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Select Medical Down 5% Despite Q3 Earnings Beat on Patient Volumes
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Key Takeaways
SEM reported Q3 EPS of 23 cents, beating estimates but falling 11.5% year over year.
Revenues rose 7.2% to $1.4 billion, lifted by strength in Rehabilitation Hospital and higher visits.
Adjusted EBITDA rose 7.5% year over year to $111.7 million amid cost pressures.
Shares of Select Medical Holdings Corporation (SEM - Free Report) have declined 5.4% since it reported third-quarter 2025 results on Oct. 30. The quarterly results were affected by an elevated expense level. Additionally, a decline in patient days exerted pressure on profitability in the Critical Illness Recovery Hospital segment and lower revenue per visit did the same for the Outpatient Rehabilitation unit. Nevertheless, the downside was partly offset by solid revenue growth in the Rehabilitation Hospital segment, driven by higher admissions and improved occupancy. A hiked 2025 EPS guidance also remains an added positive.
Select Medical reported third-quarter 2025 adjusted earnings per share (EPS) of 23 cents, which outpaced the Zacks Consensus Estimate by 27.8%. However, the bottom line declined 11.5% year over year.
Net operating revenues advanced 7.2% year over year to $1.4 billion. The top line beat the consensus mark by 2.9%.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Total costs and expenses were $1.3 billion, which increased 6% year over year and came higher than our estimate of $1.26 billion. The year-over-year rise was due to higher costs of services, exclusive of depreciation and amortization.
Adjusted EBITDA improved 7.5% year over year to $111.7 million, which beat our estimate of $104.4 million.
Select Medical’s Segmental Update
Critical Illness Recovery Hospital
The segment recorded revenues of $609.9 million in the third quarter, which grew 4.6% year over year, and surpassed the Zacks Consensus Estimate of $602 million and our estimate of $602.4 million. The unit benefited on the back of a 2.1% year-over-year increase in admissions and a 6.6% rise in revenue per patient day. Patient days slipped 1.9% year over year. The occupancy rate remained flat year over year at 65%.
Adjusted EBITDA advanced 10.5% year over year to $56.1 million but fell short of the consensus mark and our estimate of $66 million. The adjusted EBITDA margin of 9.2% improved 50 basis points (bps) year over year.
Rehabilitation Hospital
The unit’s revenues rose 16.2% year over year to $328.6 million, which outpaced the Zacks Consensus Estimate of $303 million and our estimate of $303.4 million. The favorable performance stemmed from year-over-year increases of 11.2% and 11.1%, respectively, in admissions and patient days. The occupancy rate was 83%, which improved 100 bps year over year in the quarter under review.
Adjusted EBITDA improved 13% year over year to $68 million, which beat the consensus mark of $59 million and our estimate of $58.8 million. However, the adjusted EBITDA margin of 20.7% deteriorated 60 bps year over year.
Outpatient Rehabilitation
Revenues totaled $325.4 million in the segment, which rose 4.3% year over year, and came higher than the Zacks Consensus Estimate of $313 million and our estimate of $312.8 million. The unit’s performance was aided by a 5.5% year-over-year increase in visits. Revenue per visit dipped 1% year over year.
Adjusted EBITDA tumbled 14.6% year over year to $24.2 million and lagged the consensus mark and our estimate of $46.6 million. The adjusted EBITDA margin of 7.4% deteriorated 170 bps year over year.
Select Medical’s Financial Position (As of Sept. 30, 2025)
Select Medical exited the third quarter with cash and cash equivalents of $60.1 million, which inched up 0.6% from the 2024-end level.
Total assets of $5.7 billion increased 1.4% from the 2024-end figure.
Long-term debt, net of the current portion, amounted to $1.7 billion, up 3.1% from the figure as of Dec. 31, 2024.
Total equity of $2 billion inched up 1.2% from the 2024-end level.
Select Medical generated net cash from operations of $175.3 million in the reported quarter, which fell 3.1% year over year.
Select Medical bought back shares worth around $96.5 million in the first nine months of 2025.
On Oct. 29, 2025, management approved a cash dividend of 6.25 cents per share, which will be paid out on Nov. 25 to its shareholders of record as of Nov. 12.
Select Medical’s 2025 Outlook Updated
Management still estimates revenues within $5.3-$5.5 billion, the mid-point of which represents a 4.1% increase from the 2024 figure.
Adjusted EBITDA continues to be expected to be between $510 million and $530 million.
EPS is currently expected to be within $1.14-$1.24, higher than the earlier view of $1.09-$1.19.
Interest expense is presently projected to be at $119 million, while depreciation and amortization is estimated at $146 million.
Of the Medical sector players that have reported third-quarter 2025 results so far, the bottom-line results of The Cigna Group (CI - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) beat the respective Zacks Consensus Estimate.
Cigna reported third-quarter 2025 adjusted EPS of $7.83, which beat the Zacks Consensus Estimate by 1.7%. The bottom line advanced 4% year over year. Adjusted revenues of $69.6 billion rose 9% year over year. The top line beat the consensus mark by 3.6%. Cigna’s medical customer base came in at 18.1 million as of Sept. 30, 2025, which declined 5.2% year over year. Adjusted income from operations totaled $2.1 billion, which declined 1% year over year.
The Evernorth Health Services unit recorded revenues of $60.4 billion in the third quarter, which advanced 15% year over year. Adjusted operating income, on a pre-tax basis, rose 1% year over year to $1.9 billion and beat the consensus mark by 1.1%. However, the adjusted pre-tax margin of 3.2% deteriorated 40 bps year over year. The Cigna Healthcare segment’s revenues of $10.9 billion tumbled 18% year over year in the quarter under review. Pre-tax adjusted operating income dropped 12% year over year to $1 billion.
Tenet Healthcare’s third-quarter 2025 adjusted EPS of $3.70 surpassed the Zacks Consensus Estimate by 11.1%. The bottom line increased 26.3% year over year. Net operating revenues advanced 3.2% year over year to $5.3 billion. The top line beat the consensus mark by 1%. Adjusted net income of $328 million climbed 16.3% year over year in the quarter under review. Adjusted EBITDA improved 12.4% year over year to $1.1 billion.
The Hospital Operations and Services segment recorded net operating revenues of $4 billion, which inched up 0.7% year over year. Adjusted EBITDA climbed 12.6% year over year to $607 million in the third quarter. Adjusted EBITDA margin of 15.1% improved 160 bps year over year. The Ambulatory Care segment’s net operating revenues rose 11.9% year over year to $1.3 billion. Adjusted EBITDA was $492 million, which advanced 12.1% year over year. Adjusted EBITDA margin improved 10 bps year over year at 38.6%.
UnitedHealth Group reported third-quarter 2025 adjusted EPS of $2.92, which beat the Zacks Consensus Estimate of $2.75. However, the bottom line declined 59.2% year over year. Revenues rose 12% year over year to $113.2 billion. The top line missed the consensus mark by 0.2%. UnitedHealth’s third-quarter premium of $89 billion increased from $77.4 billion a year ago. UNH’s medical care ratio (MCR) was 89.9% in the third quarter, which deteriorated 470 bps from the year-ago period.
UnitedHealth’s operating earnings declined 50% year over year to $4.3 billion in the third quarter. The net margin deteriorated 390 bps to 2.1% from the year-ago period. Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 16% year over year to $87.1 billion in the third quarter. Revenues in the Optum business line were $69.2 billion, which rose 8% year over year. The UnitedHealthcare business catered to 50.1 million people as of Sept. 30, 2025, which grew 1.6% year over year.
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Select Medical Down 5% Despite Q3 Earnings Beat on Patient Volumes
Key Takeaways
Shares of Select Medical Holdings Corporation (SEM - Free Report) have declined 5.4% since it reported third-quarter 2025 results on Oct. 30. The quarterly results were affected by an elevated expense level. Additionally, a decline in patient days exerted pressure on profitability in the Critical Illness Recovery Hospital segment and lower revenue per visit did the same for the Outpatient Rehabilitation unit. Nevertheless, the downside was partly offset by solid revenue growth in the Rehabilitation Hospital segment, driven by higher admissions and improved occupancy. A hiked 2025 EPS guidance also remains an added positive.
Select Medical reported third-quarter 2025 adjusted earnings per share (EPS) of 23 cents, which outpaced the Zacks Consensus Estimate by 27.8%. However, the bottom line declined 11.5% year over year.
Net operating revenues advanced 7.2% year over year to $1.4 billion. The top line beat the consensus mark by 2.9%.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Select Medical Holdings Corporation price-consensus-eps-surprise-chart | Select Medical Holdings Corporation Quote
Select Medical’s Q3 Performance
Total costs and expenses were $1.3 billion, which increased 6% year over year and came higher than our estimate of $1.26 billion. The year-over-year rise was due to higher costs of services, exclusive of depreciation and amortization.
Adjusted EBITDA improved 7.5% year over year to $111.7 million, which beat our estimate of $104.4 million.
Select Medical’s Segmental Update
Critical Illness Recovery Hospital
The segment recorded revenues of $609.9 million in the third quarter, which grew 4.6% year over year, and surpassed the Zacks Consensus Estimate of $602 million and our estimate of $602.4 million. The unit benefited on the back of a 2.1% year-over-year increase in admissions and a 6.6% rise in revenue per patient day. Patient days slipped 1.9% year over year. The occupancy rate remained flat year over year at 65%.
Adjusted EBITDA advanced 10.5% year over year to $56.1 million but fell short of the consensus mark and our estimate of $66 million. The adjusted EBITDA margin of 9.2% improved 50 basis points (bps) year over year.
Rehabilitation Hospital
The unit’s revenues rose 16.2% year over year to $328.6 million, which outpaced the Zacks Consensus Estimate of $303 million and our estimate of $303.4 million. The favorable performance stemmed from year-over-year increases of 11.2% and 11.1%, respectively, in admissions and patient days. The occupancy rate was 83%, which improved 100 bps year over year in the quarter under review.
Adjusted EBITDA improved 13% year over year to $68 million, which beat the consensus mark of $59 million and our estimate of $58.8 million. However, the adjusted EBITDA margin of 20.7% deteriorated 60 bps year over year.
Outpatient Rehabilitation
Revenues totaled $325.4 million in the segment, which rose 4.3% year over year, and came higher than the Zacks Consensus Estimate of $313 million and our estimate of $312.8 million. The unit’s performance was aided by a 5.5% year-over-year increase in visits. Revenue per visit dipped 1% year over year.
Adjusted EBITDA tumbled 14.6% year over year to $24.2 million and lagged the consensus mark and our estimate of $46.6 million. The adjusted EBITDA margin of 7.4% deteriorated 170 bps year over year.
Select Medical’s Financial Position (As of Sept. 30, 2025)
Select Medical exited the third quarter with cash and cash equivalents of $60.1 million, which inched up 0.6% from the 2024-end level.
Total assets of $5.7 billion increased 1.4% from the 2024-end figure.
Long-term debt, net of the current portion, amounted to $1.7 billion, up 3.1% from the figure as of Dec. 31, 2024.
Total equity of $2 billion inched up 1.2% from the 2024-end level.
Select Medical generated net cash from operations of $175.3 million in the reported quarter, which fell 3.1% year over year.
Select Medical’s Share Repurchase & Dividend Update
Select Medical bought back shares worth around $96.5 million in the first nine months of 2025.
On Oct. 29, 2025, management approved a cash dividend of 6.25 cents per share, which will be paid out on Nov. 25 to its shareholders of record as of Nov. 12.
Select Medical’s 2025 Outlook Updated
Management still estimates revenues within $5.3-$5.5 billion, the mid-point of which represents a 4.1% increase from the 2024 figure.
Adjusted EBITDA continues to be expected to be between $510 million and $530 million.
EPS is currently expected to be within $1.14-$1.24, higher than the earlier view of $1.09-$1.19.
Interest expense is presently projected to be at $119 million, while depreciation and amortization is estimated at $146 million.
SEM’s Zacks Rank
Select Medical currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported third-quarter 2025 results so far, the bottom-line results of The Cigna Group (CI - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and UnitedHealth Group Incorporated (UNH - Free Report) beat the respective Zacks Consensus Estimate.
Cigna reported third-quarter 2025 adjusted EPS of $7.83, which beat the Zacks Consensus Estimate by 1.7%. The bottom line advanced 4% year over year. Adjusted revenues of $69.6 billion rose 9% year over year. The top line beat the consensus mark by 3.6%. Cigna’s medical customer base came in at 18.1 million as of Sept. 30, 2025, which declined 5.2% year over year. Adjusted income from operations totaled $2.1 billion, which declined 1% year over year.
The Evernorth Health Services unit recorded revenues of $60.4 billion in the third quarter, which advanced 15% year over year. Adjusted operating income, on a pre-tax basis, rose 1% year over year to $1.9 billion and beat the consensus mark by 1.1%. However, the adjusted pre-tax margin of 3.2% deteriorated 40 bps year over year. The Cigna Healthcare segment’s revenues of $10.9 billion tumbled 18% year over year in the quarter under review. Pre-tax adjusted operating income dropped 12% year over year to $1 billion.
Tenet Healthcare’s third-quarter 2025 adjusted EPS of $3.70 surpassed the Zacks Consensus Estimate by 11.1%. The bottom line increased 26.3% year over year. Net operating revenues advanced 3.2% year over year to $5.3 billion. The top line beat the consensus mark by 1%. Adjusted net income of $328 million climbed 16.3% year over year in the quarter under review. Adjusted EBITDA improved 12.4% year over year to $1.1 billion.
The Hospital Operations and Services segment recorded net operating revenues of $4 billion, which inched up 0.7% year over year. Adjusted EBITDA climbed 12.6% year over year to $607 million in the third quarter. Adjusted EBITDA margin of 15.1% improved 160 bps year over year. The Ambulatory Care segment’s net operating revenues rose 11.9% year over year to $1.3 billion. Adjusted EBITDA was $492 million, which advanced 12.1% year over year. Adjusted EBITDA margin improved 10 bps year over year at 38.6%.
UnitedHealth Group reported third-quarter 2025 adjusted EPS of $2.92, which beat the Zacks Consensus Estimate of $2.75. However, the bottom line declined 59.2% year over year. Revenues rose 12% year over year to $113.2 billion. The top line missed the consensus mark by 0.2%. UnitedHealth’s third-quarter premium of $89 billion increased from $77.4 billion a year ago. UNH’s medical care ratio (MCR) was 89.9% in the third quarter, which deteriorated 470 bps from the year-ago period.
UnitedHealth’s operating earnings declined 50% year over year to $4.3 billion in the third quarter. The net margin deteriorated 390 bps to 2.1% from the year-ago period. Revenues of the health benefits business of UnitedHealth, UnitedHealthcare, advanced 16% year over year to $87.1 billion in the third quarter. Revenues in the Optum business line were $69.2 billion, which rose 8% year over year. The UnitedHealthcare business catered to 50.1 million people as of Sept. 30, 2025, which grew 1.6% year over year.