Select Medical Holdings Corporation Q3 2024 Financial Results

Select Medical (NYSE: SEM) Holdings Corporation has announced strong financial results for the third quarter of 2024, reporting a 6% year-over-year increase in both consolidated revenue and adjusted EBITDA. The company successfully launched Concentra's IPO, issuing over 23 million shares while retaining a majority stake. Plans are in place to distribute the remaining interest in Concentra to shareholders by year-end, dependent on market conditions.

Key Takeaways

• Consolidated revenue and adjusted EBITDA grew by 6% year-over-year.
• Concentra’s IPO involved 23,250,000 shares, with Select Medical retaining an 81.74% share.
• The inpatient rehab division's revenue increased by 14% and adjusted EBITDA rose by 12%, despite some startup losses.
• The critical illness recovery division also saw a 3% increase in revenue and a 9% adjusted EBITDA rise.
• A new 48-bed rehab hospital is in development in Jacksonville, Florida, with more facilities planned in various states.
• Revenue from the outpatient rehab division grew by 7%, boosted by increased patient volumes and improved net revenue.
• Earnings per share (EPS) rose to $0.43 from $0.38 in Q3 2023.
• A cash dividend of $0.125 has been declared, payable on November 26, 2024.
• Consolidated debt decreased by $498 million, improving net leverage to 3.06 times.

Company Outlook

• Revenue for 2024 is now expected to be between $6.95 billion and $7.15 billion, with adjusted EBITDA between $865 million and $885 million.
• Capital expenditures are anticipated to fall between $200 million and $250 million.
• The company aims to maintain a leverage ratio around 3 times, considering various capital deployment options.

Highlights

Bearish

• Incurred startup losses of $3.7 million from new facilities in the inpatient rehab division.
• A slight increase in day sales outstanding (DSO) to 55 days.

Bullish

• Successful IPO of Concentra and plans for further shareholder distributions.
• Multiple facilities under development, promising future growth.
• Expected improvements in operational efficiency and margins next year.

Misses

• Increased DSO of 55 days.

Q&A Highlights

• Projections for SW&B as a percentage of revenue to end the year around 57%.
• Outpatient rehab margins expected to enhance due to technology improvements.

Select Medical's performance in Q3 highlights its resilience and growth in a competitive healthcare market. The company is strategically expanding and focusing on operational efficiency while prioritizing shareholder value through its Concentra IPO success and planned distributions.

InvestingPro Insights

InvestingPro data support Select Medical's robust Q3 financial performance. The company’s market capitalization stands at $4.68 billion, with $6.87 billion in revenue for the last twelve months as of Q2 2024, marking a 5.92% revenue growth. Select Medical has a relatively low P/E ratio of 17.29, indicating potential undervaluation amidst strong growth prospects. The company is also noted for low price volatility, appealing to stability-seeking investors. InvestingPro provides 13 additional tips for a comprehensive analysis of Select Medical's financial health and market positioning.