Select Medical (SEM) Q1 Earnings And Revenues Top Estimates

Select Medical Holdings Corporation (NYSE:SEM) reported first-quarter 2018 earnings of 29 cents per share, which outperformed the Zacks Consensus Estimate by 7.4%. Also, the bottom line improved 38.1% year over year.

The company’s first-quarter results benefited from a solid performance across all its segments along with higher revenues.

Operational Update

Operating revenues of Select Medical grossed $1.3 billion during the quarter under review, up 14.8% year over year. Higher segmental revenues led to this upside. Moreover, the top line beat the Zacks Consensus Estimate by 0.7%.

Total operating expenses amounted to $1.1 billion, up 14.5% year over year. Increase of 14.7% in cost of services, 9.9% higher depreciation and amortization expenses and a 13.2% rise in general and administrative expenses induced this overall escalation in expenses.

Income from operations improved 18.3% year over year to $108.6 million on the back of stronger revenues.

Adjusted EBITDA grew 17.5% year over year to $163.2 million.

Segment Update

Long Term Acute Care segment operating revenues rose 4.4% year over year to $464.7 million.

Adjusted EBITDA was $73 million, having inched up 0.9% year over year with margins contracting 60 basis points (bps) to 15.7%.

Inpatient Rehabilitation segment operating revenues increased 20.7% year over year to $174.8 million.

Adjusted EBITDA was $26.8 million, soaring 64% year over year with margins having improved 400 basis points (bps) to 15.3%.

Operating revenues from Outpatient Rehabilitation rose 2.8% year over year to $257.4 million.

Adjusted EBITDA was $30.5 million, having slid 2.9% year over year with margins contracting 60 basis points (bps) to 11.9%.

Concentra segment reported net operating revenues of $356.1 million, up 42.1% from the prior-year quarter. Adjusted EBITDA increased 35.7% year over year to $57.8 million.

Adjusted EBITDA margin contracted 80 bps to 16.2%.

Financial Update

Select Medical exited the first quarter with cash of $119.7 million, down 2.3% from $122.5 million at year-end 2017.

As of Mar 31, 2018, long-term debt, net of current portion, increased 29.9% to $3.5 billion from the figure recorded at 2017-end.

Cash flow from operations was $50.7 million for the three months ended Mar 31, 2018, which compared favorably with ($55.9) million for the same period in 2017.

2018 Guidance

Select Medical expects earnings per share between 97 cents and $1.12. Net income is anticipated between 93 cents and $1.08 (which includes the first-quarter loss on early retirement of debt and U.S. HealthWorks acquisition costs and the related tax effects).

Net operating revenues are projected between $5 billion and $5.2 billion.

Adjusted EBITDA is likely to be between $630 million and $660 million.

Zacks Rank

Select Medical carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Health Maintenance Organizations

Among other players from the industry having reported first-quarter earnings so far, the bottom line of Anthem, Inc. (NYSE:ANTM) , Centene Corporation (NYSE:CNC) and UnitedHealth Group Incorporated (NYSE:UNH) beat the respective Zacks Consensus Estimate.

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