Select Medical, parent company of NovaCare Rehabilitation, has been acquired in a .9 billion private equity transaction.

NovaCare Rehabilitation’s parent organization, Select Medical Holdings Corp., has transitioned to private ownership following a substantial .9 billion acquisition deal finalized this week. The transaction highlights a significant shift in the rehabilitation services landscape, particularly within the Philadelphia region, where NovaCare has established over 100 physical therapy locations, some of which are operated in collaboration with Rothman Orthopaedics.

For the past quarter of a century, NovaCare has played a notable role in local sports culture, having served as the sponsor for the Philadelphia Eagles’ practice complex located in South Philadelphia. However, a recent development saw Jefferson Health assume that sponsorship earlier this year, marking the end of NovaCare’s long-standing association with the team.

The acquisition of Select Medical, based in Mechanicsburg, Pennsylvania, was spearheaded by top management in partnership with the private equity firm Welsh, Carson, Anderson & Stowe. The completion of the sale was confirmed Wednesday, with the agreement pricing Select Medical shares at .50 each — an 18% premium in comparison to the company’s stock price prior to the announcement of the deal in November.

Select Medical operates not only NovaCare’s outpatient physical therapy networks but also encompasses 1,850 healthcare facilities across 36 states, which include 104 long-term acute-care hospitals and 38 rehabilitation hospitals. The company’s workforce consists of more than 45,000 employees and reported impressive revenues of .5 billion for the previous year.

Select Medical initially acquired NovaCare in 1999, a move that came in response to financial challenges faced by NovaCare after reimbursement alterations introduced by the federal Budget Reconciliation Act of 1997. These changes, which enforced caps on reimbursement rates for speech, physical, and occupational therapy provided in nursing homes, resulted in a staggering annual revenue decline of 0 million for the company, a situation that had been extensively reported at the time.

As the rehabilitation services sector continues to evolve, the implications of Select Medical’s transition to private ownership may lead to new strategies and opportunities aimed at enhancing patient care and expanding service offerings across its extensive network. The acquisition reflects a larger trend in the healthcare industry, where private equity investments are increasingly reshaping the operational frameworks of established medical providers.

This development holds considerable significance for stakeholders in the healthcare community, particularly in light of the growing emphasis on effective rehabilitation services as essential components of comprehensive patient care in today’s healthcare landscape.