MECHANICSBURG, Pa.,
Oct. 29, 2020 /PRNewswire/ -- Select
Medical Holdings Corporation ("Select Medical," "we," "us," or
"our") (NYSE: SEM) today announced results for its third quarter
ended September 30, 2020.
For the third quarter ended September 30, 2020, net
operating revenues increased 2.2% to $1,423.9 million, compared to $1,393.3 million for the same quarter, prior
year. Income from operations increased 27.0% to $156.1 million for the third quarter ended
September 30, 2020, compared to $122.9 million for the same quarter, prior
year. Income from operations included a net reduction of
$1.2 million related to payments
received under the Provider Relief Fund, as described below. Net
income increased 137.2% to $104.5
million for the third quarter ended September 30, 2020,
compared to $44.0 million for the
same quarter, prior year. Net income included pre-tax gains on
sales of businesses of $5.1 million
for the third quarter ended September 30, 2020. Net income
included pre-tax losses on early retirement of debt of $18.6 million for the third quarter ended
September 30, 2019. Adjusted EBITDA increased 16.7% to
$213.2 million for the third quarter
ended September 30, 2020, compared to $182.7 million for the same quarter, prior year.
Earnings per common share was $0.57
on a fully diluted basis for the third quarter ended
September 30, 2020, compared to $0.23 for the same quarter, prior year. Adjusted
earnings per common share was $0.56
on a fully diluted basis for the third quarter ended
September 30, 2020, compared to $0.33 for the same quarter, prior year. Adjusted
earnings per common share excludes the gains on sales of businesses
and related tax effects for the third quarter ended
September 30, 2020. Adjusted earnings per common share
excludes the losses on early retirement of debt and related costs,
and their related tax effects, for the third quarter ended
September 30, 2019. The definition of Adjusted EBITDA and a
reconciliation of net income to Adjusted EBITDA are presented in
table IX of this release. A reconciliation of earnings per common
share to adjusted earnings per common share is presented in table X
of this release.
For the nine months ended September 30, 2020, net operating
revenues were $4,071.2 million,
compared to $4,079.3 million for the
same period, prior year. Income from operations increased 12.5% to
$404.3 million for the nine months
ended September 30, 2020, compared to $359.5 million for the same period, prior year.
For the nine months ended September 30, 2020, income from
operations included other operating income of $53.8 million related to the recognition of
payments received under the Provider Relief Fund, as described
below, for loss of revenue and health care related expenses
attributable to coronavirus disease 2019 ("COVID-19"). Net income
increased 54.0% to $242.4 million for
the nine months ended September 30, 2020, compared to
$157.4 million for the same period,
prior year. Net income included pre-tax gains on sales of
businesses of $12.7 million for the
nine months ended September 30, 2020. Net income included
pre-tax losses on early retirement of debt of $18.6 million and a pre-tax gain on sale of
businesses of $6.5 million for
the nine months ended September 30, 2019. Adjusted EBITDA
increased 7.5% to $579.3 million for
the nine months ended September 30, 2020, compared to
$539.0 million for the same period,
prior year. Earnings per common share was $1.35 on a fully diluted basis for the nine
months ended September 30, 2020, compared to $0.86 for the same period, prior year. Adjusted
earnings per common share was $1.31
on a fully diluted basis for the nine months ended
September 30, 2020, compared to $0.93 for the same period, prior year. Adjusted
earnings per common share excludes the gains on sales of businesses
and related tax effects for the nine months ended
September 30, 2020. Adjusted earnings per common share
excludes the losses on early retirement of debt and related costs,
gain on sale of businesses, and their related tax effects for the
nine months ended September 30, 2019. The definition of
Adjusted EBITDA and a reconciliation of net income to Adjusted
EBITDA are presented in table IX of this release. A reconciliation
of earnings per common share to adjusted earnings per common share
is presented in table X of this release.
Please refer to "Effects of the COVID-19 Pandemic on Select
Medical's Results of Operations" below for further
discussion.
Company Overview
Select 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 September 30, 2020,
Select Medical operated 100 critical illness recovery hospitals in
28 states, 29 rehabilitation hospitals in 12 states, and 1,777
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. At September 30, 2020, Select Medical
had operations in 46 states and the District of Columbia. Information about Select
Medical is available at www.selectmedical.com.
CARES Act Provider Relief Fund
On March 27, 2020, the Coronavirus
Aid, Relief, and Economic Security Act ("CARES Act") was enacted.
The CARES Act provided additional waivers, reimbursement, grants
and other funds to assist health care providers during the COVID-19
pandemic, including $100.0 billion in
appropriations for the Public Health and Social Services Emergency
Fund, also referred to as the Provider Relief Fund, to be used for
preventing, preparing, and responding to the coronavirus, and for
reimbursing eligible health care providers for lost revenues and
health care related expenses that are attributable to COVID-19.
For the three and nine months ended September 30, 2020,
Select Medical recognized payments received under the Provider
Relief Fund for loss of revenue and health care related expenses
attributable to COVID-19 as other operating income. For the three
months ended September 30, 2020, other operating income of
$0.4 million is included within the
operating results of our Select Medical's Concentra segment, and a
reduction to other operating income of $1.5
million is included within the operating results of its
other activities. The reduction in other operating income resulted
from changes in the terms and conditions associated with the
acceptance of the Provider Relief Fund payments; these terms and
conditions have changed from those which existed upon receipt of
the payments. For the nine months ended September 30, 2020,
$52.7 million and $1.1 million of other operating income is
included within the operating results of Select Medical's other
activities and its Concentra segment, respectively.
Critical Illness Recovery Hospital Segment
For the third quarter ended September 30, 2020, net
operating revenues for the critical illness recovery hospital
segment increased 12.2% to $519.5
million, compared to $462.9
million for the same quarter, prior year. Adjusted EBITDA
for the critical illness recovery hospital segment increased 55.2%
to $88.8 million for the third
quarter ended September 30, 2020, compared to $57.2 million for the same quarter, prior year.
The Adjusted EBITDA margin for the critical illness recovery
hospital segment was 17.1% for the third quarter ended
September 30, 2020, compared to 12.4% for the same quarter,
prior year. Certain critical illness recovery hospital key
statistics are presented in table VII of this release for both the
third quarters ended September 30, 2020 and 2019.
For the nine months ended September 30, 2020, net operating
revenues for the critical illness recovery hospital segment
increased 11.4% to $1,539.6 million,
compared to $1,381.6 million for the
same period, prior year. Adjusted EBITDA for the critical illness
recovery hospital segment increased 37.4% to $267.1 million for the nine months ended
September 30, 2020, compared to $194.4
million for the same period, prior year. The Adjusted EBITDA
margin for the critical illness recovery hospital segment was 17.4%
for the nine months ended September 30, 2020, compared to
14.1% for the same period, prior year. Certain critical illness
recovery hospital key statistics are presented in table VIII of
this release for both the nine months ended September 30, 2020
and 2019.
Rehabilitation Hospital Segment
For the third quarter ended September 30, 2020, net
operating revenues for the rehabilitation hospital segment
increased 8.5% to $188.1 million,
compared to $173.4 million for the
same quarter, prior year. Adjusted EBITDA for the rehabilitation
hospital segment increased 21.4% to $44.6
million for the third quarter ended September 30, 2020,
compared to $36.8 million for the
same quarter, prior year. The Adjusted EBITDA margin for the
rehabilitation hospital segment was 23.7% for the third quarter
ended September 30, 2020, compared to 21.2% for the same
quarter, prior year. Certain rehabilitation hospital key statistics
are presented in table VII of this release for both the third
quarters ended September 30, 2020 and 2019.
For the nine months ended September 30, 2020, net operating
revenues for the rehabilitation hospital segment increased 10.3% to
$538.8 million, compared to
$488.3 million for the same period,
prior year. Adjusted EBITDA for the rehabilitation hospital segment
increased 19.7% to $110.8 million for
the nine months ended September 30, 2020, compared to
$92.5 million for the same period,
prior year. The Adjusted EBITDA margin for the rehabilitation
hospital segment was 20.6% for the nine months ended
September 30, 2020, compared to 19.0% for the same period,
prior year. For the nine months ended September 30, 2019, the
Adjusted EBITDA results for the rehabilitation hospital segment
included start-up losses of approximately $8.8 million. Certain rehabilitation hospital key
statistics are presented in table VIII of this release for both the
nine months ended September 30, 2020 and 2019.
Outpatient Rehabilitation Segment
For the third quarter ended September 30, 2020, net
operating revenues for the outpatient rehabilitation segment were
$240.0 million, compared to
$265.3 million for the same quarter,
prior year. Adjusted EBITDA for the outpatient rehabilitation
segment was $30.6 million for the
third quarter ended September 30, 2020, compared to Adjusted
EBITDA of $40.0 million for the same
quarter, prior year. The Adjusted EBITDA margin for the outpatient
rehabilitation segment was 12.8% for the third quarter ended
September 30, 2020, compared to 15.1% for the same quarter,
prior year. Certain outpatient rehabilitation key statistics are
presented in table VII of this release for both the third quarters
ended September 30, 2020 and 2019.
For the nine months ended September 30, 2020, net operating
revenues for the outpatient rehabilitation segment were
$662.4 million, compared to
$774.1 million for the same period,
prior year. Adjusted EBITDA for the outpatient rehabilitation
segment was $51.5 million for the
nine months ended September 30, 2020, compared to $111.6 million for the same period, prior year.
The Adjusted EBITDA margin for the outpatient rehabilitation
segment was 7.8% for the nine months ended September 30, 2020,
compared to 14.4% for the same period, prior year. Certain
outpatient rehabilitation key statistics are presented in table
VIII of this release for both the nine months ended
September 30, 2020 and 2019.
Concentra Segment
For the third quarter ended September 30, 2020, net
operating revenues for the Concentra segment were $391.9 million, compared to $421.9 million for the same quarter, prior year.
Adjusted EBITDA for the Concentra segment increased 3.7% to
$80.5 million for the third quarter
ended September 30, 2020, compared to $77.7 million for the same quarter, prior year.
The Adjusted EBITDA margin for the Concentra segment was 20.6% for
the third quarter ended September 30, 2020, compared to 18.4%
for the same quarter, prior year. Certain Concentra key statistics
are presented in table VII of this release for both the third
quarters ended September 30, 2020 and 2019.
For the nine months ended September 30, 2020, net operating
revenues for the Concentra segment were $1,102.7 million, compared to $1,231.7 million for the same period, prior year.
Adjusted EBITDA for the Concentra segment was $183.5 million for the nine months ended
September 30, 2020, compared to $220.0
million for the same period, prior year. The Adjusted EBITDA
margin for the Concentra segment was 16.6% for the nine months
ended September 30, 2020, compared to 17.9% for the same
period, prior year. Certain Concentra key statistics are presented
in table VIII of this release for both the nine months ended
September 30, 2020 and 2019.
Effects of the COVID-19 Pandemic on Select Medical's Results of
Operations
The continuing implications of the COVID-19 pandemic on Select
Medical's results of operations and overall financial performance
remain uncertain. Select Medical has provided net operating
revenues and certain operating statistics to assist readers in
understanding how the COVID-19 pandemic impacted each of its
segments during the three and nine months ended September 30,
2020.
Critical Illness Recovery Hospital Segment. Select
Medical's critical illness recovery hospitals are a key component
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 apply to 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. COVID-19 has
been prevalent in certain markets that Select Medical serves; as a
result, Select Medical's critical illness recovery hospitals have
admitted patients with COVID-19 and have faced the challenging task
of treating those patients while also taking measures to protect
their patients and staff members who do not have COVID-19. The
pandemic has caused, and may 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 clinical
labor.
The following table shows the trend in net operating revenues,
patient day volume, and occupancy rates for each of the periods
presented, as well as the number of critical illness recovery
hospitals Select Medical owned at the end of each period.
|
|
Net Operating
Revenues
|
|
|
Patient
Days
|
|
|
Occupancy
Rate
|
|
|
Number of
Hospitals Owned(1)
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
|
2019
|
|
2020
|
|
|
(in thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
$
|
149,799
|
|
|
$
|
163,238
|
|
|
9.0%
|
|
|
86,238
|
|
90,783
|
|
5.3%
|
|
|
69%
|
|
69%
|
|
|
96
|
|
100
|
February
|
|
145,586
|
|
|
165,375
|
|
|
13.6%
|
|
|
80,806
|
|
87,844
|
|
8.7%
|
|
|
71%
|
|
72%
|
|
|
96
|
|
100
|
March
|
|
162,149
|
|
|
171,908
|
|
|
6.0%
|
|
|
91,085
|
|
91,831
|
|
0.8%
|
|
|
73%
|
|
70%
|
|
|
96
|
|
100
|
Three Months Ended
March 31
|
|
$
|
457,534
|
|
|
$
|
500,521
|
|
|
9.4%
|
|
|
258,129
|
|
270,458
|
|
4.8%
|
|
|
71%
|
|
70%
|
|
|
96
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
|
|
$
|
156,231
|
|
|
$
|
171,445
|
|
|
9.7%
|
|
|
88,357
|
|
90,710
|
|
2.7%
|
|
|
70%
|
|
71%
|
|
|
99
|
|
100
|
May
|
|
156,422
|
|
|
178,223
|
|
|
13.9%
|
|
|
89,350
|
|
95,191
|
|
6.5%
|
|
|
69%
|
|
72%
|
|
|
99
|
|
100
|
June
|
|
148,490
|
|
|
169,958
|
|
|
14.5%
|
|
|
85,153
|
|
90,988
|
|
6.9%
|
|
|
68%
|
|
71%
|
|
|
99
|
|
100
|
Three Months Ended June
30
|
|
$
|
461,143
|
|
|
$
|
519,626
|
|
|
12.7%
|
|
|
262,860
|
|
276,889
|
|
5.3%
|
|
|
69%
|
|
72%
|
|
|
99
|
|
100
|
Six Months Ended June
30
|
|
$
|
918,677
|
|
|
$
|
1,020,147
|
|
|
11.0%
|
|
|
520,989
|
|
547,347
|
|
5.1%
|
|
|
70%
|
|
71%
|
|
|
99
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
|
|
$
|
151,416
|
|
|
$
|
175,253
|
|
|
15.7%
|
|
|
87,143
|
|
94,144
|
|
8.0%
|
|
|
67%
|
|
71%
|
|
|
99
|
|
99
|
August
|
|
155,485
|
|
|
173,967
|
|
|
11.9%
|
|
|
86,553
|
|
93,964
|
|
8.6%
|
|
|
66%
|
|
71%
|
|
|
99
|
|
99
|
September
|
|
155,991
|
|
|
170,234
|
|
|
9.1%
|
|
|
84,393
|
|
90,955
|
|
7.8%
|
|
|
67%
|
|
71%
|
|
|
99
|
|
99
|
Three Months Ended
September 30
|
|
$
|
462,892
|
|
|
$
|
519,454
|
|
|
12.2%
|
|
|
258,089
|
|
279,063
|
|
8.1%
|
|
|
67%
|
|
71%
|
|
|
99
|
|
99
|
Nine Months Ended
September 30
|
|
$
|
1,381,569
|
|
|
$
|
1,539,601
|
|
|
11.4%
|
|
|
779,078
|
|
826,410
|
|
6.1%
|
|
|
69%
|
|
71%
|
|
|
99
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_______________________________________________________________________________
|
(1)
|
Represents the number
of hospitals owned at the end of each period presented.
|
Rehabilitation 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 in order 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. COVID-19 has been prevalent
in certain markets that Select Medical serves; as a result, Select
Medical's rehabilitation hospitals have admitted patients with
COVID-19 and have faced the challenging task of treating those
patients while also taking measures to protect their patients and
staff members who do not have 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. At the beginning of the pandemic, elective
surgeries at hospitals and other facilities were suspended, which
reduced the need for inpatient rehabilitation services. Beginning
in May, state governments and health departments began to ease
these restrictions and hospitals began to perform elective
surgeries again, which has since increased the need for the
services provided by Select Medical's rehabilitation hospitals.
The following table shows the trend in net operating revenues,
patient day volume, and occupancy rates for each of the periods
presented, as well as the number of rehabilitation hospitals Select
Medical owned at the end of each period.
|
|
Net Operating
Revenues
|
|
|
Patient
Days
|
|
|
Occupancy
Rate
|
|
|
Number of
Hospitals Owned(1)
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
|
2019
|
|
2020
|
|
|
(in thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
$
|
50,615
|
|
|
$
|
61,673
|
|
|
21.8%
|
|
|
27,434
|
|
32,111
|
|
17.0%
|
|
|
74%
|
|
79%
|
|
|
17
|
|
19
|
February
|
|
48,080
|
|
|
60,690
|
|
|
26.2%
|
|
|
25,442
|
|
31,813
|
|
25.0%
|
|
|
76%
|
|
84%
|
|
|
17
|
|
19
|
March
|
|
55,863
|
|
|
59,656
|
|
|
6.8%
|
|
|
29,940
|
|
30,644
|
|
2.4%
|
|
|
78%
|
|
76%
|
|
|
18
|
|
19
|
Three Months Ended
March 31
|
|
$
|
154,558
|
|
|
$
|
182,019
|
|
|
17.8%
|
|
|
82,816
|
|
94,568
|
|
14.2%
|
|
|
76%
|
|
79%
|
|
|
18
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
|
|
$
|
51,991
|
|
|
$
|
45,878
|
|
|
(11.8)%
|
|
|
28,266
|
|
23,553
|
|
(16.7)%
|
|
|
76%
|
|
61%
|
|
|
18
|
|
19
|
May
|
|
56,019
|
|
|
57,815
|
|
|
3.2%
|
|
|
29,730
|
|
29,787
|
|
0.2%
|
|
|
75%
|
|
73%
|
|
|
19
|
|
19
|
June
|
|
52,364
|
|
|
64,974
|
|
|
24.1%
|
|
|
28,529
|
|
30,741
|
|
7.8%
|
|
|
73%
|
|
78%
|
|
|
19
|
|
19
|
Three Months Ended June
30
|
|
$
|
160,374
|
|
|
$
|
168,667
|
|
|
5.2%
|
|
|
86,525
|
|
84,081
|
|
(2.8)%
|
|
|
75%
|
|
71%
|
|
|
19
|
|
19
|
Six Months Ended June
30
|
|
$
|
314,932
|
|
|
$
|
350,686
|
|
|
11.4%
|
|
|
169,341
|
|
178,649
|
|
5.5%
|
|
|
76%
|
|
75%
|
|
|
19
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
|
|
$
|
57,077
|
|
|
$
|
62,312
|
|
|
9.2%
|
|
|
30,054
|
|
31,986
|
|
6.4%
|
|
|
75%
|
|
81%
|
|
|
19
|
|
18
|
August
|
|
58,072
|
|
|
63,673
|
|
|
9.6%
|
|
|
30,228
|
|
32,518
|
|
7.6%
|
|
|
75%
|
|
83%
|
|
|
19
|
|
18
|
September
|
|
58,220
|
|
|
62,090
|
|
|
6.6%
|
|
|
29,172
|
|
31,176
|
|
6.9%
|
|
|
75%
|
|
82%
|
|
|
19
|
|
18
|
Three Months Ended
September 30
|
|
$
|
173,369
|
|
|
$
|
188,075
|
|
|
8.5%
|
|
|
89,454
|
|
95,680
|
|
7.0%
|
|
|
75%
|
|
82%
|
|
|
19
|
|
18
|
Nine Months Ended
September 30
|
|
$
|
488,301
|
|
|
$
|
538,761
|
|
|
10.3%
|
|
|
258,795
|
|
274,329
|
|
6.0%
|
|
|
75%
|
|
77%
|
|
|
19
|
|
18
|
|
_______________________________________________________________________________
|
(1)
|
Represents the number
of hospitals owned at the end of each period presented.
|
Outpatient Rehabilitation Segment. Beginning in
mid-March, state governments began implementing mandatory closures
of non-essential or non-life sustaining businesses, restricting
travel and individual activities outside of the home, closing
schools, and mandating other social distancing measures.
Additionally, hospitals and other facilities began to suspend
elective surgeries. As a result, Select Medical's outpatient
rehabilitation clinics experienced significantly less patient visit
volume due to a decline in patient referrals from physicians, a
reduction in workers' compensation injury visits resulting from the
temporary closure of businesses, and the suspension of elective
surgeries which would have required outpatient rehabilitation
services. Beginning in May, state governments began to ease
restrictions imposed on individuals and businesses. Further, most
physician offices have reopened for routine office visits and
hospitals and other facilities have begun to perform elective
surgeries again, which has since increased the need for services
provided by Select Medical's outpatient rehabilitation clinics.
The following table shows the trend in net operating revenues
and patient visit volume for each of the periods presented, as well
as the number of working days for each period.
|
|
Net Operating
Revenues
|
|
|
Visits
|
|
|
Working
Days(1)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
|
|
(in thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
$
|
83,185
|
|
|
$
|
90,924
|
|
|
9.3%
|
|
|
687,007
|
|
757,171
|
|
10.2%
|
|
|
22
|
|
22
|
|
February
|
|
78,573
|
|
|
88,239
|
|
|
12.3%
|
|
|
658,610
|
|
739,061
|
|
12.2%
|
|
|
20
|
|
20
|
|
March
|
|
85,147
|
|
|
76,086
|
|
|
(10.6)%
|
|
|
708,866
|
|
626,433
|
|
(11.6)%
|
|
|
21
|
|
22
|
|
Three Months Ended
March 31
|
|
$
|
246,905
|
|
|
$
|
255,249
|
|
|
3.4%
|
|
|
2,054,483
|
|
2,122,665
|
|
3.3%
|
|
|
63
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
|
|
$
|
90,230
|
|
|
$
|
49,084
|
|
|
(45.6)%
|
|
|
762,914
|
|
386,108
|
|
(49.4)%
|
|
|
22
|
|
22
|
|
May
|
|
90,272
|
|
|
51,186
|
|
|
(43.3)%
|
|
|
759,829
|
|
409,703
|
|
(46.1)%
|
|
|
22
|
|
20
|
|
June
|
|
81,389
|
|
|
66,868
|
|
|
(17.8)%
|
|
|
680,762
|
|
546,456
|
|
(19.7)%
|
|
|
20
|
|
22
|
|
Three Months Ended June
30
|
|
$
|
261,891
|
|
|
$
|
167,138
|
|
|
(36.2)%
|
|
|
2,203,505
|
|
1,342,267
|
|
(39.1)%
|
|
|
64
|
|
64
|
|
Six Months Ended June
30
|
|
$
|
508,796
|
|
|
$
|
422,387
|
|
|
(17.0)%
|
|
|
4,257,988
|
|
3,464,932
|
|
(18.6)%
|
|
|
127
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
|
|
$
|
89,267
|
|
|
$
|
77,793
|
|
|
(12.9)%
|
|
|
754,102
|
|
636,826
|
|
(15.6)%
|
|
|
22
|
|
22
|
|
August
|
|
90,687
|
|
|
79,034
|
|
|
(12.8)%
|
|
|
743,813
|
|
651,738
|
|
(12.4)%
|
|
|
22
|
|
21
|
|
September
|
|
85,376
|
|
|
83,215
|
|
|
(2.5)%
|
|
|
706,413
|
|
694,808
|
|
(1.6)%
|
|
|
20
|
|
21
|
|
Three Months Ended
September 30
|
|
$
|
265,330
|
|
|
$
|
240,042
|
|
|
(9.5)%
|
|
|
2,204,328
|
|
1,983,372
|
|
(10.0)%
|
|
|
64
|
|
64
|
|
Nine Months Ended
September 30
|
|
$
|
774,126
|
|
|
$
|
662,429
|
|
|
(14.4)%
|
|
|
6,462,316
|
|
5,448,304
|
|
(15.7)%
|
|
|
191
|
|
192
|
|
|
_______________________________________________________________________________
|
(1)
|
Represents the number
of days in which normal business operations were conducted during
the periods presented.
|
Concentra Segment. Beginning in mid-March, state
governments began placing significant restrictions on businesses
and mandating closures of non-essential or non-life sustaining
businesses, causing many employers to furlough their workforce and
temporarily cease or significantly reduce their operations. These
actions have had significant effects on Select Medical's patient
visit volumes. Beginning in May, state governments began to ease
restrictions imposed on businesses and employers began to increase
their workforce, which has since resulted in an increased need for
occupational health services.
The following table shows the trend in net operating revenues
and patient visit volume for each of the periods presented, as well
as the number of working days for each period.
|
|
Net Operating
Revenues
|
|
|
Visits
|
|
|
Working
Days(1)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
2019
|
|
2020
|
|
|
|
(in thousands,
except percentages)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
$
|
133,507
|
|
|
$
|
141,236
|
|
|
5.8%
|
|
|
985,598
|
|
1,032,069
|
|
4.7%
|
|
|
22
|
|
22
|
|
February
|
|
126,309
|
|
|
133,690
|
|
|
5.8%
|
|
|
919,065
|
|
965,741
|
|
5.1%
|
|
|
20
|
|
20
|
|
March
|
|
136,505
|
|
|
123,609
|
|
|
(9.4)%
|
|
|
1,006,944
|
|
879,585
|
|
(12.6)%
|
|
|
21
|
|
22
|
|
Three Months Ended
March 31
|
|
$
|
396,321
|
|
|
$
|
398,535
|
|
|
0.6%
|
|
|
2,911,607
|
|
2,877,395
|
|
(1.2)%
|
|
|
63
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
|
|
$
|
140,050
|
|
|
$
|
91,178
|
|
|
(34.9)%
|
|
|
1,040,543
|
|
610,555
|
|
(41.3)%
|
|
|
22
|
|
22
|
|
May
|
|
143,183
|
|
|
99,228
|
|
|
(30.7)%
|
|
|
1,073,763
|
|
674,629
|
|
(37.2)%
|
|
|
22
|
|
20
|
|
June
|
|
130,218
|
|
|
121,932
|
|
|
(6.4)%
|
|
|
988,783
|
|
865,896
|
|
(12.4)%
|
|
|
20
|
|
22
|
|
Three Months Ended June
30
|
|
$
|
413,451
|
|
|
$
|
312,338
|
|
|
(24.5)%
|
|
|
3,103,089
|
|
2,151,080
|
|
(30.7)%
|
|
|
64
|
|
64
|
|
Six Months Ended June
30
|
|
$
|
809,772
|
|
|
$
|
710,873
|
|
|
(12.2)%
|
|
|
6,014,696
|
|
5,028,475
|
|
(16.4)%
|
|
|
127
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
|
|
$
|
142,385
|
|
|
$
|
132,465
|
|
|
(7.0)%
|
|
|
1,057,809
|
|
930,427
|
|
(12.0)%
|
|
|
22
|
|
22
|
|
August
|
|
144,452
|
|
|
130,291
|
|
|
(9.8)%
|
|
|
1,087,165
|
|
933,555
|
|
(14.1)%
|
|
|
22
|
|
21
|
|
September
|
|
135,063
|
|
|
129,103
|
|
|
(4.4)%
|
|
|
1,005,929
|
|
963,065
|
|
(4.3)%
|
|
|
20
|
|
21
|
|
Three Months Ended
September 30
|
|
$
|
421,900
|
|
|
$
|
391,859
|
|
|
(7.1)%
|
|
|
3,150,903
|
|
2,827,047
|
|
(10.3)%
|
|
|
64
|
|
64
|
|
Nine Months Ended
September 30
|
|
$
|
1,231,672
|
|
|
$
|
1,102,732
|
|
|
(10.5)%
|
|
|
9,165,599
|
|
7,855,522
|
|
(14.3)%
|
|
|
191
|
|
192
|
|
|
_______________________________________________________________________________
|
(1)
|
Represents the number
of days in which normal business operations were conducted during
the periods presented.
|
Stock Repurchase Program
The board of directors of Select Medical has authorized a common
stock repurchase program to repurchase up to $500.0 million worth of shares of its common
stock. The program has been extended until December 31, 2021, and will remain in effect
until then, unless further extended or earlier terminated by the
board of directors. Stock repurchases under this program may be
made in the open market or through privately negotiated
transactions, and at times and in such amounts as Select Medical
deems appropriate. Select Medical funds this program with cash on
hand and borrowings under its revolving credit facility.
Select Medical did not repurchase shares during the quarter
ended September 30, 2020. Since the inception of the program
through September 30, 2020, Select Medical has repurchased
38,580,908 shares at a cost of approximately $356.6 million, or $9.24 per share, which includes transaction
costs.
Business Outlook
Select Medical is issuing an updated business outlook following
the reporting of its third quarter 2020 results. Select Medical now
expects for the full year of 2020 consolidated net operating
revenues to be in the range of $5.44
billion to $5.50 billion and
Adjusted EBITDA for the full year of 2020 to be in the range of
$745.0 million to $765.0 million. Select Medical now expects fully
diluted earnings per common share for the full year 2020 to be in
the range of $1.65 to $1.75 and adjusted earnings per common share for
the full year 2020 to be in the range of $1.61 to $1.71.
Adjusted earnings per common share excludes the gains on sales of
businesses and their related tax effects. Reconciliations of net
income to Adjusted EBITDA and diluted earnings per common share to
adjusted earnings per common share for the full year of 2020 are
presented in table XI of this release.
Conference Call
Select Medical will host a conference call regarding its third
quarter results, as well as its business outlook and the impact of
the COVID-19 pandemic on each of its reporting segments, on
Friday, October 30, 2020, at
9:00am ET. The domestic dial in
number for the call is 1-866-440-2669. The international dial in
number is 1-409-220-9844. The conference ID for the call is
6297066. The conference call will be webcast simultaneously and can
be accessed at Select Medical Holdings Corporation's website
www.selectmedicalholdings.com.
For those unable to participate in the conference call, a replay
will be available until 11:00am ET,
November 6, 2020. The replay number
is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The
conference ID for the replay will be 6297066. The replay can also
be accessed at Select Medical Holdings Corporation's website,
www.selectmedicalholdings.com.
Certain statements contained herein that are not descriptions of
historical facts are "forward-looking" statements (as such term is
defined in the Private Securities Litigation Reform Act of
1995). Because such statements include risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements due to
factors including the following:
- developments related to the COVID-19 pandemic including, but
not limited to, the duration and severity of the pandemic,
additional measures taken by government authorities and the private
sector to limit the spread of COVID-19, and further legislative and
regulatory actions which impact healthcare providers, including
actions that may impact the Medicare program;
- changes in government reimbursement for our services and/or new
payment policies may result in a reduction in net operating
revenues, an increase in costs, and a reduction in
profitability;
- the failure of our Medicare-certified long term care hospitals
or inpatient rehabilitation facilities to maintain their Medicare
certifications may cause our net operating revenues and
profitability to decline;
- the failure of our Medicare-certified long term care hospitals
and inpatient rehabilitation facilities operated as "hospitals
within hospitals" to qualify as hospitals separate from their host
hospitals may cause our net operating revenues and profitability to
decline;
- a government investigation or assertion that we have violated
applicable regulations may result in sanctions or reputational harm
and increased costs;
- acquisitions or joint ventures may prove difficult or
unsuccessful, use significant resources or expose us to unforeseen
liabilities;
- our plans and expectations related to our acquisitions and our
ability to realize anticipated synergies;
- private third-party payors for our services may adopt payment
policies that could limit our future net operating revenues and
profitability;
- the failure to maintain established relationships with the
physicians in the areas we serve could reduce our net operating
revenues and profitability;
- shortages in qualified nurses, therapists, physicians, or other
licensed providers, or the inability to attract or retain
healthcare professionals due to the heightened risk of infection
related to the COVID-19 pandemic, could increase our operating
costs significantly or limit our ability to staff our
facilities;
- competition may limit our ability to grow and result in a
decrease in our net operating revenues and profitability;
- the loss of key members of our management team could
significantly disrupt our operations;
- the effect of claims asserted against us could subject us to
substantial uninsured liabilities;
- a security breach of our or our third-party vendors'
information technology systems may subject us to potential legal
and reputational harm and may result in a violation of the Health
Insurance Portability and Accountability Act of 1996 or the Health
Information Technology for Economic and Clinical Health Act;
and
- other factors discussed from time to time in our filings with
the Securities and Exchange Commission (the "SEC"), including
factors discussed under the heading "Risk Factors" of the quarterly
reports on Form 10-Q and of the annual report on Form 10-K for the
year ended December 31, 2019.
Except as required by applicable law, including the securities
laws of the United States and the
rules and regulations of the SEC, we are under no obligation to
publicly update or revise any forward-looking statements, whether
as a result of any new information, future events, or otherwise.
You should not place undue reliance on our forward-looking
statements. Although we believe that the expectations reflected in
forward-looking statements are reasonable, we cannot guarantee
future results or performance.
Investor inquiries:
Joel T. Veit
Senior Vice President and Treasurer
717-972-1100
ir@selectmedical.com
I. Condensed
Consolidated Statements of Operations
For the Three
Months Ended September 30, 2019 and 2020
(In thousands,
except per share amounts, unaudited)
|
|
|
2019
|
|
2020
|
|
%
Change
|
Net operating
revenues
|
$
|
1,393,343
|
|
|
$
|
1,423,869
|
|
|
2.2
|
%
|
Costs and
expenses:
|
|
|
|
|
|
Cost of services,
exclusive of depreciation and amortization
|
1,183,111
|
|
|
1,180,951
|
|
|
(0.2)
|
|
General and
administrative
|
34,385
|
|
|
35,516
|
|
|
3.3
|
|
Depreciation and
amortization
|
52,941
|
|
|
50,110
|
|
|
(5.3)
|
|
Total costs and
expenses
|
1,270,437
|
|
|
1,266,577
|
|
|
(0.3)
|
|
Other operating
income
|
—
|
|
|
(1,160)
|
|
|
N/M
|
|
Income from
operations
|
122,906
|
|
|
156,132
|
|
|
27.0
|
|
Other income and
expense:
|
|
|
|
|
|
Loss on early
retirement of debt
|
(18,643)
|
|
|
—
|
|
|
N/M
|
|
Equity in earnings of
unconsolidated subsidiaries
|
6,950
|
|
|
8,765
|
|
|
26.1
|
|
Gain on sale of
businesses
|
—
|
|
|
5,143
|
|
|
N/M
|
|
Interest
expense
|
(54,336)
|
|
|
(34,026)
|
|
|
(37.4)
|
|
Income before income
taxes
|
56,877
|
|
|
136,014
|
|
|
139.1
|
|
Income tax
expense
|
12,847
|
|
|
31,557
|
|
|
145.6
|
|
Net income
|
44,030
|
|
|
104,457
|
|
|
137.2
|
|
Less: Net income
attributable to non-controlling interests
|
13,298
|
|
|
27,511
|
|
|
106.9
|
|
Net income
attributable to Select Medical
|
$
|
30,732
|
|
|
$
|
76,946
|
|
|
150.4
|
%
|
Diluted earnings per
common share:(1)
|
$
|
0.23
|
|
|
$
|
0.57
|
|
|
|
|
_______________________________________________________________________________
|
(1)
|
Refer to table III
for calculation of earnings per common share.
|
|
|
N/M
|
Not
Meaningful
|
II.
Condensed Consolidated Statements of Operations
For the Nine
Months Ended September 30, 2019 and 2020
(In thousands,
except per share amounts, unaudited)
|
|
|
2019
|
|
2020
|
|
%
Change
|
Net operating
revenues
|
$
|
4,079,338
|
|
|
$
|
4,071,219
|
|
|
(0.2)
|
%
|
Costs and
expenses:
|
|
|
|
|
|
Cost of services,
exclusive of depreciation and amortization
|
3,465,353
|
|
|
3,463,778
|
|
|
0.0
|
|
General and
administrative
|
94,401
|
|
|
102,808
|
|
|
8.9
|
|
Depreciation and
amortization
|
160,072
|
|
|
154,133
|
|
|
(3.7)
|
|
Total costs and
expenses
|
3,719,826
|
|
|
3,720,719
|
|
|
0.0
|
|
Other operating
income
|
—
|
|
|
53,828
|
|
|
N/M
|
|
Income from
operations
|
359,512
|
|
|
404,328
|
|
|
12.5
|
|
Other income and
expense:
|
|
|
|
|
|
Loss on early
retirement of debt
|
(18,643)
|
|
|
—
|
|
|
N/M
|
|
Equity in earnings of
unconsolidated subsidiaries
|
18,710
|
|
|
19,677
|
|
|
5.2
|
|
Gain on sale of
businesses
|
6,532
|
|
|
12,690
|
|
|
N/M
|
|
Interest
expense
|
(156,611)
|
|
|
(117,499)
|
|
|
(25.0)
|
|
Income before income
taxes
|
209,500
|
|
|
319,196
|
|
|
52.4
|
|
Income tax
expense
|
52,140
|
|
|
76,805
|
|
|
47.3
|
|
Net income
|
157,360
|
|
|
242,391
|
|
|
54.0
|
|
Less: Net income
attributable to non-controlling interests
|
40,978
|
|
|
60,670
|
|
|
48.1
|
|
Net income
attributable to Select Medical
|
$
|
116,382
|
|
|
$
|
181,721
|
|
|
56.1
|
%
|
Diluted earnings per
common share:(1)
|
$
|
0.86
|
|
|
$
|
1.35
|
|
|
|
|
_______________________________________________________________________________
|
(1)
|
Refer to table III
for calculation of earnings per common share.
|
|
|
N/M
|
Not
meaningful
|
III.
Earnings per Share
|
For the Three and
Nine Months Ended September 30, 2019 and 2020
|
(In thousands,
except per share amounts, unaudited)
|
|
Select Medical's
capital structure includes common stock and unvested restricted
stock awards. To compute earnings per share ("EPS"), Select Medical
applies the two-class method because its unvested restricted stock
awards are participating securities which are entitled to
participate equally with its common stock in undistributed
earnings.
|
|
The following table
sets forth the net income attributable to Select Medical, its
common shares outstanding, and its participating securities
outstanding for the three and nine months ended September 30,
2019 and 2020:
|
|
|
|
Diluted
EPS
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net income
|
|
$
|
44,030
|
|
|
$
|
104,457
|
|
|
$
|
157,360
|
|
|
$
|
242,391
|
|
Less: net income
attributable to non-controlling interests
|
|
13,298
|
|
|
27,511
|
|
|
40,978
|
|
|
60,670
|
|
Net income
attributable to Select Medical
|
|
30,732
|
|
|
76,946
|
|
|
116,382
|
|
|
181,721
|
|
Less: net income
attributable to participating securities
|
|
1,052
|
|
|
2,666
|
|
|
3,888
|
|
|
6,254
|
|
Net income
attributable to common shares
|
|
$
|
29,680
|
|
|
$
|
74,280
|
|
|
$
|
112,494
|
|
|
$
|
175,467
|
|
The following tables
set forth the computation of EPS under the two-class method for the
three and nine months ended September 30, 2019 and
2020:
|
|
|
|
Three Months Ended
September 30,
|
|
|
2019
|
|
|
2020
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
Common
shares
|
|
$
|
29,680
|
|
|
130,007
|
|
|
$
|
0.23
|
|
|
|
$
|
74,280
|
|
|
129,882
|
|
|
$
|
0.57
|
|
Participating
securities
|
|
1,052
|
|
|
4,607
|
|
|
$
|
0.23
|
|
|
|
2,666
|
|
|
4,662
|
|
|
$
|
0.57
|
|
Total
|
|
$
|
30,732
|
|
|
|
|
|
|
|
$
|
76,946
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
|
2020
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
Common
shares
|
|
$
|
112,494
|
|
|
130,474
|
|
|
$
|
0.86
|
|
|
|
$
|
175,467
|
|
|
129,616
|
|
|
$
|
1.35
|
|
Participating
securities
|
|
3,888
|
|
|
4,509
|
|
|
$
|
0.86
|
|
|
|
6,254
|
|
|
4,620
|
|
|
$
|
1.35
|
|
Total
|
|
$
|
116,382
|
|
|
|
|
|
|
|
$
|
181,721
|
|
|
|
|
|
|
_______________________________________________________________________________
|
(1)
|
Represents the
weighted average share count outstanding during the
period.
|
IV.
Condensed Consolidated Balance Sheets
(In thousands,
unaudited)
|
|
|
|
December 31,
2019
|
|
September 30,
2020
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
335,882
|
|
|
$
|
639,800
|
|
Accounts
receivable
|
|
762,677
|
|
|
842,615
|
|
Other current
assets
|
|
114,433
|
|
|
141,719
|
|
Total Current
Assets
|
|
1,212,992
|
|
|
1,624,134
|
|
Operating lease
right-of-use assets
|
|
1,003,986
|
|
|
1,005,689
|
|
Property and
equipment, net
|
|
998,406
|
|
|
927,975
|
|
Goodwill
|
|
3,391,955
|
|
|
3,369,009
|
|
Identifiable
intangible assets, net
|
|
409,068
|
|
|
392,506
|
|
Other
assets
|
|
323,881
|
|
|
340,564
|
|
Total
Assets
|
|
$
|
7,340,288
|
|
|
$
|
7,659,877
|
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Payables and
accruals
|
|
$
|
681,163
|
|
|
$
|
734,166
|
|
Government
advances
|
|
—
|
|
|
318,116
|
|
Unearned government
assistance
|
|
—
|
|
|
66,938
|
|
Current operating
lease liabilities
|
|
207,950
|
|
|
215,235
|
|
Current portion of
long-term debt and notes payable
|
|
25,167
|
|
|
11,031
|
|
Total Current
Liabilities
|
|
914,280
|
|
|
1,345,486
|
|
Non-current operating
lease liabilities
|
|
852,897
|
|
|
852,555
|
|
Long-term debt, net of
current portion
|
|
3,419,943
|
|
|
3,390,945
|
|
Non-current deferred
tax liability
|
|
148,258
|
|
|
131,423
|
|
Other non-current
liabilities
|
|
101,334
|
|
|
178,967
|
|
Total
Liabilities
|
|
5,436,712
|
|
|
5,899,376
|
|
Redeemable
non-controlling interests
|
|
974,541
|
|
|
541,856
|
|
Total
equity
|
|
929,035
|
|
|
1,218,645
|
|
Total Liabilities
and Equity
|
|
$
|
7,340,288
|
|
|
$
|
7,659,877
|
|
V. Condensed
Consolidated Statements of Cash Flows
For the Three
Months Ended September 30, 2019 and 2020
(In thousands,
unaudited)
|
|
|
|
2019
|
|
2020
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
|
44,030
|
|
|
$
|
104,457
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Distributions from
unconsolidated subsidiaries
|
|
2,461
|
|
|
10,497
|
|
Depreciation and
amortization
|
|
52,941
|
|
|
50,110
|
|
Provision for expected
credit losses
|
|
386
|
|
|
28
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(6,950)
|
|
|
(8,765)
|
|
Loss on extinguishment
of debt
|
|
10,160
|
|
|
—
|
|
Loss (gain) on sale of
assets and businesses
|
|
5
|
|
|
(16,842)
|
|
Stock compensation
expense
|
|
6,818
|
|
|
6,962
|
|
Amortization of debt
discount, premium and issuance costs
|
|
3,143
|
|
|
542
|
|
Deferred income
taxes
|
|
(957)
|
|
|
(11,140)
|
|
Changes in operating
assets and liabilities, net of effects of business
combinations:
|
|
|
|
|
Accounts
receivable
|
|
(7,552)
|
|
|
(104,592)
|
|
Other current
assets
|
|
3,220
|
|
|
(23,528)
|
|
Other
assets
|
|
2,198
|
|
|
4,831
|
|
Accounts payable and
accrued expenses
|
|
39,251
|
|
|
133,748
|
|
Government
advances
|
|
—
|
|
|
1,124
|
|
Unearned government
assistance
|
|
—
|
|
|
21,433
|
|
Income
taxes
|
|
(15,428)
|
|
|
(34,328)
|
|
Net cash provided by
operating activities
|
|
133,726
|
|
|
134,537
|
|
Investing
activities
|
|
|
|
|
Business
combinations, net of cash acquired
|
|
(207)
|
|
|
(7,115)
|
|
Purchases of property
and equipment
|
|
(34,671)
|
|
|
(34,319)
|
|
Investment in
businesses
|
|
(8,411)
|
|
|
(11,108)
|
|
Proceeds from sale of
assets and businesses
|
|
58
|
|
|
70,919
|
|
Net cash provided by
(used in) investing activities
|
|
(43,231)
|
|
|
18,377
|
|
Financing
activities
|
|
|
|
|
Borrowings on
revolving facilities
|
|
65,000
|
|
|
—
|
|
Payments on revolving
facilities
|
|
(260,000)
|
|
|
—
|
|
Proceeds from term
loans
|
|
593,683
|
|
|
—
|
|
Payments on term
loans
|
|
(242,399)
|
|
|
—
|
|
Proceeds from 6.250%
senior notes
|
|
539,176
|
|
|
—
|
|
Payment on 6.375%
senior notes
|
|
(710,000)
|
|
|
—
|
|
Revolving facility
debt issuance costs
|
|
(310)
|
|
|
—
|
|
Borrowings of other
debt
|
|
5,052
|
|
|
3,599
|
|
Principal payments on
other debt
|
|
(9,948)
|
|
|
(7,087)
|
|
Repurchase of common
stock
|
|
(23,689)
|
|
|
(4,827)
|
|
Proceeds from
exercise of stock options
|
|
413
|
|
|
—
|
|
Decrease in
overdrafts
|
|
(27,259)
|
|
|
—
|
|
Distributions to and
purchases of non-controlling interests
|
|
(8,287)
|
|
|
(14,536)
|
|
Net cash used in
financing activities
|
|
(78,568)
|
|
|
(22,851)
|
|
Net increase in cash
and cash equivalents
|
|
11,927
|
|
|
130,063
|
|
Cash and cash
equivalents at beginning of period
|
|
124,036
|
|
|
509,737
|
|
Cash and cash
equivalents at end of period
|
|
$
|
135,963
|
|
|
$
|
639,800
|
|
Supplemental
information
|
|
|
|
|
Cash paid for
interest
|
|
$
|
51,181
|
|
|
$
|
54,050
|
|
Cash paid for
taxes
|
|
29,231
|
|
|
77,025
|
|
VI.
Condensed Consolidated Statements of Cash Flows
For the Nine
Months Ended September 30, 2019 and 2020
(In thousands,
unaudited)
|
|
|
|
2019
|
|
2020
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
|
157,360
|
|
|
$
|
242,391
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Distributions from
unconsolidated subsidiaries
|
|
13,609
|
|
|
21,720
|
|
Depreciation and
amortization
|
|
160,072
|
|
|
154,133
|
|
Provision for expected
credit losses
|
|
2,344
|
|
|
281
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(18,710)
|
|
|
(19,677)
|
|
Loss on extinguishment
of debt
|
|
10,160
|
|
|
—
|
|
Gain on sale of assets
and businesses
|
|
(6,349)
|
|
|
(24,723)
|
|
Stock compensation
expense
|
|
19,431
|
|
|
20,828
|
|
Amortization of debt
discount, premium and issuance costs
|
|
9,469
|
|
|
1,635
|
|
Deferred income
taxes
|
|
(7,247)
|
|
|
(14,556)
|
|
Changes in operating
assets and liabilities, net of effects of business
combinations:
|
|
|
|
|
Accounts
receivable
|
|
(93,425)
|
|
|
(91,413)
|
|
Other current
assets
|
|
(6,016)
|
|
|
(22,815)
|
|
Other
assets
|
|
1,259
|
|
|
16,335
|
|
Accounts payable and
accrued expenses
|
|
23,765
|
|
|
142,027
|
|
Government
advances
|
|
—
|
|
|
318,116
|
|
Unearned government
assistance
|
|
—
|
|
|
66,938
|
|
Income
taxes
|
|
918
|
|
|
9,415
|
|
Net cash provided by
operating activities
|
|
266,640
|
|
|
820,635
|
|
Investing
activities
|
|
|
|
|
Business
combinations, net of cash acquired
|
|
(86,269)
|
|
|
(14,076)
|
|
Purchases of property
and equipment
|
|
(123,956)
|
|
|
(105,572)
|
|
Investment in
businesses
|
|
(60,668)
|
|
|
(25,857)
|
|
Proceeds from sale of
assets and businesses
|
|
183
|
|
|
83,320
|
|
Net cash used in
investing activities
|
|
(270,710)
|
|
|
(62,185)
|
|
Financing
activities
|
|
|
|
|
Borrowings on
revolving facilities
|
|
700,000
|
|
|
470,000
|
|
Payments on revolving
facilities
|
|
(720,000)
|
|
|
(470,000)
|
|
Proceeds from term
loans
|
|
593,683
|
|
|
—
|
|
Payments on term
loans
|
|
(375,084)
|
|
|
(39,843)
|
|
Proceeds from 6.250%
senior notes
|
|
539,176
|
|
|
—
|
|
Payment on 6.375%
senior notes
|
|
(710,000)
|
|
|
—
|
|
Revolving facility
debt issuance costs
|
|
(310)
|
|
|
—
|
|
Borrowings of other
debt
|
|
19,282
|
|
|
35,086
|
|
Principal payments on
other debt
|
|
(22,628)
|
|
|
(42,820)
|
|
Repurchase of common
stock
|
|
(37,309)
|
|
|
(14,242)
|
|
Proceeds from
exercise of stock options
|
|
872
|
|
|
—
|
|
Decrease in
overdrafts
|
|
(25,083)
|
|
|
—
|
|
Proceeds from
issuance of non-controlling interests
|
|
18,288
|
|
|
1,686
|
|
Distributions to and
purchases of non-controlling interests
|
|
(16,032)
|
|
|
(28,196)
|
|
Purchase of
membership interests of Concentra Group Holdings Parent
|
|
—
|
|
|
(366,203)
|
|
Net cash used in
financing activities
|
|
(35,145)
|
|
|
(454,532)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
(39,215)
|
|
|
303,918
|
|
Cash and cash
equivalents at beginning of period
|
|
175,178
|
|
|
335,882
|
|
Cash and cash
equivalents at end of period
|
|
$
|
135,963
|
|
|
$
|
639,800
|
|
Supplemental
information
|
|
|
|
|
Cash paid for
interest
|
|
$
|
149,090
|
|
|
$
|
140,174
|
|
Cash paid for
taxes
|
|
58,472
|
|
|
81,945
|
|
VII. Key
Statistics
For the Three
Months Ended September 30, 2019 and 2020
(unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
Critical Illness
Recovery Hospital
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
100
|
|
|
100
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
462,892
|
|
|
$
|
519,454
|
|
|
12.2
|
%
|
Number of patient
days(b)(c)
|
|
258,089
|
|
|
279,063
|
|
|
8.1
|
%
|
Number of
admissions(b)(d)
|
|
9,051
|
|
|
9,380
|
|
|
3.6
|
%
|
Net revenue per
patient day(b)(e)
|
|
$
|
1,773
|
|
|
$
|
1,845
|
|
|
4.1
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
57,247
|
|
|
$
|
88,830
|
|
|
55.2
|
%
|
Adjusted EBITDA
margin
|
|
12.4
|
%
|
|
17.1
|
%
|
|
|
Rehabilitation
Hospital
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
29
|
|
|
29
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
173,369
|
|
|
$
|
188,075
|
|
|
8.5
|
%
|
Number of patient
days(b)(c)
|
|
89,454
|
|
|
95,680
|
|
|
7.0
|
%
|
Number of
admissions(b)(d)
|
|
6,400
|
|
|
6,443
|
|
|
0.7
|
%
|
Net revenue per
patient day(b)(e)
|
|
$
|
1,724
|
|
|
$
|
1,775
|
|
|
3.0
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
36,780
|
|
|
$
|
44,637
|
|
|
21.4
|
%
|
Adjusted EBITDA
margin
|
|
21.2
|
%
|
|
23.7
|
%
|
|
|
Outpatient
Rehabilitation
|
|
|
|
|
|
|
Number of clinics –
end of period(a)
|
|
1,707
|
|
|
1,777
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
265,330
|
|
|
$
|
240,042
|
|
|
(9.5)
|
%
|
Number of
visits(b)
|
|
2,204,328
|
|
|
1,983,372
|
|
|
(10.0)
|
%
|
Revenue per
visit(b)(f)
|
|
$
|
103
|
|
|
$
|
104
|
|
|
1.0
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
40,040
|
|
|
$
|
30,623
|
|
|
(23.5)
|
%
|
Adjusted EBITDA
margin
|
|
15.1
|
%
|
|
12.8
|
%
|
|
|
Concentra
|
|
|
|
|
|
|
Number of centers –
end of period(b)
|
|
523
|
|
|
523
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
421,900
|
|
|
$
|
391,859
|
|
|
(7.1)
|
%
|
Number of
visits(b)
|
|
3,150,903
|
|
|
2,827,047
|
|
|
(10.3)
|
%
|
Revenue per
visit(b)(f)
|
|
$
|
120
|
|
|
$
|
121
|
|
|
0.8
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
77,679
|
|
|
$
|
80,547
|
|
|
3.7
|
%
|
Adjusted EBITDA
margin
|
|
18.4
|
%
|
|
20.6
|
%
|
|
|
|
_______________________________________________________________________________
|
(a)
|
Includes managed
locations.
|
|
|
(b)
|
Excludes managed
locations. For purposes of the Concentra segment, onsite clinics
and community-based outpatient clinics are excluded.
|
|
|
(c)
|
Each patient day
represents one patient occupying one bed for one day during the
periods presented.
|
|
|
(d)
|
Represents the number
of patients admitted to our hospitals during the periods
presented.
|
|
|
(e)
|
Represents the
average amount of revenue recognized for each patient day. Net
revenue per patient day is calculated by dividing patient service
revenues, excluding revenues from certain other ancillary and
outpatient services provided at our hospitals, by the total number
of patient days.
|
|
|
(f)
|
Represents the
average amount of revenue recognized for each patient visit. Net
revenue per visit is calculated by dividing patient service
revenue, excluding revenues from certain other ancillary services,
by the total number of visits.
|
VIII. Key
Statistics
For the Nine
Months Ended September 30, 2019 and 2020
(unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
Critical Illness
Recovery Hospital
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
100
|
|
|
100
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
1,381,569
|
|
|
$
|
1,539,601
|
|
|
11.4
|
%
|
Number of patient
days(b)(c)
|
|
779,078
|
|
|
826,410
|
|
|
6.1
|
%
|
Number of
admissions(b)(d)
|
|
27,679
|
|
|
28,080
|
|
|
1.4
|
%
|
Net revenue per
patient day(b)(e)
|
|
$
|
1,757
|
|
|
$
|
1,850
|
|
|
5.3
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
194,383
|
|
|
$
|
267,143
|
|
|
37.4
|
%
|
Adjusted EBITDA
margin
|
|
14.1
|
%
|
|
17.4
|
%
|
|
|
Rehabilitation
Hospital
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
29
|
|
|
29
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
488,301
|
|
|
$
|
538,761
|
|
|
10.3
|
%
|
Number of patient
days(b)(c)
|
|
258,795
|
|
|
274,329
|
|
|
6.0
|
%
|
Number of
admissions(b)(d)
|
|
18,253
|
|
|
18,489
|
|
|
1.3
|
%
|
Net revenue per
patient day(b)(e)
|
|
$
|
1,665
|
|
|
$
|
1,777
|
|
|
6.7
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
92,545
|
|
|
$
|
110,811
|
|
|
19.7
|
%
|
Adjusted EBITDA
margin
|
|
19.0
|
%
|
|
20.6
|
%
|
|
|
Outpatient
Rehabilitation
|
|
|
|
|
|
|
Number of clinics –
end of period(a)
|
|
1,707
|
|
|
1,777
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
774,126
|
|
|
$
|
662,429
|
|
|
(14.4)
|
%
|
Number of
visits(b)
|
|
6,462,316
|
|
|
5,448,304
|
|
|
(15.7)
|
%
|
Revenue per
visit(b)(f)
|
|
$
|
103
|
|
|
$
|
105
|
|
|
1.9
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
111,615
|
|
|
$
|
51,463
|
|
|
(53.9)
|
%
|
Adjusted EBITDA
margin
|
|
14.4
|
%
|
|
7.8
|
%
|
|
|
Concentra
|
|
|
|
|
|
|
Number of centers –
end of period(b)
|
|
523
|
|
|
523
|
|
|
|
Net operating
revenues (,000)
|
|
$
|
1,231,672
|
|
|
$
|
1,102,732
|
|
|
(10.5)
|
%
|
Number of
visits(b)
|
|
9,165,599
|
|
|
7,855,522
|
|
|
(14.3)
|
%
|
Revenue per
visit(b)(f)
|
|
$
|
122
|
|
|
$
|
123
|
|
|
0.8
|
%
|
Adjusted EBITDA
(,000)
|
|
$
|
220,024
|
|
|
$
|
183,510
|
|
|
(16.6)
|
%
|
Adjusted EBITDA
margin
|
|
17.9
|
%
|
|
16.6
|
%
|
|
|
|
_______________________________________________________________________________
|
(a)
|
Includes managed
locations.
|
|
|
(b)
|
Excludes managed
locations. For purposes of the Concentra segment, onsite clinics
and community-based outpatient clinics are excluded.
|
|
|
(c)
|
Each patient day
represents one patient occupying one bed for one day during the
periods presented.
|
|
|
(d)
|
Represents the number
of patients admitted to our hospitals during the periods
presented.
|
|
|
(e)
|
Represents the
average amount of revenue recognized for each patient day. Net
revenue per patient day is calculated by dividing patient service
revenues, excluding revenues from certain other ancillary and
outpatient services provided at our hospitals, by the total number
of patient days.
|
|
|
(f)
|
Represents the
average amount of revenue recognized for each patient visit. Net
revenue per visit is calculated by dividing patient service
revenue, excluding revenues from certain other ancillary services,
by the total number of visits.
|
IX. Net Income to
Adjusted EBITDA Reconciliation
|
For the Three and
Nine Months Ended September 30, 2019 and 2020
|
(In thousands,
unaudited)
|
|
The presentation of
Adjusted EBITDA is important to investors because Adjusted EBITDA
is commonly used as an analytical indicator of performance by
investors within the healthcare industry. Adjusted EBITDA is used
to evaluate financial performance and determine resource allocation
for each of Select Medical's operating segments. Adjusted EBITDA is
not a measure of financial performance under generally accepted
accounting principles ("GAAP"). Items excluded from Adjusted EBITDA
are significant components in understanding and assessing financial
performance. Adjusted EBITDA should not be considered in isolation
or as an alternative to, or substitute for, net income, income from
operations, cash flows generated by operations, investing or
financing activities, or other financial statement data presented
in the consolidated financial statements as indicators of financial
performance or liquidity. Because Adjusted EBITDA is not a
measurement determined in accordance with GAAP and is thus
susceptible to varying definitions, Adjusted EBITDA as presented
may not be comparable to other similarly titled measures of other
companies.
|
|
The following table
reconciles net income to Adjusted EBITDA for Select Medical.
Adjusted EBITDA is used by Select Medical to report its segment
performance. Adjusted EBITDA is defined as earnings excluding
interest, income taxes, depreciation and amortization, gain (loss)
on early retirement of debt, stock compensation expense, gain
(loss) on sale of businesses, and equity in earnings (losses) of
unconsolidated subsidiaries.
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net income
|
$
|
44,030
|
|
|
$
|
104,457
|
|
|
$
|
157,360
|
|
|
$
|
242,391
|
|
Income tax
expense
|
12,847
|
|
|
31,557
|
|
|
52,140
|
|
|
76,805
|
|
Interest
expense
|
54,336
|
|
|
34,026
|
|
|
156,611
|
|
|
117,499
|
|
Gain on sale of
businesses
|
—
|
|
|
(5,143)
|
|
|
(6,532)
|
|
|
(12,690)
|
|
Equity in earnings of
unconsolidated subsidiaries
|
(6,950)
|
|
|
(8,765)
|
|
|
(18,710)
|
|
|
(19,677)
|
|
Loss on early
retirement of debt
|
18,643
|
|
|
—
|
|
|
18,643
|
|
|
—
|
|
Income from
operations
|
122,906
|
|
|
156,132
|
|
|
359,512
|
|
|
404,328
|
|
Stock compensation
expense:
|
|
|
|
|
|
|
|
Included in general
and administrative
|
5,305
|
|
|
5,600
|
|
|
14,849
|
|
|
16,488
|
|
Included in cost of
services
|
1,513
|
|
|
1,362
|
|
|
4,582
|
|
|
4,340
|
|
Depreciation and
amortization
|
52,941
|
|
|
50,110
|
|
|
160,072
|
|
|
154,133
|
|
Adjusted
EBITDA
|
$
|
182,665
|
|
|
$
|
213,204
|
|
|
$
|
539,015
|
|
|
$
|
579,289
|
|
|
|
|
|
|
|
|
|
Critical illness
recovery hospital
|
$
|
57,247
|
|
|
$
|
88,830
|
|
|
$
|
194,383
|
|
|
$
|
267,143
|
|
Rehabilitation
hospital
|
36,780
|
|
|
44,637
|
|
|
92,545
|
|
|
110,811
|
|
Outpatient
rehabilitation
|
40,040
|
|
|
30,623
|
|
|
111,615
|
|
|
51,463
|
|
Concentra(a)
|
77,679
|
|
|
80,547
|
|
|
220,024
|
|
|
183,510
|
|
Other(a)(b)
|
(29,081)
|
|
|
(31,433)
|
|
|
(79,552)
|
|
|
(33,638)
|
|
Adjusted
EBITDA
|
$
|
182,665
|
|
|
$
|
213,204
|
|
|
$
|
539,015
|
|
|
$
|
579,289
|
|
|
_______________________________________________________________________________
|
(a)
|
For the three and
nine months ended September 30, 2020, Select Medical
recognized payments received under the Provider Relief Fund for
loss of revenue and health care related expenses attributable to
COVID-19 as other operating income. Refer to "CARES Act Provider
Relief Fund" for further discussion.
|
|
|
(b)
|
Other primarily
includes general and administrative costs.
|
X. Reconciliation
of Earnings per Common Share to Adjusted Earnings per Common
Share
|
For the Three and
Nine Months Ended September 30, 2019 and 2020
|
(In thousands,
except per share amounts, unaudited)
|
|
Adjusted net income
attributable to common shares and adjusted earnings per common
share are not measures of financial performance under GAAP.
Items excluded from adjusted net income attributable to common
shares and adjusted earnings per common share are significant
components in understanding and assessing financial performance.
Select Medical believes that the presentation of adjusted net
income attributable to common shares and adjusted earnings per
common share are important to investors because they are reflective
of the financial performance of Select Medical's ongoing operations
and provide better comparability of its results of operations
between periods. Adjusted net income attributable to common shares
and adjusted earnings per common share should not be considered in
isolation or as alternatives to, or substitutes for, net income,
cash flows generated by operations, investing or financing
activities, or other financial statement data presented in the
consolidated financial statements as indicators of financial
performance or liquidity. Because adjusted net income attributable
to common shares and adjusted earnings per common share are not
measurements determined in accordance with GAAP and are thus
susceptible to varying calculations, adjusted net income
attributable to common shares and adjusted earnings per common
share as presented may not be comparable to other similarly titled
measures of other companies.
|
|
The following tables
reconcile net income attributable to common shares and earnings per
common share on a fully diluted basis to adjusted net income
attributable to common shares and adjusted earnings per common
share on a fully diluted basis.
|
|
|
Three Months Ended
September 30,
|
|
2019
|
|
Per
Share(a)
|
|
2020
|
|
Per
Share(a)
|
Net income
attributable to common shares(a)
|
$
|
29,680
|
|
|
$
|
0.23
|
|
|
$
|
74,280
|
|
|
$
|
0.57
|
|
Adjustments:(b)
|
|
|
|
|
|
|
|
Loss on early
retirement of debt and related costs(c)
|
12,777
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
Gain on sale of
businesses
|
—
|
|
|
—
|
|
|
(1,189)
|
|
|
(0.01)
|
|
Adjusted net income
attributable to common shares
|
$
|
42,457
|
|
|
$
|
0.33
|
|
|
$
|
73,091
|
|
|
$
|
0.56
|
|
|
|
|
Nine Months Ended
September 30,
|
|
2019
|
|
Per
Share(a)
|
|
2020
|
|
Per
Share(a)
|
Net income
attributable to common shares(a)
|
$
|
112,494
|
|
|
$
|
0.86
|
|
|
$
|
175,467
|
|
|
$
|
1.35
|
|
Adjustments:(b)
|
|
|
|
|
|
|
|
Loss on early
retirement of debt and related costs(c)
|
12,777
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
Gain on sale of
businesses
|
(4,543)
|
|
|
(0.03)
|
|
|
(5,089)
|
|
|
(0.04)
|
|
Adjusted net income
attributable to common shares
|
$
|
120,728
|
|
|
$
|
0.93
|
|
|
$
|
170,378
|
|
|
$
|
1.31
|
|
|
______________________________________________________________________________
|
(a)
|
Net income
attributable to common shares and earnings per common share are
calculated based on the diluted weighted average common shares
outstanding, as presented in table III.
|
|
|
(b)
|
Adjustments to net
income attributable to common shares include estimated income tax
and non-controlling interest impacts and are calculated based on
the diluted weighted average common shares outstanding.
|
|
|
|
The estimated income
tax impact, which is determined using tax rates based on the nature
of the adjustment and the jurisdiction in which the adjustment
occurred, includes both current and deferred income tax expense or
benefit.
|
|
|
|
For the three months
ended September 30, 2019, the adjustments to net income
attributable to common shares include an estimated income tax
benefit of approximately $5.9 million. For the three months ended
September 30, 2020, the adjustments to net income attributable to
common shares include an estimated income tax benefit of
approximately $0.2 million.
|
|
|
|
For the nine months
ended September 30, 2019, the adjustments to net income
attributable to common shares include an estimated income tax
benefit of approximately $4.0 million. For the nine months ended
September 30, 2020, the adjustments to net income attributable to
common shares include estimated income tax expense of approximately
$3.3 million.
|
|
|
(c)
|
For the three and
nine months ended September 30, 2019, the loss on early retirement
of debt and related costs adjustment includes expenses related to
the amendment to the Select credit agreement, the amendment to the
Concentra-JPM first lien credit agreement, the repayment of term
loans outstanding under the Concentra-JPM second lien credit
agreement, and the redemption of the 6.375% senior
notes.
|
|
|
|
The redemption of the
6.375% senior notes occurred on August 30, 2019, while the issuance
of the $550.0 million 6.250% senior notes occurred on August 1,
2019. As a result, Select Medical recognized interest expense on
both the 6.250% senior notes and the 6.375% senior notes during
August 2019. The adjustment to net income attributable to common
shares for the loss on early retirement of debt and related costs
includes the interest expense recognized on the 6.375% senior notes
during August 2019 and its related tax effects.
|
XI. Net Income to
Adjusted EBITDA and Earnings per Common Share to Adjusted Earnings
per Common Share Reconciliations
|
Business Outlook
for the Year Ending December 31, 2020
|
(In millions,
unaudited)
|
|
The following are
reconciliations of full year 2020 Adjusted EBITDA and adjusted
earnings per common share expectations as computed at the low and
high points of the range to the closest comparable GAAP financial
measure. Refer to table IX and table X for a discussion of
Select Medical's use of Adjusted EBITDA and adjusted earnings per
common share in evaluating financial performance. Refer to table IX
for the definition of Adjusted EBITDA. Each item presented in the
below tables are estimations of full year 2020
expectations.
|
|
|
Range
|
Non-GAAP Measure
Reconciliation
|
Low
|
|
High
|
Net income
attributable to Select Medical
|
$
|
221
|
|
|
$
|
235
|
|
Net income
attributable to non-controlling interests
|
75
|
|
|
75
|
|
Net income
|
296
|
|
|
310
|
|
Income tax
expense
|
98
|
|
|
104
|
|
Interest
expense
|
154
|
|
|
154
|
|
Gain on sale of
businesses
|
(13)
|
|
|
(13)
|
|
Equity in earnings of
unconsolidated subsidiaries
|
(27)
|
|
|
(27)
|
|
Income from
operations
|
508
|
|
|
528
|
|
Stock compensation
expense
|
29
|
|
|
29
|
|
Depreciation and
amortization
|
208
|
|
|
208
|
|
Adjusted
EBITDA
|
$
|
745
|
|
|
$
|
765
|
|
|
|
|
Range
|
Non-GAAP Measure
Reconciliation
|
Low
|
|
High
|
Diluted earnings per
common share
|
$
|
1.65
|
|
|
$
|
1.75
|
|
Adjustments:
|
|
|
|
Gain on sale of
businesses
|
(0.04)
|
|
|
(0.04)
|
|
Adjusted earnings per
common share
|
$
|
1.61
|
|
|
$
|
1.71
|
|
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SOURCE Select Medical Holdings Corporation