MECHANICSBURG, Pa., May 4, 2017 /PRNewswire/ -- Select Medical Holdings Corporation (“Select Medical”) (NYSE: SEM) today announced results for its first quarter ended March 31, 2017.
For the quarter ended March 31, 2017, net operating revenues increased 2.1% to $1,111.4 million, compared to $1,088.3 million for the same quarter, prior year. Income from operations increased 5.6% to $91.8 million for the quarter ended March 31, 2017, compared to $86.9 million for the same quarter, prior year. Net income was $23.5 million for the quarter ended March 31, 2017, which includes a pre-tax loss on early retirement of debt of $19.7 million. Net income was $59.9 million for the quarter ended March 31, 2016, which includes a pre-tax non-operating gain of $25.1 million and pre-tax loss on early retirement of debt of $0.8 million. Earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, Physiotherapy acquisition costs, non-operating gain (loss), and equity in earnings (losses) of unconsolidated subsidiaries (“Adjusted EBITDA”) for the quarter ended March 31, 2017 was $138.9 million, compared to $128.6 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is presented in table V of this release. Income per common share for the quarter ended March 31, 2017 was $0.12 on a fully diluted basis, compared to $0.42 for the same quarter, prior year. Excluding the loss on early retirement of debt and related tax effects, adjusted income per common share was $0.21 per diluted share for the quarter ended March 31, 2017. Excluding the non-operating gain, loss on early retirement of debt, and related tax effects, adjusted income per common share was $0.22 per diluted share for the quarter ended March 31, 2016. A reconciliation of income per common share to adjusted income per common share is presented in table VI of this release.
Specialty Hospitals Segment
For the quarter ended March 31, 2017, net operating revenues for the specialty hospitals segment were $598.8 million, compared to $599.0 million for the same quarter, prior year. Adjusted EBITDA for the specialty hospitals segment increased 2.2% to $88.7 million for the quarter ended March 31, 2017, compared to $86.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the specialty hospitals segment was 14.8% for the quarter ended March 31, 2017, compared to 14.5% for the same quarter, prior year. The Adjusted EBITDA results for the specialty hospitals segment include start-up losses of approximately $2.0 million for the quarter ended March 31, 2017, compared to $3.8 million for the same quarter, prior year. Certain specialty hospitals key statistics for the quarters ended March 31, 2017 and 2016 are presented in table IV of this release.
Outpatient Rehabilitation Segment
The financial results of the outpatient rehabilitation segment include the contract therapy businesses through March 31, 2016 and Physiotherapy Associates Holdings, Inc. (“Physiotherapy”) beginning March 4, 2016.
For the quarter ended March 31, 2017, net operating revenues for the outpatient rehabilitation segment increased 7.4% to $255.8 million, compared to $238.1 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 8.6% to $31.4 million for the quarter ended March 31, 2017, compared to $28.9 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 12.3% for the quarter ended March 31, 2017, compared to 12.1% for the same quarter, prior year. Certain outpatient rehabilitation key statistics for the quarters ended March 31, 2017 and 2016 are presented in table IV of this release.
Concentra Segment
For the quarter ended March 31, 2017, net operating revenues for the Concentra segment increased 2.1% to $256.1 million, compared to $250.9 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 24.7% to $42.6 million for the quarter ended March 31, 2017, compared to $34.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 16.6% for the quarter ended March 31, 2017, compared to 13.6% for the same quarter, prior year. Certain Concentra key statistics for the quarters ended March 31, 2017 and 2016 are presented in table IV of this release.
Refinancing
On March 6, 2017, Select Medical entered into a new senior secured credit agreement that provides for $1.6 billion in senior secured credit facilities comprising a $1.15 billion, seven-year term loan and a $450.0 million, five-year revolving credit facility, including a $75.0 million sublimit for the issuance of standby letters of credit. Select Medical used borrowings under the new senior secured credit facilities to: (i) refinance in full the series E tranche B term loans due June 1, 2018, the series F tranche B term loans due March 31, 2021, and the revolving facility due March 1, 2018 under its then existing credit facilities; and (ii) pay fees and expenses in connection with the refinancing.
Stock Repurchase Program
Select Medical did not repurchase shares during the quarter ended March 31, 2017 under its authorized $500.0 million stock repurchase program. The program has been extended until December 31, 2017, and will remain in effect until then, unless further extended or earlier terminated by the board of directors.
Business Outlook
Select Medical continues to expect for the full year of 2017 consolidated net operating revenues to be in the range of $4.4 billion to $4.6 billion and Adjusted EBITDA for the full year of 2017 to be in the range of $540.0 million to $580.0 million. Select Medical now expects fully diluted income per common share for the full year 2017 to be in the range of $0.69 to $0.87. Select Medical expects fully diluted adjusted income per common share for the full year 2017 to be in the range of $0.78 to $0.96. Fully diluted adjusted income per common share excludes the non-operating loss and loss on early retirement of debt and their related tax effects.
Select Medical’s business outlook for fully diluted income per common share for the full year 2017 has been updated to include the effects of the refinancing of Select’s senior secured credit facilities.
Conference Call
Select Medical will host a conference call regarding its first quarter results, as well as its business outlook, on Friday, May 5, 2017, at 9:00am EDT. The domestic dial in number for the call is 1-877-430-7741. The international dial in number is 1-615-247-0054. The passcode for the call is 9660441. 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 11:59pm EDT, May 12, 2017. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The passcode for the replay will be 9660441. The replay can also be accessed at Select Medical Holdings Corporation’s website, www.selectmedicalholdings.com.
Select Medical began operations in 1997 and has grown to be one of the largest operators of specialty hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on the number of facilities. As of March 31, 2017, Select Medical operated 102 long term acute care hospitals and 20 acute medical rehabilitation hospitals in 27 states and 1,610 outpatient rehabilitation clinics in 37 states and the District of Columbia. Select Medical’s joint venture subsidiary Concentra operated 308 centers in 38 states. Concentra also provides contract services at employer worksites and Department of Veterans Affairs community-based outpatient clinics. At March 31, 2017, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.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). 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:
changes in government reimbursement for our services due to the implementation of healthcare reform legislation, deficit reduction measures, and/or new payment policies (including, for example, the expiration of the moratorium limiting the full application of the 25 Percent Rule that would reduce our Medicare payments for those patients admitted to a long term acute care hospital from a referring hospital in excess of an applicable percentage admissions threshold) may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability;
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