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, while total net income was $94.8 million.

• Adjusted EBITDA for Q2 2024 was $226.3 million (12.9% margin), up from $219.5 million (13.1% margin) in Q2 2023.

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

• 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.

• A cash dividend of $0.125 per share was declared for Q2 2024.

Financial highlights

• Q2 2024 revenue increased 5.1% year-over-year to $1,759.7 million; adjusted EBITDA was $226.3 million (12.9% margin).

• Net income for Q2 2024 was $94.8 million; net income attributable to Select Medical Holdings was $77.6 million.

• EPS and adjusted EPS for Q2 2024 were $0.60; for the first half, EPS was $1.35 and adjusted EPS $1.37.

• Interest expense for Q2 2024 decreased to $37.1 million, down 24.3% year-over-year.

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

Outlook and guidance

• 2024 revenue expected at $6.9B–$7.1B; adjusted EBITDA $845M–$885M; EPS $1.95–$2.19; adjusted EPS $1.96–$2.20.

• Capital expenditures projected at $225M–$275M, mainly for development.

• Select intends to distribute its remaining equity interest in Concentra to shareholders within twelve months of the IPO.

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

• Consolidated net leverage expected to finish 2024 at 3.2–3.3x.