Select Medical Holdings Corporation Announces Results For Its Fourth Quarter and Year Ended December 31, 2021 and Cash Dividend

Rhea-AI Summary

Select Medical Holdings Corporation (SEM) announced its Q4 and full year 2021 results, reporting a 6.8% revenue increase to $1.56 billion in Q4 and a 12.2% increase to $6.20 billion for the year. However, income from operations declined to $77.5 million in Q4 from $163.3 million a year prior, with net income falling from $102.2 million to $66.3 million. Adjusted EBITDA also decreased to $138.4 million in Q4, compared to $221.3 million a year earlier. The board declared a cash dividend of $0.125 per share, payable on March 16, 2022.

Positive

• Revenue for the year increased 12.2% to $6.20 billion.
• Net income for the year grew by 45.1% to $499.9 million.
• The company reaffirmed its three-year revenue growth rate target of 4% to 6% for 2021-2023.

Negative

• Income from operations decreased to $77.5 million for Q4, down from $163.3 million a year prior.
• Net income for Q4 fell to $66.3 million, down from $102.2 million year-over-year.
• Adjusted EBITDA declined to $138.4 million in Q4 from $221.3 million in the prior year.

MECHANICSBURG, Pa., Feb. 24, 2022 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its fourth quarter and year ended December 31, 2021 and the declaration of a cash dividend.

For the fourth quarter ended December 31, 2021, revenue increased 6.8% to $1,559.8 million, compared to $1,460.5 million for the same quarter, prior year. Income from operations was $77.5 million for the fourth quarter ended December 31, 2021, compared to $163.3 million for the same quarter, prior year. Income from operations included $8.0 million and $36.2 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the fourth quarters ended December 31, 2021 and 2020, respectively. Refer to "CARES Act Provider Relief Fund" for further discussion. Net income was $66.3 million for the fourth quarter ended December 31, 2021, compared to $102.2 million for the same quarter, prior year. For the fourth quarter ended December 31, 2021, net income included a pre-tax gain on sale of businesses of $2.2 million. For the fourth quarter ended December 31, 2020, net income included a pre-tax loss on sale of businesses of $0.3 million. Adjusted EBITDA was $138.4 million for the fourth quarter ended December 31, 2021, compared to $221.3 million for the same quarter, prior year. Earnings per common share was $0.37 for the fourth quarter ended December 31, 2021, compared to $0.57 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release. 

For the year ended December 31, 2021, revenue increased 12.2% to $6,204.5 million, compared to $5,531.7 million for the prior year. Income from operations increased 25.7% to $713.8 million for the year ended December 31, 2021, compared to $567.7 million for the prior year. Income from operations included $123.8 million and $90.0 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the years ended December 31, 2021 and 2020, respectively. Refer to "CARES Act Provider Relief Fund" for further discussion. Net income increased 45.1% to $499.9 million for the year ended December 31, 2021, compared to $344.6 million for the prior year. For the years ended December 31, 2021 and 2020, net income included pre-tax gains on sales of businesses of $2.2 million and $12.4 million, respectively. Adjusted EBITDA increased 18.3% to $947.4 million for the year ended December 31, 2021, compared to $800.6 million for the prior year. Earnings per common share increased to $2.98 for the year ended December 31, 2021, compared to $1.93 for the prior year. Adjusted earnings per common share was $2.98 for the year ended December 31, 2021, compared to $1.89 for the prior year. Adjusted earnings per common share excluded the gains on sales of businesses and their related tax effects for both the years ended December 31, 2021 and 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release. 

Please refer to "Effects of the COVID-19 Pandemic on Select Medical's Results of Operations" below for further discussion regarding the impact of the coronavirus disease 2019 ("COVID-19") pandemic on Select Medical's operating results.

Company 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 December 31, 2021, Select Medical operated 104 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,881 outpatient rehabilitation clinics in 38 states and the District of Columbia. Concentra operated 518 occupational health centers in 41 states. At December 31, 2021, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

CARES Act Provider Relief Fund

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19, and for reimbursing eligible health care providers for health care related expenses and lost revenues that are attributable to COVID-19.

For the three months and year ended December 31, 2021, Select Medical recognized $8.0 million and $123.8 million of payments received under the Provider Relief Fund as other operating income, respectively. For the three months and year ended December 31, 2020, Select Medical recognized $36.2 million and $90.0 million of payments received under the Provider Relief Fund as other operating income, respectively.

Critical Illness Recovery Hospital Segment

For the fourth quarter ended December 31, 2021, revenue for the critical illness recovery hospital segment increased 7.3% to $577.2 million, compared to $537.9 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $24.6 million for the fourth quarter ended December 31, 2021, compared to $75.3 million for the same quarter, prior year. For the fourth quarter ended December 31, 2021, Adjusted EBITDA included $2.0 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 4.3% for the fourth quarter ended December 31, 2021, compared to 14.0% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.

For the year ended December 31, 2021, revenue for the critical illness recovery hospital segment increased 8.1% to $2,246.8 million, compared to $2,077.5 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $268.0 million for the year ended December 31, 2021, compared to $342.4 million for the prior year. For the year ended December 31, 2021, Adjusted EBITDA included $19.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 11.9% for the year ended December 31, 2021, compared to 16.5% for the prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.

Rehabilitation Hospital Segment

For the fourth quarter ended December 31, 2021, revenue for the rehabilitation hospital segment increased 10.5% to $216.4 million, compared to $195.9 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $39.3 million for the fourth quarter ended December 31, 2021, compared to $42.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 18.2% for the fourth quarter ended December 31, 2021, compared to 21.6% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.

For the year ended December 31, 2021, revenue for the rehabilitation hospital segment increased 15.6% to $849.3 million, compared to $734.7 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 20.6% to $184.7 million for the year ended December 31, 2021, compared to $153.2 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.7% for the year ended December 31, 2021, compared to 20.9% for the prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.

Outpatient Rehabilitation Segment

For the fourth quarter ended December 31, 2021, revenue for the outpatient rehabilitation segment increased 7.8% to $277.5 million, compared to $257.5 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $27.6 million for the fourth quarter ended December 31, 2021, compared to $27.7 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.9% for the fourth quarter ended December 31, 2021, compared to 10.8% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.

For the year ended December 31, 2021, revenue for the outpatient rehabilitation segment increased 17.9% to $1,084.4 million, compared to $919.9 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 74.7% to $138.3 million for the year ended December 31, 2021, compared to $79.2 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 12.8% for the year ended December 31, 2021, compared to 8.6% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.

Concentra Segment

For the fourth quarter ended December 31, 2021, revenue for the Concentra segment increased 3.0% to $410.6 million, compared to $398.7 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 1.9% to $70.7 million for the fourth quarter ended December 31, 2021, compared to $69.4 million for the same quarter, prior year. Adjusted EBITDA included other operating income of $0.9 million related to the recognition of payments received under the Provider Relief Fund for the fourth quarter ended December 31, 2021. The Adjusted EBITDA margin for the Concentra segment was 17.2% for the fourth quarter ended December 31, 2021, compared to 17.4% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.

For the year ended December 31, 2021, revenue for the Concentra segment increased 15.4% to $1,732.0 million, compared to $1,501.4 million for the prior year. Adjusted EBITDA for the Concentra segment increased 54.1% to $389.6 million for the year ended December 31, 2021, compared to $252.9 million for the prior year. Adjusted EBITDA included other operating income of $34.7 million and $1.1 million related to the recognition of payments received under the Provider Relief Fund for the years ended December 31, 2021 and 2020, respectively. The Adjusted EBITDA margin for the Concentra segment was 22.5% for the year ended December 31, 2021, compared to 16.8% for the prior year. Certain Concentra key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.

Effects of the COVID-19 Pandemic on Select Medical's Results of Operations

Beginning in March 2020, state governments placed significant restrictions on businesses and mandated closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. State governments also implemented restrictions on travel and individual activities outside of the home, closed schools, and mandated other social distancing measures. At the same time, hospitals and other facilities began suspending elective surgeries. In an effort to ensure hospitals and health systems had the capacity to absorb and effectively manage surges of COVID-19 patients, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children's Health Insurance Program ("CHIP") programs were authorized in March 2020, including certain regulations under the Medicare program which govern admissions into Select Medical's critical illness recovery hospitals and rehabilitation hospitals. Specifically, Select Medical's critical illness recovery hospitals which are certified as long-term care hospitals ("LTCHs") became exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. Select Medical's rehabilitation hospitals which are certified as inpatient rehabilitation facilities ("IRFs") could exclude patients admitted solely to respond to the emergency from the calculation of the "60 percent rule" thresholds to receive payment as an IRF. The COVID-19 public health emergency period has been extended and is currently in effect through April 16, 2022.

The adverse effects of the COVID-19 pandemic, along with the actions of governmental authorities and those in the private sector to limit the spread of COVID-19, caused disruptions in each of Select Medical's segments; these disruptions were most significant within the outpatient rehabilitation and Concentra segments. By mid-March 2020, Select Medical's outpatient rehabilitation clinics began experiencing significantly less patient visit volume due to declines in patient referrals from physicians, a reduction in workers' compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries that normally increase the demand for outpatient rehabilitation services. Select Medical's Concentra centers experienced similar declines in patient visit volume due to businesses furloughing their workforce and temporarily ceasing or significantly reducing their operations. Since March 2021, Select Medical's outpatient rehabilitation clinics and Concentra centers have experienced patient visit volumes which approximate or exceed the levels experienced in the months prior to the widespread emergence of COVID-19 in the United States. Although it had experienced temporary disruptions in its core businesses as a result of the COVID-19 pandemic, Select Medical's Concentra segment was able to expand its services to provide COVID-19 screening and testing.

Select Medical's critical illness recovery hospitals have played a critical role in caring for patients during the COVID-19 pandemic. The relaxation of certain admission restrictions contributed to volume increases in certain of its hospitals during the year ended December 31, 2020. The revenue of Select Medical's critical illness recovery hospitals and rehabilitation hospitals has also benefited from the temporary suspension of the 2.0% cut to Medicare payments due to sequestration, which began May 1, 2020 following the enactment of the CARES Act, and was extended through March 31, 2022. From April 1, 2022 through June 30, 2022, the sequestration cut will be 1.0% and the full 2.0% sequestration cut will resume July 1, 2022. Certain of Select Medical's rehabilitation hospitals did experience temporary declines in patient volume in areas more significantly impacted by the spread of COVID-19 and as a result of the suspension of elective surgeries at hospitals and other facilities, which consequently reduced the demand for inpatient rehabilitation services. Additionally, some of Select Medical's rehabilitation hospitals temporarily restricted admissions as a result of the COVID-19 pandemic. The declines in volume occurred principally in April and May 2020. Beginning at the onset of the COVID-19 pandemic, both Select Medical's critical illness recovery hospitals and rehabilitation hospitals modified certain of their protocols in order to follow the guidelines and recommendations for patient treatment and for the protection of their patients and staff members. This has resulted in increased labor costs as well as additional costs resulting from the purchase of personal protective equipment. Further, labor shortages have become more pronounced as a result of the COVID-19 pandemic. Select Medical has experienced an increase in labor costs in its hospitals as a result of constrained staffing due to a shortage of healthcare workers, an increased dependence on contract clinical workers, the loss of unvaccinated employees in jurisdictions requiring vaccination, and federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic. Increased turnover rates within Select Medical's employee base have also lead to increased overtime to meet demand and increased wage rates to attract and retain employees.

The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical's operations, creates uncertainties about Select Medical's future operating results and financial condition. Select Medical has provided revenue and certain operating statistics below for each of its segments for each of the periods presented. Please refer to the risk factors in Select Medical's Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion.

		Critical Illness Recovery Hospital
		Revenue							Patient Days							Occupancy Rate							Number of Hospitals Owned(1)
		2019		2020		2021			2019		2020		2021			2019		2020		2021			2019		2020		2021
		(in thousands)
January		$    149,799		$    163,238		$     199,611			86,238		90,783		100,933			69%		69%		75%			96		100		99
February		145,586		165,375		190,703			80,806		87,844		92,036			71%		72%		75%			96		100		99
March		162,149		171,908		204,558			91,085		91,831		100,149			73%		70%		74%			96		100		99
Three Months Ended March 31		$    457,534		$     500,521		$     594,872			258,129		270,458		293,118			71%		70%		75%			96		100		99
April		$    156,231		$     171,445		$     185,934			88,357		90,710		91,506			70%		71%		70%			99		100		99
May		156,422		178,223		183,471			89,350		95,191		93,708			69%		72%		70%			99		100		99
June		148,490		169,958		174,654			85,153		90,988		87,767			68%		71%		68%			99		100		99
Three Months Ended June 30		$    461,143		$     519,626		$     544,059			262,860		276,889		272,981			69%		72%		69%			99		100		99
Six Months Ended June 30		$    918,677		$  1,020,147		$  1,138,931			520,989		547,347		566,099			70%		71%		72%			99		100		99
July		$    151,416		$     175,253		$     171,483			87,143		94,144		88,119			67%		71%		65%			99		99		100
August		155,485		173,967		178,240			86,553		93,964		91,756			66%		71%		68%			99		99		100
September		155,991		170,234		180,923			84,393		90,955		92,579			67%		71%		71%			99		99		100
Three Months Ended September 30		$    462,892		$     519,454		$     530,646			258,089		279,063		272,454			67%		71%		68%			99		99		100
Nine Months Ended September 30		$  1,381,569		$  1,539,601		$  1,669,577			779,078		826,410		838,553			69%		71%		70%			99		99		100
October		$     152,791		$     181,251		$     195,444			87,188		95,616		99,935			66%		71%		71%			100		100		104
November		150,399		174,133		191,134			84,540		92,651		96,102			67%		71%		71%			100		99		104
December		151,759		182,514		190,617			87,555		97,079		98,449			67%		72%		70%			100		99		104
Three Months Ended December 31		$     454,949		$     537,898		$     577,195			259,283		285,346		294,486			67%		71%		71%			100		99		104
Twelve Months Ended December 31		$  1,836,518		$  2,077,499		$  2,246,772			1,038,361		1,111,756		1,133,039			68%		71%		71%			100		99		104

 

		Rehabilitation Hospital
		Revenue							Patient Days							Occupancy Rate							Number of Hospitals Owned(1)
		2019		2020		2021			2019		2020		2021			2019		2020		2021			2019		2020		2021
		(in thousands)
January		$    50,615		$    61,673		$    68,297			27,434		32,111		34,404			74%		79%		82%			17		19		20
February		48,080		60,690		64,202			25,442		31,813		32,178			76%		84%		84%			17		19		20
March		55,863		59,656		75,305			29,940		30,644		35,857			78%		76%		85%			18		19		20
Three Months Ended March 31		$  154,558		$  182,019		$  207,804			82,816		94,568		102,439			76%		79%		84%			18		19		20
April		$    51,991		$    45,878		$    70,295			28,266		23,553		34,861			76%		61%		85%			18		19		20
May		56,019		57,815		71,190			29,730		29,787		35,604			75%		73%		84%			19		19		20
June		52,364		64,974		71,181			28,529		30,741		34,483			73%		78%		84%			19		19		20
Three Months Ended June 30		$  160,374		$  168,667		$  212,666			86,525		84,081		104,948			75%		71%		85%			19		19		20
Six Months Ended June 30		$  314,932		$  350,686		$  420,470			169,341		178,649		207,387			76%		75%		84%			19		19		20
July		$    57,077		$    62,312		$    70,467			30,054		31,986		34,894			75%		81%		83%			19		18		20
August		58,072		63,673		71,682			30,228		32,518		34,835			75%		83%		83%			19		18		20
September		58,220		62,090		70,285			29,172		31,176		33,224			75%		82%		81%			19		18		20
Three Months Ended September 30		$  173,369		$  188,075		$  212,434			89,454		95,680		102,953			75%		82%		82%			19		18		20
Nine Months Ended September 30		$  488,301		$  538,761		$  632,904			258,795		274,329		310,340			75%		77%		84%			19		18		20
October		$    61,975		$    66,591		$    72,509			31,767		33,378		35,908			78%		82%		85%			19		19		20
November		60,353		64,610		71,865			31,022		31,581		34,491			79%		80%		84%			19		19		20
December		60,342		64,711		72,062			31,447		31,545		33,962			78%		78%		80%			19		19		20
Three Months Ended December 31		$  182,670		$  195,912		$  216,436			94,236		96,504		104,361			78%		80%		83%			19		19		20
Twelve Months Ended December 31		$  670,971		$  734,673		$  849,340			353,031		370,833		414,701			76%		78%		83%			19		19		20

 

		Outpatient Rehabilitation
		Revenue							Visits							Working Days(2)
		2019		2020		2021			2019		2020		2021			2019		2020		2021
		(in thousands)
January		$      83,185		$      90,924		$      76,763			687,007		757,171		625,964			22		22		20
February		78,573		88,239		77,063			658,610		739,061		641,942			20		20		20
March		85,147		76,086		98,135			708,866		626,433		832,248			21		22		23
Three Months Ended March 31		$    246,905		$    255,249		$    251,961			2,054,483		2,122,665		2,100,154			63		64		63
April		$      90,230		$      49,084		$      95,251			762,914		386,108		810,314			22		22		22
May		90,272		51,186		89,030			759,829		409,703		758,773			22		20		20
June		81,389		66,868		96,128			680,762		546,456		835,774			20		22		22
Three Months Ended June 30		$    261,891		$    167,138		$    280,409			2,203,505		1,342,267		2,404,861			64		64		64
Six Months Ended June 30		$    508,796		$    422,387		$    532,370			4,257,988		3,464,932		4,505,015			127		128		127
July		$      89,267		$      77,793		$      90,352			754,102		636,826		780,118			22		22		21
August		90,687		79,034		93,056			743,813		651,738		798,459			22		21		22
September		85,376		83,215		91,132			706,413		694,808		768,493			20		21		21
Three Months Ended September 30		$    265,330		$    240,042		$    274,540			2,204,328		1,983,372		2,347,070			64		64		64
Nine Months Ended September 30		$    774,126		$    662,429		$    806,910			6,462,316		5,448,304		6,852,085			191		192		191
October		$      96,868		$      88,274		$      91,705			808,649		745,562		772,068			23		22		21
November		87,072		82,102		93,345			722,607		685,885		797,756			20		20		21
December		87,945		87,108		92,401			725,710		713,593		771,715			21		22		21
Three Months Ended December 31		$    271,885		$    257,484		$    277,451			2,256,966		2,145,040		2,341,539			64		64		63
Twelve Months Ended December 31		$ 1,046,011		$    919,913		$ 1,084,361			8,719,282		7,593,344		9,193,624			255		256		254

 

		Concentra
		Revenue							Visits							Working Days(2)
		2019		2020		2021			2019		2020		2021			2019		2020		2021
		(in thousands)
January		$    133,507		$    141,236		$    127,103			985,598		1,032,069		867,793			22		22		20
February		126,309		133,690		132,349			919,065		965,741		869,910			20		20		20
March		136,505		123,609		163,388			1,006,944		879,585		1,057,871			21		22		23
Three Months Ended March 31		$    396,321		$    398,535		$    422,840			2,911,607		2,877,395		2,795,574			63		64		63
April		$    140,050		$      91,178		$    152,143			1,040,543		610,555		999,622			22		22		22
May		143,183		99,228		142,228			1,073,763		674,629		956,250			22		20		20
June		130,218		121,932		162,001			988,783		865,896		1,074,206			20		22		22
Three Months Ended June 30		$    413,451		$    312,338		$    456,372			3,103,089		2,151,080		3,030,078			64		64		64
Six Months Ended June 30		$    809,772		$    710,873		$    879,212			6,014,696		5,028,475		5,825,652			127		128		127
July		$    142,385		$    132,465		$    146,509			1,057,809		930,427		1,033,266			22		22		21
August		144,452		130,291		150,333			1,087,165		933,555		1,106,356			22		21		22
September		135,063		129,103		145,348			1,005,929		963,065		1,084,009			20		21		21
Three Months Ended September 30		$    421,900		$    391,859		$    442,190			3,150,903		2,827,047		3,223,631			64		64		64
Nine Months Ended September 30		$ 1,231,672		$ 1,102,732		$ 1,321,402			9,165,599		7,855,522		9,049,283			191		192		191
October		$    149,260		$    139,365		$    143,609			1,113,408		1,011,816		1,072,531			23		22		21
November		123,152		126,431		135,417			908,159		867,918		991,937			19		19		21
December		124,733		132,906		131,613			881,699		892,648		938,973			21		22		21
Three Months Ended December 31		$    397,145		$    398,702		$    410,639			2,903,266		2,772,382		3,003,441			63		63		63
Twelve Months Ended December 31		$ 1,628,817		$ 1,501,434		$ 1,732,041			12,068,865		10,627,904		12,052,724			254		255		254

_______________________________________________________________________________
(1)	Represents the number of hospitals owned at the end of each period presented.
(2)	Represents the number of days in which normal business operations were conducted during the periods presented.

Purchase of Concentra Interest

On December 24, 2021, Select Medical, Welsh, Carson, Anderson & Stowe XII, L.P. ("WCAS"), and Dignity Health Holding Corporation ("DHHC") entered into an agreement pursuant to which Select Medical acquired substantially all of the outstanding membership interests of Concentra Group Holdings Parent that it did not already own from WCAS, DHHC, and the other equity holders of Concentra Group Holdings Parent for approximately $660.7 million.

This purchase was in lieu of, and deemed to be, the exercise of the third put right provided to certain equity holders under the terms of the Amended and Restated Limited Liability Company Agreement of Concentra Group Holdings Parent, LLC, dated as of February 1, 2018. Following this purchase, Select Medical owns approximately 99.3% of the outstanding membership interests of Concentra Group Holdings Parent, LLC on a fully diluted basis and 100.0% of the outstanding voting membership interests of Concentra Group Holdings Parent, LLC.

Dividend

On February 17, 2022, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about March 16, 2022 to stockholders of record as of the close of business on March 4, 2022.

There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical's board of directors after taking into account various factors, including, but not limited to, Select Medical's financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical's indebtedness, and other factors Select Medical's board of directors may deem to be relevant.

Stock Repurchase Program

The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2023, unless further extended or earlier terminated by the board of directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Select Medical deems appropriate. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility.

During the fourth quarter ended December 31, 2021, Select Medical repurchased 387,212 shares at a cost of approximately $11.1 million, or $28.65 per share, which includes transaction costs. During the year ended December 31, 2021, Select Medical repurchased 1,770,720 shares at a cost of approximately $58.6 million, or $33.09 per share, which includes transaction costs. Since the inception of the program through December 31, 2021, Select Medical has repurchased 40,351,628 shares at a cost of approximately $415.2 million, or $10.29 per share, which includes transaction costs.

Business Outlook for Revenue

Given the uncertainties due to significantly increased labor costs resulting from higher than expected use of agency clinical staff, Select Medical is issuing its business outlook at this time for revenue only for 2022. Select Medical expects revenue to be in the range of $6.25 billion to $6.40 billion for the full year of 2022. Select Medical is also reaffirming its previously issued three-year compound annual growth rate target for revenue only, which is expected to be in the range of 4% to 6% for 2021 through 2023. Select Medical intends to readdress its business outlook and target compound annual growth rates for Adjusted EBITDA and earnings per common share when the labor climate stabilizes.

Conference Call

Select Medical will host a conference call regarding its results for the fourth quarter and full year ended December 31, 2021, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reporting segments, on Friday, February 25, 2022, at 9:00am ET. The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 7334656. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website www.selectmedicalholdings.com.

For those unable to participate in the conference call, a replay will be available until 12:00pm ET, March 4, 2022. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 7334656. The replay can also be accessed at Select Medical Holdings Corporation's website, www.selectmedicalholdings.com.

*   *   *   *   *

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), including statements related to Select Medical's 2022 and long-term business outlook. 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:

• developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;
• changes in government reimbursement for our services and/or new payment policies may result in a reduction in revenue, an increase in costs, and a reduction in profitability;
• the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline;
• the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our revenue and profitability to decline;
• a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
• acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources or expose us to unforeseen liabilities;
• our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;
• private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;
• the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability;
• shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;
• competition may limit our ability to grow and result in a decrease in our revenue and profitability;
• the loss of key members of our management team could significantly disrupt our operations;
• the effect of claims asserted against us could subject us to substantial uninsured liabilities;
• a security breach of our or our third-party vendors' information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and
• other factors discussed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including factors discussed under the heading "Risk Factors" of the annual report on Form 10-K for the year ended December 31, 2021.

Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance.

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

 

I.  Condensed Consolidated Statements of Operations For the Three Months Ended December 31, 2020 and 2021 (In thousands, except per share amounts, unaudited)
		2020		2021		% Change
Revenue		$             1,460,494		$             1,559,811		6.8 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization		1,246,594		1,402,570		12.5
General and administrative		35,229		37,950		7.7
Depreciation and amortization		51,526		51,943		0.8
Total costs and expenses		1,333,349		1,492,463		11.9
Other operating income		36,184		10,191		N/M
Income from operations		163,329		77,539		(52.5)
Other income and expense:
Equity in earnings of unconsolidated subsidiaries		9,763		11,248		15.2
Gain (loss) on sale of businesses		(303)		2,155		N/M
Interest income		—		601		N/M
Interest expense		(35,512)		(33,870)		(4.6)
Income before income taxes		137,277		57,673		(58.0)
Income tax expense (benefit)		35,062		(8,637)		N/M
Net income		102,215		66,310		(35.1)
Less: Net income attributable to non-controlling interests		24,941		16,453		(34.0)
Net income attributable to Select Medical		$                   77,274		$                   49,857		(35.5) %
Basic and diluted earnings per common share:(1)		$                       0.57		$                       0.37

_______________________________________________________________________________

(1)     Refer to table III for calculation of earnings per common share.

N/M   Not meaningful.

 

 

II.  Condensed Consolidated Statements of Operations For the Years Ended December 31, 2020 and 2021 (In thousands, except per share amounts, unaudited)
		2020		2021		% Change
Revenue		$             5,531,713		$             6,204,515		12.2 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization		4,710,372		5,285,149		12.2
General and administrative		138,037		146,975		6.5
Depreciation and amortization		205,659		202,645		(1.5)
Total costs and expenses		5,054,068		5,634,769		11.5
Other operating income		90,012		144,028		N/M
Income from operations		567,657		713,774		25.7
Other income and expense:
Equity in earnings of unconsolidated subsidiaries		29,440		44,428		50.9
Gain on sale of businesses		12,387		2,155		N/M
Interest income		—		5,350		N/M
Interest expense		(153,011)		(135,985)		(11.1)
Income before income taxes		456,473		629,722		38.0
Income tax expense		111,867		129,773		16.0
Net income		344,606		499,949		45.1
Less: Net income attributable to non-controlling interests		85,611		97,724		14.1
Net income attributable to Select Medical		$                 258,995		$                 402,225		55.3 %
Basic and diluted earnings per common share:(1)		$                       1.93		$                       2.98

_______________________________________________________________________________

(1)          Refer to table III for calculation of earnings per common share.

N/M        Not meaningful.

 

III.  Earnings per Share
For the Three Months and Years Ended December 31, 2020 and 2021
(In thousands, except per share amounts, unaudited)

Select Medical's capital structure includes common stock and unvested restricted stock awards. To compute earnings per share ("EPS"), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings.

The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three months and years ended December 31, 2020 and 2021:

		Basic and Diluted EPS
		Three Months Ended December 31,				Years Ended December 31,
		2020		2021		2020		2021
Net income		$        102,215		$          66,310		$        344,606		$        499,949
Less: net income attributable to non-controlling interests		24,941		16,453		85,611		97,724
Net income attributable to Select Medical		77,274		49,857		258,995		402,225
Less: net income attributable to participating securities		2,638		1,660		8,896		13,435
Net income attributable to common shares		$          74,636		$          48,197		$        250,099		$        388,790

The following tables set forth the computation of EPS under the two-class method for the three months and years ended December 31, 2020 and 2021:

		Three Months Ended December 31,
		2020							2021
		Net Income Allocation		Shares(1)		Basic and Diluted EPS			Net Income Allocation		Shares(1)		Basic and Diluted EPS
Common shares		$         74,636		130,269		$             0.57			$         48,197		129,679		$             0.37
Participating securities		2,638		4,605		$             0.57			1,660		4,466		$             0.37
Total		$         77,274							$         49,857

 

		Years Ended December 31,
		2020							2021
		Net Income Allocation		Shares(1)		Basic and Diluted EPS			Net Income Allocation		Shares(1)		Basic and Diluted EPS
Common shares		$       250,099		129,780		$             1.93			$       388,790		130,249		$             2.98
Participating securities		8,896		4,616		$             1.93			13,435		4,501		$             2.98
Total		$       258,995							$       402,225

_______________________________________________________________________________

(1)     Represents the weighted average share count outstanding during the period.

 

 

IV.  Condensed Consolidated Balance Sheets (In thousands, unaudited)
		December 31,
		2020		2021
Assets
Current Assets:
Cash and cash equivalents		$                     577,061		$                       74,310
Accounts receivable		896,763		889,303
Other current assets		120,176		175,826
Total Current Assets		1,594,000		1,139,439
Operating lease right-of-use assets		1,032,217		1,078,754
Property and equipment, net		943,420		961,467
Goodwill		3,379,014		3,448,912
Identifiable intangible assets, net		387,541		374,879
Other assets		319,207		356,720
Total Assets		$                  7,655,399		$                  7,360,171
Liabilities and Equity
Current Liabilities:
Payables and accruals		$                     800,918		$                     942,288
Government advances		321,807		83,790
Unearned government assistance		82,607		93
Current operating lease liabilities		220,413		229,334
Current portion of long-term debt and notes payable		12,621		17,572
Total Current Liabilities		1,438,366		1,273,077
Non-current operating lease liabilities		875,367		916,540
Long-term debt, net of current portion		3,389,398		3,556,385
Non-current deferred tax liability		132,421		142,792
Other non-current liabilities		168,703		106,442
Total Liabilities		6,004,255		5,995,236
Redeemable non-controlling interests		398,171		39,033
Total equity		1,252,973		1,325,902
Total Liabilities and Equity		$                  7,655,399		$                  7,360,171

 

 

V.  Condensed Consolidated Statements of Cash Flows For the Three Months Ended December 31, 2020 and 2021 (In thousands, unaudited)
		2020		2021
Operating activities
Net income		$                     102,215		$                       66,310
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Distributions from unconsolidated subsidiaries		13,670		9,230
Depreciation and amortization		51,526		51,943
Provision for expected credit losses		323		64
Equity in earnings of unconsolidated subsidiaries		(9,763)		(11,248)
Loss (gain) sale of assets and businesses		2,160		(2,322)
Stock compensation expense		6,422		8,938
Amortization of debt discount, premium and issuance costs		549		562
Deferred income taxes		(159)		17,020
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		(25,188)		22,456
Other current assets		4,040		(596)
Other assets		1,252		(4,072)
Accounts payable and accrued expenses		44,722		(141,001)
Government advances		—		(75,715)
Unearned government assistance		15,669		(2,321)
Net cash provided by (used in) operating activities		207,438		(60,752)
Investing activities
Business combinations, net of cash acquired		(6,732)		(55,081)
Purchases of property and equipment		(40,868)		(55,151)
Investment in businesses		(5,568)		(4,600)
Proceeds from sale of assets and businesses		—		15,564
Net cash used in investing activities		(53,168)		(99,268)
Financing activities
Borrowings on revolving facilities		—		160,000
Borrowings of other debt		5,022		13,498
Principal payments on other debt		(5,561)		(16,758)
Dividends paid to common stockholders		—		(16,784)
Repurchase of common stock		(1,792)		(13,426)
Increase in overdrafts		—		42,353
Proceeds from issuance of non-controlling interests		5,878		806
Distributions to and purchases of non-controlling interests		(10,393)		(22,684)
Purchase of membership interests of Concentra Group Holdings Parent		(210,163)		(660,658)
Net cash used in financing activities		(217,009)		(513,653)
Net decrease in cash and cash equivalents		(62,739)		(673,673)
Cash and cash equivalents at beginning of period		639,800		747,983
Cash and cash equivalents at end of period		$                     577,061		$                       74,310
Supplemental information:
Cash paid for interest		$                       15,062		$                       13,633
Cash paid for taxes		$                       26,945		$                       44,327

 

 

VI.  Condensed Consolidated Statements of Cash Flows For the Years Ended December 31, 2020 and 2021 (In thousands, unaudited)
		2020		2021
Operating activities
Net income		$                     344,606		$                     499,949
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries		35,390		37,002
Depreciation and amortization		205,659		202,645
Provision for expected credit losses		604		236
Equity in earnings of unconsolidated subsidiaries		(29,440)		(44,428)
Gain on sale of assets and businesses		(22,563)		(2,409)
Stock compensation expense		27,250		30,940
Amortization of debt discount, premium and issuance costs		2,184		2,217
Deferred income taxes		(14,715)		5,055
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable		(116,601)		23,101
Other current assets		(18,775)		(2,418)
Other assets		17,587		(7,196)
Accounts payable and accrued expenses		196,164		(19,767)
Government advances		318,116		(241,185)
Unearned government assistance		82,607		(82,514)
Net cash provided by operating activities		1,028,073		401,228
Investing activities
Business combinations, net of cash acquired		(20,808)		(81,911)
Purchases of property and equipment		(146,440)		(180,537)
Investment in businesses		(31,425)		(20,967)
Proceeds from sale of assets and businesses		83,320		26,821
Net cash used in investing activities		(115,353)		(256,594)
Financing activities
Borrowings on revolving facilities		470,000		160,000
Payments on revolving facilities		(470,000)		—
Payments on term loans		(39,843)		—
Borrowings of other debt		40,108		33,013
Principal payments on other debt		(48,381)		(39,668)
Dividends paid to common stockholders		—		(50,600)
Repurchase of common stock		(16,034)		(79,476)
Increase in overdrafts		—		42,353
Proceeds from issuance of non-controlling interests		7,564		20,732
Distributions to and purchases of non-controlling interests		(38,589)		(73,081)
Purchase of membership interests of Concentra Group Holdings Parent		(576,366)		(660,658)
Net cash used in financing activities		(671,541)		(647,385)
Net increase (decrease) in cash and cash equivalents		241,179		(502,751)
Cash and cash equivalents at beginning of period		335,882		577,061
Cash and cash equivalents at end of period		$                     577,061		$                       74,310
Supplemental information:
Cash paid for interest		$                     155,236		$                     132,203
Cash paid for taxes		$                     108,890		$                     181,184

 

 

VII.  Key Statistics For the Three Months Ended December 31, 2020 and 2021 (unaudited)
		2020		2021		% Change
Critical Illness Recovery Hospital
Number of hospitals – end of period(a)		99		104
Revenue (,000)		$            537,898		$            577,195		7.3 %
Number of patient days(b)(c)		285,346		294,486		3.2 %
Number of admissions(b)(d)		9,376		9,786		4.4 %
Revenue per patient day(b)(e)		$                1,881		$                1,946		3.5 %
Adjusted EBITDA (,000)		$              75,284		$              24,572		(67.4) %
Adjusted EBITDA margin		14.0 %		4.3 %
Rehabilitation Hospital
Number of hospitals – end of period(a)		30		30
Revenue (,000)		$            195,912		$            216,436		10.5 %
Number of patient days(b)(c)		96,504		104,361		8.1 %
Number of admissions(b)(d)		6,592		7,134		8.2 %
Revenue per patient day(b)(e)		$                1,839		$                1,888		2.7 %
Adjusted EBITDA (,000)		$              42,392		$              39,326		(7.2) %
Adjusted EBITDA margin		21.6 %		18.2 %
Outpatient Rehabilitation
Number of clinics – end of period(a)		1,788		1,881
Revenue (,000)		$            257,484		$            277,451		7.8 %
Number of visits(b)(f)		2,145,040		2,341,539		9.2 %
Revenue per visit(b)(g)		$                   103		$                   102		(1.0) %
Adjusted EBITDA (,000)		$              27,701		$              27,551		(0.5) %
Adjusted EBITDA margin		10.8 %		9.9 %
Concentra
Number of centers – end of period(b)		517		518
Revenue (,000)		$            398,702		$            410,639		3.0 %
Number of visits(b)(f)		2,772,382		3,003,441		8.3 %
Revenue per visit(b)(g)		$                   122		$                   125		2.5 %
Adjusted EBITDA (,000)		$              69,382		$              70,709		1.9 %
Adjusted EBITDA margin		17.4 %		17.2 %

_______________________________________________________________________________
(a)	Includes managed locations.
(b)	Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(c)	Each patient day represents one patient occupying one bed for one day during the periods presented.
(d)	Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e)	Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f)	Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g)	Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.

 

 

VIII.  Key Statistics For the Years Ended December 31, 2020 and 2021 (unaudited)
		2020		2021		% Change
Critical Illness Recovery Hospital
Number of hospitals – end of period(a)		99		104
Revenue (,000)		$         2,077,499		$         2,246,772		8.1 %
Number of patient days(b)(c)		1,111,756		1,133,039		1.9 %
Number of admissions(b)(d)		37,456		37,921		1.2 %
Revenue per patient day(b)(e)		$                1,858		$                1,972		6.1 %
Adjusted EBITDA (,000)		$            342,427		$            267,993		(21.7) %
Adjusted EBITDA margin		16.5 %		11.9 %
Rehabilitation Hospital
Number of hospitals – end of period(a)		30		30
Revenue (,000)		$            734,673		$            849,340		15.6 %
Number of patient days(b)(c)		370,833		414,701		11.8 %
Number of admissions(b)(d)		25,081		28,868		15.1 %
Revenue per patient day(b)(e)		$                1,793		$                1,868		4.2 %
Adjusted EBITDA (,000)		$            153,203		$            184,704		20.6 %
Adjusted EBITDA margin		20.9 %		21.7 %
Outpatient Rehabilitation
Number of clinics – end of period(a)		1,788		1,881
Revenue (,000)		$            919,913		$         1,084,361		17.9 %
Number of visits(b)(f)		7,593,344		9,193,624		21.1 %
Revenue per visit(b)(g)		$                   104		$                   102		(1.9) %
Adjusted EBITDA (,000)		$              79,164		$            138,275		74.7 %
Adjusted EBITDA margin		8.6 %		12.8 %
Concentra
Number of centers – end of period(b)		517		518
Revenue (,000)		$         1,501,434		$         1,732,041		15.4 %
Number of visits(b)(f)		10,627,904		12,052,724		13.4 %
Revenue per visit(b)(g)		$                   123		$                   125		1.6 %
Adjusted EBITDA (,000)		$            252,892		$            389,616		54.1 %
Adjusted EBITDA margin		16.8 %		22.5 %

_______________________________________________________________________________
(a)	Includes managed locations.
(b)	Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(c)	Each patient day represents one patient occupying one bed for one day during the periods presented.
(d)	Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e)	Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f)	Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g)	Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.

 

IX.  Net Income to Adjusted EBITDA Reconciliation
For the Three Months and Years Ended December 31, 2020 and 2021
(In thousands, unaudited)

The presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of Select Medical's segments. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America ("GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

The following table reconciles net income to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.

	Three Months Ended December 31,				Years Ended December 31,
	2020		2021		2020		2021
Net income	$           102,215		$             66,310		$           344,606		$           499,949
Income tax expense (benefit)	35,062		(8,637)		111,867		129,773
Interest expense	35,512		33,870		153,011		135,985
Interest income	—		(601)		—		(5,350)
Loss (gain) on sale of businesses	303		(2,155)		(12,387)		(2,155)
Equity in earnings of unconsolidated subsidiaries	(9,763)		(11,248)		(29,440)		(44,428)
Income from operations	$           163,329		$             77,539		$           567,657		$           713,774
Stock compensation expense:
Included in general and administrative	5,565		7,061		22,053		24,598
Included in cost of services	857		1,877		5,197		6,342
Depreciation and amortization	51,526		51,943		205,659		202,645
Adjusted EBITDA	$           221,277		$           138,420		$           800,566		$           947,359
Critical illness recovery hospital(a)	$             75,284		$             24,572		$           342,427		$           267,993
Rehabilitation hospital	42,392		39,326		153,203		184,704
Outpatient rehabilitation	27,701		27,551		79,164		138,275
Concentra(b)	69,382		70,709		252,892		389,616
Other(c)(d)	6,518		(23,738)		(27,120)		(33,229)
Adjusted EBITDA	$           221,277		$           138,420		$           800,566		$           947,359

_______________________________________________________________________________
(a)	For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income of $2.0 million and $19.9 million, respectively. The other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services.
(b)	For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income of $1.0 million and $35.0 million, respectively. For the year ended December 31, 2020, Adjusted EBITDA included other operating income of $1.1 million. The other operating income is primarily related to the recognition of payments received under the Provider Relief Fund.
(c)	For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income of $7.1 million and $89.1 million, respectively. For the three months and year ended December 31, 2020, Adjusted EBITDA included other operating income of $36.2 million and $88.9 million, respectively. The other operating income is related to the recognition of payments received under the Provider Relief Fund.
(d)	Other primarily includes general and administrative costs and other operating income, as discussed further above.

 

X.  Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share
For the Three Months and Years Ended December 31, 2020 and 2021
(In thousands, except per share amounts, unaudited)

Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP.  Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share are important to investors because they are reflective of the financial performance of Select Medical's ongoing operations and provide better comparability of its results of operations between periods. Adjusted net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because adjusted net income attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.

The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.

	Three Months Ended December 31,
	2020		Per Share(a)		2021		Per Share(a)
Net income attributable to common shares(a)	$             74,636		$                 0.57		$             48,197		$                 0.37
Adjustments:(b)
Loss (gain) on sale of businesses	201		0.00		(775)		0.00
Adjusted net income attributable to common shares	$             74,837		$                 0.57		$             47,422		$                 0.37

 

	Years Ended December 31,
	2020		Per Share(a)		2021		Per Share(a)
Net income attributable to common shares(a)	$           250,099		$                 1.93		$           388,790		$                 2.98
Adjustments:(b)
Gain on sale of businesses	(4,888)		(0.04)		(775)		0.00
Adjusted net income attributable to common shares	$           245,211		$                 1.89		$           388,015		$                 2.98

_______________________________________________________________________________
(a)	Net income attributable to common shares and earnings per common share are calculated based on the diluted weighted average common shares outstanding, as presented in table III.
(b)	Adjustments to net income attributable to common shares include estimated income tax and non-controlling interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact, which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes both current and deferred income tax expense or benefit.
	For the three months ended December 31, 2020, the estimated income tax effect on the adjustment made to net income attributable to common shares was immaterial. For the three months ended December 31, 2021, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $1.1 million
	For the year ended December 31, 2020, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $3.3 million. For the year ended December 31, 2021, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $1.1 million.

 

 

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SOURCE Select Medical Holdings Corporation

FAQ

What were Select Medical's Q4 2021 earnings and revenue results?

In Q4 2021, Select Medical reported earnings of $66.3 million on revenue of $1.56 billion.

What is the cash dividend amount declared by Select Medical?

Select Medical declared a cash dividend of $0.125 per share.

When will Select Medical's dividend be paid?

The dividend will be payable on March 16, 2022, to stockholders of record as of March 4, 2022.

What is Select Medical's revenue outlook for 2022?

Select Medical expects revenue for 2022 to be between $6.25 billion and $6.40 billion.

How did Select Medical's net income change in 2021?

Net income for 2021 increased by 45.1% to $499.9 million compared to the previous year.