MECHANICSBURG, Pa., Aug. 14 /PRNewswire/ -- Select Medical Corporation (“Select”) today announced results for its second quarter ended June 30, 2008.
For the second quarter ended June 30, 2008, net operating revenues increased 6.4% to $538.8 million compared to $506.5 million for the same quarter, prior year. Income from operations decreased 20.1% to $48.4 million compared to $60.6 million for the same quarter, prior year. Net income decreased 40.1% to $12.6 million compared to $21.0 million for the same quarter, prior year. Additionally, net income before interest, income taxes, depreciation and amortization, stock compensation expense, other income/expense and minority interest (“Adjusted EBITDA”) for the second quarter decreased 11.5% to $66.8 million compared to $75.5 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is attached to this release.
For the six months ended June 30, 2008, net operating revenues increased 11.7% to $1,087.1 million compared to $973.3 million for the same period, prior year. Income from operations decreased 15.0% to $102.8 million compared to $120.9 million for the same period, prior year. Net income decreased 44.1% to $24.2 million compared to $43.2 million for the same period, prior year. Additionally, Adjusted EBITDA for the six months ended June 30, 2008 decreased 6.2% to $139.3 million compared to $148.4 million for the same period, prior year.
Specialty Hospitals
At June 30, 2008, Select operated 88 long-term acute care hospitals and four acute medical rehabilitation hospitals. This compares to 89 long-term acute care hospitals and three acute medical rehabilitation hospitals operated at June 30, 2007. For the second quarter of 2008, net operating revenues for all of Select’s hospitals increased 6.4% to $367.3 million compared to $345.3 million for the same quarter, prior year. Total patient days for the second quarter of 2008 were 252,727, admissions were 10,178 and net revenue per patient day was $1,425. This compares to 247,368 days, 9,823 admissions and net revenue per patient day of $1,370 for the same quarter, prior year. For the hospitals opened or acquired as of January 1, 2007 and operated by Select throughout both periods, patient days in the second quarter of 2008 were 243,011, and admissions were 9,740, compared to 234,523 days and 9,350 admissions in the same quarter, prior year. Adjusted EBITDA for the segment decreased 9.0% to $55.2 million compared to $60.7 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 15.0% for the second quarter of 2008, compared to 17.6% for the same quarter, prior year. The Adjusted EBITDA margin for the hospitals opened or acquired as of January 1, 2007 and operated by Select throughout both periods was 17.4% for the second quarter of 2008, compared to 18.7% for the same quarter, prior year.
For the six months ended June 30, 2008, net operating revenues for all of Select’s hospitals increased 6.6% to $745.9 million compared to $699.5 million for the same period, prior year. Total patient days for the six months ended June 30, 2008 were 512,286, admissions were 20,914 and net revenue per patient day was $1,428. This compares to 499,844 days, 20,239 admissions and net revenue per patient day of $1,374 for the same period, prior year. For the hospitals opened or acquired as of January 1, 2007 and operated by Select throughout both periods, patient days for the six months ended June 30, 2008 were 495,818, and admissions were 20,128, compared to 473,734 days and 19,242 admissions in the same period, prior year. Adjusted EBITDA for the segment for the six months ended June 30, 2008 decreased 6.5% to $118.5 million compared to $126.7 million for the same period, prior year. The Adjusted EBITDA margin for the segment for the six months ended June 30, 2008 was 15.9%, compared to 18.1% for the same period, prior year. The Adjusted EBITDA margin for the hospitals opened or acquired as of January 1, 2007 and operated by Select throughout both periods was 18.1% for the six months ended June 30, 2008, compared to 19.0% for the same period, prior year.
Outpatient Rehabilitation
At June 30, 2008, Select operated 970 outpatient clinics. This compares to 1,106 outpatient clinics at June 30, 2007. For the second quarter of 2008, net operating revenues increased 7.4% to $171.5 million compared to $159.7 million for the same quarter, prior year. Adjusted EBITDA for the second quarter decreased 3.3% to $23.7 million compared to $24.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the quarter was 13.8% compared to 15.4% in the same quarter, prior year. Patient visits for the quarter were 1,167,702 compared to 1,079,613 for the same quarter, prior year. Net revenue per visit was $102 for the second quarter of 2008 compared to $99 for the same quarter, prior year.
For the six months ended June 30, 2008, net operating revenues increased 25.4% to $341.1 million compared to $272.1 million for the same period, prior year. Adjusted EBITDA for the six months ended June 30, 2008 increased 4.0% to $43.8 million compared to $42.2 million for the same period, prior year. The Adjusted EBITDA margin for the six months ended June 30, 2008 was 12.9% compared to 15.5% in the same period, prior year. Patient visits for the six months ended June 30, 2008 were 2,323,609 compared to 1,726,264 for the same period, prior year. Net revenue per visit was $103 for the six months ended June 30, 2008 compared to $100 for the same period, prior year.
Conference Call
Select Medical Holdings Corporation (“Holdings”), the parent of Select, has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”) in connection with the proposed initial public offering of its common stock. Holdings and certain of its stock holders are expected to sell shares of its common stock in the offering. Based on the advice of counsel, Select’s regular quarterly earnings conference calls will be suspended while Holdings’ registration statement is under review by the SEC.
Select Medical Corporation is a leading operator of specialty hospitals in the United States. Select operates 87 long-term acute care hospitals and four acute medical rehabilitation hospitals in 25 states. Select is also a leading operator of outpatient rehabilitation clinics in the United States, with approximately 970 locations in 37 states and the District of Columbia. Select also provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and worksites. Information about Select is available at http://www.selectmedicalcorp.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 may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability;
-- the failure of our long-term acute care hospitals, or LTCHs, to maintain their status as such may cause our net operating revenues and profitability to decline;
-- the failure of our facilities operated as “hospitals within hospitals,” or HIHs, to qualify as hospitals separate from their host hospitals may cause our net operating revenues and profitability to decline;
-- implementation of modifications to the admissions policies for our inpatient rehabilitation facilities, as required to achieve compliance with Medicare guidelines, may result in a loss of patient volume at these hospitals and, as a result, may reduce our future net operating revenues and profitability;
-- a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
-- integration of acquired operations (such as the outpatient rehabilitation division of HealthSouth Corporation) and future acquisitions 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 our markets 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 or lack of adequate available insurance could subject us to substantial uninsured liabilities; and
-- the ability to obtain any necessary or desired waiver or amendment from our existing lenders may be difficult due to the current uncertainty in the credit markets.
(a) Specialty hospitals consist of long-term acute care hospitals and acute medical rehabilitation hospitals.
(b) Net revenue per patient day is calculated by dividing specialty hospital inpatient service revenue by the total number of patient days.
( c ) Adjusted EBITDA margin - same store hospitals represents the Adjusted EBITDA margin for those hospitals opened or acquired before January 1, 2007 and operated throughout both periods.
(d) Net revenue per visit is calculated by dividing outpatient rehabilitation clinic revenue by the total number of visits. For purposes of this computation, outpatient rehabilitation clinic revenue does not include managed clinics or contract services revenue.
(b) Net revenue per patient day is calculated by dividing specialty hospital inpatient service revenue by the total number of patient days.
( c ) Adjusted EBITDA margin - same store hospitals represents the Adjusted EBITDA margin for those hospitals opened or acquired before January 1, 2007 and operated throughout both periods.
(d) Net revenue per visit is calculated by dividing outpatient rehabilitation clinic revenue by the total number of visits. For purposes of this computation, outpatient rehabilitation clinic revenue does not include managed clinics or contract services revenue.
The following table reconciles net income to Adjusted EBITDA for Select. Adjusted EBITDA is used by Select to report its segment performance in accordance with SFAS No. 131. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, stock compensation expense, other expense (income) and minority interest. We believe that the presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of our operating units.
Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles. 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, 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 generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.
CONTACT: Investor inquiries, Joel Veit of Select Medical Corporation,
+1-717-972-1100
Web site: http://www.selectmedicalcorp.com/
