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~~March 3031, ~~2024~~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 ~~October~~April 3130, ~~2024~~2025, Select Medical Holdings Corporation had outstanding ~~129~~128,~~466~~538,~~933~~891 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. ~~Any reference to “Concentra” refers to Concentra Group Holdings Parent, LLC (“Concentra Group Holdings Parent”) and its subsidiaries, including Concentra Inc.~~ References to the “Company,” “we,” “us,” and “our” refer collectively to Holdings, ~~Select,~~ and ~~Concentra~~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	87
	Notes to condensed consolidated financial statements	98
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2418
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4734
ITEM 4.	CONTROLS AND PROCEDURES	4734
PART II	OTHER INFORMATION	4835
ITEM 1.	LEGAL PROCEEDINGS	4835
ITEM 1A.	RISK FACTORS	4835
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	4835
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	4835
ITEM 4.	MINE SAFETY DISCLOSURES	4835
ITEM 5.	OTHER INFORMATION	4835
ITEM 6.	EXHIBITS	4937
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, 2023		September 30, 2024
	December 31, 2024		March 31, 2025
ASSETS
Current Assets:
Cash and cash equivalents	$	8459,~~006~~694	$	~~191~~53,~~468~~213
Accounts receivable	~~940~~821,~~335~~385		1908,~~060,007~~185
Prepaid income taxes	2226,~~726~~601		86,~~669~~566
Current portion of interest rate cap contract	58,962		—
Other current assets	112,097		124,328
Other current assets	151,617		144,053
Total Current Assets	1,019,777		1,092,292
Total Current Assets	1,257,646		1,404,197
Operating lease right-of-use assets	908,095		909,180
Operating lease right-of-use assets	1,188,616		1,321,045
Property and equipment, net	872,185		894,920
Property and equipment, net	1,023,561		1,040,383
Goodwill	2,331,898		2,331,898
Goodwill	3,513,170		3,555,022
Identifiable intangible assets, net	103,183		102,544
Identifiable intangible assets, net	329,916		312,565
Other assets	372,813		365,169
Other assets	376,722		369,449
Total Assets	$	5,607,951	$	5,696,003
Total Assets	$	7,689,631	$	8,002,661
LIABILITIES AND EQUITY
Current Liabilities:
Overdrafts	$	3025,~~274~~803	$	1420,~~173~~683
Current operating lease liabilities	~~245~~179,~~400~~601		~~249~~181,~~832~~605
Current portion of long-term debt and notes payable	7020,~~329~~269		4228,~~785~~353
Accounts payable	~~174~~142,~~312~~157		~~170~~158,~~711~~542
Accrued and other liabilities	~~728~~609,~~150~~821		~~768~~555,~~203~~616
Total Current Liabilities	1977,~~248,465~~651		1944,~~245,704~~799
Non-current operating lease liabilities	1787,~~025,867~~124		1787,~~163,406~~861
Long-term debt, net of current portion	31,~~587~~691,~~675~~546		31,~~098~~767,~~957~~409
Non-current deferred tax liability	~~143~~81,~~306~~497		9575,~~557~~245
Other non-current liabilities	~~110~~73,~~303~~038		9874,~~593~~652
Total Liabilities	63,~~115~~610,~~616~~856		53,~~702~~649,~~217~~966
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 13)
Redeemable non-controlling interests	2610,~~297~~167		309,~~455~~021
Stockholders’ Equity:
Common stock, $0.001 par value, 700,000,000 shares authorized, 128,369,492 and 129,539,724 shares issued and outstanding at 2023 and 2024, respectively	128		130
Common stock, $0.001 par value, 700,000,000 shares authorized, 128,962,850 and 128,314,033 shares issued and outstanding at 2024 and 2025, respectively	129		128
Capital in excess of par	~~493~~911,~~413~~080		~~858~~908,~~741~~868
Retained earnings	~~751~~770,~~856~~146		1813,~~056,320~~504
Accumulated other comprehensive income	42,907		—
Accumulated other comprehensive loss	—		(3,106)
Total Stockholders’ Equity	1,~~288~~681,~~304~~355		1,~~915~~719,~~191~~394
Non-controlling interests	~~259~~305,~~414~~573		~~354~~317,~~798~~622
Total Equity	1,~~547~~986,~~718~~928		2,~~269~~037,~~989~~016
Total Liabilities and Equity	$	75,~~689~~607,~~631~~951	$	85,~~002~~696,~~661~~003

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,
			For the Three Months Ended March 31,
	2023		2024		2023		2024
					2024		2025
Revenue	$	~~1,665,694~~	$	~~1,761,220~~	$	51,~~005~~321,~~202~~211	$	51,~~309~~353,~~692~~172
Costs and expenses:
Cost of services, exclusive of depreciation and amortization	~~1,442,509~~		~~1,523,899~~		41,~~284~~120,~~931~~711		41,~~516~~172,~~553~~611
General and administrative	~~41,316~~		~~47,347~~		~~126~~48,~~103~~447		~~145~~33,~~672~~008
Depreciation and amortization	~~52,394~~		~~50,143~~		~~154~~35,~~758~~584		~~158~~34,~~151~~808
Total costs and expenses	~~1,536,219~~		~~1,621,389~~		41,~~565~~204,~~792~~742		41,~~820~~240,~~376~~427
Other operating income	~~485~~		~~1,302~~		12,~~211~~000		~~3,584~~—
Income from operations	129,960		141,133		440,621		492,900
Income from continuing operations before other income and expense					118,469		112,745
Other income and expense:
Loss on early retirement of debt	(14,692)		(10,939)		(14,692)		(10,939)
Equity in earnings of unconsolidated subsidiaries					10,421		12,512
Equity in earnings of unconsolidated subsidiaries	11,561		33,069		30,618		49,805
Interest expense					(40,681)		(29,072)
Interest expense	(50,271)		(55,439)		(147,839)		(143,309)
Income from continuing operations before income taxes					88,209		96,185
Income before income taxes	76,558		107,824		308,708		388,457
Income tax expense from continuing operations					26,680		21,453
Income tax expense	15,742		26,809		70,775		95,509
Income from continuing operations, net of tax					61,529		74,732
Net income	60,816		81,015		237,933		292,948
Discontinued operations:
Less: Net income attributable to non-controlling interests	12,636		25,387		40,711		62,860
Income from discontinued business					65,416		—
Net income attributable to Select Medical Holdings Corporation	$	48,180	$	55,628	$	197,222	$	230,088
Income tax expense from discontinued business					9,778		—
Earnings per common share (Note 13):
Income from discontinued operations, net of tax					55,638		—
Basic and diluted	$	0.38	$	0.43	$	1.55	$	1.78
Net income					117,167		74,732
Less: Net income attributable to non-controlling interests					20,270		18,051
Net income attributable to Select Medical Holdings Corporation					$	96,897	$	56,681
Net income attributable to Select Medical Holdings Corporation’s common stockholders:
Income from continuing operations, net of tax					42,582		56,681
Income from discontinued operations, net of tax					54,315		—
Net income attributable to Select Medical Holdings Corporation’s common stockholders					$	96,897	$	56,681
Earnings per common share (Note 12):
Continuing operations - basic and diluted					$	0.33	$	0.44
Discontinued operations - basic and diluted					0.42		—
Total earnings per common share - basic and diluted					$	0.75	$	0.44

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,
			For the Three Months Ended March 31,
	2023		2024		2023		2024
					2024		2025
Net income	$	~~60,816~~	$	~~81,015~~	$	~~237~~117,~~933~~167	$	~~292~~74,~~948~~732
Other comprehensive income (loss), net of tax:
Other comprehensive loss, net of tax:
Gain on interest rate cap contract	3,895		30		18,726		5,723
Gain (loss) on interest rate cap contract					4,370		(3,106)
Reclassification adjustment for gains included in net income	~~(16,215)~~		~~(5,812)~~		(4416,~~601~~347)		~~(48,630)~~—
Net change, net of tax benefit of $3,998, $1,826, $8,397, and $13,550	(12,320)		(5,782)		(25,875)		(42,907)
Net change, net of tax benefit of $3,782, and $981					(11,977)		(3,106)
Comprehensive income	~~48,496~~		~~75,233~~		~~212~~105,~~058~~190		~~250~~71,~~041~~626
Less: Comprehensive income attributable to non-controlling interests	~~12,636~~		~~25,387~~		4020,~~711~~270		6218,~~860~~051
Comprehensive income attributable to Select Medical Holdings Corporation	$	~~35,860~~	$	~~49,846~~	$	~~171~~84,~~347~~920	$	~~187~~53,~~181~~575

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, 2024
	For the Three Months Ended March 31, 2025
		Total Stockholders’ Equity
	CommonStockIssued	CommonStockPar Value		Capital inExcessof Par		RetainedEarnings		Accumulated Other Comprehensive ~~Income~~Loss		Total Stockholders’ Equity		Non-controllingInterests		TotalEquity
Balance at December 31, 2023	128,369	$	128	$	493,413	$	751,856	$	42,907	$	1,288,304	$	259,414	$	1,547,718
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						9656,~~897~~681				9656,~~897~~681				9656,~~897~~681
Net income attributable to non-controlling interests										—		1716,~~845~~288		1716,~~845~~288
Cash dividends declared for common stockholders ($0.125 per share)						(16,045)				(16,045)				(16,045)
Cash dividends declared for common stockholders ($0.0625 per share)						(8,060)				(8,060)				(8,060)
Issuance of restricted stock	1	0		0						—				—
Forfeitures of unvested restricted stock	(12)	0		0		14				14				14
Vesting of restricted stock				3,892						3,892				3,892
Vesting of restricted stock				11,596						11,596				11,596
Repurchase of common shares	(650)	(1)		(6,104)		(5,284)				(11,389)				(11,389)
Issuance of non-controlling interests										—		47,~~002~~944		47,~~002~~944
Distributions to and purchases of non-controlling interests				~~394~~						~~394~~—		(1012,~~900~~183)		(1012,~~506~~183)
Redemption value adjustment on non-controlling interests						~~(1,901)~~21				~~(1,901)~~21				~~(1,901)~~21
Other comprehensive loss								(113,~~977~~106)		(113,~~977~~106)				(113,~~977~~106)
Balance at March 31, 2024	128,358	$	128	$	505,403	$	830,821	$	30,930	$	1,367,282	$	270,361	$	1,637,643
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						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 IPO				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


	For the Three Months Ended March 31, 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

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

Table of Contents

	For the Nine Months Ended September 30, 2023
		Total Stockholders’ Equity
	CommonStockIssued	CommonStockPar Value		Capital inExcessof Par		RetainedEarnings		Accumulated Other Comprehensive Income		Total Stockholders’ Equity		Non-controllingInterests		TotalEquity
Balance at December 31, 2022	127,173	$	127	$	452,183	$	581,010	$	88,602	$	1,121,922	$	234,642	$	1,356,564
Net income attributable to Select Medical Holdings Corporation						70,805				70,805				70,805
Net income attributable to non-controlling interests										—		12,811		12,811
Cash dividends declared for common stockholders ($0.125 per share)						(15,897)				(15,897)				(15,897)
Issuance of restricted stock	3	0		0						—				—
Vesting of restricted stock				10,003						10,003				10,003
Issuance of non-controlling interests										—		2,731		2,731
Non-controlling interests acquired in business combination										—		3,877		3,877
Distributions to and purchases of non-controlling interests										—		(6,069)		(6,069)
Redemption value adjustment on non-controlling interests						(436)				(436)				(436)
Other comprehensive loss								(15,948)		(15,948)				(15,948)
Other				(1)		1				—				—
Balance at March 31, 2023	127,176	$	127	$	462,185	$	635,483	$	72,654	$	1,170,449	$	247,992	$	1,418,441
Net income attributable to Select Medical Holdings Corporation						78,237				78,237				78,237
Net income attributable to non-controlling interests										—		11,539		11,539
Cash dividends declared for common stockholders ($0.125 per share)						(15,924)				(15,924)				(15,924)
Issuance of restricted stock	261	0		0						—				—
Vesting of restricted stock				10,326						10,326				10,326
Repurchase of common shares	(49)			(634)		(872)				(1,506)				(1,506)
Issuance of non-controlling interests				1,870						1,870		10,211		12,081
Distributions to and purchases of non-controlling interests				195						195		(14,201)		(14,006)
Redemption value adjustment on non-controlling interests						(2)				(2)				(2)
Other comprehensive income								2,393		2,393				2,393
Balance at June 30, 2023	127,388	$	127	$	473,942	$	696,922	$	75,047	$	1,246,038	$	255,541	$	1,501,579
Net income attributable to Select Medical Holdings Corporation						48,180				48,180				48,180
Net income attributable to non-controlling interests										—		10,316		10,316
Cash dividends declared for common stockholders ($0.125 per share)						(16,035)				(16,035)				(16,035)
Issuance of restricted stock	1,217	1		(1)						—				—
Vesting of restricted stock				11,483						11,483				11,483
Repurchase of common shares	(318)	0		(3,866)		(5,678)				(9,544)				(9,544)
Issuance of non-controlling interests										—		5,651		5,651
Non-controlling interests acquired in business combination										—		5,130		5,130
Distributions to and purchases of non-controlling interests				732		(2,672)				(1,940)		(21,059)		(22,999)
Redemption value adjustment on non-controlling interests						1,912				1,912				1,912
Other comprehensive loss								(12,320)		(12,320)				(12,320)
Other						36				36		—		36
Balance at September 30, 2023	128,287	$	128	$	482,290	$	722,665	$	62,727	$	1,267,810	$	255,579	$	1,523,389

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

Table of Contents

Select Medical Holdings Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2023		2024
	2024		2025
Operating activities
Net income	$	~~237~~117,~~933~~167	$	~~292~~74,~~948~~732
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Distributions from unconsolidated subsidiaries	912,~~896~~374		3020,~~436~~145
Depreciation and amortization	~~154~~54,~~758~~069		~~158~~34,~~151~~808
Provision for expected credit losses	~~1,101~~854		12,~~659~~283
Equity in earnings of unconsolidated subsidiaries	(3010,~~618~~421)		(4912,~~805~~512)
Loss on extinguishment of debt	175		10,939
(Gain) loss on sale or disposal of assets	44		(23)
Gain on sale or disposal of assets	(7)		(1,111)
Stock compensation expense	11,610		3,892
Stock compensation expense	31,991		39,399
Amortization of debt discount, premium, and issuance costs	750		783
Amortization of debt discount, premium, and issuance costs	1,899		2,279
Deferred income taxes	(6,891)		(5,655)
Deferred income taxes	(17,049)		(34,941)
Changes in operating assets and liabilities, net of effects of business combinations:
Accounts receivable	(3195,~~014~~308)		(~~116~~89,~~761~~083)
Other current assets	(179,~~276~~611)		7(12,~~856~~230)
Other assets	72,~~028~~363		132,~~942~~127
Accounts payable	4(5,~~788~~718)		(213,~~056)~~462
Accrued expenses	21(37,~~011~~971)		39(36,~~497~~186)
Net cash provided by operating activities	402,616		392,432
Net cash used in operating activities	(66,689)		(3,457)
Investing activities
Business combinations, net of cash acquired	(205,~~482~~405)		~~(2,311)~~—
Purchases of property, equipment, and other assets	(168,597)		(158,748)
Purchases of property and equipment	(52,517)		(52,339)
Investment in businesses	(9,874)		—
Proceeds from sale of assets	265		24
Proceeds from sale of assets and businesses	60		4,241
Net cash used in investing activities	(57,657)		(52,315)
Net cash used in investing activities	(198,893)		(156,818)
Financing activities
Borrowings on revolving facilities	~~635~~495,000		~~950~~405,000
Payments on revolving facilities	(~~740~~265,000)		(1330,~~220,~~000)
Proceeds from term loans, net of issuance costs	2,092,232		836,697
Payments on term loans	(79,085)		(2,625)
Payments on term loans	(2,108,694)		(1,719,503)
Borrowings of other debt	17,728		16,015
Proceeds from 6.875% senior notes, net of issuance costs	—		637,337
Principal payments on other debt	(9,061)		(7,729)
Borrowings of other debt	30,849		20,806
Dividends paid to common stockholders	(16,045)		(8,060)
Principal payments on other debt	(38,298)		(35,782)
Repurchases of common stock	—		(11,389)
Dividends paid to common stockholders	(47,856)		(48,493)
Decrease in overdrafts	(1,740)		(5,120)
Repurchase of common stock	(11,050)		(17,924)
Proceeds from issuance of non-controlling interests	4,002		7,944
Decrease in overdrafts	(1,967)		(16,101)
Distributions to and purchases of non-controlling interests	(12,839)		(14,745)
Proceeds from issuance of non-controlling interests	20,463		9,413
Net cash provided by financing activities	132,960		49,291
Distributions to and purchases of non-controlling interests	(54,868)		(35,800)
Net increase (decrease) in cash and cash equivalents	8,614		(6,481)
Proceeds from Concentra initial public offering (Note 15)	—		511,198
Cash and cash equivalents at beginning of period	84,006		59,694
Net cash used in financing activities	(224,189)		(128,152)
Cash and cash equivalents at end of period	$	92,620	$	53,213
Net increase (decrease) in cash and cash equivalents	(20,466)		107,462
Cash and cash equivalents at beginning of period	97,906		84,006
Cash and cash equivalents at end of period	$	77,440	$	191,468
Supplemental information
Cash paid for interest, excluding amounts received of $60,353 and $68,069 under the interest rate cap contract	$	221,697	$	216,757
Cash paid for interest, excluding amounts received of $22,515 under the interest rate cap contract during the three months ended March 31, 2024	$	88,834	$	23,772
Cash paid for taxes	~~78,502~~604		~~102~~1,~~696~~472

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~~March 3031, ~~2024~~2025, and for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2023~~2024 and ~~2024~~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~~March 3031, ~~2024~~2025, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, ~~2024~~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, ~~2023~~2024, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 2220, ~~2024~~2025.

~~For~~See ~~details~~Note ~~regarding~~3. Dispositions for discussion on the ~~Concentra~~distribution ~~separation~~of ~~see~~Concentra ~~Note~~Group 15Holdings Parent, Inc. (“Concentra”) ~~Separation~~that occurred in the fourth quarter of 2024.

2. Accounting Policies

Recent Accounting Guidance Not Yet Adopted

Segment Reporting

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve disclosure of segment information so that investors can better understand an entity’s overall performance. The ASU requires entities to quantitatively disclose significant segment expenses that are regularly provided to the chief operating decision maker for each reportable segment, as well as the amount of other segment items for each reportable segment and a description of what the other segment items are comprised. Disclosure of multiple measures of profit or loss will be permitted by the ASU.

The Company will adopt ASU 2023-07 beginning with our annual reporting period ending December 31, 2024. The ASU is required to be applied retrospectively to all periods presented in the financial statements. ASU 2023-07 will not have a significant impact on the disclosures in our consolidated financial statements.

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 includes enhanced requirements on the rate reconciliation, including specific categories that must be disclosed, and provides a threshold over which reconciling items must be disclosed. 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 Company will adopt ASU 2023-09 beginning with our annual reporting period ending December 31, 2025. The ASU can be applied either prospectively or retrospectively. The Company is currently reviewing ASU 2023-09, but does not expect it to have a significant impact on the disclosures in our consolidated financial statements.

Expense 9Disaggregation

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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Recently Adopted Accounting Guidance

Leases

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, Leases (Topic 842): Common Control Arrangements, which requires companies to amortize leasehold improvements associated with related party leases under common control over the useful life of the leasehold improvement to the common control group. The ASU is effective for annual reporting periods beginning on or after December 15, 2023; however, early adoption is permitted. The ASU can either be applied prospectively or retrospectively.

The Company adopted this ASU using the prospective method of transition on January 1, 2024. There was not a material impact on the Company’s consolidated financial statements upon adoption.

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. ~~Credit Risk Concentrations~~Dispositions

~~Financial~~On ~~instruments~~July ~~that~~26, ~~potentially~~2024, ~~subject~~Concentra, ~~the~~a ~~Company~~then towholly-owned ~~concentrations~~subsidiary of ~~credit~~Select, ~~risk~~completed ~~consist~~an ~~primarily~~initial public offering (“IPO”) of ~~cash~~22,500,000 ~~balances~~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 ~~accounts~~commission ~~receivable~~of $29.1 million. ~~The~~In ~~Company~~addition, the underwriters exercised the option to purchase an additional 750,000 shares of Concentra’s ~~excess~~common ~~cash~~stock isfor ~~held~~net ~~with~~proceeds ~~large~~of ~~financial~~$16.7 million ~~institutions~~after deducting discounts and commission of $1.0 million. ~~The~~On ~~Company~~November ~~grants~~25, ~~unsecured~~2024, ~~credit~~Select tocompleted ~~its~~a ~~patients~~tax-free distribution of 104,093,503 ~~most~~shares of ~~whom~~common ~~reside~~stock inof ~~the~~Concentra ~~service~~to ~~area~~its stockholders. Following the completion of the distribution, the Company’s ~~facilities~~no ~~and~~longer ~~are~~owns ~~insured~~any ~~under~~shares ~~third-party~~of ~~payor~~Concentra ~~agreements~~common stock.

~~Because~~In ofconnection with the ~~diversity~~separation inand ~~the~~distribution ~~Company~~of Concentra’s ~~non-governmental~~common ~~third-party~~stock, ~~payor~~the ~~base~~Company and Concentra also entered into several agreements to provide a framework of our ongoing relationship with Concentra, asincluding ~~well~~a astransition ~~their~~services ~~geographic~~agreement ~~dispersion~~(“TSA”), ~~accounts~~a ~~receivable~~separation ~~due~~agreement, ~~from~~a ~~the~~tax ~~Medicare~~matters ~~program~~agreement ~~represent~~and an employee matters agreement. The services under the ~~Company’s~~TSA ~~only~~generally ~~significant~~are ~~concentration~~a continuation of ~~credit~~the ~~risk.~~support ~~Approximately~~services ~~17%~~provided ~~and~~by ~~16%~~Select ofto Concentra prior to the ~~Company’s~~IPO. ~~accounts~~The ~~receivable~~fee isfor ~~due~~support ~~from~~services ~~Medicare~~provided atto ~~December~~Concentra was $3.7 million for the three months ended March 31, ~~2023~~2025. The income from the support services fees, ~~and~~as ~~September 30~~well as the cost to provide these services, ~~2024~~are included within General and Administrative expense on the Consolidated Statements of Operations. The provision of services under the TSA will terminate no later than November 26, ~~respectively~~2026.

~~4. Redeemable~~The ~~Non-Controlling~~results ~~Interests~~of Concentra are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for the three months ended March 31, 2024.

~~The~~Certain ~~ownership~~key ~~interests~~selected ~~held~~financial byinformation ~~outside~~included ~~parties~~ in ~~subsidiaries,~~Income ~~which~~from ~~include~~discontinued ~~limited liability companies and limited partnerships~~operations, ~~controlled~~net ~~by the Company are classified as non-controlling interests. Some~~ of ~~the Company’s non-controlling ownership interests consist of outside parties that have certain redemption rights that~~tax, iffor ~~exercised,~~Concentra ~~require~~is ~~the Company to purchase the parties’ ownership interests. These interests are classified and reported~~ as ~~redeemable non-controlling interests and have been adjusted to their redemption values, after the attribution of net income or loss.~~follows:

The changes in redeemable non-controlling interests are as follows:


	For the Three Months Ended March 31,
	2024
Revenue	$	467,598
Costs and expenses:
Cost of services, exclusive of depreciation and amortization	373,899

Depreciation and amortization	18,485
Total costs and expenses	392,384
Other operating income	284
Income from operations	75,498
Other income and expense:




Interest expense(1)	(10,082)
Income from discontinued operations before income taxes	65,416
Income tax expense	9,778
Income from discontinued operations, net of tax	55,638
Less: Net income attributable to non-controlling interests	1,323
Income from discontinued operations, net of tax, attributable to Select Medical Holdings Corporation’s common stockholders	$	54,315

	Nine Months Ended September 30,
	2023		2024
	(in thousands)
Balance as of January 1	$	34,043	$	26,297
Net income attributable to redeemable non-controlling interests	1,641		2,425
Distributions to redeemable non-controlling interests	(1,900)		(2,333)
Redemption value adjustment on redeemable non-controlling interests	436		1,901
Other	179		—
Balance as of March 31	$	34,399	$	28,290
Net income attributable to redeemable non-controlling interests	2,084		2,340
Distributions to and purchases of redeemable non-controlling interests	(2,110)		(933)
Redemption value adjustment on redeemable non-controlling interests	2		(132)
Balance as of June 30	$	34,375	$	29,565
Net income attributable to redeemable non-controlling interests	2,320		2,501
Distributions to and purchases of redeemable non-controlling interests	(7,784)		(1,611)
Redemption value adjustment on redeemable non-controlling interests	(1,912)		—
Balance as of September 30	$	26,999	$	30,455

_______________________________________________________________________________

(1) For the three months ended March 31, 2024, interest expense includes allocated interest expense of $10.0 million. 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 Consolidated Statements of Cash Flows for Concentra:


	For the Three Months Ended March 31,
	2024
Depreciation and amortization	18,485
Cash flows from investing activities:
Purchases of property, equipment, and other assets	$	17,231

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54. ~~Variable~~Credit ~~Interest~~Risk ~~Entities~~Concentrations

~~Certain~~Financial ~~states~~instruments ~~prohibit~~that ~~the~~potentially ~~“corporate~~subject ~~practice of medicine,” which restricts~~ the Company ~~from~~to ~~owning~~concentrations ~~medical~~of ~~practices~~credit ~~which~~risk ~~directly~~consist ~~employ~~primarily ~~physicians~~of orcash ~~therapists~~balances and ~~from~~accounts ~~exercising control over medical decisions by physicians and therapists~~receivable. InThe ~~these states, the~~ Company’s ~~enters~~excess ~~into~~cash ~~long-term~~is ~~management~~held ~~agreements~~ with ~~medical~~large ~~practices~~financial ~~that are owned by licensed physicians or therapists, which, in turn, employ or contract with physicians or therapists who provide professional medical services~~institutions. The ~~management~~Company ~~agreements~~grants ~~provide~~unsecured ~~for~~credit ~~the Company~~ to ~~direct~~its ~~the~~patients, ~~transfer~~most of ~~ownership~~whom ofreside ~~the~~in ~~medical practices. Based on~~ the ~~provisions~~service area of the ~~management~~Company’s ~~agreements,~~facilities ~~the~~and ~~medical practices~~ are ~~variable~~insured ~~interest~~under ~~entities~~third-party ~~for~~payor ~~which the Company is the primary beneficiary~~agreements.

AsBecause of ~~December 31, 2023, and September 30, 2024,~~ the ~~total~~diversity ~~assets~~in of the Company’s ~~variable~~non-governmental ~~interest~~third-party ~~entities~~payor ~~were~~base, ~~$246.4~~as ~~million~~well ~~and~~as ~~$266.4~~their ~~million,~~geographic ~~respectively~~dispersion, ~~and are principally comprised of~~ accounts receivable. Asdue offrom ~~December 31, 2023, and September 30, 2024,~~ the ~~total~~Medicare ~~liabilities~~program ofrepresent the Company’s ~~variable~~only ~~interest~~significant ~~entities~~concentration ~~were~~of ~~$84.3~~credit ~~million and $79~~risk.2 ~~million,~~Approximately ~~respectively,~~21% and ~~are~~22% ~~principally comprised~~ of ~~accounts payable and accrued expenses. These variable interest entities have obligations payable for services received under their management agreements with~~ the Company’s ofaccounts ~~$161.8~~receivable ~~million~~is ~~and~~due ~~$191.2~~from ~~million~~Medicare asat of December 31, ~~2023~~2024, and ~~September~~March 3031, ~~2024~~2025, respectively. ~~These intercompany balances are eliminated in consolidation.~~

65. Leases

The Company’s total lease cost is as follows:

Three Months Ended September 30, 2023

Three Months Ended September 30, 2024

Three Months Ended March 31, 2024

Three Months Ended March 31, 2025

Unrelated Parties

Related Parties

Total

Unrelated Parties

Related Parties

Total

(in thousands)

Operating lease cost

7854,~~147~~265

1,834

7956,~~981~~099

8358,~~601~~983

1,834

8560,~~435~~817

Finance lease cost:

Amortization of right-of-use assets

~~387~~143

—

~~387~~143

~~233~~143

—

~~233~~143

Interest on lease liabilities

~~352~~249

—

~~352~~249

~~302~~239

—

~~302~~239

Variable lease cost

1611,~~562~~820

—

1611,~~562~~820

1712,~~250~~433

—

1712,~~250~~433

Sublease income

(1,~~633~~760)

—

(1,~~633~~760)

(1,~~718~~631)

—

(1,~~718~~631)

Total lease cost

9364,~~815~~717

1,834

9566,~~649~~551

9970,~~668~~167

1,834

~~101~~72,~~502~~001

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2024
	Unrelated Parties		Related Parties		Total		Unrelated Parties		Related Parties		Total
	(in thousands)
Operating lease cost	$	231,671	$	5,501	$	237,172	$	243,888	$	5,501	$	249,389
Finance lease cost:
Amortization of right-of-use assets	1,185		—		1,185		839		—		839
Interest on lease liabilities	1,059		—		1,059		927		—		927
Variable lease cost	48,854		84		48,938		51,501		16		51,517
Sublease income	(5,027)		—		(5,027)		(5,159)		—		(5,159)
Total lease cost	$	277,742	$	5,585	$	283,327	$	291,996	$	5,517	$	297,513

6. Accrued and other liabilities

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7. Long-Term Debt and Notes Payable

As of September 30, 2024, the Company’s long-term debt and notes payable are as follows:

	PrincipalOutstanding		Unamortized Premium (Discount)		UnamortizedIssuance Costs		Carrying Value		Fair Value
	(in thousands)
Select:
6.250% senior notes	$	1,225,000	$	11,051	$	(5,672)	$	1,230,379	$	1,228,197
Select credit facilities:
Revolving facility	10,000		—		—		10,000		9,850
Term loan	372,982		(1,705)		(457)		370,820		374,381
Other debt, including finance leases	48,721		—		(525)		48,196		48,196
Total Select debt	1,656,703		9,346		(6,654)		1,659,395		1,660,624
Concentra:
6.875% senior notes	650,000		—		(12,316)		637,684		681,493
Concentra credit facilities:
Term loan	850,000		(1,034)		(11,918)		837,048		847,875
Other debt, including finance leases	7,615		—		—		7,615		7,615
Total Concentra debt	1,507,615		(1,034)		(24,234)		1,482,347		1,536,983
Total debt	$	3,164,318	$	8,312	$	(30,888)	$	3,141,742	$	3,197,607

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

	2024		2025		2026		2027		2028		Thereafter		Total
	(in thousands)
Select:
6.250% senior notes	$	—	$	—	$	1,225,000	$	—	$	—	$	—	$	1,225,000
Select credit facilities:
Revolving facility	—		—		—		10,000		—		—		10,000
Term loan	—		—		—		372,982		—		—		372,982
Other debt, including finance leases	31,105		2,219		2,186		1,637		1,266		10,308		48,721
Total Select debt	31,105		2,219		1,227,186		384,619		1,266		10,308		1,656,703
Concentra:
6.875% senior notes	—		—		—		—		—		650,000		650,000
Concentra credit facilities:
Term loan	2,125		8,500		8,500		8,500		8,500		813,875		850,000
Other debt, including finance leases	1,874		1,570		672		718		768		2,013		7,615
Total Concentra debt	3,999		10,070		9,172		9,218		9,268		1,465,888		1,507,615
Total debt	$	35,104	$	12,289	$	1,236,358	$	393,837	$	10,534	$	1,476,196	$	3,164,318

As of December 31, 2023, the Company’s long-term debt and notes payable are as follows:

	PrincipalOutstanding		Unamortized Premium (Discount)		UnamortizedIssuance Costs		Carrying Value		Fair Value
	(in thousands)
6.250% senior notes	$	1,225,000	$	15,533	$	(7,937)	$	1,232,596	$	1,228,063
Credit facilities:
Revolving facility	280,000		—		—		280,000		278,600
Term loan	2,092,485		(12,040)		(3,229)		2,077,216		2,092,485
Other debt, including finance leases	68,255		—		(63)		68,192		68,192
Total debt	$	3,665,740	$	3,493	$	(11,229)	$	3,658,004	$	3,667,340

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Select Credit Facilities

On July 26, 2024, the Company entered into Amendment No. 10 to the Select credit agreement. Amendment No. 10 reduced the revolving credit facility commitments available under the credit agreement from $770.0 million to $550.0 million. Select also made a voluntary prepayment of $1,640.4 million on its term loan and a $300.0 million repayment on its revolving credit facility using the proceeds derived from the Concentra IPO and debt transactions, as described in Note 15, Concentra Separation. During the three months ended September 30, 2024, the Company recognized a $10.9 million loss on early retirement of debt as a result of the prepayment on its term loan and Amendment No. 10 to the Select credit agreement.

Concentra Credit Facilities

On July 26, 2024, Concentra Health Services, Inc. (“CHSI”), a then wholly-owned subsidiary of Concentra, entered into a senior secured credit agreement (the “Concentra credit agreement”) that provides for an $850.0 million term loan (the “Concentra term loan”), and a $400.0 million revolving credit facility, including a $75.0 million sublimit for the issuance of standby letters of credit (the “Concentra revolving credit facility” and, together with the Concentra term loan, the “Concentra credit facilities”).

Borrowings under the Concentra credit facilities are guaranteed by Concentra and substantially all of Concentra's current domestic subsidiaries and will be guaranteed by CHSI’s future domestic subsidiaries and secured by substantially all of Concentra’s existing and future property and assets and by a pledge of Concentra’s capital stock, the capital stock of CHSI’s domestic subsidiaries and up to 65% of the capital stock of CHSI’s foreign subsidiaries held directly by CHSI or a domestic subsidiary.

Borrowings under the Concentra credit agreement bear interest at a rate equal to: (i) in the case of the Concentra term loan, Term SOFR plus a percentage ranging from 2.00% to 2.25%, or Alternate Base Rate plus a percentage ranging from 1.00% to 1.25%, in each case based on CHSI’s leverage ratio; and (ii) in the case of the Concentra revolving credit facility, Term SOFR plus a percentage ranging from 2.25% to 2.75%, or Alternate Base Rate plus a percentage ranging from 1.25% to 1.75%, in each case on CHSI’s leverage ratio, as defined in the Concentra credit agreement.

The Concentra term loan amortizes in equal quarterly installments in amounts equal to 0.25% of the aggregate original principal amount of the Concentra term loan commencing on December 31, 2024. The balance of the Concentra term loan will be payable on July 26, 2031. Similarly, the Concentra revolving credit facility will be payable on July 26, 2029.

The Concentra credit facilities require CHSI to maintain a leverage ratio (as defined in the Concentra credit agreement), which is tested quarterly and currently must not be greater than 6.50 to 1.00. Failure to comply with this covenant would result in an event of default under the Concentra revolving credit facility and, absent a waiver or an amendment from the revolving lenders, preclude CHSI from making further borrowings under the Concentra revolving credit facility and permit the revolving lenders to accelerate all outstanding borrowings under the Concentra revolving credit facility. Upon termination of the commitments for the Concentra revolving credit facility and acceleration of all outstanding borrowings thereunder, failure to comply with the covenant also would constitute an event of default with respect to the Concentra term loan.

The Concentra credit facilities also contain a number of other affirmative and restrictive covenants, including limitations on mergers, consolidations and dissolutions; sales of assets; investments and acquisitions; indebtedness; liens; affiliate transactions; and dividends and restricted payments. The Concentra credit facilities contain events of default for non-payment of principal and interest when due, cross-default and cross-acceleration provisions and an event of default that would be triggered by a change of control.

Prepayment of borrowings

CHSI will be required to prepay borrowings under the Concentra credit facilities with (i) 100% of the net cash proceeds received from non-ordinary course asset sales or other dispositions, or as a result of a casualty or condemnation, subject to reinvestment provisions and other customary carveouts and, to the extent required, the payment of certain indebtedness secured by liens subject to a first lien intercreditor agreement if CHSI’s total net leverage ratio is greater than 4.50 to 1.00 and 50% of such net cash proceeds if our total net leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, (ii) 100% of the net cash proceeds received from the issuance of debt obligations other than certain permitted debt obligations, and (iii) 50% of excess cash flow (as defined in the Credit Agreement) if CHSI’s leverage ratio is greater than 4.50 to 1.00 and 25% of excess cash flow if CHSI’s leverage ratio is less than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, in each case, reduced by the aggregate amount of term loans, revolving loans and certain other debt optionally prepaid (and, in the case of revolving loans, accompanied by a reduction in the related commitment) during the applicable fiscal year. CHSI will not be required to prepay borrowings with excess cash flow or the net cash proceeds of asset sales if CHSI’s leverage ratio is less than or equal to 4.00 to 1.00.

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Concentra 6.875% Senior Notes

On July 11, 2024, the Company completed a private offering by its then wholly-owned subsidiary, Concentra Escrow Issuer Corporation (the “Escrow Issuer”), of $650.0 million aggregate principal amount of 6.875% senior notes due July 15, 2032 (the “Concentra senior notes”). On July 26, 2024, Escrow Issuer merged with and into CHSI, with CHSI continuing as the surviving entity, and CHSI assumed all of the Escrow Issuer’s obligations under the senior notes. The Concentra senior notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Concentra and certain of its wholly-owned subsidiaries. Interest on the Concentra senior notes accrues at a rate of 6.875% per annum and is payable semi-annually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2025.

8. Accrued and other liabilities

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

	December 31, 2023		September 30, 2024
	December 31, 2024		March 31, 2025
Accrued payroll	$	~~238~~183,~~768~~045	$	~~214~~134,~~380~~447
Accrued vacation	~~157~~122,~~748~~376		~~161~~126,~~921~~390
Accrued interest	329,~~472~~075		2114,~~541~~184
Accrued other	~~297~~288,~~663~~681		~~355~~268,~~164~~350
Income taxes payable	16,~~499~~644		1512,~~197~~245
Accrued and other liabilities	$	~~728~~609,~~150~~821	$	~~768~~555,~~203~~616

97. 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 ~~which~~that is indexed to one-month Term SOFR. The Company’s objective in using an interest rate derivative ~~was~~is to mitigate its exposure to increases in interest rates. The Company had an interest rate cap ~~limited~~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 will limit the Company’s exposure to increases in the variable rate index to 14.05% on $21.0 billion of principal outstanding under the term loan, as the interest rate cap ~~provided~~provides for payments from the counterparty when interest rates ~~rose~~rise above 14.05%. The interest rate cap, ~~which~~has ~~expired on September 30, 2024, had~~ a ~~$2.0 billion~~deferred ~~notional~~premium ~~amount.~~that ~~The~~the Company ~~paid~~will apay monthly ~~premium for the interest rate cap~~ over the term of the agreement. The annual premium ~~was~~is equal to 0.~~0916~~3300% of the notional amount, or approximately $13.83 million.

The interest rate cap ~~was~~has been designated as a cash flow hedge and ~~was~~is highly effective at offsetting the changes in cash outflows when the variable rate index ~~exceeded~~exceeds 14.05%. Changes in the fair value of the interest rate cap, net of tax, ~~were~~are recognized in other comprehensive ~~income~~loss and reclassified out of accumulated other comprehensive ~~income~~loss and into interest expense when the hedged interest obligations affected earnings. At June 30, 2024, we determined that a portion of the underlying cash flows related to our hedging relationship was probable not to occur. Accordingly, we reclassified changes in the fair value of the interest rate cap, net of tax, related to these cash flows out of accumulated other comprehensive income and into interest expense during the three months ended June 30, 2024. Subsequent changes in the fair value of the interest rate cap related to these cash flows were recorded to interest expense during the three months ended September 30, 2024.

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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,
	Three Months Ended March 31,
	2023		2024
	2024		2025
	(in thousands)
Balance as of January 1	$	8842,~~602~~907	$	~~42,907~~—
Gain (loss) on interest rate cap cash flow hedge	(24,~~696)~~370		4(3,~~370~~106)
Amounts reclassified from accumulated other comprehensive income	(13,252)		(16,347)
Amounts reclassified from accumulated other comprehensive income (loss)	(16,347)		—
Balance as of March 31	$	7230,~~654~~930	$	30(3,~~930~~106)
Gain on interest rate cap cash flow hedge	17,527		1,323
Amounts reclassified from accumulated other comprehensive income	(15,134)		(16,071)
Amounts reclassified from accumulated other comprehensive income - forecasted transactions probable not to occur	—		(10,400)
Balance as of June 30	$	75,047	$	5,782
Gain on interest rate cap cash flow hedge	3,895		30
Amounts reclassified from accumulated other comprehensive income	(16,215)		(5,812)
Balance as of September 30	$	62,727	$	—

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,
			Three Months Ended March 31,
Statement of Operations	~~2023~~		~~2024~~			~~2023~~2024		~~2024~~2025
	~~(in thousands)~~				(in thousands)
Gains included in interest expense	$	~~21,477~~	$	~~7,647~~		$	5921,~~074~~509	$	~~63,987~~—
Income tax expense	~~(5,262)~~		~~(1,835)~~			(145,~~473~~162)		~~(15,357)~~—
Amounts reclassified from accumulated other comprehensive income	$	16,215	$	5,812		$	44,601	$	48,630
Amounts reclassified from accumulated other comprehensive income (loss)						$	16,347	$	—

~~Changes~~The inCompany ~~the~~expects ~~fair~~that ~~value~~approximately $0.4 million of ~~the~~estimated ~~interest~~pre-tax ~~rate~~losses ~~cap~~will ~~recorded~~be ~~directly~~reclassified tofrom ~~interest~~accumulated ~~expense~~other ~~totaled~~comprehensive ~~$0.2 million~~loss ~~for~~into ~~the~~interest ~~three~~expense ~~months~~within ~~ended~~the ~~September~~next ~~30,~~twelve ~~2024~~months.

Refer to Note 108 – Fair Value of Financial Instruments for information on the fair value of the Company’s interest rate cap contract and its balance sheet classification.

108. Fair Value of Financial Instruments

Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as outlined below, on the basis of the observability of the inputs used in the fair value measurement:

•Level 1 – inputs are based upon quoted prices for identical instruments in active markets.

•Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data.

•Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the instrument.

The Company’s interest rate cap contract is recorded at its fair value in the condensed consolidated balance sheets on a recurring basis. The fair value of the interest rate cap contract is based upon a model-derived valuation using observable market inputs, such as interest rates and interest rate volatility, and the strike price.

Financial Instrument

Balance Sheet Classification

Level

~~December 31, 2023~~

~~September~~March 3031, ~~2024~~2025

Asset:

(in thousands)

Liability:

(in thousands)

Interest rate cap contract, current portion

~~Current~~Accrued ~~portion of interest rate cap contract~~other

Level 2

~~58,962~~

—2,919

Interest rate cap contract, non-current portion

Other non-current liabilities

Level 2

1,168

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The Company does not measure its indebtedness at fair value in its condensed consolidated balance sheets. The fair ~~values~~value of the ~~Select and Concentra~~ 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 79 – Long-Term Debt and Notes Payable, approximates fair value.

		December 31, 2023				September 30, 2024
		December 31, 2024				March 31, 2025
Financial Instrument	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
		(in thousands)
Select:
6.250% senior notes	Level 2	$	539,363	$	528,000	$	539,696	$	535,453
6.250% senior notes	Level 2	$	1,232,596	$	1,228,063	$	1,230,379	$	1,228,197
Credit facilities:
Select credit facilities:
Revolving facility	Level 2	105,000		102,900		180,000		177,300
Revolving facility	Level 2	280,000		278,600		10,000		9,850
Term loan	Level 2	1,041,661		1,051,313		1,039,346		1,044,757
Term loan	Level 2	2,077,216		2,092,485		370,820		374,381
Concentra:
6.875% senior notes	Level 2	—		—		637,684		681,493
Concentra credit facilities:
Term loan	Level 2	—		—		837,048		847,875

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.

9. Long-Term 16Debt and Notes Payable

As of March 31, 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	$	—	$	(10,304)	$	539,696	$	535,453
Credit facilities:
Revolving facility	180,000		—		—		180,000		177,300
Term loan	1,047,375		(2,593)		(5,436)		1,039,346		1,044,757
Other debt, including finance leases	37,192		—		(472)		36,720		36,720
Total debt	$	1,814,567	$	(2,593)	$	(16,212)	$	1,795,762	$	1,794,230

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	—		—		—		—		180,000		—		180,000
Term loan	7,875		10,500		10,500		10,500		10,500		997,500		1,047,375
Other debt, including finance leases	16,931		2,842		1,637		54		58		15,670		37,192
Total debt	$	24,806	$	13,342	$	12,137	$	10,554	$	190,558	$	1,563,170	$	1,814,567

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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1110. 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~~, and Concentra segment~~. Other activities include the Company’s corporate shared services, certain investments, and employee leasing services with non-consolidating subsidiaries.

The Company’s ~~evaluates~~chief operating decision maker is its Executive Chairman. The chief operating decision maker uses Adjusted EBITDA in the ~~performance~~annual budgeting and forecasting process. The chief operating decision maker considers budget-to-actual variances when making decisions about the allocation of ~~its~~operating ~~segments~~and ~~based~~capital onresources 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,				Nine Months Ended September 30,
	Three Months Ended March 31, 2024
	2023		2024		2023		2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Other		Total
	(in thousands)
Revenue:
Revenue	$	655,880	$	265,700	$	303,158	$	96,473	$	1,321,211
Critical illness recovery hospital	$	563,628	$	582,950	$	1,732,645	$	1,843,751
Personnel expense	349,294		147,650		215,417
Rehabilitation hospital	247,101		282,709		719,419		816,240
Other segment items (1)	190,646		56,650		62,813
Outpatient rehabilitation	291,804		312,042		890,679		930,696
Adjusted EBITDA	115,940		61,400		24,928
Concentra	473,964		489,638		1,397,341		1,435,151
Total assets	2,608,979		1,233,828		1,423,740		228,868		5,495,415
Other	89,197		93,881		265,118		283,854
Capital expenditures	15,941		7,101		9,500		2,744		35,286
Total Company	$	1,665,694	$	1,761,220	$	5,005,202	$	5,309,692
Adjusted EBITDA:
Critical illness recovery hospital	$	46,362	$	50,763	$	188,631	$	238,536
Rehabilitation hospital	53,626		60,117		155,531		183,471
Outpatient rehabilitation	26,346		28,319		89,395		82,016
Concentra	98,907		101,571		293,046		299,313
Other	(31,404)		(35,301)		(99,234)		(109,621)
Total Company	$	193,837	$	205,469	$	627,369	$	693,715
Total assets:
Critical illness recovery hospital	$	2,454,578	$	2,658,301	$	2,454,578	$	2,658,301
Rehabilitation hospital	1,222,853		1,294,125		1,222,853		1,294,125
Outpatient rehabilitation	1,401,148		1,414,009		1,401,148		1,414,009
Concentra	2,321,671		2,473,289		2,321,671		2,473,289
Other	283,758		162,937		283,758		162,937
Total Company	$	7,684,008	$	8,002,661	$	7,684,008	$	8,002,661
Purchases of property, equipment, and other assets:
Critical illness recovery hospital	$	21,098	$	16,208	$	76,119	$	49,765
Rehabilitation hospital	4,813		10,595		15,298		32,514
Outpatient rehabilitation	8,855		8,402		29,263		26,064
Concentra	15,456		15,145		45,702		47,639
Other	(24)		333		2,215		2,766
Total Company	$	50,198	$	50,683	$	168,597	$	158,748


	Three Months Ended March 31, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Revenue	$	637,030	$	307,388	$	307,342	$	101,412	$	1,353,172
Personnel expense	348,548		170,810		219,438
Other segment items (1)	201,833		66,154		63,631
Adjusted EBITDA	86,649		70,424		24,273
Total assets	2,696,663		1,405,911		1,415,655		177,774		5,696,003
Capital expenditures	16,671		25,925		9,047		696		52,339

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

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

	Three Months Ended September 30, 2023
			For the Year Ended		Three Months Ended March 31,
	Critical Illness Recovery Hospital		Rehabilitation Hospital			OutpatientRehabilitation				Concentra				Other		Total
								2024				2025
	~~(in thousands)~~					(in thousands)
Adjusted EBITDA	$	46,362	$	53,626		$	26,346			$	98,907			$	(31,404)
Adjusted EBITDA - Critical Illness Recovery Hospital Segment								$	115,940			$	86,649
Depreciation and amortization	(16,402)		(7,106)			(8,861)				(17,959)				(2,066)
Adjusted EBITDA - Rehabilitation Hospital Segment								61,400				70,424
Stock compensation expense	—		—			—				—				(11,483)
Adjusted EBITDA - Outpatient Rehabilitation Segment								24,928				24,273
Income (loss) from operations	$	29,960	$	46,520		$	17,485			$	80,948			$	(44,953)	$	129,960
Other revenue								96,473				101,412
Loss on early retirement of debt																(14,692)
Other cost of services (1)								(96,473)				(101,412)
Equity in earnings of unconsolidated subsidiaries																11,561
Other general and administrative expenses (1)								(36,493)				(29,901)
Interest expense																(50,271)
Depreciation and amortization								(35,584)				(34,808)
Income before income taxes																$	76,558
Stock compensation expense								(11,444)				(3,892)
Concentra separation transaction costs								(278)				—
Equity in earnings of unconsolidated subsidiaries								10,421				12,512
Interest expense								(40,681)				(29,072)
Income from continuing operations before income taxes								$	88,209			$	96,185

	Three Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Adjusted EBITDA	$	50,763	$	60,117	$	28,319	$	101,571	$	(35,301)
Depreciation and amortization	(17,032)		(6,829)		(9,121)		(15,213)		(1,948)
Stock compensation expense	—		—		—		(168)		(13,208)
Concentra separation transaction costs(1)	—		—		—		44		(861)
Income (loss) from operations	$	33,731	$	53,288	$	19,198	$	86,234	$	(51,318)	$	141,133
Loss on early retirement of debt											(10,939)
Equity in earnings of unconsolidated subsidiaries											33,069
Interest expense											(55,439)
Income before income taxes											$	107,824

_______________________________________________________________________________

(1) ~~Concentra~~Exclusive ~~separation transaction costs represent incremental consulting, legal, and audit-related fees incurred in connection with the Company’s planned separation~~ of ~~the Concentra segment into a new~~depreciation, ~~publicly~~amortization ~~traded company~~ and ~~are~~stock ~~included~~compensation ~~within general and administrative expenses on the Condensed Consolidated Statements of Operations~~expense.

	Nine Months Ended September 30, 2023
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Adjusted EBITDA	$	188,631	$	155,531	$	89,395	$	293,046	$	(99,234)
Depreciation and amortization	(46,925)		(20,881)		(26,097)		(54,552)		(6,303)
Stock compensation expense	—		—		—		(178)		(31,812)
Income (loss) from operations	$	141,706	$	134,650	$	63,298	$	238,316	$	(137,349)	$	440,621
Loss on early retirement of debt											(14,692)
Equity in earnings of unconsolidated subsidiaries											30,618
Interest expense											(147,839)
Income before income taxes											$	308,708

11. Revenue from Contracts with Customers

The 18following tables disaggregate the Company’s revenue for the three months ended March 31, 2024 and 2025:


	Three Months Ended March 31, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	226,261	$	126,386	$	45,841	$	—	$	398,488
Non-Medicare	428,666		126,577		239,613		—		794,856
Total patient services revenues	654,927		252,963		285,454		—		1,193,344
Other revenue	953		12,737		17,704		96,473		127,867
Total revenue	$	655,880	$	265,700	$	303,158	$	96,473	$	1,321,211


	Three Months Ended March 31, 2025
	Critical Illness Recovery Hospital		Rehabilitation Hospital		Outpatient Rehabilitation		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	203,864	$	141,341	$	45,100	$	—	$	390,305
Non-Medicare	432,185		153,040		244,444		—		829,669
Total patient services revenues	636,049		294,381		289,544		—		1,219,974
Other revenue	981		13,007		17,798		101,412		133,198
Total revenue	$	637,030	$	307,388	$	307,342	$	101,412	$	1,353,172

Table of Contents

	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Adjusted EBITDA	$	238,536	$	183,471	$	82,016	$	299,313	$	(109,621)
Depreciation and amortization	(51,779)		(21,185)		(27,441)		(51,568)		(6,178)
Stock compensation expense	—		—		—		(500)		(38,899)
Concentra separation transaction costs(1)	—		—		—		(1,569)		(1,696)
Income (loss) from operations	$	186,757	$	162,286	$	54,575	$	245,676	$	(156,394)	$	492,900
Loss on early retirement of debt											(10,939)
Equity in earnings of unconsolidated subsidiaries											49,805
Interest expense											(143,309)
Income before income taxes											$	388,457

12. Earnings per Share

_______________________________________________________________________________

(1) Concentra separation transaction costs represent incremental consulting, legal, and audit-related fees incurred in connection with the Company’s planned separation of the Concentra segment into a new, publicly traded company and are included within general and administrative expenses on the Condensed Consolidated Statements of Operations.

12. Revenue from Contracts with Customers

The following tables disaggregate the Company’s revenue for the three and nine months ended September 30, 2023 and 2024:

	Three Months Ended September 30, 2023
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	201,881	$	115,145	$	45,286	$	261	$	—	$	362,573
Non-Medicare	360,847		119,524		228,386		472,171		—		1,180,928
Total patient services revenues	562,728		234,669		273,672		472,432		—		1,543,501
Other revenue	900		12,432		18,132		1,532		89,197		122,193
Total revenue	$	563,628	$	247,101	$	291,804	$	473,964	$	89,197	$	1,665,694

	Three Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	182,952	$	124,386	$	48,804	$	274	$	—	$	356,416
Non-Medicare	399,091		145,536		245,064		487,402		—		1,277,093
Total patient services revenues	582,043		269,922		293,868		487,676		—		1,633,509
Other revenue	907		12,787		18,174		1,962		93,881		127,711
Total revenue	$	582,950	$	282,709	$	312,042	$	489,638	$	93,881	$	1,761,220

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	Nine Months Ended September 30, 2023
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	639,007	$	338,650	$	137,734	$	754	$	—	$	1,116,145
Non-Medicare	1,090,650		344,885		696,617		1,392,136		—		3,524,288
Total patient services revenues	1,729,657		683,535		834,351		1,392,890		—		4,640,433
Other revenue	2,988		35,884		56,328		4,451		265,118		364,769
Total revenue	$	1,732,645	$	719,419	$	890,679	$	1,397,341	$	265,118	$	5,005,202

	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
	(in thousands)
Patient service revenue:
Medicare	$	603,981	$	370,216	$	142,658	$	810	$	—	$	1,117,665
Non-Medicare	1,237,023		408,024		732,895		1,428,786		—		3,806,728
Total patient services revenues	1,841,004		778,240		875,553		1,429,596		—		4,924,393
Other revenue	2,747		38,000		55,143		5,555		283,854		385,299
Total revenue	$	1,843,751	$	816,240	$	930,696	$	1,435,151	$	283,854	$	5,309,692

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)~~Net~~Income ~~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~~March 3031, ~~2023~~2024 and ~~2024~~2025.

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

	~~Basic and Diluted EPS~~				Basic and Diluted EPS
	Three Months Ended September 30,					Nine Months Ended September 30,
			Three Months Ended March 31,
	2023		2024			2023		2024
						2024		2025
	~~(in thousands)~~				(in thousands)
Net income	$	60,816	$	81,015		$	237,933	$	292,948
Income from continuing operations, net of tax						$	61,529	$	74,732
Less: net income attributable to non-controlling interests	~~12,636~~		~~25,387~~			4018,~~711~~947		6218,~~860~~051
Net income attributable to the Company	48,180		55,628			197,222		230,088
Income from continuing operations, net of tax, attributable to Select Medical’s common stockholders						42,582		56,681
Less: Distributed and undistributed income attributable to participating securities	1,722		2,145			7,155		8,935
Less: distributed and undistributed net income attributable to participating securities						1,493		1,145
Distributed and undistributed income attributable to common shares	$	46,458	$	53,483		$	190,067	$	221,153
Distributed and undistributed income from continuing operations, net of tax, attributable to common shares						$	41,089	$	55,536

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

Three Months Ended September 30,

Three Months Ended March 31,

2023

2024

2025

Net Income Allocation

Shares(1)

Basic and Diluted EPS

Net Income Allocation

Shares(1)

Basic and Diluted EPS

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

4641,~~458~~089

123,~~400~~859

0.3833

5355,~~483~~536

~~124~~126,~~714~~205

0.4344

Participating securities

1,~~722~~493

4,~~574~~501

0.3833

21,145

52,~~001~~602

0.4344

Total Company

4842,~~180~~582

5556,~~628~~681

	Nine Months Ended September 30,
	2023					2024
	Net Income Allocation		Shares(1)	Basic and Diluted EPS		Net Income Allocation		Shares(1)	Basic and Diluted EPS
	(in thousands, except for per share amounts)
Common shares	$	190,067	122,865	$	1.55	$	221,153	124,175	$	1.78
Participating securities	7,155		4,625	$	1.55	8,935		5,017	$	1.78
Total Company	$	197,222				$	230,088

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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

~~14. Commitments and Contingencies~~15

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13. 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 $3742.0 million for professional malpractice liability insurance and $4045.0 million for general liability insurance. For the Company’s Concentra center operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $29.0 million for professional malpractice liability insurance and $29.0 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.

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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 2024, by order of the U.S. District Court for the Middle District of Florida, 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 in October 2021 and 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 amended complaint alleges 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 September 2024, the Company filed a motion to dismiss the amended complaint on multiple grounds. At this time, the Company is unable to predict the timing and outcome of this matter.

California Department of Insurance Investigation. On February 5, 2024, Concentra received a subpoena from the California Department of Insurance relating to an investigation under the California Insurance Frauds Prevention Act (“IFPA”), Cal. Ins. Code § 1871.7 et seq., which allows a whistleblower to file a false claims lawsuit based on the submission of false or fraudulent claims to insurance companies. The subpoena seeks documentation relating mainly to Concentra’s billing and coding for physical therapy claims submitted to commercial insurers and workers compensation carriers located or doing business in California. The Company has produced data and other documents requested by the California Department of Insurance and is fully cooperating on this investigation. At this time, the Company is unable to predict the timing and outcome of this matter.16

Perry Johnson & Associates, Inc. Data Breach. On November 10, 2023, Perry Johnson & Associates, Inc., a third-party vendor of health information technology solutions that provides medical transcription services (“PJ&A”), notified Concentra Health Services, Inc. (“Concentra”) that certain information related to particular Concentra patients was potentially affected by a cybersecurity event. In February 2024, Concentra sent notices to almost four million patients who may have been impacted by the data breach. During the first quarter of 2024, Concentra became aware of six putative class action lawsuits filed against PJ&A and Concentra related to the data breach. Five of the putative class action lawsuits have been transferred to the U.S. District Court for the Eastern District of New York and consolidated with the one class action lawsuit pending there. Plaintiffs filed a Consolidated Class Action Complaint on August 19, 2024 against PJ&A, Concentra, Select Medical Holdings Corporation and other unrelated defendants under the caption In re Perry Johnson & Associates Medical Transcription Data Security Breach Litigation (“Consolidated Complaint”). The Consolidated Complaint alleges that the plaintiffs have suffered injuries and damages under theories of negligence, breach of contract, and failure to comply with statutory duties, including duties under HIPAA, FTC guidelines and industry standards, and various state consumer protection and deceptive trade practice laws. The Company is working with its cybersecurity risk insurance policy carrier and does not believe that the data breach or the lawsuits will have a material impact on its operations or financial performance. However, at this time, the Company is unable to predict the timing and outcome of these matters.

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152024, by order of the U. ~~Concentra~~S. ~~Separation~~District Court for the Middle District of Florida, 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 in October 2021 and 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 amended complaint alleges 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 September 2024, the Company filed a motion to dismiss the amended complaint on multiple grounds. At this time, the Company is unable to predict the timing and outcome of this matter.

On July 26, 2024, Concentra Group Holdings Parent (“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 $014.01 Subsequent ~~per~~Events 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. Concentra shares began trading on the New York Stock Exchange under the symbol “CON” on July 25, 2024.

~~After~~On ~~the~~April ~~closing~~30, ~~of the IPO and underwriters option~~2025, ~~Select owns 81.74% of~~ the ~~total~~Company’s ~~outstanding~~Board ~~shares~~ of ~~Concentra~~Directors ~~common~~declared ~~stock,~~a ~~and~~cash ~~continues~~dividend ~~to consolidate the financial results~~ of ~~Concentra~~$0.0625 ~~Select~~per ~~intends~~share. toThe ~~make~~dividend awill ~~distribution, which is intended to~~ be ~~tax-free~~payable ~~for~~on ~~U.S.~~or ~~federal~~about ~~income~~May ~~tax~~29, ~~purposes~~2025, to ~~its~~ stockholders of ~~all~~record as of ~~its~~the ~~remaining~~close ~~equity~~of ~~interest~~business inon ~~Concentra~~May ~~within~~15, ~~twelve months of the IPO~~2025.

~~16. Subsequent Events~~ 17

On October 30, 2024, the Company’s Board of Directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about November 26, 2024, to stockholders of record as of the close of business on November 13, 2024.

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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 ~~the potential impact of the COVID-19 pandemic on those financial and operating results,~~ 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, could negatively impact patient volumes and revenues, increase labor and other operating costs, disrupt global financial markets, and/or further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;

•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;

•failure to complete or achieve some or all the expected benefits of the ~~potential~~ separation of Concentra;

•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, ~~2023~~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, ~~and occupational health centers~~ in the United States. As of ~~September~~March 3031, ~~2024~~2025, we had operations in 4640 states and the District of Columbia. We operated ~~106~~104 critical illness recovery hospitals in 29 states, 3435 rehabilitation hospitals in 1314 states, and 1,~~925~~911 outpatient rehabilitation clinics in 39 states and the District of Columbia~~, 549 occupational health centers in 41 states, and 156 onsite clinics at employer worksites~~.

Our reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, and the outpatient rehabilitation segment~~, and the Concentra segment~~. We had revenue of $51,~~309~~353.72 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. Of this total, we earned approximately 3547% of our revenue from our critical illness recovery hospital segment, approximately 1523% from our rehabilitation hospital segment, and approximately 1823% from our outpatient rehabilitation segment~~, and approximately 27% from our Concentra 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. Our Concentra segment consists of occupational health centers that provide workers’ compensation injury care, physical therapy, and consumer health services as well as onsite clinics located at employer worksites that deliver occupational health services.

On July 26, 2024, Concentra ~~Separation~~Group Holdings Parent, Inc. (“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. 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 months ended March 31, 2024.

On July 26, 2024, Concentra Group Holdings Parent (“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 the Concentra’s common stock for net proceeds of $16.7 million after deducting discounts and commission of $1.0 million. Concentra shares began trading on the New York Stock Exchange under the symbol “CON” on July 25, 2024. 20

After the closing of the IPO and underwriter option, Select owns 81.74% of the total outstanding shares of Concentra common stock, and continues to consolidate the financial results of Concentra. Select intends to make a distribution, which is intended to be tax-free for U.S. federal income tax purposes, to its stockholders of all of its remaining equity interest in Concentra within twelve months of the IPO.

Impact of the Change Healthcare Cybersecurity Incident

On February 22, 2024, UnitedHealth Group Incorporated indicated in a Form 8-K filing, that a cyber security threat actor had gained access to some of its Change Healthcare information technology systems. Upon receiving notification of the incident, we severed connectivity with all Change Healthcare-related systems and we are not aware of any impact on our own information technology systems. However, as a result of the incident, certain of our patient billing and collections processes were disrupted and alternative platforms needed to be enabled to resume normal patient billing and collections operations. The Company began to reconnect to certain applications during March 2024, and since then there has been a significant reduction in our claims processing backlog, resulting in a decrease in our days sales outstanding. We expect a further reduction in the resulting impact on our days sales outstanding during the fourth quarter of 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, ~~net~~ 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 ~~net~~ income ~~and 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,
			Three Months Ended March 31,
	2023		2024			2023		2024
						2024		2025
	~~(in thousands)~~				(in thousands)
Net income	$	60,816	$	81,015		$	237,933	$	292,948
Income from continuing operations, net of tax						$	61,529	$	74,732
Income tax expense	15,742		26,809			70,775		95,509
Income tax expense from continuing operations						26,680		21,453
Interest expense	~~50,271~~		~~55,439~~			~~147~~40,~~839~~681		~~143~~29,~~309~~072
Equity in earnings of unconsolidated subsidiaries	~~(11,561)~~		~~(33,069)~~			(3010,~~618~~421)		(4912,~~805~~512)
Loss on early retirement of debt	14,692		10,939			14,692		10,939
Income from continuing operations before other income and expense						118,469		112,745
Income from operations	129,960		141,133			440,621		492,900
Stock compensation expense:
Included in general and administrative	~~9,425~~		~~10,961~~			269,~~383~~682		323,~~517~~108
Included in cost of services	~~2,058~~		~~2,415~~			51,~~607~~762		~~6,882~~784
Depreciation and amortization	~~52,394~~		~~50,143~~			~~154~~35,~~758~~584		~~158~~34,~~151~~808
Concentra separation transaction costs(1)	—		817			—		3,265
Concentra separation transaction costs						278		—
Adjusted EBITDA	$	~~193,837~~	$	~~205,469~~		$	~~627~~165,~~369~~775	$	~~693~~151,~~715~~445

~~_______________________________________________________________________________~~21

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Summary Financial Results

Three Months Ended ~~September~~March 3031, ~~2024~~2025

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

	Three Months Ended September 30, 2024
	Three Months Ended March 31, 2025
	Critical Illness Recovery Hospital			Rehabilitation Hospital			OutpatientRehabilitation			~~Concentra~~Other			~~Other~~Total			~~Total~~
	(in thousands)
Revenue	$	~~582~~637,~~950~~030		$	~~282~~307,~~709~~388		$	~~312~~307,~~042~~342		$	~~489~~101,~~638~~412		$	931,~~881~~353,172		$	~~1,761,220~~
Operating expenses	(~~533~~550,~~220~~381)			(~~222~~236,~~592~~964)			(283,~~723~~069)			(~~388~~135,~~191~~205)			(~~143~~1,~~520~~205,619)			~~(1,571,246)~~
Depreciation and amortization	(1716,~~032~~648)			(67,~~829~~378)			(9,~~121~~052)			(151,~~213~~730)			(134,~~948~~808)			~~(50,143)~~
Other operating income	1,033			—			—			—			269			1,302
Income (loss) from continuing operations before other income and expense	$	70,001		$	63,046		$	15,221		$	(35,523)		$	112,745
Income (loss) from operations	$	33,731		$	53,288		$	19,198		$	86,234		$	(51,318)		$	141,133
Depreciation and amortization	16,648			7,378			9,052			1,730			34,808
Depreciation and amortization	17,032			6,829			9,121			15,213			1,948			50,143
Stock compensation expense	—			—			—			3,892			3,892
Concentra transaction separation costs	—			—			—			(44)			861			817
Adjusted EBITDA	$	86,649		$	70,424		$	24,273		$	(29,901)		$	151,445
Stock compensation expense	—			—			—			168			13,208			13,376
Adjusted EBITDA margin	13.6		%	22.9		%	7.9		%	N/M			11.2		%
Adjusted EBITDA	$	50,763		$	60,117		$	28,319		$	101,571		$	(35,301)		$	205,469
Adjusted EBITDA margin	8.7		%	21.3		%	9.1		%	20.7		%	N/M			11.7		%

	Three Months Ended September 30, 2023
	Three Months Ended March 31, 2024
	Critical Illness Recovery Hospital			Rehabilitation Hospital			OutpatientRehabilitation			~~Concentra~~Other			~~Other~~Total			~~Total~~
	(in thousands)
Revenue	$	~~563~~655,~~628~~880		$	~~247~~265,~~101~~700		$	~~291~~303,~~804~~158		$	~~473~~96,~~964~~473		$	891,~~197~~321,211		$	~~1,665,694~~
Operating expenses	(~~517~~541,~~266~~940)			(~~193~~204,~~475~~300)			(~~265~~278,~~458~~230)			(~~375~~144,~~057~~688)			(~~132~~1,~~569~~169,158)			~~(1,483,825)~~
Depreciation and amortization	(1617,~~402~~157)			(7,~~106~~135)			(89,~~861~~181)			(172,~~959~~111)			(235,~~066~~584)			~~(52,394)~~
Other operating income	—2,000			—			—			—			~~485~~2,000			~~485~~
Income (loss) from operations	$	29,960		$	46,520		$	17,485		$	80,948		$	(44,953)		$	129,960
Income (loss) from continuing operations before other income and expense	$	98,783		$	54,265		$	15,747		$	(50,326)		$	118,469
Depreciation and amortization	1617,~~402~~157			7,~~106~~135			89,~~861~~181			172,~~959~~111			235,~~066~~584			~~52,394~~
Stock compensation expense	—			—			—			—			11,483			11,483
Concentra separation transaction costs	—			—			—			278			278
Adjusted EBITDA	$	46,362		$	53,626		$	26,346		$	98,907		$	(31,404)		$	193,837
Stock compensation expense	—			—			—			11,444			11,444
Adjusted EBITDA margin	8.2		%	21.7		%	9.0		%	20.9		%	N/M			11.6		%
Adjusted EBITDA	$	115,940		$	61,400		$	24,928		$	(36,493)		$	165,775
Adjusted EBITDA margin	17.7		%	23.1		%	8.2		%	N/M			12.5		%

~~Net~~Income ~~income~~from continuing operations, net of tax, was $8174.07 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $6061.85 million for the three months ended ~~September~~March 3031, ~~2023~~2024.

The following table summarizes the changes in our segment performance measures for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to the three months ended ~~September~~March 3031, ~~2023~~2024:

	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		~~Concentra~~Other		~~Other~~Total		~~Total~~
Change in revenue	3(2.49)	%	1415.47	%	61.94	%	35.31	%	52.34	%	~~5.7~~	%
Change in income from operations	12.6	%	14.5	%	9.8	%	6.5	%	N/M		8.6	%
Change in income from continuing operations before other income and expense	(29.1)	%	16.2	%	(3.3)	%	N/M		(4.8)	%
Change in Adjusted EBITDA	9(25.53)	%	1214.17	%	7(2.56)	%	~~2.7~~N/M	%	~~N/M~~(8.6)	%	~~6.0~~	%

_______________________________________________________________________________

N/M — Not meaningful.

2822

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Nine Months Ended September 30, 2024

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

	Nine Months Ended September 30, 2024
	Critical Illness Recovery Hospital			Rehabilitation Hospital			OutpatientRehabilitation			Concentra			Other		Total
	(in thousands)
Revenue	$	1,843,751		$	816,240		$	930,696		$	1,435,151		$	283,854	$	5,309,692
Operating expenses	(1,608,248)			(632,769)			(848,678)			(1,138,191)			(434,339)		(4,662,225)
Depreciation and amortization	(51,779)			(21,185)			(27,441)			(51,568)			(6,178)		(158,151)
Other operating income (loss)	3,033			—			(2)			284			269		3,584
Income (loss) from operations	$	186,757		$	162,286		$	54,575		$	245,676		$	(156,394)	$	492,900
Depreciation and amortization	51,779			21,185			27,441			51,568			6,178		158,151
Concentra separation transaction costs	—			—			—			1,569			1,696		3,265
Stock compensation expense	—			—			—			500			38,899		39,399
Adjusted EBITDA	$	238,536		$	183,471		$	82,016		$	299,313		$	(109,621)	$	693,715
Adjusted EBITDA margin	12.9		%	22.5		%	8.8		%	20.9		%	N/M		13.1		%

	Nine Months Ended September 30, 2023
	Critical Illness Recovery Hospital			Rehabilitation Hospital			OutpatientRehabilitation			Concentra			Other		Total
	(in thousands)
Revenue	$	1,732,645		$	719,419		$	890,679		$	1,397,341		$	265,118	$	5,005,202
Operating expenses	(1,544,014)			(564,224)			(801,523)			(1,104,624)			(396,649)		(4,411,034)
Depreciation and amortization	(46,925)			(20,881)			(26,097)			(54,552)			(6,303)		(154,758)
Other operating income	—			336			239			151			485		1,211
Income (loss) from operations	$	141,706		$	134,650		$	63,298		$	238,316		$	(137,349)	$	440,621
Depreciation and amortization	46,925			20,881			26,097			54,552			6,303		154,758
Stock compensation expense	—			—			—			178			31,812		31,990
Adjusted EBITDA	$	188,631		$	155,531		$	89,395		$	293,046		$	(99,234)	$	627,369
Adjusted EBITDA margin	10.9		%	21.6		%	10.0		%	21.0		%	N/M		12.5		%

Net income was $292.9 million for the nine months ended September 30, 2024, compared to $237.9 million for the nine months ended September 30, 2023.

The following table summarizes the changes in our segment performance measures for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023:

	Critical Illness Recovery Hospital		Rehabilitation Hospital		OutpatientRehabilitation		Concentra		Other		Total
Change in revenue	6.4	%	13.5	%	4.5	%	2.7	%	7.1	%	6.1	%
Change in income from operations	31.8	%	20.5	%	(13.8)	%	3.1	%	N/M		11.9	%
Change in Adjusted EBITDA	26.5	%	18.0	%	(8.3)	%	2.1	%	N/M		10.6	%

N/M — Not meaningful.

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Regulatory Changes

Our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024, filed with the SEC on February 2220, ~~2024~~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 2129% ~~and 22%~~ of our revenue for both the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, and for the year ended December 31, ~~2023, respectively~~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 ~~subsequent~~ 90-day periods through May 11, 2023, the end of the public health emergency. The COVID-19 national emergency that was declared by President Trump on March 13, 2020, which was separate from the public health emergency, ended on April 10, 2023 when H.R.J. Res. 7 was signed into law.

AsOn March 13, 2020, President Trump declared a ~~result~~national ofemergency due to the COVID-19 ~~national~~pandemic ~~emergency,~~and the HHS Secretary authorized the waiver or modification of certain requirements under Medicare, Medicaid, and the ~~Children’s Health Insurance Program (“~~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 orand suppliers from specific program requirements. Our Annual Report on Form 10-K for the year ended December 31, 2023, contains a detailed discussion of ~~the~~blanket ~~federal~~waivers ~~health~~and ~~care~~other ~~program~~actions ~~changes~~by ~~made~~CMS in response to the COVID-19 pandemic, ~~including~~that ~~these~~affected ~~COVID-19~~our ~~waivers,~~operations in Part II — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Changes. Most of these COVID-19 waivers, including the waiver of the Inpatient Rehabilitation Facility (“IRF”) 60% Rule and the waiver of Medicare statutory requirements regarding site neutral payments to long-term care hospitals (“LTCHs”), ended for new admissions when the public health emergency expired on May 11, 2023. However, LTCHs were exempt from the greater-than-25-day average length of stay requirement for all cost reporting periods that include the COVID-19 public health emergency period. As a result, LTCH cost reporting periods that started prior to May 11, 2023, were exempt for the remainder of that cost reporting year. However, LTCH cost reporting periods that began on or after May 11, 2023, must comply with the greater-than-25-day average length of stay requirement.

InThe ~~addition,~~American ~~the~~Relief ~~Coronavirus Aid~~Act, ~~Relief,~~2025 and ~~Economic~~Full-Year ~~Security~~Continuing ~~(“CARES”)~~Appropriations ~~Act~~ and ~~related~~Extensions ~~legislation~~Act, ~~temporarily~~2025, ~~suspended~~further ~~the~~extended 2%certain ~~cut~~telehealth towaivers ~~Medicare payments due~~ to ~~sequestration from May 1, 2020, through~~ March 31, ~~2022,~~2025 and ~~reduced~~September ~~the sequestration adjustment from 2% to 1% from April 1 through June~~ 30, ~~2022. The full 2% reduction resumed on July 1~~2025, ~~2022~~respectively. ToCMS ~~pay~~issued ~~for~~additional ~~this~~waivers ~~relief,~~to ~~Congress~~permit ~~increased~~more ~~the~~than ~~sequestration~~150 ~~cut~~additional toservices ~~Medicare payments~~ to ~~2.25%~~be ~~for~~furnished ~~the~~by ~~first~~telehealth, ~~six~~allow ~~months~~physicians ~~of fiscal year 2030 and~~ to 3%monitor ~~for~~patient ~~the~~services ~~final~~remotely, ~~six~~and ~~months~~fulfill offace-to-face ~~fiscal~~requirements ~~year~~in ~~2030~~IRFs. ~~Additionally,~~In ~~an across-~~the~~-board~~ 4%calendar ~~payment~~year ~~cut~~2025 ~~required~~Medicare tophysician ~~take~~fee ~~effect~~schedule in(“MPFS”) ~~January~~final ~~2022~~rule, ~~due~~CMS toextended ~~the~~some ~~American~~of ~~Rescue Plan from~~ the FYtelehealth ~~2022~~flexibilities ~~Statutory~~through ~~Pay-As-You-Go~~December ~~(“PAYGO”)~~31, ~~scorecard was deferred by Congress until~~ 2025.

The CARES Act and related legislation also provided more than $178 billion in appropriations for the Public Health and Social Services Emergency Fund, also known as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19 and for reimbursing “eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.” HHS began distributing these funds to providers in April 2020. Recipients of payments were required to report data to HHS on the use of the funds via an online portal by specific deadlines established by HHS based on the date of the payment. All recipients of funds are subject to audit by HHS, the HHS OIG, or the Pandemic Response Accountability Committee. Audits may include examination of the accuracy of the data providers submitted to HHS in their applications for payments. Additional distributions are not expected and as a result, the Company does not expect to recognize additional income associated with these funds in the future.

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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 ~~2023~~2024. On August 1028, ~~2022~~2023, CMS published the final rule updating policies and payment rates for the LTCH-PPS for fiscal year ~~2023~~2024 (affecting discharges and cost reporting periods beginning on or after October 1, ~~2022~~2023, through September 30, ~~2023~~2024). Certain errors in the final rule were corrected in documents published ~~November~~October 4, ~~2022,~~2023 and ~~December~~November 139, ~~2022~~2023. The standard federal rate for fiscal year ~~2023~~2024 was set at $4648,~~433~~117, an increase from the standard federal rate applicable during fiscal year ~~2022~~2023 of $4446,~~714~~433. The update to the standard federal rate for fiscal year ~~2023~~2024 included a market basket increase of 43.15%, less a productivity adjustment of 0.32%. The standard federal rate also included an area wage budget neutrality factor of 1.~~0004304~~0031599. As a result of the CARES Act, all LTCH cases were paid at the standard federal rate during the public health emergency. When the public health emergency ended on May 11, 2023, CMS returned to using the site-neutral payment rate for reimbursement of cases that do not meet the LTCH patient criteria. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS was set at $3859,~~518~~873, an increase from the fixed-loss amount in the ~~2022~~2023 fiscal year of $3338,~~015~~518. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $3842,~~788~~750, an increase from the fixed-loss amount in the ~~2022~~2023 fiscal year of $3038,~~988~~788.

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 a document published on October 4, 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 $38,788.23

~~Fiscal~~Table Year 2025. On August 28, 2024, CMS published the 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 is $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 includes a market basket increase of 3.5%, less a productivity adjustment of 0.5%. The standard federal rate also includes an area wage budget neutrality factor of 0.9964315. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $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 is $46,217, an increase from the fixed-loss amount in the 2024 fiscal year of $42,750.Contents

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 is $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 includes a market basket increase of 3.5%, less a productivity adjustment of 0.5%. The standard federal rate also includes an area wage budget neutrality factor of 0.9964315. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $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 is $46,217, an increase from the fixed-loss amount in the 2024 fiscal year of $42,750.

Fiscal Year 2026. On April 11, 2025, CMS released a display copy of the proposed rule to update 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). CMS is expected to issue the final rule in August or shortly thereafter. The proposed standard federal rate for fiscal year 2026 is $50,729, an increase from the standard federal rate applicable during fiscal year 2025 of $49,383. The proposed update to the standard federal rate for fiscal year 2026 includes a market basket increase of 3.4%, less a productivity adjustment of 0.8%. The proposed standard federal rate also includes an area wage budget neutrality factor of 1.0012146. The proposed fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $91,247, an increase from the fixed-loss amount in the 2025 fiscal year of $77,048. The proposed fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $44,305, 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.

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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.

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 is effective for cost reporting periods beginning on or after October 1, 2024. However, CMS notes that MACs would receive the first cost reports subject to the revised policy in March 2026.

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 ~~delay~~result ~~more~~in additional delays of reimbursement appeals related to LTCH cost reports.

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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 ~~2023~~2024. On August 12, ~~2022~~2023, CMS published the final rule updating policies and payment rates for the IRF-PPS for fiscal year ~~2023~~2024 (affecting discharges and cost reporting periods beginning on or after October 1, ~~2022~~2023, through September 30, ~~2023~~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 ~~2023~~2024 was set at $1718,~~878~~541, an increase from the standard payment conversion factor applicable during fiscal year ~~2022~~2023 of $17,~~240~~878. The update to the standard payment conversion factor for fiscal year ~~2023~~2024 included a market basket increase of 43.26%, less a productivity adjustment of 0.32%. CMS ~~increased~~decreased the outlier threshold amount for fiscal year ~~2023~~2024 to $1210,~~526~~423 from $912,~~491~~526 established in the final rule for fiscal year ~~2022~~2023.

Fiscal Year 2024. On August 2, 2023, CMS published the final rule to update 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 32Year 2026. On April 11, 2025, CMS published a display copy of the proposed 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 would be set at $19,364, 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, if adopted, would include a market basket increase of 3.4%, less a productivity adjustment of 0.8%. CMS proposed to decrease the outlier threshold amount for fiscal year 2026 to $11,971 from $12,043 established in the final rule for fiscal year 2025.

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Medicare Reimbursement of Outpatient Rehabilitation Clinic Services

Our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024 contains a detailed discussion of Medicare reimbursement that affects our outpatient rehabilitation clinic operations in Part I — Business — Government Regulations ~~and in Part II — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Changes~~. 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 years 2021 and 2022, CMS’s expected decreases in Medicare reimbursement ~~under the physician fee schedule~~ were mostly offset by one-time increases in payments as a result of other legislation passed by Congress. ~~Similarly, the Consolidated Appropriations Act, 2023, provided some relief from the payment cuts in calendar years 2023 and 2024.~~ Payments under the 2023 MPFS physician fee schedule decreased by 2%, and for calendar year 2024, ~~final~~ CMS ~~policies~~expected ~~resulted~~that inits anfinal ~~approximate~~policies ~~3% decrease in Medicare payments~~ for ~~the therapy specialty. On March 9,~~ 2024, ~~President~~would ~~Biden~~result ~~signed into law the Consolidated Appropriations Act, 2024, which mitigated Medicare physician payment cuts by 1.68%, resulting~~ in a ~~lower, 1.69% cut to payments. The full~~ 3~~.37~~% ~~cut~~decrease ~~was~~in ~~applied~~Medicare to payments for ~~services provided between January 1, 2024 and~~ the ~~March~~therapy ~~9, 2024 effective date~~specialty. ~~The~~In ~~Consolidated Appropriations Act, 2024 also extends~~ the ~~Medicare~~calendar ~~physician~~year ~~work~~2025 ~~geographic~~MPFS ~~index~~final ~~floor through December 31~~rule, ~~2024.~~CMS ~~The~~calculated ~~steps~~the ~~Congress~~payment ~~has~~rates ~~taken~~without ~~to reduce~~ the ~~cuts~~one-time toincreases ~~Medicare~~provided ~~physician payments~~ for ~~the~~in ~~remainder of 2024 are temporary and will not carry over into 2025~~legislation. CMS ~~has~~expects ~~estimated~~ that its ~~proposed~~ policies for 2025 will not result in any increase or decrease in Medicare payments for the therapy specialty. However, in the ~~calendar~~policies ~~year 2025 physician fee schedule proposed rule,~~ CMS ~~calculated~~announced ~~the~~in ~~estimated payment rates without~~ the ~~1.25%~~calendar ~~and~~year ~~2.93% payment increases under the Consolidated Appropriations of 2023 and 2024, respectively. Therefore, if enacted, the~~ 2025 ~~physician~~MPFS ~~fee~~final ~~schedule proposed~~ rule iswill ~~expected~~reduce ~~to decrease~~ Medicare ~~reimbursement~~payments for ~~therapy~~the ~~services~~physical byand ~~approximately~~occupational ~~2.8%~~therapy asservices ~~compared~~we toprovide ~~the~~by ~~reimbursement~~approximately ~~rates in effect for most of 2024~~3%.

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, ~~2023~~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,
				Three Months Ended March 31,
	2023			2024			2023			2024
							2024			2025
Critical illness recovery hospital data:
Number of consolidated hospitals—start of period(1)	~~108~~			~~107~~			~~103~~107			~~107~~104
Number of hospitals acquired	—			—			1—			—
Number of hospital start-ups	—			—			4—			1—
Number of hospitals closed/sold	~~(1)~~			~~(1)~~			~~(1)~~—			~~(2)~~—
Number of consolidated hospitals—end of period(1)	~~107~~			~~106~~			107			~~106~~104
Available licensed beds(3)	~~4,524~~			~~4,512~~			4,~~524~~534			4,~~512~~432
Admissions(3)(4)	~~8,736~~			~~8,676~~			279,~~099~~529			279,~~093~~351
Patient days(3)(5)	~~267,910~~			~~270,760~~			~~831~~294,~~022~~622			~~844~~291,~~623~~324
Average length of stay (days)(3)(6)	31			31			3031			3132
Revenue per patient day(3)(7)	$	~~2,095~~		$	~~2,145~~		$	2,~~076~~219		$	2,~~175~~179
Occupancy rate(3)(8)	64		%	65		%	6871		%	6873		%
Percent patient days—Medicare(3)(9)	38		%	35		%	3836		%	35		%
Rehabilitation hospital data:
Number of consolidated hospitals—start of period(1)	20			21			20			21
Number of consolidated hospitals—start of period(1)(3)							21			23
Number of hospitals acquired	1			—			1—			—
Number of hospital start-ups	—			1			—			1—
Number of hospitals closed/sold	—			—			—			—
Number of consolidated hospitals—end of period(1)	21			22			21			22
Number of consolidated hospitals—end of period(1)(3)							21			23
Number of unconsolidated hospitals managed—end of period(2)	12			12			12			12
Number of unconsolidated hospitals managed—end of period(2)(3)							12			12
Total number of hospitals (all)—end of period	33			34			33			34
Total number of hospitals (all)—end of period(3)							33			35
Available licensed beds(3)	~~1,479~~			~~1,589~~			1,479			1,~~589~~657
Admissions(3)(4)	~~7,840~~			~~8,439~~			238,~~363~~275			258,~~039~~848
Patient days(3)(5)	~~112,095~~			~~116,835~~			~~330~~116,~~142~~844			~~350~~122,~~724~~822
Average length of stay (days)(3)(6)	14			14			14			14
Revenue per patient day(3)(7)	$	~~2,025~~		$	~~2,148~~		$	2,~~001~~096		$	2,~~119~~234
Occupancy rate(3)(8)	84		%	82		%	8487		%	8482		%
Percent patient days—Medicare(3)(9)	49		%	48		%	49		%	4850		%
Outpatient rehabilitation data:
Number of consolidated clinics—start of period	~~1,638~~			~~1,625~~			1,~~622~~633			1,~~633~~617
Number of clinics acquired	3			1			161			7—
Number of clinic start-ups	12			5			333			149
Number of clinics closed/sold	~~(8)~~			~~(4)~~			(2613)			(2712)
Number of consolidated clinics—end of period	~~1,645~~			~~1,627~~			1,~~645~~624			1,~~627~~614
Number of unconsolidated clinics managed—end of period	~~301~~			~~298~~			~~301~~298			~~298~~297
Total number of clinics (all)—end of period	~~1,946~~			~~1,925~~			1,~~946~~922			1,~~925~~911
Number of visits(3)(10)	~~2,627,362~~			~~2,773,465~~			72,~~984~~735,~~622~~126			82,~~336~~709,~~216~~964
Revenue per visit(3)(11)	$	~~100~~		$	~~101~~		$	~~100~~99		$	~~100~~102

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2024		2023		2024
Concentra data:
Number of consolidated centers—start of period	540		547		540		544
Number of centers acquired	—		1		1		3
Number of center start-ups	—		1		—		3
Number of centers closed/sold	(1)		—		(2)		(1)
Number of consolidated centers—end of period	539		549		539		549
Number of onsite clinics operated—end of period	145		156		145		156
Number of visits(3)(10)	3,281,042		3,258,605		9,766,881		9,628,515
Revenue per visit(3)(11)	$	136	$	141	$	135	$	140

_______________________________________________________________________________

(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. ~~For purposes of our Concentra segment, onsite clinics are excluded.~~

(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 ~~and Concentra centers~~ 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.

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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,
			Three Months Ended March 31,
	2023		2024		2023		2024
					2024		2025
Revenue	~~100.0~~	%	~~100.0~~	%	100.0	%	100.0	%
Costs and expenses:
Cost of services, exclusive of depreciation and amortization(1)	~~86.6~~		~~86.5~~		8584.68		8586.17
General and administrative	~~2.5~~		~~2.7~~		23.57		2.74
Depreciation and amortization	~~3.1~~		~~2.8~~		32.17		32.06
Total costs and expenses	~~92.2~~		~~92.0~~		91.2		9091.87
Other operating income	~~0.0~~		~~0.0~~		0.02		~~0.1~~—
Income from operations	7.8		8.0		8.8		9.3
Income from continuing operations before other income and expense					9.0		8.3
Loss on early retirement of debt	(0.9)		(0.6)		(0.3)		(0.2)
Equity in earnings of unconsolidated subsidiaries					0.8		0.9
Equity in earnings of unconsolidated subsidiaries	0.7		1.9		0.6		0.9
Interest expense					(3.1)		(2.1)
Interest expense	(3.0)		(3.2)		(3.0)		(2.7)
Income from continuing operations before income taxes					6.7		7.1
Income before income taxes	4.6		6.1		6.1		7.3
Income tax expense from continuing operations					2.0		1.6
Income tax expense	0.9		1.5		1.4		1.8
Income from continuing operations, net of tax					4.7		5.5
Net income	3.7		4.6		4.7		5.5
Discontinued operations:
Net income attributable to non-controlling interests	0.8		1.4		0.8		1.2
Income from discontinued business					5.0		—
Net income attributable to Select Medical Holdings Corporation	2.9	%	3.2	%	3.9	%	4.3	%
Income tax expense from discontinued business					0.8		—
Income from discontinued operations, net of tax					4.2		—
Net income					8.9		5.5
Net income attributable to non-controlling interests					1.6		1.3
Net income attributable to Select Medical Holdings Corporation					7.3	%	4.2	%

_______________________________________________________________________________

(1)Cost of services includes ~~salaries,~~personnel ~~wages and benefits~~expense, ~~operating~~facilities ~~supplies, lease and rent~~ 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,
				Three Months Ended March 31,
	2023			2024			% Change			2023			2024			% Change
										2024			2025			% Change
	~~(in thousands, except percentages)~~								(in thousands, except percentages)
Revenue:
Critical illness recovery hospital	$	~~563,628~~		$	~~582,950~~		~~3.4~~	%		$	1655,~~732,645~~880		$	1637,~~843,751~~030		6(2.49)	%
Rehabilitation hospital	~~247,101~~			~~282,709~~			~~14.4~~			~~719~~265,~~419~~700			~~816~~307,~~240~~388			1315.57
Outpatient rehabilitation	~~291,804~~			~~312,042~~			~~6.9~~			~~890~~303,~~679~~158			~~930~~307,~~696~~342			41.54
Concentra	473,964			489,638			3.3			1,397,341			1,435,151			2.7
Other(1)										96,473			101,412			5.1
Other(1)	89,197			93,881			5.3			265,118			283,854			7.1
Total Company										$	1,321,211		$	1,353,172		2.4	%
Total Company	$	1,665,694		$	1,761,220		5.7	%		$	5,005,202		$	5,309,692		6.1	%
Income (loss) from continuing operations before other income and expense:
Income (loss) from operations:
Critical illness recovery hospital										$	98,783		$	70,001		(29.1)	%
Critical illness recovery hospital	$	29,960		$	33,731		12.6	%		$	141,706		$	186,757		31.8	%
Rehabilitation hospital										54,265			63,046			16.2
Rehabilitation hospital	46,520			53,288			14.5			134,650			162,286			20.5
Outpatient rehabilitation										15,747			15,221			(3.3)
Outpatient rehabilitation	17,485			19,198			9.8			63,298			54,575			(13.8)
Other(1)										(50,326)			(35,523)			N/M
Concentra	80,948			86,234			6.5			238,316			245,676			3.1
Total Company										$	118,469		$	112,745		(4.8)	%
Other(1)	(44,953)			(51,318)			N/M			(137,349)			(156,394)			N/M
Total Company	$	129,960		$	141,133		8.6	%		$	440,621		$	492,900		11.9	%
Adjusted EBITDA:
Critical illness recovery hospital	$	~~46,362~~		$	~~50,763~~		~~9.5~~	%		$	~~188~~115,~~631~~940		$	~~238~~86,~~536~~649		26(25.53)	%
Rehabilitation hospital	~~53,626~~			~~60,117~~			~~12.1~~			~~155~~61,~~531~~400			~~183~~70,~~471~~424			1814.07
Outpatient rehabilitation	~~26,346~~			~~28,319~~			~~7.5~~			8924,~~395~~928			8224,~~016~~273			(82.36)
Concentra	98,907			101,571			2.7			293,046			299,313			2.1
Other(1)										(36,493)			(29,901)			N/M
Other(1)	(31,404)			(35,301)			N/M			(99,234)			(109,621)			N/M
Total Company										$	165,775		$	151,445		(8.6)	%
Total Company	$	193,837		$	205,469		6.0	%		$	627,369		$	693,715		10.6	%
Adjusted EBITDA margins:
Critical illness recovery hospital	~~8.2~~		%	~~8.7~~		%				1017.97		%	1213.96		%
Rehabilitation hospital	~~21.7~~			~~21.3~~						2123.61			22.59
Outpatient rehabilitation	~~9.0~~			~~9.1~~						108.02			87.89
Concentra	20.9			20.7						21.0			20.9
Other(1)										N/M			N/M
Other(1)	N/M			N/M						N/M			N/M
Total Company										12.5		%	11.2		%
Total Company	11.6		%	11.7		%				12.5		%	13.1		%
Total assets:
Critical illness recovery hospital	$	~~2,454,578~~		$	~~2,658,301~~					$	2,~~454~~608,~~578~~979		$	2,~~658~~696,~~301~~663
Rehabilitation hospital	~~1,222,853~~			~~1,294,125~~						1,~~222~~233,~~853~~828			1,~~294~~405,~~125~~911
Outpatient rehabilitation	~~1,401,148~~			~~1,414,009~~						1,~~401~~423,~~148~~740			1,~~414~~415,~~009~~655
Concentra	2,321,671			2,473,289						2,321,671			2,473,289
Other(1)										228,868			177,774
Other(1)	283,758			162,937						283,758			162,937
Total Company										$	5,495,415		$	5,696,003
Total Company	$	7,684,008		$	8,002,661					$	7,684,008		$	8,002,661
Purchases of property and equipment:
Purchases of property, equipment, and other assets:
Critical illness recovery hospital										$	15,941		$	16,671
Critical illness recovery hospital	$	21,098		$	16,208					$	76,119		$	49,765
Rehabilitation hospital										7,101			25,925
Rehabilitation hospital	4,813			10,595						15,298			32,514
Outpatient rehabilitation										9,500			9,047
Outpatient rehabilitation	8,855			8,402						29,263			26,064
Other(1)										2,744			696
Concentra	15,456			15,145						45,702			47,639
Total Company										$	35,286		$	52,339
Other(1)	(24)			333						2,215			2,766
Total Company	$	50,198		$	50,683					$	168,597		$	158,748

_______________________________________________________________________________

(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~~March 3031, ~~2024~~2025, Compared to Three Months Ended ~~September~~March 3031, ~~2023~~2024

For the three months ended ~~September~~March 3031, ~~2024~~2025, we had revenue of $1,~~761~~353.2 million and income from continuing operations before other income and expense of $~~141~~112.17 million, as compared to revenue of $1,~~665~~321.72 million and income from continuing operations before other income and expense of $~~130~~118.05 million for the three months ended ~~September~~March 3031, ~~2023~~2024. For the three months ended ~~September~~March 3031, ~~2024~~2025, Adjusted EBITDA was $~~205~~151.54 million, with an Adjusted EBITDA margin of 11.72%, as compared to Adjusted EBITDA of $~~193~~165.8 million and an Adjusted EBITDA margin of 1112.65% for the three months ended ~~September~~March 3031, ~~2023~~2024, respectively.

Revenue

Critical Illness Recovery Hospital Segment. Revenue ~~increased~~was ~~3.4% to~~ $~~583~~637.0 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~563~~655.69 million for the three months ended ~~September~~March 3031, ~~2023~~2024. The ~~increase~~decrease in revenue was principally attributable to ~~an increase in~~ revenue per patient day, which ~~increased~~was ~~2.4% to~~ $2,~~145~~179 for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $2,~~095~~219 for the three months ended ~~September~~March 3031, ~~2023~~2024. ~~Our~~The decrease in revenue per patient ~~days~~day ~~increased~~was ~~1.1%~~driven by a decrease in our Medicare rate due to ~~270,760~~lower high cost outlier revenue. Our patient days were 291,324 for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to ~~267~~294,~~910~~622 days for the three months ended ~~September~~March 3031, ~~2023~~2024. Occupancy in our critical illness recovery hospitals was 6573% and 6471% for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively.

Rehabilitation Hospital Segment. Revenue increased 1415.47% to $~~282~~307.74 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~247~~265.17 million for the three months ended ~~September~~March 3031, ~~2023~~2024. ~~The~~Revenue ~~increase in revenue was principally attributable to revenue~~ per patient day, ~~which~~ increased 6.16% to $2,~~148~~234 for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $2,~~025~~096 for the three months ended ~~September~~March 3031, ~~2023~~2024. Our patient days increased 45.21% to ~~116~~122,~~835~~822 days for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to ~~112~~116,~~095~~844 days for the three months ended ~~September~~March 3031, ~~2023~~2024. Occupancy in our rehabilitation hospitals was 82% and 8487% for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively.

Outpatient Rehabilitation Segment. Revenue increased 61.94% to $~~312~~307.03 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~291~~303.82 million for the three months ended ~~September~~March 3031, ~~2023~~2024. The increase in revenue was ~~principally~~ attributable to anrevenue ~~increase~~per ~~in patient visits~~visit, which increased 53.60% to ~~2,773,465~~$102 ~~visits~~ for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to ~~2,627,362~~$99 ~~visits~~ for the three months ended ~~September~~March 3031, ~~2023~~2024. ~~Our~~Patient ~~revenue~~visits ~~per~~were ~~visit~~2,709,964 ~~increased~~visits ~~1.0% to $101~~ for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to ~~$100~~2,735,126 visits for the three months ended ~~September~~March 3031, ~~2023~~2024.

Concentra Segment. Revenue increased 3.3% to $489.6 million for the three months ended September 30, 2024, compared to $474.0 million for the three months ended September 30, 2023. The increase in revenue was principally due to an increase in revenue per visit, which increased 3.7% to $141 for the three months ended September 30, 2024, compared to $136 for the three months ended September 30, 2023. Our patient visits were 3,258,605 visits for the three months ended September 30, 2024, compared to 3,281,042 visits for the three months ended September 30, 2023.

Operating Expenses

Our operating expenses consist principally of cost of services and general and administrative expenses. Our operating expenses were $1,~~571~~205.26 million, or 89.21% of revenue, for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $1,~~483~~169.82 million, or 8988.15% of revenue, for the three months ended ~~September~~March 3031, ~~2023~~2024. Our cost of services, a major component of which is labor expense, was $1,~~523~~172.96 million, or 86.57% of revenue, for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $1,~~442~~120.57 million, or 8684.68% of revenue, for the three months ended ~~September~~March 3031, ~~2023~~2024. The increase in our cost of services relative to our revenue was principally attributable to the decrease in revenue within our Critical Illness Recovery Hospital segment. General and administrative expenses were $4733.30 million, or 2.74% of revenue, for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $4148.34 million, or 23.57% of revenue, for the three months ended ~~September~~March 3031, ~~2023~~2024. The decrease in general and administrative expenses was principally attributable to lower stock compensation expense as a result of modifications to our restricted stock awards which occurred in November 2024 in connection with the Company’s spin-off of Concentra and a reduction in personnel expense related to bonuses.

Other Operating Income

For the three months ended ~~September~~March 3031, 2024, we had other operating income of $12.~~3 million, compared to $~~0.5 million ~~for the three months ended September 30, 2023~~.

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Adjusted EBITDA

Critical Illness Recovery Hospital Segment. Adjusted EBITDA ~~increased~~was ~~9.5% to~~ $5086.86 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $46115.49 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Our Adjusted EBITDA margin for the critical illness recovery hospital segment was 813.76% for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to 817.27% for the three months ended ~~September~~March 3031, ~~2023~~2024. The ~~increases~~decreases in our Adjusted EBITDA and Adjusted EBITDA margin during the three months ended ~~September~~March 3031, ~~2024~~2025, as compared to the three months ended ~~September~~March 3031, ~~2023~~2024, were principally due to ana ~~increase~~decrease in revenue.

Rehabilitation Hospital Segment. Adjusted EBITDA increased 1214.17% to $6070.14 million for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to $5361.64 million for the three months ended ~~September~~March 3031, ~~2023~~2024. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 2122.39% for the three months ended ~~September~~March 3031, ~~2024~~2025, compared to 2123.71% for the three months ended ~~September~~March 3031, ~~2023~~2024. The increase in our Adjusted EBITDA was principally attributable to an increase in revenue.

~~Outpatient Rehabilitation Segment. Adjusted EBITDA increased 7.5% $28.3 million for the three months ended September~~ 30, 2024, compared to $26.3 million for the three months ended September 30, 2023. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.1% for the three months ended September 30, 2024, compared to 9.0% for the three months ended September 30, 2023. The increases in our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, were principally attributable to an increase in revenue.

Concentra Segment. Adjusted EBITDA increased 2.7% to $101.6 million for the three months ended September 30, 2024, compared to $98.9 million for the three months ended September 30, 2023. Our Adjusted EBITDA margin for the Concentra segment was 20.7% for the three months ended September 30, 2024, compared to 20.9% for the three months ended September 30, 2023. The increase in Adjusted EBITDA was principally attributable to an increase in revenue.

Depreciation and Amortization

Depreciation and amortization expense was $50.1 million for the three months ended September 30, 2024, compared to $52.4 million for the three months ended September 30, 2023.

Income from Operations

For the three months ended September 30, 2024, we had income from operations of $141.1 million, compared to $130.0 million for the three months ended September 30, 2023. The increase in income from operations is principally attributable to increases in revenue within all operating segments, as discussed above under “Revenue”.

Loss on Early Retirement of Debt

For the three months ended September 30, 2024, we had a loss on early retirement of debt of $10.9 million related to the prepayment on our term loan and the amendment to the Select credit agreement, as described in Note 7 - Long-Term Debt and Notes Payable. For the three months ended September 30, 2023, we had a loss on early retirement of debt of $14.7 million related to an amendment to the Select credit agreement.

Equity in Earnings of Unconsolidated Subsidiaries

For the three months ended September 30, 2024, we had equity in earnings of unconsolidated subsidiaries of $33.1 million, compared to $11.6 million for the three months ended September 30, 2023. The increase in equity in earnings of unconsolidated subsidiaries is principally due to a gain of $18.9 million recognized upon gaining a controlling financial interest in a previously unconsolidated entity.

Interest

Interest expense was $55.4 million for the three months ended September 30, 2024, compared to $50.3 million for the three months ended September 30, 2023. The increase in interest expense was principally due to a lower gain on the interest rate cap cash flow hedge, partially offset by a decrease from the reduction in total debt as a result of the Concentra and Select financing transactions, as described in Note 7. Long-Term Debt and Notes Payable.

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~~Income~~Outpatient ~~Taxes~~Rehabilitation Segment. Adjusted EBITDA was $24.3 million for the three months ended March 31, 2025, compared to $24.9 million for the three months ended March 31, 2024. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 7.9% for the three months ended March 31, 2025, compared to 8.2% for the three months ended March 31, 2024. The decreases in our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, were principally attributable due to higher labor costs, partially offset by an increase in revenue.

We recorded income tax expense of $26.8 million for the three months ended September 30, 2024, which represented an effective tax rate of 24.9%. We recorded income tax expense of $15.7 million for the three months ended September 30, 2023, which represented an effective tax rate of 20.6%. Our income tax expense is computed based on annual estimates which we allocate throughout the year based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year as estimates of our annual income and the components of our income tax expense change throughout the year.

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Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023

For the nine months ended September 30, 2024, we had revenue of $5,309.7 million and income from operations of $492.9 million, respectively, as compared to revenue of $5,005.2 million and income from operations of $440.6 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, Adjusted EBITDA was $693.7 million, with an Adjusted EBITDA margin of 13.1%, as compared to Adjusted EBITDA of $627.4 million and an Adjusted EBITDA margin of 12.5% for the nine months ended September 30, 2023, respectively.

The improvement in our financial performance for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was principally due to the increase in revenue in our Critical Illness Recovery Hospital and Rehabilitation Hospital segments, as discussed below under “Revenue.”

Revenue

Critical Illness Recovery Hospital Segment. Revenue increased 6.4% to $1,843.8 million for the nine months ended September 30, 2024, compared to $1,732.6 million for the nine months ended September 30, 2023. The increase in revenue was principally attributable to revenue per patient day, which increased 4.8% to $2,175 for the nine months ended September 30, 2024, compared to $2,076 for the nine months ended September 30, 2023. Our patient days increased 1.6% to 844,623 for the nine months ended September 30, 2024, compared to 831,022 days for the nine months ended September 30, 2023. Occupancy in our critical illness recovery hospitals was 68% for both the nine months ended September 30, 2024 and 2023, respectively.

Rehabilitation Hospital Segment. Revenue increased 13.5% to $816.2 million for the nine months ended September 30, 2024, compared to $719.4 million for the nine months ended September 30, 2023. Our patient days increased 6.2% to 350,724 days for the nine months ended September 30, 2024, compared to 330,142 days for the nine months ended September 30, 2023. Revenue per patient day increased 5.9% to $2,119 for the nine months ended September 30, 2024, compared to $2,001 for the nine months ended September 30, 2023. Occupancy in our rehabilitation hospitals was 84% for both the nine months ended September 30, 2024 and 2023.

Outpatient Rehabilitation Segment. Revenue increased 4.5% to $930.7 million for the nine months ended September 30, 2024, compared to $890.7 million for the nine months ended September 30, 2023. The increase in revenue was attributable to patient visits, which increased 4.4% to 8,336,216 visits for the nine months ended September 30, 2024, compared to 7,984,622 visits for the nine months ended September 30, 2023. Our revenue per visit was $100 for both the nine months ended September 30, 2024 and 2023.

Concentra Segment. Revenue increased 2.7% to $1,435.2 million for the nine months ended September 30, 2024, compared to $1,397.3 million for the nine months ended September 30, 2023. The increase in revenue was attributable to revenue per visit, which increased 3.7% to $140 for the nine months ended September 30, 2024, compared to $135 for the nine months ended September 30, 2023. Our patient visits were 9,628,515 for the nine months ended September 30, 2024, compared to 9,766,881 visits for the nine months ended September 30, 2023.

Operating Expenses

Our operating expenses consist principally of cost of services and general and administrative expenses. Our operating expenses were $4,662.2 million, or 87.8% of revenue, for the nine months ended September 30, 2024, compared to $4,411.0 million, or 88.1% of revenue, for the nine months ended September 30, 2023. Our cost of services, a major component of which is labor expense, was $4,516.6 million, or 85.1% of revenue, for the nine months ended September 30, 2024, compared to $4,284.9 million, or 85.6% of revenue, for the nine months ended September 30, 2023. The decrease in our operating expenses relative to our revenue was principally attributable to the decreased labor costs within our Critical Illness Recovery Hospital segment. General and administrative expenses were $145.7 million, or 2.7% of revenue, for the nine months ended September 30, 2024, compared to $126.1 million, or 2.5% of revenue, for the nine months ended September 30, 2023.

Other Operating Income

For the nine months ended September 30, 2024, we had other operating income of $3.6 million, compared to $1.2 million for the nine months ended September 30, 2023.

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Adjusted EBITDA

Critical Illness Recovery Hospital Segment. Adjusted EBITDA increased 26.5% to $238.5 million for the nine months ended September 30, 2024, compared to $188.6 million for the nine months ended September 30, 2023. Our Adjusted EBITDA margin for the critical illness recovery hospital segment was 12.9% for the nine months ended September 30, 2024, compared to 10.9% for the nine months ended September 30, 2023. The increases in our Adjusted EBITDA and Adjusted EBITDA margin during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, were principally due to an increase in revenue. Additionally, our total contract labor costs decreased by approximately 13% during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, which was driven by an approximate 14% decrease in utilization of contract registered nurses and an approximate 4% decrease in the rate per hour for contract registered nurses.

Rehabilitation Hospital Segment. Adjusted EBITDA increased 18.0% to $183.5 million for the nine months ended September 30, 2024, compared to $155.5 million for the nine months ended September 30, 2023. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 22.5% for the nine months ended September 30, 2024, compared to 21.6% for the nine months ended September 30, 2023. The increases in our Adjusted EBITDA and Adjusted EBITDA margin were principally attributable to an increase in revenue.

Outpatient Rehabilitation Segment. Adjusted EBITDA was $82.0 million for the nine months ended September 30, 2024, compared to $89.4 million for the nine months ended September 30, 2023. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 8.8% for the nine months ended September 30, 2024, compared to 10.0% for the nine months ended September 30, 2023. The decreases in our Adjusted EBITDA and Adjusted EBITDA margin for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, were principally attributable due to higher labor costs, partially offset by an increase in revenue.

Concentra Segment. Adjusted EBITDA increased 2.1% to $299.3 million for the nine months ended September 30, 2024, compared to $293.0 million for the nine months ended September 30, 2023. Our Adjusted EBITDA margin for the Concentra segment was 20.9% for the nine months ended September 30, 2024, compared to 21.0% for the nine months ended September 30, 2023.

Depreciation and Amortization

Depreciation and amortization expense was $~~158~~34.28 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~154~~35.86 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024.

Income from Continuing Operations before Other Income and Expense

For the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, we had income from continuing operations before other income and expense of $~~492~~112.97 million, compared to $~~440~~118.65 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The ~~increase~~decrease in income from continuing operations before other income and expense is principally attributable to ~~increases~~a decrease in revenue within our Critical Illness Recovery Hospital ~~and Rehabilitation Hospital segments~~segment, as discussed above under “Revenue”.

Loss on Early Retirement of Debt

For the nine months ended September 30, 2024, we had a loss on early retirement of debt of $10.9 million, related to the prepayment on our term loan and the amendment to the Select credit agreement, as described in Note 7 - Long-Term Debt and Notes Payable. For the nine months ended September 30, 2023, we had a loss on early retirement of debt of $14.7 million related to an amendment to the Select credit agreement.

Equity in Earnings of Unconsolidated Subsidiaries

For the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, we had equity in earnings of unconsolidated subsidiaries of $4912.85 million, compared to $3010.64 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The increase in equity in earnings ~~of unconsolidated subsidiaries~~ is principally due to athe ~~gain~~improved ofoperating ~~$18.9 million~~performance ~~recognized~~of ~~upon~~our ~~gaining~~rehabilitation abusinesses ~~controlling~~in ~~financial~~which ~~interest~~we inare a ~~previously~~minority ~~unconsolidated entity~~owner.

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Interest

Interest expense was $~~143~~29.31 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~147~~40.87 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The decrease in interest expense was principally due to ~~the~~a reduction in total debt, aspartially aoffset ~~result~~by of the ~~Concentra~~$21.5 million ~~and~~gain ~~Select~~on ~~financing~~the ~~transactions,~~interest asrate ~~described~~cap inrecognized ~~Note~~during ~~7. Long-Term~~the ~~Debt~~three ~~and~~months ~~Notes~~ended ~~Payable~~March 31, 2024.

Income ~~Taxes~~Tax Expense from Continuing Operations

We recorded income tax expense of $9521.5 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, which represented an effective tax rate of 2422.63%. We recorded income tax expense of $7026.87 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, which represented an effective tax rate of 2230.92%. The decrease in our effective tax rate was primarily due to lower permanent differences associated with reduced executive compensation, including the impact on state and local taxes.

Income 43from Discontinued Operations, Net of Tax

For the three months ended March 31, 2024, we had income from discontinued operations, net of tax, of $55.6 million, which represents the operations of Concentra.

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Liquidity and Capital Resources

Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2024~~2025 and ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2023~~2024

In the following, we discuss cash flows from operating activities, investing activities, and financing activities.

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2023		2024
	2024		2025
	(in thousands)
Net cash provided by operating activities	$	402,616	$	392,432
Net cash used in operating activities	$	(66,689)	$	(3,457)
Net cash used in investing activities	(~~198~~57,~~893~~657)		(~~156~~52,~~818~~315)
Net cash used in financing activities	(224,189)		(128,152)
Net cash provided by financing activities	132,960		49,291
Net increase (decrease) in cash and cash equivalents	~~(20~~8,~~466)~~614		~~107~~(6,~~462~~481)
Cash and cash equivalents at beginning of period	9784,~~906~~006		8459,~~006~~694
Cash and cash equivalents at end of period	$	7792,~~440~~620	$	~~191~~53,~~468~~213

Operating activities ~~provided~~used $~~392~~3.45 million of cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025, compared to $~~402~~66.67 million of cash flows ~~provided~~used by operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The ~~decline~~decrease in cash flows ~~provided~~used by operating activities year over year iswas principally ~~due~~driven toby ana ~~increase~~normalization inof accounts receivable, ~~which~~following ~~was~~the ~~principally~~disruption ~~driven~~caused by anthe ~~increase~~Change inHealthcare ~~revenue~~cybersecurity ~~and~~matter, which occurred in the ~~continued~~first ~~impact~~quarter of ~~the~~2024, ~~Change~~partially ~~Healthcare~~offset ~~matter~~by a decrease in net income. The decrease in ~~cash~~net ~~flows~~income ~~provided~~is primarily driven by ~~operating~~spin-off ~~activities~~of ~~was~~Concentra ~~partially~~that ~~offset~~occurred byin the ~~increase~~fourth inquarter ~~net~~of ~~income~~2024.

Our days sales outstanding was 5560 days at ~~September~~March 3031, ~~2024~~2025, compared to 5258 days at December 31, ~~2023~~2024. Our days sales outstanding was 5262 days at ~~September~~March 3031, ~~2023~~2024, compared to 55 days at December 31, ~~2022~~2023. Our days sales outstanding will fluctuate based upon variability in our collection cycles and patient volumes ~~and the continued impact of the Change Healthcare matter~~.

Investing activities used $~~156~~52.83 million of cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2024. The principal uses of cash were $158.7 million for purchases of property~~2025, ~~equipment,~~principally ~~and other assets, and $2.3 million~~ for ~~investments in and acquisitions of businesses. The cash outflows were offset in part by proceeds received from~~ the ~~sale~~purchase of ~~assets~~property and ~~businesses of $4~~equipment.2 ~~million.~~ Investing activities used $~~198~~57.97 million of cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The principal uses of cash were $~~168~~52.65 million for purchases of property, ~~equipment,~~ and ~~other assets~~equipment, and $305.4 million for investments in and acquisitions of businesses.

Financing activities ~~used~~provided $~~128~~49.23 million of cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. The principal ~~uses~~sources of cash were ~~payments~~net ofborrowings ~~$1,719.5~~under ~~million on~~ our ~~term~~revolving ~~loan,~~facility of $~~270~~75.0 million ofand net ~~repayments~~borrowings ~~under~~on our ~~revolving~~other ~~facilities,~~debt of $488.53 million. ofThe ~~dividend~~principal ~~payments~~uses toof ~~common~~cash ~~stockholders,~~were ~~and~~ $3514.87 million for distributions to and purchases of non-controlling interests., ~~The principal sources of cash were net proceeds from Concentra’s term loans of~~ $~~836~~11.74 million, ~~net~~for ~~proceeds~~repurchases ~~from the issuance~~ of ~~Concentra’s~~common ~~6.875%~~stock, ~~senior~~and ~~notes of~~ $~~637~~8.31 million, ~~and~~of ~~net~~dividend ~~proceeds~~payments ~~from~~to ~~the~~common ~~Concentra's equity issuance of $511~~stockholders.2 ~~million.~~ Financing activities ~~used~~provided $~~224~~133.20 million of cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. The principal ~~uses~~sources of cash were net ~~repayments~~borrowings under our revolving facility of $~~105~~230.0 million, and net borrowings on our other debt of $548.97 million. ~~for~~The ~~distributions~~principal touses ~~and~~of ~~purchases~~cash were payments of ~~non-controlling~~$79.1 ~~interests,~~million ~~and~~on our term loan, $4716.90 million of dividend payments to common stockholders, and $12.8 million for distributions to and purchases of non-controlling interests.

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Capital Resources

Working capital. We had net working capital of $~~158~~147.5 million at ~~September~~March 3031, ~~2024~~2025, compared to $942.21 million at December 31, ~~2023~~2024. The increase in net working capital was principally due to an increase inour ~~cash and~~ accounts receivable.

~~Select~~ Credit facilities. OnAt ~~July~~March 2631, ~~2024~~2025, ~~the~~Select ~~Company~~had ~~entered~~outstanding ~~into~~borrowings ~~Amendment~~under ~~No.~~its 10credit tofacilities ~~the~~consisting ~~Select~~of ~~credit~~a ~~agreement~~$1,047.4 ~~Amendment~~million ~~No.~~term 10loan ~~reduced~~(excluding ~~the~~unamortized ~~revolving~~original ~~credit~~issue ~~facility~~discounts ~~commitments~~and ~~available~~debt ~~under~~issuance ~~the~~costs ~~credit~~of ~~agreement from~~ $~~770~~8.0 ~~million~~ ~~to $550.0~~ million.) ~~Select~~and ~~also~~borrowings ~~made a voluntary prepayment~~ of $~~1,640~~180.4 0 million onunder its ~~term~~revolving ~~loan~~facility. ~~and~~At aMarch 31, 2025, Select had $~~300~~377.0 5 million ~~repayment~~of onavailability under its revolving ~~credit~~ facility ~~using~~after ~~the~~giving ~~proceeds~~effect ~~derived~~to ~~from~~$42.5 ~~the~~million ~~Concentra~~of ~~IPO~~outstanding ~~and~~letters ~~debt~~of ~~transactions~~credit.

AtStock ~~September 30,~~Repurchase ~~2024,~~Program. Holdings’ ~~Select~~Board ~~had~~of ~~outstanding~~Directors ~~borrowings~~has ~~under~~authorized ~~its~~a ~~credit~~common ~~facilities~~stock ~~consisting~~repurchase ofprogram ato repurchase up to $~~373~~1.0 ~~million~~billion ~~term~~worth ~~loan~~of ~~(excluding~~shares ~~unamortized~~of ~~original~~its ~~issue~~common ~~discounts~~stock. ~~and~~The ~~debt~~common ~~issuance~~stock ~~costs~~repurchase program will remain in effect until December 31, 2025, unless further extended or earlier terminated by the Board of $2Directors.2 ~~million)~~Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and ~~borrowings~~at oftimes ~~$10~~and in such amounts as Holdings deems appropriate.0 ~~million~~Holdings funds this program with cash on hand and borrowings under its revolving facility. AtDuring ~~September~~the three months ended March 3031, ~~2024~~2025, ~~Select~~Holdings ~~had~~repurchased 649,804 shares at a cost of approximately $~~496~~11.64 million, or $17.52 per share, which includes transaction costs. Since the inception of ~~availability~~the ~~under~~program ~~its~~through ~~revolving~~March 31, ~~facility~~2025, ~~after~~Holdings ~~giving~~has ~~effect~~repurchased to48,884,627 shares at a cost of approximately $43611.47 million, ofor ~~outstanding~~$12.51 ~~letters~~per ofshare, ~~credit~~which includes transaction costs.

~~Concentra~~Use ~~Credit~~of ~~facilities~~Capital Resources. On We ~~July 26,~~may ~~2024,~~from ~~CHSI~~time ~~entered~~to ~~into~~time ~~the~~pursue ~~Concentra~~opportunities ~~credit~~to ~~agreement~~develop ~~that~~new ~~provides~~joint ~~for~~venture anrelationships ~~$850.0 million~~with ~~term loan~~large, regional health systems and aother ~~$400~~healthcare providers.~~0 million~~ ~~revolving~~We ~~credit~~also ~~facility,~~intend ~~including~~to aopen ~~$75~~new outpatient rehabilitation clinics in local areas that we currently serve where we can benefit from existing referral relationships and brand awareness to produce incremental growth.~~0 million~~ ~~sublimit~~In ~~for~~addition ~~the~~to ~~issuance~~our ofdevelopment ~~standby~~activities, ~~letters~~we ofmay ~~credit~~grow through opportunistic acquisitions.

The Concentra credit facilities require CHSI to maintain a leverage ratio (as defined in the Concentra credit agreement), which is tested quarterly and currently must not be greater than 6.50 to 1.00. Failure to comply with this covenant would result in an event of default under the Concentra revolving credit facility, absent a waiver or amendment from the lenders. CHSI will be required to prepay borrowings under the Concentra credit facilities upon cash proceeds from asset sales or dispositions, issuance of additional debt obligations, and excess cash flows, further outlined in the credit agreement.

At September 30, 2024, Concentra had outstanding borrowings under its credit facilities consisting of a $850.0 million term loan (excluding unamortized original issue discounts and debt issuance costs of $13.0 million). Concentra had no outstanding borrowings under its revolving credit facility. At September 30, 2024, Concentra had $386.4 million of availability under its revolving facility after giving effect to $13.6 million of outstanding letters of credit.

Concentra 6.875% Senior Notes. On July 11, 2024, the Company completed a private offering by its then wholly-owned subsidiary, the Escrow Issuer, of $650.0 million aggregate principal amount of 6.875% senior notes due July 15, 2032. On July 26, 2024, Escrow Issuer merged with and into CHSI, with CHSI continuing as the surviving entity, and CHSI assumed all of the Escrow Issuer’s obligations under the senior notes. The Concentra senior notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Concentra and certain of its wholly-owned subsidiaries. Interest on the Concentra senior notes accrues at a rate of 6.875% per annum and is payable semi-annually in cash in arrears on January 15 and July 15 of each year, commencing on January 15, 2025.

Concentra IPO. On July 26, 2024, Concentra completed an 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 the Concentra’s common stock for net proceeds of $16.7 million after deducting discounts and commission of $1.0 million. Concentra shares began trading on the New York Stock Exchange under the symbol “CON” on July 25, 2024. After the closing of the IPO and underwriters option, Select owns 81.74% of the total outstanding shares of Concentra common stock, and continues to consolidate the financial results of Concentra. Select intends to make a distribution, which is intended to be tax-free for U.S. federal income tax purposes, to its stockholders of all of its remaining equity interest in Concentra within twelve months of the IPO.

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Stock Repurchase Program. Holdings’ Board of Directors has authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The common stock repurchase program will remain in effect until December 31, 2025, unless further extended or earlier terminated by the Board of Directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Holdings deems appropriate. Holdings funds this program with cash on hand and borrowings under its revolving facility. Holdings did not repurchase shares under the program during the nine months ended September 30, 2024. Since the inception of the program through September 30, 2024, Holdings has repurchased 48,234,823 shares at a cost of approximately $600.3 million, or $12.45 per share, which includes transaction costs. The Inflation Reduction Act of 2022, which enacted a 1% excise tax on stock repurchases that exceed $1.0 million, became effective January 1, 2023.

Use of Capital Resources. We may from time to time pursue opportunities to develop new joint venture relationships with large, regional health systems and other healthcare providers. We also intend to open new outpatient rehabilitation clinics and occupational health centers in local areas that we currently serve where we can benefit from existing referral relationships and brand awareness to produce incremental growth. In addition to our development activities, we may grow through opportunistic acquisitions.

Liquidity

We believe our internally generated cash flows and borrowing capacity under our revolving facility will allow us to finance our operations in both the short and long term. As of ~~September~~March 3031, ~~2024~~2025, we had cash and cash equivalents of $~~191~~53.52 million and $~~883~~377.05 million of availability under our revolving facilities after giving effect to $10180.0 million of outstanding borrowings and $5742.05 million of outstanding letters of credit.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, may be funded from operating cash flows or other sources and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Dividend

On ~~February 13~~April 30, ~~2024~~2025, ~~May 1, 2024, and July 31, 2024,~~ our Board of Directors declared a cash dividend of $0.~~125~~0625 per share. OnThe ~~March~~dividend ~~13,~~will ~~2024,~~be ~~May~~payable ~~30,~~on ~~2024,~~or ~~and~~about ~~August 30~~May 29, ~~2024,~~2025 ~~cash~~to ~~dividends~~stockholders ~~totaling~~of ~~$16.0~~record ~~million,~~as ~~$16.3~~of ~~million,~~the ~~and~~close ~~$16.2~~of ~~million~~business ~~were~~on ~~paid~~May 15, 2025.

On October 30, 2024, our Board of Directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about November 26, 2024 to stockholders of record as of the close of business on November 13, 2024.

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

Effects of Inflation

The healthcare industry is labor intensive and our largest expenses are labor related costs. Wage and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. We have recently experienced higher labor costs related to an inflationary environment and competitive labor market. In addition, suppliers have passed along rising costs to us in the form of higher prices. Higher prices could also result from the impact of proposed tariffs. We cannot predict our ability to pass along cost increases to our customers.

Recent Accounting Pronouncements

Refer to Note 2 – Accounting Policies of the notes to our condensed consolidated financial statements included herein for information regarding recent accounting pronouncements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk in connection with our variable rate long-term indebtedness. Our principal interest rate exposure relates to the loans outstanding under our ~~Select and Concentra~~ credit facilities, which bear interest rates that are indexed against Term SOFR.

At ~~September~~March 3031, ~~2024~~2025, Select had outstanding borrowings under ~~the~~its ~~Select~~ Credit Facilities consisting of a $~~373~~1,047.04 million term loan (excluding unamortized original issue discounts and debt issuance costs of $28.20 million) and $10180.0 million of borrowings under its revolving facility, which bear interest at variable rates.

AtIn ~~September 30,~~order ~~2024~~to mitigate our exposure to rising interest rates, ~~Concentra~~we ~~had~~entered ~~outstanding~~into ~~borrowings~~an ~~under~~interest rate cap effective on March 31, 2025, which limits the ~~Concentra~~Term ~~Credit~~SOFR ~~Facilities~~rate ~~consisting~~to of4.5% aon $~~850~~1.0 ~~million~~billion of principal outstanding under our term loan. ~~(excluding~~The ~~unamortized~~agreement ~~original~~applies ~~issue~~to ~~discounts~~interest ~~and~~payments ~~debt~~through ~~issuance~~March ~~costs~~31, 2028. As of ~~$13.0~~March 31, ~~million).~~2025, ~~Concentra~~the ~~had~~Term noSOFR ~~outstanding~~rate ~~borrowings~~was ~~under~~4.32%. ~~its~~As ~~revolving~~of ~~facility~~March 31, 2025, we had $47.4 million of term loan borrowings which ~~bear~~would ~~interest~~be atsubject to variable interest rates. if the Term SOFR rate were to exceed 4.5%.

As of ~~September~~March 3031, ~~2024~~2025, ~~each~~a 0.25% increase in market interest rates will impact the annual interest expense on our variable rate debt by $32.14 million per year. Each subsequent 0.25% increase in market interest rates will impact the annual interest expense on our variable rate debt by $0.6 million per year.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered in this report. Based on this evaluation, as of ~~September~~March 3031, ~~2024~~2025, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures, including the accumulation and communication of disclosure to our principal executive officer and principal financial officer as appropriate to allow timely decisions regarding disclosure, are effective to provide reasonable assurance that material information required to be included in our periodic SEC reports is recorded, processed, summarized, and reported within the time periods specified in the relevant SEC rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) identified in connection with the evaluation required by Rule 13a-15(d) of the Securities Exchange Act of 1934 that occurred during the ~~third~~first quarter ended ~~September~~March 3031, ~~2024~~2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

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PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the “Litigation” section contained within Note 1413 – Commitments and Contingencies of the notes to our condensed consolidated financial statements included herein.

ITEM 1A. RISK FACTORS

~~There~~The ~~have~~risk ~~been~~factor noset ~~material~~forth ~~changes~~in ~~from~~this ~~our~~report updates, and should be read together with, the risk factors ~~set~~discussed ~~forth~~ in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

Risks Related to Our Business

Changes to United States tariff and import/export regulations and macroeconomic conditions may have a negative effect on our business, financial condition and results of operations.

The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, treaties and tariffs. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs (including retaliatory tariffs in response to tariffs imposed by the United States). These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors and uncertain and volatile macroeconomic conditions, including low productivity growth, declining business investment, inflationary pressures, fluctuating interests rates, concerns regarding the level of U.S. debt, shifts in monetary and fiscal policy, strained international trade relations, and heightened geopolitical pressures could depress economic activity and have a material adverse effect on our business, financial condition and results of operations.

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

Purchases of Equity Securities by the Issuer

Holdings’ Board of Directors authorized a common stock repurchase program to repurchase up to $1.0 billion worth of shares of its common stock. The program will remain in effect until December 31, 2025, unless further extended or earlier terminated by the Board of Directors. Stock repurchases under this program may be made in the open market or through privately negotiated transactions, and at times and in such amounts as Holdings deems appropriate.

~~During~~The ~~the~~following ~~three~~table ~~months~~provides ~~ended~~information ~~September 30,~~regarding ~~2024,~~repurchases ~~Holdings~~of ~~did~~our ~~not repurchase shares under the authorized~~ common stock ~~repurchase~~during ~~program.~~the ~~The~~three ~~common~~months ~~stock~~ended ~~repurchase program has an available capacity of $399.7~~March ~~million as of September 30~~31, ~~2024~~2025.


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs
January 1 - January 31, 2025	—	$	—	—	$	399,677,961
February 1 - February 28, 2025	—	—		—	399,677,961
March 1 - March 31, 2025	649,804	17.52		649,804	388,290,962
Total	649,804	$	17.52	649,804	$	388,290,962

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

~~During~~On ~~the~~February ~~three~~28, ~~months~~2025, ~~ended~~Brian ~~September 30~~Rusignuolo, ~~2024~~the Company’s Chief Information Officer, ~~none~~entered ofinto ~~our~~a ~~directors~~trading orplan ~~executive~~intended ~~officers~~to ~~adopted~~satisfy orthe ~~terminated~~affirmative ~~any~~defense ~~contract,~~conditions ~~instruction,~~of orRule ~~written~~10b5-1(c) under the Exchange Act. The plan provides for the ~~purchase~~sale, orsubject ~~sale~~to ofcertain ~~our~~price ~~securities~~limits, of up to ~~satisfy~~40,000 ~~the~~shares ~~affirmative~~of ~~defense~~common ~~conditions~~stock offor ~~Rule~~Brian ~~10b5-1(c)~~Rusignuolo. orThe ~~any~~plan ~~non-Rule~~will ~~10b5-~~expire on March 1, ~~trading~~2026, ~~arrangement~~subject to early termination in accordance with the terms of the plan.

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ITEM 6. EXHIBITS

Number						Description
4.1						Indenture, dated July 11, 2024, by and among the Concentra Escrow Issuer Corporation, Concentra Health Services, Inc. and U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (file No. 001-34465) filed on July 17, 2024).
10.1						Separation Agreement, dated July 26, 2024, by and between Select Medical Corporation and Concentra Group Holdings Parent, Inc. (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (file No. 001-34465) filed on July 31, 2024).
10.2						Tax Matters Agreement, dated July 26, 2024, by and between Select Medical Corporation and Concentra Group Holdings Parent, Inc. (incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K (file No. 001-34465) filed on July 31, 2024).
10.3						Employee Matters Agreement, dated July 26, 2024, by and between Select Medical Corporation and Concentra Group Holdings Parent, Inc., filed as Exhibit 10.3 to the Current Report on Form 8-K filed by Concentra Group Holdings Parent, Inc. with the Commission on August 1, 2024, and incorporated herein by reference.
10.4						Transition Services Agreement, dated July 26, 2024, by and between Select Medical Corporation and Concentra Group Holdings Parent, Inc., filed as Exhibit 10.4 to the Current Report on Form 8-K filed by Concentra Group Holdings Parent, Inc. with the Commission on August 1, 2024, and incorporated herein by reference.
10.5						Amendment No. 10, dated July 26, 2024, to the Credit Agreement, dated as of March 6, 2017, by and among Select Medical Holdings Corporation, Select Medical Corporation, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and the other lenders and issuing banks party thereto, as amended by Amendment No. 1, dated as of March 22, 2018, Amendment No. 2, dated as of October 26, 2018, Amendment No. 3, dated as of August 1, 2019, Amendment No. 4, dated as of December 10, 2019, Amendment No. 5, dated as of June 2, 2021, Amendment No. 6, dated as of February 21, 2023, Amendment No. 7, dated as of May 31, 2023, Amendment No. 8, dated as of July 31, 2023, and Amendment No. 9, dated as of August 31, 2023 (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K (file No. 001-34465) filed on July 31, 2024).
10.6						Credit Agreement, dated July 26, 2024, among Concentra Group Holdings Parent, Inc., Concentra Health Services, Inc., JPMorgan Chase Bank, N.A., as Administrative and Collateral Agent, and the other lenders and issuing banks party thereto (incorporated by reference to Exhibit 10.6 of the Current Report on Form 8-K (file No. 001-34465) filed on July 31, 2024).
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Executive Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer, and Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


			SELECT MEDICAL HOLDINGS CORPORATION


			By:			/s/ Michael F. Malatesta
						Michael F. Malatesta
						Executive Vice President and Chief Financial Officer
						(Duly Authorized Officer)

			By:			/s/ Christopher S. Weigl
						Christopher S. Weigl
						Senior Vice President, Controller & Chief Accounting Officer
						(Principal Accounting Officer)

Dated: ~~October~~May 311, ~~2024~~2025

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