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For the second quarter ended June 30, 2010, net operating revenues increased 3.6% to $579.9 million compared to $559.5 million for the same quarter, prior year. Income from operations increased 11.0% to $72.6 million compared to $65.4 million for the same quarter, prior year. Net income attributable to Select increased 23.6% to $24.5 million compared to $19.8 million for the same quarter, prior year. Net income attributable to Select for the quarter ended June 30, 2009 included a gain on early retirement of debt, net of tax, of $2.0 million. Additionally, net income before interest, income taxes, depreciation and amortization, gain on early retirement of debt, stock compensation expense and other income ("Adjusted EBITDA") for the second quarter increased 7.2% to $89.6 million compared to $83.6 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is attached to this release. Income per common share for the second quarter ended June 30, 2010 was $0.15 on a fully diluted basis and weighted average diluted shares outstanding were 159,975,000. On September 30, 2009, Select completed an initial public offering that resulted in the issuance of 30,000,000 shares of common stock. On October 28, 2009, the underwriters exercised their over-allotment option to purchase an additional 3,603,000 shares of common stock. Upon completion of the initial public offering, Select's participating preferred stock converted into a total of 64,277,000 common shares.
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Select's income per common share for the quarter ended June 30, 2009 was $0.19, which included a non-recurring gain related to the early retirement of debt. Excluding this item, on an adjusted basis income available to common stockholders was $0.16 per diluted share for the quarter ended June 30, 2009. A reconciliation of net income per share to adjusted net income per share is attached to this release.
For the six months ended June 30, 2010, net operating revenues increased 3.9% to $1,164.7 million compared to $1,120.7 million for the same period, prior year. Income from operations increased 9.2% to $145.2 million compared to $133.0 million for the same period, prior year. Net income attributable to Select increased 8.7% to $48.7 million compared to $44.8 million for the same period, prior year. Net income attributable to Select for the six months ended June 30, 2009 includes a gain on early retirement of debt, net of tax, of $8.9 million. Additionally, Adjusted EBITDA for the six months ended June 30, 2010 increased 6.6% to $180.5 million compared to $169.3 million for the same period, prior year. A reconciliation of net income to Adjusted EBITDA is attached to this release. Income per common share for the six months ended June 30, 2010 was $0.30 on a fully diluted basis and weighted average diluted shares outstanding were 159,984,000. On September 30, 2009, Select completed an initial public offering that resulted in the issuance of 30,000,000 shares of common stock. On October 28, 2009, the underwriters exercised their over-allotment option to purchase an additional 3,603,000 shares of common stock. Upon completion of the initial public offering, Select's participating preferred stock converted into a total of 64,277,000 common shares.
Select's income per common share for the six months ended June 30, 2009 was $0.47, which included a non-recurring gain related to the early retirement of debt. Excluding this item, on an adjusted basis income available to common stockholders was $0.34 per diluted share for the six months ended June 30, 2009. A reconciliation of net income per share to adjusted net income per share is attached to this release.
Specialty Hospitals
At June 30, 2010, Select operated 89 long term acute care hospitals and six acute medical rehabilitation hospitals. This compares to 87 long term acute care hospitals and five acute medical rehabilitation hospitals operated at June 30, 2009. For the second quarter of 2010, net operating revenues for all of Select's hospitals increased 4.3% to $403.1 million compared to $386.3 million for the same quarter, prior year. Total patient days for the second quarter of 2010 were 264,898, admissions were 10,616 and net revenue per patient day was $1,474. This compares to 252,710 days, 10,504 admissions and net revenue per patient day of $1,491 for the same quarter, prior year. For the hospitals opened or acquired as of January 1, 2009 and operated by Select throughout both periods, patient days in the second quarter of 2010 were 258,884 and admissions were 10,304, compared to 251,136 days and 10,433 admissions in the same quarter, prior year. Adjusted EBITDA for the specialty hospital segment increased 3.4% to $73.3 million compared to $71.0 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 18.2% for the second quarter of 2010, compared to 18.4% for the same quarter, prior year. The Adjusted EBITDA margin for the hospitals opened or acquired as of January 1, 2009 and operated by Select throughout both periods was 18.5% for the second quarter of 2010, compared to 18.4% for the same quarter, prior year.
For the six months ended June 30, 2010, net operating revenues for all of Select's hospitals increased 4.5% to $814.8 million compared to $779.6 million for the same period, prior year. Total patient days for the six months ended June 30, 2010 were 532,746, admissions were 21,717 and net revenue per patient day was $1,483. This compares to 508,983 days, 21,309 admissions and net revenue per patient day of $1,494 for the same period, prior year. For the hospitals opened or acquired as of January 1, 2009 and operated by Select throughout both periods, patient days for the six months ended June 30, 2010 were 521,823, and admissions were 21,122, compared to 505,403 days and 21,164 admissions in the same period, prior year. Adjusted EBITDA for the segment for the six months ended June 30, 2010 increased 5.8% to $156.2 million compared to $147.7 million for the same period, prior year. The Adjusted EBITDA margin for the segment for the six months ended June 30, 2010 was 19.2%, compared to 19.0% for the same period, prior year. The Adjusted EBITDA margin for the hospitals opened or acquired as of January 1, 2009 and operated by Select throughout both periods was 19.7% for the six months ended June 30, 2010, compared to 19.0% for the same period, prior year.
Outpatient Rehabilitation
At June 30, 2010, Select operated 953 outpatient clinics. This compares to 948 outpatient clinics at June 30, 2009. For the second quarter of 2010, net operating revenues for the outpatient rehabilitation segment increased 2.1% to $176.8 million compared to $173.2 million for the same quarter, prior year. Adjusted EBITDA for the segment for the second quarter increased 2.6% to $26.0 million compared to $25.3 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment for the quarter was 14.7% compared to 14.6% in the same quarter, prior year. Patient visits for the quarter were 1,172,212 compared to 1,163,341 for the same quarter, prior year. Net revenue per visit was $101 in both quarters.
For the six months ended June 30, 2010, net operating revenues were $349.9 million compared to $341.0 million for the same period, prior year. Adjusted EBITDA for the six months ended June 30, 2010 decreased 0.2% to $46.5 million compared to $46.6 million for the same period, prior year. The Adjusted EBITDA margin for the six months ended June 30, 2010 was 13.3% compared to 13.7% in the same period, prior year. Patient visits for the six months ended June 30, 2010 were 2,298,170 compared to 2,259,637 for the same period, prior year. Net revenue per visit was $101 for the six months ended June 30, 2010 compared to $102 for the same period, prior year.
Agreement to Purchase Regency Hospital Company, L.L.C.
On June 18, 2010, the Company entered into an agreement to acquire all the issued and outstanding equity securities of Regency Hospital Company, L.L.C. ("Regency") an operator of long-term acute care hospitals, for approximately $210 million, including certain assumed liabilities. The purchase price is subject to adjustment based on Regency's net working capital on the closing date.
Regency operates a network of 23 long-term acute care hospitals, located in 9 states. The transaction, which is expected to close in the third quarter of 2010, is subject to a number of closing conditions, including clearance under the Hart-Scott-Rodino antitrust Improvements Act of 1976, as amended, and receipt of certain healthcare regulatory approvals.
Business Outlook
The Company intends to revise its 2010 business outlook upon the closing of the Regency Transaction.
Conference Call
The Company will host a conference call regarding its second quarter results and its business outlook on Friday, August 6, 2010, at 9:00am EDT. The domestic dial in number for the call is 1-866-788-0541. The international dial in number is 1-857-350-1679. The passcode for the call is 10011638. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website http://www.selectmedicalholdings.com.
For those unable to participate in the conference call, a replay will be available until 11:59pm EDT, Friday, August 13, 2010. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 70263211. The replay can also be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalholdings.com.
Select Medical Holdings Corporation is a leading operator of specialty hospitals in the United States. As of June 30, 2010, Select operated 89 long term acute care hospitals and 6 acute medical rehabilitation hospitals in 25 states. Select is also a leading operator of outpatient rehabilitation clinics in the United States, with approximately 953 locations in 36 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.selectmedicalholdings.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:
VII. Net Income to Adjusted EBITDA Reconciliation
(In thousands)
(unaudited)
For the Three and Six Months Ended June 30, 2009 and 2010
The following table reconciles net income to Adjusted EBITDA for Select. Adjusted EBITDA is used by Select to report its segment performance. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, stock compensation expense, other income and gain on early retirement of debt. 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.
-- additional changes in government reimbursement for our services, including changes that will result from the expiration of the moratorium for long term acute care hospitals established by the SCHIP Extension Act of 2007, the American Recovery and Reinvestment Act, and the Patient Protection and Affordable Care Act may result in a reduction in net operating revenues, an increase in costs and a reduction in profitability; -- the failure of our specialty hospitals to maintain their Medicare certifications 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; -- a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs; -- future acquisitions or joint ventures 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 the areas we serve 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; -- other factors discussed from time to time in our filings with the Securities and Exchange Commission, including factors under the heading "Risk Factors" in our annual report on Form 10-K.
SOURCE Select Medical Holdings Corporation
