Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information

Segment Information

6.  Segment Information

The Company’s reportable segments consist of (i) specialty hospitals and (ii) outpatient rehabilitation. All other represents amounts associated with corporate activities and non-healthcare related services. The outpatient rehabilitation reportable segment has two operating segments: outpatient rehabilitation clinics and contract therapy. These operating segments are aggregated for reporting purposes as they have common economic characteristics and provide a similar service to a similar patient base. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance of the segments based on Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, gain (loss) on early retirement of debt, stock compensation expense, equity in earnings (losses) of unconsolidated subsidiaries and other income (expense).

The following tables summarize selected financial data for the Company’s reportable segments for the three and six months ended June 30, 2011 and 2012.  The segment results of Holdings are identical to those of Select with the exception of total assets:

	Three Months Ended June 30, 2011
	Specialty Hospitals		Outpatient Rehabilitation		All Other			Total
	(in thousands)
Net operating revenue	$	520,261	$	178,473	$	15		$	698,749
Adjusted EBITDA	91,081		24,467		(15,623		)	99,925
Total assets:
Select Medical Corporation	2,202,994		471,175		112,264			2,786,433
Select Medical Holdings Corporation	2,202,994		471,175		113,853			2,788,022
Capital expenditures	6,130		2,801		1,845			10,776
	Three Months Ended June 30, 2012
	Specialty Hospitals		Outpatient Rehabilitation		All Other			Total
	(in thousands)
Net operating revenue	$	557,130	$	193,050	$	13		$	750,193
Adjusted EBITDA	102,166		25,837		(17,724		)	110,279
Total assets:
Select Medical Corporation	2,184,743		437,591		156,080			2,778,414
Select Medical Holdings Corporation	2,184,743		437,591		157,303			2,779,637
Capital expenditures	12,631		2,922		630			16,183

	Six Months Ended June 30, 2011
	Specialty Hospitals		Outpatient Rehabilitation		All Other			Total
	(in thousands)
Net operating revenue	$	1,040,185	$	351,664	$	86		$	1,391,935
Adjusted EBITDA	191,434		45,873		(31,648		)	205,659
Total assets:
Select Medical Corporation	2,202,994		471,175		112,264			2,786,433
Select Medical Holdings Corporation	2,202,994		471,175		113,853			2,788,022
Capital expenditures	16,617		4,982		2,097			23,696

	Six Months Ended June 30, 2012
	Specialty Hospitals		Outpatient Rehabilitation		All Other			Total
	(in thousands)
Net operating revenue	$	1,110,168	$	383,949	$	97		$	1,494,214
Adjusted EBITDA	202,120		48,315		(31,092		)	219,343
Total assets:
Select Medical Corporation	2,184,743		437,591		156,080			2,778,414
Select Medical Holdings Corporation	2,184,743		437,591		157,303			2,779,637
Capital expenditures	19,682		6,713		1,539			27,934

A reconciliation of Adjusted EBITDA to income before income taxes is as follows:

	Three Months Ended June 30, 2011
	(in thousands)
	Specialty Hospitals				Outpatient Rehabilitation				All Other
Adjusted EBITDA	$	91,081			$	24,467			$		(15,623	)
Depreciation and amortization	(13,047			)	(4,227			)	(725			)
Stock compensation expense	—				—				(900			)
													Select Medical Holdings Corporation			Select Medical Corporation
Income (loss) from operations	$		78,034		$		20,240		$	(17,248		)	$	81,026		$	81,026
Loss on early retirement of debt													(31,018		)	(20,385		)
Equity in losses of unconsolidated subsidiaries													(251		)	(251		)
Interest expense, net													(25,185		)	(19,583		)
Income before income taxes													$	24,572		$	40,807

	Three Months Ended June 30, 2012
	(in thousands)
	Specialty Hospitals				Outpatient Rehabilitation				All Other
Adjusted EBITDA	$	102,166			$	25,837			$		(17,724	)
Depreciation and amortization	(11,479			)	(3,232			)	(717			)
Stock compensation expense	—				—				(1,338			)
													Select Medical Holdings Corporation			Select Medical Corporation
Income (loss) from operations	$		90,687		$		22,605		$	(19,779		)	$	93,513		$	93,513
Equity in earnings of unconsolidated subsidiaries													2,752			2,752
Interest expense, net													(23,798		)	(20,957		)
Income before income taxes													$	72,467		$	75,308

	Six Months Ended June 30, 2011
	(in thousands)
	Specialty Hospitals				Outpatient Rehabilitation				All Other
Adjusted EBITDA	$	191,434			$	45,873			$		(31,648	)
Depreciation and amortization	(25,093			)	(8,686			)	(1,442			)
Stock compensation expense	—				—				(1,780			)
													Select Medical Holdings Corporation			Select Medical Corporation
Income (loss) from operations	$		166,341		$		37,187		$	(34,870		)	$	168,658		$	168,658
Loss on early retirement of debt													(31,018		)	(20,385		)
Equity in losses of unconsolidated subsidiaries													(324		)	(324		)
Interest expense, net													(50,793		)	(38,189		)
Income before income taxes													$	86,523		$	109,760

	Six Months Ended June 30, 2012
	(in thousands)
	Specialty Hospitals				Outpatient Rehabilitation				All Other
Adjusted EBITDA	$	202,120			$	48,315			$		(31,092	)
Depreciation and amortization	(23,322			)	(6,882			)	(1,423			)
Stock compensation expense	—				—				(2,599			)
													Select Medical Holdings Corporation			Select Medical Corporation
Income (loss) from operations	$		178,798		$		41,433		$	(35,114		)	$	185,117		$	185,117
Equity in earnings of unconsolidated subsidiaries													5,217			5,217
Interest expense, net													(47,720		)	(42,207		)
Income before income taxes													$	142,614		$	148,127