Select Medical (SEM) 1 Nov 24 2024 Q3 Earnings call transcript
2min read In a recent earnings call, Select Medical Holdings Corporation (NYSE: SEM) highlighted its third-quarter 2024 results, underscoring a period of strategic expansion and operational challenges. The company's executives, including Executive Chairman and Co-Founder Robert Ortenzio and Senior Executive Vice President of Strategic Finance and Operations Martin Jackson, provided an overview of the company's performance, future plans, and market outlook.
Financial Highlights and Strategic Moves
Select Medical reported a 6% revenue growth compared to the same period last year, with consolidated adjusted EBITDA reaching $205.5 million, representing a 6% increase. The company's critical illness recovery hospital division saw a 3% increase in revenue and a 9% increase in adjusted EBITDA, while the inpatient rehab division achieved double-digit growth in both revenue and adjusted EBITDA for the third consecutive quarter.
A significant development in the quarter was the successful completion of Concentra's initial public offering (IPO), with Select Medical now owning 81.74% of Concentra stock. The company plans to distribute its remaining interest in Concentra to shareholders by the end of the year, pending market conditions. This move underscores Select Medical's strategic approach to capitalizing on market opportunities and managing its portfolio of businesses.
Expansion and Development Plans
Select Medical announced several new development projects, including the opening of a 48-bed inpatient rehab hospital in Jacksonville, Florida, and the acquisition of a 50-bed hospital in Oklahoma City. The company also plans to open a 54-bed rehab hospital in Temple, Texas, and a 68-bed facility in Jersey City, New Jersey, subject to regulatory approval. These expansion plans indicate a focus on geographic diversification and growth in the inpatient rehab division.
Labor Costs and Operational Efficiency
Martin Jackson, the Senior Executive Vice President of Strategic Finance and Operations, discussed the company's efforts to manage labor costs, particularly in the critical illness recovery hospital division. Despite the challenges posed by high-cost outliers, Select Medical has effectively managed these costs, underscoring its operational efficiency and ability to navigate complex market dynamics.
Market Outlook and Challenges
Looking ahead, Select Medical expects revenue to be in the range of $6.95 billion to $7.15 billion, with adjusted EBITDA projected between $865 million and $885 million. This outlook reflects the company's strategic focus on growth and operational efficiency, amidst the challenges of managing labor costs and navigating regulatory environments.
Conclusion
The third-quarter earnings call underscores Select Medical Holdings Corporation's robust performance and strategic expansion plans. The company's ability to navigate operational challenges while pursuing growth opportunities highlights its resilience and adaptability in a dynamic market. With a focus on operational efficiency, geographic diversification, and strategic partnerships, Select Medical is well-positioned to capitalize on opportunities in the healthcare sector. As the company moves forward, investors and stakeholders will closely watch its progress in executing its strategic plans and navigating the evolving healthcare landscape.