Select Medical Holdings Corporation (NYSE:SEM) saw its final public trade on June 30 at $16.51 per share, just one cent above the $16.50 cash merger price offered by the buyer group led by Executive Chairman Robert A. Ortenzio, Martin F. Jackson, and Welsh, Carson, Anderson & Stowe. The company requested a trading halt on the New York Stock Exchange before the market opened on July 1, effectively ending its public listing.
The last session saw extraordinary volume of 27.8 million shares, roughly 12 times the average daily turnover of 2.31 million shares, representing approximately $460 million in notional value at the closing price. This unusual activity reflects the final opportunity for shareholders to exit before the deal closure.
Deal Terms and Payout Structure
Under the terms of the merger, eligible shareholders received $16.50 in cash per share, while excluded and rollover shares did not participate in the cash payout. The total consideration for the shares acquired in the transaction was approximately $1.7 billion, funded through a combination of equity, rollover stakes, and third-party debt. A credit amendment also added a $1.0 billion incremental term loan to the capital structure.
The final print of $16.51, while only a penny above the deal price, carries significance for event-driven funds and arbitrageurs who bought shares at that level, as they effectively paid above the cash-out amount, excluding transaction costs.
Index Replacement and Options Settlement
Index funds faced an abrupt change as S&P Dow Jones Indices replaced Select Medical with Gulfport Energy Corp. (NYSE:GPOR) in the S&P SmallCap 600 index effective July 1. This swap moved the index slot from the health care facilities sector to the energy sector, reflecting the acquisition and subsequent delisting of Select Medical.
For options holders, the Options Clearing Corporation set the new deliverable for SEM options at $1,650 cash per contract, equivalent to $16.50 per share for a standard 100-share contract, with settlement processed through OCC's system.
Financial Performance and Outlook
Select Medical had provided its 2026 guidance during the May earnings call. CEO Thomas Mullin stated the company would continue to focus on expanding its inpatient rehabilitation business, while CFO Michael Malatesta reaffirmed the full-year 2026 outlook. The guidance included revenue of $5.6 billion to $5.8 billion, adjusted EBITDA between $520 million and $540 million, and diluted EPS in the range of $1.22 to $1.32.
Mullin noted an increase in denials from Medicare Advantage plans, which is affecting the company's hospitals. Malatesta estimated that the year-over-year volume decline from weaker Medicare Advantage conversion rates is costing approximately $13 million to $14 million.
Segment Performance in Q1 2026
In the first quarter of 2026, Select Medical's critical illness recovery hospitals generated $638.8 million in revenue with adjusted EBITDA of $73.4 million, yielding an 11.5% margin, down from 13.6% a year earlier. Rehabilitation hospitals posted $351.9 million in revenue and $81.1 million in adjusted EBITDA, with a margin of 23.0%, slightly up from 22.9%. The outpatient rehabilitation segment reported $321.3 million in revenue and $22.0 million in adjusted EBITDA, with a 6.8% margin compared to 7.9% in the prior year.
With the public equity market now closed for Select Medical, the focus shifts to the company's private debt obligations and the performance of its operations under new ownership. The gap between growth in rehabilitation services and softness in critical illness recovery hospitals remains a key watchpoint for lenders.
