SEM Stock Forecast & Price Target

Select Medical Holdings Corp is positioned favorably due to the anticipated expansion of margins in its Critical Illness Recovery Hospitals (CIRH) segment, driven by successful navigation of the CMS high-cost outlier threshold and stronger-than-expected performance in Inpatient Rehabilitation Facilities (IRF). The company's management projects an occupancy recovery to over 85% for the remainder of the year, indicating a solid demand for its services amid ongoing hospital ramp-up. Additionally, IRF revenue has demonstrated robust growth of 15.7%, fueled by both an increase in patient days and a rise in revenue per patient day, which further underscores the company’s positive financial trajectory.

Select Medical Holdings Corp experienced a notable decline in its stock, dropping over 20% following the release of weaker first-quarter results and a modest reduction in guidance, primarily attributed to margin pressures within its Critical Illness Recovery Hospitals segment due to high-cost outlier thresholds. Additionally, the company reported a year-over-year decrease of 1.8% in revenue per patient day, further indicating challenges in its revenue generation. Occupancy rates also declined by 500 basis points to 82%, significantly influenced by the recent opening of new hospitals, which contributed to an overall decline in operational efficiency.