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Select Medical (SEM) Unveils Separation Plan for Concentra
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Select Medical Holdings Corporation (SEM - Free Report) recently disclosed that management has given a nod for the separation plan of its wholly-owned occupational health services business, Concentra Group Holdings Parent, LLC. The Concentra unit comprised 539 occupational health centers in 41 states and 145 onsite clinics at employer worksites as of Sep 30, 2023. These facilities offer workers’ compensation injury care, physical therapy, consumer health services and occupational medicine services.
Subject to the fulfillment of customary conditions, the abovementioned separation is likely to be completed in late 2024. Detailed information about the capital structure, governance and other elements of the potential separation is expected to be unwrapped in the days ahead.
On completion, two independent and publicly traded companies will emerge as a result of the latest move. Post separation, the stockholders of Select Medical will retain the existing shares of the healthcare provider and additionally, be entitled to a pro-rata distribution of Concentra stock through the pursuit of a transaction. For U.S. federal income tax, the transaction is intended to be tax-free for Select Medical and its stockholders.
Also, the Concentra business will pursue one or more financing transactions regarding the proposed separation transaction. The proceeds derived from the transaction are likely to pay off intercompany debt or be dispensed to Select Medical to bring down its significant debt burden. Therefore, it seems to be time opportune considering the significant debt burden that SEM grapples with.
Long-term debt, net of the current portion, amounted to $3.7 billion as of Sep 30, 2023. Needless to say, a high debt level induces an increase in interest expenses, which escalated 21.4% year over year in the first nine months of 2023.
The recent announcement marks SEM’s sincere efforts to boost shareholder value and intensify focus on addressing strategic priorities, thereby sustaining its solid reputation of being a leading healthcare services provider across the United States. Select Medical boasts an extensive treatment network, consisting of 107 critical illness recovery hospitals in 28 states, 33 rehabilitation hospitals in 13 states and 1,946 outpatient rehabilitation clinics across 39 states and the District of Columbia as of Sep 30, 2023.
Also, the separation will provide an opportunity for the Concentra unit to boost its growth prospects and solidify its market presence. The segment accounted for around 28% of SEM’s revenues in the first nine months of 2023 and continues to benefit on the back of increased patient visits.
Shares of Select Medical have declined 3.9% in the past three months against the industry’s 5.7% growth. SEM currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the Medical space are Regeneron Pharmaceuticals, Inc. (REGN - Free Report) , Encompass Health Corporation (EHC - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . While Regeneron Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), Encompass Health and Thermo Fisher Scientific carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron Pharmaceuticals’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 12.34%. The consensus estimate for REGN’s 2024 earnings and revenues suggests an improvement of 1.9% and 4.7% from the respective 2023 estimate.
The consensus estimate for Regeneron Pharmaceuticals' 2024 earnings has moved 4.4% north in the past 30 days. Shares of REGN have gained 10.4% in the past three months.
Encompass Health’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.33%. The consensus estimate for EHC’s 2024 earnings and revenues implies a rise of 9% and 8.4% from the respective 2023 estimate.
The consensus estimate for Encompass Health’s 2024 earnings has moved 0.3% north in the past 60 days. Shares of EHC have gained 1.6% in the past three months.
Thermo Fisher Scientific’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 0.62%. The consensus estimate for TMO’s 2024 earnings suggests an improvement of 1.2% from the 2023 estimate.
The stock has witnessed one upward estimate revision compared with none for 2024 earnings over the past 30 days. Shares of TMO have gained 6.2% in the past three months.
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Select Medical (SEM) Unveils Separation Plan for Concentra
Select Medical Holdings Corporation (SEM - Free Report) recently disclosed that management has given a nod for the separation plan of its wholly-owned occupational health services business, Concentra Group Holdings Parent, LLC. The Concentra unit comprised 539 occupational health centers in 41 states and 145 onsite clinics at employer worksites as of Sep 30, 2023. These facilities offer workers’ compensation injury care, physical therapy, consumer health services and occupational medicine services.
Subject to the fulfillment of customary conditions, the abovementioned separation is likely to be completed in late 2024. Detailed information about the capital structure, governance and other elements of the potential separation is expected to be unwrapped in the days ahead.
On completion, two independent and publicly traded companies will emerge as a result of the latest move. Post separation, the stockholders of Select Medical will retain the existing shares of the healthcare provider and additionally, be entitled to a pro-rata distribution of Concentra stock through the pursuit of a transaction. For U.S. federal income tax, the transaction is intended to be tax-free for Select Medical and its stockholders.
Also, the Concentra business will pursue one or more financing transactions regarding the proposed separation transaction. The proceeds derived from the transaction are likely to pay off intercompany debt or be dispensed to Select Medical to bring down its significant debt burden. Therefore, it seems to be time opportune considering the significant debt burden that SEM grapples with.
Long-term debt, net of the current portion, amounted to $3.7 billion as of Sep 30, 2023. Needless to say, a high debt level induces an increase in interest expenses, which escalated 21.4% year over year in the first nine months of 2023.
The recent announcement marks SEM’s sincere efforts to boost shareholder value and intensify focus on addressing strategic priorities, thereby sustaining its solid reputation of being a leading healthcare services provider across the United States. Select Medical boasts an extensive treatment network, consisting of 107 critical illness recovery hospitals in 28 states, 33 rehabilitation hospitals in 13 states and 1,946 outpatient rehabilitation clinics across 39 states and the District of Columbia as of Sep 30, 2023.
Also, the separation will provide an opportunity for the Concentra unit to boost its growth prospects and solidify its market presence. The segment accounted for around 28% of SEM’s revenues in the first nine months of 2023 and continues to benefit on the back of increased patient visits.
Shares of Select Medical have declined 3.9% in the past three months against the industry’s 5.7% growth. SEM currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the Medical space are Regeneron Pharmaceuticals, Inc. (REGN - Free Report) , Encompass Health Corporation (EHC - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) . While Regeneron Pharmaceuticals sports a Zacks Rank #1 (Strong Buy), Encompass Health and Thermo Fisher Scientific carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron Pharmaceuticals’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 12.34%. The consensus estimate for REGN’s 2024 earnings and revenues suggests an improvement of 1.9% and 4.7% from the respective 2023 estimate.
The consensus estimate for Regeneron Pharmaceuticals' 2024 earnings has moved 4.4% north in the past 30 days. Shares of REGN have gained 10.4% in the past three months.
Encompass Health’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 17.33%. The consensus estimate for EHC’s 2024 earnings and revenues implies a rise of 9% and 8.4% from the respective 2023 estimate.
The consensus estimate for Encompass Health’s 2024 earnings has moved 0.3% north in the past 60 days. Shares of EHC have gained 1.6% in the past three months.
Thermo Fisher Scientific’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 0.62%. The consensus estimate for TMO’s 2024 earnings suggests an improvement of 1.2% from the 2023 estimate.
The stock has witnessed one upward estimate revision compared with none for 2024 earnings over the past 30 days. Shares of TMO have gained 6.2% in the past three months.