Select Medical (SEM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue rose 5.1% year-over-year to $1,759.7 million; net income attributable to Select Medical Holdings was $77.6 million, with adjusted EBITDA up 3.1% to $226.3 million (12.9% margin).

• For the first half of 2024, revenue was $3,548.5 million (up 6.3% year-over-year), and net income attributable to Select Medical Holdings was $174.5 million.

• Concentra completed an IPO in July 2024, raising $528.8 million and reducing Select's credit facility debt by $1.9 billion; Select plans to distribute its remaining Concentra interest to shareholders within 12 months.

• Multiple new hospital openings and expansions are in the pipeline, targeting 449 additional beds through 2026.

• Six rehabilitation hospitals were recognized among the nation's best by U.S. News & World Report.

Financial highlights

• Q2 2024 adjusted EBITDA: $226.3 million (12.9% margin); Q2 earnings per share and adjusted EPS: $0.60.

• Operating cash flow for the first half was $211.5 million; cash and equivalents at June 30, 2024, were $111.2 million.

• Debt at quarter-end: $3.6 billion; net leverage 4.13x, expected to drop to 3.2-3.3x by year-end.

• Dividend of $0.125 per share declared for Q3 2024, payable August 30.

• No share repurchases in Q2 2024; $399.7 million remains under the $1.0 billion repurchase authorization.

Outlook and guidance

• 2024 revenue expected at $6.9 billion–$7.1 billion; adjusted EBITDA $845 million–$885 million; adjusted EPS $1.96–$2.20.

• Fully diluted EPS guidance for 2024 is $1.95 to $2.19.

• Guidance includes higher borrowing costs in Q4 as interest rate protections reset.

• Management expects further reduction in days sales outstanding in Q3 2024 as claims processing normalizes post-cyber incident.

• Capital expenditures projected at $225 million–$275 million, focused on development.