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Select Medical Holdings Corporation Announces Results For Its First Quarter Ended March 31, 2021 and Cash Dividend

Select Medical Holdings Corporation Announces Results For Its First Quarter Ended March 31, 2021 and Cash Dividend

Select Medical Holdings Corporation Announces Results For Its First Quarter Ended March 31, 2021 and Cash Dividend

PR Newswire

MECHANICSBURG, Pa., May 6, 2021

MECHANICSBURG, Pa., May 6, 2021 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its first quarter ended March 31, 2021 and the declaration of a cash dividend.

For the first quarter ended March 31, 2021, revenue increased 9.3% to $1,546.5 million, compared to $1,414.6 million for the same quarter, prior year. Income from operations increased 57.0% to $202.0 million for the first quarter ended March 31, 2021, compared to $128.7 million for the same quarter, prior year. Net income increased 94.8% to $137.2 million for the first quarter ended March 31, 2021, compared to $70.4 million for the same quarter, prior year. Net income included a pre-tax gain on sale of businesses of $7.2 million for the first quarter ended March 31, 2020. Adjusted EBITDA increased 37.9% to $258.3 million for the first quarter ended March 31, 2021, compared to $187.3 million for the same quarter, prior year. Earnings per common share increased to $0.82 for the first quarter ended March 31, 2021, compared to $0.40 for the same quarter, prior year. Adjusted earnings per common share was $0.82 for the first quarter ended March 31, 2021, compared to $0.37 for the same quarter, prior year. Adjusted earnings per common share excluded the gain on sale of businesses and its related tax effects for the first quarter ended March 31, 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table VI of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table VII of this release.

Please refer to "Effects of the COVID-19 Pandemic on Select Medical's Results of Operations during the Three Months Ended March 31, 2020 and 2021" below for further discussion regarding the impact of the coronavirus disease 2019 ("COVID-19") pandemic on Select Medical's operating results.

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 March 31, 2021, Select Medical operated 99 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,809 outpatient rehabilitation clinics in 37 states and the District of Columbia. Select Medical's joint venture subsidiary Concentra operated 519 occupational health centers in 41 states. At March 31, 2021, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

CARES Act Provider Relief Fund

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including $100.0 billion in appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19, and for reimbursing eligible health care providers for health care related expenses and lost revenues that are attributable to COVID-19.

For the three months ended March 31, 2021, Select Medical recognized $16.1 million of other operating income related to payments received under the Provider Relief Fund for health care related expenses and lost revenue attributable to COVID-19. This other operating income is included within the operating results of Select Medical's other activities.

Critical Illness Recovery Hospital Segment

For the first quarter ended March 31, 2021, revenue for the critical illness recovery hospital segment increased 18.9% to $594.9 million, compared to $500.5 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 27.9% to $113.3 million for the first quarter ended March 31, 2021, compared to $88.6 million for the same quarter, prior year. Adjusted EBITDA includes $17.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 19.0% for the first quarter ended March 31, 2021, compared to 17.7% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table V of this release for both the first quarters ended March 31, 2021 and 2020.

Rehabilitation Hospital Segment

For the first quarter ended March 31, 2021, revenue for the rehabilitation hospital segment increased 14.2% to $207.8 million, compared to $182.0 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 31.0% to $50.5 million for the first quarter ended March 31, 2021, compared to $38.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 24.3% for the first quarter ended March 31, 2021, compared to 21.2% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table V of this release for both the first quarters ended March 31, 2021 and 2020.

Outpatient Rehabilitation Segment

For the first quarter ended March 31, 2021, revenue for the outpatient rehabilitation segment was $252.0 million, compared to $255.2 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $26.3 million for the first quarter ended March 31, 2021, compared to $27.1 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.4% for the first quarter ended March 31, 2021, compared to 10.6% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table V of this release for both the first quarters ended March 31, 2021 and 2020.

Concentra Segment

For the first quarter ended March 31, 2021, revenue for the Concentra segment increased 6.1% to $422.8 million, compared to $398.5 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 33.4% to $82.0 million for the first quarter ended March 31, 2021, compared to $61.5 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 19.4% for the first quarter ended March 31, 2021, compared to 15.4% for the same quarter, prior year. Certain Concentra key statistics are presented in table V of this release for both the first quarters ended March 31, 2021 and 2020.

Effects of the COVID-19 Pandemic on Select Medical's Results of Operations during the Three Months Ended March 31, 2020 and 2021

Beginning in March 2020, state governments placed significant restrictions on businesses and mandated closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. State governments also implemented restrictions on travel and individual activities outside of the home, closed schools, and mandated other social distancing measures. At the same time, hospitals and other facilities began suspending elective surgeries. In an effort to ensure hospitals and health systems had the capacity to absorb and effectively manage surges of COVID-19 patients, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children's Health Insurance Program ("CHIP") programs were authorized in March 2020, including certain regulations under the Medicare program which govern admissions into Select Medical's critical illness recovery hospitals and rehabilitation hospitals. Specifically, Select Medical's critical illness recovery hospitals which are certified as long-term care hospitals ("LTCHs") became exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. Select Medical's rehabilitation hospitals which are certified as inpatient rehabilitation facilities ("IRFs") could exclude patients admitted solely to respond to the emergency from the calculation of the "60 percent rule" thresholds to receive payment as an IRF. The COVID-19 public health emergency period has been extended and is currently in effect through July 20, 2021.

The adverse effects of the COVID-19 pandemic, along with the actions of governmental authorities and those in the private sector to limit the spread of COVID-19, caused disruptions in each of Select Medical's segments; these disruptions were most significant within the outpatient rehabilitation and Concentra segments. By mid-March 2020, Select Medical's outpatient rehabilitation clinics began experiencing significantly less patient visit volume due to declines in patient referrals from physicians, a reduction in workers' compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries which would have required outpatient rehabilitation services. Select Medical's Concentra centers experienced similar declines in patient visit volume due to businesses furloughing their workforce and temporarily ceasing or significantly reducing their operations. The effects of the COVID-19 pandemic continued to adversely impact patient visit volume in January and February 2021; however, in March 2021, both Select Medical's outpatient rehabilitation clinics and Concentra centers experienced patient visit volume approximating the levels experienced in January and February 2020, the months preceding the widespread emergence of COVID-19 in the United States. Although they have experienced temporary disruptions in their core businesses as a result of the COVID-19 pandemic, Select Medical's outpatient rehabilitation and Concentra segments have been able to expand their services to provide COVID-19 screening and testing.

Select Medical's critical illness recovery hospitals have played a critical role in caring for patients during the COVID-19 pandemic, and the relaxation of certain admission restrictions have contributed to volume increases in certain of its hospitals. The revenue of Select Medical's critical illness recovery hospitals and rehabilitation hospitals has also benefited from the temporary suspension of the 2.0% cut to Medicare payments due to sequestration, which began May 1, 2020 following the enactment of the CARES Act, and has been extended through December 31, 2021. Certain of Select Medical's rehabilitation hospitals experienced temporary declines in patient volume, beginning in March 2020, in areas more significantly impacted by the spread of COVID-19, such as New Jersey, and due to the suspension of elective surgeries at hospitals and other facilities, which consequently reduced the demand for inpatient rehabilitation services. Beginning at the onset of the COVID-19 pandemic, both Select Medical's critical illness recovery hospitals and rehabilitation hospitals modified certain of their protocols in order to follow the guidelines and recommendations for patient treatment and for the protection of their patients and staff members. This has resulted in increased labor costs, including increased contracted labor usage, as well as additional costs resulting from the purchase of personal protective equipment.

The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical's operations, creates uncertainties about Select Medical's future operating results and financial condition. Select Medical has provided revenue and certain operating statistics below for each of its segments for each of the periods presented. Please refer to our risk factors previously reported in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion.



Critical Illness Recovery Hospital



























Revenue



Patient Days



Occupancy Rate



Number of
Hospitals Owned(1)



2020


2021


% Change



2020


2021


% Change



2020


2021



2020


2021



(in thousands, except percentages)


















January


$

163,238



$

199,611



22.3%



90,783


100,933


11.2%



69%


75%



100


99

February


165,375



190,703



15.3%



87,844


92,036


4.8%



72%


75%



100


99

March


171,908



204,558



19.0%



91,831


100,149


9.1%



70%


74%



100


99

Three Months Ended March 31


$

500,521



$

594,872



18.9%



270,458


293,118


8.4%



70%


75%



100


99




Rehabilitation Hospital



























Revenue



Patient Days



Occupancy Rate



Number of
Hospitals Owned(1)



2020


2021


% Change



2020


2021


% Change



2020


2021



2020


2021



(in thousands, except percentages)


















January


$

61,673



$

68,297



10.7%



32,111


34,404


7.1%



79%


82%



19


20

February


60,690



64,202



5.8%



31,813


32,178


1.1%



84%


84%



19


20

March


59,656



75,305



26.2%



30,644


35,857


17.0%



76%


85%



19


20

Three Months Ended March 31


$

182,019



$

207,804



14.2%



94,568


102,439


8.3%



79%


84%



19


20


 




Outpatient Rehabilitation
























Revenue



Visits



Working Days(2)




2020


2021


% Change



2020


2021


% Change



2020


2021




(in thousands, except percentages)














January


$

90,924



$

76,763



(15.6)%



757,171


625,964


(17.3)%



22


20


February


88,239



77,063



(12.7)%



739,061


641,942


(13.1)%



20


20


March


76,086



98,135



29.0%



626,433


832,248


32.9%



22


23


Three Months Ended March 31


$

255,249



$

251,961



(1.3)%



2,122,665


2,100,154


(1.1)%



64


63





Concentra
























Revenue



Visits



Working Days(2)




2020


2021


% Change



2020


2021


% Change



2020


2021




(in thousands, except percentages)














January


$

141,236



$

127,103



(10.0)%



1,032,069


867,793


(15.9)%



22


20


February


133,690



132,349



(1.0)%



965,741


869,910


(9.9)%



20


20


March


123,609



163,388



32.2%



879,585


1,057,871


20.3%



22


23


Three Months Ended March 31


$

398,535



$

422,840



6.1%



2,877,395


2,795,574


(2.8)%



64


63


_______________________________________________________________________________

(1)           Represents the number of hospitals owned at the end of each period presented. 

(2)           Represents the number of days in which normal business operations were conducted during the periods presented.

 

Stock Repurchase Program

The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $500.0 million worth of shares of its common stock. The program has been extended until December 31, 2021, and will remain in effect until then, 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 during the quarter ended March 31, 2021. Since the inception of the program through March 31, 2021, Select Medical has repurchased 38,580,908 shares at a cost of approximately $356.6 million, or $9.24 per share, which includes transaction costs.

Dividend

On May 5, 2021, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about June 1, 2021 to stockholders of record as of the close of business on May 19, 2021.

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, our 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.

Business Outlook

Select Medical is updating its business outlook following the reporting of its first quarter 2021 results. Select Medical now expects revenue for the full year of 2021 to be in the range of $5.7 billion to $5.9 billion and Adjusted EBITDA for the full year of 2021 to be in the range of $870.0 million to $900.0 million. Select Medical now expects earnings per common share for the full year of 2021 to be in the range of $2.41 to $2.58. A reconciliation of net income to Adjusted EBITDA for the full year of 2021 is presented in table VIII of this release.

Select Medical reaffirms its target compound annual growth rates, provided most recently in its February 25, 2021 press release, for revenue, Adjusted EBITDA, and earnings per common share. Select Medical continues to expect its compound annual growth for revenue to be in the range of 4% to 6% and compound annual growth for Adjusted EBITDA to be in the range of 7% to 8% from 2021 through 2023. Select Medical continues to expect compound annual growth for earnings per common share to be in the range of 17% to 20% from 2021 through 2023.

Conference Call

Select Medical will host a conference call regarding its first quarter results, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reportable segments, on Friday, May 7, 2021, at 9:00am ET. The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 8189262. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website www.selectmedicalholdings.com.

For those unable to participate in the conference call, a replay will be available until 12:00pm ET, May 14, 2021. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 8189262. The replay can also be accessed at Select Medical Holdings Corporation's website, www.selectmedicalholdings.com.

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 2021 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:

  • developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;
  • 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;
  • 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;
  • 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;
  • shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;
  • 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 quarterly reports on Form 10-Q and of the annual report on Form 10-K for the year ended December 31, 2020.

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 March 31, 2020 and 2021

(In thousands, except per share amounts, unaudited)



2020


2021


% Change

Revenue

$

1,414,632



$

1,546,463



9.3

%

Costs and expenses:






Cost of services, exclusive of depreciation and amortization

1,200,371



1,293,449



7.8


General and administrative

33,831



35,403



4.6


Depreciation and amortization

51,752



49,620



(4.1)


Total costs and expenses

1,285,954



1,378,472



7.2


Other operating income



34,021



N/M


Income from operations

128,678



202,012



57.0


Other income and expense:






Equity in earnings of unconsolidated subsidiaries

2,588



9,919



283.3


Gain on sale of businesses

7,201





N/M


Interest income



4,749



N/M


Interest expense

(46,107)



(34,402)



(25.4)


Income before income taxes

92,360



182,278



97.4


Income tax expense

21,912



45,064



105.7


Net income

70,448



137,214



94.8


Less: Net income attributable to non-controlling interests

17,323



26,668



53.9


Net income attributable to Select Medical

$

53,125



$

110,546



108.1

%

Basic earnings per common share:(1)

$

0.40



$

0.82




_______________________________________________________________________________

(1)           Refer to table II for calculation of earnings per common share.

N/M         Not meaningful.

 

 

II.  Earnings per Share

For the Three Months Ended March 31, 2020 and 2021

(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 ended March 31, 2020 and 2021:




Basic EPS



Three Months Ended

March 31,



2020


2021

Net income


$

70,448



$

137,214


Less: net income attributable to non-controlling interests


17,323



26,668


Net income attributable to Select Medical


53,125



110,546


Less: net income attributable to participating securities


1,818



3,698


Net income attributable to common shares


$

51,307



$

106,848


 

The following tables set forth the computation of EPS under the two-class method for the three months ended March 31, 2020 and 2021:




Three Months Ended March 31,



2020



2021



Net Income
Allocation


Shares(1)


Basic EPS(2)



Net Income
Allocation


Shares(1)


Basic EPS(2)

Common shares


$

51,307



129,638



$

0.40




$

106,848



130,329



$

0.82


Participating securities


1,818



4,594



$

0.40




3,698



4,511



$

0.82


Total


$

53,125








$

110,546






_______________________________________________________________________________

(1)           Represents the weighted average share count outstanding during the period.

(2)           As of March 31, 2020 and 2021, Select Medical's capital structure does not contain any securities which could
                potentially dilute basic EPS.

 

 

III.  Condensed Consolidated Balance Sheets

(In thousands, unaudited)




December 31, 2020


March 31, 2021

Assets





Current Assets:





Cash and cash equivalents


$

577,061



$

750,274


Accounts receivable


896,763



959,715


Other current assets


120,176



125,325


Total Current Assets


1,594,000



1,835,314


Operating lease right-of-use assets


1,032,217



1,053,880


Property and equipment, net


943,420



930,843


Goodwill


3,379,014



3,390,325


Identifiable intangible assets, net


387,541



384,322


Other assets


319,207



326,097


Total Assets


$

7,655,399



$

7,920,781


Liabilities and Equity





Current Liabilities:





Payables and accruals


$

800,918



$

874,389


Government advances


321,807



324,975


Unearned government assistance


82,607



101,814


Current operating lease liabilities


220,413



223,648


Current portion of long-term debt and notes payable


12,621



15,426


Total Current Liabilities


1,438,366



1,540,252


Non-current operating lease liabilities


875,367



894,526


Long-term debt, net of current portion


3,389,398



3,387,249


Non-current deferred tax liability


132,421



133,408


Other non-current liabilities


168,703



168,798


Total Liabilities


6,004,255



6,124,233


Redeemable non-controlling interests


398,171



445,931


Total equity


1,252,973



1,350,617


Total Liabilities and Equity


$

7,655,399



$

7,920,781


 

 

IV.  Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2020 and 2021

(In thousands, unaudited)




2020


2021

Operating activities





Net income


$

70,448



$

137,214


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





Distributions from unconsolidated subsidiaries


8,479



11,633


Depreciation and amortization


51,752



49,620


Provision for expected credit losses


199



67


Equity in earnings of unconsolidated subsidiaries


(2,588)



(9,919)


Loss (gain) on sale of assets and businesses


(7,339)



72


Stock compensation expense


6,903



6,709


Amortization of debt discount, premium and issuance costs


553



543


Deferred income taxes


9,364



(897)


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





Accounts receivable


(53,928)



(60,142)


Other current assets


27



(4,425)


Other assets


2,248



961


Accounts payable and accrued expenses


(53,447)



44,627


Unearned government assistance




19,207


Income taxes


11,413



44,618


Net cash provided by operating activities


44,084



239,888


Investing activities





Business combinations, net of cash acquired


(6,833)



(6,314)


Purchases of property and equipment


(39,208)



(39,719)


Investment in businesses


(9,848)



(6,571)


Proceeds from sale of assets and businesses


11,230



19


Net cash used in investing activities


(44,659)



(52,585)


Financing activities





Borrowings on revolving facilities


460,000




Payments on revolving facilities


(295,000)




Payments on term loans


(39,843)




Borrowings of other debt


6,487



8,915


Principal payments on other debt


(8,099)



(9,342)


Repurchase of common stock


(8,691)




Proceeds from issuance of non-controlling interests


1,679




Distributions to and purchases of non-controlling interests


(12,474)



(13,663)


Purchase of membership interests of Concentra Group Holdings Parent


(366,203)




Net cash used in financing activities


(262,144)



(14,090)


Net increase (decrease) in cash and cash equivalents


(262,719)



173,213


Cash and cash equivalents at beginning of period


335,882



577,061


Cash and cash equivalents at end of period


$

73,163



$

750,274


Supplemental information





Cash paid for interest


$

67,885



$

52,470


Cash paid for taxes


1,135



1,343


 

 

V.  Key Statistics

For the Three Months Ended March 31, 2020 and 2021

(unaudited)




2020


2021


% Change

Critical Illness Recovery Hospital







Number of hospitals – end of period(a)


101



99




Revenue (,000)


$

500,521



$

594,872



18.9

%

Number of patient days(b)(c)


270,458



293,118



8.4

%

Number of admissions(b)(d)


9,533



9,859



3.4

%

Revenue per patient day(b)(e)


$

1,839



$

2,024



10.1

%

Adjusted EBITDA (,000)


$

88,570



$

113,272



27.9

%

Adjusted EBITDA margin


17.7

%


19.0

%



Rehabilitation Hospital







Number of hospitals – end of period(a)


29



30




Revenue (,000)


$

182,019



$

207,804



14.2

%

Number of patient days(b)(c)


94,568



102,439



8.3

%

Number of admissions(b)(d)


6,333



7,131



12.6

%

Revenue per patient day(b)(e)


$

1,732



$

1,853



7.0

%

Adjusted EBITDA (,000)


$

38,569



$

50,534



31.0

%

Adjusted EBITDA margin


21.2

%


24.3

%



Outpatient Rehabilitation







Number of clinics – end of period(a)


1,753



1,809




Revenue (,000)


$

255,249



$

251,961



(1.3)

%

Number of visits(b)


2,122,665



2,100,154



(1.1)

%

Revenue per visit(b)(f)


$

104



$

104



0.0

%

Adjusted EBITDA (,000)


$

27,122



$

26,329



(2.9)

%

Adjusted EBITDA margin


10.6

%


10.4

%



Concentra







Number of centers – end of period(b)


523



519




Revenue (,000)


$

398,535



$

422,840



6.1

%

Number of visits(b)


2,877,395



2,795,574



(2.8)

%

Revenue per visit(b)(f)


$

123



$

125



1.6

%

Adjusted EBITDA (,000)


$

61,466



$

82,015



33.4

%

Adjusted EBITDA margin


15.4

%


19.4

%




_______________________________________________________________________________

(a)

Includes managed locations.

(b)

Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient 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 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 and community-based outpatient clinics.

 

VI. Net Income to Adjusted EBITDA Reconciliation
For the Three Months Ended March 31, 2020 and 2021
(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 to evaluate financial performance and determine resource allocation for each of Select Medical's operating segments. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles ("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

March 31,


2020


2021

Net income

$

70,448



$

137,214


Income tax expense

21,912



45,064


Interest expense

46,107



34,402


Interest income



(4,749)


Gain on sale of businesses

(7,201)




Equity in earnings of unconsolidated subsidiaries

(2,588)



(9,919)


Income from operations

128,678



202,012


Stock compensation expense:




Included in general and administrative

5,437



5,460


Included in cost of services

1,466



1,249


Depreciation and amortization

51,752



49,620


Adjusted EBITDA

$

187,333



$

258,341






Critical illness recovery hospital(a)

$

88,570



$

113,272


Rehabilitation hospital

38,569



50,534


Outpatient rehabilitation

27,122



26,329


Concentra

61,466



82,015


Other(b)(c)

(28,394)



(13,809)


Adjusted EBITDA

$

187,333



$

258,341



_______________________________________________________________________________

(a)

During the three months ended March 31, 2021, Select Medical's critical illness recovery hospitals recognized $17.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services.



(b)

During the three months ended March 31, 2021, Select Medical recognized $16.1 million of other operating income related to the payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. Refer to "CARES Act Provider Relief Fund" for further discussion.



(c)

Other primarily includes general and administrative costs.

 

VII. Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share
For the Three Months Ended March 31, 2020 and 2021
(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.


Three Months Ended March 31,


2020


Per Share(a)


2021


Per Share(a)

Net income attributable to common shares(a)

$

51,307



$

0.40



$

106,848



$

0.82


Adjustments:(b)








Gain on sale of businesses, net of tax effect of $3,419

(3,652)



(0.03)






Adjusted net income attributable to common shares

$

47,655



$

0.37



$

106,848



$

0.82



______________________________________________________________________________

(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 II.



(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.

 

VIII. Net Income to Adjusted EBITDA Reconciliation
Business Outlook for the Year Ending December 31, 2021
(In millions, unaudited)

The following is a reconciliation of full year 2021 Adjusted EBITDA expectations as computed at the low and high points of the range to the closest comparable GAAP financial measure. Refer to table VI 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 2021 expectations.


Range

Non-GAAP Measure Reconciliation

Low


High

Net income attributable to Select Medical

$

327



$

349


Net income attributable to non-controlling interests

83



83


Net income

410



432


Income tax expense

141



149


Interest income

(5)



(5)


Interest expense

138



138


Equity in earnings of unconsolidated subsidiaries

(41)



(41)


Income from operations

643



673


Stock compensation expense

28



28


Depreciation and amortization

199



199


Adjusted EBITDA

$

870



$

900


 

 

View original content:http://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-first-quarter-ended-march-31-2021-and-cash-dividend-301286187.html

SOURCE Select Medical Holdings Corporation

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