Form 8-K - Current report
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
current report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date
of earliest event reported): July 19, 2023
SELECT MEDICAL HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | |
001-34465 | |
20-1764048 |
(State or other jurisdiction of
Incorporation) | |
(Commission File
Number) | |
(I.R.S. Employer Identification No.) |
4714 Gettysburg Road, P.O. Box 2034
Mechanicsburg, PA 17055
(Address of principal executive offices) (Zip Code)
(717) 972-1100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
SEM |
New York Stock Exchange (NYSE) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether either registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if either registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 | Results of Operations and Financial Condition. |
On July 19, 2023, Select
Medical Holdings Corporation issued a press release announcing an estimate of certain financial results for the second quarter ended June 30,
2023 in connection with discussions with its lenders regarding a proposed refinancing of certain of its outstanding indebtedness. A copy
of that press release is attached as Exhibit 99.1 to this report and incorporated herein by reference.
The information in this Current
Report on Form 8-K (including Exhibit 99.1) is being furnished solely to satisfy the requirements of Regulation FD and shall
not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
SELECT MEDICAL HOLDINGS CORPORATION |
|
Date: July 19, 2023 |
By: |
/s/ Michael E. Tarvin |
|
|
Michael E. Tarvin |
|
|
Executive Vice President, General Counsel and Secretary |
Exhibit 99.1
|
|
|
|
FOR IMMEDIATE RELEASE |
4714 Gettysburg Road
Mechanicsburg, PA 17055
NYSE Symbol: SEM
|
Select Medical Holdings
Corporation Announces Estimate of Certain Financial Results
for
its Second Quarter Ended June 30, 2023 in connection with Refinancing Discussions
MECHANICSBURG, PENNSYLVANIA
— July 19, 2023 — Select Medical Holdings Corporation (“Select Medical,” “we,” “us,” or
“our”) (NYSE: SEM) is currently in discussions with its lenders regarding a proposed refinancing of certain of its outstanding
indebtedness. In connection with such discussions, Select Medical today announced an estimate of certain financial results for its second
quarter ended June 30, 2023 in advance of the announcement of actual results, which is expected to occur after market close on Thursday,
August 3, 2023.
Select Medical expects its
net operating revenue for its second quarter of 2023 to be approximately $1.67 billion. Select Medical expects earnings excluding interest,
income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, gain (loss) on sale
of businesses, and equity in earnings (losses) of unconsolidated subsidiaries, or Adjusted EBITDA, for the second quarter of 2023 to be
approximately $219 million. Select Medical expects fully diluted earnings per common share for the second quarter of 2023 to be approximately
$0.61. As of June 30, 2023, Select Medical expects approximately $100 million of cash and $3.75 billion of indebtedness on its balance
sheet.
The above expectations regarding
Select Medical’s financial results for the second quarter of 2023 are management estimates and projections based on currently available
information, and are subject to change upon completion of Select Medical’s financial statement closing process.
A reconciliation of Adjusted
EBITDA expectations for the second quarter of 2023 to the closest comparable GAAP financial measure is presented in table I of this release.
Please refer to Select Medical’s most recent Form 10-Q filing for a discussion of Select Medical’s use of Adjusted EBITDA
in evaluating financial performance and determining resource allocation. Each item presented in table I is an estimation of the expectations
(dollars in millions) for the second quarter of 2023.
As
previously announced, Select Medical will host a conference call regarding its second quarter results, as well as its business outlook,
on Friday, August 4, 2023, at 9:00am ET. The conference call will be a live webcast and can be accessed at Select Medical Holdings Corporation’s
website at www.selectmedicalholdings.com. A replay of the webcast will be available shortly after the call through the
same link. For listeners wishing to dial-in via telephone, or participate in the question and answer session, you may pre-register for
the call at Select Medical Earnings Call Registration to obtain your dial-in number and unique passcode for the call.
Company Overview
Select
Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics,
and occupational health centers in the United States based on the number of facilities. Select Medical’s reportable
segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment,
and the Concentra segment. As of June 30, 2023, Select Medical operated 108 critical illness recovery hospitals in 28 states, 32 rehabilitation
hospitals in 12 states, 1,944 outpatient rehabilitation clinics in 39 states and the District of Columbia, 540 occupational health
centers in 41 states, and 141 onsite clinics at employer worksites. At June 30, 2023, Select Medical had operations in 46 states and
the District of Columbia. Information about Select Medical is available at www.selectmedical.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:
| · | adverse economic conditions including an inflationary environment could cause us to continue to experience
increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results,
cash flows, and financial condition; |
| · | shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability
to attract or retain qualified healthcare professionals could limit our ability to staff our facilities; |
| · | shortages in qualified health professionals could cause us to increase our dependence on contract labor,
increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase
our operating costs significantly; |
| · | the continuing effects of the COVID-19 pandemic including, but not limited to, the prolonged disruption
to the global financial markets, increased operational costs due to recessionary pressures and labor costs, additional measures taken
by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which
impact healthcare providers, including actions that may impact the Medicare program; |
| · | changes in government reimbursement for our services and/or new payment policies may result in a reduction
in revenue, an increase in costs, and a reduction in profitability; |
| · | the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities
to maintain their Medicare certifications may cause our revenue and profitability to decline; |
| · | the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities
operated as “hospitals within hospitals” to qualify as hospitals separate from their host hospitals may cause our revenue
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; |
| · | acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources, or expose
us to unforeseen liabilities; |
| · | our plans and expectations related to our acquisitions and our ability to realize anticipated synergies; |
| · | private third-party payors for our services may adopt payment policies that could limit our future revenue
and profitability; |
| · | the failure to maintain established relationships with the physicians in the areas we serve could reduce
our revenue and profitability; |
| · | competition may limit our ability to grow and result in a decrease in our revenue and profitability; |
| · | the loss of key members of our management team could significantly disrupt our operations; |
| · | the effect of claims asserted against us could subject us to substantial uninsured liabilities; |
| · | a security breach of our or our third-party vendors’ information technology systems may subject
us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of
1996 or the Health Information Technology for Economic and Clinical Health Act; and |
| · | other factors discussed from time to time in our filings with the Securities and Exchange Commission (the
“SEC”), including factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2022. |
Except as required by applicable
law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly
update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not
place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements
are reasonable, we cannot guarantee future results or performance.
Investor inquiries:
Joel T. Veit
Senior Vice President and Treasurer
717-972-1100
ir@selectmedical.com
SOURCE: Select Medical Holdings Corporation
I. Net Income to Adjusted EBITDA Reconciliation
Business Outlook for the Quarter Ending June
30, 2023
(In millions, unaudited)
Non-GAAP Measure Reconciliation(1) | |
| |
Net income | |
$ | 92 | |
Income tax expense | |
| 29 | |
Interest expense | |
| 49 | |
Equity in earnings of unconsolidated subsidiaries | |
| (11 | ) |
Income from operations | |
| 159 | |
Stock compensation expense | |
| 10 | |
Depreciation and amortization | |
| 50 | |
Adjusted EBITDA | |
$ | 219 | |
| (1) | These amounts are subject to change upon completion of Select Medical’s financial statement closing
process and audit. |
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