Abstract
Select Medical Holdings Corporation will report quarterly results on February 19, 2026 Post Market, with current expectations pointing to approximately $1.36 billion in revenue and adjusted EPS of $0.23 as investors watch margins, operating leverage, and segment mix for confirmation of a gradual earnings recovery.Market Forecast
Market expectations for Select Medical Holdings Corporation this quarter center on revenue of $1.36 billion, representing a 6.69% year-over-year decrease, with adjusted EPS at $0.23, up 4.36% year-over-year, and EBIT at $88.99 million, down 3.44% year-over-year; while there is no explicit forecast for gross margin or net margin, the prior quarter’s baseline of 16.34% gross margin and 2.11% net margin frames investor expectations. Momentum within the operating model will be assessed against stability in cost containment and patient flow across the portfolio, with attention to how pricing and productivity shape the conversion of revenue into operating income.Within the portfolio, hospital-based recovery units remain a foundational revenue contributor after delivering $609.93 million last quarter, and markets will look for a steady census and disciplined length-of-stay management to mitigate revenue pressure. The most promising near-term lever is widely seen in Outpatient Rehabilitation, which posted $325.38 million last quarter; while year-over-year growth for this segment was not disclosed, investors are watchful for higher visit volumes and throughput to translate into improved operating efficiency.
Last Quarter Review
In the most recently reported quarter, Select Medical Holdings Corporation generated $1.36 billion in revenue, posted a gross profit margin of 16.34%, reported GAAP net profit attributable to the parent company of $28.79 million with a net profit margin of 2.11%, and delivered adjusted EPS of $0.23; on a year-over-year basis, revenue decreased by 22.58%, adjusted EPS decreased by 46.51%, and EBIT was $72.96 million, down 48.31%. A key financial highlight was the company’s ability to retain positive operating income despite a sharp year-over-year revenue decline, reflecting cost controls that partially offset pressure on volumes and mix. In the business mix, hospital-based recovery units contributed $609.93 million, Inpatient Rehabilitation Hospitals added $328.61 million, and Outpatient Rehabilitation contributed $325.38 million, underscoring a balanced revenue base with multiple levers for throughput and margin, although segment-level year-over-year growth was not disclosed.Current Quarter Outlook (with major analytical insights)
Hospital-Based Recovery: Stabilizing census and throughput to support earnings conversion
For the hospital-based recovery units, including long-term acute care and similar settings, the quarter’s narrative hinges on patient flow stabilization and the interaction between case mix and length-of-stay management. The prior quarter’s performance of $609.93 million in revenue underscores the importance of this line in anchoring scale and fixed-cost absorption, particularly as the company works against a lower year-over-year revenue run-rate. With consensus revenue expected to decline by 6.69% year-over-year at the consolidated level, maintaining occupancy and smoothing discharge patterns are essential to preserve conversion of revenue into EBIT, which is forecast at $88.99 million. The gross margin baseline of 16.34% provides a reference point; incremental improvements will likely come from reductions in premium labor usage and enhanced productivity rather than broad pricing changes, given the seasonal and episodic nature of hospital acuity trends. Investors will closely monitor how the unit balances acuity with staffing—particularly the mix of permanent versus contract labor—since better labor mix can bolster both gross and operating margins despite softer top-line growth. Given that EBIT is anticipated to decline 3.44% year-over-year in the quarter, upside could emerge if staffing efficiencies outpace conservative expectations or if patient acuity drives higher revenue per case without materially increasing costs.Outpatient Rehabilitation: Volume and scheduling density as the key earnings lever
Outpatient Rehabilitation appears to be the most immediate lever for margin recovery, with $325.38 million in revenue last quarter and a setup that can translate incremental visit gains into profit through fixed-cost leverage. In this model, daily patient throughput and visit intensity—coupled with disciplined scheduling to reduce idle time—are likely to be central to EBIT performance, especially in a quarter with fewer calendar anomalies. While the market expects consolidated revenue to be down year-over-year, it also expects adjusted EPS to increase by 4.36%, which suggests that cost efficiencies and mix improvements may be offsetting revenue softness; Outpatient Rehabilitation often plays a central role in driving such an outcome through higher productivity and tighter expense management. Referral pipelines from orthopedic practices and post-surgical pathways can provide incremental volume catalysts, and sophisticated clinic-level resourcing can help maintain staff utilization rates at levels that support margin stability. A neutral to modestly constructive payer environment would help; however, even absent significant rate tailwinds, throughput optimization can lift profitability. The growth contribution from this segment will largely depend on the company’s ability to optimize clinic staffing and prioritize higher-acuity or more reimbursable visit types without sacrificing access or continuity of care.Quarterly swing factors: Operating leverage, labor normalization, and strategic optionality
Three variables stand out as the dominant swing factors for the stock this quarter: the cadence of operating leverage as revenue normalizes, the trajectory of labor and productivity efficiencies, and the market’s interpretation of strategic optionality following recent corporate developments. The revenue forecast of $1.36 billion, down 6.69% year-over-year, contrasts with an expected 4.36% year-over-year increase in adjusted EPS—a combination that generally implies margins are set to benefit from cost and efficiency measures. The gap between top-line contraction and EPS growth places heightened scrutiny on gross-margin cadence off the 16.34% baseline and on EBIT conversion, where the market expects $88.99 million, down 3.44% year-over-year. Positive deviation from these benchmarks would most likely emerge if staffing mix improves more quickly than expected, if case mix tilts toward higher-reimbursement profiles without adding significant complexity cost, or if outpatient volume exceeds conservative assumptions. A secondary but meaningful factor is the influence of corporate headlines—such as indications of interest or rating changes—on valuation; such developments can overshadow near-term fundamentals by reframing the equity’s risk-reward profile in the short run. Overall, earnings sensitivity this quarter appears tied more to execution on controllable cost levers and throughput than to macro demand shifts, setting the stage for either a constructive surprise on operating metrics or a reaffirmation of a gradual recovery path.Analyst Opinions
Recent institutional commentary tilts bullish for Select Medical Holdings Corporation. Multiple firms have reiterated positive stances in recent months, with two notable Buy ratings from well-followed institutions, while one major bank shifted to No Rating following corporate headlines regarding a non-binding indication of interest—an action that reads as neutral rather than negative on the operating outlook. Interpreting the current mix, the distribution of explicit ratings in the recent window reflects a majority bullish skew, with two Buy recommendations versus no outright Sell calls. The positive camp emphasizes that management’s cost actions and operational discipline can deliver earnings resilience even as revenue declines year-over-year, a pattern consistent with the market’s expectation for adjusted EPS to grow 4.36% year-over-year this quarter despite a 6.69% decline in revenue.RBC Capital has maintained a Buy rating with a price target that implies confidence in the company’s ability to navigate near-term margin pressures by boosting productivity and capturing incremental operating leverage in higher-throughput settings such as Outpatient Rehabilitation. Benchmark has reiterated a Buy stance as well, pointing to an improving balance of risk and reward as labor normalization and clinic-level efficiency work in tandem. Analysts in the bullish camp generally see potential for ongoing gross-margin stabilization off the previous quarter’s 16.34% baseline, aided by better labor mix and disciplined expense control, which together can help narrow the gap between top-line pressure and bottom-line performance. They also note that EBIT expectations of $88.99 million, down 3.44% year-over-year, appear achievable if cost controls continue to bite and if the company maintains steady patient flow through its hospital-based and outpatient sites.
A separate development—one bank moving to No Rating after a non-binding indication of interest—has introduced an element of strategic optionality into the narrative. While not a traditional earnings call driver, such headlines can influence near-term valuation frameworks by broadening the range of potential outcomes in the equity, independent of the quarter’s core operating results. The bullish majority tends to interpret this optionality as a supportive backdrop rather than a fundamental necessity, given that the forecast profile already embeds modest EPS growth in the face of declining revenue. In synthesis, the prevailing analyst perspective is that the setup into February 19, 2026 is defined by a manageable execution bar on costs and throughput, a credible path to EBIT delivery despite revenue pressure, and a watchlist of strategic possibilities that could affect sentiment. The majority bias remains positive, anchored by expectations that the company can translate incremental efficiency into EPS outperformance even in a slower-revenue quarter.