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
|
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