Select Medical (SEM) AI Stock Analysis

• Market Cap: $2.02B
• Dividend Yield: 1.69%
• Average Volume (3M): 1.19M
• Price to Earnings (P/E): 18.7
• Beta (1Y): 0.88
• Revenue Growth: -22.96%
• EPS Growth: -59.35%
• Country: US
• Employees: 30,000
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Care Facilities
• EPS (TTM): 0.16
• Shares Outstanding: 123,817,590
• 10 Day Avg. Volume: 1,406,764
• 30 Day Avg. Volume: 1,192,837
• PEG Ratio: -0.43
• Price to Book (P/B): 1.08
• Price to Sales (P/S): 0.34
• P/FCF Ratio: 4.79
• Enterprise Value/Market Cap: 1.43
• Enterprise Value/Revenue: 0.73
• Enterprise Value/Gross Profit: 8.90
• Enterprise Value/Ebitda: 12.39
• 1Y Price Target: $20.00
• Price Target Upside: 33.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: $17.50 ▲(16.59% Upside)

The score is driven primarily by improving financial flexibility (notably deleveraging) and solid recent cash conversion, supported by constructive technical momentum. These positives are tempered by weakened profitability/margins, mixed earnings-call execution (especially outpatient weakness and the insurance cost hit), and only moderate valuation support.

Positive Factors

Deleveraging / Balance Sheet

Material deleveraging meaningfully reduces financial risk and interest burden, increasing resilience to reimbursement volatility. A stronger capital structure supports continued investment in bed growth, M&A optionality, and buffers near-term cash swings over the next 2–6 months.

Cash Generation / FCF Conversion

Consistent FCF conversion funds capex, dividend payments, and deleveraging without requiring equity issuance. Reliable cash generation underpins the bed-development pipeline and provides flexibility to absorb episodic insurance or reimbursement headwinds sustainably.

Inpatient Rehab Growth & Pipeline

Outperformance in inpatient rehab with rising occupancy and expanding bed footprint strengthens market position in higher-acuity services. A multi-year bed development pipeline creates durable revenue growth and scale advantages as reimbursement mixes shift toward inpatient care.

Negative Factors

Margin Compression / Earnings Durability

Sustained margin compression reduces operating leverage and buffers against payor or cost shocks. Narrower margins limit reinvestment capacity, make deleveraging harder to sustain, and raise sensitivity to volume or reimbursement swings over the medium term.

Outpatient Profitability Weakness

A near-58% outpatient EBITDA decline highlights structural pressures: lower Medicare reimbursement, unfavorable payer mixes, variable discounts and staffing shortages. Persistent outpatient weakness undermines a large revenue stream and constrains consolidated margin recovery.

Leverage & Near-Term Liquidity

High absolute debt and modest cash balances reduce financial flexibility if margins stay depressed. Elevated leverage increases refinancing and covenant risk and limits ability to fund new development or absorb unexpected cost shocks without using revolver availability.

Select Medical Business Overview & Revenue Model

Company Description

Select Medical Holdings Corporation, through its subsidiaries, operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States. The company's Critical Illness Recovery Hospital segment consists of hospitals that provide services for heart failure, infectious disease, respiratory failure and pulmonary disease, surgery requiring prolonged recovery, renal disease, neurological events, and trauma. Its Rehabilitation Hospital segment offers therapy and rehabilitation treatments, including rehabilitative services for brain and spinal cord injuries, strokes, amputations, neurological disorders, orthopedic conditions, pediatric congenital or acquired disabilities, and cancer. The company's Outpatient Rehabilitation segment operates rehabilitation clinics that provide physical, occupational, and speech rehabilitation programs and services; and specialized programs, such as functional programs for work related injuries, hand therapy, post-concussion rehabilitation, pediatric and cancer rehabilitation, and athletic training services. Its Concentra segment operates and provides occupational health centers and contract services at employer worksites that deliver occupational medicine, consumer health, physical therapy, and wellness services. As of December 31, 2021, the company operated 104 critical illness recovery hospitals in 28 states; 30 rehabilitation hospitals in 12 states; 1,881 outpatient rehabilitation clinics in 38 states and the District of Columbia; and 518 occupational health centers in 41 states, and 134 onsite clinics at employer worksites states. Select Medical Holdings Corporation was founded in 1996 and is headquartered in Mechanicsburg, Pennsylvania.

How the Company Makes Money

Select Medical generates revenue through multiple streams, primarily from the operations of its long-term acute care hospitals and outpatient rehabilitation clinics. Revenue is derived from patient care services, which includes billing for acute care hospital stays, physical and occupational therapy sessions, and other medical services provided to patients. The company also receives reimbursements from government programs like Medicare and Medicaid, as well as private insurance companies. Significant partnerships with healthcare providers and payers enhance their revenue potential, while strategic acquisitions of healthcare facilities further expand their operational footprint. In addition, Select Medical's focus on improving patient outcomes and reducing hospital readmission rates is integral to maintaining a sustainable revenue model.

Select Medical Financial Statement Overview

Summary

Balance-sheet risk improved materially via deleveraging (debt-to-equity down to ~0.6x) and recent cash conversion is solid (free cash flow exceeding net income in 2024–2025). Offsetting this, 2025 showed sharp margin/EBIT compression and weaker earnings durability despite strong revenue growth.

Income Statement

Revenue rebounded in 2025 (up ~39% year over year), but profitability deteriorated sharply. Gross margin and EBITDA margin compressed versus prior years, and EBIT fell close to break-even, with net margin down to ~2.7% from ~4.1% in 2024 and ~6.5% in 2021. Overall, the top-line trajectory is positive most recently, but earnings quality and margin stability are clear weaknesses.

Balance Sheet

Leverage improved meaningfully in 2025, with debt-to-equity dropping to ~0.6x from very elevated levels in 2021–2023 (over ~3–4x), suggesting a materially de-risked capital structure. Equity and assets are steady, and return on equity remains positive, though it has come down with weaker earnings. Strength is the sharp deleveraging; weakness is that returns have trended lower as profitability cooled.

Cash Flow

Cash generation is a relative bright spot: free cash flow exceeds net income in 2024 and 2025 (roughly ~1.0x–1.1x), indicating solid cash conversion. Free cash flow growth accelerated strongly in 2025, and operating cash flow remains positive. The key weakness is volatility across the period (notably weaker free cash flow in 2022 and lower operating cash flow versus 2020 highs).

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.93B	5.45B	5.19B	6.66B	6.33B	6.20B
Gross Profit	323.97M	629.29M	633.64M	932.04M	733.38M	919.37M
EBITDA	232.70M	226.80M	507.27M	789.74M	635.51M	968.35M
Net Income	110.00M	146.22M	214.04M	243.49M	158.99M	402.23M
Balance Sheet
Total Assets	5.69B	5.85B	5.61B	7.69B	7.67B	7.36B
Cash, Cash Equivalents and Short-Term Investments	60.05M	26.52M	59.69M	111.59M	172.76M	74.31M
Total Debt	1.03B	1.05B	2.70B	4.52B	5.16B	4.76B
Total Liabilities	3.67B	3.82B	3.61B	6.12B	6.27B	6.00B
Stockholders Equity	1.69B	1.71B	1.68B	1.29B	1.12B	1.11B
Cash Flow
Free Cash Flow	174.02M	382.74M	539.65M	352.86M	94.45M	220.69M
Operating Cash Flow	407.57M	346.47M	517.86M	582.06M	284.82M	401.23M
Investing Cash Flow	-223.79M	-216.49M	-231.01M	-268.48M	-226.34M	-256.59M
Financing Cash Flow	-315.20M	-163.15M	-311.17M	-327.48M	-34.89M	-647.38M

Select Medical Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.01
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SEM, the sentiment is Negative. The current price of 15.01 is below the 20-day moving average (MA) of 15.55, below the 50-day MA of 15.29, and above the 200-day MA of 14.19, indicating a neutral trend. The MACD of 0.23 indicates Positive momentum. The RSI at 39.72 is Neutral, neither overbought nor oversold. The STOCH value of 52.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SEM.

Select Medical Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NHC	74 Outperform	$2.52B	25.01	9.94%	1.80%	23.74%	-18.99%
SEM	65 Neutral	$2.02B	18.73	5.57%	1.69%	-22.96%	-59.35%
ASTH	62 Neutral	$975.53M	104.05	1.29%	―	68.17%	-85.42%
BKD	58 Neutral	$3.94B	-13.39	-214.33%	―	3.93%	-42.22%
MD	54 Neutral	$1.89B	10.19	20.28%	―	-4.21%	―
AVAH	52 Neutral	$1.55B	20.61	―	―	15.48%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Select Medical Corporate Events

Select Medical Declares Quarterly Dividend Amid Solid Results

Select Medical reported stronger financial performance for the fourth quarter and full year ended December 31, 2025, with quarterly revenue up 6.4% to $1.40 billion and full-year revenue up 5.1% to $5.45 billion. Income from continuing operations surged in both periods, aided by the absence of 2024 one-time charges tied to the November 25, 2024 tax-free spin-off of Concentra, though Adjusted EBITDA declined modestly year over year.

Segment results were mixed, with rehabilitation hospitals delivering double-digit revenue and EBITDA growth, critical illness recovery hospitals showing modest revenue gains but margin compression, and outpatient rehabilitation posting slight revenue growth. On November 24, 2025, Executive Chairman and co-founder Robert A. Ortenzio made a non-binding proposal to take the company private at $16.00–$16.20 per share, prompting the board’s independent special committee to review the offer and evaluate broader strategic alternatives, while the board also declared a quarterly cash dividend of $0.0625 per share on February 12, 2026 for payment in March 2026.

The most recent analyst rating on (SEM) stock is a Buy with a $16.50 price target. To see the full list of analyst forecasts on Select Medical stock, see the SEM Stock Forecast page.

Select Medical renews CEO Mullin under new agreement

On December 17, 2025, Select Medical Corporation entered into a new employment agreement with its Chief Executive Officer, Thomas P. Mullin, effective January 1, 2026, under which he will continue as CEO for an initial one-year term with automatic one-year renewals, receiving an annual base salary of $700,000 and being subject to non-competition and non-solicitation restrictions during employment and for two years after. The agreement also provides that if Mullin is terminated by Select without cause and not due to death or disability, he will receive severance equal to 12 months of base salary, and the company confirmed there are no related-party, family, or other arrangements requiring additional regulatory disclosure, signaling a straightforward, governance-compliant leadership continuity arrangement for stakeholders.

The most recent analyst rating on (SEM) stock is a Buy with a $16.50 price target. To see the full list of analyst forecasts on Select Medical stock, see the SEM Stock Forecast page.

Select Medical Receives Acquisition Proposal from Co-Founder

On November 24, 2025, Select Medical Holdings Corporation received a non-binding proposal from Robert A. Ortenzio, the company’s Executive Chairman and Co-Founder, to acquire all outstanding shares for $16.00 to $16.20 per share. The board’s disinterested members are reviewing the proposal with advisors, emphasizing their commitment to the best interests of the company and its shareholders. The outcome of this proposal remains uncertain, and further comments will be made only if necessary.

The most recent analyst rating on (SEM) stock is a Buy with a $20.00 price target. To see the full list of analyst forecasts on Select Medical stock, see the SEM Stock Forecast page.