SCHEDULE: Select Medical Co-Founder Proposes Take-Private Deal

Robert A. Ortenzio and Martin F. Jackson, along with the Estate of Rocco A. Ortenzio, propose to acquire all outstanding shares of Select Medical Holdings Corp not already owned by them for $16.00 to $16.20 per share in cash.

Summary

• Robert A. Ortenzio, Executive Chairman and Co-Founder, Martin F. Jackson, Senior Executive Vice President of Strategic Finance and Operations, and the Estate of Rocco A. Ortenzio (collectively, the "Reporting Persons") have filed a Schedule 13D.
• The Reporting Persons propose to acquire all outstanding shares of Select Medical Holdings Corp (SEM) not already owned by them.
• The non-binding offer is for $16.00 to $16.20 per share, payable in cash.
• This offer represents a premium of 21.0% to 22.5% over the company's 90-day volume-weighted average daily trading price of $13.22 as of November 21, 2025.
• The Consortium (Reporting Persons and affiliates) currently holds approximately 12.4% of SEM's outstanding shares and will roll over these shares into the surviving company.
• The proposal is fully financed by committed equity from Welsh, Carson, Anderson & Stowe (WCAS) and committed debt from J.P. Morgan and Wells Fargo.
• The transaction is subject to satisfactory due diligence, customary approvals, and closing conditions, including approval by a Special Committee of disinterested directors and a non-waivable condition requiring approval by a majority of non-Consortium shares.

Sentiment

Score: 8

Explanation: The proposal offers a substantial premium to shareholders with committed financing, indicating a strong likelihood of a beneficial outcome for public shareholders, despite the non-binding nature and customary conditions.

Positives

• The offer price of $16.00 to $16.20 per share represents a significant premium of 21.0% to 22.5% over the 90-day volume-weighted average daily trading price of $13.22 as of November 21, 2025.
• The proposal is fully financed with committed equity from WCAS and committed debt from J.P. Morgan and Wells Fargo, indicating strong financial backing.
• The Consortium's deep familiarity with SEM's business and existing relationships are expected to facilitate an expedited due diligence process and transaction execution within eight weeks.
• The Consortium's status as "Permitted Holders" under existing indebtedness allows current debt to remain outstanding, simplifying financing.

Negatives

• The proposal is non-binding and does not create a legally binding obligation or agreement.
• There is no assurance that discussions will result in a definitive agreement or consummation of a transaction.
• Discussions concerning a transaction may be terminated at any time and without prior notice.
• The transaction is subject to numerous contingencies, including Board approval, regulatory approvals, and a majority of the minority shareholder approval.
• Robert A. Ortenzio reserves the right to withdraw or modify the proposal at any time.

Risks

• The non-binding nature of the proposal means there is no guarantee of a definitive agreement or transaction consummation.
• Failure to obtain necessary approvals from the Board, a Special Committee, or a majority of disinterested shareholders could prevent the transaction.
• Regulatory approvals are required and could introduce delays or conditions.
• The proposal may be withdrawn or modified by Robert A. Ortenzio at any time.
• Market conditions and other factors could influence the Reporting Persons' decision to proceed or alter their investment strategy.

Future Outlook

The Reporting Persons intend to pursue the non-binding proposal to acquire all outstanding shares of Select Medical Holdings Corp not already owned by them. The process is expected to involve an expedited due diligence and negotiation of definitive transaction documentation within eight weeks. The transaction is contingent on various approvals, including a Special Committee and a majority of disinterested shareholders. If the transaction is not consummated, the Reporting Persons will continue to review their investment and may acquire or sell securities based on market conditions and other factors.

Management Comments

• "I am pleased to submit this non-binding indication of interest (the Proposal) to acquire all the Company's outstanding shares of common stock (the Potential Transaction) at an all-cash purchase price of $16.00 to $16.20 per share (the Offer Price)." (Robert A. Ortenzio)
• "As the Executive Chairman and a Co-Founder of SEM, I believe that I am uniquely positioned to timely execute an acquisition of the Company on attractive terms for the Company's shareholders." (Robert A. Ortenzio)
• "I have deep familiarity with SEM's business and am prepared to move forward with an expedited due diligence process and to negotiate and execute definitive transaction documentation within eight weeks of submitting this Proposal." (Robert A. Ortenzio)
• "My equity partners and I have intimate knowledge and operating experience in each of the Company's segments... including longstanding relationships with the Company's joint venture partners and other healthcare providers." (Robert A. Ortenzio)
• "My equity partners and my status as Permitted Holders under certain of the Company's existing indebtedness would permit such indebtedness to remain outstanding following completion of the transaction, facilitating our ability to finance the Proposal on attractive terms." (Robert A. Ortenzio)
• "This 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." (Robert A. Ortenzio)
• "I will not pursue this Proposal without approval of the Special Committee, advised by independent legal and financial advisors, and further expect that the definitive merger agreement will include a non-waivable condition requiring the approval of a majority of the votes cast by the shares of SEM stock that are not held by members of the Consortium and its affiliates." (Robert A. Ortenzio)

Industry Context

This proposal represents a potential take-private transaction in the healthcare services sector. Such transactions often occur when insiders believe the public market undervalues the company or when they seek greater operational flexibility away from public scrutiny. The involvement of private equity firm WCAS and major banks like J.P. Morgan and Wells Fargo highlights the continued interest of institutional capital in the healthcare industry, particularly in established operators like Select Medical.

Management Changes

Corporate Governance

Related Party Transactions

• The proposal involves the Executive Chairman, Senior Executive Vice President, and the Estate of a Co-Founder seeking to acquire the shares not already owned by them, constituting a related-party transaction.

Stakeholder Impact

• Shareholders (non-Consortium): Potential to receive a significant cash premium for their shares, offering immediate liquidity.
• Shareholders (Consortium): Will roll over their equity into the surviving company, maintaining their investment and control.
• Employees: No direct impact mentioned, but a take-private transaction could lead to operational changes in the future.
• Creditors: Existing indebtedness is expected to remain outstanding, suggesting minimal immediate impact on current creditors.

Next Steps

• The Board of Directors is expected to appoint a Special Committee comprised of disinterested directors to evaluate the proposal.
• The Special Committee will be advised by independent legal and financial advisors.
• Negotiation and execution of definitive transaction documentation are expected within eight weeks.
• The definitive merger agreement will require approval of a majority of the votes cast by shares not held by the Consortium and its affiliates.
• The transaction will require customary due diligence and regulatory approvals.

Key Dates

Recommendation

The non-binding proposal offers a substantial premium of 21.0% to 22.5% over the recent trading price, with committed financing from reputable institutions. The involvement of key insiders and the stated intention for an expedited process, coupled with the commitment to a Special Committee and majority-of-the-minority approval, suggest a credible path to closing. While non-binding, the terms are highly attractive for current shareholders, making it a strong buy for those seeking to capitalize on the proposed acquisition premium.

Keywords

Select Medical Holdings Corp, SEM, Schedule 13D, take-private, going private, Robert A. Ortenzio, Martin F. Jackson, Rocco A. Ortenzio, Welsh Carson Anderson & Stowe, WCAS, J.P. Morgan, Wells Fargo, common stock, beneficial ownership, merger, acquisition, healthcare services