Select Medical Holdings Corporation Announces Results For Its Fourth Quarter and Year Ended December 31, 2020

February 25, 2021 4:30 PM EST

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MECHANICSBURG, Pa., Feb. 25, 2021 /PRNewswire/ -- Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its fourth quarter and year ended December 31, 2020.

For the fourth quarter ended December 31, 2020, revenue increased 6.2% to $1,460.5 million, compared to $1,374.6 million for the same quarter, prior year. Income from operations increased 45.4% to $163.3 million for the fourth quarter ended December 31, 2020, compared to $112.4 million for the same quarter, prior year. Income from operations included other operating income of $36.2 million related to the recognition of payments received under the Provider Relief Fund. Net income increased 134.1% to $102.2 million for the fourth quarter ended December 31, 2020, compared to $43.7 million for the same quarter, prior year. Net income included pre-tax losses on early retirement of debt of $19.4 million for the fourth quarter ended December 31, 2019. Adjusted EBITDA increased 28.7% to $221.3 million for the fourth quarter ended December 31, 2020, compared to $171.9 million for the same quarter, prior year. Earnings per common share increased to $0.57 on a fully diluted basis for the fourth quarter ended December 31, 2020, compared to $0.24 for the same quarter, prior year. Adjusted earnings per common share was $0.57 on a fully diluted basis for the fourth quarter ended December 31, 2020, compared to $0.31 for the same quarter, prior year. Adjusted earnings per common share excludes the losses on early retirement of debt and their related tax effects for the fourth quarter ended December 31, 2019. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release. 

For the year ended December 31, 2020, revenue increased 1.4% to $5,531.7 million, compared to $5,453.9 million for the prior year. Income from operations increased 20.3% to $567.7 million for the year ended December 31, 2020, compared to $471.9 million for the prior year. For the year ended December 31, 2020, income from operations included other operating income of $90.0 million related to the recognition of payments received under the Provider Relief Fund. Net income increased 71.4% to $344.6 million for the year ended December 31, 2020, compared to $201.0 million for the prior year. For the year ended December 31, 2020, net income included pre-tax gains on sales of businesses of $12.4 million. For the year ended December 31, 2019, net income included pre-tax losses on early retirement of debt of $38.1 million and a pre-tax gain on sale of businesses of $6.5 million. Adjusted EBITDA increased 12.6% to $800.6 million for the year ended December 31, 2020, compared to $710.9 million for the prior year. Earnings per common share increased to $1.93 on a fully diluted basis for the year ended December 31, 2020, compared to $1.10 for the prior year. Adjusted earnings per common share was $1.89 on a fully diluted basis for the year ended December 31, 2020, compared to $1.24 for the prior year. Adjusted earnings per common share excludes the gains on sales of businesses and their related tax effects for the year ended December 31, 2020. Adjusted earnings per common share excludes the losses on early retirement of debt and related costs, the gain on sale of businesses, and their related tax effects for the year ended December 31, 2019. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release. 

Please refer to "Effects of the COVID-19 Pandemic on Select Medical's Results of Operations" below for further discussion.

Company Overview

Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on number of facilities. Select Medical's reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment, and the Concentra segment. As of December 31, 2020, Select Medical operated 99 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,788 outpatient rehabilitation clinics in 37 states and the District of Columbia. Select Medical's joint venture subsidiary Concentra operated 517 occupational health centers in 41 states. At December 31, 2020, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

CARES Act Provider Relief Fund

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the coronavirus disease 2019 ("COVID-19") pandemic, including $100.0 billion in appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to the coronavirus, and for reimbursing eligible health care providers for lost revenues and health care related expenses that are attributable to the COVID-19 pandemic.

For the three months and year ended December 31, 2020, Select Medical recognized payments received under the Provider Relief Fund for loss of revenue and health care related expenses attributable to the COVID-19 pandemic as other operating income. For the three months ended December 31, 2020, other operating income of $36.2 million is included within the operating results of Select Medical's other activities. For the year ended December 31, 2020, $88.9 million and $1.1 million of other operating income is included within the operating results of Select Medical's other activities and its Concentra segment, respectively.

Critical Illness Recovery Hospital Segment

For the fourth quarter ended December 31, 2020, revenue for the critical illness recovery hospital segment increased 18.2% to $537.9 million, compared to $454.9 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 24.5% to $75.3 million for the fourth quarter ended December 31, 2020, compared to $60.5 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 14.0% for the fourth quarter ended December 31, 2020, compared to 13.3% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2020 and 2019.

For the year ended December 31, 2020, revenue for the critical illness recovery hospital segment increased 13.1% to $2,077.5 million, compared to $1,836.5 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 34.4% to $342.4 million for the year ended December 31, 2020, compared to $254.9 million for the prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 16.5% for the year ended December 31, 2020, compared to 13.9% for the prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2020 and 2019.

Rehabilitation Hospital Segment

For the fourth quarter ended December 31, 2020, revenue for the rehabilitation hospital segment increased 7.2% to $195.9 million, compared to $182.7 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $42.4 million for the fourth quarter ended December 31, 2020, compared to $43.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.6% for the fourth quarter ended December 31, 2020, compared to 23.7% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2020 and 2019.

For the year ended December 31, 2020, revenue for the rehabilitation hospital segment increased 9.5% to $734.7 million, compared to $671.0 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 12.8% to $153.2 million for the year ended December 31, 2020, compared to $135.9 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.9% for the year ended December 31, 2020, compared to 20.2% for the prior year. The Adjusted EBITDA results for the rehabilitation hospital segment include start-up losses of approximately $8.8 million for the year ended December 31, 2019. Certain rehabilitation hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2020 and 2019.

Outpatient Rehabilitation Segment

For the fourth quarter ended December 31, 2020, revenue for the outpatient rehabilitation segment was $257.5 million, compared to $271.9 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $27.7 million for the fourth quarter ended December 31, 2020, compared to $40.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.8% for the fourth quarter ended December 31, 2020, compared to 14.8% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2020 and 2019.

For the year ended December 31, 2020, revenue for the outpatient rehabilitation segment was $919.9 million, compared to $1,046.0 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $79.2 million for the year ended December 31, 2020, compared to $151.8 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 8.6% for the year ended December 31, 2020, compared to 14.5% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for both the years ended December 31, 2020 and 2019.

Concentra Segment

For the fourth quarter ended December 31, 2020, revenue for the Concentra segment increased 0.4% to $398.7 million, compared to $397.1 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 22.9% to $69.4 million for the fourth quarter ended December 31, 2020, compared to $56.5 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 17.4% for the fourth quarter ended December 31, 2020, compared to 14.2% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2020 and 2019.

For the year ended December 31, 2020, revenue for the Concentra segment was $1,501.4 million, compared to $1,628.8 million for the prior year. Adjusted EBITDA for the Concentra segment was $252.9 million for the year ended December 31, 2020, compared to $276.5 million for the prior year. The Adjusted EBITDA margin for the Concentra segment was 16.8% for the year ended December 31, 2020, compared to 17.0% for the prior year. Certain Concentra key statistics are presented in table VIII of this release for both the years ended December 31, 2020 and 2019.

Effects of the COVID-19 Pandemic on Select Medical's Results of Operations

The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical's operations, creates uncertainties about Select Medical's future operating results and financial condition. Select Medical has provided revenue and certain operating statistics for each of its segments during the three months and year ended December 31, 2020.

Critical Illness Recovery Hospital Segment.  Select Medical's critical illness recovery hospitals are a key component of the inpatient hospital continuum of care. Beginning in March 2020, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children's Health Insurance Program ("CHIP") programs were authorized, including certain regulations concerning patient length of stay requirements under the Medicare program which apply to Select Medical's critical illness recovery hospitals. The length of stay requirements were suspended in order to facilitate the transfer of patients from general acute care hospitals and expand hospital bed capacity to care for COVID-19 patients. During the year ended December 31, 2020, Select Medical's critical illness recovery hospitals played a critical role in caring for patients during the COVID-19 pandemic due, in part, to the rapid preparation and implementation of modifications that supported the treatment of COVID-19 patients.

The following table shows revenue, patient days, and occupancy rates for each of the periods presented, as well as the number of critical illness recovery hospitals Select Medical owned at the end of each period.

Revenue

Patient Days

Occupancy Rate

Number ofHospitals Owned(1)

2019

2020

% Change

2019

2020

% Change

2019

2020

2019

2020

(in thousands, except percentages)

January

$

149,799

$

163,238

9.0%

86,238

90,783

5.3%

69%

69%

96

100

February

145,586

165,375

13.6%

80,806

87,844

8.7%

71%

72%

96

100

March

162,149

171,908

6.0%

91,085

91,831

0.8%

73%

70%

96

100

Three Months Ended March 31

$

457,534

$

500,521

9.4%

258,129

270,458

4.8%

71%

70%

96

100

April

$

156,231

$

171,445

9.7%

88,357

90,710

2.7%

70%

71%

99

100

May

156,422

178,223

13.9%

89,350

95,191

6.5%

69%

72%

99

100

June

148,490

169,958

14.5%

85,153

90,988

6.9%

68%

71%

99

100

Three Months Ended June 30

$

461,143

$

519,626

12.7%

262,860

276,889

5.3%

69%

72%

99

100

Six Months Ended June 30

$

918,677

$

1,020,147

11.0%

520,989

547,347

5.1%

70%

71%

99

100

July

$

151,416

$

175,253

15.7%

87,143

94,144

8.0%

67%

71%

99

99

August

155,485

173,967

11.9%

86,553

93,964

8.6%

66%

71%

99

99

September

155,991

170,234

9.1%

84,393

90,955

7.8%

67%

71%

99

99

Three Months Ended September 30

$

462,892

$

519,454

12.2%

258,089

279,063

8.1%

67%

71%

99

99

Nine Months Ended September 30

$

1,381,569

$

1,539,601

11.4%

779,078

826,410

6.1%

69%

71%

99

99

October

$

152,791

$

181,251

18.6%

87,188

95,616

9.7%

66%

71%

100

100

November

150,399

174,133

15.8%

84,540

92,651

9.6%

67%

71%

100

99

December

151,759

182,514

20.3%

87,555

97,079

10.9%

67%

72%

100

99

Three Months Ended December 31

$

454,949

$

537,898

18.2%

259,283

285,346

10.1%

67%

71%

100

99

Twelve Months Ended December 31

$

1,836,518

$

2,077,499

13.1%

1,038,361

1,111,756

7.1%

68%

71%

100

99

(1)

Represents the number of hospitals owned at the end of each period presented.

Rehabilitation Hospital Segment.  Select Medical's rehabilitation hospitals receive most of their admissions from general acute care hospitals. Beginning in March 2020, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and CHIP programs were authorized, including certain regulations governing admissions into rehabilitation hospitals. This was done in order to facilitate the transfer of patients from general acute care hospitals and critical illness recovery hospitals and to expand hospital bed capacity to care for COVID-19 patients. Select Medical's rehabilitation hospitals were affected by the suspension of elective surgeries at hospitals and other facilities at the beginning of the pandemic, which resulted in reduced need for inpatient rehabilitation services. Beginning in May 2020, state governments and health departments began to ease restrictions and hospitals began to perform elective surgeries again, which has increased the need for the services provided by our rehabilitation hospitals.

The following table shows revenue, patient days, and occupancy rates for each of the periods presented, as well as the number of rehabilitation hospitals Select Medical owned at the end of each period.

Revenue

Patient Days

Occupancy Rate

Number ofHospitals Owned(1)

2019

2020

% Change

2019

2020

% Change

2019

2020

2019

2020

(in thousands, except percentages)

January

$

50,615

$

61,673

21.8%

27,434

32,111

17.0%

74%

79%

17

19

February

48,080

60,690

26.2%

25,442

31,813

25.0%

76%

84%

17

19

March

55,863

59,656

6.8%

29,940

30,644

2.4%

78%

76%

18

19

Three Months Ended March 31

$

154,558

$

182,019

17.8%

82,816

94,568

14.2%

76%

79%

18

19

April

$

51,991

$

45,878

(11.8)%

28,266

23,553

(16.7)%

76%

61%

18

19

May

56,019

57,815

3.2%

29,730

29,787

0.2%

75%

73%

19

19

June

52,364

64,974

24.1%

28,529

30,741

7.8%

73%

78%

19

19

Three Months Ended June 30

$

160,374

$

168,667

5.2%

86,525

84,081

(2.8)%

75%

71%

19

19

Six Months Ended June 30

$

314,932

$

350,686

11.4%

169,341

178,649

5.5%

76%

75%

19

19

July

$

57,077

$

62,312

9.2%

30,054

31,986

6.4%

75%

81%

19

18

August

58,072

63,673

9.6%

30,228

32,518

7.6%

75%

83%

19

18

September

58,220

62,090

6.6%

29,172

31,176

6.9%

75%

82%

19

18

Three Months Ended September 30

$

173,369

$

188,075

8.5%

89,454

95,680

7.0%

75%

82%

19

18

Nine Months Ended September 30

$

488,301

$

538,761

10.3%

258,795

274,329

6.0%

75%

77%

19

18

October

$

61,975

$

66,591

7.4%

31,767

33,378

5.1%

78%

82%

19

19

November

60,353

64,610

7.1%

31,022

31,581

1.8%

79%

80%

19

19

December

60,342

64,711

7.2%

31,447

31,545

0.3%

78%

78%

19

19

Three Months Ended December 31

$

182,670

$

195,912

7.2%

94,236

96,504

2.4%

78%

80%

19

19

Twelve Months Ended December 31

$

670,971

$

734,673

9.5%

353,031

370,833

5.0%

76%

78%

19

19

(1)

Represents the number of hospitals owned at the end of each period presented.

Outpatient Rehabilitation Segment.  Beginning in mid-March 2020, state governments began implementing mandatory closures of non-essential or non-life sustaining businesses, restricting travel and individual activities outside of the home, closing schools, and mandating other social distancing measures. Additionally, hospitals and other facilities began to suspend elective surgeries. As a result, Select Medical's outpatient rehabilitation clinics experienced significantly less patient visit volume due to a decline in patient referrals from physicians, a reduction in workers' compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries which would have required outpatient rehabilitation services. Beginning in May 2020, state governments began to ease restrictions imposed on businesses and individuals, physician offices began reopening for routine office visits, and hospitals and other facilities began performing elective surgeries again, which has resulted in an increased need for the services provided by Select Medical's outpatient rehabilitation clinics.

The following table shows revenue and patient visits for each of the periods presented, as well as the number of working days for each period.

Revenue

Visits

Working Days(1)

2019

2020

% Change

2019

2020

% Change

2019

2020

(in thousands, except percentages)

January

$

83,185

$

90,924

9.3%

687,007

757,171

10.2%

22

22

February

78,573

88,239

12.3%

658,610

739,061

12.2%

20

20

March

85,147

76,086

(10.6)%

708,866

626,433

(11.6)%

21

22

Three Months Ended March 31

$

246,905

$

255,249

3.4%

2,054,483

2,122,665

3.3%

63

64

April

$

90,230

$

49,084

(45.6)%

762,914

386,108

(49.4)%

22

22

May

90,272

51,186

(43.3)%

759,829

409,703

(46.1)%

22

20

June

81,389

66,868

(17.8)%

680,762

546,456

(19.7)%

20

22

Three Months Ended June 30

$

261,891

$

167,138

(36.2)%

2,203,505

1,342,267

(39.1)%

64

64

Six Months Ended June 30

$

508,796

$

422,387

(17.0)%

4,257,988

3,464,932

(18.6)%

127

128

July

$

89,267

$

77,793

(12.9)%

754,102

636,826

(15.6)%

22

22

August

90,687

79,034

(12.8)%

743,813

651,738

(12.4)%

22

21

September

85,376

83,215

(2.5)%

706,413

694,808

(1.6)%

20

21

Three Months Ended September 30

$

265,330

$

240,042

(9.5)%

2,204,328

1,983,372

(10.0)%

64

64

Nine Months Ended September 30

$

774,126

$

662,429

(14.4)%

6,462,316

5,448,304

(15.7)%

191

192

October

$

96,868

$

88,274

(8.9)%

808,649

745,562

(7.8)%

23

22

November

87,072

82,102

(5.7)%

722,607

685,885

(5.1)%

20

20

December

87,945

87,108

(1.0)%

725,710

713,593

(1.7)%

21

22

Three Months Ended December 31

$

271,885

$

257,484

(5.3)%

2,256,966

2,145,040

(5.0)%

64

64

Twelve Months Ended December 31

$

1,046,011

$

919,913

(12.1)%

8,719,282

7,593,344

(12.9)%

255

256

(1)

Represents the number of days in which normal business operations were conducted during the periods presented. 

Concentra Segment.  Beginning in mid-March 2020, state governments began placing significant restrictions on businesses and mandating closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. These actions have had significant effects on patient visit volumes. Beginning in May 2020, state governments began to ease restrictions imposed on businesses and employers began to increase their workforce, which has resulted in an increased need for occupational health services. During the year ended December 31, 2020, Concentra expanded its services to provide COVID-19 screening and testing at its centers and various onsite clinics located at employer worksites.

The following table shows revenue and patient visits for each of the periods presented, as well as the number of working days for each period.

Revenue

Visits

Working Days(1)

2019

2020

% Change

2019

2020

% Change

2019

2020

(in thousands, except percentages)

January

$

133,507

$

141,236

5.8%

985,598

1,032,069

4.7%

22

22

February

126,309

133,690

5.8%

919,065

965,741

5.1%

20

20

March

136,505

123,609

(9.4)%

1,006,944

879,585

(12.6)%

21

22

Three Months Ended March 31

$

396,321

$

398,535

0.6%

2,911,607

2,877,395

(1.2)%

63

64

April

$

140,050

$

91,178

(34.9)%

1,040,543

610,555

(41.3)%

22

22

May

143,183

99,228

(30.7)%

1,073,763

674,629

(37.2)%

22

20

June

130,218

121,932

(6.4)%

988,783

865,896

(12.4)%

20

22

Three Months Ended June 30

$

413,451

$

312,338

(24.5)%

3,103,089

2,151,080

(30.7)%

64

64

Six Months Ended June 30

$

809,772

$

710,873

(12.2)%

6,014,696

5,028,475

(16.4)%

127

128

July

$

142,385

$

132,465

(7.0)%

1,057,809

930,427

(12.0)%

22

22

August

144,452

130,291

(9.8)%

1,087,165

933,555

(14.1)%

22

21

September

135,063

129,103

(4.4)%

1,005,929

963,065

(4.3)%

20

21

Three Months Ended September 30

$

421,900

$

391,859

(7.1)%

3,150,903

2,827,047

(10.3)%

64

64

Nine Months Ended September 30

$

1,231,672

$

1,102,732

(10.5)%

9,165,599

7,855,522

(14.3)%

191

192

October

$

149,260

$

139,365

(6.6)%

1,113,408

1,011,816

(9.1)%

23

22

November

123,152

126,431

2.7%

908,159

867,918

(4.4)%

19

19

December

124,733

132,906

6.6%

881,699

892,648

1.2%

21

22

Three Months Ended December 31

$

397,145

$

398,702

0.4%

2,903,266

2,772,382

(4.5)%

63

63

Twelve Months Ended December 31

$

1,628,817

$

1,501,434

(7.8)%

12,068,865

10,627,904

(11.9)%

254

255

(1)

Represents the number of days in which normal business operations were conducted during the periods presented.

Purchase of Concentra Interest

On December 31, 2020, Select Medical, Welsh, Carson, Anderson & Stowe XII, L.P. ("WCAS"), and Dignity Health Holding Corporation ("DHHC") entered into an agreement pursuant to which Select Medical acquired approximately 11.1% of the outstanding membership interests of Concentra Group Holdings Parent, LLC on a fully diluted basis from WCAS, DHHC, and other equity holders of Concentra Group Holdings Parent, LLC for approximately $210.2 million.

This purchase was in lieu of, and deemed to be, the exercise of the second put right provided to certain equity holders under the terms of the Amended and Restated Limited Liability Company Agreement of Concentra Group Holdings Parent, LLC, dated as of February 1, 2018. Following this purchase, Select Medical owns approximately 78.0% of the outstanding membership interests of Concentra Group Holdings Parent, LLC on a fully diluted basis and approximately 79.8% of the outstanding voting membership interests of Concentra Group Holdings Parent, LLC.

Stock Repurchase Program

The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $500.0 million worth of shares of its common stock. The program has been extended until December 31, 2021, and will remain in effect until then, unless further extended or earlier terminated 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. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility.

Select Medical did not repurchase shares during the quarter ended December 31, 2020. During the year ended December 31, 2020, Select Medical repurchased 491,559 shares at a cost of approximately $8.7 million, or $17.68 per share, which includes transaction costs. Since the inception of the program through December 31, 2020, Select Medical has repurchased 38,580,908 shares at a cost of approximately $356.6 million, or $9.24 per share, which includes transaction costs.

Business Outlook

Select Medical is issuing its business outlook for 2021. Select Medical expects for the full year of 2021 revenue to be in the range of $5.65 billion to $5.85 billion and Adjusted EBITDA for the full year of 2021 to be in the range of $840.0 million to $880.0 million. Select Medical expects fully diluted earnings per common share for the full year 2021 to be in the range of $2.26 to $2.48. A reconciliation of net income to Adjusted EBITDA for the full year of 2021 is presented in table XI of this release.

Select Medical is also providing a three-year compound annual growth rate target for the years 2021 through 2023. Select Medical is targeting compound annual growth for revenue in the range of 4% to 6% from 2021 through 2023. Select Medical is targeting compound annual growth for Adjusted EBITDA in the range of 7% to 8% from 2021 through 2023. Select Medical is targeting compound annual growth for fully diluted earnings per common share in the range of 17% to 20% from 2021 through 2023.

Conference Call

Select Medical will host a conference call regarding its results for the fourth quarter and full year ended December 31, 2020, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reporting segments, on Friday, February 26, 2021, at 9:00am ET. The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 4288605. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website www.selectmedicalholdings.com.

For those unable to participate in the conference call, a replay will be available until 12:00pm ET, March 5, 2021. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 4288605. The replay can also be accessed at Select Medical Holdings Corporation's website, 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), including statements related to Select Medical's 2021 and long-term business outlook. 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:

  • developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;
  • changes in government reimbursement for our services and/or new payment policies may result in a reduction in revenue, an increase in costs, and a reduction in profitability;
  • the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline;
  • the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our revenue 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;
  • our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;
  • private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;
  • the failure to maintain established relationships with the physicians in the areas we serve could reduce our  revenue and profitability;
  • shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;
  • competition may limit our ability to grow and result in a decrease in our revenue 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;
  • a security breach of our or our third-party vendors' information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and
  • other factors discussed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including factors discussed under the heading "Risk Factors" of the annual report on Form 10-K for the year ended December 31, 2020.

Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance.

Investor inquiries:

Joel T. VeitSenior Vice President and Treasurer717-972-1100ir@selectmedical.com

I.  Condensed Consolidated Statements of Operations

For the Three Months Ended December 31, 2019 and 2020

(In thousands, except per share amounts, unaudited)

2019

2020

% Change

Revenue

$

1,374,584

$

1,460,494

6.2

%

Costs and expenses:

Cost of services, exclusive of depreciation and amortization

1,175,649

1,246,594

6.0

General and administrative

34,062

35,229

3.4

Depreciation and amortization

52,504

51,526

(1.9)

Total costs and expenses

1,262,215

1,333,349

5.6

Other operating income

36,184

N/M

Income from operations

112,369

163,329

45.4

Other income and expense:

Loss on early retirement of debt

(19,440)

N/M

Equity in earnings of unconsolidated subsidiaries

6,279

9,763

55.5

Loss on sale of businesses

(303)

N/M

Interest expense

(43,959)

(35,512)

(19.2)

Income before income taxes

55,249

137,277

148.5

Income tax expense

11,578

35,062

202.8

Net income

43,671

102,215

134.1

Less: Net income attributable to non-controlling interests

11,604

24,941

114.9

Net income attributable to Select Medical

$

32,067

$

77,274

141.0

%

Diluted earnings per common share:(1)

$

0.24

$

0.57

(1)

Refer to table III for calculation of earnings per common share.

N/M

Not meaningful

 

II.  Condensed Consolidated Statements of Operations

For the Years Ended December 31, 2019 and 2020

(In thousands, except per share amounts, unaudited)

2019

2020

% Change

Revenue

$

5,453,922

$

5,531,713

1.4

%

Costs and expenses:

Cost of services, exclusive of depreciation and amortization

4,641,002

4,710,372

1.5

General and administrative

128,463

138,037

7.5

Depreciation and amortization

212,576

205,659

(3.3)

Total costs and expenses

4,982,041

5,054,068

1.4

Other operating income

90,012

N/M

Income from operations

471,881

567,657

20.3

Other income and expense:

Loss on early retirement of debt

(38,083)

N/M

Equity in earnings of unconsolidated subsidiaries

24,989

29,440

17.8

Gain on sale of businesses

6,532

12,387

N/M

Interest expense

(200,570)

(153,011)

(23.7)

Income before income taxes

264,749

456,473

72.4

Income tax expense

63,718

111,867

75.6

Net income

201,031

344,606

71.4

Less: Net income attributable to non-controlling interests

52,582

85,611

62.8

Net income attributable to Select Medical

$

148,449

$

258,995

74.5

%

Diluted earnings per common share:(1)

$

1.10

$

1.93

(1)

Refer to table III for calculation of earnings per common share.

N/M

Not meaningful

III.  Earnings per ShareFor the Three Months and Years Ended December 31, 2019 and 2020 (In thousands, except per share amounts, unaudited)

Select Medical's capital structure includes common stock and unvested restricted stock awards. To compute earnings per share ("EPS"), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings.

The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three months and years ended December 31, 2019 and 2020:

Diluted EPS

Three Months EndedDecember 31,

Years EndedDecember 31,

2019

2020

2019

2020

Net income

$

43,671

$

102,215

$

201,031

$

344,606

Less: net income attributable to non-controlling interests

11,604

24,941

52,582

85,611

Net income attributable to Select Medical

32,067

77,274

148,449

258,995

Less: net income attributable to participating securities

1,101

2,638

4,994

8,896

Net income attributable to common shares

$

30,966

$

74,636

$

143,455

$

250,099

The following tables set forth the computation of EPS under the two-class method for the three months and years ended December 31, 2019 and 2020:

Three Months Ended December 31,

2019

2020

Net IncomeAllocation

Shares(1)

Diluted EPS

Net IncomeAllocation

Shares(1)

Diluted EPS

Common shares

$

30,966

129,676

$

0.24

$

74,636

130,269

$

0.57

Participating securities

1,101

4,610

$

0.24

2,638

4,605

$

0.57

Total

$

32,067

$

77,274

Years Ended December 31,

2019

2020

Net IncomeAllocation

Shares(1)

Diluted EPS

Net IncomeAllocation

Shares(1)

Diluted EPS

Common shares

$

143,455

130,276

$

1.10

$

250,099

129,780

$

1.93

Participating securities

4,994

4,535

$

1.10

8,896

4,616

$

1.93

Total

$

148,449

$

258,995

(1)

Represents the weighted average share count outstanding during the period.

 

IV.  Condensed Consolidated Balance Sheets

(In thousands, unaudited)

December 31,

2019

2020

Assets

Current Assets:

Cash and cash equivalents

$

335,882

$

577,061

Accounts receivable

762,677

896,763

Other current assets

114,433

120,176

Total Current Assets

1,212,992

1,594,000

Operating lease right-of-use assets

1,003,986

1,032,217

Property and equipment, net

998,406

943,420

Goodwill

3,391,955

3,379,014

Identifiable intangible assets, net

409,068

387,541

Other assets

323,881

319,207

Total Assets

$

7,340,288

$

7,655,399

Liabilities and Equity

Current Liabilities:

Payables and accruals

$

681,163

$

800,918

Government advances

321,807

Unearned government assistance

82,607

Current operating lease liabilities

207,950

220,413

Current portion of long-term debt and notes payable

25,167

12,621

Total Current Liabilities

914,280

1,438,366

Non-current operating lease liabilities

852,897

875,367

Long-term debt, net of current portion

3,419,943

3,389,398

Non-current deferred tax liability

148,258

132,421

Other non-current liabilities

101,334

168,703

Total Liabilities

5,436,712

6,004,255

Redeemable non-controlling interests

974,541

398,171

Total equity

929,035

1,252,973

Total Liabilities and Equity

$

7,340,288

$

7,655,399

 

V.  Condensed Consolidated Statements of Cash Flows

For the Three Months Ended December 31, 2019 and 2020

(In thousands, unaudited)

2019

2020

Operating activities

Net income

$

43,671

$

102,215

Adjustments to reconcile net income to net cash provided by operating activities:

Distributions from unconsolidated subsidiaries

6,613

13,670

Depreciation and amortization

52,504

51,526

Provision for expected credit losses

694

323

Equity in earnings of unconsolidated subsidiaries

(6,279)

(9,763)

Loss on extinguishment of debt

11,970

Loss on sale of assets and businesses

28

2,160

Stock compensation expense

7,020

6,422

Amortization of debt discount, premium and issuance costs

2,097

549

Deferred income taxes

(188)

(159)

Changes in operating assets and liabilities, net of effects of business combinations:

Accounts receivable

35,434

(25,188)

Other current assets

1,757

4,040

Other assets

4,863

1,252

Accounts payable and accrued expenses

18,358

44,722

Unearned government assistance

15,669

Net cash provided by operating activities

178,542

207,438

Investing activities

Business combinations, net of cash acquired

(7,436)

(6,732)

Purchases of property and equipment

(33,170)

(40,868)

Investment in businesses

(5,422)

(5,568)

Proceeds from sale of assets and businesses

9

Net cash used in investing activities

(46,019)

(53,168)

Financing activities

Proceeds from term loans

614,423

Payments on term loans

(1,243,086)

Proceeds from 6.250% senior notes

705,811

Borrowings of other debt

4,943

5,022

Principal payments on other debt

(7,976)

(5,561)

Repurchase of common stock

(1,222)

(1,792)

Proceeds from exercise of stock options

92

Proceeds from issuance of non-controlling interests

159

5,878

Distributions to and purchases of non-controlling interests

(5,748)

(10,393)

Purchase of membership interests of Concentra Group Holdings Parent

(210,163)

Net cash provided by (used in) financing activities

67,396

(217,009)

Net increase (decrease) in cash and cash equivalents

199,919

(62,739)

Cash and cash equivalents at beginning of period

135,963

639,800

Cash and cash equivalents at end of period

$

335,882

$

577,061

Supplemental information:

Cash paid for interest

$

33,902

$

15,062

Cash paid for taxes

$

12,120

$

26,945

 

VI.  Condensed Consolidated Statements of Cash Flows

For the Years Ended December 31, 2019 and 2020

(In thousands, unaudited)

2019

2020

Operating activities

Net income

$

201,031

$

344,606

Adjustments to reconcile net income to net cash provided by operating activities:

Distributions from unconsolidated subsidiaries

20,222

35,390

Depreciation and amortization

212,576

205,659

Provision for expected credit losses

3,038

604

Equity in earnings of unconsolidated subsidiaries

(24,989)

(29,440)

Loss on extinguishment of debt

22,130

Gain on sale of assets and businesses

(6,321)

(22,563)

Stock compensation expense

26,451

27,250

Amortization of debt discount, premium and issuance costs

11,566

2,184

Deferred income taxes

(7,435)

(14,715)

Changes in operating assets and liabilities, net of effects of business combinations:

Accounts receivable

(57,991)

(116,601)

Other current assets

(4,259)

(18,775)

Other assets

6,122

17,587

Accounts payable and accrued expenses

43,041

196,164

Government advances

318,116

Unearned government assistance

82,607

Net cash provided by operating activities

445,182

1,028,073

Investing activities

Business combinations, net of cash acquired

(93,705)

(20,808)

Purchases of property and equipment

(157,126)

(146,440)

Investment in businesses

(66,090)

(31,425)

Proceeds from sale of assets and businesses

192

83,320

Net cash used in investing activities

(316,729)

(115,353)

Financing activities

Borrowings on revolving facilities

700,000

470,000

Payments on revolving facilities

(720,000)

(470,000)

Proceeds from term loans

1,208,106

Payments on term loans

(1,618,170)

(39,843)

Proceeds from 6.250% senior notes

1,244,987

Payment on 6.375% senior notes

(710,000)

Revolving facility debt issuance costs

(310)

Borrowings of other debt

24,225

40,108

Principal payments on other debt

(30,604)

(48,381)

Repurchase of common stock

(38,531)

(16,034)

Proceeds from exercise of stock options

964

Decrease in overdrafts

(25,083)

Proceeds from issuance of non-controlling interests

18,447

7,564

Distributions to and purchases of non-controlling interests

(21,780)

(38,589)

Purchase of membership interests of Concentra Group Holdings Parent

(576,366)

Net cash provided by (used in) financing activities

32,251

(671,541)

Net increase in cash and cash equivalents

160,704

241,179

Cash and cash equivalents at beginning of period

175,178

335,882

Cash and cash equivalents at end of period

$

335,882

$

577,061

Supplemental information:

Cash paid for interest

$

182,992

$

155,236

Cash paid for taxes

$

70,592

$

108,890

 

VII.  Key Statistics

For the Three Months Ended December 31, 2019 and 2020

(unaudited)

2019

2020

% Change

Critical Illness Recovery Hospital

Number of hospitals – end of period(a)

101

99

Revenue (,000)

$

454,949

$

537,898

18.2

%

Number of patient days(b)(c)

259,283

285,346

10.1

%

Number of admissions(b)(d)

9,095

9,376

3.1

%

Revenue per patient day(b)(e)

$

1,742

$

1,881

8.0

%

Adjusted EBITDA (,000)

$

60,485

$

75,284

24.5

%

Adjusted EBITDA margin

13.3

%

14.0

%

Rehabilitation Hospital

Number of hospitals – end of period(a)

29

30

Revenue (,000)

$

182,670

$

195,912

7.2

%

Number of patient days(b)(c)

94,236

96,504

2.4

%

Number of admissions(b)(d)

6,636

6,592

(0.7)

%

Revenue per patient day(b)(e)

$

1,739

$

1,839

5.8

%

Adjusted EBITDA (,000)

$

43,312

$

42,392

(2.1)

%

Adjusted EBITDA margin

23.7

%

21.6

%

Outpatient Rehabilitation

Number of clinics – end of period(a)

1,740

1,788

Revenue (,000)

$

271,885

$

257,484

(5.3)

%

Number of visits(b)

2,256,966

2,145,040

(5.0)

%

Revenue per visit(b)(f)

$

104

$

103

(1.0)

%

Adjusted EBITDA (,000)

$

40,216

$

27,701

(31.1)

%

Adjusted EBITDA margin

14.8

%

10.8

%

Concentra

Number of centers – end of period(b)

521

517

Revenue (,000)

$

397,145

$

398,702

0.4

%

Number of visits(b)

2,903,266

2,772,382

(4.5)

%

Revenue per visit(b)(f)

$

122

$

122

0.0

%

Adjusted EBITDA (,000)

$

56,458

$

69,382

22.9

%

Adjusted EBITDA margin

14.2

%

17.4

%

(a)

Includes managed locations.

(b)

Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.

(c)

Each patient day represents one patient occupying one bed for one day during the periods presented.

(d)

Represents the number of patients admitted to our hospitals during the periods presented.

(e)

Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at our hospitals, by the total number of patient days.

(f)

Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits.

 

VIII.  Key StatisticsFor the Years Ended December 31, 2019 and 2020(unaudited)

2019

2020

% Change

Critical Illness Recovery Hospital

Number of hospitals – end of period(a)

101

99

Revenue (,000)

$

1,836,518

$

2,077,499

13.1

%

Number of patient days(b)(c)

1,038,361

1,111,756

7.1

%

Number of admissions(b)(d)

36,774

37,456

1.9

%

Revenue per patient day(b)(e)

$

1,753

$

1,858

6.0

%

Adjusted EBITDA (,000)

$

254,868

$

342,427

34.4

%

Adjusted EBITDA margin

13.9

%

16.5

%

Rehabilitation Hospital

Number of hospitals – end of period(a)

29

30

Revenue (,000)

$

670,971

$

734,673

9.5

%

Number of patient days(b)(c)

353,031

370,833

5.0

%

Number of admissions(b)(d)

24,889

25,081

0.8

%

Revenue per patient day(b)(e)

$

1,685

$

1,793

6.4

%

Adjusted EBITDA (,000)

$

135,857

$

153,203

12.8

%

Adjusted EBITDA margin

20.2

%

20.9

%

Outpatient Rehabilitation

Number of clinics – end of period(a)

1,740

1,788

Revenue (,000)

$

1,046,011

$

919,913

(12.1)

%

Number of visits(b)

8,719,282

7,593,344

(12.9)

%

Revenue per visit(b)(f)

$

103

$

104

1.0

%

Adjusted EBITDA (,000)

$

151,831

$

79,164

(47.9)

%

Adjusted EBITDA margin

14.5

%

8.6

%

Concentra

Number of centers – end of period(b)

521

517

Revenue (,000)

$

1,628,817

$

1,501,434

(7.8)

%

Number of visits(b)

12,068,865

10,627,904

(11.9)

%

Revenue per visit(b)(f)

$

122

$

123

0.8

%

Adjusted EBITDA (,000)

$

276,482

$

252,892

(8.5)

%

Adjusted EBITDA margin

17.0

%

16.8

%

(a)

Includes managed locations.

(b)

Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.

(c)

Each patient day represents one patient occupying one bed for one day during the periods presented.

(d)

Represents the number of patients admitted to our hospitals during the periods presented.

(e)

Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at our hospitals, by the total number of patient days.

(f)

Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits.

IX.  Net Income to Adjusted EBITDA ReconciliationFor the Three Months and Years Ended December 31, 2019 and 2020 (In thousands, unaudited)

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 to evaluate financial performance and determine resource allocation for each of Select Medical's operating segments. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). 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, income from operations, 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 GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

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 earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.

Three Months EndedDecember 31,

Years EndedDecember 31,

2019

2020

2019

2020

Net income

$

43,671

$

102,215

$

201,031

$

344,606

Income tax expense

11,578

35,062

63,718

111,867

Interest expense

43,959

35,512

200,570

153,011

Loss (gain) on sale of businesses

303

(6,532)

(12,387)

Equity in earnings of unconsolidated subsidiaries

(6,279)

(9,763)

(24,989)

(29,440)

Loss on early retirement of debt

19,440

38,083

Income from operations

112,369

163,329

471,881

567,657

Stock compensation expense:

Included in general and administrative

5,485

5,565

20,334

22,053

Included in cost of services

1,535

857

6,117

5,197

Depreciation and amortization

52,504

51,526

212,576

205,659

Adjusted EBITDA

$

171,893

$

221,277

$

710,908

$

800,566

Critical illness recovery hospital

$

60,485

$

75,284

$

254,868

$

342,427

Rehabilitation hospital

43,312

42,392

135,857

153,203

Outpatient rehabilitation

40,216

27,701

151,831

79,164

Concentra(a)

56,458

69,382

276,482

252,892

Other(a)(b)

(28,578)

6,518

(108,130)

(27,120)

Adjusted EBITDA

$

171,893

$

221,277

$

710,908

$

800,566

(a)

For the three months and year ended December 31, 2020, Select Medical recognized payments received under the Provider Relief Fund for loss of revenue and health care related expenses attributable to the COVID-19 pandemic as other operating income. The other operating income is included within the operating results of Select Medical's other activities and its Concentra segment. Refer to "CARES Act Provider Relief Fund" for further discussion.

(b)

Other primarily includes general and administrative costs.

X.  Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share For the Three Months and Years Ended December 31, 2019 and 2020 (In thousands, except per share amounts, unaudited)

Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP.  Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share are important to investors because they are reflective of the financial performance of Select Medical's ongoing operations and provide better comparability of its results of operations between periods. Adjusted net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes 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 net income attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.

The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.

Three Months Ended December 31,

2019

Per Share(a)

2020

Per Share(a)

Net income attributable to common shares(a)

$

30,966

$

0.24

$

74,636

$

0.57

Adjustments:(b)

Loss on early retirement of debt

9,505

0.07

Loss on sale of businesses

201

Adjusted net income attributable to common shares

$

40,471

$

0.31

$

74,837

$

0.57

Years Ended December 31,

2019

Per Share(a)

2020

Per Share(a)

Net income attributable to common shares(a)

$

143,455

$

1.10

$

250,099

$

1.93

Adjustments:(b)

Loss on early retirement of debt and related costs(c)

22,286

0.17

Gain on sale of businesses

(4,543)

(0.03)

(4,888)

(0.04)

Adjusted net income attributable to common shares

$

161,198

$

1.24

$

245,211

$

1.89

(a)

Net income attributable to common shares and earnings per common share are calculated based on the diluted weighted average common shares outstanding, as presented in table III.

(b)

Adjustments to net income attributable to common shares include estimated income tax and non-controlling interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact, which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes both current and deferred income tax expense or benefit.

For the three months ended December 31, 2019, the adjustments to net income attributable to common shares include an estimated income tax benefit of approximately $5.2 million. For the three months ended December 31, 2020, the estimated income tax effect on the adjustment made to net income attributable to common shares was immaterial.

For the year ended December 31, 2019, the adjustments to net income attributable to common shares include an estimated income tax benefit of approximately $9.2 million. For the year ended December 31, 2020, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $3.3 million.

(c)

Select Medical redeemed its $710.0 million 6.375% senior notes on August 30, 2019 and issued and sold $550.0 million 6.250% senior notes on August 1, 2019. As a result, Select Medical recognized interest expense on both the 6.250% senior notes and the 6.375% senior notes during August 2019. The adjustment to net income attributable to common shares for the loss on early retirement of debt and related costs includes the interest expense recognized on the 6.375% senior notes during August 2019 and its related tax effects.

XI.  Net Income to Adjusted EBITDA ReconciliationBusiness Outlook for the Year Ending December 31, 2021 (In millions, unaudited)

The following is a reconciliation of full year 2021 Adjusted EBITDA expectations as computed at the low and high points of the range to the closest comparable GAAP financial measure. Refer to table IX for the definition of Adjusted EBITDA and a discussion of Select Medical's use of Adjusted EBITDA in evaluating financial performance. Each item presented in the below table is an estimation of full year 2021 expectations.

Range

Non-GAAP Measure Reconciliation

Low

High

Net income attributable to Select Medical

$

306

$

336

Net income attributable to non-controlling interests

70

70

Net income

376

406

Income tax expense

130

140

Interest expense

147

147

Equity in earnings of unconsolidated subsidiaries

(39)

(39)

Income from operations

614

654

Stock compensation expense

28

28

Depreciation and amortization

198

198

Adjusted EBITDA

$

840

$

880

 

Cision View original content:http://www.prnewswire.com/news-releases/select-medical-holdings-corporation-announces-results-for-its-fourth-quarter-and-year-ended-december-31-2020-301236010.html

SOURCE Select Medical Holdings Corporation



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