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Select Medical Q1 Earnings Miss Estimates on Higher Expenses
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Key Takeaways
SEM's Q1 EPS missed estimates, down 18.2% YoY, as higher expenses weighed on profitability.
SEM's revenues rose 5% YoY to $1.4B, driven by strong Rehabilitation Hospital admissions and occupancy gains.
SEM Critical Illness unit saw weaker patient days and margins, while rehab unit delivered solid EBITDA growth.
Select Medical Holdings Corporation (SEM - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of 36 cents, which missed the Zacks Consensus Estimate by 16.3%. The bottom line declined 18.2% year over year.
Net operating revenues advanced 5% year over year to $1.4 billion. The top line beat the consensus mark by 1.5%.
The quarterly earnings suffered due to an elevated expense level and a decline in patient days, exerting pressure on profitability in the Critical Illness Recovery Hospital segment. However, the downside was partially offset by solid revenue growth in the Rehabilitation Hospital segment, driven by higher admissions and improved occupancy.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Total costs and expenses were $1.3 billion, which increased 6.7% year over year and came higher than our estimate by 1.4%. The year-over-year rise was due to higher costs of services, exclusive of depreciation and amortization, and general and administrative expenses.
Adjusted EBITDA declined 6.5% year over year to $141.6 million but beat our estimate of $141.1 million.
Select Medical’s Q1 Segmental Update
Critical Illness Recovery Hospital
The segment recorded revenues of $638.8 million in the first quarter, which grew 0.3% year over year, but missed the Zacks Consensus Estimate and our estimate of $671.3 million. The unit benefited on the back of a 1% year-over-year increase in admissions and a 2.5% rise in revenue per patient day. Patient days slipped 2.2% year over year. The occupancy rate deteriorated 140 bps year over year to 72%.
Adjusted EBITDA declined 15.3% year over year to $73.4 million and fell short of the consensus mark and our estimate of $88.7 million. The adjusted EBITDA margin of 11.5% deteriorated 210 bps year over year.
Rehabilitation Hospital
SEM’s Rehabilitation Hospital segment remained the primary growth engine. The unit’s revenues rose 14.5% year over year to $351.9 million, which surpassed the Zacks Consensus Estimate and our estimate of $320.8 million. The favorable performance stemmed from year-over-year increases of 13% and 12.5%, respectively, in admissions and patient days. The occupancy rate was 83%, which improved 120 bps year over year in the quarter under review.
Adjusted EBITDA improved 15.1% year over year to $81.1 million, which beat the consensus mark and our estimate of $69.4 million. The adjusted EBITDA margin of 23% improved 10 bps year over year.
Outpatient Rehabilitation
Revenues totaled $321.3 million in the segment, which rose 4.5% year over year, and beat the Zacks Consensus Estimate and our estimate of $311 million. The unit’s performance was aided by a 4.5% year-over-year increase in visits. Revenue per visit remained stable year over year.
Profitability moved the other way. Adjusted EBITDA declined 9.4% year over year to $22 million and lagged the consensus mark and our estimate of $29.5 million. The adjusted EBITDA margin of 6.8% deteriorated 110 bps year over year.
Select Medical’s Financial Position (As of March 31, 2026)
Select Medical exited the first quarter with cash and cash equivalents of $25.7 million, which fell 3.2% from the 2025-end level.
Total assets of $6 billion increased from the 2025-end figure of $5.9 billion.
Long-term debt, net of the current portion, amounted to $1.8 billion, up 1.7% from the figure as of Dec. 31, 2025.
Total equity of $2.1 billion rose 3.4% from the 2025-end level.
Select Medical generated net cash from operations of $37.9 million in the reported quarter, against cash used in operating activities of $3.5 million in the prior-year quarter.
Select Medical bought back shares worth around $11.4 million in the first quarter of 2026.
On April 29, 2026, management approved a cash dividend of 6.25 cents per share, which will be paid out on May 28 to its shareholders of record as of May 14.
Select Medical’s 2026 Outlook
Management continues to expect revenues within $5.6-$5.8 billion, the mid-point of which represents a 3.6% increase from the 2025 figure.
Adjusted EBITDA is still projected to be between $520 million and $540 million. EPS is still anticipated to be within $1.22-$1.32.
Interest expense is projected to be at $118 million, while depreciation and amortization are estimated at $146 million.
Several companies in the Medical space, including Molina Healthcare Inc. (MOH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Elevance Health, Inc. (ELV - Free Report) , have already reported their financial results for the March quarter of 2026. Here’s how they had performed:
Molina Healthcare reported first-quarter 2026 adjusted earnings per share of $2.35, which beat the Zacks Consensus Estimate of $1.57. The bottom line declined 61.3% from the year-ago period's level. Revenues amounted to $10.8 billion, which decreased 3.1% year over year. The first-quarter performance was supported by lower medical care costs, partially offset by declining premiums, membership and investment income.
UnitedHealth reported first-quarter 2026 EPS of $7.23, which beat the Zacks Consensus Estimate of $6.46. The bottom line rose 0.4% year over year. Revenues rose 2% year over year to $111.7 billion. The quarterly earnings were aided by growth in commercial fee-based membership and the strength witnessed in Optum Rx. However, weakness in UnitedHealth’s Optum Health and declining risk-based membership partially offset the positives.
Elevance Health reported first-quarter 2026 adjusted earnings per share of $12.58, which surpassed the Zacks Consensus Estimate by 17.8%. The bottom line rose 5.1% year over year. Operating revenues advanced 1.5% year over year to $49.5 billion. The quarterly results benefited on the back of strong growth in premiums. Segment-wise, the Carelon division posted a robust revenue surge, aided by scaling risk-based services, while Health Benefits saw increased premium yields. However, Elevance Health’s upside was partly offset by a decline in overall medical membership and an elevated expense level.
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Select Medical Q1 Earnings Miss Estimates on Higher Expenses
Key Takeaways
Select Medical Holdings Corporation (SEM - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of 36 cents, which missed the Zacks Consensus Estimate by 16.3%. The bottom line declined 18.2% year over year.
Net operating revenues advanced 5% year over year to $1.4 billion. The top line beat the consensus mark by 1.5%.
The quarterly earnings suffered due to an elevated expense level and a decline in patient days, exerting pressure on profitability in the Critical Illness Recovery Hospital segment. However, the downside was partially offset by solid revenue growth in the Rehabilitation Hospital segment, driven by higher admissions and improved occupancy.
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 Q1 Performance
Total costs and expenses were $1.3 billion, which increased 6.7% year over year and came higher than our estimate by 1.4%. The year-over-year rise was due to higher costs of services, exclusive of depreciation and amortization, and general and administrative expenses.
Adjusted EBITDA declined 6.5% year over year to $141.6 million but beat our estimate of $141.1 million.
Select Medical’s Q1 Segmental Update
Critical Illness Recovery Hospital
The segment recorded revenues of $638.8 million in the first quarter, which grew 0.3% year over year, but missed the Zacks Consensus Estimate and our estimate of $671.3 million. The unit benefited on the back of a 1% year-over-year increase in admissions and a 2.5% rise in revenue per patient day. Patient days slipped 2.2% year over year. The occupancy rate deteriorated 140 bps year over year to 72%.
Adjusted EBITDA declined 15.3% year over year to $73.4 million and fell short of the consensus mark and our estimate of $88.7 million. The adjusted EBITDA margin of 11.5% deteriorated 210 bps year over year.
Rehabilitation Hospital
SEM’s Rehabilitation Hospital segment remained the primary growth engine. The unit’s revenues rose 14.5% year over year to $351.9 million, which surpassed the Zacks Consensus Estimate and our estimate of $320.8 million. The favorable performance stemmed from year-over-year increases of 13% and 12.5%, respectively, in admissions and patient days. The occupancy rate was 83%, which improved 120 bps year over year in the quarter under review.
Adjusted EBITDA improved 15.1% year over year to $81.1 million, which beat the consensus mark and our estimate of $69.4 million. The adjusted EBITDA margin of 23% improved 10 bps year over year.
Outpatient Rehabilitation
Revenues totaled $321.3 million in the segment, which rose 4.5% year over year, and beat the Zacks Consensus Estimate and our estimate of $311 million. The unit’s performance was aided by a 4.5% year-over-year increase in visits. Revenue per visit remained stable year over year.
Profitability moved the other way. Adjusted EBITDA declined 9.4% year over year to $22 million and lagged the consensus mark and our estimate of $29.5 million. The adjusted EBITDA margin of 6.8% deteriorated 110 bps year over year.
Select Medical’s Financial Position (As of March 31, 2026)
Select Medical exited the first quarter with cash and cash equivalents of $25.7 million, which fell 3.2% from the 2025-end level.
Total assets of $6 billion increased from the 2025-end figure of $5.9 billion.
Long-term debt, net of the current portion, amounted to $1.8 billion, up 1.7% from the figure as of Dec. 31, 2025.
Total equity of $2.1 billion rose 3.4% from the 2025-end level.
Select Medical generated net cash from operations of $37.9 million in the reported quarter, against cash used in operating activities of $3.5 million in the prior-year quarter.
Select Medical’s Share Repurchase & Dividend Update
Select Medical bought back shares worth around $11.4 million in the first quarter of 2026.
On April 29, 2026, management approved a cash dividend of 6.25 cents per share, which will be paid out on May 28 to its shareholders of record as of May 14.
Select Medical’s 2026 Outlook
Management continues to expect revenues within $5.6-$5.8 billion, the mid-point of which represents a 3.6% increase from the 2025 figure.
Adjusted EBITDA is still projected to be between $520 million and $540 million. EPS is still anticipated to be within $1.22-$1.32.
Interest expense is projected to be at $118 million, while depreciation and amortization are estimated at $146 million.
SEM’s Zacks Rank
SEM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Did Peers Perform?
Several companies in the Medical space, including Molina Healthcare Inc. (MOH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and Elevance Health, Inc. (ELV - Free Report) , have already reported their financial results for the March quarter of 2026. Here’s how they had performed:
Molina Healthcare reported first-quarter 2026 adjusted earnings per share of $2.35, which beat the Zacks Consensus Estimate of $1.57. The bottom line declined 61.3% from the year-ago period's level. Revenues amounted to $10.8 billion, which decreased 3.1% year over year. The first-quarter performance was supported by lower medical care costs, partially offset by declining premiums, membership and investment income.
UnitedHealth reported first-quarter 2026 EPS of $7.23, which beat the Zacks Consensus Estimate of $6.46. The bottom line rose 0.4% year over year. Revenues rose 2% year over year to $111.7 billion. The quarterly earnings were aided by growth in commercial fee-based membership and the strength witnessed in Optum Rx. However, weakness in UnitedHealth’s Optum Health and declining risk-based membership partially offset the positives.
Elevance Health reported first-quarter 2026 adjusted earnings per share of $12.58, which surpassed the Zacks Consensus Estimate by 17.8%. The bottom line rose 5.1% year over year. Operating revenues advanced 1.5% year over year to $49.5 billion. The quarterly results benefited on the back of strong growth in premiums. Segment-wise, the Carelon division posted a robust revenue surge, aided by scaling risk-based services, while Health Benefits saw increased premium yields. However, Elevance Health’s upside was partly offset by a decline in overall medical membership and an elevated expense level.