Select Medical Holdings Corporation ( SEM Quick Quote SEM - Free Report) reported first-quarter 2023 adjusted earnings of 56 cents per share, beating the Zacks Consensus Estimate by 51.4% and our estimate of earnings of 35 cents. The bottom line jumped 51.4% year over year.
Net operating revenues of $1,665 million rose 4.1% year over year in the quarter under review. The metric beat the consensus mark by 3%.
The better-than-expected quarterly results benefited from improving profitability across all segments. Improving number of visits in the Outpatient Rehabilitation and Concentra segment and better occupancy rates in the Critical Illness Recovery and Rehabilitation hospital segment also supported the upside. Increasing expenses partially offset the positives.
Total costs and expenses rose 1.2% year over year to $1,513.5 million.
Adjusted EBITDA came in at $214.1 million, which increased 30.6% year over year in the first quarter.
Segmental Update Critical Illness Recovery Hospital
The segment’s operating revenues of $593.9 million declined 1.3% year over year due to a 0.2% decline in admissions and a 0.9% fall in patient days within the segment. Operating revenues beat our estimate of $572 million by 3.8%.
Adjusted EBITDA of $76.8 million skyrocketed 113.5% year over year. The metric beat our estimate of $39 million by 96.8%.
Revenues of $231.5 million improved 4.9% year over year in the segment, courtesy of 4% growth in patient days, a 6.1% rise in admissions and a 2.4% jump in occupancy rate. Revenues missed our estimate of $244 million by 5.2%.
Adjusted EBITDA increased 11.4% year over year to $47.2 million in the quarter under review. The metric missed the consensus mark by 13.7% and our estimate of $54.7 million.
The segment reported operating revenues of $295.9 million in the first quarter, up 8.8% year over year. The metric beat the consensus mark by 3.1% and our estimate of $287.5 million. The increase can be attributed to a 14.1% increase in visits. Adjusted EBITDA of $30.1 million increased 13.5% year over year. The metric beat the consensus mark by 56.9%.
Operating revenues of the segment amounted to $456.3 million, which rose 7.8% year over year. The metric beat the consensus mark by 8.2%. The increase can be attributed to a 3.2% increase in visits. Adjusted EBITDA increased 4.8% year over year to $93.7 million in the quarter under review. The metric beat the consensus mark by 26.8%.
Financial Position (as of Mar 31, 2023)
Select Medical exited the first quarter with cash and cash equivalents of $83.7 million, which declined from $97.9 million at 2022-end. Total assets of $7,699.7 increased from $7,665.3 million at 2022-end.
SEM had $133.8 million left under its revolving facility on Mar 31, 2023.
Long-term debt, net of the current portion, of $3,766.8 million decreased from $3,835.2 million at 2022-end.
Total equity of $1,418.4 million rose from $1,356.6 million at 2022-end.
Net cash provided by operating activities increased to $51.4 million from $6.3 million a year ago.
Share Repurchase & Dividend Update
Select Medical has authorized a buyback program with $1 billion in funds, which is expected to terminate on Dec 31, 2023. It did not repurchase any shares this quarter.
On May 3, 2023, management sanctioned a cash dividend of 12.5 cents per share. The dividend will be paid out on May 31 to its shareholders of record as of May 18.
2023 Business Outlook
The company expects revenues to be within the range of $6.5-$6.7 billion in 2023, the midpoint of which indicates a rise of 4.8% from the 2022 figure of $6.3 billion.
The management of SEM expects adjusted EBITDA to be within the range of $780-$820 million in 2023, the midpoint of which indicates a rise of 23.7% from the 2022 figure of $646.9 million.
The company expects fully diluted earnings per common share to be within the range of $1.75-$1.99 in 2023, the midpoint of which indicates a rise of 52% from the 2022 figure of $1.23 per share.
Select Medical currently has a Zacks Rank #4 (Sell).
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Of the companies in the
Medical – HMOspace that have reported their first-quarter results so far, the bottom lines of Humana Inc. ( HUM Quick Quote HUM - Free Report) and UnitedHealth Group Incorporated ( UNH Quick Quote UNH - Free Report) beat the Zacks Consensus Estimate, while the same for Centene Corporation ( CNC Quick Quote CNC - Free Report) missed.
Humana reported first-quarter 2023 adjusted earnings per share (EPS) of $9.38, which beat the Zacks Consensus Estimate by 1.4% but missed our estimate of $9.78. The bottom line climbed 16.7% year over year.
HUM’squarterly results benefited from growing premiums coupled with solid segmental performances. Favorable trends of inpatient utilization added to the positives. However, the upside was partly hurt by an elevated operating expense level.
UnitedHealth Group has reported first-quarter 2023 adjusted earnings of $6.26 per share, which beat the Zacks Consensus Estimate of $6.24 and our estimate of $6.17. The bottom line improved from $5.49 reported a year ago.
UNH’s quarterly performance was driven by sustained membership growth in its UnitedHealthcare business. Strong expansion in value-based arrangements at the Optum Health segment also contributed to the upside. However, the upside was partly offset by elevated operating costs.
Centene Corporation reported first-quarter 2023 adjusted EPS of $2.11, which lagged the Zacks Consensus Estimate by 5.4%. Nevertheless, the bottom line advanced 15.3% year over year.
Revenues of CNC amounted to $38,889 million, which improved 4.6% year over year. The top line outpaced the consensus mark by 7.1%.
The quarterly results took a hit from escalating medical costs. Nevertheless, the downside was partly offset by a growing premium base stemming from solid membership growth within most of its business lines and numerous contract wins.