Select Medical Holdings Corporation Announces Launch of Concentra Group Holdings Parent, Inc. IPO Roadshow

Rhea-AI Summary

Select Medical Holdings (NYSE: SEM) has announced the launch of an IPO roadshow for its wholly owned subsidiary, Concentra Group Holdings Parent, Inc. The IPO aims to offer 22,500,000 shares of common stock, with an expected price range of $23.00 to $26.00 per share. Concentra plans to list on the NYSE under the symbol 'CON'.

Underwriters have a 30-day option to purchase up to 3,375,000 additional shares. Post-IPO, Select Medical will retain 82.23% ownership of Concentra (or 80.09% if the over-allotment option is fully exercised). The IPO is subject to market conditions and regulatory approval. J.P. Morgan, Goldman Sachs & Co. , and BofA Securities are leading the offering as book-running managers.

Positive

• Potential for significant capital raise through 22,500,000 share offering
• Expected IPO price range of $23.00 to $26.00 per share indicates strong valuation
• Select Medical will retain majority ownership (82.23%) in Concentra post-IPO
• Listing on NYSE under 'CON' symbol may increase visibility and liquidity
• Strong underwriter lineup including J.P. Morgan, Goldman Sachs, and BofA Securities

Negative

• Potential dilution of Select Medical's ownership if underwriters exercise over-allotment option
• IPO subject to market conditions and regulatory approval, introducing uncertainty
• Possible reduction in Select Medical's control over Concentra's operations post-IPO

Insights

Financial Analyst

The announcement of Concentra Group Holdings Parent, Inc.'s IPO is notable as it signals a strategic move by Select Medical Holdings Corporation to generate capital and potentially unlock shareholder value. The specified price range of 23.00 to 26.00 per share places Concentra's valuation in the anticipated range of approximately 517.5 million to 585 million, given the 22,500,000 shares being offered.

From a financial perspective, this roadshow is an opportunity for Select Medical to showcase Concentra's value proposition and growth potential to prospective investors. The market's reception to this IPO will be critical in determining the final pricing and successful execution of the offering. A successful IPO could provide significant capital that can be utilized for expansion, debt reduction, or other strategic initiatives. After the IPO, Select Medical will maintain majority ownership, holding 82.23% (or 80.09% if the over-allotment option is exercised), allowing it to benefit from any future appreciation in Concentra's stock.

For retail investors, the potential impact of the IPO on Select Medical's stock price could be significant. If the market views the IPO favorably, it could result in a positive revaluation of Select Medical's shares. Conversely, any challenges or lower-than-expected demand for Concentra's shares could have a negative short-term impact. Understanding the performance metrics and growth trajectory of Concentra will be essential in evaluating the IPO's long-term benefits for Select Medical and its shareholders.

Market Research Analyst

The IPO of Concentra provides an interesting window into the occupational health services market. This sector, which encompasses clinics, rehabilitation centers and other health-related services, is poised for growth given rising awareness and regulatory requirements surrounding workplace health and safety.

By listing Concentra separately, Select Medical can potentially unlock the intrinsic value of this segment, which may have been underappreciated as part of a larger conglomerate. The decision to offer a substantial amount of shares (22,500,000) with an additional over-allotment option suggests confidence in investor interest. The involvement of high-profile underwriters like J.P. Morgan, Goldman Sachs and BofA Securities also underscores the anticipated robustness of the offering.

From a market standpoint, it's essential to monitor the performance and investor interest during the roadshow and post-IPO period. If Concentra demonstrates strong fundamentals and growth prospects, this could attract a new cohort of investors focused on healthcare services, potentially driving up demand for Select Medical’s remaining shares in Concentra.

Retail investors should consider the broader trends in occupational health services and how Concentra's positioning within this market might translate to sustained growth and profitability. Analyzing competitor benchmarks and market demands will provide deeper insights into the long-term viability of this investment.

MECHANICSBURG, Pa., July 15, 2024 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical") (NYSE: SEM) today announced that Concentra Group Holdings Parent, Inc. ("Concentra"), a wholly owned subsidiary of Select Medical, has launched a roadshow for the initial public offering ("IPO") of 22,500,000 shares of its common stock. Concentra expects to grant the underwriters a 30-day option to purchase up to an additional 3,375,000 shares of its common stock to cover over-allotments, if any. The IPO price is currently expected to be between $23.00 and $26.00 per share. Concentra has been approved to list its common stock on the New York Stock Exchange under the symbol "CON." The IPO is subject to market and other conditions, and there can be no assurance as to whether or when the IPO may be completed, or as to the actual size or terms of the IPO.

After the completion of the IPO, Select Medical will own 104,093,503 shares of Concentra's common stock, representing 82.23% of the total outstanding shares of Concentra's common stock (or 80.09% if the underwriters exercise in full their over-allotment option).

J.P. Morgan, Goldman Sachs & Co. LLC and BofA Securities are acting as lead book-running managers for the IPO. Deutsche Bank Securities, Wells Fargo Securities, Mizuho, RBC Capital Markets and Truist Securities are acting as joint book-running managers for the IPO. Capital One Securities, Fifth Third Securities and PNC Capital Markets LLC are acting as co-managers for the IPO.

A registration statement on Form S-1 relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective. The IPO will be made only by means of a prospectus. A copy of the preliminary prospectus relating to the IPO may be obtained from: J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, or by email at prospectus-eq_fi@jpmchase.com; Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, New York 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316, or email: prospectus-ny@ny.email.gs.com; and BofA Securities, NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attention: Prospectus Department, email: dg.prospectus_requests@bofa.com.

This press release is neither an offer to sell nor a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Select Medical 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 June 30, 2024, Select Medical operated 107 critical illness recovery hospitals in 29 states, 33 rehabilitation hospitals in 13 states, 1,925 outpatient rehabilitation clinics in 39 states and the District of Columbia, and 547 occupational health centers in 41 states. At June 30, 2024, Select Medical had operations in 46 states and the District of Columbia.

Forward-Looking Statements

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). Forward-looking statements use words such as "expect," "estimate," "anticipate," "outlook," "intend," "plan," "confident," "believe," "will," "should," "would," "potential," "positioning," "proposed," "planned," "objective," "likely," "could," "may," and words of similar meaning, as well as other words or expressions referencing future events, conditions or circumstances. Among other things, statements regarding the timing and details of the IPO, the number of shares to be offered in the IPO, the expected price at which such shares will be offered, the grant of the over-allotment option and whether the underwriters will exercise such option, the number of shares to be held by Select Medical Corporation following the IPO and the expectations relating to the listing of Concentra's common stock on the New York Stock Exchange are examples of forward-looking statements. 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: the frequency of work-related injuries and illnesses; the adverse changes to our relationships with employer customers, third-party payors, workers' compensation provider networks or employer services networks; changes to regulations, new interpretations of existing regulations, or violations of regulations; cost containment initiatives or state fee schedule changes undertaken by state workers' compensation boards or commissions and other third-party payors; our ability to realize reimbursement increases at rates sufficient to keep pace with the inflation of our costs; labor shortages, increased employee turnover or costs, and union activity could significantly increase our operating costs; our ability to compete effectively with other occupational health centers, onsite health clinics at employer worksites, and healthcare providers; a security breach of our, or our third-party vendors', information technology systems which may cause a violation of HIPAA and subject us to potential legal and reputational harm; negative publicity which can result in increased governmental and regulatory scrutiny and possibly adverse regulatory changes; significant legal actions could subject us to substantial uninsured liabilities; litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our business and financial statements; insurance coverage may not be sufficient to cover losses we may incur; acquisitions may use significant resources, may be unsuccessful, and could expose us to unforeseen liabilities; our exposure to additional risk due to our reliance on third parties in many aspects of our business; compliance with applicable laws regarding the corporate practice of medicine and therapy and fee- splitting; our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information; compliance with applicable data interoperability and information blocking rules; facility licensure requirements in some states are costly and time-consuming, limiting or delaying our operations; our ability to adequately protect and enforce our intellectual property and other proprietary rights; adverse economic conditions in the U.S. or globally; any negative impact on the global economy and capital markets resulting from other geopolitical tensions; the impact of impairment of our goodwill and other intangible assets; our ability to maintain satisfactory credit ratings; failure to complete or achieve some or all the expected benefits of the potential separation of Concentra; the negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic; the loss of key members of our management team; our ability to attract and retain talented, highly skilled employees and a diverse workforce, and on the succession of our senior management; climate change, or legal, regulatory or market measures to address climate change; increasing scrutiny and rapidly evolving expectations from stakeholders regarding ESG matters; the effect of closing procedures and final review with respect to our estimated preliminary results; and changes in tax laws or exposures to additional tax liabilities. A further list and descriptions of these risks, uncertainties and other factors can be found in Select Medical's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, including in the section captioned "Cautionary Note Regarding Forward-Looking Statements", and in Select Medical's subsequent filings with the U.S. Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov or on request from Select Medical. Any forward-looking statement made in this press release speaks only as of the date of this press release. Select Medical does not undertake to update any forward-looking statement as a result of new information or future events or developments.

Investor inquiries:

Joel T. Veit
Senior Vice President and Treasurer
717-972-1100
ir@selectmedical.com

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SOURCE - Select Medical Holdings Corporation

FAQ

What is the expected IPO price range for Concentra Group Holdings Parent, Inc. (CON)?

The expected IPO price range for Concentra Group Holdings Parent, Inc. (CON) is between $23.00 and $26.00 per share.

How many shares of Concentra (CON) are being offered in the IPO?

Concentra is offering 22,500,000 shares of its common stock in the IPO, with an additional 3,375,000 shares available to underwriters as an over-allotment option.

What percentage of Concentra (CON) will Select Medical Holdings (SEM) own after the IPO?

After the IPO, Select Medical Holdings (SEM) will own 82.23% of Concentra's outstanding shares, or 80.09% if the underwriters fully exercise their over-allotment option.

On which stock exchange will Concentra (CON) be listed?

Concentra (CON) has been approved to list its common stock on the New York Stock Exchange (NYSE).

Who are the lead book-running managers for Concentra's (CON) IPO?

J.P. Morgan, Goldman Sachs & Co. , and BofA Securities are acting as lead book-running managers for Concentra's (CON) IPO.