What Happened?

Shares of healthcare services company Select Medical (NYSE: SEM) jumped 13.4% in the afternoon session after it received a non-binding proposal from its Executive Chairman and Co-Founder, Robert A. Ortenzio, to take the company private. 

The offer proposed acquiring all outstanding shares for a cash price between $16.00 and $16.20 per share. This represented a premium of up to 15.6% over the stock's closing price from the previous trading session. Mr. Ortenzio, along with other parties, submitted the indication of interest to purchase the remaining 84.3% of the company they did not already own. The proposal was made public through a Schedule 13D filing with the U.S. Securities and Exchange Commission. In response, Select Medical announced that its board, excluding any interested members, was reviewing the offer with its advisors.

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What Is The Market Telling Us

Select Medical’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Select Medical and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 6.2% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. 

New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

Select Medical is down 15.6% since the beginning of the year, and at $15.85 per share, it is trading 59% below its 52-week high of $38.70 from November 2024. Investors who bought $1,000 worth of Select Medical’s shares 5 years ago would now be looking at an investment worth $639.15.

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