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Select Medical (SEM) Q2 Earnings Beat, Raises '21 EPS View

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Select Medical Holdings Corporation (SEM - Free Report) reported second-quarter 2021 adjusted earnings of $1.22 per share, which outpaced the Zacks Consensus Estimate by 103.3%. The bottom line improved to more than three-fold year over year.

The company’s results benefited from uptick in revenues, improved admissions at Rehabilitation Hospital segment and higher patient visits at Outpatient Rehabilitation segment. However, the upside was partly offset by escalating expenses.

Net operating revenues climbed 26.9% year over year to $1.6 billion driven by solid contributions from all the four segments of the company. The top line surpassed the Zacks Consensus Estimate by 3.4%.

Total costs and expenses of $1.4 billion escalated 18% year over year primarily due to 19.3% and 6.8% rise in cost of services, and general and administrative expenses, respectively.

The company’s adjusted EBITDA soared 91.3% year over year to $342 million in the quarter under review.

Segmental Update

Critical Illness Recovery Hospital

Operating revenues at the segment amounted to $544.1 million, which advanced 4.7% year over year. However, patient days fell 1.4% year over year in the second quarter. Adjusted EBITDA of $72.9 million slumped 18.7% from the prior-year quarter’s figure.

Rehabilitation Hospital Segment

The segment’s operating revenues rose 26.1% year over year to $212.7 million attributable to 24.8% increase in patient days. Adjusted EBITDA at the segment soared 83.9% year over year to $50.8 million.

Outpatient Rehabilitation

Operating revenues surged 67.8% year over year to $280.4 million, courtesy of 79.2% rise in patient visits. In the quarter under review, adjusted EBITDA of $45.6 million compared favorably with the year-ago quarter’s adjusted EBITDA losses of $6.3 million.

Concentra

The segment reported operating revenues of $456.4 million, which climbed 46.1% year over year on the back of 40.9% growth in patient visits. Adjusted EBITDA increased to more than three-fold year over year to $137.1 million in the quarter under review.

Financial Position (as of Jun 30, 2021)

Select Medical exited the second quarter with cash and cash equivalents worth $803.5 million, which increased 39.2% from the figure at 2020 end.

Long-term debt, net of current portion totaled $3.4 billion, which remained almost unchanged from the figure as of Dec 31, 2020.

Total equity of $1.4 billion rose 15.7% from the 2020-end level.

Net cash provided by operating activities in the second quarter amounted to $123.1 million, which declined to more than five-fold year over year.

Share Repurchase & Dividend Update

The company did not buy back shares in the second quarter.

The board of directors approved a cash dividend of 12.5 cents per share on Aug 4 of this year. The dividend will be paid on or about Aug 30, 2021 to shareholders of record as on Aug 18.

2021 Business Outlook Revised

Concurrent with second-quarter results, Select Medical has updated its business outlook for 2021 with respect to the following metrics.

Revenues are now estimated to be $5.85-$6.05 billion, up from the previous outlook of $5.7-$5.9 billion.

Adjusted EBITDA for 2021 is forecast between $970 million and $1 billion, higher from the prior guidance of $870-$900 million.

Earnings per common share is expected to lie within $2.91-$3.08, which is higher compared to the previous projection of $2.41-$2.58 for 2021.

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 currently 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 second-quarter results so far, the bottom line of Anthem, Inc. (ANTM - Free Report) , Universal Health Services, Inc. (UHS - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the Zacks Consensus Estimate.