It has been about a month since the last earnings report for Select Medical (SEM Quick QuoteSEM - Free Report) . Shares have added about 29.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Select Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Select Medical  Beats Q4 Earnings and Revenues Estimates

Select Medical delivered fourth-quarter 2020 earnings of 57 cents per share, beating the Zacks Consensus Estimate by 137.5%. Moreover, the bottom line soared 84% year over year on the back of improved revenues.

Additionally, net operating revenues were up 6.2% year over year to $1.46 billion owing to solid performances by its Critical Illness Recovery and Rehabilitation Hospital segments. Further, the top line surpassed the Zacks Consensus Estimate by 5.2%.

Total costs and expenses was up 5.6% year over year to $1.33 billion due to higher cost of services.

Adjusted EBITDA increased 28.7% year over year to $221.3 million.

Critical Illness Recovery Hospital

Operating revenues climbed 18.2% to $537.9 million, courtesy of better patient days. Adjusted EBITDA for the segment jumped 24.5% to $75.3 million.

Rehabilitation Hospital Segment

Operating revenues ascended 7.2% to $195.9 million, led by expanded patient days. Adjusted EBITDA was down 2.1% to $42.4 million.

Outpatient Rehabilitation

Operating revenues were down 5.3% to $257.5 million due to less patient visit volume and suspension of elective surgeries.

Adjusted EBITDA of $27.7 million down 31.1% year over year.

Concentra

Operating revenues inched up 0.4% year over year to $398.7 million due to a dip in the number of visits. Adjusted EBITDA increased 22.9% to $69.4 million.

Balance Sheet Position (as of Dec 31, 2020)

The company had $3.4 billion of long-term debt, net of current portion, down 0.9% from the level at 2019 end.

Total equity of $1.25 billion surged 34.9% from the level on Dec 31, 2019.
Total cash and cash equivalents of $577.1 million were up 71.8% from the level as of Dec 31, 2019.

Cash flow provided by operating activities for the full year 2020 was $207.4 million up 16.2% year over year.

Share Repurchase Update

Select Medical did not buy back shares in the fourth quarter.

2021 Outlook

The company expects total revenue in the range of $5.65 and $5.85 billion; adjusted EBITDA is expected in the band of $840-$880 million.The company also estimates annual adjusted earnings per share within $2.26-$2.48.

The company also provided long term guidance (2021-2023). During this period revenue is expected to grow in the n the range of 4% to 6%, Adjusted EBITDA in the range of 7% to 8% and diluted earnings per common share in the range of 17% to 20%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 41.3% due to these changes.

VGM Scores

At this time, Select Medical has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Select Medical has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.