What Happened?

Shares of healthcare services company Select Medical (NYSE:SEM) fell 22.1% in the morning session after the company reported disappointing first-quarter 2025 results, with both revenue and earnings per share falling short of Wall Street's expectations. Margins declined across two of the three segments: adjusted EBITDA fell significantly in the critical illness recovery unit and slipped slightly in outpatient rehab. This margin pressure, especially in the largest business line, partly explained why adjusted EPS failed to meet expectations. 

On the other hand, Select Medical beat analysts' full-year EPS guidance expectations. Still, this quarter could have been better.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Select Medical? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Select Medical’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for Select Medical and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock dropped 14.1% on the news that the company reported disappointing fourth quarter 2024 results, which missed across all key operating metrics. Its full-year revenue and EBITDA guidance also fell short of Wall Street's estimates. Overall, this was a weaker quarter.

Select Medical is down 25% since the beginning of the year, and at $14.11 per share, it is trading 64.9% below its 52-week high of $40.20 from November 2024. Investors who bought $1,000 worth of Select Medical’s shares 5 years ago would now be looking at an investment worth $974.43.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.