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 SeptemberJune 30, 20222023
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 OctoberJuly 31, 2022,2023, Select Medical Holdings Corporation had outstanding 126,983,615127,143,417 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
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, 2021September 30, 2022December 31, 2022June 30, 2023
ASSETSASSETS  ASSETS  
Current Assets:Current Assets:  Current Assets:  
Cash and cash equivalentsCash and cash equivalents$74,310 $108,223 Cash and cash equivalents$97,906 $101,167 
Accounts receivableAccounts receivable889,303 909,030 Accounts receivable941,312 964,680 
Prepaid income taxesPrepaid income taxes55,620 19,227 Prepaid income taxes31,868 16,513 
Current portion of interest rate cap contractCurrent portion of interest rate cap contract74,857 83,938 
Other current assetsOther current assets120,206 180,766 Other current assets125,370 138,186 
Total Current AssetsTotal Current Assets1,139,439 1,217,246 Total Current Assets1,271,313 1,304,484 
Operating lease right-of-use assetsOperating lease right-of-use assets1,078,754 1,129,872 Operating lease right-of-use assets1,169,740 1,182,839 
Property and equipment, netProperty and equipment, net961,467 957,353 Property and equipment, net1,001,440 1,004,430 
GoodwillGoodwill3,448,912 3,479,374 Goodwill3,484,200 3,486,050 
Identifiable intangible assets, netIdentifiable intangible assets, net374,879 358,411 Identifiable intangible assets, net351,662 346,733 
Interest rate cap contract, net of current portionInterest rate cap contract, net of current portion45,200 18,396 
Other assetsOther assets356,720 412,720 Other assets341,738 358,937 
Total AssetsTotal Assets$7,360,171 $7,554,976 Total Assets$7,665,293 $7,701,869 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY  LIABILITIES AND EQUITY  
Current Liabilities:Current Liabilities:  Current Liabilities:  
OverdraftsOverdrafts$42,353 $33,262 Overdrafts$31,961 $31,494 
Current operating lease liabilitiesCurrent operating lease liabilities229,334 234,595 Current operating lease liabilities236,784 241,517 
Current portion of long-term debt and notes payableCurrent portion of long-term debt and notes payable17,572 43,429 Current portion of long-term debt and notes payable44,351 57,205 
Accounts payableAccounts payable233,844 207,413 Accounts payable186,729 186,787 
Accrued payrollAccrued payroll247,292 252,041 Accrued payroll209,789 191,061 
Accrued vacationAccrued vacation144,048 147,763 Accrued vacation150,695 159,168 
Accrued interestAccrued interest29,002 10,347 Accrued interest29,837 29,514 
Accrued otherAccrued other244,312 265,451 Accrued other264,525 283,257 
Government advances83,790 942 
Unearned government assistance93 236 
Income taxes payableIncome taxes payable1,437 1,265 Income taxes payable480 8,209 
Total Current LiabilitiesTotal Current Liabilities1,273,077 1,196,744 Total Current Liabilities1,155,151 1,188,212 
Non-current operating lease liabilitiesNon-current operating lease liabilities916,540 967,758 Non-current operating lease liabilities1,008,394 1,021,314 
Long-term debt, net of current portionLong-term debt, net of current portion3,556,385 3,750,411 Long-term debt, net of current portion3,835,211 3,695,341 
Non-current deferred tax liabilityNon-current deferred tax liability142,792 162,156 Non-current deferred tax liability169,793 155,925 
Other non-current liabilitiesOther non-current liabilities106,442 109,848 Other non-current liabilities106,137 105,123 
Total LiabilitiesTotal Liabilities5,995,236 6,186,917 Total Liabilities6,274,686 6,165,915 
Commitments and contingencies (Note 14)
Commitments and contingencies (Note 13)Commitments and contingencies (Note 13)
Redeemable non-controlling interestsRedeemable non-controlling interests39,033 33,540 Redeemable non-controlling interests34,043 34,375 
Stockholders’ Equity:Stockholders’ Equity:  Stockholders’ Equity:  
Common stock, $0.001 par value, 700,000,000 shares authorized, 133,884,817 and 127,144,158 shares issued and outstanding at 2021 and 2022, respectively134 127 
Common stock, $0.001 par value, 700,000,000 shares authorized, 127,173,871 and 127,387,869 shares issued and outstanding at 2022 and 2023, respectivelyCommon stock, $0.001 par value, 700,000,000 shares authorized, 127,173,871 and 127,387,869 shares issued and outstanding at 2022 and 2023, respectively127 127 
Capital in excess of parCapital in excess of par504,314 444,843 Capital in excess of par452,183 473,942 
Retained earningsRetained earnings593,251 570,069 Retained earnings581,010 696,922 
Accumulated other comprehensive incomeAccumulated other comprehensive income12,282 90,556 Accumulated other comprehensive income88,602 75,047 
Total Stockholders’ EquityTotal Stockholders’ Equity1,109,981 1,105,595 Total Stockholders’ Equity1,121,922 1,246,038 
Non-controlling interestsNon-controlling interests215,921 228,924 Non-controlling interests234,642 255,541 
Total EquityTotal Equity1,325,902 1,334,519 Total Equity1,356,564 1,501,579 
Total Liabilities and EquityTotal Liabilities and Equity$7,360,171 $7,554,976 Total Liabilities and Equity$7,665,293 $7,701,869 
 
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 September 30,For the Nine Months Ended September 30, For the Three Months Ended June 30,For the Six Months Ended June 30,
2021202220212022 2022202320222023
RevenueRevenue$1,534,221 $1,567,794 $4,644,704 $4,752,082 Revenue$1,584,741 $1,674,528 $3,184,288 $3,339,508 
Costs and expenses:Costs and expenses:  Costs and expenses:  
Cost of services, exclusive of depreciation and amortizationCost of services, exclusive of depreciation and amortization1,297,682 1,393,817 3,882,579 4,191,377 Cost of services, exclusive of depreciation and amortization1,390,550 1,423,603 2,797,560 2,842,422 
General and administrativeGeneral and administrative37,885 39,491 109,025 114,272 General and administrative37,268 42,508 74,781 84,787 
Depreciation and amortizationDepreciation and amortization50,128 51,459 150,702 153,579 Depreciation and amortization51,081 49,939 102,120 102,364 
Total costs and expensesTotal costs and expenses1,385,695 1,484,767 4,142,306 4,459,228 Total costs and expenses1,478,899 1,516,050 2,974,461 3,029,573 
Other operating incomeOther operating income1,729 8,440 133,837 23,565 Other operating income15,125 726 15,125 726 
Income from operationsIncome from operations150,255 91,467 636,235 316,419 Income from operations120,967 159,204 224,952 310,661 
Other income and expense:Other income and expense:  Other income and expense:  
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries11,452 8,084 33,180 19,648 Equity in earnings of unconsolidated subsidiaries6,167 10,501 11,564 19,057 
Interest income— — 4,749 — 
Interest expenseInterest expense(33,825)(45,204)(102,115)(121,770)Interest expense(41,052)(48,997)(76,566)(97,568)
Income before income taxesIncome before income taxes127,882 54,347 572,049 214,297 Income before income taxes86,082 120,708 159,950 232,150 
Income tax expenseIncome tax expense27,665 16,221 138,410 53,983 Income tax expense19,820 28,848 37,762 55,033 
Net incomeNet income100,217 38,126 433,639 160,314 Net income66,262 91,860 122,188 177,117 
Less: Net income attributable to non-controlling interestsLess: Net income attributable to non-controlling interests23,289 10,960 81,271 28,824 Less: Net income attributable to non-controlling interests11,055 13,623 17,864 28,075 
Net income attributable to Select Medical Holdings CorporationNet income attributable to Select Medical Holdings Corporation$76,928 $27,166 $352,368 $131,490 Net income attributable to Select Medical Holdings Corporation$55,207 $78,237 $104,324 $149,042 
Earnings per common share (Note 13):  
Earnings per common share (Note 12):Earnings per common share (Note 12):  
Basic and dilutedBasic and diluted$0.57 $0.21 $2.61 $1.01 Basic and diluted$0.43 $0.61 $0.79 $1.17 
 
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 September 30,For the Nine Months Ended September 30,For the Three Months Ended June 30,For the Six Months Ended June 30,
20212022202120222022202320222023
Net incomeNet income$100,217 $38,126 $433,639 $160,314 Net income$66,262 $91,860 $122,188 $177,117 
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Gain (loss) on interest rate cash flow hedge(536)31,079 6,212 82,726 
Gain on interest rate cap contractGain on interest rate cap contract11,833 17,527 51,647 14,831 
Reclassification adjustment for losses (gains) included in net incomeReclassification adjustment for losses (gains) included in net income12 (4,485)18 (4,452)Reclassification adjustment for losses (gains) included in net income(6)(15,134)33 (28,386)
Net change, net of tax benefit (expense) of $182, $(8,865), $(2,166), and $(26,092)(524)26,594 6,230 78,274 
Net change, net of tax benefit (expense) of $(3,942), $(777), $(17,227), and $4,398Net change, net of tax benefit (expense) of $(3,942), $(777), $(17,227), and $4,39811,827 2,393 51,680 (13,555)
Comprehensive incomeComprehensive income99,693 64,720 439,869 238,588 Comprehensive income78,089 94,253 173,868 163,562 
Less: Comprehensive income attributable to non-controlling interestsLess: Comprehensive income attributable to non-controlling interests23,289 10,960 81,271 28,824 Less: Comprehensive income attributable to non-controlling interests11,055 13,623 17,864 28,075 
Comprehensive income attributable to Select Medical Holdings CorporationComprehensive income attributable to Select Medical Holdings Corporation$76,404 $53,760 $358,598 $209,764 Comprehensive income attributable to Select Medical Holdings Corporation$67,034 $80,630 $156,004 $135,487 

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 Nine Months Ended September 30, 2022For the Six Months Ended June 30, 2023
Total Stockholders’ Equity   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
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 
Balance at December 31, 2022Balance at December 31, 2022127,173 $127 $452,183 $581,010 $88,602 $1,121,922 $234,642 $1,356,564 
Net income attributable to Select Medical Holdings CorporationNet income attributable to Select Medical Holdings Corporation70,805 70,805 70,805 
Net income attributable to non-controlling interestsNet income attributable to non-controlling interests— 12,811 12,811 
Cash dividends declared for common stockholders ($0.125 per share)Cash dividends declared for common stockholders ($0.125 per share)(15,897)(15,897)(15,897)
Issuance of restricted stockIssuance of restricted stock— — 
Vesting of restricted stockVesting of restricted stock10,003 10,003 10,003 
Issuance of non-controlling interestsIssuance of non-controlling interests— 2,731 2,731 
Non-controlling interests acquired in business combinationNon-controlling interests acquired in business combination— 3,877 3,877 
Distributions to and purchases of non-controlling interestsDistributions to and purchases of non-controlling interests— (6,069)(6,069)
Redemption value adjustment on non-controlling interestsRedemption value adjustment on non-controlling interests(436)(436)(436)
Other comprehensive incomeOther comprehensive income(15,948)(15,948)(15,948)
OtherOther(1)— — 
Balance at March 31, 2023Balance at March 31, 2023127,176 $127 $462,185 $635,483 $72,654 $1,170,449 $247,992 $1,418,441 
Net income attributable to Select Medical Holdings CorporationNet income attributable to Select Medical Holdings Corporation49,117 49,117 49,117 Net income attributable to Select Medical Holdings Corporation   78,237 78,237 78,237 
Net income attributable to non-controlling interestsNet income attributable to non-controlling interests— 4,891 4,891 Net income attributable to non-controlling interests    — 11,539 11,539 
Cash dividends declared for common stockholders ($0.125 per share)Cash dividends declared for common stockholders ($0.125 per share)(16,691)(16,691)(16,691)Cash dividends declared for common stockholders ($0.125 per share)(15,924)(15,924)(15,924)
Issuance of restricted stockIssuance of restricted stock13 — — Issuance of restricted stock261  — — 
Vesting of restricted stockVesting of restricted stock8,288 8,288 8,288 Vesting of restricted stock10,326 10,326 10,326 
Repurchase of common sharesRepurchase of common shares(2,128)(2)(23,459)(28,215)(51,676)(51,676)Repurchase of common shares(49)(634)(872)(1,506)(1,506)
Issuance of non-controlling interestsIssuance of non-controlling interests651 651 4,578 5,229 Issuance of non-controlling interests1,870 1,870 10,211 12,081 
Non-controlling interests acquired in business combination, measurement period adjustment— 12,463 12,463 
Distributions to and purchases of non-controlling interestsDistributions to and purchases of non-controlling interests— (9,097)(9,097)Distributions to and purchases of non-controlling interests  195 195 (14,201)(14,006)
Redemption value adjustment on non-controlling interestsRedemption value adjustment on non-controlling interests(1,381)(1,381)(1,381)Redemption value adjustment on non-controlling interests   (2)(2)(2)
Other comprehensive incomeOther comprehensive income39,853 39,853 39,853 Other comprehensive income2,393 2,393 2,393 
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 
Net income attributable to Select Medical Holdings Corporation   55,207 55,207 55,207 
Net income attributable to non-controlling interests    — 9,155 9,155 
Cash dividends declared for common stockholders ($0.125 per share)(16,108)(16,108)(16,108)
Issuance of restricted stock211  — — 
Forfeitures of unvested restricted stock(6)
Vesting of restricted stock8,406 8,406 8,406 
Repurchase of common shares(5,483)(6)(56,965)(69,976)(126,947)(126,947)
Issuance of non-controlling interests— 1,725 1,725 
Distributions to and purchases of non-controlling interests  534 534 (7,348)(6,814)
Redemption value adjustment on non-controlling interests   355 355 355 
Other comprehensive income11,827 11,827 11,827 
Other  (4)(4)(4)
Balance at June 30, 2022126,491 $126 $441,769 $565,556 $63,962 $1,071,413 $232,288 $1,303,701 
Net income attributable to Select Medical Holdings Corporation27,166 27,166 27,166 
Net income attributable to non-controlling interests— 8,720 8,720 
Cash dividends declared for common stockholders ($0.125 per share)(15,893)(15,893)(15,893)
Issuance of restricted stock1,228 (1)— — 
Forfeitures of unvested restricted stock(6)
Vesting of restricted stock9,649 9,649 9,649 
Repurchase of common shares(569)(6,574)(8,417)(14,991)(14,991)
Issuance of non-controlling interests— 142 142 
Distributions to and purchases of non-controlling interests(2,450)(2,450)(12,226)(14,676)
Redemption value adjustment on non-controlling interests4,108 4,108 4,108 
Other comprehensive income26,594 26,594 26,594 
Other(4)(4)(4)
Balance at September 30, 2022127,144 $127 $444,843 $570,069 $90,556 $1,105,595 $228,924 $1,334,519 
Balance at June 30, 2023Balance at June 30, 2023127,388 $127 $473,942 $696,922 $75,047 $1,246,038 $255,541 $1,501,579 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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For the Nine Months Ended September 30, 2021For the Six Months Ended June 30, 2022
Total Stockholders’ Equity   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
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, 2020134,850 $135 $509,128 $553,244 $(2,027)$1,060,480 $192,493 $1,252,973 
Balance at December 31, 2021Balance 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 CorporationNet income attributable to Select Medical Holdings Corporation110,546 110,546 110,546 Net income attributable to Select Medical Holdings Corporation49,117 49,117 49,117 
Net income attributable to non-controlling interestsNet income attributable to non-controlling interests— 17,042 17,042 Net income attributable to non-controlling interests— 4,891 4,891 
Cash dividends declared for common stockholders ($0.125 per share)Cash dividends declared for common stockholders ($0.125 per share)(16,691)(16,691)(16,691)
Issuance of restricted stockIssuance of restricted stock— — Issuance of restricted stock13 — — 
Forfeitures of unvested restricted stock(14)— — 
Vesting of restricted stockVesting of restricted stock6,173 6,173 6,173 Vesting of restricted stock8,288 8,288 8,288 
Non-controlling interests acquired in business combination— 8,193 8,193 
Repurchase of common sharesRepurchase of common shares(2,128)(2)(23,459)(28,215)(51,676)(51,676)
Issuance of non-controlling interestsIssuance of non-controlling interests651 651 4,578 5,229 
Non-controlling interests acquired in business combination, measurement period adjustmentNon-controlling interests acquired in business combination, measurement period adjustment— 12,463 12,463 
Distributions to and purchases of non-controlling interestsDistributions to and purchases of non-controlling interests(787)(787)(13,458)(14,245)Distributions to and purchases of non-controlling interests— (9,097)(9,097)
Redemption value adjustment on non-controlling interestsRedemption value adjustment on non-controlling interests(38,405)(38,405)(38,405)Redemption value adjustment on non-controlling interests(1,381)(1,381)(1,381)
Other comprehensive incomeOther comprehensive income8,151 8,151 8,151 Other comprehensive income39,853 39,853 39,853 
OtherOther(178)(4)(182)371 189 Other(2)(2)(2)
Balance at March 31, 2021134,838 $135 $514,336 $625,381 $6,124 $1,145,976 $204,641 $1,350,617 
Balance at March 31, 2022Balance at March 31, 2022131,769 $132 $489,794 $596,079 $52,135 $1,138,140 $228,756 $1,366,896 
Net income attributable to Select Medical Holdings CorporationNet income attributable to Select Medical Holdings Corporation164,894 164,894 164,894 Net income attributable to Select Medical Holdings Corporation55,207 55,207 55,207 
Net income attributable to non-controlling interestsNet income attributable to non-controlling interests— 13,241 13,241 Net income attributable to non-controlling interests— 9,155 9,155 
Cash dividends declared for common stockholders ($0.125 per share)Cash dividends declared for common stockholders ($0.125 per share)(16,876)(16,876)(16,876)Cash dividends declared for common stockholders ($0.125 per share)(16,108)(16,108)(16,108)
Issuance of restricted stockIssuance of restricted stock211 — — Issuance of restricted stock211 — — 
Forfeitures of unvested restricted stockForfeitures of unvested restricted stock(2)— — Forfeitures of unvested restricted stock(6)
Vesting of restricted stockVesting of restricted stock6,564 6,564 6,564 Vesting of restricted stock8,406 8,406 8,406 
Repurchase of common sharesRepurchase of common shares(42)(707)(903)(1,610)(1,610)Repurchase of common shares(5,483)(6)(56,965)(69,976)(126,947)(126,947)
Issuance of non-controlling interestsIssuance of non-controlling interests(1,051)(1,051)6,739 5,688 Issuance of non-controlling interests— — 1,725 1,725 
Distributions to and purchases of non-controlling interestsDistributions to and purchases of non-controlling interests(2,970)(2,970)(9,324)(12,294)Distributions to and purchases of non-controlling interests534 534 (7,348)(6,814)
Redemption value adjustment on non-controlling interestsRedemption value adjustment on non-controlling interests(59,370)(59,370)(59,370)Redemption value adjustment on non-controlling interests355 355 355 
Other comprehensive lossOther comprehensive loss(1,397)(1,397)(1,397)Other comprehensive loss11,827 11,827 11,827 
OtherOther65 65 370 435 Other(4)(4)— (4)
Balance at June 30, 2021135,005 $135 $516,172 $713,191 $4,727 $1,234,225 $215,667 $1,449,892 
Net income attributable to Select Medical Holdings Corporation   76,928 76,928 76,928 
Net income attributable to non-controlling interests    — 10,709 10,709 
Cash dividends declared for common stockholders ($0.125 per share)(16,940)(16,940)(16,940)
Issuance of restricted stock954 (1) — — 
Forfeitures of unvested restricted stock(2)— — 
Vesting of restricted stock7,659 7,659 7,659 
Repurchase of common shares(1,813)(2)(26,712)(37,726)(64,440)(64,440)
Issuance of non-controlling interests4,592 4,592 9,646 14,238 
Distributions to and purchases of non-controlling interests  — (18,278)(18,278)
Redemption value adjustment on non-controlling interests   (96,000)(96,000)(96,000)
Other comprehensive loss(524)(524)(524)
Other   (2)(2)370 368 
Balance at September 30, 2021134,144 $134 $501,710 $639,451 $4,203 $1,145,498 $218,114 $1,363,612 
Balance at June 30, 2022Balance at June 30, 2022126,491 $126 $441,769 $565,556 $63,962 $1,071,413 $232,288 $1,303,701 
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 Nine Months Ended September 30, For the Six Months Ended June 30,
20212022 20222023
Operating activitiesOperating activities  Operating activities  
Net incomeNet income$433,639 $160,314 Net income$122,188 $177,117 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities:  
Distributions from unconsolidated subsidiariesDistributions from unconsolidated subsidiaries27,772 16,892 Distributions from unconsolidated subsidiaries11,140 8,841 
Depreciation and amortizationDepreciation and amortization150,702 153,579 Depreciation and amortization102,120 102,364 
Provision for expected credit lossesProvision for expected credit losses172 (41)Provision for expected credit losses111 761 
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries(33,180)(19,648)Equity in earnings of unconsolidated subsidiaries(11,564)(19,057)
Gain on sale or disposal of assetsGain on sale or disposal of assets(87)(1,593)Gain on sale or disposal of assets(1,476)(23)
Stock compensation expenseStock compensation expense22,002 27,956 Stock compensation expense17,769 20,508 
Amortization of debt discount, premium and issuance costsAmortization of debt discount, premium and issuance costs1,655 1,696 Amortization of debt discount, premium and issuance costs1,123 1,174 
Deferred income taxesDeferred income taxes(11,965)(7,080)Deferred income taxes(1,965)(10,876)
Changes in operating assets and liabilities, net of effects of business combinations:Changes in operating assets and liabilities, net of effects of business combinations:  Changes in operating assets and liabilities, net of effects of business combinations:  
Accounts receivableAccounts receivable645 (19,686)Accounts receivable(32,431)(23,135)
Other current assetsOther current assets(1,822)2,923 Other current assets(2,128)(5,997)
Other assetsOther assets(3,124)9,650 Other assets1,275 5,472 
Accounts payableAccounts payable22,914 (22,185)Accounts payable4,879 7,096 
Accrued expensesAccrued expenses84,796 15,989 Accrued expenses44,296 22,033 
Government advancesGovernment advances(165,470)(82,848)Government advances(77,319)— 
Unearned government assistance(80,193)143 
Income taxes13,524 36,220 
Net cash provided by operating activitiesNet cash provided by operating activities461,980 272,281 Net cash provided by operating activities178,018 286,278 
Investing activitiesInvesting activities  Investing activities  
Business combinations, net of cash acquiredBusiness combinations, net of cash acquired(26,830)(22,027)Business combinations, net of cash acquired(19,241)(7,732)
Purchases of property and equipment(125,386)(135,119)
Purchases of property, equipment, and other assetsPurchases of property, equipment, and other assets(93,177)(118,399)
Investment in businessesInvestment in businesses(16,367)(17,323)Investment in businesses(6,990)(9,800)
Proceeds from sale of assetsProceeds from sale of assets11,257 5,364 Proceeds from sale of assets5,314 56 
Net cash used in investing activitiesNet cash used in investing activities(157,326)(169,105)Net cash used in investing activities(114,094)(135,875)
Financing activitiesFinancing activities  Financing activities  
Borrowings on revolving facilitiesBorrowings on revolving facilities— 845,000 Borrowings on revolving facilities565,000 435,000 
Payments on revolving facilitiesPayments on revolving facilities— (625,000)Payments on revolving facilities(375,000)(535,000)
Borrowings of other debtBorrowings of other debt19,515 20,866 Borrowings of other debt17,494 22,298 
Principal payments on other debtPrincipal payments on other debt(22,910)(25,165)Principal payments on other debt(16,874)(26,373)
Dividends paid to common stockholdersDividends paid to common stockholders(33,816)(48,692)Dividends paid to common stockholders(32,799)(31,821)
Repurchase of common stockRepurchase of common stock(66,050)(193,614)Repurchase of common stock(178,623)(1,506)
Decrease in overdraftsDecrease in overdrafts— (9,091)Decrease in overdrafts(11,055)(467)
Proceeds from issuance of non-controlling interestsProceeds from issuance of non-controlling interests19,926 7,096 Proceeds from issuance of non-controlling interests6,955 14,812 
Distributions to and purchases of non-controlling interestsDistributions to and purchases of non-controlling interests(50,397)(40,663)Distributions to and purchases of non-controlling interests(18,663)(24,085)
Net cash used in financing activitiesNet cash used in financing activities(133,732)(69,263)Net cash used in financing activities(43,565)(147,142)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents170,922 33,913 Net increase in cash and cash equivalents20,359 3,261 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period577,061 74,310 Cash and cash equivalents at beginning of period74,310 97,906 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$747,983 $108,223 Cash and cash equivalents at end of period$94,669 $101,167 
Supplemental informationSupplemental information  Supplemental information  
Cash paid for interest, excluding amounts received of $6,232 under interest rate cash flow hedge for the nine months ended September 30, 2022$118,570 $143,455 
Cash paid for interest, excluding amounts received of $103 and $38,284 under the interest rate cap contractCash paid for interest, excluding amounts received of $103 and $38,284 under the interest rate cap contract$74,217 $133,581 
Cash paid for taxesCash paid for taxes136,857 24,844 Cash paid for taxes16,423 42,755 

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 SeptemberJune 30, 2022,2023, and for the three and ninesix month periods ended SeptemberJune 30, 20212022 and 2022,2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting and the accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, certain information and disclosures required by GAAP, which are normally included in the notes to the consolidated financial statements, have been condensed or omitted pursuant to those rules and regulations, although the Company believes the disclosure is adequate to make the information presented not misleading. In the opinion of management, such information contains all adjustments, which are normal and recurring in nature, necessary for a fair statement of the financial position, results of operations and cash flow for such periods. All significant intercompany transactions and balances have been eliminated.
The results of operations for the three and ninesix months ended SeptemberJune 30, 2022,2023, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2022.2023. 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, 2021,2022, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022.23, 2023.
2.    Accounting Policies
Recent Accounting Guidance Not Yet Adopted
In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, Leases (Topic 842): Common Control Arrangements, which requires companies to amortize leasehold improvements associated with related party leases under common control over the useful life of the leasehold improvement to the common control group. The ASU is effective for annual reporting periods beginning on or after December 15, 2023; however, early adoption is permitted. The ASU can either be applied prospectively or retrospectively.
The Company is currently evaluating this ASU, but does not expect it to have a material impact on its consolidated financial statements upon adoption. The Company plans to adopt the ASU using the prospective method as of January 1, 2024.
Recently Adopted Accounting Guidance
Reference Rate Reform
In December 2022, FASB issued ASU 2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848, which extended the relief provided under Topic 848 to contract modifications made and hedging relationships entered into on or before December 31, 2024. The FASB had previously issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020, which provided temporary relief from some of the existing accounting rules governing contract modifications when the modification is related to the replacement of the London Interbank Offered Rate (“LIBOR”) or other reference rates discontinued as a result of reference rate reform.
For eligible contract modifications, the update generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. For cash flow hedging relationships affected by reference rate reform, Topic 848 provides expedients that allow an entity to (i) change the reference rate of either the forecasted transaction or hedging instrument without requiring dedesignation of the hedging relationship; (ii) assert that changes to the hedged forecasted transaction will not impact whether it remains probable of occurring; and (iii) for the purposes of assessing hedge effectiveness, assume that the reference rate will not be replaced for the remainder of the hedging relationship if both the hedged forecasted transaction and hedging instrument are expected to be impacted by reference rate reform.

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In March 2021, the Financial Conduct Authority announced June 30, 2023 as the intended cessation date of the one-, three-, six-, and 12-month tenors of USD LIBOR. Provisions within the credit agreement provide the Company with the ability to agree with JPMorgan Chase Bank, N.A., as administrative agent to the lenders, to replace LIBOR with a different reference rate in the event that LIBOR ceases to exist. On May 31, 2023, the Company replaced LIBOR with the forward looking Secured Overnight Financing Rate (“Adjusted Term SOFR”) within the credit agreement. On May 31, 2023, the Company also modified the cash flow hedge’s contractual terms to replace LIBOR with SOFR. The amendment to the credit agreement is described further in Note 7 -Long-term Debt and Notes Payable. The Company’s cash flow hedge is described further in Note 8 – Interest Rate Cap.
These updates have not had a material impact on the Company's consolidated financial statements.
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% and 17%19% of the Company’s accounts receivable is due from Medicare at both December 31, 20212022 and SeptemberJune 30, 2022, respectively.2023.










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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.
The changes in redeemable non-controlling interests are as follows:
Nine Months Ended September 30,Six Months Ended June 30,
2021202220222023
(in thousands)(in thousands)
Balance as of January 1Balance as of January 1$398,171 $39,033 Balance as of January 1$39,033 $34,043 
Net income attributable to redeemable non-controlling interestsNet income attributable to redeemable non-controlling interests9,626 1,918 Net income attributable to redeemable non-controlling interests1,918 1,641 
Distributions to and purchases of redeemable non-controlling interests(614)(1,198)
Distributions to redeemable non-controlling interestsDistributions to redeemable non-controlling interests(1,198)(1,900)
Redemption value adjustment on redeemable non-controlling interestsRedemption value adjustment on redeemable non-controlling interests38,405 1,381 Redemption value adjustment on redeemable non-controlling interests1,381 436 
OtherOther343 536 Other536 179 
Balance as of March 31Balance as of March 31$445,931 $41,670 Balance as of March 31$41,670 $34,399 
Net income attributable to redeemable non-controlling interestsNet income attributable to redeemable non-controlling interests18,073 1,900 Net income attributable to redeemable non-controlling interests1,900 2,084 
Distributions to and purchases of redeemable non-controlling interestsDistributions to and purchases of redeemable non-controlling interests(1,987)(1,553)Distributions to and purchases of redeemable non-controlling interests(1,553)(2,110)
Redemption value adjustment on redeemable non-controlling interestsRedemption value adjustment on redeemable non-controlling interests59,370 (355)Redemption value adjustment on redeemable non-controlling interests(355)
OtherOther165 535 Other535 — 
Balance as of June 30Balance as of June 30$521,552 $42,197 Balance as of June 30$42,197 $34,375 
Net income attributable to redeemable non-controlling interests12,580 2,240 
Distributions to and purchases of redeemable non-controlling interests(2,967)(7,325)
Redemption value adjustment on redeemable non-controlling interests96,000 (4,108)
Other165 536 
Balance as of September 30$627,330 $33,540 




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5.     Variable Interest Entities
Certain states prohibit the “corporate practice of medicine,” which restricts the Company from owning medical practices which directly employ physicians or therapists and from exercising control over medical decisions by physicians.physicians and therapists. In these states, the Company enters into long-term management agreements with medical practices that are owned by licensed physicians or therapists, which, in turn, employ or contract with physicians or therapists 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.practices. 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, 2021,2022, and SeptemberJune 30, 2022,2023, the total assets of the Company’s variable interest entities were $225.1$232.1 million and $264.0$263.6 million, respectively, and are principally comprised of accounts receivable. As of December 31, 2021,2022, and SeptemberJune 30, 2022,2023, the total liabilities of the Company’s variable interest entities were $74.8$78.8 million and $87.3$84.1 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$158.3 million and $179.8$186.7 million as of December 31, 2021,2022, and SeptemberJune 30, 2022,2023, respectively. These intercompany balances are eliminated in consolidation.
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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 September 30, 2021Three Months Ended September 30, 2022Three Months Ended June 30, 2022Three Months Ended June 30, 2023
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)(in thousands)
Operating lease costOperating lease cost$71,647 $1,791 $73,438 $73,795 $1,810 $75,605 Operating lease cost$73,969 $1,809 $75,778 $76,892 $1,833 $78,725 
Finance lease cost:Finance lease cost:Finance lease cost:
Amortization of right-of-use assetsAmortization of right-of-use assets156 — 156 381 — 381 Amortization of right-of-use assets377 — 377 404 — 404 
Interest on lease liabilitiesInterest on lease liabilities270 — 270 335 — 335 Interest on lease liabilities336 — 336 387 — 387 
Short-term lease costShort-term lease cost— — — 24 — 24 Short-term lease cost15 — 15 — — — 
Variable lease costVariable lease cost13,147 141 13,288 14,855 141 14,996 Variable lease cost14,407 141 14,548 16,532 — 16,532 
Sublease incomeSublease income(2,253)— (2,253)(1,963)— (1,963)Sublease income(1,940)— (1,940)(1,716)— (1,716)
Total lease costTotal lease cost$82,967 $1,932 $84,899 $87,427 $1,951 $89,378 Total lease cost$87,164 $1,950 $89,114 $92,499 $1,833 $94,332 
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Operating lease cost$212,500 $5,388 $217,888 $221,726 $5,428 $227,154 
Finance lease cost:
Amortization of right-of-use assets296 — 296 1,105 — 1,105 
Interest on lease liabilities775 — 775 1,011 — 1,011 
Short-term lease cost— — — 74 — 74 
Variable lease cost39,242 285 39,527 42,917 321 43,238 
Sublease income(6,716)— (6,716)(5,869)— (5,869)
Total lease cost$246,097 $5,673 $251,770 $260,964 $5,749 $266,713 
Supplemental cash flow information related to leases is as follows:
Nine Months Ended September 30,
20212022
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$219,754 $232,472 
Operating cash flows for finance leases775 1,011 
Financing cash flows for finance leases273 1,086 
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$215,568 $240,185 
Finance leases436 495 












Six Months Ended June 30, 2022Six Months Ended June 30, 2023
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Operating lease cost$147,931 $3,618 $151,549 $153,524 $3,667 $157,191 
Finance lease cost:
Amortization of right-of-use assets724 — 724 798 — 798 
Interest on lease liabilities676 — 676 707 — 707 
Short-term lease cost50 — 50 — — — 
Variable lease cost28,062 180 28,242 32,293 84 32,377 
Sublease income(3,906)— (3,906)(3,394)— (3,394)
Total lease cost$173,537 $3,798 $177,335 $183,928 $3,751 $187,679 
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Supplemental balance sheet information related to leases is as follows:

December 31, 2021September 30, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Operating Leases
Operating lease right-of-use assets$1,052,603 $26,151 $1,078,754 $1,108,127 $21,745 $1,129,872 
Current operating lease liabilities$222,865 $6,469 $229,334 $230,433 $4,162 $234,595 
Non-current operating lease liabilities894,104 22,436 916,540 947,828 19,930 967,758 
Total operating lease liabilities$1,116,969 $28,905 $1,145,874 $1,178,261 $24,092 $1,202,353 

December 31, 2021September 30, 2022
Unrelated PartiesRelated PartiesTotalUnrelated PartiesRelated PartiesTotal
(in thousands)
Finance Leases
Property and equipment, net$8,505 $— $8,505 $7,947 $— $7,947 
Current portion of long-term debt and notes payable$1,404 $— $1,404 $1,593 $— $1,593 
Long-term debt, net of current portion16,679 — 16,679 15,898 — 15,898 
Total finance lease liabilities$18,083 $— $18,083 $17,491 $— $17,491 
The weighted average remaining lease terms and discount rates are as follows:
December 31, 2021September 30, 2022
Weighted average remaining lease term (in years):
Operating leases7.87.7
Finance leases24.724.6
Weighted average discount rate:
Operating leases5.6 %5.7 %
Finance leases7.4 %7.4 %
As of September 30, 2022, maturities of lease liabilities are approximately as follows:
Operating LeasesFinance Leases
(in thousands)
2022 (remainder of year)$76,457 $708 
2023284,911 2,868 
2024246,800 2,505 
2025203,253 2,227 
2026170,756 2,157 
Thereafter583,337 28,300 
Total undiscounted cash flows1,565,514 38,765 
Less: Imputed interest363,161 21,274 
Total discounted lease liabilities$1,202,353 $17,491 
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7.     Intangible Assets
Goodwill
The following table shows changes in the carrying amounts of goodwill by reporting unit for the nine months ended September 30, 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 businesses6,505 — 6,779 3,927 17,211 
Measurement period adjustment13,251 — — — 13,251 
Balance as of September 30, 2022$1,151,196 $442,155 $660,904 $1,225,119 $3,479,374 
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, 2021September 30, 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 22,999 — 22,999 
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)163,178 309,109 (162,875)146,234 
Non-compete agreements36,746 (15,095)21,651 38,434 (17,828)20,606 
Total identifiable intangible assets$536,085 $(161,206)$374,879 $544,114 $(185,703)$358,411 
The Company’s accreditations and trademarks have renewal terms, and the costs to renew these intangible assets are expensed as incurred. At September 30, 2022, the accreditations and trademarks have a weighted average time until next renewal of 1.5 years and 7.0 years, respectively.
The Company’s finite-lived intangible assets amortize over their estimated useful lives. Amortization expense was $7.4 million and $7.7 million for the three months ended September 30, 2021 and 2022, respectively. Amortization expense was $21.8 million and $23.0 million for the nine months ended September 30, 2021 and 2022, respectively.
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8.Long-Term Debt and Notes Payable
As of SeptemberJune 30, 2022,2023, the Company’s long-term debt and notes payable are as follows:
Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value
(in thousands)(in thousands)
6.250% senior notes6.250% senior notes$1,225,000 $23,082 $(11,706)$1,236,376 $1,150,300 6.250% senior notes$1,225,000 $18,562 $(9,456)$1,234,106 $1,204,175 
Credit facilities:Credit facilities:     Credit facilities:     
Revolving facilityRevolving facility380,000 — — 380,000 378,575 Revolving facility345,000 — — 345,000 343,706 
Term loanTerm loan2,103,437 (4,883)(5,323)2,093,231 2,035,075 Term loan2,103,437 (3,379)(3,684)2,096,374 2,098,178 
Other debt, including finance leasesOther debt, including finance leases84,387 — (154)84,233 84,233 Other debt, including finance leases77,164 — (98)77,066 77,066 
Total debtTotal debt$3,792,824 $18,199 $(17,183)$3,793,840 $3,648,183 Total debt$3,750,601 $15,183 $(13,238)$3,752,546 $3,723,125 
Principal maturities of the Company’s long-term debt and notes payable are approximately as follows:
20222023202420252026ThereafterTotal 20232024202520262027ThereafterTotal
(in thousands)(in thousands)
6.250% senior notes6.250% senior notes$— $— $— $— $1,225,000 $— $1,225,000 6.250% senior notes$— $— $— $1,225,000 $— $— $1,225,000 
Credit facilities:Credit facilities:       Credit facilities:       
Revolving facilityRevolving facility— — 380,000 — — — 380,000 Revolving facility— 31,846 313,154 — — — 345,000 
Term loanTerm loan— 4,757 11,150 2,087,530 — — 2,103,437 Term loan4,757 11,150 2,087,530 — — — 2,103,437 
Other debt, including finance leasesOther debt, including finance leases6,890 36,409 26,177 1,940 1,307 11,664 84,387 Other debt, including finance leases11,738 51,046 1,408 1,309 823 10,840 77,164 
Total debtTotal debt$6,890 $41,166 $417,327 $2,089,470 $1,226,307 $11,664 $3,792,824 Total debt$16,495 $94,042 $2,402,092 $1,226,309 $823 $10,840 $3,750,601 
As of December 31, 2021,2022, the Company’s long-term debt and notes payable are as follows:
Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value Principal
Outstanding
Unamortized Premium (Discount)Unamortized
Issuance Costs
Carrying ValueFair Value
(in thousands)(in thousands)
6.250% senior notes6.250% senior notes$1,225,000 $27,635 $(13,951)$1,238,684 $1,297,104 6.250% senior notes$1,225,000 $21,555 $(10,948)$1,235,607 $1,163,689 
Credit facilities:Credit facilities:     Credit facilities:     
Revolving facilityRevolving facility160,000 — — 160,000 159,400 Revolving facility445,000 — — 445,000 443,331 
Term loanTerm loan2,103,437 (6,386)(6,961)2,090,090 2,087,661 Term loan2,103,437 (4,376)(4,771)2,094,290 2,056,110 
Other debt, including finance leasesOther debt, including finance leases85,398 — (215)85,183 85,183 Other debt, including finance leases104,800 — (135)104,665 104,665 
Total debtTotal debt$3,573,835 $21,249 $(21,127)$3,573,957 $3,629,348 Total debt$3,878,237 $17,179 $(15,854)$3,879,562 $3,767,795 
Select Credit Facilities
On May 31, 2023, Select entered into Amendment No. 7 to the Select credit agreement. Amendment No. 7 replaced the interest rate based on LIBOR and LIBOR-based mechanics applicable to borrowings under the Select credit agreement with an interest rate based on Adjusted Term SOFR (as defined in the credit agreement). The Adjusted Term SOFR Rate includes a credit spread adjustment of 0.10%.
On July 31, 2023, the Company entered into Amendment No. 8 to the Select credit agreement. Amendment No. 8 provides for a new tranche of refinancing term loan in an aggregate principal amount of $2,103.0 million to replace the existing term loans and a $710.0 million new revolving credit facility to replace the existing revolving credit facility. The refinancing term loan and the extended revolving credit facility will mature on March 6, 2027, with an early springing maturity 90 days prior to the senior notes maturity, triggered if more than $300.0 million of senior notes remain outstanding on May 15, 2026. The refinancing term loan has an interest rate of Term SOFR (without the 0.10% credit spread adjustment) plus 3.00% and the refinancing revolving credit facility has an interest rate of Adjusted Term SOFR plus 2.50%, in each case, subject to a leverage-based pricing grid.
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8.     Interest Rate Cap
The Company is subject to market risk exposure arising from changes in interest rates on its term loan. The term loan which bears interest at a variable rate that is indexed to one-month LIBOR.a benchmark which changed from LIBOR to SOFR on May 31, 2023. 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 LIBORvariable interest 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 is effective 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 LIBORthe variable interest rate 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 (loss), net of tax, during the periods presented:
Nine Months Ended September 30,Six Months Ended June 30,
2021202220222023
(in thousands)(in thousands)
Balance as of January 1Balance as of January 1$(2,027)$12,282 Balance as of January 1$12,282 $88,602 
Gain (loss) on interest rate cap cash flow hedgeGain (loss) on interest rate cap cash flow hedge39,814 (2,696)
Amounts reclassified from accumulated other comprehensive incomeAmounts reclassified from accumulated other comprehensive income39 (13,252)
Balance as of March 31Balance as of March 31$52,135 $72,654 
Gain on interest rate cap cash flow hedgeGain on interest rate cap cash flow hedge8,151 39,814 Gain on interest rate cap cash flow hedge11,833 17,527 
Amounts reclassified from accumulated other comprehensive incomeAmounts reclassified from accumulated other comprehensive income— 39 Amounts reclassified from accumulated other comprehensive income(6)(15,134)
Balance as of March 31$6,124 $52,135 
Gain (loss) on interest rate cap cash flow hedge(1,403)11,833 
Amounts reclassified from accumulated other comprehensive income(6)
Balance as of June 30Balance as of June 30$4,727 $63,962 Balance as of June 30$63,962 $75,047 
Gain (loss) on interest rate cap cash flow hedge(536)31,079 
Amounts reclassified from accumulated other comprehensive income12 (4,485)
Balance as of September 30$4,203 $90,556 
The effects on net income of amounts reclassified from accumulated other comprehensive income are as follows:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
Statement of OperationsStatement of Operations2021202220212022Statement of Operations2022202320222023
(in thousands)(in thousands)
Gains (losses) included in interest expenseGains (losses) included in interest expense$(16)$5,980 $(23)$5,936 Gains (losses) included in interest expense$$20,045 $(43)$37,597 
Income tax benefit (expense)Income tax benefit (expense)(1,495)(1,484)Income tax benefit (expense)(2)(4,911)10 (9,211)
Amounts reclassified from accumulated other comprehensive incomeAmounts reclassified from accumulated other comprehensive income$(12)$4,485 $(18)$4,452 Amounts reclassified from accumulated other comprehensive income$$15,134 $(33)$28,386 
The Company expects that approximately $63.5$82.1 million of estimated pre-tax gains will be reclassified from accumulated other comprehensive income into interest expense within the next twelve months.
Refer to Note 109 – Fair Value of Financial Instruments for information on the fair value of the Company’s interest rate cap contract and its balance sheet classification.
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Table of Contents
9.     Fair Value of Financial Instruments
Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as outlined below, on the basis of the observability of the inputs used in the fair value measurement:
Level 1 – inputs are based upon quoted prices for identical instruments in active markets.
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the instrument.
The Company’s interest rate cap contract is recorded at its fair value in the condensed consolidated balance sheets on a recurring basis. The fair value of the interest rate cap contract is based upon a model-derived valuation using observable market inputs, such as interest rates and interest rate volatility, and the strike price.
Financial InstrumentBalance Sheet ClassificationLevelDecember 31, 2021September 30, 2022
Asset:(in thousands)
Interest rate cap contract, current portionOther current assetsLevel 2$— $63,192 
Interest rate cap contract, non-current portionOther assetsLevel 218,055 59,993 
Liability:
Interest rate cap contract, current portionAccrued otherLevel 2$330 $— 

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Financial InstrumentBalance Sheet ClassificationLevelDecember 31, 2022June 30, 2023
Asset:(in thousands)
Interest rate cap contract, current portionCurrent portion of interest rate cap contractLevel 2$74,857 $83,938 
Interest rate cap contract, non-current portionInterest rate cap contract, net of current portionLevel 245,200 18,396 
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 87 – Long-Term Debt and Notes Payable, approximates fair value.
December 31, 2021September 30, 2022December 31, 2022June 30, 2023
Financial InstrumentFinancial InstrumentLevelCarrying ValueFair ValueCarrying ValueFair ValueFinancial InstrumentLevelCarrying ValueFair ValueCarrying ValueFair Value
(in thousands)(in thousands)
6.250% senior notes6.250% senior notesLevel 2$1,238,684 $1,297,104 $1,236,376 $1,150,300 6.250% senior notesLevel 2$1,235,607 $1,163,689 $1,234,106 $1,204,175 
Credit facilities:Credit facilities:Credit facilities:
Revolving facilityRevolving facilityLevel 2160,000 159,400 380,000 378,575 Revolving facilityLevel 2445,000 443,331 345,000 343,706 
Term loanTerm loanLevel 22,090,090 2,087,661 2,093,231 2,035,075 Term loanLevel 22,094,290 2,056,110 2,096,374 2,098,178 
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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11.10.     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 September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202220212022 2022202320222023
(in thousands) (in thousands)
Revenue:Revenue:    Revenue:    
Critical illness recovery hospitalCritical illness recovery hospital$530,646 $524,584 $1,669,577 $1,672,247 Critical illness recovery hospital$545,908 $575,091 $1,147,663 $1,169,017 
Rehabilitation hospitalRehabilitation hospital212,434 229,387 632,904 678,908 Rehabilitation hospital228,887 240,856 449,521 472,318 
Outpatient rehabilitationOutpatient rehabilitation274,540 284,993 806,910 844,191 Outpatient rehabilitation287,258 302,972 559,198 598,875 
ConcentraConcentra442,190 444,576 1,321,402 1,309,356 Concentra441,357 467,079 864,780 923,377 
OtherOther74,411 84,254 213,911 247,380 Other81,331 88,530 163,126 175,921 
Total CompanyTotal Company$1,534,221 $1,567,794 $4,644,704 $4,752,082 Total Company$1,584,741 $1,674,528 $3,184,288 $3,339,508 
Adjusted EBITDA:Adjusted EBITDA:    Adjusted EBITDA:    
Critical illness recovery hospitalCritical illness recovery hospital$57,245 $11,013 $243,421 $66,999 Critical illness recovery hospital$20,019 $65,496 $55,986 $142,269 
Rehabilitation hospitalRehabilitation hospital44,076 49,772 145,378 141,996 Rehabilitation hospital49,845 54,689 92,224 101,905 
Outpatient rehabilitationOutpatient rehabilitation38,762 25,715 110,724 85,912 Outpatient rehabilitation33,601 32,850 60,197 63,049 
Concentra(1)
99,832 90,025 318,907 272,101 
ConcentraConcentra92,607 100,391 182,076 194,139 
Other(1)
Other(1)
(31,338)(23,412)(9,491)(69,054)
Other(1)
(15,078)(33,957)(45,642)(67,830)
Total CompanyTotal Company$208,577 $153,113 $808,939 $497,954 Total Company$180,994 $219,469 $344,841 $433,532 
Total assets:Total assets:    Total assets:    
Critical illness recovery hospitalCritical illness recovery hospital$2,181,405 $2,368,968 $2,181,405 $2,368,968 Critical illness recovery hospital$2,387,516 $2,492,370 $2,387,516 $2,492,370 
Rehabilitation hospitalRehabilitation hospital1,191,093 1,189,486 1,191,093 1,189,486 Rehabilitation hospital1,194,739 1,209,737 1,194,739 1,209,737 
Outpatient rehabilitationOutpatient rehabilitation1,339,452 1,377,010 1,339,452 1,377,010 Outpatient rehabilitation1,360,600 1,399,782 1,360,600 1,399,782 
ConcentraConcentra2,609,361 2,309,392 2,609,361 2,309,392 Concentra2,301,296 2,314,328 2,301,296 2,314,328 
OtherOther578,162 310,120 578,162 310,120 Other307,507 285,652 307,507 285,652 
Total CompanyTotal Company$7,899,473 $7,554,976 $7,899,473 $7,554,976 Total Company$7,551,658 $7,701,869 $7,551,658 $7,701,869 
Purchases of property and equipment:    
Purchases of property, equipment, and other assets:Purchases of property, equipment, and other assets:    
Critical illness recovery hospitalCritical illness recovery hospital$12,365 $21,534 $43,249 $60,631 Critical illness recovery hospital$19,528 $31,363 $39,097 $55,021 
Rehabilitation hospitalRehabilitation hospital4,366 392 8,288 11,487 Rehabilitation hospital4,821 1,903 11,095 10,485 
Outpatient rehabilitationOutpatient rehabilitation9,481 10,098 24,264 28,826 Outpatient rehabilitation9,314 10,476 18,728 20,408 
ConcentraConcentra11,353 9,074 31,624 28,030 Concentra8,716 15,846 18,956 30,246 
OtherOther11,379 844 17,961 6,145 Other3,953 (74)5,301 2,239 
Total CompanyTotal Company$48,944 $41,942 $125,386 $135,119 Total Company$46,332 $59,514 $93,177 $118,399 

(1)    For the three and ninesix months ended SeptemberJune 30, 2022, and 2021, Adjusted EBITDA includesincluded other operating income of $15.1 million. The other operating income is 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”).COVID-19.
Adjusted EBITDA for the Concentra segment includes $1.6 million and $33.8 million of this income for the three and nine months ended September 30, 2021, respectively.
Adjusted EBITDA for the Company’s other activities includes $0.1 million and $8.1 million of this income for the three months ended September 30, 2021 and 2022, respectively, and $82.0 million and $23.2 million for the nine months ended September 30, 2021 and 2022, respectively.
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A reconciliation of Adjusted EBITDA to income before income taxes is as follows:
Three Months Ended September 30, 2021 Three Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands) (in thousands)
Adjusted EBITDAAdjusted EBITDA$57,245 $44,076 $38,762 $99,832 $(31,338) Adjusted EBITDA$20,019 $49,845 $33,601 $92,607 $(15,078) 
Depreciation and amortizationDepreciation and amortization(12,972)(6,869)(7,319)(20,419)(2,549) Depreciation and amortization(14,603)(7,175)(8,130)(18,730)(2,443) 
Stock compensation expenseStock compensation expense— — — (535)(7,659) Stock compensation expense— — — (536)(8,410) 
Income (loss) from operationsIncome (loss) from operations$44,273 $37,207 $31,443 $78,878 $(41,546)$150,255 Income (loss) from operations$5,416 $42,670 $25,471 $73,341 $(25,931)$120,967 
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries    11,452 Equity in earnings of unconsolidated subsidiaries    6,167 
Interest expenseInterest expense    (33,825)Interest expense    (41,052)
Income before income taxesIncome before income taxes    $127,882 Income before income taxes    $86,082 
Three Months Ended September 30, 2022 Three Months Ended June 30, 2023
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands) (in thousands)
Adjusted EBITDAAdjusted EBITDA$11,013 $49,772 $25,715 $90,025 $(23,412) Adjusted EBITDA$65,496 $54,689 $32,850 $100,391 $(33,957) 
Depreciation and amortizationDepreciation and amortization(16,055)(6,994)(8,157)(17,781)(2,472) Depreciation and amortization(13,886)(6,887)(8,779)(18,283)(2,104) 
Stock compensation expenseStock compensation expense— — — (535)(9,652) Stock compensation expense— — — — (10,326) 
Income (loss) from operationsIncome (loss) from operations$(5,042)$42,778 $17,558 $71,709 $(35,536)$91,467 Income (loss) from operations$51,610 $47,802 $24,071 $82,108 $(46,387)$159,204 
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries    8,084 Equity in earnings of unconsolidated subsidiaries    10,501 
Interest expenseInterest expense    (45,204)Interest expense    (48,997)
Income before income taxesIncome before income taxes    $54,347 Income before income taxes    $120,708 
 Nine Months Ended September 30, 2021
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
 (in thousands)
Adjusted EBITDA$243,421 $145,378 $110,724 $318,907 $(9,491) 
Depreciation and amortization(38,958)(20,868)(21,855)(61,547)(7,474) 
Stock compensation expense— — — (1,606)(20,396) 
Income (loss) from operations$204,463 $124,510 $88,869 $255,754 $(37,361)$636,235 
Equity in earnings of unconsolidated subsidiaries    33,180 
Interest income4,749 
Interest expense    (102,115)
Income before income taxes    $572,049 

Nine Months Ended September 30, 2022 Six Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands) (in thousands)
Adjusted EBITDAAdjusted EBITDA$66,999 $141,996 $85,912 $272,101 $(69,054) Adjusted EBITDA$55,986 $92,224 $60,197 $182,076 $(45,642) 
Depreciation and amortizationDepreciation and amortization(45,276)(20,971)(24,316)(55,323)(7,693) Depreciation and amortization(29,221)(13,977)(16,159)(37,542)(5,221) 
Stock compensation expenseStock compensation expense— — — (1,606)(26,350) Stock compensation expense— — — (1,071)(16,698) 
Income (loss) from operationsIncome (loss) from operations$21,723 $121,025 $61,596 $215,172 $(103,097)$316,419 Income (loss) from operations$26,765 $78,247 $44,038 $143,463 $(67,561)$224,952 
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries    19,648 Equity in earnings of unconsolidated subsidiaries    11,564 
Interest expenseInterest expense    (121,770)Interest expense    (76,566)
Income before income taxesIncome before income taxes    $214,297 Income before income taxes    $159,950 
 Six Months Ended June 30, 2023
 Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
 (in thousands)
Adjusted EBITDA$142,269 $101,905 $63,049 $194,139 $(67,830) 
Depreciation and amortization(30,523)(13,775)(17,236)(36,593)(4,237) 
Stock compensation expense— — — (178)(20,329) 
Income (loss) from operations$111,746 $88,130 $45,813 $157,368 $(92,396)$310,661 
Equity in earnings of unconsolidated subsidiaries    19,057 
Interest expense    (97,568)
Income before income taxes    $232,150 


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12.11.     Revenue from Contracts with Customers
The following tables disaggregate the Company’s revenue for the three and ninesix months ended SeptemberJune 30, 20212022 and 2022:2023:
Three Months Ended September 30, 2021Three Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotalCritical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
Patient service revenue:Patient service revenue:Patient service revenue:
MedicareMedicare$201,337 $105,512 $45,779 $322 $— $352,950 Medicare$213,680 $105,030 $44,433 $195 $— $363,338 
Non-MedicareNon-Medicare324,857 96,326 210,877 440,145 — 1,072,205 Non-Medicare329,118 113,001 224,957 439,779 — 1,106,855 
Total patient services revenuesTotal patient services revenues526,194 201,838 256,656 440,467 — 1,425,155 Total patient services revenues542,798 218,031 269,390 439,974 — 1,470,193 
Other revenueOther revenue4,452 10,596 17,884 1,723 74,411 109,066 Other revenue3,110 10,856 17,868 1,383 81,331 114,548 
Total revenueTotal revenue$530,646 $212,434 $274,540 $442,190 $74,411 $1,534,221 Total revenue$545,908 $228,887 $287,258 $441,357 $81,331 $1,584,741 
Three Months Ended September 30, 2022Three Months Ended June 30, 2023
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotalCritical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
Patient service revenue:Patient service revenue:Patient service revenue:
MedicareMedicare$201,558 $106,584 $45,193 $205 $— $353,540 Medicare$207,743 $113,450 $46,647 $250 $— $368,090 
Non-MedicareNon-Medicare320,896 111,509 221,275 443,040 — 1,096,720 Non-Medicare366,498 115,436 236,246 465,367 — 1,183,547 
Total patient services revenuesTotal patient services revenues522,454 218,093 266,468 443,245 — 1,450,260 Total patient services revenues574,241 228,886 282,893 465,617 — 1,551,637 
Other revenueOther revenue2,130 11,294 18,525 1,331 84,254 117,534 Other revenue850 11,970 20,079 1,462 88,530 122,891 
Total revenueTotal revenue$524,584 $229,387 $284,993 $444,576 $84,254 $1,567,794 Total revenue$575,091 $240,856 $302,972 $467,079 $88,530 $1,674,528 
Nine Months Ended September 30, 2021Six Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotalCritical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
Patient service revenue:Patient service revenue:Patient service revenue:
MedicareMedicare$634,675 $311,752 $127,361 $847 $— $1,074,635 Medicare$432,667 $208,051 $86,337 $372 $— $727,427 
Non-MedicareNon-Medicare1,026,938 290,111 629,589 1,314,924 — 3,261,562 Non-Medicare710,104 220,143 439,070 861,825 — 2,231,142 
Total patient services revenuesTotal patient services revenues1,661,613 601,863 756,950 1,315,771 — 4,336,197 Total patient services revenues1,142,771 428,194 525,407 862,197 — 2,958,569 
Other revenueOther revenue7,964 31,041 49,960 5,631 213,911 308,507 Other revenue4,892 21,327 33,791 2,583 163,126 225,719 
Total revenueTotal revenue$1,669,577 $632,904 $806,910 $1,321,402 $213,911 $4,644,704 Total revenue$1,147,663 $449,521 $559,198 $864,780 $163,126 $3,184,288 
Nine Months Ended September 30, 2022Six Months Ended June 30, 2023
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotalCritical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
Patient service revenue:Patient service revenue:Patient service revenue:
MedicareMedicare$634,225 $314,635 $131,530 $577 $— $1,080,967 Medicare$437,126 $223,505 $92,448 $493 $— $753,572 
Non-MedicareNon-Medicare1,031,000 331,652 660,345 1,304,865 — 3,327,862 Non-Medicare729,803 225,361 468,231 919,965 — 2,343,360 
Total patient services revenuesTotal patient services revenues1,665,225 646,287 791,875 1,305,442 — 4,408,829 Total patient services revenues1,166,929 448,866 560,679 920,458 — 3,096,932 
Other revenueOther revenue7,022 32,621 52,316 3,914 247,380 343,253 Other revenue2,088 23,452 38,196 2,919 175,921 242,576 
Total revenueTotal revenue$1,672,247 $678,908 $844,191 $1,309,356 $247,380 $4,752,082 Total revenue$1,169,017 $472,318 $598,875 $923,377 $175,921 $3,339,508 
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13.12.    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 and ninesix months ended SeptemberJune 30, 20212022 and 2022.2023.
(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 EPSBasic and Diluted EPSBasic and Diluted EPS
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
20212022202120222022202320222023
(in thousands)(in thousands)
Net incomeNet income$100,217 $38,126 $433,639 $160,314 Net income$66,262 $91,860 $122,188 $177,117 
Less: net income attributable to non-controlling interestsLess: net income attributable to non-controlling interests23,289 10,960 81,271 28,824 Less: net income attributable to non-controlling interests11,055 13,623 17,864 28,075 
Net income attributable to the CompanyNet income attributable to the Company76,928 27,166 352,368 131,490 Net income attributable to the Company55,207 78,237 104,324 149,042 
Less: Distributed and undistributed income attributable to participating securitiesLess: Distributed and undistributed income attributable to participating securities2,550 992 11,781 4,588 Less: Distributed and undistributed income attributable to participating securities1,920 2,877 3,558 5,449 
Distributed and undistributed income attributable to common sharesDistributed and undistributed income attributable to common shares$74,378 $26,174 $340,587 $126,902 Distributed and undistributed income attributable to common shares$53,287 $75,360 $100,766 $143,593 
The following tables set forth the computation of EPS under the two-class method:
Three Months Ended September 30,Three Months Ended June 30,
2021202220222023
Net Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)(in thousands, except for per share amounts)
Common sharesCommon shares$74,378 130,594 $0.57 $26,174 122,193 $0.21 Common shares$53,287 124,897 $0.43 $75,360 122,634 $0.61 
Participating securitiesParticipating securities2,550 4,477 $0.57 992 4,631 $0.21 Participating securities1,920 4,500 $0.43 2,877 4,681 $0.61 
Total CompanyTotal Company$76,928 $27,166 Total Company$55,207 $78,237 
Nine Months Ended September 30,Six Months Ended June 30,
2021202220222023
Net Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPSNet Income Allocation
Shares(1)
Basic and Diluted EPS
(in thousands, except for per share amounts)(in thousands, except for per share amounts)
Common sharesCommon shares$340,587 130,441 $2.61 $126,902 125,341 $1.01 Common shares$100,766 126,942 $0.79 $143,593 122,594 $1.17 
Participating securitiesParticipating securities11,781 4,512 $2.61 4,588 4,532 $1.01 Participating securities3,558 4,482 $0.79 5,449 4,652 $1.17 
Total CompanyTotal Company$352,368 $131,490 Total Company$104,324 $149,042 
_______________________________________________________________________________
(1)    Represents the weighted average share count outstanding during the period.

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14.13.    Commitments and Contingencies
Litigation
The Company is a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of its business. The Company cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations. These matters could potentially subject the Company to sanctions, damages, recoupments, fines, and other penalties. The Department of Justice, Centers for Medicare & Medicaid Services (“CMS”), or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company’s businesses in the future that may, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position, results of operations, and liquidity.
To address claims arising out of the Company’s operations, the Company maintains professional malpractice liability insurance and general liability insurance coverages through a number of different programs that are dependent upon such factors as the state where the Company is operating and whether the operations are wholly owned or are operated through a joint venture. For the Company’s wholly owned hospital and outpatient clinic operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $37.0 million for professional malpractice liability insurance and $40.0 million for general liability insurance. For the Company’s Concentra center operations, the Company currently maintains insurance coverages under a combination of policies with a total annual aggregate limit of up to $19.0 million for professional malpractice liability insurance and $19.0 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.million. 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,that 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 (“CIDs”) from the U.S. Attorney’s Office for the Western District of Oklahoma seeking responses to interrogatories and the production of various documents principally relating to the documentation, billing and reviews of medical services furnished to patients at SSH-Oklahoma City. The government’sCompany understands that the investigation appears to be focused on respiratory therapy services and billings. The Company does not know whether the subpoena has been issued in connection witharose from a qui tam lawsuit or in connection with possible civil, criminal or administrative proceedings by the government.alleging billing fraud related to charges for respiratory therapy services at SSH-Oklahoma City and Select Specialty Hospital - Wichita, Inc. The Company is producinghas produced documents in response to the subpoenaCIDs 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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Physical Therapy BillingBilling. . On October 7, 2021, the Company received a letter from a Trial Attorney at the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Fraud Section (“DOJ”) stating that the DOJ, in conjunction with the U.S. Department of healthHealth and Human Services (“HHS”), is investigating the Company in connection with potential violations of the False Claims Act, 31 U.S.C. § 3729, et seq. The letter specified that the investigation relates to the Company’s billing for physical therapy services, and indicated that the DOJ would be requesting certain records from the Company. In October and December 2021, the DOJ requested, and the Company furnished, records relating to six of the Company’s outpatient therapy clinics in Florida. In May and July 2022, the DOJ requested certain data relating to all of the Company’s outpatient therapy clinics nationwide, and sought information about the Company’s ability to produce additional data relating to the physical therapy services furnished by the CompanyCompany’s outpatient therapy clinics and Concentra. The Company has produced data and other documents requested by the DOJ and is fully cooperating with the DOJ on this investigation. At this time, the Company is unable to predict the timing and outcome of this matter.

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15.14.     Subsequent EventEvents
On NovemberAugust 2, 2022,2023, the Company’s boardBoard of directorsDirectors declared a cash dividend of $0.125 per share. The dividend will be payable on or about November 29, 2022,September 1, 2023, to stockholders of record as of the close of business on November 16, 2022.August 15, 2023.
On July 31, 2023, the Company entered into Amendment No. 8 to the Select credit agreement. Amendment No. 8 provides for a new tranche of refinancing term loan in an aggregate principal amount of $2,103.0 million to replace the existing term loans and a $710.0 million new revolving credit facility to replace the existing revolving credit facility. The refinancing term loan and the extended revolving credit facility will mature on March 6, 2027, with an early springing maturity 90 days prior to the senior notes maturity, triggered if more than $300.0 million of senior notes remain outstanding on May 15, 2026. The refinancing term loan has an interest rate of Term SOFR (without the 0.10% credit spread adjustment) plus 3.00% and the refinancing revolving credit facility has an interest rate of Adjusted Term SOFR plus 2.50%, in each case, subject to a leverage-based pricing grid.

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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 relatedadverse economic conditions including an inflationary environment could cause us to continue to experience increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results, cash flows, and financial condition;
shortages in qualified nurses, therapists, physicians, or other licensed providers, and/or the inability to attract or retain qualified healthcare professionals could limit our ability to staff our facilities;
shortages in qualified health professionals could cause us to increase our dependence on contract labor, increase our efforts to recruit and train new employees, and expand upon our initiatives to retain existing staff, which could increase our operating costs significantly;
the continuing effects of the COVID-19 pandemic including, but not limited to, the durationprolonged disruption to the global financial markets, increased operational costs due to recessionary pressures and severity of the pandemic,labor costs, 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;
an inflationary environment could cause us to experience increases in the prices of labor and other costs of doing business resulting in a negative impact on our business, operating results, cash flows, and financial condition;
changes 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 facilitiesoperated 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;
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shortages in qualified nurses, therapists, physicians, or other licensed providers, or the inability to attract or retain healthcare professionals due to the heightened riskTable of infection related to the COVID-19 pandemic, could increase our operating costs significantly or limit our ability to staff our facilities;Contents
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;
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a security breach of our or our third-party vendors’ information technology systems may subject us to potential legal and reputational harm and may result in a violation of the Health Insurance Portability and Accountability Act of 1996 or the Health Information Technology for Economic and Clinical Health Act; and
other factors discussed from time to time in our filings with the SEC, including factors discussed under the heading “Risk Factors” in our quarterly reports on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021, and in our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022, as such risk factors may be updated from time to time in our periodic filings with the SEC.2022.
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 SeptemberJune 30, 2022,2023, we had operations in 46 states and the District of Columbia. We operated 105108 critical illness recovery hospitals in 28 states, 3132 rehabilitation hospitals in 12 states, and 1,9331,944 outpatient rehabilitation clinics in 39 states and the District of Columbia. Concentra operated 519Columbia, 540 occupational health centers in 41 states, as of September 30, 2022. Concentra also provides contract servicesand 141 onsite clinics 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 $4,752.1$3,339.5 million for the ninesix months ended SeptemberJune 30, 2022.2023. Of this total, we earned approximately 35% of our revenue from our critical illness recovery hospital segment, approximately 14% from our rehabilitation hospital segment, approximately 18% from our outpatient rehabilitation segment, and approximately 28% 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 September 30,Nine Months Ended September 30,
 2021202220212022
 (in thousands)
Net income$100,217 $38,126 $433,639 $160,314 
Income tax expense27,665 16,221 138,410 53,983 
Interest expense33,825 45,204 102,115 121,770 
Interest income— — (4,749)— 
Equity in earnings of unconsolidated subsidiaries(11,452)(8,084)(33,180)(19,648)
Income from operations150,255 91,467 636,235 316,419 
Stock compensation expense:    
Included in general and administrative6,457 8,000 17,537 21,995 
Included in cost of services1,737 2,187 4,465 5,961 
Depreciation and amortization50,128 51,459 150,702 153,579 
Adjusted EBITDA$208,577 $153,113 $808,939 $497,954 
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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 and nine months ended September 30, 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 changes in the business environment following 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
Three Months Ended June 30461,143 544,059 545,908 262,860 272,981 273,133 69 %69 %67 %9999105
Three Months Ended September 30462,892 530,646 524,584 258,089 272,454 278,137 67 %68 %67 %99100105 
Nine Months Ended September 30$1,381,569 $1,669,577 $1,672,247 779,078 838,553 840,487 69 %70 %68 %99100105 
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
Three Months Ended June 30160,374 212,666 228,887 86,525 104,948 108,812 75 %85 %86 %192020
Three Months Ended September 30173,369 212,434 229,387 89,454 102,953 109,076 75 %82 %85 %192020 
Nine Months Ended September 30$488,301 $632,904 $678,908 258,795 310,340 321,690 75 %84 %85 %192020 
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 
Three Months Ended June 30261,891 280,409 287,258 2,203,505 2,404,861 2,450,912 64 64 64 
Three Months Ended September 30265,330 274,540 284,993 2,204,328 2,347,070 2,404,868 64 64 64 
Nine Months Ended September 30$774,126 $806,910 $844,191 6,462,316 6,852,085 7,165,866 191 191 192 
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 
Three Months Ended June 30413,451 456,372 441,357 3,103,089 3,030,078 3,214,512 64 64 64 
Three Months Ended September 30421,900 442,190 444,576 3,150,903 3,223,631 3,273,031 64 64 64 
Nine Months Ended September 30$1,231,672 $1,321,402 $1,309,356 9,165,599 9,049,283 9,604,441 191 191 192 

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(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 and nine months ended September 30, 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 and nine months ended September 30, 2021 and 2022.
 Three Months Ended June 30,Six Months Ended June 30,
 2022202320222023
 (in thousands)
Net income$66,262 $91,860 $122,188 $177,117 
Income tax expense19,820 28,848 37,762 55,033 
Interest expense41,052 48,997 76,566 97,568 
Equity in earnings of unconsolidated subsidiaries(6,167)(10,501)(11,564)(19,057)
Income from operations120,967 159,204 224,952 310,661 
Stock compensation expense:    
Included in general and administrative7,046 8,553 13,995 16,958 
Included in cost of services1,900 1,773 3,774 3,549 
Depreciation and amortization51,081 49,939 102,120 102,364 
Adjusted EBITDA$180,994 $219,469 $344,841 $433,532 
Other Significant Events
Dividend PaymentsPayment
On February 17, 2022,16, 2023, and May 5, 2022, and August 2, 2022,3, 2023, our boardBoard of directorsDirectors declared a cash dividend of $0.125 per share. On both March 16, 2022, June 1, 2022,15, 2023, and September 2, 2022,May 31, 2023, cash dividends for both dividend payments totaling $16.7 million, $16.1 million, and $15.9 million respectively, were paid.
Financing Transaction
On May 31, 2023, Select entered into Amendment No. 7 to the Select credit agreement. Amendment No. 7 replaced the interest rate based on LIBOR and LIBOR-based mechanics applicable to borrowings under the Select credit agreement with an interest rate based on Adjusted Term SOFR (as defined in the credit agreement). The Adjusted Term SOFR Rate includes a credit spread adjustment of 0.10%.
On July 31, 2023, the Company entered into Amendment No. 8 to the Select credit agreement. Amendment No. 8 provides for a new tranche of refinancing term loan in an aggregate principal amount of $2,103.0 million to replace the existing term loans and a $710.0 million new revolving credit facility to replace the existing revolving credit facility. The refinancing term loan and the extended revolving credit facility will mature on March 6, 2027, with an early springing maturity 90 days prior to the senior notes maturity, triggered if more than $300.0 million of senior notes remain outstanding on May 15, 2026. The refinancing term loan has an interest rate of Term SOFR (without the 0.10% credit spread adjustment) plus 3.00% and the refinancing revolving credit facility has an interest rate of Adjusted Term SOFR plus 2.50%, in each case, subject to a leverage-based pricing grid.
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Summary Financial Results
Three Months Ended SeptemberJune 30, 20222023
The following tables reconcile our segment performance measures to our consolidated operating results:
Three Months Ended September 30, 2022 Three Months Ended June 30, 2023
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
RevenueRevenue$524,584 $229,387 $284,993 $444,576 $84,254 $1,567,794 Revenue$575,091 $240,856 $302,972 $467,079 $88,530 $1,674,528 
Operating expensesOperating expenses(513,691)(179,856)(259,278)(355,086)(125,397)(1,433,308)Operating expenses(509,595)(186,503)(270,361)(366,839)(132,813)(1,466,111)
Depreciation and amortizationDepreciation and amortization(16,055)(6,994)(8,157)(17,781)(2,472)(51,459)Depreciation and amortization(13,886)(6,887)(8,779)(18,283)(2,104)(49,939)
Other operating incomeOther operating income120 241 — — 8,079 8,440 Other operating income— 336 239 151 — 726 
Income (loss) from operationsIncome (loss) from operations$(5,042)$42,778 $17,558 $71,709 $(35,536)$91,467 Income (loss) from operations$51,610 $47,802 $24,071 $82,108 $(46,387)$159,204 
Depreciation and amortizationDepreciation and amortization16,055 6,994 8,157 17,781 2,472 51,459 Depreciation and amortization13,886 6,887 8,779 18,283 2,104 49,939 
Stock compensation expenseStock compensation expense— — — 535 9,652 10,187 Stock compensation expense— — — — 10,326 10,326 
Adjusted EBITDAAdjusted EBITDA$11,013 $49,772 $25,715 $90,025 $(23,412)$153,113 Adjusted EBITDA$65,496 $54,689 $32,850 $100,391 $(33,957)$219,469 
Adjusted EBITDA marginAdjusted EBITDA margin2.1 %21.7 %9.0 %20.2 %N/M9.8 %Adjusted EBITDA margin11.4 %22.7 %10.8 %21.5 %N/M13.1 %
Three Months Ended September 30, 2021 Three Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
RevenueRevenue$530,646 $212,434 $274,540 $442,190 $74,411 $1,534,221 Revenue$545,908 $228,887 $287,258 $441,357 $81,331 $1,584,741 
Operating expensesOperating expenses(473,401)(168,358)(235,778)(344,529)(113,501)(1,335,567)Operating expenses(525,889)(179,042)(253,657)(349,267)(119,963)(1,427,818)
Depreciation and amortizationDepreciation and amortization(12,972)(6,869)(7,319)(20,419)(2,549)(50,128)Depreciation and amortization(14,603)(7,175)(8,130)(18,730)(2,443)(51,081)
Other operating income— — — 1,636 93 1,729 
Other operating income (expense)Other operating income (expense)— — — (19)15,144 15,125 
Income (loss) from operationsIncome (loss) from operations$44,273 $37,207 $31,443 $78,878 $(41,546)$150,255 Income (loss) from operations$5,416 $42,670 $25,471 $73,341 $(25,931)$120,967 
Depreciation and amortizationDepreciation and amortization12,972 6,869 7,319 20,419 2,549 50,128 Depreciation and amortization14,603 7,175 8,130 18,730 2,443 51,081 
Stock compensation expenseStock compensation expense— — — 535 7,659 8,194 Stock compensation expense— — — 536 8,410 8,946 
Adjusted EBITDAAdjusted EBITDA$57,245 $44,076 $38,762 $99,832 $(31,338)$208,577 Adjusted EBITDA$20,019 $49,845 $33,601 $92,607 $(15,078)$180,994 
Adjusted EBITDA marginAdjusted EBITDA margin10.8 %20.7 %14.1 %22.6 %N/M13.6 %Adjusted EBITDA margin3.7 %21.8 %11.7 %21.0 %N/M11.4 %
Net income was $38.1$91.9 million for the three months ended SeptemberJune 30, 2022,2023, compared to $100.2$66.3 million for the three months ended SeptemberJune 30, 2021.2022.
The following table summarizes changes in segment performance measures for the three months ended SeptemberJune 30, 2022,2023, compared to the three months ended SeptemberJune 30, 2021:2022:
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
Change in revenueChange in revenue(1.1)%8.0 %3.8 %0.5 %13.2 %2.2 %Change in revenue5.3 %5.2 %5.5 %5.8 %8.9 %5.7 %
Change in income from operationsChange in income from operations(111.4)%15.0 %(44.2)%(9.1)%N/M(39.1)%Change in income from operations852.9 %12.0 %(5.5)%12.0 %N/M31.6 %
Change in Adjusted EBITDAChange in Adjusted EBITDA(80.8)%12.9 %(33.7)%(9.8)%N/M(26.6)%Change in Adjusted EBITDA227.2 %9.7 %(2.2)%8.4 %N/M21.3 %
_______________________________________________________________________________
N/M —     Not meaningful.




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NineSix Months Ended SeptemberJune 30, 20222023
The following tables reconcile our segment performance measures to our consolidated operating results:
Nine Months Ended September 30, 2022 Six Months Ended June 30, 2023
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
RevenueRevenue$1,672,247 $678,908 $844,191 $1,309,356 $247,380 $4,752,082 Revenue$1,169,017 $472,318 $598,875 $923,377 $175,921 $3,339,508 
Operating expensesOperating expenses(1,605,368)(537,153)(758,279)(1,038,842)(366,007)(4,305,649)Operating expenses(1,026,748)(370,749)(536,065)(729,567)(264,080)(2,927,209)
Depreciation and amortizationDepreciation and amortization(45,276)(20,971)(24,316)(55,323)(7,693)(153,579)Depreciation and amortization(30,523)(13,775)(17,236)(36,593)(4,237)(102,364)
Other operating income (expense)120 241 — (19)23,223 23,565 
Other operating incomeOther operating income— 336 239 151 — 726 
Income (loss) from operationsIncome (loss) from operations$21,723 $121,025 $61,596 $215,172 $(103,097)$316,419 Income (loss) from operations$111,746 $88,130 $45,813 $157,368 $(92,396)$310,661 
Depreciation and amortizationDepreciation and amortization45,276 20,971 24,316 55,323 7,693 153,579 Depreciation and amortization30,523 13,775 17,236 36,593 4,237 102,364 
Stock compensation expenseStock compensation expense— — — 1,606 26,350 27,956 Stock compensation expense— — — 178 20,329 20,507 
Adjusted EBITDAAdjusted EBITDA$66,999 $141,996 $85,912 $272,101 $(69,054)$497,954 Adjusted EBITDA$142,269 $101,905 $63,049 $194,139 $(67,830)$433,532 
Adjusted EBITDA marginAdjusted EBITDA margin4.0 %20.9 %10.2 %20.8 %N/M10.5 %Adjusted EBITDA margin12.2 %21.6 %10.5 %21.0 %N/M13.0 %
Nine Months Ended September 30, 2021 Six Months Ended June 30, 2022
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
(in thousands)(in thousands)
RevenueRevenue$1,669,577 $632,904 $806,910 $1,321,402 $213,911 $4,644,704 Revenue$1,147,663 $449,521 $559,198 $864,780 $163,126 $3,184,288 
Operating expensesOperating expenses(1,444,043)(487,526)(696,186)(1,038,053)(325,796)(3,991,604)Operating expenses(1,091,677)(357,297)(499,001)(683,756)(240,610)(2,872,341)
Depreciation and amortizationDepreciation and amortization(38,958)(20,868)(21,855)(61,547)(7,474)(150,702)Depreciation and amortization(29,221)(13,977)(16,159)(37,542)(5,221)(102,120)
Other operating income17,887 — — 33,952 81,998 133,837 
Other operating income (expense)Other operating income (expense)— — — (19)15,144 15,125 
Income (loss) from operationsIncome (loss) from operations$204,463 $124,510 $88,869 $255,754 $(37,361)$636,235 Income (loss) from operations$26,765 $78,247 $44,038 $143,463 $(67,561)$224,952 
Depreciation and amortizationDepreciation and amortization38,958 20,868 21,855 61,547 7,474 150,702 Depreciation and amortization29,221 13,977 16,159 37,542 5,221 102,120 
Stock compensation expenseStock compensation expense— — — 1,606 20,396 22,002 Stock compensation expense— — — 1,071 16,698 17,769 
Adjusted EBITDAAdjusted EBITDA$243,421 $145,378 $110,724 $318,907 $(9,491)$808,939 Adjusted EBITDA$55,986 $92,224 $60,197 $182,076 $(45,642)$344,841 
Adjusted EBITDA marginAdjusted EBITDA margin14.6 %23.0 %13.7 %24.1 %N/M17.4 %Adjusted EBITDA margin4.9 %20.5 %10.8 %21.1 %N/M10.8 %
Net income was $160.3$177.1 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $433.6$122.2 million for the ninesix months ended SeptemberJune 30, 2021.2022.
The following table summarizes the changes in our segment performance measures for the ninesix months ended SeptemberJune 30, 2022,2023, compared to the ninesix months ended SeptemberJune 30, 2021:2022:
Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal Critical Illness Recovery HospitalRehabilitation HospitalOutpatient
Rehabilitation
ConcentraOtherTotal
Change in revenueChange in revenue0.2 %7.3 %4.6 %(0.9)%15.6 %2.3 %Change in revenue1.9 %5.1 %7.1 %6.8 %7.8 %4.9 %
Change in income from operationsChange in income from operations(89.4)%(2.8)%(30.7)%(15.9)%N/M(50.3)%Change in income from operations317.5 %12.6 %4.0 %9.7 %N/M38.1 %
Change in Adjusted EBITDAChange in Adjusted EBITDA(72.5)%(2.3)%(22.4)%(14.7)%N/M(38.4)%Change in Adjusted EBITDA154.1 %10.5 %4.7 %6.6 %N/M25.7 %
_______________________________________________________________________________
N/M —     Not meaningful.
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Regulatory Changes
Our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the SEC on February 24, 2022,23, 2023, 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 the ninesix months ended SeptemberJune 30, 2022,2023, and for the year ended December 31, 2021.2022.
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 subsequent 90-day periods effectiveuntil February 9, 2023. On February 9, 2023, the HHS Secretary signed the final renewal and the public health emergency ended 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, April 16, 2022, July 15, 2022, and October 13, 2022. OnMay 11, 2023. The COVID-19 national emergency that was declared by President Trump on March 13, 2020, President Trump declaredwhich was separate from the public health emergency, ended on April 10, 2023 when H.R.J. Res. 7 was signed into law.
As a national emergency due toresult of the COVID-19 pandemic andnational emergency, 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 excuseexcused health care providers or suppliers from specific program requirements. The following blanket waivers, whileOur Annual Report on Form 10-K for the year ended December 31, 2022 contains a detailed discussion of the federal health care program changes made 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 respondresponse to the emergency fromCOVID-19 pandemic, including these COVID-19 waivers, in Part II — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Regulatory Changes. Most of these COVID-19 waivers, including the calculationwaiver of the “60 percent rule” thresholdsIRF 60% Rule and the waiver of Medicare statutory requirements regarding site neutral payments to receive payment as an IRF.
ii.Long-termlong-term care hospitals (“LTCHs”), ended when the public health emergency expired on May 11, 2023. However, 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 seekingAs a result, LTCH classification can exclude patient stays fromcost reporting periods that started prior to May 11, 2023 will continue to be exempt for the remainder of that cost reporting year. However, LTCH cost reporting periods that begin on or after May 11, 2023 must comply with 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.requirement.
In addition, to these agency actions, the CARESCoronavirus Aid, Relief, and Economic Security (“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.
iii.Temporary suspension oflegislation temporarily suspended the 2% cut to Medicare payments due to sequestration so that, for the period offrom 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 reducesreduced the sequestration cutadjustment from 2% to 1% from April 1 2022, through June 30, 2022. The full 2% sequestration cutreduction resumed on 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 defersAdditionally, an across-the-board 4% payment cut required to take effect in January 2022 due to the American Rescue Plan from the FY 2022 Statutory Pay-As-You-Go (“PAYGO”) scorecard to the FY 2023 PAYGO scorecard.was deferred by Congress until 2025.
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)CARES Act and related legislation also provided more than $178 billion in appropriations for the cost reporting period(s)Public Health and Social Services Emergency Fund, also known as the Provider Relief Fund, to be used for preventing, preparing, and responding to COVID-19 and for reimbursing “eligible health care providers for health care related expenses or lost revenues that includeare attributable to coronavirus.” HHS began distributing these funds to providers in April 2020. Recipients of payments were required to report data to HHS on the emergency period. The second waives applicationuse of the site neutral payment rate so that all LTCH cases admitted duringfunds via an online portal by specific deadlines established by HHS based on the emergency period will be paid the LTCH-PPS standard federal rate.
v.Waiverdate of the IRF 3-hour rule so that IRF services provided duringpayment. All recipients of funds are subject to audit by HHS, the public health emergency period do not need to meetHHS OIG, or 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 1135Pandemic Response Accountability Committee. Audits may include examination of the Social Security Actaccuracy of the data providers submitted to issueHHS in their applications for payments. Additional distributions are not expected and as a result, the Company does not expect to recognize additional telehealth waivers.income associated with these funds in the future.


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Medicare Reimbursement of LTCH Services
The following is a summary of significant regulatory changes to the Medicare prospective payment system for our critical illness recovery hospitals, which are certified by Medicare as LTCHs, which have affected our results of operations, as well as the policies and payment rates that may affect our future results of operations. Medicare payments to our critical illness recovery hospitals are made in accordance with the long-term care hospital prospective payment system (“LTCH-PPS”).
Fiscal Year 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. 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 August 10, 2022, CMS published the final rule updating 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). Certain errors in the final rule were corrected in documents published November 4, 2022, and December 13, 2022. The standard federal rate for fiscal year 2023 is $46,433, an increase from the standard federal rate applicable during fiscal year 2022 of $44,714. The update to the standard federal rate for fiscal year 2023 includes a market basket increase of 4.1%, less a productivity adjustment of 0.3%. The standard federal rate also includes an area wage budget neutrality factor of 1.0004304. As a result of the CARES Act, all LTCH cases are paid at the standard federal rate during the public health emergency. IfWhen the public health emergency ends during fiscal yearended on May 11, 2023, then CMS will returnreturned 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 is $38,518, an increase from the fixed-loss amount in the 2022 fiscal year of $33,015. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $38,859,$38,788, an increase from the fixed-loss amount in the 2022 fiscal year of $30,988.
Fiscal Year 2024. On August 1, 2023, CMS published a display copy of the final rule to update policies and payment rates for the LTCH-PPS for fiscal year 2024 (affecting discharges and cost reporting periods beginning on or after October 1, 2023 through September 30, 2024). The standard federal rate for fiscal year 2024 is $48,117, an increase from the standard federal rate applicable during fiscal year 2023 of $46,433. The update to the standard federal rate for fiscal year 2024 includes a market basket increase of 3.5%, less a productivity adjustment of 0.2%. The standard federal rate also includes an area wage budget neutrality factor of 1.0031599. The fixed-loss amount for high cost outlier cases paid under LTCH-PPS is $59,873, an increase from the fixed-loss amount in the 2023 fiscal year of $38,518. The fixed-loss amount for high cost outlier cases paid under the site-neutral payment rate is $42,750, an increase from the fixed-loss amount in the 2023 fiscal year of $38,788.
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.
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.
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Fiscal Year 2023. On August 1, 2022, CMS published the final rule updating 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 was set at $17,878, 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 included a market basket increase of 4.2%, less a productivity adjustment of 0.3%. CMS increased the outlier threshold amount for fiscal year 2023 to $12,526 from $9,491 established in the final rule for fiscal year 2022.
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Fiscal Year 2024. On August 2, 2023, CMS published the final rule to update policies and payment rates for the IRF-PPS for fiscal year 2024 (affecting discharges and cost reporting periods beginning on or after October 1, 2023 through September 30, 2024). The standard payment conversion factor for discharges for fiscal year 2024 was set at $18,541, an increase from the standard payment conversion factor applicable during fiscal year 2023 of $17,878. The update to the standard payment conversion factor for fiscal year 2024 included a market basket increase of 3.6%, less a productivity adjustment of 0.2%. CMS decreased the outlier threshold amount for fiscal year 2024 to $10,423 from $12,526 established in the final rule for fiscal year 2023.
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 were 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 revaluationdisplay copy 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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In the calendar year 2023 physician fee schedule proposed rule, CMS announced that it calculated the proposed payment rates forwithout the physician fee schedule as if the 3%2.5% payment increase into calendar year 20222023 rates from the Protecting Medicare and American FarmersConsolidated Appropriations Act of 2023, but with 1.25% payment increase to calendar year 2024 rates from Sequester Cuts Act was never applied. The statute stated that legislation. As a result of the 3%lower statutory payment increase for 2022 shall not be taken into account in determiningcalendar year 2024 and a negative 2.17% budget neutrality adjustment associated with changes to the payment rates for subsequent years. As a result,relative value units, physician fee schedule payments are expected to decrease in 2023, unless Congress provides additional funding for a payment increase as it has done the prior two years.2024. CMS stated in the proposed rule that it expects that its proposed policies for 20232024 would result in a 1%2% decrease in Medicare payments for the therapy specialty. The calendar year 2023 proposed ruleCMS also includes further development of MVPs.proposes changes to the quality payment program, including a transition from the Merit‑Based Incentive Payment System (“MIPS”) to the MIPS Value Pathways (“MVPs”). First, CMS proposedproposes revisions to the firstexisting set of seven12 MVPs that it previously adopted in the calendar year 2022 and 2023 final rule.rules. CMS would remove certain improvement activities from these seven MVPs and add other quality measures thatfor MVP participants in theseto choose from for data reporting. CMS also proposes to consolidate two of the existing MVPs could choose to report data on. In addition,into a single primary care MVP. Finally, CMS proposed to add five new MVPs. According to CMS, the proposed Rehabilitation Support of Musculoskeletal Care MVP will be most applicable to clinicians who specialize in rehabilitation support for musculoskeletal care, including physical therapists and occupational therapists. If finalized, these new MVPs would be available for voluntary reporting for the calendar year 20232024 performance period.
Modifiers to Identify Services of Physical Therapy Assistants or Occupational Therapy Assistants
InOur Annual Report on Form 10-K for the year ended December 31, 2022 contains a detailed discussion of Medicare physician fee schedule final rule for calendar year 2019, CMS established two new modifiers (CQ and CO) to identifyregulations concerning services furnished in whole or in partprovided by physical therapy assistants (“PTAs”) orand occupational therapy assistants (“OTAs”). These modifiers were mandated by the Bipartisan Budget Actin Part I — Business — Government Regulations and in Part II — Management’s Discussion and Analysis 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 durationFinancial Condition and Results 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 standardOperations — Regulatory Changes. There have been no significant updates 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 pays for physical therapy and occupational therapy services provided by PTAs and OTAs at 85% of the otherwise applicable Part B payment amount. CMS modified the de minimis standard in the calendar year 2022 final rule to 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.

these regulations subsequently.
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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 September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202220212022 2022202320222023
Critical illness recovery hospital data:Critical illness recovery hospital data:    Critical illness recovery hospital data:    
Number of consolidated hospitals—start of period(1)
Number of consolidated hospitals—start of period(1)
99 105 99 104 
Number of consolidated hospitals—start of period(1)
105 105 104 103 
Number of hospitals acquiredNumber of hospitals acquired— Number of hospitals acquired
Number of hospital start-upsNumber of hospital start-ups— — — Number of hospital start-ups— 
Number of hospitals closed/soldNumber of hospitals closed/sold— — — (2)Number of hospitals closed/sold(2)— (2)— 
Number of consolidated hospitals—end of period(1)
Number of consolidated hospitals—end of period(1)
100 105 100 105 
Number of consolidated hospitals—end of period(1)
105 108 105 108 
Available licensed beds(3)
Available licensed beds(3)
4,369 4,509 4,369 4,509 
Available licensed beds(3)
4,509 4,547 4,509 4,547 
Admissions(3)(4)
Admissions(3)(4)
9,250 9,056 28,135 27,319 
Admissions(3)(4)
8,806 8,925 18,263 18,363 
Patient days(3)(5)
Patient days(3)(5)
272,454 278,137 838,553 840,487 
Patient days(3)(5)
273,133 276,366 562,350 563,112 
Average length of stay (days)(3)(6)
Average length of stay (days)(3)(6)
30 31 30 31 
Average length of stay (days)(3)(6)
30 30 30 30 
Revenue per patient day(3)(7)
Revenue per patient day(3)(7)
$1,931 $1,878 $1,982 $1,981 
Revenue per patient day(3)(7)
$1,987 $2,076 $2,032 $2,067 
Occupancy rate(3)(8)
Occupancy rate(3)(8)
68 %67 %70 %68 %
Occupancy rate(3)(8)
67 %68 %69 %70 %
Percent patient days—Medicare(3)(9)
Percent patient days—Medicare(3)(9)
39 %40 %39 %39 %
Percent patient days—Medicare(3)(9)
41 %37 %39 %38 %
Rehabilitation hospital data:Rehabilitation hospital data:Rehabilitation hospital data:
Number of consolidated hospitals—start of period(1)
Number of consolidated hospitals—start of period(1)
20 20 19 20 
Number of consolidated hospitals—start of period(1)
20 20 20 20 
Number of hospitals acquiredNumber of hospitals acquired— — — Number of hospitals acquired— — — — 
Number of hospital start-upsNumber of hospital start-ups— — — — Number of hospital start-ups— — — — 
Number of hospitals closed/soldNumber of hospitals closed/sold— — — — Number of hospitals closed/sold— — — — 
Number of consolidated hospitals—end of period(1)
Number of consolidated hospitals—end of period(1)
20 20 20 20 
Number of consolidated hospitals—end of period(1)
20 20 20 20 
Number of unconsolidated hospitals managed—end of period(2)
Number of unconsolidated hospitals managed—end of period(2)
10 11 10 11 
Number of unconsolidated hospitals managed—end of period(2)
11 12 11 12 
Total number of hospitals (all)—end of periodTotal number of hospitals (all)—end of period30 31 30 31 Total number of hospitals (all)—end of period31 32 31 32 
Available licensed beds(3)
Available licensed beds(3)
1,361 1,391 1,361 1,391 
Available licensed beds(3)
1,391 1,443 1,391 1,443 
Admissions(3)(4)
Admissions(3)(4)
7,243 7,517 21,734 22,149 
Admissions(3)(4)
7,450 7,865 14,632 15,523 
Patient days(3)(5)
Patient days(3)(5)
102,953 109,076 310,340 321,690 
Patient days(3)(5)
108,812 109,680 212,614 218,047 
Average length of stay (days)(3)(6)
Average length of stay (days)(3)(6)
14 15 14 15 
Average length of stay (days)(3)(6)
15 14 15 14 
Revenue per patient day(3)(7)
Revenue per patient day(3)(7)
$1,881 $1,931 $1,861 $1,934 
Revenue per patient day(3)(7)
$1,928 $2,008 $1,935 $1,989 
Occupancy rate(3)(8)
Occupancy rate(3)(8)
82 %85 %84 %85 %
Occupancy rate(3)(8)
86 %84 %85 %85 %
Percent patient days—Medicare(3)(9)
Percent patient days—Medicare(3)(9)
50 %48 %50 %48 %
Percent patient days—Medicare(3)(9)
47 %48 %47 %49 %
Outpatient rehabilitation data:Outpatient rehabilitation data:  Outpatient rehabilitation data:  
Number of consolidated clinics—start of periodNumber of consolidated clinics—start of period1,528 1,599 1,503 1,572 Number of consolidated clinics—start of period1,584 1,632 1,572 1,622 
Number of clinics acquiredNumber of clinics acquired17 16 Number of clinics acquired10 13 
Number of clinic start-upsNumber of clinic start-ups15 37 34 Number of clinic start-ups13 25 21 
Number of clinics closed/soldNumber of clinics closed/sold(6)(5)(15)(13)Number of clinics closed/sold(6)(7)(8)(18)
Number of consolidated clinics—end of periodNumber of consolidated clinics—end of period1,542 1,609 1,542 1,609 Number of consolidated clinics—end of period1,599 1,638 1,599 1,638 
Number of unconsolidated clinics managed—end of periodNumber of unconsolidated clinics managed—end of period308 324 308 324 Number of unconsolidated clinics managed—end of period321 306 321 306 
Total number of clinics (all)—end of periodTotal number of clinics (all)—end of period1,850 1,933 1,850 1,933 Total number of clinics (all)—end of period1,920 1,944 1,920 1,944 
Number of visits(3)(10)
Number of visits(3)(10)
2,347,070 2,404,868 6,852,085 7,165,866 
Number of visits(3)(10)
2,450,912 2,720,490 4,760,998 5,357,260 
Revenue per visit(3)(11)
Revenue per visit(3)(11)
$102 $103 $103 $103 
Revenue per visit(3)(11)
$103 $100 $103 $100 
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Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202220212022 2022202320222023
Concentra data:Concentra data:Concentra data:
Number of consolidated centers—start of periodNumber of consolidated centers—start of period518 518 517 518 Number of consolidated centers—start of period518 539 518 540 
Number of centers acquiredNumber of centers acquired— — Number of centers acquired
Number of center start-upsNumber of center start-upsNumber of center start-ups— — — — 
Number of centers closed/soldNumber of centers closed/sold(1)— (3)(3)Number of centers closed/sold(2)— (3)(1)
Number of consolidated centers—end of periodNumber of consolidated centers—end of period519 519 519 519 Number of consolidated centers—end of period518 540 518 540 
Number of onsite clinics operated—end of periodNumber of onsite clinics operated—end of period135 147 135 147 Number of onsite clinics operated—end of period148 141 148 141 
Number of visits(3)(10)
Number of visits(3)(10)
3,223,631 3,273,031 9,049,283 9,604,441 
Number of visits(3)(10)
3,214,512 3,267,894 6,331,410 6,485,839 
Revenue per visit(3)(11)
Revenue per visit(3)(11)
$124 $128 $125 $127 
Revenue per visit(3)(11)
$127 $134 $126 $134 

(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. COVID-19 screening and testing services provided by our Concentra segment are not included in these figures.
(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.clinics or revenues generated from COVID-19 screening and testing services.
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Results of Operations
The following table outlines selected operating data as a percentage of revenue for the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
2021202220212022 2022202320222023
RevenueRevenue100.0 %100.0 %100.0 %100.0 %Revenue100.0 %100.0 %100.0 %100.0 %
Costs and expenses:Costs and expenses:Costs and expenses:
Cost of services, exclusive of depreciation and amortization(1)
Cost of services, exclusive of depreciation and amortization(1)
84.6 88.9 83.6 88.2 
Cost of services, exclusive of depreciation and amortization(1)
87.7 85.0 87.9 85.1 
General and administrativeGeneral and administrative2.5 2.5 2.3 2.4 General and administrative2.4 2.5 2.3 2.5 
Depreciation and amortizationDepreciation and amortization3.2 3.3 3.3 3.2 Depreciation and amortization3.3 3.0 3.2 3.1 
Total costs and expensesTotal costs and expenses90.3 94.7 89.2 93.8 Total costs and expenses93.4 90.5 93.4 90.7 
Other operating incomeOther operating income0.1 0.5 2.9 0.5 Other operating income1.0 — 0.5 — 
Income from operationsIncome from operations9.8 5.8 13.7 6.7 Income from operations7.6 9.5 7.1 9.3 
Equity in earnings of unconsolidated subsidiariesEquity in earnings of unconsolidated subsidiaries0.7 0.6 0.7 0.4 Equity in earnings of unconsolidated subsidiaries0.4 0.6 0.4 0.6 
Interest income— — 0.1 — 
Interest expenseInterest expense(2.2)(2.9)(2.2)(2.6)Interest expense(2.6)(2.9)(2.5)(2.9)
Income before income taxesIncome before income taxes8.3 3.5 12.3 4.5 Income before income taxes5.4 7.2 5.0 7.0 
Income tax expenseIncome tax expense1.8 1.1 3.0 1.1 Income tax expense1.2 1.7 1.2 1.7 
Net incomeNet income6.5 2.4 9.3 3.4 Net income4.2 5.5 3.8 5.3 
Net income attributable to non-controlling interestsNet income attributable to non-controlling interests1.5 0.7 1.7 0.6 Net income attributable to non-controlling interests0.7 0.8 0.5 0.8 
Net income attributable to Select Medical Holdings CorporationNet income attributable to Select Medical Holdings Corporation5.0 %1.7 %7.6 %2.8 %Net income attributable to Select Medical Holdings Corporation3.5 %4.7 %3.3 %4.5 %

(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 September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
20212022% Change20212022% Change 20222023% Change20222023% Change
(in thousands, except percentages) (in thousands, except percentages)
Revenue:Revenue:      Revenue:      
Critical illness recovery hospitalCritical illness recovery hospital$530,646 $524,584 (1.1)%$1,669,577 $1,672,247 0.2 %Critical illness recovery hospital$545,908 $575,091 5.3 %$1,147,663 $1,169,017 1.9 %
Rehabilitation hospitalRehabilitation hospital212,434 229,387 8.0 632,904 678,908 7.3 Rehabilitation hospital228,887 240,856 5.2 449,521 472,318 5.1 
Outpatient rehabilitationOutpatient rehabilitation274,540 284,993 3.8 806,910 844,191 4.6 Outpatient rehabilitation287,258 302,972 5.5 559,198 598,875 7.1 
ConcentraConcentra442,190 444,576 0.5 1,321,402 1,309,356 (0.9)Concentra441,357 467,079 5.8 864,780 923,377 6.8 
Other(1)
Other(1)
74,411 84,254 13.2 213,911 247,380 15.6 
Other(1)
81,331 88,530 8.9 163,126 175,921 7.8 
Total CompanyTotal Company$1,534,221 $1,567,794 2.2 %$4,644,704 $4,752,082 2.3 %Total Company$1,584,741 $1,674,528 5.7 %$3,184,288 $3,339,508 4.9 %
Income (loss) from operations:(2)
Income (loss) from operations:(2)
      
Income (loss) from operations:(2)
      
Critical illness recovery hospitalCritical illness recovery hospital$44,273 $(5,042)(111.4)%$204,463 $21,723 (89.4)%Critical illness recovery hospital$5,416 $51,610 852.9 %$26,765 $111,746 317.5 %
Rehabilitation hospitalRehabilitation hospital37,207 42,778 15.0 124,510 121,025 (2.8)Rehabilitation hospital42,670 47,802 12.0 78,247 88,130 12.6 
Outpatient rehabilitationOutpatient rehabilitation31,443 17,558 (44.2)88,869 61,596 (30.7)Outpatient rehabilitation25,471 24,071 (5.5)44,038 45,813 4.0 
ConcentraConcentra78,878 71,709 (9.1)255,754 215,172 (15.9)Concentra73,341 82,108 12.0 143,463 157,368 9.7 
Other(1)
Other(1)
(41,546)(35,536)N/M(37,361)(103,097)N/M
Other(1)
(25,931)(46,387)N/M(67,561)(92,396)N/M
Total CompanyTotal Company$150,255 $91,467 (39.1)%$636,235 $316,419 (50.3)%Total Company$120,967 $159,204 31.6 %$224,952 $310,661 38.1 %
Adjusted EBITDA:(2)
Adjusted EBITDA:(2)
      
Adjusted EBITDA:(2)
      
Critical illness recovery hospitalCritical illness recovery hospital$57,245 $11,013 (80.8)%$243,421 $66,999 (72.5)%Critical illness recovery hospital$20,019 $65,496 227.2 %$55,986 $142,269 154.1 %
Rehabilitation hospitalRehabilitation hospital44,076 49,772 12.9 145,378 141,996 (2.3)Rehabilitation hospital49,845 54,689 9.7 92,224 101,905 10.5 
Outpatient rehabilitationOutpatient rehabilitation38,762 25,715 (33.7)110,724 85,912 (22.4)Outpatient rehabilitation33,601 32,850 (2.2)60,197 63,049 4.7 
ConcentraConcentra99,832 90,025 (9.8)318,907 272,101 (14.7)Concentra92,607 100,391 8.4 182,076 194,139 6.6 
Other(1)
Other(1)
(31,338)(23,412)N/M(9,491)(69,054)N/M
Other(1)
(15,078)(33,957)N/M(45,642)(67,830)N/M
Total CompanyTotal Company$208,577 $153,113 (26.6)%$808,939 $497,954 (38.4)%Total Company$180,994 $219,469 21.3 %$344,841 $433,532 25.7 %
Adjusted EBITDA margins:(2)
Adjusted EBITDA margins:(2)
      
Adjusted EBITDA margins:(2)
      
Critical illness recovery hospitalCritical illness recovery hospital10.8 %2.1 % 14.6 %4.0 % Critical illness recovery hospital3.7 %11.4 % 4.9 %12.2 % 
Rehabilitation hospitalRehabilitation hospital20.7 21.7 23.0 20.9 Rehabilitation hospital21.8 22.7 20.5 21.6 
Outpatient rehabilitationOutpatient rehabilitation14.1 9.0  13.7 10.2  Outpatient rehabilitation11.7 10.8  10.8 10.5  
ConcentraConcentra22.6 20.2  24.1 20.8  Concentra21.0 21.5  21.1 21.0  
Other(1)
Other(1)
N/MN/M N/MN/M 
Other(1)
N/MN/M N/MN/M 
Total CompanyTotal Company13.6 %9.8 % 17.4 %10.5 % Total Company11.4 %13.1 % 10.8 %13.0 % 
Total assets:Total assets:      Total assets:      
Critical illness recovery hospitalCritical illness recovery hospital$2,181,405 $2,368,968  $2,181,405 $2,368,968  Critical illness recovery hospital$2,387,516 $2,492,370  $2,387,516 $2,492,370  
Rehabilitation hospitalRehabilitation hospital1,191,093 1,189,486 1,191,093 1,189,486 Rehabilitation hospital1,194,739 1,209,737 1,194,739 1,209,737 
Outpatient rehabilitationOutpatient rehabilitation1,339,452 1,377,010  1,339,452 1,377,010  Outpatient rehabilitation1,360,600 1,399,782  1,360,600 1,399,782  
ConcentraConcentra2,609,361 2,309,392  2,609,361 2,309,392  Concentra2,301,296 2,314,328  2,301,296 2,314,328  
Other(1)
Other(1)
578,162 310,120  578,162 310,120  
Other(1)
307,507 285,652  307,507 285,652  
Total CompanyTotal Company$7,899,473 $7,554,976  $7,899,473 $7,554,976  Total Company$7,551,658 $7,701,869  $7,551,658 $7,701,869  
Purchases of property and equipment:      
Purchases of property, equipment, and other assets:Purchases of property, equipment, and other assets:      
Critical illness recovery hospitalCritical illness recovery hospital$12,365 $21,534 $43,249 $60,631 Critical illness recovery hospital$19,528 $31,363 $39,097 $55,021 
Rehabilitation hospitalRehabilitation hospital4,366 392  8,288 11,487  Rehabilitation hospital4,821 1,903  11,095 10,485  
Outpatient rehabilitationOutpatient rehabilitation9,481 10,098  24,264 28,826  Outpatient rehabilitation9,314 10,476  18,728 20,408  
ConcentraConcentra11,353 9,074  31,624 28,030  Concentra8,716 15,846  18,956 30,246  
Other(1)
Other(1)
11,379 844  17,961 6,145  
Other(1)
3,953 (74) 5,301 2,239  
Total CompanyTotal Company$48,944 $41,942  $125,386 $135,119  Total Company$46,332 $59,514  $93,177 $118,399  

(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 September 30, 2022 and 2021, we recognized other operating income of $8.4 million and $1.7 million, respectively. During the nine months ended September 30, 2022 and 2021, we recognized other operating income of $23.6 million and $133.8 million, respectively. The impact of this income on the operating results of our segments is outlined within the tables presented under “Summary Financial Results” for the three and nine months ended September 30, 2022 and 2021.
N/M — Not meaningful.
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Three Months Ended SeptemberJune 30, 2022,2023, Compared to Three Months Ended SeptemberJune 30, 20212022
InFor the following,three months ended June 30, 2023, we discuss our resultshad revenue of operations related to revenue, operating expenses, other operating income, Adjusted EBITDA, depreciation$1,674.5 million and amortization, income from operations equity in earnings of unconsolidated subsidiaries, interest,$159.2 million, as compared to revenue of $1,584.7 million and income taxes, and net income attributable to non-controlling interests.
Please refer to “Effectsfrom operations of the COVID-19 Pandemic on our Results of Operations” above for further discussion.
Revenue
Our revenue increased 2.2% to $1,567.8$121.0 million for the three months ended SeptemberJune 30, 2022,2022. For the three months ended June 30, 2023, Adjusted EBITDA was $219.5 million, with an Adjusted EBITDA margin of 13.1%, as compared to $1,534.2Adjusted EBITDA of $181.0 million and an Adjusted EBITDA margin of 11.4% for the three months ended SeptemberJune 30, 2021.2022.
The most significant contributor to the improvement in our financial performance for the three months ended June 30, 2023, compared to the three months ended June 30, 2022, was a decrease in labor costs in our critical illness recovery hospital segment as the investments we made in the recruitment, hiring, and retention of full-time staff in 2022 resulted in a significant decrease in contract labor utilization. Additionally, reduced demand in the marketplace resulted in lower contract labor rates, which further contributed to the decrease in total contract labor costs. We believe the ratio of personnel expense to net revenue for the critical illness recovery hospital segment for the three months ended June 30, 2023, is indicative of a more stabilized labor environment. Other operating income during the three months ended June 30, 2022 included $15.1 million primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. There was no Provider Relief Fund related revenue recognized in other operating income during the three months ended June 30, 2023.
Revenue
Critical Illness Recovery Hospital Segment.    Revenue was $524.6increased 5.3% to $575.1 million for the three months ended SeptemberJune 30, 2022,2023, compared to $530.6$545.9 million for the three months ended SeptemberJune 30, 2021. The decline in revenue was caused by a decrease in our revenue per patient day, which was $1,878 for the three months ended September 30, 2022, compared to $1,931 for the three months ended September 30, 2021. The decline in revenue per patient day was due to a decline in patient acuity, as well as the reinstatement of the 2.0% cut to Medicare payments due to sequestration. Our patient days increased 2.1% to 278,137 days for the three months ended September 30, 2022, compared to 272,454 days for the three months ended September 30, 2021. We had 258,089 patient days during the three months ended September 30, 2019. Occupancy in our critical illness recovery hospitals was 67%, 68%, and 67% for the three months ended September 30, 2022, 2021, and 2019, respectively.
Rehabilitation Hospital Segment.    Revenue increased 8.0% to $229.4 million for the three months ended September 30, 2022, compared to $212.4 million for the three months ended September 30, 2021.2022. The increase in revenue was principally due to an increase in revenue per patient volume.day. Revenue per patient day increased 4.5% to $2,076 for the three months ended June 30, 2023, compared to $1,987 for the three months ended June 30, 2022. Our patient days increased 5.9%1.2% to 109,076276,366 days for the three months ended SeptemberJune 30, 2022,2023, compared to 102,953273,133 days for the three months ended SeptemberJune 30, 2021.2022. Occupancy in our critical illness recovery hospitals was 68% and 67% for the three months ended June 30, 2023 and 2022, respectively.
Rehabilitation Hospital Segment.    Revenue increased 5.2% to $240.9 million for the three months ended June 30, 2023, compared to $228.9 million for the three months ended June 30, 2022. The increase in revenue was principally due to an increase in revenue per patient day. Revenue per patient day increased 4.1% to $2,008 for the three months ended June 30, 2023, compared to $1,928 for the three months ended June 30, 2022. Our patient days increased 0.8% to 109,680 days for the three months ended June 30, 2023, compared to 108,812 days for the three months ended June 30, 2022. Occupancy in our rehabilitation hospitals was 85%, 82%,84% and 75%86% for the three months ended SeptemberJune 30, 2023 and 2022, 2021, and 2019, respectively. Revenue per patient day increased 2.7% to $1,931 for the three months ended September 30, 2022, compared to $1,881 for the three months ended September 30, 2021. We experienced an increase in our non-Medicare revenue per patient day during the three months ended September 30, 2022, compared to the three months ended September 30, 2021.
Outpatient Rehabilitation Segment.   Revenue increased 3.8%5.5% to $285.0$303.0 million for the three months ended SeptemberJune 30, 2022,2023, compared to $274.5$287.3 million for the three months ended SeptemberJune 30, 2021.2022. The increase in revenue was primarily attributable to patient visits, which increased 2.5%11.0% to 2,404,8682,720,490 visits for the three months ended SeptemberJune 30, 2022,2023, compared to 2,347,0702,450,912 visits for the three months ended SeptemberJune 30, 2021. The increase in visits resulted from the acquisition and development of clinics since September 30, 2021. Patient visits increased 9.1%2022. Our revenue per visit was $100 for the three months ended SeptemberJune 30, 2022, as2023, compared to the same period in September 30, 2019 (the comparable pre-COVID-19 pandemic period). Our revenue per visit was $103 for the three months ended SeptemberJune 30, 2022, compared2022. The decrease in revenue per visit was primarily attributable to $102 fora decrease in Medicare reimbursement, including the three months ended September 30, 2021.impact of sequestration as discussed above under “Regulatory Changes”, changes in payor mix, and an increase in variable discounts.
Concentra Segment.    Revenue increased 5.8% to $444.6$467.1 million for the three months ended SeptemberJune 30, 2022,2023, compared to $442.2$441.4 million for the three months ended SeptemberJune 30, 2021. During the three months ended September 30, 2022, our2022. The increase in revenue was primarily due to an increase in revenue per visit. Our revenue per visit increased 5.5% to $128, compared to $124$134 for the three months ended SeptemberJune 30, 2021. We experienced a higher revenue per visit due2023, compared to increases in$127 for the reimbursement rates payable pursuant to certain state fee schedules for workers’ compensation visits, as well as increases in our employer services rates.three months ended June 30, 2022. Our patient visits increased 1.5%1.7% to 3,273,0313,267,894 visits for the three months ended SeptemberJune 30, 2022,2023, compared to 3,223,6313,214,512 visits for the three months ended SeptemberJune 30, 2021. Patient visits increased 3.9%2022. COVID-19 screening and testing services did not contribute to the Concentra segment’s revenue for the three months ended SeptemberJune 30, 2022, as2023, compared to the same period in September 30, 2019 (the comparable pre-COVID-19 pandemic period). Our revenue was adversely affected by the decline in revenue generated from COVID-19 screening and testing services. These services contributed $2.5$7.7 million of revenue from these services during the three months ended SeptemberJune 30, 2022, compared to $20.6 million during the three months ended September 30, 2021.2022.






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Operating Expenses
Our operating expenses consist principally of cost of services and general and administrative expenses. Our operating expenses were $1,433.3$1,466.1 million, or 91.4%87.5% of revenue, for the three months ended SeptemberJune 30, 2022,2023, compared to $1,335.6$1,427.8 million, or 87.1%90.1% of revenue, for the three months ended SeptemberJune 30, 2021.2022. Our cost of services, a major component of which is labor expense, was $1,393.8$1,423.6 million, or 88.9%85.0% of revenue, for the three months ended SeptemberJune 30, 2022,2023, compared to $1,297.7$1,390.6 million, or 84.6%87.7% of revenue, for the three months ended SeptemberJune 30, 2021. 2022. The increasedecrease in our operating expenses relative to our revenue was principally attributable to the incurrence of additional operating expensesdecreased labor costs within our critical illness recovery hospital and outpatient rehabilitation segments,segment, as explained further within the “Adjusted EBITDA” discussion. General and administrative expenses were $39.5$42.5 million, or 2.5% of revenue, for the three months ended SeptemberJune 30, 2022,2023, compared to $37.9$37.3 million, or 2.5%2.4% of revenue, for the three months ended SeptemberJune 30, 2021.2022.
Other Operating Income
For the three months ended SeptemberJune 30, 2022,2023, we had other operating income of $8.4$0.7 million, compared to $1.7$15.1 million for the three months ended SeptemberJune 30, 2021.2022. The other operating income for the three months ended June 30, 2022 is included within the operating results of our other activities, and is primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19.
For the three months ended September 30, 2022, other operating income of $8.1 million, $0.2 million, and $0.1 million is included in the operating results of our other activities, rehabilitation hospital segment, and critical illness recovery hospital segment, respectively. For the three months ended September 30, 2021, other operating income of $1.6 million and $0.1 million is included within the operating results of our Concentra segment and other activities, respectively.
Adjusted EBITDA
Critical Illness Recovery Hospital Segment.    Adjusted EBITDA was $11.0increased 227.2% to $65.5 million for the three months ended SeptemberJune 30, 2022,2023, compared to $57.2$20.0 million for the three months ended SeptemberJune 30, 2021.2022. Our Adjusted EBITDA margin for the critical illness recovery hospital segment was 2.1%11.4% for the three months ended SeptemberJune 30, 2023, compared to 3.7% for the three months ended June 30, 2022. The increases in our Adjusted EBITDA and Adjusted EBITDA margin during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, were principally due to an increase in net revenue as well as a decrease in labor costs. The decrease in labor costs resulted from our efforts in 2022 to hire additional full-time nursing staff, improve retention among our employees, and decrease our reliance on contract labor, as well as the lower contract labor rates due to reduced demand in the marketplace. Our total contract labor costs decreased by approximately 62% during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, which was driven by an approximate 44% decrease in the utilization of contract registered nurses and an approximate 31% decrease in the rate per hour for contract registered nurses.
Rehabilitation Hospital Segment.    Adjusted EBITDA increased 9.7% to $54.7 million for the three months ended June 30, 2023, compared to $49.8 million for the three months ended June 30, 2022. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 22.7% for the three months ended June 30, 2023, compared to 21.8% for the three months ended June 30, 2022. The increases in Adjusted EBITDA and Adjusted EBITDA margin were primarily driven by an increase in revenue.
Outpatient Rehabilitation Segment.    Adjusted EBITDA was $32.9 million for the three months ended June 30, 2023, compared to $33.6 million for the three months ended June 30, 2022. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.8% for the three months ended SeptemberJune 30, 2021.2023, compared to 11.7% for the three months ended June 30, 2022. The declinesdecrease in our Adjusted EBITDA and Adjusted EBITDA margin were primarily due to an increase in labor costs and a decrease in revenue per visit during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.
Concentra Segment.    Adjusted EBITDA increased 8.4% to $100.4 million for the three months ended June 30, 2023, compared to $92.6 million for the three months ended June 30, 2022. Our Adjusted EBITDA margin for the Concentra segment was 21.5% for the three months ended June 30, 2023, compared to 21.0% for the three months ended June 30, 2022. The increases in Adjusted EBITDA and Adjusted EBITDA margin during the three months ended SeptemberJune 30, 2022,2023, as compared to the three months ended SeptemberJune 30, 2021,2022, were principallyprimarily due to the incurrence of additional labor costs from our efforts to hire additional full-time nursing staff and improve retention among our employees, which led to increases in our sign-on and retention bonuses as well as education and orientation costs. We hired more full-time nursing staff in an effort to reduce our contract labor costs, which led to an increase in administrative nursing hours during the onboarding process. During the onboarding process, we continued to use contract labor to provide services to our patients. Our contracted registered nurses represented approximately 21.9% of our total registered nursing hours for the three months ended September 30, 2022, a decrease from approximately 29.6% during the three months ended September 30, 2021. The decline in our revenue per patient day for the three months ended September 30, 2022, as discussed above under “revenue.Revenue,” also contributed to the declines in Adjusted EBITDA and Adjusted EBITDA margin.
Rehabilitation Hospital Segment.    Adjusted EBITDA increased 12.9% to $49.8 million for the three months ended September 30, 2022, compared to $44.1 million for the three months ended September 30, 2021. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 21.7% for the three months ended September 30, 2022, compared to 20.7% for the three months ended September 30, 2021. The increases in Adjusted EBITDA and Adjusted EBITDA margin were driven by increases in our revenue per patient day and patient volume, as described further above under “Revenue.”
Outpatient Rehabilitation Segment.    Adjusted EBITDA was $25.7 million for the three months ended September 30, 2022, compared to $38.8 million for the three months ended September 30, 2021. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 9.0% for the three months ended September 30, 2022, compared to 14.1% for the three months ended September 30, 2021. Our Adjusted EBITDA and Adjusted EBITDA margin were affected by increases in both labor costs and other operating expenses for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021.
Concentra Segment.    Adjusted EBITDA was $90.0 million for the three months ended September 30, 2022, compared to $99.8 million for the three months ended September 30, 2021. Our Adjusted EBITDA margin for the Concentra segment was 20.2% for the three months ended September 30, 2022, compared to 22.6% for the three months ended September 30, 2021. The declines in Adjusted EBITDA and Adjusted EBITDA margin during the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, were primarily caused by a decline in revenue generated from COVID-19 screening and testing services, as discussed above under “Revenue.” Our Concentra segment also recognized $1.6 million of Provider Relief Funds during the three months ended September 30, 2021, as described further above under “Other Operating Income.”
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Depreciation and Amortization
Depreciation and amortization expense was $51.5$49.9 million for the three months ended SeptemberJune 30, 2022,2023, compared to $50.1$51.1 million for the three months ended SeptemberJune 30, 2021.2022.



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Income from Operations
For the three months ended SeptemberJune 30, 2022,2023, we had income from operations of $91.5$159.2 million, compared to $150.3$121.0 million for the three months ended SeptemberJune 30, 2021.2022. The increasedecline in labor costs and other operating expenses experienced within our critical illness recovery hospital and outpatient rehabilitation segments weresegment was the primary cause of the decreaseincrease in income from operations, as discussed above under “Adjusted EBITDA.” Additionally,Other operating income during the declinethree months ended June 30, 2022 included $15.1 million primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. There was no Provider Relief Fund related revenue recognized in revenue per patient day for our critical illness recovery hospital segment, as discussed above under “Revenue,” contributed to this decline.other operating income during the three months ended June 30, 2023.
Equity in Earnings of Unconsolidated Subsidiaries
For the three months ended SeptemberJune 30, 2022,2023, we had equity in earnings of unconsolidated subsidiaries of $8.1$10.5 million, compared to $11.5$6.2 million for the three months ended SeptemberJune 30, 2021.2022. The increase in equity in earnings is principally due to the improved operating performance of theour rehabilitation businesses in which we are a minority owner declined during the three months ended September 30, 2022.owner.
Interest
Our term loan is subject to an interest rate cap, which limits the 1-month LIBORvariable interest rate to 1.0% on $2.0 billion of principal outstanding under the term loan. TThe 1-month LIBORhe Adjusted Term SOFR rate was 3.14%5.20% at SeptemberJune 30, 2022,2023, compared to 0.08%1.79% at SeptemberJune 30, 2021. Accordingly, t2022. he interest rate cap mitigated our exposure to increases in 1-month LIBOR in excess of 1.0% during the three months ended September 30, 2022. Interest expense was $45.2$49.0 million for the three months ended SeptemberJune 30, 2022,2023, compared to $33.8$41.1 million for the three months ended SeptemberJune 30, 2021.2022. The increase in interest expense was caused by the borrowings we made under our revolving facility during the three months ended September 30, 2022, as well an increase in the 1-month LIBORborrowings made under the revolving facility, as well as an increase in the variable interest rate as described further above.to the extent not mitigated by the interest rate cap.
Income Taxes
We recorded income tax expense of $16.2$28.8 million for the three months ended SeptemberJune 30, 2023, which represented an effective tax rate of 23.9%. We recorded income tax expense of $19.8 million for the three months ended June 30, 2022, which represented an effective tax rate of 29.8%23.0%. We recordedOur income tax expense of $27.7 million foris computed based on annual estimates which we allocate throughout the three months ended September 30, 2021, which represented anyear based on our income. This intra-period tax allocation may cause our effective tax rate to reflect variances when compared to the prior year as estimates of 21.6%. Forour annual income and the three months ended September 30, 2022, the higher effective tax rate resulted primarily from the effectcomponents of a change in Pennsylvania’s corporateour income tax rate on our net deferred tax asset. This legislation was enacted duringexpense change throughout the three months ended September 30, 2022.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests was $11.0 million for the three months ended September 30, 2022, compared to $23.3 million for the three months ended September 30, 2021. The reduction in net income attributable to non-controlling interests was principally due to a change in our ownership interest of Concentra Group Holdings Parent. Since September 30, 2021, we have acquired substantially all of the outstanding membership interests of Concentra Group Holdings Parent.year.
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NineSix Months Ended SeptemberJune 30, 2023, Compared to Six Months Ended June 30, 2022
For the six months ended June 30, 2023, we had revenue of $3,339.5 million and income from operations of $310.7 million, respectively, as compared to revenue of $3,184.3 million and income from operations of $225.0 million for the six months ended June 30, 2022. For the six months ended June 30, 2023, Adjusted EBITDA was $433.5 million, with an Adjusted EBITDA margin of 13.0%, as compared to Adjusted EBITDA of $344.8 million and an Adjusted EBITDA margin of 10.8% for the six months ended June 30, 2022, Comparedrespectively.
The most significant contributor to Nine Months Ended Septemberthe improvement in our financial performance for the six months ended June 30, 2021
In2023, compared to the following,six months ended June 30, 2022, was a decrease in labor costs in our critical illness recovery hospital segment as the investments we discuss our resultsmade in the recruitment, hiring, and retention of operationsfull-time staff in 2022 resulted in a significant decrease in contract labor utilization. Additionally, reduced demand in the marketplace resulted in lower contract labor rates, which further contributed to the decrease in total contract labor costs. We believe the ratio of personnel expense to net revenue for the critical illness recovery hospital segment for the six months ended June 30, 2023, is indicative of a more stabilized labor environment. Other operating income during the six months ended June 30, 2022 included $15.1 million primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. There was no Provider Relief Fund related revenue operating expenses,recognized in 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 ofduring the COVID-19 Pandemic on our Results of Operations” above for further discussion.
Revenue
Our revenue increased 2.3% to $4,752.1 million for the ninesix months ended SeptemberJune 30, 2022, compared to $4,644.7 million for the nine months ended September 30, 2021.2023.
Revenue
Critical Illness Recovery Hospital Segment.   Revenue increased 1.9% to $1,672.2$1,169.0 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $1,669.6$1,147.7 million for the ninesix months ended SeptemberJune 30, 2021. Our patient days increased to 840,487 for the nine months ended September 30, 2022, compared to 838,553 days for the nine months ended September 30, 2021. Occupancy in our critical illness recovery hospitals was 68%, 70%, and 69% for the nine months ended September 30, 2022, 2021, and 2019, respectively.2022. Revenue per patient day was $1,981increased 1.7% to $2,067 for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $1,982$2,032 for the ninesix months ended SeptemberJune 30, 2021. Our Medicare2022. The increase in revenue per patient day decreased during the nine months ended September 30, 2022, due to a decline in patient acuity, as well asis inclusive of the reinstatement of the 2.0% cut to Medicare payments due to sequestration. Our patient days were 563,112 for the six months ended June 30, 2023, compared to 562,350 days for the six months ended June 30, 2022. Occupancy in our critical illness recovery hospitals was 70% and 69% for the six months ended June 30, 2023 and 2022, respectively.
Rehabilitation Hospital Segment.   Revenue increased 7.3%5.1% to $678.9$472.3 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $632.9$449.5 million for the ninesix months ended SeptemberJune 30, 2021. The increase in revenue was principally due to an increase in revenue per patient day. Our revenue2022. Revenue per patient day increased 3.9%2.8% to $1,934$1,989 for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $1,861$1,935 for the ninesix months ended SeptemberJune 30, 2021. We experienced increases in both our Medicare and non-Medicare revenue per patient day during the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.2022. Our patient days increased 3.7%2.6% to 321,690218,047 days for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 310,340212,614 days for the ninesix months ended SeptemberJune 30, 2021.2022. Occupancy in our rehabilitation hospitals was 85%, 84%, and 75% for both the ninesix months ended SeptemberJune 30, 2022, 2021,2023 and 2019, respectively.2022.
Outpatient Rehabilitation Segment.   Revenue increased 4.6%7.1% to $844.2$598.9 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $806.9$559.2 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increase in revenue was primarily attributable to patient visits, which increased 4.6%12.5% to 7,165,8665,357,260 visits for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 6,852,0854,760,998 visits for the ninesix months ended SeptemberJune 30, 2021. The increase in visits resulted from the acquisition and development of clinics since September 30, 2021, as well as improvement in volume in our clinics which operated during both the nine months ended September 30, 2022 and 2021. Patient visits increased 10.9% for the nine months ended September 30, 2022, as compared to the same period in September 30, 2019 (the comparable pre-COVID-19 pandemic period).2022. Our revenue per visit wasdecreased to $100 for the six months ended June 30, 2023, compared to $103 for both the ninesix months ended SeptemberJune 30, 2022, primarily due to a decrease in Medicare reimbursement, including the impact of sequestration, changes in payor mix, and 2021.an increase in variable discounts.
Concentra Segment.   Revenue was $1,309.4increased 6.8% to $923.4 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $1,321.4$864.8 million for the ninesix months ended SeptemberJune 30, 2021.2022. The decrease is attributable to a decline in revenue generated from COVID-19 screening and testing services. These services contributed $19.3 million of revenue during the nine months ended September 30, 2022, compared to $127.2 million during the nine months ended September 30, 2021. The declineincrease in revenue was partially offset bydue to increases in both revenue per visit and patient visits. Our revenue per visit increased 6.3% to $127$134 for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $125$126 for the ninesix months ended SeptemberJune 30, 2021. We experienced a higher revenue per visit due to increases in the reimbursement rates payable pursuant to certain state fee schedules for workers’ compensation visits, as well as increases in our employer services rates.2022. Our patient visits increased 6.1%2.4% to 9,604,4416,485,839 for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 9,049,2836,331,410 visits for the ninesix months ended SeptemberJune 30, 2021. Patient visits increased 4.8%2022. COVID-19 screening and testing services did not contribute to the Concentra segment’s revenue for the ninesix months ended SeptemberJune 30, 2022, as2023, compared to $16.7 million of revenue from these services during the same period in Septembersix months ended June 30, 2019 (the comparable pre-COVID-19 pandemic period).2022.





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Operating Expenses
Our operating expenses consist principally of cost of services and general and administrative expenses. Our operating expenses were $4,305.6$2,927.2 million, or 90.6%87.6% of revenue, for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $3,991.6$2,872.3 million, or 85.9%90.2% of revenue, for the ninesix months ended SeptemberJune 30, 2021.2022. Our cost of services, a major component of which is labor expense, was $4,191.4$2,842.4 million, or 88.2%85.1% of revenue, for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $3,882.6$2,797.6 million, or 83.6%87.9% of revenue, for the ninesix months ended SeptemberJune 30, 2021.2022. The increasedecrease in our operating expenses relative to our revenue was principally attributable to the incurrence of additional operating expensesdecreased labor costs within our critical illness recovery hospital rehabilitation hospitals, and outpatient rehabilitation segments,segment, as explained further within the “Adjusted EBITDA” discussion. General and administrative expenses were $114.3$84.8 million, or 2.4%2.5% of revenue, for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $109.0$74.8 million, or 2.3% of revenue, for the ninesix months ended SeptemberJune 30, 2021.2022.
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Other Operating Income
For the six nine months ended SeptemberJune 30, 2022,2023, we had other operating income of $23.6$0.7 million, compared to $133.8$15.1 million for the ninesix months ended SeptemberJune 30, 2021.2022. The other operating income recognizedfor the six months ended June 30, 2022 is included within the operating results of our other activities, and is primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. Additionally, during the nine months ended September 30, 2021, our critical illness recovery hospital segment recognized $17.9 million of other operating income related to the outcome of litigation with CMS.
For the nine months ended September 30, 2022, other operating income of $23.2 million, $0.2 million, and $0.1 million is included in the operating results of our other activities, rehabilitation hospital segment, and critical illness recovery hospital segment, respectively. For the nine months ended September 30, 2021, other operating income of $82.0 million, $34.0 million, and $17.9 million is included in the operating results of our other activities, Concentra segment, and critical illness recovery hospital segment, respectively.
Adjusted EBITDA
Critical Illness Recovery Hospital Segment.  Adjusted EBITDA was $67.0increased 154.1% to $142.3 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $243.4$56.0 million for the ninesix months ended SeptemberJune 30, 2021.2022. Our Adjusted EBITDA margin for the critical illness recovery hospital segment was 4.0%12.2% for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 14.6%4.9% for the ninesix months ended SeptemberJune 30, 2021.2022. The declinesincreases in our Adjusted EBITDA and Adjusted EBITDA margin during the ninesix months ended SeptemberJune 30, 2022,2023, as compared to the ninesix months ended SeptemberJune 30, 2021,2022, were principally due to the incurrence of additionallower labor costs as well as an increase in net revenue. The decrease in labor costs resulted from our efforts in 2022 to hire additional full-time nursing staff, and improve retention among our employees, which led to increases inand decrease our sign-on and retention bonusesreliance on contract labor, as well as education and orientation costs. We hired more full-time nursing staffthe lower contract labor rates due to reduced demand in an effort to reduce ourthe marketplace. Our total contract labor costs which led to an increase in administrative nursing hours during the onboarding process. The increased contract labor costs are due to both increased rates and higher utilization. Our contract labor costs for registered nurses weredecreased by approximately 8.3% higher71% during the ninesix months ended SeptemberJune 30, 20222023, as compared to the ninesix months ended September 30, 2021. For the nine months ended September 30, 2022, our contracted registered nurses represented approximately 30.9% of our total registered nursing hours, compared to approximately 30.0% for the nine months ended September 30, 2021. Contract registered nursing hours as a percentage of our total registered nursing hours were 21.9%, 32.9%, 37.5%, and 37.5% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022,which was driven by an approximate 49% decrease in the utilization of contract registered nurses and December 31, 2021, respectively. Our critical illness recovery hospitals segment also recognized $17.9 million of other operating income related toan approximate 38% decrease in the outcome of litigation with CMS during the nine months ended September 30, 2021.rate per hour for contract registered nurses.
Rehabilitation Hospital Segment.   Adjusted EBITDA was $142.0increased 10.5% to $101.9 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $145.4$92.2 million for the ninesix months ended SeptemberJune 30, 2021.2022. Our Adjusted EBITDA margin for the rehabilitation hospital segment was 20.9%21.6% for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 23.0%20.5% for the ninesix months ended SeptemberJune 30, 2021. 2022. The declinesincrease in Adjusted EBITDA and Adjusted EBITDA margin duringfor the ninesix months ended SeptemberJune 30, 2022, 2023, as compared to the ninesix months ended SeptemberJune 30, 2021, were2022, was primarily attributable to the incurrence of additional labor costs. Constrained staffing due to a shortage of healthcare workers has led to increasesan increase in incentive and retention pay for our employees and greater dependence on higher-cost contract clinical workers. The demand for healthcare professionals has caused the cost of contract clinical labor to rise significantly during the nine months ended September 30, 2022.revenue.


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Outpatient Rehabilitation Segment.   Adjusted EBITDA was $85.9increased 4.7% to $63.0 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $110.7$60.2 million for the ninesix months ended SeptemberJune 30, 2021.2022. Our Adjusted EBITDA margin for the outpatient rehabilitation segment was 10.2%10.5% for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 13.7%10.8% for the ninesix months ended SeptemberJune 30, 2021. Our2022. The increase in our Adjusted EBITDA and Adjusted EBITDA margin were affectedwas primarily due to an increase in patient visits, partially offset by increases in both labor costs and other operating expensesa decrease in revenue per visit for the ninesix months ended SeptemberJune 30, 2022,2023, as compared to the ninesix months ended SeptemberJune 30, 2021.2022.
Concentra Segment.   Adjusted EBITDA was $272.1increased 6.6% to $194.1 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $318.9$182.1 million for the ninesix months ended SeptemberJune 30, 2021.2022. Our Adjusted EBITDA margin for the Concentra segment was 20.8%21.0% for the ninesix months ended SeptemberJune 30, 2022,2023, compared to 24.1%21.1% for the ninesix months ended SeptemberJune 30, 2021.2022. The declinesincrease in Adjusted EBITDA and Adjusted EBITDA margin duringwas primarily due to an increase in revenue, partially offset by increases in labor costs for the ninesix months ended SeptemberJune 30, 2022,2023, as compared to the ninesix months ended SeptemberJune 30, 2021, were primarily caused by a decline in revenue generated from COVID-19 screening and testing services, as discussed above under “Revenue.” Our Concentra segment also recognized $34.0 million of Provider Relief Funds during the nine months ended September 30, 2021, as described further above under “Other Operating Income.”2022.
Depreciation and Amortization
Depreciation and amortization expense was $153.6$102.4 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $150.7$102.1 million for the ninesix months ended SeptemberJune 30, 2021.2022.
Income from Operations
For the ninesix months ended SeptemberJune 30, 2022,2023, we had income from operations of $316.4$310.7 million, compared to $636.2$225.0 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increasedecline in labor costs and other operating expenses experienced within our critical illness recovery hospital rehabilitation hospital, and outpatient rehabilitation segments weresegment was the primary cause of the decreaseincrease in income from operations, as discussed above under “Adjusted EBITDA.” Additionally, weOther operating income during the six months ended June 30, 2022 included $15.1 million primarily related to the recognition of payments received under the Provider Relief Fund for health care related expenses and lost revenues attributable to COVID-19. There was no Provider Relief Fund related revenue recognized in other operating income of $23.6 million during thenine six months ended SeptemberJune 30, 2022, compared to $133.8 million during the nine months ended September 30, 2021, as described further under “Other Operating Income.”2023.
Equity in Earnings of Unconsolidated Subsidiaries
For the ninesix months ended SeptemberJune 30, 2022,2023, we had equity in earnings of unconsolidated subsidiaries of $19.6$19.1 million, compared to $33.2$11.6 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increase in equity in earnings is principally due to the improved operating performance of theour rehabilitation businesses in which we are a minority owner declined during the nine months ended September 30, 2022.owner.
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Interest
Our term loan is subject to an interest rate cap, which limits the 1-month LIBORvariable interest rate to 1.0% on $2.0 billion of principal outstanding under the term loan. The 1-month LIBORAdjusted Term SOFR rate was 3.14%5.20% at SeptemberJune 30, 2022,2023, compared to 0.08%1.79% at September 30, 2021. Accordingly, the interest rate cap mitigated our exposure to increases in 1-month LIBOR in excess of 1.0% during the nine months ended SeptemberJune 30, 2022. Interest expense was $121.8$97.6 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $102.1$76.6 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increase in interest expense was caused by the borrowings we made under our revolving facility during the nine months ended September 30, 2022, as well an increase in the 1-month LIBORborrowings made under the revolving facility, as well as an increase in the variable interest rate as described further above.
For the nine months ended September 30, 2021, we recognized interest income of $4.7 million. The interest income was related to the outcome of litigation with CMS.extent not mitigated by the interest rate cap.
Income Taxes
We recorded income tax expense of $54.0$55.0 million for the ninesix months ended SeptemberJune 30, 2023, which represented an effective tax rate of 23.7%. We recorded income tax expense of $37.8 million for the six months ended June 30, 2022, which represented an effective tax rate of 25.2%23.6%. We recorded income tax expense of $138.4 million for the nine months ended September 30, 2021, which represented an effective tax rate of 24.2%. For the nine months ended September 30, 2022, the higher effective tax rate resulted primarily from the effect of a change in Pennsylvania’s corporate income tax rate on our net deferred tax asset and a greater effect of nondeductible expenses on our income before income taxes.



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Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests was $28.8 million for the nine months ended September 30, 2022, compared to $81.3 million for the nine months ended September 30, 2021. The reduction in net income attributable to non-controlling interests was principally due to a change in our ownership interest of Concentra Group Holdings Parent. Since September 30, 2021, we have acquired substantially all of the outstanding membership interests of Concentra Group Holdings Parent. The reduction in net income attributable to non-controlling interests was also due to a decline in the net income of our less than wholly owned subsidiaries. Many of these subsidiaries were impacted by increases in labor costs during the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021.
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Liquidity and Capital Resources
Cash Flows for the NineSix Months Ended SeptemberJune 30, 20222023 and NineSix Months Ended SeptemberJune 30, 20212022
In the following, we discuss cash flows from operating activities, investing activities, and financing activities.
Nine Months Ended September 30, Six Months Ended June 30,
20212022 20222023
(in thousands) (in thousands)
Cash flows provided by operating activitiesCash flows provided by operating activities$461,980 $272,281 Cash flows provided by operating activities$178,018 $286,278 
Cash flows used in investing activitiesCash flows used in investing activities(157,326)(169,105)Cash flows used in investing activities(114,094)(135,875)
Cash flows used in financing activitiesCash flows used in financing activities(133,732)(69,263)Cash flows used in financing activities(43,565)(147,142)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents170,922 33,913 Net increase in cash and cash equivalents20,359 3,261 
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period577,061 74,310 Cash and cash equivalents at beginning of period74,310 97,906 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$747,983 $108,223 Cash and cash equivalents at end of period$94,669 $101,167 
Operating activities provided $272.3$286.3 million of cash flows for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $462.0$178.0 million of cash flows for the ninesix months ended SeptemberJune 30, 2021.2022. The decrease in cash flows from operating activities was primarilyduring the six months ended June 30, 2022 included the repayment of $77.3 million of Medicare advance payments. The remaining change in cash flows provided by operating activities year over year is principally due to a reductionan increase in our operatingnet income.
Our days sales outstanding was 52 days at June 30, 2023, compared to 55 days at December 31, 2022. Our days sales outstanding was 53 days at SeptemberJune 30, 2022, compared to 52 days at December 31, 2021. Our days sales outstanding was 54 days at September 30, 2021, compared to 56 days at December 31, 2020. Our days sales outstanding will fluctuate based upon variability in our collection cycles and patient volumes.
Investing activities used $169.1$135.9 million of cash flows for the ninesix months ended SeptemberJune 30, 2023. The principal uses of cash were $118.4 million for purchases of property, equipment, and other assets, and $17.5 million for investments in and acquisitions of businesses. Investing activities used $114.1 million of cash flows for the six months ended June 30, 2022. The principal uses of cash were $135.1$93.2 million for purchases of property and equipment and $39.4$26.2 million for investments in and acquisitions of businesses. The cash outflows were offset in part by proceeds received from the sale of assets of $5.4 million. Investing
Financing activities used $157.3$147.1 million of cash flows for the ninesix months ended SeptemberJune 30, 2021.2023. The principal uses of cash were $125.4net repayments under our revolving facility of $100.0 million, $31.8 million of dividend payments to common stockholders, and $24.1 million for distributions to and purchases of property and equipment and $43.2 million for investments in and acquisitions of businesses. The cash outflows were offset in part by proceeds received from the sale of assets of $11.3 million.
non-controlling interests. Financing activities used $69.3$43.6 million of cash flows for the ninesix months ended SeptemberJune 30, 2022. The principal uses of cash were $193.6$178.6 million for repurchases of common stock, $48.7$32.8 million of dividend payments to common stockholders and $40.7$18.7 million for distributions to and purchases of non-controlling interests. The principal source of cash outflows were offset in part bywas net borrowings under our revolving facility of $220.0$190.0 million. Financing activities used $133.7 million of cash flows for the nine months ended September 30, 2021. The principal uses of cash were $66.1 million for repurchases of common stock, $50.4 million for distributions to and purchases of non-controlling interests and $33.8 million of dividend payments to common stockholders.


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Capital Resources
Working capital.  We had net working capital of $20.5$116.3 million at SeptemberJune 30, 2022,2023, compared to a net working capital deficit of $133.6$116.2 million at December 31, 2021. The reduction of the working capital deficit was primarily due to an increase in our cash and cash equivalents and a reduction in our liability related to the payments we received under the Accelerated and Advance Payment Program.2022.
Credit facilities. On May 31, 2023, Select entered into Amendment No. 7 to the Select credit agreement. Amendment No. 7 replaced the interest rate based on LIBOR and LIBOR-based mechanics applicable to borrowings under the Select credit agreement with an interest rate based on Adjusted Term SOFR (as defined in the credit agreement). The Adjusted Term SOFR Rate includes a credit spread adjustment of 0.10%.
On July 31, 2023, the Company entered into Amendment No. 8 to the Select credit agreement. Amendment No. 8 provides for a new tranche of refinancing term loan in an aggregate principal amount of $2,103.0 million to replace the existing term loans and a $710.0 million new revolving credit facility to replace the existing revolving credit facility. The refinancing term loan and the extended revolving credit facility will mature on March 6, 2027, with an early springing maturity 90 days prior to the senior notes maturity, triggered if more than $300.0 million of senior notes remain outstanding on May 15, 2026. The refinancing term loan has an interest rate of Term SOFR (without the 0.10% credit spread adjustment) plus 3.00% and the refinancing revolving credit facility has an interest rate of Adjusted Term SOFR plus 2.50%, in each case, subject to a leverage-based pricing grid.
At SeptemberJune 30, 2022,2023, 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 $10.2$7.1 million) and borrowings of $380.0$345.0 million under its revolving facility. At SeptemberJune 30, 2022,2023, Select had $213.5$248.8 million of availability under its revolving facility after giving effect to $56.5$56.2 million of outstanding letters of credit.
Stock Repurchase Program.  Holdings’ boardBoard of directorsDirectors 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 boardBoard of directors.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. DuringHoldings did not repurchase shares under the nineprogram during the six months ended SeptemberJune 30, 2022, Holdings repurchased 7,883,195 shares at a cost of approximately $185.1 million, or $23.48 per share, which includes transaction costs.2023. Since the inception of the program through SeptemberJune 30, 2022,2023, Holdings has repurchased 48,234,823 shares at a cost of approximately $600.3 million, or $12.45 per share, which includes transaction costs. The Inflation Reduction Act of 2022, which enacted a 1% excise tax on stock repurchases that exceed $1.0 million, became effective January 1, 2023.
Use of Capital Resources.  We may from time to time pursue opportunities to develop new joint venture relationships with large, regional health systems and other healthcare providers. We also intend to open new outpatient rehabilitation clinics and occupational health centers in local areas that we currently serve where we can benefit from existing referral relationships and brand awareness to produce incremental growth. In addition to our development activities, we may grow through opportunistic acquisitions.
Liquidity
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, weWe 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 SeptemberJune 30, 2022,2023, we had cash and cash equivalents of $108.2$101.2 million and $213.5$248.8 million of availability under the revolving facility after giving effect to $380.0$345.0 million of outstanding borrowings and $56.5$56.2 million of outstanding letters of credit.
We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, may be funded from operating cash flows or other sources and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Dividend
On NovemberAugust 2, 2022,2023, our boardBoard of directorsDirectors declared a cash dividend of $0.125 per share. The dividend will be payable on or about November 29, 2022September 1, 2023 to stockholders of record as of the close of business on November 16, 2022.August 15, 2023.
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 boardBoard of directorsDirectors 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 boardBoard of directorsDirectors may deem to be relevant.
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Effects of Inflation
The healthcare industry is labor intensive and our largest expenses are labor related costs. Wage and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. We have recently experienced higher labor costs related to the current inflationary environment and competitive labor market. In addition, suppliers have passed along rising costs to us in the form of higher prices. We cannot predict our ability to pass along cost increases to our customers.
Recent Accounting Pronouncements
There were no new accounting standards issued between December 31, 2021, and September 30, 2022, which will have a material effect onRefer to Note 2 – Accounting Policies of the notes to our condensed consolidated 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.SOFR.
At SeptemberJune 30, 2022,2023, 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 $10.2$7.1 million) and $380.0$345.0 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 LIBORvariable interest 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 SeptemberJune 30, 2022,2023, the 1-month LIBORAdjusted Term SOFR rate was 3.14%5.20%. As of SeptemberJune 30, 2022,2023, $103.4 million of our term loan borrowings are subject to variable interest rates.
As of SeptemberJune 30, 2022,2023, each 0.25% increase in market interest rates will impact the annual interest expense on our variable rate debt by $1.2$1.1 million.
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 SeptemberJune 30, 2022,2023, 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 thirdsecond quarter ended SeptemberJune 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Refer to the “Litigation” section contained within Note 1413 – Commitments and Contingencies of the notes to our condensed consolidated financial statements included herein.
ITEM 1A. RISK FACTORS
There have been no material changes from our risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 and our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities by the Issuer
Holdings’ boardBoard of directorsDirectors 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 boardBoard of directors.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 SeptemberJune 30, 2022.2023.
 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
July 1 - July 31, 2022(1)
569,272 $26.33 315,762 $399,677,961 
August 1 - August 31, 2022— — — 399,677,961 
September 1 - September 30, 2022— — — 399,677,961 
Total569,272 $26.33 315,762 $399,677,961 
 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
April 1 - April 30, 2023(1)
49,370 $30.50 — $399,677,961 
May 1 - May 31, 2023— — — 399,677,961 
June 1 - June 30, 2023— — — 399,677,961 
Total49,370 $30.50 — $399,677,961 

(1)    Includes share repurchases under our common stock repurchase program andThe shares purchased represent common stock surrendered to us to satisfy tax withholding obligations associated with the vesting of restricted shares issued to employees, pursuant to the provisions of our equity incentive plans.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.Rule 10b5-1 Trading Plans







During the three months ended June 30, 2023, none of our directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.
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ITEM 6. EXHIBITS
NumberDescription
10.1
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. RombergerChristopher S. Weigl
  Scott A. RombergerChristopher S. Weigl
  Senior Vice President, Controller & Chief Accounting Officer
  (Principal Accounting Officer)
 
Dated:  NovemberAugust 3, 20222023
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