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Select Medical (SEM) Beats on Q1 Earnings, Hikes '21 EPS View

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Select Medical Holdings Corporation (SEM - Free Report) reported first-quarter 2021 adjusted earnings of 82 cents per share, which surpassed the Zacks Consensus Estimate by 26.2%. Further, the bottom line more than doubled from the prior-year quarter’s figure.

The company’s results gained from growing revenues and increased admissions at Critical Illness Recovery Hospital and Rehabilitation Hospital segments, partly offset by elevated costs.

Moreover, net operating revenues of $1.5 billion improved 9.3% year over year, courtesy of strong segmental performances barring Outpatient Rehabilitation segment. The top line also beat the Zacks Consensus Estimate by 4.5%.

Total costs and expenses of $1.4 billion increased 7.2% year over year primarily due to 7.8% and 4.6% rise in cost of services and, general and administrative expenses, respectively.

In the quarter under review, adjusted EBITDA amounted to $258.3 million, reflecting 37.9% growth year over year.

Segmental Performance

Critical Illness Recovery Hospital

Operating revenues of $594.9 million rose 18.9% year over year driven by 8.4% uptick in patient days. Adjusted EBITDA for the segment advanced 27.9% year over year to $113.3 million in the quarter under review.

Rehabilitation Hospital Segment

Operating revenues for the segment climbed 14.2% year over year to $207.8 million, courtesy of 8.3% rise in patient days. Adjusted EBITDA grew 31% year over year to $50.5 million.

Outpatient Rehabilitation

Operating revenues of $252 million dipped 1.3% year over year due to 1.1% decrease in patient visits. Adjusted EBITDA for the segment fell 3% year over year to $26.3 million in the quarter under review.


Operating revenues at the segment advanced 6.1% year over year to $422.8 million but number of visits declined 2.8% year over year in the quarter. Adjusted EBITDA improved 33.4% year over year to $82 million.

Balance Sheet Position (as of Mar 31, 2021)

The company exited the first quarter with cash and cash equivalents worth $750.3 million, which increased 30% from the 2020-end level.

Long-term debt, net of current portion amounted to $3.4 billion, which remained unchanged from the level at 2020 end.

Total equity increased 7.8% from the 2020-end level to $1.4 billion.

During the quarter, net cash provided by operating activities of $239.9 million increased to more than five-fold year over year.

Share Repurchase & Dividend Update

In the reported quarter, Select Medical did not buy back shares.

The company’s board of directors announced a cash dividend of 12.5 cents per share on May 5 of this year. The dividend will be paid on or about Jun 1, 2021 to shareholders of record as on May 19.

2021 Outlook Updated

Following first-quarter results, Select Medical has raised its 2021 business outlook for the following metrics. Revenues are now anticipated to be $5.7-$5.9 billion, higher than the prior guidance of $5.65-$5.85 billion. This year, adjusted EBITDA is projected between $870 million and $900 million, higher than the prior outlook of $840-$880 million. Earnings per common share is forecast to be $2.41-$2.58 for 2021, which is higher than the previous guidance of $2.26-$2.48.

Over the 2021-2023 period, the company’s long-term guidance for revenues, adjusted EBITDA and earnings per common share remained unchanged from the prior outlook.

Zacks Rank

Select Medical presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Of the medical sector players that reported first-quarter results so far, the bottom line of Molina Healthcare, Inc. (MOH - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the Zacks Consensus Estimate.

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