Select Medical Holdings Corporation (NYSE:SEM) Q2 2022 Earnings Conference Call August 5, 2022 9:00 AM ET

Company Participants

Robert Ortenzio - Executive Chairman and Co-Founder

Martin Jackson - Executive Vice President and Chief Financial Officer

Conference Call Participants

Justin Bowers - Deutsche Bank

Kevin Fischbeck - Bank of America

Ben Hendrix - RBC Capital Markets

A.J. Rice - Credit Suisse

Miles Highsmith - Deutsche Bank

Operator

Good morning. And thank you for joining us today for Select Medical Holdings Corporation's Earnings Conference Call to discuss the Second Quarter 2022 Results and the Company's Business Outlook.

Speaking today are the company's Executive Chairman and Co-Founder, Robert Ortenzio and the company's Executive Vice President and Chief Financial Officer, Martin Jackson. Management will give you an overview of the quarter and then open the call for questions.

Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including, without limitation, statements regarding operating results, growth opportunities and other statements that refer to Select Medical plans, expectations, strategies, intentions and beliefs. These forward-looking statements are based on the information available to management of Select Medical today, and the company assumes no obligation to update these statements as circumstances change.

At this time, I will turn the conference call over to Mr. Robert Ortenzio.

Robert Ortenzio

Thank you, operator. Good morning, everyone. Thanks for joining us for Select Medical earnings call for the second quarter of 2022. The past two and half years have presented numerous challenges for our company and our colleagues. As we're hopefully in the back end of the more extreme impacts of the pandemic, our focus has been on recruiting, retention and valuing the accomplishments of our employees. This quarter, we have started to experience progress as a result of our efforts, which has led to an upturn in hiring key clinical positions, namely RNs. The investment in full time staff has resulted in an increase in orientation and education costs for our new hires. We anticipate these costs will return to approximate historical trends once our utilization of agency reaches a normalized level. We have gained traction have since declined as the second quarter progressed, both in reduced agency rates and utilization. The past nine months labor costs, particularly in our critical illness recovery hospital division, have created many headwinds, but we are cautiously optimistic we will continue to see improvements, which will result in stability and predictability of our clinical labor by the end of the year. Marty Jackson will provide some more granular data supporting our optimism on the direction of our clinical labor expenses in his comments.