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Select Medical (SEM) Q1 Earnings and Revenues Top Estimates

Select Medical Holdings CorporationSEM reported first-quarter 2018 earnings of 29 cents per share, which outperformed the Zacks Consensus Estimate by 7.4%. Also, the bottom line improved 38.1% year over year.

Select Medical Holdings Corporation Price, Consensus and EPS Surprise

Select Medical Holdings Corporation Price, Consensus and EPS Surprise | Select Medical Holdings Corporation Quote

The company's first-quarter results benefited from a solid performance across all its segments along with higher revenues.

Operational Update

Operating revenues of Select Medical grossed $1.3 billion during the quarter under review, up 14.8% year over year. Higher segmental revenues led to this upside. Moreover, the top line beat the Zacks Consensus Estimate by 0.7%.

Total operating expenses amounted to $1.1 billion, up 14.5% year over year. Increase of 14.7% in cost of services, 9.9% higher depreciation and amortization expenses and a 13.2% rise in general and administrative expenses induced this overall escalation in expenses.

Income from operations improved 18.3% year over year to $108.6 million on the back of stronger revenues.

Adjusted EBITDA grew 17.5% year over year to $163.2 million.

Segment Update

Long Term Acute Care segment operating revenues rose 4.4% year over year to $464.7 million.

Adjusted EBITDA was $73 million, having inched up 0.9% year over year with margins contracting 60 basis points (bps) to 15.7%.

Inpatient Rehabilitation segment operating revenues increased 20.7% year over year to $174.8 million.

Adjusted EBITDA was $26.8 million, soaring 64% year over year with margins having improved 400 basis points (bps) to 15.3%.

Operating revenues from Outpatient Rehabilitation rose 2.8% year over year to $257.4 million.

Adjusted EBITDA was $30.5 million, having slid 2.9% year over year with margins contracting 60 basis points (bps) to 11.9%.

Concentra segment reported net operating revenues of $356.1 million, up 42.1% from the prior-year quarter. Adjusted EBITDA increased 35.7% year over year to $57.8 million.

Adjusted EBITDA margin contracted 80 bps to 16.2%.

Financial Update

Select Medical exited the first quarter with cash of $119.7 million, down 2.3% from $122.5 million at year-end 2017.

As of Mar 31, 2018, long-term debt, net of current portion, increased 29.9% to $3.5 billion from the figure recorded at 2017-end.

Cash flow from operations was $50.7 million for the three months ended Mar 31, 2018, which compared favorably with ($55.9) million for the same period in 2017.

2018 Guidance

Select Medical expects earnings per share between 97 cents and $1.12. Net income is anticipated between 93 cents and $1.08 (which includes the first-quarter loss on early retirement of debt and U.S. HealthWorks acquisition costs and the related tax effects).

Net operating revenues are projected between $5 billion and $5.2 billion.

Adjusted EBITDA is likely to be between $630 million and $660 million.

Zacks Rank

Select Medical carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Health Maintenance Organizations

Among other players from the industry having reported first-quarter earnings so far, the bottom line of Anthem, Inc. ANTM , Centene Corporation CNC and UnitedHealth Group Incorporated UNH beat the respective Zacks Consensus Estimate.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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