What is the revenue and EPS growth rate for Select Medical year over year?

What guidance did Select Medical's management provide for the next earnings period?

What were the key takeaways from Select Medical's earnings call?

What is Select Medical's gross profit margin?

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What does Select Medical do and what are its main business segments?

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What factors drove the changes in Select Medical's revenue and profit?

- **Regulatory Relief Boosts Margins**: CMS' 20% transmittal rule deferment added $12-15 million to Q3 EBITDA, mitigating high-cost outlier impacts. 
- **Strong Development Momentum**: 395 new beds in inpatient rehab by mid-2027, including 76-bed Jersey City hospital, support 7% revenue growth. 
- **Outpatient Challenges**: Medicare cuts and payer mix shifts reduced outpatient EBITDA margin to 7.4%, but 2026 rate increases and productivity improvements aim to stabilize margins. 
- **Financial Discipline**: 3.4x net leverage and $175 million cash flow support dividend payments and strategic growth.

**【Management Opening Remarks】**
- CMS deferred the 20% transmittal rule implementation to October 2025, reducing its impact on critical illness recovery hospitals. This adjustment resulted in a $12-15 million EBITDA benefit for the quarter.
- The company announced new developments, including a 30-bed critical illness recovery hospital in Memphis and expansions in Texas, Florida, and New Jersey, adding 395 beds by mid-2027. A $0.0625 per share dividend was approved, reflecting commitment to shareholder returns.

**【CEO Commentary】**
- Total revenue grew 7% YoY to $1.36 billion, driven by 16% growth in inpatient rehab revenue and 4% in critical illness recovery. Adjusted EBITDA rose 7% to $111.7 million, with EPS increasing 21% to $0.23.
- Inpatient rehab segment showed strong performance: revenue up 16%, EBITDA up 13%, and occupancy improving to 83%. Outpatient segment faced challenges, with EBITDA margin declining to 7.4% due to Medicare cuts and payer mix shifts.

**【CFO Financial Commentary】**
- Debt stood at $1.8 billion with net leverage of 3.4x, stable and comfortable for operations. Cash flow from operations was $175.3 million, supporting development and dividend payments.
- Capital expenditures for 2025 were $180-200 million, with $100-105 million allocated to maintenance and the remainder to growth initiatives.

**【Q&A Highlights】**
- **Regulatory Environment**: CMS' 20% transmittal rule deferment reduced 2025 impact by 67%, but the fixed loss threshold for high-cost outliers rose to $79,000, affecting patient admissions. Advocacy efforts continue for policy reforms.
- **Development Pipeline**: 395 new beds in inpatient rehab by mid-2027, including partnerships with Cleveland Clinic and Banner Health. New hospitals in Texas, Florida, and New Jersey are expected to open by year-end.
- **Outpatient Challenges**: Medicare cuts and payer mix shifts caused EBITDA margin decline to 7.4%. Productivity improvements and system investments aim to stabilize margins in 2026.
- **Leverage and Capital Allocation**: Management prioritizes development, dividends, and debt reduction, with 3.4x leverage considered optimal for growth.

Select Medical Holdings Corporation (SEM) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SEM

SEM fundamentals

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