BIRMINGHAM, Ala., April 9, 2025 /PRNewswire/ -- Encompass Health Corp. (NYSE: EHC) today announced it has changed the time of its 2025 first quarter earnings call from 10 a.m. ET to 9 a.m. ET on Friday, April 25, 2025. As previously announced, the Company will report results for its first quarter ended March 31, 2025, after the market closes on Thursday, April 24, 2025. The Company will host the investor conference call to discuss its results at 9 a.m. ET on Friday, April 25, 2025. The conference call may b ...

BIRMINGHAM, Ala., April 7, 2025 /PRNewswire/ -- Encompass Health Corp. (NYSE: EHC) today announced it will report results for its first quarter ended March 31, 2025, after the market closes on Thursday, April 24, 2025. The Company will host an investor conference call at 10 a.m. ET on Friday, April 25, 2025, to discuss its results. The conference call may be accessed by dialing 800-245-3047 and providing the conference ID EHCQ125. International callers should dial 203-518-9765 and provide the same conferenc ...

Core Insights - Encompass Health Corporation (EHC) has launched a new 40-bed inpatient rehabilitation facility in Athens, GA, through a joint venture with Piedmont, Georgia's largest healthcare system, reinforcing their long-term partnership [1][2][3] Company Developments - The new facility is designed to assist patients recovering from various medical conditions, providing at least three hours of intensive therapy five days a week, continuous nursing care, and regular physician consultations, which is expected to significantly enhance patient outcomes [2] - EHC currently operates 167 inpatient rehabilitation hospitals across 38 states and Puerto Rico, and the expansion with Piedmont will further establish its presence in Georgia, with future projects including additional hospitals in Loganville, GA [3] - The company is committed to growth, planning to establish seven new hospitals with a total of 340 beds and expand existing facilities by 100 beds by 2025, aiming to open six to 10 new hospitals annually between 2023 and 2027 while adding 80-120 beds each year [4] Market Performance - Shares of Encompass Health have increased by 26.4% over the past year, significantly outperforming the industry growth of 5.5% [5]

The hospital provides essential rehabilitative services that help patients recovering from strokes, brain injuries, spinal cord injuries, amputations and complex orthopedic conditions regain function and independence. Patients receive a minimum of three hours of intensive therapy for five days each week, frequent physician visits and 24-hour nursing care. "Our talented team is excited to serve the Athens community," said Loretta Rice, CEO of Rehabilitation Hospital of Athens. "The compassionate, high-qualit ...

Encompass Health Corporation (EHC) remains well-poised for growth on the back of solid top-line growth, continuous addition of facilities to its existing network and robust cash reserves. A strong 2025 outlook reinforces the growth prospects of the stock.Let’s delve deeper and analyze the factors aiding Encompass Health.EHC’s Impressive Earnings Surprise HistoryEncompass Health boasts a robust earnings surprise record. It has outpaced estimates in each of the trailing four quarters, the average surprise bei ...

Financial Performance - Total net operating revenues for 2024 reached $5,373.2 million, up 11.9% from $4,801.2 million in 2023[24]. - The number of discharges increased to 248,498 in 2024, compared to 229,480 in 2023, reflecting an 8.8% growth[24]. - The company has a strong balance sheet with approximately 78% of hospital real estate owned and no significant debt maturities until 2028[34]. - The company has a $1 billion revolving credit facility, with $944 million available for borrowing as of December 31, 2024[29]. - Medicare revenues account for approximately 82% of total revenues, with 65.1% from traditional Medicare and 16.8% from Medicare Advantage in 2024[59][60]. - The sources of revenue mix for 2024 shows a slight decrease in Medicaid revenues to 3.3% from 4.0% in 2023[60]. - Medicaid payments for specific discharges represented only 3.3% of consolidated net operating revenues for the year ended December 31, 2024[80]. - Medicaid discharges represented 5.6% of total inpatient discharges for the year ended December 31, 2024[80]. Operational Growth - In 2024, the company operated 166 inpatient rehabilitation hospitals, an increase from 161 in 2023 and 153 in 2022[24]. - The company aims to add 6 to 10 new inpatient rehabilitation hospitals and 80 to 120 beds to existing hospitals annually[30]. - The company has opened or acquired 71 new hospitals since 2012, increasing licensed beds by approximately 67%, or 4,438 beds[38]. - As of December 31, 2024, 143 out of 166 hospitals held stroke-specific certifications, indicating a focus on enhancing stroke care[27]. Employee Engagement and Development - As of December 31, 2024, the company employed approximately 40,000 individuals, with 23,564 full-time employees[40]. - The nurse turnover rate decreased to 20.4% in 2024 from 23.1% in 2023, while therapist turnover remained stable at 7.7%[50]. - The overall employee engagement score was 83.7% favorable in 2024, reflecting a small increase over 2023, with 87% participation in the survey[53]. - The company reimbursed over $1.1 million in tuition and paid over $4.0 million toward employees' student loan debt in 2024[51]. - The company has endowed five scholarships for students pursuing degrees in nursing and allied health fields[51]. - The company offers a 30% to 50% reduced tuition rate for nurses advancing their academic degrees[51]. - The company has invested in best-in-class technology for on-demand learning and development programs[52]. - The DE&I program achieved a favorable response rate of 83.1% for embracing diversity as a strength, compared to the industry benchmark of 78.9%[49]. - The company sponsored seven students from disadvantaged groups in partnership with Holy Family Cristo Rey Catholic High School in 2024[47]. Regulatory Compliance and Risks - The company is subject to audits by Medicare Administrative Contractors (MACs) and Recovery Audit Contractors (RACs), which can lead to adjustments in reimbursement[66]. - Compliance with the "60% Rule" is critical for facilities to maintain their classification as inpatient rehabilitation facilities (IRFs) and avoid reduced reimbursement rates[70]. - Future changes in Medicare reimbursement rates and regulations could materially affect the company's financial position and operations[65]. - The complexity of healthcare regulations, including the Stark law, poses challenges for compliance, and the company cannot assure that every relationship fully complies with these laws[106]. - Non-compliance with certification requirements may lead to ineligibility for Medicare or Medicaid reimbursement, and could result in substantial penalties[88]. - The company has developed operational systems to facilitate compliance with Medicare standards, but there is no assurance against allegations of noncompliance[91]. - The federal False Claims Act imposes penalties equal to three times the actual amount of overpayments plus up to approximately $28,000 per claim, with increased scrutiny on billing errors[95]. - Violations of the Anti-Kickback Law can result in penalties of up to $100,000 for each violation plus tripled damages for improper claims, and may lead to exclusion from Medicare and Medicaid programs[98]. - The 2020 Stark Rule creates permanent exceptions for value-based compensation arrangements that aim to improve patient care and reduce costs, enhancing coordinated care agreements[105]. - The company maintains a comprehensive ethics and compliance program, including annual training for employees and a policy of non-retaliation for reporting compliance concerns[85]. - The company faces significant risks from increasing state and local regulations that may conflict with federal regulations, impacting operational compliance[84]. - Violations of the Stark law could have a material adverse effect on the company's business, financial position, and stock price[107]. - The company is subject to various federal and state privacy-related laws, which could impose additional penalties beyond HIPAA regulations[113]. - Penalties for HIPAA violations can reach approximately $71,000 per violation, with potential annual caps ranging from approximately $49,000 to $2,135,000 depending on the level of culpability[112]. Market Conditions and Future Outlook - Approximately 54% of Medicare beneficiaries were enrolled in Medicare Advantage plans in 2024, with projections indicating this could rise to about 64% by 2034[77]. - The 2024 IRF Rule implemented a net 3.4% market basket increase effective for discharges between October 1, 2023, and September 30, 2024[72]. - The 2025 IRF Rule implemented a net 3.0% market basket increase effective for discharges between October 1, 2024, and September 30, 2025, with an expected net increase to Medicare payment rates of approximately 3.3%[73]. - In 2024, typical rate increases for managed care contracts ranged from 2-4%[76]. - The company has seen a growing percentage of revenue derived from Medicare Advantage payors, which typically reimburse less than traditional Medicare[77]. - The company faces risks from credit market uncertainty, which could adversely affect its financial condition and growth opportunities[262]. - The inability to obtain additional financing at reasonable costs could have a material adverse effect on the company's financial condition or growth opportunities[262]. - Future market shocks could lead to reduced availability of certain types of debt financing, impacting the company's business plan[262]. - The company monitors the financial strength of its depositories, creditors, and insurance carriers to mitigate risks associated with credit market uncertainty[263].

Core Viewpoint - Encompass Health Corporation (EHC) reported strong fourth-quarter results, with adjusted earnings per share (EPS) of $1.17, exceeding estimates and showing significant year-over-year growth [1][2]. Financial Performance - Net operating revenues reached $1.4 billion, reflecting a 12.8% increase year over year and surpassing consensus estimates by 2.1% [2][3]. - Net patient revenue per discharge increased by 4.2% year over year, beating estimates, while total discharges grew by 7.8% to 63,839, exceeding expectations [4]. - Adjusted EBITDA for the quarter was $289.6 million, a 13.6% year-over-year increase, surpassing estimates [5]. Operational Highlights - The company added 22 beds to existing hospitals and opened one new hospital during the fourth quarter [5]. - Total operating expenses rose to $1.17 billion, an 11% increase year over year, primarily due to higher salaries and benefits [4]. Year-End Financials - As of December 31, 2024, cash and cash equivalents stood at $85.4 million, a 23.6% increase from the previous year [6]. - Total assets increased by 7.1% to $6.5 billion, while long-term debt decreased by 12.2% to $2.4 billion [6][7]. - Total shareholders' equity improved by 23.8% to $2.8 billion, with net cash from operations reaching $1 billion, a 17.9% increase year over year [7]. Full Year Update - For the full year 2024, operating revenues were $5.4 billion, up from $4.8 billion in 2023, with adjusted net income per share rising to $4.43 from $3.64 [8]. Capital Deployment - In 2024, the company repurchased shares worth $31.1 million and had approximately $489 million remaining under its buyback authorization [9]. 2025 Outlook - Net operating revenues for 2025 are projected to be between $5.8 billion and $5.9 billion, indicating an 8.9% improvement from 2024 [11]. - Adjusted EPS is expected to range from $4.67 to $4.96, suggesting an 8.7% rise from the previous year [11]. - The company plans to open seven new hospitals and add around 100 beds to existing facilities in 2025 [12]. Growth Targets - Management aims to open six to ten new hospitals annually and add 80-120 beds each year from 2023 to 2027, with a projected CAGR of 6-8% in discharges during this period [13].

Financial Data and Key Metrics Changes - Revenue increased by 12.7% in Q4 2024 compared to the previous year [10] - Adjusted EBITDA rose by 13.6%, while adjusted EPS increased by 23.2% [10] - Adjusted free cash flow surged by 103.7% to $190.5 million, with a full-year total of approximately $690 million, marking a 31.3% increase from 2023 [16] Business Line Data and Key Metrics Changes - Total discharge growth for Q4 was 7.8%, with same-store discharge growth at 5.8% [11] - Medicare Advantage discharge growth was up 14.7% for the quarter and 12% year-to-date, with a five-year CAGR of 11.6% [24] - Medicare fee-for-service discharges increased by 6.8% year-to-date, with same-store growth of 8.6% for 2024 [26] Market Data and Key Metrics Changes - The company continues to focus on the Medicare beneficiary population, which is projected to grow significantly by 2030 [11] - The company is experiencing broad-based volume growth across various patient mixes, payers, and geographies [10] Company Strategy and Development Direction - The company is prioritizing growth in Medicare Advantage and expanding its capacity through new hospital openings [24][28] - There is a focus on enhancing operational efficiencies and maintaining a favorable leverage ratio while deploying excess cash flow towards shareholder distributions [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in Medicare Advantage and noted the importance of refining their value proposition to health plans [25] - The company is monitoring regulatory developments closely, particularly regarding Medicare Advantage and prior authorization processes [62] Other Important Information - The company anticipates an increase in capital expenditures by approximately $100 million, primarily for growth-related projects [28] - Adjusted EBITDA guidance for 2025 is projected between $1.16 billion and $1.20 billion, with net operating revenue expected to be between $5.8 billion and $5.9 billion [17] Q&A Session Summary Question: What is the growth trend in Medicare Advantage across different states? - Management indicated that growth is occurring in both existing and new markets, with significant upside potential in Medicare Advantage due to enrollment trends [24] Question: What are the priorities for free cash flow and capital expenditures? - The company plans to increase capital expenditures for growth-related projects and expects to utilize excess free cash flow for share repurchases and dividends [30] Question: How is the company addressing the pace of bed additions in 2025? - The company is adding one more hospital in 2025 compared to the previous year and is confident in meeting growth targets [35] Question: What are the expectations regarding group medical prescription drug costs? - Management noted that costs are expected to remain elevated through the first half of 2025, driven by increased utilization of high-cost specialty drugs [12][64] Question: How is the company managing construction costs and potential tariff impacts? - Construction costs are stabilizing, and the company does not foresee significant near-term risks from tariffs affecting their operations [100][105] Question: What is the company's stance on managed care contracting? - The company continues to negotiate favorable rates with managed care plans, maintaining a consistent spread between Medicare Advantage and traditional Medicare rates [120] Question: How is the company addressing misconceptions about IRF versus SNF care? - The company emphasizes education and outreach to discharge planners to clarify the differences in care intensity and patient outcomes between IRFs and SNFs [125][128]

Core Insights - Encompass Health (EHC) reported quarterly earnings of $1.17 per share, exceeding the Zacks Consensus Estimate of $1.02 per share, and showing an increase from $0.95 per share a year ago, resulting in an earnings surprise of 14.71% [1] - The company achieved revenues of $1.41 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.05%, compared to $1.25 billion in the same quarter last year [2] - Encompass Health shares have increased approximately 10.7% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.19 on revenues of $1.43 billion, and for the current fiscal year, it is $4.76 on revenues of $5.82 billion [7] - The estimate revisions trend for Encompass Health is currently unfavorable, leading to a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Medical - Outpatient and Home Healthcare industry, to which Encompass Health belongs, is currently in the top 34% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Financial Performance - Net operating revenue for Q4 2024 was $1,405.0 million, a 12.7% increase from $1,246.8 million in Q4 2023[2] - Income from continuing operations attributable to Encompass Health per diluted share increased by 25.5% to $1.18, compared to $0.94 in the same quarter last year[2] - Adjusted EBITDA rose by 13.6% to $289.6 million, driven primarily by increased revenue[3] - Net income for the year ended December 31, 2024, was $596.6 million, compared to $463.0 million in 2023, reflecting a year-over-year increase of 28.8%[19] - Adjusted EBITDA for the year ended December 31, 2024, reached $1,103.7 million, up from $971.1 million in 2023, indicating a growth of 13.6%[21] - Basic earnings per share for the year ended December 31, 2024, were $4.56, up from $3.63 in 2023, representing a growth of 25.7%[21] - Net income for Q4 2024 was $164.2 million, up from $119.1 million in Q4 2023, representing a 37.8% increase[31] - Adjusted EBITDA for Q4 2024 was $289.6 million, compared to $255.0 million in Q4 2023, representing a 13.5% increase[26][27] Cash Flow and Investments - Cash flows from operating activities increased by 38.7% to $278.8 million, attributed to higher net income and favorable changes in working capital[3] - Cash flows from operating activities totaled $1,002.8 million for the year ended December 31, 2024, compared to $850.8 million in 2023, marking an increase of 17.8%[19] - Net cash provided by operating activities for Q4 2024 was $278.8 million, an increase from $201.0 million in Q4 2023, marking a 38.6% rise[32] - Adjusted free cash flow for Q4 2024 was $190.5 million, significantly higher than $93.5 million in Q4 2023, indicating a 103.2% increase[32] - Net cash used in investing activities for the year ended December 31, 2024, was $653.3 million, compared to $602.8 million in 2023, reflecting an 8.4% increase[34][35] - Net cash used in financing activities for the year ended December 31, 2024, was $330.6 million, up from $197.2 million in 2023, representing a 67.5% increase[34][35] Operational Metrics - The company reported a total of 63,839 discharges in Q4 2024, reflecting a 7.8% growth compared to 59,247 discharges in Q4 2023[2] - The company achieved a same-store discharge growth of 5.8% in Q4 2024[2] - In 2024, the company increased its capacity by 427 beds through new hospitals and bed additions[4] Guidance and Future Outlook - For 2025, the company provided guidance for net operating revenue between $5,800 million and $5,900 million[6] - Adjusted EBITDA guidance for 2025 is projected to be between $1,160 million and $1,200 million[6] - Adjusted earnings per share from continuing operations is expected to be in the range of $4.67 to $4.96 for 2025[6] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[19] - The company anticipates continued growth in patient volumes and revenues, driven by strategic expansions and new service offerings[37] Balance Sheet Highlights - Total assets increased to $6,534.7 million as of December 31, 2024, up from $6,102.4 million in 2023, representing a growth of 7.1%[17] - Total current liabilities increased to $841.0 million as of December 31, 2024, from $656.4 million in 2023, a rise of 28.1%[17] - Long-term debt, net of current portion, decreased to $2,359.2 million as of December 31, 2024, from $2,687.8 million in 2023, a reduction of 12.2%[17] - The company reported a total shareholders' equity of $2,792.7 million as of December 31, 2024, up from $2,255.2 million in 2023, reflecting a growth of 23.8%[17] Other Financial Details - The company reported a loss on early extinguishment of debt of $0.6 million for the year ended December 31, 2024[28] - Stock-based compensation for the year 2024 was $48.3 million, compared to $50.6 million in 2023, showing a decrease of 4.5%[28][29] - The provision for income tax expense for the year 2024 was $150.2 million, compared to $132.2 million in 2023, an increase of 13.1%[28][29] - The company experienced a change in fair market value of equity securities, resulting in a gain of $1.0 million for the year ended December 31, 2024[28] - The company reported a loss from discontinued operations of $0.4 million in Q4 2024, compared to a gain of $8.5 million in Q4 2023[31] - Provision for income tax expense for the year ended December 31, 2024, was $150.2 million, compared to $132.2 million in 2023, indicating a 13.3% increase[31]