On August 1, 2024, Select Medical Holdings Corp (SEM, Financial) released its 8-K filing for the second quarter ended June 30, 2024. The healthcare company, which operates through four main segments—critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and Concentra institutions—reported a 5.1% increase in revenue to $1,759.7 million, surpassing the analyst estimate of $1,744.56 million. However, earnings per share (EPS) came in at $0.60, slightly below the estimated $0.62.
Company Overview
Select Medical Holdings Corp is a prominent healthcare provider in the United States, operating 107 critical illness recovery hospitals, 33 rehabilitation hospitals, 1,925 outpatient rehabilitation clinics, and 547 occupational health centers across 46 states and the District of Columbia. The company is headquartered in Pennsylvania.
Performance and Challenges
For the second quarter of 2024, Select Medical reported a revenue increase of 5.1% to $1,759.7 million compared to $1,674.5 million in the same quarter of the previous year. Income from operations slightly decreased to $157.8 million from $159.2 million, while net income rose by 3.2% to $94.8 million from $91.9 million. Adjusted EBITDA also saw a modest increase of 3.1% to $226.3 million.
Despite the revenue growth, the company faced challenges with its EPS, which decreased to $0.60 from $0.61 in the same quarter last year. This slight decline in EPS could be attributed to increased costs and expenses, which rose by 5.7% to $1,601.9 million.
Financial Achievements
For the six months ended June 30, 2024, Select Medical reported a 6.3% increase in revenue to $3,548.5 million. Income from operations grew by 13.2% to $351.8 million, and net income saw a significant rise of 19.7% to $211.9 million. Adjusted EBITDA for the six months increased by 12.6% to $488.2 million. These achievements highlight the company's ability to generate consistent revenue growth and improve operational efficiency.
Segment Performance
| Segment | Q2 2024 Revenue | Q2 2024 Adjusted EBITDA | Q2 2024 Adjusted EBITDA Margin |
|---|---|---|---|
| Critical Illness Recovery Hospitals | $604.9 million | $71.8 million | 11.9% |
| Rehabilitation Hospitals | $267.8 million | $62.0 million | 23.1% |
| Outpatient Rehabilitation | $315.5 million | $28.8 million | 9.1% |
| Concentra | $477.9 million | $101.6 million | 21.3% |
Income Statement Highlights
| Metric | Q2 2023 | Q2 2024 | % Change |
|---|---|---|---|
| Revenue | $1,674.5 million | $1,759.7 million | 5.1% |
| Income from Operations | $159.2 million | $157.8 million | -0.9% |
| Net Income | $91.9 million | $94.8 million | 3.2% |
| EPS | $0.61 | $0.60 | -1.6% |
Analysis
Select Medical's performance in Q2 2024 demonstrates its resilience and ability to grow revenue despite facing challenges in maintaining its EPS. The company's diversified operations across various healthcare segments have contributed to its overall revenue growth. However, the slight decline in EPS indicates the need for better cost management and operational efficiency.
Overall, Select Medical Holdings Corp (SEM, Financial) continues to show strong financial health and growth potential, making it a noteworthy consideration for value investors in the healthcare sector.
Explore the complete 8-K earnings release (here) from Select Medical Holdings Corp for further details.
