We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Select Medical's (SEM) Stock Down 16.9% Despite Q2 Earnings Beat
Read MoreHide Full Article
Select Medical Holdings Corporation’s(SEM - Free Report) stock lost 16.9% since it reported second-quarter 2024 results on Aug 1, 2024. Although it beat estimates thanks to improving patient days in the Critical Illness Recovery and Rehabilitation units, investors might have been worried about an elevated expense level and declining visits in the Concentra unit.
SEM reported second-quarter 2024 adjusted earnings per share (EPS) of 60 cents, which surpassed the Zacks Consensus Estimate by 1.7%. However, the bottom line declined 1.6% year over year.
Net operating revenues amounted to $1.8 billion, which improved 5.1% year over year. The metric beat the consensus mark by 1.6%.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Total costs and expenses increased 5.7% year over year to $1.6 billion in the quarter under review, higher than our estimate of $1.57 billion. The increase was due to escalating costs of services, exclusive of depreciation and amortization, and rising general and administrative expenses.
Adjusted EBITDA of $226.3 million rose 3.1% year over year and outpaced the Zacks Consensus Estimate of $222 million.
Segmental Update
Critical Illness Recovery Hospital
Revenues of the segment amounted to $604.9 million in the second quarter, which increased 5.2% year over year but missed the consensus mark of $621 million and our estimate of $620.7 million. The unit benefited from a 4% year-over-year increase in revenue per patient day. Patient days improved 1%, while admissions declined 0.4% year over year. The occupancy rate declined 1.5% year over year.
Adjusted EBITDA of $71.8 million climbed 9.7% year over year but missed the Zacks Consensus Estimate and our estimate of $74 million. Adjusted EBITDA margin improved 50 basis points (bps) year over year to 11.9%.
Rehabilitation Hospital
The segment’s revenues improved 11.2% year over year to $267.8 million in the quarter under review. The figure outpaced the consensus mark of $255 million. However, year-over-year increases of 5.8% and 6.7%, respectively, in admissions and patient days contributed to the strong performance of the unit.
Adjusted EBITDA of $62 million rose 13.3% year over year and beat the Zacks Consensus Estimate of $60 million. Adjusted EBITDA margin improved 40 bps year over year to 23.1%.
Outpatient Rehabilitation
Revenues amounted to $315.5 million in the segment, which grew 4.1% year over year in the second quarter and beat the consensus mark of $290 million. The improvement can be attributed to a 3.9% rise in patient visits. Revenue per patient visit was unchanged year over year.
Adjusted EBITDA of $28.8 million declined 12.4% year over year but beat the Zacks Consensus Estimate and our estimate of $28.6 million. Adjusted EBITDA margin deteriorated 170 bps year over year to 9.1%.
Concentra
The segment reported revenues of $477.9 million, which increased 2.3% year over year and beat the consensus mark and our estimate of $465 million. A year-over-year decline of 1.6% in visits was offset by 4.5% growth in revenue per visit, benefiting the unit’s results.
Adjusted EBITDA improved 1.2% year over year to $101.6 million in the quarter under review and surpassed the Zacks Consensus Estimate of $93 million. Adjusted EBITDA margin of 21.3% deteriorated 20 bps year over year.
Financial Position (as of Jun 30, 2024)
Select Medical exited the second quarter with cash and cash equivalents of $111.2 million, which rose from $84 million at 2023-end. It had $367.4 million left under its revolving facility as of Jun 30.
Total assets of $7.9 billion rose from $7.7 billion at 2023-end.
Long-term debt, net of the current portion, amounted to $3.6 billion, up marginally from the figure at 2023-end.
Total equity of $1.7 billion rose from $1.5 billion at 2023-end.
Select Medical generated cash flow from operations of $278.2 million in the reported quarter, which rose 18.4% year over year.
Share Repurchase & Dividend Update
Select Medical did not buy back shares in the second quarter of 2024 under the $1 billion authorized share repurchase program, which is set to expire on Dec 31, 2025.
On Jul 31, 2024, management approved a cash dividend of 12.5 cents per share, which will be paid out on Aug 30, to shareholders of record as of Aug 14.
Concentra IPO Update
The company completed the initial public offering of its Concentra unit on Jul 26, pricing 22.5 million shares at $23.50 each. Select Medical retains 82% of Concentra's shares, or 80% if the underwriters' 30-day option for an additional 3.4 million shares is fully exercised. Select Medical plans to distribute its remaining interest in Concentra to its shareholders within 12 months, as required by an IRS ruling.
2024 Outlook Reaffirmed
Management reaffirmed its previous revenue guidance between $6.9 billion and $7.1 billion, the mid-point of which suggests 4.5% growth from the 2023 reported figure of $6.7 billion.
Management expects its adjusted EBITDA between $845 million and $885 million for 2024, the mid-point of which implies a 7.1% rise from the 2023 reported figure of $807.4 million.
Capital expenditures are expected to be between $225 and $275 million in 2024.
EPS is expected to be between $1.95 and $2.19, the mid-point of which indicates an improvement of 8.4% from the 2023 reported figure of $1.91.
Of the Medical sector players that have reported second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported a second-quarter 2024 adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year in the quarter under review on the back of strong performance in its UnitedHealthcare and Optum business lines. The top line outpaced the consensus mark of $98.7 billion.
Elevance Health reported second-quarter 2024 adjusted EPS of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%.
HCA Healthcare reported a second-quarter 2024 adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year in the quarter under review. The top line outpaced the consensus mark by 2.2%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Select Medical's (SEM) Stock Down 16.9% Despite Q2 Earnings Beat
Select Medical Holdings Corporation’s (SEM - Free Report) stock lost 16.9% since it reported second-quarter 2024 results on Aug 1, 2024. Although it beat estimates thanks to improving patient days in the Critical Illness Recovery and Rehabilitation units, investors might have been worried about an elevated expense level and declining visits in the Concentra unit.
SEM reported second-quarter 2024 adjusted earnings per share (EPS) of 60 cents, which surpassed the Zacks Consensus Estimate by 1.7%. However, the bottom line declined 1.6% year over year.
Net operating revenues amounted to $1.8 billion, which improved 5.1% year over year. The metric beat the consensus mark by 1.6%.
Select Medical Holdings Corporation Price, Consensus and EPS Surprise
Select Medical Holdings Corporation price-consensus-eps-surprise-chart | Select Medical Holdings Corporation Quote
Q2 Performance
Total costs and expenses increased 5.7% year over year to $1.6 billion in the quarter under review, higher than our estimate of $1.57 billion. The increase was due to escalating costs of services, exclusive of depreciation and amortization, and rising general and administrative expenses.
Adjusted EBITDA of $226.3 million rose 3.1% year over year and outpaced the Zacks Consensus Estimate of $222 million.
Segmental Update
Critical Illness Recovery Hospital
Revenues of the segment amounted to $604.9 million in the second quarter, which increased 5.2% year over year but missed the consensus mark of $621 million and our estimate of $620.7 million. The unit benefited from a 4% year-over-year increase in revenue per patient day. Patient days improved 1%, while admissions declined 0.4% year over year. The occupancy rate declined 1.5% year over year.
Adjusted EBITDA of $71.8 million climbed 9.7% year over year but missed the Zacks Consensus Estimate and our estimate of $74 million. Adjusted EBITDA margin improved 50 basis points (bps) year over year to 11.9%.
Rehabilitation Hospital
The segment’s revenues improved 11.2% year over year to $267.8 million in the quarter under review. The figure outpaced the consensus mark of $255 million. However, year-over-year increases of 5.8% and 6.7%, respectively, in admissions and patient days contributed to the strong performance of the unit.
Adjusted EBITDA of $62 million rose 13.3% year over year and beat the Zacks Consensus Estimate of $60 million. Adjusted EBITDA margin improved 40 bps year over year to 23.1%.
Outpatient Rehabilitation
Revenues amounted to $315.5 million in the segment, which grew 4.1% year over year in the second quarter and beat the consensus mark of $290 million. The improvement can be attributed to a 3.9% rise in patient visits. Revenue per patient visit was unchanged year over year.
Adjusted EBITDA of $28.8 million declined 12.4% year over year but beat the Zacks Consensus Estimate and our estimate of $28.6 million. Adjusted EBITDA margin deteriorated 170 bps year over year to 9.1%.
Concentra
The segment reported revenues of $477.9 million, which increased 2.3% year over year and beat the consensus mark and our estimate of $465 million. A year-over-year decline of 1.6% in visits was offset by 4.5% growth in revenue per visit, benefiting the unit’s results.
Adjusted EBITDA improved 1.2% year over year to $101.6 million in the quarter under review and surpassed the Zacks Consensus Estimate of $93 million. Adjusted EBITDA margin of 21.3% deteriorated 20 bps year over year.
Financial Position (as of Jun 30, 2024)
Select Medical exited the second quarter with cash and cash equivalents of $111.2 million, which rose from $84 million at 2023-end. It had $367.4 million left under its revolving facility as of Jun 30.
Total assets of $7.9 billion rose from $7.7 billion at 2023-end.
Long-term debt, net of the current portion, amounted to $3.6 billion, up marginally from the figure at 2023-end.
Total equity of $1.7 billion rose from $1.5 billion at 2023-end.
Select Medical generated cash flow from operations of $278.2 million in the reported quarter, which rose 18.4% year over year.
Share Repurchase & Dividend Update
Select Medical did not buy back shares in the second quarter of 2024 under the $1 billion authorized share repurchase program, which is set to expire on Dec 31, 2025.
On Jul 31, 2024, management approved a cash dividend of 12.5 cents per share, which will be paid out on Aug 30, to shareholders of record as of Aug 14.
Concentra IPO Update
The company completed the initial public offering of its Concentra unit on Jul 26, pricing 22.5 million shares at $23.50 each. Select Medical retains 82% of Concentra's shares, or 80% if the underwriters' 30-day option for an additional 3.4 million shares is fully exercised. Select Medical plans to distribute its remaining interest in Concentra to its shareholders within 12 months, as required by an IRS ruling.
2024 Outlook Reaffirmed
Management reaffirmed its previous revenue guidance between $6.9 billion and $7.1 billion, the mid-point of which suggests 4.5% growth from the 2023 reported figure of $6.7 billion.
Management expects its adjusted EBITDA between $845 million and $885 million for 2024, the mid-point of which implies a 7.1% rise from the 2023 reported figure of $807.4 million.
Capital expenditures are expected to be between $225 and $275 million in 2024.
EPS is expected to be between $1.95 and $2.19, the mid-point of which indicates an improvement of 8.4% from the 2023 reported figure of $1.91.
Zacks Rank
Select Medical currently has a Zacks Rank #3 (Hold). 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 second-quarter 2024 results so far, the bottom-line results of UnitedHealth Group Incorporated (UNH - Free Report) , Elevance Health, Inc. (ELV - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) beat the Zacks Consensus Estimate.
UnitedHealth Group reported a second-quarter 2024 adjusted EPS of $6.80, which beat the Zacks Consensus Estimate by 2.3%. The bottom line rose 10.7% year over year. Revenues amounted to $98.9 billion, which improved 6.4% year over year in the quarter under review on the back of strong performance in its UnitedHealthcare and Optum business lines. The top line outpaced the consensus mark of $98.7 billion.
Elevance Health reported second-quarter 2024 adjusted EPS of $10.12 per share, which outpaced the Zacks Consensus Estimate by 1.3%. The bottom line improved 12% year over year. Operating revenues of $43.2 billion dipped 0.4% year over year. However, the top line beat the consensus mark by 0.5%.
HCA Healthcare reported a second-quarter 2024 adjusted EPS of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year. Revenues amounted to $17.5 billion, which improved 10.3% year over year in the quarter under review. The top line outpaced the consensus mark by 2.2%.