Select Medical Holdings Corporation Announces Results For Its Fourth Quarter and Year Ended December 31, 2025, Its 2026 Business Outlook, and Cash Dividend

MECHANICSBURG, Pa., Feb. 19, 2026 /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, 2025, its 2026 business outlook, and the declaration of a cash dividend.

For the fourth quarter ended December 31, 2025, revenue increased 6.4% to $1,396.6 million, compared to $1,312.6 million for the same quarter, prior year. Income from continuing operations before other income and expense increased 203.1% to $63.9 million for the fourth quarter ended December 31, 2025, compared to $21.1 million for the same quarter, prior year. Income from continuing operations, net of tax, increased 461.0% to $37.7 million for the fourth quarter ended December 31, 2025, compared to loss from continuing operations, net of tax, of $10.5 million for the same quarter, prior year. In connection with the distribution of Concentra Group Holdings Parent ("Concentra") common stock to our stockholders, there was a one-time acceleration of $45.9 million of stock compensation expense, which reduced income (loss) from continuing operations for the quarter ended December 31, 2024. Additionally, during the quarter ended December 31, 2024, we recognized a loss on early retirement of debt of $17.9 million. Adjusted EBITDA was $104.7 million for the fourth quarter ended December 31, 2025, compared to $116.0 million for the same quarter, prior year. Earnings per common share from continuing operations increased 184.2% to $0.16 for the fourth quarter ended December 31, 2025, compared to diluted loss per common share from continuing operations of $0.19 for the same quarter, prior year. Adjusted earnings per common share from continuing operations, net of tax, was $0.16 for the fourth quarter ended December 31, 2025, compared to $0.18 for the same quarter, prior year. Prior year adjusted earnings per common share excludes the one-time acceleration of stock compensation expense, the loss on early retirement of debt, and certain transaction costs associated with the Concentra transaction. The definition of Adjusted EBITDA and a reconciliation of income from continuing operations, net of tax, to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share from continuing operations, net of tax, to adjusted earnings per common share from continuing operations, net of tax, is presented in table X of this release.

For the year ended December 31, 2025, revenue increased 5.1% to $5,452.8 million, compared to $5,187.1 million for the prior year. Income from continuing operations before other income and expense increased 25.3% to $336.2 million for the year ended December 31, 2025, compared to $268.3 million for the prior year. Income from continuing operations, net of tax, increased 65.0% to $214.5 million for the year ended December 31, 2025, compared to $130.0 million for the prior year. In connection with the distribution of Concentra, there was a one-time acceleration of $45.9 million of stock compensation expense, which reduced income from continuing operations for the year ended December 31, 2024. Additionally, during the year ended December 31, 2024, we recognized a loss on early retirement of debt of $28.8 million. Adjusted EBITDA was $493.2 million for the year ended December 31, 2025, compared to $510.4 million for the prior year. Earnings per common share from continuing operations, net of tax, increased 127.5% to $1.16 for the year ended December 31, 2025, compared to $0.51 for the prior year. Adjusted earnings per common share from continuing operations, net of tax, increased 23.4% to $1.16 for the year ended December 31, 2025, compared to $0.94 for the prior year. Prior year adjusted earnings per common share excludes the one-time acceleration of stock compensation expense and the loss on early retirement of debt. The definition of Adjusted EBITDA and a reconciliation of income from continuing operations, net of tax, to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share from continuing operations, net of tax, to adjusted earnings per common share from continuing operations, net of tax, is presented in table X of this release.

On November 25, 2024, we completed a tax-free distribution of 104,093,503 shares of common stock of Concentra to our stockholders. Following the completion of the distribution, we no longer own any shares of Concentra's common stock. The results of Concentra, and related transaction costs, have been reflected as discontinued operations in the prior period consolidated statements of operations.

On November 24, 2025, the Company received a non-binding indication of interest from Robert A. Ortenzio, our Executive Chairman, Co-Founder and Director, to acquire all of the Company's outstanding shares for cash consideration of $16.00 to $16.20 per share of our common stock (the "Proposal" and such transaction, the "Take Private Transaction"). Mr. Ortenzio publicly announced the Proposal on November 24, 2025 in a Schedule 13D filing with the SEC. On November 25, 2025, in connection with the Proposal, the disinterested members of the Board of Directors met and voted to form an independent special committee of the Board of Directors (the "Special Committee"). The Special Committee is carefully reviewing and evaluating the Proposal in consultation with their advisors and will determine the appropriate course of action in the best interests of the Company and its stockholders. In connection therewith, the Special Committee is evaluating other potential strategic alternatives to maximize stockholder value.

Company Overview

Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics 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, and the outpatient rehabilitation segment. As of December 31, 2025, Select Medical operated 104 critical illness recovery hospitals in 28 states, 38 rehabilitation hospitals in 15 states, and 1,917 outpatient rehabilitation clinics in 39 states and the District of Columbia. At December 31, 2025, Select Medical had operations in 39 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

Critical Illness Recovery Hospital Segment

For the fourth quarter ended December 31, 2025, revenue for the critical illness recovery hospital segment increased 4.9% to $629.7 million, compared to $600.4 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment increased 5.3% to $66.4 million for the fourth quarter ended December 31, 2025, compared to $63.1 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.5% both the fourth quarters ended December 31, 2025 and 2024. Certain critical illness recovery hospital key statistics are presented in table VII of this release for the fourth quarters ended December 31, 2025 and 2024.

For the year ended December 31, 2025, revenue for the critical illness recovery hospital segment increased 1.4% to $2,477.8 million, compared to $2,444.2 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $265.4 million for the year ended December 31, 2025, compared to $301.6 million for the prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.7% for the year ended December 31, 2025, compared to 12.3% for the prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for the years ended December 31, 2025 and 2024.

Rehabilitation Hospital Segment

For the fourth quarter ended December 31, 2025, revenue for the rehabilitation hospital segment increased 15.2% to $339.2 million, compared to $294.4 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 11.1% to $69.2 million for the fourth quarter ended December 31, 2025, compared to $62.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.4% for the fourth quarter ended December 31, 2025, compared to 21.2% 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, 2025 and 2024.

For the year ended December 31, 2025, revenue for the rehabilitation hospital segment increased 16.1% to $1,289.0 million, compared to $1,110.6 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 13.4% to $278.6 million for the year ended December 31, 2025, compared to $245.7 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.6% for the year ended December 31, 2025, compared to 22.1% for the prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for the years ended December 31, 2025 and 2024.

Outpatient Rehabilitation Segment

For the fourth quarter ended December 31, 2025, revenue for the outpatient rehabilitation segment increased 1.6% to $324.6 million, compared to $319.6 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $11.2 million for the fourth quarter ended December 31, 2025, compared to $26.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 3.4% for the fourth quarter ended December 31, 2025, compared to 8.3% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for the fourth quarters ended December 31, 2025 and 2024.

For the year ended December 31, 2025, revenue for the outpatient rehabilitation segment increased 2.8% to $1,284.9 million, compared to $1,250.3 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $90.2 million for the year ended December 31, 2025, compared to $108.6 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 7.0% for the year ended December 31, 2025, compared to 8.7% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for the years ended December 31, 2025 and 2024.

Dividend

On February 12, 2026, Select Medical's Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about March 12, 2026 to stockholders of record as of the close of business on March 2, 2026.

There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical's Board of Directors after taking into account various factors, including, but not limited to, Select Medical's financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical's indebtedness, and other factors Select Medical's Board of Directors may deem to be relevant.

Stock Repurchase Program

The Board of Directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2027, 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.

During the year ended December 31, 2025, Select Medical repurchased 6,375,512 shares at a cost of approximately $96.5 million, or $15.13 per share, which includes transaction costs. From the inception of the common stock repurchase program through December 31, 2025, Select Medical has repurchased 54,610,335 shares at a cost of approximately $696.8 million, or $12.76 per share, which includes transaction costs. On August 16, 2022, Congress passed the Inflation Reduction Act of 2022, which enacted a 1% excise tax on stock repurchases that exceed $1.0 million, effective January 1, 2023. For the year ended December 31, 2025, $0.8 million has been accrued for the 1% excise tax as a cost of the stock repurchase.

Business Outlook

Select Medical is issuing its business outlook for 2026. Select Medical expects revenue to be in the range of $5.6 billion to $5.8 billion, Adjusted EBITDA to be in the range of $520.0 million to $540.0 million, and fully diluted earnings per share to be in the range of $1.22 to $1.32. A reconciliation of full year 2026 Adjusted EBITDA expectations to income from continuing operations, net of tax, is presented in table XI of this release.

Conference Call

Select Medical will host a conference call regarding its results for the fourth quarter and full year ended December 31, 2025, and its business outlook on Friday, February 20, 2026, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holdings Corporation's website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the same link.

For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode.

* * * * *

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 2026 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:

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:

Robert S. Kido

Senior Vice President and Treasurer

717-972-1100

[email protected]

I. Condensed Consolidated Statements of Operations

For the Three Months Ended December 31, 2024 and 2025

(In thousands, except per share amounts, unaudited)

2024

2025

% Change

Revenue

$ 1,312,564

$ 1,396,634

6.4 %

Costs and expenses:

Cost of services, exclusive of depreciation and amortization

1,175,099

1,250,800

6.4

General and administrative

80,197

45,693

(43.0)

Depreciation and amortization

36,283

36,205

(0.2)

Total costs and expenses

1,291,579

1,332,698

3.2

Other operating income

106

—

N/M

Income from continuing operations before other income and expense

21,091

63,936

203.1

Other income and expense:

Loss on early retirement of debt

(17,906)

—

N/M

Equity in earnings of unconsolidated subsidiaries

10,423

15,399

47.7

Interest expense

(28,551)

(28,871)

1.1

Income (loss) from continuing operations before income taxes

(14,943)

50,464

437.7

Income tax expense (benefit) from continuing operations

(4,487)

12,722

383.5

Income (loss) from continuing operations, net of tax

(10,456)

37,742

461.0

Discontinued operations:

Income from discontinued business

24,669

—

N/M

Income tax expense from discontinued business

10,457

—

N/M

Income from discontinued operations, net of tax

14,212

—

N/M

Net income

3,756

37,742

904.8

Less: Net income attributable to non-controlling interests

19,806

17,568

(11.3)

Net income (loss) attributable to Select Medical

$ (16,050)

$ 20,174

225.7

Net income (loss) attributable to Select Medical's common stockholders:

Income (loss) from continuing operations, net of tax

$ (23,664)

$ 20,174

Income from discontinued operations, net of tax

7,614

—

Net income (loss) attributable to Select Medical's common stockholders

$ (16,050)

$ 20,174

Basic earnings (loss) per common share:

Continuing operations

$ (0.18)

$ 0.16

Discontinued operations

0.06

—

Total basic earnings (loss) per common share (1)

$ (0.12)

$ 0.16

Diluted earnings (loss) per common share:

Continuing operations

$ (0.19)

$ 0.16

Discontinued operations

0.06

—

Total diluted earnings (loss) per common share (1)

$ (0.13)

$ 0.16

(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, 2024 and 2025

(In thousands, except per share amounts, unaudited)

2024

2025

% Change

Revenue

$ 5,187,105

$ 5,452,830

5.1 %

Costs and expenses:

Cost of services, exclusive of depreciation and amortization

4,553,461

4,823,535

5.9

General and administrative

225,869

154,414

(31.6)

Depreciation and amortization

142,866

140,303

(1.8)

Total costs and expenses

4,922,196

5,118,252

4.0

Other operating income

3,406

1,592

(53.3)

Income from continuing operations before other income and expense

268,315

336,170

25.3

Other income and expense:

Loss on early retirement of debt

(28,845)

—

N/M

Equity in earnings of unconsolidated subsidiaries

63,904

54,521

(14.7)

Interest expense

(128,605)

(117,942)

(8.3)

Income from continuing operations before income taxes

174,769

272,749

56.1

Income tax expense from continuing operations

44,782

58,216

30.0

Income from continuing operations, net of tax

129,987

214,533

65.0

Discontinued operations:

Income from discontinued business

223,414

—

N/M

Income tax expense from discontinued business

56,697

—

N/M

Income from discontinued operations, net of tax

166,717

—

N/M

Net income

296,704

214,533

(27.7)

Less: Net income attributable to non-controlling interests

82,666

68,314

(17.4)

Net income attributable to Select Medical

$ 214,038

$ 146,219

(31.7) %

Net income attributable to Select Medical's common stockholders:

Income from continuing operations, net of tax

$ 65,473

$ 146,219

Income from discontinued operations, net of tax

148,565

—

Net income attributable to Select Medical's common stockholders:

$ 214,038

$ 146,219

Earnings per common share:

Continuing operations - basic and diluted

$ 0.51

$ 1.16

Discontinued operations - basic and diluted

1.15

—

Total earnings per common share - basic and diluted: (1)

$ 1.66

$ 1.16

(1)

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

N/M

Not meaningful.

III. Earnings per Share

For the Three Months and Years Ended December 31, 2024 and 2025

(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. Select Medical applies the treasury stock method when computing diluted EPS.

The following table sets forth the income from continuing operations, net of tax, attributable to Select Medical's common stockholders, its common shares outstanding, and its participating securities outstanding for the three months and years ended December 31, 2024 and 2025:

Basic EPS

Three Months Ended

December 31,

Years Ended

December 31,

2024

2025

2024

2025

Income (loss) from continuing operations, net of tax

$ (10,456)

$ 37,742

$ 129,987

$ 214,533

Less: Net income attributable to non-controlling interests

13,208

17,568

64,514

68,314

Income (loss) from continuing operations, net of tax,

attributable to Select Medical's common stockholders

(23,664)

20,174

65,473

146,219

Less: distributed and undistributed net income (loss)

attributable to participating securities (1)

(597)

542

2,319

3,354

Income (loss) from continuing operations, net of tax,

attributable to common shares

$ (23,067)

$ 19,632

$ 63,154

$ 142,865

The following tables set forth the computation of EPS for the three months and years ended December 31, 2024 and 2025:

Three Months Ended December 31,

2024

Loss from

Continuing

Operations,

Net of Tax,

Allocation -

Basic

Shares (1)

Basic EPS

Loss from

Continuing

Operations,

Net of Tax,

Allocation -

Diluted

Shares (1)

Diluted EPS

Common shares

$ (23,067)

125,923

$ (0.18)

$ (23,664)

127,535

$ (0.19)

Participating securities

(597)

3,261

$ (0.18)

Total

$ (23,664)

Three Months Ended December 31,

2025

Income from

Continuing

Operations, Net of

Tax, Allocation

Shares (1)

Basic and Diluted

EPS

Common shares

$ 19,632

120,634

$ 0.16

Participating securities

542

3,331

$ 0.16

Total

$ 20,174

Year Ended December 31,

2024

2025

Income from

Continuing

Operations,

Net of Tax,

Allocation

Shares (1)

Basic and

Diluted EPS

Income from

Continuing

Operations,

Net of Tax,

Allocation

Shares (1)

Basic and

Diluted EPS

Common shares

$ 63,154

124,614

$ 0.51

$ 142,865

122,647

$ 1.16

Participating securities

2,319

4,576

$ 0.51

3,354

2,879

$ 1.16

Total

$ 65,473

$ 146,219

(1)

Represents the weighted average share count outstanding during the period.

IV. Condensed Consolidated Balance Sheets

(In thousands, unaudited)

December 31,

2024

2025

Assets

Current Assets:

Cash and cash equivalents

$ 59,694

$ 26,523

Accounts receivable

821,385

864,207

Other current assets

138,698

134,551

Total Current Assets

1,019,777

1,025,281

Operating lease right-of-use assets

908,095

957,904

Property and equipment, net

872,185

992,314

Goodwill

2,331,898

2,360,902

Identifiable intangible assets, net

103,183

100,800

Other assets

372,813

414,388

Total Assets

$ 5,607,951

$ 5,851,589

Liabilities and Equity

Current Liabilities:

Payables and accruals

$ 777,781

$ 771,872

Current operating lease liabilities

179,601

188,405

Current portion of long-term debt and notes payable

20,269

24,217

Total Current Liabilities

977,651

984,494

Non-current operating lease liabilities

787,124

835,362

Long-term debt, net of current portion

1,691,546

1,803,979

Non-current deferred tax liability

81,497

112,157

Other non-current liabilities

73,038

79,858

Total Liabilities

3,610,856

3,815,850

Redeemable non-controlling interests

10,167

18,808

Total Equity

1,986,928

2,016,931

Total Liabilities and Equity

$ 5,607,951

$ 5,851,589

V. Condensed Consolidated Statements of Cash Flows

For the Three Months Ended December 31, 2024 and 2025

(In thousands, unaudited)

2024

2025

Operating activities

Net income

$ 3,756

$ 37,742

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

Distributions from unconsolidated subsidiaries

8,742

10,155

Depreciation and amortization

45,743

36,205

Provision for expected credit losses

2,620

301

Equity in earnings of unconsolidated subsidiaries

(10,423)

(15,399)

Loss on extinguishment of debt

8,099

—

Loss on sale of assets and businesses

Stock compensation expense

61,271

4,523

Amortization of debt discount, premium and issuance costs

684

783

Deferred income taxes

2,507

20,105

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

Accounts receivable

20,916

(38,698)

Other current assets

10,216

7,911

Other assets

(1,009)

(13,864)

Accounts payable and accrued expenses

(27,738)

14,506

Net cash provided by operating activities

125,432

64,325

Investing activities

Business combinations, net of cash acquired

(10,786)

(7,596)

Purchases of property and equipment

(63,429)

(59,100)

Investment in businesses

—

(1,455)

Proceeds from sales and exchanges of assets and sale of business

1,259

Net cash used in investing activities

(74,193)

(66,892)

Financing activities

Borrowings on revolving facilities

290,000

320,000

Payments on revolving facilities

(195,000)

(370,000)

Proceeds from term loans, net of issuance costs

1,043,355

—

Payments on term loans

(372,982)

(2,625)

Payment on senior notes, including call premium

(1,237,764)

—

Proceeds from senior notes, net of issuance costs

539,261

—

Borrowings of other debt

4,086

59,696

Principal payments on other debt

(29,498)

(8,363)

Dividends paid to common stockholders

(16,124)

(7,751)

Repurchase of common stock

(19,981)

(542)

Increase in overdrafts

11,630

16,751

Proceeds from issuance of non-controlling interests

6,300

2,940

Distributions to and purchases of non-controlling interests

(24,201)

(41,070)

Cash transferred to Concentra at separation

(182,095)

—

Net cash used in financing activities

(183,013)

(30,964)

Net decrease in cash and cash equivalents

(131,774)

(33,531)

Cash and cash equivalents at beginning of period

191,468

60,054

Cash and cash equivalents at end of period

$ 59,694

$ 26,523

Supplemental information:

Cash paid for interest

$ 39,472

$ 36,622

Cash paid for taxes

30,491

3,904

VI. Condensed Consolidated Statements of Cash Flows

For the Years Ended December 31, 2024 and 2025

(In thousands, unaudited)

2024

2025

Operating activities

Net income

$ 296,704

$ 214,533

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

Distributions from unconsolidated subsidiaries

39,178

52,970

Depreciation and amortization

203,894

140,303

Provision for expected credit losses

4,279

2,362

Equity in earnings of unconsolidated subsidiaries

(60,228)

(54,521)

Loss on extinguishment of debt

19,038

—

(Gain) loss on sale of assets and businesses

(1,063)

Stock compensation expense

100,670

16,702

Amortization of debt discount, premium and issuance costs

2,963

3,136

Deferred income taxes

(32,434)

30,652

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

Accounts receivable

(95,845)

(45,185)

Other current assets

18,072

413

Other assets

12,933

(8,808)

Accounts payable and accrued expenses

9,703

(6,098)

Net cash provided by operating activities

517,864

346,467

Investing activities

Business combinations, net of cash acquired

(13,097)

(9,197)

Purchases of property and equipment

(222,177)

(229,225)

Investment in businesses

—

(1,455)

Proceeds from sales and exchanges of assets and sale of business

4,263

23,391

Net cash used in investing activities

(231,011)

(216,486)

Financing activities

Borrowings on revolving facilities

1,240,000

1,290,000

Payments on revolving facilities

(1,415,000)

(1,295,000)

Proceeds from term loans, net of issuance costs

1,880,052

—

Payments on term loans

(2,092,485)

(10,500)

Payment on senior notes, including call premium

(1,237,764)

—

Proceeds from senior notes, net of issuance costs

1,176,598

—

Borrowings of other debt

24,892

101,218

Principal payments on other debt

(65,280)

(34,328)

Dividends paid to common stockholders

(64,617)

(31,435)

Repurchase of common stock

(37,905)

(100,077)

Decrease in overdrafts

(4,471)

(9,052)

Proceeds from issuance of non-controlling interests

15,713

15,904

Distributions to and purchases of non-controlling interests

(60,001)

(89,882)

Proceeds from Concentra initial public offering

511,198

—

Cash transferred to Concentra at separation

(182,095)

—

Net cash used in financing activities

(311,165)

(163,152)

Net decrease in cash and cash equivalents

(24,312)

(33,171)

Cash and cash equivalents at beginning of period

84,006

59,694

Cash and cash equivalents at end of period

$ 59,694

$ 26,523

Supplemental information:

Cash paid for interest, excluding amounts received of $68,069 under the

interest rate cap contract in 2024

$ 256,229

$ 120,624

Cash paid for taxes

133,187

26,022

VII. Key Statistics

For the Three Months Ended December 31, 2024 and 2025

(unaudited)

2024

2025

% Change

Critical Illness Recovery Hospital

Number of hospitals operated – end of period (a)

104

Revenue (,000)

$ 600,445

$ 629,716

4.9 %

Number of patient days (b)(c)

274,134

271,417

(1.0) %

Number of admissions (b)(d)

8,691

8,950

3.0 %

Revenue per patient day (b)(e)

$ 2,183

$ 2,312

5.9 %

Occupancy rate (b)(f)

67 %

0.0 %

Adjusted EBITDA (,000)

$ 63,098

$ 66,413

5.3 %

Adjusted EBITDA margin

10.5 %

Rehabilitation Hospital

Number of hospitals operated – end of period (a)

Revenue (,000)

$ 294,352

$ 339,184

15.2 %

Number of patient days (b)(c)

119,870

131,591

9.8 %

Number of admissions (b)(d)

8,626

9,452

9.6 %

Revenue per patient day (b)(e)

$ 2,177

$ 2,311

6.2 %

Occupancy rate (b)(f)

81 %

82 %

1.2 %

Adjusted EBITDA (,000)

$ 62,277

$ 69,195

11.1 %

Adjusted EBITDA margin

21.2 %

20.4 %

Outpatient Rehabilitation

Number of clinics operated – end of period (a)

1,914

1,917

Working days (g)

Revenue (,000)

$ 319,598

$ 324,564

1.6 %

Number of visits (b)(h)

2,811,704

2,948,604

4.9 %

Revenue per visit (b)(i)

$ 102

$ 98

(3.9) %

Adjusted EBITDA (,000)

$ 26,561

$ 11,179

(57.9) %

Adjusted EBITDA margin

8.3 %

3.4 %

(a)

Includes managed locations.

(b)

Excludes managed locations.

(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 Select Medical's 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 Select Medical's hospitals, by the total number of patient days.

(f)

Represents the portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.

(g)

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

(h)

Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics during the periods presented.

(i)

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 Statistics

For the Years Ended December 31, 2024 and 2025

(unaudited)

2024

2025

% Change

Critical Illness Recovery Hospital

Number of hospitals operated – end of period (a)

104

Revenue (,000)

$ 2,444,196

$ 2,477,814

1.4 %

Number of patient days (b)(c)

1,118,757

1,107,387

(1.0) %

Number of admissions (b)(d)

35,784

36,126

1.0 %

Revenue per patient day (b)(e)

$ 2,177

$ 2,230

2.4 %

Occupancy rate (b)(f)

68 %

69 %

1.5 %

Adjusted EBITDA (,000)

$ 301,634

$ 265,447

(12.0) %

Adjusted EBITDA margin

12.3 %

10.7 %

Rehabilitation Hospital

Number of hospitals operated – end of period (a)

Revenue (,000)

$ 1,110,592

$ 1,288,954

16.1 %

Number of patient days (b)(c)

470,594

510,127

8.4 %

Number of admissions (b)(d)

33,665

36,787

9.3 %

Revenue per patient day (b)(e)

$ 2,134

$ 2,260

5.9 %

Occupancy rate (b)(f)

84 %

82 %

(2.4) %

Adjusted EBITDA (,000)

$ 245,748

$ 278,622

13.4 %

Adjusted EBITDA margin

22.1 %

21.6 %

Outpatient Rehabilitation

Number of clinics operated – end of period (a)

1,914

1,917

Working days (g)

256

255

Revenue (,000)

$ 1,250,294

$ 1,284,873

2.8 %

Number of visits (b)(h)

11,147,920

11,517,388

3.3 %

Revenue per visit (b)(i)

$ 101

$ 100

(1.0) %

Adjusted EBITDA (,000)

$ 108,577

$ 90,163

(17.0) %

Adjusted EBITDA margin

8.7 %

7.0 %

(a)

Includes managed locations.

(b)

Excludes managed locations.

(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 Select Medical's hospitals during the periods presented.

(e)

(f)

(g)

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

(h)

Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics during the periods presented.

(i)

IX. Income from Continuing Operations, Net of Tax, to Adjusted EBITDA Reconciliation

For the Three Months and Years Ended December 31, 2024 and 2025

(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 by management to evaluate financial performance and determine resource allocation for each of Select Medical's segments. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America ("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, income from continuing operations, income from continuing operations before other income and expense, 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 income from continuing operations, net of tax, to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as earnings from continuing operations excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, transaction costs associated with the Concentra separation, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.

Three Months Ended

December 31,

Years Ended

December 31,

2024

2025

2024

2025

Income (loss) from continuing operations, net of tax

$ (10,456)

$ 37,742

$ 129,987

$ 214,533

Income tax expense (benefit)

(4,487)

12,722

44,782

58,216

Interest expense

28,551

28,871

128,605

117,942

Equity in earnings of unconsolidated subsidiaries

(10,423)

(15,399)

(63,904)

(54,521)

Loss on early retirement of debt

17,906

—

28,845

—

Income from continuing operations before other income and expense

$ 21,091

$ 63,936

$ 268,315

$ 336,170

Stock compensation expense:

Included in general and administrative

47,414

3,571

79,931

13,285

Included in cost of services

12,902

952

19,283

3,417

Depreciation and amortization

36,283

36,205

142,866

140,303

Concentra separation transaction costs (b)

(1,698)

—

Adjusted EBITDA

$ 115,992

$ 104,664

$ 510,395

$ 493,175

Critical illness recovery hospital

$ 63,098

$ 66,413

$ 301,634

$ 265,447

Rehabilitation hospital

62,277

69,195

245,748

278,622

Outpatient rehabilitation

26,561

11,179

108,577

90,163

Other (a)

(35,944)

(42,123)

(145,564)

(141,057)

Adjusted EBITDA

$ 115,992

$ 104,664

$ 510,395

$ 493,175

(a)

Other primarily includes general and administrative costs and other operating income, as discussed further above.

(b)

During the three months ended December 31, 2024, transaction costs of $1.7 million recognized in previous periods were reclassified from income from continuing operations to income from discontinued operations. Total Concentra separation transaction costs of $16.3 million were recognized during the year ended December 31, 2024 and included in income from discontinued business.

X. Reconciliation of Earnings per Common Share from Continuing Operations, Net of Tax, to Adjusted Earnings per Common Share from Continuing Operations, Net of Tax

For the Years Ended December 31, 2024 and 2025

(In thousands, except per share amounts, unaudited)

Adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations are not measures of financial performance under GAAP. Items excluded from adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations 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 income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations should not be considered in isolation or as alternatives to, or substitutes for, income from continuing operations, net of tax, 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 income from continuing operations, net of tax, 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 income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations as presented may not be comparable to other similarly titled measures of other companies.

The following tables reconcile income from continuing operations, net of tax, attributable to common shares and earnings per common share from continuing operations on a fully diluted basis to adjusted income from continuing operations, net of tax, attributable to common shares and adjusted earnings per common share from continuing operations on a fully diluted basis.

Three Months Ended December 31,

2024

Per Share (a)

2025

Per Share (a)

Income (loss) from continuing operations, net of tax,

attributable to common shares (a)

$ (23,664)

$ (0.19)

$ 19,632

0.16

Adjustments: (b)

Loss on early retirement of debt, net of tax

12,885

0.10

—

Concentra separation transaction costs, net of tax

(1,241)

(0.01)

—

Stock compensation expense due to accelerated

vesting, net of tax

34,645

0.28

—

Adjusted income from continuing operations, net of

tax, attributable to common shares

$ 22,625

$ 0.18

$ 19,632

$ 0.16

Years Ended December 31,

2024

Per Share (a)

2025

Per Share (a)

Income from continuing operations, net of tax,

attributable to common shares (a)

$ 63,154

$ 0.51

$ 142,865

$ 1.16

Adjustments: (b)

Loss on early retirement of debt, net of tax

20,311

0.16

—

Stock compensation expense due to accelerated

vesting, net of tax

33,846

0.27

—

Adjusted income from continuing operations, net of

tax, attributable to common shares

$ 117,311

$ 0.94

$ 142,865

$ 1.16

(a)

Income from continuing operations, net of tax, attributable to common shares and earnings per common share from continuing operations are calculated based on the diluted weighted average common shares outstanding, as presented in table III.

(b)

Adjustments to income from continuing operations, net of tax, 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.

XI. Income from Continuing Operations, Net of Tax, to Adjusted EBITDA Reconciliation

Business Outlook for the Year Ending December 31, 2026

(In millions, unaudited)

The following is a reconciliation of full year 2026 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 2026 expectations.

Range

Non-GAAP Measure Reconciliation

Low

High

Income from continuing operations, net of tax, attributable to Select Medical

$ 152

$ 164

Net income attributable to non-controlling interests

Income from continuing operations, net of tax

228

244

Income tax expense

Interest expense

118

Equity in earnings of unconsolidated subsidiaries

(57)

(58)

Income from continuing operations before other income and expense

353

373

Stock compensation expense

Depreciation and amortization

146

Adjusted EBITDA

$ 520

$ 540

SOURCE Select Medical Holdings Corporation