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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on SEM

Breaking News: Select Medical Holdings Corporation reported its Q4 earnings on February 20, 2026, missing estimates due to increasing expenses and margin pressure. Despite revenue growth and strength in key segments, the company's EPS was impacted. The company discussed its Q4 2025 earnings during its earnings call. Analysts from various firms have provided their recommendations, with some recommending a buy, while others suggest holding or selling the stock. The recent earnings release led to changes in analyst recommendations. Several analysts have reiterated their hold recommendations.

1.c. Company Highlights

2. Select Medical Holdings: A Mixed Bag in Q4 2025

Select Medical Holdings Corporation reported a 6% year-over-year revenue growth in the fourth quarter of 2025, with total revenue reaching $1.8 billion. However, adjusted EBITDA declined 10% to $104.7 million, and earnings per common share from continuing operations was $0.16, missing estimates of $0.23. For the full year, revenue grew more than 5%, with adjusted EBITDA of $493.2 million and a 9% margin. The company's financial performance was impacted by higher health insurance expenses, which affected the entire company, but had a greater effect on the outpatient division.

Publication Date: Feb -22

📋 Highlights
  • Q4 Revenue Growth:: 6% YoY increase to $1.8 billion, driven by inpatient rehabilitation expansion.
  • Inpatient Rehab Expansion:: 212 beds added in 2025, revenue grew 15% to $339.2M with 11% EBITDA rise.
  • Adjusted EBITDA Decline:: Q4 adjusted EBITDA fell 10% to $104.7M due to $15M health insurance costs and operational challenges.
  • 2026 Outlook:: Revenue guidance $5.6–5.8B, adjusted EBITDA $520–540M, with outpatient rehab margin improvement expected.
  • Liquidity Position:: $1.8B debt and $26.5M cash, with share repurchases paused pending acquisition review and capital allocation focus on inpatient growth.

Inpatient Rehabilitation Division Performance

The inpatient rehabilitation division added 150 beds in the fourth quarter and 212 beds for the full year, driving revenue growth of over 15% year-over-year to $339.2 million. Adjusted EBITDA rose 11% to $69.2 million, indicating a strong performance from this segment. The company expects startup losses in this division to be relatively consistent year-over-year, around $15 million in losses for 2026.

Outpatient Rehabilitation Segment Challenges

The outpatient rehabilitation segment experienced a decline in adjusted EBITDA to $11.2 million, primarily due to lower net revenue per visit and higher health insurance expenses. However, the company expects outpatient rehab to improve and grow year-over-year in 2026, driven by a Medicare rate increase.

Valuation and Outlook

With a P/E Ratio of 12.68 and an EV/EBITDA of 6.07, the company's valuation appears reasonable. The market is expecting a revenue growth of around 4.3% next year. The company's guidance for 2026 expects revenue between $5.6 billion and $5.8 billion, with adjusted EBITDA ranging from $520 million to $540 million. The pending review of a non-binding indication of interest to acquire all outstanding shares of Select Medical puts share repurchases on hold, and the focus remains on growing the inpatient rehab division.

Operational Highlights and Future Plans

The company is investing in new rehab units and neuro-transitional centers, and exploring the use of AI in back-end processes, outpatient collections, and clinical initiatives. Labor costs have stabilized, with agency rates settling into a more normalized range. The critical illness segment is performing well, with labor margins running above 56%. The long-term care acute hospital (LTACH) business is not expected to face significant headwinds from high-cost outlier thresholds, with a 1% increase to $1,888.

3. NewsRoom

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Select Medical Q4 Earnings Miss Estimates on Increasing Expenses

Feb -20

Source: zacks.com

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Select Medical Holdings Corporation (SEM) Q4 2025 Earnings Call Transcript

Feb -20

Source: seekingalpha.com

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Select Medical (SEM) Q4 Earnings Miss Estimates

Feb -19

Source: zacks.com

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

Feb -19

Source: prnewswire.com

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PHILADELPHIA EAGLES RENEW DEAL WITH SELECT MEDICAL NAMING NOVACARE REHABILITATION THE TEAM'S OFFICIAL PHYSICAL THERAPY PARTNER

Feb -17

Source: prnewswire.com

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Select Medical Holdings Corporation to Announce Fourth Quarter and Full Year 2025 Results and Business Outlook on Thursday, February 19, 2026

Feb -17

Source: prnewswire.com

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SEM to Report Q4 Earnings: Can Higher Admissions Protect Results?

Feb -16

Source: zacks.com

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Principal Financial Group Inc. Trims Position in Select Medical Holdings Corporation $SEM

Feb -07

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.43%)

6. Segments

Critical Illness Recovery Hospital

Expected Growth: 3.5%

Critical Illness Recovery Hospital's 3.5% growth is driven by increasing demand for post-acute care, aging population, and rising healthcare expenditures. Additionally, Select Medical's strategic partnerships, expanded service offerings, and efficient operations contribute to the segment's growth.

Concentra

Expected Growth: 3.8%

Concentra's 3.8% growth is driven by increasing demand for occupational health services, expansion of its medical centers, and strategic partnerships. Additionally, the company's focus on providing high-quality, cost-effective care and its ability to adapt to changing healthcare regulations have contributed to its growth.

Outpatient Rehabilitation

Expected Growth: 3.2%

Outpatient Rehabilitation from Select Medical Holdings Corporation's 3.2% growth driven by increasing demand for post-acute care, aging population, and expansion of services into new markets. Additionally, the shift towards value-based care and cost-effective treatment options also contribute to the segment's growth.

Rehabilitation Hospital

Expected Growth: 3.0%

Strong demand for post-acute care services, increasing Medicare reimbursement rates, and strategic partnerships drive growth for Rehabilitation Hospital from Select Medical Holdings Corporation. Additionally, the company's focus on expanding its network of hospitals and investing in technology to improve patient outcomes contribute to its 3.0% growth rate.

Other

Expected Growth: 2.8%

Select Medical Holdings Corporation's 2.8% growth is driven by increasing demand for outpatient rehabilitation services, expansion of its occupational health business, and strategic acquisitions. Additionally, the company's focus on cost containment and operational efficiencies has contributed to its growth. Furthermore, the shift towards value-based care and the need for post-acute care services have also supported the company's growth momentum.

7. Detailed Products

Inpatient Rehabilitation Hospitals

Provides intensive rehabilitation services to patients who have been impaired by a physical disability, injury, or illness.

Long-Term Acute Care Hospitals

Offers extended medical care to patients who require ongoing treatment for complex medical conditions.

Medical Rehabilitation Centers

Provides outpatient rehabilitation services to patients who require physical, occupational, or speech therapy.

Occupational Health Services

Offers occupational health services, including injury care, physical therapy, and wellness programs, to employers and their employees.

Concentra Urgent Care Centers

Provides urgent care services for non-life-threatening injuries and illnesses, including occupational health services.

8. Select Medical Holdings Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Select Medical Holdings Corporation operates in a niche market, providing specialized healthcare services. While there are some substitutes available, they are not as effective or convenient, reducing the threat of substitutes.

Bargaining Power Of Customers

Select Medical Holdings Corporation's customers are primarily patients and healthcare providers. While they have some bargaining power, it is limited due to the specialized nature of the services provided.

Bargaining Power Of Suppliers

Select Medical Holdings Corporation relies on a network of suppliers for medical equipment, pharmaceuticals, and other essential goods. While suppliers have some bargaining power, the company's size and diversification mitigate this threat.

Threat Of New Entrants

Entering the healthcare services market requires significant capital investment, regulatory compliance, and specialized expertise. These barriers to entry reduce the threat of new entrants.

Intensity Of Rivalry

The healthcare services market is highly competitive, with many established players vying for market share. Select Medical Holdings Corporation must continually innovate and improve its services to maintain its competitive edge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 79.38%
Debt Cost 5.11%
Equity Weight 20.62%
Equity Cost 10.81%
WACC 6.29%
Leverage 384.97%

11. Quality Control: Select Medical Holdings Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Select Medical

A-Score: 4.4/10

Value: 7.7

Growth: 4.3

Quality: 4.0

Yield: 4.0

Momentum: 1.0

Volatility: 5.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.71$

Current Price

14.71$

Potential

-0.00%

Expected Cash-Flows