Good morning and thank you for joining us today for Select Medical Holdings Corporation’s Earnings Conference Call to discuss the Fourth Quarter and Full Year 2016 Results and the Company’s Business Outlook. Speaking today are the Company’s Executive Chairman and Co-Founder, Robert Ortenzio; and the Company’s Executive Vice President and Chief Financial Officer, Martin Jackson. Management will give you an overview of the quarter and then open the call for questions. Before we get started, we would like to remind you that this conference may contain forward-looking statements regarding future events or the future financial performance of the Company, including without limitation, statements regarding operating results, growth opportunities, and other statements that refer to Select Medical’s plans, expectations, strategies, intentions, and beliefs. These forward-looking statements are based on the information available to management of Select Medical today and the company assumes no obligation to update these statements as circumstances change. At this time, I will turn the conference call over to Mr. Robert Ortenzio.

Thanks operator. Good morning everyone. Thanks for joining us for Select Medical’s fourth quarter and full year earnings conference call for 2016. As you’re aware the Company announced updated estimates, net revenue and adjusted EBITDA on January 27 in connection to discussions with our lenders about refinancing Select’s senior credit facilities. Our results for the quarter and the full year 2016 announced in our earnings press release yesterday were in line with those estimates. We anticipate completing the refinancing in early March, which will include a new seven-year $1.15 billion term loan priced at LIBOR plus $3.50 and a new five-year $450 million revolver price at LIBOR plus $3.25. The refinancing transaction will reduce our interest expense and extend the maturity on our senior secured debt to 2024. Before I provide some additional specifics on the quarter and full year results, I want to briefly recap some of the accomplishments for the company in 2016. As you know in mid 2015, we closed on the acquisition of Concentra with our partners Welsh, Carson and Cressey & Co. This was the largest acquisition in Select’s 20-year history. The new management team in Concentra as well as the corporate team at Select did an outstanding job achieving the expected synergies and growing Concentra EBITDA. Adjusted EBITDA grew to $143 million in 2016 or approximately $90 million 2015. In March 2016, we’ve acquired Physiotherapy Associates, the second largest physical therapy provider in the country. Integration of Physio has gone well and we expect to realize the full amount of synergies expected in 2017. Also in March 2016, we sold our Contract Therapy business for an attractive valuation resulting in a gain of $33.9 million. We believe both the strategy and timing were right for that sale. In our Specialty Hospital business or LTAC…

Thanks Bob. Good morning everyone. For the fourth quarter, our operating expenses which include our cost of services, general, administrative expenses and bad debt expense was $953.1 million. This compares to $942.6 million in the same quarter last year. As a percentage of net revenue, operating expenses for the fourth quarter were 91.1% compared to 90.7% in the same quarter last year. For the year our operating expenses were $3.84 billion, this compares to$3.36 billion last year. As a percentage of our net revenue, operating expenses for the year were 89.6% compared to 89.9% last year. The decrease in our operating expenses as a percentage of net revenue is attributable to a 30 basis point decrease in cost of services compared to last year. Cost of services increased to $909.9 million for the fourth quarter. This compares to $902.3 million in the same quarter last year. As a percent of net revenue, cost of service increased 20 basis points to 87% in the fourth quarter. This compares to 86.8% in the same quarter last year. The increase is primarily due to the higher relative costs in our Specialty Hospitals. For the year, cost of services increased to $3.66 billion, this compares to $3.21 billion last year. As a percent of net revenue cost of services decreased 30 basis points to 85.5%, this compares to 85.8% last year. The decrease in cost of services as a percent of net revenue was the result of cost reductions achieved by Concentra which were partially offset by an increase in Specialty Hospital cost of services as a percentage of revenue. G&A expense was $25.7 million in the fourth quarter, which is as a percent of net revenue was 2.5% compared to $24.1 million or 2.3% of net revenue for the same quarter last year.…

Thank you. [Operator Instructions] Our first question comes from Kevin Fischbeck from Bank of America Merrill Lynch. Your line is open.

Good morning. This is actually Joanna Gajuk filling in for Kevin today. Thanks so much for taking the question here. So first on guidance, the adjusted EBITDA margin guidance assumes about 150 basis points improvement in margin year-over-year. Can you talk about the drivers for that improvement? Is there any segment that is worth highlighting, in terms of the margin improvement that’s assumed in the guidance here?

Sure, Joanna. Let us give you a bridge to get you to both the improvement in the margin as well as the increase in total overall EBITDA. So you take a look at where we ended up for 2016, we ended up at close to $466 million. And if you take a look at our business segments – you take a look at on the Specialty Hospital side, first take a look at in patient rehab. Inpatient rehab, we had about $22 million worth of start up losses associated with the three projects that Bob talked about which were CRI, TriHealth and Cleveland Clinic. We anticipated that those will generate somewhere in the neighborhood of $15 million to $18 million worth of EBITDA. That in and of itself is a $40 million swing, plus the overall business we anticipate on the inpatient rehab side to be about another $5 million. So all told for the inpatient rehab facilities would be about $45 million. On the outpatient rehab side, we acquired Physio in March of 2016. So if you annualized that plus add back the synergies – the $20 million of synergies that we expect to get from that, plus the growth from our legacy business, that’s about another $25 million. And then on Concentra, Concentra had a fabulous year in 2016. So we anticipate the growth on the same-store basis will be pretty modest probably in that $5 million range. So adding all those up you’re going to come up with about $75 million which will get you to in that $540 million to $545 million range. And then the balance of the year or the balance of 2017 will really be a function of the volume increases that we see on the LTAC business and that’s really where that’s coming.

That’s very helpful. And then in terms of going forward, I don’t want to ask you to talk about 2018 guidance necessarily, but should we think about, then 2017 as being a normalized margin because of all these reasons that are helping 2017? Or you think there’s more opportunity in some of the segments, in terms of margins going forward?

No, I think certainly we have a lot going on in 2016. I think the improvement – the margins in 2017 will be more attuned to our business moving forward. And I think the other thing to point out is the CRI development that we did, it is a very unique development, it’s a very large project, as Bob had mentioned in the opening of the call. And we don’t anticipate seeing those types of projects very often from that perspective and that had a very detrimental impact on the margins in 2016.

Great. Thank you. And if I squeeze the last one here, clarification, maybe I didn’t catch it, but did you talk about the impact in the quarter from the swap? I know that in Q3 it was about $6.5 million, but was there something of that magnitude, or bigger in this quarter?

It’s not – it was about $4 million for the quarter.

Great, thank you so much. I go back to the queue. Thanks.

Sure.

Thank you. And at this time, I’m showing no further questions. I would like to turn the call back to Mr. Ortenzio for any closing remarks.

No closing remarks. Thank you everyone for joining us.