MECHANICSBURG, Pa.,
Feb. 25, 2021 /PRNewswire/ -- Select
Medical Holdings Corporation ("Select Medical," "we," "us," or
"our") (NYSE: SEM) today announced results for its fourth quarter
and year ended December 31, 2020.
For the fourth quarter ended December 31, 2020, revenue
increased 6.2% to $1,460.5 million,
compared to $1,374.6 million for the
same quarter, prior year. Income from operations increased 45.4% to
$163.3 million for the fourth quarter
ended December 31, 2020, compared to
$112.4 million for the same quarter,
prior year. Income from operations included other operating income
of $36.2 million related to the
recognition of payments received under the Provider Relief Fund.
Net income increased 134.1% to $102.2
million for the fourth quarter ended December 31, 2020, compared to $43.7 million for the same quarter, prior year.
Net income included pre-tax losses on early retirement of debt of
$19.4 million for the fourth quarter
ended December 31, 2019. Adjusted
EBITDA increased 28.7% to $221.3
million for the fourth quarter ended December 31, 2020, compared to $171.9 million for the same quarter, prior year.
Earnings per common share increased to $0.57 on a fully diluted basis for the fourth
quarter ended December 31, 2020,
compared to $0.24 for the same
quarter, prior year. Adjusted earnings per common share was
$0.57 on a fully diluted basis for
the fourth quarter ended December 31,
2020, compared to $0.31 for
the same quarter, prior year. Adjusted earnings per common share
excludes the losses on early retirement of debt and their related
tax effects for the fourth quarter ended
December 31, 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 year ended December 31, 2020, revenue increased
1.4% to $5,531.7 million, compared to
$5,453.9 million for the prior year.
Income from operations increased 20.3% to $567.7 million for the year ended
December 31, 2020, compared to $471.9
million for the prior year. For the year ended December 31, 2020, income from operations
included other operating income of $90.0
million related to the recognition of payments received
under the Provider Relief Fund. Net income increased 71.4% to
$344.6 million for the year ended
December 31, 2020, compared to $201.0
million for the prior year. For the year ended December 31, 2020, net income included pre-tax
gains on sales of businesses of $12.4
million. For the year ended December 31, 2019, net
income included pre-tax losses on early retirement of debt of
$38.1 million and a pre-tax gain on
sale of businesses of $6.5 million.
Adjusted EBITDA increased 12.6% to $800.6
million for the year ended December 31, 2020, compared
to $710.9 million for the prior year.
Earnings per common share increased to $1.93 on a fully diluted basis for the year ended
December 31, 2020, compared to $1.10 for the prior year. Adjusted earnings per
common share was $1.89 on a fully
diluted basis for the year ended December
31, 2020, compared to $1.24
for the prior year. Adjusted earnings per common share excludes the
gains on sales of businesses and their related tax effects for the
year ended December 31, 2020.
Adjusted earnings per common share excludes the losses on early
retirement of debt and related costs, the gain on sale of
businesses, and their related tax effects for the year ended
December 31, 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 December 31,
2020, Select Medical operated 99 critical illness recovery
hospitals in 28 states, 30 rehabilitation hospitals in 12 states,
and 1,788 outpatient rehabilitation clinics in 37 states and the
District of Columbia. Select
Medical's joint venture subsidiary Concentra operated 517
occupational health centers in 41 states. At December 31, 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
coronavirus disease 2019 ("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 the COVID-19
pandemic.
For the three months and year ended December 31, 2020, Select Medical recognized
payments received under the Provider Relief Fund for loss of
revenue and health care related expenses attributable to the
COVID-19 pandemic as other operating income. For the three months
ended December 31, 2020, other
operating income of $36.2 million is included within the
operating results of Select Medical's other activities. For the
year ended December 31, 2020,
$88.9 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 fourth quarter ended December 31,
2020, revenue for the critical illness recovery hospital
segment increased 18.2% to $537.9
million, compared to $454.9
million for the same quarter, prior year. Adjusted EBITDA
for the critical illness recovery hospital segment increased 24.5%
to $75.3 million for the fourth
quarter ended December 31, 2020,
compared to $60.5 million for the
same quarter, prior year. The Adjusted EBITDA margin for the
critical illness recovery hospital segment was 14.0% for the fourth
quarter ended December 31, 2020,
compared to 13.3% for the same quarter, prior year. Certain
critical illness recovery hospital key statistics are presented in
table VII of this release for both the fourth quarters ended
December 31, 2020 and 2019.
For the year ended December 31,
2020, revenue for the critical illness recovery hospital
segment increased 13.1% to $2,077.5
million, compared to $1,836.5
million for the prior year. Adjusted EBITDA for the critical
illness recovery hospital segment increased 34.4% to $342.4 million for the year ended December 31, 2020, compared to $254.9 million for the prior year. The Adjusted
EBITDA margin for the critical illness recovery hospital segment
was 16.5% for the year ended December 31,
2020, compared to 13.9% for the prior year. Certain critical
illness recovery hospital key statistics are presented in table
VIII of this release for both the years ended December 31, 2020 and 2019.
Rehabilitation Hospital Segment
For the fourth quarter ended December 31,
2020, revenue for the rehabilitation hospital segment
increased 7.2% to $195.9 million,
compared to $182.7 million for the
same quarter, prior year. Adjusted EBITDA for the rehabilitation
hospital segment was $42.4 million
for the fourth quarter ended December 31,
2020, compared to $43.3
million for the same quarter, prior year. The Adjusted
EBITDA margin for the rehabilitation hospital segment was 21.6% for
the fourth quarter ended December 31,
2020, compared to 23.7% for the same quarter, prior year.
Certain rehabilitation hospital key statistics are presented in
table VII of this release for both the fourth quarters ended
December 31, 2020 and 2019.
For the year ended December 31,
2020, revenue for the rehabilitation hospital segment
increased 9.5% to $734.7 million,
compared to $671.0 million for the
prior year. Adjusted EBITDA for the rehabilitation hospital segment
increased 12.8% to $153.2 million for
the year ended December 31, 2020,
compared to $135.9 million for the
prior year. The Adjusted EBITDA margin for the rehabilitation
hospital segment was 20.9% for the year ended December 31, 2020, compared to 20.2% for the
prior year. The Adjusted EBITDA results for the rehabilitation
hospital segment include start-up losses of approximately
$8.8 million for the year ended
December 31, 2019. Certain
rehabilitation hospital key statistics are presented in table VIII
of this release for both the years ended December 31, 2020 and 2019.
Outpatient Rehabilitation Segment
For the fourth quarter ended December 31,
2020, revenue for the outpatient rehabilitation segment
was $257.5 million, compared to $271.9
million for the same quarter, prior year. Adjusted EBITDA
for the outpatient rehabilitation segment was $27.7 million for the fourth quarter ended
December 31, 2020, compared to
$40.2 million for the same quarter,
prior year. The Adjusted EBITDA margin for the outpatient
rehabilitation segment was 10.8% for the fourth quarter ended
December 31, 2020, compared to 14.8%
for the same quarter, prior year. Certain outpatient rehabilitation
key statistics are presented in table VII of this release for both
the fourth quarters ended December 31,
2020 and 2019.
For the year ended December 31,
2020, revenue for the outpatient rehabilitation segment was
$919.9 million, compared to
$1,046.0 million for the prior year.
Adjusted EBITDA for the outpatient rehabilitation segment was
$79.2 million for the year ended
December 31, 2020, compared to
$151.8 million for the prior year.
The Adjusted EBITDA margin for the outpatient rehabilitation
segment was 8.6% for the year ended December
31, 2020, compared to 14.5% for the prior year. Certain
outpatient rehabilitation key statistics are presented in table
VIII of this release for both the years ended December 31, 2020 and 2019.
Concentra Segment
For the fourth quarter ended December 31,
2020, revenue for the Concentra segment increased 0.4% to
$398.7 million, compared to
$397.1 million for the same quarter,
prior year. Adjusted EBITDA for the Concentra segment increased
22.9% to $69.4 million for the fourth
quarter ended December 31, 2020,
compared to $56.5 million for the
same quarter, prior year. The Adjusted EBITDA margin for the
Concentra segment was 17.4% for the fourth quarter ended
December 31, 2020, compared to 14.2%
for the same quarter, prior year. Certain Concentra key statistics
are presented in table VII of this release for both the fourth
quarters ended December 31, 2020 and
2019.
For the year ended December 31,
2020, revenue for the Concentra segment was $1,501.4 million, compared to $1,628.8 million for the prior year. Adjusted
EBITDA for the Concentra segment was $252.9
million for the year ended December
31, 2020, compared to $276.5
million for the prior year. The Adjusted EBITDA margin for
the Concentra segment was 16.8% for the year ended December 31, 2020, compared to 17.0% for the
prior year. Certain Concentra key statistics are presented in table
VIII of this release for both the years ended December 31, 2020 and 2019.
Effects of the COVID-19 Pandemic on Select Medical's Results of
Operations
The unpredictable effects of the COVID-19 pandemic, including
the duration and extent of disruption on Select Medical's
operations, creates uncertainties about Select Medical's future
operating results and financial condition. Select Medical has
provided revenue and certain operating statistics for each of its
segments during the three months and year ended December 31,
2020.
Critical Illness Recovery Hospital Segment. Select
Medical's critical illness recovery hospitals are a key component
of the inpatient hospital continuum of care. Beginning in
March 2020, a number of waivers and
modifications of certain requirements under the Medicare, Medicaid
and Children's Health Insurance Program ("CHIP") programs were
authorized, including certain regulations concerning patient length
of stay requirements under the Medicare program which apply to
Select Medical's critical illness recovery hospitals. The length of
stay requirements were suspended in order to facilitate the
transfer of patients from general acute care hospitals and expand
hospital bed capacity to care for COVID-19 patients. During the
year ended December 31, 2020, Select
Medical's critical illness recovery hospitals played a critical
role in caring for patients during the COVID-19 pandemic due, in
part, to the rapid preparation and implementation of modifications
that supported the treatment of COVID-19 patients.
The following table shows revenue, patient days, 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.
|
|
Revenue
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
|
|
$
|
152,791
|
|
|
$
|
181,251
|
|
|
18.6%
|
|
|
87,188
|
|
95,616
|
|
9.7%
|
|
|
66%
|
|
71%
|
|
|
100
|
|
100
|
|
November
|
|
150,399
|
|
|
174,133
|
|
|
15.8%
|
|
|
84,540
|
|
92,651
|
|
9.6%
|
|
|
67%
|
|
71%
|
|
|
100
|
|
99
|
|
December
|
|
151,759
|
|
|
182,514
|
|
|
20.3%
|
|
|
87,555
|
|
97,079
|
|
10.9%
|
|
|
67%
|
|
72%
|
|
|
100
|
|
99
|
|
Three Months Ended
December 31
|
|
$
|
454,949
|
|
|
$
|
537,898
|
|
|
18.2%
|
|
|
259,283
|
|
285,346
|
|
10.1%
|
|
|
67%
|
|
71%
|
|
|
100
|
|
99
|
|
Twelve Months Ended
December 31
|
|
$
|
1,836,518
|
|
|
$
|
2,077,499
|
|
|
13.1%
|
|
|
1,038,361
|
|
1,111,756
|
|
7.1%
|
|
|
68%
|
|
71%
|
|
|
100
|
|
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. Beginning in March 2020, a number of waivers and modifications
of certain requirements under the Medicare, Medicaid and CHIP
programs were authorized, including certain regulations governing
admissions into rehabilitation hospitals. This was done in order to
facilitate the transfer of patients from general acute care
hospitals and critical illness recovery hospitals and to expand
hospital bed capacity to care for COVID-19 patients. Select
Medical's rehabilitation hospitals were affected by the suspension
of elective surgeries at hospitals and other facilities at the
beginning of the pandemic, which resulted in reduced need for
inpatient rehabilitation services. Beginning in May 2020, state governments and health
departments began to ease restrictions and hospitals began to
perform elective surgeries again, which has increased the need for
the services provided by our rehabilitation hospitals.
The following table shows revenue, patient days, 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.
|
|
Revenue
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
|
|
$
|
61,975
|
|
|
$
|
66,591
|
|
|
7.4%
|
|
|
31,767
|
|
33,378
|
|
5.1%
|
|
|
78%
|
|
82%
|
|
|
19
|
|
19
|
|
November
|
|
60,353
|
|
|
64,610
|
|
|
7.1%
|
|
|
31,022
|
|
31,581
|
|
1.8%
|
|
|
79%
|
|
80%
|
|
|
19
|
|
19
|
|
December
|
|
60,342
|
|
|
64,711
|
|
|
7.2%
|
|
|
31,447
|
|
31,545
|
|
0.3%
|
|
|
78%
|
|
78%
|
|
|
19
|
|
19
|
|
Three Months Ended
December 31
|
|
$
|
182,670
|
|
|
$
|
195,912
|
|
|
7.2%
|
|
|
94,236
|
|
96,504
|
|
2.4%
|
|
|
78%
|
|
80%
|
|
|
19
|
|
19
|
|
Twelve Months Ended
December 31
|
|
$
|
670,971
|
|
|
$
|
734,673
|
|
|
9.5%
|
|
|
353,031
|
|
370,833
|
|
5.0%
|
|
|
76%
|
|
78%
|
|
|
19
|
|
19
|
|
|
|
|
|
(1)
|
Represents the number
of hospitals owned at the end of each period presented.
|
Outpatient Rehabilitation Segment. Beginning in
mid-March 2020, 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 2020, state governments began to ease
restrictions imposed on businesses and individuals, physician
offices began reopening for routine office visits, and hospitals
and other facilities began performing elective surgeries again,
which has resulted in an increased need for the services provided
by Select Medical's outpatient rehabilitation clinics.
The following table shows revenue and patient visits for each of
the periods presented, as well as the number of working days for
each period.
|
|
Revenue
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
|
|
$
|
96,868
|
|
|
$
|
88,274
|
|
|
(8.9)%
|
|
|
808,649
|
|
745,562
|
|
(7.8)%
|
|
|
23
|
|
22
|
|
|
November
|
|
87,072
|
|
|
82,102
|
|
|
(5.7)%
|
|
|
722,607
|
|
685,885
|
|
(5.1)%
|
|
|
20
|
|
20
|
|
|
December
|
|
87,945
|
|
|
87,108
|
|
|
(1.0)%
|
|
|
725,710
|
|
713,593
|
|
(1.7)%
|
|
|
21
|
|
22
|
|
|
Three Months Ended
December 31
|
|
$
|
271,885
|
|
|
$
|
257,484
|
|
|
(5.3)%
|
|
|
2,256,966
|
|
2,145,040
|
|
(5.0)%
|
|
|
64
|
|
64
|
|
|
Twelve Months Ended
December 31
|
|
$
|
1,046,011
|
|
|
$
|
919,913
|
|
|
(12.1)%
|
|
|
8,719,282
|
|
7,593,344
|
|
(12.9)%
|
|
|
255
|
|
256
|
|
|
|
|
|
|
|
(1)
|
Represents the number
of days in which normal business operations were conducted during
the periods presented.
|
Concentra Segment. Beginning in mid-March 2020, 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 patient visit volumes. Beginning in
May 2020, state governments began to
ease restrictions imposed on businesses and employers began to
increase their workforce, which has resulted in an increased need
for occupational health services. During the year ended
December 31, 2020, Concentra expanded its services to provide
COVID-19 screening and testing at its centers and various onsite
clinics located at employer worksites.
The following table shows revenue and patient visits for each of
the periods presented, as well as the number of working days for
each period.
|
|
Revenue
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
|
|
$
|
149,260
|
|
|
$
|
139,365
|
|
|
(6.6)%
|
|
|
1,113,408
|
|
1,011,816
|
|
(9.1)%
|
|
|
23
|
|
22
|
|
|
November
|
|
123,152
|
|
|
126,431
|
|
|
2.7%
|
|
|
908,159
|
|
867,918
|
|
(4.4)%
|
|
|
19
|
|
19
|
|
|
December
|
|
124,733
|
|
|
132,906
|
|
|
6.6%
|
|
|
881,699
|
|
892,648
|
|
1.2%
|
|
|
21
|
|
22
|
|
|
Three Months Ended
December 31
|
|
$
|
397,145
|
|
|
$
|
398,702
|
|
|
0.4%
|
|
|
2,903,266
|
|
2,772,382
|
|
(4.5)%
|
|
|
63
|
|
63
|
|
|
Twelve Months Ended
December 31
|
|
$
|
1,628,817
|
|
|
$
|
1,501,434
|
|
|
(7.8)%
|
|
|
12,068,865
|
|
10,627,904
|
|
(11.9)%
|
|
|
254
|
|
255
|
|
|
|
|
|
|
(1)
|
Represents the number
of days in which normal business operations were conducted during
the periods presented.
|
Purchase of Concentra Interest
On December 31, 2020, Select
Medical, Welsh, Carson, Anderson & Stowe XII, L.P. ("WCAS"),
and Dignity Health Holding Corporation ("DHHC") entered into an
agreement pursuant to which Select Medical acquired approximately
11.1% of the outstanding membership interests of Concentra Group
Holdings Parent, LLC on a fully diluted basis from WCAS, DHHC, and
other equity holders of Concentra Group Holdings Parent, LLC for
approximately $210.2 million.
This purchase was in lieu of, and deemed to be, the exercise of
the second put right provided to certain equity holders under the
terms of the Amended and Restated Limited Liability Company
Agreement of Concentra Group Holdings Parent, LLC, dated as of
February 1, 2018. Following this
purchase, Select Medical owns approximately 78.0% of the
outstanding membership interests of Concentra Group Holdings
Parent, LLC on a fully diluted basis and approximately 79.8% of the
outstanding voting membership interests of Concentra Group Holdings
Parent, LLC.
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 December 31, 2020. During the year ended
December 31, 2020, Select Medical repurchased 491,559 shares
at a cost of approximately $8.7
million, or $17.68 per share,
which includes transaction costs. Since the inception of the
program through December 31, 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 its business outlook for 2021. Select
Medical expects for the full year of 2021 revenue to be in the
range of $5.65 billion to
$5.85 billion and Adjusted EBITDA for
the full year of 2021 to be in the range of $840.0 million to $880.0
million. Select Medical expects fully diluted earnings per
common share for the full year 2021 to be in the range of
$2.26 to $2.48. A reconciliation of net income to Adjusted
EBITDA for the full year of 2021 is presented in table XI of this
release.
Select Medical is also providing a three-year compound annual
growth rate target for the years 2021 through 2023. Select Medical
is targeting compound annual growth for revenue in the range of 4%
to 6% from 2021 through 2023. Select Medical is targeting compound
annual growth for Adjusted EBITDA in the range of 7% to 8% from
2021 through 2023. Select Medical is targeting compound annual
growth for fully diluted earnings per common share in the range of
17% to 20% from 2021 through 2023.
Conference Call
Select Medical will host a conference call regarding its results
for the fourth quarter and full year ended December 31, 2020,
as well as its business outlook and the impact of the COVID-19
pandemic on each of its reporting segments, on Friday, February 26, 2021, 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 4288605. 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 12:00pm ET,
March 5, 2021. The replay number is
1-855-859-2056 (domestic) or 1-404-537-3406 (international). The
conference ID for the replay will be 4288605. 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),
including statements related to Select Medical's 2021 and long-term
business outlook. 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 revenue, 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 revenue 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 revenue 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 revenue and
profitability;
- the failure to maintain established relationships with the
physicians in the areas we serve could reduce our revenue 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 revenue 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 annual
report on Form 10-K for the year ended December 31, 2020.
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 December 31, 2019 and 2020
|
|
(In thousands,
except per share amounts, unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
Revenue
|
|
$
|
1,374,584
|
|
|
$
|
1,460,494
|
|
|
6.2
|
%
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of services,
exclusive of depreciation and amortization
|
|
1,175,649
|
|
|
1,246,594
|
|
|
6.0
|
|
|
General and
administrative
|
|
34,062
|
|
|
35,229
|
|
|
3.4
|
|
|
Depreciation and
amortization
|
|
52,504
|
|
|
51,526
|
|
|
(1.9)
|
|
|
Total costs and
expenses
|
|
1,262,215
|
|
|
1,333,349
|
|
|
5.6
|
|
|
Other operating
income
|
|
—
|
|
|
36,184
|
|
|
N/M
|
|
Income from
operations
|
|
112,369
|
|
|
163,329
|
|
|
45.4
|
|
|
Other income and
expense:
|
|
|
|
|
|
|
|
Loss on early
retirement of debt
|
|
(19,440)
|
|
|
—
|
|
|
N/M
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
6,279
|
|
|
9,763
|
|
|
55.5
|
|
|
Loss on sale of
businesses
|
|
—
|
|
|
(303)
|
|
|
N/M
|
|
Interest
expense
|
|
(43,959)
|
|
|
(35,512)
|
|
|
(19.2)
|
|
|
Income before income
taxes
|
|
55,249
|
|
|
137,277
|
|
|
148.5
|
|
|
Income tax
expense
|
|
11,578
|
|
|
35,062
|
|
|
202.8
|
|
|
Net income
|
|
43,671
|
|
|
102,215
|
|
|
134.1
|
|
|
Less: Net income
attributable to non-controlling interests
|
|
11,604
|
|
|
24,941
|
|
|
114.9
|
|
|
Net income
attributable to Select Medical
|
|
$
|
32,067
|
|
|
$
|
77,274
|
|
|
141.0
|
%
|
|
Diluted earnings per
common share:(1)
|
|
$
|
0.24
|
|
|
$
|
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 Years
Ended December 31, 2019 and 2020
(In thousands,
except per share amounts, unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
Revenue
|
|
$
|
5,453,922
|
|
|
$
|
5,531,713
|
|
|
1.4
|
%
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of services,
exclusive of depreciation and amortization
|
|
4,641,002
|
|
|
4,710,372
|
|
|
1.5
|
|
|
General and
administrative
|
|
128,463
|
|
|
138,037
|
|
|
7.5
|
|
|
Depreciation and
amortization
|
|
212,576
|
|
|
205,659
|
|
|
(3.3)
|
|
|
Total costs and
expenses
|
|
4,982,041
|
|
|
5,054,068
|
|
|
1.4
|
|
|
Other operating
income
|
|
—
|
|
|
90,012
|
|
|
N/M
|
|
Income from
operations
|
|
471,881
|
|
|
567,657
|
|
|
20.3
|
|
|
Other income and
expense:
|
|
|
|
|
|
|
|
Loss on early
retirement of debt
|
|
(38,083)
|
|
|
—
|
|
|
N/M
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
24,989
|
|
|
29,440
|
|
|
17.8
|
|
|
Gain on sale of
businesses
|
|
6,532
|
|
|
12,387
|
|
|
N/M
|
|
Interest
expense
|
|
(200,570)
|
|
|
(153,011)
|
|
|
(23.7)
|
|
|
Income before income
taxes
|
|
264,749
|
|
|
456,473
|
|
|
72.4
|
|
|
Income tax
expense
|
|
63,718
|
|
|
111,867
|
|
|
75.6
|
|
|
Net income
|
|
201,031
|
|
|
344,606
|
|
|
71.4
|
|
|
Less: Net income
attributable to non-controlling interests
|
|
52,582
|
|
|
85,611
|
|
|
62.8
|
|
|
Net income
attributable to Select Medical
|
|
$
|
148,449
|
|
|
$
|
258,995
|
|
|
74.5
|
%
|
|
Diluted earnings per
common share:(1)
|
|
$
|
1.10
|
|
|
$
|
1.93
|
|
|
|
|
|
|
(1)
|
Refer to table III
for calculation of earnings per common share.
|
|
N/M
|
Not
meaningful
|
III. Earnings per Share
For the Three Months
and Years Ended December 31, 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 months and years
ended December 31, 2019 and 2020:
|
|
Diluted
EPS
|
|
|
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
|
Net income
|
|
$
|
43,671
|
|
|
$
|
102,215
|
|
|
$
|
201,031
|
|
|
$
|
344,606
|
|
|
|
Less: net income
attributable to non-controlling interests
|
|
11,604
|
|
|
24,941
|
|
|
52,582
|
|
|
85,611
|
|
|
|
Net income
attributable to Select Medical
|
|
32,067
|
|
|
77,274
|
|
|
148,449
|
|
|
258,995
|
|
|
|
Less: net income
attributable to participating securities
|
|
1,101
|
|
|
2,638
|
|
|
4,994
|
|
|
8,896
|
|
|
|
Net income
attributable to common shares
|
|
$
|
30,966
|
|
|
$
|
74,636
|
|
|
$
|
143,455
|
|
|
$
|
250,099
|
|
|
The following tables set forth the computation of EPS under the
two-class method for the three months and years ended December 31, 2019 and 2020:
|
|
Three Months Ended
December 31,
|
|
|
2019
|
|
|
2020
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
Common
shares
|
|
$
|
30,966
|
|
|
129,676
|
|
|
$
|
0.24
|
|
|
|
$
|
74,636
|
|
|
130,269
|
|
|
$
|
0.57
|
|
|
Participating
securities
|
|
1,101
|
|
|
4,610
|
|
|
$
|
0.24
|
|
|
|
2,638
|
|
|
4,605
|
|
|
$
|
0.57
|
|
|
Total
|
|
$
|
32,067
|
|
|
|
|
|
|
|
$
|
77,274
|
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
|
|
2019
|
|
|
2020
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
|
Net Income
Allocation
|
|
Shares(1)
|
|
Diluted
EPS
|
|
Common
shares
|
|
$
|
143,455
|
|
|
130,276
|
|
|
$
|
1.10
|
|
|
|
$
|
250,099
|
|
|
129,780
|
|
|
$
|
1.93
|
|
|
Participating
securities
|
|
4,994
|
|
|
4,535
|
|
|
$
|
1.10
|
|
|
|
8,896
|
|
|
4,616
|
|
|
$
|
1.93
|
|
|
Total
|
|
$
|
148,449
|
|
|
|
|
|
|
|
$
|
258,995
|
|
|
|
|
|
|
|
|
(1)
|
Represents the
weighted average share count outstanding during the
period.
|
|
IV.
Condensed Consolidated Balance Sheets
(In thousands,
unaudited)
|
|
|
|
December
31,
|
|
|
2019
|
|
2020
|
|
Assets
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
335,882
|
|
|
$
|
577,061
|
|
|
Accounts
receivable
|
|
762,677
|
|
|
896,763
|
|
|
Other current
assets
|
|
114,433
|
|
|
120,176
|
|
|
Total Current
Assets
|
|
1,212,992
|
|
|
1,594,000
|
|
|
Operating lease
right-of-use assets
|
|
1,003,986
|
|
|
1,032,217
|
|
|
Property and
equipment, net
|
|
998,406
|
|
|
943,420
|
|
|
Goodwill
|
|
3,391,955
|
|
|
3,379,014
|
|
|
Identifiable
intangible assets, net
|
|
409,068
|
|
|
387,541
|
|
|
Other
assets
|
|
323,881
|
|
|
319,207
|
|
|
Total
Assets
|
|
$
|
7,340,288
|
|
|
$
|
7,655,399
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Payables and
accruals
|
|
$
|
681,163
|
|
|
$
|
800,918
|
|
|
Government
advances
|
|
—
|
|
|
321,807
|
|
|
Unearned government
assistance
|
|
—
|
|
|
82,607
|
|
|
Current operating
lease liabilities
|
|
207,950
|
|
|
220,413
|
|
|
Current portion of
long-term debt and notes payable
|
|
25,167
|
|
|
12,621
|
|
|
Total Current
Liabilities
|
|
914,280
|
|
|
1,438,366
|
|
|
Non-current operating
lease liabilities
|
|
852,897
|
|
|
875,367
|
|
|
Long-term debt, net of
current portion
|
|
3,419,943
|
|
|
3,389,398
|
|
|
Non-current deferred
tax liability
|
|
148,258
|
|
|
132,421
|
|
|
Other non-current
liabilities
|
|
101,334
|
|
|
168,703
|
|
|
Total
Liabilities
|
|
5,436,712
|
|
|
6,004,255
|
|
|
Redeemable
non-controlling interests
|
|
974,541
|
|
|
398,171
|
|
|
Total
equity
|
|
929,035
|
|
|
1,252,973
|
|
|
Total Liabilities
and Equity
|
|
$
|
7,340,288
|
|
|
$
|
7,655,399
|
|
|
V. Condensed
Consolidated Statements of Cash Flows
For the Three
Months Ended December 31, 2019 and 2020
(In thousands,
unaudited)
|
|
|
|
2019
|
|
2020
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
|
$
|
43,671
|
|
|
$
|
102,215
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Distributions from
unconsolidated subsidiaries
|
|
6,613
|
|
|
13,670
|
|
|
Depreciation and
amortization
|
|
52,504
|
|
|
51,526
|
|
|
Provision for
expected credit losses
|
|
694
|
|
|
323
|
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(6,279)
|
|
|
(9,763)
|
|
|
Loss on
extinguishment of debt
|
|
11,970
|
|
|
—
|
|
|
Loss on sale of assets
and businesses
|
|
28
|
|
|
2,160
|
|
|
Stock compensation
expense
|
|
7,020
|
|
|
6,422
|
|
|
Amortization of debt
discount, premium and issuance costs
|
|
2,097
|
|
|
549
|
|
|
Deferred income
taxes
|
|
(188)
|
|
|
(159)
|
|
|
Changes in operating
assets and liabilities, net of effects of business
combinations:
|
|
|
|
|
|
Accounts
receivable
|
|
35,434
|
|
|
(25,188)
|
|
|
Other current
assets
|
|
1,757
|
|
|
4,040
|
|
|
Other
assets
|
|
4,863
|
|
|
1,252
|
|
|
Accounts payable and
accrued expenses
|
|
18,358
|
|
|
44,722
|
|
|
Unearned government
assistance
|
|
—
|
|
|
15,669
|
|
|
Net cash provided by
operating activities
|
|
178,542
|
|
|
207,438
|
|
|
Investing
activities
|
|
|
|
|
|
Business combinations,
net of cash acquired
|
|
(7,436)
|
|
|
(6,732)
|
|
|
Purchases of property
and equipment
|
|
(33,170)
|
|
|
(40,868)
|
|
|
Investment in
businesses
|
|
(5,422)
|
|
|
(5,568)
|
|
|
Proceeds from sale of
assets and businesses
|
|
9
|
|
|
—
|
|
|
Net cash used in
investing activities
|
|
(46,019)
|
|
|
(53,168)
|
|
|
Financing
activities
|
|
|
|
|
|
Proceeds from term
loans
|
|
614,423
|
|
|
—
|
|
|
Payments on term
loans
|
|
(1,243,086)
|
|
|
—
|
|
|
Proceeds from 6.250%
senior notes
|
|
705,811
|
|
|
—
|
|
|
Borrowings of other
debt
|
|
4,943
|
|
|
5,022
|
|
|
Principal payments on
other debt
|
|
(7,976)
|
|
|
(5,561)
|
|
|
Repurchase of common
stock
|
|
(1,222)
|
|
|
(1,792)
|
|
|
Proceeds from exercise
of stock options
|
|
92
|
|
|
—
|
|
|
Proceeds from issuance
of non-controlling interests
|
|
159
|
|
|
5,878
|
|
|
Distributions to and
purchases of non-controlling interests
|
|
(5,748)
|
|
|
(10,393)
|
|
|
Purchase of
membership interests of Concentra Group Holdings Parent
|
|
—
|
|
|
(210,163)
|
|
|
Net cash provided by
(used in) financing activities
|
|
67,396
|
|
|
(217,009)
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
199,919
|
|
|
(62,739)
|
|
|
Cash and cash
equivalents at beginning of period
|
|
135,963
|
|
|
639,800
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
335,882
|
|
|
$
|
577,061
|
|
|
Supplemental
information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
33,902
|
|
|
$
|
15,062
|
|
|
Cash paid for
taxes
|
|
$
|
12,120
|
|
|
$
|
26,945
|
|
|
VI.
Condensed Consolidated Statements of Cash Flows
For the Years
Ended December 31, 2019 and 2020
(In thousands,
unaudited)
|
|
|
|
2019
|
|
2020
|
|
Operating
activities
|
|
|
|
|
|
Net income
|
|
$
|
201,031
|
|
|
$
|
344,606
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Distributions from
unconsolidated subsidiaries
|
|
20,222
|
|
|
35,390
|
|
|
Depreciation and
amortization
|
|
212,576
|
|
|
205,659
|
|
|
Provision for
expected credit losses
|
|
3,038
|
|
|
604
|
|
|
Equity in earnings of
unconsolidated subsidiaries
|
|
(24,989)
|
|
|
(29,440)
|
|
|
Loss on
extinguishment of debt
|
|
22,130
|
|
|
—
|
|
|
Gain on sale of
assets and businesses
|
|
(6,321)
|
|
|
(22,563)
|
|
|
Stock compensation
expense
|
|
26,451
|
|
|
27,250
|
|
|
Amortization of debt
discount, premium and issuance costs
|
|
11,566
|
|
|
2,184
|
|
|
Deferred income
taxes
|
|
(7,435)
|
|
|
(14,715)
|
|
|
Changes in operating
assets and liabilities, net of effects of business
combinations:
|
|
|
|
|
|
Accounts
receivable
|
|
(57,991)
|
|
|
(116,601)
|
|
|
Other current
assets
|
|
(4,259)
|
|
|
(18,775)
|
|
|
Other
assets
|
|
6,122
|
|
|
17,587
|
|
|
Accounts payable and
accrued expenses
|
|
43,041
|
|
|
196,164
|
|
|
Government
advances
|
|
—
|
|
|
318,116
|
|
|
Unearned government
assistance
|
|
—
|
|
|
82,607
|
|
|
Net cash provided by
operating activities
|
|
445,182
|
|
|
1,028,073
|
|
|
Investing
activities
|
|
|
|
|
|
Business combinations,
net of cash acquired
|
|
(93,705)
|
|
|
(20,808)
|
|
|
Purchases of property
and equipment
|
|
(157,126)
|
|
|
(146,440)
|
|
|
Investment in
businesses
|
|
(66,090)
|
|
|
(31,425)
|
|
|
Proceeds from sale of
assets and businesses
|
|
192
|
|
|
83,320
|
|
|
Net cash used in
investing activities
|
|
(316,729)
|
|
|
(115,353)
|
|
|
Financing
activities
|
|
|
|
|
|
Borrowings on
revolving facilities
|
|
700,000
|
|
|
470,000
|
|
|
Payments on revolving
facilities
|
|
(720,000)
|
|
|
(470,000)
|
|
|
Proceeds from term
loans
|
|
1,208,106
|
|
|
—
|
|
|
Payments on term
loans
|
|
(1,618,170)
|
|
|
(39,843)
|
|
|
Proceeds from 6.250%
senior notes
|
|
1,244,987
|
|
|
—
|
|
|
Payment on 6.375%
senior notes
|
|
(710,000)
|
|
|
—
|
|
|
Revolving facility
debt issuance costs
|
|
(310)
|
|
|
—
|
|
|
Borrowings of other
debt
|
|
24,225
|
|
|
40,108
|
|
|
Principal payments on
other debt
|
|
(30,604)
|
|
|
(48,381)
|
|
|
Repurchase of common
stock
|
|
(38,531)
|
|
|
(16,034)
|
|
|
Proceeds from exercise
of stock options
|
|
964
|
|
|
—
|
|
|
Decrease in
overdrafts
|
|
(25,083)
|
|
|
—
|
|
|
Proceeds from issuance
of non-controlling interests
|
|
18,447
|
|
|
7,564
|
|
|
Distributions to and
purchases of non-controlling interests
|
|
(21,780)
|
|
|
(38,589)
|
|
|
Purchase of
membership interests of Concentra Group Holdings Parent
|
|
—
|
|
|
(576,366)
|
|
|
Net cash provided by
(used in) financing activities
|
|
32,251
|
|
|
(671,541)
|
|
|
Net increase in cash
and cash equivalents
|
|
160,704
|
|
|
241,179
|
|
|
Cash and cash
equivalents at beginning of period
|
|
175,178
|
|
|
335,882
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
335,882
|
|
|
$
|
577,061
|
|
|
Supplemental
information:
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
182,992
|
|
|
$
|
155,236
|
|
|
Cash paid for
taxes
|
|
$
|
70,592
|
|
|
$
|
108,890
|
|
|
VII. Key
Statistics
For the Three
Months Ended December 31, 2019 and 2020
(unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
Critical Illness
Recovery Hospital
|
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
101
|
|
|
99
|
|
|
|
|
Revenue
(,000)
|
|
$
|
454,949
|
|
|
$
|
537,898
|
|
|
18.2
|
%
|
|
Number of patient
days(b)(c)
|
|
259,283
|
|
|
285,346
|
|
|
10.1
|
%
|
|
Number of
admissions(b)(d)
|
|
9,095
|
|
|
9,376
|
|
|
3.1
|
%
|
|
Revenue per patient
day(b)(e)
|
|
$
|
1,742
|
|
|
$
|
1,881
|
|
|
8.0
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
60,485
|
|
|
$
|
75,284
|
|
|
24.5
|
%
|
|
Adjusted EBITDA
margin
|
|
13.3
|
%
|
|
14.0
|
%
|
|
|
|
Rehabilitation
Hospital
|
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
29
|
|
|
30
|
|
|
|
|
Revenue
(,000)
|
|
$
|
182,670
|
|
|
$
|
195,912
|
|
|
7.2
|
%
|
|
Number of patient
days(b)(c)
|
|
94,236
|
|
|
96,504
|
|
|
2.4
|
%
|
|
Number of
admissions(b)(d)
|
|
6,636
|
|
|
6,592
|
|
|
(0.7)
|
%
|
|
Revenue per patient
day(b)(e)
|
|
$
|
1,739
|
|
|
$
|
1,839
|
|
|
5.8
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
43,312
|
|
|
$
|
42,392
|
|
|
(2.1)
|
%
|
|
Adjusted EBITDA
margin
|
|
23.7
|
%
|
|
21.6
|
%
|
|
|
|
Outpatient
Rehabilitation
|
|
|
|
|
|
|
|
Number of clinics –
end of period(a)
|
|
1,740
|
|
|
1,788
|
|
|
|
|
Revenue
(,000)
|
|
$
|
271,885
|
|
|
$
|
257,484
|
|
|
(5.3)
|
%
|
|
Number of
visits(b)
|
|
2,256,966
|
|
|
2,145,040
|
|
|
(5.0)
|
%
|
|
Revenue per
visit(b)(f)
|
|
$
|
104
|
|
|
$
|
103
|
|
|
(1.0)
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
40,216
|
|
|
$
|
27,701
|
|
|
(31.1)
|
%
|
|
Adjusted EBITDA
margin
|
|
14.8
|
%
|
|
10.8
|
%
|
|
|
|
Concentra
|
|
|
|
|
|
|
|
Number of centers –
end of period(b)
|
|
521
|
|
|
517
|
|
|
|
|
Revenue
(,000)
|
|
$
|
397,145
|
|
|
$
|
398,702
|
|
|
0.4
|
%
|
|
Number of
visits(b)
|
|
2,903,266
|
|
|
2,772,382
|
|
|
(4.5)
|
%
|
|
Revenue per
visit(b)(f)
|
|
$
|
122
|
|
|
$
|
122
|
|
|
0.0
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
56,458
|
|
|
$
|
69,382
|
|
|
22.9
|
%
|
|
Adjusted EBITDA
margin
|
|
14.2
|
%
|
|
17.4
|
%
|
|
|
|
|
|
|
(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. 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.
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 Years
Ended December 31, 2019 and 2020
(unaudited)
|
|
|
|
2019
|
|
2020
|
|
%
Change
|
|
Critical Illness
Recovery Hospital
|
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
101
|
|
|
99
|
|
|
|
|
Revenue
(,000)
|
|
$
|
1,836,518
|
|
|
$
|
2,077,499
|
|
|
13.1
|
%
|
|
Number of patient
days(b)(c)
|
|
1,038,361
|
|
|
1,111,756
|
|
|
7.1
|
%
|
|
Number of
admissions(b)(d)
|
|
36,774
|
|
|
37,456
|
|
|
1.9
|
%
|
|
Revenue per patient
day(b)(e)
|
|
$
|
1,753
|
|
|
$
|
1,858
|
|
|
6.0
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
254,868
|
|
|
$
|
342,427
|
|
|
34.4
|
%
|
|
Adjusted EBITDA
margin
|
|
13.9
|
%
|
|
16.5
|
%
|
|
|
|
Rehabilitation
Hospital
|
|
|
|
|
|
|
|
Number of hospitals –
end of period(a)
|
|
29
|
|
|
30
|
|
|
|
|
Revenue
(,000)
|
|
$
|
670,971
|
|
|
$
|
734,673
|
|
|
9.5
|
%
|
|
Number of patient
days(b)(c)
|
|
353,031
|
|
|
370,833
|
|
|
5.0
|
%
|
|
Number of
admissions(b)(d)
|
|
24,889
|
|
|
25,081
|
|
|
0.8
|
%
|
|
Revenue per patient
day(b)(e)
|
|
$
|
1,685
|
|
|
$
|
1,793
|
|
|
6.4
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
135,857
|
|
|
$
|
153,203
|
|
|
12.8
|
%
|
|
Adjusted EBITDA
margin
|
|
20.2
|
%
|
|
20.9
|
%
|
|
|
|
Outpatient
Rehabilitation
|
|
|
|
|
|
|
|
Number of clinics –
end of period(a)
|
|
1,740
|
|
|
1,788
|
|
|
|
|
Revenue
(,000)
|
|
$
|
1,046,011
|
|
|
$
|
919,913
|
|
|
(12.1)
|
%
|
|
Number of
visits(b)
|
|
8,719,282
|
|
|
7,593,344
|
|
|
(12.9)
|
%
|
|
Revenue per
visit(b)(f)
|
|
$
|
103
|
|
|
$
|
104
|
|
|
1.0
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
151,831
|
|
|
$
|
79,164
|
|
|
(47.9)
|
%
|
|
Adjusted EBITDA
margin
|
|
14.5
|
%
|
|
8.6
|
%
|
|
|
|
Concentra
|
|
|
|
|
|
|
|
Number of centers –
end of period(b)
|
|
521
|
|
|
517
|
|
|
|
|
Revenue
(,000)
|
|
$
|
1,628,817
|
|
|
$
|
1,501,434
|
|
|
(7.8)
|
%
|
|
Number of
visits(b)
|
|
12,068,865
|
|
|
10,627,904
|
|
|
(11.9)
|
%
|
|
Revenue per
visit(b)(f)
|
|
$
|
122
|
|
|
$
|
123
|
|
|
0.8
|
%
|
|
Adjusted EBITDA
(,000)
|
|
$
|
276,482
|
|
|
$
|
252,892
|
|
|
(8.5)
|
%
|
|
Adjusted EBITDA
margin
|
|
17.0
|
%
|
|
16.8
|
%
|
|
|
|
|
|
|
(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. 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.
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 Months and Years Ended
December 31, 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
December 31,
|
|
Years
Ended
December 31,
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
Net income
|
$
|
43,671
|
|
|
$
|
102,215
|
|
|
$
|
201,031
|
|
|
$
|
344,606
|
|
|
Income tax
expense
|
11,578
|
|
|
35,062
|
|
|
63,718
|
|
|
111,867
|
|
|
Interest
expense
|
43,959
|
|
|
35,512
|
|
|
200,570
|
|
|
153,011
|
|
|
Loss (gain) on sale
of businesses
|
—
|
|
|
303
|
|
|
(6,532)
|
|
|
(12,387)
|
|
|
Equity in earnings of
unconsolidated subsidiaries
|
(6,279)
|
|
|
(9,763)
|
|
|
(24,989)
|
|
|
(29,440)
|
|
|
Loss on early
retirement of debt
|
19,440
|
|
|
—
|
|
|
38,083
|
|
|
—
|
|
|
Income from
operations
|
112,369
|
|
|
163,329
|
|
|
471,881
|
|
|
567,657
|
|
|
Stock compensation
expense:
|
|
|
|
|
|
|
|
|
Included in general
and administrative
|
5,485
|
|
|
5,565
|
|
|
20,334
|
|
|
22,053
|
|
|
Included in cost of
services
|
1,535
|
|
|
857
|
|
|
6,117
|
|
|
5,197
|
|
|
Depreciation and
amortization
|
52,504
|
|
|
51,526
|
|
|
212,576
|
|
|
205,659
|
|
|
Adjusted
EBITDA
|
$
|
171,893
|
|
|
$
|
221,277
|
|
|
$
|
710,908
|
|
|
$
|
800,566
|
|
|
|
|
|
|
|
|
|
|
Critical illness
recovery hospital
|
$
|
60,485
|
|
|
$
|
75,284
|
|
|
$
|
254,868
|
|
|
$
|
342,427
|
|
|
Rehabilitation
hospital
|
43,312
|
|
|
42,392
|
|
|
135,857
|
|
|
153,203
|
|
|
Outpatient
rehabilitation
|
40,216
|
|
|
27,701
|
|
|
151,831
|
|
|
79,164
|
|
|
Concentra(a)
|
56,458
|
|
|
69,382
|
|
|
276,482
|
|
|
252,892
|
|
|
Other(a)(b)
|
(28,578)
|
|
|
6,518
|
|
|
(108,130)
|
|
|
(27,120)
|
|
|
Adjusted
EBITDA
|
$
|
171,893
|
|
|
$
|
221,277
|
|
|
$
|
710,908
|
|
|
$
|
800,566
|
|
|
|
|
|
(a)
|
For the three months
and year ended December 31, 2020, Select Medical recognized
payments received under the Provider Relief Fund for loss of
revenue and health care related expenses attributable to the
COVID-19 pandemic as other operating income. The other operating
income is included within the operating results of Select Medical's
other activities and its Concentra segment. 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 Months
and Years Ended December 31, 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
December 31,
|
|
2019
|
|
Per
Share(a)
|
|
2020
|
|
Per
Share(a)
|
|
Net income
attributable to common shares(a)
|
$
|
30,966
|
|
|
$
|
0.24
|
|
|
$
|
74,636
|
|
|
$
|
0.57
|
|
|
Adjustments:(b)
|
|
|
|
|
|
|
|
|
Loss on early
retirement of debt
|
9,505
|
|
|
0.07
|
|
|
—
|
|
|
—
|
|
|
Loss on sale of
businesses
|
—
|
|
|
—
|
|
|
201
|
|
|
—
|
|
|
Adjusted net income
attributable to common shares
|
$
|
40,471
|
|
|
$
|
0.31
|
|
|
$
|
74,837
|
|
|
$
|
0.57
|
|
|
|
Years Ended
December 31,
|
|
2019
|
|
Per
Share(a)
|
|
2020
|
|
Per
Share(a)
|
|
Net income
attributable to common shares(a)
|
$
|
143,455
|
|
|
$
|
1.10
|
|
|
$
|
250,099
|
|
|
$
|
1.93
|
|
|
Adjustments:(b)
|
|
|
|
|
|
|
|
|
Loss on early
retirement of debt and related costs(c)
|
22,286
|
|
|
0.17
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of
businesses
|
(4,543)
|
|
|
(0.03)
|
|
|
(4,888)
|
|
|
(0.04)
|
|
|
Adjusted net income
attributable to common shares
|
$
|
161,198
|
|
|
$
|
1.24
|
|
|
$
|
245,211
|
|
|
$
|
1.89
|
|
|
|
|
|
(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 December 31, 2019, the adjustments to net income attributable
to common shares include an estimated income tax benefit of
approximately $5.2 million. For the three months ended December 31,
2020, the estimated income tax effect on the adjustment made to net
income attributable to common shares was immaterial.
|
|
For the year ended
December 31, 2019, the adjustments to net income attributable to
common shares include an estimated income tax benefit of
approximately $9.2 million. For the year ended December 31, 2020,
the adjustments to net income attributable to common shares include
estimated income tax expense of approximately $3.3
million.
|
|
(c)
|
Select Medical
redeemed its $710.0 million 6.375% senior notes on August 30, 2019
and issued and sold $550.0 million 6.250% senior notes 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
Reconciliation
Business Outlook for the Year Ending
December 31, 2021
(In
millions, unaudited)
The following is a reconciliation of full year 2021 Adjusted
EBITDA expectations as computed at the low and high points of the
range to the closest comparable GAAP financial measure. Refer to
table IX for the definition of Adjusted EBITDA and a discussion of
Select Medical's use of Adjusted EBITDA in evaluating financial
performance. Each item presented in the below table is an
estimation of full year 2021 expectations.
|
Range
|
|
Non-GAAP Measure
Reconciliation
|
Low
|
|
High
|
|
Net income
attributable to Select Medical
|
$
|
306
|
|
|
$
|
336
|
|
|
Net income
attributable to non-controlling interests
|
70
|
|
|
70
|
|
|
Net income
|
376
|
|
|
406
|
|
|
Income tax
expense
|
130
|
|
|
140
|
|
|
Interest
expense
|
147
|
|
|
147
|
|
|
Equity in earnings of
unconsolidated subsidiaries
|
(39)
|
|
|
(39)
|
|
|
Income from
operations
|
614
|
|
|
654
|
|
|
Stock compensation
expense
|
28
|
|
|
28
|
|
|
Depreciation and
amortization
|
198
|
|
|
198
|
|
|
Adjusted
EBITDA
|
$
|
840
|
|
|
$
|
880
|
|
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SOURCE Select Medical Holdings Corporation