MECHANICSBURG, Pa., May 14 /PRNewswire/ -- Select Medical Corporation ("Select") today announced results for its first quarter ended March 31, 2009.
For the first quarter ended March 31, 2009, net operating revenues increased 2.4% to $561.2 million compared to $548.3 million for the same quarter, prior year. Income from operations increased 24.4% to $67.6 million compared to $54.3 million for the same quarter, prior year. Net income attributable to Select Medical Corporation increased to $31.7 million compared to $11.6 million for the same quarter, prior year. Additionally, net income before interest, income taxes, depreciation and amortization, gain on early retirement of debt, stock compensation expense, other income, other expense and non-controlling interest ("Adjusted EBITDA") for the first quarter increased 18.1% to $85.7 million compared to $72.5 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is attached to this release.
Specialty Hospitals
At March 31, 2009, Select operated 87 long term acute care hospitals and five acute medical rehabilitation hospitals. This compares to 88 long term acute care hospitals and four acute medical rehabilitation hospitals operated at March 31, 2008. For the first quarter of 2009, net operating revenues for all of Select's hospitals increased 3.9% to $393.2 million compared to $378.6 million for the same quarter, prior year. Total patient days for the first quarter of 2009 were 256,273, admissions were 10,805 and net revenue per patient day was $1,508. This compares to 259,559 days, 10,736 admissions and net revenue per patient day of $1,432 for the same quarter, prior year. For the hospitals opened or acquired as of January 1, 2008 and operated by Select throughout both periods, patient days in the first quarter of 2009 were 238,535 and admissions were 10,049, compared to 251,287 days and 10,391 admissions in the same quarter, prior year. Adjusted EBITDA for the segment increased 21.4% to $76.8 million compared to $63.2 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 19.5% for the first quarter of 2009, compared to 16.7% for the same quarter, prior year. The Adjusted EBITDA margin for the hospitals opened or acquired as of January 1, 2008 and operated by Select throughout both periods was 21.1% for the first quarter of 2009, compared to 19.0% for the same quarter, prior year.
Outpatient Rehabilitation
At March 31, 2009, Select operated 948 outpatient clinics. This compares to 985 outpatient clinics at March 31, 2008. For the first quarter of 2009, net operating revenues for the segment decreased 1.0% to $167.8 million compared to $169.6 million for the same quarter, prior year. Adjusted EBITDA for the segment for the first quarter increased 5.9% to $21.3 million compared to $20.1 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment for the quarter was 12.7% compared to 11.9% in the same quarter, prior year. Patient visits for the quarter were 1,096,296 compared to 1,155,907 for the same quarter, prior year. Net revenue per visit was $103 for both the first quarter of 2009 and for the same quarter, prior year.
Conference Call
Select Medical Holdings Corporation ("Holdings"), the Parent of Select, has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission ("SEC") in connection with the proposed initial public offering of its common stock. Based on advice of counsel, Select's regular quarterly earnings conference calls will be suspended while Holdings' registration statement is under review by the SEC.
Select Medical Corporation is a leading operator of specialty hospitals in the United States. Select operates 87 long term acute care hospitals and five acute medical rehabilitation hospitals in 25 states. Select is also a leading operator of outpatient rehabilitation clinics in the United States, with approximately 948 locations in 37 states and the District of Columbia. Select also provides medical rehabilitation services on a contract basis at nursing homes, hospitals, assisted living and senior care centers, schools and worksites. Information about Select is available at http://www.selectmedicalcorp.com/
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). 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:
- additional changes in government reimbursement for our services may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability;
- the failure of our long term acute care hospitals, or LTCHs, to maintain their status as such may cause our net operating revenues and profitability to decline;
- the failure of our facilities operated as "hospitals within hospitals," or HIHs, to qualify as hospitals separate from their host hospitals may cause our net operating revenues and profitability to decline;
- implementation of modifications to the admissions policies for our inpatient rehabilitation facilities, as required to achieve compliance with Medicare guidelines, may result in a loss of patient volume at these hospitals and, as a result, may reduce our future net operating revenues and profitability;
- a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
- future acquisitions may prove difficult or unsuccessful, use significant resources or expose us to unforeseen liabilities;
- private third-party payors for our services may undertake future cost containment initiatives that limit our future net operating revenues and profitability;
- the failure to maintain established relationships with the physicians in our markets could reduce our net operating revenues and profitability;
- shortages in qualified nurses or therapists could increase our operating costs significantly;
- competition may limit our ability to grow and result in a decrease in our net operating revenues and profitability;
- the loss of key members of our management team could significantly disrupt our operations;
- the effect of claims asserted against us or lack of adequate available insurance could subject us to substantial uninsured liabilities;
- the ability to obtain any necessary or desired waiver or amendment from our existing lenders may be difficult due to the current uncertainty in the credit markets; and
- the inability to draw funds under our senior secured credit facility because of lender defaults.
I. Condensed Consolidated Statements of Operations
(In thousands)
(unaudited)
For the Three Months Ended March 31, 2008 and 2009
%
2008 2009 Change
Net operating revenues $548,278 $561,172 2.4%
Costs and expenses:
Cost of services 452,271 451,394 (0.2)%
General and administrative 11,651 12,775 9.6%
Bad debt expense 12,615 11,646 (7.7)%
Depreciation and amortization 17,397 17,731 1.9%
Income from operations 54,344 67,626 24.4%
Gain on early retirement of debt - 11,754 N/M
Other income (expense) (4,293) 1,653 N/M
Interest income 126 52 (58.7)%
Interest expense (28,235) (25,969) (8.0)%
Income from operations before income taxes 21,942 55,116 151.2%
Income tax expense 10,079 22,368 121.9%
Net income 11,863 32,748 176.1%
Less: Net income attributable to
non-controlling interests 309 1,021 230.4%
Net income attributable to Select Medical
Corporation $11,554 $31,727 174.6%
N/M = Not Meaningful
II. Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
December 31, March 31
2008 2009
ASSETS
Cash $64,260 $12,686
Accounts receivable, net 312,418 366,317
Current deferred tax asset 48,594 51,603
Prepaid income taxes 7,362 -
Other current assets 20,897 25,322
Total Current Assets 453,531 455,928
Property and equipment, net 471,065 462,399
Goodwill 1,506,661 1,506,661
Other identifiable intangibles 74,078 71,868
Assets held for sale 12,542 12,542
Other assets 44,548 41,880
Total Assets $2,562,425 $2,551,278
LIABILITIES AND EQUITY
Payables and accruals $344,358 $318,685
Current portion of long-term debt 9,046 12,154
Total Current Liabilities 353,404 330,839
Long-term debt, net of current
portion 1,460,276 1,426,790
Non-current deferred tax
liability 42,918 47,761
Other non-current liabilities 67,709 65,479
Total equity 638,118 680,409
Total Liabilities and Equity $2,562,425 $2,551,278
III. Key Statistics
(unaudited)
For the Three Months Ended March 31, 2008 and 2009
%
2008 2009 Change
Specialty Hospitals (a)
Number of hospitals - end of period 92 92 0.0%
Net operating revenues (,000) $378,604 $393,232 3.9%
Number of patient days 259,559 256,273 (1.3)%
Number of admissions 10,736 10,805 0.6%
Net revenue per patient day (b) $1,432 $1,508 5.3%
Adjusted EBITDA (,000) $63,243 $76,781 21.4%
Adjusted EBITDA margin - all hospitals 16.7% 19.5% 16.8%
Adjusted EBITDA margin - same store
hospitals (c) 19.0% 21.1% 11.1%
Outpatient Rehabilitation
Number of clinics - end of period 985 948 (3.8)%
Net operating revenues (,000) $169,577 $167,819 (1.0)%
Number of visits 1,155,907 1,096,296 (5.2)%
Revenue per visit (d) $103 $103 0.0%
Adjusted EBITDA (,000) $20,097 $21,284 5.9%
Adjusted EBITDA margin 11.9% 12.7% 6.7%
(a) Specialty hospitals consist of long term acute care hospitals and
acute medical rehabilitation hospitals.
(b) Net revenue per patient day is calculated by dividing specialty
hospital patient service revenue by the total number of patient days.
(c) Adjusted EBITDA margin - same store hospitals represents the
Adjusted EBITDA margin for those hospitals opened or acquired before
January 1, 2008 and operated throughout both periods.
(d) Net revenue per visit is calculated by dividing outpatient
rehabilitation clinic revenue by the total number of visits. For
purposes of this computation, outpatient rehabilitation clinic
revenue does not include managed clinics or contract services
revenue.
IV. Net Income to Adjusted EBITDA Reconciliation
(In thousands)
(unaudited)
For the Three Months Ended March 31, 2008 and 2009
The following table reconciles net income to Adjusted EBITDA for Select.
Adjusted EBITDA is used by Select to report its segment performance in
accordance with SFAS No. 131. Adjusted EBITDA is defined as net income
before interest, income taxes, depreciation and amortization, stock
compensation expense, gain on early retirement of debt, other income,
other expense and non-controlling interest. We believe that the
presentation of Adjusted EBITDA is important to investors because
Adjusted EBITDA is used by management to evaluate financial Performance
and determine resource allocation for each of our operating units.
Adjusted EBITDA is not a measure of financial performance under Generally
accepted accounting principles. 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, 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 generally
accepted accounting principles and is thus susceptible to varying
calculations, Adjusted EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
Three Months Ended
March 31,
2008 2009
Net income $11,554 $31,727
Non-controlling interest 309 1,021
Income tax expense 10,079 22,368
Interest expense, net 28,109 25,917
Other expense (income) 4,293 (1,653)
Gain on early retirement of debt - (11,754)
Stock compensation expense
Included in general and administrative 709 242
Included in cost of services 45 53
Depreciation and amortization 17,397 17,731
Adjusted EBITDA $72,495 $85,652
Specialty hospitals $63,243 $76,781
Outpatient rehabilitation 20,097 21,284
Other (1) (10,845) (12,413)
Adjusted EBITDA $72,495 $85,652
(1) Other primarily includes Select's general and administrative costs.
The following tables reconcile specialty hospital same store information.
Three Months Ended
March 31, 2008 March 31, 2009
Specialty hospitals net operating
revenue $378,604 $393,232
Less: Specialty hospitals in
development, opened or closed after
1/1/08 10,344 26,633
Specialty hospitals same store net
operating revenue $368,260 $366,599
Specialty hospitals Adjusted EBITDA $63,243 $76,781
Less: Specialty hospitals in
development, opened or closed after
1/1/08 (6,734) (508)
Specialty hospitals same store
Adjusted EBITDA $69,977 $77,289
All specialty hospitals Adjusted
EBITDA margin 16.7% 19.5%
Specialty hospitals same store
Adjusted EBITDA margin 19.0% 21.1%
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