Benchmark Reiterates Buy Rating on Select Medical Holdings (SEM) Ahead of Q3 Results

Benchmark analyst Bill Sutherland reiterated a Buy rating and $21.00 price target on Select Medical Holdings (NYSE: SEM).

The analyst commented, "Select Medical reports 3Q results after the market on October 30th with a conference call the next morning at 9 ET. While we think the company has performed in line with current FY25 guidance, there should be a positive impact to current year earnings with an expected accrual reversal. As discussed below, the reversal relates to a recent announcement from CMS to retroactively push the implementation of more burdensome cost report reconciliation for LTACH from 10/1/24 to 10/1/25. Based on the original 10/1/24 implementation, the impact represented ~40% of the $10M reduction (at the midpoint) in FY25 AEBITDA guidance provided with 1Q25 results, with the balance due to the impact of an increased threshold for high-cost outlier reimbursement, which is unchanged. More important than this modest positive (non-cash) impact to FY25 guidance is the emerging FY26 outlook, which we continue to view constructively based on 1) positive rate updates for all three segments; 2) nearly flat high-cost outlier threshold for LTACH; 3) the further accretive impact of faster growing Rehab Hospitals, SEM’s most profitable segment; and 4) improving margin trend from system upgrades in Outpatient Rehab."

For an analyst ratings summary and ratings history on Select Medical Holdings click here. For more ratings news on Select Medical Holdings click here.

Shares of Select Medical Holdings closed at $14.29 yesterday.

You May Also Be Interested In

• JD.com (JD) Reiterated at Buy by Benchmark Amid Earnings Recovery
• UBS Reiterates Buy Rating on NVIDIA (NVDA), Expects Q2 Revenue Beat
• Fiserv (FISV) PT Lowered to $60 at Freedom Broker