557


$             1.23



8,773


4,601


$             1.91

Total


$       158,994







$       243,491







(1)

Represents the weighted average share count outstanding during the period.

 

IV.  Condensed Consolidated Balance Sheets

(In thousands, unaudited)




December 31,



2022


2023

Assets





Current Assets:





Cash and cash equivalents


$                       97,906


$                       84,006

Accounts receivable


941,312


940,335

Other current assets


232,095


233,305

Total Current Assets


1,271,313


1,257,646

Operating lease right-of-use assets


1,169,740


1,188,616

Property and equipment, net


1,001,440


1,023,561

Goodwill


3,484,200


3,513,170

Identifiable intangible assets, net


351,662


329,916

Other assets


386,938


376,722

Total Assets


$                  7,665,293


$                  7,689,631

Liabilities and Equity





Current Liabilities:





Payables and accruals


$                     874,016


$                     932,736

Current operating lease liabilities


236,784


245,400

Current portion of long-term debt and notes payable


44,351


70,329

Total Current Liabilities


1,155,151


1,248,465

Non-current operating lease liabilities


1,008,394


1,025,867

Long-term debt, net of current portion


3,835,211


3,587,675

Non-current deferred tax liability


169,793


143,306

Other non-current liabilities


106,137


110,303

Total Liabilities


6,274,686


6,115,616

Redeemable non-controlling interests


34,043


26,297

Total Equity


1,356,564


1,547,718

Total Liabilities and Equity


$                  7,665,293


$                  7,689,631

 

V.  Condensed Consolidated Statements of Cash Flows

For the Three Months Ended December 31, 2022 and 2023

(In thousands, unaudited)




2022


2023

Operating activities





Net income


$                       37,712


$                       61,798

Adjustments to reconcile net income to net cash provided by operating activities:





Distributions from unconsolidated subsidiaries


5,019


13,521

Depreciation and amortization


52,246


53,984

Provision for expected credit losses


215


(71)

Equity in earnings of unconsolidated subsidiaries


(6,759)


(10,195)

Gain on sale of assets and businesses


(1,121)


(50)

Stock compensation expense


9,799


11,818

Amortization of debt discount, premium and issuance costs


576


748

Deferred income taxes


14,601


930

Changes in operating assets and liabilities, net of effects of business combinations:





Accounts receivable


(32,497)


4,170

Other current assets


(7,789)


(12,098)

Other assets


6,841


3,003

Accounts payable and accrued expenses


(65,357)


51,884

Government advances


(942)


—

Net cash provided by operating activities


12,544


179,442

Investing activities





Business combinations, net of cash acquired


(4,960)


(9,085)

Purchases of property and equipment


(55,253)


(60,603)

Proceeds from sale of assets and businesses


2,979


104

Net cash used in investing activities


(57,234)


(69,584)

Financing activities





Borrowings on revolving facilities


275,000


270,000

Payments on revolving facilities


(210,000)


(330,000)

Payments on term loans


—


(5,258)

Borrowings of other debt


4,800


550

Principal payments on other debt


(10,429)


(8,648)

Dividends paid to common stockholders


(15,897)


(16,048)

Repurchase of common stock


(1,914)


(1,709)

Increase (decrease) in overdrafts


(1,301)


280

Proceeds from issuance of non-controlling interests


2,434


2,472

Distributions to and purchases of non-controlling interests


(8,320)


(14,931)

Net cash provided by (used in) financing activities


34,373


(103,292)

Net increase (decrease) in cash and cash equivalents


(10,317)


6,566

Cash and cash equivalents at beginning of period


108,223


77,440

Cash and cash equivalents at end of period


$                       97,906


$                       84,006

Supplemental information:





Cash paid for interest, excluding amounts received of $13,352 and $22,465
under the interest rate cap contract


$                       39,998


$                       50,564

Cash paid for taxes


7,446


10,008

 

VI.  Condensed Consolidated Statements of Cash Flows

For the Years Ended December 31, 2022 and 2023

(In thousands, unaudited)




2022


2023

Operating activities





Net income


$                     198,026


$                     299,731

Adjustments to reconcile net income to net cash provided by operating activities:





Distributions from unconsolidated subsidiaries


21,911


23,417

Depreciation and amortization


205,825


208,742

Provision for expected credit losses


174


1,030

Equity in earnings of unconsolidated subsidiaries


(26,407)


(40,813)

Loss on extinguishment of debt


—


175

Gain on sale of assets and businesses


(2,714)


(57)

Stock compensation expense


37,755


43,809

Amortization of debt discount, premium and issuance costs


2,272


2,647

Deferred income taxes


7,521


(16,119)

Changes in operating assets and liabilities, net of effects of business combinations:





Accounts receivable


(52,183)


1,156

Other current assets


(4,866)


(29,374)

Other assets


16,491


10,031

Accounts payable and accrued expenses


(35,190)


77,683

Government advances


(83,790)


—

Net cash provided by operating activities


284,825


582,058

Investing activities





Business combinations, net of cash acquired


(26,987)


(29,567)

Purchases of property, equipment, and other assets


(190,372)


(229,200)

Investment in businesses


(17,323)


(9,873)

Proceeds from sale of assets and businesses


8,343


163

Net cash used in investing activities


(226,339)


(268,477)

Financing activities





Borrowings on revolving facilities


1,120,000


905,000

Payments on revolving facilities


(835,000)


(1,070,000)

Proceeds from term loans


—


2,092,232

Payments on term loans


—


(2,113,952)

Borrowings of other debt


25,666


31,399

Principal payments on other debt


(35,594)


(46,946)

Dividends paid to common stockholders


(64,589)


(63,904)

Repurchase of common stock


(195,528)


(12,759)

Decrease in overdrafts


(10,392)


(1,687)

Proceeds from issuance of non-controlling interests


9,530


22,935

Distributions to and purchases of non-controlling interests


(43,107)


(63,531)

Purchase of membership interests of Concentra Group Holdings Parent


(5,876)


(6,268)

Net cash used in financing activities


(34,890)


(327,481)

Net increase (decrease) in cash and cash equivalents


23,596


(13,900)

Cash and cash equivalents at beginning of period


74,310


97,906

Cash and cash equivalents at end of period


$                       97,906


$                       84,006

Supplemental information:





Cash paid for interest, excluding amounts received of $19,584 and $82,818
under the interest rate cap contract


$                     183,453


$                     272,261

Cash paid for taxes


32,290


88,510

 

VII.  Key Statistics
For the Three Months Ended December 31, 2022 and 2023

(unaudited)




2022


2023


% Change

Critical Illness Recovery Hospital







Number of hospitals operated – end of period(a)


103


107



Revenue (,000)


$          561,885


$          567,128


0.9 %

Number of patient days(b)(c)


287,424


277,470


(3.5) %

Number of admissions(b)(d)


9,275


9,126


(1.6) %

Revenue per patient day(b)(e)


$              1,947


$              2,037


4.6 %

Occupancy rate(b)(f)


70 %


66 %


(5.7) %

Adjusted EBITDA (,000)


$            44,345


$            57,384


29.4 %

Adjusted EBITDA margin


7.9 %


10.1 %



Rehabilitation Hospital







Number of hospitals operated – end of period(a)


31


33



Revenue (,000)


$          237,855


$          260,166


9.4 %

Number of patient days(b)(c)


108,857


116,003


6.6 %

Number of admissions(b)(d)


7,587


8,264


8.9 %

Revenue per patient day(b)(e)


$               2,011


$              2,063


2.6 %

Occupancy rate(b)(f)


85 %


85 %


0.0 %

Adjusted EBITDA (,000)


$             56,038


$            66,344


18.4 %

Adjusted EBITDA margin


23.6 %


25.5 %



Outpatient Rehabilitation







Number of clinics operated – end of period(a)


1,928


1,933



Working days(g)


63


63



Revenue (,000)


$          281,091


$          298,235


6.1 %

Number of visits(b)(h)


2,408,114


2,672,936


11.0 %

Revenue per visit(b)(i)


$                 102


$                 100


(2.0) %

Adjusted EBITDA (,000)


$            15,948


$            22,473


40.9 %

Adjusted EBITDA margin


5.7 %


7.5 %



Concentra







Number of centers operated – end of period(b)


540


544



Working days(g)


63


63



Revenue (,000)


$          415,003


$          440,740


6.2 %

Number of visits(b)(h)


2,975,027


3,010,751


1.2 %

Revenue per visit(b)(i)


$                 130


$                 137


5.4 %

Adjusted EBITDA (,000)


$            62,236


$            68,288


9.7 %

Adjusted EBITDA margin


15.0 %


15.5 %






(a)

Includes managed locations.

(b)

Excludes managed locations. For purposes of the Concentra segment, onsite 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 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 and Concentra centers during the periods presented. COVID-19 screening and testing services provided by our Concentra segment are not included in these figures.

(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. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics or revenues generated from COVID-19 screening and testing services.

 

VIII.  Key Statistics
For the Years Ended December 31, 2022 and 2023

(unaudited)




2022


2023


% Change

Critical Illness Recovery Hospital







Number of hospitals operated – end of period(a)


103


107



Revenue (,000)


$       2,234,132


$       2,299,773


2.9 %

Number of patient days(b)(c)


1,127,911


1,108,492


(1.7) %

Number of admissions(b)(d)


36,594


36,225


(1.0) %

Revenue per patient day(b)(e)


$             1,973


$              2,067


4.8 %

Occupancy rate(b)(f)


69 %


68 %


(1.4) %

Adjusted EBITDA (,000)


$          111,344


$          246,015


121.0 %

Adjusted EBITDA margin


5.0 %


10.7 %



Rehabilitation Hospital







Number of hospitals operated – end of period(a)


31


33



Revenue (,000)


$          916,763


$          979,585


6.9 %

Number of patient days(b)(c)


430,547


446,145


3.6 %

Number of admissions(b)(d)


29,736


31,627


6.4 %

Revenue per patient day(b)(e)


$              1,953


$              2,017


3.3 %

Occupancy rate(b)(f)


85 %


85 %


0.0 %

Adjusted EBITDA (,000)


$          198,034


$          221,875


12.0 %

Adjusted EBITDA margin


21.6 %


22.6 %



Outpatient Rehabilitation







Number of clinics operated – end of period(a)


1,928


1,933



Working days(g)


255


254



Revenue (,000)


$       1,125,282


$       1,188,914


5.7 %

Number of visits(b)(h)


9,573,980


10,657,558


11.3 %

Revenue per visit(b)(i)


$                 103


$                 100


(2.9) %

Adjusted EBITDA (,000)


$          101,860


$          111,868


9.8 %

Adjusted EBITDA margin


9.1 %


9.4 %



Concentra







Number of centers operated – end of period(b)


540


544



Working days(g)


255


254



Revenue (,000)


$       1,724,359


$       1,838,081


6.6 %

Number of visits(b)(h)


12,579,468


12,777,632


1.6 %

Revenue per visit(b)(i)


$                 127


$                 135


6.3 %

Adjusted EBITDA (,000)


$          334,337


$          361,334


8.1 %

Adjusted EBITDA margin


19.4 %


19.7 %




(a)

Includes managed locations.

(b)

Excludes managed locations. For purposes of the Concentra segment, onsite 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 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 and Concentra centers during the periods presented. COVID-19 screening and testing services provided by our Concentra segment are not included in these figures.

(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. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics or revenues generated from COVID-19 screening and testing services.

 

IX.  Net Income to Adjusted EBITDA Reconciliation

For the Three Months and Years Ended December 31, 2022 and 2023

(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, 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

December 31,



Years Ended

December 31,


2022


2023



2022


2023

Net income

$          37,712


$          61,798



$        198,026


$       299,731

Income tax expense

8,570


11,850



62,553


82,625

Interest expense

47,341


50,800



169,111


198,639

Equity in earnings of unconsolidated subsidiaries

(6,759)


(10,195)



(26,407)


(40,813)

Loss on early retirement of debt

—


—



—


14,692

Income from operations

$          86,864


$        114,253



$        403,283


$       554,874

Stock compensation expense:









Included in general and administrative

8,560


9,658



30,555


36,041

Included in cost of services

1,239


2,161



7,200


7,768

Depreciation and amortization

52,246


53,984



205,825


208,742

Adjusted EBITDA

$        148,909


$        180,056



$        646,863


$       807,425










Critical illness recovery hospital

$          44,345


$          57,384



$        111,344


$       246,015

Rehabilitation hospital

56,038


66,344



198,034


221,875

Outpatient rehabilitation

15,948


22,473



101,860


111,868

Concentra

62,236


68,288



334,337


361,334

Other(a)

(29,658)


(34,433)



(98,712)


(133,667)

Adjusted EBITDA

$        148,909


$        180,056



$        646,863


$       807,425



(a)

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 Years Ended December 31, 2022 and 2023

(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. There were no adjustments to earnings per common share for the three months ended December 31, 2022 and 2023.


Years Ended December 31,


2022


Per Share(a)


2023


Per Share(a)

Net income attributable to common shares(a)

$           153,385


$                 1.23


$           234,718


$                 1.91

Adjustments:(b)








Loss on early retirement of debt, net of tax

—


—


10,019


0.08

Adjusted net income attributable to common shares

$           153,385


$                 1.23


$           244,737


$                 1.99



(a)

Net income attributable to common shares and earnings per common share are calculated based on the diluted 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, 2024

(In millions, unaudited)

The following is a reconciliation of full year 2024 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 2024 expectations


Range

Non-GAAP Measure Reconciliation

Low


High

Net income attributable to Select Medical

$                            243


$                            282

Net income attributable to non-controlling interests

59


61

Net income

302


343

Income tax expense

95


108

Interest expense

217


217

Equity in earnings of unconsolidated subsidiaries

(43)


(47)

Income from operations

571


621

Stock compensation expense

48


48

Depreciation and amortization

211


211

Adjusted EBITDA

$                            830


$                            880

 

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View original content:https://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-fourth-quarter-and-year-ended-december-31-2023-and-cash-dividend-302069287.html

SOURCE Select Medical Holdings Corporation

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