MECHANICSBURG, Pa., May 4, 2023
/PRNewswire/ -- Select Medical Holdings Corporation ("Select
Medical," "we," "us," or "our") (NYSE: SEM) today announced results
for its first quarter ended March 31, 2023, and the
declaration of a cash dividend.
For the first quarter ended March 31, 2023, revenue
increased 4.1% to $1,665.0 million,
compared to $1,599.5 million for the
same quarter, prior year. Income from operations increased 45.7% to
$151.5 million for the first quarter
ended March 31, 2023, compared to $104.0 million for the same quarter, prior
year. Net income increased 52.4% to $85.3
million for the first quarter ended March 31, 2023,
compared to $55.9 million for the
same quarter, prior year. Adjusted EBITDA increased 30.6% to
$214.1 million for the first quarter
ended March 31, 2023, compared to $163.8 million for the same quarter, prior year.
Earnings per common share increased 51.3% to $0.56 for the first quarter ended March 31,
2023, compared to $0.37 for the same
quarter, prior year. The definition of Adjusted EBITDA and a
reconciliation of net income to Adjusted EBITDA are presented in
table VI of this release.
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 March 31, 2023,
Select Medical operated 105 critical illness recovery hospitals in
28 states, 32 rehabilitation hospitals in 12 states, 1,936
outpatient rehabilitation clinics in 39 states and the District of Columbia, and 539 occupational
health centers in 41 states. At March 31, 2023, 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 first quarter ended March 31, 2023, revenue for the
critical illness recovery hospital segment was $593.9 million, compared to $601.8 million for the same quarter, prior year.
Adjusted EBITDA for the critical illness recovery hospital segment
increased 113.5% to $76.8 million for
the first quarter ended March 31, 2023, compared to
$36.0 million for the same quarter,
prior year. The Adjusted EBITDA margin for the critical illness
recovery hospital segment was 12.9% for the first quarter ended
March 31, 2023, compared to 6.0% for the same quarter, prior
year. Certain critical illness recovery hospital key statistics are
presented in table V of this release for the first quarters ended
March 31, 2023 and 2022.
Rehabilitation Hospital Segment
For the first quarter ended March 31, 2023, revenue for the
rehabilitation hospital segment increased 4.9% to $231.5 million, compared to $220.6 million for the same quarter, prior year.
Adjusted EBITDA for the rehabilitation hospital segment increased
11.4% to $47.2 million for the first
quarter ended March 31, 2023, compared to $42.4 million for the same quarter, prior year.
The Adjusted EBITDA margin for the rehabilitation hospital segment
was 20.4% for the first quarter ended March 31, 2023, compared
to 19.2% for the same quarter, prior year. Certain rehabilitation
hospital key statistics are presented in table V of this release
for the first quarters ended March 31, 2023 and 2022.
Outpatient Rehabilitation Segment
For the first quarter ended March 31, 2023, revenue for the
outpatient rehabilitation segment increased 8.8% to $295.9 million, compared to $271.9 million for the same quarter, prior year.
Adjusted EBITDA for the outpatient rehabilitation segment increased
13.5% to $30.2 million for the first
quarter ended March 31, 2023, compared to $26.6 million for the same quarter, prior year.
The Adjusted EBITDA margin for the outpatient rehabilitation
segment was 10.2% for the first quarter ended March 31, 2023,
compared to 9.8% for the same quarter, prior year. Certain
outpatient rehabilitation key statistics are presented in table V
of this release for the first quarters ended March 31, 2023
and 2022.
Concentra Segment
For the first quarter ended March 31, 2023, revenue for the
Concentra segment increased 7.8% to $456.3
million, compared to $423.4
million for the same quarter, prior year. Adjusted EBITDA
for the Concentra segment increased 4.8% to $93.7 million for the first quarter ended
March 31, 2023, compared to $89.5
million for the same quarter, prior year. The Adjusted
EBITDA margin for the Concentra segment was 20.5% for the first
quarter ended March 31, 2023, compared to 21.1% for the same
quarter, prior year. Certain Concentra key statistics are presented
in table V of this release for the first quarters ended
March 31, 2023 and 2022.
Dividend
On May 3, 2023, Select Medical's Board of Directors
declared a cash dividend of $0.125
per share. The dividend will be payable on or about May 31,
2023, to stockholders of record as of the close of business on
May 18, 2023.
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.
Select Medical did not repurchase shares under its authorized
stock repurchase program during the three months ended
March 31, 2023. Since the inception of the common stock
repurchase program through March 31, 2023, Select Medical has
repurchased 48,234,823 shares at a cost of approximately
$600.3 million, or $12.45 per share, which includes transaction
costs.
Financing Transaction
On February 21, 2023, Select
Medical entered into Amendment No. 6 to its senior secured credit
agreement. Amendment No. 6 extended the maturity date on
$530.0 million of the total
borrowing capacity of $650.0 million
under the revolving credit facility to March
6, 2025; however, in the event that Select Medical's term
loan borrowings under its senior secured credit agreement are not
refinanced by January 3, 2025, the
maturity date for those revolving credit facility borrowings will
be January 3, 2025.
Business Outlook
Select Medical reaffirms its 2023 business outlook for revenue,
which was provided most recently in its February 23, 2023 press release. Select Medical
continues to expect consolidated revenue to be in the range of
$6.5 billion to $6.7 billion for the full year of 2023. Select
Medical is also issuing its 2023 business outlook for Adjusted
EBITDA and fully diluted earnings per common share. Select Medical
expects Adjusted EBITDA to be in the range of $780.0 million to $820.0
million and fully diluted earnings per common share to be in
the range of $1.75 to $1.99. A reconciliation of full year 2023
Adjusted EBITDA expectations to net income is presented in table
VII of this release.
Conference Call
Select Medical will host a conference call regarding its first
quarter result and its business outlook on Friday, May 5, 2023, at 9:00am ET. The conference call will be a live
webcast and can be accessed at Select Medical Holdings
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 2023 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:
- adverse economic conditions including an inflationary
environment could cause us to continue to experience increases in
the prices of labor and other costs of doing business resulting in
a negative impact on our business, operating results, cash flows,
and financial condition;
- shortages in qualified nurses, therapists, physicians, or other
licensed providers, and/or the inability to attract or retain
qualified healthcare professionals could limit our ability to staff
our facilities;
- shortages in qualified health professionals could cause us to
increase our dependence on contract labor, increase our efforts to
recruit and train new employees, and expand upon our initiatives to
retain existing staff, which could increase our operating costs
significantly;
- the continuing effects of the COVID-19 pandemic including, but
not limited to, the prolonged disruption to the global financial
markets, increased operational costs due to recessionary pressures
and labor costs, 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;
- 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" in our annual
report on Form 10-K for the year ended December 31, 2022.
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 March 31, 2022 and 2023
(In thousands,
except per share amounts, unaudited)
|
|
|
|
2022
|
|
2023
|
|
%
Change
|
Revenue
|
|
$
1,599,547
|
|
$
1,664,980
|
|
4.1 %
|
Costs and
expenses:
|
|
|
|
|
|
|
Cost of services,
exclusive of depreciation and amortization
|
|
1,407,010
|
|
1,418,819
|
|
0.8
|
General and
administrative
|
|
37,513
|
|
42,279
|
|
12.7
|
Depreciation and
amortization
|
|
51,039
|
|
52,425
|
|
2.7
|
Total costs and
expenses
|
|
1,495,562
|
|
1,513,523
|
|
1.2
|
Income from
operations
|
|
103,985
|
|
151,457
|
|
45.7
|
Other income and
expense:
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
5,397
|
|
8,556
|
|
58.5
|
Interest
expense
|
|
(35,514)
|
|
(48,571)
|
|
36.8
|
Income before income
taxes
|
|
73,868
|
|
111,442
|
|
50.9
|
Income tax
expense
|
|
17,942
|
|
26,185
|
|
45.9
|
Net income
|
|
55,926
|
|
85,257
|
|
52.4
|
Less: Net income
attributable to non-controlling interests
|
|
6,809
|
|
14,452
|
|
112.2
|
Net income attributable
to Select Medical
|
|
$
49,117
|
|
$
70,805
|
|
44.2 %
|
Basic and diluted
earnings per common share:(1)
|
|
$
0.37
|
|
$
0.56
|
|
|
|
(1) Refer to table II
for calculation of earnings per common share.
|
II. Earnings per Share
For the Three Months
Ended March 31, 2022 and 2023
(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 months ended
March 31, 2022 and 2023:
|
Basic and Diluted
EPS
|
|
Three Months Ended
March 31,
|
|
2022
|
|
2023
|
Net income
|
$
55,926
|
|
$
85,257
|
Less: net income
attributable to non-controlling interests
|
6,809
|
|
14,452
|
Net income attributable
to Select Medical
|
49,117
|
|
70,805
|
Less: net income
attributable to participating securities
|
1,643
|
|
2,573
|
Net income attributable
to common shares
|
$
47,474
|
|
$
68,232
|
The following tables set forth the computation of EPS under the
two-class method for the three months ended March 31, 2022 and
2023:
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
|
2023
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Basic and
Diluted EPS
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Basic and
Diluted EPS
|
Common
shares
|
|
$
47,474
|
|
129,010
|
|
$
0.37
|
|
|
$
68,232
|
|
122,553
|
|
$
0.56
|
Participating
securities
|
|
1,643
|
|
4,464
|
|
$
0.37
|
|
|
2,573
|
|
4,622
|
|
$
0.56
|
Total
|
|
$
49,117
|
|
|
|
|
|
|
$
70,805
|
|
|
|
|
|
|
|
(1) Represents the
weighted average share count outstanding during the
period.
|
III. Condensed
Consolidated Balance Sheets
(In thousands,
unaudited)
|
|
|
|
December 31,
2022
|
|
March 31,
2023
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
97,906
|
|
$
83,703
|
Accounts
receivable
|
|
941,312
|
|
997,274
|
Other current
assets
|
|
232,095
|
|
232,756
|
Total Current
Assets
|
|
1,271,313
|
|
1,313,733
|
Operating lease
right-of-use assets
|
|
1,169,740
|
|
1,186,534
|
Property and equipment,
net
|
|
1,001,440
|
|
987,283
|
Goodwill
|
|
3,484,200
|
|
3,484,594
|
Identifiable intangible
assets, net
|
|
351,662
|
|
346,606
|
Other assets
|
|
386,938
|
|
380,986
|
Total
Assets
|
|
$
7,665,293
|
|
$
7,699,736
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Payables and
accruals
|
|
$
874,016
|
|
$
832,099
|
Current operating
lease liabilities
|
|
236,784
|
|
239,713
|
Current portion of
long-term debt and notes payable
|
|
44,351
|
|
113,894
|
Total Current
Liabilities
|
|
1,155,151
|
|
1,185,706
|
Non-current operating
lease liabilities
|
|
1,008,394
|
|
1,024,676
|
Long-term debt, net of
current portion
|
|
3,835,211
|
|
3,766,838
|
Non-current deferred
tax liability
|
|
169,793
|
|
163,024
|
Other non-current
liabilities
|
|
106,137
|
|
106,652
|
Total
Liabilities
|
|
6,274,686
|
|
6,246,896
|
Redeemable
non-controlling interests
|
|
34,043
|
|
34,399
|
Total equity
|
|
1,356,564
|
|
1,418,441
|
Total Liabilities
and Equity
|
|
$
7,665,293
|
|
$
7,699,736
|
IV. Condensed
Consolidated Statements of Cash Flows
For the Three Months
Ended March 31, 2022 and 2023
(In thousands,
unaudited)
|
|
|
|
2022
|
|
2023
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
55,926
|
|
$
85,257
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Distributions from
unconsolidated subsidiaries
|
|
7,486
|
|
2,566
|
Depreciation and
amortization
|
|
51,039
|
|
52,425
|
Provision for expected
credit losses
|
|
94
|
|
429
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(5,397)
|
|
(8,556)
|
Gain on sale or
disposal of assets
|
|
(23)
|
|
(7)
|
Stock compensation
expense
|
|
8,823
|
|
10,181
|
Amortization of debt
discount, premium and issuance costs
|
|
558
|
|
565
|
Deferred income
taxes
|
|
420
|
|
(2,601)
|
Changes in operating
assets and liabilities, net of effects of business
combinations:
|
|
|
|
|
Accounts
receivable
|
|
(52,225)
|
|
(55,397)
|
Other current
assets
|
|
(1,819)
|
|
(11,742)
|
Other
assets
|
|
2,686
|
|
3,659
|
Accounts payable and
accrued expenses
|
|
1,697
|
|
(25,339)
|
Government
advances
|
|
(62,928)
|
|
—
|
Net cash provided by
operating activities
|
|
6,337
|
|
51,440
|
Investing
activities
|
|
|
|
|
Business combinations,
net of cash acquired
|
|
(5,186)
|
|
(397)
|
Purchases of property,
equipment, and other assets
|
|
(46,845)
|
|
(58,885)
|
Investment in
businesses
|
|
(3,337)
|
|
(9,800)
|
Proceeds from sale of
assets
|
|
37
|
|
20
|
Net cash used in
investing activities
|
|
(55,331)
|
|
(69,062)
|
Financing
activities
|
|
|
|
|
Borrowings on revolving
facilities
|
|
280,000
|
|
225,000
|
Payments on revolving
facilities
|
|
(100,000)
|
|
(210,000)
|
Borrowings of other
debt
|
|
15,794
|
|
21,448
|
Principal payments on
other debt
|
|
(9,188)
|
|
(11,170)
|
Dividends paid to
common stockholders
|
|
(16,691)
|
|
(15,897)
|
Repurchase of common
stock
|
|
(51,676)
|
|
—
|
Decrease in
overdrafts
|
|
(7,608)
|
|
(724)
|
Proceeds from issuance
of non-controlling interests
|
|
5,229
|
|
2,731
|
Distributions to and
purchases of non-controlling interests
|
|
(10,295)
|
|
(7,969)
|
Net cash provided by
financing activities
|
|
105,565
|
|
3,419
|
Net increase (decrease)
in cash and cash equivalents
|
|
56,571
|
|
(14,203)
|
Cash and cash
equivalents at beginning of period
|
|
74,310
|
|
97,906
|
Cash and cash
equivalents at end of period
|
|
$
130,881
|
|
$
83,703
|
Supplemental
information
|
|
|
|
|
Cash paid for interest,
excluding amounts received of $17,828 under the
interest rate cap contract for the three months ended March 31,
2023
|
|
$
53,517
|
|
$
84,531
|
Cash paid for
taxes
|
|
923
|
|
336
|
V. Key
Statistics
For the Three Months
Ended March 31, 2022, and 2023
(unaudited)
|
|
|
|
2022
|
|
2023
|
|
%
Change
|
Critical Illness
Recovery Hospital
|
|
|
|
|
|
|
Number of hospitals
operated – end of period(a)
|
|
105
|
|
105
|
|
|
Revenue
(,000)
|
|
$
601,755
|
|
$
593,926
|
|
(1.3) %
|
Number of patient
days(b)(c)
|
|
289,217
|
|
286,746
|
|
(0.9) %
|
Number of
admissions(b)(d)
|
|
9,457
|
|
9,438
|
|
(0.2) %
|
Revenue per patient
day(b)(e)
|
|
$
2,075
|
|
$
2,058
|
|
(0.8) %
|
Occupancy
rate(b)(f)
|
|
71 %
|
|
72 %
|
|
1.4 %
|
Adjusted EBITDA
(,000)
|
|
$
35,967
|
|
$
76,773
|
|
113.5 %
|
Adjusted EBITDA
margin
|
|
6.0 %
|
|
12.9 %
|
|
|
Rehabilitation
Hospital
|
|
|
|
|
|
|
Number of hospitals
operated – end of period(a)
|
|
30
|
|
32
|
|
|
Revenue
(,000)
|
|
$
220,634
|
|
$
231,462
|
|
4.9 %
|
Number of patient
days(b)(c)
|
|
103,802
|
|
107,910
|
|
4.0 %
|
Number of
admissions(b)(d)
|
|
7,182
|
|
7,620
|
|
6.1 %
|
Revenue per patient
day(b)(e)
|
|
$
1,943
|
|
$
1,969
|
|
1.3 %
|
Occupancy
rate(b)(f)
|
|
84 %
|
|
86 %
|
|
2.4 %
|
Adjusted EBITDA
(,000)
|
|
$
42,379
|
|
$
47,216
|
|
11.4 %
|
Adjusted EBITDA
margin
|
|
19.2 %
|
|
20.4 %
|
|
|
Outpatient
Rehabilitation
|
|
|
|
|
|
|
Number of clinics
operated – end of period(a)
|
|
1,901
|
|
1,936
|
|
|
Working
days(g)
|
|
64
|
|
64
|
|
|
Revenue
(,000)
|
|
$
271,940
|
|
$
295,903
|
|
8.8 %
|
Number of
visits(b)(h)
|
|
2,310,086
|
|
2,636,770
|
|
14.1 %
|
Revenue per
visit(b)(i)
|
|
$
102
|
|
$
101
|
|
(1.0) %
|
Adjusted EBITDA
(,000)
|
|
$
26,596
|
|
$
30,199
|
|
13.5 %
|
Adjusted EBITDA
margin
|
|
9.8 %
|
|
10.2 %
|
|
|
Concentra
|
|
|
|
|
|
|
Number of centers
operated – end of period(b)
|
|
518
|
|
539
|
|
|
Working
days(g)
|
|
64
|
|
64
|
|
|
Revenue
(,000)
|
|
$
423,423
|
|
$
456,298
|
|
7.8 %
|
Number of
visits(b)(h)
|
|
3,116,898
|
|
3,217,945
|
|
3.2 %
|
Revenue per
visit(b)(i)
|
|
$
125
|
|
$
133
|
|
6.4 %
|
Adjusted EBITDA
(,000)
|
|
$
89,469
|
|
$
93,748
|
|
4.8 %
|
Adjusted EBITDA
margin
|
|
21.1 %
|
|
20.5 %
|
|
|
|
|
|
|
(a)
|
Includes managed
locations.
|
|
|
(b)
|
Excludes managed
locations. For purposes of the Concentra segment, onsite 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. COVID-19 screening and testing services provided
by our Concentra segment are not included in these
figures.
|
|
|
(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 or
revenues generated from COVID-19 screening and testing
services.
|
VI. Net Income to Adjusted EBITDA
Reconciliation
For the Three Months Ended March 31, 2022 and 2023
(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
March
31,
|
|
|
2022
|
|
2023
|
Net income
|
|
$
55,926
|
|
$
85,257
|
Income tax
expense
|
|
17,942
|
|
26,185
|
Interest
expense
|
|
35,514
|
|
48,571
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(5,397)
|
|
(8,556)
|
Income from
operations
|
|
103,985
|
|
151,457
|
Stock compensation
expense:
|
|
|
|
|
Included in general
and administrative
|
|
6,949
|
|
8,405
|
Included in cost of
services
|
|
1,874
|
|
1,776
|
Depreciation and
amortization
|
|
51,039
|
|
52,425
|
Adjusted
EBITDA
|
|
$
163,847
|
|
$
214,063
|
|
|
|
|
|
Critical illness
recovery hospital
|
|
$
35,967
|
|
$
76,773
|
Rehabilitation
hospital
|
|
42,379
|
|
47,216
|
Outpatient
rehabilitation
|
|
26,596
|
|
30,199
|
Concentra
|
|
89,469
|
|
93,748
|
Other(a)
|
|
(30,564)
|
|
(33,873)
|
Adjusted
EBITDA
|
|
$
163,847
|
|
$
214,063
|
|
|
|
|
(a)
|
Other primarily
includes general and administrative costs and other operating
income, as discussed further above.
|
VII. Net Income to Adjusted EBITDA
Reconciliation
Business Outlook for the Year Ending
December 31, 2023
(In
millions, unaudited)
The following is a reconciliation of full year 2023 Adjusted
EBITDA expectations as computed at the low and high points of the
range to the closest comparable GAAP financial measure. Refer to
table VI for the definition of Adjusted EBITDA and a discussion of
Select Medical's use of Adjusted EBITDA in evaluating financial
performance. Each item presented in the below table is an
estimation of full year 2023 expectations.
|
Range
|
Non-GAAP Measure
Reconciliation
|
Low
|
|
High
|
Net income attributable
to Select Medical
|
$
224
|
|
$
254
|
Net income attributable
to non-controlling interests
|
53
|
|
57
|
Net income
|
277
|
|
311
|
Income tax
expense
|
92
|
|
102
|
Interest
expense
|
192
|
|
192
|
Equity in earnings of
unconsolidated subsidiaries
|
(38)
|
|
(42)
|
Income from
operations
|
523
|
|
563
|
Stock compensation
expense
|
43
|
|
43
|
Depreciation and
amortization
|
214
|
|
214
|
Adjusted
EBITDA
|
$
780
|
|
$
820
|
View original
content:https://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-first-quarter-ended-march-31-2023-and-cash-dividend-301816587.html
SOURCE Select Medical Holdings Corporation