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• Revenue Growth: 8% increase in Q4; 7% increase for the full year from continuing operations.

• Adjusted EBITDA: 4% growth in Q4 from $111.8 million to $116 million; 14% growth for the full year to $510.4 million with a 9.8% margin.

• Critical Illness Recovery Hospital Division: 6% revenue increase, 10% adjusted EBITDA increase, and 4% adjusted EBITDA margin increase in Q4.

• Inpatient Rehab Division: 13% revenue increase in Q4; adjusted EBITDA margin decreased to 21.2% from 25.5% due to start-up losses and integration costs.

• Outpatient Rehab Division: 7% revenue increase, 4% patient volume increase, 2% net revenue per visit increase, and 18% adjusted EBITDA increase in Q4.

• Net Revenue Per Visit: Increased from $100 to $102 in Q4.

• Occupancy Rates: Critical illness recovery hospitals increased from 66% to 67%; inpatient rehab division decreased from 85% to 81%.

• Debt Refinancing: $1.6 billion refinanced; $1.05 billion in new term loans and $550 million in senior notes issued.

• Cash Flow from Operating Activities: $125.4 million in Q4.

• Interest Expense: Decreased to $28.6 million in Q4 from $40.3 million prior year.

• Days Sales Outstanding (DSO): 58 days at December 31, 2024, compared to 55 days prior year.

• 2025 Outlook: Revenue expected between $5.4 billion to $5.6 billion; adjusted EBITDA between $520 million to $540 million; adjusted EPS between $1.09 to $1.19.

• Warning! GuruFocus has detected 5 Warning Signs with SEM.

Release Date: February 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Select Medical Holdings Corp (NYSE:SEM) completed the spin-off of Concentra, allowing the company to focus on its remaining three lines of business.

• The company successfully refinanced $1.6 billion of its outstanding debt, extending the maturity of its revolving credit facility to 2029 and increasing availability.

• SEM added 94 inpatient rehabilitation beds in the fourth quarter, including new facilities in Oklahoma City, Dallas, and Dublin, Ohio.

• Revenue from continuing operations grew by 7% for the full year, with adjusted EBITDA growth of 14%.

• The outpatient rehab division saw a 7% increase in revenue and an 18% increase in adjusted EBITDA from the prior year Q4.

Negative Points

• Adjusted EBITDA for the inpatient rehab hospital division declined by 6% due to start-up losses and integration costs.

• Occupancy rates for the rehab division decreased from 85% to 81%, primarily due to new hospitals.

• The company experienced a negative EBITDA impact of over $1 million due to hurricanes Helene and Milton affecting southern outpatient markets.

• Dilution loss per common share from continuing operations was $0.19 for the fourth quarter, compared to earnings per common share of $0.12 in the prior year.

• Margins for the inpatient rehab division are expected to be constrained in 2025 due to start-up losses and integration costs.