MECHANICSBURG, Pa., May 2, 2024 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its first quarter ended March 31, 2024, and the declaration of a cash dividend. For the first quarter ended March 31, 2024, revenue increased 7.4% to $1,788.8 million, compared to $1,665.0 million for the same quarter, prior year. Income from operations increased 28.1% to $194.0 million for the first quarter ended March 31, 2024, compared to $151.5 million for the same quarter, prior year. Net income increased 37.4% to $117.2 million for the first quarter ended March 31, 2024, compared to $85.3 million for the same quarter, prior year. Adjusted EBITDA increased 22.4% to $261.9 million for the first quarter ended March 31, 2024, compared to $214.1 million for the same quarter, prior year. Earnings per common share increased 33.9% to $0.75 for the first quarter ended March 31, 2024, compared to $0.56 for the same quarter, prior year. Adjusted earnings per common share increased 37.5% to $0.77 for the first quarter ended March 31, 2024, compared to $0.56 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table VI of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table VII of this release. Company Overview Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on number of facilities.   Select Medical's reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment, and the Concentra segment. As of March 31, 2024, Select Medical operated 107 critical illness recovery hospitals in 28 states, 33 rehabilitation hospitals in 13 states, 1,922 outpatient rehabilitation clinics in 39 states and the District of Columbia, and 547 occupational health centers in 41 states. At March 31, 2024, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com. Critical Illness Recovery Hospital Segment For the first quarter ended March 31, 2024, revenue for the critical illness recovery hospital segment increased 10.4% to $655.9 million, compared to $593.9 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 51.0% to $115.9 million for the first quarter ended March 31, 2024, compared to $76.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 17.7% for the first quarter ended March 31, 2024, compared to 12.9% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table V of this release for the first quarters ended March 31, 2024 and 2023. Rehabilitation Hospital Segment For the first quarter ended March 31, 2024, revenue for the rehabilitation hospital segment increased 14.8% to $265.7 million, compared to $231.5 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 30.0% to $61.4 million for the first quarter ended March 31, 2024, compared to $47.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 23.1% for the first quarter ended March 31, 2024, compared to 20.4% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table V of this release for the first quarters ended March 31, 2024 and 2023. Outpatient Rehabilitation Segment For the first quarter ended March 31, 2024, revenue for the outpatient rehabilitation segment increased 2.5% to $303.2 million, compared to $295.9 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $24.9 million for the first quarter ended March 31, 2024, compared to $30.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 8.2% for the first quarter ended March 31, 2024, compared to 10.2% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table V of this release for the first quarters ended March 31, 2024 and 2023. Concentra Segment For the first quarter ended March 31, 2024, revenue for the Concentra segment increased 2.5% to $467.6 million, compared to $456.3 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 2.6% to $96.1 million for the first quarter ended March 31, 2024, compared to $93.7 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 20.6% for the first quarter ended March 31, 2024, compared to 20.5% for the same quarter, prior year. Certain Concentra key statistics are presented in table V of this release for the first quarters ended March 31, 2024 and 2023. Dividend On May 1, 2024, Select Medical's Board of Directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about May 30, 2024, to stockholders of record as of the close of business on May 16, 2024. There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical's Board of Directors after taking into account various factors, including, but not limited to, Select Medical's financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical's indebtedness, and other factors Select Medical's Board of Directors may deem to be relevant. Stock Repurchase Program The Board of Directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2025, unless further extended or earlier terminated by the Board of Directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Select Medical deems appropriate. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility. Select Medical did not repurchase shares under its authorized stock repurchase program during the three months ended March 31, 2024. Since the inception of the common stock repurchase program through March 31, 2024, Select Medical has repurchased 48,234,823 shares at a cost of approximately $600.3 million, or $12.45 per share, which includes transaction costs. Business Outlook Select Medical is reaffirming its 2024 business outlook for revenue and adjusting its 2024 business outlook for Adjusted EBITDA and fully diluted earnings per share, which was provided most recently in its February 22, 2024, press release. Select Medical is also issuing its business outlook for adjusted earnings per share. Select Medical expects revenue to be in the range of $6.9 billion to $7.1 billion, Adjusted EBITDA to be in the range of $845 million to $885 million, fully diluted earnings per share to be in the range of $1.95 to $2.19 and adjusted earnings per share to be in the range of $1.96 to $2.20. Reconciliations of full year 2024 Adjusted EBITDA expectations to net income and adjusted earnings per share to fully diluted earnings per share are presented in table VIII of this release. Conference Call Select Medical will host a conference call regarding its first quarter results and its business outlook on Friday, May 3, 2024, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holdings Corporation's website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the same link. For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode. Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), including statements related to Select Medical's 2024 and long-term business outlook. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements due to factors including the following: changes in government reimbursement for our services and/or new payment policies may result in a reduction in revenue, an increase in costs, and a reduction in profitability; adverse economic conditions including an inflationary environment could cause us to continue to experience increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results, cash flows, and financial condition; shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability to attract or retain qualified healthcare professionals could limit our ability to staff our facilities; shortages in qualified health professionals could cause us to increase our dependence on contract labor, increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase our operating costs significantly; public threats such as a global pandemic, or widespread outbreak of an infectious disease, similar to the COVID-19 pandemic, could negatively impact patient volumes and revenues, increase labor and other operating costs, disrupt global financial markets, and/or further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program; the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline; the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our revenue and profitability to decline; a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs; acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources, or expose us to unforeseen liabilities; our plans and expectations related to our acquisitions and our ability to realize anticipated synergies; failure to complete or achieve some or all the expected benefits of the potential separation of Concentra; private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability; the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability; competition may limit our ability to grow and result in a decrease in our revenue and profitability; the loss of key members of our management team could significantly disrupt our operations; the effect of claims asserted against us could subject us to substantial uninsured liabilities; a security breach of our or our third-party vendors' information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and other factors discussed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including factors discussed under the heading "Risk Factors" of the annual report on Form 10-K for the year ended December 31, 2023. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance. Investor inquiries:Joel T. VeitSenior Vice President and   I.  Condensed Consolidated Statements of Operations For the Three Months Ended March 31, 2023 and 2024 (In thousands, except per share amounts, unaudited) 2023 2024 % Change Revenue $             1,664,980 $             1,788,809 7.4 % Costs and expenses: Cost of services, exclusive of depreciation and amortization 1,418,819 1,494,610 5.3 General and administrative 42,279 48,447 14.6 Depreciation and amortization 52,425 54,069 3.1 Total costs and expenses 1,513,523 1,597,126 5.5 Other operating income — 2,284 N/M Income from operations 151,457 193,967 28.1 Other income and expense: Equity in earnings of unconsolidated subsidiaries 8,556 10,421 21.8 Interest expense (48,571) (50,763) 4.5 Income before income taxes 111,442 153,625 37.9 Income tax expense 26,185 36,458 39.2 Net income 85,257 117,167 37.4 Less: Net income attributable to non-controlling interests 14,452 20,270 40.3 Net income attributable to Select Medical $                  70,805 $                  96,897 36.9 % Basic and diluted earnings per common share:(1) $                       0.56 $                       0.75 (1) Refer to table II for calculation of earnings per common share. N/M Not meaningful   II.  Earnings per Share For the Three Months Ended March 31, 2023 and 2024(In thousands, except per share amounts, unaudited) Select Medical's capital structure includes common stock and unvested restricted stock awards. To compute earnings per share ("EPS"), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings. The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three months ended March 31, 2023 and 2024: Basic and Diluted EPS Three Months Ended March 31, 2023 2024 Net income $                           85,257 $                         117,167 Less: net income attributable to non-controlling interests 14,452 20,270 Net income attributable to Select Medical 70,805 96,897 Less: net income attributable to participating securities 2,573 3,398 Net income attributable to common shares $                           68,232 $                           93,499 The following tables set forth the computation of EPS under the two-class method for the three months ended March 31, 2023 and 2024: Three Months Ended March 31, 2023 2024 Net IncomeAllocation Shares(1) Basic andDiluted EPS Net IncomeAllocation Shares(1) Basic andDiluted EPS (in thousands, except for per share amounts) Common shares