Select Medical Holdings Corporation Announces Results for First Quarter Ended March 31, 2011

MECHANICSBURG, Pa., May 5, 2011 /PRNewswire/ -- Select Medical Holdings Corporation ("Select") (NYSE: SEM), today announced results for its first quarter ended March 31, 2011.

For the first quarter ended March 31, 2011, net operating revenues increased 18.5% to $693.2 million compared to $584.8 million for the same quarter, prior year.  Income from operations increased 20.6% to $87.6 million compared to $72.6 million for the same quarter, prior year.  Net income attributable to Select increased to $33.7 million compared to $24.2 million for the same quarter, prior year.  Net income before interest, income taxes, depreciation and amortization, stock compensation expense, other income and equity in losses of unconsolidated subsidiaries ("Adjusted EBITDA") for the first quarter increased 16.4% to $105.7 million compared to $90.9 million for the same quarter, prior year.  A reconciliation of net income to Adjusted EBITDA is attached to this release.  Income per common share for the first quarter ended March 31, 2011 was $0.22 on a fully diluted basis compared to income per common share of $0.15 for the quarter ended March 31, 2010.

Specialty Hospitals

Certain specialty hospital key statistics are presented on a schedule attached to this release.  For the first quarter of 2011, net operating revenues for all of Select's hospitals increased 26.3% to $519.9 million compared to $411.7 million for the same quarter, prior year.  The hospitals acquired in the Regency acquisition contributed $90.1 million of this increase.  Adjusted EBITDA for the specialty hospital segment increased 21.1% to $100.4 million compared to $82.9 million for the same quarter, prior year.  The hospitals acquired in the Regency acquisition contributed $14.5 million of this increase.  The Adjusted EBITDA margin for the segment was 19.3% for the first quarter of 2011, compared to 20.1% for the same quarter, prior year.  

Outpatient Rehabilitation

Certain outpatient rehabilitation key statistics are presented on a schedule attached to this release.  For the first quarter of 2011, net operating revenues for the outpatient rehabilitation segment increased slightly to $173.2 million compared to $173.1 million for the same quarter, prior year.  Adjusted EBITDA for the segment for the first quarter increased 4.3% to $21.4 million compared to $20.5 million for the same quarter, prior year.  The Adjusted EBITDA margin for the segment was 12.4% for the first quarter of 2011, compared to 11.9% for the same quarter, prior year.

Stock Repurchase Program

Select's board of directors has authorized a program to repurchase up to $100.0 million worth of shares of Select's common stock.  The program will remain in effect until January 31, 2012, unless extended 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 deems appropriate.  The timing of purchases of stock will be based upon market conditions and other factors.  Select is funding this program with cash on hand or borrowings under its revolving credit facility.  During the quarter ended March 31, 2011, Select repurchased 269,991 shares at a cost of $2.0 million, which includes transaction costs. Since the inception of the program through March 31, 2011, Select has repurchased 7,175,691 shares at a cost of $46.2 million, which includes transaction costs.

Indebtedness

Included in Select's indebtedness is a senior secured credit facility which at March 31, 2011 consisted of $143.5 million in term loans that mature on February 24, 2012, $278.8 million of term loans that mature on August 22, 2014 and $125.0 million drawn on a $300.0 million revolving loan facility that will terminate on August 22, 2013. As of March 31, 2011, Select also had outstanding $611.5 million in aggregate principal amount of 7 5/8% senior subordinated notes due 2015.  On April 25, 2011, Select Medical Corporation commenced a cash tender offer and consent solicitation for any and all of its 7 5/8% senior subordinated notes.  The tender offer is scheduled to expire at 11:59 p.m. on May 20, 2011.  The tender offer and consent solicitation are being conducted in connection with Select Medical Corporation's negotiations to refinance its senior secured credit facility.  The tender offer and consent solicitation are conditioned on Select Medical Corporation's entry into a new senior secured credit facility.  Select expects to use a portion of the proceeds from such new senior secured credit facility to purchase the tendered and accepted 7 5/8% senior subordinated notes and to retire Select's 10% senior subordinated notes.  Select Medical Corporation can provide no assurance that it will be able to successfully refinance either its current senior secured credit facility or the 7 5/8% senior subordinated notes, or that the refinancing, if it occurs, will not be delayed beyond the second quarter of 2011, or that the terms of any new indebtedness will be as favorable as the terms of its existing indebtedness. 

Business Outlook

Select reaffirms the guidance it provided in its January 20, 2011 release.  Select expects consolidated revenue for full year 2011 to be in the range of $2.65 billion to $2.75 billion.  Select expects Adjusted EBITDA for full year 2011 to be in the range of $365 million to $385 million.  Select expects income per common share for full year 2011 to be in the range of $0.67 to $0.72.

Conference Call

Select will host a conference call regarding its first quarter results and its business outlook on Friday, May 6, 2011, at 9:00 am EDT. The domestic dial in number for the call is 1-888-873-4896.  The international dial in number is 1-617-213-8850.  The pass code for the call is 52671937.  The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website http://www.selectmedicalholdings.com/.

For those unable to participate in the conference call, a replay will be available until 11:59pm EDT, May 13, 2011. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 76692850. The replay can also be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalholdings.com.

Select Medical Holdings Corporation is a leading operator of specialty hospitals and outpatient rehabilitation clinics in the United States.  As of March 31, 2011, Select operated 110 long term acute care hospitals and eight acute medical rehabilitation hospitals in 28 states, and 945 outpatient rehabilitation clinics in 35 states and the District of Columbia.  Select also provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and worksites.  Information about Select is available at http://www.selectmedicalholdings.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:

• additional changes in government reimbursement for our services, including changes that will result from the expiration of the moratorium for long term acute care hospitals established by the Medicare, Medicaid and SCHIP Extension Act of 2007, the American Recovery and Reinvestment Act, and the Patient Protection and Affordable Care Act may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability;
• the failure of our specialty hospitals to maintain their Medicare certifications may cause our net operating revenues and profitability to decline;
• the failure of our facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our net operating revenues 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;
• private third-party payors for our services may undertake future cost containment initiatives that limit our future net operating revenues and profitability;
• the failure to maintain established relationships with the physicians in the areas we serve could reduce our net operating revenues and profitability;
• shortages in qualified nurses or therapists could increase our operating costs significantly;
• competition may limit our ability to grow and result in a decrease in our net operating revenues 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 and in the future we may not be able to obtain insurance at a reasonable price;
• other factors discussed from time to time in our filings with the Securities and Exchange Commission, including factors under the heading "Risk Factors" in our annual report on Form 10-K.

Investor inquiries:

Joel Veit, 717/972-1100

SOURCE Select Medical Holdings Corporation