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For the third quarter ended September 30, 2009, net operating revenues increased 5.1% to $545.6 million compared to $519.2 million for the same quarter, prior year. Income from operations decreased 9.0% to $32.9 million compared to $36.2 million for the same quarter, prior year. Income from operations for the third quarter ended September 30, 2009 includes compensation costs of $22.0 million Select incurred associated with its initial public offering of common stock. Net income attributable to Select increased to $0.6 million compared to a loss of $0.8 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, long term incentive compensation and non-controlling interest ("Adjusted EBITDA") for the third quarter increased 34.0% to $73.0 million compared to $54.5 million for the same quarter, prior year. A reconciliation of net income to Adjusted EBITDA is attached to this release. Loss per common share was $0.09 on a fully diluted basis compared to a loss of $0.11 per common share for the same quarter prior year.
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For the nine months ended September 30, 2009, net operating revenues increased 3.7% to $1,666.3 million compared to $1,606.3 million for the same period, prior year. Income from operations increased 19.4% to $165.9 million compared to $138.9 million for the same period, prior year. Income from operations for the nine months ended September 30, 2009 includes compensation costs of $22.0 million Select incurred associated with its initial public offering of common stock. Net income attributable to Select increased to $45.4 million compared to $13.6 million for the same period, prior year. Additionally, Adjusted EBITDA for the nine months ended September 30, 2009 increased 25.0% to $242.3 million compared to $193.8 million for the same period, prior year. Earnings per share were $0.37 on a fully diluted basis compared to a loss of $0.07 per common share for the same period, prior year.
On an adjusted basis, income available to common stockholders was $0.09 per diluted share for the third quarter ended September 30, 2009 and $0.42 per diluted share for the nine months ended September 30, 2009. Adjusted income available to common stockholders excludes non-recurring items relating to Select's initial public offering such as long term incentive compensation and stock compensation expense related to the grant of restricted stock; and gains related to the early retirement of debt. A reconciliation of net income per share to adjusted net income per share is attached to this release.
Specialty Hospitals
At September 30, 2009, Select operated 89 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 September 30, 2008. For the third quarter of 2009, net operating revenues for all of Select's hospitals increased 5.0% to $376.9 million compared to $358.8 million for the same quarter, prior year. Total patient days for the third quarter of 2009 were 248,504, admissions were 10,466 and net revenue per patient day was $1,489. This compares to 243,807 days, 9,977 admissions and net revenue per patient day of $1,446 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 third quarter of 2009 were 231,509 and admissions were 9,710, compared to 234,112 days and 9,614 admissions in the same quarter, prior year. Adjusted EBITDA for the segment increased 31.0% to $64.4 million compared to $49.1 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment was 17.1% for the third quarter of 2009, compared to 13.7% 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 18.1% for the third quarter of 2009, compared to 16.0% for the same quarter, prior year.
For the nine months ended September 30, 2009, net operating revenues for all of Select's hospitals increased 4.7% to $1,156.4 million compared to $1,104.7 million for the same period, prior year. Total patient days for the nine months ended September 30, 2009 were 757,487, admissions were 31,775 and net revenue per patient day was $1,500. This compares to 756,093 days, 30,891 admissions and net revenue per patient day of $1,434 for the same period, prior year. For the hospitals opened or acquired as of January 1, 2008 and operated by Select throughout both periods, patient days for the nine months ended September 30, 2009 were 705,692 and admissions were 29,570, compared to 728,733 days and 29,794 admissions in the same period, prior year. Adjusted EBITDA for the segment for the nine months ended September 30, 2009 increased 26.6% to $212.1 million compared to $167.6 million for the same period, prior year. The Adjusted EBITDA margin for the segment for the nine months ended September 30, 2009 was 18.3%, compared to 15.2% for the same period, 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 19.8% for the nine months ended September 30, 2009, compared to 17.3% for the same period, prior year.
Outpatient Rehabilitation
At September 30, 2009, Select operated 947 outpatient clinics. This compares to 965 outpatient clinics at September 30, 2008. For the third quarter of 2009, net operating revenues for the segment increased 5.3% to $168.8 million compared to $160.3 million for the same quarter, prior year. Adjusted EBITDA for the segment for the third quarter increased 27.4% to $20.9 million compared to $16.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the segment for the quarter was 12.4% compared to 10.2% in the same quarter, prior year. Patient visits for the quarter were 1,126,096 compared to 1,106,529 for the same quarter, prior year. Net revenue per visit was $101 for both the quarter ended September 30, 2009 and the same quarter, prior year.
For the nine months ended September 30, 2009, net operating revenues for the segment increased 1.7% to $509.8 million compared to $501.4 million for the same period, prior year. Adjusted EBITDA for the nine months ended September 30, 2009 increased 12.0% to $67.5 million compared to $60.2 million for the same period, prior year. The Adjusted EBITDA margin for the nine months ended September 30, 2009 was 13.2% compared to 12.0% in the same period, prior year. Patient visits for the nine months ended September 30, 2009 were 3,385,733 compared to 3,430,138 for the same period, prior year. Net revenue per visit was $102 for both the nine months ended September 30, 2009 and the same period, prior year.
Initial Public Offering of Common Stock
On September 30, 2009, Select completed its initial public offering of common stock at a price to the public of $10.00 per share. Select sold 30,000,000 shares in the offering. The total net proceeds to Select from the offering after deducting underwriting discounts and commissions and offering expenses were approximately $279.1 million. A portion of the net proceeds from the offering were used to repay indebtedness and to make payments to executive officers under the Long Term Cash Incentive Plan, and any remaining proceeds will be used to repay additional indebtedness or for general corporate purposes. Because the closing and receipt of cash occurred on September 30, 2009, the repayments of indebtedness and payment under the Long Term Cash Incentive Plan were not made until October. As a result, we have reported a significant amount of cash on our September 30, 2009 balance sheet and we have reflected the mandatory repayment due under our credit facility as a current portion of long term debt.
On October 28, 2009, the underwriters purchased an additional 3,602,700 shares pursuant to their over-allotment option at a price to the public of $10.00 per share. The total net proceeds to Select from the exercise of the over-allotment option were approximately $33.9 million. A portion of the net proceeds from the exercise of the over-allotment option were used to repay indebtedness, and any remaining proceeds will be used to repay additional indebtedness or for general corporate purposes.
Conference Call
Select will host a conference call regarding its third quarter results on Friday, November 6, 2009, at 11:00 am EST. The domestic dial in number for the call is 1-866-783-2146. The international dial in number is 1-857-350-1605. The passcode for the call is 78893390. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website http://www.selectmedicalcorp.com.
For those unable to participate in the conference call, a replay will be available until 2:00pm EST, November 13, 2009. The replay number is 1-888-286-8010 (domestic) or 1-617-801-6888 (international). The passcode for the replay will be 54139669. The replay can also be accessed at Select Medical Holdings Corporation's website, http://www.selectmedicalcorp.com.
Select Medical Holdings Corporation is a leading operator of specialty hospitals in the United States. As of September 30, 2009, Select operated 89 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 947 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 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 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.
SOURCE Select Medical Holdings Corporation
