Select Medical Holdings Corporation Announces Results For Its Second Quarter Ended June 30, 2022 and Cash Dividend

Select Medical Holdings Corporation announced results for its second quarter ended June 30, 2022, and the declaration of a cash dividend.

MECHANICSBURG, Pa., Aug. 4, 2022 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its second quarter ended June 30, 2022, and the declaration of a cash dividend.

For the second quarter ended June 30, 2022, revenue increased 1.3% to $1,584.7 million, compared to $1,564.0 million for the same quarter, prior year. Income from operations was $121.0 million for the second quarter ended June 30, 2022, compared to $284.0 million for the same quarter, prior year. For the second quarter ended June 30, 2022, income from operations included $15.1 million of other operating income related to the recognition of payments received under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, compared to $98.0 million for the same quarter, prior year. Net income was $66.3 million for the second quarter ended June 30, 2022, compared to $196.2 million for the same quarter, prior year. Adjusted EBITDA was $181.0 million for the second quarter ended June 30, 2022, compared to $342.0 million for the same quarter, prior year. Earnings per common share was $0.43 for the second quarter ended June 30, 2022, compared to $1.22 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release.

For the six months ended June 30, 2022, revenue increased 2.4% to $3,184.3 million, compared to $3,110.5 million for the same period, prior year. Income from operations was $225.0 million for the six months ended June 30, 2022, compared to $486.0 million for the same period, prior year. For the six months ended June 30, 2022, income from operations included $15.1 million of other operating income related to the recognition of payments received under the Provider Relief Fund, compared to $114.1 million for the same period, prior year. Net income was $122.2 million for the six months ended June 30, 2022, compared to $333.4 million for the same period, prior year. Adjusted EBITDA was $344.8 million for the six months ended June 30, 2022, compared to $600.4 million for the same period, prior year. Earnings per common share was $0.79 for the six months ended June 30, 2022, compared to $2.04 for the same period, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release.

In addition to providing key statistics in tables VII and VIII of this release for both the second quarters and six months ended June 30, 2022 and 2021, Select Medical also provided statistics for the comparable period in 2019. Select Medical believes this additional data provides insight into how it has performed in comparison to the year prior to the widespread emergence of the coronavirus disease 2019 ("COVID-19") in the United States. The effects of the COVID-19 pandemic, including the duration and extent of disruption on our operations, continues to create uncertainties about Select Medical's future operating results and financial condition. Please refer to the risk factors in Item 1A and the section titled "Effects of the COVID-19 Pandemic on our Results of Operations" in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, for further discussion.

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 June 30, 2022, Select Medical operated 105 critical illness recovery hospitals in 28 states, 31 rehabilitation hospitals in 12 states, and 1,920 outpatient rehabilitation clinics in 38 states and the District of Columbia. Concentra operated 518 occupational health centers in 41 states. At June 30, 2022, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

Critical Illness Recovery Hospital Segment

For the second quarter ended June 30, 2022, revenue for the critical illness recovery hospital segment increased to $545.9 million, compared to $544.1 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $20.0 million for the second quarter ended June 30, 2022, compared to $72.9 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 3.7% for the second quarter ended June 30, 2022, compared to 13.4% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the critical illness recovery hospital segment increased to $1,147.7 million, compared to $1,138.9 million for the same period, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $56.0 million for the six months ended June 30, 2022, compared to $186.2 million for the same period, prior year. For the six months ended June 30, 2021, Adjusted EBITDA included $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 4.9% for the six months ended June 30, 2022, compared to 16.3% for the same period, prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Rehabilitation Hospital Segment

For the second quarter ended June 30, 2022, revenue for the rehabilitation hospital segment increased 7.6% to $228.9 million, compared to $212.7 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $49.8 million for the second quarter ended June 30, 2022, compared to $50.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.8% for the second quarter ended June 30, 2022, compared to 23.9% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the rehabilitation hospital segment increased 6.9% to $449.5 million, compared to $420.5 million for the same period, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $92.2 million for the six months ended June 30, 2022, compared to $101.3 million for the same period, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.5% for the six months ended June 30, 2022, compared to 24.1% for the same period, prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Outpatient Rehabilitation Segment

For the second quarter ended June 30, 2022, revenue for the outpatient rehabilitation segment increased 2.4% to $287.3 million, compared to $280.4 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $33.6 million for the second quarter ended June 30, 2022, compared to $45.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 11.7% for the second quarter ended June 30, 2022, compared to 16.3% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the outpatient rehabilitation segment increased 5.0% to $559.2 million, compared to $532.4 million for the same period, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $60.2 million for the six months ended June 30, 2022, compared to $72.0 million for the same period, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.8% for the six months ended June 30, 2022, compared to 13.5% for the same period, prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Concentra Segment

For the second quarter ended June 30, 2022, revenue for the Concentra segment was $441.4 million, compared to $456.4 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment was $92.6 million for the second quarter ended June 30, 2022, compared to $137.1 million for the same quarter, prior year. For the second quarter ended June 30, 2021, Adjusted EBITDA included $32.3 million of other operating income related to the recognition of payments received under the Provider Relief Fund. The Adjusted EBITDA margin for the Concentra segment was 21.0% for the second quarter ended June 30, 2022, compared to 30.0% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the Concentra segment was $864.8 million, compared to $879.2 million for the same period, prior year. Adjusted EBITDA for the Concentra segment was $182.1 million for the six months ended June 30, 2022, compared to $219.1 million for the same period, prior year. For the six months ended June 30, 2021, Adjusted EBITDA included $32.3 million of other operating income related to the recognition of payments received under the Provider Relief Fund. The Adjusted EBITDA margin for the Concentra segment was 21.1% for the six months ended June 30, 2022, compared to 24.9% for the same period, prior year. Certain Concentra key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Dividend

On August 2, 2022, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about September 2, 2022, to stockholders of record as of the close of business on August 16, 2022.

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, Select Medical's 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.

Stock Repurchase Program

The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2023, 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.

During the six months ended June 30, 2022, Select Medical repurchased 7,567,433 shares at a cost of approximately $177.6 million, or $23.47 per share, which includes transaction costs. Since the inception of the common stock repurchase program through June 30, 2022, Select Medical has repurchased 47,919,061 shares at a cost of approximately $592.8 million, or $12.37 per share, which includes transaction costs.

Business Outlook for Revenue

Select Medical reaffirms its 2022 business outlook for revenue, which was provided most recently in its May 5, 2022, press release. Select Medical continues to expect consolidated revenue to be in the range of $6.25 billion to $6.40 billion for the full year of 2022. Select Medical is also reaffirming its previously issued three-year compound annual growth rate target for revenue only, which is expected to be in the range of 4% to 6% for 2021 through 2023.

Select Medical intends to address its business outlook and target compound annual growth rates for Adjusted EBITDA and earnings per common share when the labor climate stabilizes.

Conference Call

Select Medical will host a conference call regarding its second quarter results, as well as its business outlook for revenue and the impact of the COVID-19 pandemic on each of its reportable segments, on Friday, August 5, 2022, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holding Corporation's website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the same link.

For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode.

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 2022 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, 2021.

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 June 30, 2021 and 2022
(In thousands, except per share amounts, unaudited)

 
   

2021

 

2022

 

% Change

     

Revenue

 

$ 1,564,020

 

$ 1,584,741

 

1.3 %

     

Costs and expenses:

                 

Cost of services, exclusive of depreciation and amortization

 

1,291,448

 

1,390,550

 

7.7

     

General and administrative

 

35,737

 

37,268

 

4.3

     

Depreciation and amortization

 

50,954

 

51,081

 

0.2

     

Total costs and expenses

 

1,378,139

 

1,478,899

 

7.3

     

Other operating income

 

98,087

 

15,125

 

N/M

     

Income from operations

 

283,968

 

120,967

 

(57.4)

     

Other income and expense:

                 

Equity in earnings of unconsolidated subsidiaries

 

11,809

 

6,167

 

(47.8)

     

Interest expense

 

(33,888)

 

(41,052)

 

21.1

     

Income before income taxes

 

261,889

 

86,082

 

(67.1)

     

Income tax expense

 

65,681

 

19,820

 

(69.8)

     

Net income

 

196,208

 

66,262

 

(66.2)

     

Less: Net income attributable to non-controlling interests

 

31,314

 

11,055

 

(64.7)

     

Net income attributable to Select Medical

 

$ 164,894

 

$ 55,207

 

(66.5) %

     

Basic and diluted earnings per common share:(1)

 

$ 1.22

 

$ 0.43

         

_____________________________________________

(1)

Refer to table III for calculation of earnings per common share.

N/M

Not meaningful.

II. Condensed Consolidated Statements of Operations
For the Six Months Ended June 30, 2021 and 2022
(In thousands, except per share amounts, unaudited)

 
   

2021

 

2022

 

% Change

Revenue

 

$ 3,110,483

 

$ 3,184,288

 

2.4 %

Costs and expenses:

           

Cost of services, exclusive of depreciation and amortization

 

2,584,897

 

2,797,560

 

8.2

General and administrative

 

71,140

 

74,781

 

5.1

Depreciation and amortization

 

100,574

 

102,120

 

1.5

Total costs and expenses

 

2,756,611

 

2,974,461

 

7.9

Other operating income

 

132,108

 

15,125

 

N/M

Income from operations

 

485,980

 

224,952

 

(53.7)

Other income and expense:

           

Equity in earnings of unconsolidated subsidiaries

 

21,728

 

11,564

 

(46.8)

Interest income

 

4,749

 

 

N/M

Interest expense

 

(68,290)

 

(76,566)

 

12.1

Income before income taxes

 

444,167

 

159,950

 

(64.0)

Income tax expense

 

110,745

 

37,762

 

(65.9)

Net income

 

333,422

 

122,188

 

(63.4)

Less: Net income attributable to non-controlling interests

 

57,982

 

17,864

 

(69.2)

Net income attributable to Select Medical

 

$ 275,440

 

$ 104,324

 

(62.1) %

Basic and diluted earnings per common share:(1)

 

$ 2.04

 

$ 0.79

   

______________________________________________

(1)

Refer to table III for calculation of earnings per common share.

N/M

Not meaningful.

III. Earnings per Share
For the Three and Six Months Ended June 30, 2021 and 2022
(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 and six months ended June 30, 2021 and 2022:

 
 
   

Basic and Diluted EPS

   

Three Months Ended

June 30,

 

Six Months Ended

June 30,

   

2021

 

2022

 

2021

 

2022

Net income

 

$ 196,208

 

$ 66,262

 

$ 333,422

 

$ 122,188

Less: net income attributable to non-controlling interests

 

31,314

 

11,055

 

57,982

 

17,864

Net income attributable to Select Medical

 

164,894

 

55,207

 

275,440

 

104,324

Less: net income attributable to participating securities

 

5,560

 

1,920

 

9,250

 

3,558

Net income attributable to common shares

 

$ 159,334

 

$ 53,287

 

$ 266,190

 

$ 100,766

The following tables set forth the computation of EPS under the two-class method for the three and six months ended
June 30, 2021 and 2022:

 
   

Three Months Ended June 30,

   

2021

   

2022

   

Net Income
Allocation

 

Shares(1)

 

Basic and
Diluted EPS

   

Net Income
Allocation

 

Shares(1)

 

Basic and
Diluted EPS

Common shares

 

$ 159,334

 

130,396

 

$ 1.22

   

$ 53,287

 

124,897

 

$ 0.43

Participating securities

 

5,560

 

4,550

 

$ 1.22

   

1,920

 

4,500

 

$ 0.43

Total

 

$ 164,894

           

$ 55,207

       
 
   

Six Months Ended June 30,

   

2021

   

2022

   

Net Income
Allocation

 

Shares(1)

 

Basic and
Diluted EPS

   

Net Income
Allocation

 

Shares(1)

 

Basic and
Diluted EPS

Common shares

 

$ 266,190

 

130,362

 

$ 2.04

   

$ 100,766

 

126,942

 

$ 0.79

Participating securities

 

9,250

 

4,530

 

$ 2.04

   

3,558

 

4,482

 

$ 0.79

Total

 

$ 275,440

           

$ 104,324

       

________________________________

(1)

Represents the weighted average share count outstanding during the period.

IV. Condensed Consolidated Balance Sheets
(In thousands, unaudited)

 
   

December 31, 2021

 

June 30, 2022

Assets

       

Current Assets:

       

Cash and cash equivalents

 

$ 74,310

 

$ 94,669

Accounts receivable

 

889,303

 

921,623

Other current assets

 

175,826

 

204,756

Total Current Assets

 

1,139,439

 

1,221,048

Operating lease right-of-use assets

 

1,078,754

 

1,136,678

Property and equipment, net

 

961,467

 

955,752

Goodwill

 

3,448,912

 

3,476,213

Identifiable intangible assets, net

 

374,879

 

366,222

Other assets

 

356,720

 

395,745

Total Assets

 

$ 7,360,171

 

$ 7,551,658

Liabilities and Equity

       

Current Liabilities:

       

Payables and accruals

 

$ 942,288

 

$ 956,756

Government advances

 

83,790

 

6,471

Unearned government assistance

 

93

 

586

Current operating lease liabilities

 

229,334

 

233,917

Current portion of long-term debt and notes payable

 

17,572

 

44,009

Total Current Liabilities

 

1,273,077

 

1,241,739

Non-current operating lease liabilities

 

916,540

 

974,657

Long-term debt, net of current portion

 

3,556,385

 

3,723,734

Non-current deferred tax liability

 

142,792

 

157,892

Other non-current liabilities

 

106,442

 

107,738

Total Liabilities

 

5,995,236

 

6,205,760

Redeemable non-controlling interests

 

39,033

 

42,197

Total equity

 

1,325,902

 

1,303,701

Total Liabilities and Equity

 

$ 7,360,171

 

$ 7,551,658

V. Condensed Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 2021 and 2022
(In thousands, unaudited)

 
   

2021

 

2022

Operating activities

       

Net income

 

$ 196,208

 

$ 66,262

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

       

Distributions from unconsolidated subsidiaries

 

7,751

 

3,654

Depreciation and amortization

 

50,954

 

51,081

Provision for expected credit losses

 

145

 

17

Equity in earnings of unconsolidated subsidiaries

 

(11,809)

 

(6,167)

Loss (gain) on sale or disposal of assets

 

422

 

(1,453)

Stock compensation expense

 

7,099

 

8,946

Amortization of debt discount, premium and issuance costs

 

552

 

565

Deferred income taxes

 

(7,426)

 

(2,385)

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

       

Accounts receivable

 

28,391

 

19,794

Other current assets

 

(8,431)

 

(309)

Other assets

 

(12,945)

 

(1,411)

Accounts payable and accrued expenses

 

45,288

 

40,369

Government advances

 

(73,703)

 

(14,391)

Unearned government assistance

 

(97,716)

 

392

Income taxes

 

(1,642)

 

6,717

Net cash provided by operating activities

 

123,138

 

171,681

Investing activities

       

Business combinations, net of cash acquired

 

(3,767)

 

(14,055)

Purchases of property and equipment

 

(36,723)

 

(46,332)

Investment in businesses

 

(4,614)

 

(3,653)

Proceeds from sale of assets

 

9,444

 

5,277

Net cash used in investing activities

 

(35,660)

 

(58,763)

Financing activities

       

Borrowings on revolving facilities

 

 

285,000

Payments on revolving facilities

 

 

(275,000)

Borrowings of other debt

 

 

1,700

Principal payments on other debt

 

(5,972)

 

(7,686)

Dividends paid to common stockholders

 

(16,876)

 

(16,108)

Repurchase of common stock

 

(1,610)

 

(126,947)

Decrease in overdrafts

 

 

(3,447)

Proceeds from issuance of non-controlling interests

 

5,688

 

1,726

Distributions to and purchases of non-controlling interests

 

(15,489)

 

(8,368)

Net cash used in financing activities

 

(34,259)

 

(149,130)

Net increase (decrease) in cash and cash equivalents

 

53,219

 

(36,212)

Cash and cash equivalents at beginning of period

 

750,274

 

130,881

Cash and cash equivalents at end of period

 

$ 803,493

 

$ 94,669

Supplemental information

       

Cash paid for interest

 

$ 14,485

 

$ 20,700

Cash paid for taxes

 

74,751

 

15,500

VI. Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2021 and 2022
(In thousands, unaudited)

 
   

2021

 

2022

Operating activities

       

Net income

 

$ 333,422

 

$ 122,188

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

       

Distributions from unconsolidated subsidiaries

 

19,384

 

11,140

Depreciation and amortization

 

100,574

 

102,120

Provision for expected credit losses

 

212

 

111

Equity in earnings of unconsolidated subsidiaries

 

(21,728)

 

(11,564)

Loss (gain) on sale or disposal of assets

 

494

 

(1,476)

Stock compensation expense

 

13,808

 

17,769

Amortization of debt discount, premium and issuance costs

 

1,095

 

1,123

Deferred income taxes

 

(8,323)

 

(1,965)

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

       

Accounts receivable

 

(31,751)

 

(32,431)

Other current assets

 

(12,856)

 

(2,128)

Other assets

 

(11,984)

 

1,275

Accounts payable and accrued expenses

 

89,915

 

25,367

Government advances

 

(73,703)

 

(77,319)

Unearned government assistance

 

(78,509)

 

493

Income taxes

 

42,976

 

23,315

Net cash provided by operating activities

 

363,026

 

178,018

Investing activities

       

Business combinations, net of cash acquired

 

(10,081)

 

(19,241)

Purchases of property and equipment

 

(76,442)

 

(93,177)

Investment in businesses

 

(11,185)

 

(6,990)

Proceeds from sale of assets

 

9,463

 

5,314

Net cash used in investing activities

 

(88,245)

 

(114,094)

Financing activities

       

Borrowings on revolving facilities

 

 

565,000

Payments on revolving facilities

 

 

(375,000)

Borrowings of other debt

 

8,915

 

17,494

Principal payments on other debt

 

(15,314)

 

(16,874)

Dividends paid to common stockholders

 

(16,876)

 

(32,799)

Repurchase of common stock

 

(1,610)

 

(178,623)

Decrease in overdrafts

 

 

(11,055)

Proceeds from issuance of non-controlling interests

 

5,688

 

6,955

Distributions to and purchases of non-controlling interests

 

(29,152)

 

(18,663)

Net cash used in financing activities

 

(48,349)

 

(43,565)

Net increase in cash and cash equivalents

 

226,432

 

20,359

Cash and cash equivalents at beginning of period

 

577,061

 

74,310

Cash and cash equivalents at end of period

 

$ 803,493

 

$ 94,669

Supplemental information

       

Cash paid for interest

 

$ 66,955

 

$ 74,217

Cash paid for taxes

 

76,094

 

16,423

VII. Key Statistics
For the Three Months Ended June 30, 2019, 2021, and 2022
(unaudited)

 
   

2019

   

2021

 

2022

 

% Change

Critical Illness Recovery Hospital

                 

Number of hospitals operated – end of period(a)

 

100

   

99

 

105

   

Revenue (,000)

 

$ 461,143

   

$ 544,059

 

$ 545,908

 

0.3 %

Number of patient days(b)(c)

 

262,860

   

272,981

 

273,133

 

0.1 %

Number of admissions(b)(d)

 

9,172

   

9,026

 

8,806

 

(2.4) %

Revenue per patient day(b)(e)

 

$ 1,739

   

$ 1,986

 

$ 1,987

 

0.1 %

Occupancy rate(b)(f)

 

69 %

   

69 %

 

67 %

 

(2.9) %

Adjusted EBITDA (,000)

 

$ 64,138

   

$ 72,904

 

$ 20,019

 

(72.5) %

Adjusted EBITDA margin

 

13.9 %

   

13.4 %

 

3.7 %

   

Rehabilitation Hospital

                 

Number of hospitals operated – end of period(a)

 

28

   

30

 

31

   

Revenue (,000)

 

$ 160,374

   

$ 212,666

 

$ 228,887

 

7.6 %

Number of patient days(b)(c)

 

86,525

   

104,948

 

108,812

 

3.7 %

Number of admissions(b)(d)

 

6,017

   

7,360

 

7,450

 

1.2 %

Revenue per patient day(b)(e)

 

$ 1,635

   

$ 1,849

 

$ 1,928

 

4.3 %

Occupancy rate(b)(f)

 

75 %

   

85 %

 

86 %

 

1.2 %

Adjusted EBITDA (,000)

 

$ 29,968

   

$ 50,768

 

$ 49,845

 

(1.8) %

Adjusted EBITDA margin

 

18.7 %

   

23.9 %

 

21.8 %

   

Outpatient Rehabilitation

                 

Number of clinics operated – end of period(a)

 

1,695

   

1,833

 

1,920

   

Working days(g)

 

64

   

64

 

64

   

Revenue (,000)

 

$ 261,891

   

$ 280,409

 

$ 287,258

 

2.4 %

Number of visits(b)(h)

 

2,203,505

   

2,404,861

 

2,450,912

 

1.9 %

Revenue per visit(b)(i)

 

$ 102

   

$ 102

 

$ 103

 

1.0 %

Adjusted EBITDA (,000)

 

$ 42,584

   

$ 45,633

 

$ 33,601

 

(26.4) %

Adjusted EBITDA margin

 

16.3 %

   

16.3 %

 

11.7 %

   

Concentra

                 

Number of centers operated – end of period(b)

 

526

   

518

 

518

   

Working days(g)

 

64

   

64

 

64

   

Revenue (,000)

 

$ 413,451

   

$ 456,372

 

$ 441,357

 

(3.3) %

Number of visits(b)(h)

 

3,103,089

   

3,030,078

 

3,214,512

 

6.1 %

Revenue per visit(b)(i)

 

$ 121

   

$ 125

 

$ 127

 

1.6 %

Adjusted EBITDA (,000)

 

$ 76,087

   

$ 137,060

 

$ 92,607

 

(32.4) %

Adjusted EBITDA margin

 

18.4 %

   

30.0 %

 

21.0 %

   

_____________________________________________________

(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 portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.

(g)

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

(h)

Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.

(i)

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.

VIII. Key Statistics
For the Six Months Ended June 30, 2019, 2021, and 2022
(unaudited)

 
   

2019

   

2021

 

2022

 

% Change

Critical Illness Recovery Hospital

                 

Number of hospitals operated – end of period(a)

 

100

   

99

 

105

   

Revenue (,000)

 

$ 918,677

   

$ 1,138,931

 

$ 1,147,663

 

0.8 %

Number of patient days(b)(c)

 

520,989

   

566,099

 

562,350

 

(0.7) %

Number of admissions(b)(d)

 

18,628

   

18,885

 

18,263

 

(3.3) %

Revenue per patient day(b)(e)

 

$ 1,749

   

$ 2,006

 

$ 2,032

 

1.3 %

Occupancy rate(b)(f)

 

70 %

   

72 %

 

69 %

 

(4.2) %

Adjusted EBITDA (,000)

 

$ 137,136

   

$ 186,176

 

$ 55,986

 

(69.9) %

Adjusted EBITDA margin

 

14.9 %

   

16.3 %

 

4.9 %

   

Rehabilitation Hospital

                 

Number of hospitals operated – end of period(a)

 

28

   

30

 

31

   

Revenue (,000)

 

$ 314,932

   

$ 420,470

 

$ 449,521

 

6.9 %

Number of patient days(b)(c)

 

169,341

   

207,387

 

212,614

 

2.5 %

Number of admissions(b)(d)

 

11,853

   

14,491

 

14,632

 

1.0 %

Revenue per patient day(b)(e)

 

$ 1,634

   

$ 1,851

 

$ 1,935

 

4.5 %

Occupancy rate(b)(f)

 

76 %

   

84 %

 

85 %

 

1.2 %

Adjusted EBITDA (,000)

 

$ 55,765

   

$ 101,302

 

$ 92,224

 

(9.0) %

Adjusted EBITDA margin

 

17.7 %

   

24.1 %

 

20.5 %

   

Outpatient Rehabilitation

                 

Number of clinics operated – end of period(a)

 

1,695

   

1,833

 

1,920

   

Working days(g)

 

127

   

127

 

128

   

Revenue (,000)

 

$ 508,796

   

$ 532,370

 

$ 559,198

 

5.0 %

Number of visits(b)(h)

 

4,257,988

   

4,505,015

 

4,760,998

 

5.7 %

Revenue per visit(b)(i)

 

$ 103

   

$ 103

 

$ 103

 

0.0 %

Adjusted EBITDA (,000)

 

$ 71,575

   

$ 71,962

 

$ 60,197

 

(16.3) %

Adjusted EBITDA margin

 

14.1 %

   

13.5 %

 

10.8 %

   

Concentra

                 

Number of centers operated – end of period(b)

 

526

   

518

 

518

   

Working days(g)

 

127

   

127

 

128

   

Revenue (,000)

 

$ 809,772

   

$ 879,212

 

$ 864,780

 

(1.6) %

Number of visits(b)(h)

 

6,014,696

   

5,825,652

 

6,331,410

 

8.7 %

Revenue per visit(b)(i)

 

$ 122

   

$ 125

 

$ 126

 

0.8 %

Adjusted EBITDA (,000)

 

$ 142,345

   

$ 219,075

 

$ 182,076

 

(16.9) %

Adjusted EBITDA margin

 

17.6 %

   

24.9 %

 

21.1 %

   

__________________________________________________

(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 portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.

(g)

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

(h)

Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.

(i)

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.

IX. Net Income to Adjusted EBITDA Reconciliation
For the Three and Six Months Ended June 30, 2019, 2021 and 2022
(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 by management
to evaluate financial performance and determine resource allocation for each of Select Medical's segments. Adjusted
EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States
of America ("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 June 30,

 

Six Months Ended June 30,

 

2019

   

2021

 

2022

 

2019

   

2021

 

2022

Net income

$ 59,986

   

$ 196,208

 

$ 66,262

 

$ 113,330

   

$ 333,422

 

$ 122,188

Income tax expense

20,826

   

65,681

 

19,820

 

39,293

   

110,745

 

37,762

Interest expense

51,464

   

33,888

 

41,052

 

102,275

   

68,290

 

76,566

Interest income

   

 

 

   

(4,749)

 

Gain on sale of businesses

   

 

 

(6,532)

   

 

Equity in earnings of unconsolidated subsidiaries

(7,394)

   

(11,809)

 

(6,167)

 

(11,760)

   

(21,728)

 

(11,564)

Income from operations

124,882

   

283,968

 

120,967

 

236,606

   

485,980

 

224,952

Stock compensation expense:

                         

Included in general and administrative

4,796

   

5,620

 

7,046

 

9,544

   

11,080

 

13,995

Included in cost of services

1,562

   

1,479

 

1,900

 

3,069

   

2,728

 

3,774

Depreciation and amortization

54,993

   

50,954

 

51,081

 

107,131

   

100,574

 

102,120

Adjusted EBITDA

$ 186,233

   

$ 342,021

 

$ 180,994

 

$ 356,350

   

$ 600,362

 

$ 344,841

                           

Critical illness recovery hospital(a)

$ 64,138

   

$ 72,904

 

$ 20,019

 

$ 137,136

   

$ 186,176

 

$ 55,986

Rehabilitation hospital

29,968

   

50,768

 

49,845

 

55,765

   

101,302

 

92,224

Outpatient rehabilitation

42,584

   

45,633

 

33,601

 

71,575

   

71,962

 

60,197

Concentra(b)

76,087

   

137,060

 

92,607

 

142,345

   

219,075

 

182,076

Other(c)(d)

(26,544)

   

35,656

 

(15,078)

 

(50,471)

   

21,847

 

(45,642)

Adjusted EBITDA

$ 186,233

   

$ 342,021

 

$ 180,994

 

$ 356,350

   

$ 600,362

 

$ 344,841

______________________________________________________________________

(a)

For the six months ended June 30, 2021, Adjusted EBITDA included other operating income of $17.9 million. The other operating income is related to the outcome of litigation with the Centers for Medicare & Medicaid Services.

(b)

For both the three and six months ended June 30, 2021, Adjusted EBITDA included other operating income of $32.3 million. The other operating income is related to the recognition of payments received under the Provider Relief Fund.

(c)

For both the three and six months ended June 30, 2022, Adjusted EBITDA included other operating income of $15.1 million related to the recognition of payments received under the Provider Relief Fund. For the three and six months ended June 30, 2021, Adjusted EBITDA included other operating income of $65.8 million and $81.9 million, respectively. The other operating income is related to the recognition of payments received under the Provider Relief Fund.

(d)

Other primarily includes general and administrative costs and other operating income, as discussed further above.

Cision View original content:https://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-second-quarter-ended-june-30-2022-and-cash-dividend-301600285.html

SOURCE Select Medical Holdings Corporation


Company Codes: NYSE:SEM

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