Form 8-K

8-K — SELECT MEDICAL HOLDINGS CORP

Accession: 0001104659-26-053056

Filed: 2026-04-30

Period: 2026-04-28

CIK: 0001320414

SIC: 8060 (SERVICES-HOSPITALS)

Item: Results of Operations and Financial Condition

Item: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers

Item: Other Events

Item: Financial Statements and Exhibits

Documents

8-K — tm2613082d1_8k.htm (Primary)

EX-99.1 — EXHIBIT 99.1 (tm2613082d1_ex99-1.htm)

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2026-04-28

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

current

report

Pursuant to Section 13

or 15(d) of the

Securities Exchange

Act of 1934

Date of Report (Date

of earliest event reported): April 28, 2026

SELECT

MEDICAL HOLDINGS CORPORATION

(Exact name of registrant

as specified in its charter)

Delaware

001-34465

20-1764048

(State or other jurisdiction of

Incorporation)

(Commission File

Number)

(I.R.S. Employer

Identification No.)

4714 Gettysburg Road, P.O. Box 2034

Mechanicsburg, PA 17055

(Address of principal executive offices) (Zip Code)

(717) 972-1100

(Registrant’s telephone number, including

area code)

Securities registered pursuant to Section

12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

SEM

New York Stock Exchange (NYSE)

Check the appropriate box below if the Form 8-K filing is intended

to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the

Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the

Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b)

under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c)

under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether either registrant is an emerging

growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities

Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if either registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards

provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 Results of Operations and Financial Condition.

April 30, 2026, Select Medical Holdings Corporation (the “Company”) issued a press release announcing its financial

results for its first quarter ended March 31, 2026 (the “Press Release”). A copy of the Press Release and the attached financial

schedules are attached as Exhibit 99.1 to this report and incorporated herein by reference.

The information in this report

(including Exhibit 99.1) is being furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes

of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities

of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the

“Securities Act”), or the Exchange Act.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of

Certain Officers.

On April, 28 2026, the Human

Capital and Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved the deferral

of the scheduled vesting dates of certain previously granted equity awards held by Robert A. Ortenzio, our Executive Chairman and Co-Founder,

and Martin F. Jackson, our Senior Executive Vice President, Strategic Finance and Operations. The equity awards subject to the Compensation

Committee’s action were granted under the Company’s 2020 Equity Incentive Plan on the dates set forth below. Pursuant to the

Compensation Committee’s action, the scheduled vesting dates of the following tranches of such equity awards were each delayed by

one year, in each case subject to the applicable individual’s continued service with the Company through the applicable deferred

vesting date:

Name

Original Grant Date

Original Vesting Date

Deferred Vesting Date

Robert A. Ortenzio

51,111

April 30, 2024

April 30, 2026

April 30, 2027

83,333

July 29, 2025

July 29, 2026

July 29, 2027

55,556

August 1, 2023

August 1, 2026

August 1, 2027

Martin F. Jackson

30,667

April 30, 2024

April 30, 2026

April 30, 2027

50,000

July 29, 2025

July 29, 2026

July 29, 2027

33,334

August 1, 2023

August 1, 2026

August 1, 2027

Item 8.01 Other Events

Dividend Declaration

On April 29, 2026, the Company’s

board of directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about May 28, 2026 to stockholders

of record as of the close of business on May 14, 2026.

Item 9.01 Financial Statements

and Exhibits.

(d) Exhibits.

Exhibit Number

Description

99.1

Press Release, dated April 30, 2026, announcing financial results for the first quarter ended March 31, 2026 and cash dividend.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities

Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SELECT MEDICAL HOLDINGS CORPORATION

Date: April 30, 2026

By:

/s/ John F. Duggan

John F. Duggan

Executive Vice President, General Counsel and Secretary

EX-99.1 — EXHIBIT 99.1

EX-99.1

Filename: tm2613082d1_ex99-1.htm · Sequence: 2

Exhibit 99.1

FOR IMMEDIATE RELEASE

4714 Gettysburg Road

Mechanicsburg, PA 17055

NYSE Symbol: SEM

Select Medical Holdings Corporation Announces

Results

For Its First Quarter Ended March 31, 2026

and Cash Dividend

MECHANICSBURG, PENNSYLVANIA

— April 30, 2026 — Select Medical Holdings Corporation (“Select Medical,” “we,” “us,”

or “our”) (NYSE: SEM) today announced results for its first quarter ended March 31, 2026, and the declaration of a cash

dividend.

For the first quarter ended

March 31, 2026, revenue increased 5.0% to $1,421.5 million, compared to $1,353.2 million for the same quarter, prior year. Income

from operations was $98.4 million for the first quarter ended March 31, 2026, compared to $112.7 million for the same quarter,

prior year. Net income was $63.8 million for the first quarter ended March 31, 2026, compared to $74.7 million for the same quarter,

prior year. Adjusted EBITDA was $141.6 million for the first quarter ended March 31, 2026, compared to $151.4 million for the same

quarter, prior year. Earnings per common share was $0.35 for the first quarter ended March 31, 2026, compared to $0.44 for the same

quarter, prior year. Adjusted earnings per common share was $0.36 for the first quarter ended March 31, 2026, compared to $0.44 for

the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in

table VI of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table VII

of this release.

On March 2, 2026, the Company entered into an agreement and plan of merger with wholly owned subsidiaries of WCAS XIV, L.P., an investment

fund affiliated with Welsh, Carson, Anderson & Stowe and a member of a consortium led by Robert A. Ortenzio, our Executive Chairman,

Co-Founder and Director and Martin F. Jackson, our Senior Executive Vice President of Strategic Finance and Operations,

pursuant to which, subject to the terms and conditions of the merger agreement, a wholly-owned subsidiary of the buyer will merge with

and into the Company, with the Company surviving as a wholly-owned subsidiary of the buyer (the “Merger”). Upon completion

of the Merger, each issued and outstanding share of Company common stock (subject to certain exceptions) will be converted into the right

to receive $16.50 per share in cash, without interest. Immediately prior to the Merger, each share of common stock that is subject to

forfeiture conditions (other than any Rollover Shares as defined in the merger agreement) will vest in full and be treated the same as

all other shares of common stock.

The completion of the Merger

is subject to the receipt of required regulatory approvals, including certain healthcare regulatory approvals, the approval of the Company’s

stockholders (including the approval of a majority of shares not held by the buyer group or their affiliates), and other customary closing

conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on April 27,

2026. The merger agreement does not contain any financing condition. The Company currently expects to complete the Merger in the middle

of 2026, although there can be no assurance that the Merger will occur in accordance with the expected plans or anticipated timeline,

or at all. If the Merger is consummated, the shares of common stock will be delisted from the New York Stock Exchange and deregistered

under the Exchange Act.

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 March 31, 2026, Select Medical operated

103 critical illness recovery hospitals in 28 states, 41 rehabilitation hospitals in 15 states, and 1,912 outpatient rehabilitation clinics

in 37 states and the District of Columbia. At March 31, 2026, Select Medical had operations in 38 states and the District of Columbia.

Information about Select Medical is available at www.selectmedical.com.

Critical Illness Recovery Hospital Segment

For the first quarter ended

March 31, 2026, revenue for the critical illness recovery hospital segment increased 0.3% to $638.8 million, compared to $637.0 million

for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $73.4 million for the first quarter

ended March 31, 2026, compared to $86.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness

recovery hospital segment was 11.5% for the first quarter ended March 31, 2026, compared to 13.6% for the same quarter, prior year.

Certain critical illness recovery hospital key statistics are presented in table V of this release for the first quarters ended March 31,

2026 and 2025.

Rehabilitation Hospital Segment

For the first quarter ended

March 31, 2026, revenue for the rehabilitation hospital segment increased 14.5% to $351.9 million, compared to $307.4 million for

the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 15.1% to $81.1 million for the first quarter

ended March 31, 2026, compared to $70.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation

hospital segment was 23.0% for the first quarter ended March 31, 2026, compared to 22.9% for the same quarter, prior year. Certain

rehabilitation hospital key statistics are presented in table V of this release for the first quarters ended March 31, 2026 and 2025.

Outpatient Rehabilitation Segment

For the first quarter ended

March 31, 2026, revenue for the outpatient rehabilitation segment increased 4.5% to $321.3 million, compared to $307.3 million for

the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $22.0 million for the first quarter ended

March 31, 2026, compared to $24.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation

segment was 6.8% for the first quarter ended March 31, 2026, compared to 7.9% for the same quarter, prior year. Certain outpatient

rehabilitation key statistics are presented in table V of this release for the first quarters ended March 31, 2026 and 2025.

Dividend

On April 29, 2026, Select

Medical’s Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about May 28,

2026, to stockholders of record as of the close of business on May 14, 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.

Business Outlook

Select Medical is maintaining

its 2026 business outlook, which was provided most recently in its February 19, 2026 press release. For fiscal year 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. Reconciliations of full year 2026 Adjusted EBITDA

expectations to net income, is presented in table VIII of this release.

Conference Call

Select Medical will host

a conference call regarding its first quarter results and its business outlook on Friday, May 1, 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 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:

· changes in government reimbursement for our services and/or new payment policies may result in a reduction

in revenue, an increase in costs, and a reduction in profitability;

· adverse economic conditions including an inflationary environment, and changes to United States tariff

and import/export regulations, could cause us to continue to experience increases in the prices of labor and other costs of doing business

resulting in a negative impact on our business, operating results, cash flows, and financial condition;

· shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability

to attract or retain qualified healthcare professionals could limit our ability to staff our facilities;

· shortages in qualified health professionals could cause us to increase our dependence on contract labor,

increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase

our operating costs significantly;

· the negative impact of public threats such as a global pandemic or widespread outbreak of an infectious

disease similar to the COVID-19 pandemic;

· political instability, conflicts (such as the ongoing war between Russia and Ukraine, conflicts in the

Middle East, tensions between China and Taiwan, and recent U.S. military action in Venezuela), and government shutdowns, civil disturbances,

and international events;

· the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities

to maintain their Medicare certifications may cause our revenue and profitability to decline;

· the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities

operated as “hospitals within hospitals” to qualify as hospitals separate from their host hospitals may cause our revenue

and profitability to decline;

· a government investigation or assertion that we have violated applicable regulations may result in sanctions

or reputational harm and increased costs;

· acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources, or expose

us to unforeseen liabilities;

· our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;

· private third-party payors for our services may adopt payment policies that could limit our future revenue

and profitability;

· the failure to maintain established relationships with the physicians in the areas we serve could reduce

our revenue and profitability;

· the proposed Merger, including the ability of the parties to consummate the proposed Merger, if at all,

on the anticipated terms and timing, including obtaining the stockholder and regulatory approvals, and the satisfaction of other conditions

to the completion of the proposed Merger;

· potential payment of the termination fees under specified circumstances if the Merger Agreement is terminated;

· the outcome of any current or potential litigation against us, and members of our Board of Directors relating

to the proposed Merger;

· competition may limit our ability to grow and result in a decrease in our revenue and profitability;

· the loss of key members of our management team could significantly disrupt our operations;

· the effect of claims asserted against us could subject us to substantial uninsured liabilities;

· a security breach of our or our third-party vendors’ information technology systems may subject

us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of

1996 or the Health Information Technology for Economic and Clinical Health Act; and

· other factors discussed from time to time in our filings with the Securities and Exchange Commission (the

“SEC”), including factors discussed under the heading “Risk Factors” of the quarterly reports on Form 10-Q

and of the annual report on Form 10-K for the year ended December 31, 2025.

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

ir@selectmedical.com

SOURCE: Select Medical Holdings Corporation

I. Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2025 and 2026

(In thousands, except per share amounts, unaudited)

2025

2026

% Change

Revenue

$ 1,353,172

$ 1,421,476

5.0 %

Costs and expenses:

Cost of services, exclusive of depreciation and amortization

1,172,611

1,246,008

6.3

General and administrative

33,008

39,384

19.3

Depreciation and amortization

34,808

37,666

8.2

Total costs and expenses

1,240,427

1,323,058

6.7

Income from operations

112,745

98,418

(12.7 )

Other income and expense:

Equity in earnings of unconsolidated subsidiaries

12,512

12,011

(4.0 )

Interest expense

(29,072 )

(28,336 )

(2.5 )

Income before income taxes

96,185

82,093

(14.7 )

Income tax expense

21,453

18,318

(14.6 )

Net income

74,732

63,775

(14.7 )

Less: Net income attributable to non-controlling interests

18,051

19,780

9.6

Net income attributable to Select Medical

$ 56,681

$ 43,995

(22.4 )%

Basic and diluted earnings per common share:(1)

$ 0.44

$ 0.35

(1) Refer

to table II for calculation of earnings per common share.

II. Earnings per Share

For the Three Months Ended March 31,

2025 and 2026

(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.

The following table sets

forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the

three months ended March 31, 2025 and 2026:

Basic and Diluted EPS

Three Months Ended

March 31,

2025

2026

Net income

$ 74,732

$ 63,775

Less: net income attributable to non-controlling interests

18,051

19,780

Net income attributable to Select Medical’s common stockholders

56,681

43,995

Less: distributed and undistributed net income attributable to participating securities

1,145

1,191

Distributed and undistributed net income attributable to common shares

$ 55,536

$ 42,804

The following tables set

forth the computation of EPS under the two-class method for the three months ended March 31, 2025 and 2026:

Three Months Ended March 31,

2025

2026

Net Income

Allocation

Shares(1)

Basic and

Diluted EPS

Net Income

Allocation

Shares(1)

Basic and

Diluted EPS

Common shares

$ 55,536

126,205

$ 0.44

$ 42,804

120,661

$ 0.35

Participating securities

1,145

2,602

$ 0.44

1,191

3,356

$ 0.35

Total

$ 56,681

$ 43,995

(1) Represents

the weighted average share count outstanding during the period.

III. Condensed Consolidated Balance Sheets

(In thousands, unaudited)

December 31, 2025

March 31, 2026

Assets

Current Assets:

Cash and cash equivalents

$ 26,523

$ 25,683

Accounts receivable

864,207

949,480

Other current assets

134,551

136,934

Total Current Assets

1,025,281

1,112,097

Operating lease right-of-use assets

957,904

1,042,220

Property and equipment, net

992,314

997,409

Goodwill

2,360,902

2,378,179

Identifiable intangible assets, net

100,800

99,864

Other assets

414,388

412,314

Total Assets

$ 5,851,589

$ 6,042,083

Liabilities and Equity

Current Liabilities:

Payables and accruals

$ 771,872

$ 765,731

Current operating lease liabilities

188,405

179,449

Current portion of long-term debt and notes payable

24,217

25,185

Total Current Liabilities

984,494

970,365

Non-current operating lease liabilities

835,362

931,195

Long-term debt, net of current portion

1,803,979

1,835,523

Non-current deferred tax liability

112,157

117,862

Other non-current liabilities

79,858

81,197

Total Liabilities

3,815,850

3,936,142

Redeemable non-controlling interests

18,808

20,967

Total equity

2,016,931

2,084,974

Total Liabilities and Equity

$ 5,851,589

$ 6,042,083

IV. Condensed Consolidated Statements of Cash

Flows

For the Three Months Ended March 31,

2025 and 2026

(In thousands, unaudited)

2025

2026

Operating activities

Net income

$ 74,732

$ 63,775

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Distributions from unconsolidated subsidiaries

20,145

14,043

Depreciation and amortization

34,808

37,666

Provision for expected credit losses

2,283

1,098

Equity in earnings of unconsolidated subsidiaries

(12,512 )

(12,011 )

(Gain) loss on sale or disposal of assets

(23 )

Stock compensation expense

3,892

4,638

Amortization of debt discount and issuance costs

783

778

Deferred income taxes

(5,655 )

6,336

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

Accounts receivable

(89,083 )

(86,370 )

Other current assets

(12,230 )

(10,563 )

Other assets

2,127

5,092

Accounts payable and accrued expenses

(22,724 )

13,330

Net cash provided by (used in) operating activities

(3,457 )

37,860

Investing activities

Business combinations, net of cash acquired

—

Purchases of property and equipment

(52,339 )

(58,898 )

Proceeds from sales of assets and business

2,212

Net cash used in investing activities

(52,315 )

(56,655 )

Financing activities

Borrowings on revolving facilities

405,000

250,000

Payments on revolving facilities

(330,000 )

(225,000 )

Payments on term loans

(2,625 )

Borrowings of other debt

16,015

19,369

Principal payments on other debt

(7,729 )

(9,903 )

Dividends paid to common stockholders

(8,060 )

(7,751 )

Repurchases of common stock

(11,389 )

—

Increase (decrease) in overdrafts

(5,120 )

2,643

Proceeds from issuance of non-controlling interests

7,944

5,948

Distributions to and purchases of non-controlling interests

(14,745 )

(14,726 )

Net cash provided by financing activities

49,291

17,955

Net decrease in cash and cash equivalents

(6,481 )

(840 )

Cash and cash equivalents at beginning of period

59,694

26,523

Cash and cash equivalents at end of period

$ 53,213

$ 25,683

Supplemental information

Cash paid for interest

$ 23,772

$ 17,554

Cash paid for taxes

1,472

3,908

V. Key Statistics

For the Three Months Ended March 31, 2025, and 2026

(unaudited)

2025

2026

% Change

Critical Illness Recovery Hospital

Number of hospitals operated – end of period(a)

104

103

Revenue (,000)

$ 637,030

$ 638,776

0.3 %

Number of patient days(b)(c)

291,324

284,936

(2.2 )%

Number of admissions(b)(d)

9,351

9,449

1.0 %

Revenue per patient day(b)(e)

$ 2,179

$ 2,234

2.5 %

Occupancy rate(b)(f)

73 %

72 %

(1.4 )%

Adjusted EBITDA (,000)

$ 86,649

$ 73,433

(15.3 )%

Adjusted EBITDA margin

13.6 %

11.5 %

Rehabilitation Hospital

Number of hospitals operated – end of period(a)

Revenue (,000)

$ 307,388

$ 351,942

14.5 %

Number of patient days(b)(c)

122,822

138,133

12.5 %

Number of admissions(b)(d)

8,848

9,999

13.0 %

Revenue per patient day(b)(e)

$ 2,234

$ 2,296

2.8 %

Occupancy rate(b)(f)

82 %

83 %

1.2 %

Adjusted EBITDA (,000)

$ 70,424

$ 81,078

15.1 %

Adjusted EBITDA margin

22.9 %

23.0 %

Outpatient Rehabilitation

Number of clinics operated – end of period(a)

1,911

1,912

Working days(g)

Revenue (,000)

$ 307,342

$ 321,300

4.5 %

Number of visits(b)(h)

2,709,964

2,831,858

4.5 %

Revenue per visit(b)(i)

$ 102

0.0 %

Adjusted EBITDA (,000)

$ 24,273

$ 21,984

(9.4 )%

Adjusted EBITDA margin

7.9 %

6.8 %

(a) Includes managed locations.

(b) Excludes managed locations.

(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.

VI. Net Income to Adjusted EBITDA Reconciliation

For the Three Months Ended March 31, 2025 and 2026

(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,

net income, income from operations, 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

net income to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted

EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt,

stock compensation expense, take private transaction costs, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated

subsidiaries.

Three Months Ended

March 31,

2025

2026

Net income

$ 74,732

$ 63,775

Income tax expense

21,453

18,318

Interest expense

29,072

28,336

Equity in earnings of unconsolidated subsidiaries

(12,512 )

(12,011 )

Income from operations

112,745

98,418

Stock compensation expense:

Included in general and administrative

3,108

3,609

Included in cost of services

784

1,029

Depreciation and amortization

34,808

37,666

Take private transaction costs

—

846

Adjusted EBITDA

$ 151,445

$ 141,568

Critical illness recovery hospital

$ 86,649

$ 73,433

Rehabilitation hospital

70,424

81,078

Outpatient rehabilitation

24,273

21,984

Other(a)

(29,901 )

(34,927 )

Adjusted EBITDA

$ 151,445

$ 141,568

(a) Other primarily includes general and administrative costs.

VII. Reconciliation of Earnings per Common Share to Adjusted Earnings

per Common Share

For the Three Months Ended March 31, 2025 and 2026

(In thousands, except per share amounts, unaudited)

Adjusted net income attributable

to common shares and adjusted earnings per common share are not measures of financial performance under GAAP. Items excluded from adjusted

net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing

financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted

earnings per common share 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 net income attributable to

common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes for,

net income, 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 net income, 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 net income attributable to common shares and adjusted earnings per common share as presented may not be comparable

to other similarly titled measures of other companies.

The following tables reconcile

net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to

common shares and adjusted earnings per common share on a fully diluted basis.

Three Months Ended March 31,

2025

Per Share(a)

2026

Per Share(a)

Net income attributable to common shares(a)

$ 55,536

$ 0.44

$ 42,804

$ 0.35

Adjustments:(b)

Take private transaction costs, net of tax

—

646

0.01

Adjusted net income attributable to common shares

$ 55,536

$ 0.44

$ 43,450

$ 0.36

(a) Net income attributable to common shares and earnings per common share are calculated based on the diluted

weighted average common shares outstanding, as presented in table II.

(b) Adjustments to net income 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.

VIII. Net Income 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 as computed at the low and high points of the range to the closest comparable GAAP financial measure.

Refer to table VI for the definition of Adjusted EBITDA and 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

Net income attributable to Select Medical

$ 152

$ 164

Net income attributable to non-controlling interests

Net income

228

244

Income tax expense

Interest expense

118

Equity in earnings of unconsolidated subsidiaries

(57 )

(58 )

Income from operations

353

373

Stock compensation expense

Depreciation and amortization

146

Adjusted EBITDA

$ 520

$ 540

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