Revisiting Select Medical Holdings' Earnings: A Closer Look at Unusual Items

Select Medical Holdings' (NYSE:SEM) recent earnings announcement was disappointing, but the company's profit numbers were decent. The $29m expense attributed to unusual items should improve in the future, making the company's earnings potential better than it seems. Despite losing money last year, the company made a profit this year, and investors can also consider other factors like margins, forecast growth, and return on investment.

Select Medical Holdings Corp (NYSE:SEM) reported its Q2 2025 earnings on July 31, 2025, with mixed results. The company's revenue grew by nearly 5% to $1.3 billion, while earnings per share (EPS) from continuing operations surged 88% year-over-year (YoY) to $0.60 [1]. The company's adjusted EBITDA increased slightly to $125.4 million, reflecting strong operational efficiency and cost management.

However, revenue in the Critical Illness Recovery Hospitals division declined by 1% due to regulatory changes, impacting adjusted EBITDA. Despite this, the company reaffirmed its full-year revenue guidance of $5.3 to $5.5 billion and EPS outlook of $1.09 to $1.19 [1].

The company's stock price reacted negatively to the earnings announcement, falling by 9.91% to $14.79. This decline reflects investor concerns about the revenue miss, but the stock's low price volatility suggests potential opportunities for investors [1].

Select Medical's CEO, Robert Ortenzio, emphasized the company's commitment to improving outpatient services and engaging with regulators. The company plans to add 382 rehab beds by H1 2027 and has executed its development strategy with new hospital openings and expansions [1].

Benchmark, an investment research firm, has reiterated its Buy rating and $21.00 price target on Select Medical Holdings (NYSE:SEM) following the company’s second-quarter earnings report. The stock, currently trading at $12.08, has recently hit near 52-week lows, presenting a potential opportunity according to InvestingPro data [2].

The healthcare provider maintained its full-year 2025 guidance, which implies adjusted EBITDA growth of 8% and 11% for the third and fourth quarters, respectively. Select Medical operates across multiple healthcare segments including long-term acute care hospitals (LTACH), inpatient rehabilitation facilities (IRF), and outpatient rehabilitation centers [2].

Select Medical's financial performance highlights both the potential for strong earnings growth and the challenges posed by revenue expectations. Despite losing money last year, the company made a profit this year, and investors can also consider other factors like margins, forecast growth, and return on investment.

References:
[1] https://www.ainvest.com/news/select-medical-2025-q2-earnings-misses-targets-net-income-drops-38-9-2508/
[2] https://www.investing.com/news/analyst-ratings/select-medical-stock-reaffirmed-as-buy-by-benchmark-with-21-price-target-93CH-4168219