Select Medical Holdings Corporation Announces Results

For Its Third Quarter Ended September 30, 2021 and Cash Dividend

MECHANICSBURG, PENNSYLVANIA - November 4, 2021 - Select Medical Holdings Corporation ("Select Medical," "we," "us," or "our") (NYSE: SEM) today announced results for its third quarter ended September 30, 2021 and the declaration of a cash dividend.

For the third quarter ended September 30, 2021, revenue increased 7.8% to $1,534.2 million, compared to $1,423.9 million for the same quarter, prior year. Income from operations was $150.3 million for the third quarter ended September 30, 2021, compared to $156.1 million for the same quarter, prior year. Income from operations included $1.7 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the third quarter ended September 30, 2021, compared to a reduction of other operating income of $1.2 million related to payments received under the Provider Relief Fund for the same quarter, prior year. Refer to "CARES Act Provider Relief Fund" for further discussion. Net income was $100.2 million for the third quarter ended September 30, 2021, compared to $104.5 million for the same quarter, prior year. Net income included pre-tax gains on sales of businesses of $5.1 million for the third quarter ended September 30, 2020. Adjusted EBITDA was $208.6 million for the third quarter ended September 30, 2021, compared to $213.2 million for the same quarter, prior year. Earnings per common share was $0.57 for both the third quarters ended September 30, 2021 and 2020. Adjusted earnings per common share was $0.57 for the third quarter ended September 30, 2021, compared to $0.56 for the same quarter, prior year. Adjusted earnings per common share excluded the gains on sales of businesses and related tax effects for the third quarter ended September 30, 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.

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For the nine months ended September 30, 2021, revenue increased 14.1% to $4,644.7 million, compared to $4,071.2 million for the same period, prior year. Income from operations increased 57.4% to $636.2 million for the nine months ended September 30, 2021, compared to $404.3 million for the same period, prior year. Income from operations included $115.8 million of other operating income related to the recognition of payments received under the Provider Relief Fund for the nine months ended September 30, 2021, compared to $53.8 million for the same period, prior year. Refer to "CARES Act Provider Relief Fund" for further discussion. Net income increased 78.9% to $433.6 million for the nine months ended September 30, 2021, compared to $242.4 million for the same period, prior year. Net income included pre-tax gains on sales of businesses of $12.7 million for the nine months ended September 30, 2020. Adjusted EBITDA increased 39.6% to $808.9 million for the nine months ended September 30, 2021, compared to $579.3 million for the same period, prior year. Earnings per common share increased to $2.61 for the nine months ended September 30, 2021, compared to $1.35 for the same period, prior year. Adjusted earnings per common share was $2.61 for the nine months ended September 30, 2021, compared to $1.31 for the same period, prior year. Adjusted earnings per common share excluded the gains on sales of businesses and related tax effects for the nine months ended September 30, 2020. The definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA are presented in table IX of this release. A reconciliation of earnings per common share to adjusted earnings per common share is presented in table X of this release.

Please refer to "Effects of the COVID-19 Pandemic on Select Medical's Results of Operations" below for further discussion regarding the impact of the coronavirus disease 2019 ("COVID-19") pandemic on Select Medical's operating results.

Company Overview

Select Medical is one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States based on number of facilities. Select Medical's reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment, and the Concentra segment. As of September 30, 2021, Select Medical operated 100 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,850 outpatient rehabilitation clinics in 39 states and the District of Columbia. Select Medical's joint venture subsidiary Concentra operated 519 occupational health centers in 41 states. At September 30, 2021, Select Medical had operations in 46 states and the District of Columbia. Information about Select Medical is available at www.selectmedical.com.

CARES Act Provider Relief Fund

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted. The CARES Act provided additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 pandemic, including appropriations for the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19, and for reimbursing eligible health care providers for health care related expenses and lost revenues that are attributable to COVID-19.

For the three and nine months ended September 30, 2021, Select Medical recognized $1.7 million and $115.8 million of payments received under the Provider Relief Fund as other operating income, respectively.

For the three months ended September 30, 2020, Select Medical recognized a reduction to other operating income of $1.2 million related to payments received under the Provider Relief Fund. This resulted from changes in the terms and conditions associated with the Provider Relief Fund program. For the nine months ended September 30, 2020, Select Medical recognized $53.8 million of payments received under the Provider Relief Fund as other operating income.

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Critical Illness Recovery Hospital Segment

For the third quarter ended September 30, 2021, revenue for the critical illness recovery hospital segment increased 2.2% to $530.6 million, compared to $519.5 million for the same quarter, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $57.2 million for the third quarter ended September 30, 2021, compared to $88.8 million for the same quarter, prior year. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 10.8% for the third quarter ended September 30, 2021, compared to 17.1% for the same quarter, prior year. Certain critical illness recovery hospital key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.

For the nine months ended September 30, 2021, revenue for the critical illness recovery hospital segment increased 8.4% to $1,669.6 million, compared to $1,539.6 million for the same period, prior year. Adjusted EBITDA for the critical illness recovery hospital segment was $243.4 million for the nine months ended September 30, 2021, compared to $267.1 million for the same period, prior year. For the nine months ended September 30, 2021, Adjusted EBITDA included $17.9 million of other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services. The Adjusted EBITDA margin for the critical illness recovery hospital segment was 14.6% for the nine months ended September 30, 2021, compared to 17.4% for the same period, prior year. Certain critical illness recovery hospital key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.

Rehabilitation Hospital Segment

For the third quarter ended September 30, 2021, revenue for the rehabilitation hospital segment increased 13.0% to $212.4 million, compared to $188.1 million for the same quarter, prior year. Adjusted EBITDA for the rehabilitation hospital segment was $44.1 million for the third quarter ended September 30, 2021, compared to $44.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 20.7% for the third quarter ended September 30, 2021, compared to 23.7% for the same quarter, prior year. Certain rehabilitation hospital key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.

For the nine months ended September 30, 2021, revenue for the rehabilitation hospital segment increased 17.5% to $632.9 million, compared to $538.8 million for the same period, prior year. Adjusted EBITDA for the rehabilitation hospital segment increased 31.2% to $145.4 million for the nine months ended September 30, 2021, compared to $110.8 million for the same period, prior year. The Adjusted EBITDA margin for the rehabilitation hospital segment was 23.0% for the nine months ended September 30, 2021, compared to 20.6% for the same period, prior year. Certain rehabilitation hospital key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.

Outpatient Rehabilitation Segment

For the third quarter ended September 30, 2021, revenue for the outpatient rehabilitation segment increased 14.4% to $274.5 million, compared to $240.0 million for the same quarter, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased 26.6% to $38.8 million for the third quarter ended September 30, 2021, compared to $30.6 million for the same quarter, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 14.1% for the third quarter ended September 30, 2021, compared to 12.8% for the same quarter, prior year. Certain outpatient rehabilitation key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.

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For the nine months ended September 30, 2021, revenue for the outpatient rehabilitation segment increased 21.8% to $806.9 million, compared to $662.4 million for the same period, prior year. Adjusted EBITDA for the outpatient rehabilitation segment increased to $110.7 million for the nine months ended September 30, 2021, compared to $51.5 million for the same period, prior year. The Adjusted EBITDA margin for the outpatient rehabilitation segment was 13.7% for the nine months ended September 30, 2021, compared to 7.8% for the same period, prior year. Certain outpatient rehabilitation key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.

Concentra Segment

For the third quarter ended September 30, 2021, revenue for the Concentra segment increased 12.8% to $442.2 million, compared to $391.9 million for the same quarter, prior year. Adjusted EBITDA for the Concentra segment increased 23.9% to $99.8 million for the third quarter ended September 30, 2021, compared to $80.5 million for the same quarter, prior year. Adjusted EBITDA included other operating income of $1.6 million related to the recognition of payments received under the Provider Relief Fund for the third quarter ended September 30, 2021, compared to $0.4 million for the same quarter, prior year. The Adjusted EBITDA margin for the Concentra segment was 22.6% for the third quarter ended September 30, 2021, compared to 20.6% for the same quarter, prior year. Certain Concentra key statistics are presented in table VII of this release for both the third quarters ended September 30, 2021 and 2020.

For the nine months ended September 30, 2021, revenue for the Concentra segment increased 19.8% to $1,321.4 million, compared to $1,102.7 million for the same period, prior year. Adjusted EBITDA for the Concentra segment increased to $318.9 million for the nine months ended September 30, 2021, compared to $183.5 million for the same period, prior year. Adjusted EBITDA included other operating income of $33.8 million related to the recognition of payments received under the Provider Relief Fund for the nine months ended September 30, 2021, compared to $1.1 million for the same period, prior year. The Adjusted EBITDA margin for the Concentra segment was 24.1% for the nine months ended September 30, 2021, compared to 16.6% for the same period, prior year. Certain Concentra key statistics are presented in table VIII of this release for both the nine months ended September 30, 2021 and 2020.

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Effects of the COVID-19 Pandemic on Select Medical's Results of Operations

Beginning in March 2020, state governments placed significant restrictions on businesses and mandated closures of non-essential or non-life sustaining businesses, causing many employers to furlough their workforce and temporarily cease or significantly reduce their operations. State governments also implemented restrictions on travel and individual activities outside of the home, closed schools, and mandated other social distancing measures. At the same time, hospitals and other facilities began suspending elective surgeries. In an effort to ensure hospitals and health systems had the capacity to absorb and effectively manage surges of COVID-19 patients, a number of waivers and modifications of certain requirements under the Medicare, Medicaid and Children's Health Insurance Program ("CHIP") programs were authorized in March 2020, including certain regulations under the Medicare program which govern admissions into Select Medical's critical illness recovery hospitals and rehabilitation hospitals. Specifically, Select Medical's critical illness recovery hospitals which are certified as long-term care hospitals ("LTCHs") became exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. Select Medical's rehabilitation hospitals which are certified as inpatient rehabilitation facilities ("IRFs") could exclude patients admitted solely to respond to the emergency from the calculation of the "60 percent rule" thresholds to receive payment as an IRF. The COVID-19 public health emergency period has been extended and is currently in effect through January 15, 2022.

The adverse effects of the COVID-19 pandemic, along with the actions of governmental authorities and those in the private sector to limit the spread of COVID-19, caused disruptions in each of Select Medical's segments; these disruptions were most significant within the outpatient rehabilitation and Concentra segments. By mid-March 2020, Select Medical's outpatient rehabilitation clinics began experiencing significantly less patient visit volume due to declines in patient referrals from physicians, a reduction in workers' compensation injury visits resulting from the temporary closure of businesses, and the suspension of elective surgeries which would have required outpatient rehabilitation services. Select Medical's Concentra centers experienced similar declines in patient visit volume due to businesses furloughing their workforce and temporarily ceasing or significantly reducing their operations. Since March 2021, Select Medical's outpatient rehabilitation clinics and Concentra centers have experienced patient visit volumes which approximate or exceed the levels experienced in the months prior to the widespread emergence of COVID-19 in the United States. Although they have experienced temporary disruptions in their core businesses as a result of the COVID-19 pandemic, Select Medical's outpatient rehabilitation and Concentra segments have been able to expand their services to provide COVID-19 screening and testing.

Select Medical's critical illness recovery hospitals have played a critical role in caring for patients during the COVID-19 pandemic, and the relaxation of certain admission restrictions have contributed to volume increases in certain of its hospitals. The revenue of Select Medical's critical illness recovery hospitals and rehabilitation hospitals has also benefited from the temporary suspension of the 2.0% cut to Medicare payments due to sequestration, which began May 1, 2020 following the enactment of the CARES Act, and has been extended through December 31, 2021. Certain of Select Medical's rehabilitation hospitals experienced temporary declines in patient volume, beginning in March 2020, in areas more significantly impacted by the spread of COVID-19, and as a result of the suspension of elective surgeries at hospitals and other facilities, which consequently reduced the demand for inpatient rehabilitation services. Additionally, some of Select Medical's rehabilitation hospitals temporarily restricted admissions as a result of the COVID-19 pandemic. Beginning at the onset of the COVID-19 pandemic, both Select Medical's critical illness recovery hospitals and rehabilitation hospitals modified certain of their protocols in order to follow the guidelines and recommendations for patient treatment and for the protection of their patients and staff members. This has resulted in increased labor costs, including increased contracted labor usage, as well as additional costs resulting from the purchase of personal protective equipment.

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The unpredictable effects of the COVID-19 pandemic, including the duration and extent of disruption on Select Medical's operations, creates uncertainties about Select Medical's future operating results and financial condition. Select Medical has provided revenue and certain operating statistics below for each of its segments for each of the periods presented. Please refer to our risk factors previously reported in our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion.

Critical Illness Recovery Hospital
Revenue Patient Days Occupancy Rate Number of Hospitals Owned(1)
2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021
(in thousands)
January $ 149,799 $ 163,238 $ 199,611 86,238 90,783 100,933 69 % 69 % 75 % 96 100 99
February 145,586 165,375 190,703 80,806 87,844 92,036 71 % 72 % 75 % 96 100 99
March 162,149 171,908 204,558 91,085 91,831 100,149 73 % 70 % 74 % 96 100 99
Three Months Ended March 31 $ 457,534 $ 500,521 $ 594,872 258,129 270,458 293,118 71 % 70 % 75 % 96 100 99
April $ 156,231 $ 171,445 $ 185,934 88,357 90,710 91,506 70 % 71 % 70 % 99 100 99
May 156,422 178,223 183,471 89,350 95,191 93,708 69 % 72 % 70 % 99 100 99
June 148,490 169,958 174,654 85,153 90,988 87,767 68 % 71 % 68 % 99 100 99
Three Months Ended June 30 $ 461,143 $ 519,626 $ 544,059 262,860 276,889 272,981 69 % 72 % 69 % 99 100 99
Six Months Ended June 30 $ 918,677 $ 1,020,147 $ 1,138,931 520,989 547,347 566,099 70 % 71 % 72 % 99 100 99
July $ 151,416 $ 175,253 $ 171,483 87,143 94,144 88,119 67 % 71 % 65 % 99 99 100
August 155,485 173,967 178,240 86,553 93,964 91,756 66 % 71 % 68 % 99 99 100
September 155,991 170,234 180,923 84,393 90,955 92,579 67 % 71 % 71 % 99 99 100
Three Months Ended September 30 $ 462,892 $ 519,454 $ 530,646 258,089 279,063 272,454 67 % 71 % 68 % 99 99 100
Nine Months Ended September 30 $ 1,381,569 $ 1,539,601 $ 1,669,577 779,078 826,410 838,553 69 % 71 % 70 % 99 99 100
Rehabilitation Hospital
Revenue Patient Days Occupancy Rate Number of Hospitals Owned(1)
2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021
(in thousands)
January $ 50,615 $ 61,673 $ 68,297 27,434 32,111 34,404 74 % 79 % 82 % 17 19 20
February 48,080 60,690 64,202 25,442 31,813 32,178 76 % 84 % 84 % 17 19 20
March 55,863 59,656 75,305 29,940 30,644 35,857 78 % 76 % 85 % 18 19 20
Three Months Ended March 31 $ 154,558 $ 182,019 $ 207,804 82,816 94,568 102,439 76 % 79 % 84 % 18 19 20
April $ 51,991 $ 45,878 $ 70,295 28,266 23,553 34,861 76 % 61 % 85 % 18 19 20
May 56,019 57,815 71,190 29,730 29,787 35,604 75 % 73 % 84 % 19 19 20
June 52,364 64,974 71,181 28,529 30,741 34,483 73 % 78 % 84 % 19 19 20
Three Months Ended June 30 $ 160,374 $ 168,667 $ 212,666 86,525 84,081 104,948 75 % 71 % 85 % 19 19 20
Six Months Ended June 30 $ 314,932 $ 350,686 $ 420,470 169,341 178,649 207,387 76 % 75 % 84 % 19 19 20
July $ 57,077 $ 62,312 $ 70,467 30,054 31,986 34,894 75 % 81 % 83 % 19 18 20
August 58,072 63,673 71,682 30,228 32,518 34,835 75 % 83 % 83 % 19 18 20
September 58,220 62,090 70,285 29,172 31,176 33,224 75 % 82 % 81 % 19 18 20
Three Months Ended September 30 $ 173,369 $ 188,075 $ 212,434 89,454 95,680 102,953 75 % 82 % 82 % 19 18 20
Nine Months Ended September 30 $ 488,301 $ 538,761 $ 632,904 258,795 274,329 310,340 75 % 77 % 84 % 19 18 20

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Outpatient Rehabilitation
Revenue Visits Working Days(2)
2019 2020 2021 2019 2020 2021 2019 2020 2021
(in thousands)
January $ 83,185 $ 90,924 $ 76,763 687,007 757,171 625,964 22 22 20
February 78,573 88,239 77,063 658,610 739,061 641,942 20 20 20
March 85,147 76,086 98,135 708,866 626,433 832,248 21 22 23
Three Months Ended March 31 $ 246,905 $ 255,249 $ 251,961 2,054,483 2,122,665 2,100,154 63 64 63
April $ 90,230 $ 49,084 $ 95,251 762,914 386,108 810,314 22 22 22
May 90,272 51,186 89,030 759,829 409,703 758,773 22 20 20
June 81,389 66,868 96,128 680,762 546,456 835,774 20 22 22
Three Months Ended June 30 $ 261,891 $ 167,138 $ 280,409 2,203,505 1,342,267 2,404,861 64 64 64
Six Months Ended June 30 $ 508,796 $ 422,387 $ 532,370 4,257,988 3,464,932 4,505,015 127 128 127
July $ 89,267 $ 77,793 $ 90,352 754,102 636,826 780,118 22 22 21
August 90,687 79,034 93,056 743,813 651,738 798,459 22 21 22
September 85,376 83,215 91,132 706,413 694,808 768,493 20 21 21
Three Months Ended September 30 $ 265,330 $ 240,042 $ 274,540 2,204,328 1,983,372 2,347,070 64 64 64
Nine Months Ended September 30 $ 774,126 $ 662,429 $ 806,910 6,462,316 5,448,304 6,852,085 191 192 191
Concentra
Revenue Visits Working Days(2)
2019 2020 2021 2019 2020 2021 2019 2020 2021
(in thousands)
January $ 133,507 $ 141,236 $ 127,103 985,598 1,032,069 867,793 22 22 20
February 126,309 133,690 132,349 919,065 965,741 869,910 20 20 20
March 136,505 123,609 163,388 1,006,944 879,585 1,057,871 21 22 23
Three Months Ended March 31 $ 396,321 $ 398,535 $ 422,840 2,911,607 2,877,395 2,795,574 63 64 63
April $ 140,050 $ 91,178 $ 152,143 1,040,543 610,555 999,622 22 22 22
May 143,183 99,228 142,228 1,073,763 674,629 956,250 22 20 20
June 130,218 121,932 162,001 988,783 865,896 1,074,206 20 22 22
Three Months Ended June 30 $ 413,451 $ 312,338 $ 456,372 3,103,089 2,151,080 3,030,078 64 64 64
Six Months Ended June 30 $ 809,772 $ 710,873 $ 879,212 6,014,696 5,028,475 5,825,652 127 128 127
July $ 142,385 $ 132,465 $ 146,509 1,057,809 930,427 1,033,266 22 22 21
August 144,452 130,291 150,333 1,087,165 933,555 1,106,356 22 21 22
September 135,063 129,103 145,348 1,005,929 963,065 1,084,009 20 21 21
Three Months Ended September 30 $ 421,900 $ 391,859 $ 442,190 3,150,903 2,827,047 3,223,631 64 64 64
Nine Months Ended September 30 $ 1,231,672 $ 1,102,732 $ 1,321,402 9,165,599 7,855,522 9,049,283 191 192 191

(1) Represents the number of hospitals owned at the end of each period presented.

(2) Represents the number of days in which normal business operations were conducted during the periods presented.

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Stock Repurchase Program

The board of directors of Select Medical previously authorized a common stock repurchase program to repurchase up to $500.0 million worth of shares of its common stock. On November 2, 2021, the board of directors increased the capacity of the program from $500.0 million to $1.0 billion worth of shares and the program has been extended until December 31, 2023. The common stock repurchase program will remain in effect until then, unless further extended or earlier terminated by the board of directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Select Medical deems appropriate. Select Medical funds this program with cash on hand and borrowings under its revolving credit facility.

During the quarter ended September 30, 2021, Select Medical repurchased 1,383,508 shares at a cost of approximately $47.5 million, or $34.34 per share, which includes transaction costs. Since the inception of the common stock repurchase program through September 30, 2021, Select Medical has repurchased 39,964,416 shares at a cost of approximately $404.1 million, or $10.11 per share, which includes transaction costs.

Dividend

On November 2, 2021, Select Medical's board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about November 29, 2021 to stockholders of record as of the close of business on November 16, 2021.

There is no assurance that future dividends will be declared. The declaration and payment of dividends in the future are at the discretion of Select Medical's board of directors after taking into account various factors, including, but not limited to, Select Medical's financial condition, operating results, available cash and current and anticipated cash needs, the terms of Select Medical's indebtedness, and other factors Select Medical's board of directors may deem to be relevant.

Business Outlook

Select Medical is updating its business outlook for 2021 following the reporting of its third quarter 2021 results. Select Medical now expects revenue for the full year of 2021 to be in the range of $6.05 billion to $6.15 billion and Adjusted EBITDA for the full year of 2021 to be in the range of $980.0 million to $1.0 billion. Select Medical now expects fully diluted earnings per common share for the full year of 2021 to be in the range of $2.98 to $3.09. A reconciliation of net income to Adjusted EBITDA for the full year of 2021 is presented in table XI of this release.

Select Medical reaffirms its target compound annual growth rates, provided most recently in its August 5, 2021 press release, for revenue, Adjusted EBITDA, and earnings per common share. Select Medical continues to expect its compound annual growth for revenue to be in the range of 4% to 6% and compound annual growth for Adjusted EBITDA to be in the range of 7% to 8% from 2021 through 2023. Select Medical continues to expect compound annual growth for earnings per common share to be in the range of 17% to 20% from 2021 through 2023.

Conference Call

Select Medical will host a conference call regarding its third quarter results, as well as its business outlook and the impact of the COVID-19 pandemic on each of its reportable segments, on Friday, November 5, 2021, at 9:00am ET. The domestic dial in number for the call is 1-866-440-2669. The international dial in number is 1-409-220-9844. The conference ID for the call is 2359393. The conference call will be webcast simultaneously and can be accessed at Select Medical Holdings Corporation's website www.selectmedicalholdings.com.

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For those unable to participate in the conference call, a replay will be available until 12:00pm ET, November 12, 2021. The replay number is 1-855-859-2056 (domestic) or 1-404-537-3406 (international). The conference ID for the replay will be 2359393. The replay can also be accessed at Select Medical Holdings Corporation's website, www.selectmedicalholdings.com.

Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), including statements related to Select Medical's 2021 and long-term business outlook. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements due to factors including the following:

• developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;
• changes in government reimbursement for our services and/or new payment policies may result in a reduction in revenue, an increase in costs, and a reduction in profitability;
• the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline;
• the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as "hospitals within hospitals" to qualify as hospitals separate from their host hospitals may cause our revenue and profitability to decline;
• a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
• acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources or expose us to unforeseen liabilities;
• our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;
• private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;
• the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability;
• shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;
• competition may limit our ability to grow and result in a decrease in our revenue and profitability;
• the loss of key members of our management team could significantly disrupt our operations;
• the effect of claims asserted against us could subject us to substantial uninsured liabilities;

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• a security breach of our or our third-party vendors' information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and
• other factors discussed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including factors discussed under the heading "Risk Factors" of the quarterly reports on Form 10-Q and of the annual report on Form 10-K for the year ended December 31, 2020.

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Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance.

Investor inquiries:

Joel T. Veit

Senior Vice President and Treasurer

717-972-1100

ir@selectmedical.com

SOURCE: Select Medical Holdings Corporation

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I. Condensed Consolidated Statements of Operations

For the Three Months Ended September 30, 2020 and 2021

(In thousands, except per share amounts, unaudited)

2020 2021 % Change
Revenue $ 1,423,869 $ 1,534,221 7.8 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization 1,180,951 1,297,682 9.9
General and administrative 35,516 37,885 6.7
Depreciation and amortization 50,110 50,128 0.0
Total costs and expenses 1,266,577 1,385,695 9.4
Other operating income (1,160 ) 1,729 N/M
Income from operations 156,132 150,255 (3.8 )
Other income and expense:
Equity in earnings of unconsolidated subsidiaries 8,765 11,452 30.7
Gain on sale of businesses 5,143 - N/M
Interest expense (34,026 ) (33,825 ) (0.6 )
Income before income taxes 136,014 127,882 (6.0 )
Income tax expense 31,557 27,665 (12.3 )
Net income 104,457 100,217 (4.1 )
Less: Net income attributable to non-controlling interests 27,511 23,289 (15.3 )
Net income attributable to Select Medical $ 76,946 $ 76,928 0.0 %
Basic and diluted earnings per common share:(1) $ 0.57 $ 0.57
(1) Refer to table III for calculation of earnings per common share.

N/M Not meaningful.

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II. Condensed Consolidated Statements of Operations

For the Nine Months Ended September 30, 2020 and 2021

(In thousands, except per share amounts, unaudited)

2020 2021 % Change
Revenue $ 4,071,219 $ 4,644,704 14.1 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization 3,463,778 3,882,579 12.1
General and administrative 102,808 109,025 6.0
Depreciation and amortization 154,133 150,702 (2.2 )
Total costs and expenses 3,720,719 4,142,306 11.3
Other operating income 53,828 133,837 N/M
Income from operations 404,328 636,235 57.4
Other income and expense:
Equity in earnings of unconsolidated subsidiaries 19,677 33,180 68.6
Gain on sale of businesses 12,690 - N/M
Interest income - 4,749 N/M
Interest expense (117,499 ) (102,115 ) (13.1 )
Income before income taxes 319,196 572,049 79.2
Income tax expense 76,805 138,410 80.2
Net income 242,391 433,639 78.9
Less: Net income attributable to non-controlling interests 60,670 81,271 34.0
Net income attributable to Select Medical $ 181,721 $ 352,368 93.9 %
Basic and diluted earnings per common share:(1) $ 1.35 $ 2.61

(1) Refer to table III for calculation of earnings per common share.

N/M Not meaningful.

13

III. Earnings per Share

For the Three and Nine Months Ended September 30, 2020 and 2021

(In thousands, except per share amounts, unaudited)

Select Medical's capital structure includes common stock and unvested restricted stock awards. To compute earnings per share ("EPS"), Select Medical applies the two-class method because its unvested restricted stock awards are participating securities which are entitled to participate equally with its common stock in undistributed earnings.

The following table sets forth the net income attributable to Select Medical, its common shares outstanding, and its participating securities outstanding for the three and nine months ended September 30, 2020 and 2021:

Basic and Diluted EPS

Three Months Ended

September 30,

Nine Months Ended
September 30,
2020 2021 2020 2021
(in thousands)
Net income $ 104,457 $ 100,217 $ 242,391 $ 433,639
Less: net income attributable to non-controlling interests 27,511 23,289 60,670 81,271
Net income attributable to Select Medical 76,946 76,928 181,721 352,368
Less: net income attributable to participating securities 2,666 2,550 6,254 11,781
Net income attributable to common shares $ 74,280 $ 74,378 $ 175,467 $ 340,587

The following tables set forth the computation of EPS under the two-class method for the three and nine months ended September 30, 2020 and 2021:

Three Months Ended September 30,
2020 2021
Net Income Allocation Shares(1) Basic and
Diluted EPS 		Net Income Allocation Shares(1) Basic and
Diluted EPS
Common shares $ 74,280 129,882 $ 0.57 $ 74,378 130,594 $ 0.57
Participating securities 2,666 4,662 $ 0.57 2,550 4,477 $ 0.57
Total $ 76,946 $ 76,928
Nine Months Ended September 30,
2020 2021
Net Income Allocation Shares(1) Basic and
Diluted EPS 		Net Income Allocation Shares(1) Basic and
Diluted EPS
Common shares $ 175,467 129,616 $ 1.35 $ 340,587 130,441 $ 2.61
Participating securities 6,254 4,620 $ 1.35 11,781 4,512 $ 2.61
Total $ 181,721 $ 352,368

(1) Represents the weighted average share count outstanding during the period.

14

IV. Condensed Consolidated Balance Sheets

(In thousands, unaudited)

December 31, 2020 September 30, 2021
Assets
Current Assets:
Cash and cash equivalents $ 577,061 $ 747,983
Accounts receivable 896,763 898,823
Other current assets 120,176 132,535
Total Current Assets 1,594,000 1,779,341
Operating lease right-of-use assets 1,032,217 1,069,953
Property and equipment, net 943,420 936,695
Goodwill 3,379,014 3,399,794
Identifiable intangible assets, net 387,541 378,433
Other assets 319,207 335,257
Total Assets $ 7,655,399 $ 7,899,473
Liabilities and Equity
Current Liabilities:
Payables and accruals $ 800,918 $ 919,976
Government advances 321,807 159,505
Unearned government assistance 82,607 2,414
Current operating lease liabilities 220,413 226,419
Current portion of long-term debt and notes payable 12,621 18,059
Total Current Liabilities 1,438,366 1,326,373
Non-current operating lease liabilities 875,367 909,950
Long-term debt, net of current portion 3,389,398 3,384,164
Non-current deferred tax liability 132,421 120,274
Other non-current liabilities 168,703 167,770
Total Liabilities 6,004,255 5,908,531
Redeemable non-controlling interests 398,171 627,330
Total equity 1,252,973 1,363,612
Total Liabilities and Equity $ 7,655,399 $ 7,899,473

15

V. Condensed Consolidated Statements of Cash Flows

For the Three Months Ended September 30, 2020 and 2021

(In thousands, unaudited)

2020 2021
Operating activities
Net income $ 104,457 $ 100,217
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries 10,497 8,388
Depreciation and amortization 50,110 50,128
Provision for expected credit losses 28 (40 )
Equity in earnings of unconsolidated subsidiaries (8,765 ) (11,452 )
Gain on sale of assets and businesses (16,842 ) (581 )
Stock compensation expense 6,962 8,194
Amortization of debt discount, premium and issuance costs 542 560
Deferred income taxes (11,140 ) (3,642 )
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable (104,592 ) 32,396
Other current assets (23,528 ) 11,034
Other assets 4,831 8,860
Accounts payable and accrued expenses 133,748 17,795
Government advances 1,124 (91,767 )
Unearned government assistance 21,433 (1,684 )
Income taxes (34,328 ) (29,452 )
Net cash provided by operating activities 134,537 98,954
Investing activities
Business combinations, net of cash acquired (7,115 ) (16,749 )
Purchases of property and equipment (34,319 ) (48,944 )
Investment in businesses (11,108 ) (5,182 )
Proceeds from sale of assets and businesses 70,919 1,794
Net cash provided by (used in) investing activities 18,377 (69,081 )
Financing activities
Borrowings of other debt 3,599 10,600
Principal payments on other debt (7,087 ) (7,596 )
Dividends paid to common stockholders - (16,940 )
Repurchase of common stock (4,827 ) (64,440 )
Proceeds from issuance of non-controlling interests - 14,238
Distributions to and purchases of non-controlling interests (14,536 ) (21,245 )
Net cash used in financing activities (22,851 ) (85,383 )
Net increase (decrease) in cash and cash equivalents 130,063 (55,510 )
Cash and cash equivalents at beginning of period 509,737 803,493
Cash and cash equivalents at end of period $ 639,800 $ 747,983
Supplemental information
Cash paid for interest $ 54,050 $ 51,615
Cash paid for taxes 77,025 60,763

16

VI. Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2021

(In thousands, unaudited)

2020 2021
Operating activities
Net income $ 242,391 $ 433,639
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries 21,720 27,772
Depreciation and amortization 154,133 150,702
Provision for expected credit losses 281 172
Equity in earnings of unconsolidated subsidiaries (19,677 ) (33,180 )
Gain on sale of assets and businesses (24,723 ) (87 )
Stock compensation expense 20,828 22,002
Amortization of debt discount, premium and issuance costs 1,635 1,655
Deferred income taxes (14,556 ) (11,965 )
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable (91,413 ) 645
Other current assets (22,815 ) (1,822 )
Other assets 16,335 (3,124 )
Accounts payable and accrued expenses 142,027 107,710
Government advances 318,116 (165,470 )
Unearned government assistance 66,938 (80,193 )
Income taxes 9,415 13,524
Net cash provided by operating activities 820,635 461,980
Investing activities
Business combinations, net of cash acquired (14,076 ) (26,830 )
Purchases of property and equipment (105,572 ) (125,386 )
Investment in businesses (25,857 ) (16,367 )
Proceeds from sale of assets and businesses 83,320 11,257
Net cash used in investing activities (62,185 ) (157,326 )
Financing activities
Borrowings on revolving facilities 470,000 -
Payments on revolving facilities (470,000 ) -
Payments on term loans (39,843 ) -
Borrowings of other debt 35,086 19,515
Principal payments on other debt (42,820 ) (22,910 )
Dividends paid to common stockholders - (33,816 )
Repurchase of common stock (14,242 ) (66,050 )
Proceeds from issuance of non-controlling interests 1,686 19,926
Distributions to and purchases of non-controlling interests (28,196 ) (50,397 )
Purchase of membership interests of Concentra Group Holdings Parent (366,203 ) -
Net cash used in financing activities (454,532 ) (133,732 )
Net increase in cash and cash equivalents 303,918 170,922
Cash and cash equivalents at beginning of period 335,882 577,061
Cash and cash equivalents at end of period $ 639,800 $ 747,983
Supplemental information
Cash paid for interest $ 140,174 $ 118,570
Cash paid for taxes 81,945 136,857

17

VII. Key Statistics

For the Three Months Ended September 30, 2020 and 2021

(unaudited)

2020 2021 % Change
Critical Illness Recovery Hospital
Number of hospitals - end of period(a) 100 100
Revenue (,000) $ 519,454 $ 530,646 2.2 %
Number of patient days(b)(c) 279,063 272,454 (2.4 )%
Number of admissions(b)(d) 9,380 9,250 (1.4 )%
Revenue per patient day(b)(e) $ 1,845 $ 1,931 4.7 %
Adjusted EBITDA (,000) $ 88,830 $ 57,245 (35.6 )%
Adjusted EBITDA margin 17.1 % 10.8 %
Rehabilitation Hospital
Number of hospitals - end of period(a) 29 30
Revenue (,000) $ 188,075 $ 212,434 13.0 %
Number of patient days(b)(c) 95,680 102,953 7.6 %
Number of admissions(b)(d) 6,443 7,243 12.4 %
Revenue per patient day(b)(e) $ 1,775 $ 1,881 6.0 %
Adjusted EBITDA (,000) $ 44,637 $ 44,076 (1.3 )%
Adjusted EBITDA margin 23.7 % 20.7 %
Outpatient Rehabilitation
Number of clinics - end of period(a) 1,777 1,850
Revenue (,000) $ 240,042 $ 274,540 14.4 %
Number of visits(b)(f) 1,983,372 2,347,070 18.3 %
Revenue per visit(b)(g) $ 104 $ 102 (1.9 )%
Adjusted EBITDA (,000) $ 30,623 $ 38,762 26.6 %
Adjusted EBITDA margin 12.8 % 14.1 %
Concentra
Number of centers - end of period(b) 523 519
Revenue (,000) $ 391,859 $ 442,190 12.8 %
Number of visits(b)(f) 2,827,047 3,223,631 14.0 %
Revenue per visit(b)(g) $ 121 $ 124 2.5 %
Adjusted EBITDA (,000) $ 80,547 $ 99,832 23.9 %
Adjusted EBITDA margin 20.6 % 22.6 %
(a) Includes managed locations.
(b) Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(c) Each patient day represents one patient occupying one bed for one day during the periods presented.
(d) Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e) Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f) Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g) Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.

18

VIII. Key Statistics

For the Nine Months Ended September 30, 2020 and 2021

(unaudited)

2020 2021 % Change
Critical Illness Recovery Hospital
Number of hospitals - end of period(a) 100 100
Revenue (,000) $ 1,539,601 $ 1,669,577 8.4 %
Number of patient days(b)(c) 826,410 838,553 1.5 %
Number of admissions(b)(d) 28,080 28,135 0.2 %
Revenue per patient day(b)(e) $ 1,850 $ 1,982 7.1 %
Adjusted EBITDA (,000) $ 267,143 $ 243,421 (8.9 )%
Adjusted EBITDA margin 17.4 % 14.6 %
Rehabilitation Hospital
Number of hospitals - end of period(a) 29 30
Revenue (,000) $ 538,761 $ 632,904 17.5 %
Number of patient days(b)(c) 274,329 310,340 13.1 %
Number of admissions(b)(d) 18,489 21,734 17.6 %
Revenue per patient day(b)(e) $ 1,777 $ 1,861 4.7 %
Adjusted EBITDA (,000) $ 110,811 $ 145,378 31.2 %
Adjusted EBITDA margin 20.6 % 23.0 %
Outpatient Rehabilitation
Number of clinics - end of period(a) 1,777 1,850
Revenue (,000) $ 662,429 $ 806,910 21.8 %
Number of visits(b)(f) 5,448,304 6,852,085 25.8 %
Revenue per visit(b)(g) $ 105 $ 103 (1.9 )%
Adjusted EBITDA (,000) $ 51,463 $ 110,724 115.2 %
Adjusted EBITDA margin 7.8 % 13.7 %
Concentra
Number of centers - end of period(b) 523 519
Revenue (,000) $ 1,102,732 $ 1,321,402 19.8 %
Number of visits(b)(f) 7,855,522 9,049,283 15.2 %
Revenue per visit(b)(g) $ 123 $ 125 1.6 %
Adjusted EBITDA (,000) $ 183,510 $ 318,907 73.8 %
Adjusted EBITDA margin 16.6 % 24.1 %
(a) Includes managed locations.
(b) Excludes managed locations. For purposes of the Concentra segment, onsite clinics and community-based outpatient clinics are excluded.
(c) Each patient day represents one patient occupying one bed for one day during the periods presented.
(d) Represents the number of patients admitted to Select Medical's hospitals during the periods presented.
(e) Represents the average amount of revenue recognized for each patient day. Revenue per patient day is calculated by dividing patient service revenues, excluding revenues from certain other ancillary and outpatient services provided at Select Medical's hospitals, by the total number of patient days.
(f) Represents the number of visits in which patients were treated at Select Medical's outpatient rehabilitation clinics and Concentra centers during the periods presented.
(g) Represents the average amount of revenue recognized for each patient visit. Revenue per visit is calculated by dividing patient service revenue, excluding revenues from certain other ancillary services, by the total number of visits. For purposes of this computation for the Concentra segment, patient service revenue does not include onsite clinics and community-based outpatient clinics.

19

IX. Net Income to Adjusted EBITDA Reconciliation

For the Three and Nine Months Ended September 30, 2020 and 2021

(In thousands, unaudited)

The presentation of Adjusted EBITDA is important to investors because Adjusted EBITDA is commonly used as an analytical indicator of performance by investors within the healthcare industry. Adjusted EBITDA is used to evaluate financial performance and determine resource allocation for each of Select Medical's operating segments. Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, income from operations, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying definitions, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

The following table reconciles net income to Adjusted EBITDA for Select Medical. Adjusted EBITDA is used by Select Medical to report its segment performance. Adjusted EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2020 2021 2020 2021
Net income $ 104,457 $ 100,217 $ 242,391 $ 433,639
Income tax expense 31,557 27,665 76,805 138,410
Interest expense 34,026 33,825 117,499 102,115
Interest income - - - (4,749 )
Gain on sale of businesses (5,143 ) - (12,690 ) -
Equity in earnings of unconsolidated subsidiaries (8,765 ) (11,452 ) (19,677 ) (33,180 )
Income from operations 156,132 150,255 404,328 636,235
Stock compensation expense:
Included in general and administrative 5,600 6,457 16,488 17,537
Included in cost of services 1,362 1,737 4,340 4,465
Depreciation and amortization 50,110 50,128 154,133 150,702
Adjusted EBITDA $ 213,204 $ 208,577 $ 579,289 $ 808,939
Critical illness recovery hospital(a) $ 88,830 $ 57,245 $ 267,143 $ 243,421
Rehabilitation hospital 44,637 44,076 110,811 145,378
Outpatient rehabilitation 30,623 38,762 51,463 110,724
Concentra(b) 80,547 99,832 183,510 318,907
Other(c)(d) (31,433 ) (31,338 ) (33,638 ) (9,491 )
Adjusted EBITDA $ 213,204 $ 208,577 $ 579,289 $ 808,939
(a) For the nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $17.9 million. The other operating income related to the outcome of litigation with the Centers for Medicare & Medicaid Services.
(b) For the three and nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $1.6 million and $34.0 million, respectively. For the three and nine months ended September 30, 2020, Adjusted EBITDA included other operating income of $0.4 million and $1.1 million, respectively. The other operating income is primarily related to the recognition of payments received under the Provider Relief Fund.
(c) For the three and nine months ended September 30, 2021, Adjusted EBITDA included other operating income of $0.1 million and $82.0 million, respectively. For the three and nine months ended September 30, 2020, Adjusted EBITDA included a reduction to other operating income of $1.5 million and other operating income of $52.7 million, respectively. The other operating income is related to the recognition of payments received under the Provider Relief Fund.
(d) Other primarily includes general and administrative costs and other operating income, as discussed further above.

20

X. Reconciliation of Earnings per Common Share to Adjusted Earnings per Common Share

For the Three and Nine Months Ended September 30, 2020 and 2021

(In thousands, except per share amounts, unaudited)

Adjusted net income attributable to common shares and adjusted earnings per common share are not measures of financial performance under GAAP. Items excluded from adjusted net income attributable to common shares and adjusted earnings per common share are significant components in understanding and assessing financial performance. Select Medical believes that the presentation of adjusted net income attributable to common shares and adjusted earnings per common share are important to investors because they are reflective of the financial performance of Select Medical's ongoing operations and provide better comparability of its results of operations between periods. Adjusted net income attributable to common shares and adjusted earnings per common share should not be considered in isolation or as alternatives to, or substitutes for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because adjusted net income attributable to common shares and adjusted earnings per common share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, adjusted net income attributable to common shares and adjusted earnings per common share as presented may not be comparable to other similarly titled measures of other companies.

The following tables reconcile net income attributable to common shares and earnings per common share on a fully diluted basis to adjusted net income attributable to common shares and adjusted earnings per common share on a fully diluted basis.

Three Months Ended September 30,
2020 Per Share(a) 2021 Per Share(a)
Net income attributable to common shares(a) $ 74,280 $ 0.57 $ 74,378 $ 0.57
Adjustments:(b)
Gains on sales of businesses, net of tax effects of $234 (1,189 ) (0.01 ) - -
Adjusted net income attributable to common shares $ 73,091 $ 0.56 $ 74,378 $ 0.57
Nine Months Ended September 30,
2020 Per Share(a) 2021 Per Share(a)
Net income attributable to common shares(a) $ 175,467 $ 1.35 $ 340,587 $ 2.61
Adjustments:(b)
Gains on sales of businesses, net of tax effects of $3,272 (5,089 ) (0.04 ) - -
Adjusted net income attributable to common shares $ 170,378 $ 1.31 $ 340,587 $ 2.61
(a) Net income attributable to common shares and earnings per common share are calculated based on the weighted average common shares outstanding, as presented in table III.
(b) Adjustments to net income attributable to common shares include estimated income tax and non-controlling interest impacts and are calculated based on the diluted weighted average common shares outstanding. The estimated income tax impact, which is determined using tax rates based on the nature of the adjustment and the jurisdiction in which the adjustment occurred, includes both current and deferred income tax expense or benefit.

21

XI. Net Income to Adjusted EBITDA Reconciliation

Business Outlook for the Year Ending December 31, 2021

(In millions, unaudited)

The following is a reconciliation of full year 2021 Adjusted EBITDA expectations as computed at the low and high points of the range to the closest comparable GAAP financial measure. Refer to table IX for the definition of Adjusted EBITDA and a discussion of Select Medical's use of Adjusted EBITDA in evaluating financial performance. Each item presented in the below table is an estimation of full year 2021 expectations.

Range
Non-GAAP Measure Reconciliation Low High
Net income attributable to Select Medical $ 402 $ 417
Net income attributable to non-controlling interests 98 98
Net income 500 515
Income tax expense 162 167
Interest income (5 ) (5 )
Interest expense 137 137
Equity in earnings of unconsolidated subsidiaries (44 ) (44 )
Income from operations 750 770
Stock compensation expense 29 29
Depreciation and amortization 201 201
Adjusted EBITDA $ 980 $ 1,000

22

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Select Medical Holdings Corporation published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 20:58:07 UTC.