Select Medical Shares Fall 5% Even After Q3 Earnings Exceed Expectations Due to Patient Volumes
Select Medical Holdings Corporation Q3 2025 Results: Select Medical's shares fell 5.4% following its Q3 2025 report, which showed a decline in adjusted EPS by 11.5% year-over-year despite a 7.2% increase in net operating revenues to $1.4 billion, surpassing estimates.
Segment Performance: The Critical Illness Recovery Hospital segment faced profitability pressure due to a decline in patient days, while the Rehabilitation Hospital segment saw revenue growth from higher admissions and occupancy rates.
Financial Outlook: Select Medical raised its 2025 EPS guidance to between $1.14 and $1.24, with expected revenues of $5.3-$5.5 billion, indicating a 4.1% increase from 2024.
Comparative Performance in Healthcare Sector: Other healthcare companies like Cigna, Tenet Healthcare, and UnitedHealth Group reported mixed results, with some exceeding earnings estimates while facing challenges in revenue growth and profitability.
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- Revenue Forecast Downgrade: UnitedHealth's fiscal 2026 revenue forecast exceeds $439 billion, falling short of analysts' expectations of $454.6 billion, resulting in a significant stock price drop of 12% since January, indicating market concerns about future growth.
- Volatility Analysis: Despite the stock decline, the volatility skew suggests that investors are not overly worried about downside risks, as the implied volatility (IV) at lower strike prices does not indicate strong protective demand, reflecting a relatively calm market sentiment.
- Trading Parameter Setting: According to the Black-Scholes model, UnitedHealth stock is expected to trade between $288 and $302 over the next 35 days, with probability density peaking around $297, providing potential trading opportunities for investors.
- Bull Call Spread Strategy: Investors might consider a 290/300 bull call spread, where a breakout above $300 at expiration could yield over 122% maximum profit, indicating that an aggressive trading strategy is rational in the current market environment.
- Market Rebound: After a volatile week, the S&P 500 showed signs of recovery on Friday, although it still faced losses over the past five trading days, indicating a renewed investor confidence in the economic outlook.
- Inflation Data Impact: The cooler-than-expected January consumer price index contributed to a drop in bond yields and increased expectations for interest rate cuts later this year, further bolstering investor sentiment.
- Eli Lilly's Drug Inventory: Eli Lilly has built up $1.5 billion worth of pre-launch inventory for its GLP-1 obesity pill orforglipron, significantly up from $550 million last year, indicating strong demand expectations from the market.
- Upcoming Earnings Reports: Approximately 50 S&P 500 companies are set to report earnings next week, including Palo Alto Networks and Texas Roadhouse, with the market closely watching these reports for their implications on the broader economy.
- Market Uncertainty: The stock market faced challenges last week due to unresolved questions affecting investor confidence.
- Impact of Lack of Answers: The absence of clear answers contributed to volatility and uncertainty in market performance.
- Questionable Timing: Congressman John McGuire's rapid buying and selling of Microsoft stock within just 10 days raises concerns about the unusual nature of his trading activities, particularly given his role on the Armed Services Committee, which may present potential conflicts of interest.
- Disclosure Details: The trades were executed by McGuire's spouse through an IRA, with a maximum disclosed trade size of $15,000, suggesting he may not have been directly involved in the transactions, which raises questions about transparency.
- Market Reaction Analysis: Microsoft shares traded between $438.68 and $452.69 at purchase and fell to $426.45 to $439.60 at sale, indicating a potential loss of 5.8%, highlighting the risks associated with his investment decisions.
- Historical Trading Context: Since joining Congress in 2025, McGuire has had minimal trading activity, with previous trades also drawing scrutiny regarding potential conflicts of interest in the healthcare sector, intensifying public scrutiny of his trading behavior.
- Price Range Analysis: VONE's stock has a 52-week low of $218.75 and a high of $316.38, with the last trade at $314.58, indicating that the stock is nearing its high point, which may attract investor interest.
- Technical Analysis Tool: Comparing the current stock price to the 200-day moving average can provide valuable insights for investors, helping to assess market trends and optimal buying or selling opportunities.
- ETF Trading Mechanism: Exchange-traded funds (ETFs) trade similarly to stocks, where investors buy and sell 'units' that can be created or destroyed based on investor demand, impacting the underlying holdings of the ETF.
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- UnitedHealth Membership Loss: The company anticipates losing up to 2.8 million members due to rising medical costs, resulting in a 20% drop in stock price following its Q4 earnings release, reflecting market concerns over profitability.
- Ryman's Performance Decline: Ryman Hospitality Properties reported a 15.5% drop in adjusted funds from operations (AFFO) per unit in Q3, primarily due to planned renovations and an increase in short-term cancellations, although bookings are up nearly 8% this year.
- ONEOK's Significant Earnings Growth: ONEOK's adjusted EBITDA surged 37% year-over-year to $2.1 billion in Q3, driven by contributions from EnLink and Medallion assets, showcasing its enhanced integration capabilities.
- Dividend Safety Analysis: Despite ongoing uncertainties, UnitedHealth's 3.2% dividend remains secure, with last year's free cash flow reaching $16 billion, nearly double the dividend payout, indicating strong financial health.










