The stock trades near the $16.50 take-private price, limiting upside. The operational weakness in the core critical illness segment (15.3% EBITDA decline) is concerning but likely overshadowed by the pending merger. Monitor for stockholder vote and regulatory approvals — any delay or termination risk would expose downside to fair value in the $12-14 range based on deteriorating fundamentals.
Price Chart
Executive Summary
Select Medical reported Q1 2026 revenue of $1.42B (+5.0% YoY) but EPS of $0.35 declined 20.5% YoY, missing the $0.43 consensus. Operating income fell 12.7% and Adjusted EBITDA dropped 6.5% as the critical illness recovery hospital segment saw a 15.3% EBITDA decline. The company maintained its 2026 guidance and declared a $0.0625 dividend. Separately, the pending take-private merger at $16.50/share (no financing condition, HSR waiting period expired) continues to progress toward a mid-2026 close, which will likely cap the stock near the deal price.
Key Financial Metrics
Key Facts
- Q1 2026 revenue $1.421B (+5.0% YoY) vs $1.353B prior year
- GAAP EPS $0.35 vs $0.44 YoY (-20.5%), missed consensus of $0.43
- Operating income fell 12.7% to $98.4M from $112.7M
- Adjusted EBITDA declined 6.5% to $141.6M from $151.4M
- Critical illness recovery hospital EBITDA dropped 15.3% to $73.4M; margin compressed from 13.6% to 11.5%
- Outpatient rehab EBITDA fell 9.4% to $22.0M; margin down from 7.9% to 6.8%
- Rehab hospital segment was the bright spot: EBITDA +15.1% to $81.1M, margin 23.0%
- 2026 guidance maintained: revenue $5.6B-$5.8B, Adj. EBITDA $520M-$540M, EPS $1.22-$1.32
- Pending take-private merger at $16.50/share; HSR waiting period expired April 27, 2026; expected close mid-2026
- Equity award vesting deferred for Chairman Ortenzio and EVP Jackson by one year
- Quarterly dividend of $0.0625/share declared
Financial Impact
EPS miss of ~18.6% vs consensus ($0.35 actual vs $0.43 est); operating income decline of $14.3M YoY; Adj. EBITDA decline of $9.9M YoY
Risk Factors
- Merger fails to close — stock would reprice to reflect declining earnings trajectory
- Critical illness recovery hospital margins continue compressing (11.5% vs 13.6% last year)
- Outpatient rehab segment margin erosion (6.8% vs 7.9%) may persist
- Labor cost inflation pressuring cost of services (+6.3% vs revenue +5.0%)
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001104659-26-053056 |
| Document: tm2613082d1_8k.htm | 0001104659-26-053056 |
| Document: 0001104659-26-053056-index-headers.html | 0001104659-26-053056 |
| Document: 0001104659-26-053056-index.html | 0001104659-26-053056 |
| Document: 0001104659-26-053056.txt | 0001104659-26-053056 |
| 8-K Data (Synthetic) | 0001104659-26-053056 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Jul 13, 2026 11w ago | 15-12G | — | awaiting T+1 | — | — |
Jul 1, 2026 13w ago | 25-NSE | $16.52 awaiting T+1 | awaiting T+1 | — | — |
Jul 1, 2026 13w ago | 8-K | $16.52 awaiting T+1 | awaiting T+1 | — | — |
Jun 26, 2026 13w ago | 8-K | $16.53 $16.51 | ▼ −0.12% | ▼ −0.90% | — |
Apr 30, 2026 22w ago | 8-K | $16.38 $16.38 | · 0.00% | ▼ −0.34% | — |
Apr 15, 2026 24w ago | PREM14A | $16.38 $16.39 | ▲ +0.06% | ▼ −0.19% | — |
Mar 4, 2026 30w ago | DEFA14A | $16.25 $16.25 | · 0.00% | ▲ +0.57% | — |
Mar 3, 2026 30w ago | DEFA14A | $16.26 $16.25 | ▼ −0.06% | ▼ −0.82% | — |
US Market Status
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