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Relative valuation derived from Healthcare sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
12.8%
Sector: -43.5%
Dividend Analysis audit
HIGH RISK
138.19%
Trailing Yield
$138.19
Per $100 Invested
High yield may not be sustainable given weak profitability.
Est. Payout Ratio
1088%HIGH
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, SELECT MEDICAL HOLDINGS CORP (SEM) receives a "Hold" rating with a composite score of 53.6/100, ranked #377 out of 4446 stocks. Key factor scores: Quality 50/100, Value 78/100, Momentum 48/100. This is quantitative analysis only — not investment advice.
SELECT MEDICAL HOLDINGS CORP (SEM) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does SELECT MEDICAL HOLDINGS CORP Do?
Select Medical Holdings Corporation, through its subsidiaries, operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States. The company's Critical Illness Recovery Hospital segment consists of hospitals that provide services for heart failure, infectious disease, respiratory failure and pulmonary disease, surgery requiring prolonged recovery, renal disease, neurological events, and trauma. Its Rehabilitation Hospital segment offers therapy and rehabilitation treatments, including rehabilitative services for brain and spinal cord injuries, strokes, amputations, neurological disorders, orthopedic conditions, pediatric congenital or acquired disabilities, and cancer. The company's Outpatient Rehabilitation segment operates rehabilitation clinics that provide physical, occupational, and speech rehabilitation programs and services; and specialized programs, such as functional programs for work related injuries, hand therapy, post-concussion rehabilitation, pediatric and cancer rehabilitation, and athletic training services. Its Concentra segment operates and provides occupational health centers and contract services at employer worksites that deliver occupational medicine, consumer health, physical therapy, and wellness services. As of December 31, 2021, the company operated 104 critical illness recovery hospitals in 28 states; 30 rehabilitation hospitals in 12 states; 1,881 outpatient rehabilitation clinics in 38 states and the District of Columbia; and 518 occupational health centers in 41 states, and 134 onsite clinics at employer worksites states. Select Medical Holdings Corporation was founded in 1996 and is headquartered in Mechanicsburg, Pennsylvania. SELECT MEDICAL HOLDINGS CORP (SEM) is classified as a mid-cap stock in the Healthcare sector. The company is led by CEO David S. Chernow and employs approximately 53,800 people, headquartered in MECHANICSBURG, Pennsylvania. With a market capitalization of $2.0B, SEM is one of the notable companies in the Healthcare sector.
SELECT MEDICAL HOLDINGS CORP (SEM) Stock Rating — Hold (April 2026)
As of April 2026, SELECT MEDICAL HOLDINGS CORP receives a Hold rating with a composite score of 53.6/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.SEM ranks #377 out of 4,446 stocks in our coverage universe. Within the Healthcare sector, SELECT MEDICAL HOLDINGS CORP ranks #19 of 838 stocks, placing it in the top 10% of its Healthcare peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
SEM Stock Price and 52-Week Range
SELECT MEDICAL HOLDINGS CORP (SEM) currently trades at $16.37. The 52-week high for SEM is $18.61, which means the stock is currently trading -12.0% from its annual peak. The 52-week low is $11.65, putting the stock 40.5% above its annual trough. Recent trading volume was 818K shares, suggesting relatively thin trading activity.
Is SEM Overvalued or Undervalued? — Valuation Analysis
SELECT MEDICAL HOLDINGS CORP (SEM) carries a value factor score of 78/100 in the Blank Capital model, suggesting the stock trades at a meaningful discount to its fundamental earning power. The trailing price-to-earnings ratio is 7.87x, compared to the Healthcare sector average of 23.63x — a discount of 67%. The price-to-book ratio stands at 1.01x, versus the sector average of 2.75x. The price-to-sales ratio is 0.38x, compared to 1.66x for the average Healthcare stock. On an enterprise value basis, SEM trades at 3.57x EV/EBITDA, versus 6.34x for the sector.
Based on these multiples, SELECT MEDICAL HOLDINGS CORP appears attractively valued relative to both its sector peers and the broader market. Value-oriented investors may find the current entry point compelling, particularly if the company's fundamental quality metrics also score well.
SELECT MEDICAL HOLDINGS CORP Profitability — ROE, Margins, and Quality Score
SELECT MEDICAL HOLDINGS CORP (SEM) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 12.8%, compared to the Healthcare sector average of -43.5%, which is within a healthy range. Return on assets (ROA) comes in at 4.4% versus the sector average of -33.1%.
On a margin basis, SELECT MEDICAL HOLDINGS CORP reports gross margins of 11.0%, compared to 71.5% for the sector. The operating margin is 7.8% (sector: -66.1%). Net profit margin stands at 4.9%, versus -58.7% for the average Healthcare stock. Revenue growth is running at 6.4% on a trailing basis, compared to 10.6% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
SEM Debt, Balance Sheet, and Financial Health
SELECT MEDICAL HOLDINGS CORP has a debt-to-equity ratio of 189.0%, compared to the Healthcare sector average of 32.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. The current ratio is 1.04x, suggesting adequate working capital coverage. Total debt on the balance sheet is $1.77B. Cash and equivalents stand at $60M.
SEM has a beta of 0.63, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for SELECT MEDICAL HOLDINGS CORP is 70/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
SELECT MEDICAL HOLDINGS CORP Revenue and Earnings History — Quarterly Trend
In TTM 2026, SELECT MEDICAL HOLDINGS CORP reported revenue of $5.33B and earnings per share (EPS) of $1.16. Net income for the quarter was $258M. Gross margin was 11.0%. Operating income came in at $413M.
In FY 2025, SELECT MEDICAL HOLDINGS CORP reported revenue of $5.45B and earnings per share (EPS) of $1.16. Net income for the quarter was $215M. Revenue grew 5.1% year-over-year compared to FY 2024. Operating income came in at $336M.
In Q3 2025, SELECT MEDICAL HOLDINGS CORP reported revenue of $1.36B and earnings per share (EPS) of $0.23. Net income for the quarter was $44M. Revenue grew 7.2% year-over-year compared to Q3 2024. Operating income came in at $73M.
In Q2 2025, SELECT MEDICAL HOLDINGS CORP reported revenue of $1.34B and earnings per share (EPS) of $0.32. Net income for the quarter was $58M. Revenue grew 4.5% year-over-year compared to Q2 2024. Operating income came in at $87M.
Over the past 8 quarters, SELECT MEDICAL HOLDINGS CORP has demonstrated a growth trajectory, with revenue expanding from $1.28B to $5.33B. Investors analyzing SEM stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
SEM Dividend Yield and Income Analysis
SELECT MEDICAL HOLDINGS CORP (SEM) currently pays a dividend yield of 138.2%. At this yield, a $10,000 investment in SEM stock would generate approximately $$13819.00 in annual dividend income.
SEM Momentum and Technical Analysis Profile
SELECT MEDICAL HOLDINGS CORP (SEM) has a momentum factor score of 48/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 31/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 48/100 reflects moderate short selling activity.
SEM vs Competitors — Healthcare Sector Ranking and Peer Comparison
Comparing SEM against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full SEM vs S&P 500 (SPY) comparison to assess how SELECT MEDICAL HOLDINGS CORP stacks up against the broader market across all factor dimensions.
SEM Next Earnings Date
No upcoming earnings date has been announced for SELECT MEDICAL HOLDINGS CORP (SEM) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy SEM? — Investment Thesis Summary
SELECT MEDICAL HOLDINGS CORP presents a balanced picture with arguments on both sides. The value score of 78/100 suggests attractive pricing relative to fundamentals. Low volatility (stability score 70/100) reduces downside risk.
In summary, SELECT MEDICAL HOLDINGS CORP (SEM) earns a Hold rating with a composite score of 53.6/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on SEM stock.
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Institutional Research Dossier
SELECT MEDICAL HOLDINGS CORP (SEM) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
Select Medical Holdings Corp. is currently rated as a Hold, a 3-star rating reflecting a composite score of 49.8/100. This rating is primarily driven by a mixed performance across key metrics. While the company exhibits strong value characteristics and reasonable stability, its investment profile, quality, and momentum scores are less compelling. The Hold rating suggests that the company's current valuation fairly reflects its prospects, with neither a compelling reason to aggressively buy nor sell.
The most critical takeaway is that Select Medical operates in a complex healthcare environment with both opportunities and challenges. Its diversified business segments, including critical illness recovery, rehabilitation, outpatient services, and occupational health, provide some resilience. However, the company's relatively low gross margins compared to the sector, coupled with a high debt-to-equity ratio, warrant caution. Investors should closely monitor the company's ability to improve profitability and manage its debt burden in the face of evolving healthcare regulations and competitive pressures.
Business Strategy & Overview
Select Medical Holdings Corporation operates a diversified healthcare business model encompassing four key segments: Critical Illness Recovery Hospitals, Rehabilitation Hospitals, Outpatient Rehabilitation clinics, and Concentra (occupational health centers). This diversification allows Select Medical to capture revenue streams across various stages of patient care, from acute critical illness to outpatient rehabilitation and workplace health services. The company's strategy revolves around providing specialized, high-acuity care in its critical illness recovery and rehabilitation hospitals, while offering convenient and accessible outpatient and occupational health services through its clinics and centers.
The Critical Illness Recovery Hospital segment focuses on treating patients with complex medical conditions requiring prolonged recovery periods. These hospitals offer specialized services for conditions such as heart failure, respiratory failure, and neurological events. The Rehabilitation Hospital segment provides intensive therapy and rehabilitation treatments for patients recovering from brain and spinal cord injuries, strokes, and other debilitating conditions. These two segments are crucial for Select Medical's revenue generation and profitability, as they cater to patients with high medical needs and often involve longer lengths of stay.
The Outpatient Rehabilitation segment operates a network of clinics offering physical, occupational, and speech rehabilitation programs. This segment caters to a broader patient population with less acute conditions, providing services for work-related injuries, sports injuries, and general rehabilitation needs. The Concentra segment focuses on occupational health services, providing medical care, physical therapy, and wellness programs to employers and their employees. This segment offers a stable revenue stream through contracts with employers and provides access to a large patient base.
Select Medical's strategic positioning involves expanding its network of facilities and services through acquisitions and organic growth. The company aims to enhance its market presence in key geographic areas and broaden its service offerings to meet the evolving needs of patients and employers. The company also focuses on improving operational efficiency and cost management to enhance profitability across its various segments. The healthcare industry is subject to significant regulatory oversight and reimbursement pressures, requiring Select Medical to adapt its business strategies to navigate these challenges effectively.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
6.4%
Sector: 10.6%
-40% VS SCTR
Economic Moat Analysis
Select Medical's economic moat can be classified as Narrow. While the company possesses certain competitive advantages, they are not strong enough to create a wide and sustainable moat. The primary sources of Select Medical's narrow moat are its specialized expertise and established network of facilities in specific healthcare niches.
The company's Critical Illness Recovery Hospital and Rehabilitation Hospital segments benefit from specialized knowledge and experience in treating complex medical conditions. These segments require specialized medical staff, equipment, and protocols, creating a barrier to entry for new competitors. However, the healthcare industry is highly competitive, and other established players also possess similar expertise and capabilities. The Outpatient Rehabilitation and Concentra segments face even greater competition from numerous local and regional providers.
Switching costs for patients in the Critical Illness Recovery and Rehabilitation Hospital segments can be moderate, as patients may be referred to specific facilities based on their medical needs and insurance coverage. However, patients and their families may also have some choice in selecting a provider, particularly for rehabilitation services. In the Outpatient Rehabilitation and Concentra segments, switching costs are relatively low, as patients and employers can easily switch to alternative providers if they are dissatisfied with the services or pricing.
Select Medical's network of facilities provides some competitive advantage, as it allows the company to serve a broad geographic area and offer a comprehensive range of services. However, the healthcare industry is characterized by a fragmented market structure, with numerous local and regional providers competing for patients and contracts. The company's brand recognition and reputation may also provide some competitive advantage, but these are not strong enough to create a wide moat. Overall, Select Medical's narrow moat is based on its specialized expertise, established network, and moderate switching costs in certain segments, but it faces significant competition and regulatory pressures that limit its ability to generate consistently high returns on invested capital.
Financial Health & Profitability
Select Medical's financial health presents a mixed picture. The company's revenue has shown moderate growth, with TTM revenue at $5.45 billion, compared to $5.19 billion in FY2024 and $6.66 billion in FY2023. This indicates some volatility in revenue, possibly due to changes in healthcare utilization or reimbursement rates. The gross margin of 11.0% is significantly lower than the sector average of 71.9%, suggesting potential cost pressures or pricing challenges. However, the operating margin of 7.8% and net margin of 4.9% are positive, contrasting sharply with the sector averages of -65.2% and -54.1%, respectively, indicating better operational efficiency than many peers.
The company's profitability metrics, such as ROE (12.8%), are favorable compared to the sector average of -42.5%. This suggests that Select Medical is effectively utilizing equity to generate profits. Net income for the TTM period is $214.53 million, down from $296.70 million in FY2024 and $299.73 million in FY2023, indicating a decline in profitability. The quarterly financial history shows fluctuations in net income and operating margin, with Q1 2024 showing the highest operating margin at 14.7% and Q3 2025 showing the lowest at 5.4%.
Select Medical's balance sheet reveals a debt-heavy structure. The total debt stands at $1.77 billion, while total cash is only $60.05 million. The debt-to-equity ratio of 189.00 is significantly higher than the sector average of 30.00, indicating substantial leverage. The current ratio of 1.04 suggests that the company has sufficient liquid assets to cover its short-term liabilities, but the high debt burden remains a concern. The company's free cash flow is reported as $1.58 billion, which is a positive sign, indicating strong cash generation capabilities. However, the consistency of this free cash flow needs to be evaluated over a longer period.
Overall, Select Medical's financial health is characterized by moderate revenue growth, relatively low gross margins, positive operating and net margins, high leverage, and strong free cash flow generation. The company's ability to manage its debt burden and improve its gross margins will be crucial for its long-term financial stability and performance. The declining net income trend warrants close monitoring.
Valuation Assessment
Select Medical's valuation presents an interesting case. The company's P/E ratio of 14.0x is significantly lower than the healthcare sector average of 24.3x, suggesting that the stock may be undervalued relative to its earnings. Similarly, the EV/EBITDA ratio of 1.1x is substantially lower than the sector average of 6.4x, further indicating potential undervaluation based on its enterprise value and earnings before interest, taxes, depreciation, and amortization. However, these metrics must be considered in the context of the company's growth prospects, financial health, and industry dynamics.
Given the company's moderate revenue growth of 6.4% compared to the sector's 10.7%, the lower valuation multiples may reflect investor concerns about its growth potential. The high debt-to-equity ratio of 189.00 also likely contributes to the lower valuation, as investors may perceive the company as riskier due to its leverage. The free cash flow yield, while not explicitly provided, can be inferred to be relatively high given the substantial free cash flow of $1.58 billion and a market cap of $2.02 billion. This suggests that the company is generating significant cash relative to its market value, which could be attractive to value investors.
Compared to its historical valuation, it's important to consider how Select Medical's multiples have fluctuated over time. Without historical data, it's difficult to determine whether the current valuation represents a significant discount or premium relative to its past performance. However, the fact that the company's net income has declined from FY2023 to the TTM period suggests that the lower valuation multiples may be justified by the recent earnings decline.
In conclusion, Select Medical's valuation appears to be relatively cheap based on its P/E and EV/EBITDA ratios compared to the healthcare sector. However, the lower valuation may be warranted due to its moderate revenue growth, high debt burden, and recent decline in net income. The strong free cash flow generation is a positive sign, but investors should carefully consider the company's growth prospects and financial risks before making an investment decision. The Hold rating seems appropriate, reflecting a balanced view of the company's valuation and fundamentals.
Risk & Uncertainty
Select Medical faces several specific risks that could impact its business and financial performance. One of the most significant risks is regulatory and reimbursement pressures within the healthcare industry. Changes in government regulations, such as the Affordable Care Act (ACA) or Medicare/Medicaid reimbursement policies, could significantly affect the company's revenue and profitability. The healthcare industry is subject to constant regulatory scrutiny, and any adverse changes in regulations could negatively impact Select Medical's operations.
Competition is another key risk factor. The healthcare industry is highly competitive, with numerous local, regional, and national providers vying for patients and contracts. Select Medical faces competition from other critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers. Increased competition could lead to pricing pressures, reduced market share, and lower profitability. The company's ability to differentiate its services and maintain its competitive position is crucial for its success.
High leverage poses a significant financial risk. Select Medical's high debt-to-equity ratio of 189.00 indicates substantial leverage, which could increase its vulnerability to economic downturns or adverse business conditions. The company's ability to service its debt obligations depends on its cash flow generation, and any decline in revenue or profitability could strain its financial resources. High leverage also limits the company's financial flexibility to pursue growth opportunities or weather unexpected challenges.
Concentration risk within the Concentra segment could also be a concern. If a significant portion of Concentra's revenue is derived from a small number of large employer contracts, the loss of one or more of these contracts could have a material adverse effect on the company's financial performance. The company's ability to diversify its customer base and maintain strong relationships with its key clients is essential for mitigating this risk.
Bulls Say / Bears Say
The Bull Case
BULL VIEWSelect Medical's diversified business model across various healthcare segments provides resilience and allows it to capture revenue streams at different stages of patient care.
BULL VIEWThe company's strong free cash flow generation and relatively low valuation multiples compared to the sector suggest potential upside for value investors.
The Bear Case
BEAR VIEWSelect Medical's high debt-to-equity ratio and relatively low gross margins compared to the sector raise concerns about its financial health and profitability.
BEAR VIEWThe company's moderate revenue growth and declining net income trend indicate potential challenges in maintaining its competitive position and generating sustainable earnings growth.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score SEM and 4,400+ other equities.
SELECT MEDICAL HOLDINGS CORP exhibits a 63% valuation discount relative to institutional benchmarks. This represents a constructive entry window based on current multiples.
Return on Assets
Efficiency of asset utilization
4.4%
Sector: -33.1%
Gross Margin
Pricing power and cost efficiency
11.0%
Sector: 71.5%
Operating Margin
Core business profitability
7.8%
Sector: -66.1%
Net Margin
Bottom-line profitability
4.9%
Sector: -58.7%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield0.00%
Yield Delta—
Income Projection audit
A $10,000 investment would generate approximately $13819 annually in dividends at the current trailing rate.
