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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file numbers: 001-34465

SELECT MEDICAL HOLDINGS CORPORATION

(Exact name of Registrant as specified in its Charter)


Delaware						20-1764048
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

4714 Gettysburg Road, P.O. Box 2034

Mechanicsburg, PA 17055

(Address of Principal Executive Offices and Zip code)

(717) 972-1100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SEM	New York Stock Exchange
		(NYSE)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as such Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 30, 2025, Select Medical Holdings Corporation had outstanding 123,817,591 shares of common stock.

Unless the context indicates otherwise, any reference in this report to “Holdings” refers to Select Medical Holdings Corporation and any reference to “Select” refers to Select Medical Corporation, the wholly owned operating subsidiary of Holdings, and any of Select’s subsidiaries. References to the “Company,” “we,” “us,” and “our” refer collectively to Holdings and Select.

Table of Contents

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION	3

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Condensed consolidated balance sheets	3

	Condensed consolidated statements of operations	4

	Condensed consolidated statements of comprehensive income	5

	Condensed consolidated statements of changes in equity and income	6

	Condensed consolidated statements of cash flows	8

	Notes to condensed consolidated financial statements	9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42

ITEM 4.	CONTROLS AND PROCEDURES	42

PART II	OTHER INFORMATION	43

ITEM 1.	LEGAL PROCEEDINGS	43

ITEM 1A.	RISK FACTORS	43

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	43

ITEM 4.	MINE SAFETY DISCLOSURES	43

ITEM 5.	OTHER INFORMATION	43

ITEM 6.	EXHIBITS	44

SIGNATURES

Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Select Medical Holdings Corporation

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)


	December 31, 2024		September 30, 2025
ASSETS
Current Assets:
Cash and cash equivalents	$	59,694	$	60,054
Accounts receivable	821,385		825,811
Prepaid income taxes	26,601		10,719

Other current assets	112,097		123,880
Total Current Assets	1,019,777		1,020,464
Operating lease right-of-use assets	908,095		939,083
Property and equipment, net	872,185		903,242
Goodwill	2,331,898		2,333,143
Identifiable intangible assets, net	103,183		101,425
Other assets	372,813		388,366
Total Assets	$	5,607,951	$	5,685,723
LIABILITIES AND EQUITY
Current Liabilities:
Overdrafts	$	25,803	$	—
Current operating lease liabilities	179,601		184,215
Current portion of long-term debt and notes payable	20,269		28,778
Accounts payable	142,157		167,102
Accrued and other liabilities	609,821		559,483








Total Current Liabilities	977,651		939,578
Non-current operating lease liabilities	787,124		818,586
Long-term debt, net of current portion	1,691,546		1,743,371
Non-current deferred tax liability	81,497		88,311
Other non-current liabilities	73,038		76,021
Total Liabilities	3,610,856		3,665,867
Commitments and contingencies (Note 14)
Redeemable non-controlling interests	10,167		8,651
Stockholders’ Equity:
Common stock, $0.001 par value, 700,000,000 shares authorized, 128,962,850 and 123,817,591 shares issued and outstanding at 2024 and 2025, respectively	129		124
Capital in excess of par	911,080		870,575
Retained earnings	770,146		824,813
Accumulated other comprehensive loss	—		(6,242)
Total Stockholders’ Equity	1,681,355		1,689,270
Non-controlling interests	305,573		321,935
Total Equity	1,986,928		2,011,205
Total Liabilities and Equity	$	5,607,951	$	5,685,723

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Select Medical Holdings Corporation

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share amounts)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2025		2024		2025
Revenue	$	1,271,582	$	1,363,445	$	3,874,541	$	4,056,196
Costs and expenses:
Cost of services, exclusive of depreciation and amortization	1,135,708		1,215,995		3,378,362		3,572,735
General and administrative	47,347		40,050		145,672		108,721
Depreciation and amortization	34,930		34,442		106,583		104,098
Total costs and expenses	1,217,985		1,290,487		3,630,617		3,785,554
Other operating income	1,302		—		3,300		1,592
Income from continuing operations before other income and expense	54,899		72,958		247,224		272,234
Other income and expense:
Loss on early retirement of debt	(10,939)		—		(10,939)		—
Equity in earnings of unconsolidated subsidiaries	33,069		12,992		53,481		39,122


Interest expense	(31,379)		(30,021)		(100,054)		(89,071)
Income from continuing operations before income taxes	45,650		55,929		189,712		222,285
Income tax expense from continuing operations	4,374		11,749		49,269		45,494
Income from continuing operations, net of tax	41,276		44,180		140,443		176,791
Discontinued operations:
Income from discontinued business	62,174		—		198,745		—
Income tax expense from discontinued business	22,435		—		46,240		—
Income from discontinued operations, net of tax	39,739		—		152,505		—
Net income	81,015		44,180		292,948		176,791
Less: Net income attributable to non-controlling interests	25,387		15,387		62,860		50,746
Net income attributable to Select Medical Holdings Corporation	$	55,628	$	28,793	$	230,088	$	126,045
Net income attributable to Select Medical Holdings Corporation’s common stockholders:
Income from continuing operations, net of tax	24,798		28,793		89,137		126,045
Income from discontinued operations, net of tax	30,830		—		140,951		—
Net income attributable to Select Medical Holdings Corporation’s common stockholders	$	55,628	$	28,793	$	230,088	$	126,045
Earnings per common share (Note 13):
Continuing operations - basic and diluted	$	0.19	$	0.23	$	0.69	$	1.00
Discontinued operations - basic and diluted	0.24		—		1.09		—
Total earnings per common share - basic and diluted	$	0.43	$	0.23	$	1.78	$	1.00

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Select Medical Holdings Corporation

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2024		2025		2024		2025
Net income	$	81,015	$	44,180	$	292,948	$	176,791
Other comprehensive loss, net of tax:
Gain (loss) on interest rate cap contract	30		(1,163)		5,723		(6,334)
Reclassification adjustment for (gains) losses included in net income	(5,812)		78		(48,630)		92
Net change, net of tax benefit of $1,826, $343, $13,550, and $1,971	(5,782)		(1,085)		(42,907)		(6,242)
Comprehensive income	75,233		43,095		250,041		170,549
Less: Comprehensive income attributable to non-controlling interests	25,387		15,387		62,860		50,746
Comprehensive income attributable to Select Medical Holdings Corporation	$	49,846	$	27,708	$	187,181	$	119,803

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

Select Medical Holdings Corporation

Condensed Consolidated Statements of Changes in Equity and Income

(unaudited)

(in thousands)


	For the Nine Months Ended September 30, 2025

		Total Stockholders’ Equity
	Common Stock Issued	Common Stock Par Value		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance at December 31, 2024	128,963	$	129	$	911,080	$	770,146	$	—	$	1,681,355	$	305,573	$	1,986,928
Net income attributable to Select Medical Holdings Corporation						56,681				56,681				56,681
Net income attributable to non-controlling interests										—		16,288		16,288
Cash dividends declared for common stockholders ($0.0625 per share)						(8,060)				(8,060)				(8,060)
Issuance of restricted stock	1	0		0						—				—

Vesting of restricted stock				3,892						3,892				3,892
Repurchase of common shares	(650)	(1)		(6,104)		(5,284)				(11,389)				(11,389)
Issuance of non-controlling interests										—		7,944		7,944

Distributions to and purchases of non-controlling interests										—		(12,183)		(12,183)
Redemption value adjustment on non-controlling interests						21				21				21
Other comprehensive loss								(3,106)		(3,106)				(3,106)

Balance at March 31, 2025	128,314	$	128	$	908,868	$	813,504	$	(3,106)	$	1,719,394	$	317,622	$	2,037,016
Net income attributable to Select Medical Holdings Corporation						40,571				40,571				40,571
Net income attributable to non-controlling interests										—		16,116		16,116
Cash dividends declared for common stockholders ($0.0625 per share)						(7,885)				(7,885)				(7,885)
Issuance of restricted stock	256	0		0						—				—

Vesting of restricted stock				4,032						4,032				4,032
Repurchase of common shares	(5,794)	(5)		(45,609)		(41,462)				(87,076)				(87,076)
Issuance of non-controlling interests										—		2,962		2,962
Distributions to and purchases of non-controlling interests				56						56		(12,972)		(12,916)

Other comprehensive loss								(2,051)		(2,051)				(2,051)

Balance at June 30, 2025	122,776	$	123	$	867,347	$	804,728	$	(5,157)	$	1,667,041	$	323,728	$	1,990,769
Net income attributable to Select Medical Holdings Corporation						28,793				28,793				28,793
Net income attributable to non-controlling interests										—		14,656		14,656
Cash dividends declared for common stockholders ($0.0625 per share)						(7,739)				(7,739)				(7,739)
Issuance of restricted stock	1,214	1		(1)						—				—
Forfeitures of unvested restricted stock	(15)	0		0		7				7				7
Vesting of restricted stock				4,248						4,248				4,248
Repurchase of common shares	(157)	0		(1,019)		(951)				(1,970)				(1,970)
Issuance of non-controlling interests										—		2,058		2,058

Distributions to and purchases of non-controlling interests										—		(18,507)		(18,507)
Redemption value adjustment on non-controlling interests						(25)				(25)				(25)

Other comprehensive loss								(1,085)		(1,085)				(1,085)

Balance at September 30, 2025	123,818	$	124	$	870,575	$	824,813	$	(6,242)	$	1,689,270	$	321,935	$	2,011,205

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	For the Nine Months Ended September 30, 2024

		Total Stockholders’ Equity
	Common Stock Issued	Common Stock Par Value		Capital in Excess of Par		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance at December 31, 2023	128,369	$	128	$	493,413	$	751,856	$	42,907	$	1,288,304	$	259,414	$	1,547,718
Net income attributable to Select Medical Holdings Corporation						96,897				96,897				96,897
Net income attributable to non-controlling interests										—		17,845		17,845
Cash dividends declared for common stockholders ($0.125 per share)						(16,045)				(16,045)				(16,045)
Issuance of restricted stock	1	0		0						—				—
Forfeitures of unvested restricted stock	(12)	0		0		14				14				14
Vesting of restricted stock				11,596						11,596				11,596

Issuance of non-controlling interests										—		4,002		4,002

Distributions to and purchases of non-controlling interests				394						394		(10,900)		(10,506)
Redemption value adjustment on non-controlling interests						(1,901)				(1,901)				(1,901)
Other comprehensive loss								(11,977)		(11,977)				(11,977)

Balance at March 31, 2024	128,358	$	128	$	505,403	$	830,821	$	30,930	$	1,367,282	$	270,361	$	1,637,643
Net income attributable to Select Medical Holdings Corporation						77,563				77,563				77,563
Net income attributable to non-controlling interests										—		14,863		14,863
Cash dividends declared for common stockholders ($0.125 per share)						(16,254)				(16,254)				(16,254)
Issuance of restricted stock	1,725	2		(2)						—				—
Forfeitures of unvested restricted stock	(6)	0		0		6				6				6
Vesting of restricted stock				14,408						14,408				14,408
Repurchase of common shares	(51)			(529)		(871)				(1,400)				(1,400)
Issuance of non-controlling interests										—		9,750		9,750
Distributions to and purchases of non-controlling interests										—		(4,598)		(4,598)
Redemption value adjustment on non-controlling interests						132				132				132
Other comprehensive loss								(25,148)		(25,148)				(25,148)

Balance at June 30, 2024	130,026	$	130	$	519,280	$	891,397	$	5,782	$	1,416,589	$	290,376	$	1,706,965
Net income attributable to Select Medical Holdings Corporation						55,628				55,628				55,628
Net income attributable to non-controlling interests										—		22,886		22,886
Cash dividends declared for common stockholders ($0.125 per share)						(16,194)				(16,194)				(16,194)
Issuance of restricted stock	1	0		0						—				—
Forfeitures of unvested restricted stock	(21)	0		0		21				21				21
Vesting of restricted stock				13,354						13,354				13,354
Repurchase of common shares	(466)			(8,745)		(7,779)				(16,524)				(16,524)
Issuance of non-controlling interests										—		3,662		3,662
Non-controlling interests acquired in business combination										—		10,465		10,465
Distributions to and purchases of non-controlling interests										—		(15,819)		(15,819)

Concentra initial public offering				334,852		133,118				467,970		43,228		511,198
Other comprehensive loss								(5,782)		(5,782)				(5,782)
Other						129				129		—		129
Balance at September 30, 2024	129,540	$	130	$	858,741	$	1,056,320	$	—	$	1,915,191	$	354,798	$	2,269,989

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Select Medical Holdings Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	For the Nine Months Ended September 30,
	2024		2025
Operating activities
Net income	$	292,948	$	176,791
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions from unconsolidated subsidiaries	30,436		42,815
Depreciation and amortization	158,151		104,098
Provision for expected credit losses	1,659		2,061
Equity in earnings of unconsolidated subsidiaries	(49,805)		(39,122)
Loss on extinguishment of debt	10,939		—
Gain on sale or disposal of assets	(1,111)		(47)
Stock compensation expense	39,399		12,179
Amortization of debt discount, premium, and issuance costs	2,279		2,353
Deferred income taxes	(34,941)		10,547
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable	(116,761)		(6,487)
Other current assets	7,856		(7,498)
Other assets	13,942		5,056
Accounts payable	(2,056)		17,772
Accrued expenses	39,497		(38,376)




Net cash provided by operating activities	392,432		282,142
Investing activities
Business combinations, net of cash acquired	(2,311)		(1,601)
Purchases of property and equipment	(158,748)		(170,125)

Proceeds from sales and exchange of assets	4,241		22,132
Net cash used in investing activities	(156,818)		(149,594)
Financing activities
Borrowings on revolving facilities	950,000		970,000
Payments on revolving facilities	(1,220,000)		(925,000)
Proceeds from term loans, net of issuance costs	836,697		—
Payments on term loans	(1,719,503)		(7,875)
Proceeds from 6.875% senior notes, net of issuance costs	637,337		—


Borrowings of other debt	20,806		41,522
Principal payments on other debt	(35,782)		(25,965)
Dividends paid to common stockholders	(48,493)		(23,684)
Repurchases of common stock	(17,924)		(99,535)

Decrease in overdrafts	(16,101)		(25,803)
Proceeds from issuance of non-controlling interests	9,413		12,964
Distributions to and purchases of non-controlling interests	(35,800)		(48,812)
Proceeds from Concentra initial public offering (Note 4)	511,198		—
Net cash used in financing activities	(128,152)		(132,188)
Net increase in cash and cash equivalents	107,462		360
Cash and cash equivalents at beginning of period	84,006		59,694
Cash and cash equivalents at end of period	$	191,468	$	60,054
Supplemental information
Cash paid for interest, excluding amounts received of $68,069 under the interest rate cap contract during the nine months ended September 30, 2024	$	216,757	$	84,002
Cash paid for taxes	102,696		22,118

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SELECT MEDICAL HOLDINGS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. 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 September 30, 2025, and for the three and nine month periods ended September 30, 2024 and 2025, 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 and nine months ended September 30, 2025, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2025. 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, 2024, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 20, 2025.

See Note 4. Dispositions for discussion on the distribution of Concentra Group Holdings Parent, Inc. (“Concentra”) that occurred in the fourth quarter of 2024.

2. Accounting Policies

Recent Accounting Guidance Not Yet Adopted

Income Taxes

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to improve the transparency and decision usefulness of income tax disclosures. The ASU requires disclosure of a tabular rate reconciliation using specified categories and additional information for reconciling items that exceed a quantitative threshold. The amendments in the update also require annual disclosure of income taxes paid, disaggregated by federal, state, and foreign taxes, as well as any individual jurisdictions in which income taxes paid is greater than 5% of total income taxes paid.

The ASU should be applied prospectively, though retrospective application is permitted. The Company will adopt ASU 2023-09 beginning with our annual reporting period ending December 31, 2025. The adoption of ASU 2023-09 will result in expanded disclosures within the income tax footnote.

Expense Disaggregation

In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which is intended to improve the disclosures of expenses by providing more detailed information about the types of expenses in commonly presented expense captions. The ASU requires entities to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included in each relevant expense caption; as well as a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The amendment also requires disclosure of the total amount of selling expense and, in annual reporting periods, an entity’s definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027; however early adoption is permitted. The ASU can be applied either prospectively or retrospectively. The Company is currently reviewing the impact that ASU 2024-03 will have on the disclosures in our consolidated financial statements.

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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.

3. Equity Method Investments

On September 26, 2025, a wholly-owned subsidiary of the Company contributed a recently constructed hospital to BHSM Rehabilitation, LLC (“Banner”) in exchange for an equity interest in Banner. The carrying value and fair value of the building was $45.8 million. As part of this transaction, Banner made a special distribution to each of its equity holders based on their respective ownership interest. The Company’s distribution was $23.3 million, $22.1 million of which is included in Proceeds from sales and exchange of assets on the Condensed Consolidated Statement of Cash Flows, and $1.3 million of which is a distribution receivable and is included in Other current assets on the Condensed Consolidated Balance Sheet. Our equity method investments are included in Other assets on the Condensed Consolidated Balance Sheets.

4. Dispositions

On July 26, 2024, Concentra, a then wholly-owned subsidiary of Select, completed an initial public offering (“IPO”) of 22,500,000 shares of its common stock, par value $0.01 per share, at an initial public offering price of $23.50 per share for net proceeds of $499.7 million after deducting underwriting discounts and commission of $29.1 million. In addition, the underwriters exercised the option to purchase an additional 750,000 shares of Concentra’s common stock for net proceeds of $16.7 million after deducting discounts and commission of $1.0 million. On November 25, 2024, Select completed a tax-free distribution of 104,093,503 shares of common stock of Concentra to its stockholders. Following the completion of the distribution, the Company no longer owns any shares of Concentra common stock.

In connection with the separation and distribution of Concentra’s common stock, the Company and Concentra also entered into several agreements to provide a framework of our ongoing relationship with Concentra, including a transition services agreement (“TSA”), a separation agreement, a tax matters agreement and an employee matters agreement. The services under the TSA generally are a continuation of the support services provided by Select to Concentra prior to the IPO. The fee for support services provided to Concentra was $2.7 million and $9.9 million for the three and nine months ended September 30, 2025, respectively. The income from the support services fees, as well as the cost to provide these services, are included within General and Administrative expense on the condensed consolidated statements of operations. The provision of services under the TSA will terminate no later than November 26, 2026.

The results of Concentra are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the three and nine months ended September 30, 2024.

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Certain key selected financial information included in Income from discontinued operations, net of tax, for Concentra is as follows:


	For the Three Months Ended September 30, 2024		For the Nine Months Ended September 30, 2024

Revenue	$	489,638	$	1,435,151
Costs and expenses:
Cost of services, exclusive of depreciation and amortization	388,191		1,138,191

Depreciation and amortization	15,213		51,568
Total costs and expenses	403,404		1,189,759
Other operating income	—		284
Income from operations	86,234		245,676
Other income and expense:

Equity in earnings of unconsolidated subsidiaries	—		(3,676)


Interest expense(1)	(24,060)		(43,255)
Income from discontinued operations before income taxes	62,174		198,745
Income tax expense	22,435		46,240
Income from discontinued operations, net of tax	39,739		152,505
Less: Net income attributable to non-controlling interests	8,909		11,554
Income from discontinued operations, net of tax, attributable to Select Medical Holdings Corporation’s common stockholders	$	30,830	$	140,951

_______________________________________________________________________________

(1) For the three and nine months ended September 30, 2024, interest expense includes allocated interest expense of $2.7 million and $22.0 million, respectively. Interest was allocated in accordance with the terms of an intercompany promissory note in place between the Company and Concentra prior to the separation.

The following is selected financial information included on the Condensed Consolidated Statements of Cash Flows for Concentra:


	For the Nine Months Ended September 30, 2024

Depreciation and amortization	$	51,568
Cash flows from investing activities:
Purchases of property and equipment	$	47,639

5. 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 21% of the Company’s accounts receivable is due from Medicare at both December 31, 2024, and September 30, 2025.

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6. Leases

The Company’s total lease cost is as follows:


	Three Months Ended September 30, 2024						Three Months Ended September 30, 2025
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
	(in thousands)
Operating lease cost	$	58,016	$	1,834	$	59,850	$	60,703	$	1,834	$	62,537
Finance lease cost:
Amortization of right-of-use assets	143		—		143		143		—		143
Interest on lease liabilities	248		—		248		235		—		235

Variable lease cost	12,083		—		12,083		12,813		—		12,813
Sublease income	(1,718)		—		(1,718)		(1,920)		—		(1,920)
Total lease cost	$	68,772	$	1,834	$	70,606	$	71,974	$	1,834	$	73,808


	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2025
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
	(in thousands)
Operating lease cost	$	168,436	$	5,501	$	173,937	$	179,402	$	5,501	$	184,903
Finance lease cost:
Amortization of right-of-use assets	429		—		429		429		—		429
Interest on lease liabilities	741		—		741		709		—		709

Variable lease cost	35,785		16		35,801		38,160		—		38,160
Sublease income	(5,159)		—		(5,159)		(5,445)		—		(5,445)
Total lease cost	$	200,232	$	5,517	$	205,749	$	213,255	$	5,501	$	218,756

7. Accrued and other liabilities

The following table sets forth the components of accrued and other liabilities on the Condensed Consolidated Balance Sheets:


	December 31, 2024		September 30, 2025

Accrued payroll	$	183,045	$	170,180
Accrued vacation	122,376		125,059
Accrued interest	9,075		13,169
Accrued other	288,681		247,563
Income taxes payable	6,644		3,512
Accrued and other liabilities	$	609,821	$	559,483

8. Interest Rate Cap

The Company is subject to market risk exposure arising from changes in interest rates on the Select term loan, which bears interest at a rate that is indexed to one-month Term Secured Overnight Financing Rate (“SOFR”). The Company’s objective in using an interest rate derivative is to mitigate its exposure to increases in interest rates. The Company had an interest rate cap which matured on September 30, 2024. During the three months ended March 31, 2025, the Company entered into a new interest rate cap with a scheduled maturity of March 31, 2028. The interest rate cap limits the Company’s exposure to increases in the variable rate index to 4.5% on $1.0 billion of principal outstanding under the term loan, as the interest rate cap provides for payments from the counterparty when interest rates rise above 4.5%. The interest rate cap has a deferred premium that the Company will pay monthly over the term of the agreement. The annual premium is equal to 0.3300% of the notional amount, or approximately $3.3 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 the variable rate index exceeds 4.5%. Changes in the fair value of the interest rate cap, net of tax, are recognized in other comprehensive loss and reclassified out of accumulated other comprehensive loss and into interest expense when the hedged interest obligations affected earnings.

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The following table outlines the changes in accumulated other comprehensive income (loss), net of tax, during the periods presented:


	Nine Months Ended September 30,
	2024		2025
	(in thousands)
Balance as of January 1	$	42,907	$	—
Gain (loss) on interest rate cap cash flow hedge	4,370		(3,106)
Amounts reclassified from accumulated other comprehensive income (loss)	(16,347)		—
Balance as of March 31	$	30,930	$	(3,106)
Gain (loss) on interest rate cap cash flow hedge	1,323		(2,065)
Amounts reclassified from accumulated other comprehensive income (loss)	(16,071)		14
Amounts reclassified from accumulated other comprehensive income (loss) - forecasted transactions probable not to occur	(10,400)		—
Balance as of June 30	$	5,782	$	(5,157)
Gain (loss) on interest rate cap cash flow hedge	30		(1,163)
Amounts reclassified from accumulated other comprehensive income (loss)	(5,812)		78
Balance as of September 30	$	—	$	(6,242)

The effects on net income of amounts reclassified from accumulated other comprehensive income (loss) are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
Statement of Operations	2024		2025		2024		2025
	(in thousands)
Gains (losses) included in interest expense	$	7,647	$	(103)	$	63,987	$	(121)
Income tax benefit (expense)	(1,835)		25		(15,357)		29
Amounts reclassified from accumulated other comprehensive income (loss)	$	5,812	$	(78)	$	48,630	$	(92)

The Company expects that approximately $2.0 million of estimated pre-tax losses will be reclassified from accumulated other comprehensive loss into interest expense within the next twelve months.

Refer to Note 9 – Fair Value of Financial Instruments for information on the fair value of the Company’s interest rate cap contract and its balance sheet classification.

9. 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

September 30, 2025

Liability:

(in thousands)

Interest rate cap contract, current portion

Accrued other

Level 2

3,207

Interest rate cap contract, non-current portion

Other non-current liabilities

Level 2

3,450

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The Company does not measure its indebtedness at fair value in its condensed consolidated balance sheets. The fair value of the credit facilities are based on quoted market prices for this debt in the syndicated loan market. The fair values of the senior notes are based on quoted market prices. The carrying value of the Company’s other debt, as disclosed in Note 10 – Long-Term Debt and Notes Payable, approximates fair value.


		December 31, 2024				September 30, 2025
Financial Instrument	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
		(in thousands)
6.250% senior notes	Level 2	$	539,363	$	528,000	$	540,362	$	550,275
Credit facilities:
Revolving facility	Level 2	105,000		102,900		150,000		147,750
Term loan	Level 2	1,041,661		1,051,313		1,034,717		1,043,428

The Company’s other financial instruments, which primarily consist of cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value because of the short-term maturities of these instruments.

10. Long-Term Debt and Notes Payable

As of September 30, 2025, the Company’s long-term debt and notes payable are as follows:


	Principal Outstanding		Unamortized Premium (Discount)		Unamortized Issuance Costs		Carrying Value		Fair Value
	(in thousands)
6.250% senior notes	$	550,000	$	—	$	(9,638)	$	540,362	$	550,275
Credit facilities:
Revolving facility	150,000		—		—		150,000		147,750
Term loan	1,042,125		(2,392)		(5,016)		1,034,717		1,043,428
Other debt, including finance leases	47,506		—		(436)		47,070		47,070
Total debt	$	1,789,631	$	(2,392)	$	(15,090)	$	1,772,149	$	1,788,523

Principal maturities of the Company’s long-term debt and notes payable are approximately as follows:


	2025		2026		2027		2028		2029		Thereafter		Total
	(in thousands)
6.250% senior notes	$	—	$	—	$	—	$	—	$	—	$	550,000	$	550,000
Credit facilities:
Revolving facility	—		—		—		—		150,000		—		150,000
Term loan	2,625		10,500		10,500		10,500		10,500		997,500		1,042,125
Other debt, including finance leases	8,686		11,034		1,637		54		58		26,037		47,506
Total debt	$	11,311	$	21,534	$	12,137	$	10,554	$	160,558	$	1,573,537	$	1,789,631

As of December 31, 2024, the Company’s long-term debt and notes payable are as follows:


	Principal Outstanding		Unamortized Premium (Discount)		Unamortized Issuance Costs		Carrying Value		Fair Value
	(in thousands)
6.250% senior notes	$	550,000	$	—	$	(10,637)	$	539,363	$	528,000
Credit facilities:
Revolving facility	105,000		—		—		105,000		102,900
Term loan	1,050,000		(2,693)		(5,646)		1,041,661		1,051,313
Other debt, including finance leases	26,282		—		(491)		25,791		25,791
Total debt	$	1,731,282	$	(2,693)	$	(16,774)	$	1,711,815	$	1,708,004

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11. Segment Information

The Company identifies its segments according to how the chief operating decision maker evaluates financial performance and allocates resources. The Company’s reportable segments consist of the critical illness recovery hospital segment, rehabilitation hospital segment, and outpatient rehabilitation segment. Other activities include the Company’s corporate shared services, certain investments, and employee leasing services with non-consolidating subsidiaries.

The Company’s chief operating decision maker is its Executive Chairman. The chief operating decision maker uses Adjusted EBITDA in the annual budgeting and forecasting process. The chief operating decision maker considers budget-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. The chief operating decision maker also uses segment Adjusted EBITDA to assess the performance of each segment by comparing the results of each segment to one another and to each segment’s budget. Adjusted EBITDA is defined as earnings from continuing operations excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, transaction costs associated with the Concentra separation, 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 September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Revenue	$	582,950	$	282,709	$	312,042	$	93,881	$	1,271,582
Personnel expense	341,219		161,892		221,446
Other segment items (1)	190,968		60,700		62,277
Adjusted EBITDA	50,763		60,117		28,319
Total assets	2,658,301		1,294,125		1,414,009		162,937		5,529,372
Capital expenditures	16,208		10,595		8,402		333		35,538


	Three Months Ended September 30, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Revenue	$	609,929	$	328,607	$	325,383	$	99,526	$	1,363,445
Personnel expense	350,015		186,452		234,666
Other segment items (1)	203,812		74,199		66,519
Adjusted EBITDA	56,102		67,956		24,198
Total assets	2,631,998		1,478,363		1,415,655		159,707		5,685,723
Capital expenditures	18,186		25,608		8,959		349		53,102


	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Revenue	$	1,843,751	$	816,240	$	930,696	$	283,854	$	3,874,541
Personnel expense	1,032,664		459,827		659,024
Other segment items (1)	572,551		172,942		189,656
Adjusted EBITDA	238,536		183,471		82,016
Total assets	2,658,301		1,294,125		1,414,009		162,937		5,529,372
Capital expenditures	49,765		32,514		26,064		2,766		111,109

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	Nine Months Ended September 30, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Revenue	$	1,848,098	$	949,770	$	960,309	$	298,019	$	4,056,196
Personnel expense	1,047,408		532,703		685,793
Other segment items (1)	601,656		207,640		195,532
Adjusted EBITDA	199,034		209,427		78,984
Total assets	2,631,998		1,478,363		1,415,655		159,707		5,685,723
Capital expenditures	58,096		82,878		27,850		1,301		170,125

(1) Other segment items consist of facilities expense, other operating expenses, and other operating income.

A reconciliation of Adjusted EBITDA to income from continuing operations before income taxes is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2025		2024		2025
	(in thousands)
Adjusted EBITDA - Critical Illness Recovery Hospital Segment	$	50,763	$	56,102	$	238,536	$	199,034
Adjusted EBITDA - Rehabilitation Hospital Segment	60,117		67,956		183,471		209,427
Adjusted EBITDA - Outpatient Rehabilitation Segment	28,319		24,198		82,016		78,984
Other revenue	93,881		99,526		283,854		298,019
Other cost of services (1)	(93,881)		(99,526)		(283,854)		(298,019)
Other general and administrative expenses (1)	(35,570)		(36,601)		(109,890)		(99,006)
Other other operating income	269		—		269		72
Depreciation and amortization	(34,930)		(34,442)		(106,583)		(104,098)
Stock compensation expense	(13,208)		(4,255)		(38,899)		(12,179)
Concentra separation transaction costs	(861)		—		(1,696)		—
Loss on early retirement of debt	(10,939)		—		(10,939)		—
Equity in earnings of unconsolidated subsidiaries	33,069		12,992		53,481		39,122


Interest expense	(31,379)		(30,021)		(100,054)		(89,071)
Income from continuing operations before income taxes	$	45,650	$	55,929	$	189,712	$	222,285

_______________________________________________________________________________

(1) Exclusive of depreciation, amortization and stock compensation expense.

12. Revenue from Contracts with Customers

The following tables disaggregate the Company’s revenue for the three and nine months ended September 30, 2024 and 2025:


	Three Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	182,952	$	124,386	$	48,804	$	—	$	356,142
Non-Medicare	399,091		145,536		245,064		—		789,691
Total patient services revenues	582,043		269,922		293,868		—		1,145,833
Other revenue	907		12,787		18,174		93,881		125,749
Total revenue	$	582,950	$	282,709	$	312,042	$	93,881	$	1,271,582

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	Three Months Ended September 30, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	196,245	$	143,749	$	48,549	$	—	$	388,543
Non-Medicare	412,675		171,653		257,136		—		841,464
Total patient services revenues	608,920		315,402		305,685		—		1,230,007
Other revenue	1,009		13,205		19,698		99,526		133,438
Total revenue	$	609,929	$	328,607	$	325,383	$	99,526	$	1,363,445


	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	603,981	$	370,216	$	142,658	$	—	$	1,116,855
Non-Medicare	1,237,023		408,024		732,895		—		2,377,942
Total patient services revenues	1,841,004		778,240		875,553		—		3,494,797
Other revenue	2,747		38,000		55,143		283,854		379,744
Total revenue	$	1,843,751	$	816,240	$	930,696	$	283,854	$	3,874,541


	Nine Months Ended September 30, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	588,356	$	429,463	$	142,587	$	—	$	1,160,406
Non-Medicare	1,256,765		480,481		760,184		—		2,497,430
Total patient services revenues	1,845,121		909,944		902,771		—		3,657,836
Other revenue	2,977		39,826		57,538		298,019		398,360
Total revenue	$	1,848,098	$	949,770	$	960,309	$	298,019	$	4,056,196

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13. 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)Income attributable to the Company from continuing operations, net of tax, 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 and nine months ended September 30, 2024 and 2025.

(ii)The remaining undistributed income of the Company from continuing operations, net of tax, 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 income from continuing operations, net of tax, 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 income attributable to the Company from continuing operations, net of tax, and the Company’s common shares outstanding, and its participating securities outstanding.


	Basic and Diluted EPS
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2025		2024		2025
	(in thousands)
Income from continuing operations, net of tax	$	41,276	$	44,180	$	140,443	$	176,791
Less: net income attributable to non-controlling interests	16,478		15,387		51,306		50,746
Income from continuing operations, net of tax, attributable to Select Medical Holdings Corporation’s common stockholders	24,798		28,793		89,137		126,045
Less: distributed and undistributed net income attributable to participating securities	956		706		3,462		2,727
Distributed and undistributed income from continuing operations, net of tax, attributable to common shares	$	23,842	$	28,087	$	85,675	$	123,318

The following tables set forth the computation of EPS under the two-class method:


	Three Months Ended September 30,
	2024					2025
	Income from Continuing Operations, Net of Tax, Allocation		Shares(1)	Basic and Diluted EPS		Income from Continuing Operations, Net of Tax, Allocation		Shares(1)	Basic and Diluted EPS
	(in thousands, except for per share amounts)
Common shares	$	23,842	124,714	$	0.19	$	28,087	120,476	$	0.23
Participating securities	956		5,001	$	0.19	706		3,030	$	0.23
Total Company	$	24,798				$	28,793


	Nine Months Ended September 30,
	2024					2025
	Income from Continuing Operations, Net of Tax, Allocation		Shares(1)	Basic and Diluted EPS		Income from Continuing Operations, Net of Tax, Allocation		Shares(1)	Basic and Diluted EPS
	(in thousands, except for per share amounts)
Common shares	$	85,675	124,175	$	0.69	$	123,318	123,326	$	1.00
Participating securities	3,462		5,017	$	0.69	2,727		2,727	$	1.00
Total Company	$	89,137				$	126,045

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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

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14. 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 hospital and outpatient clinic operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $42.0 million for professional malpractice liability insurance and $45.0 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 applicable professional malpractice and general liability insurance policies, including workers compensation, property and casualty, directors and officers, cyber liability insurance, and employment practices liability insurance coverages. Our insurance policies generally are silent with respect to punitive damages so coverage is available to the extent insurable under the law of any applicable jurisdiction, 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 Investigation. On August 24, 2020, the Company and Select Specialty Hospital – Oklahoma City, Inc. (“SSH–Oklahoma City”) received civil investigative demands (“CIDs”) 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 understands that the investigation arose from a qui tam lawsuit alleging billing fraud related to charges for respiratory therapy services at SSH–Oklahoma City and Select Specialty Hospital – Wichita, Inc. The Company has produced documents in response to the CIDs and is fully cooperating with this investigation. 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 letter from a Trial Attorney at the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Fraud Section (“DOJ”) stating that the DOJ, in conjunction with the U.S. Department of Health and Human Services (“HHS”), 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 for physical therapy services, and indicated that the DOJ would be requesting certain records from the Company. In October and December 2021, the DOJ requested, and the Company furnished, records relating to six of the Company’s outpatient therapy clinics in Florida. In 2022 and 2023, the DOJ requested certain data relating to all of the Company’s outpatient therapy clinics nationwide, and sought information about the Company’s ability to produce additional data relating to the physical therapy services furnished by the Company’s outpatient therapy clinics and Concentra. The Company has produced data and other documents requested by the DOJ and is fully cooperating on this investigation. In May

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2024, by order of the U.S. District Court for the Middle District of Florida (the “Court”), a qui tam lawsuit that is related to the DOJ’s investigation was unsealed after the U.S. filed a notice declining to intervene in the case, but stating that its investigation is continuing and reserving its right to intervene at a later date. The lawsuit, filed in May 2021 and amended by a first amended complaint in October 2021 and by a second amended complaint in July 2024, was brought by Kathleen Kane, a physical therapist formerly employed in the Company’s outpatient division, against Select Medical Corporation, Select Physical Therapy Holdings, Inc., and Select Employment Services, Inc. The second amended complaint alleged that the defendants billed Federally funded health programs for one-on-one therapy services when group therapy was performed or overbilled for one-on-one therapy services, and billed for unreimbursable unskilled physical therapy services. In June 2025, the Court granted the Company's motion to dismiss the second amended complaint, and allowed Ms. Kane a final opportunity to amend her lawsuit. In July 2025, Ms. Kane filed her third amended complaint, which contains substantially the same allegations as the second amended complaint. In August 2025, the Company filed a motion to dismiss the third amended complaint on multiple grounds. At this time, the Company is unable to predict the timing and outcome of this matter.

15. Subsequent Events

On October 29, 2025, the Company’s Board of Directors declared a cash dividend of $0.0625 per share. The dividend will be payable on or about November 25, 2025, to stockholders of record as of the close of business on November 12, 2025.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion together with our unaudited condensed consolidated financial statements and accompanying notes.

Forward-Looking Statements

This report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “target,” “estimate,” “project,” “intend,” and similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, including our business strategy and means to implement our strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs, and sources of liquidity.

Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding our services, the expansion of our services, competitive conditions, and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

•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;

•adverse economic conditions including an inflationary environment could cause us to continue to experience increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results, cash flows, and financial condition;

•changes to United States tariff and import/export regulations and the impact on global economic conditions may have a negative effect on our business, financial condition, and results of operations;

•shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability to attract or retain qualified healthcare professionals could limit our ability to staff our facilities;

•shortages in qualified health professionals could cause us to increase our dependence on contract labor, increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase our operating costs significantly;

•the negative impact of public threats such as a global pandemic or widespread outbreak of an infectious disease similar to the COVID-19 pandemic;

•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;

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•the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability;

•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;

•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 SEC, including factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and in our Quarterly Report on Form 10-Q.

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.

Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to securities analysts any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any securities analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of the Company.

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Overview

We began operations in 1997 and, based on number of facilities, are one of the largest operators of critical illness recovery hospitals, rehabilitation hospitals, and outpatient rehabilitation clinics in the United States. As of September 30, 2025, we had operations in 40 states and the District of Columbia. We operated 105 critical illness recovery hospitals in 29 states, 36 rehabilitation hospitals in 14 states, and 1,922 outpatient rehabilitation clinics in 39 states and the District of Columbia.

Our reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, and the outpatient rehabilitation segment. We had revenue of $4,056.2 million for the nine months ended September 30, 2025. Of this total, we earned approximately 46% of our revenue from our critical illness recovery hospital segment, approximately 23% from our rehabilitation hospital segment, and approximately 24% from our outpatient rehabilitation segment. Our critical illness recovery hospital segment consists of hospitals designed to serve the needs of patients recovering from critical illnesses, often with complex medical needs, and our rehabilitation hospital segment consists of hospitals designed to serve patients that require intensive physical rehabilitation care. Patients are typically admitted to our critical illness recovery hospitals and rehabilitation hospitals from general acute care hospitals. Our outpatient rehabilitation segment consists of clinics that provide physical, occupational, and speech rehabilitation services.

On July 26, 2024, Concentra Group Holdings Parent, Inc. (“Concentra”), a then wholly-owned subsidiary of Select, completed an initial public offering of 22,500,000 shares of its common stock, par value $0.01 per share, at an initial public offering price of $23.50 per share for net proceeds of $499.7 million after deducting underwriting discounts and commission of $29.1 million. In addition, the underwriters exercised the option to purchase an additional 750,000 shares of Concentra’s common stock for net proceeds of $16.7 million after deducting discounts and commission of $1.0 million. On November 25, 2024, Select completed a tax-free distribution of 104,093,503 shares of common stock of Concentra to its stockholders. Following the completion of the distribution, the Company no longer owns any shares of Concentra common stock. The results of Concentra are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the three and nine months ended September 30, 2024.

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Non-GAAP Measure

We believe that the presentation of Adjusted EBITDA, as defined below, 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 by management to evaluate financial performance and determine resource allocation for each of our segments. Adjusted EBITDA is not a measure of financial performance under 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, income from continuing operations, income from continuing operations before other income and expense, 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.

We define Adjusted EBITDA as earnings from continuing operations excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, transaction costs associated with the Concentra separation, gain (loss) on sale of businesses, and equity in earnings (losses) of unconsolidated subsidiaries. We will refer to Adjusted EBITDA throughout the remainder of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following table reconciles income from continuing operations, net of tax, to Adjusted EBITDA and should be referenced when we discuss Adjusted EBITDA:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2025		2024		2025
	(in thousands)
Income from continuing operations, net of tax	$	41,276	$	44,180	$	140,443	$	176,791
Income tax expense from continuing operations	4,374		11,749		49,269		45,494
Interest expense	31,379		30,021		100,054		89,071


Equity in earnings of unconsolidated subsidiaries	(33,069)		(12,992)		(53,481)		(39,122)
Loss on early retirement of debt	10,939		—		10,939		—
Income from continuing operations before other income and expense	54,899		72,958		247,224		272,234
Stock compensation expense:
Included in general and administrative	10,961		3,448		32,517		9,714
Included in cost of services	2,247		807		6,382		2,465
Depreciation and amortization	34,930		34,442		106,583		104,098
Concentra separation transaction costs	861		—		1,696		—
Adjusted EBITDA	$	103,898	$	111,655	$	394,402	$	388,511

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Summary Financial Results

Three Months Ended September 30, 2025

The following tables reconcile our segment performance measures to our consolidated operating results:


	Three Months Ended September 30, 2025
	Critical Illness Recovery Hospital			Rehabilitation Hospital			Outpatient Rehabilitation			Other		Total
	(in thousands)
Revenue	$	609,929		$	328,607		$	325,383		$	99,526	$	1,363,445
Operating expenses	(553,827)			(260,651)			(301,185)			(140,382)		(1,256,045)
Depreciation and amortization	(16,146)			(7,571)			(9,082)			(1,643)		(34,442)

Income (loss) from continuing operations before other income and expense	$	39,956		$	60,385		$	15,116		$	(42,499)	$	72,958
Depreciation and amortization	16,146			7,571			9,082			1,643		34,442

Stock compensation expense	—			—			—			4,255		4,255
Adjusted EBITDA	$	56,102		$	67,956		$	24,198		$	(36,601)	$	111,655
Adjusted EBITDA margin	9.2		%	20.7		%	7.4		%	N/M		8.2		%


	Three Months Ended September 30, 2024
	Critical Illness Recovery Hospital			Rehabilitation Hospital			Outpatient Rehabilitation			Other		Total
	(in thousands)
Revenue	$	582,950		$	282,709		$	312,042		$	93,881	$	1,271,582
Operating expenses	(533,220)			(222,592)			(283,723)			(143,520)		(1,183,055)
Depreciation and amortization	(17,032)			(6,829)			(9,121)			(1,948)		(34,930)
Other operating income	1,033			—			—			269		1,302
Income (loss) from continuing operations before other income and expense	$	33,731		$	53,288		$	19,198		$	(51,318)	$	54,899
Depreciation and amortization	17,032			6,829			9,121			1,948		34,930
Concentra separation transaction costs	—			—			—			861		861
Stock compensation expense	—			—			—			13,208		13,208
Adjusted EBITDA	$	50,763		$	60,117		$	28,319		$	(35,301)	$	103,898
Adjusted EBITDA margin	8.7		%	21.3		%	9.1		%	N/M		8.2		%

Income from continuing operations, net of tax, was $44.2 million for the three months ended September 30, 2025, compared to $41.3 million for the three months ended September 30, 2024.

The following table summarizes changes in segment performance measures for the three months ended September 30, 2025, compared to the three months ended September 30, 2024:


	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
Change in revenue	4.6	%	16.2	%	4.3	%	6.0	%	7.2	%
Change in income from continuing operations before other income and expense	18.5	%	13.3	%	(21.3)	%	N/M		32.9	%
Change in Adjusted EBITDA	10.5	%	13.0	%	(14.6)	%	N/M		7.5	%

_______________________________________________________________________________

N/M Not meaningful.

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Nine Months Ended September 30, 2025

The following tables reconcile our segment performance measures to our consolidated operating results:


	Nine Months Ended September 30, 2025
	Critical Illness Recovery Hospital			Rehabilitation Hospital			Outpatient Rehabilitation			Other		Total
	(in thousands)
Revenue	$	1,848,098		$	949,770		$	960,309		$	298,019	$	4,056,196
Operating expenses	(1,650,584)			(740,343)			(881,325)			(409,204)		(3,681,456)
Depreciation and amortization	(49,415)			(22,441)			(27,191)			(5,051)		(104,098)
Other operating income	1,520			—			—			72		1,592
Income (loss) from continuing operations before other income and expense	$	149,619		$	186,986		$	51,793		$	(116,164)	$	272,234
Depreciation and amortization	49,415			22,441			27,191			5,051		104,098

Stock compensation expense	—			—			—			12,179		12,179
Adjusted EBITDA	$	199,034		$	209,427		$	78,984		$	(98,934)	$	388,511
Adjusted EBITDA margin	10.8		%	22.1		%	8.2		%	N/M		9.6		%


	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital			Rehabilitation Hospital			Outpatient Rehabilitation			Other		Total
	(in thousands)
Revenue	$	1,843,751		$	816,240		$	930,696		$	283,854	$	3,874,541
Operating expenses	(1,608,248)			(632,769)			(848,678)			(434,339)		(3,524,034)
Depreciation and amortization	(51,779)			(21,185)			(27,441)			(6,178)		(106,583)
Other operating income (loss)	3,033			—			(2)			269		3,300
Income (loss) from continuing operations before other income and expense	$	186,757		$	162,286		$	54,575		$	(156,394)	$	247,224
Depreciation and amortization	51,779			21,185			27,441			6,178		106,583
Concentra separation transaction costs	—			—			—			1,696		1,696
Stock compensation expense	—			—			—			38,899		38,899
Adjusted EBITDA	$	238,536		$	183,471		$	82,016		$	(109,621)	$	394,402
Adjusted EBITDA margin	12.9		%	22.5		%	8.8		%	N/M		10.2		%

Income from continuing operations, net of tax, was $176.8 million for the nine months ended September 30, 2025, compared to $140.4 million for the nine months ended September 30, 2024.

The following table summarizes the changes in our segment performance measures for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024:


	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
Change in revenue	0.2	%	16.4	%	3.2	%	5.0	%	4.7	%
Change in income from continuing operations before other income and expense	(19.9)	%	15.2	%	(5.1)	%	N/M		10.1	%
Change in Adjusted EBITDA	(16.6)	%	14.1	%	(3.7)	%	N/M		(1.5)	%

_______________________________________________________________________________

N/M Not meaningful.

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Regulatory Changes

Our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025, contains a detailed discussion of the regulations that affect our business in Part I — Business — Government Regulations. The following is a discussion of some of the more significant healthcare regulatory changes that have affected our financial performance in the periods covered by this report, or are likely to affect our financial performance and financial condition in the future. The information below should be read in conjunction with the more detailed discussion of regulations contained in our Form 10-K.

Medicare Reimbursement

The Medicare program reimburses healthcare providers for services furnished to Medicare beneficiaries, which are generally persons age 65 and older, those who are chronically disabled, and those suffering from end stage renal disease. The program is governed by the Social Security Act of 1965 and is administered primarily by the Department of Health and Human Services (“HHS”) and CMS. Revenue generated directly from the Medicare program represented approximately 29% of our revenue for both the nine months ended September 30, 2025, and for the year ended December 31, 2024.

Federal Health Care Program Changes in Response to the COVID-19 Pandemic

On January 31, 2020, HHS declared a public health emergency under section 319 of the Public Health Service Act, 42 U.S.C. § 247d, in response to the COVID-19 outbreak in the United States. The HHS Secretary subsequently renewed the public health emergency determination for 90-day periods through May 11, 2023, the end of the public health emergency.

On March 13, 2020, President Trump declared a national emergency due to the COVID-19 pandemic and the HHS Secretary authorized the waiver or modification of certain requirements under Medicare, Medicaid, and the CHIP program pursuant to section 1135 of the Social Security Act. Under this authority, CMS issued a number of blanket waivers that excused health care providers and suppliers from specific program requirements. Our Annual Report on Form 10-K for the year ended December 31, 2023 contains a detailed discussion of blanket waivers and other actions by CMS in response to the COVID-19 pandemic that affected our operations in Part II — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Changes.

The American Relief Act, 2025 and Full-Year Continuing Appropriations and Extensions Act, 2025, further extended certain telehealth waivers to March 31, 2025 and September 30, 2025, respectively. CMS issued additional waivers to permit more than 150 additional services to be furnished by telehealth, allow physicians to monitor patient services remotely, and fulfill face-to-face requirements in IRFs. In the calendar year 2025 Medicare physician fee schedule (“MPFS”) final rule, CMS extended some of the telehealth flexibilities through December 31, 2025.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (Pub. L. No. 119-21) (“OBBBA”) into law. OBBBA made several significant changes to Medicaid funding and coverage requirements beginning in 2027 that will impact many health care providers. The Congressional Budget Office (“CBO”) estimates that OBBBA will reduce federal funding for Medicaid and the Children’s Health Insurance Program by approximately $1 trillion over the next 10 years. The OBBBA includes significant proposed changes to Medicaid provider taxes, provider tax waivers and state directed payments (“SDPs”), including new limits on SDPs for inpatient hospital services, outpatient hospital services, and nursing facility services. Under OBBBA, SDP rates will now be capped and will reduce federal Medicaid spending by approximately $149 billion over 10 years. The passage of OBBBA will likely result in many states needing to reform their Medicaid programs to account for the reduced federal funding. Responses by individual states could include adjustments to provider tax assessments, cuts to their Medicaid reimbursement rates for providers, and eliminating Medicaid coverage for certain optional services or patient populations. At this time, we cannot estimate the OBBBA’s impact, nor can we predict the timing of that impact, on our future financial condition or results of operations; however, we may experience decreased reimbursement from governmental health care programs as a result. Additionally, as discussed below under the “Medicare Reimbursement of Outpatient Rehabilitation Clinic Services,” the OBBBA requires CMS to implement a statutory increase of 2.5% to the calendar year 2026 MPFS conversion factor.

The CBO sent an August 15, 2025 letter to Democratic budget and finance committee leaders in Congress estimating that OBBBA will increase the federal deficit by $2.1 trillion from 2025 to 2029 and by $3.4 trillion from 2025 to 2034, triggering Pay-As-You-Go (“PAYGO”) Act cuts to government spending through a sequestration provision. For Medicare spending, the cuts would be capped at 4%, an estimated $45 billion for fiscal year 2026. Sequestration currently reduces Medicare payments to all providers and suppliers by 2% but the cut will likely rise to 4% without relief from Congress. Congress has passed legislation to prevent PAYGO cuts in every other prior instance and would need to do so again to prevent a 4% cut in 2026.

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Medicare Reimbursement of LTCH Services

The following is a summary of significant regulatory changes to the Medicare prospective payment system for our critical illness recovery hospitals, which are certified by Medicare as LTCHs, which have affected our results of operations, as well as the policies and payment rates that may affect our future results of operations. Medicare payments to our critical illness recovery hospitals are made in accordance with the long-term care hospital prospective payment system (“LTCH-PPS”).

Fiscal Year 2024. On August 28, 2023, CMS published the final rule updating policies and payment rates for the LTCH-PPS for fiscal year 2024 (affecting discharges and cost reporting periods beginning on or after October 1, 2023, through September 30, 2024). Certain errors in the final rule were corrected in documents published October 4, 2023 and November 9, 2023. The standard federal rate for fiscal year 2024 was set at $48,117, an increase from the standard federal rate applicable during fiscal year 2023 of $46,433. The update to the standard federal rate for fiscal year 2024 included a market basket increase of 3.5%, less a productivity adjustment of 0.2%. The standard federal rate also included an area wage budget neutrality factor of 1.0031599. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS was set at $59,873, an increase from the fixed-loss amount in the 2023 fiscal year of $38,518. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $42,750, an increase from the fixed-loss amount in the 2023 fiscal year of $38,788.

Fiscal Year 2025. On August 28, 2024, CMS published a final rule updating policies and payment rates for the LTCH-PPS for fiscal year 2025 (affecting discharges and cost reporting periods beginning on or after October 1, 2024, through September 30, 2025). Certain errors in the final rule were corrected in a document published on October 2, 2024. In an interim final action document published on October 3, 2024, CMS also made modifications to the fiscal year 2025 policies and payment rates as a result of a recent decision issued by the United States Court of Appeals for the District of Columbia Circuit. The standard federal rate for fiscal year 2025 was set at $49,383, an increase from the standard federal rate applicable during fiscal year 2024 of $48,117. The update to the standard federal rate for fiscal year 2025 included a market basket increase of 3.5%, less a productivity adjustment of 0.5%. The standard federal rate also included an area wage budget neutrality factor of 0.9964315. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS was set at $77,048, an increase from the fixed-loss amount in the 2024 fiscal year of $59,873. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $46,217, an increase from the fixed-loss amount in the 2024 fiscal year of $42,750.

Fiscal Year 2026. On August 4, 2025, CMS published a final rule updating policies and payment rates for the LTCH-PPS for fiscal year 2026 (affecting discharges and cost reporting periods beginning on or after October 1, 2025, through September 30, 2026). The standard federal rate for fiscal year 2026 is $50,825, an increase from the standard federal rate applicable during fiscal year 2025 of $49,383. The update to the standard federal rate for fiscal year 2026 includes a market basket increase of 3.4%, less a productivity adjustment of 0.7%. The standard federal rate also includes an area wage budget neutrality factor of 1.0021275. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $78,936, an increase from the fixed-loss amount in the 2025 fiscal year of $77,048. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $40,397, a decrease from the fixed-loss amount in the 2025 fiscal year of $46,217.

Criteria for Reconciliation of Outlier Payments

Under the LTCH PPS, CMS makes two types of outlier payments to LTCHs. First, CMS makes additional payments to LTCHs for high cost outlier cases that have extraordinarily high costs relative to the costs of most discharges. For these cases, CMS sets a fixed loss amount each year that represents the maximum loss an LTCH will incur for a case before qualifying for a high cost outlier payment. A high cost outlier threshold equal to the LTCH PPS adjusted Federal payment for the case plus the fixed loss amount determines when Medicare pays a high cost outlier payment. Such payments are based on 80% of the estimated cost of the case above the high cost outlier threshold. Second, CMS reduces payments to LTCHs for patients with a relatively short stay, which is defined as a length of stay less than or equal to five-sixths of the geometric average length of stay for that particular MS-LTC-DRG. Short stay outlier cases are paid using a per diem rate based on 120% of the MS-LTC-DRG specific per diem amount and an IPPS per diem amount.

Outlier payments made to LTCHs during the cost reporting year may be reconciled at cost report settlement by the Medicare Administrative Contractor (“MAC”) if certain criteria are met. According to CMS, the reconciliation of outlier payments is intended to account for the fact that the LTCH’s cost-to-charge ratio (“CCR”) used to pay Medicare claims during the cost reporting year may differ from the LTCH’s final CCR for the year calculated by the MAC at cost report settlement. The outlier reconciliation criteria were: (1) a change in the LTCH’s CCR of 10 percentage points or more when comparing the actual CCR to the CCR used during the cost reporting period to make outlier payments; and (2) the LTCH received at least $500,000 in outlier payments during the cost reporting period. If the criteria for outlier reconciliation are met, the MAC will conduct an outlier reconciliation to determine whether the LTCH was overpaid or underpaid for outlier cases. If the LTCH was overpaid, the LTCH must repay Medicare in the amount of the overpayment plus the time value of money (i.e., interest). If the LTCH was underpaid, Medicare must pay the LTCH in the amount of the underpayment plus the time value of money.

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On April 26, 2024, CMS issued new guidance in Transmittal 12594 changing the criteria for LTCH outlier reconciliations. CMS modified the first criterion to a change in the LTCH’s CCR of 20 percent or more from the CCR used to make outlier payments during the cost reporting period. CMS did not change the second criterion for reconciliation that the LTCH must have received at least $500,000 in outlier payments during the cost reporting period. The revised policy was scheduled to be effective for cost reporting periods beginning on or after October 1, 2024. However, CMS recently issued Transmittal 13428 to delay the effective date by one year, for cost reporting periods beginning on or after October 1, 2025. MACs would receive the first cost reports subject to the revised policy in March 2027.

Setting the threshold at 20 percent for changes in the hospital’s CCR will result in more outlier reconciliations. This increases the likelihood that LTCHs will have a portion of their outlier payments recouped by the MAC at cost report settlement. Because outlier reconciliations often delay the final settlement of cost reports, and providers cannot appeal disputed reimbursement amounts until the cost report is settled, this new policy will likely result in additional delays of reimbursement appeals related to LTCH cost reports.

Medicare Reimbursement of IRF Services

The following is a summary of significant regulatory changes to the Medicare prospective payment system for our rehabilitation hospitals, which are certified by Medicare as IRFs, which have affected our results of operations, as well as the policies and payment rates that may affect our future results of operations. Medicare payments to our rehabilitation hospitals are made in accordance with the inpatient rehabilitation facility prospective payment system (“IRF-PPS”).

Fiscal Year 2024. On August 2, 2023, CMS published the final rule updating policies and payment rates for the IRF-PPS for fiscal year 2024 (affecting discharges and cost reporting periods beginning on or after October 1, 2023, through September 30, 2024). Certain errors in the final rule were corrected in a document published on October 4, 2023. The standard payment conversion factor for discharges for fiscal year 2024 was set at $18,541, an increase from the standard payment conversion factor applicable during fiscal year 2023 of $17,878. The update to the standard payment conversion factor for fiscal year 2024 included a market basket increase of 3.6%, less a productivity adjustment of 0.2%. CMS decreased the outlier threshold amount for fiscal year 2024 to $10,423 from $12,526 established in the final rule for fiscal year 2023.

Fiscal Year 2025. On August 6, 2024, CMS published the final rule to update policies and payment rates for the IRF-PPS for fiscal year 2025 (affecting discharges and cost reporting periods beginning on or after October 1, 2024, through September 30, 2025). Certain errors in the final rule were corrected in a document published on October 2, 2024. The standard payment conversion factor for discharges for fiscal year 2025 was set at $18,907, an increase from the standard payment conversion factor applicable during fiscal year 2024 of $18,541. The update to the standard payment conversion factor for fiscal year 2025 included a market basket increase of 3.5%, less a productivity adjustment of 0.5%. CMS increased the outlier threshold amount for fiscal year 2025 to $12,043 from $10,423 established in the final rule for fiscal year 2024.

Fiscal Year 2026. On August 5, 2025, CMS published a final rule to update policies and payment rates for the IRF-PPS for fiscal year 2026 (affecting discharges and cost reporting periods beginning on or after October 1, 2025, through September 30, 2026). The standard payment conversion factor for discharges for fiscal year 2026 was set at $19,371, an increase from the standard payment conversion factor applicable during fiscal year 2025 of $18,907. The update to the standard payment conversion factor for fiscal year 2026 included a market basket increase of 3.3%, less a productivity adjustment of 0.7%. CMS decreased the outlier threshold amount for fiscal year 2026 to $10,062 from $12,043 established in the final rule for fiscal year 2025.

Medicare Reimbursement of Outpatient Rehabilitation Clinic Services

Our Annual Report on Form 10-K for the year ended December 31, 2024 contains a detailed discussion of Medicare reimbursement that affects our outpatient rehabilitation clinic operations in Part I — Business — Government Regulations. Outpatient rehabilitation providers enroll in Medicare as a rehabilitation agency, a clinic, or a public health agency. The Medicare program reimburses outpatient rehabilitation providers based on the Medicare physician fee schedule.

For calendar year 2024, CMS expected that its final policies would result in a 3% decrease in Medicare payments for the therapy specialty. The policies CMS announced for the calendar year 2025 MPFS final rule reduced Medicare payments for the physical and occupational therapy services we provide by approximately 3%. Congress directed the Secretary to increase calendar year 2026 MPFS payments by 2.5% in section 71202 of OBBBA. In the calendar year 2026 MPFS proposed rule, CMS proposes to implement this OBBBA statutory 2.5% increase to the conversion factor for calendar year 2026, along with the two separate conversion factors based on alternative payment model (“APM”) participation as required under the Medicare Access and CHIP Reauthorization Act ("MACRA"). Starting in 2026 as required by MACRA, eligible professionals participating in an APM who meet certain criteria will receive an annual update of 0.75%, while all other professionals will receive an annual update of 0.25%. CMS expects that its proposed policies for 2026 will result in a 1% decrease in Medicare

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payments for the therapy specialty but it did not consider the statutory increases to the conversion factor and APM in its therapy specialty estimated impact. After factoring in these statutory increases, the calendar year 2026 MPFS final rule will increase Medicare payments for the physical and occupational therapy services we provide by approximately 2%.

CMS also proposes changes to the quality payment program, including changes to support the transition from the Merit‑Based Incentive Payment System (“MIPS”) to the MIPS Value Pathways (“MVPs”). First, CMS proposes revisions to the existing 21 MVPs that were adopted in the calendar years 2022-2025 final rules. CMS would remove certain measures and improvement activities from these MVPs and add other quality measures for MVP participants to choose from for data reporting. This proposal includes a new “Advancing Health and Wellness” subcategory with new measures to report under the improvement activities performance category. For the rehabilitative support for musculoskeletal care MVP, which is most applicable to clinicians who specialize in rehabilitation support for musculoskeletal care (including physical therapists and occupational therapists), CMS proposes to add two quality measures and three improvement activities, and remove one quality measure. CMS is also considering modifications to four qualified clinical data registry measures for this MVP. Finally, CMS proposes to add six new MVPs. If finalized, these new MVPs would be available for voluntary reporting for the calendar year 2026 performance period.

Modifiers to Identify Services of Physical Therapy Assistants or Occupational Therapy Assistants

Our Annual Report on Form 10-K for the year ended December 31, 2024, contains a detailed discussion of Medicare regulations concerning services provided by physical therapy assistants and occupational therapy assistants in Part I — Business — Government Regulations and in Part II — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Changes. There have been no significant updates to these regulations subsequently.

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Operating Statistics

The following table sets forth operating statistics for each of our segments for the periods presented. The operating statistics reflect data for the period of time we managed these operations. Our operating statistics include metrics we believe provide relevant insight about the number of facilities we operate, volume of services we provide to our patients, and average payment rates for services we provide. These metrics are utilized by management to monitor trends and performance in our businesses and therefore may be important to investors because management may assess our performance based in part on such metrics. Other healthcare providers may present similar statistics, and these statistics are susceptible to varying definitions. Our statistics as presented may not be comparable to other similarly titled statistics of other companies.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2025			2024			2025
Critical illness recovery hospital data:
Number of consolidated hospitals—start of period(1)	107			104			107			104
Number of hospitals acquired	—			1			—			1
Number of hospital start-ups	—			—			1			—
Number of hospitals closed/sold	(1)			—			(2)			—
Number of consolidated hospitals—end of period(1)	106			105			106			105


Available licensed beds(3)	4,512			4,451			4,512			4,451
Admissions(3)(4)	8,676			8,859			27,093			27,176
Patient days(3)(5)	270,760			265,730			844,623			835,970
Average length of stay (days)(3)(6)	31			30			31			31
Revenue per patient day(3)(7)	$	2,145		$	2,287		$	2,175		$	2,203
Occupancy rate(3)(8)	65		%	65		%	68		%	69		%
Percent patient days—Medicare(3)(9)	35		%	34		%	35		%	35		%
Rehabilitation hospital data:
Number of consolidated hospitals—start of period(1)	21			24			21			23
Number of hospitals acquired	—			—			—			—
Number of hospital start-ups	1			—			1			1
Number of hospitals closed/sold	—			—			—			—
Number of consolidated hospitals—end of period(1)	22			24			22			24
Number of unconsolidated hospitals managed—end of period(2)	12			12			12			12
Total number of hospitals (all)—end of period	34			36			34			36
Available licensed beds - consolidated hospitals(3)	1,589			1,696			1,589			1,696
Available licensed beds - unconsolidated hospitals managed(12)	632			652			632			652
Admissions(3)(4)	8,439			9,385			25,039			27,335
Patient days(3)(5)	116,835			129,787			350,724			378,536
Average length of stay (days)(3)(6)	14			14			14			14
Revenue per patient day(3)(7)	$	2,148		$	2,254		$	2,119		$	2,242
Occupancy rate(3)(8)	82		%	83		%	84		%	82		%
Percent patient days—Medicare(3)(9)	48		%	50		%	48		%	50		%


Outpatient rehabilitation data:
Number of consolidated clinics—start of period	1,625			1,620			1,633			1,617
Number of clinics acquired	1			4			7			4
Number of clinic start-ups	5			4			14			20
Number of clinics closed/sold	(4)			(5)			(27)			(18)
Number of consolidated clinics—end of period	1,627			1,623			1,627			1,623
Number of unconsolidated clinics managed—end of period	298			299			298			299
Total number of clinics (all)—end of period	1,925			1,922			1,925			1,922
Number of visits(3)(10)	2,773,465			2,924,794			8,336,216			8,568,784
Revenue per visit(3)(11)	$	101		$	100		$	100		$	101

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(1)Represents the number of hospitals included in our consolidated financial results at the end of each period presented.

(2)Represents the number of hospitals which are managed by us at the end of each period presented. We have minority ownership interests in these businesses.

(3)Data excludes locations managed by the Company.

(4)Represents the number of patients admitted to our hospitals during the periods presented.

(5)Each patient day represents one patient occupying one bed for one day during the periods presented.

(6)Represents the average number of days in which patients were admitted to our hospitals. Average length of stay is calculated by dividing the number of patient days, as presented above, by the number of patients discharged from our hospitals during the periods presented.

(7)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 our hospitals, by the total number of patient days.

(8)Represents the portion of our hospitals being utilized for patient care during the periods presented. Occupancy rate is calculated using the number of patient days, as presented above, divided by the total number of bed days available during the period. Bed days available is derived by adding the daily number of available licensed beds for each of the periods presented.

(9)Represents the portion of our patient days which are paid by Medicare. The Medicare patient day percentage is calculated by dividing the total number of patient days which are paid by Medicare by the total number of patient days, as presented above.

(10)Represents the number of visits in which patients were treated at our outpatient rehabilitation clinics during the periods presented.

(11)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.

(12)Represents the number of available licensed beds at hospitals which are managed by us at the end of each period presented. We own a minority interest in these businesses.

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Results of Operations

The following table outlines selected operating data as a percentage of revenue for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2025		2024		2025
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of services, exclusive of depreciation and amortization(1)	89.3		89.2		87.2		88.1
General and administrative	3.7		2.9		3.8		2.7
Depreciation and amortization	2.7		2.5		2.8		2.6
Total costs and expenses	95.7		94.6		93.8		93.4
Other operating income	0.0		—		0.2		0.1
Income from continuing operations before other income and expense	4.3		5.4		6.4		6.7
Loss on early retirement of debt	(0.9)		—		(0.3)		—
Equity in earnings of unconsolidated subsidiaries	2.6		1.0		1.4		1.0


Interest expense	(2.4)		(2.3)		(2.6)		(2.2)
Income from continuing operations before income taxes	3.6		4.1		4.9		5.5
Income tax expense from continuing operations	0.4		0.9		1.3		1.1
Income from continuing operations, net of tax	3.2		3.2		3.6		4.4
Discontinued operations:
Income from discontinued business	4.9		—		5.1		—
Income tax expense from discontinued business	1.8		—		1.2		—
Income from discontinued operations, net of tax	3.1		—		3.9		—
Net income	6.3		3.2		7.5		4.4
Net income attributable to non-controlling interests	1.9		1.1		1.6		1.3
Net income attributable to Select Medical Holdings Corporation	4.4	%	2.1	%	5.9	%	3.1	%

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(1)Cost of services includes personnel expense, facilities expense, and other operating costs.

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The following table summarizes selected financial data by segment for the periods indicated:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2024			2025			% Change		2024			2025			% Change
	(in thousands, except percentages)
Revenue:
Critical illness recovery hospital	$	582,950		$	609,929		4.6	%	$	1,843,751		$	1,848,098		0.2	%
Rehabilitation hospital	282,709			328,607			16.2		816,240			949,770			16.4
Outpatient rehabilitation	312,042			325,383			4.3		930,696			960,309			3.2
Other(1)	93,881			99,526			6.0		283,854			298,019			5.0
Total Company	$	1,271,582		$	1,363,445		7.2	%	$	3,874,541		$	4,056,196		4.7	%
Income (loss) from continuing operations before other income and expense:
Critical illness recovery hospital	$	33,731		$	39,956		18.5	%	$	186,757		$	149,619		(19.9)	%
Rehabilitation hospital	53,288			60,385			13.3		162,286			186,986			15.2
Outpatient rehabilitation	19,198			15,116			(21.3)		54,575			51,793			(5.1)
Other(1)	(51,318)			(42,499)			N/M		(156,394)			(116,164)			N/M
Total Company	$	54,899		$	72,958		32.9	%	$	247,224		$	272,234		10.1	%
Adjusted EBITDA:
Critical illness recovery hospital	$	50,763		$	56,102		10.5	%	$	238,536		$	199,034		(16.6)	%
Rehabilitation hospital	60,117			67,956			13.0		183,471			209,427			14.1
Outpatient rehabilitation	28,319			24,198			(14.6)		82,016			78,984			(3.7)
Other(1)	(35,301)			(36,601)			N/M		(109,621)			(98,934)			N/M
Total Company	$	103,898		$	111,655		7.5	%	$	394,402		$	388,511		(1.5)	%
Adjusted EBITDA margins:
Critical illness recovery hospital	8.7		%	9.2		%			12.9		%	10.8		%
Rehabilitation hospital	21.3			20.7					22.5			22.1
Outpatient rehabilitation	9.1			7.4					8.8			8.2
Other(1)	N/M			N/M					N/M			N/M
Total Company	8.2		%	8.2		%			10.2		%	9.6		%
Total assets:
Critical illness recovery hospital	$	2,658,301		$	2,631,998				$	2,658,301		$	2,631,998
Rehabilitation hospital	1,294,125			1,478,363					1,294,125			1,478,363
Outpatient rehabilitation	1,414,009			1,415,655					1,414,009			1,415,655
Other(1)	162,937			159,707					162,937			159,707
Total Company	$	5,529,372		$	5,685,723				$	5,529,372		$	5,685,723
Purchases of property and equipment:
Critical illness recovery hospital	$	16,208		$	18,186				$	49,765		$	58,096
Rehabilitation hospital	10,595			25,608					32,514			82,878
Outpatient rehabilitation	8,402			8,959					26,064			27,850
Other(1)	333			349					2,766			1,301
Total Company	$	35,538		$	53,102				$	111,109		$	170,125

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(1) Other includes our corporate administration and shared services, as well as employee leasing services with our non-consolidating subsidiaries. Total assets include certain non-consolidating joint ventures and minority investments in other healthcare related businesses.

N/M Not meaningful.

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Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024

For the three months ended September 30, 2025, we had revenue of $1,363.4 million and income from continuing operations before other income and expense of $73.0 million, as compared to revenue of $1,271.6 million and income from continuing operations before other income and expense of $54.9 million for the three months ended September 30, 2024. For the three months ended September 30, 2025, Adjusted EBITDA was $111.7 million, with an Adjusted EBITDA margin of 8.2%, as compared to Adjusted EBITDA of $103.9 million and an Adjusted EBITDA margin of 8.2% for the three months ended September 30, 2024.

Revenue

Critical Illness Recovery Hospital Segment. Revenue increased 4.6% to $609.9 million for the three months ended September 30, 2025, compared to $583.0 million for the three months ended September 30, 2024. The increase in revenue was attributable to revenue per patient day, which increased 6.6% to $2,287 for the three months ended September 30, 2025, compared to $2,145 for the three months ended September 30, 2024. The increase in revenue per patient day was partially driven by the deferral of the implementation of the 20 percent transmittal rule, as discussed further in Regulatory Changes, which resulted in a change in revenue estimates made in prior periods. Our patient days were 265,730 for the three months ended September 30, 2025, compared to 270,760 days for the three months ended September 30, 2024. Occupancy in our critical illness recovery hospitals was 65% for both the three months ended September 30, 2025 and 2024.

Rehabilitation Hospital Segment. Revenue increased 16.2% to $328.6 million for the three months ended September 30, 2025, compared to $282.7 million for the three months ended September 30, 2024. The increase in revenue was principally attributable to our patient days, which increased 11.1% to 129,787 days for the three months ended September 30, 2025, compared to 116,835 days for the three months ended September 30, 2024. Revenue per patient day increased 4.9% to $2,254 for the three months ended September 30, 2025, compared to $2,148 for the three months ended September 30, 2024. Occupancy in our rehabilitation hospitals was 83% and 82% for the three months ended September 30, 2025 and 2024, respectively.

Outpatient Rehabilitation Segment. Revenue increased 4.3% to $325.4 million for the three months ended September 30, 2025, compared to $312.0 million for the three months ended September 30, 2024. The increase in revenue was attributable to patient visits, which increased 5.5% to 2,924,794 visits for the three months ended September 30, 2025, compared to 2,773,465 visits for the three months ended September 30, 2024. Our revenue per visit was $100 for the three months ended September 30, 2025, compared to $101 for the three months ended September 30, 2024. The decrease in revenue per visit was primarily driven by a reduction in Medicare reimbursement and an unfavorable shift i

SELECT MEDICAL HOLDINGS CORP 10-Q