Heralding Select Medical’s Subsidiary
A confidential initial public offering (IPO) filing is the latest chapter in Select Medical Holdings Corporation’s subsidiary, Concentra’s story. Recently, Concentra quietly submitted a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission (SEC), marking a notable stride towards a potential IPO. While key details like the number of shares and the offering price range are still pending, the move underscores Select Medical’s confidence in the resurgent U.S. IPO landscape, particularly for healthcare entities.
Utah-based PACS Group, a nursing home operator, and Auna, a prominent player in the Latin American market, have also set their sights on IPOs recently, pointing towards a robust appetite for healthcare stocks in the public market.
A Narrative of Growth and Evolution
Starting the year with grand intentions, Select Medical has been vocal about its plans to break away from the occupational health services realm, a strategic move earmarked for completion by the end of 2024. With this impending separation, Select Medical shareholders were slated to retain their SEM shares intact while receiving a pro-rata distribution of Concentra stock. The entire transaction was structured to be tax-free, a pleasing development for both Select Medical and its loyal shareholders.
Diving into the rich history of Concentra, a notable milestone was in 2015 when Select Medical and private equity titan, Welsh, Carson, Anderson & Stowe, jointly acquired Concentra from Humana. Fast forward to 2021, and SEM doubled down, securing full ownership of Concentra. Last year, Concentra stood as a robust pillar, contributing a substantial 28% to SEM’s revenues. As of December 31, 2023, Concentra boasted an impressive network of 544 occupational health centers spread across 41 states, alongside 150 onsite clinics at employer worksites. Not restricting itself to physical spaces, Concentra caters to modern needs by providing telemedicine services for work-related ailments.
Charting Select Medical’s Trajectory
In the dynamic world of finance, stock performance serves as a compass for investor sentiment. Select Medical’s shares have soared by 12.9% over the past year, eclipsing the 6% uptick seen in its industry.
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Exploring Bright Spots: Zacks Rank & Key Players
While Select Medical currently carries a Zacks Rank #4 (Sell), the realm of healthcare stocks unveils promising gems like Universal Health Services, Inc. (UHS), The Cigna Group (CI), and Health Catalyst, Inc. (HCAT), each flaunting a Zacks Rank #2 (Buy) at present.
Peering into forecasts, Universal Health Services eyes a robust 22.4% year-over-year surge in its 2024 earnings. A track record of surpassing estimates underscores UHS’s resilience. Meanwhile, Cigna’s projected 13% jump in full-year 2024 earnings hints at a steady climb towards success. Health Catalyst, with a staggering 113.3% expected surge in 2024 full-year earnings, showcases an impressive growth trajectory. These companies’ strong fundamentals and market positioning signal a positive outlook in the healthcare sector.
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