8-K
Select Medical Holdings Corp (SEM)
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 (Dateof earliest event reported): February 24, 2022
SELECT MEDICAL HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-34465 | 20-1764048 |
|---|---|---|
| (State or other jurisdiction of <br><br>Incorporation) | (Commission File <br><br>Number) | (I.R.S. Employer <br>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 February 24, 2022, Select Medical Holdings Corporation (the “Company”) issued a press release announcing its financial results for its fourth quarter and fiscal year ended December 31, 2021 (the “Press Release”). A copy of the Press Release and the attached financial schedules are attached as Exhibit 99.1 to this report and incorporated herein by reference.
The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 2.02 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 (the “Securities Act”), or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release, dated February 24, 2022, announcing financial results for the fourth quarter and year ended December 31, 2021. |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
| SELECT MEDICAL HOLDINGS CORPORATION | ||
|---|---|---|
| Date: February 24, 2022 | By: | /s/ Michael E. Tarvin |
| Michael E. Tarvin | ||
| Executive Vice President, General Counsel and Secretary |
Exhibit 99.1
| FOR IMMEDIATE RELEASE | 4714 Gettysburg Road<br><br> <br>Mechanicsburg, PA 17055<br><br> <br>****<br><br> <br>NYSE Symbol: SEM |
|---|
Select Medical Holdings Corporation AnnouncesResults
For Its Fourth Quarter and Year Ended December 31,2021 and Cash Dividend
MECHANICSBURG, PENNSYLVANIA — February 24, 2022 — Select Medical Holdings Corporation (“Select Medical,” “we,” “us,” or “our”) (NYSE: SEM) today announced results for its fourth quarter and year ended December 31, 2021 and the declaration of a cash dividend.
For the fourth quarter ended December 31, 2021, revenue increased 6.8% to $1,559.8 million, compared to $1,460.5 million for the same quarter, prior year. Income from operations was $77.5 million for the fourth quarter ended December 31, 2021, compared to $163.3 million for the same quarter, prior year. Income from operations included $8.0 million and $36.2 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the fourth quarters ended December 31, 2021 and 2020, respectively. Refer to “CARESAct Provider Relief Fund” for further discussion. Net income was $66.3 million for the fourth quarter ended December 31, 2021, compared to $102.2 million for the same quarter, prior year. For the fourth quarter ended December 31, 2021, net income included a pre-tax gain on sale of businesses of $2.2 million. For the fourth quarter ended December 31, 2020, net income included a pre-tax loss on sale of businesses of $0.3 million. Adjusted EBITDA was $138.4 million for the fourth quarter ended December 31, 2021, compared to $221.3 million for the same quarter, prior year. Earnings per common share was $0.37 for the fourth quarter ended December 31, 2021, compared to $0.57 for the same quarter, prior year. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.
For the year ended December 31, 2021, revenue increased 12.2% to $6,204.5 million, compared to $5,531.7 million for the prior year. Income from operations increased 25.7% to $713.8 million for the year ended December 31, 2021, compared to $567.7 million for the prior year. Income from operations included $123.8 million and $90.0 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the years ended December 31, 2021 and 2020, respectively. Refer to “CARES Act Provider Relief Fund” for further discussion. Net income increased 45.1% to $499.9 million for the year ended December 31, 2021, compared to $344.6 million for the prior year. For the years ended December 31, 2021 and 2020, net income included pre-tax gains on sales of businesses of $2.2 million and $12.4 million, respectively. Adjusted EBITDA increased 18.3% to $947.4 million for the year ended December 31, 2021, compared to $800.6 million for the prior year. Earnings per common share increased to $2.98 for the year ended December 31, 2021, compared to $1.93 for the prior year. Adjusted earnings per common share was $2.98 for the year ended December 31, 2021, compared to $1.89 for the prior year. Adjusted earnings per common share excluded the gains on sales of businesses and their related tax effects for both the years ended December 31, 2021 and 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.
Please refer to “Effectsof the COVID-19 Pandemic on Select Medical’s Results of Operations” below for further discussion regarding the impact of the coronavirus disease 2019 (“COVID-19”) pandemic on Select Medical’s operating results.
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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 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 December 31, 2021, Select Medical operated 104 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,881 outpatient rehabilitation clinics in 38 states and the District of Columbia. Concentra operated 518 occupational health centers in 41 states. At December 31, 2021, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.
CARES Act Provider Relief Fund
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19, and for reimbursing eligible health care providers for health care related expenses and lost revenues that are attributable to COVID-19.
For the three months and year ended December 31, 2021, Select Medical recognized $8.0 million and $123.8 million of payments received under the Provider Relief Fund as other operating income, respectively. For the three months and year ended December 31, 2020, Select Medical recognized $36.2 million and $90.0 million of payments received under the Provider Relief Fund as other operating income, respectively.
Critical Illness Recovery Hospital Segment
For the fourth quarter ended December 31, 2021, revenue for the critical illness recovery hospital segment increased 7.3% to $577.2 million, compared to $537.9 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $24.6 million for the fourth quarter ended December 31, 2021, compared to $75.3 million for the same quarter, prior year. For the fourth quarter ended December 31, 2021, Adjusted EBITDA included $2.0 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 4.3% for the fourth quarter ended December 31, 2021, compared to 14.0% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.
For the year ended December 31, 2021, revenue for the critical illness recovery hospital segment increased 8.1% to $2,246.8 million, compared to $2,077.5 million for the prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $268.0 million for the year ended December 31, 2021, compared to $342.4 million for the prior year. For the year ended December 31, 2021, Adjusted EBITDA included $19.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 11.9% for the year ended December 31, 2021, compared to 16.5% for the prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.
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Rehabilitation Hospital Segment
For the fourth quarter ended December 31, 2021, revenue for the rehabilitation hospital segment increased 10.5% to $216.4 million, compared to $195.9 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $39.3 million for the fourth quarter ended December 31, 2021, compared to $42.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 18.2% for the fourth quarter ended December 31, 2021, compared to 21.6% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.
For the year ended December 31, 2021, revenue for the rehabilitation hospital segment increased 15.6% to $849.3 million, compared to $734.7 million for the prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 20.6% to $184.7 million for the year ended December 31, 2021, compared to $153.2 million for the prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 21.7% for the year ended December 31, 2021, compared to 20.9% for the prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.
Outpatient Rehabilitation Segment
For the fourth quarter ended December 31, 2021, revenue for the outpatient rehabilitation segment increased 7.8% to $277.5 million, compared to $257.5 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment was $27.6 million for the fourth quarter ended December 31, 2021, compared to $27.7 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.9% for the fourth quarter ended December 31, 2021, compared to 10.8% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.
For the year ended December 31, 2021, revenue for the outpatient rehabilitation segment increased 17.9% to $1,084.4 million, compared to $919.9 million for the prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 74.7% to $138.3 million for the year ended December 31, 2021, compared to $79.2 million for the prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 12.8% for the year ended December 31, 2021, compared to 8.6% for the prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.
Concentra Segment
For the fourth quarter ended December 31, 2021, revenue for the Concentra segment increased 3.0% to $410.6 million, compared to $398.7 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 1.9% to $70.7 million for the fourth quarter ended December 31, 2021, compared to $69.4 million for the same quarter, prior year. Adjusted EBITDA included other operating income of $0.9 million related to the recognition of payments received under the Provider Relief Fund for the fourth quarter ended December 31, 2021. The Adjusted EBITDA margin for the Concentra segment was 17.2% for the fourth quarter ended December 31, 2021, compared to 17.4% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for both the fourth quarters ended December 31, 2021 and 2020.
For the year ended December 31, 2021, revenue for the Concentra segment increased 15.4% to $1,732.0 million, compared to $1,501.4 million for the prior year. Adjusted EBITDA for the Concentra segment increased 54.1% to $389.6 million for the year ended December 31, 2021, compared to $252.9 million for the prior year. Adjusted EBITDA included other operating income of $34.7 million and $1.1 million related to the recognition of payments received under the Provider Relief Fund for the years ended December 31, 2021 and 2020, respectively. The Adjusted EBITDA margin for the Concentra segment was 22.5% for the year ended December 31, 2021, compared to 16.8% for the prior year. Certain Concentra key statistics are presented in table VIII of this release for both the years ended December 31, 2021 and 2020.
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Effects of the COVID-19 Pandemic on Select Medical’s Results of Operations
Beginning in March 2020, state governments placed significant restrictions on businesses and mandated closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. State governments also implemented restrictions on travel and individual activities outside of the home, closed schools, and mandated other social distancing measures. At the same time, hospitals and other facilities began suspending elective surgeries. In an effort to ensure hospitals and health systems had the capacity to absorb and effectively manage surges of COVID-19 patients, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children’s Health Insurance Program (“CHIP”) programs were authorized in March 2020, including certain regulations under the Medicare program which govern admissions into Select Medical’s critical illness recovery hospitals and rehabilitation hospitals. Specifically, Select Medical’s critical illness recovery hospitals which are certified as long-term care hospitals (“LTCHs”) became exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. Select Medical’s rehabilitation hospitals which are certified as inpatient rehabilitation facilities (“IRFs”) could exclude patients admitted solely to respond to the emergency from the calculation of the “60 percent rule” thresholds to receive payment as an IRF. The COVID-19 public health emergency period has been extended and is currently in effect through April 16, 2022.
The adverse effects of the COVID-19 pandemic, along with the actions of governmental authorities and those in the private sector to limit the spread of COVID-19, caused disruptions in each of Select Medical’s segments; these disruptions were most significant within the outpatient rehabilitation and Concentra segments. By mid-March 2020, Select Medical’s outpatient rehabilitation clinics began experiencing significantly less patient visit volume due to declines in patient referrals from physicians, a reduction in workers’ compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries that normally increase the demand for outpatient rehabilitation services. Select Medical’s Concentra centers experienced similar declines in patient visit volume due to businesses furloughing their workforce and temporarily ceasing or significantly reducing their operations. Since March 2021, Select Medical’s outpatient rehabilitation clinics and Concentra centers have experienced patient visit volumes which approximate or exceed the levels experienced in the months prior to the widespread emergence of COVID-19 in the United States. Although it had experienced temporary disruptions in its core businesses as a result of the COVID-19 pandemic, Select Medical’s Concentra segment was able to expand its services to provide COVID-19 screening and testing.
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Select Medical’s critical illness recovery hospitals have played a critical role in caring for patients during the COVID-19 pandemic. The relaxation of certain admission restrictions contributed to volume increases in certain of its hospitals during the year ended December 31, 2020. The revenue of Select Medical’s critical illness recovery hospitals and rehabilitation hospitals has also benefited from the temporary suspension of the 2.0% cut to Medicare payments due to sequestration, which began May 1, 2020 following the enactment of the CARES Act, and was extended through March 31, 2022. From April 1, 2022 through June 30, 2022, the sequestration cut will be 1.0% and the full 2.0% sequestration cut will resume July 1, 2022. Certain of Select Medical’s rehabilitation hospitals did experience temporary declines in patient volume in areas more significantly impacted by the spread of COVID-19 and as a result of the suspension of elective surgeries at hospitals and other facilities, which consequently reduced the demand for inpatient rehabilitation services. Additionally, some of Select Medical’s rehabilitation hospitals temporarily restricted admissions as a result of the COVID-19 pandemic. The declines in volume occurred principally in April and May 2020. Beginning at the onset of the COVID-19 pandemic, both Select Medical’s critical illness recovery hospitals and rehabilitation hospitals modified certain of their protocols in order to follow the guidelines and recommendations for patient treatment and for the protection of their patients and staff members. This has resulted in increased labor costs as well as additional costs resulting from the purchase of personal protective equipment. Further, labor shortages have become more pronounced as a result of the COVID-19 pandemic. Select Medical has experienced an increase in labor costs in its hospitals as a result of constrained staffing due to a shortage of healthcare workers, an increased dependence on contract clinical workers, the loss of unvaccinated employees in jurisdictions requiring vaccination, and federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic. Increased turnover rates within Select Medical’s employee base have also lead to increased overtime to meet demand and increased wage rates to attract and retain employees.
The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical’s operations, creates uncertainties about Select Medical’s future operating results and financial condition. Select Medical has provided revenue and certain operating statistics below for each of its segments for each of the periods presented. Please refer to the risk factors in Select Medical’s Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion.
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| --- | | | Critical<br> Illness Recovery Hospital | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | | | | | Patient<br> Days | | | | | | Occupancy<br> Rate | | | | | | | | | Number of Hospitals Owned^(1)^ | | | | | | | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | 2019 | | | 2020 | | | 2021 | | | 2019 | | 2020 | | 2021 | | | | (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | January | $ | 149,799 | $ | 163,238 | $ | 199,611 | | 86,238 | | 90,783 | | 100,933 | | 69 | % | | 69 | % | | 75 | % | | 96 | | 100 | | 99 | | February | | 145,586 | | 165,375 | | 190,703 | | 80,806 | | 87,844 | | 92,036 | | 71 | % | | 72 | % | | 75 | % | | 96 | | 100 | | 99 | | March | | 162,149 | | 171,908 | | 204,558 | | 91,085 | | 91,831 | | 100,149 | | 73 | % | | 70 | % | | 74 | % | | 96 | | 100 | | 99 | | Three Months Ended March 31 | $ | 457,534 | $ | 500,521 | $ | 594,872 | | 258,129 | | 270,458 | | 293,118 | | 71 | % | | 70 | % | | 75 | % | | 96 | | 100 | | 99 | | April | $ | 156,231 | $ | 171,445 | $ | 185,934 | | 88,357 | | 90,710 | | 91,506 | | 70 | % | | 71 | % | | 70 | % | | 99 | | 100 | | 99 | | May | | 156,422 | | 178,223 | | 183,471 | | 89,350 | | 95,191 | | 93,708 | | 69 | % | | 72 | % | | 70 | % | | 99 | | 100 | | 99 | | June | | 148,490 | | 169,958 | | 174,654 | | 85,153 | | 90,988 | | 87,767 | | 68 | % | | 71 | % | | 68 | % | | 99 | | 100 | | 99 | | Three Months Ended June 30 | $ | 461,143 | $ | 519,626 | $ | 544,059 | | 262,860 | | 276,889 | | 272,981 | | 69 | % | | 72 | % | | 69 | % | | 99 | | 100 | | 99 | | Six Months Ended June 30 | $ | 918,677 | $ | 1,020,147 | $ | 1,138,931 | | 520,989 | | 547,347 | | 566,099 | | 70 | % | | 71 | % | | 72 | % | | 99 | | 100 | | 99 | | July | $ | 151,416 | $ | 175,253 | $ | 171,483 | | 87,143 | | 94,144 | | 88,119 | | 67 | % | | 71 | % | | 65 | % | | 99 | | 99 | | 100 | | August | | 155,485 | | 173,967 | | 178,240 | | 86,553 | | 93,964 | | 91,756 | | 66 | % | | 71 | % | | 68 | % | | 99 | | 99 | | 100 | | September | | 155,991 | | 170,234 | | 180,923 | | 84,393 | | 90,955 | | 92,579 | | 67 | % | | 71 | % | | 71 | % | | 99 | | 99 | | 100 | | Three Months Ended September 30 | $ | 462,892 | $ | 519,454 | $ | 530,646 | | 258,089 | | 279,063 | | 272,454 | | 67 | % | | 71 | % | | 68 | % | | 99 | | 99 | | 100 | | Nine Months Ended September 30 | $ | 1,381,569 | $ | 1,539,601 | $ | 1,669,577 | | 779,078 | | 826,410 | | 838,553 | | 69 | % | | 71 | % | | 70 | % | | 99 | | 99 | | 100 | | October | $ | 152,791 | $ | 181,251 | $ | 195,444 | | 87,188 | | 95,616 | | 99,935 | | 66 | % | | 71 | % | | 71 | % | | 100 | | 100 | | 104 | | November | | 150,399 | | 174,133 | | 191,134 | | 84,540 | | 92,651 | | 96,102 | | 67 | % | | 71 | % | | 71 | % | | 100 | | 99 | | 104 | | December | | 151,759 | | 182,514 | | 190,617 | | 87,555 | | 97,079 | | 98,449 | | 67 | % | | 72 | % | | 70 | % | | 100 | | 99 | | 104 | | Three Months Ended December 31 | $ | 454,949 | $ | 537,898 | $ | 577,195 | | 259,283 | | 285,346 | | 294,486 | | 67 | % | | 71 | % | | 71 | % | | 100 | | 99 | | 104 | | Twelve Months Ended December 31 | $ | 1,836,518 | $ | 2,077,499 | $ | 2,246,772 | | 1,038,361 | | 1,111,756 | | 1,133,039 | | 68 | % | | 71 | % | | 71 | % | | 100 | | 99 | | 104 | | | Rehabilitation<br> Hospital | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | | | | | Patient<br> Days | | | | | | Occupancy<br> Rate | | | | | | | | | Number of Hospitals Owned^(1)^ | | | | | | | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | 2019 | | | 2020 | | | 2021 | | | 2019 | | 2020 | | 2021 | | | | (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | January | $ | 50,615 | $ | 61,673 | $ | 68,297 | | 27,434 | | 32,111 | | 34,404 | | 74 | % | | 79 | % | | 82 | % | | 17 | | 19 | | 20 | | February | | 48,080 | | 60,690 | | 64,202 | | 25,442 | | 31,813 | | 32,178 | | 76 | % | | 84 | % | | 84 | % | | 17 | | 19 | | 20 | | March | | 55,863 | | 59,656 | | 75,305 | | 29,940 | | 30,644 | | 35,857 | | 78 | % | | 76 | % | | 85 | % | | 18 | | 19 | | 20 | | Three Months Ended March 31 | $ | 154,558 | $ | 182,019 | $ | 207,804 | | 82,816 | | 94,568 | | 102,439 | | 76 | % | | 79 | % | | 84 | % | | 18 | | 19 | | 20 | | April | $ | 51,991 | $ | 45,878 | $ | 70,295 | | 28,266 | | 23,553 | | 34,861 | | 76 | % | | 61 | % | | 85 | % | | 18 | | 19 | | 20 | | May | | 56,019 | | 57,815 | | 71,190 | | 29,730 | | 29,787 | | 35,604 | | 75 | % | | 73 | % | | 84 | % | | 19 | | 19 | | 20 | | June | | 52,364 | | 64,974 | | 71,181 | | 28,529 | | 30,741 | | 34,483 | | 73 | % | | 78 | % | | 84 | % | | 19 | | 19 | | 20 | | Three Months Ended June 30 | $ | 160,374 | $ | 168,667 | $ | 212,666 | | 86,525 | | 84,081 | | 104,948 | | 75 | % | | 71 | % | | 85 | % | | 19 | | 19 | | 20 | | Six Months Ended June 30 | $ | 314,932 | $ | 350,686 | $ | 420,470 | | 169,341 | | 178,649 | | 207,387 | | 76 | % | | 75 | % | | 84 | % | | 19 | | 19 | | 20 | | July | $ | 57,077 | $ | 62,312 | $ | 70,467 | | 30,054 | | 31,986 | | 34,894 | | 75 | % | | 81 | % | | 83 | % | | 19 | | 18 | | 20 | | August | | 58,072 | | 63,673 | | 71,682 | | 30,228 | | 32,518 | | 34,835 | | 75 | % | | 83 | % | | 83 | % | | 19 | | 18 | | 20 | | September | | 58,220 | | 62,090 | | 70,285 | | 29,172 | | 31,176 | | 33,224 | | 75 | % | | 82 | % | | 81 | % | | 19 | | 18 | | 20 | | Three Months Ended September 30 | $ | 173,369 | $ | 188,075 | $ | 212,434 | | 89,454 | | 95,680 | | 102,953 | | 75 | % | | 82 | % | | 82 | % | | 19 | | 18 | | 20 | | Nine Months Ended September 30 | $ | 488,301 | $ | 538,761 | $ | 632,904 | | 258,795 | | 274,329 | | 310,340 | | 75 | % | | 77 | % | | 84 | % | | 19 | | 18 | | 20 | | October | $ | 61,975 | $ | 66,591 | $ | 72,509 | | 31,767 | | 33,378 | | 35,908 | | 78 | % | | 82 | % | | 85 | % | | 19 | | 19 | | 20 | | November | | 60,353 | | 64,610 | | 71,865 | | 31,022 | | 31,581 | | 34,491 | | 79 | % | | 80 | % | | 84 | % | | 19 | | 19 | | 20 | | December | | 60,342 | | 64,711 | | 72,062 | | 31,447 | | 31,545 | | 33,962 | | 78 | % | | 78 | % | | 80 | % | | 19 | | 19 | | 20 | | Three Months Ended December 31 | $ | 182,670 | $ | 195,912 | $ | 216,436 | | 94,236 | | 96,504 | | 104,361 | | 78 | % | | 80 | % | | 83 | % | | 19 | | 19 | | 20 | | Twelve Months Ended December 31 | $ | 670,971 | $ | 734,673 | $ | 849,340 | | 353,031 | | 370,833 | | 414,701 | | 76 | % | | 78 | % | | 83 | % | | 19 | | 19 | | 20 |
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| --- | | | Outpatient Rehabilitation | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | | | | | Visits | | | | | | Working Days^(2)^ | | | | | | | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | | | (in thousands) | | | | | | | | | | | | | | | | | | | January | $ | 83,185 | $ | 90,924 | $ | 76,763 | | 687,007 | | 757,171 | | 625,964 | | 22 | | 22 | | 20 | | February | | 78,573 | | 88,239 | | 77,063 | | 658,610 | | 739,061 | | 641,942 | | 20 | | 20 | | 20 | | March | | 85,147 | | 76,086 | | 98,135 | | 708,866 | | 626,433 | | 832,248 | | 21 | | 22 | | 23 | | Three Months Ended March 31 | $ | 246,905 | $ | 255,249 | $ | 251,961 | | 2,054,483 | | 2,122,665 | | 2,100,154 | | 63 | | 64 | | 63 | | April | $ | 90,230 | $ | 49,084 | $ | 95,251 | | 762,914 | | 386,108 | | 810,314 | | 22 | | 22 | | 22 | | May | | 90,272 | | 51,186 | | 89,030 | | 759,829 | | 409,703 | | 758,773 | | 22 | | 20 | | 20 | | June | | 81,389 | | 66,868 | | 96,128 | | 680,762 | | 546,456 | | 835,774 | | 20 | | 22 | | 22 | | Three Months Ended June 30 | $ | 261,891 | $ | 167,138 | $ | 280,409 | | 2,203,505 | | 1,342,267 | | 2,404,861 | | 64 | | 64 | | 64 | | Six Months Ended June 30 | $ | 508,796 | $ | 422,387 | $ | 532,370 | | 4,257,988 | | 3,464,932 | | 4,505,015 | | 127 | | 128 | | 127 | | July | $ | 89,267 | $ | 77,793 | $ | 90,352 | | 754,102 | | 636,826 | | 780,118 | | 22 | | 22 | | 21 | | August | | 90,687 | | 79,034 | | 93,056 | | 743,813 | | 651,738 | | 798,459 | | 22 | | 21 | | 22 | | September | | 85,376 | | 83,215 | | 91,132 | | 706,413 | | 694,808 | | 768,493 | | 20 | | 21 | | 21 | | Three Months Ended September 30 | $ | 265,330 | $ | 240,042 | $ | 274,540 | | 2,204,328 | | 1,983,372 | | 2,347,070 | | 64 | | 64 | | 64 | | Nine Months Ended September 30 | $ | 774,126 | $ | 662,429 | $ | 806,910 | | 6,462,316 | | 5,448,304 | | 6,852,085 | | 191 | | 192 | | 191 | | October | $ | 96,868 | $ | 88,274 | $ | 91,705 | | 808,649 | | 745,562 | | 772,068 | | 23 | | 22 | | 21 | | November | | 87,072 | | 82,102 | | 93,345 | | 722,607 | | 685,885 | | 797,756 | | 20 | | 20 | | 21 | | December | | 87,945 | | 87,108 | | 92,401 | | 725,710 | | 713,593 | | 771,715 | | 21 | | 22 | | 21 | | Three Months Ended December 31 | $ | 271,885 | $ | 257,484 | $ | 277,451 | | 2,256,966 | | 2,145,040 | | 2,341,539 | | 64 | | 64 | | 63 | | Twelve Months Ended December 31 | $ | 1,046,011 | $ | 919,913 | $ | 1,084,361 | | 8,719,282 | | 7,593,344 | | 9,193,624 | | 255 | | 256 | | 254 | | | Concentra | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | | | | | Visits | | | | | | Working Days^(2)^ | | | | | | | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | 2019 | | 2020 | | 2021 | | | | (in thousands) | | | | | | | | | | | | | | | | | | | January | $ | 133,507 | $ | 141,236 | $ | 127,103 | | 985,598 | | 1,032,069 | | 867,793 | | 22 | | 22 | | 20 | | February | | 126,309 | | 133,690 | | 132,349 | | 919,065 | | 965,741 | | 869,910 | | 20 | | 20 | | 20 | | March | | 136,505 | | 123,609 | | 163,388 | | 1,006,944 | | 879,585 | | 1,057,871 | | 21 | | 22 | | 23 | | Three Months Ended March 31 | $ | 396,321 | $ | 398,535 | $ | 422,840 | | 2,911,607 | | 2,877,395 | | 2,795,574 | | 63 | | 64 | | 63 | | April | $ | 140,050 | $ | 91,178 | $ | 152,143 | | 1,040,543 | | 610,555 | | 999,622 | | 22 | | 22 | | 22 | | May | | 143,183 | | 99,228 | | 142,228 | | 1,073,763 | | 674,629 | | 956,250 | | 22 | | 20 | | 20 | | June | | 130,218 | | 121,932 | | 162,001 | | 988,783 | | 865,896 | | 1,074,206 | | 20 | | 22 | | 22 | | Three Months Ended June 30 | $ | 413,451 | $ | 312,338 | $ | 456,372 | | 3,103,089 | | 2,151,080 | | 3,030,078 | | 64 | | 64 | | 64 | | Six Months Ended June 30 | $ | 809,772 | $ | 710,873 | $ | 879,212 | | 6,014,696 | | 5,028,475 | | 5,825,652 | | 127 | | 128 | | 127 | | July | $ | 142,385 | $ | 132,465 | $ | 146,509 | | 1,057,809 | | 930,427 | | 1,033,266 | | 22 | | 22 | | 21 | | August | | 144,452 | | 130,291 | | 150,333 | | 1,087,165 | | 933,555 | | 1,106,356 | | 22 | | 21 | | 22 | | September | | 135,063 | | 129,103 | | 145,348 | | 1,005,929 | | 963,065 | | 1,084,009 | | 20 | | 21 | | 21 | | Three Months Ended September 30 | $ | 421,900 | $ | 391,859 | $ | 442,190 | | 3,150,903 | | 2,827,047 | | 3,223,631 | | 64 | | 64 | | 64 | | Nine Months Ended September 30 | $ | 1,231,672 | $ | 1,102,732 | $ | 1,321,402 | | 9,165,599 | | 7,855,522 | | 9,049,283 | | 191 | | 192 | | 191 | | October | $ | 149,260 | $ | 139,365 | $ | 143,609 | | 1,113,408 | | 1,011,816 | | 1,072,531 | | 23 | | 22 | | 21 | | November | | 123,152 | | 126,431 | | 135,417 | | 908,159 | | 867,918 | | 991,937 | | 19 | | 19 | | 21 | | December | | 124,733 | | 132,906 | | 131,613 | | 881,699 | | 892,648 | | 938,973 | | 21 | | 22 | | 21 | | Three Months Ended December 31 | $ | 397,145 | $ | 398,702 | $ | 410,639 | | 2,903,266 | | 2,772,382 | | 3,003,441 | | 63 | | 63 | | 63 | | Twelve Months Ended December 31 | $ | 1,628,817 | $ | 1,501,434 | $ | 1,732,041 | | 12,068,865 | | 10,627,904 | | 12,052,724 | | 254 | | 255 | | 254 |
(1) Represents the number of hospitals owned at the end of each period presented.
(2) Represents the number of days in which normal business operations were conducted during the periods presented.
| 7 |
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Purchase of Concentra Interest
On December 24, 2021, Select Medical, Welsh, Carson, Anderson & Stowe XII, L.P. (“WCAS”), and Dignity Health Holding Corporation (“DHHC”) entered into an agreement pursuant to which Select Medical acquired substantially all of the outstanding membership interests of Concentra Group Holdings Parent that it did not already own from WCAS, DHHC, and the other equity holders of Concentra Group Holdings Parent for approximately $660.7 million.
This purchase was in lieu of, and deemed to be, the exercise of the third put right provided to certain equity holders under the terms of the Amended and Restated Limited Liability Company Agreement of Concentra Group Holdings Parent, LLC, dated as of February 1, 2018. Following this purchase, Select Medical owns approximately 99.3% of the outstanding membership interests of Concentra Group Holdings Parent, LLC on a fully diluted basis and 100.0% of the outstanding voting membership interests of Concentra Group Holdings Parent, LLC.
Dividend
On February 17, 2022, Select Medical’s board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about March 16, 2022 to stockholders of record as of the close of business on March 4, 2022.
There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical’s board of directors after taking into account various factors, including, but not limited to, Select Medical’s financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical’s indebtedness, and other factors Select Medical’s board of directors may deem to be relevant.
Stock Repurchase Program
The board of directors of Select Medical has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2023, unless further extended or earlier terminated by the board of directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Select Medical deems appropriate. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility.
During the fourth quarter ended December 31, 2021, Select Medical repurchased 387,212 shares at a cost of approximately $11.1 million, or $28.65 per share, which includes transaction costs. During the year ended December 31, 2021, Select Medical repurchased 1,770,720 shares at a cost of approximately $58.6 million, or $33.09 per share, which includes transaction costs. Since the inception of the program through December 31, 2021, Select Medical has repurchased 40,351,628 shares at a cost of approximately $415.2 million, or $10.29 per share, which includes transaction costs.
Business Outlook for Revenue
Given the uncertainties due to significantly increased labor costs resulting from higher than expected use of agency clinical staff, Select Medical is issuing its business outlook at this time for revenue only for 2022. Select Medical expects revenue to be in the range of $6.25 billion to $6.40 billion for the full year of 2022. Select Medical is also reaffirming its previously issued three-year compound annual growth rate target for revenue only, which is expected to be in the range of 4% to 6% for 2021 through 2023. Select Medical intends to readdress its business outlook and target compound annual growth rates for Adjusted EBITDA and earnings per common share when the labor climate stabilizes.
| 8 |
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Conference Call
Select Medical will host a conference call regarding its results for the fourth quarter and full year ended December 31, 2021, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reporting segments, on Friday, February 25, 2022, at 9:00am ET. The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 7334656. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation’s website www.selectmedicalholdings.com.
For those unable to participate in the conference call, a replay will be available until 12:00pm ET, March 4, 2022. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 7334656. The replay can also be accessed at Select Medical Holdings Corporation’s website, www.selectmedicalholdings.com.
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* * * * *
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), including statements related to Select Medical's 2022 and long-term business outlook. 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:
| • | developments related to the COVID-19 pandemic including, but not limited to, the duration and severity<br>of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further<br>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<br>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<br>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<br>operated as “hospitals within hospitals” to qualify as hospitals separate from their host hospitals may cause our revenue<br>and profitability to decline; |
| --- | --- |
| • | a government investigation or assertion that we have violated applicable regulations may result in sanctions<br>or reputational harm and increased costs; |
| --- | --- |
| • | acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources or expose<br>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<br>and profitability; |
| --- | --- |
| • | the failure to maintain established relationships with the physicians in the areas we serve could reduce<br>our revenue and profitability; |
| --- | --- |
| • | shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to<br>attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our<br>operating costs significantly or limit our ability to staff our facilities; |
| --- | --- |
| • | 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<br>us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of<br>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<br> “SEC”), including factors discussed under the heading “Risk Factors” of the annual report on Form 10-K for<br>the year ended December 31, 2021. |
| --- | --- |
| 10 |
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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
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I. Condensed Consolidated Statements of Operations
For the Three Months Ended December 31, 2020 and 2021
(In thousands, except per share amounts, unaudited)
| 2020 | 2021 | % Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 1,460,494 | $ | 1,559,811 | 6.8 | % | |||
| Costs and expenses: | |||||||||
| Cost of services, exclusive of depreciation and amortization | 1,246,594 | 1,402,570 | 12.5 | ||||||
| General and administrative | 35,229 | 37,950 | 7.7 | ||||||
| Depreciation and amortization | 51,526 | 51,943 | 0.8 | ||||||
| Total costs and expenses | 1,333,349 | 1,492,463 | 11.9 | ||||||
| Other operating income | 36,184 | 10,191 | N/M | ||||||
| Income from operations | 163,329 | 77,539 | (52.5 | ) | |||||
| Other income and expense: | |||||||||
| Equity in earnings of unconsolidated subsidiaries | 9,763 | 11,248 | 15.2 | ||||||
| Gain (loss) on sale of businesses | (303 | ) | 2,155 | N/M | |||||
| Interest income | — | 601 | N/M | ||||||
| Interest expense | (35,512 | ) | (33,870 | ) | (4.6 | ) | |||
| Income before income taxes | 137,277 | 57,673 | (58.0 | ) | |||||
| Income tax expense (benefit) | 35,062 | (8,637 | ) | N/M | |||||
| Net income | 102,215 | 66,310 | (35.1 | ) | |||||
| Less: Net income attributable to non-controlling interests | 24,941 | 16,453 | (34.0 | ) | |||||
| Net income attributable to Select Medical | $ | 77,274 | $ | 49,857 | (35.5 | )% | |||
| Basic and diluted earnings per common share:^(1)^ | $ | 0.57 | $ | 0.37 |
(1) Refer to table III for calculation of earnings per common share.
N/M Not meaningful.
12
II. Condensed Consolidated Statements of Operations
For the Years Ended December 31, 2020 and 2021
(In thousands, except per share amounts, unaudited)
| 2020 | 2021 | % Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 5,531,713 | $ | 6,204,515 | 12.2 | % | |||
| Costs and expenses: | |||||||||
| Cost of services, exclusive of depreciation and amortization | 4,710,372 | 5,285,149 | 12.2 | ||||||
| General and administrative | 138,037 | 146,975 | 6.5 | ||||||
| Depreciation and amortization | 205,659 | 202,645 | (1.5 | ) | |||||
| Total costs and expenses | 5,054,068 | 5,634,769 | 11.5 | ||||||
| Other operating income | 90,012 | 144,028 | N/M | ||||||
| Income from operations | 567,657 | 713,774 | 25.7 | ||||||
| Other income and expense: | |||||||||
| Equity in earnings of unconsolidated subsidiaries | 29,440 | 44,428 | 50.9 | ||||||
| Gain on sale of businesses | 12,387 | 2,155 | N/M | ||||||
| Interest income | — | 5,350 | N/M | ||||||
| Interest expense | (153,011 | ) | (135,985 | ) | (11.1 | ) | |||
| Income before income taxes | 456,473 | 629,722 | 38.0 | ||||||
| Income tax expense | 111,867 | 129,773 | 16.0 | ||||||
| Net income | 344,606 | 499,949 | 45.1 | ||||||
| Less: Net income attributable to non-controlling interests | 85,611 | 97,724 | 14.1 | ||||||
| Net income attributable to Select Medical | $ | 258,995 | $ | 402,225 | 55.3 | % | |||
| Basic and diluted earnings per common share:^(1)^ | $ | 1.93 | $ | 2.98 |
(1) Refer to table III for calculation of earnings per common share.
N/M Not meaningful.
13
III. Earnings per Share
For the Three Months and Years Ended December 31, 2020 and2021
(In thousands, except per share amounts, unaudited)
Select Medical’s capital structure includes common stock and unvested restricted stock awards. To compute earnings per share (“EPS”), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings.
The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three months and years ended December 31, 2020 and 2021:
| Basic and Diluted EPS | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended <br><br>December 31, | Years Ended<br> <br>December 31, | |||||||
| 2020 | 2021 | 2020 | 2021 | |||||
| Net income | $ | 102,215 | $ | 66,310 | $ | 344,606 | $ | 499,949 |
| Less: net income attributable to non-controlling interests | 24,941 | 16,453 | 85,611 | 97,724 | ||||
| Net income attributable to Select Medical | 77,274 | 49,857 | 258,995 | 402,225 | ||||
| Less: net income attributable to participating securities | 2,638 | 1,660 | 8,896 | 13,435 | ||||
| Net income attributable to common shares | $ | 74,636 | $ | 48,197 | $ | 250,099 | $ | 388,790 |
The following tables set forth the computation of EPS under the two-class method for the three months and years ended December 31, 2020 and 2021:
| Three Months Ended December 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | |||||||||||
| Net Income Allocation | Shares^(1)^ | Basic and Diluted EPS | Net Income Allocation | Shares^(1)^ | Basic and Diluted EPS | |||||||
| Common shares | $ | 74,636 | 130,269 | $ | 0.57 | $ | 48,197 | 129,679 | $ | 0.37 | ||
| Participating securities | 2,638 | 4,605 | $ | 0.57 | 1,660 | 4,466 | $ | 0.37 | ||||
| Total | $ | 77,274 | $ | 49,857 | ||||||||
| Years Ended December 31, | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2021 | |||||||||||
| Net Income Allocation | Shares^(1)^ | Basic and Diluted EPS | Net Income Allocation | Shares^(1)^ | Basic and Diluted EPS | |||||||
| Common shares | $ | 250,099 | 129,780 | $ | 1.93 | $ | 388,790 | 130,249 | $ | 2.98 | ||
| Participating securities | 8,896 | 4,616 | $ | 1.93 | 13,435 | 4,501 | $ | 2.98 | ||||
| Total | $ | 258,995 | $ | 402,225 | ||||||||
| (1) | Represents the weighted average share count outstanding during the period. | |||||||||||
| --- | --- |
14
IV. Condensed Consolidated Balance Sheets
(In thousands, unaudited)
| December 31, | ||||
|---|---|---|---|---|
| 2020 | 2021 | |||
| Assets | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $ | 577,061 | $ | 74,310 |
| Accounts receivable | 896,763 | 889,303 | ||
| Other current assets | 120,176 | 175,826 | ||
| Total Current Assets | 1,594,000 | 1,139,439 | ||
| Operating lease right-of-use assets | 1,032,217 | 1,078,754 | ||
| Property and equipment, net | 943,420 | 961,467 | ||
| Goodwill | 3,379,014 | 3,448,912 | ||
| Identifiable intangible assets, net | 387,541 | 374,879 | ||
| Other assets | 319,207 | 356,720 | ||
| Total Assets | $ | 7,655,399 | $ | 7,360,171 |
| Liabilities and Equity | ||||
| Current Liabilities: | ||||
| Payables and accruals | $ | 800,918 | $ | 942,288 |
| Government advances | 321,807 | 83,790 | ||
| Unearned government assistance | 82,607 | 93 | ||
| Current operating lease liabilities | 220,413 | 229,334 | ||
| Current portion of long-term debt and notes payable | 12,621 | 17,572 | ||
| Total Current Liabilities | 1,438,366 | 1,273,077 | ||
| Non-current operating lease liabilities | 875,367 | 916,540 | ||
| Long-term debt, net of current portion | 3,389,398 | 3,556,385 | ||
| Non-current deferred tax liability | 132,421 | 142,792 | ||
| Other non-current liabilities | 168,703 | 106,442 | ||
| Total Liabilities | 6,004,255 | 5,995,236 | ||
| Redeemable non-controlling interests | 398,171 | 39,033 | ||
| Total equity | 1,252,973 | 1,325,902 | ||
| Total Liabilities and Equity | $ | 7,655,399 | $ | 7,360,171 |
15
V. Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2020 and 2021
(In thousands, unaudited)
| 2020 | 2021 | |||||
|---|---|---|---|---|---|---|
| Operating activities | ||||||
| Net income | $ | 102,215 | $ | 66,310 | ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
| Distributions from unconsolidated subsidiaries | 13,670 | 9,230 | ||||
| Depreciation and amortization | 51,526 | 51,943 | ||||
| Provision for expected credit losses | 323 | 64 | ||||
| Equity in earnings of unconsolidated subsidiaries | (9,763 | ) | (11,248 | ) | ||
| Loss (gain) sale of assets and businesses | 2,160 | (2,322 | ) | |||
| Stock compensation expense | 6,422 | 8,938 | ||||
| Amortization of debt discount, premium and issuance costs | 549 | 562 | ||||
| Deferred income taxes | (159 | ) | 17,020 | |||
| Changes in operating assets and liabilities, net of effects of business combinations: | ||||||
| Accounts receivable | (25,188 | ) | 22,456 | |||
| Other current assets | 4,040 | (596 | ) | |||
| Other assets | 1,252 | (4,072 | ) | |||
| Accounts payable and accrued expenses | 44,722 | (141,001 | ) | |||
| Government advances | — | (75,715 | ) | |||
| Unearned government assistance | 15,669 | (2,321 | ) | |||
| Net cash provided by (used in) operating activities | 207,438 | (60,752 | ) | |||
| Investing activities | ||||||
| Business combinations, net of cash acquired | (6,732 | ) | (55,081 | ) | ||
| Purchases of property and equipment | (40,868 | ) | (55,151 | ) | ||
| Investment in businesses | (5,568 | ) | (4,600 | ) | ||
| Proceeds from sale of assets and businesses | — | 15,564 | ||||
| Net cash used in investing activities | (53,168 | ) | (99,268 | ) | ||
| Financing activities | ||||||
| Borrowings on revolving facilities | — | 160,000 | ||||
| Borrowings of other debt | 5,022 | 13,498 | ||||
| Principal payments on other debt | (5,561 | ) | (16,758 | ) | ||
| Dividends paid to common stockholders | — | (16,784 | ) | |||
| Repurchase of common stock | (1,792 | ) | (13,426 | ) | ||
| Increase in overdrafts | — | 42,353 | ||||
| Proceeds from issuance of non-controlling interests | 5,878 | 806 | ||||
| Distributions to and purchases of non-controlling interests | (10,393 | ) | (22,684 | ) | ||
| Purchase of membership interests of Concentra Group Holdings Parent | (210,163 | ) | (660,658 | ) | ||
| Net cash used in financing activities | (217,009 | ) | (513,653 | ) | ||
| Net decrease in cash and cash equivalents | (62,739 | ) | (673,673 | ) | ||
| Cash and cash equivalents at beginning of period | 639,800 | 747,983 | ||||
| Cash and cash equivalents at end of period | $ | 577,061 | $ | 74,310 | ||
| Supplemental information: | ||||||
| Cash paid for interest | $ | 15,062 | $ | 13,633 | ||
| Cash paid for taxes | $ | 26,945 | $ | 44,327 |
16
VI. Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2020 and 2021
(In thousands, unaudited)
| 2020 | 2021 | |||||
|---|---|---|---|---|---|---|
| Operating activities | ||||||
| Net income | $ | 344,606 | $ | 499,949 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Distributions from unconsolidated subsidiaries | 35,390 | 37,002 | ||||
| Depreciation and amortization | 205,659 | 202,645 | ||||
| Provision for expected credit losses | 604 | 236 | ||||
| Equity in earnings of unconsolidated subsidiaries | (29,440 | ) | (44,428 | ) | ||
| Gain on sale of assets and businesses | (22,563 | ) | (2,409 | ) | ||
| Stock compensation expense | 27,250 | 30,940 | ||||
| Amortization of debt discount, premium and issuance costs | 2,184 | 2,217 | ||||
| Deferred income taxes | (14,715 | ) | 5,055 | |||
| Changes in operating assets and liabilities, net of effects of business combinations: | ||||||
| Accounts receivable | (116,601 | ) | 23,101 | |||
| Other current assets | (18,775 | ) | (2,418 | ) | ||
| Other assets | 17,587 | (7,196 | ) | |||
| Accounts payable and accrued expenses | 196,164 | (19,767 | ) | |||
| Government advances | 318,116 | (241,185 | ) | |||
| Unearned government assistance | 82,607 | (82,514 | ) | |||
| Net cash provided by operating activities | 1,028,073 | 401,228 | ||||
| Investing activities | ||||||
| Business combinations, net of cash acquired | (20,808 | ) | (81,911 | ) | ||
| Purchases of property and equipment | (146,440 | ) | (180,537 | ) | ||
| Investment in businesses | (31,425 | ) | (20,967 | ) | ||
| Proceeds from sale of assets and businesses | 83,320 | 26,821 | ||||
| Net cash used in investing activities | (115,353 | ) | (256,594 | ) | ||
| Financing activities | ||||||
| Borrowings on revolving facilities | 470,000 | 160,000 | ||||
| Payments on revolving facilities | (470,000 | ) | — | |||
| Payments on term loans | (39,843 | ) | — | |||
| Borrowings of other debt | 40,108 | 33,013 | ||||
| Principal payments on other debt | (48,381 | ) | (39,668 | ) | ||
| Dividends paid to common stockholders | — | (50,600 | ) | |||
| Repurchase of common stock | (16,034 | ) | (79,476 | ) | ||
| Increase in overdrafts | — | 42,353 | ||||
| Proceeds from issuance of non-controlling interests | 7,564 | 20,732 | ||||
| Distributions to and purchases of non-controlling interests | (38,589 | ) | (73,081 | ) | ||
| Purchase of membership interests of Concentra Group Holdings Parent | (576,366 | ) | (660,658 | ) | ||
| Net cash used in financing activities | (671,541 | ) | (647,385 | ) | ||
| Net increase (decrease) in cash and cash equivalents | 241,179 | (502,751 | ) | |||
| Cash and cash equivalents at beginning of period | 335,882 | 577,061 | ||||
| Cash and cash equivalents at end of period | $ | 577,061 | $ | 74,310 | ||
| Supplemental information: | ||||||
| Cash paid for interest | $ | 155,236 | $ | 132,203 | ||
| Cash paid for taxes | $ | 108,890 | $ | 181,184 |
17
VII. Key StatisticsFor the Three Months Ended December 31, 2020 and 2021
(unaudited)
| 2020 | 2021 | % Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Critical Illness Recovery Hospital | |||||||||
| Number of hospitals – end of period^(a)^ | 99 | 104 | |||||||
| Revenue (,000) | $ | 537,898 | $ | 577,195 | 7.3 | % | |||
| Number of patient days^(b)(c)^ | 285,346 | 294,486 | 3.2 | % | |||||
| Number of admissions^(b)(d)^ | 9,376 | 9,786 | 4.4 | % | |||||
| Revenue per patient day^(b)(e)^ | $ | 1,881 | $ | 1,946 | 3.5 | % | |||
| Adjusted EBITDA (,000) | $ | 75,284 | $ | 24,572 | (67.4 | )% | |||
| Adjusted EBITDA margin | 14.0 | % | 4.3 | % | |||||
| Rehabilitation Hospital | |||||||||
| Number of hospitals – end of period^(a)^ | 30 | 30 | |||||||
| Revenue (,000) | $ | 195,912 | $ | 216,436 | 10.5 | % | |||
| Number of patient days^(b)(c)^ | 96,504 | 104,361 | 8.1 | % | |||||
| Number of admissions^(b)(d)^ | 6,592 | 7,134 | 8.2 | % | |||||
| Revenue per patient day^(b)(e)^ | $ | 1,839 | $ | 1,888 | 2.7 | % | |||
| Adjusted EBITDA (,000) | $ | 42,392 | $ | 39,326 | (7.2 | )% | |||
| Adjusted EBITDA margin | 21.6 | % | 18.2 | % | |||||
| Outpatient Rehabilitation | |||||||||
| Number of clinics – end of period^(a)^ | 1,788 | 1,881 | |||||||
| Revenue (,000) | $ | 257,484 | $ | 277,451 | 7.8 | % | |||
| Number of visits^(b)(f)^ | 2,145,040 | 2,341,539 | 9.2 | % | |||||
| Revenue per visit^(b)(g)^ | $ | 103 | $ | 102 | (1.0 | )% | |||
| Adjusted EBITDA (,000) | $ | 27,701 | $ | 27,551 | (0.5 | )% | |||
| Adjusted EBITDA margin | 10.8 | % | 9.9 | % | |||||
| Concentra | |||||||||
| Number of centers – end of period^(b)^ | 517 | 518 | |||||||
| Revenue (,000) | $ | 398,702 | $ | 410,639 | 3.0 | % | |||
| Number of visits^(b)(f)^ | 2,772,382 | 3,003,441 | 8.3 | % | |||||
| Revenue per visit^(b)(g)^ | $ | 122 | $ | 125 | 2.5 | % | |||
| Adjusted EBITDA (,000) | $ | 69,382 | $ | 70,709 | 1.9 | % | |||
| Adjusted EBITDA margin | 17.4 | % | 17.2 | % | |||||
| (a) | Includes managed locations. | ||||||||
| --- | --- | ||||||||
| (b) | Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based<br>outpatient clinics are excluded. | ||||||||
| --- | --- | ||||||||
| (c) | Each patient day represents one patient occupying one bed for one day during the periods presented. | ||||||||
| --- | --- | ||||||||
| (d) | Represents the number of patients admitted to Select Medical’s hospitals during the periods presented. | ||||||||
| --- | --- | ||||||||
| (e) | Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated<br>by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical’s<br>hospitals, by the total number of patient days. | ||||||||
| --- | --- | ||||||||
| (f) | Represents the number of visits in which patients were treated at Select Medical’s outpatient rehabilitation<br>clinics and Concentra centers during the periods presented. | ||||||||
| --- | --- | ||||||||
| (g) | Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated<br>by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes<br>of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient<br>clinics. | ||||||||
| --- | --- |
18
VIII. Key StatisticsFor the Years Ended December 31, 2020 and 2021
(unaudited)
| 2020 | 2021 | % Change | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Critical Illness Recovery Hospital | |||||||||
| Number of hospitals – end of period^(a)^ | 99 | 104 | |||||||
| Revenue (,000) | $ | 2,077,499 | $ | 2,246,772 | 8.1 | % | |||
| Number of patient days^(b)(c)^ | 1,111,756 | 1,133,039 | 1.9 | % | |||||
| Number of admissions^(b)(d)^ | 37,456 | 37,921 | 1.2 | % | |||||
| Revenue per patient day^(b)(e)^ | $ | 1,858 | $ | 1,972 | 6.1 | % | |||
| Adjusted EBITDA (,000) | $ | 342,427 | $ | 267,993 | (21.7 | )% | |||
| Adjusted EBITDA margin | 16.5 | % | 11.9 | % | |||||
| Rehabilitation Hospital | |||||||||
| Number of hospitals – end of period^(a)^ | 30 | 30 | |||||||
| Revenue (,000) | $ | 734,673 | $ | 849,340 | 15.6 | % | |||
| Number of patient days^(b)(c)^ | 370,833 | 414,701 | 11.8 | % | |||||
| Number of admissions^(b)(d)^ | 25,081 | 28,868 | 15.1 | % | |||||
| Revenue per patient day^(b)(e)^ | $ | 1,793 | $ | 1,868 | 4.2 | % | |||
| Adjusted EBITDA (,000) | $ | 153,203 | $ | 184,704 | 20.6 | % | |||
| Adjusted EBITDA margin | 20.9 | % | 21.7 | % | |||||
| Outpatient Rehabilitation | |||||||||
| Number of clinics – end of period^(a)^ | 1,788 | 1,881 | |||||||
| Revenue (,000) | $ | 919,913 | $ | 1,084,361 | 17.9 | % | |||
| Number of visits^(b)(f)^ | 7,593,344 | 9,193,624 | 21.1 | % | |||||
| Revenue per visit^(b)(g)^ | $ | 104 | $ | 102 | (1.9 | )% | |||
| Adjusted EBITDA (,000) | $ | 79,164 | $ | 138,275 | 74.7 | % | |||
| Adjusted EBITDA margin | 8.6 | % | 12.8 | % | |||||
| Concentra | |||||||||
| Number of centers – end of period^(b)^ | 517 | 518 | |||||||
| Revenue (,000) | $ | 1,501,434 | $ | 1,732,041 | 15.4 | % | |||
| Number of visits^(b)(f)^ | 10,627,904 | 12,052,724 | 13.4 | % | |||||
| Revenue per visit^(b)(g)^ | $ | 123 | $ | 125 | 1.6 | % | |||
| Adjusted EBITDA (,000) | $ | 252,892 | $ | 389,616 | 54.1 | % | |||
| Adjusted EBITDA margin | 16.8 | % | 22.5 | % | |||||
| (a) | Includes managed locations. | ||||||||
| --- | --- | ||||||||
| (b) | Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based<br>outpatient clinics are excluded. | ||||||||
| --- | --- | ||||||||
| (c) | Each patient day represents one patient occupying one bed for one day during the periods presented. | ||||||||
| --- | --- | ||||||||
| (d) | Represents the number of patients admitted to Select Medical’s hospitals during the periods presented. | ||||||||
| --- | --- | ||||||||
| (e) | Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated<br>by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical’s<br>hospitals, by the total number of patient days. | ||||||||
| --- | --- | ||||||||
| (f) | Represents the number of visits in which patients were treated at Select Medical’s outpatient rehabilitation<br>clinics and Concentra centers during the periods presented. | ||||||||
| --- | --- | ||||||||
| (g) | Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated<br>by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes<br>of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient<br>clinics. | ||||||||
| --- | --- |
19
IX. Net Income to Adjusted EBITDA Reconciliation
For the Three Months and Years Ended December 31, 2020 and2021
(In thousands, unaudited)
The presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA is used by management to evaluate financial performance and determine resource allocation for each of Select Medical’s segments. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”). 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, income from operations, 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 GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.
The following table reconciles net income to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as 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.
| Three Months Ended <br> December 31, | Years Ended<br> <br>December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | 2021 | |||||||||
| Net income | $ | 102,215 | $ | 66,310 | $ | 344,606 | $ | 499,949 | ||||
| Income tax expense (benefit) | 35,062 | (8,637 | ) | 111,867 | 129,773 | |||||||
| Interest expense | 35,512 | 33,870 | 153,011 | 135,985 | ||||||||
| Interest income | — | (601 | ) | — | (5,350 | ) | ||||||
| Loss (gain) on sale of businesses | 303 | (2,155 | ) | (12,387 | ) | (2,155 | ) | |||||
| Equity in earnings of unconsolidated subsidiaries | (9,763 | ) | (11,248 | ) | (29,440 | ) | (44,428 | ) | ||||
| Income from operations | $ | 163,329 | $ | 77,539 | $ | 567,657 | $ | 713,774 | ||||
| Stock compensation expense: | ||||||||||||
| Included in general and administrative | 5,565 | 7,061 | 22,053 | 24,598 | ||||||||
| Included in cost of services | 857 | 1,877 | 5,197 | 6,342 | ||||||||
| Depreciation and amortization | 51,526 | 51,943 | 205,659 | 202,645 | ||||||||
| Adjusted EBITDA | $ | 221,277 | $ | 138,420 | $ | 800,566 | $ | 947,359 | ||||
| Critical illness recovery hospital^(a)^ | $ | 75,284 | $ | 24,572 | $ | 342,427 | $ | 267,993 | ||||
| Rehabilitation hospital | 42,392 | 39,326 | 153,203 | 184,704 | ||||||||
| Outpatient rehabilitation | 27,701 | 27,551 | 79,164 | 138,275 | ||||||||
| Concentra^(b)^ | 69,382 | 70,709 | 252,892 | 389,616 | ||||||||
| Other^(c)(d)^ | 6,518 | (23,738 | ) | (27,120 | ) | (33,229 | ) | |||||
| Adjusted EBITDA | $ | 221,277 | $ | 138,420 | $ | 800,566 | $ | 947,359 | ||||
| (a) | For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income<br>of $2.0 million and $19.9 million, respectively. The other operating income related to the outcome of litigation with the Centers<br>for Medicare & Medicaid Services. | |||||||||||
| --- | --- | |||||||||||
| (b) | For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income<br>of $1.0 million and $35.0 million, respectively. For the year ended December 31, 2020, Adjusted EBITDA included other operating income<br>of $1.1 million. The other operating income is primarily related to the recognition of payments received under the Provider Relief Fund. | |||||||||||
| --- | --- | |||||||||||
| (c) | For the three months and year ended December 31, 2021, Adjusted EBITDA included other operating income<br>of $7.1 million and $89.1 million, respectively. For the three months and year ended December 31, 2020, Adjusted EBITDA included<br>other operating income of $36.2 million and $88.9 million, respectively. The other operating income is related to the recognition of payments<br>received under the Provider Relief Fund. | |||||||||||
| --- | --- | |||||||||||
| (d) | Other primarily includes general and administrative costs and<br>other operating income, as discussed further above. | |||||||||||
| --- | --- |
20
X. Reconciliation of Earnings per Common Share to Adjusted Earningsper Common Share
For the Three Months and Years Ended December 31, 2020 and2021
(In thousands, except per share amounts, unaudited)
Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP. Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share are important to investors because they are reflective of the financial performance of Select Medical’s ongoing operations and provide better comparability of its results of operations between periods. Adjusted net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes 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 net income attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.
The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.
| Three Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | Per Share^(a)^ | 2021 | Per Share^(a)^ | ||||||||
| Net income attributable to common shares^(a)^ | $ | 74,636 | $ | 0.57 | $ | 48,197 | $ | 0.37 | |||
| Adjustments:^(b)^ | |||||||||||
| Loss (gain) on sale of businesses | 201 | 0.00 | (775 | ) | 0.00 | ||||||
| Adjusted net income attributable to common shares | $ | 74,837 | $ | 0.57 | $ | 47,422 | $ | 0.37 | |||
| Years Ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | Per Share^(a)^ | 2021 | Per Share^(a)^ | ||||||||
| Net income attributable to common shares^(a)^ | $ | 250,099 | $ | 1.93 | $ | 388,790 | $ | 2.98 | |||
| Adjustments:^(b)^ | |||||||||||
| Gain on sale of businesses | (4,888 | ) | (0.04 | ) | (775 | ) | 0.00 | ||||
| Adjusted net income attributable to common shares | $ | 245,211 | $ | 1.89 | $ | 388,015 | $ | 2.98 | |||
| (a) | Net income attributable to common shares and earnings per common share are calculated based on the diluted<br>weighted average common shares outstanding, as presented in table III. | ||||||||||
| --- | --- | ||||||||||
| (b) | Adjustments to net income attributable to common shares include estimated income tax and non-controlling<br>interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact,<br>which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes<br>both current and deferred income tax expense or benefit. | ||||||||||
| --- | --- |
For the three months ended December 31, 2020, the estimated income tax effect on the adjustment made to net income attributable to common shares was immaterial. For the three months ended December 31, 2021, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $1.1 million
For the year ended December 31, 2020, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $3.3 million. For the year ended December 31, 2021, the adjustments to net income attributable to common shares include estimated income tax expense of approximately $1.1 million.
21