Select Medical Holdings Reports Q1 2026 Revenue Growth to $1.42 Billion, Net Income Decline

Select Medical Holdings Corporation reported its financial results for the first quarter of 2026, revealing a revenue increase to $1.42 billion, up 5% from $1.35 billion in the same period last year. However, net income decreased to $63.8 million, compared to $74.7 million in the prior year, resulting in earnings per share of $0.35, down from $0.44. The decline in profitability was attributed to rising operational costs, particularly in the critical illness recovery hospital segment, which saw a 20.3% drop in income from operations.

The company experienced notable changes across its segments. Revenue from the critical illness recovery hospital segment increased marginally by 0.3% to $638.8 million, while the rehabilitation hospital segment saw a significant 14.5% rise to $351.9 million, driven by a 12.5% increase in patient days. The outpatient rehabilitation segment also reported a 4.5% revenue increase to $321.3 million, supported by a rise in patient visits. Despite these gains, the overall income from operations fell to $98.4 million, down 12.7% from the previous year, primarily due to increased personnel expenses and general administrative costs.

In terms of operational metrics, Select Medical's total assets grew to $6.04 billion as of March 31, 2026, compared to $5.85 billion at the end of 2025. The company reported a total of 103 critical illness recovery hospitals and 41 rehabilitation hospitals, with a slight decrease in the number of outpatient rehabilitation clinics to 1,607. The company also noted an increase in patient engagement, with outpatient visits rising to approximately 2.83 million. However, the average length of stay in critical illness recovery hospitals decreased to 31 days, reflecting operational adjustments.

Strategically, Select Medical announced a merger agreement on March 2, 2026, with Stallion Intermediate Corporation, which will see the company become a wholly-owned subsidiary. The merger is expected to be completed in mid-2026, subject to regulatory approvals and stockholder consent. The agreement includes a commitment for equity financing of up to $880 million to fund the merger consideration. The company anticipates that this merger will enhance its operational capabilities and market position.

Looking ahead, Select Medical's management expressed cautious optimism regarding future performance, despite the challenges posed by rising labor costs and regulatory changes in healthcare reimbursement. The company plans to continue expanding its services and facilities while managing operational efficiencies to improve profitability. The ongoing merger process is also expected to play a significant role in shaping the company's strategic direction in the coming months.