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Select Medical (SLMC) Announces Results for Second Quarter Ended June 30, 2012


8/8/2012 12:20:38 PM

MECHANICSBURG, Pa., Aug. 7, 2012 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical") (NYSE: SEM) today announced results for its second quarter ended June 30, 2012.

For the second quarter ended June 30, 2012, net operating revenues increased 7.4% to $750.2 million compared to $698.7 million for the same quarter, prior year. Income from operations increased 15.4% to $93.5 million compared to $81.0 million for the same quarter, prior year. Net income attributable to Select Medical increased to $43.2 million compared to $11.7 million for the same quarter, prior year. Net income attributable to Select Medical for the quarter ended June 30, 2011 included a loss on early retirement of debt, net of tax of $19.3 million associated with the June 1, 2011 refinancing of a portion of its indebtedness. Net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries and other income (expense) ("Adjusted EBITDA") for the second quarter increased 10.4% to $110.3 million compared to $99.9 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is presented in table VII of this release. Income per common share for the second quarter ended June 30, 2012 was $0.31 on a fully diluted basis compared to income per common share of $0.08 for the quarter ended June 30, 2011. Excluding the loss related to the early retirement of debt and its tax effect of $0.12 per share, net income available to common stockholders on an adjusted basis was $0.20 per diluted share for the quarter ended June 30, 2011. A reconciliation of net income per share to adjusted net income per share is presented in table VIII of this release.

For the six months ended June 30, 2012, net operating revenues increased 7.3% to $1,494.2 million compared to $1,391.9 million for the same period, prior year. Income from operations increased 9.8% to $185.1 million compared to $168.7 million for the same period, prior year. Net income attributable to Select Medical increased to $84.7 million compared to $45.4 million for the same period, prior year. Net income attributable to Select Medical for the six months ended June 30, 2011 includes a loss on early retirement of debt, net of tax, of $19.3 million associated with the June 1, 2011 refinancing of a portion of its indebtedness. Adjusted EBITDA for the six months ended June 30, 2011 increased 6.7% to $219.3 million compared to $205.7 million for the same period, prior year. A reconciliation of net income to Adjusted EBITDA is presented in table VII of this release. Income per common share for the six months ended June 30, 2012 was $0.59 on a fully diluted basis compared to income per common share of $0.29 for the six months ended June 30, 2011. Excluding the loss related to the early retirement of debt and its tax effect, net income available to common stockholders on an adjusted basis was $0.42 per diluted share for the six months ended June 30, 2011. A reconciliation of net income per share to adjusted net income per share is presented in table IX of this release.

Specialty Hospitals

For the second quarter of 2012, net operating revenues for the specialty hospital segment increased 7.1% to $557.1 million compared to $520.3 million for the same quarter, prior year. Adjusted EBITDA for the specialty hospital segment increased 12.2% to $102.2 million compared to $91.1 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 18.3% for the second quarter of 2012, compared to 17.5% for the same quarter, prior year. Certain specialty hospital key statistics for the second quarter periods are presented in table V of this release.

For the six months ended June 30, 2012, net operating revenues for the specialty hospital segment increased 6.7% to $1,110.2 million compared to $1,040.2 million for the same period, prior year. Adjusted EBITDA for the specialty hospital segment for the six months ended June 30, 2012 increased 5.6% to $202.1 million compared to $191.4 million for the same period, prior year. The Adjusted EBITDA margin for the segment was 18.2% for the six months ended June 30, 2012, compared to 18.4% for the same period, prior year. Certain specialty hospital key statistics for the six month periods are presented in table VI of this release.

Outpatient Rehabilitation

For the second quarter of 2012, net operating revenues for the outpatient rehabilitation segment increased 8.2% to $193.1 million compared to $178.5 million for the same quarter, prior year. Adjusted EBITDA for the segment for the second quarter increased 5.6% to $25.8 million compared to $24.5 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 13.4% for the second quarter of 2012, compared to 13.7% for the same quarter, prior year. Certain outpatient rehabilitation key statistics for the second quarter periods are presented in table V of this release.

For the six months ended June 30, 2012, net operating revenues for the outpatient rehabilitation segment increased 9.2% to $383.9 million compared to $351.7 million for the same period, prior year. Adjusted EBITDA for the segment for the six months ended June 30, 2012 increased 5.3% to $48.3 million compared to $45.9 million for the same period, prior year. The Adjusted EBITDA margin for the segment was 12.6% for the six months ended June 30, 2012, compared to 13.0% for the same period, prior year. Certain specialty hospital key statistics for the six month periods are presented in table VI of this release.

Stock Repurchase Program

On February 22, 2012, the board of directors of Select Medical authorized an increase of $100.0 million in the capacity of its common stock repurchase program from $150.0 million to $250.0 million. The program will remain in effect until March 31, 2013, unless extended 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. The timing of purchases of stock will be based upon market conditions and other factors. Select Medical is funding this program with cash on hand or borrowings under its revolving credit facility. Select Medical repurchased 2,522,090 shares at a cost of $21.1 million and 5,725,782 shares at a cost of $46.8 million, which includes transaction costs, during the quarter and six months ended June 30, 2012, respectively. Since the inception of the program through June 30, 2012, Select Medical has repurchased 22,490,389 shares at a cost of $163.6 million, an average cost per share of $7.28, which includes transaction costs.

Business Outlook

Select Medical is increasing its prior financial guidance for calendar year 2012. Select Medical now expects consolidated net operating revenue for the full year 2012 to be in the range of $2.9 billion to $2.975 billion. Select Medical now expects Adjusted EBITDA for the full year 2012 to be in the range of $400 million to $410 million. Select Medical now expects fully diluted income per common share for the full year 2012 to be in the range of $1.01 to $1.06.

Conference Call

Select Medical will host a conference call regarding its second quarter results and its business outlook on Wednesday, August, 8, 2012, at 9:00am EDT. The domestic dial-in number for the call is 1-866-788-0542. The international dial-in number is 1-857-350-1680. The passcode for the call is 27834747. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalholdings.com.

For those unable to participate in the conference call, a replay will be available until 11:59pm EDT, August 15, 2012. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 65865128. The replay can also be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalholdings.com.

Select Medical is a leading operator of specialty hospitals and outpatient rehabilitation clinics in the United States. As of June 30, 2012, Select Medical operated 111 long term acute care hospitals and 12 acute medical rehabilitation hospitals in 28 states and 956 outpatient rehabilitation clinics in 32 states and the District of Columbia. Select Medical also provides medical rehabilitation services on a contracted basis to nursing homes, hospitals, assisted living and senior care centers, schools and work sites. Information about Select Medical is available at www.selectmedical.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). 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:

  • additional changes in government reimbursement for our services, including changes that will result from the expiration of the moratorium for long term acute care hospitals established by the Medicare, Medicaid, and SCHIP Extension Act of 2007, the American Recovery and Reinvestment Act, and the Patient Protection and Affordable Care Act may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability;
  • the failure of our specialty hospitals to maintain their Medicare certifications may cause our net operating revenues and profitability to decline;
  • the failure of our facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our net operating revenues 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;
  • private third-party payors for our services may undertake future cost containment initiatives that limit our future net operating revenues and profitability;
  • the failure to maintain established relationships with the physicians in the areas we serve could reduce our net operating revenues and profitability;
  • shortages in qualified nurses or therapists could increase our operating costs significantly;
  • competition may limit our ability to grow and result in a decrease in our net operating revenues 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; and
  • other factors discussed from time to time in our filings with the Securities and Exchange Commission, including factors under the heading "Risk Factors" in our annual report on Form 10-K.

Investor inquiries:
Joel T. Veit
Vice President and Treasurer
717-972-1100
ir@selectmedicalcorp.com



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