Select Medical (SEM) AI Stock Analysis

• Market Cap: $1.92B
• Dividend Yield: 1.68%
• Average Volume (3M): 1.26M
• Price to Earnings (P/E): 11.1
• Beta (1Y): 0.75
• Revenue Growth: -8.86%
• EPS Growth: -36.22%
• Country: US
• Employees: 30,000
• Sector: Healthcare
• Sector Strength: 46
• Industry: Medical - Care Facilities
• EPS (TTM): 0.44
• Shares Outstanding: 128,538,900
• 10 Day Avg. Volume: 1,190,202
• 30 Day Avg. Volume: 1,257,024
• PEG Ratio: -0.18
• Price to Book (P/B): 1.26
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 17.64
• Enterprise Value/Market Cap: 3.49
• Enterprise Value/Revenue: 0.28
• Enterprise Value/Gross Profit: 16.09
• Enterprise Value/Ebitda: 2.57
• 1Y Price Target: $19.60
• Price Target Upside: 32.08% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 64 Neutral
• Price Target: ―

Select Medical's overall score reflects moderate financial performance with strong cash flow. The stock is undervalued with a decent dividend yield, but technical indicators suggest a downward trend in the short term. Despite growth in certain divisions, regulatory challenges and adverse weather have impacted performance. The company's strategic growth plans and positive earnings guidance provide a balanced outlook.

Positive Factors

Inpatient Rehabilitation

Inpatient Rehab Hospital segment is more than offsetting LTACH headwinds with 20%+ segment margins and is the focus of the company’s expansion plans.

Outpatient Rehabilitation

Outpatient Rehab segment is positioned for margin expansion with the roll-out of an upgraded scheduling and office management system.

Strategic Expansion

Increasing capacity in the IRF segment is a key strategic priority for SEM, with the company aiming to increase bed capacity by ~28% from 2024 to 2026.

Negative Factors

Critical Illness Recovery Hospitals

The lower guidance largely reflects the 1Q miss, the majority of which is due to Critical Illness Recovery Hospitals where reimbursement was penalized in its seasonally biggest quarter with highest acuity cases.

Guidance Reduction

The shares pulled back sharply to ~$14 after a 1Q miss that led to FY25 AEBITDA guidance being reduced 2% at the midpoint.

LT Acute Care Hospital Challenges

LT Acute Care Hospital segment is experiencing a margin headwind that is expected to result in a decline in AEBITDA.

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 makes money primarily through its two main business segments: Specialty Hospitals and Outpatient Rehabilitation. In the Specialty Hospitals segment, revenue is generated by providing inpatient care services, including critical illness recovery and rehabilitation services, to patients who require long-term acute care. This includes payments from Medicare, Medicaid, and private insurance companies. In the Outpatient Rehabilitation segment, revenue is earned through physical therapy services offered in various outpatient clinics. The company also benefits from strategic partnerships and collaborations with healthcare providers and insurance companies, which help in expanding its patient base and optimizing reimbursement rates, thereby contributing to its overall earnings.

Select Medical Financial Statement Overview

Summary

Select Medical exhibits moderate profitability with a strong cash flow generation capability. Despite this, the company faces challenges due to revenue fluctuations and high leverage, which pose risks if not managed. Shareholder returns are decent, but the financial health could be impacted by high debt levels.

Income Statement

The company's revenue has shown fluctuations, with a decline in TTM compared to prior years. Gross profit margin for TTM stands at 8.75%, and the net profit margin is 3.66%. EBIT and EBITDA margins are 3.94% and 7.03% respectively. These indicate moderate profitability but with room for improvement in operational efficiency.

Balance Sheet

The debt-to-equity ratio is high, reflecting significant leverage, which poses a potential risk if revenue declines. ROE for TTM is 10.11%, indicating decent shareholder returns, and the equity ratio is 30.19%, suggesting a moderate level of stability in the capital structure.

Cash Flow

The cash flow statement reveals a strong operating cash flow relative to net income, indicating good cash generation capability. While free cash flow has decreased, the operating cash flow to net income ratio is robust, highlighting efficiency in converting income into cash.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.75B	5.19B	6.66B	6.33B	6.20B	5.53B
	Gross Profit
415.92M	633.64M	932.04M	733.38M	919.37M	821.34M
	EBIT
187.27M	268.31M	554.87M	403.28M	713.77M	567.66M
	EBITDA
410.39M	510.23M	789.74M	585.31M	772.72M	683.30M
	Net Income Common Stockholders
173.82M	214.04M	243.49M	158.99M	402.23M	259.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
53.21M	59.69M	142.97M	97.91M	74.31M	577.06M
	Total Assets
5.70B	5.61B	7.69B	7.67B	7.36B	7.66B
	Total Debt
2.79B	2.70B	4.96B	5.12B	4.72B	4.50B
	Net Debt
2.73B	2.64B	4.88B	5.03B	4.65B	3.92B
	Total Liabilities
3.65B	3.61B	6.12B	6.31B	6.03B	6.40B
	Stockholders Equity
1.72B	1.68B	1.29B	1.32B	1.33B	1.06B
Cash Flow		Free Cash Flow
359.10M	539.65M	352.86M	94.45M	220.69M	881.63M
	Operating Cash Flow
581.10M	517.86M	582.06M	284.82M	401.23M	1.03B
	Investing Cash Flow
-219.92M	-231.01M	-268.48M	-226.34M	-256.59M	-115.35M
	Financing Cash Flow
-400.58M	-311.17M	-327.48M	-34.89M	-647.38M	-671.54M

Select Medical Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 14.84
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 14.84 is below the 20-day moving average (MA) of 15.07, below the 50-day MA of 15.57, and below the 200-day MA of 17.83, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 43.76 is Neutral, neither overbought nor oversold. The STOCH value of 46.36 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	78 Outperform	$1.64B	15.34	11.19%	2.30%	19.16%	31.92%
ASTH	70 Outperform	$1.21B	33.45	5.00%	―	54.81%	-45.07%
SEM	64 Neutral	$1.92B	11.10	10.38%	1.68%	-8.86%	-36.22%
ACHC	60 Neutral	$1.98B	10.56	6.35%	―	5.48%	―
SGRY	59 Neutral	$2.54B	―	-10.43%	―	13.54%	-30732.00%
Sector *	54 Neutral	$5.24B	3.26	-44.35%	6.48%	16.78%	-0.10%
LFST	50 Neutral	$1.92B	―	-2.47%	―	16.31%	79.86%

Select Medical Corporate Events

Select Medical Stockholders Approve Key Proposals at Meeting

On April 24, 2025, Select Medical Holdings Corporation held its annual meeting where stockholders approved the Non-Employee Director Compensation Policy, which includes cash and equity compensation for non-employee directors. Additionally, stockholders approved several proposals, including the election of four Class I Directors, an amendment to eliminate supermajority voting requirements, and the ratification of PricewaterhouseCoopers LLP as the independent accounting firm for 2025.