In a registration statement filed with the Securities Exchange Commission, Select Medical Holdings Corp. (SEM), the parent of specialty hospitals operator Select Medical Corp., on Wednesday announced the launch of its initial public offering or IPO of 33.33 million shares of Select common stock for net proceeds of up to about $433 million. Select noted that it has also applied to have its common stock approved for quotation on the New York Stock Exchange or NYSE under the symbol "SEM."
The Mechanicsburg, Pennsylvania-based company noted that the IPO of 33.33 million shares is expected to be priced between $11.00 and $13.00 per share. According to the SEC filing, the company estimates net proceeds the offering to be $372.7 million, or $429.1 million, if the underwriters exercise their over-allotment option in full, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable based on an assumed public offering price of $12.00 per share.
The company intends to use the net proceeds from the offering to repay debts of at least $186.4 million of term loans outstanding under its senior secured credit facility, and any related prepayment costs. Further, Select would make payments to executive officers under its Long Term Cash Incentive Plan in the amount of about $18.0 million. Pursuant to these payments, any remaining amount from the net proceeds would be used for repayment or repurchase of indebtedness or for general corporate purposes.
Goldman, Sachs & Co., Morgan Stanley & Co., Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc. and JPMorgan Securities, Inc. are serving as joint bookrunners for the offering. The underwriters of the offering have the option to purchase up to an additional 5.0 million shares of common stock, on the same terms and conditions, to cover over-allotments, if any.
Select Medical Holdings Corp. was formed in October 2004. On February 24, 2005, Select Medical Corp. merged with a subsidiary of Holdings, formerly known as EGL Holding company, which resulted in Select becoming a wholly owned subsidiary of Holdings.
Beginning operations in 1997, Select Medical Corp. currently operates 87 long term acute care hospitals and five acute medical rehabilitation hospitals in 25 states, and 948 outpatient rehabilitation clinics in 37 states and the District of Columbia. Welsh Carson holds a controlling interest in the company, which filed to go public in 2008.
On August 13, Select Medical Corp. announced financial results for the second quarter, reporting a two-fold year-over-year growth in profit to $25.50 million from $12.61 million in the prior-year quarter. Net operating revenues for the quarter increased 3.8% to $559.54 million from $538.81 million in the same quarter last year. Income from operations increased 35.0% to $65.39 million from $48.42 million in the year-ago quarter.
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