Select Medical's (SEM) Concentra Submits Confidential IPO Filing
Select Medical Holdings Corporation’s SEM wholly-owned subsidiary, Concentra, has recently taken a significant step toward a potential initial public offering (IPO) by confidentially submitting a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission (SEC). The details regarding the number of shares to be offered and the price range for the offering are yet to be finalized.
The move from SEM highlights the recovery in the U.S. IPO market, especially for healthcare companies. Utah-based nursing home operator PACS Group submitted the necessary documentation for an IPO last week. Another company, Auna, with a strong presence in the Latin American market, is poised to list on the NYSE soon.
Toward the beginning of this year, Select Medical revealed its intention to separate the occupational health services business, which was expected to close by late 2024. Following the separation, Select Medical shareholders were set to retain their current SEM shares and receive a pro-rata distribution of Concentra stock. The transaction was expected to be tax-free for both Select Medical and its shareholders.
In 2015, a joint venture between Select Medical and private equity firm Welsh, Carson, Anderson & Stowe bought Concentra from Humana. Later, in 2021, SEM upped its stake in Concentra to 100%. The Concentra unit generated around 28% of SEM’s revenues in 2023. The segment comprised 544 occupational health centers in 41 states and 150 onsite clinics at employer worksites as of Dec 31, 2023. It also offers telemedicine services for work-related illnesses.
Price Performance
Select Medical’s shares have gained 12.9% in the past year compared with the 6% increase of the industry it belongs to.
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Zacks Rank & Key Picks
Select Medical currently has a Zacks Rank #4 (Sell).
Enhancing the array of healthcare options, some better-ranked and promising stocks in the Medical sector are Universal Health Services, Inc. UHS, The Cigna Group CI and Health Catalyst, Inc. HCAT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 22.4% year-over-year growth. UHS has witnessed four upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 113.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308.2 million, which indicates a 4.2% year-over-year increase.
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