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Can Low Occupancy Rate Affect Select Medical (SEM) Q4 Earnings?
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Select Medical Holdings Corporation (SEM - Free Report) is set to report its fourth-quarter 2023 results on Feb 22, after the closing bell.
Where Do the Estimates Stand?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 31 cents suggests a 40.9% increase from the prior-year level of 22 cents. The consensus mark, however, declined by a penny over the past week. The consensus estimate for fourth-quarter revenues of nearly $1.6 billion indicates a 1.8% increase from the year-ago reported figure.
Select Medical beat the consensus estimate for earnings in two of the prior four quarters, met once and missed on the other occasion, with the average surprise being 9.8%. This is depicted in the graph below:
Select Medical Holdings Corporation Price and EPS Surprise
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at SEM’s previous-quarter performance first.
Q3 Earnings Rewind
In the last reported quarter, Select Medical’s adjusted earnings per share of 46 cents beat the Zacks Consensus Estimate by 21.1% on the back of the Rehabilitation Hospital and Concentra segments’ strength. The positives were partially offset by rising costs and expenses.
Select Medical’s fourth-quarter results are expected to benefit from growing visits in Outpatient Rehabilitation and Concentra. Also, both the Zacks Consensus Estimate as well as our estimate for Critical Illness Recovery Hospital revenues indicate an increase of 0.7% from the year-ago figure of $561.9 million.
Similarly, both the estimates for Rehabilitation Hospital revenues indicate 1.4% year-over-year growth. Both the Zacks Consensus Estimate as well as our estimate for Rehabilitation Hospital patient days suggest a 1.3% increase from a year ago.
The consensus mark and our model estimates for Outpatient Rehabilitation revenues suggest a 1.7% increase from the year-ago period. We expect the number of visits in the segment to have jumped 9.5% in the fourth quarter.
We expect revenues from its Concentra business, which provides occupational health services, to have increased more than 4% year over year. It is likely to have benefited from a 7% increase in number of visits.
The above-mentioned factors are expected to have positioned Select Medical for year-over-year growth. However, the Zacks Consensus Estimate for Critical Illness Recovery Hospital occupancy rate indicates a deterioration of 360 basis points. We expect the same for Rehabilitation Hospital to have declined 290 basis points in the fourth quarter.
Furthermore, we expect total costs and expenses in the fourth quarter to have increased to more than $1.5 billion due to higher cost of services and depreciation and amortization expenses. This is likely to have partially offset the upside, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Select Medical this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -6.73%. This is because the Most Accurate Estimate is currently pegged at 29 cents per share, lower than the Zacks Consensus Estimate of 31 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Select Medical currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Select Medical, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Esperion Therapeutics’ bottom line for the to-be-reported quarter indicates a 30.3% improvement from the year-ago period. ESPR beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 7.5%.
Amarin Corporation plc (AMRN - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #3.
The Zacks Consensus Estimate for Amarin’s bottom line for the to-be-reported quarter improved by a penny over the past month. During this time, it has witnessed one upward revision against none in the opposite direction. AMRN beat earnings estimates in each of the past four quarters, with an average surprise of 175%.
Codexis, Inc. (CDXS - Free Report) has an Earnings ESP of +81.25% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Codexis’ earnings per share for the to-be-reported quarter indicates a 15.8% year-over-year improvement. CDXS beat earnings estimates in three of the past four quarters and missed once, with the average surprise being 9.5%.
Image: Bigstock
Can Low Occupancy Rate Affect Select Medical (SEM) Q4 Earnings?
Select Medical Holdings Corporation (SEM - Free Report) is set to report its fourth-quarter 2023 results on Feb 22, after the closing bell.
Where Do the Estimates Stand?
The Zacks Consensus Estimate for fourth-quarter earnings per share of 31 cents suggests a 40.9% increase from the prior-year level of 22 cents. The consensus mark, however, declined by a penny over the past week. The consensus estimate for fourth-quarter revenues of nearly $1.6 billion indicates a 1.8% increase from the year-ago reported figure.
Select Medical beat the consensus estimate for earnings in two of the prior four quarters, met once and missed on the other occasion, with the average surprise being 9.8%. This is depicted in the graph below:
Select Medical Holdings Corporation Price and EPS Surprise
Select Medical Holdings Corporation price-eps-surprise | Select Medical Holdings Corporation Quote
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at SEM’s previous-quarter performance first.
Q3 Earnings Rewind
In the last reported quarter, Select Medical’s adjusted earnings per share of 46 cents beat the Zacks Consensus Estimate by 21.1% on the back of the Rehabilitation Hospital and Concentra segments’ strength. The positives were partially offset by rising costs and expenses.
Now, let’s see how things have shaped up before the fourth-quarter earnings announcement.
Q4 Factors to Note
Select Medical’s fourth-quarter results are expected to benefit from growing visits in Outpatient Rehabilitation and Concentra. Also, both the Zacks Consensus Estimate as well as our estimate for Critical Illness Recovery Hospital revenues indicate an increase of 0.7% from the year-ago figure of $561.9 million.
Similarly, both the estimates for Rehabilitation Hospital revenues indicate 1.4% year-over-year growth. Both the Zacks Consensus Estimate as well as our estimate for Rehabilitation Hospital patient days suggest a 1.3% increase from a year ago.
The consensus mark and our model estimates for Outpatient Rehabilitation revenues suggest a 1.7% increase from the year-ago period. We expect the number of visits in the segment to have jumped 9.5% in the fourth quarter.
We expect revenues from its Concentra business, which provides occupational health services, to have increased more than 4% year over year. It is likely to have benefited from a 7% increase in number of visits.
The above-mentioned factors are expected to have positioned Select Medical for year-over-year growth. However, the Zacks Consensus Estimate for Critical Illness Recovery Hospital occupancy rate indicates a deterioration of 360 basis points. We expect the same for Rehabilitation Hospital to have declined 290 basis points in the fourth quarter.
Furthermore, we expect total costs and expenses in the fourth quarter to have increased to more than $1.5 billion due to higher cost of services and depreciation and amortization expenses. This is likely to have partially offset the upside, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Select Medical this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -6.73%. This is because the Most Accurate Estimate is currently pegged at 29 cents per share, lower than the Zacks Consensus Estimate of 31 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Select Medical currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
While an earnings beat looks uncertain for Select Medical, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Esperion Therapeutics, Inc. (ESPR - Free Report) has an Earnings ESP of +24.53% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Esperion Therapeutics’ bottom line for the to-be-reported quarter indicates a 30.3% improvement from the year-ago period. ESPR beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 7.5%.
Amarin Corporation plc (AMRN - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank #3.
The Zacks Consensus Estimate for Amarin’s bottom line for the to-be-reported quarter improved by a penny over the past month. During this time, it has witnessed one upward revision against none in the opposite direction. AMRN beat earnings estimates in each of the past four quarters, with an average surprise of 175%.
Codexis, Inc. (CDXS - Free Report) has an Earnings ESP of +81.25% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Codexis’ earnings per share for the to-be-reported quarter indicates a 15.8% year-over-year improvement. CDXS beat earnings estimates in three of the past four quarters and missed once, with the average surprise being 9.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.