SEM Stock Forecast & Price Target

Select Medical Holdings Corp demonstrated robust financial performance, with the inpatient rehabilitation facility (IRF) segment achieving a 19% year-over-year growth in adjusted EBITDA to $63.8 million and a margin expansion of 90 basis points. The outpatient rehabilitation segment also showed positive metrics, with adjusted EBITDA rising 7.5% year-over-year to $28.3 million, bolstered by a stable demand for rehabilitation services. Additionally, the overall company is adjusting its 2025 adjusted EBITDA estimate upward to $938.1 million, reflecting strong topline growth and anticipated margin improvements across its segments, particularly if the company successfully navigates regulatory challenges.

The financial analysis of Select Medical Holdings Corp indicates a concerning trend, with a 6% year-over-year decline in adjusted EBITDA for the Critical Illness Recovery Hospitals (CIRH) segment, alongside an 80 basis points contraction in margins to 8.3%. Furthermore, the company's occupancy rate fell by 200 basis points to 82%, attributed to the opening of new hospitals, suggesting potential overcapacity and diminished demand. Additionally, prolonged labor pressures are expected to result in FY25 EBITDA-MI being 10% below prior estimates, highlighting continued operational challenges and financial strain.