Select Medical Holdings Corp SEM reported first-quarter 2016 earnings of 23 cents a share which surpassed the Zacks Consensus Estimate of 21 cents by 9.5%. Earnings declined 18.5% from the year-ago level.Select Medical Holdings Corporation (SEM) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany Though revenues improved, an increase in expenses weighed on the bottom line. Including gains from the sale of its contract therapy business, equity impairment loss, early debt retirement loss, Physiotherapy Associates Holdings, Inc. ("Physiotherapy") acquisition costs and other line items, Select Medical delivered net income of 42 cents per share on net operating revenues of $1.1 billion.Operational ActivitiesOperating revenues of Select Medical grossed $1.1 billion during the quarter, up 36.8% year over year, on higher Outpatient Rehabilitation revenues and Concentra revenues. The top line also beat the Zacks Consensus Estimate of $1 billion by 4%.Total operating expenses amounted to $1 billion, up 39% year over year. Increase of 99% in depreciation and amortization expenses, 38.8% in cost of services, 30.4% in general and administrative expenses, and 29.4% in bad debt expenses led to the overall rise in expenses.Income from operations amounted to $86.8 million, up 9.6% year over year on higher revenues.Business UpdateSelect Medical completed the acquisition of Physiotherapy, a national provider of outpatient physical rehabilitation care. The insurer also purchased 100% of the issued and outstanding equity securities of the acquired entity. Physiotherapy's financial results have been consolidated with those of Select Medical from Mar 4, 2016.Select Medical made a pre-tax gain of $30.4 million through the sale of its contract therapy business on Mar 31, 2016. Results from this segment have been included in the quarterly results. Segment UpdateSpecialty Hospitals’ operating revenues remained flat year over year at $599 million.Adjusted EBITDA was $86.8 million, down 10% year over year, with margins contracting 160 basis points (bps) to 14.5%. The decline was due to start-up losses of $3.8 million along with 4.1% lower patient days and 3.7% lower number of admissions.Operating revenues from Outpatient Rehabilitation surged 21.2% year over year to $238.1 million mainly due to the inclusion of Physiotherapy revenues worth $26.2 million acquired by the company and higher number of visits by patients.Number of visits to clinics increased 27.5% year over year.Adjusted EBITDA soared 30.5% year over year to $28.9 million, while margin expanded by 80 bps to 12.1% year over year.Concentra segment reported net operating revenues of $250.9 million for the quarter, while adjusted EBITDA was $34.2 million. Adjusted EBITDA margin was 13.6% for the reported quarter.Share Repurchase UpdateThe company did not repurchase shares this quarter under its authorized $500 million stock repurchase program. It bought back a total of 35.9 million shares at a cost of $314.7 million or $8.76 per share since inception of the program to Mar 31, 2016.Financial UpdateSelect Medical exited the first quarter with cash of $85 million, increasing more than six fold from $14.4 million at year-end 2015.As of Mar 31, 2016, long-term debt, net of current portion, increased 28.3% to $2.8 billion from $2.2 billion at the end of 2015. Cash flow from operations increased 196% year over year to $111.1 million in the quarter.2016 GuidanceSelect Medical updated its full-year 2016 operating earnings outlook to account for the acquisition of Physiotherapy. The sale of its contract therapy business along with refinancing completed during the first quarter has also been included in the revised guidance.The company expects diluted income per share to be between 87 cents and $1.06 per share on operating revenue of $4.15–$4.35 billion. Adjusted EBITDA is expected between $500 million and $540 million. Zacks RankSelect Medical presently carries a Zacks Rank #2 (Buy).Performance of Other Healthcare StocksThe bottom line at Humana HUM and Anthem Inc. ANTM outperformed their respective Zacks Consensus Estimate, while Molina Healthcare MOH missed the same for the first quarter.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HUMANA INC NEW (HUM): Free Stock Analysis Report MOLINA HLTHCR (MOH): Free Stock Analysis Report SELECT MEDICAL (SEM): Free Stock Analysis Report ANTHEM INC (ANTM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research