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Select Medical (SEM) Lags Q2 Earnings, Revises 2016 View
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Select Medical Holdings Corp. (SEM - Free Report) reported second-quarter 2016 earnings of 23 cents per share, which missed the Zacks Consensus Estimate of 24 cents by 4.2%. Also, earnings declined 17.9% from the year-ago level.
In spite of an improvement in revenues, the bottom-line growth was limited by an increase in expenses.
Including gains from the sale of its contract therapy business, gain on exchange of long term acute care hospitals and gain on sale of outpatient rehabilitation clinics, Select Medical delivered net income of 26 cents per share, down 7.1% year over year.
However, share price gained 13.4% in the last trading session.
Operational Activities
Operating revenues of Select Medical grossed $1.09 billion during the quarter, up 23.7% year over year. Higher Outpatient Rehabilitation revenues and Concentra revenues drove the upside. The top line lagged the Zacks Consensus Estimate of $1.12 billion by 1.3%.
Total operating expenses amounted to $0.9 million, up 24.3% year over year. Increase of 65.7% in depreciation and amortization expenses, 23.3% in cost of services, 7.6% in general and administrative expenses, and 42.6% in bad debt expenses resulted in the overall rise in expenses.
Income from operations jumped 18.9% year over year to $1 billion backed by higher revenues.
Segment Update
Specialty Hospitals’ operating revenues dipped 1.1% year over year to $585.8 million.
Adjusted EBITDA was $82.7 million, down 9.5% year over year, with margins contracting 130 basis points (bps) to 14.1%.
Operating revenues from Outpatient Rehabilitation were up 23.6% year over year to $256.9 million, mainly due to higher number of visits by patients.
Number of visits to clinics surged 58.8% year over year.
Adjusted EBITDA jumped 32.8% year over year to $38.1 million, while margin expanded 100 bps year over year to 14.8%.
Concentra segment reported net operating revenues of $254.9 million, up 193.7% from the prior-year quarter. Adjusted EBITDA soared 284% year over year to $43.0 million. Adjusted EBITDA margin was 16.9% for the second quarter compared with 12.9% in the year-ago quarter.
Financial Update
Select Medical exited the second quarter with cash of $78.4 million, up 443.4% from $14.4 million at year-end 2015.
As of Jun 30, 2016, long-term debt, net of current portion, increased 25.3% to $2.7 billion from $2.2 billion at the end of 2015. Cash flow from operations was up 78.1% year over year to $66.8 million in the quarter.
2016 Guidance
Select Medical updated its 2016 outlook following the release of its second-quarter 2016 earnings.
The company now expects diluted income per share to be between 87 cents per share and $1 per share on operating revenues of $4.25–$4.35 billion. Adjusted EBITDA is expected between $500 million and $530 million.
Zacks Rank & Performance of Other Health Maintenance Organization Stocks
Select Medical presently holds a Zacks Rank #2 (Buy). Among other stocks from the health maintenance organization industry that have reported their second-quarter earnings so far, the bottom lines at Humana Inc. (HUM - Free Report) , Aetna Inc. and UnitedHealth Group Incorporated (UNH - Free Report) beat their respective Zacks Consensus Estimate.
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Select Medical (SEM) Lags Q2 Earnings, Revises 2016 View
Select Medical Holdings Corp. (SEM - Free Report) reported second-quarter 2016 earnings of 23 cents per share, which missed the Zacks Consensus Estimate of 24 cents by 4.2%. Also, earnings declined 17.9% from the year-ago level.
In spite of an improvement in revenues, the bottom-line growth was limited by an increase in expenses.
Including gains from the sale of its contract therapy business, gain on exchange of long term acute care hospitals and gain on sale of outpatient rehabilitation clinics, Select Medical delivered net income of 26 cents per share, down 7.1% year over year.
However, share price gained 13.4% in the last trading session.
Operational Activities
Operating revenues of Select Medical grossed $1.09 billion during the quarter, up 23.7% year over year. Higher Outpatient Rehabilitation revenues and Concentra revenues drove the upside. The top line lagged the Zacks Consensus Estimate of $1.12 billion by 1.3%.
Total operating expenses amounted to $0.9 million, up 24.3% year over year. Increase of 65.7% in depreciation and amortization expenses, 23.3% in cost of services, 7.6% in general and administrative expenses, and 42.6% in bad debt expenses resulted in the overall rise in expenses.
Income from operations jumped 18.9% year over year to $1 billion backed by higher revenues.
Segment Update
Specialty Hospitals’ operating revenues dipped 1.1% year over year to $585.8 million.
Adjusted EBITDA was $82.7 million, down 9.5% year over year, with margins contracting 130 basis points (bps) to 14.1%.
Operating revenues from Outpatient Rehabilitation were up 23.6% year over year to $256.9 million, mainly due to higher number of visits by patients.
Number of visits to clinics surged 58.8% year over year.
Adjusted EBITDA jumped 32.8% year over year to $38.1 million, while margin expanded 100 bps year over year to 14.8%.
Concentra segment reported net operating revenues of $254.9 million, up 193.7% from the prior-year quarter. Adjusted EBITDA soared 284% year over year to $43.0 million. Adjusted EBITDA margin was 16.9% for the second quarter compared with 12.9% in the year-ago quarter.
Financial Update
Select Medical exited the second quarter with cash of $78.4 million, up 443.4% from $14.4 million at year-end 2015.
As of Jun 30, 2016, long-term debt, net of current portion, increased 25.3% to $2.7 billion from $2.2 billion at the end of 2015. Cash flow from operations was up 78.1% year over year to $66.8 million in the quarter.
2016 Guidance
Select Medical updated its 2016 outlook following the release of its second-quarter 2016 earnings.
The company now expects diluted income per share to be between 87 cents per share and $1 per share on operating revenues of $4.25–$4.35 billion. Adjusted EBITDA is expected between $500 million and $530 million.
SELECT MEDICAL Price, Consensus and EPS Surprise
SELECT MEDICAL Price, Consensus and EPS Surprise | SELECT MEDICAL Quote
Zacks Rank & Performance of Other Health Maintenance Organization Stocks
Select Medical presently holds a Zacks Rank #2 (Buy). Among other stocks from the health maintenance organization industry that have reported their second-quarter earnings so far, the bottom lines at Humana Inc. (HUM - Free Report) , Aetna Inc. and UnitedHealth Group Incorporated (UNH - Free Report) beat their respective Zacks Consensus Estimate.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>