Select Medical Holdings Corporation (SEM) reported first‑quarter 2026 results on April 30, 2026, with revenue of $1.4215 billion, up 5.0 % from a year earlier, and adjusted EBITDA of $141.6 million, a decline from $151.4 million in the same quarter last year. GAAP diluted earnings per share were $0.35, missing the consensus estimate of $0.44, while adjusted EPS of $0.36 also fell short of expectations.
Revenue growth was driven by the company’s three operating divisions. Inpatient rehabilitation revenue rose 14 % to $351.9 million, outpatient rehabilitation grew 4.5 % to $321.3 million, and critical‑illness recovery revenue increased only 0.3 % to $638.8 million. The modest top‑line gain masks a mix shift toward lower‑margin outpatient services and a small decline in the high‑margin critical‑illness recovery segment.
Adjusted EBITDA margin contracted from 11.2 % in Q1 2025 to 10.0 % in Q1 2026. The decline was driven by a 2.1‑percentage‑point drop in the critical‑illness recovery margin, falling from 13.6 % to 11.5 %, and a 1.1‑percentage‑point slide in outpatient rehabilitation margin, from 7.9 % to 6.8 %. Higher operating costs, including service and administrative expenses, and regulatory headwinds in the critical‑illness recovery segment contributed to the compression.
Management reaffirmed its 2026 full‑year guidance, maintaining revenue expectations of $5.6 billion to $5.8 billion and adjusted EBITDA of $520 million to $540 million. The company also reiterated its full‑year EPS guidance of $1.22 to $1.32. In addition, SEM announced a cash dividend of $0.0625 per share, payable on May 28, 2026 to shareholders of record as of May 14, 2026. The dividend continues the company’s modest return to investors while it pursues expansion of its post‑acute care footprint.
CFO Michael Malatesta said, “We are maintaining our full‑year 2026 guidance. We continue to expect revenue to range between $5.6 billion and $5.8 billion and adjusted EBITDA between $520 million and $540 million.” CEO Thomas Mullin noted that a one‑time cost of approximately $1 million related to the exit of four Oregon clinics contributed to the earnings miss. He also highlighted a decline in Medicare Advantage conversion rates that reduced volume by roughly $13 million to $14 million year over year.
Investors reacted cautiously, focusing on the EPS miss and margin compression. The company’s take‑private transaction, valued at $16.50 per share, remains pending and could influence future capital structure and valuation. While revenue growth and the company’s expansion plans signal resilience, the narrowing margins and earnings miss underscore short‑term profitability challenges that management must address to maintain investor confidence.
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