SEM Stock Forecast & Price Target

Select Medical Holdings Corp is positioned for positive financial performance, particularly within its critical illness recovery hospitals (CIRH) segment, which is expected to benefit from margin expansion and improved efficiencies as it navigates the CMS's high-cost outlier threshold. The company anticipates strong growth in its inpatient rehabilitation facilities (IRF), with a reported 15.7% revenue increase driven by both patient day growth and revenue per patient day, contributing to overall margin stability. Furthermore, management's forecast of achieving 85%+ occupancy rates in new hospitals for the remainder of the year signals robust demand and operational recovery, reinforcing a favorable outlook for FY25 EBITDA-MI expectations.

Select Medical Holdings Corp has experienced a significant decline in share value, dropping over 20% following the release of weaker first-quarter results and a modest reduction in guidance, indicating underlying financial pressures. The company's critical illness recovery hospitals are facing margin pressures due to high-cost outlier thresholds, which have negatively impacted revenue per patient day, decreasing by 1.8% year-over-year. Additionally, occupancy rates have declined by 500 basis points to 82%, which reflects the impact of new hospital openings, further complicating the company's revenue generation capabilities.