SEM - Select Medical: Solid Growth Prospects And A Compelling Valuation

2024-03-05 16:27:41 ET

Summary

• Select Medical operates specialty hospitals and outpatient rehabilitation clinics, providing care for patients with complex medical conditions.
• The business model is attractive due to the willingness of patients to pay for specialized care, and the potential for growth through acquisitions.
• Currently, the Net Debt/EBITDA ratio is 6x, making it a significant risk to consider before investing in SEM.
• Historical performance and the high skin in the game of management make me think that this risk can be controlled, making SEM an interesting investment case.

Investment Thesis

After a fiscal year 2022 where margins were compressed due to high inflation and growth slowed a little bit, Select Medical Holdings ( SEM ) has reported a 2023 that invites optimism, since it seems that margins have already stabilized, and prospect for growth is on the horizon again....

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