Summary of Select Medical Holdings Corporation Q1 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: Increased by 5% year-over-year to approximately $1.3 billion.

Adjusted EBITDA: Declined by 6.5% to $141.6 million from $151.4 million in Q1 2025.

Earnings Per Share (EPS): Reported at $0.35, down from $0.44 in the prior year; adjusted EPS (excluding take-private transaction costs) was $0.36.

Debt: Total debt stood at $1.9 billion with a net leverage ratio of 3.75.

Cash Flow: Operating cash flow was $37.9 million.

Dividends: A cash dividend of $0.0625 per share was declared.

2Strategic Updates and Business Highlights

Take-Private Transaction: Announced acquisition by a consortium led by Executive Chairman Robert Ortenzio, with a cash offer of $16.50 per share for unaffiliated shareholders. Expected to close mid-2026.

Expansion Plans: Added 166 beds across three new inpatient rehabilitation hospitals in Q1 2026, with plans to add 275 more beds throughout the year and into 2027.

Capital Allocation: Focus on growth through new hospitals and expansions, with capital expenditures projected between $200 million and $220 million for the year.

3Forward Guidance and Outlook

2026 Revenue Guidance: Expected to range between $5.6 billion and $5.8 billion.

Adjusted EBITDA Guidance: Projected between $520 million and $540 million.

EPS Guidance: Anticipated to be in the range of $1.22 to $1.32 for the full year.

4Bad News, Challenges, or Points of Concern

Declining Adjusted EBITDA: The decrease in adjusted EBITDA reflects operational challenges and increased costs.

Increased Denials: Notable rise in Medicare Advantage denials, particularly affecting long-term acute care and inpatient rehab segments.

Critical Illness Recovery Hospital Division: Adjusted EBITDA declined by 15%, with margins dropping to 11.5% from 13.6% year-over-year.

Market Exits: The company closed four clinics in Oregon, resulting in a $1 million impact on earnings.

5Notable Q&A Insights

Outpatient Rehabilitation Margins: Management is implementing scheduling optimizations and assessing underperforming markets to improve margins.

Medicare TEAM Model: Minimal impact observed on inpatient rehab census; management remains vigilant regarding potential future effects.

Regulatory Environment: Positive outlook on proposed CMS payment rate increases for both inpatient rehabilitation and long-term acute care hospitals, expected to be finalized in late July or early August. This summary encapsulates the key points from Select Medical's Q1 2026 earnings call, highlighting financial performance, strategic initiatives, and areas of concern while providing a balanced view of the company's current status and future outlook.