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SELECT MEDICAL HOLDINGS CORP - Quarter Report: 2022 March (Form 10-Q)


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 March 31, 2022
OR
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)
Delaware20-1764048
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareSEMNew 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 filerAccelerated filer
Non-accelerated filerSmaller 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 April 30, 2022, Select Medical Holdings Corporation had outstanding 130,627,340 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.
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TABLE OF CONTENTS
 
   
 
   
 
   
 
   
 
   
 
   
 
   
   
   
   
   
   
   
   
   
   
   
   
 
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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, 2021March 31, 2022
ASSETS  
Current Assets:  
Cash and cash equivalents$74,310 $130,881 
Accounts receivable889,303 941,434 
Prepaid income taxes55,620 40,761 
Other current assets120,206 137,775 
Total Current Assets1,139,439 1,250,851 
Operating lease right-of-use assets1,078,754 1,102,710 
Property and equipment, net961,467 952,926 
Goodwill3,448,912 3,465,456 
Identifiable intangible assets, net374,879 368,850 
Other assets356,720 395,151 
Total Assets$7,360,171 $7,535,944 
LIABILITIES AND EQUITY  
Current Liabilities:  
Overdrafts$42,353 $34,745 
Current operating lease liabilities229,334 234,420 
Current portion of long-term debt and notes payable17,572 24,513 
Accounts payable233,844 238,150 
Accrued payroll247,292 242,749 
Accrued vacation144,048 148,114 
Accrued interest29,002 9,932 
Accrued other244,312 232,297 
Government advances83,790 20,862 
Unearned government assistance93 194 
Income taxes payable1,437 3,175 
Total Current Liabilities1,273,077 1,189,151 
Non-current operating lease liabilities916,540 938,423 
Long-term debt, net of current portion3,556,385 3,738,299 
Non-current deferred tax liability142,792 156,407 
Other non-current liabilities106,442 105,098 
Total Liabilities5,995,236 6,127,378 
Commitments and contingencies (Note 14)
Redeemable non-controlling interests39,033 41,670 
Stockholders’ Equity:  
Common stock, $0.001 par value, 700,000,000 shares authorized, 133,884,817 and 131,769,303 shares issued and outstanding at 2021 and 2022, respectively
134 132 
Capital in excess of par504,314 489,794 
Retained earnings593,251 596,079 
Accumulated other comprehensive income12,282 52,135 
Total Stockholders’ Equity1,109,981 1,138,140 
Non-controlling interests215,921 228,756 
Total Equity1,325,902 1,366,896 
Total Liabilities and Equity$7,360,171 $7,535,944 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Select Medical Holdings Corporation
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)

 For the Three Months Ended March 31,
 20212022
Revenue$1,546,463 $1,599,547 
Costs and expenses:  
Cost of services, exclusive of depreciation and amortization1,293,449 1,407,010 
General and administrative35,403 37,513 
Depreciation and amortization49,620 51,039 
Total costs and expenses1,378,472 1,495,562 
Other operating income34,021 — 
Income from operations202,012 103,985 
Other income and expense:  
Equity in earnings of unconsolidated subsidiaries9,919 5,397 
Interest income4,749 — 
Interest expense(34,402)(35,514)
Income before income taxes182,278 73,868 
Income tax expense45,064 17,942 
Net income137,214 55,926 
Less: Net income attributable to non-controlling interests26,668 6,809 
Net income attributable to Select Medical Holdings Corporation$110,546 $49,117 
Earnings per common share (Note 13):  
Basic and diluted$0.82 $0.37 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Select Medical Holdings Corporation
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)

For the Three Months Ended March 31,
20212022
Net income$137,214 $55,926 
Other comprehensive income, net of tax:
Gain on interest rate cap cash flow hedge8,151 39,814 
Reclassification adjustment for losses (gains) included in net income— 39 
Net change, net of tax benefit (expense) of $(2,834) and $(13,284)
8,151 39,853 
Comprehensive income145,365 95,779 
Less: Comprehensive income attributable to non-controlling interests26,668 6,809 
Comprehensive income attributable to Select Medical Holdings Corporation$118,697 $88,970 

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


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Select Medical Holdings Corporation
Condensed Consolidated Statements of Changes in Equity and Income
(unaudited)
(in thousands)

For the Three Months Ended March 31, 2022
 Total Stockholders’ Equity  
 Common
Stock
Issued
Common
Stock
Par Value
Capital in
Excess
of Par
Retained
Earnings
Accumulated Other Comprehensive IncomeTotal Stockholders’ EquityNon-controlling
Interests
Total
Equity
Balance at December 31, 2021133,884 $134 $504,314 $593,251 $12,282 $1,109,981 $215,921 $1,325,902 
Net income attributable to Select Medical Holdings Corporation49,117 49,117 49,117 
Net income attributable to non-controlling interests— 4,891 4,891 
Cash dividends declared for common stockholders ($0.125 per share)
(16,691)(16,691)(16,691)
Issuance of restricted stock13 — — 
Vesting of restricted stock8,288 8,288 8,288 
Repurchase of common shares(2,128)(2)(23,459)(28,215)(51,676)(51,676)
Issuance of non-controlling interests651 651 4,578 5,229 
Non-controlling interests acquired in business combination, measurement period adjustment— 12,463 12,463 
Distributions to and purchases of non-controlling interests— (9,097)(9,097)
Redemption value adjustment on non-controlling interests(1,381)(1,381)(1,381)
Other comprehensive income39,853 39,853 39,853 
Other(2)(2)(2)
Balance at March 31, 2022131,769 $132 $489,794 $596,079 $52,135 $1,138,140 $228,756 $1,366,896 


For the Three Months Ended March 31, 2021
 Total Stockholders’ Equity  
 Common
Stock
Issued
Common
Stock
Par Value
Capital in
Excess
of Par
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Total Stockholders’ EquityNon-controlling
Interests
Total
Equity
Balance at December 31, 2020134,850 $135 $509,128 $553,244 $(2,027)$1,060,480 $192,493 $1,252,973 
Net income attributable to Select Medical Holdings Corporation110,546 110,546 110,546 
Net income attributable to non-controlling interests— 17,042 17,042 
Issuance of restricted stock— — 
Forfeitures of unvested restricted stock(14)— — 
Vesting of restricted stock6,173 6,173 6,173 
Non-controlling interests acquired in business combination— 8,193 8,193 
Distributions to and purchases of non-controlling interests(787)(787)(13,458)(14,245)
Redemption value adjustment on non-controlling interests(38,405)(38,405)(38,405)
Other comprehensive income8,151 8,151 8,151 
Other(178)(4)(182)371 189 
Balance at March 31, 2021134,838 $135 $514,336 $625,381 $6,124 $1,145,976 $204,641 $1,350,617 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Select Medical Holdings Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
 For the Three Months Ended March 31,
 20212022
Operating activities  
Net income$137,214 $55,926 
Adjustments to reconcile net income to net cash provided by operating activities:  
Distributions from unconsolidated subsidiaries11,633 7,486 
Depreciation and amortization49,620 51,039 
Provision for expected credit losses67 94 
Equity in earnings of unconsolidated subsidiaries(9,919)(5,397)
Loss (gain) on sale or disposal of assets72 (23)
Stock compensation expense6,709 8,823 
Amortization of debt discount, premium and issuance costs543 558 
Deferred income taxes(897)420 
Changes in operating assets and liabilities, net of effects of business combinations:  
Accounts receivable(60,142)(52,225)
Other current assets(4,425)(1,819)
Other assets961 2,686 
Accounts payable23,460 16,074 
Accrued expenses21,167 (31,076)
Government advances— (62,928)
Unearned government assistance19,207 101 
Income taxes44,618 16,598 
Net cash provided by operating activities239,888 6,337 
Investing activities  
Business combinations, net of cash acquired(6,314)(5,186)
Purchases of property and equipment(39,719)(46,845)
Investment in businesses(6,571)(3,337)
Proceeds from sale of assets19 37 
Net cash used in investing activities(52,585)(55,331)
Financing activities  
Borrowings on revolving facilities— 280,000 
Payments on revolving facilities— (100,000)
Borrowings of other debt8,915 15,794 
Principal payments on other debt(9,342)(9,188)
Dividends paid to common stockholders— (16,691)
Repurchase of common stock— (51,676)
Decrease in overdrafts— (7,608)
Proceeds from issuance of non-controlling interests— 5,229 
Distributions to and purchases of non-controlling interests(13,663)(10,295)
Net cash provided by (used in) financing activities(14,090)105,565 
Net increase in cash and cash equivalents173,213 56,571 
Cash and cash equivalents at beginning of period577,061 74,310 
Cash and cash equivalents at end of period$750,274 $130,881 
Supplemental Information  
Cash paid for interest$52,470 $53,517 
Cash paid for taxes1,343 923 

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 March 31, 2022, and for the three month periods ended March 31, 2021 and 2022, 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 months ended March 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2022. 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, 2021, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022.
2.    Accounting Policies
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
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash balances and accounts receivable. The Company’s excess cash is held with large financial institutions. The Company grants unsecured credit to its patients, most of whom reside in the service area of the Company’s facilities and are insured under third-party payor agreements.
Because of the diversity in the Company’s non-governmental third-party payor base, as well as their geographic dispersion, accounts receivable due from the Medicare program represent the Company’s only significant concentration of credit risk. Approximately 15% of the Company’s accounts receivable is due from Medicare at both December 31, 2021 and March 31, 2022.
4.     Redeemable Non-Controlling Interests
The ownership interests held by outside parties in subsidiaries, which include limited liability companies and limited partnerships, controlled 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, if exercised, require 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 approximate redemption values, after the attribution of net income or loss.







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The changes in redeemable non-controlling interests are as follows:
Three Months Ended March 31,
20212022
(in thousands)
Balance as of January 1$398,171 $39,033 
Net income attributable to redeemable non-controlling interests9,626 1,918 
Distributions to and purchases of redeemable non-controlling interests(614)(1,198)
Redemption value adjustment on redeemable non-controlling interests38,405 1,381 
Other343 536 
Balance as of March 31$445,931 $41,670 
5.     Variable Interest Entities
Certain states prohibit the “corporate practice of medicine,” which restricts the Company from owning medical practices which directly employ physicians and from exercising control over medical decisions by physicians. In these states, the Company enters into long-term management agreements with medical practices that are owned by licensed physicians, which, in turn, employ or contract with physicians who provide professional medical services. The management agreements provide for the Company to direct the transfer of ownership of the medical practices to new licensed physicians at any time. Based on the provisions of the management agreements, the medical practices are variable interest entities for which the Company is the primary beneficiary.
As of December 31, 2021 and March 31, 2022, the total assets of the Company’s variable interest entities were $225.1 million and $242.0 million, respectively, and are principally comprised of accounts receivable. As of December 31, 2021 and March 31, 2022, the total liabilities of the Company’s variable interest entities were $74.8 million and $79.1 million, respectively, and are 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 of $150.3 million and $163.4 million as of December 31, 2021 and March 31, 2022, respectively. These intercompany balances are eliminated in consolidation.
6.     Leases
The Company has operating and finance leases for its facilities. The Company leases its corporate office space from related parties.
The Company’s total lease cost is as follows:

Three Months Ended March 31, 2021Three Months Ended March 31, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Operating lease cost
$70,114 $1,799 $71,913 $73,962 $1,809 $75,771 
Finance lease cost:
Amortization of right-of-use assets
35 — 35 347 — 347 
Interest on lease liabilities
251 — 251 340 — 340 
Short-term lease cost— — — 35 — 35 
Variable lease cost13,009 13,012 13,655 39 13,694 
Sublease income(2,234)— (2,234)(1,966)— (1,966)
Total lease cost$81,175 $1,802 $82,977 $86,373 $1,848 $88,221 




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Supplemental cash flow information related to leases is as follows:
Three Months Ended March 31,
20212022
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$72,437 $77,689 
Operating cash flows for finance leases
251 340 
Financing cash flows for finance leases
58 344 
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$79,987 $88,636 
Finance leases138 — 

Supplemental balance sheet information related to leases is as follows:

December 31, 2021March 31, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Operating Leases
Operating lease right-of-use assets$1,052,603 $26,151 $1,078,754 $1,077,980 $24,730 $1,102,710 
Current operating lease liabilities$222,865 $6,469 $229,334 $228,598 $5,822 $234,420 
Non-current operating lease liabilities894,104 22,436 916,540 916,887 21,536 938,423 
Total operating lease liabilities$1,116,969 $28,905 $1,145,874 $1,145,485 $27,358 $1,172,843 

December 31, 2021March 31, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Finance Leases
Property and equipment, net$8,505 $— $8,505 $8,158 $— $8,158 
Current portion of long-term debt and notes payable$1,404 $— $1,404 $1,436 $— $1,436 
Long-term debt, net of current portion16,679 — 16,679 16,303 — 16,303 
Total finance lease liabilities$18,083 $— $18,083 $17,739 $— $17,739 
The weighted average remaining lease terms and discount rates are as follows:
December 31, 2021March 31, 2022
Weighted average remaining lease term (in years):
Operating leases
7.87.6
Finance leases
24.724.8
Weighted average discount rate:
Operating leases
5.6 %5.6 %
Finance leases
7.4 %7.4 %






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As of March 31, 2022, maturities of lease liabilities are approximately as follows:
Operating LeasesFinance Leases
(in thousands)
2022 (remainder of year)$222,152 $2,040 
2023259,672 2,747 
2024219,375 2,384 
2025175,699 2,101 
2026145,837 2,126 
Thereafter495,998 28,181 
Total undiscounted cash flows1,518,733 39,579 
Less: Imputed interest345,890 21,840 
Total discounted lease liabilities$1,172,843 $17,739 
7.     Intangible Assets
Goodwill
The following table shows changes in the carrying amounts of goodwill by reporting unit for the three months ended March 31, 2022:
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraTotal
 (in thousands)
Balance as of December 31, 2021$1,131,440 $442,155 $654,125 $1,221,192 $3,448,912 
Acquisition of businesses— — 409 2,884 3,293 
Measurement period adjustment13,251 — — — 13,251 
Balance as of March 31, 2022$1,144,691 $442,155 $654,534 $1,224,076 $3,465,456 
Identifiable Intangible Assets
The following table provides the gross carrying amounts, accumulated amortization, and net carrying amounts for the Company’s identifiable intangible assets:
 December 31, 2021March 31, 2022
 Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
 (in thousands)
Indefinite-lived intangible assets:      
Trademarks$166,698 $— $166,698 $166,698 $— $166,698 
Certificates of need21,478 — 21,478 21,625 — 21,625 
Accreditations1,874 — 1,874 1,874 — 1,874 
Finite-lived intangible assets:      
Trademarks5,000 (5,000)— 5,000 (5,000)— 
Customer relationships304,289 (141,111)163,178 305,839 (148,283)157,556 
Non-compete agreements36,746 (15,095)21,651 37,087 (15,990)21,097 
Total identifiable intangible assets$536,085 $(161,206)$374,879 $538,123 $(169,273)$368,850 
The Company’s accreditations and trademarks have renewal terms and the costs to renew these intangible assets are expensed as incurred. At March 31, 2022, the accreditations and trademarks have a weighted average time until next renewal of 1.5 years and 7.5 years, respectively.
The Company’s finite-lived intangible assets amortize over their estimated useful lives. Amortization expense was $7.1 million and $7.6 million for the three months ended March 31, 2021 and 2022, respectively.
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8.     Long-Term Debt and Notes Payable
As of March 31, 2022, the Company’s long-term debt and notes payable were as follows:
 Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value
(in thousands)
6.250% senior notes
$1,225,000 $26,131 $(13,212)$1,237,919 $1,262,118 
Credit facilities:     
Revolving facility340,000 — — 340,000 338,725
Term loan2,103,437 (5,890)(6,421)2,091,126 2,079,773 
Other debt, including finance leases93,961 — (194)93,767 93,767 
Total debt$3,762,398 $20,241 $(19,827)$3,762,812 $3,774,383 
Principal maturities of the Company’s long-term debt and notes payable were approximately as follows:
 20222023202420252026ThereafterTotal
(in thousands)
6.250% senior notes
$— $— $— $— $1,225,000 $— $1,225,000 
Credit facilities:       
Revolving facility— — 340,000 — — — 340,000 
Term loan— 4,757 11,150 2,087,530 — — 2,103,437 
Other debt, including finance leases22,143 31,064 26,081 1,824 1,286 11,563 93,961 
Total debt$22,143 $35,821 $377,231 $2,089,354 $1,226,286 $11,563 $3,762,398 
As of December 31, 2021, the Company’s long-term debt and notes payable were as follows:
 Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value
(in thousands)
6.250% senior notes
$1,225,000 $27,635 $(13,951)$1,238,684 $1,297,104 
Credit facilities:     
Revolving facility160,000 — — 160,000 159,400 
Term loan2,103,437 (6,386)(6,961)2,090,090 2,087,661 
Other debt, including finance leases85,398 — (215)85,183 85,183 
Total debt$3,573,835 $21,249 $(21,127)$3,573,957 $3,629,348 
9.     Interest Rate Cap
The Company is subject to market risk exposure arising from changes in interest rates on its term loan, which bears interest at a rate that is indexed to one-month LIBOR. The Company’s objective in using an interest rate derivative is to mitigate its exposure to increases in interest rates. The interest rate cap limits the Company’s exposure to increases in the one-month LIBOR rate to 1.0% on $2.0 billion of principal outstanding under the term loan, as the interest rate cap provides for payments from the counterparty when interest rates rise above 1.0%. The interest rate cap has a $2.0 billion notional amount and became effective March 31, 2021 for the monthly periods from and including April 30, 2021 through September 30, 2024. The Company will pay a monthly premium for the interest rate cap over the term of the agreement. The annual premium is equal to 0.0916% of the notional amount, or approximately $1.8 million.
The interest rate cap has been designated as a cash flow hedge and is highly effective at offsetting the changes in cash outflows when one-month LIBOR exceeds 1.0%. Changes in the fair value of the interest rate cap, net of tax, are recognized in other comprehensive income and are reclassified out of accumulated other comprehensive income and into interest expense when the hedged interest obligations affect earnings.

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The following table outlines the changes in accumulated other comprehensive income, net of tax, during the periods presented:
Three Months Ended March 31,
20212022
(in thousands)
Balance as of January 1$(2,027)$12,282 
Gain on interest rate cap cash flow hedge
8,151 39,814 
Amounts reclassified from accumulated other comprehensive income
— 39 
Balance as of March 31$6,124 $52,135 
The Company expects that approximately $16.9 million of estimated pre-tax gains will be reclassified from accumulated other comprehensive income into interest expense within the next twelve months.
Refer to Note 10 – Fair Value of Financial Instruments for information on the fair value of the Company’s interest rate cap contract and its balance sheet classification.
10.     Fair Value of Financial Instruments
Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as outlined below, on the basis of the observability of the inputs used in the fair value measurement:
Level 1 – inputs are based upon quoted prices for identical instruments in active markets.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the instrument.
The Company’s interest rate cap contract is recorded at its fair value in the condensed consolidated balance sheets on a recurring basis. The fair value of the interest rate cap contract is based upon a model-derived valuation using observable market inputs, such as interest rates and interest rate volatility, and the strike price.
Financial InstrumentBalance Sheet ClassificationLevelDecember 31, 2021March 31, 2022
Asset:(in thousands)
Interest rate cap contract, current portionOther current assetsLevel 2$— $15,745 
Interest rate cap contract, non-current portionOther assetsLevel 218,055 55,523 
Liability:
Interest rate cap contract, current portionAccrued otherLevel 2$330 $— 
The Company does not measure its indebtedness at fair value in its condensed consolidated balance sheets. The fair value of the credit facilities is based on quoted market prices for this debt in the syndicated loan market. The fair value of the senior notes is based on quoted market prices. The carrying value of the Company’s other debt, as disclosed in Note 8 – Long-Term Debt and Notes Payable, approximates fair value.
December 31, 2021March 31, 2022
Financial InstrumentLevelCarrying ValueFair ValueCarrying ValueFair Value
(in thousands)
6.250% senior notes
Level 2$1,238,684 $1,297,104 $1,237,919 $1,262,118 
Credit facilities:
Revolving facilityLevel 2160,000 159,400 340,000 338,725 
Term loanLevel 22,090,090 2,087,661 2,091,126 2,079,773 
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.
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11.     Segment Information
The Company’s reportable segments consist of the critical illness recovery hospital segment, rehabilitation hospital segment, 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 evaluates the performance of its segments based on Adjusted EBITDA. Adjusted EBITDA is defined as earnings excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, 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 March 31,
 20212022
 (in thousands)
Revenue:  
Critical illness recovery hospital$594,872 $601,755 
Rehabilitation hospital207,804 220,634 
Outpatient rehabilitation251,961 271,940 
Concentra422,840 423,423 
Other68,986 81,795 
Total Company$1,546,463 $1,599,547 
Adjusted EBITDA:  
Critical illness recovery hospital$113,272 $35,967 
Rehabilitation hospital50,534 42,379 
Outpatient rehabilitation26,329 26,596 
Concentra82,015 89,469 
Other(1)
(13,809)(30,564)
Total Company$258,341 $163,847 
Total assets:  
Critical illness recovery hospital$2,233,067 $2,367,490 
Rehabilitation hospital1,188,387 1,187,118 
Outpatient rehabilitation1,321,268 1,350,374 
Concentra2,468,157 2,339,940 
Other709,902 291,022 
Total Company$7,920,781 $7,535,944 
Purchases of property and equipment:  
Critical illness recovery hospital$14,385 $19,569 
Rehabilitation hospital665 6,274 
Outpatient rehabilitation7,335 9,414 
Concentra12,680 10,240 
Other4,654 1,348 
Total Company$39,719 $46,845 
_______________________________________________________________________________
(1)     For the three months ended March 31, 2021, Adjusted EBITDA included other operating income of $16.1 million related to the recognition of payments received under the Provider Relief Fund for health care related expenses and loss of revenue attributable to the coronavirus disease 2019 (“COVID-19”).





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A reconciliation of Adjusted EBITDA to income before income taxes is as follows:
 Three Months Ended March 31, 2021
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
 (in thousands)
Adjusted EBITDA$113,272 $50,534 $26,329 $82,015 $(13,809) 
Depreciation and amortization(13,050)(7,060)(7,191)(19,898)(2,421) 
Stock compensation expense— — — (536)(6,173) 
Income (loss) from operations$100,222 $43,474 $19,138 $61,581 $(22,403)$202,012 
Equity in earnings of unconsolidated subsidiaries    9,919 
Interest income4,749 
Interest expense    (34,402)
Income before income taxes    $182,278 
 Three Months Ended March 31, 2022
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
 (in thousands)
Adjusted EBITDA$35,967 $42,379 $26,596 $89,469 $(30,564) 
Depreciation and amortization(14,618)(6,802)(8,029)(18,812)(2,778) 
Stock compensation expense— — — (535)(8,288) 
Income (loss) from operations$21,349 $35,577 $18,567 $70,122 $(41,630)$103,985 
Equity in earnings of unconsolidated subsidiaries    5,397 
Interest expense    (35,514)
Income before income taxes    $73,868 
12.     Revenue from Contracts with Customers
The following tables disaggregate the Company’s revenue for the three months ended March 31, 2021 and 2022:
Three Months Ended March 31, 2021
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)
Patient service revenue:
Medicare$232,140 $102,375 $36,291 $230 $— $371,036 
Non-Medicare361,152 95,342 200,819 420,654 — 1,077,967 
Total patient services revenues593,292 197,717 237,110 420,884 — 1,449,003 
Other revenue1,580 10,087 14,851 1,956 68,986 97,460 
Total revenue$594,872 $207,804 $251,961 $422,840 $68,986 $1,546,463 
Three Months Ended March 31, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)
Patient service revenue:
Medicare$218,987 $103,021 $41,904 $177 $— $364,089 
Non-Medicare380,986 107,142 214,113 422,046 — 1,124,287 
Total patient services revenues599,973 210,163 256,017 422,223 — 1,488,376 
Other revenue1,782 10,471 15,923 1,200 81,795 111,171 
Total revenue$601,755 $220,634 $271,940 $423,423 $81,795 $1,599,547 
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13.    Earnings per Share
The Company’s capital structure includes common stock and unvested restricted stock awards. To compute earnings per share (“EPS”), the Company applies the two-class method because the Company’s unvested restricted stock awards are participating securities which are entitled to participate equally with the Company’s common stock in undistributed earnings. Application of the Company’s two-class method is as follows:
(i)Net income attributable to the Company 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 months ended March 31, 2021 and 2022.
(ii)The remaining undistributed net income of the Company 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 net income 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, its common shares outstanding, and its participating securities outstanding.
Basic and Diluted EPS
Three Months Ended March 31,
20212022
(in thousands)
Net income$137,214 $55,926 
Less: net income attributable to non-controlling interests26,668 6,809 
Net income attributable to the Company110,546 49,117 
Less: Distributed and undistributed income attributable to participating securities3,698 1,643 
Distributed and undistributed income attributable to common shares$106,848 $47,474 
The following tables set forth the computation of EPS under the two-class method:
Three Months Ended March 31,
20212022
Net Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)
Common shares$106,848 130,329 $0.82 $47,474 129,010 $0.37 
Participating securities3,698 4,511 $0.82 1,643 4,464 $0.37 
Total Company$110,546 $49,117 
_______________________________________________________________________________
(1)    Represents the weighted average share count outstanding during the period.

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14.    Commitments and Contingencies
Litigation
The Company is a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of its business. The Company cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject the Company to sanctions, damages, recoupments, fines, and other penalties. The Department of Justice, Centers for Medicare & Medicaid Services (“CMS”), or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company’s businesses in the future that may, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position, results of operations, and liquidity.
To address claims arising out of the Company’s operations, the Company maintains professional malpractice liability insurance and general liability insurance coverages through a number of different programs that are dependent upon such factors as the state where the Company is operating and whether the operations are wholly owned or are operated through a joint venture. For the Company’s wholly owned operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $37.0 million for professional malpractice liability insurance and $40.0 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 Company’s professional and general liability insurance policies. These insurance policies also do not generally cover punitive damages and are subject to various deductibles and policy limits. The Company reviews its insurance program annually and may make adjustments to the amount of insurance coverage and self-insured retentions in future years. Significant legal actions, as well as the cost and possible lack of available insurance, could subject the Company to substantial uninsured liabilities. In the Company’s opinion, the outcome of these actions, individually or in the aggregate, will not have a material adverse effect on its financial position, results of operations, or cash flows.
Healthcare providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act. Qui tam lawsuits typically remain under seal (hence, usually unknown to the defendant) for some time while the government decides whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation. These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who successfully bring the suits. The Company is and has been a defendant in these cases in the past, and may be named as a defendant in similar cases from time to time in the future.
Oklahoma City Subpoena. On August 24, 2020, the Company and Select Specialty Hospital – Oklahoma City, Inc. (“SSH–Oklahoma City”) received Civil Investigative Demands 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 does not know whether the subpoena has been issued in connection with a qui tam lawsuit or in connection with possible civil, criminal or administrative proceedings by the government. The Company is producing documents in response to the subpoena and is fully cooperating with this investigation. At this time, the Company is unable to predict the timing and outcome of this matter.
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New Jersey Litigation. In December 2020, the United States District Court for the District of New Jersey unsealed a qui tam complaint in the United States of America and State of New Jersey ex rel. Keith A. DiLello, Sr. v. Hackensack Meridian Health, Jersey Shore University Medical Center, Ocean Medical Center, Seaview Orthopaedics, Shrewsbury Surgery Center, Kessler Rehabilitation, Dr. Halambros Demetriades, Dr. Theodore Kutzan, Dr. Adam Myers, Dr. Hoan-Vu Nguyen, Dr. Frederick De Paola, ABC Corporations 1-10, and John/Jane Does 1-10, Case 3:20-cv-02949-FLW-ZNQ. The complaint was filed under seal in March 2020 and was unsealed after the United States and the State of New Jersey declined to intervene in the case. In the complaint, the plaintiff-relator, an automobile accident victim and former patient of the defendant providers, alleges that they routinely billed both personal injury protection (“PIP”) carriers and CMS. He alleges that they violated federal and state law by billing CMS when other insurance is available and failing to return payment to CMS after payment was made by the PIP carriers. In March 2021, defendant Kessler Rehabilitation waived service of process of the complaint. In April 2022, the Court granted defendant Kessler Rehabilitation’s motion to dismiss the complaint, dismissing all counts without prejudice. The Court also gave the plaintiff-relator leave to amend his complaint, within 30 days of the Court’s order, to cure the deficiencies outlined in the Court’s opinion. The Company intends to vigorously defend this action, but 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 one-page letter from a Trial Attorney at the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Fraud Section (“DOJ”). The letter stated that the DOJ, in conjunction with the U.S. Department of Health and Human Services, 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 of physical therapy services. The Company is producing documents and data in response to such letter and is fully cooperating with this investigation. At this time, the Company is unable to predict the timing and outcome of this matter.
15.     Subsequent Event
On May 5, 2022, the Company’s board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about June 1, 2022 to stockholders of record as of the close of business on May 19, 2022.

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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:
developments related to the COVID-19 pandemic including, but not limited to, the duration and severity of the pandemic, additional measures taken by government authorities and the private sector to limit the spread of COVID-19, and further legislative and regulatory actions which impact healthcare providers, including actions that may impact the Medicare program;
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;
the failure of our Medicare-certified long term care hospitals or inpatient rehabilitation facilities to maintain their Medicare certifications may cause our revenue and profitability to decline;
the failure of our Medicare-certified long term care hospitals and inpatient rehabilitation facilities operated as “hospitals within hospitals” to qualify as hospitals separate from their host hospitals may cause our revenue and profitability to decline;
a government investigation or assertion that we have violated applicable regulations may result in sanctions or reputational harm and increased costs;
acquisitions or joint ventures may prove difficult or unsuccessful, use significant resources, or expose us to unforeseen liabilities;
our plans and expectations related to our acquisitions and our ability to realize anticipated synergies;
private third-party payors for our services may adopt payment policies that could limit our future revenue and profitability;
the failure to maintain established relationships with the physicians in the areas we serve could reduce our revenue and profitability;
shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened risk of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;
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
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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, 2021, as such risk factors may be updated from time to time in our periodic filings with the SEC.
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.
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, outpatient rehabilitation clinics, and occupational health centers in the United States. As of March 31, 2022, we had operations in 46 states and the District of Columbia. We operated 105 critical illness recovery hospitals in 28 states, 30 rehabilitation hospitals in 12 states, and 1,901 outpatient rehabilitation clinics in 38 states and the District of Columbia. Concentra operated 518 occupational health centers in 41 states as of March 31, 2022. Concentra also provides contract services at employer worksites.
Our reportable segments include the critical illness recovery hospital segment, the rehabilitation hospital segment, the outpatient rehabilitation segment, and the Concentra segment. We had revenue of $1,599.5 million for the three months ended March 31, 2022. Of this total, we earned approximately 38% of our revenue from our critical illness recovery hospital segment, approximately 14% from our rehabilitation hospital segment, approximately 17% from our outpatient rehabilitation segment, and approximately 26% 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 medicine services.
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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, income from operations, 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 excluding interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, 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 operations to Adjusted EBITDA and should be referenced when we discuss Adjusted EBITDA:
 Three Months Ended March 31,
 20212022
 (in thousands)
Net income$137,214 $55,926 
Income tax expense45,064 17,942 
Interest expense34,402 35,514 
Interest income(4,749)— 
Equity in earnings of unconsolidated subsidiaries(9,919)(5,397)
Income from operations202,012 103,985 
Stock compensation expense:  
Included in general and administrative5,460 6,949 
Included in cost of services1,249 1,874 
Depreciation and amortization49,620 51,039 
Adjusted EBITDA$258,341 $163,847 
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Effects of the COVID-19 Pandemic on our Results of Operations
We have provided revenue and certain operating statistics below for each of our segments for the three months ended March 31, 2022 and 2021, as well as the comparable pre-COVID-19 pandemic period in 2019. We believe this additional data provides insight into how each segment has performed in comparison to the year prior to the widespread emergence of COVID-19 in the United States. The effects of the COVID-19 pandemic, including the duration and extent of disruption on our operations, continues to create uncertainties about our future operating results and financial condition. Please refer to the risk factors in Item 1A and the section titled “Effects of the COVID-19 Pandemic on our Results of Operations” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for further discussion.
Critical Illness Recovery Hospital
RevenuePatient DaysOccupancy Rate
Number of Hospitals(1)
201920212022201920212022201920212022201920212022
(in thousands)
Three Months Ended March 31$457,534 $594,872 $601,755 258,129 293,118 289,217 71 %75 %71 %9699105
Rehabilitation Hospital
RevenuePatient DaysOccupancy Rate
Number of Hospitals(1)
201920212022201920212022201920212022201920212022
(in thousands)
Three Months Ended March 31$154,558 $207,804 $220,634 82,816 102,439 103,802 76 %84 %84 %182020
Outpatient Rehabilitation
RevenueVisits
Working Days(2)
201920212022201920212022201920212022
(in thousands)
Three Months Ended March 31$246,905 $251,961 $271,940 2,054,483 2,100,154 2,310,086 63 63 64 
Concentra
RevenueVisits
Working Days(2)
201920212022201920212022201920212022
(in thousands)
Three Months Ended March 31$396,321 $422,840 $423,423 2,911,607 2,795,574 3,116,898 63 63 64 
_______________________________________________________________________________
(1)    Represents the number of hospitals included in our consolidated financial results at the end of each period presented and does not include the managed hospitals in which we have a minority ownership interest.
(2)    Represents the number of days in which normal business operations were conducted during the periods presented.
Please refer to “Summary Financial Results” and “Results of Operations” for further discussion of our segment performance measures for the three months ended March 31, 2021 and 2022. Please refer to “Operating Statistics” for further discussion regarding the uses and calculations of the metrics provided above, as well as the operating statistics data for each segment for the three months ended March 31, 2021 and 2022.
Other Significant Events
Dividend Payments
On February 17, 2022, the Company’s board of directors declared a cash dividend of $0.125 per share. The dividend, totaling $16.7 million, was paid on March 16, 2022 to stockholders of record as of the close of business on March 4, 2022.
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Summary Financial Results
Three Months Ended March 31, 2022
The following tables reconcile our segment performance measures to our consolidated operating results:
 Three Months Ended March 31, 2022
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)
Revenue$601,755 $220,634 $271,940 $423,423 $81,795 $1,599,547 
Operating expenses(565,788)(178,255)(245,344)(334,489)(120,647)(1,444,523)
Depreciation and amortization(14,618)(6,802)(8,029)(18,812)(2,778)(51,039)
Income (loss) from operations$21,349 $35,577 $18,567 $70,122 $(41,630)$103,985 
Depreciation and amortization14,618 6,802 8,029 18,812 2,778 51,039 
Stock compensation expense— — — 535 8,288 8,823 
Adjusted EBITDA$35,967 $42,379 $26,596 $89,469 $(30,564)$163,847 
Adjusted EBITDA margin6.0 %19.2 %9.8 %21.1 %N/M10.2 %
 Three Months Ended March 31, 2021
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)
Revenue$594,872 $207,804 $251,961 $422,840 $68,986 $1,546,463 
Operating expenses(499,487)(157,270)(225,632)(341,361)(105,102)(1,328,852)
Depreciation and amortization(13,050)(7,060)(7,191)(19,898)(2,421)(49,620)
Other operating income17,887 — — — 16,134 34,021 
Income (loss) from operations$100,222 $43,474 $19,138 $61,581 $(22,403)$202,012 
Depreciation and amortization13,050 7,060 7,191 19,898 2,421 49,620 
Stock compensation expense— — — 536 6,173 6,709 
Adjusted EBITDA$113,272 $50,534 $26,329 $82,015 $(13,809)$258,341 
Adjusted EBITDA margin19.0 %24.3 %10.4 %19.4 %N/M16.7 %
Net income was $55.9 million for the three months ended March 31, 2022, compared to $137.2 million for the three months ended March 31, 2021.
The following table summarizes the changes in our segment performance measures for the three months ended March 31, 2022, compared to the three months ended March 31, 2021:
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
Change in revenue1.2 %6.2 %7.9 %0.1 %18.6 %3.4 %
Change in income from operations(78.7)%(18.2)%(3.0)%13.9 %N/M(48.5)%
Change in Adjusted EBITDA(68.2)%(16.1)%1.0 %9.1 %N/M(36.6)%
_______________________________________________________________________________
N/M —     Not meaningful.
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Regulatory Changes
Our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022, 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 23% of our revenue for both the three months ended March 31, 2022 and for the year ended December 31, 2021.
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 renewed the public health emergency determination for 90-day periods effective on April 26, 2020, July 25, 2020, October 23, 2020, January 21, 2021, April 21, 2021, July 20, 2021, October 18, 2021, January 16, 2022, and April 16, 2022. On March 13, 2020, President Trump declared a national emergency due to the COVID-19 pandemic and the HHS Secretary authorized the waiver or modification of certain requirements under Medicare, Medicaid and the Children’s Health Insurance Program (“CHIP”) pursuant to section 1135 of the Social Security Act. Under this authority, CMS issued a number of blanket waivers that excuse health care providers or suppliers from specific program requirements. The following blanket waivers, while in effect, may impact our results of operations:
i.Inpatient rehabilitation facilities (“IRFs”), IRF units, and hospitals and units applying to be classified as IRFs, can exclude patients admitted solely to respond to the emergency from the calculation of the “60 percent rule” thresholds to receive payment as an IRF.
ii.Long-term care hospitals (“LTCHs”) are 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. Hospitals seeking LTCH classification can exclude patient stays from the greater-than-25-day average length of stay requirement where the patient was admitted or discharged to meet the demands of the COVID-19 public health emergency.
iii.Medicare expanded the types of health care professionals who can furnish telehealth services to include all those who are eligible to bill Medicare for their professional services. This allows health care professionals who were previously ineligible to furnish and bill for Medicare telehealth services, including physical therapists, occupational therapists, speech language pathologists, and others, to receive payment for Medicare telehealth services.
iv.Medicare will not require out-of-state physician and non-physician practitioners to be licensed in the state where they are providing services when they are licensed in another state, subject to certain conditions and state or local licensure requirements.
v.Many requirements under the hospital conditions of participation (“CoPs”) are waived during the emergency period to give hospitals more flexibility in treating COVID-19 patients.
vi.Hospitals can operate temporary expansion locations without meeting the provider-based entity requirements or certain requirements in the physical environment CoP for hospitals during the emergency. This waiver also allows hospitals to change the status of their current provider-based department locations to meet patient needs as part of the state or local pandemic plan.
vii.The HHS Secretary waived sanctions under the physician self-referral law (i.e., Stark law) for certain types of remuneration and referral arrangements that are related to a COVID-19 purpose. The Office of the Inspector General (“OIG”) will also exercise enforcement discretion to not impose administrative sanctions under the federal anti-kickback statute for many payments covered by the Stark law waivers.

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Pursuant to the Coronavirus Preparedness and Response Supplemental Appropriations Act, Public Law 116-123, CMS has waived Medicare telehealth payment requirements during the emergency so that beneficiaries in all areas of the country (not just rural areas) can receive telehealth services, including in their homes, beginning on March 6, 2020. CMS issued additional waivers to permit more than 160 additional services to be furnished by telehealth, allow physicians to monitor patient services remotely, and fulfill face-to-face requirements in IRFs.
In addition to these agency actions, the CARES Act was enacted on March 27, 2020. It provides additional waivers, reimbursement, grants and other funds to assist health care providers during the COVID-19 public health emergency. Some of the CARES Act provisions that may impact our operations include:
i.$100 billion in appropriations for the Public Health and Social Services Emergency 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.” The Paycheck Protection Program and Health Care Enhancement Act, Public Law 116-139, added $75 billion to this fund. The Consolidated Appropriations Act, 2021, added another $3 billion to this fund. HHS began distributing these funds to providers in April 2020. HHS initially allocated funds for a general distribution to providers that received Medicare fee-for-service payments in 2019. Later general distributions required providers to submit an application to HHS. Other funding was allocated for targeted distributions for specific provider types. Recipients of payments must 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. Any funds that a provider does not apply towards expenses or lost revenue attributable to COVID-19 must be returned to HHS within 30 calendar days after the end of the applicable reporting period. 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.
ii.Expansion of the Accelerated and Advance Payment Program to advance three months of payments to Medicare providers. CMS has the ability to recoup the advanced payments through future Medicare claims. Section 2501 of the Continuing Appropriations Act, 2021 and Other Extensions Act, Public Law 116-159, modified the terms of repayment so that a provider can request no recoupment for one year after the advanced payment was issued, followed by a 25% offset the next 11 months, and a 50% offset the last 6 months. Any amounts that remain unpaid after 29 months will be subject to a 4% interest rate (instead of 10.25%). CMS began recouping advance payments on March 30, 2021, but the actual date for each provider is based on the first anniversary of when the provider received the first payment. CMS publishes repayment data every six months, beginning June 28, 2021.
iii.Temporary suspension of the 2% cut to Medicare payments due to sequestration so that, for the period of May 1, 2020 to December 31, 2020, the Medicare program would be exempt from any sequestration order. The Consolidated Appropriations Act, 2021, extended this temporary suspension of the 2% sequestration cut through March 31, 2021. The Medicare sequester relief bill, which became Public Law 117-7, extended the temporary suspension of the sequestration cut again, through December 31, 2021. To pay for the continued suspension of the sequestration cuts through December 31, 2021, Congress increased the sequestration cut that will apply in fiscal year 2030. The Protecting Medicare and American Farmers from Sequester Cuts Act, signed into law by President Biden on December 10, 2021, further extended the suspension of the sequestration cut through March 31, 2022, and reduces the sequestration cut to 1% from April 1, 2022 through June 30, 2022. The full 2% sequestration cut will resume July 1, 2022. To pay for this relief, Congress increased the sequestration cut to Medicare payments to 2.25% for the first six months of fiscal year 2030 and to 3% for the final six months of fiscal year 2030. The same legislation defers an across-the-board 4% payment cut due to the American Rescue Plan from the FY 2022 Statutory Pay-As-You-Go (“PAYGO”) scorecard to the FY 2023 PAYGO scorecard.
iv.Two waivers of Medicare statutory requirements regarding site neutral payment to LTCHs. The first waives the LTCH discharge payment percentage requirement (i.e., 50% rule) for the cost reporting period(s) that include the emergency period. The second waives application of the site neutral payment rate so that all LTCH cases admitted during the emergency period will be paid the LTCH-PPS standard federal rate.
v.Waiver of the IRF 3-hour rule so that IRF services provided during the public health emergency period do not need to meet the coverage requirement that patients receive at least 3 hours of therapy a day or 15 hours of therapy per week.
vi.Broader waiver authority for HHS under section 1135 of the Social Security Act to issue additional telehealth waivers.


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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 2021. On September 18, 2020, CMS published the final rule updating policies and payment rates for the LTCH-PPS for fiscal year 2021 (affecting discharges and cost reporting periods beginning on or after October 1, 2020 through September 30, 2021). Certain errors in the final rule were corrected in a document published December 7, 2020. The standard federal rate was set at $43,755, an increase from the standard federal rate applicable during fiscal year 2020 of $42,678. The update to the standard federal rate for fiscal year 2021 included a market basket increase of 2.3% with no productivity adjustment. The standard federal rate also included an area wage budget neutrality factor of 1.0016837. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS was set at $27,195, an increase from the fixed-loss amount in the 2020 fiscal year of $26,778. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $29,064, an increase from the fixed-loss amount in the 2020 fiscal year of $26,552.
Fiscal Year 2022. On August 13, 2021, CMS published the final rule updating policies and payment rates for the LTCH-PPS for fiscal year 2022 (affecting discharges and cost reporting periods beginning on or after October 1, 2021 through September 30, 2022). The standard federal rate was set at $44,714, an increase from the standard federal rate applicable during fiscal year 2021 of $43,755. The update to the standard federal rate for fiscal year 2022 included a market basket increase of 2.6%, less a productivity adjustment of 0.7%. The standard federal rate also included an area wage budget neutrality factor of 1.002848. As a result of the CARES Act, all LTCH cases are paid at the standard federal rate during the public health emergency. If the public health emergency ends during fiscal year 2022, then CMS will return 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 $33,015, an increase from the fixed-loss amount in the 2021 fiscal year of $27,195. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate was set at $30,988, an increase from the fixed-loss amount in the 2021 fiscal year of $29,064.
Fiscal Year 2023. On April 18, 2022, CMS released a display copy of the proposed rule to update policies and payment rates for the LTCH-PPS for fiscal year 2023 (affecting discharges and cost reporting periods beginning on or after October 1, 2022 through September 30, 2023). CMS is expected to issue the final rule in August 2022 or shortly thereafter. The proposed standard federal rate for fiscal year 2023 is $45,953, an increase from the standard federal rate applicable during fiscal year 2022 of $44,714. The proposed update to the standard federal rate for fiscal year 2023 includes a market basket increase of 3.1%, less a productivity adjustment of 0.4%. The proposed standard federal rate also includes an area wage budget neutrality factor of 1.000691. As a result of the CARES Act, all LTCH cases are paid at the standard federal rate during the public health emergency. If the public health emergency ends before or during fiscal year 2023, then CMS will return to using the site-neutral payment rate for reimbursement of cases that do not meet the LTCH patient criteria. The proposed fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $44,182, an increase from the fixed-loss amount in the 2022 fiscal year of $33,015. The proposed fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $43,214, an increase from the fixed-loss amount in the 2022 fiscal year of $30,988.
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 2021. On August 10, 2020, CMS published the final rule updating policies and payment rates for the IRF-PPS for fiscal year 2021 (affecting discharges and cost reporting periods beginning on or after October 1, 2020 through September 30, 2021). The standard payment conversion factor for discharges for fiscal year 2021 was set at $16,856, an increase from the standard payment conversion factor applicable during fiscal year 2020 of $16,489. The update to the standard payment conversion factor for fiscal year 2021 included a market basket increase of 2.4% with no productivity adjustment. CMS decreased the outlier threshold amount for fiscal year 2021 to $7,906 from $9,300 established in the final rule for fiscal year 2020.


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Fiscal Year 2022. On August 4, 2021, CMS published the final rule updating policies and payment rates for the IRF-PPS for fiscal year 2022 (affecting discharges and cost reporting periods beginning on or after October 1, 2021 through September 30, 2022). The standard payment conversion factor for discharges for fiscal year 2022 was set at $17,240, an increase from the standard payment conversion factor applicable during fiscal year 2021 of $16,856. The update to the standard payment conversion factor for fiscal year 2022 included a market basket increase of 2.6%, less a productivity adjustment of 0.7%. CMS increased the outlier threshold amount for fiscal year 2022 to $9,491 from $7,906 established in the final rule for fiscal year 2021.
Fiscal Year 2023. On April 6, 2022, CMS published a proposed rule to update policies and payment rates for the IRF-PPS for fiscal year 2023 (affecting discharges and cost reporting periods beginning on or after October 1, 2022 through September 30, 2023). The standard payment conversion factor for discharges for fiscal year 2023, if adopted, would be set at $17,698, an increase from the standard payment conversion factor applicable during fiscal year 2022 of $17,240. The update to the standard payment conversion factor for fiscal year 2023, if adopted, would include a market basket increase of 3.2%, less a productivity adjustment of 0.4%. CMS proposed to increase the outlier threshold amount for fiscal year 2023 to $13,038 from $9,491 established in the final rule for fiscal year 2022.
Medicare Reimbursement of Outpatient Rehabilitation Clinic Services
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 services provided in 2017 through 2019, a 0.5% update was applied each year to the fee schedule payment rates, subject to an adjustment beginning in 2019 under the Merit-Based Incentive Payment System (“MIPS”). In 2019, CMS added physical and occupational therapists to the list of MIPS eligible clinicians. For these therapists in private practice, payments under the fee schedule are subject to adjustment in a later year based on their performance in MIPS according to established performance standards. Calendar year 2021 is the first year that payments are adjusted, based upon the therapist’s performance under MIPS in 2019. Providers in facility-based outpatient therapy settings are excluded from MIPS eligibility and therefore not subject to this payment adjustment. For services provided in 2020 through 2025, a 0.0% percent update will be applied each year to the fee schedule payment rates, subject to adjustments under MIPS and the alternative payment models (“APMs”). In 2026 and subsequent years, eligible professionals participating in APMs who meet certain criteria would receive annual updates of 0.75%, while all other professionals would receive annual updates of 0.25%.
Each year from 2019 through 2024 eligible clinicians who receive a significant share of their revenues through an advanced APM (such as accountable care organizations or bundled payment arrangements) that involves risk of financial losses and a quality measurement component will receive a 5% bonus. The bonus payment for APM participation is intended to encourage participation and testing of new APMs and to promote the alignment of incentives across payors.
In the 2020 Medicare physician fee schedule final rule, CMS revised coding, documentation guidelines, and increased the valuation for evaluation and management (“E/M”) office visit codes, beginning in 2021. Because the Medicare physician fee schedule is budget-neutral, any revaluation of E/M services that will increase spending by more than $20 million requires a budget neutrality adjustment. To increase values for the E/M codes while maintaining budget neutrality under the fee schedule, CMS cut the values of other codes to make up the difference, beginning in 2021.
In the 2021 Medicare physician fee schedule final rule, CMS increased the values for the E/M office visit codes and cuts to other specialty codes to maintain budget neutrality. As a result, therapy services provided in our outpatient rehabilitation clinics received an estimated 3.6% decrease in payment from Medicare in calendar year 2021. The Consolidated Appropriations Act, 2021, provided relief in the form of a one-time 3.75% increase in payments in calendar year 2021 for therapy services and other services paid under the physician fee schedule.
In the calendar year 2022 physician fee schedule final rule, CMS announced that Medicare payments for the therapy specialty are expected to decrease 1% in 2022. After CMS issued the final rule, Congress passed the Protecting Medicare and American Farmers from Sequester Cuts Act, which provided in Section 3 a one-time 3% increase in payments in calendar year 2022 to offset most of the 3.75% cut to payments for therapy services and other services paid under the physician fee schedule. In the final rule, CMS also adopted its plan to transition the MIPS program to MIPS Value Pathways (“MVPs”). CMS will begin the transition to MVPs in 2023 with an initial set of MVPs in which reporting is voluntary. Beginning in 2026, multispecialty groups must form subgroups to report MVPs. CMS plans to develop more MVPs from 2024 to 2027 and is considering that MVP reporting would become mandatory in 2028. Each MVP would include population health claims-based measures and require clinicians to report on the Promoting Interoperability performance category measures. In addition, MVP participants would select certain quality measures and improvement activities and then report data for such measures and activities.

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Modifiers to Identify Services of Physical Therapy Assistants or Occupational Therapy Assistants
In the Medicare physician fee schedule final rule for calendar year 2019, CMS established two new modifiers (CQ and CO) to identify services furnished in whole or in part by physical therapy assistants (“PTAs”) or occupational therapy assistants (“OTAs”). These modifiers were mandated by the Bipartisan Budget Act of 2018, which requires that claims for outpatient therapy services furnished in whole or part by therapy assistants on or after January 1, 2020 include the appropriate modifier. In the final 2020 Medicare physician fee schedule rule, CMS clarified that when the physical therapist is involved for the entire duration of the service and the PTA provides skilled therapy alongside the physical therapist, the CQ modifier is not required. Also, when the same service (code) is furnished separately by the physical therapist and PTA, CMS will apply the de minimis standard to each 15-minute unit of codes, not on the total physical therapist and PTA time of the service, allowing the separate reporting, on two different claim lines, of the number of units to which the new modifiers apply and the number of units to which the modifiers do not apply. In the calendar year 2022 physician fee schedule final rule, CMS implemented the final part of the requirements in the Bipartisan Budget Act of 2018 regarding PTA and OTA services. For dates of service on and after January 1, 2022, CMS will pay for physical therapy and occupational therapy services provided by PTAs and OTAs at 85% of the otherwise applicable Part B payment amount. CMS also modified the de minimis standard for calendar year 2022. Specifically, CMS will allow a timed service to be billed without the CQ or CO modifier when a PTA or OTA participates in providing care, but the physical therapist or occupational therapist meets the Medicare billing requirements without including the PTA’s or OTA’s minutes. This occurs when the physical therapist or occupational therapist provides more minutes than the 15-minute midpoint.

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Operating Statistics
The following table sets forth operating statistics for each of our reportable 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 March 31,
 20212022
Critical illness recovery hospital data:  
Number of consolidated hospitals—start of period99 104 
Number of hospitals acquired— — 
Number of hospital start-ups— 
Number of hospitals closed/sold— — 
Number of consolidated hospitals—end of period(1)
99 105 
Available licensed beds(3)
4,380 4,524 
Admissions(3)(4)
9,859 9,457 
Patient days(3)(5)
293,118 289,217 
Average length of stay (days)(3)(6)
30 30 
Revenue per patient day(3)(7)
$2,024 $2,075 
Occupancy rate(3)(8)
75 %71 %
Percent patient days—Medicare(3)(9)
40 %37 %
Rehabilitation hospital data:
Number of consolidated hospitals—start of period19 20 
Number of hospitals acquired— 
Number of hospital start-ups— — 
Number of hospitals closed/sold— — 
Number of consolidated hospitals—end of period(1)
20 20 
Number of unconsolidated hospitals managed—end of period(2)
10 10 
Total number of hospitals (all)—end of period30 30 
Available licensed beds(3)
1,361 1,391 
Admissions(3)(4)
7,131 7,182 
Patient days(3)(5)
102,439 103,802 
Average length of stay (days)(3)(6)
15 15 
Revenue per patient day(3)(7)
$1,853 $1,943 
Occupancy rate(3)(8)
84 %84 %
Percent patient days—Medicare(3)(9)
49 %47 %
Outpatient rehabilitation data:
Number of consolidated clinics—start of period1,503 1,572 
Number of clinics acquired
Number of clinic start-ups10 12 
Number of clinics closed/sold(4)(2)
Number of consolidated clinics—end of period1,517 1,584 
Number of unconsolidated clinics managed—end of period292 317 
Total number of clinics (all)—end of period1,809 1,901 
Number of visits(3)(10)
2,100,154 2,310,086 
Revenue per visit(3)(11)
$104 $102 
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 Three Months Ended March 31,
 20212022
Concentra data:
Number of consolidated centers—start of period517 518 
Number of centers acquired
Number of center start-ups— — 
Number of centers closed/sold(1)(1)
Number of consolidated centers—end of period519 518 
Number of onsite clinics operated—end of period133 140 
Number of visits(3)(10)
2,795,574 3,116,898 
Revenue per visit(3)(11)
$125 $125 
_______________________________________________________________________________
(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. For purposes of this computation for our Concentra segment, patient service revenue does not include onsite clinics.
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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 March 31,
 20212022
Revenue100.0 %100.0 %
Costs and expenses:
Cost of services, exclusive of depreciation and amortization(1)
83.6 88.0 
General and administrative2.3 2.3 
Depreciation and amortization3.2 3.2 
Total costs and expenses89.1 93.5 
Other operating income2.2 — 
Income from operations13.1 6.5 
Equity in earnings of unconsolidated subsidiaries0.6 0.3 
Interest income0.3 — 
Interest expense(2.2)(2.2)
Income before income taxes11.8 4.6 
Income tax expense2.9 1.1 
Net income8.9 3.5 
Net income attributable to non-controlling interests1.8 0.4 
Net income attributable to Select Medical Holdings Corporation7.1 %3.1 %
_______________________________________________________________________________
(1)Cost of services includes salaries, wages and benefits, operating 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 March 31,
 20212022% Change
 (in thousands, except percentages)
Revenue:   
Critical illness recovery hospital$594,872 $601,755 1.2 %
Rehabilitation hospital207,804 220,634 6.2 
Outpatient rehabilitation251,961 271,940 7.9 
Concentra422,840 423,423 0.1 
Other(1)
68,986 81,795 18.6 
Total Company$1,546,463 $1,599,547 3.4 %
Income (loss) from operations:   
Critical illness recovery hospital(2)
$100,222 $21,349 (78.7)%
Rehabilitation hospital43,474 35,577 (18.2)
Outpatient rehabilitation19,138 18,567 (3.0)
Concentra61,581 70,122 13.9 
Other(1)(2)
(22,403)(41,630)N/M
Total Company$202,012 $103,985 (48.5)%
Adjusted EBITDA:   
Critical illness recovery hospital(2)
$113,272 $35,967 (68.2)%
Rehabilitation hospital50,534 42,379 (16.1)
Outpatient rehabilitation26,329 26,596 1.0 
Concentra82,015 89,469 9.1 
Other(1)(2)
(13,809)(30,564)N/M
Total Company$258,341 $163,847 (36.6)%
Adjusted EBITDA margins:   
Critical illness recovery hospital(2)
19.0 %6.0 % 
Rehabilitation hospital24.3 19.2 
Outpatient rehabilitation10.4 9.8  
Concentra19.4 21.1  
Other(1)(2)
N/MN/M 
Total Company16.7 %10.2 % 
Total assets:   
Critical illness recovery hospital$2,233,067 $2,367,490  
Rehabilitation hospital1,188,387 1,187,118 
Outpatient rehabilitation1,321,268 1,350,374  
Concentra2,468,157 2,339,940  
Other(1)
709,902 291,022  
Total Company$7,920,781 $7,535,944  
Purchases of property and equipment:   
Critical illness recovery hospital$14,385 $19,569 
Rehabilitation hospital665 6,274  
Outpatient rehabilitation7,335 9,414  
Concentra12,680 10,240  
Other(1)
4,654 1,348  
Total Company$39,719 $46,845  
_______________________________________________________________________________
(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.
(2)    During the three months ended March 31, 2021, we recognized other operating income of $34.0 million. The impact of this income on the operating results of our critical illness recovery hospital segment and other activities is outlined within the table presented under “Summary Financial Results” for the three months ended March 31, 2021.
N/M — Not meaningful.
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Three Months Ended March 31, 2022, Compared to Three Months Ended March 31, 2021
In the following, we discuss our results of operations related to revenue, operating expenses, other operating income, Adjusted EBITDA, depreciation and amortization, income from operations, equity in earnings of unconsolidated subsidiaries, interest, income taxes, and net income attributable to non-controlling interests.
Please refer to “Effects of the COVID-19 Pandemic on our Results of Operations” above for further discussion.
Revenue
Our revenue increased 3.4% to $1,599.5 million for the three months ended March 31, 2022, compared to $1,546.5 million for the three months ended March 31, 2021.
Critical Illness Recovery Hospital Segment.   Revenue increased 1.2% to $601.8 million for the three months ended March 31, 2022, compared to $594.9 million for the three months ended March 31, 2021. The increase in revenue was due to an increase in revenue per patient day during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. Revenue per patient day increased 2.5% to $2,075 for the three months ended March 31, 2022, compared to $2,024 for the three months ended March 31, 2021. We experienced increases in both our non-Medicare and Medicare revenue per patient day during the three months ended March 31, 2022, compared to the three months ended March 31, 2021. Our patient days were 289,217 for the three months ended March 31, 2022, compared to 293,118 days for the three months ended March 31, 2021. Our patient days for the three months ended March 31, 2021 benefited from an increase in referrals from general acute care hospitals, which was due in part to an increase in volume in the intensive care units in those hospitals as a result of the COVID-19 pandemic. As COVID-19 cases which require hospitalization decline, the patient volume experienced in intensive care units has also declined. This adversely impacted the level of referrals we received during the three months ended March 31, 2022. Occupancy in our critical illness recovery hospitals was 71%, 75%, and 71% for the three months ended March 31, 2022, 2021, and 2019, respectively.
Rehabilitation Hospital Segment.   Revenue increased 6.2% to $220.6 million for the three months ended March 31, 2022, compared to $207.8 million for the three months ended March 31, 2021. The increase in revenue resulted principally due to an increase in revenue per patient day during the three months ended March 31, 2022, compared to the three months ended March 31, 2021. Our revenue per patient day increased 4.9% to $1,943 for the three months ended March 31, 2022, compared to $1,853 for the three months ended March 31, 2021. We experienced increases in both our Medicare and non-Medicare revenue per patient day during the three months ended March 31, 2022, compared to the three months ended March 31, 2021. Our patient days increased 1.3% to 103,802 days for the three months ended March 31, 2022, compared to 102,439 days for the three months ended March 31, 2021. Occupancy in our rehabilitation hospitals was 84%, 84%, and 76% for the three months ended March 31, 2022, 2021, and 2019, respectively.
Outpatient Rehabilitation Segment.   Revenue increased 7.9% to $271.9 million for the three months ended March 31, 2022, compared to $252.0 million for the three months ended March 31, 2021. The increase in revenue was due to an increase in visits, which increased 10.0% to 2,310,086 for the three months ended March 31, 2022, compared to 2,100,154 and 2,054,483 visits for the three months ended March 31, 2021 and 2019, respectively. The increase in visits was attributable to outpatient rehabilitation clinics which commenced operations since March 31, 2021, as well as improvement in volume in our clinics which operated during both the three months ended March 31, 2022 and 2021. Our patient visit volume was adversely impacted by the ongoing effects of the COVID-19 pandemic during the three months ended March 31, 2021. Our revenue per visit was $102 for the three months ended March 31, 2022, compared to $104 for the three months ended March 31, 2021. The decrease in revenue per visit was primarily due to a decrease in the reimbursement rates received under the Medicare physician fee schedule, as described further under “Regulatory Changes.” Additionally, we experienced a greater proportion of Medicare visits during the three months ended March 31, 2022. These visits yield lower per visit rates.
Concentra Segment.   Revenue increased to $423.4 million for the three months ended March 31, 2022, compared to $422.8 million for the three months ended March 31, 2021. The increase in revenue was primarily attributable to an increase in visits, which increased 11.5% to 3,116,898 for the three months ended March 31, 2022, compared to 2,795,574 and 2,911,607 visits for the three months ended March 31, 2021 and 2019, respectively. This increase was offset partially by a decline in the revenue generated from our COVID-19 screening and testing services. These services contributed $9.1 million of revenue during the three months ended March 31, 2022, compared to $51.7 million during the three months ended March 31, 2021. Our revenue per visit was $125 for both the three months ended March 31, 2022 and 2021. We experienced increases in the reimbursement rates for our employer services and workers’ compensation visits during the three months ended March 31, 2022. The increases in our reimbursement rates were offset, however, by a greater percentage of employer services visits, which yield lower per visit rates.

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Operating Expenses
Our operating expenses consist principally of cost of services and general and administrative expenses. Our operating expenses were $1,444.5 million, or 90.3% of revenue, for the three months ended March 31, 2022, compared to $1,328.9 million, or 85.9% of revenue, for the three months ended March 31, 2021. Our cost of services, a major component of which is labor expense, was $1,407.0 million, or 88.0% of revenue, for the three months ended March 31, 2022, compared to $1,293.4 million, or 83.6% of revenue, for the three months ended March 31, 2021. The increase in our operating expenses relative to our revenue was principally due to increased labor costs within our critical illness recovery hospital and rehabilitation hospital segments, as discussed further below under “Adjusted EBITDA.” General and administrative expenses were $37.5 million, or 2.3% of revenue, for the three months ended March 31, 2022, compared to $35.4 million, or 2.3% of revenue, for the three months ended March 31, 2021.
Other Operating Income
For the three months ended March 31, 2021, we had other operating income of $34.0 million. Of this amount, $16.1 million related to the recognition of payments received under the Public Health and Social Services Emergency Fund, also referred to as the Provider Relief Fund, for health care related expenses and lost revenues attributable to COVID-19. This income is included within the operating results of our other activities. The remaining $17.9 million is related to the outcome of litigation with CMS. This income is included within the operating results of our critical illness recovery hospital segment.
Adjusted EBITDA
Critical Illness Recovery Hospital Segment.   Adjusted EBITDA was $36.0 million for the three months ended March 31, 2022, compared to $113.3 million for the three months ended March 31, 2021. Our Adjusted EBITDA margin for the critical illness recovery hospital segment was 6.0% for the three months ended March 31, 2022, compared to 19.0% for the three months ended March 31, 2021. Our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended March 31, 2022 were adversely affected by the incurrence of additional labor costs. Constrained staffing due to a shortage of healthcare workers, which has led to increases in incentive and bonus pay for our employees, and greater dependence on contract clinical workers have contributed to the increased labor costs. Our use of contract clinical workers has increased by approximately 26.0% during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. For the three months ended March 31, 2022, our contracted clinical labor represented approximately 27.0% of our workforce, compared to approximately 21.0% for the three months ended March 31, 2021. Additionally, the cost of contract clinical labor has risen significantly due to the demand for healthcare professionals. These costs were approximately 23.0% higher during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. During the three months ended March 31, 2021, our Adjusted EBITDA and Adjusted EBITDA margin also benefited from the recognition of $17.9 million of other operating income, as described further above under “Other Operating Income.
Rehabilitation Hospital Segment.   Adjusted EBITDA was $42.4 million for the three months ended March 31, 2022, compared to $50.5 million for the three months ended March 31, 2021. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 19.2% for the three months ended March 31, 2022, compared to 24.3% for the three months ended March 31, 2021. Our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended March 31, 2022 were adversely affected by the incurrence of additional labor costs. Constrained staffing due to a shortage of healthcare workers, which has led to increases in incentive and bonus pay for our employees, and greater dependence on contract clinical workers have contributed to the increased labor costs. Additionally, the cost of contract clinical labor has risen significantly due to the demand for healthcare professionals. The increase in contracted clinical labor usage and labor rates occurred predominantly within our hospitals operating in California and New Jersey.
Outpatient Rehabilitation Segment.   Adjusted EBITDA increased 1.0% to $26.6 million for the three months ended March 31, 2022, compared to $26.3 million for the three months ended March 31, 2021. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.8% for the three months ended March 31, 2022, compared to 10.4% for the three months ended March 31, 2021. The increase in Adjusted EBITDA was principally driven by an increase in patient visit volume during the three months ended March 31, 2022. Our Adjusted EBITDA and Adjusted EBITDA margin for the three months ended March 31, 2022 were adversely affected by disruptions in our workforce which were caused by the COVID-19 Omicron variant.
Concentra Segment.   Adjusted EBITDA increased 9.1% to $89.5 million for the three months ended March 31, 2022, compared to $82.0 million for the three months ended March 31, 2021. Our Adjusted EBITDA margin for the Concentra segment was 21.1% for the three months ended March 31, 2022, compared to 19.4% for the three months ended March 31, 2021. The increases in Adjusted EBITDA and Adjusted EBITDA margin were primarily attributable to an increase in patient visits in our centers during the three months ended March 31, 2022.
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Depreciation and Amortization
Depreciation and amortization expense was $51.0 million for the three months ended March 31, 2022, compared to $49.6 million for the three months ended March 31, 2021.
Income from Operations
For the three months ended March 31, 2022, we had income from operations of $104.0 million, compared to $202.0 million for the three months ended March 31, 2021. The increase in labor costs experienced within our critical illness recovery hospital and rehabilitation hospital segments was the primary cause of the decrease in income from operations, as discussed above under “Adjusted EBITDA.” Additionally, we recognized other operating income of $34.0 million during the three months ended March 31, 2021, as described further under “Other Operating Income.”
Equity in Earnings of Unconsolidated Subsidiaries
For the three months ended March 31, 2022, we had equity in earnings of unconsolidated subsidiaries of $5.4 million, compared to $9.9 million for the three months ended March 31, 2021. The decrease in equity in earnings is due in part to an increase in labor costs incurred by the rehabilitation businesses in which we are a minority owner. Additionally, certain of these rehabilitation businesses recognized income during the three months ended March 31, 2021 for the payments they received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19.
Interest
Interest expense was $35.5 million for the three months ended March 31, 2022, compared to $34.4 million for the three months ended March 31, 2021. The increase in interest expense was caused by the borrowings we made under our revolving facility during the three months ended March 31, 2022.
For the three months ended March 31, 2021, we recognized interest income of $4.7 million. The interest income is related to the outcome of litigation with CMS.
Income Taxes
We recorded income tax expense of $17.9 million for the three months ended March 31, 2022, which represented an effective tax rate of 24.3%. We recorded income tax expense of $45.1 million for the three months ended March 31, 2021, which represented an effective tax rate of 24.7%.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests was $6.8 million for the three months ended March 31, 2022, compared to $26.7 million for the three months ended March 31, 2021. The decrease in net income attributable to non-controlling interests was principally due to a decrease in the net income of our less than wholly owned critical illness recovery hospitals and rehabilitation hospitals. Many of these hospitals were impacted by increases in labor costs during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021. The decline in net income attributable to non-controlling interests was also due to a change in our ownership interest of Concentra Group Holdings Parent. Since March 31, 2021, we have acquired additional outstanding membership interests of Concentra Group Holdings Parent.
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Liquidity and Capital Resources
Cash Flows for the Three Months Ended March 31, 2022 and Three Months Ended March 31, 2021
In the following, we discuss cash flows from operating activities, investing activities, and financing activities.
 Three Months Ended March 31,
 20212022
 (in thousands)
Cash flows provided by operating activities$239,888 $6,337 
Cash flows used in investing activities(52,585)(55,331)
Cash flows provided by (used in) financing activities(14,090)105,565 
Net increase in cash and cash equivalents173,213 56,571 
Cash and cash equivalents at beginning of period577,061 74,310 
Cash and cash equivalents at end of period$750,274 $130,881 
Operating activities provided $6.3 million of cash flows for the three months ended March 31, 2022, compared to $239.9 million of cash flows for the three months ended March 31, 2021. The decrease in cash flows from operating activities was primarily due to our financial performance during the three months ended March 31, 2022. We also repaid $62.9 million of Medicare advance payments received under the Accelerated and Advance Payment Program during the three months ended March 31, 2022. CMS began recouping these payments in April 2021.
Our days sales outstanding was 53 days at March 31, 2022, compared to 52 days at December 31, 2021. Our days sales outstanding was 56 days at both March 31, 2021 and December 31, 2020. Our days sales outstanding will fluctuate based upon variability in our collection cycles and patient volumes.
Investing activities used $55.3 million of cash flows for the three months ended March 31, 2022. The principal uses of cash were $46.8 million for purchases of property and equipment and $8.5 million for investments in and acquisitions of businesses. Investing activities used $52.6 million of cash flows for the three months ended March 31, 2021. The principal uses of cash were $39.7 million for purchases of property and equipment and $12.9 million for investments in and acquisitions of businesses.
Financing activities provided $105.6 million of cash flows for the three months ended March 31, 2022. The principal source of cash was net borrowings under our revolving facility of $180.0 million. The principal uses of cash were $51.7 million of cash for repurchases of common stock, $16.7 million of dividend payments to common stockholders, and $10.3 million for distributions to and purchases of non-controlling interests. Financing activities used $14.1 million of cash flows for the three months ended March 31, 2021. The principal use of cash was $13.7 million for distributions to and purchases of non-controlling interests.


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Capital Resources
Working capital.  We had net working capital of $61.7 million at March 31, 2022, compared to a net working capital deficit of $133.6 million at December 31, 2021. The increase in working capital was primarily due to increases in our cash and cash equivalents and accounts receivable, as well as a reduction in our liability related to the payments we received under the Accelerated and Advance Payment Program.
Credit facilities. At March 31, 2022, Select had outstanding borrowings under its credit facilities consisting of a $2,103.4 million term loan (excluding unamortized original issue discounts and debt issuance costs of $12.3 million) and borrowings of $340.0 million under our revolving facility. At March 31, 2022, Select had $252.8 million of availability under its revolving facility after giving effect to $57.2 million of outstanding letters of credit.
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, 2023, 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. During the three months ended March 31, 2022, Holdings repurchased 2,128,494 shares at a cost of approximately $51.7 million, or $24.28 per share, which includes transaction costs. Since the inception of the program through March 31, 2022, Holdings has repurchased 42,480,122 shares at a cost of approximately $466.9 million, or $10.99 per share, which includes transaction costs.
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
The duration and extent of the impact from the COVID-19 pandemic on our operations and liquidity depends on future developments that cannot be accurately predicted at this time; however, 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 March 31, 2022, we had cash and cash equivalents of $130.9 million and $252.8 million of availability under the revolving facility after giving effect to $340.0 million of outstanding borrowings and $57.2 million of 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 May 5, 2022, our board of directors declared a cash dividend of $0.125 per share. The dividend will be payable on or about June 1, 2022 to stockholders of record as of the close of business on May 19, 2022.
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.
Recent Accounting Pronouncements
There were no new accounting standards issued since December 31, 2021, which will have a material effect on the financial statements upon adoption.
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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 credit facilities, which generally bear interest rates that are indexed against LIBOR.
At March 31, 2022, Select had outstanding borrowings under its credit facilities consisting of a $2,103.4 million term loan (excluding unamortized original issue discounts and debt issuance costs of $12.3 million) and $340.0 million of borrowings under its revolving facility.
In order to mitigate our exposure to rising interest rates, we entered into an interest rate cap transaction to limit our 1-month LIBOR rate to 1.0% on $2.0 billion of principal outstanding under our term loan. The agreement applies to interest payments through September 30, 2024. As of March 31, 2022, the 1-month LIBOR rate was 0.45%. A 0.25% change in market interest rates would impact the interest expense on our variable rate debt by $6.1 million until 1-month LIBOR exceeds 1.0%, at which time the impact of increases in 1-month LIBOR on the interest expense incurred on our term loan borrowings will be mitigated in part by the interest rate cap, as described further in Note 9 – Interest Rate Cap of the notes to our condensed consolidated financial statements included herein.
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 March 31, 2022, 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 first quarter ended March 31, 2022, 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 14 – Commitments and Contingencies of the notes to our condensed consolidated financial statements included herein.
ITEM 1A. RISK FACTORS
The risk factor set forth in this report updates, and should be read together with, the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.
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, 2023, 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.
The following table provides information regarding repurchases of our common stock during the three months ended March 31, 2022.
 Total Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs
January 1 - January 31, 2022— $— — $584,796,612 
February 1 - February 28, 2022— — — 584,796,612 
March 1 - March 31, 20222,128,494 24.28 2,128,494 533,120,670 
Total2,128,494 $24.28 2,128,494 $533,120,670 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.










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ITEM 6. EXHIBITS
NumberDescription
31.1
31.2
32.1
101.INSXBRL 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.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover 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/ Martin F. Jackson
  Martin F. Jackson
  Executive Vice President and Chief Financial Officer
  (Duly Authorized Officer)
   
 By:/s/  Scott A. Romberger
  Scott A. Romberger
  Senior Vice President, Chief Accounting Officer
  (Principal Accounting Officer)
 
Dated:  May 5, 2022
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