Good morning and thank you for joining us today for Select Medical Holdings Corporation's Earnings Conference Call to discuss the third quarter 2012 results and the company's business outlook. Speaking today are the company's CEO, Robert Ortenzio; and the company's Executive Vice President and Chief Financial Officer, Martin Jackson. Management will give you an overview of the quarter highlights and then open the call for questions. Before we get started, we would like to remind you, that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including, without limitations, statements regarding operations results, growth opportunities and other statements that refer to Select'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 would like to turn the conference call over to Robert Ortenzio.

Thank you, operator. Good morning, everyone, and thanks for joining us for Select Medical Holdings' Third Quarter Earnings Conference Call for 2012. For our prepared remarks, I'll provide some overall highlights for the company and our existing -- and our operating divisions, and ask Martin Jackson to provide some additional financial details before opening the call up for questions. In our earnings press release issued last night, the company announced that our Board of Directors declared a special cash dividend of $1.50 per share to be paid on or about December 12 to all stockholders of record at the close of business on December 5, 2012. The company's cash flow continues to be strong and we expect approximately $100 million of the $210 million required to pay the dividend will come from cash-on-hand, with the balance being drawn from our revolving credit facility. As you know, over the past 2 years, the company has repurchased close to 22.5 million shares of its common stock and continues to look for ways to enhance value to our shareholders. The dividend allows us to return capital to our shareholders, without limiting our ability to pursue other opportunities. Our reported earnings per fully diluted share were $0.17 in the third quarter. However, this included a non-recurring loss on early retirement of debt. Excluding this loss and the related tax effect, our adjusted earnings per fully diluted share were $0.20 in the third quarter compared to earnings per share in the third quarter of last year of $0.17. Net revenue for the third quarter increased 2.8% to $713.7 million compared to the same quarter last year. During the quarter, we generated approximately 74% of our revenues from our specialty hospital segment, which includes both our long-term acute care and inpatient rehab hospitals, and 26% from…

Thanks, Bob. For the quarter, our operating expenses, which include our cost to service, general and administrative costs and bad debt expense increased 3.1% to $627.3 million compared to the same quarter last year. As a percentage of our net revenue, operating expenses for the quarter were 87.9%, a slight increase compared to 87.7% in the same quarter last year. Cost of services, a major component of which is labor, were $599 million in the third quarter. As a percentage of net revenue, cost of services was 83.9% for the third quarter compared to 83.8% in the same quarter last year. The increase in cost of services as a percentage of net operating revenue resulted primarily from increased relative labor costs in both our specialty hospital and our outpatient rehabilitation segment. This increase in relative labor costs resulted from increased labor costs associated with the Baylor JV services agreement, increased staffing costs in our hospital and lower productivity in our contract services business. G&A expense was $17.1 million in the third quarter which, as a percentage of net revenue, was 2.4%. This compares to $15 million or 2.2% of revenue for the same quarter last year. Bad debt, as a percent of net revenue, was 1.6% for the third quarter. This compares to 1.7% for the same quarter last year. The decrease in bad debt as a percentage of revenue occurred across both our operating segments and is attributable to favorable collections experience of accounts receivable during the quarter. As Bob mentioned, total adjusted EBITDA was $87.7 million for the third quarter and adjusted EBITDA margins were 12.3%, which compared to adjusted EBITDA of $86.5 million and 12.5% adjusted EBITDA margins in the same quarter last year. Depreciation and amortization expense was $15.5 million in the third quarter. This compares…

[Operator Instructions] And your first question comes from the line of Kevin Fischbeck from Bank of America Merrill Lynch.

This is actually Joanna Gajuk filling in for Kevin today. The first question -- definitely that's good to see the special dividend. It's not totally expected given the pretty aggressive share repurchase earlier this year. And the question is, does this mean -- the dividend mean that we should expect less share repurchases going forward?

I don't think we ought to expect less share repurchases going on. And as you recall, we have $250 million of share buyback authorization, of which we used $164 million. And we will be very opportunistic, and we believe that we could potentially use the balance of that.

Great. And then on a different topic. Again, the volumes were weaker than on our model, and you made some comment around it. So -- but can you give us a little bit more color in terms of what caused the weak volumes. I mean we've heard from acute care hospitals in terms of what's going on there. But can you just give us more color from your perspective?

Sure. We think the lower volume is really reflective of the overall lower volume in the acute cares. As you may or may not know, over 97% of the admissions into our specialty hospitals come from acute cares. And so we think that a good portion of that is really just reflective of that lower volume in acute care levels.

Great. And just the last question on the subpoena that was disclosed in the 10-Q last night. Seems like there's something with this facility that keeps on coming back. So can you just talk about any implications of these subpoenas for the company?

Yes. I don't think there's any additional implication. I mean these investigational processes take a fairly predictable route, which is that's in the investigative phase and as the government wants more information, they request the information through subpoenas. That's just the way they do it. So I think that as this thing moves along, we'll continue to see requests for additional information, which we're cooperating with. I mean our policy is to, even though we disclosed the investigation at that individual hospital, we continue to update our disclosure and I think provide as much or more information than anybody does that has these types of investigations. So we'll continue to update the disclosure with any new information that we have.

Your next question comes from the line of A.J. Rice of UBS.

Just a couple of questions. First of all, your big competitor in the contract therapy area had mentioned that they were having some issues with the Medicare Part D therapy caps. Is there anything -- you haven't mentioned that. Is there anything going on there that has an impact on your business?

A.J., there has been some changes in the methodology that you have to use in order to see the patient. And it is more time-consuming. So just like a number of the other activities with Medicare, you just have to get used to it and incorporate that into your process.

But you're reaffirming guidance, so there’s nothing there that's meaningful enough from your perspective to make any changes or in outlook or trend?

That's correct.

Yes. And I think the other thing to keep in mind, A.J., is while we kind of tease it out in our disclosures, our contract therapy businesses is -- relative to the company is really not that big.

Right. That's right. Also just in the interest of making sure I'm on top of what's in the guidance, I don't know whether you had been able to assess whether you've had much impact from this Hurricane Sandy on your operations, but have you looked at that in terms of what implications it might have, if any, on the fourth quarter?

Yes. Let me address a part of that, A.J., is just for your information, we have 120 clinics in the Philadelphia and South Jersey area. It's probably our largest market. And they are branded under the NovaCare brand. And we have 85 clinics under the Kessler brand in Northern New Jersey. So obviously, we did have a lot of our operations in the path of the storm. And so we're continuing to look at that and our lost visits. But at this point, we can probably give you some estimate of what we think the impact will be in the fourth quarter.

A.J., the preliminary evaluation of that, we've got a range of somewhere in the neighborhood of $1.5 million to $2.5 million.

Okay. This is small item, but it does reflect on the Baylor JV. The equity in earnings of affiliates seemed to slip from the second quarter level. How is the Baylor JV doing? And is there any other items in that line item that we should know about that are impacting it?

Yes, there is, A.J. You can make the -- if you're making the assumption that Baylor's doing just fine, and they're doing the same or, if not, better than they did same quarter last year, that's a very good assumption. What we have done is we have purchased the minority shares in some companies that we actually use and they have some start-up losses. That's what's really reflecting in that line item, and the reduction in that rate.

Okay. And you would assume that those start-up losses would impact you for a few more quarters?

Yes.

Okay. All right. And then just finally, on the -- I know you sometimes have talked about Regency and where that stands relative to the Select legacy portfolio. Can you just comment on the relative performance, in any way, of the old Regency properties versus the Select, and where -- margin volume, et cetera?

We sure can. We are very pleased with the performance of the Regency hospitals. They are up, and they're at the same margins that our legacy Select hospitals are at right now. So we're very, very comfortable with that acquisition. It's been fully integrated. And as I said, we're comfortable with where it is right now.

Your next question comes from the line of Gary Lieberman of Wells Fargo.

Just last week, CMS reached a settlement with a provider group regarding the -- providing therapy to patients, even if it wasn't going to improve their condition and just to maintain their current condition. Can you talk about what impact, if any, that might have on your business?

At this point in time, Gary, we haven't really been able to kind of put a handle on that. Our expectation is that would impact us in our contract therapy area. But again, we haven't attached a number to that. Obviously, it's a positive event.

Yes. We haven't -- just a follow-up, I don't think we've made any changes in our business model based on that decision.

Okay. And any idea of how long it would take you to put some numbers around it?

Probably a couple of weeks.

As there are no further questions, we will turn it back over to management for closing remarks.

Okay. I'll just close by thanking you for joining us and look forward to updating you again next quarter.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a wonderful day.