Full Press Release Details
Select Medical Holdings Corporation
For Its First Quarter Ended March 31,
MECHANICSBURG, PENNSYLVANIA
- April 30, 2020 - Select Medical Holdings Corporation ("Select Medical," "we," "us,"
or "our") (NYSE: SEM) today announced results for its first quarter ended March 31, 2020.
For the first quarter
ended March 31, 2020, net operating revenues increased 6.8% to $1,414.6 million, compared to $1,324.6 million for the same
quarter, prior year. Income from operations increased 15.2% to $128.7 million for the first quarter ended March 31, 2020,
compared to $111.7 million for the same quarter, prior year. Net income increased 32.1% to $70.4 million for the first quarter
ended March 31, 2020, compared to $53.3 million for the same quarter, prior year. For both the first quarters ended March 31,
2020 and 2019, net income included pre-tax gains on sales of businesses of $7.2 million and $6.5 million, respectively. Adjusted
EBITDA increased 10.1% to $187.3 million for the first quarter ended March 31, 2020, compared to $170.1 million for the same
quarter, prior year. Earnings per common share increased to $0.40 on a fully diluted basis for the first quarter ended March 31,
2020, compared to $0.30 for the same quarter, prior year. Adjusted earnings per common share was $0.37 on a fully diluted basis
for the first quarter ended March 31, 2020, compared to $0.27 for the same quarter, prior year. Adjusted earnings per common
share excludes the gains on sales of businesses and their related tax effects for both of the quarters ended March 31, 2020
and 2019. 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
Please refer to "Effects
of the COVID-19 Pandemic on Select Medical's Results of Operations" for further discussion regarding the impact
of the coronavirus disease 2019 ("COVID-19") pandemic on Select Medical's operating results for the first quarter
ended March 31, 2020.
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, 2020, Select Medical operated 101 critical illness recovery hospitals
in 28 states, 29 rehabilitation hospitals in 12 states, and 1,753 outpatient rehabilitation clinics in 37 states and the District
of Columbia. Select Medical's joint venture subsidiary Concentra operated 523 occupational health centers in 41 states.
Concentra also provides contract services at employer worksites and Department of Veterans Affairs community-based outpatient
clinics. At March 31, 2020, Select Medical had operations in 47 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, 2020, net operating revenues for the critical illness recovery hospital segment increased 9.4% to $500.5 million,
compared to $457.5 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment
increased 21.3% to $88.6 million for the first quarter ended March 31, 2020, compared to $73.0 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, 2020, compared to 16.0% for the same quarter, prior year. Certain critical illness recovery hospital key statistics
are presented in table V of this release for both the first quarters ended March 31, 2020 and 2019.
Rehabilitation Hospital Segment
For the first quarter
ended March 31, 2020, net operating revenues for the rehabilitation hospital segment increased 17.8% to $182.0 million, compared
to $154.6 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 49.5% to
$38.6 million for the first quarter ended March 31, 2020, compared to $25.8 million for the same quarter, prior year. The
Adjusted EBITDA margin for the rehabilitation hospital segment was 21.2% for the first quarter ended March 31, 2020, compared
to 16.7% for the same quarter, prior year. For the first quarter ended March 31, 2019, the Adjusted EBITDA results for the
rehabilitation hospital segment include start-up losses of approximately $2.8 million. Certain rehabilitation hospital key statistics
are presented in table V of this release for both the first quarters ended March 31, 2020 and 2019.
Outpatient Rehabilitation Segment
For the first quarter
ended March 31, 2020, net operating revenues for the outpatient rehabilitation segment increased 3.4% to $255.2 million, compared
to $246.9 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $27.1 million
for the first quarter ended March 31, 2020, compared to $29.0 million for the same quarter, prior year. The Adjusted EBITDA
margin for the outpatient rehabilitation segment was 10.6% for the first quarter ended March 31, 2020, compared to 11.7% for
the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table V of this release for both
the first quarters ended March 31, 2020 and 2019.
For the first quarter
ended March 31, 2020, net operating revenues for the Concentra segment increased 0.6% to $398.5 million, compared to $396.3
million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment was $61.5 million for the first quarter ended
March 31, 2020, compared to $66.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment
was 15.4% for the first quarter ended March 31, 2020, compared to 16.7% for the same quarter, prior year. Certain Concentra
key statistics are presented in table V of this release for both the first quarters ended March 31, 2020 and 2019.
Effects of the COVID-19 Pandemic on
Select Medical's Results of Operations
The broader implications
of the COVID-19 pandemic on Select Medical's results of operations and overall financial performance remain uncertain. Select
Medical is a healthcare service provider that provides patient care services in both inpatient and outpatient settings. Select
Medical has provided certain additional performance metrics to assist readers in understanding how the COVID-19 pandemic impacted
each of its segments during the one month ended March 31, 2020, including its (i) net operating revenues and Adjusted
EBITDA for the two months ended February 29, 2020 and February 28, 2019, (ii) net operating revenues and Adjusted
EBITDA for the one month ended March 31, 2020 and 2019, (iii) net operating revenues and Adjusted EBITDA for the quarters
ended March 31, 2020 and 2019, and (iv) certain operating statistics for each of the aforementioned periods.
Illness Recovery Hospital Segment. Select Medical's critical illness recovery hospitals are a key part of the
inpatient hospital continuum of care. Both the Centers for Medicare & Medicaid Services ("CMS") and Congress
acted to temporarily suspend certain regulations concerning length of stay requirements, which impact Select Medical's critical
illness recovery hospitals, in order to facilitate the transfer of patients from general acute care hospitals. This was done in
order to expand hospital bed capacity to care for COVID-19 patients. As COVID-19 has spread in the general acute care hospitals
in many markets where it operates, Select Medical has admitted patients with COVID-19 and has faced the challenging task of treating
them while attempting to protect its patients and staff members who do not have COVID-19. The hospitals have followed CDC guidelines,
directives and recommendations with regard to the use of personal protective equipment and the isolation and treatment of patients
with COVID-19. The pandemic has caused, and will continue to cause, disruptions in Select Medical's critical illness recovery
hospitals, which include, in some cases, the addition or reduction of beds, the creation of isolated units and spaces, temporary
increases or restrictions on admissions, the incurrence of additional costs, staff illnesses, and the increased use of contract
Hospital Segment. Select Medical's rehabilitation hospitals receive most of their admissions from general acute
care hospitals. Both CMS and Congress acted to temporarily suspend certain regulations that govern admissions into rehabilitation
hospitals to facilitate the transfer of patients from general acute care hospitals and critical illness recovery hospitals. This
was done in order to expand hospital bed capacity to care for COVID-19 patients. As COVID-19 has spread in the general acute care
hospitals in many markets where it operates, Select Medical has admitted patients with COVID-19 and has faced the challenging task
of treating them while attempting to protect its patients and staff members who do not have COVID-19. The hospitals have followed
CDC guidelines, directives and recommendations with regard to the use of personal protective equipment and the isolation and treatment
of patients with COVID-19. The pandemic has caused, and will continue to cause, disruptions in Select Medical's rehabilitation
hospitals, which include, in some cases, the addition or reduction of beds, the creation of isolated units and spaces, temporary
restrictions on admissions, the incurrence of additional costs, staff illnesses, and the increased use of contract clinical labor.
Additionally, elective surgeries at hospitals and other facilities have been suspended which is reducing the need for inpatient
rehabilitation services.
Rehabilitation Segment. Beginning in mid-March, hospitals and other facilities began to suspend elective surgeries.
Additionally, state governments in the areas experiencing the most significant growth of COVID-19 infections began implementing
mandatory closures of non-essential or non-life sustaining businesses, restrictions on individual activities outside of the home,
restrictions on travel, and closures of schools. These actions continued to expand throughout March and by the end of March,
most states implemented significant restrictions on businesses and individuals. The suspension of elective surgeries at hospitals