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MECHANICSBURG, Pa., Aug. 4, 2022 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its second quarter ended June 30, 2022, and the declaration of a cash dividend.

For the second quarter ended June 30, 2022, revenue increased 1.3% to $1,584.7 million, compared to $1,564.0 million for the same quarter, prior year. Income from operations was $121.0 million for the second quarter ended June 30, 2022, compared to $284.0 million for the same quarter, prior year. For the second quarter ended June 30, 2022, income from operations included $15.1 million of other operating income related to the recognition of payments received under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, compared to $98.0 million for the same quarter, prior year. Net income was $66.3 million for the second quarter ended June 30, 2022, compared to $196.2 million for the same quarter, prior year. Adjusted EBITDA was $181.0 million for the second quarter ended June 30, 2022, compared to $342.0 million for the same quarter, prior year. Earnings per common share was $0.43 for the second quarter ended June 30, 2022, compared to $1.22 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.

For the six months ended June 30, 2022, revenue increased 2.4% to $3,184.3 million, compared to $3,110.5 million for the same period, prior year. Income from operations was $225.0 million for the six months ended June 30, 2022, compared to $486.0 million for the same period, prior year. For the six months ended June 30, 2022, income from operations included $15.1 million of other operating income related to the recognition of payments received under the Provider Relief Fund, compared to $114.1 million for the same period, prior year. Net income was $122.2 million for the six months ended June 30, 2022, compared to $333.4 million for the same period, prior year. Adjusted EBITDA was $344.8 million for the six months ended June 30, 2022, compared to $600.4 million for the same period, prior year. Earnings per common share was $0.79 for the six months ended June 30, 2022, compared to $2.04 for the same period, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release.

In addition to providing key statistics in tables VII and VIII of this release for both the second quarters and six months ended June 30, 2022 and 2021, Select Medical also provided statistics for the comparable period in 2019. Select Medical believes this additional data provides insight into how it has performed in comparison to the year prior to the widespread emergence of the coronavirus disease 2019 ("COVID-19") in the United States. The effects of the COVID-19 pandemic, including the duration and extent of disruption on our operations, continues to create uncertainties about Select Medical's future operating results and financial condition. Please refer to the risk factors in Item 1A and the section titled "Effects of the COVID-19 Pandemic on our Results of Operations" in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, for further discussion.

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 June 30, 2022, Select Medical operated 105 critical illness recovery hospitals in 28 states, 31 rehabilitation hospitals in 12 states, and 1,920 outpatient rehabilitation clinics in 38 states and the District of Columbia. Concentra operated 518 occupational health centers in 41 states. At June 30, 2022, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

Critical Illness Recovery Hospital Segment

For the second quarter ended June 30, 2022, revenue for the critical illness recovery hospital segment increased to $545.9 million, compared to $544.1 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $20.0 million for the second quarter ended June 30, 2022, compared to $72.9 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 3.7% for the second quarter ended June 30, 2022, compared to 13.4% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the critical illness recovery hospital segment increased to $1,147.7 million, compared to $1,138.9 million for the same period, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $56.0 million for the six months ended June 30, 2022, compared to $186.2 million for the same period, prior year. For the six months ended June 30, 2021, Adjusted EBITDA included $17.9 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 4.9% for the six months ended June 30, 2022, compared to 16.3% for the same period, prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Rehabilitation Hospital Segment

For the second quarter ended June 30, 2022, revenue for the rehabilitation hospital segment increased 7.6% to $228.9 million, compared to $212.7 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $49.8 million for the second quarter ended June 30, 2022, compared to $50.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.8% for the second quarter ended June 30, 2022, compared to 23.9% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the rehabilitation hospital segment increased 6.9% to $449.5 million, compared to $420.5 million for the same period, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $92.2 million for the six months ended June 30, 2022, compared to $101.3 million for the same period, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.5% for the six months ended June 30, 2022, compared to 24.1% for the same period, prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Outpatient Rehabilitation Segment

For the second quarter ended June 30, 2022, revenue for the outpatient rehabilitation segment increased 2.4% to $287.3 million, compared to $280.4 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $33.6 million for the second quarter ended June 30, 2022, compared to $45.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 11.7% for the second quarter ended June 30, 2022, compared to 16.3% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the outpatient rehabilitation segment increased 5.0% to $559.2 million, compared to $532.4 million for the same period, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $60.2 million for the six months ended June 30, 2022, compared to $72.0 million for the same period, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.8% for the six months ended June 30, 2022, compared to 13.5% for the same period, prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Concentra Segment

For the second quarter ended June 30, 2022, revenue for the Concentra segment was $441.4 million, compared to $456.4 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment was $92.6 million for the second quarter ended June 30, 2022, compared to $137.1 million for the same quarter, prior year. For the second quarter ended June 30, 2021, Adjusted EBITDA included $32.3 million of other operating income related to the recognition of payments received under the Provider Relief Fund. The Adjusted EBITDA margin for the Concentra segment was 21.0% for the second quarter ended June 30, 2022, compared to 30.0% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for the second quarters ended June 30, 2022 and 2021.

For the six months ended June 30, 2022, revenue for the Concentra segment was $864.8 million, compared to $879.2 million for the same period, prior year. Adjusted EBITDA for the Concentra segment was $182.1 million for the six months ended June 30, 2022, compared to $219.1 million for the same period, prior year. For the six months ended June 30, 2021, Adjusted EBITDA included $32.3 million of other operating income related to the recognition of payments received under the Provider Relief Fund. The Adjusted EBITDA margin for the Concentra segment was 21.1% for the six months ended June 30, 2022, compared to 24.9% for the same period, prior year. Certain Concentra key statistics are presented in table VIII of this release for the six months ended June 30, 2022 and 2021.

Dividend

On August 2, 2022, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about September 2, 2022, to stockholders of record as of the close of business on August 16, 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 six months ended June 30, 2022, Select Medical repurchased 7,567,433 shares at a cost of approximately $177.6 million, or $23.47 per share, which includes transaction costs. Since the inception of the common stock repurchase program through June 30, 2022, Select Medical has repurchased 47,919,061 shares at a cost of approximately $592.8 million, or $12.37 per share, which includes transaction costs.

Business Outlook for Revenue

Select Medical reaffirms its 2022 business outlook for revenue, which was provided most recently in its May 5, 2022, press release. Select Medical continues to expect consolidated 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 address 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 second quarter results, as well as its business outlook for revenue and the impact of the COVID-19 pandemic on each of its reportable segments, on Friday, August 5, 2022, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holding Corporation's website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the same link.

For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode.

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 quarterly reports on Form 10-Q and 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