NYSE:SEM

Stock Analysis Report

Select Medical Holdings

Executive Summary

Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States.

Rewards

Trading at 21% below its fair value

Earnings are forecast to grow 19.63% per year

Risk Analysis

Interest payments are not well covered by earnings

Profit margins (2.6%) are lower than last year (4.2%)



Snowflake Analysis

Fair value with moderate growth potential.


Similar Companies

Share Price & News

How has Select Medical Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SEM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.2%

SEM

0.1%

US Healthcare

0.06%

US Market


1 Year Return

61.8%

SEM

12.4%

US Healthcare

19.4%

US Market

Return vs Industry: SEM exceeded the US Healthcare industry which returned 12.4% over the past year.

Return vs Market: SEM exceeded the US Market which returned 19.4% over the past year.


Shareholder returns

SEMIndustryMarket
7 Day-0.2%0.1%0.06%
30 Day5.7%1.7%1.1%
90 Day19.1%8.1%8.9%
1 Year61.8%61.8%13.9%12.4%21.9%19.4%
3 Year95.8%95.8%52.0%45.2%48.9%39.3%
5 Year98.5%97.0%62.3%51.1%71.9%53.1%

Price Volatility Vs. Market

How volatile is Select Medical Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Select Medical Holdings undervalued compared to its fair value and its price relative to the market?

21.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SEM ($25.26) is trading below our estimate of fair value ($31.96)

Significantly Below Fair Value: SEM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SEM is good value based on its PE Ratio (24.2x) compared to the Healthcare industry average (29.1x).

PE vs Market: SEM is poor value based on its PE Ratio (24.2x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: SEM is poor value based on its PEG Ratio (1.2x)


Price to Book Ratio

PB vs Industry: SEM is overvalued based on its PB Ratio (4.5x) compared to the US Healthcare industry average (3.1x).


Next Steps

Future Growth

How is Select Medical Holdings forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

19.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SEM's forecast earnings growth (19.6% per year) is above the savings rate (1.7%).

Earnings vs Market: SEM's earnings (19.6% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: SEM's earnings are forecast to grow, but not significantly.

Revenue vs Market: SEM's revenue (4% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SEM's revenue (4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SEM's Return on Equity is forecast to be high in 3 years time (20.4%)


Next Steps

Past Performance

How has Select Medical Holdings performed over the past 5 years?

6.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SEM has high quality earnings.

Growing Profit Margin: SEM's current net profit margins (2.6%) are lower than last year (4.2%).


Past Earnings Growth Analysis

Earnings Trend: SEM's earnings have grown by 6.2% per year over the past 5 years.

Accelerating Growth: SEM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SEM had negative earnings growth (-34.1%) over the past year, making it difficult to compare to the Healthcare industry average (14%).


Return on Equity

High ROE: SEM's Return on Equity (10.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Select Medical Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: SEM's short term assets ($1.1B) exceed its short term liabilities ($869.8M).

Long Term Liabilities: SEM's short term assets ($1.1B) do not cover its long term liabilities ($4.4B).


Debt to Equity History and Analysis

Debt Level: SEM's debt to equity ratio (179.6%) is considered high.

Reducing Debt: SEM's debt to equity ratio has reduced from 201.2% to 179.6% over the past 5 years.

Debt Coverage: SEM's debt is not well covered by operating cash flow (11.4%).

Interest Coverage: SEM's interest payments on its debt are not well covered by EBIT (2.2x coverage).


Balance Sheet

Inventory Level: SEM has a high level of physical assets or inventory.

Debt Coverage by Assets: SEM's debt is not covered by short term assets (assets are 0.3x debt).


Next Steps

Dividend

What is Select Medical Holdings's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%1.4%markettop25%3.7%industryaverage1.4%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate SEM's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SEM's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SEM's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SEM's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: SEM is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SEM's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

20.8yrs

Average management tenure


CEO

David Chernow (62yo)

6.1yrs

Tenure

US$8,201,031

Compensation

Mr. David S. Chernow has been the Chief Executive Officer at Select Medical Holdings Corporation and Select Medical Corporation since January 1, 2014. Mr. Chernow has been the President of Select Medical H ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD8.20M) is above average for companies of similar size in the US market ($USD4.89M).

Compensation vs Earnings: David's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Robert Ortenzio
Co-Founder & Executive Chairman6.1yrsUS$8.22m6.72% $230.2m
David Chernow
President & CEO6.1yrsUS$8.20m0.64% $22.0m
Rocco Ortenzio
Co-Founder & Vice Chairman6.1yrsUS$5.64m7.87% $269.5m
Martin Jackson
Executive VP & CFO20.8yrsUS$4.95m1.24% $42.4m
Michael Tarvin
Executive VP23yrsUS$3.44m0.27% $9.1m
Scott Romberger
Senior VP19.2yrsUS$380.36k0.11% $3.9m
John Saich
Executive VP & Chief Administrative Officer1.3yrsno data0.35% $11.9m
Robert Breighner
VP of Compliance & Audit Services and Corporate Compliance Officer0yrsno data0.025% $842.6k
Joel Veit
Senior VP & Treasurer0yrsno datano data

20.8yrs

Average Tenure

59.5yo

Average Age

Experienced Management: SEM's management team is seasoned and experienced (20.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Robert Ortenzio
Co-Founder & Executive Chairman6.1yrsUS$8.22m6.72% $230.2m
Rocco Ortenzio
Co-Founder & Vice Chairman6.1yrsUS$5.64m7.87% $269.5m
Bryan Cressey
Independent Director15yrsUS$317.00k0.46% $15.9m
Russell Carson
Lead Director5.1yrsUS$297.00k1.64% $56.1m
Thomas Scully
Independent Director16yrsUS$300.00k0.12% $4.2m
Daniel Thomas
Director0.6yrsno data0.015% $510.2k
Leopold Swergold
Independent Director14.5yrsUS$320.00k0.15% $5.0m
William Frist
Independent Director9.8yrsUS$308.00k0.17% $5.8m
Marilyn Tavenner
Independent Director1.3yrsUS$180.80k0.015% $510.2k
James Ely
Independent Director11.3yrsUS$325.00k0.083% $2.8m

7.9yrs

Average Tenure

67.5yo

Average Age

Experienced Board: SEM's board of directors are considered experienced (7.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SEM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Select Medical Holdings Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Select Medical Holdings Corporation
  • Ticker: SEM
  • Exchange: NYSE
  • Founded: 1996
  • Industry: Health Care Facilities
  • Sector: Healthcare
  • Market Cap: US$3.427b
  • Shares outstanding: 134.33m
  • Website: https://www.selectmedical.com

Number of Employees


Location

  • Select Medical Holdings Corporation
  • 4714 Gettysburg Road
  • PO Box 2034
  • Mechanicsburg
  • Pennsylvania
  • 17055
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SEMNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 2009
S24DB (Deutsche Boerse AG)YesCommon StockDEEURSep 2009

Biography

Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States. It operates through four segments: Critical Illness Recovery Hospital, Rehabilitation Hospital, Outpatient Rehabilitation, and Concentra. The Critical Illness Recovery Hospital segment consists of hospitals that provide services for heart failure, infectious disease, respiratory failure and pulmonary disease, surgery requiring recovery, renal disease, neurological events, and trauma. The Rehabilitation Hospital segment offers therapy and rehabilitation treatments, including rehabilitative services for brain and spinal cord injuries, strokes, amputations, neurological disorders, orthopedic conditions, pediatric congenital or acquired disabilities, and cancer. The Outpatient Rehabilitation segment operates rehabilitation clinics that provide physical, occupational, and speech rehabilitation programs and services; and specialized programs, such as functional programs for work related injuries, hand therapy, post-concussion rehabilitation, and athletic training services. The Concentra segment operates and provides medical centers and contract services at employer worksites and Department of Veterans Affairs community-based outpatient clinics (CBOCs) that deliver occupational medicine, consumer health, physical therapy, and veteran's healthcare services. As of December 31, 2018, the company operated 96 critical illness recovery hospitals in 27 states; 26 rehabilitation hospitals in 11 states; 1,662 facilities in 37 states and the District of Columbia; and 524 occupational health centers, 124 onsite clinics at employer worksites, and 31 Department of Veterans Affairs CBOCs in 44 states. Select Medical Holdings Corporation was founded in 1996 and is headquartered in Mechanicsburg, Pennsylvania. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 01:26
End of Day Share Price2020/02/18 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.