SCHEDULE: Select Medical Chairman Refines Buyout Offer to $16/Share

Select Medical Holdings Corp's Executive Chairman, Robert A. Ortenzio, has submitted a refined non-binding proposal to acquire all outstanding shares not already owned by the reporting persons for $16.00 per share in cash.

Summary

• Robert A. Ortenzio, Executive Chairman of Select Medical Holdings Corp, submitted a refined non-binding proposal on February 22, 2026, to acquire all outstanding shares not currently owned by the reporting persons.
• The offer price is $16.00 per share, payable in cash.
• This represents a 17.2% premium over the unaffected share price of $13.65 as of November 21, 2025.
• The proposal is fully financed by committed equity from Welsh, Carson, Anderson & Stowe (WCAS) and committed debt from J.P. Morgan and Wells Fargo, with no financing conditions.
• The Consortium, including Robert Ortenzio and Martin Jackson, intends to roll over approximately 12.4% of the outstanding shares they own.
• The transaction is subject to approval by a Special Committee and a majority of votes cast by shares not held by the Consortium and its affiliates.
• Robert A. Ortenzio beneficially owns 14,019,735 shares, representing 11.3% of the class.
• Martin F. Jackson beneficially owns 1,383,421 shares, representing 1.1% of the class.
• The Estate of Rocco A. Ortenzio beneficially owns 4,085,550 shares, representing 3.3% of the class.
• Total outstanding shares of Select Medical Holdings Corporation are 124,017,191 as of February 1, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive development for shareholders, offering a significant premium and a clear path to liquidity, though the non-binding nature introduces some uncertainty.

Positives

• The refined proposal offers a 17.2% premium over the unaffected share price, providing a clear exit opportunity for shareholders at a higher valuation.
• The offer is fully financed with committed equity and debt, eliminating financing risk for the transaction.
• The Consortium, including key management, intends to roll over a significant portion of their equity (approximately 12.4%), indicating their continued belief in the company's value.
• The Consortium anticipates no substantial regulatory hurdles or delays.

Negatives

• The proposal is non-binding and may be withdrawn or modified at any time, creating uncertainty.
• There is no assurance that discussions will lead to a definitive agreement or that a transaction will be consummated.
• The transaction is subject to multiple contingencies, including Special Committee approval and a majority of minority shareholder vote, which are beyond the Reporting Persons' control.

Risks

• The non-binding nature of the proposal means there is no guarantee of a definitive agreement or transaction consummation.
• Discussions may be terminated at any time without prior notice.
• The transaction is contingent on approvals from the Special Committee and a majority of non-consortium shareholders, which may not be secured.
• Failure to secure necessary regulatory approvals could prevent the transaction from closing.

Future Outlook

The refined proposal indicates a potential take-private transaction for Select Medical Holdings Corp, with the Consortium aiming for an expeditious path to signing definitive documentation. However, the non-binding nature and various contingencies mean the outcome remains uncertain.

Management Comments

• I would like to thank you and your advisors for your responsiveness and constructive engagement to-date.
• I am pleased to submit this refined non-binding indication of interest... to acquire all the Company's outstanding shares of common stock... at an all-cash purchase price of $16.00 per share.
• I reaffirm that this Refined Proposal is not subject to any financing conditions and would be fully financed by committed equity financing from funds affiliated with Welsh, Carson, Anderson & Stowe (WCAS) and committed debt financing from J.P. Morgan and Wells Fargo.
• The Financing Sources and I have substantially completed our due diligence and are prepared to move forward expeditiously to signing definitive documentation for the Potential Transaction.
• Martin Jackson, SEM's Senior Executive Vice President of Strategic Finance & Operations, remains a committed member of the equity consortium supporting this Refined Proposal.
• Members of the Consortium continue to intend to roll over the approximately 12.4% of the outstanding shares of the Company they own.
• I reaffirm based on our diligence that the Consortium does not anticipate substantial regulatory or other hurdles or delays to consummating a Potential Transaction.
• I look forward to continuing to work with the Special Committee and your advisors to quickly consummate a successful transaction.

Industry Context

StockSavvy.ai notes that take-private transactions often occur when management or significant shareholders believe the public market undervalues the company, or when they seek greater operational flexibility away from public scrutiny. The involvement of a private equity firm like WCAS and major banks for financing suggests a robust financial backing for this potential move, aligning with a broader trend of private capital seeking value in healthcare services.

Comparison to Industry Standards

• StockSavvy.ai observes that a 17.2% premium over the unaffected share price is a reasonable, though not exceptionally high, premium for a take-private offer in the healthcare services sector. For example, recent take-private deals in similar sectors have seen premiums ranging from 15% to 30%.
• The all-cash nature of the offer is standard and preferred by many shareholders for its certainty.
• The involvement of a reputable private equity firm like Welsh, Carson, Anderson & Stowe, known for its healthcare investments, and major financial institutions like J.P. Morgan and Wells Fargo for debt financing, provides strong validation for the financial viability of the proposal, comparable to financing structures seen in other large-scale private equity buyouts.

Corporate Governance

Related Party Transactions

• Robert A. Ortenzio, Executive Chairman and co-founder, is leading the acquisition proposal.
• Martin F. Jackson, Senior Executive Vice President of Strategic Finance and Operations, is a committed member of the equity consortium.
• The proposal involves acquiring shares not already owned by these reporting persons and their affiliates, indicating a related-party buyout.
• Shares are held by various family foundations and trusts associated with Robert A. Ortenzio and the Estate of Rocco A. Ortenzio, over which Robert A. Ortenzio exercises shared voting and dispositive power.

Stakeholder Impact

• Shareholders: Potential to receive $16.00 per share in cash, representing a 17.2% premium, offering liquidity and a higher valuation. Minority shareholders will have a vote on the transaction.
• Management/Employees: Key management (Robert Ortenzio, Martin Jackson) are part of the acquiring consortium and intend to roll over equity, suggesting continuity for leadership. Other management/Board members may also be invited to roll over equity.
• Creditors: The transaction involves significant debt financing from J.P. Morgan and Wells Fargo, which could alter the company's capital structure and leverage profile post-acquisition.

Next Steps

• Discussions between the Reporting Persons and the Issuer's Special Committee regarding the Refined Proposal.
• Negotiation and execution of definitive agreements for the Potential Transaction.
• Obtaining approval from the Special Committee.
• Obtaining approval from a majority of the votes cast by shares not held by the Consortium and its affiliates.
• Satisfaction of customary closing conditions and receipt of all necessary regulatory approvals.

Key Dates

Recommendation

The refined non-binding proposal offers a substantial 17.2% premium over the unaffected share price, which is attractive for current shareholders. However, the proposal remains non-binding and is subject to various approvals, including a majority of minority shareholders, introducing execution risk. A 'hold' recommendation allows investors to benefit from the potential upside if the deal closes at $16.00, while acknowledging the inherent uncertainties of a non-binding offer and the possibility of a higher bid or the deal falling through.

Keywords

Select Medical Holdings, SEM, Schedule 13D, Buyout Proposal, Take-private, Robert Ortenzio, Share Acquisition, Equity Financing, Debt Financing, Welsh Carson Anderson & Stowe, J.P. Morgan, Wells Fargo, Shareholder Value, Corporate Governance