Select Medical Holdings Corporation Announces Results for First Quarter Ended March 31, 2012

MECHANICSBURG, Pa., May 3, 2012 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical") (NYSE: SEM) today announced results for its first quarter ended March 31, 2012.

For the first quarter ended March 31, 2012, net operating revenues increased 7.3% to $744.0 million compared to $693.2 million for the same quarter, prior year.  Income from operations increased 4.5% to $91.6 million compared to $87.6 million for the same quarter, prior year.  Net income attributable to Select Medical increased 23.4% to $41.5 million compared to $33.7 million for the same quarter, prior year.  Net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries, and other income (expense) ("Adjusted EBITDA") for the first quarter increased 3.1% to $109.1 million compared to $105.7 million for the same quarter, prior year.  A reconciliation of net income to Adjusted EBITDA is presented in table V of this release.  Income per common share for the first quarter ended March 31, 2012 was $0.29 on a fully diluted basis compared to income per common share of $0.22 for the quarter ended March 31, 2011.

Specialty Hospitals

Certain specialty hospital key statistics are presented in table IV of this release.  For the first quarter of 2012, net operating revenues for the specialty hospital segment increased 6.4% to $553.0 million compared to $519.9 million for the same quarter, prior year.  Adjusted EBITDA for the specialty hospital segment decreased 0.4% to $100.0 million compared to $100.4 million for the same quarter, prior year.  The Adjusted EBITDA margin for the segment was 18.1% for the first quarter of 2012, compared to 19.3% for the same quarter, prior year.

Outpatient Rehabilitation

Certain outpatient rehabilitation key statistics are presented in table IV of this release.  For the first quarter of 2012, net operating revenues for the outpatient rehabilitation segment increased 10.2% to $190.9 million compared to $173.2 million for the same quarter, prior year.  Adjusted EBITDA for the segment for the first quarter increased 5.0% to $22.5 million compared to $21.4 million for the same quarter, prior year.  The Adjusted EBITDA margin for the segment was 11.8% for the first quarter of 2012, compared to 12.4% for the same quarter, prior year.

Stock Repurchase Program

On February 22, 2012, the board of directors of Select Medical authorized an increase of $100.0 million in the capacity of its common stock repurchase program from $150.0 million to $250.0 million.  The program will remain in effect until March 31, 2013, 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 Medical deems appropriate.  The timing of purchases of stock will be based upon market conditions and other factors.  Select Medical is funding this program with cash on hand or borrowings under its revolving credit facility.  Select Medical repurchased 3,203,692 shares at a cost of $25.7 million, which includes transaction costs, during the quarter ended March 31, 2012.  Since the inception of the program through March 31, 2012, Select Medical has repurchased 19,968,299 shares at a cost of $142.6 million, which includes transaction costs.

Business Outlook

Select Medical reaffirms the financial guidance provided in its January 6, 2012 press release.  Select Medical expects consolidated revenue for full year 2012 to be in the range of $2.85 billion to $2.95 billion.  Select Medical expects Adjusted EBITDA for full year 2012 to be in the range of $390 million to $410 million.  Select Medical expects fully diluted income per common share for full year 2012 to be in the range of $0.86 to $0.94.

Conference Call

Select Medical will host a conference call regarding its first quarter results and its business outlook on Friday, May, 4, 2012, at 9:00am EDT. The domestic dial-in number for the call is 1-866-578-5788. The international dial-in number is 1-617-213-8057. The passcode for the call is 68707993. 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 11, 2012. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 75172895. The replay can also be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalholdings.com.

Select Medical is a leading operator of specialty hospitals and outpatient rehabilitation clinics in the United States. As of March 31, 2012, Select Medical operated 111 long term acute care hospitals and 12 acute medical rehabilitation hospitals in 28 states and 950 outpatient rehabilitation clinics in 32 states and the District of Columbia. Select Medical also provides medical rehabilitation services on a contracted basis to nursing homes, hospitals, assisted living and senior care centers, schools and work sites. Information about Select Medical is available at www.selectmedical.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
• 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 T. Veit
Vice President and Treasurer
717-972-1100
[email protected]

V. Net Income to Adjusted EBITDA Reconciliation
For the Three Months Ended March 31, 2011 and 2012
(In thousands, unaudited)

The following table reconciles net income to Adjusted EBITDA for Select Medical.  Adjusted EBITDA is used by Select Medical to report its segment performance.  Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries, and other income (expense).  The Company believes that the presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry.  Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of its operating units.

Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles.  Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance.  Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity.  Because Adjusted EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. 

SOURCE Select Medical Holdings Corporation