Select Medical (SEM) AI Stock Analysis

• Market Cap: $1.52B
• Dividend Yield: 2.02%
• Average Volume (3M): 961.61K
• Price to Earnings (P/E): 11.4
• Beta (1Y): 0.71
• Revenue Growth: -16.10%
• EPS Growth: -48.97%
• Country: US
• Employees: 30,000
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Care Facilities
• EPS (TTM): 0.32
• Shares Outstanding: 123,989,260
• 10 Day Avg. Volume: 894,260
• 30 Day Avg. Volume: 961,611
• PEG Ratio: -0.87
• Price to Book (P/B): 1.45
• Price to Sales (P/S): 0.47
• P/FCF Ratio: 4.51
• Enterprise Value/Market Cap: 3.33
• Enterprise Value/Revenue: 0.88
• Enterprise Value/Gross Profit: 7.67
• Enterprise Value/Ebitda: 15.55
• 1Y Price Target: $16.80
• Price Target Upside: 33.02% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 69 Neutral
• Price Target: $14.00 ▲(10.85% Upside)

Select Medical's overall stock score is driven by a stable financial performance with challenges in revenue growth and leverage. Technical indicators suggest a bearish trend, while valuation metrics indicate reasonable pricing. The earnings call and corporate events provide positive sentiment, with strategic expansions and leadership changes supporting future growth.

Positive Factors

Revenue Growth

The 5% revenue growth indicates a positive trend in business operations, suggesting effective strategies in expanding market reach and service offerings.

Leadership Change

The new CEO appointment is part of a strategic succession plan, potentially bringing fresh perspectives and driving long-term growth and operational improvements.

Inpatient Rehab Segment Performance

Strong performance in the inpatient rehab segment suggests a robust demand for services, supporting revenue stability and growth in a key business area.

Negative Factors

Revenue Decline in Critical Illness Recovery

The decline in revenue from critical illness recovery highlights challenges in adapting to regulatory changes, potentially impacting future profitability.

High Leverage

Significant leverage can strain financial flexibility, posing risks during economic downturns and potentially limiting strategic investments.

Declining Free Cash Flow

A decline in free cash flow growth could hinder the company's ability to fund operations and investments, affecting long-term financial health.

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 primarily through its healthcare services, which are reimbursed by government programs, private insurance payers, and self-paying patients. Key revenue streams include payments for inpatient rehabilitation services, outpatient therapy sessions, and long-term acute care hospital services. The company also benefits from contracts with various insurance companies and partnerships with healthcare systems, which provide a steady flow of patients. Additionally, Select Medical's business model capitalizes on the growing demand for rehabilitation services as the population ages and more individuals require specialized post-acute care.

Select Medical Financial Statement Overview

Summary

Select Medical demonstrates a stable but challenged financial position with declining revenues and moderate profitability. The balance sheet indicates high leverage, which could pose risks in economic downturns. Cash flow remains a strength, highlighting efficient cash management despite declining free cash flow. The company must focus on revenue growth and leverage reduction to improve its financial health.

Income Statement

The TTM shows a gross profit margin of 8.4% and a net profit margin of 3.2%, indicating moderate profitability. Revenue has declined in recent years, with a notable drop from 2023 to 2024. EBIT and EBITDA margins are relatively low at 0.7% and 5.7%, respectively, pointing to efficiency challenges. The overall income statement reflects stable but declining revenues with pressure on profit margins.

Balance Sheet

The company has a high debt-to-equity ratio of 0.61 in the TTM, suggesting significant leverage. Return on equity (ROE) is moderate at 8.2%, showing decent returns for shareholders. The equity ratio of 29.0% denotes a moderate reliance on equity financing, but high liabilities could pose risks if not managed carefully.

Cash Flow

The cash flow analysis reveals a decline in free cash flow growth, but the operating cash flow to net income ratio of 3.0 in the TTM is strong, indicating effective cash generation relative to net income. The free cash flow to net income ratio is 1.3, also highlighting solid cash flow management despite capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.77B	5.19B	6.66B	6.33B	6.20B	5.53B
Gross Profit	660.65M	633.64M	932.04M	733.38M	919.37M	821.34M
EBITDA	325.82M	510.23M	789.74M	585.31M	772.72M	683.30M
Net Income	136.83M	214.04M	243.49M	158.99M	402.23M	259.00M
Balance Sheet
Total Assets	5.74B	5.61B	7.69B	7.67B	7.36B	7.66B
Cash, Cash Equivalents and Short-Term Investments	52.35M	59.69M	142.97M	97.91M	74.31M	577.06M
Total Debt	2.88B	2.70B	4.96B	5.12B	4.72B	4.50B
Total Liabilities	3.74B	3.61B	6.12B	6.31B	6.03B	6.40B
Stockholders Equity	1.67B	1.68B	1.29B	1.32B	1.33B	1.06B
Cash Flow
Free Cash Flow	182.10M	539.65M	352.86M	94.45M	220.69M	881.63M
Operating Cash Flow	413.24M	517.86M	582.06M	284.82M	401.23M	1.03B
Investing Cash Flow	-236.27M	-231.01M	-268.48M	-226.34M	-256.59M	-115.35M
Financing Cash Flow	-235.78M	-311.17M	-327.48M	-34.89M	-647.38M	-671.54M

Select Medical Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 12.63
• 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 12.63 is below the 20-day moving average (MA) of 12.84, below the 50-day MA of 13.22, and below the 200-day MA of 16.14, indicating a bearish trend. The MACD of -0.22 indicates Positive momentum. The RSI at 46.43 is Neutral, neither overbought nor oversold. The STOCH value of 22.10 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	69 Neutral	1.79B	17.19	10.26%	2.07%	25.19%	13.44%
SEM	69 Neutral	$1.52B	11.37	8.15%	2.02%	-16.10%	-48.97%
ASTH	69 Neutral	1.45B	57.71	3.90%	―	51.97%	-64.10%
ACHC	64 Neutral	2.02B	14.54	4.52%	―	5.64%	0.00%
SGRY	60 Neutral	2.79B	-15.42	-10.32%	―	12.05%	-432.59%
LFST	59 Neutral	2.00B	-127.25	-1.10%	―	13.86%	89.49%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Select Medical Corporate Events

Select Medical Appoints New CEO Thomas P. Mullin

On September 2, 2025, Select Medical Holdings Corporation announced the appointment of Thomas P. Mullin as the new Chief Executive Officer, effective September 1, 2025. This leadership change marks a significant transition as David S. Chernow steps down from the CEO position to become Vice Chairman of the Board. John A. Saich will assume the role of sole President, and John F. Duggan has been named Executive Vice President, General Counsel, and Secretary. These appointments highlight Select Medical’s commitment to its succession planning and growth strategy, aiming to enhance its operations and deliver value to stakeholders.

Select Medical Updates Bylaws for Proxy Compliance

On July 30, 2025, Select Medical Holdings Corporation’s Board of Directors approved amendments to the company’s bylaws. These changes enhance procedural and disclosure requirements for stockholder nominations and proposals at meetings, aligning with SEC’s universal proxy rules. The amendments require stockholders to provide a proxy statement and evidence of soliciting proxies from holders of at least 67% of the voting power for director elections, impacting the company’s governance and stakeholder engagement.

Select Medical Reports Strong Q2 2025 Financial Results

Select Medical Holdings Corporation announced its financial results for the second quarter of 2025, reporting a 4.5% increase in revenue to $1,339.6 million and a significant 53.8% rise in net income from continuing operations to $57.9 million compared to the previous year. The company also declared a cash dividend of $0.0625 per share, payable on August 28, 2025, and announced a stock repurchase program to buy back up to $1.0 billion worth of shares, reflecting its robust financial performance and commitment to returning value to shareholders.