Hospital operator Select Medical Holdings Corporation SEM recently completed the spin-off of Concentra Group Holdings Parent, Inc. CON by distributing its 81.7% ownership stake in the company to its shareholders. Per the previously announced distribution plan, Select Medical distributed 104,093,503 shares of Concentra’s common stock.
This was done through a pro-rata stock distribution, where shareholders of SEM received 0.806971 shares of Concentra common stock for each share of SEM they held as of the record date, Nov. 18, 2024. Following the spin-off, SEM no longer owns any shares in Concentra, effectively separating the two companies.
Shareholders were also compensated in cash for any fractional shares of Concentra. This strategic move streamlines SEM’s operations and enables the company to focus on its core business areas, such as critical illness recovery hospitals, rehabilitation hospitals and outpatient rehabilitation clinics. It generated revenues of $583 million in the third quarter from critical illness recovery hospitals, $282.7 million from rehabilitation hospitals and $312 million from outpatient rehabilitation.
By separating from Concentra, which specializes in occupational health services, SEM can better allocate resources to its primary segments. For SEM’s shareholders, the spin-off offers an opportunity to hold shares in two different companies, potentially unlocking value in both.
The company completed the IPO of Concentra in July 2024 and it started trading on NYSE from July 25. Concentra has a massive network of 549 occupational health centers across 45 states and serves more than 50,000 patients per day on average.
Price Performance of SEM
Select Medical’s shares have gained 64.7% in the year-to-date period compared with the 6.7% growth of the industry it belongs to.
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SEM’s Zacks Rank & Other Key Picks
Select Medical currently has a Zacks Rank #2 (Buy). Some other top-ranked and promising stocks in the broader Medical sector are CareDx, Inc CDNA and Encompass Health Corporation EHC, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CareDx’s current-year earnings indicates a 162.5% year-over-year improvement. CDNA beat earnings estimates in each of the trailing four quarters, with an average surprise of 135.2%. The consensus mark for revenues implies 17.5% growth from the year-ago period.
The Zacks Consensus Estimate for Encompass Health’s 2024 earnings implies a 17.6% increase from the year-ago reported figure. EHC beat earnings estimates in each of the trailing four quarters, with an average surprise of 13.6%. The consensus mark for its current-year revenues is pegged at $5.34 billion, which indicates an 11.2% year-over-year increase.
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Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Select Medical Holdings Corporation (SEM) : Free Stock Analysis Report
CareDx, Inc. (CDNA) : Free Stock Analysis Report
Encompass Health Corporation (EHC) : Free Stock Analysis Report
Concentra Group Holdings Parent, Inc. (CON) : Free Stock Analysis Report
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