Select Medical Holdings Corporation

For Q1 2026, Select Medical reported total revenue up 5% year over year, adjusted EBITDA of $141.6 million versus $151.4 million last year, and EPS of $0.35 versus $0.44. Adjusted EPS excluding take-private transaction costs was $0.36. Inpatient rehab revenue increased more than 14% to approximately $351.9 million with adjusted EBITDA of $81.1 million; critical illness revenue was $638.8 million versus $637 million with adjusted EBITDA of $73.4 million; outpatient rehab revenue was $321.3 million versus $307.3 million with adjusted EBITDA of $22 million. For the full year 2026, management kept guidance at revenue of $5.6 billion to $5.8 billion, adjusted EBITDA of $520 million to $540 million, fully diluted EPS of $1.22 to $1.32, and capex of $200 million to $220 million.

Thomas Mullin framed the quarter around Select Medical’s pending take-private transaction, saying the deal to be acquired for $16.50 per share remains on track to close in mid-2026, subject to approvals. He also emphasized continued development activity, including 166 beds added so far in 2026 and a broader pipeline of hospital and unit openings into 2027. On operations, he highlighted scheduling optimization in outpatient rehab and said the company is reviewing underperforming markets and may exit or consolidate clinics to improve productivity.

Michael Malatesta said the balance sheet ended the quarter with $1.9 billion of total debt and $25.7 million of cash, along with $443.5 million of revolver availability and net leverage of 3.75 under the senior secured credit agreement. He cited quarterly cash flow from operations of $37.9 million, capital expenditures of $58.9 million, and interest expense of $28.3 million versus $29.1 million a year ago. He also reiterated 2026 guidance ranges for revenue, adjusted EBITDA, EPS, and capex, indicating the company is maintaining its prior outlook.

Analysts focused on outpatient rehab margin recovery, Medicare Advantage denials, the new IRF rule, LTACH outlier policy, and the Medicare TEAM model. Management said outpatient margins should benefit from scheduling and productivity work, but also noted it closed four Oregon clinics in the quarter, which added about $1 million of cost, and more market exits or consolidations may follow. On denials, management said Medicare Advantage conversion fell in Q1, especially in LTACH and IRF, but commercial and Medicare conversion improved; they also said the IRF rule was benign, the TEAM model has had little impact so far, and they expect the LTACH outlier threshold to eventually come down.