Select Medical Holdings Corporation’s SEM stock lost 7.2% since it reported fourth-quarter 2024 results on Feb. 20, 2025. The reduced occupancy rate in the Rehabilitation Hospital segment and lower admissions in the Critical Illness Recovery Hospital segment, coupled with higher costs and expenses, affected its fourth-quarter earnings. However, the negatives were partially offset by improved revenue per patient day and occupancy rates in the Critical Illness Recovery Hospital. Increased profitability in the Outpatient Rehabilitation business also provided some respite.
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SEM reported fourth-quarter 2024 adjusted earnings per share (EPS) of 18 cents, which missed the Zacks Consensus Estimate by 5.3%. The bottom line rose 50% year over year.
Net operating revenues amounted to $1.31 billion, which rose 7.8% year over year. The metric beat the consensus mark by 1.2%.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Select Medical Holdings Corporation price-consensus-eps-surprise-chart | Select Medical Holdings Corporation Quote
SEM’s Q4 Performance
Total costs and expenses increased 12% year over year to $1.29 billion, lower than our estimate of $1.62 billion. The increase was due to escalating costs of services, exclusive of depreciation and amortization, and rising general and administrative expenses.
Adjusted EBITDA of $116 million rose 3.8% year over year but missed our estimate of $187 million.
Select Medical’s Segmental Update
Critical Illness Recovery Hospital
The segment's revenues amounted to $600.4 million, which increased 5.9% year over year but missed the consensus mark and our estimate of $612.5 million. The unit benefited from a 7.2% year-over-year increase in revenue per patient day. Patient days declined 1.2%, while admissions declined 4.8% year over year. The occupancy rate improved 1.5% year over year.
Adjusted EBITDA of $63.1 million climbed 10% year over year but missed the Zacks Consensus Estimate and our estimate of $64.7 million. Adjusted EBITDA margin improved 40 basis points (bps) year over year to 10.5%.
Rehabilitation Hospital
The segment’s revenues improved 13.1% year over year to $294.4 million. The figure outpaced the consensus mark of $286 million. Year-over-year increases of 4.4% and 3.3%, respectively, in admissions and patient days contributed to the strong performance of the unit.
Adjusted EBITDA of $62.3 million declined 6.1% year over year but beat the Zacks Consensus Estimate of $51.8 million. Adjusted EBITDA margin deteriorated 430 bps year over year to 21.2%.
Outpatient Rehabilitation
Revenues amounted to $319.6 million in the segment, which grew 7.2% year over year beat the consensus mark of $308.4 million. The improvement can be attributed to a 5.2% rise in patient visits. Revenue per patient visit inched up 2% year over year.
Adjusted EBITDA of $26.6 million improved 18.2% year over year and beat the Zacks Consensus Estimate and our estimate of $23.2 million. Adjusted EBITDA margin improved 80 bps year over year to 8.3%.
SEM’s Financial Position (as of Dec. 31, 2024)
Select Medical exited the fourth quarter with cash and cash equivalents of $59.7 million, which rose from $52.6 million at 2023-end. It had $453.3 million left under its revolving facility as of Dec. 31, 2024.
Total assets of $5.6 billion declined from $7.7 billion at 2023-end.
Long-term debt, net of the current portion, amounted to $1.7 billion, down from the figure at 2023-end.
Total equity of $2 billion rose from $1.5 billion at 2023-end.
Select Medical generated cash flow from operations of $125.4 million in the reported quarter, which declined 30.1% year over year.
Select Medical’s Full-Year Highlights
EPS in 2024 was 94 cents compared with 54 cents in the prior year.
The revenue figure for 2024 rose to $5.2 billion compared with $4.8 billion at 2023-end.
Adjusted EBITDA was $510.4 million, higher than $446 million at 2023-end.
SEM’s Share Repurchase & Dividend Update
Select Medical did not buy back shares in the fourth quarter of 2024 under the $1 billion authorized share repurchase program, which is set to expire on Dec. 31, 2025.
On Feb. 13, 2025, management approved a cash dividend of 6.25 cents per share, which will be paid out on March 13, to shareholders of record as of March 3.
Select Medical’s 2025 Outlook
Management currently anticipates revenues to be between $5.4 billion and $5.6 billion, the mid-point of which implies 5.8% growth from the 2024 figure of $5.2 billion.
Management expects adjusted EBITDA to be between $520 million and $540 million, the mid-point of which implies a 3.8% rise from the 2024 figure of $510.4 million.
Capital expenditures are expected to be between $160 million and $200 million.
EPS is expected to be between $1.09 and $1.19.
Zacks Rank
Select Medical currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Here are some stocks in the broader Medical space that have also reported earnings for the December quarter: HCA Healthcare, Inc. HCA, The Ensign Group, Inc. ENSG and The Cigna Group CI.
HCA Healthcare reported fourth-quarter 2024 adjusted EPS of $6.22, which outpaced the Zacks Consensus Estimate by 4.2%, driven by higher patient volumes giving rise to an increased number of inpatient surgeries and same-facility emergency room visits. However, the upside was partly offset by elevated salaries and benefits expenses. Additional expenses due to Hurricane Helene and Hurricane Milton also impacted the results.
Ensign reported fourth-quarter 2024 adjusted EPS of $1.49, which outpaced the Zacks Consensus Estimate by 1.4% thanks to improved occupancy rates, higher patient days and increased skilled service revenues. The positives were partly offset by an elevated expense level due to the higher cost of services and rents.
Cigna reported fourth-quarter 2024 adjusted EPS of $6.64, which missed the Zacks Consensus Estimate by 15.2% due to a decline in its overall medical customer base and elevated medical costs. Nevertheless, the downside was partly offset by expanding specialty volumes in the Evernorth Health Services segment and new client wins.
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