Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 30, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-34465 | |
Entity Registrant Name | SELECT MEDICAL HOLDINGS CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-1764048 | |
Entity Address, Address Line One | 4714 Gettysburg Road | |
Entity Address, Address Line Two | P.O. Box 2034 | |
Entity Address, City or Town | Mechanicsburg | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 17055 | |
City Area Code | 717 | |
Local Phone Number | 972-1100 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | SEM | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 130,627,340 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001320414 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 130,881 | $ 74,310 |
Accounts receivable | 941,434 | 889,303 |
Prepaid income taxes | 40,761 | 55,620 |
Other current assets | 137,775 | 120,206 |
Total Current Assets | 1,250,851 | 1,139,439 |
Operating lease right-of-use assets | 1,102,710 | 1,078,754 |
Property and equipment, net | 952,926 | 961,467 |
Goodwill | 3,465,456 | 3,448,912 |
Identifiable intangible assets, net | 368,850 | 374,879 |
Other assets | 395,151 | 356,720 |
Total Assets | 7,535,944 | 7,360,171 |
Current Liabilities: | ||
Overdrafts | 34,745 | 42,353 |
Current operating lease liabilities | 234,420 | 229,334 |
Current portion of long-term debt and notes payable | 24,513 | 17,572 |
Accounts payable | 238,150 | 233,844 |
Accrued payroll | 242,749 | 247,292 |
Accrued vacation | 148,114 | 144,048 |
Accrued interest | 9,932 | 29,002 |
Accrued other | 232,297 | 244,312 |
Government advances | 20,862 | 83,790 |
Unearned government assistance | 194 | 93 |
Income taxes payable | 3,175 | 1,437 |
Total Current Liabilities | 1,189,151 | 1,273,077 |
Non-current operating lease liabilities | 938,423 | 916,540 |
Long-term debt, net of current portion | 3,738,299 | 3,556,385 |
Non-current deferred tax liability | 156,407 | 142,792 |
Other non-current liabilities | 105,098 | 106,442 |
Total Liabilities | 6,127,378 | 5,995,236 |
Commitments and contingencies (Note 14) | ||
Redeemable non-controlling interests | 41,670 | 39,033 |
Stockholders’ Equity: | ||
Common stock, $0.001 par value, 700,000,000 shares authorized, 133,884,817 and 131,769,303 shares issued and outstanding at 2021 and 2022, respectively | 132 | 134 |
Capital in excess of par | 489,794 | 504,314 |
Retained earnings | 596,079 | 593,251 |
Accumulated other comprehensive income | 52,135 | 12,282 |
Total Stockholders’ Equity | 1,138,140 | 1,109,981 |
Non-controlling interests | 228,756 | 215,921 |
Total Equity | 1,366,896 | 1,325,902 |
Total Liabilities and Equity | $ 7,535,944 | $ 7,360,171 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 700,000,000 | 700,000,000 |
Common stock, shares issued (in shares) | 131,769,303 | 133,884,817 |
Common stock, shares outstanding (in shares) | 131,769,303 | 133,884,817 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 1,599,547 | $ 1,546,463 |
Costs and expenses: | ||
Cost of services, exclusive of depreciation and amortization | 1,407,010 | 1,293,449 |
General and administrative | 37,513 | 35,403 |
Depreciation and amortization | 51,039 | 49,620 |
Total costs and expenses | 1,495,562 | 1,378,472 |
Other operating income | 0 | 34,021 |
Income from operations | 103,985 | 202,012 |
Other income and expense: | ||
Equity in earnings of unconsolidated subsidiaries | 5,397 | 9,919 |
Interest income | 0 | 4,749 |
Interest expense | (35,514) | (34,402) |
Income before income taxes | 73,868 | 182,278 |
Income tax expense | 17,942 | 45,064 |
Net income | 55,926 | 137,214 |
Less: Net income attributable to non-controlling interests | 6,809 | 26,668 |
Net income attributable to Select Medical Holdings Corporation | $ 49,117 | $ 110,546 |
Earnings per common share (Note 13): | ||
Basic (in dollars per share) | $ 0.37 | $ 0.82 |
Diluted (in dollars per share) | $ 0.37 | $ 0.82 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 55,926 | $ 137,214 |
Other comprehensive income, net of tax: | ||
Gain on interest rate cap cash flow hedge | 39,814 | 8,151 |
Reclassification adjustment for losses (gains) included in net income | 39 | 0 |
Net change, net of tax benefit (expense) of $(2,834) and $(13,284) | 39,853 | 8,151 |
Comprehensive income | 95,779 | 145,365 |
Less: Comprehensive income attributable to non-controlling interests | 6,809 | 26,668 |
Comprehensive income attributable to Select Medical Holdings Corporation | $ 88,970 | $ 118,697 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Tax benefit (expense) on components of other comprehensive income | $ (13,284) | $ (2,834) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Equity and Income (unaudited) - USD ($) $ in Thousands | Total | Total Stockholders’ Equity | Common Stock | Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive Income | Non-controlling Interests |
Beginning balance (in shares) at Dec. 31, 2020 | 134,850,000 | ||||||
Beginning balance at Dec. 31, 2020 | $ 1,252,973 | $ 1,060,480 | $ 135 | $ 509,128 | $ 553,244 | $ (2,027) | $ 192,493 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Select Medical Holdings Corporation | 110,546 | 110,546 | 110,546 | ||||
Net income attributable to non-controlling interests | 17,042 | 0 | 17,042 | ||||
Issuance of restricted stock (in shares) | 2,000 | ||||||
Issuance of restricted stock | 0 | 0 | $ 0 | 0 | |||
Forfeitures of unvested restricted stock (in shares) | (14,000) | ||||||
Forfeitures of unvested restricted stock | 0 | 0 | $ 0 | 0 | |||
Vesting of restricted stock | 6,173 | 6,173 | 6,173 | ||||
Non-controlling interests acquired in business combination | 8,193 | 0 | 8,193 | ||||
Distributions to and purchases of non-controlling interests | (14,245) | (787) | (787) | (13,458) | |||
Redemption value adjustment on non-controlling interests | (38,405) | (38,405) | (38,405) | ||||
Other comprehensive income | 8,151 | 8,151 | 8,151 | ||||
Other | 189 | (182) | (178) | (4) | 371 | ||
Ending balance (in shares) at Mar. 31, 2021 | 134,838,000 | ||||||
Ending balance at Mar. 31, 2021 | $ 1,350,617 | 1,145,976 | $ 135 | 514,336 | 625,381 | 6,124 | 204,641 |
Beginning balance (in shares) at Dec. 31, 2021 | 133,884,817 | 133,884,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 1,325,902 | 1,109,981 | $ 134 | 504,314 | 593,251 | 12,282 | 215,921 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Select Medical Holdings Corporation | 49,117 | 49,117 | 49,117 | ||||
Net income attributable to non-controlling interests | 4,891 | 0 | 4,891 | ||||
Cash dividends declared for common stockholders ($0.125 per share) | (16,691) | (16,691) | (16,691) | ||||
Issuance of restricted stock (in shares) | 13,000 | ||||||
Issuance of restricted stock | 0 | 0 | $ 0 | 0 | |||
Vesting of restricted stock | 8,288 | 8,288 | 8,288 | ||||
Repurchase of common shares (in shares) | (2,128,000) | ||||||
Repurchase of common shares | (51,676) | (51,676) | $ (2) | (23,459) | (28,215) | ||
Issuance of non-controlling interests | 5,229 | 651 | 651 | 4,578 | |||
Non-controlling interests acquired in business combination | 12,463 | 0 | 12,463 | ||||
Distributions to and purchases of non-controlling interests | (9,097) | 0 | (9,097) | ||||
Redemption value adjustment on non-controlling interests | (1,381) | (1,381) | (1,381) | ||||
Other comprehensive income | 39,853 | 39,853 | 39,853 | ||||
Other | $ (2) | (2) | (2) | ||||
Ending balance (in shares) at Mar. 31, 2022 | 131,769,303 | 131,769,000 | |||||
Ending balance at Mar. 31, 2022 | $ 1,366,896 | $ 1,138,140 | $ 132 | $ 489,794 | $ 596,079 | $ 52,135 | $ 228,756 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Equity and Income (unaudited) (Parenthetical) | 3 Months Ended |
Mar. 31, 2022$ / shares | |
Statement of Stockholders' Equity [Abstract] | |
Cash dividend declared (in dollars per share) | $ 0.125 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities | ||
Net income | $ 55,926 | $ 137,214 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Distributions from unconsolidated subsidiaries | 7,486 | 11,633 |
Depreciation and amortization | 51,039 | 49,620 |
Provision for expected credit losses | 94 | 67 |
Equity in earnings of unconsolidated subsidiaries | (5,397) | (9,919) |
Loss (gain) on sale or disposal of assets | (23) | 72 |
Stock compensation expense | 8,823 | 6,709 |
Amortization of debt discount, premium and issuance costs | 558 | 543 |
Deferred income taxes | 420 | (897) |
Changes in operating assets and liabilities, net of effects of business combinations: | ||
Accounts receivable | (52,225) | (60,142) |
Other current assets | (1,819) | (4,425) |
Other assets | 2,686 | 961 |
Accounts payable | 16,074 | 23,460 |
Accrued expenses | (31,076) | 21,167 |
Government advances | (62,928) | 0 |
Unearned government assistance | 101 | 19,207 |
Income taxes | 16,598 | 44,618 |
Net cash provided by operating activities | 6,337 | 239,888 |
Investing activities | ||
Business combinations, net of cash acquired | (5,186) | (6,314) |
Purchases of property and equipment | (46,845) | (39,719) |
Investment in businesses | (3,337) | (6,571) |
Proceeds from sale of assets | 37 | 19 |
Net cash used in investing activities | (55,331) | (52,585) |
Financing activities | ||
Borrowings on revolving facilities | 280,000 | 0 |
Payments on revolving facilities | (100,000) | 0 |
Borrowings of other debt | 15,794 | 8,915 |
Principal payments on other debt | (9,188) | (9,342) |
Dividends paid to common stockholders | (16,691) | 0 |
Repurchase of common stock | (51,676) | 0 |
Decrease in overdrafts | (7,608) | 0 |
Proceeds from issuance of non-controlling interests | 5,229 | 0 |
Distributions to and purchases of non-controlling interests | (10,295) | (13,663) |
Net cash provided by (used in) financing activities | 105,565 | (14,090) |
Net increase in cash and cash equivalents | 56,571 | 173,213 |
Cash and cash equivalents at beginning of period | 74,310 | 577,061 |
Cash and cash equivalents at end of period | 130,881 | 750,274 |
Supplemental Information | ||
Cash paid for interest | 53,517 | 52,470 |
Cash paid for taxes | $ 923 | $ 1,343 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements of Select Medical Holdings Corporation (“Holdings”) include the accounts of its wholly owned subsidiary, Select Medical Corporation (“Select”). Holdings conducts substantially all of its business through Select and its subsidiaries. Holdings, Select, and Select’s subsidiaries are collectively referred to as the “Company.” The unaudited condensed consolidated financial statements of the Company as of March 31, 2022, and for the three month periods ended March 31, 2021 and 2022, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting and the accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, certain information and disclosures required by GAAP, which are normally included in the notes to the consolidated financial statements, have been condensed or omitted pursuant to those rules and regulations, although the Company believes the disclosure is adequate to make the information presented not misleading. In the opinion of management, such information contains all adjustments, which are normal and recurring in nature, necessary for a fair statement of the financial position, results of operations and cash flow for such periods. All significant intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. |
Accounting Policies
Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Accounting Policies | Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. |
Credit Risk Concentrations
Credit Risk Concentrations | 3 Months Ended |
Mar. 31, 2022 | |
Credit Loss [Abstract] | |
Credit Risk Concentrations | Credit Risk Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash balances and accounts receivable. The Company’s excess cash is held with large financial institutions. The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements. Because of the diversity in the Company’s non-governmental third-party payor base, as well as their geographic dispersion, accounts receivable due from the Medicare program represent the Company’s only significant concentration of credit risk. Approximately 15% of the Company’s accounts receivable is due from Medicare at both December 31, 2021 and March 31, 2022. |
Redeemable Non-Controlling Inte
Redeemable Non-Controlling Interests | 3 Months Ended |
Mar. 31, 2022 | |
Noncontrolling Interest [Abstract] | |
Redeemable Non-Controlling Interests | Redeemable Non-Controlling InterestsThe ownership interests held by outside parties in subsidiaries, which include limited liability companies and limited partnerships, controlled by the Company are classified as non-controlling interests. Some of the Company’s non-controlling ownership interests consist of outside parties that have certain redemption rights that, if exercised, require the Company to purchase the parties’ ownership interests. These interests are classified and reported as redeemable non-controlling interests and have been adjusted to their approximate redemption values, after the attribution of net income or loss. The changes in redeemable non-controlling interests are as follows: Three Months Ended March 31, 2021 2022 (in thousands) Balance as of January 1 $ 398,171 $ 39,033 Net income attributable to redeemable non-controlling interests 9,626 1,918 Distributions to and purchases of redeemable non-controlling interests (614) (1,198) Redemption value adjustment on redeemable non-controlling interests 38,405 1,381 Other 343 536 Balance as of March 31 $ 445,931 $ 41,670 |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities Certain states prohibit the “corporate practice of medicine,” which restricts the Company from owning medical practices which directly employ physicians and from exercising control over medical decisions by physicians. In these states, the Company enters into long-term management agreements with medical practices that are owned by licensed physicians, which, in turn, employ or contract with physicians who provide professional medical services. The management agreements provide for the Company to direct the transfer of ownership of the medical practices to new licensed physicians at any time. Based on the provisions of the management agreements, the medical practices are variable interest entities for which the Company is the primary beneficiary. As of December 31, 2021 and March 31, 2022, the total assets of the Company’s variable interest entities were $225.1 million and $242.0 million, respectively, and are principally comprised of accounts receivable. As of December 31, 2021 and March 31, 2022, the total liabilities of the Company’s variable interest entities were $74.8 million and $79.1 million, respectively, and are principally comprised of accounts payable and accrued expenses. These variable interest entities have obligations payable for services received under their management agreements with the Company of $150.3 million and $163.4 million as of December 31, 2021 and March 31, 2022, respectively. These intercompany balances are eliminated in consolidation. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company has operating and finance leases for its facilities. The Company leases its corporate office space from related parties. The Company’s total lease cost is as follows: Three Months Ended March 31, 2021 Three Months Ended March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating lease cost $ 70,114 $ 1,799 $ 71,913 $ 73,962 $ 1,809 $ 75,771 Finance lease cost: Amortization of right-of-use assets 35 — 35 347 — 347 Interest on lease liabilities 251 — 251 340 — 340 Short-term lease cost — — — 35 — 35 Variable lease cost 13,009 3 13,012 13,655 39 13,694 Sublease income (2,234) — (2,234) (1,966) — (1,966) Total lease cost $ 81,175 $ 1,802 $ 82,977 $ 86,373 $ 1,848 $ 88,221 Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2021 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 72,437 $ 77,689 Operating cash flows for finance leases 251 340 Financing cash flows for finance leases 58 344 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 79,987 $ 88,636 Finance leases 138 — Supplemental balance sheet information related to leases is as follows: December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating Leases Operating lease right-of-use assets $ 1,052,603 $ 26,151 $ 1,078,754 $ 1,077,980 $ 24,730 $ 1,102,710 Current operating lease liabilities $ 222,865 $ 6,469 $ 229,334 $ 228,598 $ 5,822 $ 234,420 Non-current operating lease liabilities 894,104 22,436 916,540 916,887 21,536 938,423 Total operating lease liabilities $ 1,116,969 $ 28,905 $ 1,145,874 $ 1,145,485 $ 27,358 $ 1,172,843 December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Finance Leases Property and equipment, net $ 8,505 $ — $ 8,505 $ 8,158 $ — $ 8,158 Current portion of long-term debt and notes payable $ 1,404 $ — $ 1,404 $ 1,436 $ — $ 1,436 Long-term debt, net of current portion 16,679 — 16,679 16,303 — 16,303 Total finance lease liabilities $ 18,083 $ — $ 18,083 $ 17,739 $ — $ 17,739 The weighted average remaining lease terms and discount rates are as follows: December 31, 2021 March 31, 2022 Weighted average remaining lease term (in years): Operating leases 7.8 7.6 Finance leases 24.7 24.8 Weighted average discount rate: Operating leases 5.6 % 5.6 % Finance leases 7.4 % 7.4 % As of March 31, 2022, maturities of lease liabilities are approximately as follows: Operating Leases Finance Leases (in thousands) 2022 (remainder of year) $ 222,152 $ 2,040 2023 259,672 2,747 2024 219,375 2,384 2025 175,699 2,101 2026 145,837 2,126 Thereafter 495,998 28,181 Total undiscounted cash flows 1,518,733 39,579 Less: Imputed interest 345,890 21,840 Total discounted lease liabilities $ 1,172,843 $ 17,739 |
Leases | Leases The Company has operating and finance leases for its facilities. The Company leases its corporate office space from related parties. The Company’s total lease cost is as follows: Three Months Ended March 31, 2021 Three Months Ended March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating lease cost $ 70,114 $ 1,799 $ 71,913 $ 73,962 $ 1,809 $ 75,771 Finance lease cost: Amortization of right-of-use assets 35 — 35 347 — 347 Interest on lease liabilities 251 — 251 340 — 340 Short-term lease cost — — — 35 — 35 Variable lease cost 13,009 3 13,012 13,655 39 13,694 Sublease income (2,234) — (2,234) (1,966) — (1,966) Total lease cost $ 81,175 $ 1,802 $ 82,977 $ 86,373 $ 1,848 $ 88,221 Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2021 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 72,437 $ 77,689 Operating cash flows for finance leases 251 340 Financing cash flows for finance leases 58 344 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 79,987 $ 88,636 Finance leases 138 — Supplemental balance sheet information related to leases is as follows: December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating Leases Operating lease right-of-use assets $ 1,052,603 $ 26,151 $ 1,078,754 $ 1,077,980 $ 24,730 $ 1,102,710 Current operating lease liabilities $ 222,865 $ 6,469 $ 229,334 $ 228,598 $ 5,822 $ 234,420 Non-current operating lease liabilities 894,104 22,436 916,540 916,887 21,536 938,423 Total operating lease liabilities $ 1,116,969 $ 28,905 $ 1,145,874 $ 1,145,485 $ 27,358 $ 1,172,843 December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Finance Leases Property and equipment, net $ 8,505 $ — $ 8,505 $ 8,158 $ — $ 8,158 Current portion of long-term debt and notes payable $ 1,404 $ — $ 1,404 $ 1,436 $ — $ 1,436 Long-term debt, net of current portion 16,679 — 16,679 16,303 — 16,303 Total finance lease liabilities $ 18,083 $ — $ 18,083 $ 17,739 $ — $ 17,739 The weighted average remaining lease terms and discount rates are as follows: December 31, 2021 March 31, 2022 Weighted average remaining lease term (in years): Operating leases 7.8 7.6 Finance leases 24.7 24.8 Weighted average discount rate: Operating leases 5.6 % 5.6 % Finance leases 7.4 % 7.4 % As of March 31, 2022, maturities of lease liabilities are approximately as follows: Operating Leases Finance Leases (in thousands) 2022 (remainder of year) $ 222,152 $ 2,040 2023 259,672 2,747 2024 219,375 2,384 2025 175,699 2,101 2026 145,837 2,126 Thereafter 495,998 28,181 Total undiscounted cash flows 1,518,733 39,579 Less: Imputed interest 345,890 21,840 Total discounted lease liabilities $ 1,172,843 $ 17,739 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Goodwill The following table shows changes in the carrying amounts of goodwill by reporting unit for the three months ended March 31, 2022: Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Total (in thousands) Balance as of December 31, 2021 $ 1,131,440 $ 442,155 $ 654,125 $ 1,221,192 $ 3,448,912 Acquisition of businesses — — 409 2,884 3,293 Measurement period adjustment 13,251 — — — 13,251 Balance as of March 31, 2022 $ 1,144,691 $ 442,155 $ 654,534 $ 1,224,076 $ 3,465,456 Identifiable Intangible Assets The following table provides the gross carrying amounts, accumulated amortization, and net carrying amounts for the Company’s identifiable intangible assets: December 31, 2021 March 31, 2022 Gross Accumulated Net Gross Accumulated Net (in thousands) Indefinite-lived intangible assets: Trademarks $ 166,698 $ — $ 166,698 $ 166,698 $ — $ 166,698 Certificates of need 21,478 — 21,478 21,625 — 21,625 Accreditations 1,874 — 1,874 1,874 — 1,874 Finite-lived intangible assets: Trademarks 5,000 (5,000) — 5,000 (5,000) — Customer relationships 304,289 (141,111) 163,178 305,839 (148,283) 157,556 Non-compete agreements 36,746 (15,095) 21,651 37,087 (15,990) 21,097 Total identifiable intangible assets $ 536,085 $ (161,206) $ 374,879 $ 538,123 $ (169,273) $ 368,850 The Company’s accreditations and trademarks have renewal terms and the costs to renew these intangible assets are expensed as incurred. At March 31, 2022, the accreditations and trademarks have a weighted average time until next renewal of 1.5 years and 7.5 years, respectively. The Company’s finite-lived intangible assets amortize over their estimated useful lives. Amortization expense was $7.1 million and $7.6 million for the three months ended March 31, 2021 and 2022, respectively. |
Long-Term Debt and Notes Payabl
Long-Term Debt and Notes Payable | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Notes Payable | Long-Term Debt and Notes Payable As of March 31, 2022, the Company’s long-term debt and notes payable were as follows: Principal Unamortized Premium (Discount) Unamortized Carrying Value Fair Value (in thousands) 6.250% senior notes $ 1,225,000 $ 26,131 $ (13,212) $ 1,237,919 $ 1,262,118 Credit facilities: Revolving facility 340,000 — — 340,000 338,725 Term loan 2,103,437 (5,890) (6,421) 2,091,126 2,079,773 Other debt, including finance leases 93,961 — (194) 93,767 93,767 Total debt $ 3,762,398 $ 20,241 $ (19,827) $ 3,762,812 $ 3,774,383 Principal maturities of the Company’s long-term debt and notes payable were approximately as follows: 2022 2023 2024 2025 2026 Thereafter Total (in thousands) 6.250% senior notes $ — $ — $ — $ — $ 1,225,000 $ — $ 1,225,000 Credit facilities: Revolving facility — — 340,000 — — — 340,000 Term loan — 4,757 11,150 2,087,530 — — 2,103,437 Other debt, including finance leases 22,143 31,064 26,081 1,824 1,286 11,563 93,961 Total debt $ 22,143 $ 35,821 $ 377,231 $ 2,089,354 $ 1,226,286 $ 11,563 $ 3,762,398 As of December 31, 2021, the Company’s long-term debt and notes payable were as follows: Principal Unamortized Premium (Discount) Unamortized Carrying Value Fair Value (in thousands) 6.250% senior notes $ 1,225,000 $ 27,635 $ (13,951) $ 1,238,684 $ 1,297,104 Credit facilities: Revolving facility 160,000 — — 160,000 159,400 Term loan 2,103,437 (6,386) (6,961) 2,090,090 2,087,661 Other debt, including finance leases 85,398 — (215) 85,183 85,183 Total debt $ 3,573,835 $ 21,249 $ (21,127) $ 3,573,957 $ 3,629,348 |
Interest Rate Cap
Interest Rate Cap | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Cap | Interest Rate Cap The Company is subject to market risk exposure arising from changes in interest rates on its term loan, which bears interest at a rate that is indexed to one-month LIBOR. The Company’s objective in using an interest rate derivative is to mitigate its exposure to increases in interest rates. The interest rate cap limits the Company’s exposure to increases in the one-month LIBOR rate to 1.0% on $2.0 billion of principal outstanding under the term loan, as the interest rate cap provides for payments from the counterparty when interest rates rise above 1.0%. The interest rate cap has a $2.0 billion notional amount and became effective March 31, 2021 for the monthly periods from and including April 30, 2021 through September 30, 2024. The Company will pay a monthly premium for the interest rate cap over the term of the agreement. The annual premium is equal to 0.0916% of the notional amount, or approximately $1.8 million. The interest rate cap has been designated as a cash flow hedge and is highly effective at offsetting the changes in cash outflows when one-month LIBOR exceeds 1.0%. Changes in the fair value of the interest rate cap, net of tax, are recognized in other comprehensive income and are reclassified out of accumulated other comprehensive income and into interest expense when the hedged interest obligations affect earnings. The following table outlines the changes in accumulated other comprehensive income, net of tax, during the periods presented: Three Months Ended March 31, 2021 2022 (in thousands) Balance as of January 1 $ (2,027) $ 12,282 Gain on interest rate cap cash flow hedge 8,151 39,814 Amounts reclassified from accumulated other comprehensive income — 39 Balance as of March 31 $ 6,124 $ 52,135 The Company expects that approximately $16.9 million of estimated pre-tax gains will be reclassified from accumulated other comprehensive income into interest expense within the next twelve months. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as outlined below, on the basis of the observability of the inputs used in the fair value measurement: • Level 1 – inputs are based upon quoted prices for identical instruments in active markets. • Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data. • Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the instrument. The Company’s interest rate cap contract is recorded at its fair value in the condensed consolidated balance sheets on a recurring basis. The fair value of the interest rate cap contract is based upon a model-derived valuation using observable market inputs, such as interest rates and interest rate volatility, and the strike price. Financial Instrument Balance Sheet Classification Level December 31, 2021 March 31, 2022 Asset: (in thousands) Interest rate cap contract, current portion Other current assets Level 2 $ — $ 15,745 Interest rate cap contract, non-current portion Other assets Level 2 18,055 55,523 Liability: Interest rate cap contract, current portion Accrued other Level 2 $ 330 $ — The Company does not measure its indebtedness at fair value in its condensed consolidated balance sheets. The fair value of the credit facilities is based on quoted market prices for this debt in the syndicated loan market. The fair value of the senior notes is based on quoted market prices. The carrying value of the Company’s other debt, as disclosed in Note 8 – Long-Term Debt and Notes Payable, approximates fair value. December 31, 2021 March 31, 2022 Financial Instrument Level Carrying Value Fair Value Carrying Value Fair Value (in thousands) 6.250% senior notes Level 2 $ 1,238,684 $ 1,297,104 $ 1,237,919 $ 1,262,118 Credit facilities: Revolving facility Level 2 160,000 159,400 340,000 338,725 Term loan Level 2 2,090,090 2,087,661 2,091,126 2,079,773 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s reportable segments consist of the critical illness recovery hospital segment, rehabilitation hospital segment, outpatient rehabilitation segment, and Concentra segment. Other activities include the Company’s corporate shared services, certain investments, and employee leasing services with non-consolidating subsidiaries. The Company evaluates the performance of its segments based on Adjusted EBITDA. 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. The Company has provided additional information regarding its reportable segments, such as total assets, which contributes to the understanding of the Company and provides useful information to the users of the consolidated financial statements. The following tables summarize selected financial data for the Company’s reportable segments. Three Months Ended March 31, 2021 2022 (in thousands) Revenue: Critical illness recovery hospital $ 594,872 $ 601,755 Rehabilitation hospital 207,804 220,634 Outpatient rehabilitation 251,961 271,940 Concentra 422,840 423,423 Other 68,986 81,795 Total Company $ 1,546,463 $ 1,599,547 Adjusted EBITDA: Critical illness recovery hospital $ 113,272 $ 35,967 Rehabilitation hospital 50,534 42,379 Outpatient rehabilitation 26,329 26,596 Concentra 82,015 89,469 Other (1) (13,809) (30,564) Total Company $ 258,341 $ 163,847 Total assets: Critical illness recovery hospital $ 2,233,067 $ 2,367,490 Rehabilitation hospital 1,188,387 1,187,118 Outpatient rehabilitation 1,321,268 1,350,374 Concentra 2,468,157 2,339,940 Other 709,902 291,022 Total Company $ 7,920,781 $ 7,535,944 Purchases of property and equipment: Critical illness recovery hospital $ 14,385 $ 19,569 Rehabilitation hospital 665 6,274 Outpatient rehabilitation 7,335 9,414 Concentra 12,680 10,240 Other 4,654 1,348 Total Company $ 39,719 $ 46,845 _______________________________________________________________________________ (1) For the three months ended March 31, 2021, Adjusted EBITDA included other operating income of $16.1 million related to the recognition of payments received under the Provider Relief Fund for health care related expenses and loss of revenue attributable to the coronavirus disease 2019 (“COVID-19”). A reconciliation of Adjusted EBITDA to income before income taxes is as follows: Three Months Ended March 31, 2021 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Adjusted EBITDA $ 113,272 $ 50,534 $ 26,329 $ 82,015 $ (13,809) Depreciation and amortization (13,050) (7,060) (7,191) (19,898) (2,421) Stock compensation expense — — — (536) (6,173) Income (loss) from operations $ 100,222 $ 43,474 $ 19,138 $ 61,581 $ (22,403) $ 202,012 Equity in earnings of unconsolidated subsidiaries 9,919 Interest income 4,749 Interest expense (34,402) Income before income taxes $ 182,278 Three Months Ended March 31, 2022 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Adjusted EBITDA $ 35,967 $ 42,379 $ 26,596 $ 89,469 $ (30,564) Depreciation and amortization (14,618) (6,802) (8,029) (18,812) (2,778) Stock compensation expense — — — (535) (8,288) Income (loss) from operations $ 21,349 $ 35,577 $ 18,567 $ 70,122 $ (41,630) $ 103,985 Equity in earnings of unconsolidated subsidiaries 5,397 Interest expense (35,514) Income before income taxes $ 73,868 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following tables disaggregate the Company’s revenue for the three months ended March 31, 2021 and 2022: Three Months Ended March 31, 2021 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Patient service revenue: Medicare $ 232,140 $ 102,375 $ 36,291 $ 230 $ — $ 371,036 Non-Medicare 361,152 95,342 200,819 420,654 — 1,077,967 Total patient services revenues 593,292 197,717 237,110 420,884 — 1,449,003 Other revenue 1,580 10,087 14,851 1,956 68,986 97,460 Total revenue $ 594,872 $ 207,804 $ 251,961 $ 422,840 $ 68,986 $ 1,546,463 Three Months Ended March 31, 2022 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Patient service revenue: Medicare $ 218,987 $ 103,021 $ 41,904 $ 177 $ — $ 364,089 Non-Medicare 380,986 107,142 214,113 422,046 — 1,124,287 Total patient services revenues 599,973 210,163 256,017 422,223 — 1,488,376 Other revenue 1,782 10,471 15,923 1,200 81,795 111,171 Total revenue $ 601,755 $ 220,634 $ 271,940 $ 423,423 $ 81,795 $ 1,599,547 |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The Company’s capital structure includes common stock and unvested restricted stock awards. To compute earnings per share (“EPS”), the Company applies the two-class method because the Company’s unvested restricted stock awards are participating securities which are entitled to participate equally with the Company’s common stock in undistributed earnings. Application of the Company’s two-class method is as follows: (i) Net income attributable to the Company is reduced by the amount of dividends declared and by the contractual amount of dividends that must be paid for the current period for each class of stock. There were no contractual dividends paid for the three months ended March 31, 2021 and 2022. (ii) The remaining undistributed net income of the Company is then equally allocated to its common stock and unvested restricted stock awards, as if all of the earnings for the period had been distributed. The total net income allocated to each security is determined by adding both distributed and undistributed net income for the period. (iii) The net income allocated to each security is then divided by the weighted average number of outstanding shares for the period to determine the EPS for each security considered in the two-class method. The following table sets forth the net income attributable to the Company, its common shares outstanding, and its participating securities outstanding. Basic and Diluted EPS Three Months Ended March 31, 2021 2022 (in thousands) Net income $ 137,214 $ 55,926 Less: net income attributable to non-controlling interests 26,668 6,809 Net income attributable to the Company 110,546 49,117 Less: Distributed and undistributed income attributable to participating securities 3,698 1,643 Distributed and undistributed income attributable to common shares $ 106,848 $ 47,474 The following tables set forth the computation of EPS under the two-class method: Three Months Ended March 31, 2021 2022 Net Income Allocation Shares (1) Basic and Diluted EPS Net Income Allocation Shares (1) Basic and Diluted EPS (in thousands, except for per share amounts) Common shares $ 106,848 130,329 $ 0.82 $ 47,474 129,010 $ 0.37 Participating securities 3,698 4,511 $ 0.82 1,643 4,464 $ 0.37 Total Company $ 110,546 $ 49,117 _______________________________________________________________________________ (1) Represents the weighted average share count outstanding during the period. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company is a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of its business. The Company cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject the Company to sanctions, damages, recoupments, fines, and other penalties. The Department of Justice, Centers for Medicare & Medicaid Services (“CMS”), or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company’s businesses in the future that may, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position, results of operations, and liquidity. To address claims arising out of the Company’s operations, the Company maintains professional malpractice liability insurance and general liability insurance coverages through a number of different programs that are dependent upon such factors as the state where the Company is operating and whether the operations are wholly owned or are operated through a joint venture. For the Company’s wholly owned operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $37.0 million for professional malpractice liability insurance and $40.0 million for general liability insurance. The Company’s insurance for the professional liability coverage is written on a “claims-made” basis, and its commercial general liability coverage is maintained on an “occurrence” basis. These coverages apply after a self-insured retention limit is exceeded. For the Company’s joint venture operations, the Company has designed a separate insurance program that responds to the risks of specific joint ventures. Most of the Company’s joint ventures are insured under a master program with an annual aggregate limit of up to $80.0 million, subject to a sublimit aggregate ranging from $23.0 million to $33.0 million for most joint ventures. The policies are generally written on a “claims-made” basis. Each of these programs has either a deductible or self-insured retention limit. The Company also maintains additional types of liability insurance covering claims which, due to their nature or amount, are not covered by or not fully covered by the Company’s professional and general liability insurance policies. These insurance policies also do not generally cover punitive damages and are subject to various deductibles and policy limits. The Company reviews its insurance program annually and may make adjustments to the amount of insurance coverage and self-insured retentions in future years. Significant legal actions, as well as the cost and possible lack of available insurance, could subject the Company to substantial uninsured liabilities. In the Company’s opinion, the outcome of these actions, individually or in the aggregate, will not have a material adverse effect on its financial position, results of operations, or cash flows. Healthcare providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act. Qui tam lawsuits typically remain under seal (hence, usually unknown to the defendant) for some time while the government decides whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation. These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who successfully bring the suits. The Company is and has been a defendant in these cases in the past, and may be named as a defendant in similar cases from time to time in the future. Oklahoma City Subpoena. On August 24, 2020, the Company and Select Specialty Hospital – Oklahoma City, Inc. (“SSH–Oklahoma City”) received Civil Investigative Demands from the U.S. Attorney’s Office for the Western District of Oklahoma seeking responses to interrogatories and the production of various documents principally relating to the documentation, billing and reviews of medical services furnished to patients at SSH-Oklahoma City. The Company does not know whether the subpoena has been issued in connection with a qui tam lawsuit or in connection with possible civil, criminal or administrative proceedings by the government. The Company is producing documents in response to the subpoena and is fully cooperating with this investigation. At this time, the Company is unable to predict the timing and outcome of this matter. New Jersey Litigation. In December 2020, the United States District Court for the District of New Jersey unsealed a qui tam complaint in the United States of America and State of New Jersey ex rel. Keith A. DiLello, Sr. v. Hackensack Meridian Health, Jersey Shore University Medical Center, Ocean Medical Center, Seaview Orthopaedics, Shrewsbury Surgery Center, Kessler Rehabilitation, Dr. Halambros Demetriades, Dr. Theodore Kutzan, Dr. Adam Myers, Dr. Hoan-Vu Nguyen, Dr. Frederick De Paola, ABC Corporations 1-10, and John/Jane Does 1-10, Case 3:20-cv-02949-FLW-ZNQ. The complaint was filed under seal in March 2020 and was unsealed after the United States and the State of New Jersey declined to intervene in the case. In the complaint, the plaintiff-relator, an automobile accident victim and former patient of the defendant providers, alleges that they routinely billed both personal injury protection (“PIP”) carriers and CMS. He alleges that they violated federal and state law by billing CMS when other insurance is available and failing to return payment to CMS after payment was made by the PIP carriers. In March 2021, defendant Kessler Rehabilitation waived service of process of the complaint. In April 2022, the Court granted defendant Kessler Rehabilitation’s motion to dismiss the complaint, dismissing all counts without prejudice. The Court also gave the plaintiff-relator leave to amend his complaint, within 30 days of the Court’s order, to cure the deficiencies outlined in the Court’s opinion. The Company intends to vigorously defend this action, but at this time the Company is unable to predict the timing and outcome of this matter. Physical Therapy Billing . On October 7, 2021, the Company received a one-page letter from a Trial Attorney at the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Fraud Section (“DOJ”). The letter stated that the DOJ, in conjunction with the U.S. Department of Health and Human Services, is investigating the Company in connection with potential violations of the False Claims Act, 31 U.S.C. § 3729, et seq . The letter specified that the investigation relates to the Company’s billing of physical therapy services. The Company is producing documents and data in response to such letter and is fully cooperating with this investigation. At this time, the Company is unable to predict the timing and outcome of this matter. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On May 5, 2022, the Company’s board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about June 1, 2022 to stockholders of record as of the close of business on May 19, 2022. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. |
Credit Risk Concentrations | Credit Risk ConcentrationsFinancial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash balances and accounts receivable. The Company’s excess cash is held with large financial institutions. The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements.Because of the diversity in the Company’s non-governmental third-party payor base, as well as their geographic dispersion, accounts receivable due from the Medicare program represent the Company’s only significant concentration of credit risk. |
Redeemable Non-Controlling Interests | Redeemable Non-Controlling InterestsThe ownership interests held by outside parties in subsidiaries, which include limited liability companies and limited partnerships, controlled by the Company are classified as non-controlling interests. Some of the Company’s non-controlling ownership interests consist of outside parties that have certain redemption rights that, if exercised, require the Company to purchase the parties’ ownership interests. These interests are classified and reported as redeemable non-controlling interests and have been adjusted to their approximate redemption values, after the attribution of net income or loss. |
Variable Interest Entities | Variable Interest EntitiesCertain states prohibit the “corporate practice of medicine,” which restricts the Company from owning medical practices which directly employ physicians and from exercising control over medical decisions by physicians. In these states, the Company enters into long-term management agreements with medical practices that are owned by licensed physicians, which, in turn, employ or contract with physicians who provide professional medical services. The management agreements provide for the Company to direct the transfer of ownership of the medical practices to new licensed physicians at any time. Based on the provisions of the management agreements, the medical practices are variable interest entities for which the Company is the primary beneficiary. |
Redeemable Non-Controlling In_2
Redeemable Non-Controlling Interests (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Noncontrolling Interest [Abstract] | |
Schedule of redeemable non-controlling interests | The changes in redeemable non-controlling interests are as follows: Three Months Ended March 31, 2021 2022 (in thousands) Balance as of January 1 $ 398,171 $ 39,033 Net income attributable to redeemable non-controlling interests 9,626 1,918 Distributions to and purchases of redeemable non-controlling interests (614) (1,198) Redemption value adjustment on redeemable non-controlling interests 38,405 1,381 Other 343 536 Balance as of March 31 $ 445,931 $ 41,670 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of lease cost | The Company’s total lease cost is as follows: Three Months Ended March 31, 2021 Three Months Ended March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating lease cost $ 70,114 $ 1,799 $ 71,913 $ 73,962 $ 1,809 $ 75,771 Finance lease cost: Amortization of right-of-use assets 35 — 35 347 — 347 Interest on lease liabilities 251 — 251 340 — 340 Short-term lease cost — — — 35 — 35 Variable lease cost 13,009 3 13,012 13,655 39 13,694 Sublease income (2,234) — (2,234) (1,966) — (1,966) Total lease cost $ 81,175 $ 1,802 $ 82,977 $ 86,373 $ 1,848 $ 88,221 The weighted average remaining lease terms and discount rates are as follows: December 31, 2021 March 31, 2022 Weighted average remaining lease term (in years): Operating leases 7.8 7.6 Finance leases 24.7 24.8 Weighted average discount rate: Operating leases 5.6 % 5.6 % Finance leases 7.4 % 7.4 % |
Supplemental cash flow information | Supplemental cash flow information related to leases is as follows: Three Months Ended March 31, 2021 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 72,437 $ 77,689 Operating cash flows for finance leases 251 340 Financing cash flows for finance leases 58 344 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 79,987 $ 88,636 Finance leases 138 — |
Supplemental balance sheet information | Supplemental balance sheet information related to leases is as follows: December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Operating Leases Operating lease right-of-use assets $ 1,052,603 $ 26,151 $ 1,078,754 $ 1,077,980 $ 24,730 $ 1,102,710 Current operating lease liabilities $ 222,865 $ 6,469 $ 229,334 $ 228,598 $ 5,822 $ 234,420 Non-current operating lease liabilities 894,104 22,436 916,540 916,887 21,536 938,423 Total operating lease liabilities $ 1,116,969 $ 28,905 $ 1,145,874 $ 1,145,485 $ 27,358 $ 1,172,843 December 31, 2021 March 31, 2022 Unrelated Parties Related Parties Total Unrelated Parties Related Parties Total (in thousands) Finance Leases Property and equipment, net $ 8,505 $ — $ 8,505 $ 8,158 $ — $ 8,158 Current portion of long-term debt and notes payable $ 1,404 $ — $ 1,404 $ 1,436 $ — $ 1,436 Long-term debt, net of current portion 16,679 — 16,679 16,303 — 16,303 Total finance lease liabilities $ 18,083 $ — $ 18,083 $ 17,739 $ — $ 17,739 |
Maturities of operating lease liabilities | As of March 31, 2022, maturities of lease liabilities are approximately as follows: Operating Leases Finance Leases (in thousands) 2022 (remainder of year) $ 222,152 $ 2,040 2023 259,672 2,747 2024 219,375 2,384 2025 175,699 2,101 2026 145,837 2,126 Thereafter 495,998 28,181 Total undiscounted cash flows 1,518,733 39,579 Less: Imputed interest 345,890 21,840 Total discounted lease liabilities $ 1,172,843 $ 17,739 |
Maturities of finance lease liabilities | As of March 31, 2022, maturities of lease liabilities are approximately as follows: Operating Leases Finance Leases (in thousands) 2022 (remainder of year) $ 222,152 $ 2,040 2023 259,672 2,747 2024 219,375 2,384 2025 175,699 2,101 2026 145,837 2,126 Thereafter 495,998 28,181 Total undiscounted cash flows 1,518,733 39,579 Less: Imputed interest 345,890 21,840 Total discounted lease liabilities $ 1,172,843 $ 17,739 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amount of goodwill | The following table shows changes in the carrying amounts of goodwill by reporting unit for the three months ended March 31, 2022: Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Total (in thousands) Balance as of December 31, 2021 $ 1,131,440 $ 442,155 $ 654,125 $ 1,221,192 $ 3,448,912 Acquisition of businesses — — 409 2,884 3,293 Measurement period adjustment 13,251 — — — 13,251 Balance as of March 31, 2022 $ 1,144,691 $ 442,155 $ 654,534 $ 1,224,076 $ 3,465,456 |
Schedule of carrying value and amortization of identifiable intangible assets | The following table provides the gross carrying amounts, accumulated amortization, and net carrying amounts for the Company’s identifiable intangible assets: December 31, 2021 March 31, 2022 Gross Accumulated Net Gross Accumulated Net (in thousands) Indefinite-lived intangible assets: Trademarks $ 166,698 $ — $ 166,698 $ 166,698 $ — $ 166,698 Certificates of need 21,478 — 21,478 21,625 — 21,625 Accreditations 1,874 — 1,874 1,874 — 1,874 Finite-lived intangible assets: Trademarks 5,000 (5,000) — 5,000 (5,000) — Customer relationships 304,289 (141,111) 163,178 305,839 (148,283) 157,556 Non-compete agreements 36,746 (15,095) 21,651 37,087 (15,990) 21,097 Total identifiable intangible assets $ 536,085 $ (161,206) $ 374,879 $ 538,123 $ (169,273) $ 368,850 |
Long-Term Debt and Notes Paya_2
Long-Term Debt and Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt and notes payable | As of March 31, 2022, the Company’s long-term debt and notes payable were as follows: Principal Unamortized Premium (Discount) Unamortized Carrying Value Fair Value (in thousands) 6.250% senior notes $ 1,225,000 $ 26,131 $ (13,212) $ 1,237,919 $ 1,262,118 Credit facilities: Revolving facility 340,000 — — 340,000 338,725 Term loan 2,103,437 (5,890) (6,421) 2,091,126 2,079,773 Other debt, including finance leases 93,961 — (194) 93,767 93,767 Total debt $ 3,762,398 $ 20,241 $ (19,827) $ 3,762,812 $ 3,774,383 As of December 31, 2021, the Company’s long-term debt and notes payable were as follows: Principal Unamortized Premium (Discount) Unamortized Carrying Value Fair Value (in thousands) 6.250% senior notes $ 1,225,000 $ 27,635 $ (13,951) $ 1,238,684 $ 1,297,104 Credit facilities: Revolving facility 160,000 — — 160,000 159,400 Term loan 2,103,437 (6,386) (6,961) 2,090,090 2,087,661 Other debt, including finance leases 85,398 — (215) 85,183 85,183 Total debt $ 3,573,835 $ 21,249 $ (21,127) $ 3,573,957 $ 3,629,348 |
Schedule of principal maturities of long-term debt and notes payable | Principal maturities of the Company’s long-term debt and notes payable were approximately as follows: 2022 2023 2024 2025 2026 Thereafter Total (in thousands) 6.250% senior notes $ — $ — $ — $ — $ 1,225,000 $ — $ 1,225,000 Credit facilities: Revolving facility — — 340,000 — — — 340,000 Term loan — 4,757 11,150 2,087,530 — — 2,103,437 Other debt, including finance leases 22,143 31,064 26,081 1,824 1,286 11,563 93,961 Total debt $ 22,143 $ 35,821 $ 377,231 $ 2,089,354 $ 1,226,286 $ 11,563 $ 3,762,398 |
Interest Rate Cap (Tables)
Interest Rate Cap (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of accumulated other comprehensive income | The following table outlines the changes in accumulated other comprehensive income, net of tax, during the periods presented: Three Months Ended March 31, 2021 2022 (in thousands) Balance as of January 1 $ (2,027) $ 12,282 Gain on interest rate cap cash flow hedge 8,151 39,814 Amounts reclassified from accumulated other comprehensive income — 39 Balance as of March 31 $ 6,124 $ 52,135 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of interest rate cap | Financial Instrument Balance Sheet Classification Level December 31, 2021 March 31, 2022 Asset: (in thousands) Interest rate cap contract, current portion Other current assets Level 2 $ — $ 15,745 Interest rate cap contract, non-current portion Other assets Level 2 18,055 55,523 Liability: Interest rate cap contract, current portion Accrued other Level 2 $ 330 $ — |
Schedule of long-term debt | December 31, 2021 March 31, 2022 Financial Instrument Level Carrying Value Fair Value Carrying Value Fair Value (in thousands) 6.250% senior notes Level 2 $ 1,238,684 $ 1,297,104 $ 1,237,919 $ 1,262,118 Credit facilities: Revolving facility Level 2 160,000 159,400 340,000 338,725 Term loan Level 2 2,090,090 2,087,661 2,091,126 2,079,773 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of selected financial data for reportable segments | The following tables summarize selected financial data for the Company’s reportable segments. Three Months Ended March 31, 2021 2022 (in thousands) Revenue: Critical illness recovery hospital $ 594,872 $ 601,755 Rehabilitation hospital 207,804 220,634 Outpatient rehabilitation 251,961 271,940 Concentra 422,840 423,423 Other 68,986 81,795 Total Company $ 1,546,463 $ 1,599,547 Adjusted EBITDA: Critical illness recovery hospital $ 113,272 $ 35,967 Rehabilitation hospital 50,534 42,379 Outpatient rehabilitation 26,329 26,596 Concentra 82,015 89,469 Other (1) (13,809) (30,564) Total Company $ 258,341 $ 163,847 Total assets: Critical illness recovery hospital $ 2,233,067 $ 2,367,490 Rehabilitation hospital 1,188,387 1,187,118 Outpatient rehabilitation 1,321,268 1,350,374 Concentra 2,468,157 2,339,940 Other 709,902 291,022 Total Company $ 7,920,781 $ 7,535,944 Purchases of property and equipment: Critical illness recovery hospital $ 14,385 $ 19,569 Rehabilitation hospital 665 6,274 Outpatient rehabilitation 7,335 9,414 Concentra 12,680 10,240 Other 4,654 1,348 Total Company $ 39,719 $ 46,845 _______________________________________________________________________________ (1) For the three months ended March 31, 2021, Adjusted EBITDA included other operating income of $16.1 million related to the recognition of payments received under the Provider Relief Fund for health care related expenses and loss of revenue attributable to the coronavirus disease 2019 (“COVID-19”). |
Schedule of reconciliation of Adjusted EBITDA to income before income taxes | A reconciliation of Adjusted EBITDA to income before income taxes is as follows: Three Months Ended March 31, 2021 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Adjusted EBITDA $ 113,272 $ 50,534 $ 26,329 $ 82,015 $ (13,809) Depreciation and amortization (13,050) (7,060) (7,191) (19,898) (2,421) Stock compensation expense — — — (536) (6,173) Income (loss) from operations $ 100,222 $ 43,474 $ 19,138 $ 61,581 $ (22,403) $ 202,012 Equity in earnings of unconsolidated subsidiaries 9,919 Interest income 4,749 Interest expense (34,402) Income before income taxes $ 182,278 Three Months Ended March 31, 2022 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Adjusted EBITDA $ 35,967 $ 42,379 $ 26,596 $ 89,469 $ (30,564) Depreciation and amortization (14,618) (6,802) (8,029) (18,812) (2,778) Stock compensation expense — — — (535) (8,288) Income (loss) from operations $ 21,349 $ 35,577 $ 18,567 $ 70,122 $ (41,630) $ 103,985 Equity in earnings of unconsolidated subsidiaries 5,397 Interest expense (35,514) Income before income taxes $ 73,868 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | The following tables disaggregate the Company’s revenue for the three months ended March 31, 2021 and 2022: Three Months Ended March 31, 2021 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Patient service revenue: Medicare $ 232,140 $ 102,375 $ 36,291 $ 230 $ — $ 371,036 Non-Medicare 361,152 95,342 200,819 420,654 — 1,077,967 Total patient services revenues 593,292 197,717 237,110 420,884 — 1,449,003 Other revenue 1,580 10,087 14,851 1,956 68,986 97,460 Total revenue $ 594,872 $ 207,804 $ 251,961 $ 422,840 $ 68,986 $ 1,546,463 Three Months Ended March 31, 2022 Critical Illness Recovery Hospital Rehabilitation Hospital Outpatient Concentra Other Total (in thousands) Patient service revenue: Medicare $ 218,987 $ 103,021 $ 41,904 $ 177 $ — $ 364,089 Non-Medicare 380,986 107,142 214,113 422,046 — 1,124,287 Total patient services revenues 599,973 210,163 256,017 422,223 — 1,488,376 Other revenue 1,782 10,471 15,923 1,200 81,795 111,171 Total revenue $ 601,755 $ 220,634 $ 271,940 $ 423,423 $ 81,795 $ 1,599,547 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the net income attributable to the Company, its common shares outstanding, and its participating securities outstanding. Basic and Diluted EPS Three Months Ended March 31, 2021 2022 (in thousands) Net income $ 137,214 $ 55,926 Less: net income attributable to non-controlling interests 26,668 6,809 Net income attributable to the Company 110,546 49,117 Less: Distributed and undistributed income attributable to participating securities 3,698 1,643 Distributed and undistributed income attributable to common shares $ 106,848 $ 47,474 The following tables set forth the computation of EPS under the two-class method: Three Months Ended March 31, 2021 2022 Net Income Allocation Shares (1) Basic and Diluted EPS Net Income Allocation Shares (1) Basic and Diluted EPS (in thousands, except for per share amounts) Common shares $ 106,848 130,329 $ 0.82 $ 47,474 129,010 $ 0.37 Participating securities 3,698 4,511 $ 0.82 1,643 4,464 $ 0.37 Total Company $ 110,546 $ 49,117 _______________________________________________________________________________ (1) Represents the weighted average share count outstanding during the period. |
Credit Risk Concentrations (Det
Credit Risk Concentrations (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Medicare Receivable | Credit Concentration Risk | Accounts Receivable | ||
Concentration Risk [Line Items] | ||
Percentage of concentration risk | 15.00% | 15.00% |
Redeemable Non-Controlling In_3
Redeemable Non-Controlling Interests - Schedule of Redeemable Non-Controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Balance, beginning | $ 39,033 | $ 398,171 |
Net income attributable to redeemable non-controlling interests | 1,918 | 9,626 |
Distributions to and purchases of redeemable non-controlling interests | (1,198) | (614) |
Redemption value adjustment on redeemable non-controlling interests | 1,381 | 38,405 |
Other | 536 | 343 |
Balance, ending | $ 41,670 | $ 445,931 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 |
Variable Interest Entity [Line Items] | |||
Assets | $ 7,535,944 | $ 7,360,171 | $ 7,920,781 |
Liabilities | 6,127,378 | 5,995,236 | |
Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Assets | 242,000 | 225,100 | |
Liabilities | 79,100 | 74,800 | |
Obligations payable | $ 163,400 | $ 150,300 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating lease cost | ||
Unrelated Parties | $ 73,962 | $ 70,114 |
Related Parties | 1,809 | 1,799 |
Total | 75,771 | 71,913 |
Amortization of right-of-use assets | ||
Unrelated Parties | 347 | 35 |
Related Parties | 0 | 0 |
Total | 347 | 35 |
Interest on lease liabilities | ||
Unrelated Parties | 340 | 251 |
Related Parties | 0 | 0 |
Total | 340 | 251 |
Short-term lease cost | ||
Unrelated Parties | 35 | 0 |
Related Parties | 0 | 0 |
Total | 35 | 0 |
Variable lease cost | ||
Unrelated Parties | 13,655 | 13,009 |
Related Parties | 39 | 3 |
Total | 13,694 | 13,012 |
Sublease income | ||
Unrelated Parties | (1,966) | (2,234) |
Related Parties | 0 | 0 |
Total | (1,966) | (2,234) |
Total lease cost | ||
Unrelated Parties | 86,373 | 81,175 |
Related Parties | 1,848 | 1,802 |
Total | $ 88,221 | $ 82,977 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | $ 77,689 | $ 72,437 |
Operating cash flows for finance leases | 340 | 251 |
Financing cash flows for finance leases | 344 | 58 |
Right-of-use assets obtained in exchange for lease liabilities: | ||
Operating leases | 88,636 | 79,987 |
Finance leases | $ 0 | $ 138 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Operating lease right-of-use assets | ||
Unrelated Parties | $ 1,077,980 | $ 1,052,603 |
Related Parties | 24,730 | 26,151 |
Total | 1,102,710 | 1,078,754 |
Current operating lease liabilities | ||
Unrelated Parties | 228,598 | 222,865 |
Related Parties | 5,822 | 6,469 |
Total | 234,420 | 229,334 |
Non-current operating lease liabilities | ||
Unrelated Parties | 916,887 | 894,104 |
Related Parties | 21,536 | 22,436 |
Total | 938,423 | 916,540 |
Total operating lease liabilities | ||
Unrelated Parties | 1,145,485 | 1,116,969 |
Related Parties | 27,358 | 28,905 |
Total | 1,172,843 | 1,145,874 |
Property and equipment, net | ||
Unrelated Parties | 8,158 | 8,505 |
Related Parties | 0 | 0 |
Total | $ 8,158 | $ 8,505 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Current portion of long-term debt and notes payable | ||
Unrelated Parties | $ 1,436 | $ 1,404 |
Related Parties | 0 | 0 |
Total | $ 1,436 | $ 1,404 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of long-term debt and notes payable | Current portion of long-term debt and notes payable |
Long-term debt, net of current portion | ||
Unrelated Parties | $ 16,303 | $ 16,679 |
Related Parties | 0 | 0 |
Total | $ 16,303 | $ 16,679 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt, net of current portion | Long-term debt, net of current portion |
Total finance lease liabilities | ||
Unrelated Parties | $ 17,739 | $ 18,083 |
Related Parties | 0 | 0 |
Total | $ 17,739 | $ 18,083 |
Leases - Weighted Average Lease
Leases - Weighted Average Lease Terms and Discount Rates (Details) | Mar. 31, 2022 | Dec. 31, 2021 |
Weighted average remaining lease term (in years): | ||
Operating leases | 7 years 7 months 6 days | 7 years 9 months 18 days |
Finance leases | 24 years 9 months 18 days | 24 years 8 months 12 days |
Weighted average discount rate: | ||
Operating leases | 5.60% | 5.60% |
Finance leases | 7.40% | 7.40% |
Leases - Maturities of Operatin
Leases - Maturities of Operating and Finance Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2022 (remainder of year) | $ 222,152 | |
2023 | 259,672 | |
2024 | 219,375 | |
2025 | 175,699 | |
2026 | 145,837 | |
Thereafter | 495,998 | |
Total undiscounted cash flows | 1,518,733 | |
Less: Imputed interest | 345,890 | |
Total discounted lease liabilities | 1,172,843 | $ 1,145,874 |
Finance Leases | ||
2022 (remainder of year) | 2,040 | |
2023 | 2,747 | |
2024 | 2,384 | |
2025 | 2,101 | |
2026 | 2,126 | |
Thereafter | 28,181 | |
Total undiscounted cash flows | 39,579 | |
Less: Imputed interest | 21,840 | |
Total finance lease liabilities | $ 17,739 | $ 18,083 |
Intangible Assets - Carrying Am
Intangible Assets - Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill | |
Goodwill, Beginning Balance | $ 3,448,912 |
Acquisition of businesses | 3,293 |
Measurement period adjustment | 13,251 |
Goodwill, Ending Balance | 3,465,456 |
Critical Illness Recovery Hospital | |
Goodwill | |
Goodwill, Beginning Balance | 1,131,440 |
Acquisition of businesses | 0 |
Measurement period adjustment | 13,251 |
Goodwill, Ending Balance | 1,144,691 |
Rehabilitation Hospital | |
Goodwill | |
Goodwill, Beginning Balance | 442,155 |
Acquisition of businesses | 0 |
Measurement period adjustment | 0 |
Goodwill, Ending Balance | 442,155 |
Outpatient Rehabilitation | |
Goodwill | |
Goodwill, Beginning Balance | 654,125 |
Acquisition of businesses | 409 |
Measurement period adjustment | 0 |
Goodwill, Ending Balance | 654,534 |
Concentra | |
Goodwill | |
Goodwill, Beginning Balance | 1,221,192 |
Acquisition of businesses | 2,884 |
Measurement period adjustment | 0 |
Goodwill, Ending Balance | $ 1,224,076 |
Intangible Assets - Carrying Va
Intangible Assets - Carrying Value and Amortization of Identifiable Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, accumulated amortization | $ (169,273) | $ (161,206) | |
Total identifiable intangible assets, gross carrying amount | 538,123 | 536,085 | |
Total identifiable intangible assets, net carrying amount | 368,850 | 374,879 | |
Amortized intangible assets: | |||
Amortization expense | 7,600 | $ 7,100 | |
Trademarks | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, gross carrying amount | 5,000 | 5,000 | |
Finite-lived intangible assets, accumulated amortization | (5,000) | (5,000) | |
Finite-lived intangible assets, net carrying amount | 0 | 0 | |
Customer relationships | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, gross carrying amount | 305,839 | 304,289 | |
Finite-lived intangible assets, accumulated amortization | (148,283) | (141,111) | |
Finite-lived intangible assets, net carrying amount | 157,556 | 163,178 | |
Non-compete agreements | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Finite-lived intangible assets, gross carrying amount | 37,087 | 36,746 | |
Finite-lived intangible assets, accumulated amortization | (15,990) | (15,095) | |
Finite-lived intangible assets, net carrying amount | 21,097 | 21,651 | |
Trademarks | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 166,698 | 166,698 | |
Amortized intangible assets: | |||
Weighted average time until next renewal (in years) | 7 years 6 months | ||
Certificates of need | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 21,625 | 21,478 | |
Accreditations | |||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 1,874 | $ 1,874 | |
Amortized intangible assets: | |||
Weighted average time until next renewal (in years) | 1 year 6 months |
Long-Term Debt and Notes Paya_3
Long-Term Debt and Notes Payable - Components of Long-Term Debt And Notes Payable (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Principal Outstanding | $ 3,762,398 | $ 3,573,835 |
Unamortized Premium (Discount) | 20,241 | 21,249 |
Unamortized Issuance Costs | (19,827) | (21,127) |
Carrying Value | 3,762,812 | 3,573,957 |
Fair Value | $ 3,774,383 | $ 3,629,348 |
Senior notes | 6.250% senior notes | ||
Debt Instrument [Line Items] | ||
Interest rate of debt (as a percent) | 6.25% | 6.25% |
Principal Outstanding | $ 1,225,000 | $ 1,225,000 |
Unamortized Premium (Discount) | 26,131 | 27,635 |
Unamortized Issuance Costs | (13,212) | (13,951) |
Carrying Value | 1,237,919 | 1,238,684 |
Fair Value | 1,262,118 | 1,297,104 |
Term loan | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | 2,103,437 | 2,103,437 |
Unamortized Premium (Discount) | (5,890) | (6,386) |
Unamortized Issuance Costs | (6,421) | (6,961) |
Carrying Value | 2,091,126 | 2,090,090 |
Fair Value | 2,079,773 | 2,087,661 |
Other debt, including finance leases | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | 93,961 | 85,398 |
Unamortized Premium (Discount) | 0 | 0 |
Unamortized Issuance Costs | (194) | (215) |
Carrying Value | 93,767 | 85,183 |
Fair Value | 93,767 | 85,183 |
Revolving facility | Revolving facility | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | 340,000 | 160,000 |
Unamortized Premium (Discount) | 0 | 0 |
Unamortized Issuance Costs | 0 | 0 |
Carrying Value | 340,000 | 160,000 |
Fair Value | $ 338,725 | $ 159,400 |
Long-Term Debt and Notes Paya_4
Long-Term Debt and Notes Payable - Principal Maturities Of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
2022 | $ 22,143 | |
2023 | 35,821 | |
2024 | 377,231 | |
2025 | 2,089,354 | |
2026 | 1,226,286 | |
Thereafter | 11,563 | |
Total | $ 3,762,398 | $ 3,573,835 |
Senior notes | 6.250% senior notes | ||
Debt Instrument [Line Items] | ||
Interest rate of debt (as a percent) | 6.25% | 6.25% |
2022 | $ 0 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 1,225,000 | |
Thereafter | 0 | |
Total | 1,225,000 | $ 1,225,000 |
Revolving facility | Revolving facility | ||
Debt Instrument [Line Items] | ||
2022 | 0 | |
2023 | 0 | |
2024 | 340,000 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 0 | |
Total | 340,000 | 160,000 |
Term loan | ||
Debt Instrument [Line Items] | ||
2022 | 0 | |
2023 | 4,757 | |
2024 | 11,150 | |
2025 | 2,087,530 | |
2026 | 0 | |
Thereafter | 0 | |
Total | 2,103,437 | 2,103,437 |
Other debt, including finance leases | ||
Debt Instrument [Line Items] | ||
2022 | 22,143 | |
2023 | 31,064 | |
2024 | 26,081 | |
2025 | 1,824 | |
2026 | 1,286 | |
Thereafter | 11,563 | |
Total | $ 93,961 | $ 85,398 |
Interest Rate Cap - Narrative (
Interest Rate Cap - Narrative (Details) - Interest Rate Cap $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Derivative [Line Items] | |
Derivative cap interest rate (as a percent) | 1.00% |
Notional amount | $ 2,000 |
Annual premium (in percent) | 0.000916 |
Annual premium amount | $ 1.8 |
Estimated pre-tax gain expected to be reclassified in the next twelve months | $ 16.9 |
Interest Rate Cap - Schedule of
Interest Rate Cap - Schedule of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,325,902 | $ 1,252,973 |
Ending balance | 1,366,896 | 1,350,617 |
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | Interest Rate Cap | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 12,282 | (2,027) |
Gain on interest rate cap cash flow hedge | 39,814 | 8,151 |
Amounts reclassified from accumulated other comprehensive income | 39 | 0 |
Ending balance | $ 52,135 | $ 6,124 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Schedule of Interest Rate Cap (Details) - Interest Rate Cap - Fair Value, Inputs, Level 2 - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Other current assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap contract, current portion | $ 15,745 | $ 0 |
Other assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap contract, non-current portion | 55,523 | 18,055 |
Accrued other | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap contract, current portion | $ 0 | $ 330 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 3,774,383 | $ 3,629,348 |
Senior notes | 6.250% senior notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate of debt (as a percent) | 6.25% | 6.25% |
Carrying Value | $ 1,237,919 | $ 1,238,684 |
Fair Value | 1,262,118 | 1,297,104 |
Senior notes | Fair Value, Inputs, Level 2 | 6.250% senior notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value | 1,237,919 | 1,238,684 |
Fair Value | 1,262,118 | 1,297,104 |
Revolving facility | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value | 340,000 | 160,000 |
Fair Value | 338,725 | 159,400 |
Term loan | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value | 2,091,126 | 2,090,090 |
Fair Value | 2,079,773 | 2,087,661 |
Term loan | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value | 2,091,126 | 2,090,090 |
Fair Value | $ 2,079,773 | $ 2,087,661 |
Segment Information - Selected
Segment Information - Selected Financial Data (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 1,599,547 | $ 1,546,463 | |
Adjusted EBITDA | 163,847 | 258,341 | |
Total assets | 7,535,944 | 7,920,781 | $ 7,360,171 |
Purchases of property and equipment | 46,845 | 39,719 | |
Government assistance recognized in earnings, CARES Act | 16,100 | ||
Operating Segments | Critical Illness Recovery Hospital | |||
Segment Reporting Information [Line Items] | |||
Revenue | 601,755 | 594,872 | |
Adjusted EBITDA | 35,967 | 113,272 | |
Total assets | 2,367,490 | 2,233,067 | |
Purchases of property and equipment | 19,569 | 14,385 | |
Operating Segments | Rehabilitation Hospital | |||
Segment Reporting Information [Line Items] | |||
Revenue | 220,634 | 207,804 | |
Adjusted EBITDA | 42,379 | 50,534 | |
Total assets | 1,187,118 | 1,188,387 | |
Purchases of property and equipment | 6,274 | 665 | |
Operating Segments | Outpatient Rehabilitation | |||
Segment Reporting Information [Line Items] | |||
Revenue | 271,940 | 251,961 | |
Adjusted EBITDA | 26,596 | 26,329 | |
Total assets | 1,350,374 | 1,321,268 | |
Purchases of property and equipment | 9,414 | 7,335 | |
Operating Segments | Concentra | |||
Segment Reporting Information [Line Items] | |||
Revenue | 423,423 | 422,840 | |
Adjusted EBITDA | 89,469 | 82,015 | |
Total assets | 2,339,940 | 2,468,157 | |
Purchases of property and equipment | 10,240 | 12,680 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Revenue | 81,795 | 68,986 | |
Adjusted EBITDA | (30,564) | (13,809) | |
Total assets | 291,022 | 709,902 | |
Purchases of property and equipment | $ 1,348 | $ 4,654 |
Segment Information - Reconcili
Segment Information - Reconciliation of Adjusted EBITDA to Income Before Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | $ 163,847 | $ 258,341 |
Depreciation and amortization | (51,039) | (49,620) |
Income from operations | 103,985 | 202,012 |
Equity in earnings of unconsolidated subsidiaries | 5,397 | 9,919 |
Interest income | 0 | 4,749 |
Interest expense | (35,514) | (34,402) |
Income before income taxes | 73,868 | 182,278 |
Operating Segments | Critical Illness Recovery Hospital | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | 35,967 | 113,272 |
Depreciation and amortization | (14,618) | (13,050) |
Stock compensation expense | 0 | 0 |
Income from operations | 21,349 | 100,222 |
Operating Segments | Rehabilitation Hospital | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | 42,379 | 50,534 |
Depreciation and amortization | (6,802) | (7,060) |
Stock compensation expense | 0 | 0 |
Income from operations | 35,577 | 43,474 |
Operating Segments | Outpatient Rehabilitation | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | 26,596 | 26,329 |
Depreciation and amortization | (8,029) | (7,191) |
Stock compensation expense | 0 | 0 |
Income from operations | 18,567 | 19,138 |
Operating Segments | Concentra | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | 89,469 | 82,015 |
Depreciation and amortization | (18,812) | (19,898) |
Stock compensation expense | (535) | (536) |
Income from operations | 70,122 | 61,581 |
Other | ||
Segment Reporting Information [Line Items] | ||
Adjusted EBITDA | (30,564) | (13,809) |
Depreciation and amortization | (2,778) | (2,421) |
Stock compensation expense | (8,288) | (6,173) |
Income from operations | $ (41,630) | $ (22,403) |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 1,599,547 | $ 1,546,463 |
Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,488,376 | 1,449,003 |
Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 364,089 | 371,036 |
Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,124,287 | 1,077,967 |
Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 111,171 | 97,460 |
Operating Segments | Critical Illness Recovery Hospital | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 601,755 | 594,872 |
Operating Segments | Critical Illness Recovery Hospital | Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 599,973 | 593,292 |
Operating Segments | Critical Illness Recovery Hospital | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 218,987 | 232,140 |
Operating Segments | Critical Illness Recovery Hospital | Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 380,986 | 361,152 |
Operating Segments | Critical Illness Recovery Hospital | Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,782 | 1,580 |
Operating Segments | Rehabilitation Hospital | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 220,634 | 207,804 |
Operating Segments | Rehabilitation Hospital | Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 210,163 | 197,717 |
Operating Segments | Rehabilitation Hospital | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 103,021 | 102,375 |
Operating Segments | Rehabilitation Hospital | Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 107,142 | 95,342 |
Operating Segments | Rehabilitation Hospital | Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 10,471 | 10,087 |
Operating Segments | Outpatient Rehabilitation | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 271,940 | 251,961 |
Operating Segments | Outpatient Rehabilitation | Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 256,017 | 237,110 |
Operating Segments | Outpatient Rehabilitation | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 41,904 | 36,291 |
Operating Segments | Outpatient Rehabilitation | Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 214,113 | 200,819 |
Operating Segments | Outpatient Rehabilitation | Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 15,923 | 14,851 |
Operating Segments | Concentra | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 423,423 | 422,840 |
Operating Segments | Concentra | Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 422,223 | 420,884 |
Operating Segments | Concentra | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 177 | 230 |
Operating Segments | Concentra | Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 422,046 | 420,654 |
Operating Segments | Concentra | Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,200 | 1,956 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 81,795 | 68,986 |
Other | Total patient services revenues | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 0 | 0 |
Other | Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 0 | 0 |
Other | Non-Medicare | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 0 | 0 |
Other | Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 81,795 | $ 68,986 |
Earnings per Share - Narrative
Earnings per Share - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Contractual dividends paid | $ 0 | $ 0 |
Earnings per Share - Net Income
Earnings per Share - Net Income Attributable to the Company, Common Shares Outstanding, and Participating Securities Outstanding (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Net income | $ 55,926 | $ 137,214 |
Less: Net income attributable to non-controlling interests | 6,809 | 26,668 |
Net income attributable to Select Medical Holdings Corporation | 49,117 | 110,546 |
Basic EPS | ||
Less: Distributed and undistributed income attributable to participating securities - Basic EPS | 1,643 | 3,698 |
Distributed and undistributed income attributable to common shares | 47,474 | 106,848 |
Diluted EPS | ||
Less: Distributed and undistributed income attributable to participating securities - Diluted EPS | 1,643 | 3,698 |
Distributed and undistributed income attributable to common shares | $ 47,474 | $ 106,848 |
Earnings per Share - Computatio
Earnings per Share - Computation of EPS Under the Two-Class Method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Net Income Allocation | ||
Net income allocated to common shares - basic | $ 47,474 | $ 106,848 |
Participating securities - basic | 1,643 | 3,698 |
Net income allocated to common shares - diluted | 47,474 | 106,848 |
Participating securities - diluted | 1,643 | 3,698 |
Net income attributable to Select Medical Holdings Corporation | $ 49,117 | $ 110,546 |
Weighted average common shares outstanding, basic (in shares) | 129,010 | 130,329 |
Weighted average common shares outstanding, diluted (in shares) | 129,010 | 130,329 |
Weighted average participating securities outstanding (in shares) | 4,464 | 4,511 |
Basic EPS | ||
Basic EPS (in dollars per share) | $ 0.37 | $ 0.82 |
Diluted EPS | ||
Diluted EPS (in dollars per share) | $ 0.37 | $ 0.82 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Apr. 30, 2022 | Mar. 31, 2022 | |
Maximum | New Jersey Litigation | Subsequent Event | ||
Commitments and Contingencies | ||
Period for plaintiff-relator leave to amend complaint (in days) | 30 days | |
Professional liability claims | ||
Commitments and Contingencies | ||
Total annual aggregate limit of insurance coverage | $ 37 | |
Professional liability claims | Joint Venture Operations | ||
Commitments and Contingencies | ||
Total annual aggregate limit of insurance coverage | 80 | |
Professional liability claims | Joint Venture Operations | Minimum | ||
Commitments and Contingencies | ||
Total annual aggregate limit of insurance coverage | 23 | |
Professional liability claims | Joint Venture Operations | Maximum | ||
Commitments and Contingencies | ||
Total annual aggregate limit of insurance coverage | 33 | |
General Liability | ||
Commitments and Contingencies | ||
Total annual aggregate limit of insurance coverage | $ 40 |
Subsequent Event (Details)
Subsequent Event (Details) | May 05, 2022$ / shares |
Subsequent Event | |
Subsequent Event [Line Items] | |
Cash dividend declared (in dollars per share) | $ 0.125 |