Select Medical Holdings Corporation
) has inked a deal with OhioHealth, pursuant to which it will
establish an inpatient rehabilitation hospital in central Ohio.
This, the OhioHealth Rehabilitation Hospital will focus on acute
treatment of neuroscience patients, mainly those suffering from
neurological trauma and stroke.
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In recent times there has been a surge in the number of
neuroscience patients who need rehabilitative care. The new
establishment is focused on satisfying the needs of these
patients in Ohio. This new hospital will open in Aug, 2013.
As per the deal, the existing 15 inpatient rehabilitation beds of
OhioHealth's Riverside Methodist Hospital will be shifted to the
new rehabilitation hospital. The present bed capacity of 15
allows OhioHealth to retain only one third of its patients in
need of inpatient rehabilitative care. With the new OhioHealth
Rehabilitation Hospital, it will be able to cater to more
patients with an increased bed capacity of 44.
Select Medical is well known for its specialty hospitals and
rehabilitative care. Presently it serves 30,000 patients per day
and has a huge network of 100 hospitals specializing in long-term
acute care, 15 medical rehabilitation hospitals, and
approximately 1,000 outpatient clinics providing physical and
occupational therapy. The aforementioned alliance is expected to
enhance the network of Select Medical thus increasing the number
of patients served.
Among its recent ventures towards business expansion, Select
Medical acquired two inpatient rehabilitation facilities from
Global Rehab Management, LLC and its affiliates in the San
Antonio and Phoenix markets last month.
During the first quarter of 2013, Select Medical's revenues
increased 0.8% year over year to $750 million. We expect the
association with OhioHealth to help the company generate a steady
stream of revenues by making way for receiving more patients in
Ohio. The Specialty Hospitals segment of Select Medical
contributed 74.4% of total revenues during the quarter. We expect
these initiatives of the company to increase the contribution of
this segment going forward.
However, the company will have to check rising operating expenses
so as to not mar the top-line strength and consequently
pressurize the margins. We presently have a Zacks Rank #5 (Strong
Sell) on Select Medical. Among other favorable names in the
) carries a favorable Zacks Rank #1 (Strong Buy) whereas
Health Net Inc.
) carry a Zacks Rank #2 (Buy).