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Select Medical (SEM) '21 Sales View Up, Labor Costs Ail Profits

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Select Medical Holdings Corporation (SEM - Free Report) recently provided estimates for some crucial metrics for the year 2021. It plans to report fourth-quarter and full-year 2021 results on Feb 24, after the closing bell. Let’s see how the company fared in 2021 and which way estimates are headed.

Operational Update

SEM estimates net operating revenues for 2021 to be $6.2 billion, up from the previous expectation of $6.05-$6.15 billion. This indicates significant growth from the 2020 reported figure of $5.5 billion.

Yet, Select Medical’s increasing costs are eating into profits. Its critical illness recovery hospital segment witnessed a greater-than-expected usage of agency clinical staff in the fourth quarter. This might have increased costs for agency in the hospitals. Higher labor costs might have affected the company’s profits.

Adjusted EBITDA for 2021 is now estimated at $947 million, down from the previous forecast between $980 million and $1 billion. Nevertheless, this indicates an increase from the 2020 reading of $800.6 million.

Earnings for 2021 are expected within $2.90-$2.92 per share.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 42 cents per share, indicating a decline of 26.3% from the year-ago figure. The estimate has been unchanged over the past week. Revenues for the fourth quarter are estimated at $1.5 billion, signaling a 3.7% increase from the year-ago period.

Select Medical boasts an impressive earnings surprise history. The company beat earnings estimates in each of the last four quarters, with the average being 69.2%. This is depicted in the graph below.

Zacks Rank & Key Picks

Select Medical currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space include Globus Medical, Inc. (GMED - Free Report) , Apyx Medical Corporation (APYX - Free Report) and Neogen Corporation (NEOG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Globus Medicaldevelops healthcare solutions for patients with musculoskeletal disorders. GMED also provides products for orthopedic trauma treatments. The medical device company’s bottom line for 2021 is expected to jump 40.3% from the year-ago figure. Audubon, PA-based Globus Medical has witnessed one upward estimate revision in the past 60 days and no movement in the opposite direction. Globus Medical beat earnings estimates in each of the last four quarters, with the average being 21.4%.

Apyx Medical is a manufacturer of medical devices for cosmetic and surgical markets around the world. Based in Clearwater, FL, APYX’s bottom line for 2021 is expected to rise 17.5% year over year. It has witnessed one upward estimate revision in the past 60 days and no movement in the opposite direction. Apyx Medical beat earnings estimates thrice in the last four quarters and met once, with the average surprise being 25.9%.

Neogen develops products for food and animal safety all over the world. Based in Lansing, MI, the diagnostic and research company’s bottom line for the current year is expected to rise 15.8% year over year. Neogen is well poised to gain from its extensive global foothold and diverse product mix. The company’s long-term growth strategy is impressive.