Select Medical Holdings Corporation (NYSE:SEM) Q4 2022 Earnings Call Transcript

Martin Jackson: Yes, Ben, this is Marty. We anticipate for ’23 that we will probably remain in that higher range, 55% to 57% in ’23. Remember, it’s not just the expenses that we see, but it’s also the increases that we’re getting on our – contracts. So we would anticipate that, that would go into ’24 and possibly even ’25 to see us get back to historical range, which is in that 52%. With regards to comfort, I think that we’re continuing to gain comfort with where we are on the labor side. And I think we’re going to evaluate this first quarter, see where we are and then make a determination as to whether we provide guidance on EBITDA and EPS moving forward. And whether its next quarter or the quarter after that, we’ll have to wait and see.

Robert Ortenzio: And as we feel comfortable, even if it is before the next quarter’s earnings release, I mean, we would certainly consider putting guidance out after the first quarter, but even before we filed the Q. So we – that’s a topic of discussion internally at the company because we do appreciate the analyst community would like to see us give some more guidance on EBITDA and EPS. And when we feel comfortable, we just don’t want to go out prematurely and then have to constantly revise it and update it. So – but I do think that you will see it at some point during the first half of this year.

Operator: Thank you. Our next question will come from William Sutherland from Benchmark Company. Your line is open.

Bill Sutherland: Hey good morning guys. I was curious, Bob, as you look across the four groups, are you – is hiring been an issue as far as being able to kind of run those groups at the productivity levels that you’d get there built to do?

Robert Ortenzio: Well, it’s a great question. And I think the answer is that it varies in each of the divisions. I mean it’s kind of very evident how difficult it has been in the critical illness recovery hospital division because we’re we were competing with short-term acute care hospitals for highly trained near ICU-level nursing staff. And I think it’s well known that, that has just been a really big challenge in the past year. Now on the rehab side, you’d think, well, specialty hospitals, especially hospital, but the rehab employment tends to be a bit more sticky because of the nature of the work and the longer tenured employees that are there being a little bit more therapy-driven as well as some nursing. So the rehab hospital division hasn’t been near the challenge, anywhere near the challenge that the critical illness has been.

Outpatient has been a little bit of a surprise. I mean, and for a different reason, it is impacted by the macro labor environment, particularly on our front desk people, but it’s also because of the smaller nature of outpatient clinics that a call off for illness or suspected illness or pre-COVID test really disrupts the efficiency of that business model. So that — and I think you’ve seen that to a lesser extent in the outpatient, but it still exists. And as we commented earlier, we seem to be coming out of that here now. And then that leaves Concentra. Concentra because of the nature of that business, they have had their staffing challenges. Of course, they have as every employer has. But the nature of the Concentra Medical Center is that it puts stress on the existing staff when they’re short staffed, but the volume does not fall off because it’s a walk-in business.