MECHANICSBURG, Pa., Aug. 6, 2015 /PRNewswire/ -- Select Medical Holdings Corporation (“Select Medical”) (NYSE: SEM) today announced results for its second quarter ended June 30, 2015.
On June 1, 2015, MJ Acquisition Corporation, a joint venture that Select Medical created with Welsh, Carson, Anderson & Stowe XII, L.P. (“WCAS”), consummated the acquisition of Concentra Inc. (“Concentra”), which provides occupational health, consumer health, physical therapy, and veteran’s healthcare services throughout the United States. Select Medical owns 50.1% of the voting interests of Concentra Group Holdings, LLC, the indirect parent of Concentra. Concentra’s financial results are consolidated with Select Medical’s effective June 1, 2015.
For the second quarter ended June 30, 2015, net operating revenues increased 14.8% to $887.1 million, compared to $772.8 million for the same quarter, prior year. Income from operations was $85.0 million for the second quarter ended June 30, 2015, compared to $82.2 million for the same quarter, prior year. Net income attributable to Select Medical was $36.9 million for the second quarter ended June 30, 2015, compared to $35.3 million for the same quarter, prior year. Net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, Concentra acquisition costs, equity in earnings (losses) of unconsolidated subsidiaries and other income (expense) (“Adjusted EBITDA”) for the second quarter ended June 30, 2015 increased 13.4% to $114.9 million, compared to $101.4 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is presented in table VIII of this release. Income per common share for the second quarter ended June 30, 2015 was $0.28 on a fully diluted basis compared to income per common share of $0.27 for the same quarter, prior year.
For the six months ended June 30, 2015, net operating revenues increased 9.6% to $1,682.4 million compared to $1,535.3 million for the same period, prior year. Income from operations was $164.3 million for the six months ended June 30, 2015, compared to $160.6 million for the same period, prior year. Net income attributable to Select Medical was $72.0 million for the six months ended June 30, 2015, compared to $68.4 million for the same period, prior year. Net income attributable to Select Medical for the six months ended June 30, 2014 includes a loss on early retirement of debt, net of tax, of $1.4 million. Adjusted EBITDA for the six months ended June 30, 2015 increased 7.9% to $213.8 million compared to $198.2 million for the same period, prior year. A reconciliation of net income to Adjusted EBITDA is presented in table VIII of this release. Income per common share for the six months ended June 30, 2015 was $0.55 on a fully diluted basis compared to income per common share of $0.51 for the six months ended June 30, 2014. Excluding the loss related to the early retirement of debt and the related tax effect, adjusted income per common share was $0.52 per diluted share for the six months ended June 30, 2014. A reconciliation of net income per common share to adjusted income per common share for the six months ended June 30, 2014 is presented in table IX of this release.
Specialty Hospital Segment
For the second quarter ended June 30, 2015, net operating revenues for the specialty hospital segment increased 6.2% to $592.3 million, compared to $557.8 million for the same quarter, prior year. Adjusted EBITDA for the specialty hospital segment increased 3.1% to $91.4 million for the second quarter ended June 30, 2015, compared to $88.7 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 15.4% for the second quarter ended June 30, 2015, compared to 15.9% for the same quarter, prior year. The Adjusted EBITDA results for the specialty hospital segment include start-up losses of approximately $3.3 million for the second quarter ended June 30, 2015 and $3.9 million for the same quarter, prior year. Certain specialty hospital key statistics for both the second quarter ended June 30, 2015 and 2014 are presented in table VI of this release.
For the six months ended June 30, 2015, net operating revenues for the specialty hospital segment increased 6.1% to $1,191.1 million, compared to $1,122.5 million for the same period, prior year. Adjusted EBITDA for the specialty hospital segment for the six months ended June 30, 2015 increased 3.9% to $187.9 million, compared to $180.8 million for the same period, prior year. The Adjusted EBITDA margin for the segment was 15.8% for the six months ended June 30, 2015, compared to 16.1% for the same period, prior year. The Adjusted EBITDA results for the specialty hospital segment include start-up losses of approximately $8.8 million for the six months ended June 30, 2015 and $4.7 million for the same period, prior year. Certain specialty hospital key statistics for both the six months ended June 30, 2015 and 2014 are presented in table VII of this release.
Outpatient Rehabilitation Segment
For the second quarter ended June 30, 2015, net operating revenues for the outpatient rehabilitation segment decreased 3.3% to $207.8 million, compared to $214.8 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment decreased 5.6% to $28.7 million for the second quarter ended June 30, 2015, compared to $30.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 13.8% for the second quarter ended June 30, 2015, compared to 14.2% for the same quarter, prior year. Certain outpatient rehabilitation key statistics for both the second quarter ended June 30, 2015 and 2014 are presented in table VI of this release.
For the six months ended June 30, 2015, net operating revenues for the outpatient rehabilitation segment decreased 2.0% to $404.2 million, compared to $412.6 million for the same period, prior year. Adjusted EBITDA for the outpatient rehabilitation segment for the six months ended June 30, 2015 decreased 1.1% to $50.9 million, compared to $51.4 million for the same period, prior year. The Adjusted EBITDA margin for the segment was 12.6% for the six months ended June 30, 2015, compared to 12.5% for the same period, prior year. Certain outpatient rehabilitation key statistics for both the six months ended June 30, 2015 and 2014 are presented in table VII of this release.
Concentra Segment
For both the second quarter and six months ended June 30, 2015, which only includes results beginning June 1, 2015, net operating revenues for the Concentra segment were $86.8 million. Adjusted EBITDA for the Concentra segment was $11.2 million for both the second quarter and six months ended June 30, 2015. The Adjusted EBITDA margin for the Concentra segment was 12.9% for both the second quarter and six months ended June 30, 2015. Certain Concentra key statistics for both the second quarter and six months ended June 30, 2015 are presented in table VI and table VII, respectively, of this release.
Stock Repurchase Program
The board of directors of Select Medical has authorized a $500.0 million stock repurchase program that will remain in effect until December 31, 2016, unless 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 is funding this program with cash on hand and borrowings under Select’s revolving facility. Select Medical did not repurchase shares during the six months ended June 30, 2015. Since the inception of the program through June 30, 2015, Select Medical has repurchased 34,891,794 shares at a cost of approximately $301.1 million, or an average price of $8.63 per share, which includes transaction costs.
Business Outlook
Select Medical is updating its most recent business outlook to incorporate both the first half of 2015’s actual financial performance as well as the expected contribution from Concentra, which closed on June 1st and is now consolidated in our financial results. We now expect for the full year of 2015 consolidated net operating revenues to be in the range of $3.675 billion to $3.750 billion, Adjusted EBITDA in the range of $430.0 million to $445.0 million and fully diluted income per common share for the full year 2015 to be in the range of $0.90 to $0.96.
The Concentra segment is expected to contribute approximately $550.0 million of net operating revenues, approximately $55.0 million of Adjusted EBITDA and approximately $0.01 fully diluted income per common share, which amounts are included in the above revised business outlook.
Select Medical’s business outlook includes expected Adjusted EBITDA start-up losses during the full year 2015 of approximately $17.0 million at Select Medical’s long term acute care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) recently opened or under development. Select Medical assumed a 39.0% effective tax rate for the second half of 2015 when preparing the above business outlook.
Conference Call
Select Medical will host a conference call regarding its second quarter results and its business outlook on Friday, August 7, 2015, at 9:00am EDT. The domestic dial in number for the call is 1-877-415-3178. The international dial in number is 1-857-244-7321. The passcode for the call is 97808155. The conference call will be webcast simultaneously and can be accessed at Select Medical’s website www.selectmedicalholdings.com.
For those unable to participate in the conference call, a replay will be available until 11:59pm EDT, August 14, 2015. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 47080385. The replay can also be accessed at Select Medical’s website, www.selectmedicalholdings.com.
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Select Medical began operations in 1997 and has grown to be one of the largest operators of specialty hospitals and outpatient rehabilitation clinics in the United States based on number of facilities. On June 1, 2015, a joint venture created by Select Medical and WCAS consummated the acquisition of Concentra, which provides occupational health, consumer health, physical therapy, and veteran’s healthcare services throughout the United States. As of June 30, 2015, Select Medical operated 111 long term acute care hospitals and 17 acute medical rehabilitation hospitals in 28 states, and 1,028 outpatient rehabilitation clinics in 31 states and the District of Columbia. Select Medical’s contract therapy business provides medical rehabilitation services on a contracted basis to nursing homes, hospitals, assisted living and senior care centers, schools, and work sites.
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