Positive Outlook for Select Medical Amid CMS Rule Delay and Strength in Inpatient Rehabilitation

Bank of America Securities analyst Joanna Gajuk reiterated a Buy rating on Select Medical today and set a price target of $15.00.

Joanna Gajuk’s rating is based on the recent delay of the 20% Rule by CMS, which had previously exerted pressure on Select Medical’s long-term care hospitals. This delay is expected to allow Select Medical to reverse a significant reserve it had booked earlier in the year, thereby improving its financial outlook for the third quarter. Additionally, the anticipated impact of the 20% Rule in 2026 is expected to be less severe due to the use of more recent cost reports, which should reflect more normalized labor costs.
Furthermore, the delay suggests that the long-term care hospital industry is gaining more influence with CMS, which is a positive development as the industry seeks reforms. Joanna Gajuk reiterates a Buy rating, considering the reduced reimbursement pressure and the strength of Select Medical’s inpatient rehabilitation segment, which provides a counterbalance to potential challenges. The combination of these factors supports a favorable outlook for Select Medical’s stock.

In another report released on October 2, TR | OpenAI – 4o also upgraded the stock to a Buy with a $14.50 price target.