In fiscal 2025, Select Medical Holdings Corp (SEM) delivered a substantial 25.3% year-over-year increase in operating income and a strong net income rebound after a prior year loss; however, operating cash flow declined sharply by 33%. This divergence stems largely from delayed Medicare outlier payment reconciliations caused by recent CMS policy changes affecting long-term acute care hospitals (LTCHs) and the inpatient rehabilitation facility prospective payment system (IRF-PPS). The company advanced its rehabilitation footprint through a joint venture with Vibra Healthcare early in 2026, signaling growth ambitions amid ongoing regulatory uncertainties. Capital allocation favored share repurchases over dividends, funded by a revolving credit facility that preserves liquidity while maintaining leverage well below covenant limits. Looking ahead, Select Medical faces a balance between expanding its outpatient network and managing reimbursement risks tied to evolving Medicare policies.