Please ensure Javascript is enabled for purposes of website accessibility

Why Select Medical Holdings Is Blasting 20% Higher Today

By Eric Volkman - Feb 26, 2021 at 2:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Critical care hospitalizations were up during the quarter, for obvious reasons.

What happened

On Friday, big hospital and clinic operator Select Medical Holdings' (SEM 1.33%) stock price was up by roughly 20% in midafternoon trading. That was thanks to a very encouraging set of quarterly results.

So what

For Q4 2020, Select Medical's revenue rose by 6% year over year to $1.46 billion. Non-GAAP (adjusted) net profit shot 141% higher to $77.3 million ($0.57 per share).

Both figures exceeded analyst estimates, particularly the net profit. On average, they were expecting Select Medical to earn $1.41 billion in revenue, and a mere $0.26 per share in adjusted net profit.

Medical professionals conferring in a hospital lobby

Image source: Getty Images.

The big driver of Select Medical's growth was its largest business, critical illness recovery hospitals. In Q4 the unit booked nearly $538 million in revenue for a robust 18% year-over-year improvement, by far the best performance of the company's four segments.

Revenue growth was fueled, not surprisingly, by an influx of COVID-19 patients, and profitability was boosted by the federal government's Provider Relief Fund that supported healthcare companies during the pandemic.

Select Medical also proffered guidance for full-year 2021. The company expects it will earn $5.65 billion to $5.85 billion, which would be 2% to 6% higher than the 2020 tally. GAAP per-share earnings should land at $2.26 to $2.48, for growth of at least 17%.

Now what

While the coronavirus outbreak will (hopefully) subside, for the most part, relatively soon, Select Medical should remain an important company in its segment. It probably won't be posting such lofty growth numbers post-pandemic, however.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Select Medical Holdings Corporation Stock Quote
Select Medical Holdings Corporation
SEM
$24.30 (1.33%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.