Select Medical acquired by WCAS, et. al.: fairness opinion by Goldman Sachs
Announced March 2, 2026 · Going-private · All cash ·
DEFM14A filed May 20, 2026
Enterprise value
$3.9B
EV / LTM EBITDA
8.0x
EBITDA $487M · 9% margin
EV / LTM revenue
0.68x
revenue $5.7B
DCF discount rate
10.0%–12.0%
Perpetuity growth
Deal terms
ConsiderationAll cash
Price per share$16.50
Premium18.0%
Premium basisUnaffected closing price of $14.01 per share on November 24, 2025, the last trading day prior to public disclosure of the November Proposal
StructureGoing-private
Termination fee$66.5M (3.3% of equity)
Reverse termination fee$133M
Go-shopNone
Outside date—
FilingDEFM14A · EDGAR index
Implied value per share by method vs. $16.50 offer
Precedent transactions — EV / LTM Adjusted EBITDA $9.99 – $29.87
Discounted cash flow $15.04 – $25.33
Illustrative Present Value of Future Share Price Analysis $14.04 – $25.72
Premia Paid Analysis $15.69 – $24.80
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Goldman Sachs to the special committee
Delivered March 2, 2026 · Fee $11.0M ($11.0M contingent on closing)
Discounted cash flow assumptions
Discount rate10.0%–12.0%
BasisWeighted average cost of capital derived via Capital Asset Pricing Model; mid-year convention, discounted to December 31, 2025
Terminal valuePerpetuity growth
Perpetuity growth1.5%–2.5%
Exit multiple5.5x–7.8x Implied terminal year EBITDA exit multiple
Projection period2026E-2035E
Projections usedCompany management Forecasts approved by the Special Committee
Implied value per share$15.04–$25.33
Unlevered free cash flows for fiscal years 2026 through 2035; enterprise value adjusted for total debt and cash, divided by fully diluted shares using treasury stock method.
Selected precedent transactions (9)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2017-12 | Kindred Healthcare, Inc. | Humana Inc., Welsh, Carson, Anderson & Stowe XII, L.P. and TPG Global, LLC | 8.2x EV/LTM Adjusted EBITDA |
| 2015-06 | Reliant Hospital Partners, LLC | HealthSouth Corporation | 9.8x EV/LTM Adjusted EBITDA |
| 2015-06 | Revera Inc. | Genesis HealthCare LLC | 7.9x EV/LTM Adjusted EBITDA |
| 2014-11 | Centerre Healthcare Corporation | Kindred Healthcare, Inc. | 11.2x EV/LTM Adjusted EBITDA |
| 2013-04 | Kindred Healthcare, Inc. | Vibra Healthcare, LLC | 6.4x EV/LTM Adjusted EBITDA |
| 2011-02 | RehabCare Group, Inc. | Kindred Healthcare, Inc. | 7.7x EV/LTM Adjusted EBITDA |
| 2010-08 | Vista Healthcare, LLC | Kindred Healthcare, Inc. | 6.7x EV/LTM Adjusted EBITDA |
| 2010-06 | Regency Hospital Company, L.L.C. | Select Medical Holdings Corporation | 7.6x EV/LTM Adjusted EBITDA |
| 2009-11 | Triumph HealthCare Holdings, Inc. | RehabCare Group, Inc. | 6.2x EV/LTM Adjusted EBITDA |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Adjusted EBITDA | 6.2x | — | 11.2x | 6.2x–11.2x | $9.99–$29.87 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Historical Stock Trading Analysis | $16.50 represented a premium of ~18% to the undisturbed closing price of $14.01 on November 24, 2025; ~21% to the 30-trading day VWAP of $13.63; and ~24% to the 60-trading day VWAP of $13.29. | — |
| Illustrative Present Value of Future Share Price Analysis | Applied EV/NTM EBITDA multiples of 6.0x to 8.0x to implied year-end 2026-2028 estimates, subtracted net debt, added cumulative dividends, and discounted to December 31, 2025 at a 12.2% cost of equity. | $14.04–$25.72 |
| Premia Paid Analysis | 18 all-cash acquisitions of U.S. public healthcare targets (excluding biotech/pharma) announced January 1, 2020 through February 27, 2026 with enterprise values of $1-5 billion; premiums to last undisturbed close showed minimum 12%, median 28%, mean 32%, maximum 77%. Applied a 12%-77% premium range to the $14.01 unaffected price. | $15.69–$24.80 |
Engagement letter dated December 20, 2025; transaction fee estimated at approximately $11 million, all contingent on consummation. Expense reimbursement and indemnification also provided.
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Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $6.0B | $6.3B | $6.6B | $6.9B | $7.2B | 4.7% |
| Revenue growth | 5.0% | 5.1% | 4.6% | 4.8% | 4.2% | |
| EBITDA | $597M | $664M | $730M | $801M | $828M | 8.5% |
| EBITDA growth | 22.6% | 11.2% | 9.9% | 9.7% | 3.4% | |
| EBITDA margin | 10% | 11% | 11% | 12% | 11% | |
| Implied EV / EBITDA | 6.5x | 5.9x | 5.3x | 4.9x | 4.7x |
Year-1 growth is against LTM at announcement ($5.7B revenue, $487M EBITDA); later years are year over year.
Management prepared the "Forecasts" in Fall 2025 covering fiscal years 2026-2030, later extended through 2035, reviewed and approved by the Special Committee for Goldman Sachs' use. Total revenues grow from $5,722 million in 2026E to $8,066 million in 2035E, with adjusted EBITDA rising from $531 million (9.3% margin) in 2026E to $876 million (10.9% margin) in 2035E. Unlevered free cash flow grows from $157 million in 2026E to $480 million in 2035E, assuming a 21% tax rate, D&A of $146-150 million per year and capital expenditures of $237 million in 2026 declining to $175 million thereafter. Only the 2026-2030 portion was made available to the Buyer Consortium for due diligence.
Process notes
Rule 13e-3 going-private transaction with a Special Committee of independent directors advised by Goldman Sachs (financial) and Skadden (legal); Dechert acted for the Company; Cravath and Ropes & Gray for the Buyer Consortium. Goldman Sachs delivered the only fairness opinion, to the Special Committee. Parent's financial advisors Wells Fargo and JPMorgan prepared November 2025 and March 2026 discussion materials for the Purchaser Filing Parties but rendered no fairness opinion (Wells Fargo fee ~$11.5M contingent plus ~$5.4M debt financing; JPMorgan fee ~$10M contingent plus ~$5.8M debt financing). Price was negotiated up from an initial $16.00-$16.20 proposal to $16.50. Special Committee, with Goldman Sachs, contacted nine other potential bidders; none made an offer. Closing conditioned on a non-waivable majority-of-unaffiliated-shares approval. Company Termination Fee equals 3.25% of equity value; Parent Termination Fee equals 6.5% of equity value and is guaranteed by WCAS. Outside date is nine months after signing with automatic three-month extension if only regulatory conditions remain.
Other Hospitals fairness opinions
- LifePoint Health / Apollo Global Management 2018 · 7.5x EV/EBITDA
- Kindred Healthcare / Humana/TPG/WCAS 2017 · 8.0x EV/EBITDA
- Health Management Associates / Community Health Systems 2013 · 9.1x EV/EBITDA
- Vanguard Health Systems / Tenet Healthcare 2013 · 8.1x EV/EBITDA