Select Medical Holdings

Select Medical Holdings Corporation is a leading operator of specialty hospitals in the United States. As of September 30, 2015, Select operated 110 long-term acute care hospitals and 17 acute medical rehabilitation hospitals in 28 states. Select is also a leading operator of outpatient rehabilitation clinics in the United States, with approximately 1,033 locations in 31 states and the District of Columbia. Select also provides medical rehabilitation services on a contract basis at nursing homes, assisted living and senior care centers, schools and worksites.

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​Select Medical Holdings Corporation, through its subsidiary, Select Medical Corporation, operates specialty hospitals and outpatient rehabilitation clinics in the United States. It operates in two segments, Specialty Hospitals and Outpatient Rehabilitation. The Specialty Hospitals segment provides long term acute care hospital services and inpatient acute rehabilitative hospital care. This segment offers various medical services for the treatment of respiratory failure, neuromuscular disorders, traumatic brain and spinal cord injuries, strokes, non-healing wounds, cardiac disorders, renal disorders, and cancer. The Outpatient Rehabilitation segment operates clinics that provides physical, occupational, and speech rehabilitation services. This segment also offers medical rehabilitative services to residents and patients of nursing homes, hospitals, schools, assisted living and senior care centers, and worksites. In addition, this segment provides specialized programs, such as functional programs for work related injuries, hand therapy, and athletic training services; and services that are designed to prevent short term disabilities from becoming chronic conditions. As of December 31, 2014, it operated 113 long term acute care hospitals and 16 acute medical rehabilitation hospitals in 28 states; and 1,023 outpatient rehabilitation clinics in 31 states and the District of Columbia. Select Medical Holdings Corporation was founded in 1996 and is headquartered in Mechanicsburg, Pennsylvania.
(Summary) (Company) (Chart)

20 December 2015
Price $12.01
1yr Target $13.50
Analysts 6
Dividend $0.40
Payout Ratio 41.23%

1yr Cap Gain 12.40%
Yield 3.33%
1yr Tot Return 15.73%
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EPS (ttm) $0.97
EPS next yr $0.98
EPS next 5yr 12.50%
1yr Price Support $12.25
P/E 12.38
PEG 0.99
Beta 1.19
Market Cap $1.58 Bil
Revenues $3.48 Bil
Earnings $123.40 Mil
Profit Margin 3.53%
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1yr EarnGR 10.97%
3yr EarnGR 8.53%
5yr EarnGR 30.54%
1yr DivGR 33.33%
3yr DivGR ---
5yr DivGR ---
Quick Ratio 1.30
Current Ratio 1.30
Debt/Equity 2.88
ROA 4.30%
ROE 20.10%

​Background

Co-founded in 1996 by Rocco Ortenzio and Robert Ortenzio, Select Medical began as a regional provider of outpatient physical rehabilitation. Contract therapy was added to the company's specialized health care offerings in 1997, and was quickly followed by the introduction of long-term acute care in 1998. In 1999, Select Medical made one of its largest acquisitions by purchasing NovaCare Physical Rehabilitation and Occupational Health.

In April 2001, the company completed an initial public offering and was listed on the NASDAQ exchange. Fourteen months later, Select Medical moved to the New York Stock Exchange, where it is currently traded under the symbol SEM.

In 2004 the company acquired the Kessler Institute for Rehabilitation formally adding inpatient medical rehabilitation to its patient care offerings. Further growth in this newest care line continued through joint ventures with Penn State Milton S. Hershey Medical Center, SSM Health Care - St. Louis and Baylor Health Care System in 2011.

In 2015 Select Medical completed its largest acquisition to date when it entered into a joint venture partnership for the purchase of Concentra, a national health care company that delivers a wide range of medical services, including urgent care, occupational medicine and physical therapy.

Today Select Medical encompasses four areas of expertise: long-term acute care, inpatient medical rehabilitation, outpatient physical therapy and contract therapy. All of this is provided by a staff of 42,000 care providers across the United States.
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​My Perspective

Every once in a while the market seems to get it right. In the case of Select Medical I think the market has valued this company correctly. It's growing at about 12% per year, has a P/E ratio of approximately 12, and a PEG of approximately 1. That pretty much hits it on the head when it comes to figuring out value on a napkin. 

For the most part, an investor can figure on an increase of about 12% each year in the value of the stock over the next couple of years combined with a continuing dividend of a little over 3% for a total return of about 15%. That's not bad for just about any investment. 

I personally have no exposure to the hospital industry and this may be a nice way to gain some exposure. With the aging of the Baby Boomers, long term acute care and physical rehabilitation may just be an area that's set to take off over the next 10-20 years. If that's the case, this might just be a great company for a long term dividend growth investor like myself. 
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Quarterly Revenues 2004-2015